2nd quarter oil prices rose by the most in any quarter in 30 years, but were still down 36% year to date, natural gas prices ended their best quarter in 2 years just 2 days after hitting a 25 year low
oil prices rose for the 2nd week of the past three this week on improving economc data and falling US crude inventores....after falling 3.6% to $38.49 a barrel last week on a resurgence of covid-19 cases in the US and globally, the contract price of US light sweet crude for August delivery opened higher on Monday, supported by improving economic data in Europe and China, and rallied with stock markets to close $1.21 higher at $39.70 a barrel as U.S. pending home sales posted a record gain, supporting the economic recovery hypothesis...but another surge in US coronavirus cases dampened the outlook on Tuesday and prices fell 43 cents to $39.27 a barrel as a potential resurgence of Libyan oil production reminded traders there's still a massive global oversupply, even as oil prices ended the 2nd quarter 92% higher than March 31st but remained 36% lower year to date...but oil prices jumped in overnight trading after the American Petroleum Institute reported the largest draw from crude oil inventories since 2019, and then opened 57 cents higher on Wednesday, and rose to as high as $40.58 a barrel after the EIA confirmed the draw, but faded after the EIA report to settle with a gain of just 55 cents at $39.82 a barrel as another surge in US coronavirus cases tempered the gains...oil prices then rose 83 cents, or 2.1%, to settle at $40.65 a barrel on Thursday after the labor department reported a larger jump in payrolls and a much bigger drop in unemployment than was expected, thus finishing the holiday shortened week 5% higher, at the highest level since March 6th...
natural gas prices also rose this week, as the long awaited summertime air conditioning demand finally kicked in ...after falling more than 10% to a 25 year low of $1.495 per mmBTU last week on the largest June storage build on record, trading in the contract price of natural gas for July delivery expired and natural gas opened this week with the the contract price of natural gas for August delivery trading at $1.567 per mmBTU, 2.3 cents higher than it's $1.544 per mmBTU Friday close, and it quickly jumped more than 10% to a session high of $1.753 as forecasts for much warmer weather drove expectations of higher cooling demand, before it settled at $1.709 per mmBTU, still an increase of 16.5 cents for the day...the rally continued into Tuesday, with prices rising 4.2 cents, or 2.5%, to settle at $1.751 per mmBTU, which oddly enough turned out to finish the 2nd quarter with the largest quarterly gain since June 2018....but natural gas prices turned lower and fell 8 cents on Wednesday, as another spike in coronavirus infections fueled fears of another lockdown, which would lower the demand for gas-fired electricity...but greater than expected cooling demand led the EIA to report a smaller addition to storage than was expected Thursday, and August gas prices rose 6.3 cents to settle at $1.734 per mmBTU, thus finishing the week a gain of 12.3% for the August gas contract and 16% higher than the prior week's close...
the natural gas storage report from the EIA for the week ending June 19th indicated that the quantity of natural gas held in underground storage in the US rose by 65 billion cubic feet to 3,077 billion cubic feet by the end of the week, which left our gas supplies 712 billion cubic feet, or 30.1% greater than the 2,365 billion cubic feet that were in storage on June 19th of last year, and 466 billion cubic feet, or 17.8% above the five-year average of 2,611 billion cubic feet of natural gas that has been in storage as of the 19th of June in recent years....the 65 billion cubic feet that were added to US natural gas storage this week was less than the consensus forecast from S&P Global Platts' survey of analysts, who expected a 77 billion cubic feet increase, and it was also less than the 92 billion cubic feet addition of natural gas to storage during the corresponding week of 2019, but it exactly matched the average of 65 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 June 26th indicated that because of a sizable drop in our oil imports and an increase in oil used by refineries, we had to pull oil out of our stored commercial supplies of crude oil for the 1st time in four weeks, and for the 12th time in the past forty-two weeks....our imports of crude oil fell by an average of 571,000 barrels per day to an average of 5,969,000 barrels per day, after falling by an average of 102,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 65,000 barrels per day to an average of 3,092,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,877,000 barrels of per day during the week ending June 26th, 506,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was unchanged at 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 13,877,000 barrels per day during this reporting week..
meanwhile, US oil refineries reported they were processing 14,033,000 barrels of crude per day during the week ending June 26th, 193,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a net of 786,000 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 631,000 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 (-631,000) 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 6,504,000 barrels per day last week, which was 11.3% less than the 7,330,000 barrel per day average that we were importing over the same four-week period last year....the 786,000 barrel per day net reduction of our total crude inventories was as 1,028,000 barrels per day were being pulled out of our commercially available stocks of crude oil, which was partially offset by 242,000 barrels per day that were added to our Strategic Petroleum Reserve...this week's crude oil production was reported to be unchanged at 11,000,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at 10,600,000 barrels per day, while a 1,000 barrel per day increase in Alaska's oil production to 363,000 barrels per day had no impact on the rounded national total....last year's US crude oil production for the week ending June 28th was rounded to 12,200,000 barrels per day, so this reporting week's rounded oil production figure was about 9.9% 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 75.5% of their capacity while using 14,033,000 barrels of crude per day during the week ending June 26th, up from 74.6% of capacity during the prior week, but excluding the 2005 & 2008 hurricane-related refinery interruptions, still one of the lowest refinery utilization rates of the last thirty years...hence, the 14,033,000 barrels per day of oil that were refined this week were still 18.8% fewer barrels than the 17,290,000 barrels of crude that were being processed daily during the week ending June 28th, 2019, when US refineries were operating at 94.2% of capacity....
with the increase in the amount of oil being refined, gasoline output from our refineries was also higher, increasing by 111,000 barrels per day to 8,905,000 barrels per day during the week ending June 26th, after our refineries' gasoline output had increased by 438,000 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 10.5% lower than the 9,948,000 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 63,000 barrels per day to 4,624,000 barrels per day, after our distillates output had also increased by 63,000 barrels per day over the prior week...but even after this week's increase in distillates output, our distillates' production was still 13.3% less than the 5,336,000 barrels of distillates per day that were being produced during the week ending June 28th, 2019....
with the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 4th time in 10 weeks and for the 8th time in 22 weeks, rising by 1,199,000 barrels to 256,521,000 barrels during the week ending June 26th, after our gasoline supplies had decreased by 1,673,000 barrels over the prior week...our gasoline supplies increased this week because the amount of gasoline supplied to US markets decreased by 47,000 barrels per day to 8,561,000 barrels per day, and because our imports of gasoline rose by 307,000 barrels per day to 1,011,000 barrels per day, while our exports of gasoline rose 197,000 barrels per day to 483,000 barrels per day....after this week's inventory increase, our gasoline supplies were 9.9% higher than last June 28th's gasoline inventories of 232,225,000 barrels, and roughly 10% above the five year average of our gasoline supplies for this time of the year...
even with the increase in our distillates production, our supplies of distillate fuels decreased for the thirteenth time in 24 weeks and for the 23rd time in 39 weeks, falling by 593,000 barrels to 174,720,000 barrels during the week ending June 26th, after our distillates supplies had increased by 249,000 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 312,000 barrels per day to 3,778,000 barrels per day, even as our exports of distillates fell by 62,000 barrels per day to 1,066,000 barrels per day while our imports of distillates rose by 66,000 barrels per day to 135,000 barrels per day....but even after this week's inventory decrease, our distillate supplies at the end of the week were still 37.3% above the 126,788,000 barrels of distillates that we had stored on June 28th, 2019, and about 28% above the five year average of distillates stocks for this time of the year...
finally, with the increase in our refining and the decrease in our oil imports, our commercial supplies of crude oil in storage fell for the just 4th time in twenty-three weeks and for the 18th time in the past 52 weeks, decreasing by 7,195,000 barrels, from a record high of 540,722,000 barrels on June 19th to 533,527,000 barrels on June 26th....but even after that decrease, our our commercial crude oil inventories were still around 15% above the five-year average of crude oil supplies for this time of year, and around 53% above the prior 5 year (2010 - 2014) average of our crude oil stocks for the third week of June, 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 June 26th were 13.9% above the 468,491,000 barrels of oil we had in commercial storage on June 28th of 2019, 27.7% above the 417,881,000 barrels of oil that we had in storage on June 29th of 2018, and 6.1% above the 502,914,000 barrels of oil we had in commercial storage on June 30th of 2017...
however, even with the big drop in our crude inventories, our inventories of products made from oil increased by even more, and hence the total of our commercial oil supplies and the stockpiles of all the refined product made from oil have again increased by 1,124,000 barrels this week to yet another record high of 1,451,779,000 barrels, 11.5% more than the 1,302,493,000 barrel total of the same week a year ago...
This Week's Rig Count
the US rig count fell for the 17th week in a row during the period ending July 2nd, leaving the rig count down by 66.8% over that seventeen week period...(note that this week's report was released on Thursday because of the widespread celebration of July 4th on July 3rd, and hence only covers 6 days)...Baker Hughes reported that the total count of rotary rigs running in the US decreased by 2 rig to 263 rigs this past week, which again was the fewest active rigs in Baker Hughes records going back to 1940 and 141 fewer rigs than the all time low prior to this year, and was also down by 700 rigs from the 963 rigs that were in use as of the July 3rd report of 2019, and 1,666 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 3 rigs to 185 oil rigs this week, after falling by 1 oil rig the prior week, leaving oil rig activity at its lowest since May 29th, 2009, which was also 603 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 rose by 1 rig to 76 natural gas rigs, which was still down by 98 natural gas rigs from the 174 natural gas rigs that were drilling a year ago, and less than a twentieth of modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, and one in Lake County, California... a year ago, there was just one such "miscellaneous" rig deployed, drilling a test well in Sandusky county Ohio..
the Gulf of Mexico rig count was up by 1 to 12 rigs this week, with 10 of those rigs drilling for oil in Louisiana's offshore waters and two of them now drilling for oil offshore from Texas...that was 12 fewer rigs than the 24 rigs drilling in the Gulf a year ago, when 22 rigs were drilling offshore from Louisiana and two rigs were operating in Texas waters...meanwhile, there are no rigs operating off other US shores at this time, nor were there a year ago, so the Gulf of Mexico rig count is equal to the national rig count, just as it has been since the onset of last winter...
the count of active horizontal drilling rigs decreased by 4 rigs to 226 horizontal rigs this week, which was the fewest horizontal rigs active since December 30th, 2005, and hence is a new 14 1/2 year low for horizontal drilling...it was also 613 fewer horizontal rigs than the 839 horizontal rigs that were in use in the US on July 3rd of last year, and less than a fifth of the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, the directional rig count was unchanged at 20 directional rigs this week, but those were still down by 46 from the 66 directional rigs that were operating during the same week of last year...on the other hand, the vertical rig count rose by 2 rigs to 17 vertical rigs this week, but those were also still down by 41 from the 58 vertical rigs that were in use on July 3rd 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 2nd, the second column shows the change in the number of working rigs between last week's count (June 26th) and this week's (July 2nd) count, the third column shows last week's June 26th 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 3rd of July, 2019...
there were again very few changes in drilling activity this week, with just a handful of rig removals and even fewer additions, which suggests that prices have risen high enough that drillers are no longer anxious to shut down money-losing operations, but not high enough to encourage the addition of new rigs to the field...checking the rig counts in the Texas part of Permian basin, we find that three rigs were shut down in Texas Oil District 8, or the core Permian Delaware, while the rig counts in Texas Oil District 7C and Texas Oil District 8A, the southern and northern reaches of the Permian Midland respectively, remained unchanged...since the overall Permian basin rig count was down by 5 rigs nationally, that means that the 2 rigs that were shut down in New Mexico would have been drilling in the western Permian Delaware to account for that national decrease...elsewhere in Texas, there was a new rig added in Texas Oil District 6, which accounts for the Haynesville shale increase, and two rigs began drilling in the state's offshore waters, while at the same time another offshore rigs was pulled out the water in Louisiana, accounting for that state's 1 rig decrease...the new rig in the Haynesville shale, plus the one that began drlling in West Virginia's Marcellus, account for this week's natural gas rig increase, which was reduced to one after a natural gas rig was pulled out of Ohio's Utica shale...
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Public Utilities Commission of Ohio fines Dominion Energy $1 million for Pepper Pike gas explosion - cleveland.com -- The Public Utilities Commission of Ohio fined Dominion Energy $1 million for a November gas pipeline explosion in Pepper Pike. PUCO determined that the cause of the explosion was the "failure of a 30-inch steel distribution main, that released natural gas into the atmosphere which subsequently ignited," according to a news release from PUCO Wednesday afternoon. PUCO's report says Dominion failed to follow proper procedures, had poor construction practices and a lack of oversight. The agreement also requires Dominion Energy to create a plan to improve its gas safety program. "A third-party consulting firm will investigate and provide a root cause analysis within 90 days. Dominion and PUCO staff will review the analysis and determine an implementation plan," PUCO said in a statement released Wednesday. "A third-party consultant will then evaluate Dominion's adherence to the implementation plan to ensure the company adequately improves its processes and procedures." The company will pay the $1 million to the state with an additional $500,000 that the commission can impose if Dominion Energy does not fulfill the terms of the settlement or implementation plan. A preliminary investigation showed that a welding failure caused a rupture that, in turn, caused an explosion that happened at 12:54 a.m. on Nov. 15 on Shaker Boulevard near the Pepper Pike Services Department. Firefighters from Pepper Pike and Beachwood went door to door to evacuate residents living within the vicinity of the explosion. They were later allowed to return to their homes.
Ohio AG Yost fights to reopen Line 5 pipeline in Great Lakes region - On the eve of a major hearing that could decide the fate of the Great Lakes region’s most controversial pipeline, Ohio Attorney General Dave Yost has asked the hearing’s judge to consider the potential loss of 1,000 northwest Ohio refinery jobs if he allows Enbridge Energy’s Line 5 to remain shut down.In an 11-page brief filed Monday with Ingham County Circuit Court in Lansing, Mich., Mr. Yost — along with attorneys general from Indiana and Louisiana — said the state of Ohio “has a significant interest in the continued operation of the West Line of Enbridge’s Line 5 pipeline and will experience far-reaching consequences if it is shut down.”The brief states that officials recognize “that environmental protection and economic impact are not mutually exclusive” and that Ohio, Michigan, and Indiana all have a duty to protect the Great Lakes. “However, Ohio, Indiana, and Louisiana also owe a duty to their citizens whose livelihoods depend on commerce that crosses state lines,” the brief states. Line 5 is a 645-mile pipeline owned by Calgary-based Enbridge Energy, the same pipeline company that experienced one of North America’s worst inland oil spills when a pipeline it owns along the Kalamazoo River near Marshall, Mich., burst in 2010. Line 5 became a flashpoint of controversy in early 2018 when the anchor of a boat passing through the Straits of Mackinac dented — but did not rupture — it.Activists quickly underscored the dangers of polluting Lake Michigan and Lake Huron, which sit at the center of the world’s largest collection of freshwater lakes, the Great Lakes. They flow south to Lake Erie.Enbridge worked out a deal with former Michigan Gov. Rick Snyder, a Republican, during the waning days of his administration to build a new pipeline beneath the Straits and submerge it in a tunnel 100 feet below Lake Michigan’s lakebed. That project is expected to cost up to $500 million and take as long as a decade to build.Michigan’s current governor, Democrat Gretchen Whitmer, and that state’s attorney general, Democrat Dana Nessel, campaigned on a platform of shutting down Line 5 to minimize risks to the Great Lakes. The pipeline splits into two as it passes through the Straits. Soon after Enbridge announced recently that an anchor support on the east line had been “significantly” damaged, Ms. Nessel filed a motion to have the entire system shut down on at least a temporary basis. Judge James Jamo granted that motion last Thursday, and scheduled a hearing to discuss the pipeline’s fate for Tuesday. Line 5 serves PBF Energy’s 123-year-old Toledo Refining Co. plant in East Toledo, which employs 585 people, and the BP-Husky Toledo refinery in Oregon, which employs 625 people, according to figures provided by Mr. Yost’s office.
Reports Offer Different Outlook On Ohio Valley’s Petrochemical Future --A new report by the Trump administration suggests the Ohio Valley’s growing petrochemical industry could be an unprecedented source of economic opportunity and growth when the county, and region, eventually emerge from the COVID-19 pandemic. But the assessment is drawing criticism from environmental groups and some financial analysts that warn the risk is growing for plastics and petrochemical manufacturers.The Department of Energy assessment released Tuesday makes the case that natural gas production in the region, which includes parts of West Virginia, Ohio, Pennsylvania and Kentucky, will continue to grow in the coming decades. The report argues the region is on the “cusp of an energy and petrochemical renaissance” due to the fact that gas extracted from the region is rich in natural gas liquids, including ethane, the building block of many plastics and chemicals, and the Ohio Valley’s proximity to the bulk of downstream manufacturers. The 75-page document was commissioned under president Donald Trump’s April 2019 executive order “Promoting Energy Infrastructure and Economic Growth.” Six additional federal agencies and the Appalachian Regional Commission contributed. Officials in the region have been working on the so-called Appalachian Storage and Trading Hub for nearly a decade. The natural gas storage hub cleared its first major hurdle in 2018 when it got approval for the first of two phases for a $1.9 billion U.S. Department of Energy loan. A previous DOE report, requested by lawmakers in Congress, found the hub is crucial for growing the region’s petrochemical industry. Sarah Carballo, a communications specialist with the Ohio Valley Environmental Coalition, a regional advocacy group, said the new DOE report did not take into account the growing financial risk associated with a regional petrochemical industry buildout, or the concerns of some residents in the region. “Communities across Appalachia deserve viable, fair and sustainable economic transition strategies that protect public health and environmental quality,” she said. “So, instead of investing in petrochemicals and coal as a basis for economic renaissance — industries that poisoned our land, air, water, communities — we think it’s time for our leaders to explore more feasible and sustainable economic development strategies that provide long term prosperity for the people of our region.”
Fracking Trailblazer Chesapeake Energy Files for Bankruptcy - Chesapeake Energy filed for bankruptcy protection Sunday as an oil- and gas-price rout stoked by the coronavirus pandemic proved to be the final blow for a shale-drilling pioneer long hamstrung by debt. Chesapeake is the latest debt-laden U.S. oil and gas producer to file for bankruptcy, as a coronavirus-induced economic slowdown saps demand for fossil fuels. More than 200 shale companies may file for bankruptcy over the next two years if oil and gas prices stay around current levels, analysts say. Co-founded in 1989 by the late wildcatter Aubrey McClendon, the company was early to recognize that horizontal drilling and hydraulic fracturing could unlock vast troves of natural gas, a trend that led to a rebirth of American fossil-fuel output and eventually made the U.S. the top oil producer in the world. By the end of 2008, the Oklahoma City-based company had drilling rights to nearly 15 million acres, according to a securities filing, an empire roughly the size of West Virginia. That vast footprint once helped Chesapeake earn the title of second-largest U.S. gas producer. But Chesapeake’s breakneck growth left it highly leveraged, and it was far slower than many of its peers to pivot to tapping shale formations for oil, which turned out to be much more lucrative than gas. U.S. natural gas prices are at their lowest levels in years. The result was a painful fall in recent years as Chesapeake shrank, selling assets to pare debt before winding up in bankruptcy court. “They were at the forefront, and they were the most aggressive. But because of how aggressive they were, it left them unable to pivot to what ended up being the real moneymaker,” said Chris Duncan, a Brandes Investment Partners director with a say in mutual funds that own Chesapeake debt. Chesapeake, which filed for chapter 11 protection with more than three dozen affiliated companies, listed assets of $16.2 billion and liabilities of $11.8 billion in its petition with the U.S. Bankruptcy Court in Houston. The company reached a restructuring agreement with many of its lenders that is intended to guide the bankruptcy process and seeks to eliminate some $7 billion in debt.
Chesapeake Files For Bankruptcy, Wiping Out $7 Billion In Debt And Any Existing Equity Value - After years of melting, the Chesapeake icecube is finally history: at exactly 350pm on Sunday afternoon, the company that launched the US shale boom, finally gave up and filed for a pre-packaged bankruptcy in the Southern District of Texas. In so doing, the company with roughly $9.5 billion in debt has become one of the biggest victims of a spectacular collapse in energy demand from the virus-induced global recession, and follows the collapse of another high-flyer in the US oil patch, Whiting Petroleum, which filed for Chapter 11 at the start of April after championing what was once the premiere U.S. shale field, the Bakken of North Dakota. As part of its prepack agreement, Chesapeake announced that it had entered into a Restructuring Support Agreement ("RSA") with 100% of the lenders under its revolving credit facility, holders of approximately 87% of the obligations under its Term Loan Agreement, approximately 60% of its senior secured second lien notes due 2025, and approximately 27% of its senior unsecured notes, pursuant to which Chesapeake will implement a Chapter 11 plan of reorganization to eliminate approximately $7 billion of debt. Of course, since 73% of unsecured bondholders refused to sign off on the deal, expect a very vicious bankruptcy fight over the recoveries, as hedge funds that accumulated positions in the bonds unleash hell in their fight with the secureds (even as the equity committee claims that all classes above it should be unimpaired). Also, we have some bad news for Jefferies, which won't be able to repeat its hilarious attempt to fund the company in bankruptcy by selling stock to Robnhood daytraders: as part of the RSA, the Company has secured $925 million in debtor-in-possession financing lenders under Chesapeake's revolving credit facility. The DIP will provide Chesapeake the capital necessary to fund its operations during the Court-supervised Chapter 11 reorganization proceedings. To summarize: Chesapeake which enters bankruptcy with just over $9.5 billion in debt... ... will eliminate about $7 billion of it, and emerge with a $2.5 billion exit financing, consisting of a new $1.75 billion revolving credit facility and a new $750 million term loan. Additionally, according to the RSA, the Company has the support of its term loan lenders and secured note holders to backstop a $600 million rights offering upon exit.
Chesapeake Energy’s Long Road to Bankruptcy -- Chesapeake has been a dead man walking for the best part of a decade. The company will reorganize approximately $7 billion in debt and receive $925 million in debtor-in-possession (DIP) financing to continue operating. Chesapeake also has secured a $600 million rights offering, backstopped by some of its existing lenders, and a $2.5 billion exit financing package. At the end of March, Chesapeake reported $9.2 billion in long-term debt. According to Bloomberg, the company listed assets of $10 billion and liabilities of $50 billion. CEO Doug Lawler, who took over in 2013, said that even though the company had eliminated some $20 billion of leverage and financial commitments, “we believe this restructuring is necessary for the long-term success and value creation of the business.” In its early days, the company, under co-founder and CEO Aubrey McClendon, was an early adopter of the drilling practice that has come to be known as fracking. In the middle of the first decade of the 21st century, natural gas prices soared to more than $13 per million BTUs in 2008 (as of Monday morning, the price is around $1.60 for an equivalent amount). If the company couldn’t make money once prices collapsed, the next best thing was to buy and sell leasing rights to proven reserves. The company’s business model began to emphasize an aggressive plan to lease acreage in many shale gas plays. Next, the company proved the presence of the energy resource and, finally, flipped the property for a profit. In early 2012, for example, Chesapeake sold a 25% stake in its leases in Ohio’s Utica shale play to French oil major Total for $2.3 billion. At time, McClendon said, “This Utica transaction is our seventh significant JV and in these seven JVs, Chesapeake has sold approximately 1.5 million net acres for total leasehold consideration of $14.8 billion while retaining 3.6 million net acres as of the JV date with an indicated value by the JV partners of $45.7 billion.” By then, natural gas traded at around $3 per million BTUs. A few months later, Chesapeake’s board discovered (it said) that McClendon had reportedly borrowed up to $1.1 billion using his interests in Chesapeake’s wells as collateral without disclosing the loans to shareholders. In May, the board ousted McClendon as board chair and terminated the program that gave him the right to participate in every new well the company drilled. In June, Reuters reported that it had discovered a series of emails between Chesapeake and Canadian oil and gas firm Encana that suggested the companies had engaged in bid-rigging. (Encana changed its name to Ovintiv in January 2020 and moved its headquarters to the United States.) In 2016, McClendon was indicted on the charges. The day following that announcement, he was killed in car crash.
Hidden wine cave, $110 million parking bill: Energy collapse wasn't only thing that sunk Chesapeake - Fracking giant Chesapeake Energy's bankruptcy filing comes following a financial mess at the company that included no budgets, a massive wine collection and a nine-figure bill for parking garages, sources told CNBC's David Faber. CEO Robert D. "Doug" Lawler found in examining the company's books a $110 million bill for two parking garages, Faber reported Monday. That was part of about $30 billion in spending above cash flow that happened from 2010-12, while the late Aubrey McClendon was CEO and prior to Lawler taking over in 2013. Other revelations include a wine collection in a cave hidden behind a broom closet in the Chesapeake office. Extravagances further included a season ticket package to the NBA's Oklahoma City Thunder that was the biggest in the league and a lavish campus that was modeled after Duke University, complete with bee keepers, botox treatments and chaplains for employees. The company announced its bankruptcy filing on Sunday, amid a brutal time for the energy sector. Prices have tumbled throughout the coronavirus pandemic as demand has crumbled and the economic expansion that began in 2009 ended in February. Chesapeake's share price has fallen nearly 93% in 2020. "While today is a challenging day, your leadership team and I are confident that this is the best path forward for Chesapeake, and that we will emerge from the Chapter 11 process as a stronger and more competitive company," Lawler said in a memo to employees. In the Chapter 11 announcement, Lawler added that the company is "fundamentally resetting" its capital structure and business "to address our legacy financial weaknesses and capitalize on our substantial operational strengths." Chesapeake declined comment for this report.
Chesapeake Energy files for bankruptcy, as details emerge of wine cellars and botox - From 2010 to 2012, the company spent $30 billion more in drilling and leasing than it made from its operations.Chesapeake Energy, the poster child of the U.S. shale revolution, filed for bankruptcy protection on Sunday. The move comes as the company and industry more broadly has been rocked by a drop in oil and gas prices amid the coronavirus pandemic. The heavily indebted company has been in trouble for some time, and in May said that it had concerns regarding its long-term viability. Chesapeake said that $7 billion in debt will be wiped out through the restructuring. The company has secured $925 million in debtor-in-possession financing in order to continue operations during the bankruptcy process. In addition, Chesapeake has secured an agreement in principle from certain existing lenders for $2.5 billion in debt financing on emergence from bankruptcy, as well as a backstop commitment for $600 million in new equity. Franklin Resources and Fidelity are among the biggest creditors, according to people close to the company, and they will be among the primary equity holders following the company’s restructuring. The company will continue operations at a much reduced capacity, with a handful of gas rigs and no oil rigs, according to those familiar with the company’s plans. Chesapeake Energy was founded in 1989 by Aubrey McClendon. An early pioneer of horizontal drilling, he built the company into a key player in the U.S. gas industry. At its peak, Chesapeake had 175 operating rigs, with operations across the U.S. including in Texas, Louisiana, Pennsylvania and Ohio. But the company took on a lot of debt to fuel its rapid expansion, and from 2010 to 2012 spent $30 billion more in drilling and leasing than it made from its operations. The fracking giant’s bankruptcy filing comes following a financial mess at the company that included no budgets, a massive wine collection and a nine-figure bill for parking garages, sources told CNBC’s David Faber.CEO Robert D. “Doug” Lawler found in examining the company’s books a $110 million bill for two parking garages, Faber reported Monday. Other revelations include a wine collection in a cave hidden behind a broom closet in the Chesapeake office. Extravagances further included a season ticket package to the NBA’s Oklahoma City Thunder that was the biggest in the league and a lavish campus that was modeled after Duke University, complete with bee keepers, botox treatments and chaplains for employees.
Chesapeake asks to cancel pipeline contracts, sets drilling cuts - (Reuters) - Chesapeake Energy Corp on Monday sought bankruptcy court approval to cancel $311 million in pipeline contracts, setting up a battle with U.S. regulators and operators including Energy Transfer LP, according to court filings. Chesapeake on Sunday became the largest U.S. oil and gas producer to seek bankruptcy protection in at least five years, falling to heavy debt and the impact of the coronavirus outbreak on energy markets. The company separately said in a filing it plans to operate six to eight drilling rigs for the next two years, about half the 14 rigs active on average in the first quarter, as it battles a historic downturn in oil prices. The shale pioneer wants to walk away from contracts with units of Energy Transfer, Boardwalk Pipelines, and a Crestwood Equity Partners and Consolidated Edison gas joint venture. The contracts involve about $293 million with Energy Transfer’s Tiger Pipeline and $18 million with Boardwalk’s Gulf South Pipeline. Neither Energy Transfer, Boardwalk nor Chesapeake responded to a request for comment. U.S. pipeline regulator, the Federal Energy Regulatory Commission, last week barred Chesapeake from altering its agreement with Energy Transfer and is set to weigh similar requests from Gulf South and from Stagecoach Pipeline & Storage Co, owned by Crestwood Equity Partners and Consolidated Edison. Crestwood said it is positioned to maintain operations for Chesapeake, including its Stagecoach unit. However, Chesapeake must show any rejection benefits the public good for FERC to approve it, a Crestwood spokesman said. Cancelling the contracts are key to winning creditors’ consent of its debt restructuring, Chesapeake told U.S. Bankruptcy court Judge David Jones in a filing. The battle could represent a turning point in energy bankruptcies, said Matthew Lewis, director at pipeline research firm East Daley Capital, with FERC seeking equal footing with interstate pipeline contracts. If FERC is “less liberal with contract rejection, it could force more renegotiations of contracts,” instead of outright cancellations, Lewis said.
Chesapeake sues FERC over pipeline contracts - Chesapeake Energy has sued the Federal Energy Regulatory Commission to keep two pipeline companies from interfering in its Chapter 11 reorganization, Kallanish Energy reports. Named in the suit were ETC Tiger Pipeline LLC and Gulf Southern. Chesapeake Energy is seeking to reject certain negotiated contracts with the pipeline companies for moving natural gas. It wants the federal bankruptcy court, not FERC, to decide the issue. Chesapeake is the sixth-largest natural gas producer in the United States. It was once the No.2 natural gas producer in the country. The company’s Chapter 11 filing on Sunday kicks off one of the biggest energy bankruptcies in recent years. Chesapeake has asked the U.S. Bankruptcy Court in the Southern District of Texas to prevent legal action by the two pipeline companies, saying that to fulfill the contracts would endanger its negotiated reorganization plan to eliminate $7 billion in debt. At year-end 2019, it had $9 billion in debt. The Oklahoma-based company said it had paid $890 million since early 2009 for pipeline transportation under existing agreements with the two companies. Chesapeake owes $311 million for the remainder of the contracts. Both companies last month petitioned FERC to protect their contracts with Chesapeake. If FERC orders Chesapeake to comply with those terms, its Chapter 11 reorganization would face “irreparable harm,” it said in the court filing. Chesapeake said they would likely file an appeal with a U.S. Court of Appeals if FERC orders those contracts to be upheld. A third pipeline company, Stagecoach Pipeline & Storage, made a similar filing with FERC earlier this month. In its Sunday filing, Chesapeake Energy cited debts of $10 billion and its reorganization will affect drilling service companies and pipeline companies from Pennsylvania to Texas to Wyoming. Companies including Williams, Energy Transfer, and Crestwood Equity Partners all have contracts with Chesapeake that may be reduced or rejected in bankruptcy court, said Ryan Smith of East Daley Capital in a Reuters report. Chesapeake is a major player in the Marcellus Shale in the Appalachian Basin, the Hayesville Shale in Louisiana and Texas, the Eagle Ford and Brazos Valley in Texas, in the Powder River Basin in Wyoming and Montana and the Mid-Continent in Oklahoma. It was the major player in the Utica Shale in eastern Ohio but later divested those assets.
Chesapeake Bankruptcy Extends String of 2020 Shale Busts -- The shale bust has reached a grim milestone by claiming the pioneer of America’s drilling renaissance. But Chesapeake Energy Corp., which filed for bankruptcy protection on Sunday, is just the latest in a long list of casualties. More than 200 North American oil and gas producers, owing over $130 billion in debt, have filed for bankruptcy since the beginning of 2015, according to a May report from law firm Haynes & Boone. This year alone, at least 20 have gone under after oil prices plunged amid the Covid-19 pandemic. The shale boom spearheaded by the likes of Chesapeake a decade ago was fueled by debt. Profitability and shareholder returns have been consistently disappointing, and investors had already grown wary of throwing more money into shale before this year’s oil crash. The rate of default on high-yield energy debt stood at 11%, Fitch Ratings said in a June 11 report, the highest level since April 2017. Here are a handful other notable shale bankruptcies so far this year:
- Whiting Petroleum -An oil explorer focused on the Bakken Shale in North Dakota, Whiting Petroleum Corp. was already facing headwinds prior to 2020. Last year, the Denver-based company announced it would fire a third of its workforce and scale back production targets after posting a surprise quarterly loss.
- Extraction Oil & Gas - Another Colorado driller, Extraction Oil & Gas Inc. focused exclusively on the Denver-Julesburg Basin in the Rockies. It filed for Chapter 11 on June 15, offering to ease its debt burden of roughly $1.5 billion by giving note holders 97% of new common stock to be issued. Extraction had withdrawn its 2020 guidance in May and warned it may have to file for bankruptcy. Then, in early June, the company announced plans to pay 16 executives and senior managers a total of $6.7 million in return for staying with Extraction ahead of a possible default on its bond payments.
- Ultra Petroleum - Once wasn’t enough. Ultra Petroleum Corp. filed for its second bankruptcy in May, four years after its first. Listing $2.56 billion in debt and $1.45 billion in assets in its Chapter 11 filing, the Englewood, Colorado, driller reached a deal with most of its senior creditors that would slash $2 billion in debt, while looking to restructure within three months.
- Sable Permian Resources - Soon after his ouster from Chesapeake in 2013, co-founder Aubrey McClendon went to work building a new empire, American Energy Partners. Part of that business, American Energy - Permian Basin, merged with Sable Permian Resources LLC last year. That particular business was widely seen as having among the best assets of a half dozen oil-and-gas acquisition vehicles that McClendon set up during his brief tenure at American Energy Partners.Sable filed for bankruptcy last week in Houston alongside affiliates, listing at least $1 billion of assets and liabilities each.
Pennsylvania impact fee could be lower next year - Pittsburgh Business Times -New well spuds dropped 29% to 255 across Pennsylvania between January and June, according to data from the Pennsylvania Department of Environmental Protection.
Wolf Administration advances proposed emission limits on thousands of oil and gas sites - The Wolf Administration wants to limit emissions from thousands of oil and natural gas sites in Pennsylvania. It’s proposing a new regulation that would require better monitoring and control of emissions at existing oil and gas wells, including those that use hydraulic fracturing, and related sites. Companies would have to install equipment to stop emissions from escaping, and inspect sites for leaks every three months. The rule targets volatile organic compounds (VOCs), which contribute to ozone and can affect people’s health. The Department of Environmental Protection says the tighter controls will also prevent leaks of the potent greenhouse gas methane. DEP said the rule would reduce annual air pollution by 4,404 tons of VOCs and 75,603 tons of methane. A recent Environmental Defense Fund study found Pennsylvania’s shale gas industry leaked more than 1 million tons of methane in 2017 — seven times more than state reporting showed. People can offer written comments on the plan through July. They can also participate in their choice of three virtual hearings in June. In 2018, the Wolf Administration enacted a similar regulation for new sources of emissions, as part of the governor’s plan to reduce methane leaks and fight climate change. The administration has faced criticism from environmental groups for moving too slowly on the new rule. Methane is the main component of natural gas. Compared to carbon dioxide, it has about 30 times the warming power, according to the Environmental Protection Agency. Scientists say greenhouses gases must be curbed significantly to stop the worst effects of climate change. “Pennsylvania is one of the leading states in the country as far as natural gas production, and to have existing source regulations in Pennsylvania will make a dent into the climate pollution problem that we have in this country,” said Dan Grossman, senior director of state advocacy for the Environmental Defense Fund. He added that enactment in Pennsylvania could spur adoption of methane standards in other oil and gas producing states. Colorado, California, and Ohio have created similar rules.
Department of Health says it is looking into fracking public health risks following grand jury report -The Pennsylvania Department of Health says it is taking steps to learn more about the health risks of fracking following criticism from an investigative grand jury.The department’s comments come days after the grand jury’s report said the Pennsylvania Department of Environmental Protection and the health department failed to protect people from the adverse health effects of the fracking boom that began about 10 years ago.The report, which resulted from a two-year investigation, describes drinking water turned brown from chemical-intensive fracking operations, and includes testimony describing children and adults getting sick, animals dying and, in one case, a state DEP that threatened someone who spoke up with “filing a false report” rather than helping them.While the DEP took the brunt of the criticism in the report, the grand jury also criticized the health department’s response, saying it was “unable to meet the challenge” of understanding how fracking could affect people.The health department did launch two studies in November to look at the role of fracking in Ewing sarcoma and childhood cancers in Southwestern Pennsylvania, and is committing $3.9 million to those studies over three years, said spokesman Nate Wardle.In a formal response to the grand jury report, Health Secretary Dr. Rachel Levine said the report was a helpful tool for the department to continue to improve in its public health role. However, the department already has taken some of the measures recommended in the report, such as setting up an oil and natural gas registry that allows people to submit public health complaints. Some of the other measures would require action by the state legislature, Levine said. Read the grand jury report:
Attorney: Politics at play in pipeline prosecution — The attorney who won dismissal of criminal charges against a Delaware County man accused of orchestrating a “buy-a-badge” scheme to provide security for the controversial Mariner East 2 pipeline construction project said Monday that the case had been unduly influenced by political considerations rather than “sound, fair prosecutorial decisions.” Justin Danilewitz of the Philadelphia law firm of Saul, Ewing, Arnstein & Lehr said in an interview that he had urged the Chester County District Attorney’s Office on multiple occasions not to file charges of bribery and conspiracy against his client, Frank Recknagel, the head of security for Energy Transfers Partners, the parent company of Sunoco Pipelines, which is building the massive project through Chester and Delaware counties. He said he had given the prosecution ample evidence that Recknagel had done nothing wrong in getting state constables to work as off-duty security on the pipeline, and had been in consultation with local township police and elected officials about their work. But he was ultimately put off, and left shaken after the charges were filed late last year. On Thursday, Magisterial District Judge John Bailey of West Whiteland dismissed all charges against Recknagel at the conclusion of a five-hour-long preliminary hearing. Bailey determined that the prosecution had not shown that Recknagel had sought to commit a crime in the matter, and had, in fact, tried the best he could to follow the law, Danilewitz said. “Our argument to the judge was essentially no different than the argument we made to the D.A.’s Office on many occasions,” Danilewitz, who was assisted in Recknagel’s defense by defense attorney Thomas Bellwoar of West Chester. “Our client had no criminal intent. Our point was that he was a careful security person, and that he would ultimately be vindicated.
High Court Wants White House View on PennEast Pipeline Case - The U.S. Supreme Court wants the Trump administration’s views on a major energy case that could decide the fate of the proposed PennEast pipeline. At issue is whether developers can seize state-owned land in New Jersey to build the $1 billion natural gas project, which is backed by Enbridge Inc., Southern Co., and other companies. The justices on Monday asked the solicitor general to file a brief expressing the U.S. views on the question—a sign of interest in the case. The move comes as pipeline opponents increasingly ask judges to halt development, and industry lawyers look to the high court to intercede. The justices did just that two weeks ago when they resolved a separate pipeline dispute, siding with the natural gas industry and the Trump administration in a case involving the Atlantic Coast project. PennEast supporters say the industry will face severe disruptions—giving states a new tool to block projects—if the Supreme Court leaves a lower court’s decision in place.The project is slated to move natural gas 116 miles across Pennsylvania and New Jersey, and is part of a broader buildout of gas infrastructure across the East Coast. PennEast pipeline spokeswoman Patricia Kornick said the project backers are pleased the Supreme Court requested the administration’s views on the case. “PennEast remains hopeful that the U.S. Supreme Court will grant the petition,” she said in an email. The Interstate Natural Gas Association of America likewise said it welcomed the development.
'Gimmick' is how future pipelines will avoid environmental and permitting issues - What if PennEast could secure a pipeline through Hopewell without having to apply for a single permit? Recently, several residents, who live along Jacobs Creek, received a letter from a representative of Sunoco Logistics Partners LP (Sunoco) that it had filed an application for an “Emergency Repair” permit with the New Jersey Department of Environmental Protection (DEP), that they had 15 days to visit the DEP offices or the township clerk’s office to examine Sunoco’s application and file any objections. Unbeknownst to all residents with whom we spoke, including several who have lived along the creek for over 50 years, there is an underground pipeline beneath Jacobs Creek, which is the subject of the Sunoco permit. Sunoco’s letter proposes “Two (2) 1250-foot HDD [horizontal directional drill] pipeline strings,” a replacement and an additional pipeline, or two new pipelines. Why have a pipeline beneath a fresh water stream in the first place? The creek is a source for wildlife, including birds, deer, red foxes, raccoons, and other small animals, to drink and bathe. And yes, this is the same creek that General George Washington and his ragtag army traversed to surprise the Hessians at the Battle of Trenton, changing the course of the Revolutionary War. Since this pipeline predates the 1970s, we have learned much about the ecology of streams, wetlands and the flora and fauna in the habitat that the creek supports. According to Sunoco’s 2016 SEC Form 10-K, Sunoco plans to transport NGLs [natural gas liquids] from the Marcellus and Utica Shale areas in Pennsylvania, West Virginia and Ohio east, through Northern Pennsylvania, across the Delaware River to Northern New Jersey, then south through New Jersey, and then west, back across the Delaware River at Jacobs Creek, into Pennsylvania and south, down to its Marcus Hook refinery. With the “total takeaway capacity to 345 thousand barrels per day.” There is a global glut of fossil fuels, they at historically low prices, another fracker, Chesapeake Energy, just filed for bankruptcy, and renewable energy is cheap. Therefore, these pipelines are unnecessary. PennEast has been unsuccessfully trying to put a pipeline through this area for years. Is Sunoco/PennEast just using this “Emergency Repair” Permit Application as a ruse to install two new pipelines, circumventing the necessary permit process? Then, afterwards, Sunoco could sell or lease these pipelines, maybe even to PennEast? If this ploy is successful here, maybe this gimmick is how future pipelines will avoid environmental and permitting issues: find an old pipeline, get a permit for “repair,” in which it is actually replaced, then sneak in an additional pipeline. This would yield two brand new pipelines and avoid the messy business of having to apply for all those nasty permits. Genius!
Controversial gas pipeline project that would run through Chesapeake delayed - State regulators declined for now to give the go-ahead for a proposed $346 million gas pipeline project that would run through Chesapeake, arguing Virginia Natural Gas needs to do more legwork on securing financing and environmental justice issues before construction. Opponents of the Header Improvement Project said it would affect communities of color and people living on low incomes, exposing them to air and noise pollution. For now, Virginia Natural Gas has until Dec. 31 to meet a host of requirements laid out in an 18-page ruling Friday from the State Corporation Commission. That includes addressing financial concerns raised during recent testimony from the primary driver of the project, an electricity-generating plant known as C4GT, as well as protecting the utility’s ratepayers from added costs. A Virginia Natural Gas spokesman, Rick DelaHaya, said in an email Monday that the company will work with state officials “to develop a model project that meets all regulations.” A number of concerned residents and groups including the Sierra Club and Chesapeake Climate Action Network have cried foul on the project, saying the pipelines and compressor stations used to push gas through the pipelines would be built around communities predominantly composed of African Americans and Latinos. The project includes three new pipelines totaling 24 miles and three new or expanded gas compressor stations spanning northern Virginia to Hampton Roads.
Belinda Joyner Is Tired of Fighting the Atlantic Coast Pipeline, But She’s Still Fighting - “We are tired of being dumped on.”In February, Belinda Joyner caught a ride to the U.S. Supreme Court. Alongside a couple of close friends, the 67-year-old rode from her home in Garysburg, a 1,000-person town near the North Carolina-Virginia border, up to Washington, D.C.They were there to watch the court hear arguments over whether the U.S. Forest Service should be allowed to issue permits for the Atlantic Coast Pipeline to be built through national forest lands connected to the Appalachian Trail.The 600-mile, $8 billion pipeline—spearheaded by Dominion Energy and Duke Energy and first proposed in 2014—would run through West Virginia, Virginia, and North Carolina, delivering some 1.5 billion cubic feet of natural gas per day from the Appalachian Basin. In North Carolina, the pipeline is set to snake through eight counties: Halifax, Nash, Wilson, Johnston, Sampson, Cumberland, Robeson, and Northampton—Joyner’s back yard.This week, the Supreme Court ruled 7–2 to allow the companies to secure right-of-way under the AT.The ruling was a blow to Joyner and her neighbors. The pipeline, they say, is just the latest example of unwanted industry development disrupting their community with dire consequences for human and environmental health. But in the marathon that is the fight for environmental justice, setbacks come with the territory. In the shadow of the nearby second-home tourist haven Lake Gaston, Northampton County, with its predominantly Black population, has been a hotbed of environmental activism for more than 25 years. But with the ACP halfway in the ground and the nearby Enviva wood-pellet facility recently granted permits to expand by the state Department of Environmental Quality—a development that raises additional concerns over air pollution—community members say they’ve been worn down by the Sisyphean task of fighting for a healthy future.“[The companies] don’t live here, so they don’t have to suffer with the damage they cause to the community,” Joyner says. “We are tired of being dumped on.”
U.S. natgas futures jump 10% on forecasts for warmer weather - (Reuters) - U.S. natural gas futures rose over 10% on Monday, regaining ground after slumping to a more than 25-year low the previous session, as forecasts for warmer weather drove expectations of higher cooling demand for the fuel. In its first day as the front month, gas futures for August delivery rose 16.5 cents, or 10.7%, to settle at $1.709 per million British thermal units (mmBtu). Prices had earlier touched their highest since June 15 at $1.753. U.S. natural gas futures slumped to their lowest since August 1995 in the previous session as the market focused on demand destruction from the coronavirus, swelling stockpiles and lower liquefied natural gas exports earlier in the month. "With temperatures going up, cooling demand has increased and forecasts say they will continue to increase. Along with that, Chesapeake's restructuring has also signaled some drop in supply," said Phil Flynn, Price Futures Group senior market analyst. Chesapeake Energy filed for Chapter 11 on Sunday, becoming the largest U.S. oil and gas producer to seek bankruptcy protection in recent years as it bowed to heavy debts and the impact of the coronavirus outbreak on energy markets. Refinitiv data indicated 222 cooling degree days (CDDs) in the lower 48 states over the next two weeks. The normal is 190 CDDs for this time of year. Prolonged lockdowns to curb the spread of coronavirus have kept many U.S. businesses shut, curbing LNG demand. LNG exports have also fallen, dropping by half since the start of 2020, with burgeoning stockpiles expected to reach a record 4.1 trillion cubic feet by the end of October. Refinitiv said production in the Lower 48 U.S. states averaged 87.8 billion cubic feet per day (bcfd) in June, down from a 16-month low of 88.2 bcfd in May and an all-time monthly high of 95.4 bcfd in November.
-U.S. natgas hits 3-week high, wraps up best quarter since mid-2018 - (Reuters) - U.S. natural gas futures rose to their highest in nearly three weeks on Tuesday, ending the best quarter since June 2018, as forecasts for hotter-than-normal weather increased demand for cooling. August futures rose 4.2 cents, or 2.5%, to settle at $1.751 per million British thermal units, having jumped more than 14% on Monday, the biggest daily gain since January 2019. Prices have gained nearly 7% this quarter, the most since June 2018. "We are seeing some support coming from expectation of summer heat and after last week's collapse some prolonged heat could actually start to bring in the extra demand and curb injections a little bit lower," said Daniel Myers, senior market analyst at Gelber & Associates. Refinitiv data indicated 243 cooling degree days (CDDs) in the lower 48 states over the next two weeks. The normal is 191 CDDs for this time of year. "Prices might have some trouble holding these gains until LNG export demand goes up and if supply does not ramp up as expected by many investors," Myers said. For the month, futures suffered their second straight fall after slumping to their lowest since August 1995 last week, hurt by demand destruction from the coronavirus, swelling stockpiles and lower liquefied natural gas exports earlier in the month. Prolonged lockdowns to curb the spread of the coronavirus have kept many businesses shut, cutting U.S. LNG exports by half since the start of the year with stockpiles filling fast, expected to reach a record 4.1 trillion cubic feet by the end of October. Chesapeake on Sunday became the largest U.S. oil and gas producer to seek bankruptcy protection in at least five years, falling to heavy debt and the impact of the coronavirus outbreak on energy markets.
U.S. natgas breaks 3-day win streak as virus cases resurge - (Reuters) - U.S. natural gas futures on Wednesday snapped a three-session gaining streak as concerns about another lockdown due to surging coronavirus infections clouded demand outlook. The August gas futures contract fell 8 cents, or 4.6%, to settle at $1.671 per million British thermal units, having hit its highest since June 12 in the last session. The front-month contract also posted its biggest quarterly rise since June 2018 on Tuesday. "We are seeing some investors walking away with profit as concerns of another wave of coronavirus is resurfacing on the horizon," said Raymond James analyst Muhammed Ghulam. Increases in infection have fueled concerns of another lockdown, which could lead to closure of offices and factories, in turn reducing the demand for electricity and cooling, Ghulam added. New U.S. COVID-19 cases rose by more than 47,000 on Tuesday, according to a Reuters tally, the biggest one-day spike since the start of the pandemic, as the government's top infectious disease expert, Dr. Anthony Fauci, warned that number could soon double. Prolonged lockdowns to curb the spread of the coronavirus have kept many businesses shut, cutting U.S. LNG exports by half since the start of the year with stockpiles filling fast, expected to reach a record 4.1 trillion cubic feet by the end of October. "The expected end of season higher storage level is the most significant factor that keeps a lid on gas prices at this point," said Zhen Zhu, economist at Oklahoma City-based C.H. Guernsey. However, "several factors are still providing some support to prices: summer weather uncertainty (more on the warmer than normal side), possible damaging tropical storms, and expected gas lower production for this year." Weather forecasts pointed toward a warm summer with Refinitiv data indicating 248 cooling degree days (CDDs) in the Lower 48 states over the next two weeks. The normal is 193 CDDs for this time of year.
US working natural gas storage volumes rise by 65 Bcf on week: EIA | S&P Global Platts — One week after it reported a much larger injection than the market expected, the US Energy Information Administration estimated a smaller-than-expected addition to US storage fields for the week ended June 26, boosting the remaining Henry Hub summer strip by 4 cents, as analysts struggle to nail down weekly injections during this period of mid-summer demand and wavering coronavirus restrictions. The amount of natural gas in US underground storage facilities increased by 65 Bcf to 3.077 Tcf, according to US Energy Information Administration data released July 2. The injection was much smaller than the consensus expectations of analysts surveyed by S&P Global Platts, which called for a 77 Bcf build. Responses to the survey ranged from an injection of 66 Bcf to one of 85 Bcf. The injection was also smaller than the 92 Bcf build reported during the same week a year earlier, but it matched the five-year average increase of 65 Bcf, according to EIA data. The injection was nearly 50% smaller than the build reported the week prior as warmer temperatures boosted gas-fired power generation and LNG feedgas deliveries showed some signs of recovery. Power burn estimates ramped up 5.9 Bcf/d while feedgas demand increased by 300 MMcf/d, according to S&P Global Platts Analytics. However, residential and commercial as well as industrial demand, fell by a combined 800 MMcf/d week over week. Storage volumes now stand 712 Bcf, or 30%, above the year-ago level of 2.365 Tcf and 466 Bcf, or 18%, higher than the five-year average of 2.611 Tcf. The NYMEX Henry Hub balance-of-summer contract, August through October, increased 5 cents to $1.78/MMBtu in trading following the release of the data. The ICE end-of-season storage contract is treading close to the 4 Tcf mark as nearly all regions are on track for high storage fills by the end of the season, in some cases possibly prompting a drop in supplies by late summer as caverns reach their upper limits. S&P Global Platts Analytics' supply and demand model currently expects a 59 Bcf injection for the week ending July 3, which would be 9 Bcf below the five-year average. Fundamentals have seen a continued tightening in supply and demand balances by an additional 1.8 Bcf/d compared with the week prior. Total supplies have held essentially flat, but warmer weather has contributed roughly 2.2 Bcf/d of incremental demand from the power sector as the market enters the peak months of the cooling season.
U.S. natgas futures gain as cooling demand reduces injection U.S. natural gas futures rose on Thursday after a federal report showed a smaller-than-expected storage build last week amid greater demand for cooling as the weather turned hotter in the United States. The August gas futures contract was up 6.3 cents, or 3.7%, to settle at $1.734 per million British thermal units. “Warmer-than-expected weather has increased cooling demand and that is being reflected in the report with injection coming below expectations,” said Thomas Saal, senior vice president of energy at INTL FCStone. Weather forecasts pointed toward a hot summer, with Refinitiv data indicating 248 cooling degree days (CDDs) in the Lower 48 states over the next two weeks. The normal for this time of year is 194 CDDs. The U.S. Energy Information Administration said U.S. utilities injected 65 billion cubic feet (bcf) of natural gas into storage last week, lower than the 78 bcf forecast by a Reuters poll on Wednesday. The increase during the week ended June 26 has increased stockpiles to 3.077 trillion cubic feet (tcf), which is still 17.8% higher than the five-year average and about 30.1% above the same week a year ago. Prolonged lockdowns to curb the spread of the coronavirus have kept many businesses shut, cutting U.S. LNG exports by half since the start of the year, with stockpiles filling fast and expected to reach a record 4.1 trillion cubic feet by the end of October. “Futures are still below $2 because the LNG exports have dropped drastically due to the pandemic and a recovering crude oil price have ramped up production,” Saal added.
Colonial Pipeline to Enter the Terminal Business -- Colonial Pipeline Co. reported Wednesday that it plans to expand into the terminal business by acquiring three refined products terminals in the Southeastern U.S. In a written statement emailed to Rigzone, Colonial stated that Colonial Terminals Operating Co. LLC – a unit of affiliate company Colonial Enterprises, Inc. – has entered into an agreement to purchase terminals in Charlotte, N.C., Chattanooga, Tenn., and Fredericksburg, Va., from Lincoln Terminal Co., Inc. According to Lincoln’s website, the three terminals boast 525,000 barrels of tank capacity. Colonial pointed out the Charlotte and Chattanooga terminals are linked to the Colonial Pipeline system. The system spans more than 5,500 miles (8,851 kilometers), linking Gulf Coast refineries to markets throughout the Eastern U.S. Colonial stated the acquisition offers the company an “excellent opportunity” to enter the terminal business. It contends the move will allow it to offer a complementary service to the markets, including Colonial Pipeline customers. Moreover, it stated the company is laying the groundwork for further strategic expansion. “Terminals are a natural extension of Colonial’s overall business, providing the opportunity to serve customers in new ways while building and strengthening relationships,” the firm stated.
‘Kafkaesque’ FERC Pipeline Process Needs Revamp, Court Says -Federal regulators can’t dawdle on pipeline appeals and keep challengers out of court in the process, the D.C. Circuit ruled Tuesday in a landmark decision for energy law. The Federal Energy Regulatory Commission violated the law by routinely issuing “tolling orders” that prevent pipeline opponents from seeking judicial review while an agency petition process drags on and industrial development moves forward, the court said. The ruling is a major victory for landowners, environmentalists, and other pipeline critics who can now get to court faster to challenge projects, and may have a better shot at blocking construction. “Now, the government must stop allowing construction of pipelines while keeping the courthouse doors closed to those who are directly affected by them,” Kelly Martin, head of the Sierra Club’s Beyond Dirty Fuels Campaign, said in a statement. FERC’s tolling order practice effectively rewrote federal law to say “it can take as much time as it wants; and until it chooses to act, the applicant is trapped, unable to obtain judicial review,” Judge Patricia A. Millett wrote for the court. “But the Commission has no authority to erase and replace the statutorily prescribed jurisdictional consequences of its inaction,” she concluded. The full slate of 11 active judges on the U.S. Court of Appeals for the District of Columbia Circuit decided the case. The court agreed to review the case en banc after Millett in 2019 called FERC’s review process “Kafkaesque.” Avoiding Court The D.C. Circuit’s ruling still allows FERC to take extra time to consider whether a contested pipeline approval was proper. But the commission can no longer use tolling orders to avoid judicial review in the meantime. That means the agency must streamline its internal review process, or be equipped to defend against legal challenges earlier in the process. Pipeline opponents, meanwhile, can sue FERC and attempt to block construction before it begins—an option that was often impossible before.
Enbridge: Boat anchor, wire cable may have caused Line 5 damage ⋆ Embattled Canadian oil company Enbridge has still not been able to determine how an anchor support holding up the east segment of the Line 5 pipeline was damaged, according to court documents submitted to the Ingham County Circuit Court Monday.Enbridge does, however, raise the possibility that a boat anchor caused the damage to the east segment of the dual underwater pipeline. The reply brief also states that an “area of interest” on the west segment of Line 5 could have resulted from a wire cable dragged by a boat.The documents were submitted ahead of oral arguments in Nessel v Enbridge, which are scheduled for 1:30 p.m. Tuesday and will address Attorney General Dana Nessel’s request for a preliminary injunction. On Thursday, Judge James Jamo granted Nessel’s request for a temporary restraining order on Line 5’s operation. Enbridge agreed that day to completely shut down the pipeline until a determination is made in court. “While Enbridge has not yet reached a final conclusion, there is visible evidence that the area on the West Line resulted from a vessel dragging a relatively thin item such as a wire cable in a direction perpendicular to the Line,” Enbridge’s reply brief reads. “…In contrast, the damage to the East Line anchor assembly and markings on the lake bed near the damaged anchor assembly are more consistent with damage caused by a vessel of modest size dragging an object parallel to the Line.” The company’s attorneys argue that neither incident put the pipelines in immediate danger and Enbridge is taking steps to prevent further damage. In Tuesday’s filings, Enbridge attorneys argue that Nessel has neither factual nor legal basis for requesting the “extraordinary injunctive relief” that she seeks. They also contend that because federal regulators at the Pipeline and Hazardous Materials Safety Administration (PHMSA) already gave the OK for Enbridge to restart the west line of Line 5, Jamo should lift the restraining order so as to not violate federal law.
Public hearing to be held on Enbridge Energy's proposed line relocation – In response to widespread interest in the upcoming public hearing on Enbridge Energy’s proposed relocation of the Line 5 pipeline in Ashland, Bayfield, and Iron counties, the Wisconsin Department of Natural Resources is hosting a virtual public hearing on Wednesday, July 1.The public can watch the hearing live beginning at 4 p.m. After the hearing is over, the same Media Site link will take people to an online recording of the hearing.Members of the public who wish to provide oral testimony during the hearing will be able to do so using the Zoom Remote Conferencing Platform, which is accessible by computer or phone. Information on how to register to participate via Zoom is available on the DNR’s Enbridge Pipeline Projects web page.The DNR is asking people who want to watch the hearing but do not wish to provide oral testimony to use Media Site instead. That will help ensure that people who wish to testify at the hearing will be able to do so.The hearing will cover Enbridge’s application for a waterway and wetland permit, as well as the scope of the Environmental Impact Statement that will be prepared for the overall project. As proposed, the project would involve construction of 42 miles of new 30-inch pipeline needed to relocate the existing Line 5 pipeline outside of tribal lands of the Bad River Band of Lake Superior Chippewa.Members of the public can submit written comments on the waterway and wetland permit application and the scope of the EIS by email, to DNROEEACOMMENTS@WI.GOV, or by U.S. mail to “Line 5 Comments, DNR (EA/7),” 101 South Webster Street, Madison, WI 53707. All electronic and hardcopy comments must be submitted or postmarked by no later than Saturday, July 11.More information on the proposed project, permit application, and to review a draft outline of the Environmental Impact Statement is available here.
Regulators deny quick approval of new Great Lakes pipeline (AP) — A Michigan regulatory panel on Tuesday refused to grant quick permission to run a new oil pipeline beneath a channel that connects two of the Great Lakes, deciding instead to conduct a full review. The state Public Service Commission's decision involved a proposed replacement for a segment of Enbridge's Line 5 that extends beneath the Straits of Mackinac, which links Lakes Huron and Michigan. The Canadian energy transport company wants to replace dual pipelines that rest on the lake floor with a new pipe that would be placed in a 4-mile-long (6.4-kilometer-long) tunnel to be drilled in bedrock beneath the waterway. Also Tuesday, a state judge heard arguments on whether to extend an order he issued June 25 to shut down the existing underwater segment after damage was discovered on a support piece at the lake bottom. Circuit Judge James Jamo promised to move quickly but made no immediate ruling. That means Line 5 — which carries 23 million gallons of crude oil and natural gas liquids daily between Superior, Wisconsin, and Sarnia, Ontario — will remain closed for now. The 645-mile-long (1,038-kilometer-long) pipeline supplies refineries in Michigan, Ohio and Pennsylvania, as well as the Canadian provinces of Ontario and Quebec. Enbridge said halting its flow even temporarily threatens fuel supplies in those areas, while the state of Michigan and environmental groups contend a major spill would do considerably worse economic damage. “There is a serious risk of harm ... to many communities that potentially endangers the livelihood of many people and businesses as well as the natural resources,” Robert Reichel, representing state Attorney General Dana Nessel's office, said during the online court hearing. Enbridge filed an application in April with the Public Service Commission to relocate the underwater section of Line 5 into the proposed tunnel. The company asked the commission to approve the plan immediately, arguing that the agency in effect had already given permission by allowing the original Line 5 in 1953. But during an online meeting, the panel disagreed on a 3-0 vote. Members concluded that the proposed tunnel pipe “differs substantially” from the twin pipes that were laid 67 years ago, requiring a new easement and a 99-year lease of public trust property.
Michigan regulator: Enbridge needs permission to move Line 5 into tunnel - The Michigan Public Service Commission will not give Enbridge Energy carte blanche to relocate the Line 5 pipeline inside a tunnel beneath the Straits of Mackinac, it ruled Tuesday. The decision triggers a lengthy administrative process to evaluate Enbridge’s plan to relocate the lakebottom petroleum pipeline inside an underground tunnel; a process Line 5 opponents hope will be a key forum for public scrutiny over the pipeline’s future.Enbridge had asked the commission, Michigan’s energy regulator, to rule that it doesn’t need the state’s permission to relocate Line 5 inside the planned tunnel. The company argued that the commission’s 1953 approval of the existing dual-span lakebottom line also covers its plan to replace that section with a 30-inch diameter pipeline running through a concrete-lined tunnel deep beneath the lakebed. The company already has the state’s initial approval to build the tunnel, but it now needs the commission’s approval to move the pipeline into it. The commission rejected the company’s argument and refused to grant its approval Tuesday, opting instead to forward the matter as a so-called “contested case,” allowing Enbridge and the public to debate the matter before an administrative law judge. Ultimately, commissioners will decide whether to grant Enbridge’s relocation request. The deliberations will test the loyalties of a commission whose political makeup has changed significantly since Democratic Gov. Gretchen Whitmer took office last year, replacing two former appointees of GOP predecessor Rick Snyder, Republican Norm Saari and Independent Rachel Eubanks, with Democrats Dan Scripps and Tremaine Phillips to create a 2-1 Democratic majority, with the third member, Chair Sally Talberg, being an independent. As the commission deliberates on the pipeline, Enbridge is moving forward with the tunnel plan. The company is awaiting state and federal permits with the goal of beginning construction on the tunnel next year. Multiple parties, including Native American tribal governments and environmental groups who have advocated for the pipeline’s shutdown, have filed motions to intervene in the proceedings. They have long called for the 67-year-old pipeline’s shutdown, arguing it poses an unacceptable oil spill risk in the Straits, where it sits exposed on the lakebottom as it pumps crude oil and natural gas between Ontario and Wisconsin.
Enbridge to court: State can't override feds' regulation of Line 5. - Michigan can't order the Line 5 oil and gas pipelines on the Straits of Mackinac lake bottom shut down even temporarily over concerns about anchor strikes or other damage — only federal regulators of interstate pipelines have that authority, Enbridge's attorneys argued in an online court hearing Tuesday. The company is fighting a preliminary injunction sought by state Attorney General Dana Nessel, seeking to keep Line 5 shut down until Enbridge provides the state with all information related to "significant damage" found June 18 to an anchor support on the east leg of the twin underwater pipelines, and a mark from some object apparently striking the west leg of the line, potentially affecting its outer protective coating.The state wants its own evaluators to determine whether it is safe to continue operations of either or both of the pipelines. Nessel's office cites the state's 1953 easement with Enbridge allowing it to place and operate the pipes on the state-held lake bottom. A provision in that easement requires the pipeline operator "at all times shall exercise the due care of a reasonably prudent person for the safety and welfare of all persons and all public and private property."Ingham County Circuit Court Judge James Jamo last Thursday ordered Enbridge to shut down Line 5 in the Straits, pending the outcome of Tuesday's hearing on a temporary injunction. After more than four hours of testimony Tuesday, Jamo said he would consider the evidence and issue a written ruling, likely within the next few days."Underlying this case, and relevant to this motion, there is a serious risk of harm, not only to natural resources, but to many communities — that endangers, or potentially endangers, the livelihood of many people and businesses," assistant state attorney general Robert Reichel said.Though Enbridge last week provided state officials with engineering reports and video from its remote-operated vehicles inspecting the underwater pipes, critical information is still not available to the state to evaluate whether the pipelines should continue operating, Reichel said. Enbridge now believes that the damage was done to the individual underwater lines by two separate boats in separate incidents — one ship traveling east-west through the Straits, dragging something other than an anchor, perhaps a cable, based on drag marks and the glancing loss of outer biological coverings on the west leg pipeline, and the other ship traveling north-south through the Straits, parallel to Line 5, that caused the damage to the east leg anchor support.
Enbridge's Damaged Line 5 Allowed to Restart by Michigan Judge - Enbridge Inc. can partially restart its dual oil and gas pipeline below Lakes Michigan and Huron, even though one leg of the line remains closed due to damage, a state court ruled Wednesday. The Canadian energy titan convinced Ingham County Circuit Court Judge James Jamo to deny a preliminary injunction to Michigan Attorney General Dana Nessel. The judge issued an amended temporary restraining order requiring Enbridge to provide information to the state’s attorneys and keep the eastern leg of the pipeline closed. Federal regulators gave Enbridge the green light to reopen the western leg of the pipeline, which the company said it plans to start doing immediately. Jamo concluded the risk of rupture in Line 5’s undamaged western section was remote enough that the company should be allowed to operate that portion while investigating damage in the line’s eastern leg. The order saves Enbridge roughly $1.76 million per day, which it says it lost while the line was shut down. Jamo seemed to accept arguments from Enbridge’s attorneys that the pipeline’s west leg must be restarted in order to perform an in-pipeline assessment of the damage discovered on June 18. Jamo said the company’s duty of “due care” required it to restart the western leg so an “in-line-investigation” of the pipeline could be completed and technical data could be shared with state and federal regulators. Enbridge will begin restarting the west segment and anticipates “operations will soon return to normal,” company spokesman Ryan Duffy said in an email. Enbridge doesn’t know what caused the damage to the underwater pipe, but the firm’s initial findings indicate a boat may have dragged a fishing line across the western pipe, and a boat’s anchor may have struck a support for the eastern pipe. The court ordered the eastern leg to remain closed until the Pipeline Hazardous Materials Safety Administration investigates the damage and Enbridge completes all repairs the federal regulator recommends.
Frac sand producer Covia files for bankruptcy; $1B cost reduction plan proposed - other Wisconsin sand mine operator is facing bankruptcy as the COVID-19 pandemic and falling oil prices continue to shake the industry. Covia, which owns permitted mines and plants in Columbia, Dunn, Monroe, Pierce and Waupaca counties, filed for Chapter 11 bankruptcy Monday, saying a restructuring plan negotiated with lenders will eliminate more than $1 billion in fixed costs. The Ohio-based company said it has more than $250 million cash on hand that will allow the company to continue operation during the proceedings. CEO Richard Navarre said the bankruptcy was brought on by a combination of the COVID-19 pandemic and “recent energy price shocks” that significantly affected Covia’s customers, which include oil and gas producers who use sand to prop open cracks in underground rock formations. Along with the pandemic, which has triggered a global recession, oil prices plunged in March when the 13-member Organization of Petroleum Exporting Countries. According to court filings, this came on the heels of two difficult years for producers of the high-quality Northern White sand found in Wisconsin: starting in late 2018, the companies that drill for oil and gas scaled back operations when lenders pulled back; at the same time, the supply of sand essentially doubled as producers opened dozens of new mines, and producers turned to cheaper, lower-quality sand mined closer to oil fields.
A Texas-based oil and gas company files for bankruptcy (AP) — Texas oil and gas company Sable Permian Resources has recently filed for bankruptcy. Sable Permian Resources filed for Chapter 11 bankruptcy protection last week in federal bankruptcy court in Houston, according to a news release. Permian Resources was once part of American Energy Partners, a company founded by Aubrey McClendon in 2013, The Oklahoman reported Tuesday. American Energy announced it would close in 2016, splitting up operations into separate companies, including Permian Resources. In 2017, it became Sable after the company reached a $1 billion deal with creditors to continue operating. The company and its affiliates said the bankruptcy filing will allow them to position the companies for long-term success. If first day motions are approved, the companies would be able to to continue operations. They arranged $150 million for that. Chesapeake Energy, which McClendon also founded, filed for bankruptcy this week.
Houston-based Sanchez Energy emerges from bankruptcy under new name - Houston oil company Sanchez Energy has exited from Chapter 11 bankruptcy with a new CEO and as a privately held company under new leadership and the name Mesquite Energy.Once among the largest drillers of the Eagle Ford Shale of South Texas, bankruptcy proceedings allowed the company to shed $2.3 billion of debt. The company's founding CEO Tony Sanchez is leaving the company while chief financial officer Cameron George has been named as interim CEO.“We are excited to begin our new chapter as Mesquite Energy, a simpler and leaner company, guided by our core principles of cost discipline and production efficiency to create long-term value for our stakeholders,” George said. Saddled by debt and high interest payments, the company filed for Chapter 11 in August 2019 and emerged with new leadership.Nathan Van Duzer with Fidelity Investments, Wilson Handler with Apollo Global Management and oil industry veteran Harry Quarls have been named to the reorganized company's board of directors.The company's general counsel Gregory Kopel will remain at Mesquite as executive vice president, general counsel and corporate secretary.“With a clean balance sheet and substantial repositioning of our cost structure, we have taken the hard but necessary steps to become profitable in this low commodity price environment," George said.
Some Populated Texas Areas Are At Risk Of Hydrogen Sulfide Pollution According To New Report - The oil and gas industry has become more active in the Permian Basin in recent years, and west Texas residents have complained of noxious smells and increased air pollution. In response, The Texas Commission on Environmental Quality launched two air monitoring surveys in December and February, and the results are now public. The survey teams spent 10 total days in Midland, Odessa, Goldsmith, Seminole and Denver City over December and February. They focused on publicly accessible and populated areas near industrial sites. The surveys measured air pollutants, like sulfur dioxide, and the more poisonous gas, hydrogen sulfide. The legal limit of hydrogen sulfide in Texas is 80 parts per billion over a 30-minute average. That limit was exceeded in several different places on multiple days — in the worst instance, by 500% when the 30-minute average was 400 parts per billion. That level of the gas isn’t enough to cause immediate, serious health concerns, but it can do damage in the long term, says Afamia Elnakat, a doctor of environmental toxicology at University of Texas San Antonio. "Well, in terms of long-term exposure, we look at it the same way we look at either respiratory irritant or long term. And that is basically as much as people will be impacted, you become less tolerant to other irritants," said Elnakat. She added the levels of hydrogen sulfide documented in the survey would likely affect the most sensitive groups only. (embedded study: Permian Basin Survey: Lubbock and Midland)
Exxon Reports Roof Problem, Spill at Beaumont, Texas, Refinery - Exxon Mobil Corp. said a storage-tank's floating roof gave way Friday at its Beaumont, Texas, refinery, causing thousands of pounds of chemicals to spill out."A roof on a floating roof failed," the 362,000-barrel-a-day refinery said in a filing Friday night to the Texas Commission on Environmental Quality. "The material is being pumped into another tank. Vacuum trucks have been deployed to recover spilled material."Exxon said it expected to finish cleaning up on Sunday. The spill included some 8,000 pounds of benzene, more than 2,000 pounds of ethylbenzene and other chemicals. This is at least the third storage tank roof problem Exxon has reported at its Texas refineries in the past year. Valero Energy Corp. also reported roof problems at its 293,000-barrel-a-day Corpus Christi, Texas, refinery earlier this month, saying a floating roof sank and caused spillage.
Demand for oil is dry, but this bill may keep money going to energy companies — Texas and Oklahoma Republican Senators John Cornyn and Jim Inhofe are trying to shore up the oil industry and oil jobs in their states. As the pandemic has all but dried-up demand for oil, the senators have introduced a bill that would keep the money flowing to energy companies and keep oil and gas workers on the payroll. Texas provides about 40% of the nation’s oil and gas. Cornyn says all that oil is good for jobs, but when oil prices plummet it means “a lot of people are getting laid off jobs.” Cornyn and Inhofe’s bill, the “Save Jobs Act” would provide tax and regulatory relief for US energy companies hit hard by the pandemic. “Be ready when the economy starts to rebound, as we are already starting to see, that they will have those people in place so they can hopefully get back to business as soon as possible,” Cornyn said. “We are looking to provide additional liquidity and sort of a lifeline to help.” Inhofe says one in five jobs in his home state are directly tied to the energy industry. “I think we will all benefit from that, certainly Oklahoma will,” Inhofe said. “The companies have to keep going. We have to keep producing oil and gas.” Inhofe says the bill is only a short-term fix, but would incentivize companies who are tight on money to keep drilling.
Baker Hughes Rig Count Shows US Decrease - Baker Hughes Co. reported Thursday that the U.S. rotary rig count decreased by two drilling units this week. Based on the latest figure, 263 rigs were operating in the U.S. The number comprises 185 oil rigs, 76 gas rigs and two miscellaneous rigs. The number of oil rigs decreased by three week-on-week and the number of gas rigs increased by one during the period, Baker Hughes noted in a written statement emailed to Rigzone. The latest U.S. rig count represents a 700-rig decrease from the 963-rig figure a year ago, Baker Hughes added. The firm pointed out that, year-on-year, the number of oil rigs is down 603, gas rigs down 98 and miscellaneous rigs up by one. It also stated the U.S. offshore rig count is up one this week to 12 but down by 12 units compared to the same period in 2019. In Canada, the number of rigs jumped by five this week to 18, Baker Hughes noted. It pointed out the oil rig count increased by two to six units during the period and the gas rigs figure rose by three to 12. Canada’s 18-rig total for the week represents a 102-rig decrease from the year-ago level, Baker Hughes stated. Against the corresponding period in 2019, Canada’s oil rig and gas rig counts are down by 74 and 28 drilling units, respectively.
ConocoPhillips to Ramp Up Oil Production-- ConocoPhillips said it will begin restoring curtailed oil production in July as crude prices rebound from their lockdown depths. The company will bring back output in Alaska and other states next month, with Canadian production coming back in the third quarter. “Given ongoing variability and uncertainty in the outlook for production curtailments, the company will continue to suspend forward-looking guidance and sensitivities,” Conoco said in a statement Tuesday. Conoco is the latest oil driller to turn on the taps after a pandemic-fueled collapse in crude prices spurred an unprecedented halt to significant portions of output. Earlier this month, Continental Resources Inc. said it would bring back a portion of its curtailed production in July, joining the ranks of restorationists that include Parsley Energy Inc. and EOG Resources Inc. West Texas Intermediate crude futures have more than doubled in the past two months and were hovering around $39 a barrel on Tuesday. In late April, they plunged into negative territory for the first time in history. Conoco said it will pump the equivalent of 960,000 to 980,000 barrels a day during the quarter that ends on Tuesday, excluding Libyan output, down from 1.3 million barrels during the first quarter.
New polling shows dramatically low levels of support for drilling in the Arctic National Wildlife Refuge - Alaska Native News - Recent attempts by the Trump administration to allow drilling in the Arctic National Wildlife Refuge and to bail out oil companies during the COVID-19 pandemic with taxpayer money, as well as its criticism of banks’ decisions not to fund Arctic oil and gas development, are hugely unpopular with American voters.According to newly completed public opinion research, drilling in the Arctic Refuge is incredibly unpopular across the political spectrum. Moreover, the notion of the federal government helping oil companies with taxpayer dollars and special allowances to exploit public lands for private profits is not popular with most Americans. And the recent movement by banks like Wells Fargo, Goldman Sachs and Morgan Stanley to commit to not funding drilling in the Arctic Refuge is supported by a broad swath of people.Climate Nexus Polling, in partnership with the Yale Program on Climate Change Communicationand the George Mason University Center for Climate Change Communication, conducted a nationally representative survey of 2,119 registered voters in the United States June 6-8, 2020. You can find the national poll crosstabs here and the toplines here.Only 1 in 5 think the Trump administration should open the Arctic Refuge for drilling by oil companies.An abysmal 22% of voters think the Trump administration should open the Arctic National Wildlife Refuge for drilling by oil companies — almost three times as many (61%) oppose this action. Only 19% of Independents and 17% of female respondents support the Trump administration’s efforts here, and even among Republicans 46% oppose oil drilling in the Arctic Refuge versus 35% that support Trump’s push. Voters, including large majorities of Republicans and Independents, overwhelmingly support banking policies that reject funding for Arctic oil and gas, including in the Arctic Refuge.
US oil, gas rig count falls 6 to 285 as industry begins to stabilize— After consecutive weeks of single-digit declines, the US oil and gas rig count may have essentially reached its long-awaited bottom. The US oil and gas rig count fell by six to 285 for the week ending July 1, Enverus data shows, following a one-rig decline the week prior. Upstream operators shed four oil rigs week on week, leaving 191, and lost two gas rigs, leaving 94. From here on, some "minor" fluctuations in rig counts may occur, what analysts call "noise," but large weekly changes are not expected, said analyst Matt Andre of S&P Global Platts Analytics. "We're going to see some slight up-and-down movements, but we're really close to a bottom," Andre said. "Oil is $40/b, and ConocoPhillips is talking about increasing oil production." Based on its economic criteria, ConocoPhillips said June 30 it expects in July to begin restoring some of the 225,000 boe/d of production it curtailed during the second quarter. Restored volumes will be both in the Lower 48 and Alaska. Five of the eight largest US basins showed no weekly change in rig counts, and four of those basins—the Bakken Shale in North Dakota/Montana, the SCOOP/STACK in Oklahoma, the Utica Shale mostly in Ohio and the DJ Basin in Colorado—now have 10 active rigs or less. Years ago, the Bakken and the Eagle Ford in South Texas each had over 200 rigs running. On July 1, the Bakken had 10 rigs, unchanged on the week, while the Eagle Ford had nine rigs after losing two rigs from the previous week. The Permian Basin of West Texas/New Mexico, which boasted a rig count over 400 in January, is down to 140, with one rig shed from the previous week. "The horrendous second-quarter 2020 is finally behind us, with total drilling activity finishing [at] record-low levels," investment bank Tudor Pickering Holt said in a June 29 investor note. The rig count averaged 411 in the second quarter, down 50% from 828 during Q1, according to Enverus data. "For reference, the worst quarterly decline during the 2015-16 downturn was around 35%," Tudor Pickering Holt said. By comparison, Q2 2020's sequential decline of 50% highlights "the sheer speed of the recent rig count fall-off." Investment bank B. Riley FBR estimated the number of well completions decreased 36% in May over the prior month to 441. The recent peak was 781 in November 2016, it said.
Canadian exporter sentenced in US for breaching Iran embargo by secretly exporting oil and gas equipment - A Toronto export manager for a Mississauga company has been sentenced to prison in the United States for illegally exporting gas turbine engine parts to Iran, in violation of long-standing U.S. embargo and trade sanctions. Angelica O. Preti, 45, of Toronto, was sentenced to 18 months in prison in Columbus, Ohio, on Friday, according to the U.S. Attorney’s office in the Southern District of Ohio. Few details, however, are available — including details of the allegations against her or the date she was arrested — as the case is sealed by the court and remains “sensitive,” according to a Justice Department official. “Preti made a calculated decision to harm the United States by supplying enemies abroad,” U.S. Attorney David DeVillers said in a written statement. “Preti also attempted to cover up her crimes by directing the filing of false electronic export information, and attesting that the final destination of goods was not Iran. Preti also employed a number of additional methods to obscure the fact that Iran was the end-user for the shipments,” DeVillers said. U.S. authorities said that during Preti’s time as export operations manager at UE Canada Inc., the freight company was involved with 47 shipments exported from the U.S. Of those shipments, 23 were traced as destined for Iran. UE Canada is based in Mississauga, 5 kilometres west of Toronto Pearson Airport.
Shell to cut asset values by up to $22 billion after coronavirus hit - (Reuters) - Royal Dutch Shell plans to slash the value of its oil and gas assets by up to $22 billion after the coronavirus crisis hit demand for fuel and weakened the outlook for energy prices, the Anglo-Dutch energy company said on Tuesday. The writedown announcement came after Shell cut its forecast for energy prices into 2023 on expectations that sales will only recover slowly after the pandemic, adding to the company’s already bleak longer-term outlook for fossil fuel demand. Shell’s move follows similar steps by other major energy companies such as BP (BP.L), which plans to cut the value of its assets by up to $17.5 billion following the hit to fuel sales from global travel restrictions to prevent the virus spreading. Shell, which has a market value of $126.5 billion, said in an update ahead of second-quarter results due on July 30 that it would take an aggregate post-tax charge of $15 billion to $22 billion because of the writedowns. The charges relate to large liquefied natural gas (LNG)operations in Australia, including the Prelude floating LNG facility, the world’s biggest, as well as oil and gas production assets in Brazil and U.S. shale basins.
BP to Raise $5B via Petchems Business Sale - BP plc reported Monday that it has agreed to sell its global petrochemicals business to INEOS for a total consideration of $5 billion, subject to adjustments. The deal, which includes BP’s global aromatics, acetyls and related businesses, will enable the company to achieve its $15 billion divestment target a year ahead of schedule, BP noted in a written statement emailed to Rigzone. “Today’s agreement is another deliberate step in building a BP that can compete and succeed through the energy transition,” remarked BP CEO Bernard Looney. Under the agreement, INEOS will pay BP a $400 million deposit and subsequently pay $3.6 billion on completion, BP stated. The company added the remaining $1 billion will be deferred and paid in installments: “I recognize this decision will come as a surprise and we will do our best to minimize uncertainty. I am confident however that the businesses will thrive as part of INEOS, a global leader in petrochemicals.” stated Looney. From a strategic standpoint, limited overlap exists between BP’s petrochemicals business and the rest of BP, Looney continued. “(I)t would take considerable capital for us to grow these businesses,” he commented. “As we work to build a more focused, more integrated BP, we have other opportunities that are more aligned with our future direction. Today’s agreement is another deliberate step in building a BP that can compete and succeed through the energy transition.”
1H Discoveries at Lowest Point in 21st Century - Global discoveries of conventional resource volumes (CRV) dwindled in the first half (1H) of this year, according to Rystad Energy. The company estimates that CRV discoveries stood at 4.9 billion barrels of oil equivalent (boe) in 1H 2020, which is the weakest performing first half of the 21st century, Rystad highlights. Resource volumes were said to be 42 percent lower and discovery numbers were down 31 percent compared to the same period in 2019, Rystad revealed. Rystad estimates that the average monthly discovered volumes so far this year stand at 810 million boe, which marks a 34 percent drop from the same period last year, according to the company. The monthly average was pulled down primarily by June, which only saw three small onshore discoveries, Rystad noted. January and May were said to be the most successful months in 1H due to “significant” discoveries such as Jebel Ali in the United Arab Emirates, Maka Central in Suriname, Uaru in Guyana and 75 Let Pobedy in Russia. Russia, South America and the Middle East account for about 73 percent of the total discovered resources so far in 2020, according to Rystad, which revealed that the period saw a total of 49 conventional oil and gas discoveries. Of these, 27 were said to have been announced during the global lockdown and travel restriction period. “Last year we saw the highest volumes of discovered resources since the last downturn,” Rystad Energy’s upstream analyst Taiyab Zain Shariff said in a company statement sent to Rigzone. “Based on the large number of high-impact exploration wells planned for this year, 2020 was meant to follow the same path. But then Covid-19 struck and the oil market crashed in 1Q20, resulting in delays and cancellations as operators cut budgets,” Shariff added in the statement.
Analysts Expect Refinery Closures-- The global refining industry is entering a consolidation phase as slowing oil demand growth is set to coincide with large-scale projects that will start coming online next year, according to Goldman Sachs Group Inc. The demand hit from the coronavirus is yet to cause any delays in a number of mega-refining projects, most of which are in China and the Middle East, that will start operations from 2021 to 2024, the bank said in a note. This will cause global utilization rates to be 3% lower over this period than in 2019. “We expect competition to intensify leading to below consensus -- and mid-cycle -- refining margins over 2021-22 and potential refinery closures in developed markets,” analysts including Nikhil Bhandari said in the note. Global oil demand will return to pre-virus levels by 2022, they said. Emerging markets will provide the bulk of oil consumption growth in the first half of this decade and the new mega-refineries will be located close to where the demand is, according to Goldman. This means refinery closures will be more likely in developed nations. Among oil products, gasoline will lead the recovery in fuel demand, the lender said. The outlook for distillates is more challenging as jet fuel’s recovery will be slower and diesel consumption will be hit by the uptake of electric vehicles in the medium term. In addition, the new mega-refineries are distillates heavy. Gasoline and diesel consumption will return to 2019 levels by next year, while jet fuel is unlikely to get there until at least 2023, the analysts said. Liquefied petroleum gas and naphtha will be key long-term growth drivers on the back of growing petrochemical consumption, while overall oil demand won’t peak before 2030, they said.
Petrol sold to Nigeria from Europe ‘dirtier’ than black market ‘bush’ fuel - Black market fuel made from stolen oil in rudimentary “bush” refineries hidden deep in the creeks and swamps of the Niger delta is less polluting than the highly toxic diesel and petrol that Europe exports to Nigeria, new laboratory analysis has found. Shell, Exxon, Chevron and other major oil companies extract and export up to 2m barrels a day of high quality, low sulphur “Bonny Light” crude from the Niger delta. But very little of this oil is refined in the country because its four state-owned refineries are dysfunctional or have closed. Instead, international dealers export to Nigeria around 900,000 tonnes a year of low-grade, “dirty” fuel, made in Dutch, Belgian and other European refineries, and hundreds of small-scale artisanal refineries produce large quantities of illegal fuel from oil stolen from the network of oil pipelines that criss-cross the Niger delta. The net result, says international resource watchdog group Stakeholder Democracy Network (SDN) in a new report, is that Nigeria has some of the worst air pollution in the world, with dense clouds of choking soot hanging over gridlocked cities leading to a rise in serious health conditions as well as damaged vehicles. The extreme toxicity of the “official” fuel exported from Europe surprised researchers who took samples of diesel sold in government-licensed filling stations in Port Harcourt and Lagos. They found that on average the fuel exceeded EU pollution limits by as much as 204 times, and by 43 times the level for gasoline. Laboratory analysis also showed that the black market fuel was highly polluting but of a higher quality than the imported diesel and gasoline. The average “unofficial” diesel tested exceeded the level of EU sulphur standards 152 times, and 40 times the level for gasoline.
Nigeria Bucks LNG Export Trend-- Nigeria plans to keep its liquefied natural gas supply at current levels despite prices near record lows, the opposite of what exporters from the U.S. to Australia are doing. State-owned Nigeria LNG Ltd. plans to continue utilization levels and may even boost exports in August and September depending on demand, according to a person with knowledge of the strategy. The country exported over 1.8 million tons last month, higher than last year’s monthly average of 1.7 million, according to ship-tracking data compiled by Bloomberg. A spokesperson for Nigeria LNG didn’t immediately comment on the plans. Most of the world’s suppliers curbed deliveries in June as measures to contain coronavirus slashed gas consumption, with global exports down 6.3% from the previous year. Only a handful of exporting countries, including Qatar and Algeria, have been able to boost output. Some of Nigeria’s buyers have exercised clauses in their long-term contracts, that allow them to take fewer shipments than originally agreed. The firm has been able to sell that excess supply into the spot market, but usually at a discount. More than half of Nigeria’s exports in May ended up in Asia, compared with less than a third last year, according to ship-tracking data. Production costs at Nigeria’s Bonny Island facility are so low that it can still turn a profit amid weak spot prices, said the person who asked not to be identified because the plans are private. The facility has among the lowest costs in the world, according to data from Sanford C. Bernstein & Co.
Three-kilometre oil spill reported on Sharjah beach - An oil slick was reported along the coast of Khor Fakkan in Sharjah on Monday. The spill washed up over a three-kilometre stretch between Luluyah and Zubara public beaches. The environmental hazard was reported to Khor Fakkan Municipality, which assembled a team including members from Beeah, an environmental management company, to clean up the beach. “We received a report about the oil spill and a team of 50 people will be working on cleaning up both Luluyah and Zubara beaches,” said Fawzia Al Qadi, director of the municipality. Ms Al Qadi said that the clean-up process began Monday and is expected to be completed by Tuesday. “We don’t know the reason behind it, but there is a high possibility that the oil was dumped by tankers into the water,” she said. Ms Al Qadi said it was is not the first time oil has washed up onshore on the east coast with the most recent incident occurring five months ago. A resident of the area, who shared a video of the spill online said he noticed trails of black sludge enveloping the sand at Luluyah beach.“I noticed the oil on the sand at 7am and the smell in the area was bad similar to the fuel smell,” said Khaled Al Rayssi, who runs a Khor Fakkan news Instagram account. “The colour of the water near the shore was dark and the oil was coming out of the water and settling on the sand,” he said. Oil spills on the east coast happen several times a year. Last March, campers shared videos of Al Aqah coastline in Fujairah covered with black oil that washed ashore. The oil covered around 1.5 kilometres of the beach and reached some of the hotels next to the public beach camping site.
Nearly 48,000 liters of oil spill into Iloilo City waters after power barge explosion - — Around 48,000 liters of oil spilled into waters off Iloilo City on Friday after an explosion at a power barge, local officials said. Authorities estimated an area of 1,200 square meters was affected by the spillage. The Coast Guard also pegged that about 40,000 liters were spilled. "Current efforts involve scooping and skimming of spilt oil in order to contain the spill led by the [Philippine Coast Guard]," said the city's city's emergency operation center. The explosion took place at 2:24 p.m. at AC Energy's Power Barge 102 in Lapuz district's Barrio Obrero, officials reported. The fire was declared out by 3 p.m. The barge's estimated capacity is 200,000 liters. AC Energy said it is investigating the cause of the explosion. It added that the oil spill was initially blocked by a structure surrounding the barge but high waves caused it to spill out. "We will do the needed cleanup once we are confident that we have done a good job containing the oil in the area," the company said in a statement. "We target completion of containment tonight, to be followed by skimming activities tomorrow."
Asian gasoil margins improve as lockdowns ease, but challenges remain - (Reuters) - Asian refiners’ profits from gasoil have more than trebled from a record low seen in early May as demand recovers after sweeping lockdowns imposed to curb the COVID-19 pandemic, although refiners ramping up production after maintenance could cap gains, analysts said. Refining profits for gasoil with 10 parts per million of sulphur in Singapore were at $6.29 a barrel over Dubai crude on Monday, up from a record low of $1.77 on May 5, Refinitiv data showed. Gasoil spot premiums are hovering near their strongest levels this year, while traders believe that overall refining margins in the region will be supported as the worst is behind for the industrial fuel. “Resumption in industrial activities and an improvement in road freight and transport needs will support a recovery in the third quarter gasoil demand in major economies,” said Sri Paravaikkarasu, director for Asia oil at consultancy FGE. FGE expects gasoil demand in the second half of the year to rise by 600,000 barrels per day (bpd) from the first half, but still be 490,000 bpd lower compared with the same period a year ago. “The region’s gasoil surplus should trend flat q-o-q at around 900,000 bpd in the third quarter and the second half (of 2020) should average at 840,000 bpd, down by 300,000 bpd compared to the first half of the year,”
Russia Benefiting from Oil Market Turmoil - Demand for Russian Urals grade oil is so strong that is has been trading at a pretty steep premium to Brent Crude this month. Southfront references this report from Argus research. This means that the Russian Urals crude is trading at a premium to the European benchmark Brent. The premium is $1.55 per barrel in North-Western Europe and $2.55 – in the Mediterranean. Argus names competition as the reason of Urals reaching such a high price. After the United States imposed sanctions against Venezuelan oil, American refineries began to willingly buy Russian heavy oil, very similar to the one exported by the Venezuelan PDVSA. In addition, demand for Russian oil in Asia is growing.Traditionally, Urals trades at a discount to Brent because of a lack of a unified benchmark price for it. The July Shanghai Crude Oil futures contract closed at ¥299 (or $42.30) per barrel this week, putting it at a ~$1.70 premium to Brent Crude.Russian Urals is far closer to the Medium Sour oil the Shanghai contract represents than the Light Sweet Brent. At the same time the Saudi Arabian plan to flood the market with oil to gain market share has failed entirely.Despite record oil exports in April as Saudi Arabia flooded the market with oil, the value of the Kingdom’s crude exports plunged by US$12 billion from April 2019 levels as the lowest oil prices in years hit revenues.In April, the value of Saudi Arabia’s oil exports plummeted by 65.4%, or US$12 billion (45.3 billion Saudi riyals), severely affecting the value of the total exports of the world’s top oil exporter, data from Saudi Arabia’s General Authority of Statistics showed on Thursday.China was Saudi Arabia’s main trading partner for merchandise trade in April 2020, with Saudi exports to China valued at US$1.9 billion (7.16 billion riyals).The Saudis flooded the market with oil after the collapse of the previous OPEC+ deal in early March, exporting a record 10.237 million barrels per day (bpd) in April 2020, up from 7.391 million bpd in March, according to data from the Joint Organisations Data Initiative (JODI).They shipped out 50% more oil and revenues plunged by 65%. They practically gave the stuff away in April. They had to. With the Riyal tied to the dollar they had to undercut Russian oil which trades in freely-floated rubles.In March and April the ruble spiked to a high of RUB81.66 per dollar and has steadily fallen since then. Today it is still trading around 5% weaker against the U.S. dollar than it was pre-crisis. That then becomes an even bigger source of profit given that now Urals grade is trading at a premium to Brent Crude while U.S. exports continue to lag behind. And the Saudis are now still price takers rather than price makers since they immediately had to go back and adhere to production cuts in like with the rest of OPEC+’s agreement.
Russia Urals Exports Set to Fall Sharply --Russia’s exports of its flagship Urals crude oil grade are set to plunge next month, underscoring the nation’s commitment to helping OPEC and allied producers to avert a global glut. Exports of the grade from its three main western ports -- Primorsk and Ust-Luga in the Baltic Sea and Novorossiysk in the Black Sea -- will fall 40% month-on-month to about 785,000 barrels a day in July, according to loading plans seen by Bloomberg. The country only began shipping from Ust-Luga in 2012 and flows from the three facilities have never been lower on a combined basis since then.Russia is working with Saudi Arabia and other producing countries to eliminate a surplus. Its output cuts have driven up premiums that Urals command to the highest in years, and tightened the wider physical oil market, albeit at the cost of selling smaller volumes. Financial derivatives in the Urals market rallied after the news. Swaps contracts for July were trading at premiums of between $1.80 and $1.95 to Dated Brent, brokers said. That compares with a discount of about $4.50 at the depths of oil’s rout in early April. The reduced exports had already been foreshadowed by a partial loading program. An export schedule for the first 10 days of July showed flows for the period dropping to 880,000 barrels a day. Primorsk will lead the drop, handling 1.3m tons, or about 307,000 barrels a day, next month. That’s less than a third of what it was shipping a year ago. Ust-Luga will ship 284,000 barrels a day, while flows from Novorossiysk will decline to below 200,000 barrels a day.
Oil steady as rise in virus cases offsets better data - Oil prices steadied on Monday, supported by improving economic data but held in check by sharp spikes in new coronavirus infections around the world that have forced some countries to impose partial lockdowns. Brent crude fell 4 cents, or 0.1%, to $40.98 a barrel and U.S. crude was up 7 cents, or 0.2%, at $38.56. Crude prices found some support as profits at China's industrial firms rose for the first time in six months in May, suggesting the country's economic recovery is gaining traction. The recovery of economic sentiment in the euro zone also intensified in June after a modest pick-up in May, with improvements across all sectors and a much more buoyant sense of future business, European Commission data showed. However, fears of a second wave of the pandemic took the shine off the improving economic data. The United States, India and Brazil are experiencing a resurgence in infections, leading authorities to partially reinstate lockdowns in what experts say could be a recurring pattern in the coming months and into 2021. The death toll from COVID-19 surpassed half a million people on Sunday, according to a Reuters tally. "Looking ahead, anxiety is likely to remain heightened as the epic fight against the coronavirus pandemic continues. This spells bad news for risk assets (such as oil) which will inevitably remain under pressure," said Stephen Brennock of broker PVM. Oil prices were also under pressure from poor refining margins and high inventories, analysts said. Still, Brent is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.
Oil Prices Rebound Amid Positive Economic Data -- Oil rebounded from a weekly loss as better-than-estimated economic data countered fears that Covid-19’s resurgence will crimp fuel demand. Futures in New York and London closed higher after declining for two out of the last three weeks. Prices followed equities higher as U.S. pending home sales posted a record gain, signaling that America’s economic recovery is underway. Yet the outlook remains uncertain. “The economic data continues to improve,” Still, the overall market picture is bearish. Crude stockpiles in the U.S. are at record highs, worldwide consumption remains a long way off pre-virus levels and many refiners are struggling with low margins. In another indication that supplies are plentiful, WTI and Brent crude for prompt delivery are trading at discounts to later dated contacts in a market structure known as contango. New clusters of coronavirus infections across the U.S. South and Southwest have states including Texas reversing or slowing reopening plans. Domestic fuel consumption dropped 2.3% Saturday from the same day the week prior. “We have a demand problem,” “I wouldn’t be shocked to see us retest the low $30s.” While American gasoline demand has gradually improved, diesel inventories have expanded for 11 out of the last 12 weeks, suggesting that industrial activity has a long road to recovery. “The product inventory problem may be the most bearish factor out there,” said O’Grady. “If you look at the demand for distillate, it’s terrible, and distillate is what drives the economy,” Prices:
- West Texas Intermediate for August delivery rose $1.21 to $39.70 a barrel in New York
- Brent for the same month, which expires Tuesday, settled 69 cents higher at $41.71. The more active September contract settled at $41.85
Oil Markets On Edge As Second Wave Hits - Oil continues to trade around $40 per barrel. There are offsetting forces at play – continued economic rebound creates upward pressure but fears of accelerating Covid-19 transmission magnifies downside risk. In the oil market, the possibility of new Libyan oil is offset by tighter compliance from OPEC+. Shell said it would write down $22 billion, as it revised down its assumed oil price in the years to come. The writedown included an $8-$9 billion impairment in its integrated gas unit, $4-$6 billion in upstream, and $3-$7 billion in its refining portfolio. The move will increase deb gearing by 3 percent. Chesapeake Energy is arguably the highest-profile shale driller to succumb to bankruptcy to date. The company will continue to operate six to eight rigs for the next two years, about half of the number of rigs from the first quarter. The bankruptcy will wipe out $7 billion in debt. Chesapeake reported a first quarter loss of $8.3 billion earlier this year. China, India, the European Union and the United States will join other countries in a “green recovery” summit hosted by the IEA. The agency is pushing the world to undertake green stimulus. “Even if governments do not take climate change as a key priority, they should still implement our sustainable recovery plan just to create jobs and to give economic growth. Renovating buildings, for instance, is a job machine,” the IEA’s Fatih Birol said. A Reuters survey of 45 analysts finds an average Brent price of $40 per barrel for 2020, with price gains towards the end of 2020 and into 2021. ExxonMobil is preparing to let go between5% and 10% of its US-based employees subject to performance reviewed, anonymous sources told BNN Bloomberg. The number of active U.S. frack crews, which bottomed out at 45 last month, has since jumped to 78 last week, according to industry consultant Primary Vision Inc. and Bloomberg. Libyan oil could resume. Negotiations between the U.S. and regional governments in the Middle East could pave the way for oil exports. BP agreed to sell off its entire petrochemical unit to Ineos for $5 billion. The oil market downturn has accelerated BP’s plans to transition into a low-carbon energy company. The oil company’s shares jumped on the news.
Oil slips slightly on rising coronavirus cases, returning Libyan supplies - (Reuters) - Oil prices slipped on Tuesday as investors worried that rising COVID-19 cases would hurt demand while supply could rise with a potential resurgence of Libyan oil production, which has slowed to a trickle since the start of the year. The more-active September contract for Brent LCOc2 settled down 58 cents at $41.27 a barrel. The August contract LCOc1, which expires on Tuesday, fell 56 cents, or 1.2%, to $41.15. The contract has gained 16.5% this month so far, and 81% on the quarter. U.S. crude CLc1 was down 43 cents, or 1%, at $39.27 a barrel. U.S. crude has risen 12.4% in the past month, up about 95% in the quarter, reflecting its recovery from late March. The contract pared losses in post-settlement trade after data from trade group the API showed a larger-than-expected draw in U.S. crude stockpiles. Fuel demand has recovered from the worst weeks of the outbreak, but cases have been rising in southern and southwestern U.S. states. Northeastern states like New York and New Jersey doubled the number of states from which travelers face quarantine restrictions. “Sustaining the independent show of gasoline strength will be challenged by coronavirus headlines where news has seen a definite negative shift in recent weeks,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report. Investors will seek signs of demand recovery in weekly inventory data due on Tuesday from the American Petroleum Institute industry group and from the U.S. government on Wednesday. [EIA/S] Libya is trying to resume exports, which have been almost entirely blocked since January due to civil war. The state’s oil company hopes talks will end a blockade by eastern-based forces.
Oil posts hefty quarterly climb, but coronavirus cases, oversupply worries feed year-to-date loss - Oil futures ended lower on Tuesday as persistent concerns about the rising number of cases of COVID-19 offset upbeat data suggesting both China’s manufacturing and service sectors are recovering. Despite a significant rebound for oil prices in the second quarter, U.S. oil prices still ended the first half of the year with losses of close to 36%. “The second quarter will not soon be forgotten by energy traders given that WTI crude oil futures plunged into negative territory for the first time in history, and decidedly so, in the month of April,” said Tyler Richey, co-editor at Sevens Report Research. That was “due to logistics issues in the physical supply chain, most notably a critical lack of available storage for freshly lifted crude barrels in the U.S.” On April 20, WTI oil futures fell 306% to settle at negative $37.63. “Since then, oil and refined product markets have staged an equally historic rebound with prices poised to end the second quarter nearly 100% higher than where they ended Q1 due to a swift recovery in consumer demand as well as sharp output cuts by global oil producers,” Richey told MarketWatch. On Tuesday, West Texas Intermediate crude for August fell 43 cents, or 1.1%, to settle at $39.27 a barrel on the New York Mercantile Exchange. So far this year, prices based on the front-month contracts, were nearly 36% lower, according to Dow Jones Market Data. For the quarter, however, prices rose nearly 92%.
WTI Jumps After Biggest Crude Inventory Draw Since 2019 -- A rollercoaster day saw WTI ramped to $40, fail and fade back to close red on the day (but ends more than 90% higher for the quarter, but still down nearly 36% year to date). "As we move into the second half of the year, the energy rebound is showing signs of stalling, however, as traders assess the threat of the recent resurgence in COVID-19 cases and the looming possibility of more economic shutdowns in the back half of the year," said Tyler Richey, co-editor at Sevens Report Research. . API
- Crude -8.156mm (-2.7mm exp)
- Cushing +164k
- Gasoline -2.459mm (-2.7mm exp)
- Distillates +2.638 (+900k exp)
After two weekly surprise builds in a row, US crude stocks saw a major draw of over 8mm barrels - the most since 2019... WTI hovered around $39.30 ahead of the API print and spiked higher on the surprisingly large draw... As Richey told MarketWatch, "The second quarter will not soon be forgotten by energy traders given that WTI crude oil futures plunged into negative territory for the first time in history, and decidedly so, in the month of April." That was "due to logistics issues in the physical supply chain, most notably a critical lack of available storage for freshly lifted crude barrels in the U.S."
Oil prices just had their best quarter in 30 years — what's next? -Oil prices registered their best quarterly performance in 30 years during the three months through to the end of June, staging a dramatic comeback after falling to record lows in April. Brent crude futures skyrocketed more than 80% in the second quarter. It was the international benchmark's best quarterly performance since the third quarter of 1990, when it registered gains of 142% during the first Gulf War. U.S. West Texas Intermediate futures surged 91% in the three months through to end of June, also reflecting the best quarterly performance for U.S. crude since the third quarter of 1990 when it soared 131%. However, despite notching extraordinary gains in recent weeks, both Brent and WTI futures are still down over 34% since the start of the year. The IEA's Executive Director Fatih Birol has reportedly said he believes 2020 may well come to be regarded as the worst year in the history of global oil markets, with April likely to be the worst month the industry has ever seen. "I think obviously what we saw with the Covid crisis was unprecedented and, in oil markets, it was coupled with the dislocation of the supply agreement between Russia and the OPEC countries at the same time," Martin Fraenkel, president of S&P Global Platts, told CNBC's "Squawk Box Europe" on Tuesday. Those two "massive" events impacting oil prices was "a once-in-a-generation coincidence, so I don't really expect that again," Fraenkel said. Nonetheless, he warned oil price volatility was likely to continue over the coming months, citing "really high" dislocations throughout the global energy sector. On April 20, benchmark U.S. crude prices tumbled into negative territory for the first time on record, falling as low as negative $40 a barrel at the height of coronavirus lockdown measures. It meant producers were effectively having to pay traders to take oil off their hands. Brent futures did not enter negative territory in late April, but the benchmark did slump to its lowest level since 1999 in a week some Wall Street veterans have since described as: "Scary," "unbelievable," and "very visceral."
WTI Fades Despite Biggest Crude Draw Since 2019 - Oil prices extended gains overnight after API reported a surprisingly large crude inventory draw (the biggest in 2020) and bounced back above $40 this morning after the vaccine headlines. “The market’s main concern is demand and how Covid-19 affects it,” said Louise Dickson, an analyst at consultant Rystad Energy AS.This follows Dr. Fauci's warning yesterday that the U.S. is “going in the wrong direction” in its effort to contain the outbreak; but for now, all eyes on whether the official inventory data confirms API's surprise. DOE
- Crude -7.195mm (-2.7mm exp, BBG -500k exp) - biggest draw since Dec 2019
- Cushing -263k - 8 week streak of draws
- Gasoline +1.19mm (-2.7mm exp)
- Distillates -593k (+900k exp)
After three straight weeks of builds, DOE confirmed API's report of the biggest crude draw since 2019... After a rebound (from storm Cristobal's shut-ins) in the prior week, US crude production was flat week-over-week...Graphs Source: BloombergWTI was trading just below $40.00 ahead of the DOE print and after briefly popping, began to fade back to pre-API levels...
Oil up more than 2% on U.S. jobs data but virus fears cap gains - (Reuters) - Oil futures gained more than 2% on Thursday, supported by a drop in U.S. unemployment and a drawdown in crude inventories, but a resurgence in U.S. coronavirus infections fanned concerns that economic activity will weaken in coming weeks. New COVID-19 cases in the United States rose by nearly 50,000 on Wednesday, the biggest one-day increase since the start of the pandemic. Numerous states are advising citizens to restrict movements and closing businesses and restaurants again, which is expected to hamper job growth. Brent crude LCOc1 futures settled at $43.14 a barrel, rising $1.11, or 2.6%. U.S. West Texas Intermediate (WTI) crude CLc1 futures settled at $40.65 a barrel, up 83 cents, or 2.1%. ADVERTISEMENT “At this time, the economic data seems to be outpacing the COVID-19 infections and it seems the growth is happening despite this uptick in cases,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. U.S. non-farm payrolls increased by 4.8 million in June, beating expectations, even as permanent job losses rose. Traders said the data could lessen the desire in Washington for more federal support for the economy. “The jobs report was good, but the flip side of that was that it was so good that it might inhibit a stimulus program,” said Bob Yawger, director of energy futures at Mizuho. U.S. energy firms cut the number of operating oil and natural gas rigs to a record low for a ninth straight week, according to Baker Hughes Co.
Oil climbs for a second session, settles at highest since March - Oil futures rose for a second session on Thursday to mark their highest finish since March, buoyed by better-than-expected U.S. job growth in June, after data a day earlier showed the biggest weekly domestic crude supply decline since 2019. The U.S. added 4.8 million jobs in June and the unemployment rate fell for the second straight month to 11.1%, according to government data released Thursday. “A strong U.S. nonfarm payroll report suggests the U.S. economic rebound continues and that crude demand should follow suit,” said Edward Moya, senior market analyst at Oanda, in a market update. On Thursday, West Texas Intermediate crude for August rose 83 cents, or 2.1%, to settle at $40.65 a barrel on the New York Mercantile Exchange, after gaining 1.4% on Wednesday. For the holiday-shortened week, oil saw a weekly gain of 5%, based on the most-active contract close last Friday, according to FactSet data. Read:Is the stock market closed Friday? For July 4th, here’s everything investors need to know about trading hours and closures Global benchmark Brent oil for September BRNU20, -0.04% picked up $1.11, or 2.6%, at $43.14 a barrel on ICE Futures Europe, which will hold an abbreviated trading session Friday. Brent oil traded 5.2% higher week to date.
Oil jumps 2% on U.S. economic data, posts second weekly gain in three - Oil prices rose on Thursday after data showed a fall in U.S. unemployment and a sharp drop in crude stockpiles, although concerns that a spike in U.S. coronavirus infections could stall a recovery in fuel demand kept gains in check. U.S. non-farm payrolls increased by 4.8 million in June, the Labor Department reported on Thursday, beating expectations. Brent crude futures gained $1.11, or 2.64%, to settle at $43.14 per barrel, after rising 1.8% in the previous session. West Texas Intermediate crude futures gained 83 cents, or 2.08%, to settle at $40.65 per barrel, adding to a 1.4% rise on Wednesday. U.S. crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, U.S. Energy Information Administration data showed, as refiners ramped up production and imports eased. "Oil prices have remained rangebound as OPEC has done its job on the supply side, and the key uncertainty now remains on demand recovery," Harry Tchilinguirian, head of commodity research at BNP Paribas, said. "Crude exceeded expectations of a draw but gasoline stocks rose, which means the recovery has at least paused for a week." New COVID-19 cases in the United States rose by nearly 50,000 on Wednesday, according to a Reuters tally, in the biggest one-day spike since the start of the pandemic. California rolled back efforts to reopen its economy, banning indoor restaurant dining in much of the state, closing bars and beefing up enforcement of social distancing and other measures. Gasoline stockpiles were higher, confounding expectations of a fall. Analysts highlighted worries about the spike in cases in heavily populated U.S. sun belt states, which are among the country's biggest consumers of gasoline. Attention will be on U.S. driving activity over the upcoming July 4 holiday weekend and how quickly U.S. producers revive shut-in production, analysts said.
Oil demand to return to pre-pandemic levels by 2022, Goldman says, but unlikely to peak this decade - Analysts at Goldman Sachs expect global oil demand to return to pre-pandemic levels by 2022, citing a pick-up in commuting, a shift to private transportation and higher infrastructure spending. In a research note published Thursday, analysts at the U.S. investment bank estimated global oil demand would decline by 8% in 2020, rebound by 6% in 2021 and "fully recover" to pre-coronavirus levels by 2022. Gasoline was thought to stage the fastest demand recovery among oil products as a result of a pick-up in broader commuting activity, a shift from public to private transportation for commuting, and a higher use of cars to substitute air travel for domestic tourism — particularly in the U.S., Europe and China. Diesel demand was forecast to recover to 2019 levels by 2021, boosted by government-led spending on infrastructure projects. However, Goldman Sachs warned jet fuel demand had been the "biggest loser" from the coronavirus crisis, with consumer confidence on flying set to stay low in the absence of a vaccine and consumer behavior potentially set to change over the long term. Consequently, the U.S. bank does not expect jet fuel demand to return to pre-Covid-19 levels at least before 2023.
Saudi Crude Exports Appear to Be Down 8 Percent-- Saudi Arabia seems to have made good on its promise to cut oil production by a record amount in June. Observed Saudi crude exports for this month fell to 5.7 million barrels a day through June 29, the lowest since Bloomberg began tracking the flows at the start of 2017. That compares with 6.2 million a day in May. It’s a reduction equivalent to more than seven full supertankers over the course of the month. As the coronavirus ravages the global economy and saps energy demand, the Saudis are leading a push among major oil producers to cut supplies. State company Saudi Aramco agreed to cap output at 8.5 million barrels a day from May-July as part of an OPEC+ agreement to boost prices. The kingdom then went a step further, pledging to pump 1 million barrels daily less than that in June. While changes in exports and overall production aren’t perfectly correlated, those curbs are showing up in the kingdom’s shipments to the world’s biggest economies. Flows to China, usually the largest purchaser, are down by about 45% on a monthly basis in June to 1.1 million barrels a day. A recent flood of Saudi oil to the U.S. has dropped sharply. Flows in June have shriveled to 224,000 barrels a day, compared with almost 1.3 million in April, a three-year high. Only three supertankers and a smaller vessel were observed carrying Saudi crude to the U.S. in June, though more may emerge as some cargoes update their final destinations. Tankers hauling a combined 17 million barrels of oil from the kingdom this month haven’t yet indicated their ultimate port of call. It takes a ship roughly six weeks to sail from Saudi Arabia to the U.S. and about three weeks to China. Any vessel leaving for America now would arrive in the first half of August. The volume of oil from Saudi Arabia has swung wildly in the past few months, in part due to the lingering effects of the kingdom’s price war with Russia earlier in the year. Aramco slashed its official selling prices for oil in April and May, before raising them for this month, after the Organization of Petroleum Exporting Countries and its partners agreed to limit output.
Saudi Aramco's Dividend Math Doesn't Add Up - It’s the mother of all payouts. The $75 billion that Saudi Aramco doles out in dividends every year dwarfs what any other listed company gives to shareholders. It’s roughly equivalent to the payouts from Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp., BP Plc, Total SA, PetroChina Co., Eni SpA, Petroleo Brasiliero SA and China Petroleum & Chemical Corp. or Sinopec — put together. That makes Chief Executive Officer Amin Nasser’s promise to continue that level of returns for the next five years an extraordinary vote of confidence in an oil market awash with uncertainties. Saudi Aramco will be prepared to borrow money to ensure that it meets its commitment this year despite oil prices heading into negative territory, he said this month. Running up debts to keep the dividend on track is standard practice for energy companies amid the carnage of 2020’s oil market — except for those, like Shell, which plan to cut payouts altogether. You only want to fund dividends out of borrowings, though, if you’re certain it’ll be a strictly temporary measure. The risk for Aramco is that upholding such a long-term promise to shareholders will bend its entire business out of shape, just when it needs to be especially nimble as crude demand slows and goes into reverse. The core of Aramco’s profitability is its astonishingly low production costs, with operating expenses amounting to not much more than $8 a barrel of oil and equivalent products last year. It’s remarkable how quickly the spending adds up, though. Royalties paid to the Saudi state alone added another $10 a barrel or so, while corporate income tax came to around $19 a barrel and dividends swallowed a further $15. Once all those tolls were paid, Aramco didn’t have a lot of spare change left out of $60-a-barrel oil, let alone the stuff in the $40-a-barrel range it’s selling at the moment. A firm dividend policy is an unusually inflexible cost. Unlike the royalties and income taxes levied as a percentage of Aramco’s revenues and profits, payouts don’t automatically shrink if the price of crude declines. If anything, the burden per barrel rises further when prices and output fall. Perhaps in recognition of this, the Saudi state has from the start agreed to forgo its portion of any payouts to the extent that receiving them would get in the way of Umm-and-Abu investors getting their share . That may help maintain a theoretical $75 billion-a-year payout but it makes a nonsense of the idea that all shareholders are equal, not to mention the principle that a dividend policy is some sort of a commitment to future earnings. It’s not clear, either, why a company with this get-out clause would want to take on debt to meet its promised payments, although Aramco’s borrowing costs are essentially identical to those of the Saudi state.
Libya Says US Backed Talks Could End Oil Blockade- Tribes in eastern Libya backed the resumption of oil production from their region, shortly after the state energy company said negotiations between the U.S. and regional governments could lead to a restart of exports from the war-battered OPEC member. The tribes, which helped shutdown most energy facilities in the east in January, will back rebel commander Khalifa Haftar’s Libyan National Army in negotiations with the United Nations over the distribution of oil revenue, Ibrahim Bouhreba al-Baraassi, a member of one of the groups, told Bloomberg on Monday. The announcement came after the state-run National Oil Corp. said it was in talks with Libya’s UN-recognized government in Tripoli, the U.S. and some Middle Eastern powers. The NOC and Washington have called on supporters of Haftar, who’s backed in Libya’s civil war by Egypt, Russia and the United Arab Emirates, to end their blockade of the nation’s oil ports and fields. “We are hopeful that those regional countries will lift the blockade and allow us to resume our work for the benefit of all the Libyan people,” the NOC said, without identifying the nations. An agreement should “protect the oil facilities and make sure they are never used as a military target or a political bargaining chip again.” Libya’s exports have plummeted to less than 100,000 barrels a day from 1.1 million because of the shut downs. The NOC has said that neglect and damage from the conflict, which began in 2011 after the ouster of former leader Moammar Qaddafi, means it will cost hundreds of millions of dollars to restore output fully. Haftar, who’s based in the east, launched a western offensive and was close to taking the capital, Tripoli, earlier this year, which would have effectively given him control of the country. Turkey intervened on behalf of the Tripoli government of Fayez al-Sarraj and pushed Haftar’s forces back toward Sirte. The two sides are poised to square off in the central city close to Libya’s “oil crescent” -- where some of its largest fields and export terminals lie. The NOC said last week that Russian and other mercenaries had entered the western oil field of Sharara, the nation’s biggest, to prevent production from restarting. “Many oil-producing countries are benefiting from the ongoing oil blockade and are taking advantage of the absence of the Libyan oil from global markets,” Mustafa Sanalla, the NOC’s chairman, said on Monday following a meeting with the European Union’s ambassador to the country.
Yemen Rebels Send Repair Team to Stricken Tanker -- Yemen’s Houthi rebels say they’ve sent a maintenance team to repair an aging oil tanker laden with more than 1 million barrels that the United Nations and environmental groups see as a threat to marine life in the Red Sea. The decaying vessel Safer has been moored off Houthi-controlled Hodiedah province since 1988, and the crude, worth some $40 million at today’s prices, was on board when civil war broke out in Yemen in 2015. The repair team may fail to prevent the Safer from leaking oil, however, because the Saudi Arabian-led coalition fighting the Houthis has blocked access to necessary equipment, Mohammed Ali Al-Houthi, a member of the Houthi ruling political council, said in a statement. The Houthis, who are backed by Iran, can’t sell the oil; international buyers are wary of dealing with them, and the Saudi-led coalition controls waters near the vessel. Yemen’s UN-recognized government has said the rebels would be to blame for any leaks from the ship because it’s moored in a Houthi-held area. The Houthis have refused to accept any responsibility. The conflict in Yemen has caused severe hunger, an outbreak of deadly cholera, and -- in the words of the UN -- “the worst man-made humanitarian crisis of our time.” An oil spill from the Safer could destroy the livelihoods of 126,000 fishermen, according to a statement posted last month on the Yemen-based website Holm Akhdar. Some 850,000 tons of fish in the Red Sea, the Bab El Mandab waterway, and the Gulf of Aden could perish, it said.
Iran Calls For Trump's Arrest Over 'Brutal Murder' Of Revolutionary Guard General - A top Iranian prosecutor has called for the arrest of President Trump and dozens of other Americans for their involvement in the "brutal murder" of former IRGC General Qassem Soleimani in Baghdad. According to the AP, "the charges underscore the heightened tensions between Iran and the US since President Trump unilaterally withdrew America from Tehran’s nuclear deal with world powers," though President Trump "faces no danger of arrest." Iran's state-run IRNA news agency reported Monday that Tehran prosecutor Ali Alqasimehr has accused Trump and more than 30 other Americans (whom Iran believes were involved in planning and executing the Jan. 3 strike that killed Gen. Qassem Soleimani in Baghdad) of "murder and terrorism charges". The identities of those other than Trump weren't disclosed, however. After filing the charges, Alqasimehr on behalf of Iran reportedly requested an Interpol “red notice” be issued calling for the arrest of Trump and the others, which represents the highest level arrest request issued by Interpol. Local authorities end up making the arrests on behalf of the country that request it. The notices cannot force countries to arrest or extradite suspects, though they can put subjects at risk of arrest or detention if they travel abroad. Interpol hasn't commented on the requests, suggesting that it isn't taking Iran's petition seriously. Interpol's guidelines for red notices explicitly states that the agency can't get involved in political issues. Soleimani, the head of the IRGC's Quds Force (an international arm tasked with coordinating terror attacks in accordance with Iran's interests around the world) was killed during the opening days of 2020, kicking off what has been a year of non-stop news and activity as both Iran and the US were soon hammered by the coronavirus as it spread internationally from Wuhan, China.
U.S. files suit to seize gasoline in four Iran tankers headed to Venezuela (Reuters) - U.S. prosecutors late on Wednesday filed a lawsuit to seize the gasoline aboard four tankers that Iran is shipping to Venezuela, the latest attempt by the Trump administration to increase economic pressure on the two U.S. foes.The government of Venezuelan socialist President Nicolas Maduro has flaunted the tankers, which departed last month, to show it remains unbowed by U.S. pressure. The United States, has been pressing for Maduro's ouster with a campaign of diplomatic and punitive measures, including sanctions on state oil company PDVSA [PDVSA.UL].Gasoline shortages in Venezuela, like Iran a member of OPEC, have grown acute due to the U.S. sanctions, and the country has undergone an economic collapse. Still, Maduro has held on, and the failure to unseat him has been source of frustration for U.S. President Donald Trump, some American officials have said privately.In the civil-forfeiture complaint, the federal prosecutors aim to stop delivery of Iranian gasoline aboard the Liberia-flagged Bella and the Bering, and the Pandi and the Luna, according to the lawsuit, first reported in the Wall Street Journal. It also seeks to deter future deliveries.The complaint, filed in the U.S. District Court for the District of Columbia, also aims to stop the flow of revenues from petroleum sales to Iran, which Washington has sanctioned over its nuclear program, ballistic missiles, and influence across the Middle East. Tehran says its nuclear program is for peaceful purposes.Zia Faruqui and two other assistant U.S. attorneys allege in the lawsuit that Iranian businessman Mahmoud Madanipour, affiliated with Iran's Islamic Revolutionary Guard Corps, or IRGC, helped arrange the shipments by changing documents about the tankers to evade U.S. sanctions. The lawsuit says that since September 2018, the Revolutionary Guards' elite Quds Force has moved oil through a sanctioned shipping network involving dozens of ship managers, vessels and facilitators.
Israel Is On Brink Of War With Iran & Hezbollah- Top Israeli Officials The former Israeli Defense Minister, Avigdor Lieberman, said that Iran and Lebanese Hezbollah are pushing Israel to the brink. In an interview with Israel's national Hebrew-language daily newspaper Maariv on Friday, the former Israeli Defense Minister had expressed his concern about Iran possessing enriched uranium, which he said is eight times the permitted amount according to the nuclear agreement, and that a month ago Iran successfully launched a spy satellite into orbit. Lieberman further charged that Hezbollah is now building a precision missile factory in honor of the late Iranian Quds Force commander, General Qassem Soleimani, which is pushing Israel to the brink, claiming that Israeli Prime Minister Benjamin Netanyahu has no plans to confront them. Lieberman said Iran is continuing its ongoing policies in its regular military programs and continues to fund Hezbollah, Hamas, and the Islamic Jihad, although Iran faces enormous economic difficulties of its own. However, despite Lieberman’s claims, Israel has in fact intensified their attacks against the Iranian forces and allies inside Syria this year, with multiple attacks taking place each month.
Iran threatens retaliation after what it calls possible cyber attack on nuclear site (Reuters) - Iran will retaliate against any country that carries out cyber attacks on its nuclear sites, the head of civilian defence said, after a fire at its Natanz plant which some Iranian officials said may have been caused by cyber sabotage. The Natanz uranium-enrichment site, much of which is underground, is one of several Iranian facilities monitored by inspectors of the International Atomic Energy Agency (IAEA), the U.N. nuclear watchdog. Iran’s top security body said on Friday the cause of the “incident” at the nuclear site had been determined, but “due to security considerations” it would be announced at a convenient time. Iran’s Atomic Energy Organisation initially reported an “incident” had occurred early on Thursday at Natanz, located in the desert in the central province of Isfahan. It later published a photo of a one-storey brick building with its roof and walls partly burned. A door hanging off its hinges suggested there had been an explosion inside the building. “Responding to cyber attacks is part of the country’s defence might. If it is proven that our country has been targeted by a cyber attack, we will respond,” civil defence chief Gholamreza Jalali told state TV late on Thursday. An article issued on Thursday by state news agency IRNA addressed what it called the possibility of sabotage by enemies such as Israel and the United States, although it stopped short of accusing either directly. “So far Iran has tried to prevent intensifying crises and the formation of unpredictable conditions and situations,” IRNA said. “But the crossing of red lines of the Islamic Republic of Iran by hostile countries, especially the Zionist regime and the U.S., means that strategy ... should be revised.”
ISIS was state-sponsored by US allies, says former government intelligence analyst - A stunning new study authored by a former US government intelligence analyst and staff member for official investigations into the 9/11 attacks, concludes that the Islamic State (ISIS) received significant state-sponsorship up to 2016. The study is corroborated by revelations from two former senior British intelligence officials in exclusive interviews with INSURGE. The new evidence raises urgent questions about the material context of ISIS’ extraordinarily rapid growth, and its ability to inspire incidents such as the truck attack in New York. Contrary to conventional wisdom, the peer-reviewed paper published in the Routledge journal Studies in Conflict and Terrorism in July, confirms not only that several regional states deliberately empowered al-Qaeda and ISIS foreign fighters for their geopolitical ends, but that many of these states are ostensibly US allies in the ‘war on terror’: including Turkey, Pakistan and Saudi Arabia. How States Exploit Jihadist Foreign Fighters Jihadist foreign fighters are frequently described as non-state actors whose prominence challenges the traditional… www.tandfonline.com Study author Professor Daniel Byman of Georgetown University’s Security Studies Programme was previously a Middle East analyst for the US intelligence community, and headed up the Center for Middle East Studies at the RAND Corporation — a major US government defence contractor.
China Oil Titans Plan Joint Crude Buying to Add Market Clout - China’s state-owned oil refining giants are in discussions to form a purchasing group to buy crude together, increasing their bargaining power and avoiding bidding wars. Senior executives from China Petroleum & Chemical Corp., PetroChina Co., Cnooc Ltd. and Sinochem Group Co. are in advanced talks to iron out details of the plan, said people familiar with the initiative, who asked not to be identified as discussions are private and ongoing. The proposal has won the support of the Chinese central government and relevant industry watchdogs, the people said. For a start, the group is set to collectively issue bids for certain Russian and African grades in the spot market, they said. While it’s unclear how the cooperation will evolve, the group represents refiners that import more than 5 million barrels of oil a day. That’s nearly a fifth of OPEC’s total output, which would make it the world’s largest crude buyer in theory. The initiative -- first mooted in 2019 -- gained traction this year as the coronavirus spurred historic output cuts by OPEC and its allies to regain control of the market. China's crude oil imports almost tripled in past decade The original epicenter of the pandemic, China was the first major economy to reopen and its consumption of transportation and industrial fuels is now almost back to pre-virus levels. The v-shaped recovery has in recent months prompted the country’s state-owned and independent refiners to snap up Russian and Brazilian crude in the spot market, pushing up prices. The state-owned refiners may jointly bid for Russian ESPO cargoes as early as next month in a trial run, the people said. The group might expand to allow participation from non-state owned processors -- including so-called teapots in Shandong province -- in the future, they said. Sinopec’s media office declined to comment on the matter when contacted on Friday, while PetroChina couldn’t immediately respond. Emails sent to CNOOC and Sinochem went unanswered, while nobody immediately responded to fax messages to China’s National Energy Administration and the National Development and Reform Commission.
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