oil prices finished lower for the first week in the past five as the dollar strenghtened and as equities sold off on fears of a slowing recovery....after rising 1.5% to $42.97 a barrel last week as two hurricanes shut down 80% of Gulf oil production, the contract price of US light sweet crude for October delivery opened the week lower but found support early Monday after data showed a stronger-than-expected pickup in China’s service sector, but then moved broadly lower to finish down 36 cents at $42.61 a barrel amid ongoing uncertainty about the outlook for demand...oil prices then edged higher on Tuesday as better-than-expected U.S. manufacturing activity data spurred hope for a post-pandemic economic recovery and settled at $42.76 a barrel, up 15 cents on the day...but the price for the benchmark US crude reversed course on Wednesday, as the EIA reported that US gasoline demand fell sharply in the latest week, indicating that economic recovery from the pandemic might be slower than expected, as oil tumbled $1.25, or 3% to a one month low of $41.51 a barrel, even as the hurricane-driven draw from crude supplies was much larger than expected...oil prices moved sharply lower again on Thursday as the U.S. stock market sold off sharply but regained most of an early 3% drop to close off 14 cents at $41.36 a barrel as weekly unemployment data fed fears of a slow economic recovery...another stock market selloff pressured prices early Friday as US crude crashed more than 4% before recovering to finish down $1.60 at $39.77 a barrel, as coronavirus flare-ups around the world threatened oil consumption at a time when the OPEC and its allies were easing their historic output curbs and increasing production...oil prices thus finished the week more than 7% lower, closing below $40 a barrel for the first time since early July amid concerns over prospects for demand, losses in the stock market and strength in the U.S. dollar ...
natural gas prices also finished lower for the first week in five as the August heat wave broke and demand fell in the wake of Hurricane Laura....after rising 3.3% to $2.657 per mmBTU last week as storms in the Gulf shut down 60% of US offshore production, the contract price of natural gas for October delivery fell 2.7 cents to $2.630 per mmBTU on Monday as weather forecasts turned cooler and less-than-expected damage from Hurricane Laura and lower LNG exports weighed on prices...weak LNG exports and a cool September outlook continued to pressure prices midweek as they fell 10.3 cents on Tuesday and then another 4.1 cents on Wednesday, as hurricane Laura had turned the weather cooler and reduced electric power consumption in its wake due to widespread outages...natural gas prices steadied Thursday, inching up a tenth of a cent to $2.487 per mmBTU, after forecasts for warmer weather and the report of a below-normal storage build were offset by a recovery in the production shut in by the hurricanes...natural gas turned higher on Friday, supported by expectations of a recovery in LNG exports after they had dropped last week, with prices settling 10.1 cents, or 4.1%, higher at $2.588 per mmBTU...but even after that jump, prices for October gas still finished the week 2.6% lower as the threat to supplies that had kept prices higher in recent weeks abated..
the natural gas storage report from the EIA for the week ending August 28th indicated that the quantity of natural gas held in underground storage in the US rose by 35 billion cubic feet to 3,455 billion cubic feet by the end of the week, which left our gas supplies 538 billion cubic feet, or 18.4% greater than the 2,917 billion cubic feet that were in storage on August 28th of last year, and 407 billion cubic feet, or 13.4% above the five-year average of 3,048 billion cubic feet of natural gas that have been in storage as of the 28th of August in recent years....the 35 billion cubic feet that were added to US natural gas storage this week were in line with the forecast of a 34 billion cubic foot increase from an S&P Global Platts'' survey of analysts, but it was much less than the 77 billion cubic feet addition of natural gas to storage during the corresponding week of 2019, and also well less than the average of 66 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 August 28th showed that because of big storm-related drops in our oil productiion and in our oil imports, we needed to withdraw oil from our stored supplies for the sixth week in a row and for the 8th time in the past thirteeen weeks...our imports of crude oil fell by an average of 1,016,000 barrels per day to an average of 4,900,000 barrels per day, after rising by an average of 185,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 361,000 barrels per day to an average of 3,002,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 1,898,000 barrels of per day during the week ending August 28th, 655,000 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 1,100,000 barrels per day lower at 9,700,000 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 11,598,000 barrels per day during this reporting week. the smallest daily oil supply figure since Hurricane Ike hit in 2008..
meanwhile, US oil refineries reported they were processing 13,868,000 barrels of crude per day during the week ending August 28th, 844,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a net of 1,523,000 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 747,000 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 (+747,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the average daily supply of oil and the data for the average daily consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting there is an error or errors of that magnitude in the oil supply & demand figures we have just transcribed...however, since the media treats these weekly EIA figures as gospel and since these numbers often drive oil pricing and hence decisions to drill or complete wells, we'll continue to report them, just as they're watched & believed to be accurate by most everyone in the industry... (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....
further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 5,542,000 barrels per day last week, which was 20.2% less than the 6,941,000 barrel per day average that we were importing over the same four-week period last year....the 1,523,000 barrel per day net withdrawal from our total crude inventories was as 1,337,000 barrels per day were being pulled out of our commercially available stocks of crude oil and 186,000 barrels per day were being withdrawn from the oil supplies in our Strategic Petroleum Reserve, space in which is also being leased for commercial use....this week's crude oil production was reported to be 1,100,000 barrels per day lower at 9,700,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states fell by 1,200,000 barrels per day to 9,200,000 barrels per day, while Alaska's oil production rose by 22,000 barrrels per day to 464,000 barrels per day and added 500,000 barrels per day to the rounded national total (which is the EIA's math, not mine)....last year's US crude oil production for the week ending August 30th was rounded to 12,400,000 barrels per day, so this reporting week's rounded oil production figure was 21.8% below that of a year ago, yet still 15.1% 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 76.7% of their capacity while using 13,868,000 barrels of crude per day during the week ending August 28th, down from 82.0% of capacity during the prior week, and excluding the 2005 and 2008 hurricane-related refinery interruptions, one of the lowest refinery utilization rates of the last thirty years...hence, the 13,868,000 barrels per day of oil that were refined this week were 20.2% fewer barrels than the 17,381,000 barrels of crude that were being processed daily during the week ending August 30th of last year, when US refineries were operating at 94.8% of capacity....
even with the decrease in the amount of oil being refined, gasoline output from our refineries was a bit higher, increasing by 16,000 barrels per day to 9,534,000 barrels per day during the week ending August 28th, after our refineries' gasoline output had increased by 118,000 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 7.2% less than the 10,272,000 barrels of gasoline that were being produced daily over the same week of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 343,000 barrels per day to 5,122,000 barrels per day, after our distillates output had increased by 380,000 barrels per day over the prior week... after this week's big decrease in distillates output, our distillates' production was 7.3% less than the 5,154,000 barrels of distillates per day that were being produced during the week ending August 30th, 2019....
with the small increase in our gasoline production, our supply of gasoline in storage at the end of the week decreased for the 7th time in 9 weeks and for the 22nd time in 31 weeks, falling by 4,320,000 barrels to 234,859,000 barrels during the week ending August 28th, after our gasoline supplies had decreased by 4,583,000 barrels over the prior week...our gasoline supplies decreased by less this week as the amount of gasoline supplied to US markets decreased by 375,000 barrels per day to 8,786,000 barrels per day, while our imports of gasoline rose by 38,000 barrels per day to 577,000 barrels per day and while our exports of gasoline fell by 51,000 barrels per day to 569,000 barrels per day....but even after the large inventory drawdowns of recent weeks, our gasoline supplies were still 2.3% higher than last August 30th's gasoline inventories of 229,586,000 barrels, and roughly 4% above the five year average of our gasoline supplies for this time of the year...
meanwhile, with the big drop in our distillates production, our supplies of distillate fuels decreased for the sixteenth time in 37 weeks and for the 26th time in 48 weeks, falling by 1,75,000 barrels to 177,195,000 barrels during the week ending August 28th, after our distillates supplies had increased by 1,388,000 barrels during the prior week....our distillates supplies fell this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 40,000 barrels per day to 3,918,000 barrels per day, because our exports of distillates rose by 172,000 barrels per day to 1,266,000 barrels per day, while our imports of distillates rose by 37,000 barrels per day to 166,000 barrels per day...but even after this week's inventory decrease, our distillate supplies at the end of the week were 33.0% above the 133,522,000 barrels of distillates that we had in storage on August 30th, 2019, and about 23% above the five year average of distillates stocks for this time of the year...
finally, with the drop in our oilfiled production and the drop in our oil imports, our commercial supplies of crude oil in storage fell for the 11th time in thirty-three weeks and for the 16th time in the past year, decreasing by 9,362,000 barrels, from 507,763,000 barrels on August 21st to 498,401,000 barrels on August 28th....but even after that big decrease, our commercial crude oil inventories were still around 14% above the five-year average of crude oil supplies for this time of year, and 53% above the prior 5 year (2010 - 2014) average of our crude oil stocks for the last weekend of August, 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 the past two summers, after generally falling until then through most of the prior year and a half, our crude oil supplies as of August 28th were 17.8% above the 422,980,000 barrels of oil we had in commercial storage on August 30th of 2019, 24.1% more than the 401,490,000 barrels of oil that we had in storage on August 31st of 2018, and 7.8% above the 462,353,000 barrels of oil we had in commercial storage on September 1st of 2017...
This Week's Rig Count
the US rig count rose for the 2nd time in the past half year during the week ending September 4th, but it is still down by 67.8% over that twenty-six week period....Baker Hughes reported that the total count of rotary rigs running in the US rose by 2 to 256 rigs this past week, which was still 148 fewer rigs than the all time low prior to this year, down by 662 rigs from the 916 rigs that were in use as of the September 6th report of 2019, and 1,673 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 increased by 1 rig to 181 oil rigs this week, after decreasing by 3 oil rigs the prior week, leaving us with 557 fewer oil rigs than were running a year ago, and less than a 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 was unchanged at 72 natural gas rigs, which was still down by 88 natural gas rigs from the 160 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, three rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, one in Eddy County, New Mexico, and one in Sonoma County, California... a year ago, there were no such "miscellaneous" rigs deployed...
The Gulf of Mexico rig count rose by 2 to 15 rigs this week, with 12 of those rigs drilling for oil in Louisiana's offshore waters and three drilling for oil offshore from Texas...that was 11 fewer Gulf rigs than the 26 rigs drilling in the Gulf a year ago, when 25 Gulf rigs were drilling offshore from Louisiana and one was deployed in Texas waters...while there are no rigs operating off other US shores at this time, a year ago there were also two rigs deployed offshore from Alaska, so this week's national offshore count is down by 13 from the national offshore rig count of 28 a year ago...also note that in addition to those rigs offshore, drilling continues through an inland body of water in St Mary County, Louisiana this week, while a year ago there were no rigs drilling in inland waters..
The count of active horizontal drilling rigs was down by 1 to 220 horizontal rigs this week, which was still 563 fewer horizontal rigs than the 783 horizontal rigs that were in use in the US on September 6th of last year, and less than a sixth of the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was was unchanged at 20 directional rigs this week, and those were also down by 47 from the 67 directional rigs that were operating during the same week of last year....on the other hand, the vertical rig count rose by 3 to 16 vertical rigs this week, but those were still down by 33 from the 48 vertical rigs that were in use on September 6th 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 September 4th, the second column shows the change in the number of working rigs between last week's count (August 28th) and this week's (September 4th) count, the third column shows last week's August 28th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running during the count 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 6th of September, 2019...
as has been the case most of the summer, there were only a few changes in drilling activity again this week, with only two rig removals and just four rig additions, suggesting that prices are currently high enough that drillers are no longer trying 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 just one rig was shut down Texas Oil District 8, which is the core Permian Delaware, while rigs operating in the other Texas Permian basin districts were unchanged....since the national Permian basin rig count was unchanged, that means that the miscellaneous rig that was added in New Mexico must have been set up to drill in the far western Permian Delaware to balance the national count, a fact which we have confirmed by cross checking the North America Rotary Rig Count Pivot Table...elsewhere, the rig that was pulled out of North Dakota had been drilling in the Williston basin, while the 3 rigs that we added in Louisiana include the gas rig addition in the Haynesville shown above and the 2 oil rigs that were added to the Gulf of Mexico fleet...the natural gas rig count remains unchanged, however, because the rig that was pulled out of the Texas Permian Delaware had been targetting natural gas, even as all the rigs now remaining in the Permian are drilling for oil...
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Ohio's shale oil, gas and liquids production falls for 2nd quarter in a row - Ohio's shale gas and liquids production dropped for the second quarter in a row as the state's privately backed drillers could not make up for production cuts by their publicly traded peers in the second quarter of 2020, the latest data from the state's Department of Natural Resources showed. Ohio shale production, largely from the Utica Shale, declined 8% to 6.56 Bcfe/d compared to the second quarter of 2019. Output was down 3% from the first quarter, far less than the 14% sequential drop in the first quarter as the coronavirus pandemic set in, according to data released Aug. 28. Most of Appalachia's large gas drillers began shutting in production in the second quarter to save those volumes for higher commodity prices expected this winter. EQT Corp.'s Ohio volumes dropped 28% as part of a 1.4 Bcf/d second quarter shut-in across its wells in Ohio, West Virginia and Pennsylvania. Private equity-backed Ascent Resources, the state's largest producer and the eighth-largest producer in the U.S., reported a 13% year-over-year increase in gas, oil and NGL volumes, to 2.42 Bcfe/d in the second quarter, despite a cutback in drilling activity. "Due to the decreased demand for natural gas and the associated decrease in price, we have curtailed certain natural gas wells in an effort to optimize revenue in future periods," Ascent told investors in an Aug. 12 second-quarter financial report. "Increased curtailments of oil production in the United States have led to a decline in the associated natural gas produced from such wells, which has improved the supply-demand imbalance that the natural gas market currently faces." Ascent said its capital spending dropped 34% to $160 million in the second quarter, compared to the preceding quarter. For the first half of the year, Ascent's capital spending declined 46% to $402 million compared to the first six months of 2019. The private company told investors that it posted $23 million in adjusted losses in the second quarter, a reversal from the $64 million in adjusted profits in the previous year. The largest contributor to those losses was a 16% year-over-year decrease in its realized price for oil, gas and liquids to $2.54/Mcfe. While the dry gas counties of Belmont, Jefferson and Monroe continued to be the dominant locus of production, Harrison County in the wet gas window saw the sharpest uptick, 32%, in gas and liquids production in the second quarter compared to the previous year. Privately held Encino Energy LLC, backed by a Canadian pension plan and operating in Chesapeake Energy Corp.'s old leasehold, was the major contributor to that increase.
Peregrine Moves into Ohio-- Peregrine Energy Partners has announced the closing of producing mineral interests in Monroe County, Ohio from a private seller. In commenting on the transaction, the local royalty owner said of Peregrine, “They made the process seamless and continually went above and beyond as we worked together towards closing. I really appreciated the smooth and quick process from beginning to end. The royalty owner continued, “After discussing my options with Mr. Prier, I decided that it was in my family’s best interest to sell part of my royalties in an effort to fast-forward the next half-decade of income and minimize my overall tax burden.” This acquisition delivers on a key strategic objective of Peregrine as the company continues to target producing royalties in the Marcellus and Utica Shale formations. This marks the first acquisition in Ohio for Peregrine who has steadily expanded their Appalachia footprint. The Founders have been active in Pennsylvania and West Virginia for over a decade but only recently began efforts to acquire royalties across the border in Ohio. “Ohio has been an area we’ve watched closely for the past few years.” said Josh Prier, Peregrine Managing Director. “As the current production has had some time to settle in and provide us with a clearer picture of the decline profile, we’ve begun to look for opportunities to work closely with the royalty owners and industry professionals in the Buckeye State.” Peregrine finalized the acquisition of natural gas royalties in eastern Ohio under Montage Resources (NYSE: MR). Montage was recently acquired by Southwestern Energy (NYSE: SWN), now the third largest operator in the Appalachia Basin. Discussing the acquisition, Wolf Hanschen, Peregrine Co-Founder, remarked, “Our team is excited about the prospect of working with additional royalty owners in Ohio to bring transparency and optionality about their oil and gas interests.” The current state of the economy and fluidity of the oil and gas industry has Peregrine committed and focused in their efforts to provide clients with reliable and valuable insight throughout the decision-making process. When Peregrine engages with a royalty owner, the company delivers a professional evaluation of clients’ interest, thereby helping them better understand their options which puts them in a more comfortable position to make the best decision for their family.
Transparency, Environmental Concerns Surround Proposal To Barge Oil And Gas Waste On The Ohio River - - A proposal to repurpose a docking facility near Marietta, Ohio, to allow for the barging of oil and gas drilling waste on the Ohio River is drawing concern from environmental groups and local residents. Ohio-based DeepRock Disposal Solutions LLC is seeking approval from the U.S. Army Corps of Engineers Huntington District to operate a barge offloading facility to transfer the waste to existing storage tanks. The proposal indicates the loading facility can accommodate a 300-foot-long barge that is 54 feet wide. It is the third barging proposal this year being considered by federal regulators. A proposal near Martins Ferry, Ohio, and one near Portland, Ohio, both to build new barging loading facilities have already been approved. Opponents of the projects fear the barges will eventually carry millions of gallons of briny fracking waste laced with radioactive elements as well as other, unknown chemicals. The chemical makeup of fracking fluid is considered proprietary. Robin Blakeman, project coordinator with the Ohio Valley Environmental Coalition, said her main concern is the possibility of spills or leaks occurring during loading or unloading of the waste or on the river. She said a spill would threaten both the river's ecosystems and the drinking water for about 5 million people who draw their tap water from the Ohio River. “The proposed facility would involve the transport and handling of enormous amounts of oil and gas waste, which has the possibility of radioactive content and definitely has hazardous components,” she said. “The toxic contents of this oil and gas waste could be huge.” DeepRock Disposal declined a request for an interview about the nature of the project. It’s unclear if oil and gas waste is currently being barged on the river. A spokesperson for the U.S. Coast Guard, which regulates shipping on the river, said the Guard could only provide that information through a records request. The Coast Guard Marine Safety Unit Pittsburgh said no produced water is being transported by vessel in their area of responsibility, which includes a small portion of the Ohio River.
FERC environmental report on PennEast gas pipe project comes under attack - — The Federal Energy Regulatory Commission's favorable environmental assessment for the phased-in PennEast Pipeline project generated hundreds of critical comments from environmental groups and residents opposed to one of the only large Northeast gas pipeline projects still pending at the commission. The roughly 118-mile, 1.1 Bcf/d project, originally intended to link Marcellus Shale dry gas production with markets in Pennsylvania, New Jersey, and New York has faced hurdles in New Jersey, and an appeals court ruling thwarting its ability to condemn lands in which the state held an interest. To advance the project, PennEast proposed to amend the authorization and begin with a first phase: a 68-mile segment in Pennsylvania with the capacity to carry 695,000 Dt/d. A second phase segment, mostly in New Jersey, would enable the full capacity. The FERC staff Aug. 3 released an environmental assessment that found the two-phase approach would not constitute a major federal action significantly affecting the environment. The report focused mostly on new, limited facilities within a 2.1-acre site, the Church Road interconnects in Bethlehem Township, Pennsylvania, while considering some cumulative impacts of shifting to a phased approach. Between Aug. 27 and Sept. 3, more than 500 comments flowed into FERC about the report. Multiple commenters argued it was wrong to narrow the focus to the Church Road Interconnects when, they argued, the Phase 1 amendment would alter the entire project's certificated purpose and need. A number of commenters, including New Jersey regulators, also argued that more environmental survey data is available than when the original environmental impact statement was conducted, but that FERC had not pulled that new information into its analysis. Others found fault with FERC's consideration of the project purpose and need, now that it has been divided into two phases, arguing evidence of market support amounted to 57% of the first phase capacity, which is contracted to project affiliates. Delaware Riverkeeper Network and Clean Air Council argued that PennEast's proposal is not a mere phasing of construction but a reconfiguration of the original project, and thus an environmental impact statement is required.
Biden pushes back on Trump claims: 'I am not banning fracking' - The Hill Democratic presidential nominee Joe Biden in Pennsylvania on Monday sharply refuted claims from President Trump that he plans to ban fracking, a key drilling method for oil producers in the swing state.“I am not banning fracking,” Biden said. “Let me say that again: I am not banning fracking no matter how many times Donald Trump lies about me.” Throughout the Republican National Convention last week, speakers attacked Biden’s climate and energy plan, offering a number ofmisleading comments. Biden’s climate plan calls for ending new oil and gas leases on public lands, but it would not ban oil drilling and does not bar any specific method for extracting fossil fuels.Biden reiterated Monday that he views a transition to clean energy as part of his vision for improving the nation’s economy.“I've laid out an agenda for economic recovery that will restore a sense of security for working families,” he said. “We won't just build things back the way they were before. We're going to build them back better with good paying jobs building our nation's roads, bridges, solar arrays, windmills,” he said, saying the clean energy strategy has “a place for the energy workers right here in western Pennsylvania.”
Our opinion: Truth fracked - The notion that any president could simply ban fracking and gas and oil drilling is preposterous on its face. Even President Donald Trump couldn’t simply override the long-term leases, hundreds of billions of dollars in public and private investments and contracts to provide gas and oil to industrial enterprises that frame the industry. That hasn’t stopped the Trump campaign from claiming that Democratic presidential nominee Joe Biden is out to ban fracking, the process by which drillers extract gas and oil from deep shale deposits. It’s an especially contentious message in Pennsylvania, where gas extraction from the deep Marcellus and Utica shale deposits has become a major industry. According to the Trump campaign, Biden’s alleged position would wipe out 600,000 jobs, even though the U.S. Department of Labor reports that, in July, gas extraction directly employed about 32,500 people in Pennsylvania and contributed to the employment of a total of about 155,000 people. Either way, the industry obviously is important to Pennsylvania. In Pittsburgh on Monday, Biden stated his actual position — that he would not attempt to ban fracking but would oppose any new oil or gas leases on federal land, which would have a minimal impact on production and hardly any impact in Pennsylvania. Biden favors acceleration of alternative energy development in the fight against climate change, and views a ban on new federal leases as an impetus for that initiative. If he succeeds, the air will be much cleaner than that emanating from misleading political advertising.
Video: Pipeline Battle in New Jersey May Be Heading to the Supreme Court | NJ Spotlight - Jacqueline Evans has been fighting for nearly six years to keep the 120-mile PennEast pipeline, which would stretch from Pennsylvania to Mercer County, off her property. She says it’s caused so much stress that she decided to rent her home and move until matters get resolved. The PennEast project is currently on pause after a third circuit of appeals’ decision regarding eminent domain. “The third circuit ruled in favor of the state that PennEast, a private pipeline developer, can’t seize state lands in federal court. So that brought the project to a screeching halt because they lost authority to over 40 properties in New Jersey that the state either owned or had some interest in,” said Tom Gilbert, campaign director for the New Jersey Conservation Foundation. PennEast has now petitioned the U.S. Supreme Court to review the case because it was given approval by the Federal Energy Regulatory Commission to “… exercise the federal government’s power of eminent domain to secure necessary rights-of-way for the construction of an interstate pipeline.” Adding in a statement, “If left standing, the Third Circuit’s decision has the potential to increase energy costs to consumers, impede manufacturing and industrial projects, reduce high-paying labor jobs and deprive mineral rights owners of their ability to realize their property rights.” The Supreme Court has called on the U.S. solicitor general to look into the case. “The fate of my property and other people’s property is really weighing on that,” Evans said.
Algonquin Gas Gets Massachusetts Plant OK’d Despite Permit Suit Algonquin Gas Transmission LLC can operate its natural gas compressor in Massachusetts while the state completes its environmental review of the project, the First Circuit said Monday after reweighing the issue and the winter ahead. The U.S. Court of Appeals for the First Circuit previously vacated the Massachusetts Department of Environmental Protection’s air permit issued for the Weymouth compressor station. The court said in its June decision that the department didn’t follow its own procedures when it found that Algonquin was using the best available technology to reduce emissions. The department sided with the company when it rejected an electric... To read the full article log in.
U.S. natgas slips, but posts best month since 2009 (Reuters) - U.S. natural gas futures fell on Monday, retreating from an over nine-month high scaled in the last session, as weather forecasts turned cooler, although prices registered their best month since 2009 on a surge in LNG exports. Front-month gas futures fell 2.7 cents, or 1%, to settle at $2.630 per million British thermal units. Prices had touched their highest since early November at $2.743 on Friday. "There is a weather change. It is going to be cooler-than-normal, which is going to reduce demand," Phil Flynn, a senior analyst at Price Futures Group in Chicago said, adding that less-than-anticipated damage from Hurricane Laura and slower exports because of the storms is also weighing on prices. However, for the month, prices were up about 46%, the most since September 2009, propped up by a surge in LNG exports and on concerns about tropical storms. Refinitiv data indicated 151 cooling degree days (CDDs) in the Lower 48 states over the next two weeks, declining from 175 CDDs in the prior day. CDDs measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to cool homes and businesses. Prices had earlier declined as much as 6%, but the market pared losses on concerns of another tropical disturbance which is beginning to form in the Caribbean and could cap production, advisory firm Ritterbusch said in a note. U.S. output rose to 87 bcfd on Sunday as many wells in the Gulf resumed operations after Laura, preliminary data from Refinitiv showed. U.S. Gulf Coast offshore producers on Sunday reported 50%, or 1.35 billion cubic feet, of natural gas output was offline due to the storm. Demand in the Lower 48 states is expected to decline as the weather turns cooler, falling from 85.8 bcfd this week to 82 bcfd in the next, according to Refinitiv.
U.S. natgas falls as cooling demand, LNG exports decline - (Reuters) - U.S. natural gas futures fell on Tuesday on forecasts for cooler weather and lower demand for air conditioning, while a drop in liquefied natural gas exports due to the recent storms also weighed on prices. Front-month gas futures fell 10.3 cents, or 3.9%, to settle at $2.527 per million British thermal units. "Hurricane Laura took out a lot of demand from the Texas-Louisiana border right through the center of the country and it brought some cooler weather behind it," said Robert DiDona of Energy Ventures Analysis. Refinitiv data indicated 147 cooling degree days (CDDs) in the Lower 48 states over the next two weeks, declining from 151 CDDs in the prior day. CDDs measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to cool homes and businesses. Demand in the Lower 48 states is expected to decline as the weather turns cooler, falling from 85.3 bcfd this week to 83.3 bcfd in the next, according to Refinitiv. A big drop in LNG exports from August levels are also weighing on prices, DiDona said, adding, however, the market will tighten as the LNG facilities come back online again. Damage to power lines and communications outages from the storm have hurt offshore oil and gas production, with natural gas down by 25%, or 676.55 million cubic feet per day, the U.S. Department of Interior reported on Tuesday. An offshore natural gas pipeline that serves four major U.S. Gulf of Mexico production platforms also remained out of commission, Enbridge Inc said. However, Cheniere Energy, the country's top LNG exporter, and Sempra LNG are expected to resume operations after no major damage was found following Hurricane Laura. U.S. output rose to 87.9 bcfd on Monday as many wells in the Gulf resumed operations after Laura, preliminary data from Refinitiv showed.
U.S. natgas futures slip on lower air conditioning demand - U.S. natural gas futures fell to their lowest in nearly a week on Wednesday as cooler-than-normal weather after heavy rains spawned by Hurricane Laura cut demand for air conditioning. Front-month gas futures fell 4.1 cents, or 1.6%, to settle at $2.486 per million British thermal units. Prices had earlier fallen to $2.415, their lowest since Aug. 27. Hurricane Laura has reduced demand for natural gas as rains from the storm turned the weather cooler and lowered electric power consumption due to outages, said Thomas Saal, senior vice president of energy at StoneX. Laura knocked out power to thousands of homes and businesses in Louisiana, Texas and Arkansas after slamming into the Gulf Coast near the Texas-Louisiana border last week as a major Category 4 storm. Refinitiv data on Wednesday indicated 144 cooling degree days (CDDs) in the Lower 48 states over the next two weeks, declining from 147 CDDs the previous day. CDDs measure the number of degrees a day’s average temperature is above 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to cool homes and businesses. Demand in the Lower 48 is expected to decline as the weather turns cooler, falling from 85.3 billion cubic feet per day (bcfd) this week to 83.8 bcfd in the next, according to Refinitiv. Meanwhile, producers were ramping up output after there was no significant damage to offshore production facilities from the storm. Natural gas production was down by 25%, or 676.55 million cubic feet per day, on Tuesday. Enbridge’s two natural gas pipelines that connect offshore U.S. Gulf production platforms resumed operation on Tuesday, while Cheniere Energy, the country’s top liquefied natural gas exporter, and Sempra LNG were also expected to resume operations after shutdowns last week.
US working natural gas volumes in underground storage rise by 35 Bcf: EIA | S&P Global Platts — US natural gas stocks increased mainly in line with analysts' expectations at about half the five-year average build, and Henry Hub futures showed mixed results following the release of the storage report as a power outage at an LNG terminal could slow export demand recovery during September. \ Storage inventories increased by 35 Bcf to 3.455 Tcf for the week ended Aug. 28, a US Energy Information Administration report showed Sept. 3. The injection was barely more than an S&P Global Platts survey of analysts calling for a 34 Bcf build. Responses to the survey ranged from an injection of 27 Bcf to 48 Bcf. The injection measured less than the 77 Bcf build reported during the same week last year as well as the five-year average gain of 66 Bcf, according to EIA data. Storage volumes stood at 538 Bcf, or 18.4% more than the year-ago level of 2.917 Tcf, and 407 Bcf, or 13.4% more than the five-year average of 3.048 Tcf. The NYMEX Henry Hub October contract added 5 cents to $2.54/MMBtu in trading following the release of the weekly storage report. However, the winter strip of November through March fell by 1 cent to average at $3.22/MMBtu. The S&P Global Platts Analytics supply and demand model currently forecasts a 60 Bcf injection for the week ending Sept. 4. This would lower the surplus to the five-year average by 8 Bcf as about 10 net injections remain before the flip to the winter withdrawal season. Inventories are predicted to peak at 3.864 Tcf before net withdrawals begin in November. Gulf of Mexico production and LNG feedgas demand have both started recovering during the week in progress. Offshore production has started to rebound from near-zero to 700 MMcf/d, following almost entirely shutting in 2.2 Bcf/d last week due to Hurricane Laura. However, feedgas demand recovery at the Cameron LNG export terminal looks to be delayed due to widespread power grid damage in Louisiana from the hurricane. Total supplies are down 800 MMcf/d week over week, mainly driven by reduced net Canadian imports after onshore and offshore production saw similar offsetting moves. Downstream, total demand has fallen by more than 5 Bcf/d on the week, with the vast majority of that coming from reduced power burn demand, and bolstered by a second consecutive 900 MMcf/d drop in LNG feedgas demand.
U.S. natgas steadies as production recovery offsets warmer weather view - - U.S. natural gas futures settled little changed on Thursday after forecasts for warmer weather and below-normal storage build were offset by a recovery in production post-Hurricane Laura. Front-month gas futures rose 0.1 cent, to settle at $2.487 per million British thermal units (mmBtu). "With Laura we saw a tremendous amount of supply shut in, but a lot of demand was shut as well, and the suppliers came back, but at the same time the weather is turning to moderate," said Art Gelber, president of Gelber & Associates in Houston. Prices had earlier risen over 3% after the U.S. Energy Information Administration said U.S. utilities injected 35 billion cubic feet of gas into storage in the week ended Aug. 28, which was in line with expectations of a 34 bcf build, but still below normal. The five-year (2015-19) average build is of 66 bcf, compared with 77 bcf in the same week last year. Some of the cooler-than-normal weather after heavy rains from Laura turned a bit warmer, providing support to the market, said Phil Flynn, a senior analyst at Price Futures Group in Chicago. Refinitiv data indicated 148 cooling degree days in the Lower 48 states over the next two weeks, increasing from 144 CDDs the previous day. CDDs measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to cool homes and businesses. Laura, which landed as a major Category 4 storm near the Texas-Louisiana border last week, impacted 60% of natural gas offshore production, but producers were rapidly ramping up output after there was no significant damage due to the storm. Natural gas output from the Gulf of Mexico was down by 16%, or 420 million cubic feet per day (mmcfd), on Thursday, the U.S. Bureau of Safety and Environmental Enforcement said.
U.S. natgas rises on hopes of higher LNG exports - (Reuters) - U.S. natural gas futures rose on Friday, supported by expectations of an increase in LNG exports after they dropped last week as Hurricane Laura shut facilities and export plants. Front-month gas futures rose 10.1 cents, or 4.1%, to settle at $2.588 per million British thermal units (mmBtu). For the week, the front-month registered its first weekly fall in five and at a decline of 3.5%, its worst performance since the week ended July 17. "There are some news that the LNG exports demand is about to start picking back up again in the next week or so, as some of the facilities are getting back electricity and ramping up, that's very supportive for the market," said Robert DiDona of Energy Ventures Analysis. "The market was definitely looking for that demand, after having the big falloff in the exports towards the end of August before the storms hit," he added. Cheniere Energy, the country's top LNG exporter, and Sempra LNG are expected to resume operations after no major damage was found following Hurricane Laura. Laura knocked out power to thousands of homes and businesses in Louisiana, Texas and Arkansas after slamming into the Gulf Coast near the Texas-Louisiana border last week as a major Category 4 storm. Demand in the Lower 48 states is expected to decline slightly, falling from 83.9 billion cubic feet per day (bcfd) this week to 83.6 bcfd in the next, according to Refinitiv. Refinitiv data indicated 137 cooling degree days (CDDs) in the Lower 48 over the next two weeks, decreasing from 148 CDDs the previous day, but still above the 30-year normal of 126. CDDs measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to cool homes and businesses.
US ethane production rises to record: EIA - US ethane field production rose to a record high in June as producers moved to recover more product late in the second quarter.Ethane output rose to 2.1mn b/d, a 14pc increase from the prior record 1.8mn b/d produced in May and a 16pc increase from the previous June, the Energy Information Administration (EIA) reported today in its monthly data.Production fell sharply in March and April as shut-in natural gas wells reduced output of associated gas. By late May, rising prices supported recovery of more ethane from the gas stream. Mont Belvieu, Texas, EPC ethane averaged 12.97¢/USG in April, before rising to 22.36¢/USG in May and 21.88¢/USG in June.Ethane inventories also rose, climbing to 52mn bl in June, up 9pc from the previous month, but a 14pc drop from the 60mn bl reported in June 2019. June ethane exports of 308,000 b/d were up by 3pc from May and up by 12pc from June last year.US butane exports stood at 301,000 b/d in June, down from 352,000 b/d last month and up slightly from the 296,000 b/d during the same month last year. June butane exports mainly went to destinations in Indonesia and South Korea.Butane stocks stood at 55.4mn bl in June, up by 20pc from May when production fell sharply, but down from 58.2mn bl of inventories in June last year. The US produced 13.4mn bl of butane in June, down from 13.8mn bl in May, but up from 12.7mn bl last June.
Big Oil’s Petrochemical Bet Is A Risky One -Petrochemicals are expected to underpin global oil demand growth in the future as growth in transportation fuels demand is set to slow with the increased use of electric vehicles, the International Energy Agency (IEA) said in March in its annual Oil 2020 report with projections until 2025. But are petrochemicals really profitable?“Petrochemical feedstocks LPG/ethane and naphtha will drive around half of all oil products demand growth, helped by continued rising plastics demand and cheap natural gas liquids in North America,” the IEA said in March when the COVID-19 pandemic was already upending global oil demand growth projections for this year. Before the pandemic, oil majors had already bet big on petrochemicals, expecting demand in the sector to continue driving oil demand growth.But with the coronavirus crisis shocking every major industry, analysts are now questioning the economics and long-term rationale of Big Oil’s ‘safety bet’ on petrochemicals, especially in view of the energy transition and continued drive toward reduced use of plastics in developed economies.Even before the pandemic, some parts of the petrochemical value chain were already overwhelmed with overcapacity, with profits in the segment shrinking as a result. COVID-19 has heightened the pressure on profits for petrochemical players, Wood Mackenzie’s petrochemicals analysts said last month. A number of oil producers and refiners are targeting chemicals, especially olefins and aromatics, which is set to add more capacity and “likely lead to national and international oil companies steadily increasing their stake in the petrochemical market,” according to WoodMac’s analyst. Indeed, NOCs and IOCs have increased their bets on petrochemicals, which they expect to support their profit margins and downstream businesses in a future of increased electrification of transport. However, the pandemic has caused some majors to pause and defer investments. Saudi Arabia’s oil giant Aramco sees chemicals and petrochemicals as a key focus area of development as it aims to become “the world’s preeminent integrated energy and chemicals company.” Aramco announced in mid-July a downstream reorganization, which Abdulaziz M. Al Gudaimi, Senior Vice President of Aramco Downstream, described as helping to “streamline our operations and reinforce our position as a major global energy and petrochemicals player.But one European major is getting out of the petrochemicals business. BP is divesting its global petrochemicals business to UK’s Ineos for US$5 billion as part of the next strategic step in BP’s metamorphosis from an oil and gas company to an energy company that could compete in the energy transition.The future of petrochemicals is not black and white, and large petrochemical integration could help refiners remain competitive in the next decade.Nevertheless, the COVID-19 crisis and the new bust in the oil price cycle have highlighted the cautionary tale that Big Oil would be wise not to put all their eggs in one basket.
Saudi oil shipments to America plunge to 35-year low - Saudi Arabia drew the wrath of Republicans in Washington this spring by sending an armada of tankers to America to drown US oil makers with cheap crude. Now, the kingdom has reversed course, steering the fewest barrels here since the Reagan era.The United States imported just 264,000 barrels per day of Saudi crude during August, according to estimates from ClipperData, a commodity research firm. That's down nearly 50% from 2019's average.If confirmed by official government statistics, that would mark the lowest amount of Saudi oil exports to the United States since 1985. "Saudi crude flows bound for the US have basically dried up," Matt Smith, director of commodity research at ClipperData, told CNN Business in an email. The course-reversal by Saudi Arabia -- from intentionally flooding the United States with excess crude to holding back barrels -- underscores the kingdom's dramatic efforts to revive depressed energy markets during the pandemic.
U.S. energy imports and exports were nearly equal in May -In May 2020, the United States exported and imported nearly equal amounts of energy, based on data in the U.S. Energy Information Administration’s (EIA) Monthly Energy Review. The United States had been a net exporter of energy in several months of the past year. Changes in domestic production and declines in global demand for energy since mid-March in response to COVID-19 have shifted energy trade balances back in the direction of net imports, especially for U.S. crude oil and petroleum products.The United States exported slightly more energy than it imported in May 2020; imports and exports were each about 1.7 quadrillion British thermal units (Btu). U.S. energy exports decreased 15% and imports decreased 19% compared with May 2019. Generally, the United States imports more crude oil than it exports, but it exports more petroleum products, natural gas, and coal than it imports. Trade volumes for other fuels such as biofuels, biomass, electricity, nuclear fuel, and coal coke are relatively small. EIA's Monthly Energy Review converts the physical volumes of energy trade into energy equivalent units based on each fuel’s estimated energy, or heat, content. In 2019, the United States exported more total energy on an annual basis than it imported for the first time in 67 years. U.S. net exports reached a record-high monthly value of 480 trillion Btu in March 2020, but they fell to just 2 trillion Btu in May.
US GOM Oil Slowly Coming Back - U.S. Gulf of Mexico (GOM) oil production is slowly returning following Hurricane Laura, the Bureau of Safety and Environmental Enforcement (BSEE) has revealed. As of August 31, 53.48 percent of oil production from the region is estimated to still be shut in, which marks a decrease from the figure of 69.76 percent recorded on August 30 and 82.13 percent registered on August 29. Just over 41 percent of gas production was estimated to still be offline as of August 31, which also marked a decrease from the August 30 figure of 49.87 percent and the August 29 figure of 58.84 percent. According to the BSEE, 117 production platforms, or 18.2 percent of the 643 manned platforms in the U.S. GOM, remained evacuated as of August 31. A total of two non-dynamically positioned rigs remained evacuated, which equates to 16.67 percent of the 12 rigs of this type in the region. All dynamically positioned rigs were said to have returned to their working locations. The BSEE’s latest figures are based on data from 35 offshore operator reports submitted as of 11:30 CDT on August 31. In its latest report, the BSEE reiterated that once all standard checks had been completed, production from undamaged facilities would be brought back online immediately and warned again that facilities sustaining damage may take longer to bring back online. Hurricane Laura made landfall on August 27 and has been described as the most powerful storm in Louisiana and Texas in 150 years. CNN reported yesterday that some Louisiana residents won’t have power for weeks following the hurricane.
US Gulf of Mexico operators slowly continue to restore oil, gas output from storm shut-ins - — US Gulf of Mexico oil and gas operators continue to restore oil and natural gas output, albeit slowly, from platforms temporarily brought offline prior to Hurricane Laura which slammed the Texas-Louisiana border a week ago, a federal offshore agency said Sept. 3. Stay up to date with the latest commodity content. Sign up for our free daily Commodities Bulletin. Sign Up At midday Sept. 3, 301,077 b/d of oil production, or 16.3% of the region's total, was still shut in from the storm, as well as 420,000 Mcf/d or 15.5% of the area total, the US Bureau of Safety and Environmental Enforcement, said in its daily update. That means slightly more than 67,000 b/d of oil and 112,000 Mcf/d of gas was restored in the 24 hours prior to the latest BSEE report. Also, 51 platforms were still shut in Sept. 3, or 8% of the US Gulf's total, compared to 59 a day earlier. BSEE said its data is based on 31 operators reporting Sept. 3. If restoration efforts appear to be inching along rather slowly compared to the usual brisk pace of most industry efforts, it's likely due to the extensive number of platforms that were offline – 297 at peak, BSEE spokeswoman Karla Marshall said. "It was a pretty big storm, and a lot of production was shut in, so it's a little bit slower than the previous few" hurricanes, Marshall said. "[Industry] only has so many inspectors, and so many helicopters" to perform the reviews and other work prior to normalizing Gulf production. At peak, 1.559 million b/d of oil (84% of Gulf's total) and 1.6 Bcf/d of gas (61% of total US Gulf gas output) had been shut-in from Laura as the powerful Category 4 hurricane approached, and eventually hit, the far southwest Louisiana shore near the Texas border on Aug. 27. Also Sept. 3, two tropical waves and a low-pressure area of disturbance were located off the West African coast on Thursday and these could develop further in the next five days, the US National Hurricane Center said Sept. 3. The three events had potentials ranging from 20% to 70% of developing into cyclones in the next five days, NHC said.
Emission abates from leaking natural gas well of Texas coast (AP) — The emission from a leaking natural gas well off the Texas coast could no longer be seen from shore by Wednesday and was down to about 5 percent of what it was the day before, officials said. The well located on a platform about 3 miles (5 kilometers) offshore from Padre Island’s Bob Hall Pier was spewing a visible cloud of natural gas, water and condensate Tuesday, in addition to making a sound like a jet engine. Texas General Land Office spokeswoman Karina Erickson said Wednesday morning that the release from the platform could no longer be seen from shore. U.S. Coast Guard spokeswoman Hailye Reynolds said the emission from the well was down to about 5 percent of what it was on Tuesday. She said it was unclear why dramatic decrease happened. Efforts to get to the unmanned platform owned by Houston-based Magellan E&P Holdings Inc. by boat have been stymied by rough waters from high winds. A spokesman for Witt O’Brien’s, the company that’s handling Magellan’s operational response to the incident, said that as soon as weather permits, a crew will be sent by boat to make the repairs. The spokesman, Sean Fitzgerald, said they expect the repair to be completed sometime over the weekend. Officials so far have said the environmental impact has been minimal. The U.S. Coast Guard said a light natural gas sheen that surrounded the platform on Tuesday was gone by Wednesday and there hasn’t been an impact to the shoreline. The Texas Commission on Environmental Quality said Wednesday that so far air monitoring has not detected anything at levels of concern. Last month four people were killed when a dredging vessel in the Port of Corpus Christi hit a submerged propane pipeline, causing an explosion.
Baker Hughes Shows Gain in US Rigs - The total number of rotary drilling rigs operating in the United States rose by two this week, Baker Hughes Co. (NYSE: BKR) reported Friday. The 256-rig U.S. count includes 181 oil rigs (up one from last week), 72 gas rigs (no change) and three miscellaneous rigs (up one), Baker Hughes noted in a written statement emailed to Rigzone. The latest U.S. figure reflects a year-on-year decrease of 642 drilling units, with 557 fewer oil, 88 fewer gas and three additional miscellaneous for the period, the service company added. Baker Hughes also revealed the U.S. offshore rig count increased by two this week to 15 units. Compared to this time last year, the U.S. offshore figure is down by 11. Canada shed two rigs this past week, Baker Hughes continued. The firm stated that Canada’s 52-rig count consists of 19 oil rigs (unchanged from last week) and 33 gas rigs (down two). Ninety-five more rigs were operating in Canada at this time in 2019, noted Baker Hughes. The company pointed out that oil rigs are down 83 and gas rigs are down 12.
Cheniere to restart Sabine Pass LNG production after hurricane --Cheniere Energy and Cheniere Energy Partners say a comprehensive facility and operational assessment of the Sabine Pass Liquefaction facility and pipeline assets revealed no significant damage from Hurricane Laura. Bechtel, Cheniere's EPC contractor, is returning today to Sabine Pass to resume work constructing Train 6 and on the Third Berth project.Also, Sempra Energy (SRE +0.8%) reports no catastrophic wind damage at its Cameron LNG export facility in Louisiana and "minimal" flooding at the site of its proposed Port Arthur LNG terminal in Texas.Gulf Coast energy facilities braced for "catastrophic" damage from the hurricane but averted worst-case scenarios.
Changing demand for petroleum products has led to operational changes at U.S. refineries --Demand for transportation fuels in the United States has fallen since mid-March because of the spread of coronavirus and efforts to mitigate it. Demand for motor gasoline and jet fuel in particular has fallen to its lowest levels in years. In response, U.S. refineries reduced their operations to adjust to changing levels of overall demand for petroleum products and made other changes that resulted in proportionately less production of motor gasoline and jet fuel and more production of distillate fuel oil.Beginning in April, refiners responded to less demand for transportation fuels by decreasing overall refinery runs.Refinery runs were 22% lower in April 2020 compared with the full year 2019 average of 17.0 million barrels per day (b/d). In May, inputs to distillation units were similar, at 21% lower than the 2019 average. These reductions largely resembled the overall declines in demand for finished petroleum products in those months, as measured by product supplied.Because demand for motor gasoline and jet fuel was disproportionately affected by travel restrictions and other measures that were in place throughout much of the United States starting in late March, refineries changed operations in ways that resulted in less production of motor gasoline and jet fuel and more production of distillate fuel oil.These three products generally have the highest yield percentages from refineries. In 2019, refinery yields for motor gasoline averaged 46%; distillate fuel oil, 30%; and jet fuel, 10%. Refinery yields reflect the volumetric ratio of a finished product to refineries’ total inputs of crude oil and net inputs of unfinished oils.In April, refinery yields for motor gasoline fell to 41%, and jet fuel yields fell to 5%. Both values were, at the time, the lowest in the U.S. Energy Information Administration’s (EIA) monthly data series for refinery yields, which dates back to 1993. Refinery yields are zero-sum, meaning a decline in one product’s yield will mean an increase in another product’s or group of products’ yields.In April, U.S. distillate fuel oil yields increased to 38%, their highest value on record. In the U.S. Gulf Coast region, distillate fuel oil yields surpassed those of gasoline for the first time, reaching 40% for distillate and 39% for gasoline. In May, as travel increased, motor gasoline demand increased, but jet fuel demand continued to fall.Refineries can change their petroleum product output by running downstream units, or units that process the output from distillation units, differently. EIA surveys the amount of material (referred to as fresh feed) that runs through four types of downstream units (catalytic reformers, catalytic crackers, catalytic hydrocrackers and cokers). Of these four types, catalytic crackers tend to be associated with motor gasoline production, and these units were operated less than other downstream units in April.
Demand for jet fuel in the U.S. is recovering faster than in many other markets - - U.S. Energy Information Administration (EIA) U.S. jet fuel consumption has been particularly affected by responses to the 2019 novel coronavirus. However, analysis of flight-level data provided by Cirium on commercial passenger flights—a category of aircraft that the U.S. Energy Information Administration (EIA) estimates accounted for 73% of total U.S. jet fuel consumption in January 2020—suggests that demand for jet fuel in the United States has, so far, recovered faster than in many other major aviation markets. EIA estimates that as of August 16, 2020, consumption of jet fuel by U.S. commercial passenger flights was approximately 612,000 barrels per day (b/d), 43% of the estimated amount consumed on the same date one year earlier. This estimate is considerably higher than the estimate of jet fuel consumption compared with year-ago levels as of August 16, 2020, from Europe (36%), the rest of Africa (31%), the Middle East and North Africa (30%), the rest of Asia (28%), and in the rest of the Americas (24%). Relative jet fuel consumption in China (including its Special Administrative Regions Hong Kong and Macau) was, however, higher in August; China consumed 60% of the amount used in the previous year. As discussed in greater detail in a previous EIA analysis, differences in the speed and degree of a region’s commercial jet fuel consumption recovery can be attributed to a couple of key factors.First, each market’s or country’s exposure and response to COVID-19 has been different, particularly with respect to the timing of the disease’s arrival, the extent of government-required restrictions, and the country’s ability to effectively contain the disease. China’s relatively advanced state of recovery can be primarily attributed to its early exposure to COVID-19 and its relatively strict government controls. Second, regional differences can also be attributed to a market’s reliance on domestic, rather than international, air travel. Because of the less severe restrictions on domestic travel (the U.S. Department of State has officially limited or advised against travel with several dozen countries), the shorter distances typically involved, and the larger share of domestic air travel that is non-discretionary, domestic air travel has, in most markets, been relatively less affected by COVID-19 mitigation efforts than international air travel.
Harbor Island crude terminal project needs funding, pipelines after legal debate resolved — The lengthy legal fight for the Harbor Island crude export terminal was resolved amicably, but the Texas port project still requires more financial support, new pipelines and, perhaps most importantly, recovered global oil demand in order to ever move forward with construction. The Port of Corpus Christi and the tourist-friendly city of Port Aransas announced on Aug. 31 that they would settle their litigation, but Port CEO Sean Strawbridge acknowledged that a lot of pieces must still come together to make the Harbor Island project a reality even if he remains bullish on its long-term prospects. In a Sept. 2 interview, Strawbridge said he's glad the port and the city are "finally aligned" on the project with city services now set to receive more funding from the port. "The bigger question, of course, is are the economic conditions going to support development out there?" Strawbridge said. "I think eventually they will, but the economics are difficult at this point." The Harbor Island project is designed to accommodate VLCCs at an island terminal, which would be a first in the US. The roughly $1 billion would export up to 2 million barrels of crude per vessel, which is about how much VLCCs can accommodate. Harbor Island also would include a desalination plant for crude oil processing. Thus far, only one Gulf of Mexico port, Louisiana's LOOP, can fully load VLCCs without reverse lightering from smaller ships. Dollars and pipes Apart from pending permitting approvals from the state and the US Army Corps of Engineers to proceed with channel dredging, Strawbridge said another big financial backer is likely needed, as are at least two substantive pipeline projects to direct crude oil from the Cushing, Oklahoma storage hub to Corpus Christi. As it stands now, Corpus Christi, which emerged as the nation's top oil exporter late in 2019, exports crude almost entirely from the Permian Basin and South Texas' Eagle Ford Shale. "Harbor Island absolutely makes sense with Cushing connections, but it's challenged otherwise," Strawbridge said. Likewise, "We certainly would like to see a blue-chip player enter the space," Strawbridge said, in order to support the project with funding and industry expertise. The big private equity player, The Carlyle Group, walked away from the Harbor Island project last year, leaving developer Lone Star Ports with a sole owner in the form of the smaller firm, The Berry Group.
Permian Basin natural gas pipeline clears legal hurdle despite concerns - A federal judge in West Texas ruled in favor of a natural gas pipeline that would connect Permian Basin extraction operations with Gulf Coast refinery markets as the Sierra Club sought to block the pipeline due to its perceived threat to the environment along the route. Kinder Morgan’s $2 billion Permian Highway Pipeline would stretch about 430 miles from Waha, Texas in the Permian to the Gulf Coast via a 42-inch line. It would cross through central Texas and terminate southeast of Austin with the ability to access the liquefied natural gas (LNG) market on the Gulf Coast along with gas markets in Agua Dulce and Katy, Texas. The project faced stiff opposition as it passed through Texas Hill Country, where residents and environmental groups maligned an incident earlier this spring when drilling fluid was spilled in the Blanco River as the pipeline was built beneath. Kinder Morgan subsequently announced it would seek plans to reroute the line around the river. It was also challenged as it crossed through hundreds of water crossings, allegedly imperiling sensitive ecosystems, karstic formation and endangered species. The Sierra Club filed a motion in April for an injunction to halt construction of the pipeline, citing the current and future damage the project would cause to the environment during its ongoing construction and future use. The motion also alleged the pipeline did not receive proper permitting despite permits issued by the Army Corps of Engineers which the Sierra Club argued did not involve proper environmental analysis. But U.S. District Judge Robert Pitman for the Western District of Texas argued in his denial of the motion that the Sierra Club had not demonstrated adequate future impacts as the pipeline was almost completed with an expected in-service date in early 2021.
Second U.S. shale boom's legacy: Overpriced deals, unwanted assets - (Reuters) - Oil and gas companies plunged over $156 billion into corporate takeovers and land deals during the second U.S. shale boom, in a massive bet that good times would continue and crude prices would rise. Many of those deals have become financial albatrosses. The prospect for relief is limited: the industry is still working through the shock of a historic collapse in fuel demand in such a short period of time, prompted by the sudden impact of the coronavirus on global mobility. Oil companies are cutting their budgets to preserve cash and survive - not to spend it on buying more companies. That leaves few companies with the money or the appetite to buy distressed assets. Another 150 North American oil and gas producers could face bankruptcy by the end of 2022, according to Rystad Energy, if crude prices remain near current levels. The shale revolution turned the United States into the world’s largest crude producer, pumping out more than 12 million barrels per day (bpd) at its peak. The industry beat forecasts again and again for production growth, but rarely for financial returns. Still, the promise of future returns lured investors, including a wave of acquisitions that happened after the first boom when prices pulled back sharply from 2014 to 2016. Now, many of the 2016 to 2019 shale deals are financially unworkable due to low oil prices, according to six people familiar with the transactions. Of the 50 largest acreage purchases or M&A transactions between 2016 and 2019, at least 31 add value only if global benchmark Brent crude LOCc1 is above $50 a barrel, or $5 higher than current levels, according to energy research firm Wood MacKenzie. Production has fallen by more than 1 million bpd, and there is little to encourage a sustained rise in prices. Fuel storage is brimming worldwide, and fuel demand has been slow to recover even as global lockdowns ease. Investors are wary of energy shares, as the S&P 500 Energy sector .SPNY is down 40% this year even as the U.S. stock market touched new highs this month. Oil companies such as BP Plc (BP.L), Occidental Petroleum Corp (OXY.N) and Exxon Mobil Corp (XOM.N) made highly publicized purchases that have lost substantial value. BP, Royal Dutch Shell (RDSa.L) and others have cut the assumed value of those assets, conceding big wagers on shale will not pay off.
US oil, gas rig count rises by three to 285 heading into last trimester of 2020 - S&P Global — The US oil and natural gas rig count rose by three on the week to 285, rig data provider Enverus said Sept. 3, as the final trimester of the year approaches with the drilling arena not showing much change. Two of the three rigs added in the week that ended Sept. 2 were oil-focused, as that number rose to 196. The other rig was gas-focused, for a total of 89. The big jump for the week came from the Permian Basin of West Texas/New Mexico, which saw an increase of four rigs to 131. Both the Eagle Ford Shale of South Texas and the Haynesville Shale of East Texas/Northwest Louisiana gained one rig each, for totals of 11 and 37, respectively. "The Permian rig additions were from larger companies that may be able to make $44/b WTI economical," Matt Andre, an analyst for S&P Global Platts Analytics, said. EOG Resources, Occidental Petroleum, WPX Energy and QEP Resources each added a rig in the prolific basin, Andre said. But five of the US' largest domestic plays saw no change week on week. The Bakken Shale of North Dakota/Montana still has 10 rigs, the Denver-Julesburg Basin of Colorado six; the Marcellus Shale, mostly sited in Pennsylvania, 25; the SCOOP/STACK play in Oklahoma 10 rigs; and the Utica Shale mostly in Ohio, has six. The Texas Gulf Coast, where the count declined by three in the week that ended Aug. 26 and coincided with Hurricane Laura's landfall on the Texas-Louisiana border a day later, remains at three this week as operators continue to restore US Gulf of Mexico production. It is still unclear if there was a connection between the storm and those onshore rigs dropped from small fields in that region. Powerful storms such as Laura, which was a Category 4 – the second highest on the Saffir-Simpson Hurricane Wind Scale – often retain their force for a time even after they move inland. In any case, the total US rig count has bounced around since the 279 rig trough of early July and appears to be hovering in a slightly higher range.
Colorado considers oil well rules guarding against environmental racism - Denver Business Journal --Projects near minority, low-income communities may trigger permit scrutiny.
Oil and Gas Rulemaking to Delete Environmental Law References (2) -- The U.S. Forest Service proposed new oil and gas development regulations on Monday that eliminate references to environmental laws and defer final oil leasing decisions to the Interior Department. The proposed rules, which would apply to a land area the size of California and Montana combined, would delete references to complying with the National Environmental Policy Act and the Endangered Species Act “in favor of letting those laws and regulations speak for themselves,” according to a pre-publication notice appearing in the Federal Register on Monday.
Trump Admin Proposes 'Vicious' Plan for Fossil Fuel Lease Sales in California Amid Historic Wildfires - Especially given the climate-fueled wildfires ravaging the region, conservationists sounded alarm Thursday in response to a Trump administration proposal for an oil and gas lease sale in California, which would be the state's first such federal auction in eight years.At issue are over 4,300 acres of public land in Kern County, an area recently dubbed "the oil industry's political power center." The Bureau of Land Management (BLM) released a draft environmental assessment of the plan Wednesday for the sales, which would occur by the end of the year.A BLM statement announcing the proposal notes that California allows fracking—much to the ire of environmental groups.The proposal comes as California to reel from massive wildfires that have stretched firefighting resources thin and burned over 1.25 million acres amid a heatwave and the coronavirus pandemic."It's breathtakingly vicious for the Trump administration to expand drilling and fracking while California battles historic wildfires driven by climate change," Clare Lakewood, an attorney at the Center for Biological Diversity, said in a statement.Lakewood said that if the sales go through, adverse impacts on the climate will be guaranteed."More oil wells mean more greenhouse gases, more air pollution, and more destroyed habitat," she said, and warned that "selling this public land to oil companies will do significant harm to our environment, despite the administration's ridiculous claims."Drilling leases haven't been offered in the state since a federal judge ruled in 2013, based on a legal challenge from the Center for Biological Diversity and the Sierra Club, that BLM acted unlawfully in issuing oil leases in Monterey County without considering the environmental impacts of fracking.Other bids by the federal government to open public lands in California to fossil fuel drilling have sufferedsimilar fates. The Trump administration's proposals last year to offer up over 1 million acres of public land to oil drilling are the subject of ongoing litigation, the Center for Biological Diversity noted. “We've blocked any new federal leasing in California in court for eight years now, and we'll fight this too," said Lakewood.
Trump Admin Proposes Drilling for Oil and Gas in National Forests - The Trump Administration released a proposed rule allowing oil and gas drilling on millions of acres of protected national forests, The Houston Chronicle reported.The new rule would allow drilling without public review or environmental reviews that would analyze the impact of industrial actions, The Guardian reported."By undermining the public participation and environmental review required by the National Environmental Policy Act, this proposed rule puts the interests of the fossil fuel industry ahead of the public interest," Will Fadely, a senior government relations representative for The Wilderness Society, said in a statement.So far, the U.S. Forest Service allows drilling and exploration in roughly one-third of its protected forests, or about three percent of its lands. Now, a new analysis from The Wilderness Society finds that the proposed rule will transfer control of the lands from the Forest Service to the Bureau of Land Management, which will then open up drilling on millions of acres in Colorado, Montana, New Mexico, Nevada, Utah and Wyoming, The Guardian reported.The Forest Service would experience a drastically reduced role, with its duties limited to protecting specifically named natural resources.Although the rule mostly targets forests in the West, the proposed rule could also affect national forests on the East Coast, according to The Guardian. This means more forests could share the fate of Allegheny National Forest, now home to thousands of abandoned oil and gas wells, which taxpayers must pay to clean up, The National Resources Defense Council (NRDC) reported. As the National Audubon Society pointed out, national forests play an important role in storing carbon dioxide and combatting the climate crisis. By eliminating the necessary environmental review, the new leases will have free reign to cleave habitats with roads and pollute pristine lands.
Forest Service official meets with oil producers, ranchers The federal official who oversees the U.S. Forest Service heard from North Dakotans about oil and gas leasing and grazing during a Wednesday visit to Bismarck. U.S. Department of Agriculture Undersecretary for Natural Resources and Environment James Hubbard met with energy producers and ranchers, according to the offices of U.S. Sens. John Hoeven and Kevin Cramer, R-N.D. Among the issues discussed was the backlog of requests for oil and gas leasing permits in the Dakota Prairie Grasslands, including efforts to fill vacancies within the grasslands offices. The event comes after the Forest Service proposed a rule aimed at streamlining the process for identifying National Forest System land open for leasing, among other measures regarding oil development on federal land. Hoeven in a statement said he's also working to ensure equitable access to the grasslands for the state's ranchers. "As a western state, North Dakota has a significant presence of federal land, which carries real impacts on local industries, including our ranchers," he said. "That's why ensuring these lands are managed properly and access for local use is maintained are such important issues."
145 Progressive Groups Urge Biden to Shun Fossil Fuel Execs and Lobbyists -- A diverse coalition of nearly 150 progressive advocacy groups is demanding that Democratic presidential nominee Joe Biden ban fossil fuel executives and lobbyists from his 2020 campaign and commit to barring them from his administration if elected in November, warning that a cabinet stocked with Big Oilrepresentatives would render empty the former vice president's vows to confront the climate crisis with ambition and urgency.In a letter Tuesday morning, 145 organizations representing a wide array of progressive interests called on Biden to "ban all fossil fuel executives, lobbyists, and representatives from any advisory or official position on your campaign, transition team, cabinet, and administration," arguing there are countless qualified experts and advocates who have not attempted to benefit financially from polluting and extractive industries. "People who left government to serve on a fossil fuel industry board, enrich themselves as oil and gas advisors, receive funding from fossil fuel companies to espouse 'reasonable' climate positions, or work with industry front groups should have no role in a Biden administration or campaign," the groups wrote. "Neither should fossil fuel backers on Wall Street, who have attempted to profit off pollution." The letter's signatories — which include Oil Change U.S., Greenpeace, Justice Democrats, Sunrise Movement, People's Action, and Public Citizen — raised alarm at a Bloomberg report earlier this month indicating that industry-tied individuals like Jason Bordoff, a member of the National Petroleum Council, are advising the Biden campaign in an informal capacity. "Joe Biden can't address the climate crisis while listening to people taking checks from the fossil fuel industry like Ernest Moniz, Jason Bordoff, Ken Salazar, and Heather Zichal," Collin Rees, senior campaigner at Oil Change U.S., said in a statement. "Biden must act boldly in collaboration with grassroots leaders fighting for environmental and climate justice — which means ruling out positions for dangerous 'all-of-the-above' boosters whose time has passed." The groups' call comes hours after Biden, speaking in the battleground state of Pennsylvania on Monday, told supporters that contrary to President Donald Trump's claims, he has no plan to ban fracking even as he pushes for large investments in clean energy. Tamara Toles O'Laughlin of 350 Action said Biden's approach to the climate emergency will be judged not by soaring rhetoric and promises but by his actions during the presidential campaign and, if elected, while in office.
Study: There's no meaningful relationship between party control and domestic oil output - There's no doubt that President Trump and Joe Biden have hugely different energy policies, but the effect of a Biden win on U.S. oil production is less certain — at least in the near- and medium-term.According to a Rystad Energy note published last week, there's no meaningful relationship between party control and domestic output, which is historically far more influenced by other forces.How much will Biden's agenda, if he wins, affect how much U.S. output bounces back from the pandemic-fueled decline from record level production before the outbreak?
- Biden is vowing to end new oil-and-gas leasing on federal lands and waters, impose new emissions regulations, boost EV deployment and more.
- But he has not called for a ban on fracking that would block development on private lands at the heart of the (now stalled) U.S. boom.
A potential fracking ban on federal acreage would hardly have any impact on nationwide oil and gas output in the medium term, given the already existing depth of low-cost inventory and activity migration," Rystad notes.
Summer Fuel Demand Disappoints, Challenging Economy – WSJ - A swift recovery in fuel consumption by U.S. drivers is petering out, posing new challenges to the oil market, economy and global energy industry. After demand for gasoline surged from mid-April to late June, consumption has stayed relatively flat in the past two months and remains well below its prepandemic levels, government data show. The fizzling rebound highlights the lingering effects of coronavirus precautions and travel restrictions. Even as some states advance business reopening plans, rising cases in other parts of the country are fueling caution among consumers. Many companies have delayed plans to reopen offices, while many school districts and colleges around the country are opening with hybrid or remote instruction, taking a bigger bite out of fuel demand.The trend is a threat to the economy because people tend to spend more money when they are moving around and engaging with businesses. Some analysts think gasoline demand will need to rise for the economic recovery to continue at its current pace, especially with many Americans avoiding public transportation due to coronavirus concerns and seeking to take vacations before summer ends. Combined with other data points showing that improvements in consumer spending and hiring are cooling, the slower increase in fuel demand illustrates that the next phase of the economic recovery could be more difficult. The stalled demand rebound is helping keep U.S. crude-oil prices stuck in the low $40s per barrel, even with the Organization of the Petroleum Exporting Countries and companies from Exxon Mobil Corp. to Chevron Corp. curbing supply in response to the industry turmoil. Oil has remained in a narrow trading range for two months following a swift rebound after prices in April briefly dropped below $0 for the first time. As a result, fuel prices also have remained flat recently, a boon for those consumers who are able to take advantage at the pump but a threat to energy companies whose spending cuts and layoffs could add to the pressure on the economy.
Corps weighs Dakota Access easement options, plans to begin environmental review process _The federal agency embroiled in a lawsuit over the Dakota Access Pipeline is evaluating whether to continue allowing the line to pump oil following a court order revoking a key permit, and it plans to begin a lengthy environmental review this week. The U.S. Army Corps of Engineers indicated its plans in a court filing Monday. Because U.S. District Court Judge James Boasberg revoked the pipeline’s easement in a July ruling, the pipeline is now considered an “encroachment” on federal property managed by the Corps, the agency wrote in a status report. While the Corps weighs its options, it’s allowing Energy Transfer to continue operating the pipeline under the terms of that easement. The easement allows the line to cross under the Missouri River just north of the Standing Rock Sioux Reservation. The Corps’ general policy “is to require removal of encroachments,” but it can make exceptions, the agency said. The two “most plausible options” involve removing the pipeline or giving it permission to continue using the property through a method such as granting a new easement. The Corps acknowledged that the latter option would be subject to the National Environmental Policy Act, which is at the heart of the lawsuit filed by the Standing Rock Sioux Tribe and other tribes over the pipeline. “There’s something truly upside down about the situation we’re in,” said Jan Hasselman, an attorney representing Standing Rock.Issuing a new easement after the first was found to be in violation of the law “doesn’t make any sense,” he said. The Corps indicated it might make a decision within 60 days, or it could decline to act. It’s seeking input from other federal agencies, including the Pipeline and Hazardous Materials Safety Administration and the Department of Energy.
North Dakota's request to dismiss road closure suit denied - A federal judge has denied North Dakota’s request to dismiss a lawsuit filed over the five-month closure of a section of highway during the large protests against the Dakota Access oil pipeline. The federal lawsuit brought by members of the Standing Rock Sioux tribe and a reservation priest in 2018 alleges that the closure of state Highway 1806 near the pipeline route north of the reservation unduly restricted travel and commerce and violated the free speech and religious rights of them and others. It seeks unspecified monetary damages from state officials, Morton County and TigerSwan, a North Carolina-based company that oversaw private security for the Texas-based pipeline developer, Energy Transfer Partners. U.S. District Judge Daniel Traynor said in his 101-page ruling issued Tuesday that the state “may not have had a compelling interest in closing the road.” Attorneys for the county and the state officials, including Republican Gov. Doug Burgum, argued in court filings that the highway shutdown was warranted because of “mayhem” caused by some of the thousands of demonstrators who gathered in the area in 2016 and early 2017 to protest the $3.8 billion pipeline, which now moves North Dakota oil to Illinois.
North Dakota blues: The legacy of fracking - When oil drillers descended on North Dakota en masse a decade ago, state officials and residents generally welcomed them with open arms. A new form of hydraulic fracturing, or "fracking" for short, would allow an estimated 3 to 4 billion barrels of so-called shale oil to be extracted from the Bakken Formation, some 2 miles below the surface. The boom that ensued has now turned to bust as oil prices sagged in 2019 and then went into free fall with the spread of the coronavirus pandemic. The financial fragility of the industry had long been hidden by the willingness of investors to hand over money to drillers in hopes of getting in on the next big energy play. Months before the coronavirus appeared, one former oil CEO calculated that the shale oil and gas industry has destroyed 80 percent of the capital entrusted to it since 2008. Not long after that the capital markets were almost entirely closed to the industry as investor sentiment finally shifted in the wake of financial realities. The collapse of oil demand in 2020 due to a huge contraction in the world economy associated with the pandemic has increased the pace of bankruptcies. Oil output has also collapsed as the number of new wells needed to keep total production from these short-lived wells from shrinking has declined dramatically as well.Operating rotary rigs in North Dakota plummeted from an average of 48 in August 2019 to just 11 this month. Oil production in the state has dropped from an all-time high of 1.46 million barrels per day in October 2019 to 850,000 as of June, the latest month for which figures are available. Even one of the most ardent oil industry promoters of shale oil and gas development said earlier this year that North Dakota's most productive days are over. CEO John Hess of the eponymous Hess Corporation is taking cash flow from his wells in North Dakota and investing it elsewhere. So, what has this meant for the state? Not only is the oil industry in North Dakota suffering, but all those contractors who service the oil industry. Beyond that are the housing and public services which had to be expanded dramatically during the boom. Will there be enough people to live in that housing years from now? Will the cities be able to maintain the greatly expanded infrastructure their dwindling tax revenues must pay for? The state government relies on oil and gas revenues for 53 percent of its budget. So far those revenues are running 83 percent lower than projected for this year. In addition, the pandemic reduced other revenue sources, but those are returning to normal as the overall economy bounces back (at least for now). North Dakota's historically low unemployment rate popped from 2 percent in March to 9.1 percent in April, but has recently come down. Perhaps the most enduring legacy of the boom will be the damage to the landscape and the water in North Dakota from years of sloppy environmental practices. While companies are legally responsible for cleaning up their sites and capping old wells, in practice the state's failure to force companies to post bonds to pay for these things means much of the work will have to be done by the state or not done at all. This is because bankrupt companies are just abandoning their wells and other infrastructure. There will be no one left with money to sue to pay for the cleanup in many cases.
World’s Largest Oilfield Services Provider Sells U.S. Fracking Business - The world’s largest oilfield services provider, Schlumberger, is selling its North American fracking business to Liberty Oilfield Services for a minority stake in a new combined company after the oil price crash crushed the U.S. shale patch’s fracking activity. Schlumberger has agreed to combine its onshore hydraulic fracturing business in the United States and Canada—including its pressure pumping, pumpdown perforating, and Permian frac sand businesses—into Liberty, in exchange for a 37-percent equity interest in the combined company, the two firms said in a joint statement on Tuesday. The deal—which is subject to Liberty stockholder approval, regulatory approvals, and other customary closing conditions—is expected to close in Q4 2020. “The last several months have been extremely challenging for the world, the industry and the Liberty family. These times also bring opportunity. This transaction will be a transformative step forward in our journey as a company,” said Liberty’s chairman and CEO Chris Wright. This year, Schlumberger booked for Q2 its second straight quarterly loss on the back of a dramatic revenue slump in U.S. shale and asset impairment charges in what “has probably been the most challenging quarter in past decades,” as Le Peuch said. “North America revenue declined 48% sequentially with land revenue falling 60% as customers dramatically cut back spending,” the executive commented on the Q2 financials in July. According to Schlumberger, there are conditions for a modest increase in frac completion activity in North America in the third quarter, but if the economic recovery is slower and a second wave forces new major disruptions, they would be downside risks to its forecasts.
Schlumberger Sale Marks Shale Turning Point-- Schlumberger has become the biggest oil-service industry player yet to abandon frack work in North America, a sign that activity in the U.S. shale patch may never revisit previous highs. The provider of drilling and oil-production equipment agreed to sell its U.S. and Canadian fracking business to smaller rival Liberty Oilfield Services Inc. After similar exits over the past few years by Baker Hughes Co. and Weatherford International Plc, Halliburton Co. is now the sole global provider of well completions for shale, and even Halliburton has said it’s looking overseas for better growth. For Schlumberger, the world’s top oilfield-services company, the deal is a massive reversal from its North American buying binge over the past few years, which added frack-sand mines, artificial-lift technology and Weatherford’s frack fleet. For Liberty, meanwhile, buying Schlumberger’s OneStim unit in exchange for a 37% stake in the company means the oilfield contractor will more than double the size of its frack fleet in a market that has sidelined three-fourths of U.S. crews this year. “The Covid pandemic has thrown the world for a loop, bringing serious threats to our industry,” Chris Wright, chief executive of Denver-based Liberty, told analysts and investors Tuesday on a conference call. “But these dark hours are most fertile for opportunity.” The combination with OneStim, which is expected to close in the final three months of this year, will make Liberty the second-biggest U.S. fracker with 2.3 million horsepower, according to Citigroup Inc.
Schlumberger’s North American frac exit may signal the end of the U.S. shale boom--Schlumberger has become the biggest oil-service industry player yet to abandon frac work in North America, a sign that activity in the U.S. shale patch may never revisit previous highs. The provider of drilling and oil-production equipment agreed to sell its U.S. and Canadian fracing business to smaller rival Liberty Oilfield Services Inc. After similar exits over the past few years by Baker Hughes Co. and Weatherford International Plc, Halliburton Co. is now the sole global provider of well completions for shale, and even Halliburton has said it’s looking overseas for better growth. For Schlumberger, the world’s top oilfield-services company, the deal is a massive reversal from its North American buying binge over the past few years, which added frac-sand mines, artificial-lift technology and Weatherford’s frac fleet. For Liberty, meanwhile, buying Schlumberger’s OneStim unit in exchange for a 37% stake in the company means the oilfield contractor will more than double the size of its frac fleet in a market that has sidelined three-fourths of U.S. crews this year. “The Covid pandemic has thrown the world for a loop, bringing serious threats to our industry,” OneStim helps customers extract oil and gas from shale wells by blasting water, sand and chemicals underground to release trapped hydrocarbons. When combined with horizontal drilling, fracing launched the shale boom more than a decade ago. But now an historic crash in oil prices along with a glut of fracing gear has triggered a crisis that’s driven some fracers into bankruptcy. The combination with OneStim, which is expected to close in the final three months of this year, will make Liberty the second-biggest U.S. fracer with 2.3 million horsepower, according to Citigroup Inc. “The last several months have been extremely challenging for the world, the industry and the Liberty family,” Wright said in a statement announcing the deal. “This transaction will be a transformative step forward in our journey as a company.” Schlumberger’s sale comes less than three years after it acquired Weatherford’s fracing unit for $430 million. Liberty said Tuesday it plans to scrap 1 million horsepower -- essentially the former Weatherford fleet -- amid an industrywide glut. As shale explorers heeded investor calls rein in spending, fracing demand has dwindled. Beginning late last year, frac providers took the unusual step of scrapping much of their idle equipment. The business started to show signs of recovery at the start of 2020, until the pandemic paralyzed economic activity and the energy usage that underpins it. By July, Schlumberger was describing the decline in fracing demand as “precipitous,” contributing to a 40% plunge in second-quarter revenue.
Why Schlumberger Is Giving Away Its Fracking Business - 24/7 Wall St. Oilfield services giant Schlumberger Ltd. (NYSE: SLB) took a third-quarter, pretax impairment charge of $1.6 billion on its North American pressure pumping business last year. On Tuesday, the company contributed its onshore fracking business (OneStim) in the United States and Canada to Liberty Oilfield Services. In exchange, Schlumberger received a 37% stake in the expanded version of Liberty. Liberty shares closed Monday at $6.45, implying a market cap of around $550 million. The smaller company’s stock traded up by around 37% in the noon hour Tuesday, at around $8.86, implying a market cap of around $1 billion, valuing the OneStim business at right around $450 million.That tells nearly the whole story in the shale oil plays in North America. In its annual report for last year, Schlumberger said it was continuing to “right-size” its fracking capacity by stacking (mothballing) more fleets in light of lower demands. And that was before the COVID-19 pandemic. In the second quarter of this year, Schlumberger’s production revenue (including the OneStim business) fell by 48% to $1.6 billion and margins fell by 630 basis points sequentially to just 2%. North American production revenues fell by 58%. The write-down on production assets added to a total write-down of nearly $13 billion in the third quarter of last year. CEO Olivier Le Peuch had warned in September 2019 that Schlumberger would take such a write-down as the company shifted from its former strategy of taking equity positions in oil and gas assets and adopted a “focus on the company’s strength in digitization of oil and gas exploration and development.” Tuesday’s deal will help Schlumberger reach its goal of cutting 21,000 jobs and transitioning to a business model that is light on assets and heavy on technology that can be licensed to other oilfield services firms.
Fossil Fuels Are Here To Stay -- Crude oil accounted for 48.2 percent of final energy consumption globally in 1973. Forty-five years and huge renewable energy advancements later, crude oil’s share in total final energy consumption had fallen by a meager 8.6 percentage points to 40.8 percent.This is not a lot, even if we acknowledge that the drive to cut emissions started a lot later than the early 70s, so renewables have had less than 45 years to stake their claim as an alternative to fossil fuels. Speaking of which, coal’s share in the mix only fell by 3.6 percentage points in the 45-year period, to 10 percent of the total in 2018.Meanwhile, the share of electricity in this mix, thanks to renewables, went up from 9.4 percent to 19.3 percent, which is certainly impressive growth, especially given the abovementioned unequal start. But is it enough?Let’s look at the total energy supply. In 1973, crude oil accounted for 46.2 percent of the global energy supply. Gas accounted for 16 percent, and coal accounted for 24.5 percent. A category dubbed “Other” (excluding hydro, biofuels and biomass, and nuclear) accounted for 0.1 percent.Fast forward 45 years, and we have crude oil accounting for 31.6 percent of the total energy supply, gas accounting for 22.8 percent, and coal, somewhat surprisingly, rising to 26.9 percent. Meanwhile, the “Other” category has risen to 2 percent of the total. But so has total energy supply, and not by a small percentage, either. Between 1973 and 2018, global energy supply rose from 6,089 million tons of oil equivalent to more than 14,000 million tons of oil equivalent as the world’s population grew and became more affluent, driving energy demand up.It is hardly a surprise, then, that emissions have been rising, although the distribution of “responsibility” among the three fossil fuels has changed. Back in 1973, oil was the biggest emitter, accounting for 49.9 percent of the total, with gas accounting for 14.4 percent, and coal for 35.7 percent. In 2018, probably thanks to energy efficiency and the rising share of gas in electricity generation, among other things, the share of oil in total emissions fell to 43.1 percent. Meanwhile, however, coal’s share rose 44 percent, and the share of gas went up to 21.1 percent. What this suggests is what we already know: fossil fuels are cheap, which is why they are often preferred not just in regions that cannot afford to invest in wind and solar but in the world’s largest renewables investor, China, along with most other countries.
An Ecuadorian court will rule on the oil spill in the Amazon - An Ecuadorian court plans to give a ruling next Tuesday on an oil spill that contaminated several waterways in the Amazon in April, a legal process that will be preceded on Monday by a « People’s Ethical Tribunal », made up of human rights experts against those who consider responsible. The sentence will be issued in the city of Francisco de Orellana, also known as Coca, before a lawsuit for the adoption of precautionary measures in a protection action demanded by a hundred indigenous communities affected by pollution. More than 15,000 barrels, according to indigenous groups, ended up in the region’s rivers when three pipes of two oil pipelines that run from the Amazon, in the east, to the Ecuadorian coast, broke on April 7 due to a landslide in a highly seismic and eroded region. A disaster that those affected consider could have been avoided because, they affirm in a statement, « the Ministry of the Environment and the operators (of the pipelines) knew in advance of the imminent risk of the collapse that broke the pipeline, without there being evidence of the actions taken with that information. » « There is also no evidence of the deployment of effective and timely measures to contain the advance of the spill or to notify downstream communities about the dangers of contamination, » said an alliance of indigenous organizations and human rights. Those responsible for the Trans-Ecuadorian Pipeline System (SOTE), the Heavy Crude Oil Pipeline (OCP) and the Shushufindi-Quito pipeline, assure for their part that they closed the pipes as soon as they learned of their rupture, and that the spilled fuel is basically the amount remnant from the valves. And they insist that they offered water, food and doctors to the population. In addition to the companies OCP and Petroecuador, the lawsuit concerns the Ministries of Energy and Non-Renewable Natural Resources, Environment and Public Health.
Ministry monitoring Venezuelan oil storage vessel - Minister of Energy and Energy Industries, Franklin Khan, said they are closely monitoring a Venezuelan oil storage vessel which was said to be in an emergency situation near the Gulf of Paria. Khan said that the Ministry is monitoring the situation very closely regarding the NABARIMA, a floating stored oil (FSO) vessel which stores oil from the Corocoro Oil field in the Venezuelan Gulf. ‘The MEEI is monitoring the situation closely. There is currently a bi-lateral oil spill contingency plan between Venezuela and Trinidad and Tobago that will govern our response to any eventuality. Parties are free to request assistance from each other.’ The Ministry said the FSO would transfer oil to tankers for shipment abroad, however because of various international sanctions, the transfer vessels have stopped operating and the FSO is now at full capacity. ‘Information coming out of Venezuela is that the ship is upright and in a stable condition pending preparation for the transfer of the cargo to a contracted vessel,’ Khan said. According to a report by Maritime Bulletin, the NABARIMA was reported to be in an emergency situation with some 173,000 tons of oil aboard, and was suffering water ingress in the engine room area, developing a starboard list.
Eni seeks US clearance to transfer Venezuelan oil - Italy's Eni is seeking clearance from US sanctions authorities to transfer oil off of an impaired floating storage unit moored off Venezuela's coast. The Nabarima floating storage and offloading unit (FSO) belongs to PetroSucre, a joint venture controlled by Venezuela's state-owned PdV. Eni holds a minority 26pc stake. The vessel has been tethered at PetroSucre's Corocoro field in the Paria Gulf for 10 years. But since production was suspended last year, it has remained idle with a full cargo of around 1.2mn bl of medium-quality crude. In recent days, workers on and off the FSO have described precarious conditions on board, including faulty equipment and internal flooding that caused the vessel to list. Repairs have since allowed the water to recede. Eni said yesterday that the FSO has been stabilized and discounted any current risk of an oil spill. In a follow-up statement today, Eni affirmed that a transfer would require US clearance. "Eni is collaborating with PetroSucre to define and implement a program for unloading the oil cargo from Nabarima. This program implies the utilization of a dynamic positioning tanker and technical services. In order to be implemented, under USA sanctions this program requires a green light." The US government has not commented on the situation. Neighboring Trinidad and Tobago has signaled concern over a possible spill and offered to provide technical assistance.
Llangennech diesel spill cleanup continues - THE oil spillage has seeped further than the contained area of the Loughor Estuary following the train derailment at Llangennech on Wednesday, August 26. Natural Resources Wales continue to monitor and carry out daily surveys around the estuary but today, Sunday, August 30, they have confirmed that the diesel has now been seen at many locations as far as Crofty – whereas it was initially contained in the upper reaches of the estuary near the Loughor Bridge and upstream. Work is still continuing to recover the diesel from the derailed wagons and that had spilled. They have dug trenches to intercept the diesel and are using vacuuming and skimming operations. All of the watercourses around the area are being monitored and NRW have confirmed that the booms and absorbent pads that are being used are working well to remove a considerable quantity of diesel from the watercourses. The shellfisheries and cockle beds in the area remain closed for the foreseeable to ensure safety. It is hoped that a crane will be delivered tomorrow, Monday, August 31 and work will begin to move the wagons on Tuesday, September 1. At 11.15pm on Wednesday, August 26, a freight train carrying 25 tank wagons with around 75.5 tonnes of diesel in each, derailed at Llangennech near Carmarthenshire. 10 of the 25 wagons were derailed, causing a large diesel spill which also seeped into the nearby Loughor Estuary, and a major fire. Residents were told to leave their homes and the two employees who were aboard the train were uninjured and able to limit the number of wagons to catch fire. It took fire crews until the morning of Friday, August 28 to extinguish the fire, which limited the initial efforts to contain the diesel due to safety and priority of extinguishing the fire. Although initial measures were put in place at a safe distance to help to limit the spill polluting the estuary. The incident is being investigated by the Rail Accident Investigation Branch and the section of the railway remains closed.
39 dolphins, 3 whales wash up on Mauritius after oil spill (AP) — The number of dead dolphins that have washed ashore on the Indian Ocean island nation of Mauritius after an oil spill has risen to 39, the government said Friday, ahead of protests this weekend against authorities’ handling of the disaster at sea. Three whales also were found dead Friday, an environmental expert said. It’s not yet clear what caused the dolphins’ deaths, but alarmed environmentalists have called for an investigation. The dolphins began washing up this week, several days after some 1,000 tons of fuel spilled from a Japanese ship that ran aground on a coral reef then split apart under the pounding surf. The country’s fisheries minister, Sudheer Maudhoo, told reporters that some dead dolphins had injuries but he denied reports that oil had been found inside them and called their deaths a “sad coincidence.” Experts were still studying the corpses. Other dolphins may have died out at sea, environmental consultant and former lawmaker Sunil Dowarkasing said Friday. “We expect that a lot more have been killed during these few days,” he said, adding that three whales also died. It was not clear what kind of whales they were. Dowarkasing believes the dolphins either died from the fuel or were poisoned by toxic materials on the ship, which was sunk offshore after the vessel split in two. Most of the remaining 3,000 tons of fuel had been pumped off the ship by then. Thousands of civilian volunteers worked for days to try to minimize the damage, creating makeshift oil barriers by stuffing fabric bags with sugar cane leaves and empty plastic bottles to keep them afloat. Environmental workers carefully ferried dozens of baby tortoises and rare plants to shore, plucking some trapped seabirds out of the goo. Prime Minister Pravind Jugnauth earlier blamed bad weather for the slow response to the ship’s grounding, but Dowarkasing said “no one believes in official reports.”
Thousands march in Mauritius over dead dolphins, oil spill — Honking and drumming, tens of thousands of people protested Saturday in Mauritius over the government’s slow response to an oil spill from a grounded Japanese ship and the alarming discovery of dozens of dead dolphins in recent days. Outraged over the Indian Ocean island nation’s worst environmental disaster in years, protesters displayed signs such as “You have no shame” and “I’ve seen better Cabinets at IKEA.” “Inaction,” one protester scrawled on an inflatable dolphin held above the crowd. They marched peacefully through the capital, Port Louis, a month after the ship struck a coral reef a mile offshore. It later cracked under the pounding surf and spilled around 1,000 tons of fuel oil into fragile marine areas. “It’s clear we are at a turning point in the history of our country,” a commentary in the Le Mauricien newspaper said, as residents said the demonstration could politicize a broader section of the population. Addressing the crowd in Port Louis, some speakers called for top officials to step down. There was no immediate government comment. Other protests were reported outside the Mauritius High Commission in London and in Paris and Perth, Australia. “I’d be surprised if it’s not close to 100,000” people who attended the march, local writer Khalil Cassimally said. Public demonstrations aren’t common in Mauritius, but “one of the things that really binds people together is the sea,” he said. “It’s one of the jewels of this country, and everyone feels very passionately about this.” Another protest is planned on Sept. 12 in Mahebourg, one of the most affected coastal villages, Cassimally said. Mauritius depends heavily on tourism, and the spill has been a severe blow on top of the effects of the coronavirus pandemic, which has limited international travel. Authorities on Friday said at least 39 dead dolphins have washed ashore but it’s not yet clear what killed them. The government said no fuel oil was found in two necropsies so far and called the deaths a “sad coincidence.” Civil society groups should be present as necropsies continue, and independent experts should give a second opinion, local environmental group Eco-Sud said Friday. Some experts fear water-soluble chemicals in the fuel are to blame.
Japan proposes wiping down Mauritius mangroves by hand to remove oil (Kyodo) -- Japan is proposing manually wiping down mangrove trees to remove from their roots any oil that was spilled from a grounded Japanese freighter off Mauritius in the Indian Ocean, a source familiar with the matter said Saturday. The idea, which was suggested by Japan at a Mauritian government task force meeting in late August, also involves removing any fallen leaves covered in oil. The work would be conducted by a firm entrusted by the island nation and it is up to the Mauritian government to adopt the measure, the source said. On July 25, the bulk carrier Wakashio transporting a total of some 3,800 tons of fuel oil and 200 tons of diesel, operated by Mitsui O.S.K. Lines Ltd., ran aground near Pointe d'Esny, designated as a wetland of international importance under the Ramsar Convention. More than 1,000 tons of oil began leaking from the vessel on Aug. 6. According to the Japanese Environment Ministry, high-pressure washing apparatuses or chemicals should not be used to remove oil from mangrove trees as they could damage them. Japanese experts dispatched as members of a disaster relief team have confirmed the effectiveness of manually wiping the roots down by testing the method by themselves. Tokyo is considering dispatching additional experts specializing in birds and wildlife after the Mauritian government requested research into the effects of the oil spill on its native fauna. Meanwhile, tens of thousands of protesters gathered Saturday in the Mauritian capital Port Louis to accuse the government of being slow in responding to the oil spill. They demanded the resignation of Prime Minister Pravind Jugnauth and government officials over the incident. A lawsuit has been filed against the country's fisheries minister Sudheer Maudhoo and environment minister Kavydass Ramano to pursue the government's responsibility. The two were summoned to appear in court on Aug. 21. Some protesters called for an investigation into the deaths of around 40 dolphins, which had washed ashore as of Saturday. Others have focused on the government's failure to provide a sufficient alert to the ship before it initially ran ashore. The government has denied the claims, insisting it had signaled a warning to the carrier but received no answer. The oil removal process has seen delays due to poor weather conditions, it added.
Two sailors killed as Mauritius oil spill clean-up boats collide - Two crew members from a tugboat involved in cleaning up an oil spill off Mauritius were killed late on Monday when their vessel collided with a barge in bad weather, the island nation's prime minister said. "It is tragic that we lost two of the tugboat crew, while two others are still missing," Prime Minister Pravind Jugnauth said on Tuesday. Four other members of the crew were rescued by helicopter and two were still missing, Mahend Gungapersad, a member of parliament for the opposition Labour Party, told Reuters news agency. "We are doing everything we can to locate them, with all our means and with the help of fishermen in the area," the prime minister said as he extended his "sympathies to the family" of the slain sailors. The MV Wakashio, a Japanese bulk carrier, struck a coral reef off the Indian Ocean island nation's coast in July, spilling thousands of tonnes of crude oil into the sea and choking marine life in a pristine lagoon. According to Gungapersad, the tugboat and barge sent out distress signals between 7:30 and 8pm on Monday. The tugboat capsized after the collision. Both ships were moving parts salvaged from the site of the oil spill into the port. Jugnauth said the tug was transporting some fuel at the time "but there is no risk of a leak". He promised an investigation into the accident. The prime minister faces growing anger over his administration's handling of the oil spill, which has caused untold ecological damage to a protected coastline that sustains the island's economy.
Mauritius oil spill- Japan asked to pay $34 million for recovery - Mauritius has asked Japan to pay close to 3.6 billion yen (€28.5 billion, $34 million) in order to support local fishermen whose livelihoods were adversely impacted by an oil leak last month, according to a Mauritian government document accessed by Japanese news agency Kyodo News. The spill occurred when Japanese bulk carrier MV Wakashio, owned by Nagashiki Shipping Co., crashed into a reef off southeastern Mauritius in July. More than 1,000 tons of oil spilled into waters that are home to mangrove forests and endangered species, causing Mauritius to declare a "state of environmental emergency" on August 7. As the island nation attempts to control the spread of the fuel, there has been considerable debate over who will pay for the damage inflicted on sea life and those who are dependent on it for their livelihoods. According to the document cited by Kyodo, Mauritius has estimated a cost of over $30 million for constructing 100 fishing boats, while over $240,000 would be used for providing training to 475 fishermen and 60 skippers who may not have experience fishing in rough seas. Over $3 million has been requested for renovating Mauritius' Albion Fisheries Research Center, which was built in the 1980s with Japanese assistance. According to the Japanese agency, an official from the Embassy of Japan in Mauritius confirmed that various requests had been received. The official said, "It is true that we are currently receiving various requests. Japan is working to promptly do all that it can." Over the weekend, Mauritius saw large scale demonstrations in the capital, the biggest protests the country has seen in 40 years. Close to 75,000 protesters marched against Prime Minister Pravind Jugnauth's inaction in dealing with the crisis, calling for the leader and many top officials to step down. Signs such as "Your incompetence is destroying our island," "You have no shame," and "I've seen better Cabinets at IKEA" were carried by protesters, who were also outraged over the alarming discovery of dozens of dead dolphins in recent days.
Fire Breaks Out on Oil Tanker - A fire has broken out on the Panama-flagged New Diamond oil tanker 38 nautical miles off Sangamankanda Point east of Sri Lanka, the country’s navy announced on Thursday. The navy said it responded immediately to a distress signal of an explosion of a boiler followed by a fire in the main engine room. According to the distress signal received by the Maritime Rescue Coordinating Center in Colombo, the oil tanker was manned by 23 crew members including five Greek and 18 Philippine nationals. The tanker was said to be transporting 270,000 metric tons of crude oil from the port of Mina Al Ahmadi in Kuwait to the Indian port of Paradip. In addition, 1,700 metric tons of diesel required for the use of the tanker was also said to have been stored onboard. As of September 4, the Sri Lanka Navy, Air Force, Ports Authority, the Indian Navy and the Indian Coast Guard were still working to contain the spread of the fire on board the oil tanker, the navy outlined. There is no risk of oil leakage from the vessel to the sea so far, according to the navy, which revealed that one Philippine national of the crew has not been located since the incident. “In accordance with the instructions given by the health sector in the current Covid-19 emergency situation, arrangements have been made to direct the rescued crew members to the shore for treatment and isolation following the proper health instructions,” the navy said in a statement posted on its website. “The navy has been entrusted with the responsibility for maritime search and rescue operations in Sri Lanka’s search and rescue region. Remaining true to its mandate the Navy has responded to distress calls of this nature, made by ships and craft, on numerous occasions previously,” the navy added in the statement.
Oil tanker in flames off Sri Lanka, spill possible - The vessel was carrying more than a quarter-million tons of crude oil when it caught fire. It is larger than the vessel that spilled oil near Mauritius in July. An oil tanker caught fire near the coast of Sri Lanka on Thursday as it was traveling from Kuwait to the Indian port of Paradip. Sri Lankan authorities said there was no immediate danger to the coastline should there be a leak from the New Diamond tanker, which was carrying 270,000 tons of crude and 1,700 tons of diesel. The vessel had 23 people on board, 18 Filipinos and five Greeks. One Filipino crew member was missing, another was injured. The rest were rescued by a Panama-flagged vessel, according to the Sri Lankan navy. Tugboats traveled to the scene of the fire in order to battle the blaze. "An Indian coast guard vessel and one of our ships are now in the process of dousing the flames that have spread to the deck of the tanker's service area," navy spokesman Captain Indika de Silva told French news agency AFP. The New Diamond oil tanker is classified as a very large crude carrier (VLCC) and is about 330 meters (1,080 feet) long. It is larger than the Japanese bulk carrier MV Wakashio, which crashed into a reef just off the coast from Mauritius last month and leaked more than 1,000 tons of oil into the nation's waters. Sri Lankan officials said they were hopeful that they could contain the fire on the New Diamond. But they would require help if a spill were to take place, as they do not have the proper equipment to deal with that situation. India said it was sending three naval vessels and two more coast guard vessels to deal with the fire and potential marine pollution.
Chinese And Saudi Oil Giants Book Mammoth Losses - The first two quarters of the current year have been brutal to U.S. oil and gas companies. According to Refintiv data, the energy sector has recorded the lowest Q2 2020 earnings growth rate (-168.5 percent) of any U.S. sector with earnings clocking in at -$10.5B vs. $15.3B in the year-ago comparable quarter. That's far worse than the S&P 500 average earnings growth rate of -19.1 percent when you exclude the energy sector. As expected, oilfield service companies operating in the Shale Patch have been faring worse than most thanks to huge capex cuts by producers.But U.S. shale producers can take some comfort in the fact that their counterparts elsewhere have not been doing much better.Saudi and Chinese oil and gas giants have been booking massive losses, too, proving that Covid-19 is a pandemic of equal opportunity.In the first half of 2020, Saudi oil revenue plummeted by 42.6 percent year-on-year to SAR 224.73 billion ($60.68B), compared to SAR 391.3 billion ($105.65B) for last year's corresponding period. April and May recorded the biggest revenue slumps at 65.4 percent and 66.1 percent, respectively, to SAR 24 billion ($6.48B) and SAR 23.87 billion ($6.44B), respectively. Net profit at Saudi Aramco (ARMCO) slumped 73 percent to 24.6B riyals ($6.57B) in Q2 vs. estimates of 31.3B riyals. But unlike BP Plc. and Royal Dutch Shell (NYSE:RDS.A), which cut their dividends in recent months, the majority state-owned company maintained its Q2 dividend of $18.75B. Aramcoplans to cut 2020 capex to a range of $20-$25B in 2020 in order to pay the$75B dividend it pledged to investors during its IPO. China--the world's largest oil importer-- has been importing less from Saudi Arabia as it boosts imports from the U.S., ostensibly in a bid to fulfill its obligations for the January trade deal. Still, China is coming nowhere near holding up its end of the bargain: Last month, we reported that China's imports of U.S. energy products, including crude oil, liquefied natural gas (LNG), and metallurgical coal, clocked in at just $1.29B through June, or a mere 5 percent of the $25.3B energy target. Asia's largest oil and gas producer and China's second-largest refiner, PetroChina, has reported a first-half net loss of 29.98 billion yuan ($4.36 billion) compared with a profit of 28.42 billion yuan ($4.13B) while H1 revenue fell 22 percent to 929 billion yuan ($135.1B). That's despite crude oil output climbing 5.2 percent to 475.4 million barrels while natural gas production rose 9.4 percent to 2.15 trillion cubic feet thanks to the state giant sustaining domestic drilling in a bid to safeguard national supply security. Meanwhile, China's largest petroleum refiner, Sinopec Shanghai Petrochemical Company Limited, saw net losses of 22.88 billion yuan ($3.33 billion) in contrast with a net profit of 31.34 billion yuan ($4.56B) over last year's corresponding timeframe amid sluggish demand for refined products.
Saudi Aramco shelves $20 billion petrochemical plant . -- Saudi Aramco is shelving multi-billion-dollar petrochemical and gas projects as the state oil giant’s determination to preserve its dividend forces it to cut back on major investments. The world’s biggest oil company is abandoning plans to build a $20 billion crude-to-chemicals plant at Yanbu on the kingdom’s Red Sea coast, according to two people familiar with the matter, who asked not to be identified because they aren’t authorized to speak to the media. It’s also reviewing a decision last year to buy 25% of Sempra Energy’s liquefied natural gas terminal in Texas -- which would cost several billion dollars -- and has already taken some staff off the project, according to a separate person. Aramco declined to comment. Sempra said it continued to work with Aramco and others “to move our project at Port Arthur LNG forward.” The about-turns come as the Saudi firm tries to honor its pledge to pay a $75 billion dividend annually for the next several years. Rivals such as BP Plc and Royal Dutch Shell Plc slashed shareholder payouts as the coronavirus pandemic crushed energy demand. Oil prices have more than doubled since April to around $45 a barrel but are still down more than 30% this year. “There is excess supply in the oil market, and full recovery may not happen until 2022,” said Mazen Al Sudairi, head of research at Al Rajhi Capital in Riyadh. “It makes sense to cut capital expenditure.” Aramco’s Chief Executive Officer Amin Nasser is navigating one of the oil industry’s most turbulent periods less than a year after listing the company in the Saudi capital of Riyadh. The initial public offering brought added scrutiny to the once secretive firm, though the Saudi government still owns 98% of it. Nasser has already slashed 2020 investment to as little as $25 billion from the original target of around $40 billion, and will probably reduce it even more next year. All of Aramco’s major greenfield projects -- which involve building plants from scratch -- are under review, and the company is likely to invest in existing assets instead, said one of the people. Delaying the chemical and gas projects is a blow to Aramco’s plans to diversify from pumping and selling oil. As part of that strategy, the company aimed to roughly double refining capacity to boost its unprofitable downstream unit. It also bought Saudi state chemical producer Sabic for $69 billion this year to break into new manufacturing industries. Aramco planned to build the Yanbu plant with Sabic to create a new outlet for its crude as the global shift to greener energy worsens the long-term demand outlook for petroleum products. One option for Yanbu is to build petrochemical facilities and integrate them with existing refineries, said one of the people. Aramco will finish a feasibility study by the end of the year, they said.
Saudi Arabia Keeps Oil Deliveries to America All But Halted -Saudi Arabia is continuing to divert its oil away from America’s shores. The kingdom last month loaded about 5.6 million barrels a day on to tankers, a small increase from July, vessel-tracking information compiled by Bloomberg show. Within that, an ever-smaller share went to the U.S., and import data show that deliveries in August were likely the lowest in decades. For Saudi Arabia, cutting oil shipments into the U.S. is the quickest way to telegraph to the wider market that it’s tightening supply. The U.S. government is alone among major oil-consuming nations in publishing weekly data on crude stocks and imports, which carries enormous influence among oil traders. Saudi crude exports to the U.S. dwindled to about 177,000 barrels a day in August, tracking data show. Although that number could rise as more vessels indicate their final destination, it’s still a fraction of the 1.3 million barrels a day the kingdom shipped to America in April, when the flow threatened to upend the U.S. oil market. While it’s clear that shipments on the trade route are slumping, data from vessel tracking and cargo unloadings often won’t tally perfectly with weekly import numbers produced by the Energy Information Administration. That’s because it’s not possible to know precisely when a cargo that gets unloaded will appear in the U.S. government data. The U.S. imported 355,000 barrels of Saudi crude, or about 51,000 barrels a day, in the week through Aug. 28, cargo data compiled by Bloomberg show. That entire volume arrived on the West Coast. Preliminary EIA figures for the same period show U.S. imports of Saudi crude at 197,000 barrels a day, near a record low. The EIA began publishing weekly data in 2010. Before then the figures were monthly. August’s imports work out at a rate of about 310,000 barrels a day, according to Bloomberg calculations based on EIA data for the first four weeks of the month. The last time monthly imports were lower was 1985. Government data processing and weather can further complicate the picture. A 496,000-barrel shipment of Saudi crude arrived in Port Arthur, Texas, on Aug. 21, though it wasn’t processed by customs until three days later. It’s not clear whether it was included in the EIA figures. Hurricane Laura, which battered the U.S. Gulf Coast last week, may have also affected shipments. More than 60 oil and gas tankers sought refuge in the western Gulf, waiting for the storm to pass. Only two supertankers from Saudi Arabia were scheduled to reach the region after mid-August -- others were bound for the West Coast.
Oil prices edge up on stimulus support despite ample supplies - Oil prices nudged up on Monday, with Brent futures set to post a fifth straight monthly gain, as global stimulus measures underpin prices even as demand struggles to return to pre-COVID levels in a well supplied market. Brent crude futures for November were unchanged at $45.81 per barrel, while U.S. West Texas Intermediate crude was at $43.05 a barrel, up 8 cents. WTI is on track for a fourth monthly rise, reaching $43.78 a barrel on Aug. 26 when Hurricane Laura struck. Oil markets largely shrugged off the hurricane's impact on Friday as energy companies continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut before the storm. A weak U.S. dollar has supported oil prices even though fuel demand has struggled to recover amid the coronavirus pandemic and supplies remain excessive, although crude may face hurdles going forward, analysts said. "We believe that the impact of a cheaper dollar from current levels will see a minimal impact on crude purchases, irrespective of slightly more favorable crude pricing," RBC Capital's Mike Tran said in an Aug. 27 note. "The relationship between demand and price elasticity is blunted in the current environment, because oil is already cheap and readily available and there currently exist a dearth of buyers." China's crude imports in September are set to fall for the first time in five months as record volumes of crude are storedin and outside of the world's largest importer, data from Refinitiv and Vortexa showed. Reflecting concerns about rising supplies and sluggish global economic recovery, hedge funds and money managers cut bullish wagers on U.S. crude to the lowest level in nearly four months, data showed on Friday. Higher oil and gas prices are also encouraging U.S. producers to resume drilling as the country's oil and gas rig count rose by three to 254 in August, according to data from energy services firm Baker Hughes Co. Separately, Saudi Aramco discovered two new oil and gas fields in the northern regions, the kingdom's energy minister said on Sunday, state news agency SPA reported.
Oil moves lower, but posts fourth straight positive month as demand rebounds -- Oil prices were little changed on Monday, with Brent slipping from a five-month high as global demand struggled to return to pre-COVID levels in a well supplied market. Brent crude futures for November stood at $45.79 a barrel, down 2 cents. West Texas Intermediate crude settled 36 cents, or 0.8%, lower at $42.61 per barrel. Brent is set to close out August with a fifth successive monthly price rise, while WTI is on track for a fourth monthly gain, having hit a five-month high of $43.78 a barrel on Aug. 26 when Hurricane Laura struck. With the economic recovery from coronavirus lockdowns still muted, some analysts said the market could remain oversupplied with fuel. "The issues over demand just aren't showing signs of any real improvement," said John Kilduff, partner at Again Capital in New York. "That's what's holding us back." Abu Dhabi National Oil Company told its customers on Monday it will reduce October supplies by 30%, up from a 5% cut in September, as directed by the United Arab Emirates government to meet its commitment on the recent OPEC+ agreement. "With demand gradually recovering, this will allow the market to better absorb the inventory glut from earlier this year," OCBC's economist Howie Lee said. Energy companies continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut before the storm. A weak U.S. dollar and a survey on Monday showing strength in China's services sector supported oil prices even though fuel demand has struggled to recover amid the coronavirus pandemic and supplies remain ample, analysts say, cautioning of hurdles for crude going forward. China's crude imports in September are set to fall for the first time in five months as record volumes of crude are stored in and outside of the world's largest importer, data from Refinitiv and Vortexa showed.
Oil Gains on Weak Dollar - -- Oil rose to trade near $43 a barrel in New York with support from a weaker dollar, while U.S. crude stockpiles are expected to fall further. Futures added 1.2% after the U.S. currency extended losses to the lowest level since May 2018, making commodities priced in the dollar more appealing. Crude inventories fell by 2 million barrels last week for a sixth weekly draw, according to a Bloomberg survey, which would be the longest run of declines this year. Meanwhile, AstraZeneca Plc has started a large-scale human trial of its coronavirus vaccine in the U.S. as many major economies struggle to contain the outbreak that has hit oil and fuel demand. Oil capped a fourth monthly gain in August but has struggled to make a convincing push above $43 a barrel as rising coronavirus infections raised concerns about sustained demand. However, the biggest producer in the United Arab Emirates signaled it may slash output in October to meet the country’s target under a global production-cuts deal, helping to ease a global glut. “The market is playing a wait-and-see approach,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. “With some indicators showing that demand recovery is waning and supply is picking up, prices may move in a downward trend in the next couple of months.” West Texas Intermediate for October delivery rose 49 cents to $43.10 a barrel on the New York Mercantile Exchange as of 7:55 a.m. London time after losing 1.8% in the previous three sessions Future climbed 5.8% last month. Brent futures for November settlement gained 1.2% to $45.82 on the ICE Futures Europe exchange after falling 1.2% on Monday. U.S. gasoline stockpiles fell by 3.55 million barrels last week, according to the survey. That would be a fourth weekly draw if confirmed by Energy Information Administration data on Wednesday. Industry figures are due Tuesday. However, demand concerns still linger. Virus cases in the U.S. topped 6 million, while Covid-19 fatalities in India surpassed Mexico’s, giving it the third-largest death toll globally. The headwinds may force top crude exporter Saudi Aramco to slash the price of its flagship Arab Light crude by $1 a barrel for October sales to Asian customers as refiners struggle to make profits.
Oil prices rise on improving economic data - Oil prices rose on Tuesday, reversing overnight losses as better-than-expected U.S. manufacturing activity data spurred hope for a post-pandemic economic recovery, and as analysts forecast a sixth weekly drawdown in U.S. crude inventories. The dollar was at it lowest in more than two years against a basket of currencies, pressured by the U.S. Federal Reserve's loosening of inflation policy last week, which was supportive for oil as dollar-priced commodities become cheaper for global buyers. Brent crude futures gained 30 cents, or 0.66%, to settle at $45.58 per barrel, while West Texas Intermediate crude futures settled 15 cents, or 0.4%, higher at $42.76 per barrel. "Everyone is looking for a draw, of one degree or another, in the API this afternoon," "The manufacturing numbers and the bullishness around the AstraZeneca virus vaccine added to the optimism," he said. U.S. crude stocks were forecast to have fallen by about 2 million barrels last week, according to analysts in a Reuters poll ahead of weekly data from the American Petroleum Institute at 4:30 p.m. ET (2030 GMT) and the government on Wednesday. Gasoline inventories were expected to have fallen by 3.6 million barrels. U.S. manufacturing activity accelerated to a more than 1-1/2-year high in August amid a surge in new orders, but employment continued to lag, supporting views that the labor market recovery was losing momentum. The Institute for Supply Management (ISM) said its index of national factory activity increased to a reading of 56.0 last month from 54.2 in July. That was the highest level since January 2019 and marked three straight months of growth. Strong Chinese manufacturing data also lifted oil prices, said Jeffrey Halley, a senior market analyst at OANDA. The Caixin/Markit Manufacturing Purchasing Managers' Index(PMI) showed China's factory activity expanded at the fastest pace in nearly a decade last month, bolstered by the first increase in new export orders this year. Bulls also pushed up equities, with the MSCI world equity index close to a record peak on Tuesday. Yet oil, which often moves in tandem with equities, remains reined in by demand concerns. In a Reuters poll of 43 analysts and economists, global oil demand was seen contracting by between 8-10 million barrels per day (bpd) versus July's 7.2-8.5 million bpd consensus. Brent was forecast to average $42.75 a barrel in 2020, up from July's $41.50 consensus and compared with an average price of $42.60 so far this year. Brent is expected to average $50.45 in 2021.
U.S. oil prices log first gain in 4 sessions as upbeat economic data boost demand prospects - - Oil futures notched modest gains on Tuesday, with U.S. prices up for the first time in four sessions, finding support as some economic data show signs of recovery, boosting prospects for energy demand. Prices are “aided by broader economic sentiment,” said Robbie Fraser, senior commodity analyst at Schneider Electric, in a Tuesday note. “Relatively bullish Chinese manufacturing data has reinforced the view that East Asia continues to push closer to pre-COVID demand levels—a core component of any long-term oil price recovery. In the U.S. Tuesday, the Institute for Supply Management said its manufacturing index rose to 56% in August, up a fourth month in a row, from 54.2% in July. West Texas Intermediate crude for October delivery CL.1, -0.65% CLV20, -0.65% on the New York Mercantile Exchange rose 15 cents, or nearly 0.4%, to settle at $42.76 a barrel, while November Brent crude, the global benchmark, settled 30 cents, or 0.7%, higher at $45.58 a barrel on ICE Futures Europe. Earlier weakness in the dollar had provided a lift to dollar-denominated oil prices, with the ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, touching 91.746, its lowest since 2018. The index, however, moved up in the wake of a better-than-expected U.S. manufacturing survey reading. Oil futures lost ground Monday but WTI logged its fourth straight monthly rise and Brent rose for a fifth straight month. In other energy trading Tuesday, October gasoline rose 0.9% to $1.2247 a gallon, while October heating oil added 1.1% at $1.2308 a gallon.
WTI Rebounds On Hurricane-Driven Crude Draw, Production Plunge --Oil is tumbling this morning following 'Russia poisoned Navalny with Novichok' headlines combined with reports that OPEC’s key ally also raised oil production last month.The nation pumped 41.7 million tons of crude and condensate in August, preliminary data from the Energy Ministry’s CDU-TEK unit show, up 5.1% from July, when lower OPEC+ quotas were in force.This week's data will start to show the effects of Hurricane Laura's destructive trip through the Gulf states. DOE:
- Crude -9.36mm (-2.0mm exp)
- Cushing +110k
- Gasoline -4.32mm
- Distillates -1.675mm
US crude stocks tumbled 9.36mm barrels last week amid Hurricane Laura production shut-ins. Gasoline and Distillate stocks also declined as refineries were forced to close... Hurricane Laura's effect on US crude production is clear as over 80% of the Gulf was shut in... US Crude production plunged 1.1mm b/d last week...(graphs source: Bloomberg)Having traded at around $43 for a week or so, WTI was slammed lower ahead of the DOE data and spiked back higher after the big crude and gasoline draws... Let's see how long this bounce lasts. Catherine Ngai, Bloomberg's oil trading reporter, sums it up perfectly: "Important to remember that so many numbers here in today’s data will be impacted by Hurricane Laura. So please take it all with a grain of salt!"
Oil drops 3% to one-month low on weak U.S. gasoline demand - Oil fell more than 2% on Wednesday, reversing course as gasoline demand fell in the United States in the latest week, an indication that economic recovery from the pandemic may be slower than expected. Futures prices turned negative after weekly government data from the U.S. showed lower gasoline demand from a week earlier, shrugging off bullish crude inventory data. "The market is trying to dismiss the number as a storm-related one-off," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "While the storm may have exaggerated the numbers, it doesn't justify the amount of the sell-off that we got." Crude inventories fell by 9.4 million barrels in the last week to 498.4 million barrels, a far steeper dive than the 1.9 million-barrel drop that analysts expected in a Reuters poll. The data reflects a period during which Hurricane Laura shut output and refining facilities. Brent crude, the global benchmark, fell $1.15, or 2.5%, to settle at $44.43 per barrel, after two days of price gains. West Texas Intermediate crude settled 2.9%, or $1.25, lower at $41.51 per barrel. Oil has recovered from historic lows hit in April, when Brent slumped to a 21-year low below $16 and U.S. crude ended one session in negative territory. A record supply cut by the Organization of the Petroleum Exporting Countries and allies, a grouping known as OPEC+, has supported prices. The producers have begun to return some crude to the market as demand partially recovers and OPEC in August raised output by about 1 million barrels per day (bpd), a Reuters survey found on Tuesday.
The weak dollar is the 'only support' for oil prices, analyst says - Oil prices are likely to continue creeping up simply due to a weak dollar, an analyst said on Thursday. "As far as fundamentals are concerned, there is really not much to move oil around either way, which is why we have seen it pretty range bound, but within that continuing to grind higher because of a weaker dollar," said Vandana Hari, founder of Vanda Insights, an energy consultancy. "That's been the only support, I would say." Like most commodities traded internationally, oil is denominated in dollars, so a weaker greenback lends support to prices. In March, a futures contract for U.S. crude prices dropped more than 100% and turned negative for the first time in history as demand collapsed due to the coronavirus pandemic. There was a slight rebound in crude oil prices through May and June as economies reopened after lockdowns to contain the coronavirus. But oil demand has fallen in July and August in some countries like India, while flatlining in others, she told CNBC's "Squawk Box Asia." On Thursday, international benchmark Brent crude oil futures were trading around $44.50 a barrel at 10:36 a.m. HK/SIN, while U.S. West Texas Intermediate futures were around $41.65 a barrel. Hari said the greenback is likely to remain under pressure through 2021 as it would be in the interest of the U.S. economy to keep the dollar lower. This will give some lift to crude oil prices. U.S. President Donald Trump's efforts "to keep the U.S. stock markets buoyant" will also help, said Hari. That would include lots of monetary and fiscal stimulus and positive news on a coronavirus vaccine. "These measures will keep risk-on trade, it will keep sentiment quite buoyant in larger global financial markets," said Hari. "To some extent, I think it will support sentiment in oil, it will prop up oil."
Oil closes slightly lower, regaining most of an early 3% drop - Oil prices fell on Thursday, at one point touchig their lowest since early August as U.S. unemployment data fed fears of a slow recovery for the economy and fuel demand a day after weak U.S. gasoline demand data. Brent crude fell 30 cents, or 0.7%, to $44.13 a barrel. West Texas Intermediate crude futures settled 14 cents, or 0.34%, lower at $41.37 per barrel. Both benchmarks fell more than 2% earlier in the session. U.S. stock prices sank as investors sold high-flying tech stocks and worried about economic recovery after Labor Department data showed the number of Americans filing new claims for unemployment reached a seasonally adjusted 881,000 for the latest week. Continuing claims remained high, with millions out of work. A day earlier both oil benchmarks fell more than 2% after U.S. Energy Information Administration (EIA) data showed domestic gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier. Consumption of other oil products also fell. "The market failed to react positively to the drawdown in inventories and then threw in the towel for the Labor Day weekend," Analysts warn that upcoming refinery maintenance and the end of the summer driving season could also limit crude demand. WTI crude has come under pressure "after U.S. refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil", ANZ Research said in a note on Thursday. Due to shutdowns ahead of Hurricane Laura, U.S. refinery utilization rates fell by 5.3 percentage points to 76.7% of total capacity, the EIA said. Some analysts believe processing will not rebound in the fall. "These factors suggest a seasonal drop-off in refinery runs and higher oil inventory levels as we advance through September," AxiCorp market strategist Stephen Innes said.
Oil prices continue to slide as U.S. data feeds fuel demand worry - (Reuters) - Oil prices settled lower on Thursday, at one point touching their lowest since early August as U.S. unemployment data fed fears of a slow recovery for the economy and fuel demand a day after weak U.S. gasoline demand data. Brent crude LCOc1 settled down 36 cents, or 0.8%, to $44.07 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures were down 14 cents, or 0.3%, at $41.37 a barrel. Both benchmarks fell more than 2% earlier in the session. U.S. stock prices sank as investors sold high-flying tech stocks and worried about economic recovery after Labor Department data showed the number of Americans filing new claims for unemployment reached a seasonally adjusted 881,000 for the latest week. Continuing claims remained high, with millions out of work. A day earlier both oil benchmarks fell more than 2% after U.S. Energy Information Administration (EIA) data showed domestic gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier. Consumption of other oil products also fell. [EIA/S] “The market failed to react positively to the drawdown in inventories and then threw in the towel for the Labor Day weekend,” said Phil Flynn, analyst at Price Futures Group in Chicago. Analysts warn that upcoming refinery maintenance and the end of the summer driving season could also limit crude demand. WTI crude has come under pressure “after U.S. refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil”, ANZ Research said in a note on Thursday.
Oil prices fall below $40 on mounting demand concerns --Oil in New York closed below $40 a barrel for the first time in a month as a selloff in broader markets exacerbated concerns over weakening demand following a sluggish summer driving season. U.S. benchmark crude futures tumbled nearly 4% on Friday, leading oil to post its worst week since June. Stocks weakened and the S&P 500 Index dropped more than 3% before easing losses. Meanwhile, the upcoming U.S. Labor Day holiday will mark an informal end to the summer driving months and a customary drop-off in demand is looming with refineries soon shutting for seasonal maintenance. “It’s a big psychological level” “Settlement below $40 a barrel and the fact that we have turnaround season,” creates conditions where it’s “impossible make a bullish argument.” Crude is off to a weak start in September as coronavirus flare-ups in various parts of the world threaten a sustained rebound in oil consumption at a time when the Organization of Petroleum Exporting Countries and its allies are returning oil to the market and easing historic output curbs. Russia’s energy minister said demand has returned to 90% of pre-Covid levels, but limited travel and work from home arrangements are slowing down the recovery. “This has been the summer driving season that wasn’t,” “The demand situation just continues to haunt this market.” Meanwhile, key refineries are still recovering from storms that swept through the U.S. Gulf Coast last week. Citgo Petroleum Corp. and Phillips 66Lake Charles refineries in Louisiana may be facing many more weeks of downtime as they wrestle with loss of power and damage related to Hurricane Laura. West Texas Intermediate fell $1.60 to settle at $39.77 a barrel in New York, the lowest level since early July. Prices dropped 7.5% decline this week, the biggest weekly loss since June. Brent for November settlement dropped $1.41 to end the session at $42.66 a barrel. Plus, with profit margins so low, “refineries are not really in a rush to come back into service after Laura,” said Gary Cunningham, director of market research at Tradition Energy. “That is bearish to crude because we do have some pretty good stockpiles right now.”
Oil drops nearly 4% to end the week lower, snapping four-week win streak - Oil prices fell more than 3% on Friday, headed for their biggest weekly decline since June as concern around a slow economic recovery from the COVID-19 pandemic added to worries about weak oil demand. Brent crude, the international benchmark, settled $1.41, or 3.2%, lower at $42.66 per barrel. West Texas Intermediate crude fell $1.60, or 3.8%, to settle at $39.77 per barrel. Prices were pressured by extended declines in the U.S. equities market and by a report showing U.S. job growth slowed further in August as financial assistance from the government ran out. Nonfarm payrolls increased by 1.37 million jobs last month, though employment remained 11.5 million below its pre-pandemic level and the jobless rate was 4.9 percentage points higher than in February. The unemployment rate fell to 8.4% last month, compared with a forecast 9.8%, which some market analysts said would lessen urgency in Washington, D.C. to pass additional economic stimulus legislation. "The hopes for more stimulus are going out the window," said John Kilduff, partner at Again Capital in New York. "We need to see economic activity back up to get demand flowing." A U.S. government report this week showed domestic gasoline demand has fallen again, while middle distillate inventories at Asia's Singapore oil hub have surpassed a nine-year high, official data showed. . "The bigger market picture is overall bearish sentiment that kicked off with lower gasoline demand reports on Wednesday," said Paola Rodriguez-Masiu, analyst at Rystad Energy. Global oil demand could fall by 9-10 million barrels per day (bpd) this year due to the pandemic, Russian Energy Minister Alexander Novak said. A record supply cut since May by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, has supported prices. OPEC began in August to ease the scale of the cuts, raising output by almost 1 million bpd, according to a Reuters survey.
U.S. oil benchmark ends below $40 a barrel, down over 7% for the week – While the Dow skidded 600 points on Friday, oil futures closed below $40 a barrel for the first time since early July. The drop contributed to a loss for the week amid concerns over prospects for demand, losses in the stock market and strength in the U.S. dollar pushing prices to their lowest in nearly two months. West Texas Intermediate crude for October delivery fell $1.60, or 3.9%, to settle at $39.77 a barrel on the New York Mercantile Exchange. November Brent, the global benchmark, lost $1.41, or 3.2%, at $42.66 a barrel on ICE Futures Europe. Both crude benchmarks settled at their lowest since July 9, based on the front-month contracts, according to Dow Jones Market Data. Oil was pressured by a strengthening U.S. dollar, as it also got “swept up in the wave of risk-off sentiment and selling in broader markets,” Matt Smith, director of commodity research, at ClipperData, told MarketWatch. The dollar was trading 0.4% higher for the week, as gauged by the ICE U.S. Dollar Index, a measure of the buck’s strength against a half-dozen currencies. The greenback got a boost Friday, in part, from better-than-expected monthly U.S. employment data, which revealed a drop to 8.4% in the August unemployment rate, from 10.2%. Oil demand also continues to be a key concern. “Crude demand in the U.S. is being reined in, driven by weaker crack spreads as a result of stymied product demand and elevated inventories—particularly relating to middle distillates,” said Smith. Crack spreads refer to the price difference between crude oil and the products refined from it and middle distillates include heating oil and diesel.
Greek-Turkish standoff escalates war danger in eastern Mediterranean - The escalating confrontation in the eastern Mediterranean between Turkey and Greece has reached a new and dangerous stage. Top officials of NATO member states are openly threatening to wage war against one another in conflicts that could set the Mediterranean and the world ablaze. Last Thursday, Turkish F-16 jets blocked Greek F-16s off Crete from overflying disputed zones of the eastern Mediterranean where Turkey is drilling for oil and gas. In July, Greek and Turkish naval flotillas steamed directly towards each other, avoiding a clash only at the last minute when Berlin intervened, calling Ankara and ordering the Turkish ships to change course. Tensions escalated in August, when France dispatched two warships and Rafale jets to back Greece. The European Union (EU) foreign ministers meeting on Friday in Berlin marked a further shift to a more aggressive stance, backing Greece against Turkey. After the meeting, EU foreign policy chief Josep Borell said: “We are clear and determined in defending European Union interests and solidarity with Greece and Cyprus. Turkey has to refrain from unilateral actions.” Borell indicated the EU could adopt economic sanctions to strangle the Turkish economy later this month. While thanking “the efforts deployed by Germany in this attempt to look for solutions through dialogue between Turkey and Greece and Cyprus,” he expressed the EU’s “growing frustration” with Turkey and proposed sanctions against Turkish officials. He added that broader “restrictive measures could be discussed at the European Council on 24-25 September.” In follow-up questions, Borell explained that the EU could target industries “in which the Turkish economy is more interrelated with the European economy.” The same day, President Emmanuel Macron issued an extraordinary threat, comparing French deployments in Greece to the “red line” policy that saw France, Britain and the United States bomb Syria. This 2018 bombing, based on fraudulent allegations that the Syrian regime had used chemical weapons, led Moscow to accelerate its build-up of Syrian air defences. Macron said his policy is based on the view that aggressive military action is the only way forward. “When it comes to Mediterranean sovereignty, I must be consistent in deeds and word,” he said. “I can tell you that the Turks only consider and respect that. If you say words that are not followed by acts ... What France did this summer was important: it’s a red line policy. I did it in Syria.” Turkish officials responded this weekend by warning that the Greek policy backed by the EU could provoke war. They cited Greek Prime Minister Kyriakos Mitsotakis’ threats to expand Greece’s exclusive economic zone from six to 12 miles—including around Greek islands directly off the coast of Turkey—and reports that Greece is strengthening its ground forces on these islands. “This would be grounds for war, a casus belli,” declared Turkish Foreign Minister Mevlüt Çavuşoğlu, while Vice President Fuat Oktay said: “If it is not grounds for war, what is it?”
How Should the European Union Respond to Rising Greece-Turkey Tensions? --The European Union is seeking to mediate in a naval confrontation on its doorstep, in the Eastern Mediterranean, which involves NATO partners Greece and Turkey, as well as EU member Cyprus.EU foreign ministers are discussing the issue and, without de-escalation, sanctions against Turkey could be implemented. But so far, the two most powerful EU nations have adopted a ‘good cop, bad cop’ approach that conveys different and confusing messages – and has not prevented escalation. Chancellor Angela Merkel, with the added authority of holding the EU’s six-month revolving presidency, has launched a German initiative to prevent escalation, reduce tensions and overcome longstanding conflicts. But French President Emmanuel Macron, while not eschewing mediation, has opted for a show of force, sending French naval vessels into disputed waters to counter the presence of Turkish warships. The dispute is ostensibly over ownership of offshore gas deposits and the delimitation of 200-mile exclusive economic zones (EEZs).Turkey has sent exploration vessels and warships into waters claimed by Greece and Cyprus and begun drilling for gas. Despite its 1,600 kilometre Mediterranean coastline, Turkey is the only Eastern Mediterranean state without internationally recognised rights to offshore resources in the area because nearby Greek islands and Cyprus have secured the right to generate EEZs under the United Nations Convention on the Law of the Sea (UNCLOS). Turkey is one of fifteen UN members that is not a party to UNCLOS, and Ankara insists that Turkey’s continental shelf gives it ownership rights that take priority over the UNCLOS-backed claims of Cyprus and Greece. But the dispute also reflects deep-rooted rivalries. Greece and Turkey are at loggerheads over the division of Cyprus and rival maritime claims in the Aegean. Ankara asserts the right of ‘the Turkish Republic of North Cyprus’, recognized only by Turkey, to a share of offshore gas resources. The government of the Republic of Cyprus accepts in principle the rights of Turkish Cypriots to a stake in the country’s energy resources, but this commitment has yet to be tested as Cyprus is still seeking investors to fund the infrastructure to bring deep-water Cypriot gas to market. Differences over offshore gas have also been exacerbated by the Libya conflict, with Greece and Turkey supporting opposing sides. Turkey concluded a delimitation agreement with Libya in 2019, which sweeps aside Cypriot and Greek claims. Greece responded in August by inking a partial maritime delimitation agreement with Egypt which is incompatible with Turkish claims. Greek and Turkish vessels collided at sea in mid-August and there is a risk of further clashes. In January, Cyprus, Egypt, Greece, Israel, Italy, Jordan, and the Palestinian Authority set up the Eastern Mediterranean Energy Forum, which Ankara views as threatening Turkish interests.
"Poisons Regional Peace": Turkey Enraged After US Lifts Decades-Old Arms Embargo On Cyprus The timing significantly comes amid Turkey's Mediterranean gas exploration standoff with Greece and Cyprus, which this past weekend very nearly resulted in shots fired, as the conflict gets increasingly militarized: the US has announced it will lift a decades-old arms embargo on Cyprus. For now, the US move will only allow "non-lethal" military items to be exported to EU member Cyprus. US Secretary of State Mike Pompeo relayed the change to Republic of Cyprus President Nicos Anastasiades in a Tuesday phone call. Pompeo further "reaffirmed US support for a comprehensive settlement to reunify the island" - given the arms embargo was imposed in the first place in 1987 in the hope it would encourage reunification, following Turkey's military invasion and occupation of the northern half of the island since 1974. President Anastasiades welcomed the temporary sanctions lifting, while predictably Turkey sees it as a direct threat, urging Washington to reverse course: "It poisons the peace and stability environment in the region," the Turkish foreign ministry said, adding it does "not comply with the spirit of alliance" between the US and Turkey. If Washington did not reverse course, the ministry said, "Turkey, as a guarantor country, will take the necessary decisive counter steps to guarantee the security of the Turkish Cypriot people, in line with its legal and historical responsibilities. But Pompeo reaffirmed on Twitter that "Cyprus is a key partner in the Eastern Mediterranean," and added, "We will waive restrictions on the sale of non-lethal defense articles and services to the Republic of Cyprus for the coming fiscal year."
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