oil prices ended lower this week after the GDP report showed that the US economy had shrunk at a 32.9% rate in the second quarter, by far the worst drop in US history, and after congressional talks on a new virus relief bill broke up without an agreement...after rising 1.7% to $41.29 last week on encouraging economic reports and on hopes for a virus vaccine, the contract price of US light sweet crude for September delivery opened lower and fell nearly 2% early on Monday as tensions between the US and China worsened, but recovered to end the session 31 cents higher at $41.60 a barrel after Senate Republicans unveiled a new $1 trillion coronavirus aid package,...however, after an initial move higher, oil prices weakened on Tuesday as the Republican stimulus plan faced tough sledding and fell to a loss of 56 cents at $41.04 a barrel after a report showed U.S. consumer confidence fell in July amid a flare-up in COVID-19 infections, and as traders worried about rising coronavirus cases worldwide....but oil prices rebounded early Wednesday after the API reported a large draw from US crude supplies, and held on to finished 23 cents higher at $41.27 a barrel as the EIA confirmed the biggest U.S. crude supply decline of this year, even as another record day for coronavirus cases worldwide kept the price rise in check...while prices opened higher Thursday, they quickly tanked after the BEA reported the largest drop in US GDP on record, and after Trump roiled markets with a suggestion that the US should delay its November presidential election, and went on to finish $1.35 lower at $39.92 a barrel, the lowest close since the first of the month, with prices further pressured by worries a global resurgence in coronavirus cases would hit demand just as major oil producers relaxed their output cuts...but oil prices opened higher on Friday after the EIA reported that U.S. oil production cuts in May had been the largest on record and held on to more than half of the early gains to finish 35 cents higher at $40.27 a barrel, as investors moved to oil and other commodities as a haven against a rapidly falling dollar...while September oil prices thus ended the week 2.5% lower at the lowest end of week close since June 26th, they still finished the month higher for the 3 straight month, after recovering from briefly turning negative at the end of April...
natural gas prices, meanwhile, finished the week lower, as the hurricane which had been threatening western Gulf production last Friday passed into the Rio Grande valley without incident....after rising 5.2% to a two week high of $1.808 per mmBTU last week on a widespread heatwave and a late week threat from a Gulf of Mexico tropical storm, the contract price of natural gas for August delivery opened lower on Monday and fell 7.4 cents or 4% to $1.734 per mmBTU, as natural gas output rose and the demand for cooling eased, keeping gas in storage on track to reach a record high later this year...but prices rebounded 6.6 cents on Tuesday as natural gas pipeline exports increased, and then rose another 5.4 cents on Wednesday as forecasts for above-normal temperatures were expected to boost cooling demand, as trading in the August natural gas contract expired at a three week high of $1.854 per mmBTU, while the new front month September oil contract rose 6.6 cents to close at $1.930 per mmBTU....but natural gas prices tanked with oil on Thursday, falling 10.1 cents to $1.829 per mmBTU, as new forecasts called for cooler weather and the EIA's gas storage report was in line with expectations...prices then weakened further on the moderating heatwave Friday and gave up another 3 cents to finish the week at $1.799 per mmBTU, down 5.0% from the previous week's August quote and 3.6% lower than last Friday's September gas close...
the natural gas storage report from the EIA for the week ending July 24th indicated that the quantity of natural gas held in underground storage in the US rose by 26 billion cubic feet to 3,241 billion cubic feet by the end of the week, which left our gas supplies 626 billion cubic feet, or 23.9% greater than the 2,559 billion cubic feet that were in storage on July 24th of last year, and 429 billion cubic feet, or 15.3% above the five-year average of 2,812 billion cubic feet of natural gas that have been in storage as of the 24th of July in recent years....the 26 billion cubic feet that were added to US natural gas storage this week was more than the average 23 billion cubic feet increase that was forecast by analysts polled by S&P Global Platts, but it was much less than the 56 billion cubic feet addition of natural gas to storage during the corresponding week of 2019, and also less than the average of 33 billion cubic feet of natural gas that has been added to natural gas storage during the same week over the past 5 years...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending July 24th indicated that because of a big drop in our oil imports, a modest increase in our oil exports, and a pickup in our oil refining, we needed to withdraw oil from our stored supplies for the 3rd time in the past 8 weeks and by the most since late December 2019....our imports of crude oil fell by an average of 794,000 barrels per day to an average of 5,146,000 barrels per day, after rising by an average of 373,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 218,000 barrels per day to an average of 3,211,000 barrels per day during the week, which means that our effective trade in oil worked out to a net import average of 1,935,000 barrels of per day during the week ending July 24th, 1,012,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was reportedly unchanged at 11,100,000 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 13,035,000 barrels per day during this reporting week..
meanwhile, US oil refineries reported they were processing 14,595,000 barrels of crude per day during the week ending July 24th, 389,000 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 1,516,000 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 43,000 barrels per day less 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 (+43,000) 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"....(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 6,012,000 barrels per day last week, which was 13.6% less than the 6,956,000 barrel per day average that we were importing over the same four-week period last year....the 1,516,000 barrel per day net withdrawal from our total crude inventories came as 1,516,000 barrels per day were being pulled out of our commercially available stocks of crude oil while the oil supplies in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported to be unchanged at 11,100,000 barrels per day even though the rounded estimate of the output from wells in the lower 48 states rose by 100,000 barrels per day to 10,700,000 barrels per day because a 13,000 barrel per day decrease in Alaska's oil production to 448,000 barrels per day was enough to subtract 100,000 barrels per day from the rounded national total....last year's US crude oil production for the week ending July 26th was rounded to 12,200,000 barrels per day, so this reporting week's rounded oil production figure was about 9.0% below that of a year ago, yet still 31.7% 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 79.5% of their capacity while using 14,595,000 barrels of crude per day during the week ending July 24th, up from 77.9% of capacity during the prior week, but excluding the 2005, 2008, and 2017 hurricane-related refinery interruptions, still one of the lowest refinery utilization rates of the last thirty years...hence, the 14,595,000 barrels per day of oil that were refined this week were still 14.1% fewer barrels than the 16,991,000 barrels of crude that were being processed daily during the week ending July 26th, 2019, when US refineries were operating at 93.0% of capacity....
with the increase in the amount of oil being refined, gasoline output from our refineries was also higher, increasing by 79,000 barrels per day to 9,158,000 barrels per day during the week ending July 24th, after our refineries' gasoline output had decreased by 16,000 barrels per day over the prior week... but with our gasoline production still recovering from a multi-year low, this week's gasoline output was still 12.1% less than the 10,416,000 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 20,000 barrels per day to 4,763,000 barrels per day, after our distillates output had decreased by 97,000 barrels per day over the prior week... after this week's increase in distillates output, our distillates' production was 7.4% less than the 5,164,000 barrels of distillates per day that were being produced during the week ending July 26th, 2019....
with the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 1st time in 4 weeks and for the 8th time in 26 weeks, rising by 654,000 barrels to 247,387,000 barrels during the week ending July 24th, after our gasoline supplies had decreased by 1,802,000 barrels over the prior week...our gasoline supplies increased this week even though the amount of gasoline supplied to US markets increased by 259,000 barrels per day to 8,809,000 barrels per day because our imports of gasoline rose by 381,000 barrels per day to 924,000 barrels per day and because our exports of gasoline fell by 28,000 barrels per day to 441,000 barrels per day....after this week's inventory increase, our gasoline supplies were 7.2% higher than last July 26th's gasoline inventories of 230,735,000 barrels, and roughly 8% above the five year average of our gasoline supplies for this time of the year...
likewise, with the increase in our distillates production, our supplies of distillate fuels increased for the fourteenth time in 28 weeks and for the 19th time in 43 weeks, rising by 503,000 barrels to another 38 year high of 178,386,000 barrels during the week ending July 24th, after our distillates supplies had increased by 1,047,000 barrels over the prior week....our distillates supplies rose again this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 412,000 barrels per day to 3,635,000 barrels per day, because our exports of distillates fell by 215,000 barrels per day to 1,224,000 barrels per day and because our imports of distillates rose by 96,000 barrels per day to 148,000 barrels per day...after this week's inventory increase, our distillate supplies at the end of the week were 31.2% above the 135,922,000 barrels of distillates that we had in storage on July 26th, 2019, and about 26% above the five year average of distillates stocks for this time of the year...
finally, with the drop in our oil imports and the increase in oil refining, our commercial supplies of crude oil in storage fell for the 6th time in twenty-eight weeks and for the 14th time in the past year, decreasing by 10,066,000 barrels, from 536,580,000 barrels on July 17th 525,969,000 barrels on July 24th, the largest decrease since the week ending December 27th, 2019....but even after that decrease, our our commercial crude oil inventories were still around 17% above the five-year average of crude oil supplies for this time of year, and 55.5% above the prior 5 year (2010 - 2014) average of our crude oil stocks for the fourth weekend of July, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories have generally been rising since September of 2018, except for during last summer, after generally falling until then through most of the prior year and a half, our crude oil supplies as of July 24th were 20.5% above the 436,545,000 barrels of oil we had in commercial storage on July 26th of 2019, 28.7% more than the 408,740,000 barrels of oil that we had in storage on July 27th of 2018, and 9.1% above the 481,888,000 barrels of oil we had in commercial storage on July 28th of 2017...
This Week's Rig Count
the US rig count was unchanged during the week ending July 31st, after falling by 68.3% over the prior twenty weeks....Baker Hughes reported that the total count of rotary rigs running in the US remained at 251 rigs this past week, which was still equal to the fewest active rigs in Baker Hughes records going back to 1940 and 153 fewer rigs than the all time low prior to this year...it was also down by 691 rigs from the 942 rigs that were in use as of the August 2nd report of 2019, and 1,678 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in their first attempt to put US shale out of business....
the number of rigs drilling for oil decreased by 1 rig to 181 oil rigs this week, after increasing by 1 oil rig the prior week, which still left 590 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 69 natural gas rigs, which was still down by 102 natural gas rigs from the 171 natural gas rigs that were drilling a year ago, and was also less than a twentieth of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, and one in Sonoma County, California... a year ago, there was just one such "miscellaneous" rig deployed...
the Gulf of Mexico rig count was unchanged at 12 rigs this week, with 9 of those rigs drilling for oil in Louisiana's offshore waters and three of them now drilling for oil offshore from Texas...that was 10 fewer rigs than the 22 rigs drilling in the Gulf a year ago, when 22 rigs were drilling offshore from Louisiana and no rigs were operating in Texas waters...while there are no rigs operating off other US shores at this time, a year ago there were two rigs deployed offshore from Alaska, so this week's national offshore count is down by 12 from the national offshore rig count of 25 a year ago
the count of active horizontal drilling rigs was up by one to 216 horizontal rigs this week, which was still 603 fewer horizontal rigs than the 819 horizontal rigs that were in use in the US on August 2nd of last year, and less than a sixth of the record of 1372 horizontal rigs that were deployed on November 21st of 2014...on the other hand, the vertical rig count was down by one to 13 vertical rigs this week, and those were also down by 43 from the 56 vertical rigs that were operating during the same week of last year....meanwhile, the directional rig count was unchanged at 22 directional rigs this week, and those were also down by 45 from the 67 directional rigs that were in use on August 2nd 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 31st, the second column shows the change in the number of working rigs between last week's count (July 24th) and this week's (July 31st) count, the third column shows last week's July 24th 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 2nd of August, 2019...
again there were just a few changes in drilling activity this week, with just a handful of rig removals and an equal number of rig 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 one rig was shut down in Texas Oil District 7C, or the southern Permian Midland, while one rig was added in Texas Oil District 8A, or the northern Permian Midland....since the Texas Permian count thus appears to be unchanged while the national Permian basin rig count was down by 2 rigs, that strongly suggests that the 2 rigs that were removed from New Mexico would have been drilling in the western Permian Delaware until this week, to account for the national decrease...while there was no change apparent in the rig counts elsewhere in Texas, there was an oil rig added offshore from the state (while one was shut down offshore from Louisiana) to thus account for the rig increase in Texas and the decrease in Louisiana...outside of those, an oil rig was added in North Dakota's Williston basin, and another oil rig was added in Oklahoma's Cana Woodford, to thus account for all the changes we see on the table above...meanwhile, this week's natural gas rig addition was in the Eagle Ford shale of southeastern Texas, where an oil rig was shut down at the same time, thus leaving the Eagle Ford rig count unchanged at 12...
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Montage Strikes Deal to Sell Utica Gathering Infrastructure -Appalachian pure-play Montage Resources Corp. has agreed to sell noncore natural gas gathering assets in Ohio’s Utica Shale to an undisclosed company for $25 million. Montage said an international company agreed to purchase the infrastructure, which is in a condensate development area. The transaction is expected to close in 4Q2020. Proceeds would be used to cut debt and improve the strength of the balance sheet. In a brief operational update announced along with the deal, Montage expects second quarter production volumes to come in at the high end of the 535-555 MMcfe/d announced last month, after rising oil and gas prices prompted it to bring back production curtailed earlier in the year. Like other Lower 48 operators, Montage shut-in production in April after oil prices fell precipitously and Covid-19 destroyed energy demand. The company primarily curtailed liquids-rich volumes from Ohio’s Utica. It returned those volumes to sales on June 1 and said full-year production would increase as a result. The company is now guiding for 565-585 MMcfe/d this year, or 2% above the midpoint of its previous range. The company also has lowered its 2020 capital expenditures to $120-140 million from the previously announced range of $130-150 million. The spending cut would be driven by continued efficiency gains and is not expected to impact production volumes. The company reports second quarter results Aug. 6.
Exxon Unit Says Bid For Win In Drilling Suit Is Premature - - An Exxon Mobil Corp. unit and other drilling companies have urged an Ohio federal court to throw out a bid for a quick win by mineral rights owners alleging the companies drilled deeper than they should have, saying it's too early in the proposed class litigation to decide the case on its merits. In a motion filed Wednesday, Exxon subsidiary XTO Energy Inc., as well as Rice Drilling D LLC, Ascent Resources Utica LLC and Gulfport Energy Corp., said the summary judgment bid from the mineral owners, led by J&R Passmore LLC, can't come before a decision is made on class certification. . . ..
CNX Resources' curtailments to end in November - CNX Resources Corp. has reported a net loss to shareholders of $146 million or 78 cents per share, Kallanish Energy reports. That compares to earnings of $162.4 million or 85 cents a share in 2Q 2019. The company reported that adjusted net income was $24 million and adjusted EBITDAX was $212 million. Net cash provided by operating activities was $144 million and capital expenditures were $135 million. Consolidated free cash flow was $21 million. It reported 2Q 2020 revenue of $148.8 million. There was also an unrealized loss on commodity derivative instruments of $206 million. The company also got $29 million in net proceeds from terminating natural gas hedges that were to settle from May to November 2020. It also curtailed and delayed production, in the wake of the coronavirus pandemic and the lower demand for fuels that resulted. The company, with headquarters in Pittsburgh, Pennsylvania, operated two rigs and drilled eight wells in the Appalachian Basin in the second quarter. It utilized one all-electric frack crew to complete 11 wells in the quarter. There were eight wells in Pennsylvania Marcellus Shale and three wells in Ohio’s Utica Shale. It now has one rig working and one frack crew at work. Production volumes decreased due to the temporary shut-in of a portion of the company’s liquids-rich Shirley-Pennsboro production in May and June in response to low natural gas liquid prices. Additionally, two new pads pf dry gas wells were also shut in in May and June due to low natural gas prices, it said. The decisions to shut in production were made to take advantage of improved gas prices at the start of winter, it said. That curtailment is expected to end in November.
Pipelines come into focus in CNX and EQT messages to investors - Pipelines have always played the supporting role to drillers. They’re not at the forefront of technological disruption — the kind that CNX president and CEO Nick DeIuliis said is responsible for the industry’s current financial woes, which he maintains is how every success story begins. They’re not the dreams of wildcatters, nor a cash cow for landowners. Instead, they’re the veins of what makes oil and gas development work — without them, you couldn’t get gas from the well to the market. For that reason, many executives of exploration and production companies would prefer to control the pipelines that determine their destiny. It’s why CNX Resources, the Cecil-based driller, announced Monday that it will reabsorb the midstream company it spun out six years ago and pay $357 million for the shares it doesn’t already own. “Our peers have outsourced their midstream services, driving up their cost, and they cannot unwind those decisions and bring those margins back into the company,” Mr. DeIuliis said. “Our gathering systems and water systems required hundreds of millions of dollars and five-plus years to build. So in order for our competitors to catch up, it will take them hundreds of millions of dollars and half a decade to match those investments.” CNX Midstream, which began as Cone Midstream, is a master limited partnership — a business whose profits are not taxed at the corporate level but are instead passed along to investors and taxed at their personal income level. Because pipeline profits tend to be steady and predictable — whereas commodity-based businesses like oil and gas drilling can be volatile — midstream master limited partnerships opened up space in the industry for a different set of investors. While operating teams at the oil and gas firms may have wanted to retain control of these assets, shareholders often pushed to separate them, believing that a stand-alone pipeline company would be worth more than one folded into a production firm. In Appalachia, many of the major drillers split their pipeline infrastructure into separate, publicly traded companies, even if some retained the same management teams.CNX Resources, then known as Consol Energy Inc., did it in 2014. EQT Corp. did it with a number of entities, including EQT Midstream.Rice Energy Corp. did it in 2014, three years before it was acquired by EQT Corp.But as investors began to sour on energy stocks as a whole and as the corporate tax rate fell to 21% in 2017, midstream MLPs were no longer the hot ticket they once seemed. At that point, the sacrifice of losing some control over pipeline operations by making them a separate company began to look like too much to bear for some. Last month, Equitrans Midstream Corp. bought all outstanding shares of EQT Midstream, the master limited partnership that has since been folded into the corporate umbrella.Equitrans itself spun out of EQT Corp. in 2018, although the two entities remain linked by pipeline contracts like the Mountain Valley Pipeline, a huge, much-challenged and frequently delayed transmission pipeline under construction to bring natural gas out of the Appalachian basin.EQT was supposed to be the anchor shipper on the pipeline. But on Monday, EQT’s leaders told analysts that it’s their goal to sell some or all their reserved space on the pipeline that the company helped to create and which many, including EQT CEO Toby Rice, believe may be the last big pipeline built in the U.S. in the near future.
You've Got Your Troubles - Is the Northeast Gas Market Headed for a Fall Meltdown? -- U.S. Northeast natural gas production has surged nearly 1.5 Bcf/d in the past four weeks as wells that were shut-in this spring came back to life. The supply gains have been matched by strong intraregional demand, which has posted at or near record highs on a monthly average basis in recent months. But the returning supply volumes raise the question: what happens when summer cooling demand begins to fade? Storage will only be able to absorb so much, as regional storage inventories are already well above year-ago levels and the historical average for this time of year. That leaves flows out of the region as the only other outlet for excess supply, and those may be limited as well, as pipeline issues and drastically reduced downstream demand from LNG exports have stymied outflows. So, is the Northeast gas market headed for a shoulder-season meltdown? Appalachian gas supply prices this month already have weakened relative to the national benchmark Henry Hub, and these dynamics suggest there is more tumult ahead. Today, we consider what’s in store for the Northeast gas market this fall given the latest fundamentals. To understand the most recent gas market shifts in the U.S. Northeast — and their near-term implications — it’s worth putting them in the context of what’s transpired in the past few months. As we discussed last month in The Waiting Game, gas prices were feeling the pressure of oversupply conditions well before COVID-19 and the oil price collapse. Appalachian producers last year already had trimmed their rig counts and capital spending budgets in response to sub-$2.00/MMBtu gas prices in the region and overall weakness in Henry Hub benchmark futures prices. Then came the mild winter that suppressed storage withdrawals and left a hefty surplus in storage compared with previous years. That was followed by the pandemic-induced stay-at-home directives and lockdowns, which disrupted gas consumption. And, by May, there was also the disruption of another major demand “sink” for domestic production, including from the Marcellus/Utica — U.S. LNG exports — as an existing global surplus of LNG combined with lockdowns abroad to slash global demand, wiping out margins for cargo liftings from U.S. ports, and leading to widespread cargo cancellations. On top of all that, Appalachian producers have weathered a number of major pipeline outages that cut takeaway capacity for flows out of the region, particularly southbound flows serving Gulf Coast demand, in some cases for prolonged periods of time. Enbridge’s Texas Eastern Transmission (TETCO), for one, has been operating at reduced pressure following a force majeure in early May 2020 that triggered federally mandated integrity testing on the system. Outages in 2019 already had limited flows on TETCO to below 1.5 Bcf/d (from an average between 1.5 and 2 Bcf/d through 2018), and this latest incident set flows back further, to less than 1.3 Bcf/d in recent months. Additionally, earlier this year, a force majeure on the Columbia Gas Transmission (CGT) system cut outflows by ~500 MMcf/d for more than a month, from mid-January to early March. Most recently, a July 7 force majeure on Columbia Gas’s Mountaineer Xpress Pipeline (MXP) briefly reduced southbound flows out of Appalachia.
DEP fines CNX $310,000 for pipeline spills in Washington County - The Pennsylvania Department of Environmental Protection has fined the natural gas driller CNX $310,000 for spills and landslides associated with a pipeline project in Washington County. The fines are for violations along pipelines it built to carry natural gas and wastewater the company used in its fracking operations, the DEP said. The spills happened between August 2016 and August 2018 in East Finley Township, according to a DEP consent order signed by the company, which names CNX Gas Company LLC, and CNX Midstream Partners, LP, the company’s pipeline subsidiary. During construction, the company spilled 43 gallons of drilling mud into a stream, according to the consent order. The company also had two leaks, one of 630 gallons and another of 2,100 gallons of drilling brine — waste water that contains high amounts of naturally occurring salts, as well as radioactive materials found in gas-rich shale beds. The DEP found the spill killed vegetation and resulted in contamination of soil, a groundwater seep, and contamination of a nearby stream. The company removed contaminated soil and set up monitoring wells to detect pollutants of nearby groundwater. The company submitted soil samples showing levels of contaminants within thresholds the DEP considers safe. In addition to spills, there were landslides along a hill where the pipeline was built, including one that temporarily destabilized the soil holding up a nearby gas well pad. The consent agreement ordered the company to submit to an independent audit of its wastewater management practices, and to resubmit to the state its pollution contingency plans.
Chester County commissioners appoint new law firm for pipeline suit —The Chester County commissioners on Thursday approved the appointment of a new law firm to handle its case before the state Public Utilities Commission in which it is seeking to halt construction and operations of the two Mariner East gas transmission pipelines through the heart of the county. At the same time, the commissioners also formally approved the hiring of a new county solicitor who will work alongside the new outside counsel in preparation for an upcoming two-week-long hearing before the PUC later this year. The commissioners had previously confirmed that they intended to hire Deputy Attorney General Nicole McCauley Forzato to replace retired Solicitor Thomas Whiteman to run the county’s legal office, but Thursday’s unanimous vote during a virtual commissioners’ meeting made her appointment official. She begins her role as the first female county Solicitor on Tuesday.In appointing the Bucks County firm of Curtin & Heefner to handle its case before the PUC, the county will now draw on the resources of attorney Mark Freed, who has been a part of the litigation surrounding Sunoco’s pipeline operations in the region for years, and one who also happens to be a resident of the county and an elected supervisor in Tredyffrin. Freed is the attorney who represents Uwchlan before the PUC in the action seeking to force Sunoco to develop and implement safety and community notification policies for emergencies along the Mariner East pipelines, and had previously represented state Sen. Andy Dinniman, D-19th, of West Whiteland, in his battles against the company over the pipeline. A former staff attorney for the state Department of Environmental Protection (DEP) and member of the state Attorney General’s environmental crimes division in the 1990s who specializes in environmental law litigation, Freed will take over representation of the county before the PUC from attorney Margaret Morris of the Philadelphia law firm of Reger, Rizzo & Darnall.
Hearing officer OKs Delaware River LNG dock – An adjudicatory hearing officer has recommended that Delaware River dock to serve a liquefied natural gas export terminal in New Jersey should remain as approved, Kallanish Energy reports. The report was filed last week by hearing officer John D. Kelly on the project by developer Delaware River Partners, a subsidiary of New Fortress Energy LLC. The parties involved have 20 days to object to Kelly’s findings, before the report and any objections go to the Delaware River Basin Commission, which can accept or reject Kelly’s findings. Critics had argued that the commission in June 2019 did not allow enough time for public comment in approving the project that would allow two tankers to dock at Gibbstown on the Delaware River in New Jersey’s Gloucester County and the project should be reconsidered. Kelly said the Delaware Riverkeeper Network made its arguments against the approval, but “the effort and evidence were insufficient to carry the burden.” The evidence “has not demonstrated any substantial impairment or conflict with the plan for Dock 2 Project,” he said in the conclusion of his 102-page report. “Accordingly, it is recommended that the Dock 2 Docket should remain as previously approved by the commission,” Kelly said. The LNG that would be loaded onto the tankers would come from the Marcellus Shale in northeast Pennsylvania under the New Fortress plan It would be moved by truck and rail about 200 miles to the New Jersey site. The company has gotten a special federal rail permit to be allowed to move LNG by rail in specially designed rail cars. Construction started last fall at a New Fortress liquefaction plant in Wyalusing, Pennsylvania. It is expected to be operational in late 2020 or early 2021. New Fortress has said it has signed a 15-year contract with unnamed producers to acquire all the needed feed gas in Bradford County.The company has plans for a second facility in Pennsylvania. It would be operational in first quarter 2021. Each plant would produce 3.6 million gallons of LNG per day or 2.15 million tons of LNG per year.
Senators withdraw request to join fracking lawsuit - State Sen. Lisa Baker and two other legislators withdrew their request to intervene in a federal lawsuit that challenges the Delaware River Basin Commission’s authority to regulate hydraulic fracturing within the watershed. The decision in the case filed by Wayne Land and Mineral Group comes as the commission asks a judge to rule in its favor on a technical issue relating to the company’s equipment used in hydraulic fracturing. Hydraulic fracturing, or fracking, is a process that uses high pressure to inject a large volume of water, chemicals and sand into a Marcellus Shale formation, causing it to crack and release natural gas. It’s controversial because of concerns over the impact is has on the environment. Wayne Land wants to drill well pads on land it owns within the Delaware River Basin, but it can’t because the commission issued a 2010 moratorium that banned fracking until it could develop regulations to cover the practice. The commission still has not done so. The company’s 2016 lawsuit asks a judge to rule that the commission overstepped its authority.The resolution of the case will have significant ramifications for Pennsylvania. It’s estimated the basin holds more than $40 billion in natural gas reserves on land that is located within the state. Baker, R-20, Lehman Twp., Sen. Gene Yaw, R-23, Williamsport, and Senate President Pro Tempore Joseph Scarnati, R-25, Wellsboro, filed a motion in September 2018, in support of Wayne Land’s position. In court papers, the senators’ attorney, Matthew Haverstick, argued the moratorium is a matter that should be decided by state legislators, not the Delaware River Basin Commission. The senators, as trustees of the state’s natural resources, should be allowed to intervene because they have an obligation to protect the best interests of citizens, he said.
West Milford NJ wants voice in project to bring more natural gas to NY— Township officials are seeking to formally intervene in Tennessee Gas Pipeline Co.’s plan to place a natural gas compressor near the Monksville Reservoir to increase capacity for Con Edison and its New York state customers. In a filing to the Federal Energy Regulatory Commission this week, township legal representatives requested stakeholder status for the Kinder Morgan subsidiary’s proposed 300 Line Upgrade Project in New Jersey and Pennsylvania. The request cites the project’s potential environmental implications and impacts. “The township has immediate interests in regard to the project,” reads the request. “Its participation in these proceedings is necessary to serve the public interest.” The proposed compressor station off Burnt Meadow Road has ignited a debate among residents. Some back the installation of the electric-motor-driven compressor for its promised $500,000 in annual tax revenue and reuse of a spent quarry eyed in 2019 as the home of an expanded organic recycling center. Others have expressed concerns about noise and emissions from a facility that would sit just north of a reservoir network that serves millions in North Jersey. Opinion: It’s time for New Jersey to hold climate polluters accountable | Opinion The 115,000 dekatherms per day enhanced its 65-year-old 300 Line roughly a decade ago with new looping pipeline segments and compressor stations that went online in 2011. The environmental impacts of the installation led to some local backlash. Tennessee Gas Pipeline Co. applied June 30 to the Federal Energy Regulatory Commission for construction authorization at the former Tilcon quarry, records show. Mayor Michele Dale told nearby residents weeks earlier that township officials did not solicit or envision the project, raising likely concerns over gas emissions, noise and visibility.
Gas pipeline fuels debate among NH gubernatorial candidates - – Democratic gubernatorial candidate Andru Volinsky called the proposed Granite Bridge pipeline a ”$400 million step in the wrong direction” during a press conference in front of the Town Hall Friday. Volinsky said Liberty Utilities’ proposed 16-inch liquefied natural gas pipeline for the Route 101 corridor between Exeter and Manchester will exacerbate climate change while other high-profile projects, like the Dakota Access pipeline, were being halted around the country. “A key part of why I’m running for governor is to combat climate change, and part of that effort is to be opposed to fracked gas pipelines projects, like the Granite Bridge pipeline,” said Volinsky, a member of the state Executive Council. “Last municipal election, Exeter went on record as opposed to the pipeline. Fracking is especially dangerous for the environment, ratepayers would have to pay for that project for 20 or 30 years, and to what purpose? To line the pockets of Liberty Utilities and Granite Bridge shareholders.” The Granite Bridge application is stalled at the state Public Utilities Commission after being filed in December 2017. The project includes a 150- to 170-foot high tank capable of storing 2 billion cubic feet of LNG in an abandoned quarry in West Epping. Liberty maintains Granite Bridge would provide lower cost LNG that is cleaner than traditional home heating oil. It claims the pipeline will be a bridge to a clean-energy future because New Hampshire lacks the infrastructure to meet its future energy needs.
Mountain Valley to receive new permit to cross Blue Ridge Parkway - The Mountain Valley Pipeline will be granted a new permit to cross the Blue Ridge Parkway, the first in a string of federal approvals needed before the natural gas pipeline can be completed. In a letter filed Tuesday with the Federal Energy Regulatory Commission, the National Park Service said it intended to issue a right of way permit for the pipeline to pass under the parkway atop Bent Mountain in Roanoke County. Construction of that segment of the 303-mile pipeline was completed in January 2019, but Mountain Valley needs the permit to maintain and operate the transmission line. Parkway Superintendent J.D. Lee wrote in the letter that the approval was “not a wholly new undertaking,” as the initial permit was suspended for technical reasons at the request of Mountain Valley. The joint venture of five energy companies building the pipeline still lacks three sets of key permits — set aside after lawsuits questioned the wisdom of running such a large pipeline through the mountainous terrain of Southwest Virginia — that must be re-granted if the project is to be finished by early next year. Mountain Valley has said it expects the U.S. Fish and Wildlife Service to decide by the end of the month whether the pipeline will jeopardize endangered species along its path from West Virginia to Pittsylvania County. In 2017, several months before construction began, the agency found that burying the 42-inch diameter pipeline along steep slopes and under steams and rivers would not excessively harm protected fish, bats and plants. But after new concerns about the Roanoke logperch were raised last year, a coalition of environmental groups brought a legal challenge of the Fish and Wildlife Service’s decision. FERC, the lead agency overseeing construction of the $5.7 billion project, then ordered almost all work to halt while the endangered species question was reconsidered. Meanwhile, the lawsuit was placed on hold. Still pending before the 4th U.S. Circuit Court of Appeals, it asserts that unexpected levels of land movement and sedimentation caused by construction poses an undue risk to two fish, the Roanoke logperch and the candy darter, and two bats, the Indiana bat and the northern long-eared bat.
Lovelace: Pipeline cancellation puts spotlight on Northam and Herring inaction --The years-long effort for environmental justice and resulting cancellation of the Atlantic Coast Pipeline (ACP) not only put on full display the systemic injustices that permeate our regulatory system, but it also put a spotlight on the apathy of Gov. Northam and Attorney General Herring in the face of such glaring injustices. This apathy continues as Northam and Herring stand by while those in the path of the very similar Mountain Valley Pipeline (MVP) continue to suffer. Like the ACP, the MVP is missing many required permits, including the same NWP12 permit that had a part in the ACP’s demise. And like the ACP, the original Advisory Council on Environmental Justice recommended that state permits for the MVP be revoked because of environmental justice concerns. In a display of not only apathy toward environmental justice but active support for the harms perpetuated by these pipelines, Northam subsequently dismantled the Advisory Council on Environmental Justice, creating a new Council instead that was underfunded and has exclusionary requirements, including application questions like, “In the last five years, have you been publicly identified, in person or by organizational membership, with a particularly controversial national, state or local issue?” Unlike the ACP, the MVP has had continued construction in multiple Virginia counties despite lacking various permits needed for the pipeline to be legally completed. This has resulted in consistent violations during pipeline work and a blatant disregard for water quality by MVP, LLC. Many of the water bodies violated by MVP are relied on as drinking water sources, yet MVP has been allowed to commit hundreds of violations with little more than slaps on the wrist. Attorney General Herring, whose office gave counsel on the state water permit which was violated time and again by the MVP, has always had the power to use legal means to remedy this and stop work on the pipeline. Instead, he decided on a civil suit that appears to be no more than a public relations move in light of Herring’s potential run for governor, Despite this long track record of harm to Virginia communities by MVP, Northam’s PAC has still accepted donations from MVP and its affiliates, profiting from harm to Virginians.
The Atlantic Coast Pipeline was canceled. What happens to all the land acquired for it? - The bitterly fought Atlantic Coast Pipeline has been canceled, but the two major utilities behind it, Virginia-based Dominion Energy and North Carolina-based Duke Energy, still have not decided what to do about the land they gained control over for the project, in some cases through eminent domain. “There are a number of important issues that will need to be addressed in the coming months as we wind down the project,” said Dominion spokesperson Aaron Ruby in an email. “As part of that process, we will be evaluating the best path forward for resolving existing easement agreements with ACP landowners.” The uncertainty about the land’s future was also evident in a letter sent to all landowners along the proposed pipeline route this week and shared with the Mercury. In it, ACP representative Dan O’Brien states that the Atlantic Coast Pipeline “will be evaluating the best path forward to work with landowners having existing easement agreements.” “Landowners will keep any compensation they have received as consideration for these easement agreements,” the letter continues. Figuring out what to do with the lands placed under permanent easement for the 604-mile pipeline that was set to cross West Virginia, Virginia and North Carolina, with just over half in Virginia, may be one of the thorniest problems Dominion and Duke will face as they unwind the $8 billion project. “It’s not incorrect to say there’s just a huge mess on ACP’s hands,” said Joshua Baker, a partner with Norfolk firm Waldo & Lyle, which focuses on eminent domain cases and has represented numerous landowners affected by the Atlantic Coast Pipeline Since 1947, when Congress amended the Natural Gas Act to expand developers’ rights, pipeline companies have had the power of eminent domain: the ability to take private property for use or ownership, regardless of whether its owner wishes to sell, in return for “just compensation.” Atlantic Coast Pipeline drew on that power in acquiring permanent easements, also known as rights of way, for the pipeline over the past six years. Under these agreements the company left the land in private ownership but secured the right to build and operate the pipeline on it for at least the life of the project — even if the underlying property was sold. Not all those agreements were alike, however. Varying levels of opposition along the route ultimately produced a patchwork of rights for Atlantic Coast, from the wide latitude granted under a generic agreement for an interstate pipeline to more restrictive terms that tied the easement specifically to the Atlantic Coast project or terminated the easement if the project wasn’t constructed within a certain period of time.
No longer in Atlantic Coast Pipeline’s path, landowners consider next steps - With the pipeline threat removed, questions abound. Landowners want to scrub Atlantic Coastline easements from their property records. Others wonder if they can be reimbursed for attorney and court fees they shelled out. So, what’s next? Attorneys steeped in pipeline cases aren’t being coy when they answer: “It depends.” “That might be a frustrating lawyer-type answer, but that’s where it is,” said Isak Howell, a Roanoke-based lawyer with Appalachian Mountain Advocates, with dozens of Atlantic Coast Pipeline cases in Virginia and West Virginia. “This is a totally Byzantine system.” Howell and others are scrambling to figure out what abandonment of the project means for the hundreds of landowners along the entire route. About half of the 600-mile, West Virginia-to-North Carolina pipeline would have been buried in Virginia. Virginia landowners — and those in the other two states — fall into one of three broad categories. The first is those who eventually signed an easement agreement with Dominion, thus allowing the pipeline corridor on their property to be condemned. Second are families who didn’t sign an easement agreement, then lost their legal challenge after going to federal court to fight Dominion’s attempts at using eminent domain to condemn the corridor. A third group — which includes the Averitts — is landowners whose court challenges to eminent domain weren’t yet ruled on by juries before Dominion and Duke Energy quashed the $8 billion pipeline on July 5. Those court dates were still months away. An online records check revealed upward of 50 Atlantic Coast Pipeline cases still listed in the federal Virginia Eastern and Western District Courts this month. Howell called that figure a “fair gauge of landowners whose jury trial over a court-enforced easement had yet to occur.”
Virginia's Energy Kingpin Could Finally Face A Reckoning Over Race | HuffPost - Dominion CEO Thomas Farrell’s history of railroading Black communities and glorifying the Confederacy is under new scrutiny after the demise of his controversial pipeline. Under Farrell, Dominion has become a national symbol of how political corruption and monopoly power can undercut efforts to reduce the country’s dependence on fossil fuels. That worked for Farrell so long as Dominion’s cash could buy it the acquiescence of state legislatures. But now Virginia and many other states are looking to transition to 100% carbon-free electricity, and Dominion’s shareholders are in revolt. In May, nearly 47% of those shareholders voted in favor of a proposal to require an independent board chair, which would have given Farrell ― who currently serves as both chairman and chief executive ― a boss. In early July, Dominion’s stock price plunged more than 11% after the company and its partner, North Carolina-based Duke Energy, announced the Atlantic Coast Pipeline’s cancellation. The stock price has yet to fully recover, even as the market rebounds. Virginia progressives, who cheered the toppling of four Confederate monuments in Richmond in recent weeks, hope Farrell could be the next storied edifice to fall.“Clearly there’s a need for new leadership and new direction,” said state Del. Sam Rasoul, a Democratic legislator from Roanoke. “Dominion has consistently operated counter to the interests of Virginians and … when you have a CEO who championed a film that essentially glorifies the Confederacy, with all that is going on, it’s clear that there’s a new mindset needed.”
White House announces intent to nominate SCC Chair Mark Christie to FERC - Virginia State Corporation Commission Chair Mark Christie will be nominated by President Donald Trump’s administration to sit on the Federal Energy Regulatory Commission, the White House announced Monday. FERC, which can include up to five commissioners, is the federal regulatory agency that oversees interstate energy sales and transmission projects, including pipelines, natural gas storage and liquefied natural gas terminals. The body currently has three members after the expiration of Commissioner Bernard McNamee’s term on June 30. If confirmed by the U.S. Senate, Christie and another nominee, energy lawyer and strategist Allison Clements of Ohio, would bring FERC’s membership to five. Albert Pollard, a former Virginia state delegate and clean energy advocate who was involved in the crafting of the Virginia’s landmark Clean Economy Act, called Christie “a ‘little c conservative’ who … would bring a good state perspective to FERC.”
U.S. natgas drops over 4% as output rises, cooling demand eases - (Reuters) - U.S. natural gas futures dropped over 4% on Monday as output slowly rises and cooling demand eases, keeping the amount of gas utilities inject into storage on track to reach a record high this year. Even though meteorologists projected temperatures will remain warmer-than-normal through at least mid-August, they also predicted the hottest days of summer were past. The weather over much of the United States has been hotter-than-normal every day since late June. "Natural gas prices are in trouble as the heatwave could break," Phil Flynn, senior analyst at Price Futures Group in Chicago, said, advising traders to "buy puts." Front-month gas futures fell 7.4 cents, or 4.1%, to settle at $1.734 per million British thermal units, which is only the lowest close since July 22 after the contract gained over 5% last week. Refinitiv said production in the Lower 48 U.S. states averaged 88.5 billion cubic feet per day (bcfd) in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November. Refinitiv projected U.S. demand, including exports, will slide from 91.5 bcfd this week to 90.8 bcfd next week. Pipeline gas flowing to U.S. LNG export plants averaged 3.3 bcfd (34% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record 8.7 bcfd in February. U.S. pipeline exports, meanwhile, rose as consumers in neighboring countries cranked up their air conditioners.
U.S. natgas jumps 4% as pipeline exports rise despite less hot weather forecasts - (Reuters) - U.S. natural gas futures jumped almost 4% on Tuesday as pipeline exports increase despite forecasts for less hot weather and lower air conditioning demand over the next two weeks than previously expected. On its second to last day as the front-month, gas futures for August delivery rose 6.6 cents, or 3.8%, to settle at $1.800 per million British thermal units (mmBtu). That erased much of Monday's 4% loss. September futures, which will soon be the front-month, were up about 7 cents to $1.86 per mmBtu. Even though the hottest days of summer are likely past, meteorologists project temperatures will remain above-normal in the Lower 48 U.S. states through at least mid August. The weather has already been hotter-than-normal every day since late June. Refinitiv said U.S. production averaged 88.5 billion cubic feet per day (bcfd) in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November. Refinitiv projected U.S. demand, including exports, will slide from 91.0 bcfd this week to 89.9 bcfd next week. That is lower than Refinitiv's outlook on Monday. Pipeline gas flowing to U.S. LNG export plants averaged 3.3 bcfd (34% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record 8.7 bcfd in February. Utilization was about 90% in 2019. U.S. pipeline exports, meanwhile, rose as consumers in neighboring countries cranked up their air conditioners. Refinitiv said pipeline exports to Canada averaged 2.4 bcfd so far in July, up from 2.3 bcfd in June, but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.62 bcfd so far this month, up from 5.44 bcfd in June and on track to top the record 5.55 bcfd in March.
UPDATE 1-U.S. natgas hits 3-week high on forecasts for warmer weather - (Reuters) - U.S. natural gas futures rose to their highest levels in three weeks on Wednesday as forecasts for above-normal temperatures were expected to boost cooling demand, while concerns that a storm nearing the Gulf of Mexico could affect production also provided support. On its last day as the front-month contract, gas futures for August delivery rose 5.4 cents, or 3%, to settle at $1.854 per million British thermal units. Prices earlier touched their highest since July 7 at $1.893. September futures, which will soon be the front month, settled up 6.6 cents at $1.930 per mmBtu. The warmer weather seen on the East Coast of the United States is supporting prices, Raymond James analyst Muhammed Ghulam said, noting there are some concerns about the impact on offshore production due to Atlantic storms. Although weather forecasts turned less hot from the previous day, Refinitiv data showed temperatures will remain above normal in the Lower 48 U.S. states. A system in the Atlantic, near Dominica, has a 90% of chance of becoming a cyclone in the next 48 hours, the U.S. National Hurricane Center said it is latest advisory. "There is a little bit of concern that the storm coming toward the Gulf (of Mexico) could shut down some production," said Phil Flynn, senior analyst at Price Futures Group in Chicago. Meanwhile, weekly supply was likely to rise to 96.0 billion cubic feet per day next week, up from current week's 95.8 bcfd. Refinitiv projected U.S. demand, including exports, will slide from 91.4 bcfd this week to 89.1 bcfd next week. The Federal Reserve on Wednesday repeated a pledge to use its "full range of tools" to support the U.S. economy and keep interest rates near zero for as long as it takes to recover from the fallout from the coronavirus outbreak.
US working natural gas volumes in underground storage rise by 26 Bcf: EIA - Platts — Storage inventories increased by 26 Bcf to 3.241 Tcf for the week ended July 24, the US Energy Information Administration reported July 30. US natural gas in underground storage increased by the lowest net volume of the injection season last week under record-setting gas-fired generation demand, but a lowered demand outlook for August prompted the NYMEX Henry Hub balance-of-summer contract strip to retreat. The injection was more than an S&P Global Platts survey of analysts calling for a 23 Bcf build. The injection measured less than the 56 Bcf build reported during the same week last year as well as the five-year average gain of 33, according to EIA data. It was the smallest net injection of the year. Storage volumes now stand at 626 Bcf, or 24%, more than the year-ago level of 2.615 Tcf, and 429 Bcf, or 15.3%, more than the five-year average of 2.812 Tcf. The NYMEX Henry Hub balance-of-summer contract strip, now including only the months of September and October, sold off sharply following a slightly larger-than-anticipated storage inventory increase last week, with September trading down 6 cents, to $1.87, and October down 5 cents, to $2.03. With September now advancing to the prompt-month slot, it is the last contract in the entire strip trading below $2. October kicks off a steep section of the curve that hits just shy of $3 by the beginning of next year, with January 2021 hitting resistance just below at $2.99 the morning of July 30. Platts Analytics supply and demand model currently forecasts a 26 Bcf injection for the week ending July 31, which would be 7 Bcf less than the five-year average, causing another reduction to the storage overhang. However, overall US demand is forecast to slip during August, prompting larger injections. After several consecutive weeks of tightening, US supply-demand balances are trending looser for the week ending July 31 as temperature-driven power burn demand has begun to sputter and the LNG sector faces continuing weak demand. Total supplies have held mostly flat, with the week's 0.1 Bcf/d net decline composed of a 0.3 Bcf/d drop in storm-related offshore production declines partly offset by nominal increases in LNG sendout and net Canadian imports. Downstream, total demand has fallen by 1.4 Bcf/d on the week, with power burn demand dipping 0.7 Bcf/d on the week and LNG export terminals taking 0.5 Bcf/d less volume than a week earlier.
U.S. natgas falls over 5% on milder weather outlook -(Reuters) - U.S. natural gas futures fell over 5% on Thursday on forecasts power generators will burn less gas next week as cooling demand drops with the coming of milder weather despite a small weekly storage build that was in line with expectations. The U.S. Energy Information Administration said utilities injected just 26 billion cubic feet (bcf) of gas into storage in the week ended July 24, when consumers were still cranking up their air conditioners to escape a heat wave that has blanketed much of the country since late June. That matches the 26-bcf build analysts forecast in a Reuters poll and compares with an increase of 56 bcf during the same week last year and a five-year (2015-19) average build of 33 bcf. But with the weather expected to turn cooler in coming weeks, analysts said utilities would start injecting more gas into storage than usual and inventories will reach a record high over 4.1 tcf by the end of the injection season in October. On its first day as the front-month, gas futures for the most active September contract fell 10.1 cents, or 5.2%, to settle at $1.829 per million British thermal units. Even though gas futures were only up about 1% so far this week, the contract has been volatile in intraday trade after falling over 5% on Monday and rising over 5% on Wednesday. The premium of the October contract over September NGU20-V20, meanwhile, rose to its highest on record as the market expects energy demand to rise as the economy rebounds later this year when governments lift coronavirus lockdowns. With the weather expected to moderate, Refinitiv projected U.S. demand, including exports, will drop from 92.3 billion cubic feet per day (bcfd) this week to 89.3 bcfd next week.
U.S. natgas futures slip as weather moderates, cooling demand eases – (Reuters) - U.S. natural gas futures slipped almost 2% on Friday on forecasts the weather will moderate and air-conditioning demand decline now that the hottest days of summer are past. Front-month gas futures fell 3.0 cents, or 1.6%, to settle at $1.799 per million British thermal units. For the week, the contract was down less than 1% after rising over 5% last week, and for the month, the contract was up almost 3% after falling more than 10% in the prior two months. In the Atlantic, Hurricane Isaias is expected to march up the U.S. East Coast from Florida to Maine over the next five days after battering the Bahamas on Friday. Traders noted storms in nonproduction areas tend to cut demand. With the weather expected to moderate, data provider Refinitiv projected U.S. demand, including exports, will drop from 91.9 billion cubic feet per day (bcfd) this week to 89.3 bcfd next week before rising to 92.1 bcfd in two weeks with liquefied natural gas (LNG) exports expected to increase. Pipeline gas flowing to U.S. LNG export plants averaged 3.3 bcfd (34% utilization) so far in July after buyers canceled dozens of cargoes, down from a 20-month low of 4.1 bcfd in June and a record 8.7 bcfd in February. Utilization was about 90% in 2019. Analysts expect LNG exports to rise in August since buyers have so far canceled fewer cargoes that month. Refinitiv said pipeline exports to Canada averaged 2.4 bcfd so far in July, up from 2.3 bcfd in June, but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.65 bcfd so far this month, up from 5.44 bcfd in June and on track to top the record 5.55 bcfd in March.
Florida Could See Natural Gas Prices Double Over the Next 10 Years, Report Shows -With 70 percent of Florida’s electricity generation coming from natural gas, which is around twice the national average, the U.S. Energy Information Administration (USEIA) insists the Sunshine State could see natural gas prices doubling over the next ten years–which could result in an extra $360 a year on every customer’s electric bill.Vote Solar released a report detailing Florida’s reliance on natural gas, stressing that the state loses around $5 billion annually to pay to import it.“Florida’s dependence on natural gas to produce electricity is one of the highest in the country, even though there are now more affordable alternatives like solar energy,” saidKatie Chiles Ottenweller, the southeast director of Vote Solar. “The state’s lack of energy diversification puts us in a precarious position, especially as fuel prices increase.”The fuel markets Florida relies on to power its electric grid can be volatile, creating risk for residents when prices go up or supplies are restricted. The federal government has forecast that natural gas prices could double within the next decade.The report also notes that for every $4 Floridians pay their electric utilities, at least one of those dollars immediately departs the state to pay for out-of-state gas.“If Florida invested in homegrown solar energy instead, those dollars could remain in the state and grow its local economy,” Vote Solar noted.
US Gulf region still struggling 10 years after BP oil spill - Ten years after the catastrophic BP oil spill in the Gulf of Mexico, Dean Blanchard of Grand Isle, Louisiana, is still haunted by what he witnessed. “It was about three weeks after the spill and I was standing on the beach,” he remembers. “I saw a pelican flying crooked with blood coming out of him. I yelled for my buddies to take a look, and then this pelican crashed and died right in front of us. We walked over to it and it was covered in that thick brown oil.” A few days later, he was on his dock and saw a dolphin with her calf – both also covered in oil. “The baby was dead,” he says, “and that momma was just looking up at us with these eyes that were like, ‘Please help.’ Dolphins are smart animals, and I still can’t forget how scared those eyes looked.” Blanchard operates one of America’s biggest shrimp distributors, Dean Blanchard Seafood, which has yet to fully recover from the aftereffects of one of the world’s worst oil disasters. By the time the well was capped, more than 800 million liters of crude oil – some 5 million barrels – had leaked into the Gulf of Mexico. The environmental catastrophe devastated one of the world’s most productive aquatic ecosystems five years after Hurricane Katrina had decimated the region. Many of Louisiana’s coastal towns had been fighting for survival for years before oil began choking the region’s estuaries. “We had lost 67% of our population after the storm,” said fishing charter captain Ryan Lambert of Buras, Louisiana. “We used to have orange groves employing people, but Katrina knocked those out.” In the years after the hurricane, Lambert said, what was left of the community centered on fishermen like him who decided to stay. The oil spill sunk what was left of the fishing industry. “Once oil hit the beaches and the news showed all those animals covered in crude, my livelihood was done,” Lambert explained. “Nobody wanted to go on fishing trips.” Some argue decisions made after the spill inflicted more harm, including the use of a chemical, Corexit, to disperse oil and keep it off the surface. Researchers say the chemical has increased toxicity in Gulf waters. Many locals blame it for a range of health problems suffered by fishermen and others along the Gulf Coast. “Eleven people died when that rig exploded, but the BP oil spill has a lot more victims than that.”
Natural gas storage facility explodes in Mont Belvieu – - A natural gas storage facility exploded Wednesday in Mont Belvieu after a contractor struck an underground pipeline, officials said. No injuries were reported. All facility workers had been accounted for, said Mont Belvieu city spokesman Brian Ligon. The explosion sparked a large fire around 5 p.m. in the Lone Star NGL facility at 506 W. Winfree St. Firefighters were still working to suppress the flames as of 8 p.m. Wednesday night. The fire had dwindled significantly, and officials expected the fire to burn itself out overnight, according to a Facebook post from the city. “MBFD and industrial units are continuing with suppression operations while the line bleeds out,” the city said. “We are very thankful that no plant employees or responders were injured during this incident or during the response.”West Winfree Street and State Highway 146 remained closed late Wednesday. Lone Star NGL is a subsidiary of Dallas-based Energy Transfer LP, one of the largest natural gas infrastructure companies in the U.S. Company spokeswoman Lisa Coleman told the Houston Chronicle that a contractor struck an underground pipeline at 4:45 p.m. In addition to Mont Belvieu firefighters, the company’s own fire team responded to the incident. Coleman said there were no evacuations.Energy Transfer and the Baytown Fire Department late Wednesday began conducting air monitoring. Results did not show any levels of concern, Coleman said.“There will be an investigation into the cause of this incident,” Coleman said. “Updates will be provided as information becomes available.” A 2016 Houston Chronicle investigation found there is a major chemical incident every six weeks in the Houston area. The Lone Star facility stores and processes natural gas liquids, which include products like propane, butane and ethane. At the facility, natural gas liquids are separated into individual components through a process called fractionation. Transmission pipelines from the Permian Basin, Barnett Shale and East Texas make up the company’s Lone Star Express network, 535 miles of pipeline that ships natural gas liquids from shale plays to the Mont Belvieu storage and fractionation facility.
Texas Regulators Ask Washington To Act Against Saudi Oil Dumping In U.S. - The federal government should take steps against Saudi Arabia and Russia’s dumping of oil on the American market during the Covid-19 crisis, the chairman of the Texas Railroad Commission has said, after a cross-state government agency passed his resolution that called on Washington to investigate the allegations for oil dumping.“Flooding the market during ongoing negotiations with President Trump and the international community is disingenuous,” Wayne Christian said, as quoted by World Oil. “More than 100,000 oil and natural gas jobs in the United States have been lost according to Rystad Energy Group. Our federal government must push back against international efforts that harm American energy dominance.”In March and April, Saudi Arabia sent much higher than usual amounts of oil to the United States, with the March average at 516,000 bpd—a 12-month high—and some 14 million bpd shipped to the U.S. during the first week of April alone. Later in April, the Wall Street Journal reported the amount of Saudi crude en route to the United States was seven times the normal intake of Saudi oil by the U.S. in 2019.The surge in Saudi oil exports—not just to the U.S.—coincided with a colossal demand loss around the world due to the coronavirus pandemic, and some analysts see global oil demand in April crashing by 30 percent, or by 30 million bpd, compared to the world’s typical levels of consumption.These developments led President Donald Trump to threaten a ban on Saudi oil imports, which would have forced the Kingdom to reroute as much as 40 million barrels of crude."After the COVID-19 pandemic crippled the U.S. oil and gas industry, Saudi Arabia shipped 1.3 million barrels a day to our nation, roughly four times February's daily volume and the highest figure since 2014." Wayne Christian said. He did not comment on the inclusion of Russia in the list of oil dumpers.Russia exported record amount of fuel oil to the United States during the first half of the year, according to a Reuters report, as the U.S. sought to replace Venezuelan oil.
Trinity Operating to drill 9 wells in Eagle Ford Shale - Houston-based Trinity Operating LLC filed to drill nine new Eagle Ford Shale wells over the weekend, helping to push the South Texas permit count to a three-month high.Trinity applied for the permits with Railroad Commission of Texas on Sunday. The independent oil and gas operator informed the Commission that it plans to drill nine wells on a lease in Zavala County. The 8,000-foot deep, horizontal wells will target the Eagle Ford Shale for both oil and gas, according to the permit applications.If approved, the permits will be the first for Trinity since the March oil price downturn shut down most drilling in the shale. Signs that oil fields in South Texas may be recovering were present in last week's new permit count, with 33 applications for new wells submitted overall.Though that number is still far below the pre-pandemic count, it's the highest it's been since early April. The shale play also added a rig last week, with 12 oil rigs now spread across the Eagle Ford's 27 counties, according to Baker Hughes Inc. There were 66 rigs in the shale this time last year.
Oil and gas production jobs in Texas could hit bottom this fall - The number of oil and gas production jobs in Texas could fall to a 15-year low in the coming months and may never fully recover as the industry consolidates and produces more crude with fewer workers. Battered by the coronavirus pandemic, drilling and oil-field services companies operating in Texas employed 162,350 workers in June, about half of the 297,100 workers at their peak of employment in December 2014, according to the Texas Alliance of Energy Producers, which represents some 2,600 independent oil and gas producers. Texas lost 46,100 jobs in production and oil-field services from February to June as the pandemic crushed demand for crude, and oil companies cut drilling budgets and halted production amid historically low oil prices. Karr Ingham, the alliance’s petroleum economist, said he expects oil and gas production employment in Texas to fall to around 150,000 in the next three months, which would be the lowest since 2005. If rising coronavirus cases prompt governments to impose another round of business and travel restrictions, oil and gas extraction employment could fall further, he said. The forecast came as Exxon Mobil, the largest U.S. oil and gas producer, is reportedly plannning to cut spending and jobs to protect its 8 percent shareholder dividend, despite CEO Darren Woods' statement this year that no layoffs were planned. Meanwhile, Chevron said it would lay off 7,000 workers and BP said it would cut 10,000 jobs. The oil and gas industry was contracting well before the coronavirus pandemic broke out in the U.S. and brought the economy to a screeching halt. Employment in oil and gas production, including oil-field services jobs, was recovering from the previous downturn of 2014-16, climbing back to 228,500 jobs in December 2018, the alliance said. But then, Wall Street investment soured on the sector after years of underperformance, and the number of operating rigs and employment fell throughout 2019.M
The Permian Basin's Oil Boom is Over. What Does That Mean for Texas? -- Hydraulic fracturing requires almost unfathomable amounts of pressure, as truckloads of water, sand, and chemicals are pumped into the ground to open tiny fractures and release previously inaccessible pockets of oil and gas. To control that pressure, workers mount hulking assemblages of steel valves and piping—the frac stacks—at the wellhead.. “When something fails at that kind of pressure, it’s like a bomb going off. It would cut you in half, probably before you even knew what happened.” With the Permian Basin in the middle of a historic oil boom and companies feverishly drilling more wells, assembling these frac stacks has been critical, high-demand work. During especially busy times, Thomas sometimes worked shifts that went well over 24 hours straight, racing to turn around orders. On Monday, March 9, Thomas started a new job. Four days later, Thomas was out of work, along with almost everyone else at the company. With the price of oil plummeting, it could no longer turn a profit in the Permian. His boss told him that the company hoped to restart operations by early summer and promised to give Thomas a call when that happened, but he isn’t holding his breath. The volatile boom-and-bust nature of oil and gas is no secret in Texas. The ecstatic peaks and despondent valleys are hard-wired into the state’s DNA. But the fallout this time was unprecedented, casting the outsize risks of Texas’ economic dependence on fossil fuels in painfully sharp relief. “Since humans started using oil, we have never seen anything like this,” a commodities analyst told the Wall Street Journal. “There is no guide we are following. This is uncharted.” In 2019, the oil and gas industry brought in more than $16 billion in state and local tax revenue and royalties, accounting for 10 percent of the workforce. Oil and gas extraction, along with mining and quarrying, generated $268 billion, which, at 15 percent, is the greatest share of the state’s annual GDP. But as the coronavirus pandemic continues, global markets remain in chaos, the scope of the Permian bust deepens, and renewable energy becomes a stronger force in the energy markets, the risk of tethering an economy to fossil fuels will likely only heighten in the years ahead.
President Donald Trump's Texas visit focuses on oil and gas workers - President Donald Trump sought to give a morale boost to the beleaguered Texas energy industry during a visit Wednesday to the Permian Basin, while also rallying oil and gas workers against Democrats ahead of the November election. "We are telling the Washington politicians trying to abolish American energy: Don't mess with Texas," Trump said during an afternoon speech at Double Eagle Energy in Midland, after an oil rig tour and fundraiser in nearby Odessa. Trump's comments doubled as part campaign speech, part policy announcement, as he repeatedly assailed Democrats' energy proposals and predicted their presumptive presidential nominee, Joe Biden, would not "do too well in Texas" as a result. Polls continue to show a close competition in the once-solidly red state. As for policy, Trump announced an extension for liquified natural gas exporters, following through with the Department of Energy’s proposal earlier this year to extend export contracts through the year 2050. Trump also announced permits “granting approval to vital pipeline and railway infrastructure” along the U.S.-Mexico border, including “two permits allowing the export of Texas crude to Mexico,” which he signed, after speaking, alongside Texas Republicans who joined him in Midland. For now, though, the industry continues to face severe headwinds from the coronavirus pandemic. Trump touted his administration's actions to help the reeling industry earlier this year, including a deal with Saudi Arabia and Russia to drastically cut production. "We were very close to losing a very powerful, great industry," Trump said, "and now we're back and we're just gonna keep expanding." Among the permits that Trump signed was one that granted the company NuStar Energy permission to operate and maintain existing pipelines underneath the Rio Grande that transport hydrocarbons and petroleum products through a 46-mile pipeline from Hidalgo County into northern Mexico. Another permit Trump signed allows for Kansas City Southern Railway Co. to build and operate a new international railway bridge in Laredo, the type of cross-border project on the international boundary that requires a presidential permit.
'We're back.' Trump shrugs off grim oil outlook in Texas -- Thursday, July 30, 2020 -- President Trump announced a pair of energy initiatives as he stood before a Texas oil rig yesterday, courting an oil and gas industry reeling from the coronavirus as polls suggest a close race this November in a reliably red state.Trump, who raised $7 million for his campaign and other Republicans before arriving at Midland's Double Eagle Energy Holdings III LLC's Rig No. 43 in West Texas, said to applause that he had signed orders extending certain exports of U.S. liquefied natural gas through 2050 and allowing exports of Texas crude to Mexico."We will defend your jobs, and we will defend the Lone Star State," Trump said, proclaiming of the industry, "We're back." But analysts suggested the moves were overstated and could have little effect on an industry still staggering from a plunge in demand caused by stay-at-home orders prompted by the coronavirus pandemic.Both of Trump's energy proposals are "immaterial," said Ed Hirs, who teaches energy economics at the University of Houston. Any benefit from extending the timeline of LNG permits isn't likely to happen for years, he said. And exports to Mexico were already made easier earlier this year when Trump signed the United States-Mexico-Canada Agreement on trade (Greenwire, Jan. 29)."It's very difficult for anybody to help the industry right now," Hirs said. "It's like pushing on a string."The Department of Energy in February signaled that it would push to extend the authorization of existing LNG export capabilities to 2050 for permit holders who wanted to do so. The department has noted that for most authorizations, it would amount to an additional 10 years compared with the 20-year operating approval they have already received (Greenwire, Feb. 21).Still, Trump's campaign views the president's embrace of the energy industry as a powerful weapon, and Trump delivered a campaign-style speech at the official, taxpayer-financed event, charging that Democrats — and other "zealots, radicals and extremists" — would put the crowd of oil and gas workers out of work. "No drilling, no fracking, no coal, no shale, no gas, no oil," he said of Democrats, who have embraced clean energy as a way of tackling climate change. "You've got to be careful. People don't take it seriously ... if they got in, you would have no more energy coming out of the great state of Texas, out of New Mexico, out of anywhere."
Trump downplays West Texas energy worries, attacks Democrats - — President Donald Trump took sweeping digs at “crazy left radical Democrats” on a trip Wednesday to the fracking fields of West Texas, launching unsubstantiated claims that a Democratic administration would destroy everything from the country's suburbs to the U.S. energy industry. Trump, speaking in front of stacked oil barrels, also played down the difficulties of the U.S. oil and gas industry, which is still struggling with the pandemic economic downturn and global oversupply that briefly drove oil prices into negative territory this spring. Prices have rebounded to around $40 a barrel, still below what some producers here need to break even. “We’re OK now. We’re back, we’re back,” Trump said to a crowd scattered with people wearing cowboy hats and face masks. He sought to contrast his support for oil and gas with Democratic rival Joe Biden's more climate-friendly energy plan, though Biden himself has stopped short of calling for a ban on hydraulic fracturing, or fracking, the production method that spurred U.S. oil and gas to a yearslong boom that started under President Barack Obama. "If they got in, you would have no more energy coming out of the great state of Texas,'' warned Trump, whose poll numbers for the 2020 election are lagging. He claimed the same, without evidence, for Ohio and Pennsylvania, two fracking states that also are battlegrounds in the presidential race. Speaking under a tent on a hot, windy day, Trump alluded to the opposing party in the most extreme terms, saying a Democratic White House win and the policies of the “Washington crazy left radical Democrats" would mean “the death of American prosperity. It would destroy our country.” “They want to uproot and demolish every American value. They want to wipe away every trace of religion from national life. They want to indoctrinate our children, defund our police, abolish the suburbs, incite riots and leave every city at the mercy of the radical left," Trump declared.
One In 10 Permian Basin Flares Are Spewing Methane Into The Air, Environmental Defense Fund Says The amount of methane that fossil fuel companies burn off in Texas as a waste product could power every home in the state, according to some estimates. The industry practice known as “flaring” has been decried as wasteful and polluting by public health groups, environmentalists and even some in the industry.Now, a survey of flares in West Texas suggests the problem could be even worse than previously thought.Companies flare when they can’t capture methane that spews into the air from oil and gas operations. The idea is that burning the gas is not as bad for health and climate as letting it go into the atmosphere.But it is still bad. Flaring contributes to global warming and releases toxins into the air. A recent study found that pregnant women who live near gas flares have a 50% higher chance of giving birth prematurely.This year, the Environmental Defense Fund started flying a helicopter around the oilfields of the Permian Basin to take a closer look at gas leaks and flaring. The helicopter was equipped with an infrared camera that detects methane, a tool that’s been used for years to expose oilfield emissions.In three surveys over the basin conducted in February, May and June, the camera consistently revealed that 11% of flares were not functioning properly and that 5% of flares were completely unlit. A video from the Environmental Defense Fund shows the difference between emissions from unlit and lit flares:
Chevron to Build 500MW of Renewables to Power Oil and Gas Facilities — and It's Considering More -Chevron announced it will build 500 megawatts of renewable energy plants to power some of its global facilities, in what amounts to a sizable clean energy expansion for an oil giant with comparatively few big investments in renewables to date. Chevron will work with Canada’s Algonquin Power & Utilities, a growing global renewables developer, to build the plants over the next four years at "priority operations sites" in the Permian Basin of Texas and New Mexico, as well as Argentina, Kazakhstan and Western Australia. The initial projects will be sited on Chevron-owned land, with construction to begin in 2021. U.S. oil producers lag their European rivals in making strategic investments into clean energy companies and technologies, but as voracious consumers of electricity — and often in remote areas — they have begun taking a greater interest in low-cost wind and solar power. Deals like Chevron’s are increasingly common in high-renewables states like Texas. In 2018 ExxonMobil agreed to buy 500 megawatts of wind and solar power from Ørsted in Texas, described at the time as the largest renewables deal ever signed by an oil company. Chevron already buys 65 megawatts of wind energy in West Texas, and last year it signed a 35-megawatt power-purchase agreement with SunPower to power its Lost Hills oil field in Kern County, California. The 500-megawatt deal with Algonquin appears to represent a new level of engagement with renewables for Chevron, the second largest U.S.-based oil producer. "What has changed is the cost of wind and solar power, which is becoming more competitive, and the technology, which has also progressed substantially," Chevron spokesperson Veronica Flores-Paniagua said in an email. "This makes opportunities to increase renewable power in support of our operations a feasible option for reliability, scale and cost-effectiveness." The projects will be jointly co-developed and owned by Chevron and Algonquin, with Chevron buying the electricity through power-purchase agreements.
Marathon to pay $82,000 in fines, invest in projects for emissions release— Marathon Petroleum Co. will pay nearly $82,000 in fines and invest hundreds of thousands more into safeguards for the community under a proposed consent order with state environmental regulators.The Michigan Department of Energy, Great Lakes and Energy outlined Monday the tentative $360,000 deal with the Detroit refinery that has the company installing an air filtration system at Mark Twain School for Scholars in southwest Detroit, boosting its data reporting and paying penalties over an emission release last fall as well as prior incidents. “The two projects Marathon will do had community input and will provide direct benefits to students at the Mark Twain School and the community as a whole," said state Air Quality Enforcement Supervisor Jenine Camilleri. "This is the result of the community around Marathon continuing to advocate for projects to improve air quality and public health."Marathon is pursuing the supplemental environmental project as part of the settlement based on input from the community and environmental groups, the company said in a Monday statement. The agreement is a result of an incident in February 2019 when a flare system malfunction prompted the release of sulfide and mercaptan vapor. The order also covers eight emission violations on five separate events dating to 2017, the company said.
Enbridge crude volumes rebound quicker than expected on higher earnings - — North American pipeline operator Enbridge said July 29 its crude volumes and finances rebounded more quickly than expected from the coronavirus pandemic, but that the recovery will progress more slowly in the second half of the year and that it will likely take until late 2021 to bounce back fully. Enbridge's Mainline system's liquids volumes plunged by about 15% in the second quarter and will remain down by an average of about 9% in the second half of the year. Mainline's volumes fell to 2.44 million b/d in Q2 from an average of 2.84 million b/d in Q1 which was less of a drop than feared, and will average about 2.6 million b/d for the second half of 2020, said CEO Al Monaco. The Mainline system is Canada-based Enbridge's main crude oil artery that runs through a series a pipelines from Alberta to the Midwestern US and eventually to the US Gulf Coast. Enbridge recently added 50,000 b/d of Mainline capacity through optimization projects. "We weathered the storm well, but we're monitoring the signposts very carefully," Monaco said during the July 29 earnings call. "We're cautious on the timing of a full return. We see a more gradual pace of recovery from here." Concerns remain about rising coronavirus cases in the US and the potential for a second wave of the coronavirus in the autumn and into 2021, executives said. Enbridge pointed out that North American gasoline demand collapsed by 44% in April at the peak of the coronavirus pandemic lockdowns, but remained down by only around 9% in July. Diesel demand only fell by 15% in April, but is still about 13% below average. However, jet fuel demand nosedived by 62% in April and is still down by 41%. "Jet fuel is still way off as personal and business travel remains low," Monaco said. He highlighted that US Gulf Coast heavy crude imports from Venezuela, Mexico and other regions continue to fall, reiterating the need for more Canadian heavy crude in the US. Despite ongoing volume declines, Midwestern and USGC refinery demand bounced back more quickly than expected, he said. "This trend reflects the strong competitive position of the Midwest and Gulf Coast refineries that take Canadian heavy barrels off of our system," Monaco added.
Nessel ends challenge to constitutionality of Line 5 tunnel law - Attorney General Dana Nessel's office will not appeal to the Michigan Supreme Court after a lower court's opinion affirmed the constitutionality of an agreement between the state and Enbridge Energy to build the Line 5 tunnel. A notice of appeal regarding the Court of Appeals' June 11 decision should have been filed within 42 days or Thursday, but no appeal was filed. Nessel's office will instead focus its efforts on other litigation related to the controversial pipeline, attorney general spokesman Ryan Jarvi said Wednesday. A three-judge appellate panel unanimously upheld the constitutionality of the law that was also found to be constitutional by a lower Court of Claims judge. Those rulings would allow Enbridge to construct a $500 million, four-mile utility tunnel beneath the Straits of Mackinac to house Line 5. The June decision upheld the constitutionality of not just the tunnel agreement, but also a third agreement with the state that allows the company to continue operating the existing pipeline "while a tunnel to house a replacement section of Line 5 is permitted and constructed," Enbridge spokesman Ryan Duffy said. "We look forward to working with the state to make a safe pipeline even safer," he said. Line 5, which transports up to 540,000 barrels a day of light crude oil, light synthetic crude and natural gas liquids, has been the subject of a years-long dispute. Critics have feared a possible rupture of the 67-year-old pipeline in the Straits of Mackinac between lakes Michigan and Huron.
Opinion: Massive Kalamazoo oil pipeline spill taught Enbridge nothing -- Saturday marked the 10th anniversary of Enbridge’s spilling almost a million gallons of heavy tar-sands oil into the Kalamazoo River from its 41-year-old Line 6B — causing one of the worst inland oil spills in U.S. history. The July 25, 2010, disaster awoke Michigan from its complacency by revealing an even older and more dangerous set of oil pipelines lurking in the open waters of the Straits of Mackinac — Enbridge Line 5. Today the overwhelming consensus across party lines is that Enbridge’s 67-year-old Line 5 threatens Michigan resident's drinking water, economy and our way of life.Now Enbridge is touting its proposed oil pipeline tunnel under the Great Lakes as a quick-and-simple fix to Line 5. The Canadian oil transporter knows the permitting process and legal challenges thereafter could take another decade to navigate, with no guarantee that an oil tunnel could ever satisfy environmental standards designed to protect the Great Lakes, including the requirement to prove that there’s no betteralternative for Michigan. And that timeline ignores whether Enbridge can even finance a project that is likely to far exceed Enbridge’s current $500 million estimate. What Enbridge might gain from its oil pipeline tunnel proposal, however, is time to keep profiting from the high-stakes transport of oil through the Straits via a series of 2018 agreements with the state that may violate public trust law.Media reports have shown that Enbridge violated of its easement agreement with the state for years. Line 5 has been struck in recent years by vessel anchorsand/or cable lines, damaging the pipeline coating and anchor supports. Last month’s discovery of such damage triggered the temporary court-ordered shutdown of the flow of oil in Line 5; Enbridgesuspects one of its own contracted vessels may have caused this incident.For Enbridge, ignoring safety requirements and racking up violations is just the cost of doing business (e.g., see its $6.7 million fine in 2020 and $1.8 million fine in 2018). The company’s troubling track record includes 33 documented spills from Line 5. Enbridge also deceived state and federal regulators about Line 5’s damaged condition when it knew about numerous missing anchor supports and failed to disclose it until 2017, and hid its knowledge for three years of bare spots in the pipeline’s protective coating.
Santa Barbara County to Vote on ExxonMobil Plan to Restart Offshore Platforms, Truck Oil in California -Santa Barbara County has released the final environmental impact report on ExxonMobil’s proposal to transport oil by tanker trucks so it can restart three drilling platforms off California, setting up a vote on the project. The plan calls for up to 70 oil-filled trucks per day on coastal Highway 101 and Route 166, 24 hours a day, seven days a week. The Santa Barbara County Planning Commission is scheduled to hold hearings on the project on Sept. 2 and Sept. 9 before voting on it. “ExxonMobil would put California communities and motorists in harm’s way, just to restart its dirty and dangerous offshore platforms,” said Kristen Monsell, ocean legal director at the Center for Biological Diversity. “Sending oil tanker trucks along California’s coastal highway all day and night risks deadly accidents. Santa Barbara County should reject this reckless plan and urge ExxonMobil to decommission its platforms.” The FEIR concludes that there would be significant, unavoidable impacts from the project, including significant impacts on wildlife and cultural resources in the event of an oil spill from a tanker truck. “The county’s Final Environmental Impact Report fails to disclose the devastating impacts that will result if ExxonMobil is allowed to resume oil drilling in the Santa Barbara Channel and truck oil along our scenic highways,” “ExxonMobil’s proposal will result in more oil spills, air pollution, and increased climate change at a time when we need to pursue clean energy alternatives.” A majority of Santa Barbara County voters say they oppose proposals to restart ExxonMobil’s offshore drilling platforms in the Santa Barbara Channel, according to a recent poll. “Trucks are the least safe way to transport oil — in human death, property destruction, and amount of oil spilled,” said Katie Davis, chair of the Sierra Club’s Los Padres Chapter. “Not only that, but this environmental report is severely lacking by leaving out the oil spills and other risks of restarting the aging oil rigs and Gaviota Coast oil facilities, which were one of the largest sources of air pollution in the county.” ExxonMobil’s three offshore platforms near Santa Barbara were shut down in 2015 after the Plains All American Pipeline ruptured and spilled hundreds of gallons of oil along the California coast. The company proposes to restart its platforms and load its offshore oil onto tanker trucks at its Las Flores Canyon processing facility. The trucks would transport up to 470,400 gallons of oil per day up to 140 miles to refineries in Kern County and Santa Maria.
States Sue EPA Over Water Rule, Alleging Loss of Veto Power - A multistate coalition is suing the EPA over a rule that it claims limits the power of states to block infrastructure projects, such as interstate oil and gas pipelines, on water quality grounds. Democratic Attorneys General Xavier Becerra of California, Bob Ferguson of Washington, and Letitia James of New York are leading a group of 20 states and the District of Columbia alleging that the new rule will hamper states’ ability to adequately review project proposals for water quality impacts. Becerra said the rule “clears the deck for fossil fuel infrastructure” by limiting the scope of reviews states can conduct. The recently published rule (RIN: 2040-AF86) will make it more difficult for states to protect their waters and wetlands, the attorneys general said Tuesday in a complaint filed in the U.S. District Court for the Northern District of California. The Environmental Protection Agency’s rule amounts to a “drastic curtailment of state authority” that violates “the plain language, structure, purpose and legislative history of the Clean Water Act,” the attorneys general alleged. The rule, published July 13, reduces the scope of state reviews of pipeline crossings. States must focus on direct water quality impacts, and not on indirect impacts such as climate change or acid rain caused by air pollution, under the rule. State reviews are mandated under Section 401 of the Clean Water Act, which directs states to ensure that proposals needing federal permits also meet water quality standards within their borders. A project can’t obtain a federal license until it has received state certification. The EPA declined to comment directly on the litigation, but said “the agency’s final rule increases the transparency and efficiency of the Section 401 certification process in order to promote the timely review of infrastructure projects while continuing to ensure that Americans have clean water for drinking and recreation.” Becerra said the administration “once again” is “attempting to undermine the Clean Water Act—this time by limiting longstanding state authority to protect our waters from degradation tied to federally-approved projects,”
What Major Pipeline Decisions Mean for Energy Dominance, the Environment and Indigenous Rights - (podcat & transcript) Federal courts recently handed down major decisions against big pipelines that would transmit oil around the country, while other big pipelines are facing legal challenges that may put them out of business. What do these decisions mean for America’s continued oil and gas buildout and the Trump administration’s campaign for energy dominance? In this episode of our podcast, Trump on Earth, host Reid Frazier talks first with our guest, Ellen Gilmer, who tracks environmental policy and courtroom drama forBloomberg News. Then we hear from Nick Tilsen, President and CEO of NDN Collective, a Native American rights and social justice organization based in South Dakota, about what the Dakota Access decision means for the rights of America’s Indigenous people. Tilsen is a member of the Oglala Lakota Nation.
Alexandria Ocasio-Cortez Proposes A Death Blow To Pipelines Like Dakota Access -Shortly after Donald Trump won the presidency in November 2016, Alexandria Ocasio-Cortez, then a 27-year-old activist and bartender, hopped in a 1998 Subaru and roadtripped from New York City to North Dakota to join the frigid protest camp attempting to stop construction of the Dakota Access Pipeline.Not long after, Trump made completing the pipeline one of his first priorities in the White House. But the experience, Ocasio-Cortez has often said, inspired her decision to run in New York’s 14th congressional district on her vision for a Green New Deal. Now she’s proposing a legal change that would upend thousands of future pipeline projects. The New York congresswoman is pushing to block the U.S. Army Corps of Engineers from permitting oil and gas projects like the Dakota Access Pipeline, HuffPost has learned. An amendment Ocasio-Cortez proposed for the next budget bill would prohibit the nation’s main infrastructure-building agency from using federal money to issue permits under the Section 404 of the Clean Water Act “for the discharge of dredged or fill material resulting from an activity to construct a pipeline for the transportation of oil or gas.”That would prevent the Army Corps from constructing, repairing or working on roughly 8,000 projects per year involving oil and gas pipelines that cross waterways. It could also imperil the Dakota Access Pipeline itself. In March, U.S. District Judge James Boasberg ordered the Army Corps to carry out a new environmental review of the project, determining that the agency had failed to answer major questions about the possibility of oil spills. Then, earlier this month, Boasberg pulled the permits to operate the 1,172-mile oil route from North Dakota to Illinois, ordering the pipeline to shut down and drain by Aug. 5 while the review is carried out. If the ruling holds, Ocasio-Cortez’s amendment could, in theory, prevent the Army Corps from issuing a new permit to restart the 570,000-barrel-per-day pipeline once it’s drained.
U.S. shale supply chain will emerge smaller from price war, pandemic - Kemp (Reuters) - Slumping oil and gas prices as a result of the pandemic and the volume war earlier in the year between Saudi Arabia and Russia have slashed employment in the U.S. oil and gas fields at some of the fastest rates on record. Oil and gas-related employment is split across several different categories in the federal government’s statistical system, making it hard to track changes in total oilfield and gasfield employment. But one of the largest and most visible categories is “support activities for oil and gas operations”, covering a wide range of ancillary activities from exploration, site works, casing and tubing to cementing, fracking and acidizing.Total employment at support firms fell by 54,000 jobs (20%) in just three months between February and May, according to the U.S. Bureau of Labor Statistics (“Current employment statistics”, July 2).Employment has shrunk by 86,000 (30%) compared with its recent peak in October 2018 and is now back to the low level reported in the aftermath of the previous volume war in 2014-2016.Even more job losses are likely to have occurred in June and July given the continued drop in the number of active rigs reported by field services firm Baker Hughes since the end of May.Layoffs have had a devastating impact on employment in the oil-rich Permian Basin with the total number of jobs in both the Midland and Odessa metro areas down by more than 10% compared with a year ago. The combined impact of the coronavirus epidemic and price slump have produced the worst job losses in the area for more than thirty years (https://tmsnrt.rs/2PeIB6R).The slump is putting intense stress on the entire supply chain, the ecosystem of large and small contractors, skilled and semi-skilled labour that underpins oil and gas production.The supply chain’s extraordinary flexibility and responsiveness fuelled three shale booms in gas (2004-2008) and oil (2012-2014 and 2017-2018).And it has proved resilient, with drilling and completion activity bouncing back rapidly when oil prices climbed back above $50 per barrel after the 2014-2016 slump.But the longer prices remain low, the greater the risk some supply capacity will be lost permanently, limiting its ability to expand again when the next cyclical upswing begins, causing long-term scarring in output. Some rigs will likely be dismantled and scrapped; drilling, fracking and site preparation crews disbanded; and smaller businesses closed.
Oil and Gas Groups See ‘Some Common Ground’ in Biden Energy Plan - The New York Times — Joseph R. Biden Jr. won over environmentalists and liberals when he announced a $2 trillion plan to promote electric vehicles, energy efficiency and other policies intended to address climate change.But the plan released on July 14 has also earned a measure of support from an unexpected source: the oil and gas industry that is closely aligned with the Trump administration and is a big source of campaign contributions to the president.That might seem odd considering that the plan aims for “net-zero” greenhouse gas emissions by no later than 2050, in part by discouraging the use of fossil fuels. Mr. Biden also wants to spend more on mass transit, expand solar and wind farms and build thousands of electric vehicle charging stations.Yet the industry was relieved by what the plan did not include, chiefly a ban on hydraulic fracturing, the approach that has turbocharged domestic production of oil and gas over the past dozen years.“There is a lot of room in there for oil and gas,” said Matt Gallagher, president of Parsley Energy, a West Texas oil producer, about the Biden plan.Some executives were particularly enthusiastic that Mr. Biden wanted the federal government to invest in carbon capture and sequestration, which entails preventing emissions of greenhouse gases from reaching the atmosphere and thus allowing industry to continue burning fossil fuels for decades. In a sign of his all-inclusive, eclectic approach to energy, Mr. Biden is also proposing to use advanced nuclear reactors to produce electricity.“There is some common ground,” said Mike Sommers, president of the American Petroleum Institute, which represents the industry in Washington and is close to the Trump administration. “We appreciate the fact that they recognize that there is going to be a role for natural gas and oil in our future. We share the broad goal of reducing emissions and addressing climate change.” Oil and gas executives noted that they had worked productively with Democratic administrations. During the Obama administration, oil companies enjoyed handsome profits even as federal regulators put in effect tougher environmental regulations.
Revealed: oil giants help fund powerful police groups in top US cities -Big corporations accused of driving environmental and health inequalities in black and brown communities through toxic and climate-changing pollution are also funding powerful police groups in major US cities, according to a new investigation. Some of America’s largest oil and gas companies, private utilities, and financial institutions that bankroll fossil fuels also back police foundations – opaque private entities that raise money to pay for training, weapons, equipment, and surveillance technology for departments across the US.The investigation by the Public Accountability Initiative, a nonprofit corporate and government accountability research institute, and its research database project LittleSis, details how police foundations in cities such as Seattle, Chicago, Washington, New Orleans and Salt Lake City are partially funded by household names such as Chevron, Shell and Wells Fargo.Police foundations are industry groups that provide substantial funds to local departments, yet, as nonprofits, avoid much public scrutiny.The investigation details how firms linked to fossil fuels also sponsor events and galas that celebrate the police, while some have senior staff serving as directors of police foundations.The report portrays the fossil fuel industry as a common enemy in the struggle for racial and environmental justice. “Many powerful companies that drive environmental injustice are also backers of the same police departments that tyrannize the very communities these corporate actors pollute,” it states. The report included such companies as:
- Chevron, a multinational oil and gas company, that is among the world’s top 25 polluters. In the US, it owns two of the worst six benzene-emitting refineries, according to the EPA. Chevron is a corporate sponsor of the New Orleans police and justice foundation, as well as a board member of the Houston police foundation and sponsor of the Houston mounted patrol. It also donates and serves on the board of Salt Lake City police foundation.
- Shell is one of the biggest fossil fuel companies in the world, and is currently building a huge ethane cracker plant near Pittsburgh, which advocates warn could turn Appalachia into the next so-called Cancer Alley – a corridor of Louisiana refineries, where Shell is also a major polluter. Shell is a “featured partner” of the New Orleans police foundation and a sponsor of the Houston police’s mounted patrol.
- The nation’s largest oil refining company Marathon Petroleum has long been accused of generating pollution that disproportionately affects the health of black and brown communities. Its refinery in Detroit has received 15 violations from the state environmental regulator since 2013. Marathon’s security coordinator is on the board of the Detroit police foundation, and sponsors numerous events.
Deutsche Bank Ditches Arctic Drilling After Pressure From Activists -- Climate activists are celebrating Deutsche Bank's new energy policy banning financial support of drilling in theArctic, a move which comes after years of pressure from advocacy groups.The bank, a multinational investment company headquartered in Germany, announced Monday that it will no longer offer financial services to new projects that involve drilling for oil or gas in the Arctic. The policy also states it will not fund any tar sand projects or fracking in areas that have low water supply.Concerns over the Arctic have risen in recent weeks as the region has been battling a prolonged heatwave and wildfires, which have been caused by human-driven climate change.Last week, the World Meteorological Organization announced that Siberia's average temperature in June was 10°C above normal. The Arctic is warming over two times faster than the rest of the world. Ben Cushing, Sierra Club senior campaign representative, said in a statement that it is becoming clear to banks that divesting from Arctic drilling is important. He pointed to the Arctic National Wildlife Refuge, which spans over 19 million acres of Alaskan land. "As the list of major banks rejecting funding for Arctic drilling continues to grow, it's clearer by the day that investing in the destruction of the Arctic Refuge would be a mistake," Cushing said. "The Trump administration may still think auctioning off the Arctic Refuge is a good idea, but it′s obvious that oil companies would be foolish to take them up on their offer." Deutsche stated it will not be terminating any current financial backing of Arctic drilling projects, but that it will be evaluating all ongoing oil and gas business ventures by the end of 2020 and end any business in coal mining by or before 2025.
BP fined £7,000 for Clair oil spill - BP has been fined £7,000 at Aberdeen Sheriff Court for allowing 95 tonnes of crude oil to spill into the sea around 75 miles west of Shetland in 2016. BP Exploration Operating Company Limited pled guilty to not following properly regulations required when starting production from a newly drilled well on the Clair Phase one offshore installation. The incident happened on 2 October 2016. An investigation by the department for business, energy and industrial strategy (BEIS) found that regular water sampling should have been in place, with the results of this being fed back to the control room. The written procedure was not specific on when results should be provided, or when the control room should request late results. As a result a significant amount of crude oil was discharged into the North Sea. Head of the health and safety investigation unit at the Crown Office Alistair Duncan said: “BP accepted liability and the Crown accepted their guilty plea to the contravention of the regulations. “The lack of sufficiently robust procedures could have had a significant environmental impact, had these issues not been addressed. “Thankfully there was no significant impact to the environment as a result of this incident and the company has introduced improved procedures since then. “Hopefully this prosecution will serve as a reminder that failing to have sufficiently robust procedures and adhere to the regulations can have potentially serious consequences.” In a statement issued after the court hearing BP said: “Safety is BP’s core value and our operations are grounded in the principles of no accidents, no harm to people and no damage to the environment. “On this occasion in 2016, we regrettably fell short of these high standards. While there was no injury to people or significant impact on the environment, this incident should not have happened.
Little Known UK Shale Firm Challenges Fracking Ban --UK’s oil company Aurora Energy Resources plans to challenge the government moratorium on fracking issued at the end of 2019, just a few months after Aurora had applied for permission to frack at a site in Lancashire, northwest England, the Guardian reports. Aurora Energy Resources has dropped its application to frack two wellbores in Lancashire because of the “de facto ban on shale gas activity,” according to Aurora’s managing director Ian Roche.In November 2019, the UK government ended support for fracking, after a report from the UK’s Oil and Gas Authority (OGA) concluded that “it is not possible with current technology to accurately predict the probability of tremors associated with fracking.” The UK government announced in November “a moratorium on fracking until compelling new evidence is provided,” after considering the OGA’s report and after several tremors at the fracking site of Cuadrilla at Preston New Road near Blackpool in Lancashire. Cuadrilla had to stop fracking operations multiple times at the site, because under UK regulations, in case of micro seismic events of 0.50 on the Richter scale or higher, fracking must temporarily be halted and pressure in the well reduced. At the time of the moratorium announcement, Cuadrilla’s activities had been suspended since a magnitude 2.9 event was recorded on August 26, 2019. Aurora Energy Resources, which applied for permission to frack at the Altcar Moss well site in June, plans to “address this issue” with the moratorium with the Department of Business, Energy and Industrial Strategy, Roche told the Guardian. “It is clear from recent comments by the minister of state for energy that the government considers the ‘moratorium’ on hydraulic fracturing to be a de facto ban on shale gas activity in the UK. It is therefore perhaps unsurprising that the council officers have felt unable to determine this application,” Roche told the Guardian.
Shell's second-quarter profit slumps 82% on coronavirus hit to oil prices, energy demand - Oil giant Royal Dutch Shell on Thursday reported a sharp drop in net profit for the three months through to the end of June, following an unprecedented period of energy market turmoil and significantly weaker oil and gas prices. The Anglo-Dutch company reported adjusted earnings of $638 million for the second quarter of 2020. That compared with net profit of $3.5 billion over the same period a year earlier and $2.9 billion in the first three months of 2020. Net income attributable to shareholders on a current cost of supplies (CCS) basis and excluding identified items, which is used as a proxy for net profit, came in at a loss of $18.4 billion for the second quarter. This followed an impairment charge of $16.8 billion post-tax over the same period, given the oil major now anticipates significantly lower oil and gas prices over the next 30 years. Shell had previously warned it could incur aggregate post-tax impairment charges in the range of $15 billion to $22 billion over the three-month period. "It is, of course, a non-cash measure and it is reflective of how we see the environment going forward but yes, in the sense that we needed to do a review of our balance sheet, we are done," Ben van Beurden, CEO of Royal Dutch Shell, told CNBC's "Squawk Box Europe" on Thursday. "But, of course, we are not done yet with the pandemic so we will have to see what the coming quarters and years will bring us," he added. Analysts had warned that "Big Oil" companies, referring to the world's largest energy majors, were likely to report "horrendous" second-quarter results as coronavirus lockdown measures coincided with an unparalleled demand shock. "Inevitably, the biggest talking point in this morning's results from Royal Dutch Shell is the huge loss the company has incurred — largely as a result of revised pricing," "The pandemic's influence is likely to remain far-reaching, with Shell saying it may still need to curtail or reduce production later in the year to mitigate lack of demand — an indication that there may still be more pain to come,"
Israel to hold drill to prepare for potential oil spill from largest gas rig (Xinhua) -- Israel will conduct a drill to prepare for potential spill from the largest gas rig in Israeli waters, the Ministry of Environmental Protection said Wednesday. According to a ministry statement, the exercise will take place in September on northern Israeli shores of the Mediterranean Sea. The objective is to get ready for any malfunctions that may occur with the Leviathan natural gas platform located about 120 km west of the coastal city of Haifa, which could result in an oil spill in the sea or on Israeli beaches. One of the goals is improving the response skills and time to such an incident by the rig's U.S. owner Noble Energy company, the regional council, local authorities, and those who treat and clean up oil spills.
Oil slick cleanup near Kharg Island - A leak in a subsea oil pipeline from Abouzar Oilfield (in the Persian Gulf) to Kharg Island and Bandar Genaveh in Bushehr Province has been fixed and the oil spill is being cleaned up.The leakage occurred on July 27, about 4 kilometers off the coast of Kharg Island, IRNA reported. Tar balls (little, dark-colored pieces of oil) have been seen scattered over an area of 20 kilometers between Bandar Genaveh and Bandar Deylam (both in Bushehr Province). According to Nader Pasandideh, head of the HSE department of the Ports and Maritime Organization, the Iranian Offshore Oil Company sent technicians to find the leak location and took quick measures to fix it.
Hedge fund buying switches from crude to fuels: Kemp (Reuters) - Hedge funds continued buying oil last week, but the focus switched from crude to previously-neglected refined products, where cautious positioning and very low refinery margins may offer more upside potential. Hedge funds and other money managers purchased 28 million barrels in the six most important petroleum futures and options contracts in the week to July 21, adding to 24 million barrels of buying the week before. Portfolio managers have now bought petroleum in 14 out of the last 17 weeks, increasing their position by a total of 388 million barrels since the end of March, though the rate of purchases has slowed recently. Last week's buying was concentrated in U.S. gasoline (+7 million barrels), U.S. diesel (+4 million) and European gasoil (+9 million) with only small purchases in Brent (+3 million) and NYMEX and ICE WTI (+5 million). For the last three months, buying has concentrated on crude, responding to sharp output cuts by U.S. shale producers as well as by OPEC and its partners in the wider OPEC+ alliance. By contrast, fund interest in oil products has been limited as refiners struggle to eliminate excess inventories built up during the lockdowns in April and May (https://tmsnrt.rs/3jMsRpx). By the middle of July, bullish hedge fund positions in crude outnumbered bearish ones by a ratio of more than 5:1 compared with less than 3:1 for gasoline and less than 2:1 for distillates.
Oil rises on stimulus hopes, but U.S.-China tensions cap gains - Oil prices edged higher on Monday helped by a weak dollar and expected U.S. stimulus measures but gains were capped by rising global coronavirus cases and tensions between the United States and China. Brent crude rose 7 cents to settle at $43.41 per barrel, while West Texas Intermediate crude settled 31 cents, or 0.75%, higher at $41.60 per barrel. The U.S. dollar index reached its lowest since September 2018, hurt by deteriorating U.S.-China relations and domestic economic concerns as coronavirus infections showed no sign of slowing. U.S. Senate Republicans on Monday are expected to unveil a new $1 trillion coronavirus aid package. "Massive monetary stimulus has bullish implications for oil," analysts from Raymond James said in a note, adding that oil prices have historically moved upwards with inflation spikes and that the current U.S. money supply increase is unprecedented. Oil price gains were capped by escalating China-U.S. tensions following the closures of consulates in Houston and Chengdu. Global coronavirus cases, meanwhile, exceeded 16 million. In Asia, fresh lockdowns were imposed and in Europe, Britain imposed a quarantine on travellers returning from Spain. Brent is on track for a fourth straight monthly gain in July and WTI is set to rise for a third month. Helping are unprecedented supply cuts from the Organization of the Petroleum Exporting Countries and others including Russia. Output has also fallen sharply in the United States although the U.S. oil rig count rose last week for the first week since March. Oil demand has improved from the deep trough of the second quarter, although the recovery path is uneven as resumption of lockdowns in the United States and other parts of the world is capping consumption.
Oil price falls as US stimulus package faces tough talks -Oil prices fell on Tuesday as U.S. lawmakers prepared to wrangle over an economic stimulus package and investors worried about a rise in coronavirus cases worldwide.Brent crude futures fell 19 cents, or 0.4%, to settle at $43.22 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 56 cents, or 1.4%, to settle at $41.04 a barrel.Brent is still on track for a fourth monthly rise, and U.S. crude is expected to gain for a third month.U.S. Republicans on Monday unveiled a new coronavirus relief proposal hammered out with the White House, four days before millions of Americans lose expanded unemployment benefits. The package is facing opposition both from Democrats and from some Republicans, however. "There's concern with the stimulus out of Washington, which is critical to the oil complex and to supporting demand, especially for gasoline," said John Kilduff, partner at Again Capital LLC in New York. Kilduff added that the longer the talks drag out, the more it will weigh on market sentiment. Also a negative for prices, U.S. consumer confidence ebbed in July amid a flare-up in COVID-19 infections across the country. Cases worldwide have risen to around 16.57 million people.
Oil drops more than 1% as rising Covid-19 cases spark demand fears - Oil prices fell around 1% on Tuesday, as U.S. lawmakers prepared to wrangle over an economic stimulus package and investors worried about a rise in coronavirus cases worldwide. Brent crude futures fell 19 cents, or 0.44%, to $43.22 a barrel, while West Texas Intermediate crude futures settled 56 cents, or 1.35%, lower at $41.04 per barrel. U.S. Republicans unveiled a new coronavirus relief proposal on Monday, four days before millions of Americans lose expanded unemployment benefits. On Tuesday, they faced difficult talks with Democrats on how best to recover from the coronavirus pandemic. "There's concern with the stimulus out of Washington, which is critical to the oil complex and to supporting demand, especially for gasoline," said John Kilduff, partner at Again Capital LLC in New York. Kilduff added that the longer the talks drag out, the more it will weigh on market sentiment. Also a negative for prices, U.S. consumer confidence ebbed in July amid a flare-up in COVID-19 infections across the country. Cases worldwide have risen to around 16.57 million people. Investors are awaiting the outcome of the U.S. Federal Reserve's policy-setting panel meeting on Tuesday and Wednesday. The panel is expected to reiterate that interest rates will remain near zero for years to come. This month, Brent crude has fallen deeper into contango , a market structure in which the future price of the commodity is higher than the spot price, encouraging a build-up of inventories. October prices were as much as 53 cents per barrel above September levels, compared with a 1 cent difference in early July. "This suggests that the tightening we were seeing in the market has eased somewhat, with the demand outlook more uncertain given the resurgence of COVID-19 cases in some regions," said Warren Patterson, ING's head of commodities strategy. Industry data on U.S. stockpiles is due later on Tuesday. Analysts polled by Reuters expect U.S. crude oil stockpiles were likely unchanged last week, while inventories of refined products probably declined.
WTI Extends Gains After Biggest Crude Draw Since 2019 - Oil prices rebounded this morning with WTI rallying off $41 as traders shrugged off a surprising gasoline build (demand questions) and focused on API's reporting a large crude draw. A continually weakening dollar is also helping oil prices at the margin. “It might be theoretically possible that the weaker dollar would ignite a rapid increase in crude demand,” but renewed virus outbreaks call this into question, he said. So all eyes now on the official inventory data to confirm API's surprise. DOE
- Crude -10.611mm (-1.2mm exp) - biggest draw since Dec 2019
- Cushing +1.309mm - 4th weekly build in a row
- Gasoline +654k (-2mm exp)
- Distillates +503k (unch exp)
Expectations for a modest crude draw were blown away by API and the official data was even more impressive with a massive 10.6mm barrel drawdown... Graphs: BloombergTotal US crude stocks are falling modestly but remain stuck near record highs.. US Crude production has stabilized in recent weeks... WTI traded around $41.30 ahead of the DOE print and lifted on the big surprise draw...
Oil rises after surprise drop in U.S. inventories offsets demand concerns - Oil prices inched up on Wednesday after a steep drop in U.S. crude inventories, but another record day for coronavirus cases worldwide kept gains in check. Brent crude futures gained 45 cents to $43.67 a barrel. West Texas Intermediate crude futures were up 23 cents to $41.27. U.S. crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, in their largest drawdown since December. Net U.S. crude imports fell 1 million barrels per day to 1.9 million bpd, the EIA said. "If we are seeing a drawdown, that is a key indicator in terms of largely a market that's starting to move more aggressively into balance," said CHS Hedging analyst Tony Headrick. The fall in crude stocks was likely a result of supply cuts by the Organization of the Petroleum Exporting Countries and its allies, which were agreed-upon in April, finally being realized. A record number of new coronavirus infections were reported globally, while in the United States, deaths from the novel coronavirus were approaching 150,000, the highest level in the world and rising by 10,000 in 11 days, according to a Reuters tally. "The virus is spreading like wildfire across the Americas while Europe and Asia are displaying worrying signs of a second surge in cases," said Stephen Brennock of oil brokerage PVM. Six U.S. states reported one-day records for coronavirus deaths on Tuesday and Texas cases passed the 400,000 mark. Attempts to provide relief amid the outbreak were in disarray after Republicans in the United States on Tuesday disagreed over their own plan for providing $1 trillion in new coronavirus aid. Indian refiners are cutting crude processing and shutting units for maintenance as fuel demand falters, officials at the companies said.
Oil edges up after sharp U.S. crude inventory drop - (Reuters) - Oil prices rose on Wednesday after a steep drop in U.S. crude inventories, but another record day for coronavirus cases worldwide kept gains in check. Brent crude futures LCOc1 settled at $43.75 a barrel, up 53 cents, or 1.2%. U.S. West Texas Intermediate crude futures CLc1 settled at $41.27 a barrel, gaining 23 cents, or 0.6%. U.S. crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, the largest drawdown since December. [EIA/S] Net U.S. crude imports fell 1 million barrels per day to 1.9 million bpd, the EIA said. The fall in crude stocks was likely a result of supply cuts, agreed in April by the Organization of the Petroleum Exporting Countries and its allies, finally being realized. “The expectation is that the OPEC cuts are going to lead to bigger draws in the United States and this could be the beginning of it,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. A record number of new coronavirus infections were reported globally. In the United States, nearly 150,000 people have died from the novel coronavirus - the most for any country - having risen by 10,000 in 11 days, according to a Reuters tally. “The virus is spreading like wildfire across the Americas while Europe and Asia are displaying worrying signs of a second surge in cases,”
Oil prices get a lift as EIA reports the biggest weekly U.S. crude supply decline of the year - Oil futures ended higher Wednesday after U.S. government data showed a more-than-10-million-barrel weekly decline in U.S. crude — the largest so far this year. An unexpected weekly rise in gasoline supplies, however, tempered the rise for oil as worries about slow demand growth prevailed. The Energy Information Administration reported Wednesday that U.S. crude inventories fell by 10.6 million barrels for the week ended July 24, the largest weekly decline since the 11.5 million-barrel fall reported for the week ended Dec. 27. The latest fall compared with an average forecast by analysts polled by S&P Global Platts for a decline of 1.2 million barrels. The American Petroleum Institute on Tuesday reported a decrease of 6.8 million barrels. The size of the crude supply decline was a surprise, but “looking deeper into the numbers we saw a build in gasoline stockpiles as well as distillates,” Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch. Even with “all the bullish headlines out there with a large crude oil draw” and U.S. dollar weakness, “we feel it is quite telling” that crude oil can’t move much higher, he said. The ICE U.S. Dollar Index DXY, +0.46%, a measure of the U.S. currency against a basket of six major rivals, was down 0.4% Wednesday after edging to a two-year low. The gasoline build shows “demand for driving is not going higher as it usually does at this time of year,” said Zahir, and as many people continue to work from home, that will keep demand low for crude oil in the near term.
Oil sinks on weak U.S. economic data, political uncertainty - (Reuters) - Oil prices sank on Thursday following poor U.S. economic figures and after U.S. President Donald Trump roiled markets with a suggestion that the nation should delay its November presidential election. Investors sold riskier assets following Trump’s tweet that raised the prospect of delaying the vote. The date of the U.S. election is enshrined in the U.S. Constitution, but Trump’s remarks were viewed as an attack on the integrity of the coming election, worrying investors. Oil markets recovered from their lowest levels of the selloff. U.S. West Texas Intermediate (WTI) crude futures settled down $1.35, or 3.3%, at $39.92 a barrel after falling 5% earlier in the session. Brent crude futures, which expire on Friday, fell 81 cents, or 1.9%, to $42.94 a barrel. “We have the potential for serious political uncertainty in the U.S. if election dates are challenged,” said John Kilduff, partner at Again Capital in New York. In a sign of the devastating impact of the coronavirus on the United States, the world’s biggest oil consumer, the country’s economy contracted at its steepest pace since the Great Depression in the second quarter. U.S. gross domestic product collapsed at a 32.9% annualised rate, the deepest decline in output since the government started keeping records in 1947. In addition, weekly jobless claims rose, a signal that the worsening outbreaks across wide swathes of the United States are taking a further toll on the economy. Deaths from COVID-19 have now topped 150,000 in the United States, while Brazil, with the world’s second-worst outbreak, set daily records of confirmed cases and deaths. New infections in Australia hit a record on Thursday.
U.S. oil prices drop below $40 on fears rising coronavirus cases will crimp demand -Oil futures were sharply lower on Thursday, with U.S. prices settling below $40 a barrel for the first time in three weeks, pressured by worries a resurgence in coronavirus cases around the world will cause demand to falter as major oil producers begin relaxing output curbs. “Demand concerns are front and center,” Iraq’s rising exports, meanwhile, have “raised concerns that Russia and the Saudis might start unwinding the OPEC+ deal as Iraq continues to cheat” on production cuts, he said. Iraq’s crude-oil exports averaged 2.75 million barrels per day, based on figures from Refinitive Eikon and an industry source, Reuters reported Thursday—up 50,000 barrels from June.“Terrible Jobs data and a worse than expected GDP added to demand woes, but the fact that President [Donald] Trump tweeted the question that the election could be delayed freaked people out,” he said.Against that backdrop, West Texas Intermediate crude for September delivery CL.1, +0.39% CLU20, +0.39% on the New York Mercantile Exchange dropped $1.35, or 3.3%, to settle at $39.92 a barrel. That was the first settlement below $40 and lowest front-month contract finish since July 9, according to Dow Jones Market Data. September Brent crude BRNU20, +0.04% BRN00, +0.43%, which expires at the end of Friday’s session, fell 81 cents, or nearly 1.9%, at $42.94 a barrel on ICE Futures Europe. “Prospects of slower economic recovery” and OPEC’s hurry to trim production cuts show that the “demand/supply dynamics are not supportive of further short-term gains in oil markets,”
Oil prices bounce back from 3-week lows, but economic headwinds loom - Oil prices rose on Friday, recovering further ground after touching three-week lows in the previous session, hit by a record decline in U.S. growth as the coronavirus ravaged the world's biggest economy and oil consumer. Brent crude was up by 38 cents, or 0.88%, at $43.32 a barrel. On Thursday, Brent closed down 1.9% but had recovered much of the ground lost from the lowest level since July 10. U.S. crude gained 38 cents, or 0.95%, to $40.30 after dropping 3.3% the previous session, again recovering from lows not seen since July 10. That leaves Brent on track for a fourth month of gains, while U.S. crude is heading for a third consecutive month of increases, as the contracts have recovered from the depths reached in April when much of the world was in lockdown. But as a second wave of infections rages around the world, the threat to oil demand is becoming apparent. "Despite the resilient and range-bound nature of oil pricing over recent weeks, plateauing global demand and increasing OPEC+ output raises the question of whether the market can absorb additional barrels," RBC Capital Markets said in a note. OPEC+, a grouping of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively plan to increase production from Saturday, adding about 1.5 million barrels per day to global supply. Globally, the economic outlook has dimmed again, with increasing coronavirus infections raising the risk of renewed lockdowns and threatening any rebound, according to Reuters polls of over 500 economists globally. That was underlined by Thursday's news that U.S. gross domestic product collapsed at a 32.9% annualised rate, the deepest decline in output since records began in 1947.
Oil posts monthly gains as U.S. reports record output cuts in May - (Reuters) - Oil prices rose on Friday and were on track for monthly gains, benefiting from news that U.S. oil output cuts in May were the largest on record. Brent crude settled up 37 cents, or 0.9%, at $43.31 a barrel. U.S. crude was up 35 cents, or 0.9%, at $40.27 after dropping 3.3% in the previous session, also off lows not seen since July 10. Brent crude posted a fourth month of gains and U.S. crude posted a third as both rise from depths hit in April, when much of the world was in lockdown due to the coronavirus pandemic. U.S. crude oil production plummeted in May, falling a record 2 million barrels per day to 10 million bpd, the U.S. Energy Information Administration said in a monthly report on Friday. The dollar extended its dramatic fall on Friday and was on course for its biggest monthly drop in a decade after news on Thursday that U.S. gross domestic product collapsed at a 32.9% annualized rate - the steepest decline in output since records began in 1947. Investors typically use dollar-denominated commodities as safe havens when the currency weakens. “Global stimulus and a weak dollar will continue to support oil prices, as historically oil is seen as a hedge against inflation,” s Globally, the economic outlook has dimmed again, with increasing coronavirus infections raising the risk of renewed lockdowns and threatening any rebound, according to Reuters polls of more than 500 economists.
Iran's IRGC Attacks US Carrier Mock-Up In Massive Drill Off Hormuz Strait --New satellite images have confirmed that Iran has moved its mock US aircraft carrier to the strategic Strait of Hormuz for use in live-fire drills, which state media says have commenced. Analysts say the mock-up actually appears close to America's fleet of Nimitz-class carriers, commonly stationed in the region and routinely traversing the contested Strait of Hormuz. It even includes fake fighter jets parked on the deck. The fake carrier been estimated to be at some 650 feet long and 160 feet wide. Timing-wise it should be noted that the real USS Nimitz just entered the Persian Gulf area via the Indian Ocean just days ago. According to an AP-CBS report: Iran's paramilitary Revolutionary Guard fired a missile from a helicopter targeting a replica aircraft carrier in the strategic Strait of Hormuz, state television reported on Tuesday, an exercise aimed at threatening the U.S. amid tensions between Tehran and Washington. The maritime tracking analysis site Tanker Trackers showed that Iran cleared its shipping lanes to make way for the military drills.
Iran Reports Successful Test of Underground Ballistic Missile --Iran’s Revolutionary Guard issued a statement Wednesday claiming to have successfully launched an underground ballistic missile for the first time during live-fire exercises this week. The missile was in an underground silo, and the Guards claim this is the first successful such launch anywhere in the world. It’s not clear in what way this is the first time, as underground missiles have been a thing for decades. That these are a thing in Iran’s already substantial missile arsenal now could change things quite a bit. Iran can now keep a portion of its missile system deployed underground, where they aren’t visible to be targeted in the event the US or Israel attacks, and gives them some semi-secure retaliatory capabilities. US officials have argued that Iran isn’t allowed to have ballistic missiles under UN rules. Those rules technically only restrict nuclear-capable missiles, which Iran argues is irrelevant because Iran doesn’t have nuclear arms to start with.
Russia Through Wagner Group Upping Military Involvement in Libya – US DoD - U.S. Africa Command has mounting evidence that Russia, through the Wagner Group, continues to position military equipment in Libya capable of conducting kinetic operations there. Overhead imagery shows Wagner forces and equipment on the front lines of the Libyan conflict in Sirte. Wagner, also known as the Wagner Group, is a Russian private military company. "Russia continues to play an unhelpful role in Libya by delivering supplies and equipment to the Wagner group," said Marine Corps Maj. Gen. Bradford Gering, Africom director of operations. "Imagery continues to unmask their consistent denials." An aerial photo shows military equipment on the ground. It is assessed that the Russian Federation continues to violate U.N. Security Council Resolution UNSCR 1970 by actively providing military equipment and fighters to the front lines of the conflict in Libya. As Africom has documented in a series of media releases, the U.S. assesses that Russia supplied Wagner forces operating in Libya with fighter aircraft, military armored vehicles, air defense systems and supplies, further complicating the situation and increasing the risk for miscalculation, leading to continued and needless violence in Libya. "Imagery reflects the broad scope of Russian involvement," said Army Brig. Gen. Gregory Hadfield, Africom deputy director of intelligence. "They continue to look to attempt to gain a foothold in Libya." The latest imagery details the extent of equipment being supplied to Wagner. Russian military cargo aircraft, including IL-76s, continue to supply Wagner fighters. Russian air defense equipment, including SA-22s, are present in Libya and operated by Russia, the Wagner Group or their proxies. Photos also show Wagner utility trucks and Russian mine-resistant, ambush-protected armored vehicles are also present in Libya. "The type and volume of equipment demonstrates an intent toward sustained offensive combat action capabilities, not humanitarian relief, and indicates the Russian Ministry of Defense is supporting these operations," Gering said. In May, U.S. Africa Command reported at least 14 Mig-29s and Su-24s had been flown from Russia to Syria, where their Russian markings were painted over to camouflage their origin. The aircraft were then flown into Libya, a violation of the U.N. arms embargo. U.S. Africa Command assesses that the warplanes are being actively flown in Libyan airspace.U.S. Africa Command previously provided photographic evidence that Wagner had laid land mines and improvised explosive devices in civilian areas in and around Tripoli without regard to the safety of civilians. U.S. Africa Command has continued to document how Russia uses the Wagner Group as a proxy in Libya to establish a long-term presence on the Mediterranean Sea.
In Message To Turkey, France & Egypt Conduct Joint Naval Exercises In Mediterranean - On Saturday, the Egyptian and French naval forces carried out naval drills in the eastern Mediterranean, with the participation of the Egyptian Ghost frigate and French Ghost frigate (ACONIT). These joint naval drills also come at a time when Egypt, Greece, France, and Cyprus are at odds with Turkey over the latter’s intervention in Libya and their oil exploration plans in the eastern Mediterranean. According to the Egyptian army statement, “The training included many training activities of a professional nature focused on methods of organizing cooperation in the implementation of combat missions in the sea against hostile marine formations with the actual use of weapons in engagement with surface and air targets in addition to the implementation of confrontational battles, with the use of aircraft.” The statement said, “The training showed the professionalism of the crews of ships in carrying out combat missions with accuracy and high efficiency, with a focus on common coordination points between all the common elements.” It added that “these exercises are in the framework of supporting the pillars of joint cooperation between the Egyptian and French armed forces, and identifying the latest fighting systems and methods in a manner that contributes to honing skills and combat and operational experiences and supporting efforts of maritime security, stability and peace in the Mediterranean.” Meanwhile on the same day, Saturday evening, the Turkish Ministry of Defense published a video clip of its own military exercises in the eastern Mediterranean region, amid heightened tensions over the Libyan crisis.
In Rare Compromise, Turkey 'Pauses' Gas Exploration Near Greece After EU & US Pressure - The Turkish gas and oil exploration drama in the East Mediterranean which put Greece and Cyprus on a war footing with Turkish forces has taken a surprise turn. Amid the ratcheting pressure on Ankara over alleged incursions into Greece and Cyprus' economic zones coming from the European Union and United States, it appears Turkey has backed down for now.Days ago France's Emmanuel Macron even invoked the threat of EU sanctions, citing that it's "not acceptable for the maritime space of a European Union member state to be violated or threatened." Turkey has frequently been source of rifts among fellow NATO member states. For the first time, Turkey says its ambitious and expansive, but hugely controversial, gas exploration initiative is on hold. On Tuesday TRT World reports that "Turkey has said it could pause energy-exploration operations in the Eastern Mediterranean Sea for a while pending talks with Greece."The announcement came from the office of the president, with spokesman Ibrahim Kalin revealing in a CNN Turk interview that Erdogan told his aides to "be constructive and put this on hold for some time".He identified that the seismic exploration vessel "Oruc Reis" was set to search for hydrocarbons "180 kilometers from the island of Meis (Kastellorizo in Greek)" — an area Greece recently said it would deploy military assets to if the Turkish operation was initiated. "Despite this our president said while the negotiations are continuing, let's be constructive and hold (energy search) for a while," the presidential spokesman said. The Greek Navy has said it's in a state of "heightened readiness" in response to any incursion of Greece's territorial waters. It boils down to how the rival longtime enemies interpret their offshore zones, with Turkey in the past years using especially its so-called "Turkish Republic of Northern Cyprus" to lay claim to waters entirely surrounding the island. Below is a Turkish interpretation of its rightful waters, within which some of Greece's easternmost islands are located:
US and China Are Both Raising the Military Stakes in the South China Sea - As if on cue, the Pentagon’s rhetoric on presumed Chinese designs on South China Sea marine resources included a comment from the Secretary of the Navy, James Esper: “American aircraft carriers have been in the South China Sea in the Indo-Pacific since World War II and we’ll continue to be there, and we’re not going to be stopped by anybody.”This followed a deployment of two aircraft carrier strike groups, headed by the carriers Ronald Reagan and Nimitz, to joint exercises in the region at the start of July. Since then, according to the US Naval Institute, the Ronald Reagan group has moved to the Philippine Seafor exercises with a Japanese destroyer and a substantial Australian task group led by the amphibious warfare ship HMAS Canberra. The Nimitz, meanwhile, has moved on to exercises with the Indian navy.The whole process is part of a wider US positioning of military forces around Chinathat includes the recent deployment of four US Air Force B-1B Lancer strategic bombersfrom Dyess Air Force Base in Texas to Andersen AFB on Guam in the western Pacific. According to the commander of the USAF’s 7th Bomb Wing,Colonel Ed Sumangi, in a news release: “Our wing has conducted, and participated in, a variety of exercises over the last year to ensure we are primed for large-scale missions such as this one.” China, meanwhile, has rather upped the ante by announcing a series of ‘live fire’ military exercises reportedly involving the firing of 3,000 missiles, with the South China Morning Post reportingthat:China’s air force held live-fire drills and sent more fighter jets to its base on disputed Woody Island in the South China Sea last week, as the US Navy steps up drills and freedom of navigation operations in the region.The People’s Liberation Army Southern Theatre Command conducted the drills on Wednesday and Thursday last week, with more than 3,000 missiles fired at moving targets at sea, state-run China National Radio reported on Sunday. It did not say where in the South China Sea the exercises were held. Photos from the drills posted on state broadcaster CCTV’s website showed they involved JH-7 bombers and J-11B fighter jets.
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