*as widely quoted, on a front month contract basis...contract prices for December, January and February natural gas are and have been higher than the front month price over the period cited....
oil prices finished lower for the first week in three on rising fuel inventories and the prospect for new coronavirs related lockdowns...after inching up 0.7% to $40.88 a barrel last week on bullish economic reports and the success of OPEC's supply cuts, the contract price of US light sweet crude for November delivery opened lower on Monday on disappointing economic data from China, but steadied to finish down just 5 cents at $40.83 a barrel supported by hopes for a U.S. fiscal package as OPEC+ members stressed compliance to their output cuts...oil prices started lower on Tuesday, as oil traders struggled to interpret the result of the previous day’s OPEC+ meeting, but rallied midday to finish 63 cents higher at $41.46 a barrel on the prospect that Congress was nearing a deal on coronavirus relief as trading in the November contract expired... subsequently, the contract price of US light sweet crude for December delivery, which had risen 64 cents to $41.70 a barrel on Tuesday, was hit in after hours trading after the American Petroleum Institute reported a surprise build of US crude inventories and hence opened more than 1% lower on Wednesday, and then accelerated their decline after the EIA reported that gasoline inventories rose by the most since May, while gasoline consumption slid to the lowest since late September and ended down $1.67, or 4%, at $40.03 a barrel, as rising cases of Covid-19 in the U.S. and Europe led to the prospect for more economic shutdowns...oil prices struggled to recover from the news on gasoline Thursday, but managed to post a gain of 61 cents at $40.64 a barrel after Nancy Pelosi said the two sides were nearing agreement on an economic stimulus package, boosting expectations that demand might improve...oil prices held those gains early Friday after Putin indicated Russia would be prepared to extend supply cuts in the face of the COVID-19 pandemic, but then sank after Libya’s National Oil Corp said it would restore exports from key ports and that crude output would reach 1 million barrels per day within four weeks, and finished down 79 cents at $39.85 a barrel...that left the US benchmark price down 2.5% on the week as talks appeared to stall on a stimulus deal before the election, while the price of the December crude contract finished 3.1% lower than the prior week...
natural gas prices, on the other hand, finish higher for the third straight week on falling gas production and on rising exports...after rising 1.2% to $2.773 per mmBTU last week on an unseasonably small addition to inventories, the contract price of natural gas for November delivery opened more than 4% lower Monday on a jump in gas production amid further uncertainty surrounding the pace of LNG exports recovery, but recovered to finish 2.2 cents higher as traders focused more on rising LNG exports and colder weather coming next week than the increase in output.....natural gas prices then jumped over 4% on Tuesday on rising LNG exports from Sabine Pass and on forecasts for colder weather and more heating demand over the next two weeks than was previously forecast, with the November gas contract rising 11.8 cents, or 4.2%, to settle at $2.913 per mmBTU, the highest close for a front month contract since January 2019...prices were then up another 11 cents to another 20 month high on Wednesday, after a report showed October's natural gas production to be the lowest since September 2018 and on track to drop for a fourth month in a row for the first time since June 2016...however, the gas price rally lost steam on Thursday and prices fell 1.6 cents, even though the EIA reported a slightly smaller than expected weekly storage build, because LNG exports kept rising, and then fell another 3.6 cents to $2.971 per mmBTU on Friday on forecasts for lower demand in November as gas price increases were causing electric power generators to burn cheaper coal...nonethess, November natural gas prices still ended up 7.1% on the week and will likely be reported higher next week when reports will reference the contract price of natural gas for December delivery, which fell 2.3% this week but still closed at 22.4 cents higher than November gas at $3.195 per mmBTU..
the natural gas storage report from the EIA for the week ending October 16th indicated that the quantity of natural gas held in underground storage in the US increased by 49 billion cubic feet to 3,926 billion cubic feet by the end of the week, which left our gas supplies 345 billion cubic feet, or 9.6% greater than the 3,581 billion cubic feet that were in storage on October 16th of last year, and 353 billion cubic feet, or 9.1% above the five-year average of 3,599 billion cubic feet of natural gas that have been in storage as of the 16th of October in recent years....the 49 billion cubic feet that were added to US natural gas storage this week was a bit less than the forecast for a 51 billion cubic foot increase from an S&P Global Platts' survey of analysts, and it was also below the average of 75 billion cubic feet of natural gas that are typically added to natural gas storage during the same week over the past 5 years, and it was much lower than the 92 billion cubic feet that was added to natural gas storage during the corresponding week of 2019...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending October 16th showed that due to a big increase in our oil exports and a decrease in our oil production, we needed to withdraw oil from our stored commercial supplies for the 11th time in the past thirteen weeks and for the 16th time in forty weeks...our imports of crude oil fell by an average of 167,000 barrels per day to an average of 5,118,000 barrels per day, after falling by an average of 447,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 901,000 barrels per day to an average of 3,036,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,082,000 barrels of per day during the week ending October 16th, 1,086,000 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 600,000 barrels per day lower at 9,900,000 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 11,982,000 barrels per day during this reporting week...
meanwhile, US oil refineries reported they were processing 13,026,000 barrels of crude per day during the week ending October 16th, 551,000 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 total of 252,000 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 791,000 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 (+791,000) 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 that there must have been an error or errors of that magnitude in the oil supply & demand figures we have just transcribed....moreover, since last week's fudge factor was -785,000 barrels per day, indicating a week over week difference of 1,576,000 barrels per day in the line 13 balance sheet adjustment, the difference between those errors means any week over week comparisons of oil supply and demand figures reported here are complete nonsense...however, since most everyone 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 as published, just as they're watched & believed to be accurate by most everyone in the industry, in what is clearly a case where a common delusion has become reality...(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 5,315,000 barrels per day last week, which was 13.8% less than the 6,167,000 barrel per day average that we were importing over the same four-week period last year....the 252,000 barrel per day net withdrawal from our total crude inventories included 143,000 barrels per day that were withdrawn from our commercially available stocks of crude oil and 109,000 barrels per day were being withdrawn from the oil supplies in our Strategic Petroleum Reserve, space in which is now being leased for commercial use, and hence the recent SPR additions and withdrawals should really be included in our commercial supplies....this week's crude oil production was reported to be 600,000 barrels per day lower at 9,900,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states fell by 600,000 barrels per day to 9,400,000 barrels per day, while a 14,000 barrels per day increase to 464,000 barrels per day in Alaska's oil production still added 500,000 more barrels per day to the rounded national total...last year's US crude oil production for the week ending October 18th was rounded to 12,600,000 barrels per day, so this reporting week's rounded oil production figure was 21.4% below that of a year ago, yet still 17.5% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 72.9% of their capacity while using 13,026,000 barrels of crude per day during the week ending October 16th, down from 75.1% 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 past thirty years...hence, the 13,026,000 barrels per day of oil that were refined this week were 17.9% fewer barrels than the 15,865,000 barrels of crude that were being processed daily during the week ending October 18th of last year, when US refineries were operating at 85.2% of capacity...
with the decrease in the amount of oil being refined, gasoline output from our refineries was also lower, decreasing by 307,000 barrels per day to 8,933,000 barrels per day during the week ending October 16th, after our refineries' gasoline output had decreased by 282,000 barrels per day over the prior week...and since our gasoline production is still recovering from a multi-year low in the wake of this Spring's covid lockdown, this week's gasoline output was 11.5% less than the 10,098 ,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 138,000 barrels per day to a three year low of 4,131,000 barrels per day, after our distillates output had decreased by 263,000 barrels per day from the prior three year low over the prior week...after this week's decrease, our distillates' production was 13.3% less than the 4,765,000 barrels of distillates per day that were being produced during the week ending October 18th, 2019...
even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 4th time in 16 weeks and for the 11th time in 38 weeks, rising by 1,895,000 barrels to 227,016,000 barrels during the week ending October 16th, after our gasoline supplies had decreased by 1,626,000 barrels over the prior week...our gasoline supplies increased this week because the amount of gasoline supplied to US markets decreased by 287,000 barrels per day to 8,289,000 barrels per day, and because our imports of gasoline rose by 111,000 barrels per day to 509,000 barrels per day while our exports of gasoline fell by 26,000 barrels per day to 699,000 barrels per day...so despite the gasoline inventory drawdowns of recent weeks, our gasoline supplies were 1.8% higher than last October 18th's gasoline inventories of 226,201,000 barrels, and about 2% above the five year average of our gasoline supplies for this time of the year...
meanwhile, with our distillates production at another three year low, our supplies of distillate fuels decreased for the 11th time in 29 weeks and for the 30th time in 52 weeks, falling by 3,832,000 barrels to 160,719,000 barrels during the week ending October 16th, after our distillates supplies had decreased by 7,245,000 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 587,000 barrels per day to 3,588,000 barrels per day, as our exports of distillates fell by 46,000 barrels per day to 1,243,000 barrels per day, while our imports of distillates fell by 8,000 barrels per day to 152,000 barrels per day....but even after this week's inventory decrease, our distillate supplies at the end of the week were still 33.1% above the 120,786,000 barrels of distillates that we had in storage on October 18th, 2019, and about 19% above the five year average of distillates stocks for this time of the year...
finally, with the big increases in our oil exports and the drop in our oil production, our commercial supplies of crude oil in storage (not including commercial oil in the SPR) fell for the 12th time in the past nineteen weeks and for the 18th time in the past year, decreasing by 1,002,000 barrels, from 489,109,000 barrels on October 9th to 488,107,000 barrels on October 16th ...but even after the decreases of recent weeks, our commercial crude oil inventories were around 10% above the five-year average of crude oil supplies for this time of year, and about 43.4% above the prior 5 year (2010 - 2014) average of our crude oil stocks for the third weekend of October, 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 had generally been rising over the past two years, except for recently and during the past two summers, after generally falling over the year and a half prior to September of 2018, our commercial crude oil supplies as of October 16th were 12.7% above the 433,151,000 barrels of oil we had in commercial storage on October 18th of 2019, 15.4% more than the 422,787,000 barrels of oil that we had in storage on October 19th of 2018, and 6.7% above the 457,341,000 barrels of oil we had in commercial storage on October 20th of 2017...
This Week's Rig Count
the US rig count rose for the 6th week in a row during the week ending October 23rd, but for just the 8th time in the past 33 weeks, and hence it is still down by 63.9% over that thirty-three week period....Baker Hughes reported that the total count of rotary rigs running in the US rose by 5 to 287 rigs this past week, which was still down by 543 rigs from the 830 rigs that were in use as of the October 25th report of 2019, and was also 117 fewer rigs than the all time low prior to this year, and 1,642 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 6 rigs to 211 oil rigs this week, after increasing by 12 oil rigs the prior week, still leaving us with 485 fewer oil rigs than were running a year ago, and less than a seventh of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by one to 73 natural gas rigs, which was also down by 60 natural gas rigs from the 133 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 Sonoma County, California, and one in the Permian basin in Eddy County, New Mexico...a year ago, there only one such "miscellaneous" rig deployed...
The Gulf of Mexico rig count fell by 1 ro 13 rigs this week, with 12 of those rigs drilling for oil in Louisiana's offshore waters and one drilling for oil offshore from Texas...that was 7 fewer Gulf rigs than the 20 rigs drilling in the Gulf a year ago, when all 20 Gulf rigs were drilling offshore from Louisiana...while there are no rigs operating off of other US shores at this time, a year ago there was also a rig deployed offshore from Alaska, so this week's national offshore count is down by 8 from the national offshore rig count of 21 a year ago....also note that in addition to those rigs offshore, a rig continues to drill through an inland body of water in St Mary County, Louisiana this week, while a year ago there were two rigs drilling on southern Louisiana inland waters..
The count of active horizontal drilling rigs was up by 5 to 245 horizontal rigs this week, which was still 483 fewer horizontal rigs than the 728 horizontal rigs that were in use in the US on October 25th of last year, and less than a fifth of the record of 1372 horizontal rigs that were deployed on November 21st of 2014....meanwhile, the vertical rig count was was unchanged at 21 vertical rigs this week, while those were down by 30 from the 51 vertical rigs that were operating during the same week of last year....at the same time, the directional rig count was also unchanged at 21 directional rigs this week, and those were also down by 30 from the 51 directional rigs that were in use on October 25th 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 October 23rd, the second column shows the change in the number of working rigs between last week's count (October 16th) and this week's (October 23rd) count, the third column shows last week's October 16th 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 25th of October, 2019...
the first thing we notice about those tables is that neither accounts for 5 rig increase nationally that we reported earlier...that's because rigs were added this week in basins that aren't tracked by Baker Hughes, in two states that have seen little drilling activity lately: Alabama and Mississippi...the Alabama rig addition was a directional rig targeting oil in Conecum county and was the first in the state since April 9th, while the Mississippi rig is vertical in Jasper county, also targeting oil, & the first in the state since July 24th, but still down from the 2 rigs deployed in Mississippi a year ago...meanwhile, the increase in Permian basin was all in Texas, as one rig was added to Texas Oil District 8, which roughly aligns with the Permian Delaware, another rig was added in Texas Oil District 8A, which corresponds to the northern Permian Midland, and another rig was added in Texas Oil District 7C, which corresponds to the southern Permian Midland...however, the Texas rig count was only up by 2 because the vertical Gulf of Mexico rig that was shut down had been drilling in Texas waters...the rig that was pulled out of Louisiana was directional and the only land-based rig that had been drilling in the southern part of the state; all other land based rigs in Louisiana are in the Haynesville shale in the northwest corner of the state...elsewhere, we had an oil rig added in Oklahoma that is targetting a basin that isn't one of the five basins in the state that are tracked by Baker Hughes, and another horizontal rig set up to drill fo oil on the Kenai Penisula in Alaska, where there already is a natural gas rig deployed....meanwhile, the natural gas rig that was removed this week came out of the Eagle Ford, which doesn't show up in the Texas Oil District data or on the basin table above because an oil rig was added in the same district at the same time...
DUC well report for September
Last week we neglected to cover the release of the EIA's Drilling Productivity Report for October, which includes the EIA's September data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions....that report showed a decrease in uncompleted wells nationally for the 15th time in the past nineteen months in September, as completions of drilled wells were unchanged while drilling of new wells increased....for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 77 wells, falling from 7,669 DUC wells in August to 7,592 DUC wells in September, which was also 7.8% fewer DUCs than the 8,237 wells that had been drilled but remained uncompleted as of the end of September of a year ago...this month's DUC decrease occurred as 295 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during September, up from the 292 wells that were drilled in August, while 372 wells were completed and brought into production by fracking, the same number of completions seen in August, and down by 71.8% from the 1,308 completions seen in September of last year....at the September completion rate, the 7,592 drilled but uncompleted wells left at the end of the month represents a 20.4 month backlog of wells that have been drilled but are not yet fracked, down from the 20.7 month DUC well backlog of a month ago, with the understanding that this normally indicative backlog ratio is being skewed by near record low completions...
both oil producing regions and natural gas producing regions saw DUC well decreases in September, even as one natural gas basin saw a small DUC increase...the number of uncompleted wells remaining in the Oklahoma Anadarko decreased by 23, falling from 704 at the end of August to 681 DUC wells at the end of September, as just 12 wells were drilled into the Anadarko basin during September, while 35 Anadarko wells were being fracked....at the same time, DUCs in the Permian basin of west Texas and New Mexico decreased by 21, from 3,546 DUC wells at the end of August to 3,525 DUCs at the end of September, as 134 new wells were drilled into the Permian, while 155 wells in the region were completed...there was also a decrease of 15 DUC wells in the Eagle Ford of south Texas, from 1,181 DUC wells at the end of August to 1,166 DUCs at the end of September, as 15 wells were drilled in the Eagle Ford during September, while 30 already drilled Eagle Ford wells were completed... in addition, DUC wells in the Bakken of North Dakota decreased by 11, from 881 DUC wells at the end of August to 870 DUCs at the end of September, as 18 wells were drilled into the Bakken in September, while 29 of the drilled wells in that basin were being fracked... meanwhile, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range was unchanged at 454, as 20 new Niobrara wells were drilled in September while 20 drilled Niobrara wells were being fracked...
among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 11 wells, from 586 DUCs at the end of August to 575 DUCs at the end of September, as 60 wells were drilled into the Marcellus and Utica shales during the month, while 71 of the already drilled wells in the region were fracked....on the other hand, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 4 to 321, as 36 wells were drilled into the Haynesville during September, while 32 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of September, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a net of 70 wells to 6,696 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 7 wells to 896 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...
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Appalachian Town Must 'Wait And Wait' As Pandemic Puts Plastics Plant On Hold - From his bar in Shadyside, Ohio, Matt Coffland has been counting on his town getting a new petrochemical plant since it was first planned, seven years ago. He says the southeastern part of the state has long been neglected. "For us to get something like that, rightfully, I think we deserve it by now," he says. The plant, to be built by Thailand-based oil and gas company PTT, would be a major construction project. "You're talking an influx of close to 10,000 people at one point," Coffland says. The ethane "cracker," as it's called, would turn natural gas from nearby wells into petrochemicals and plastics. It's part of a much-planned wave of petrochemical construction across Appalachia. Oil and gas backers say a decade of fracking has unlocked enough gas in this region for four or five chemical plants like PTT's. But so far only one is under construction, a Shell plant near Pittsburgh, which President Trump has visited to tout U.S. "energy dominance." Now, as the Ohio project has stalled amid the pandemic, some wonder if it will ever be built. A final decision was due this summer. But then came COVID-19 and PTT pushed it off. In July, citing the pandemic, one of the project's investors backed out. That was a disappointment for John Haswell, superintendent of the Shadyside Local School District. On one wall of his office are drawings for a brand new $30 million school complex. If the PTT plant goes ahead, the company has said it will pay for the badly needed building. "I would really love to get really busy on a building project," Haswell says. But without a final decision, all he can do is "sit, and wait and wait and wait."
Leading Utica Producer Gulfport in Restructuring Talks with Lenders - Gulfport Energy Corp. revealed in a regulatory filing on Friday that it’s having discussions with its lenders about filing for bankruptcy. The company has entered a 30-day grace period to defer making an interest payment that was due Thursday on its 6% senior unsecured notes due 2024. It took the grace period “while it continues ongoing constructive discussions with its lenders and certain other stakeholders regarding a potential comprehensive financial restructuring to strengthen the company’s balance sheet and financial position,” according to an 8-K filed with the U.S. Securities and Exchange Commission. Gulfport has also entered into a forbearance agreement with parties to its credit agreement in which they’ve agreed to waive any action they could take against the company related to delaying the interest payment. The company’s borrowing base was also cut from $700 million to $580 million. Notice of the restructuring talks comes after Gulfport received notice from Nasdaq last month that its stock could be delisted from the exchange because it closed below $1.00/share for 30 consecutive business days. The company’s stock has traded at a 52-week low of 29 cents/share. Gulfport has six months to regain compliance.Gulfport, which operates in the Appalachian Basin and South Central Oklahoma Oil Province, aka the SCOOP, has struggled with low commodity prices, particularly those for natural gas. The company produces the bulk of its volumes from the gassy Utica Shale in Ohio, where it’s a leading producer with more than 200,000 net acres. It produced 1.03 Bcfe/d in the second quarter, 91% of which was natural gas. The company has shut in production, cut spending and sold noncore assets in recent years to help reduce debt, which stood at $2.3 billion at the end of the second quarter. During that period, Gulfport also took a $532.9 million impairment on the value of its oil and gas properties given the decline in commodity prices.
Gulfport Energy Bankruptcy? 13 Things for GPOR Stock Investors to Know - Gulfport Energy may be approaching bankruptcy if recent reports are to be believed. Here’s what investors in GPOR stock need to know about a possible Gulfport Energy bankruptcy.
- A report from Kallanish Energy claims that the company will file for bankruptcy in the company days.
- According to this report, the company plans to restructure its debt under bankruptcy protection.
- That would allow it to better manage the $2 billion of debt that it currently has.
- The report claims that Gulfport Energy plans to file its bankruptcy in Houston, Texas.
- Talk of a possible bankruptcy for GPOR comes after it deferred payment on some of its senior notes.
- A filing with the U.S. Securities and Exchange Commission (SEC) on Friday revealed as much.
- This is for senior notes due in 2024 that had interest payments due on Thursday.
- The company decided to enter into a 30-day grace period rather than pay the interest on the notes.
- In that filing, the company says that it’s in talks with lenders about a possible financial restructuring.
- In that same SEC filing, the company reveals that its borrowing base under its credit agreement dropped.
- The company now has $580 million it can borrow instead of the previous $700 million.
- All of these signs point to financial trouble for the Oklahoma-based shale company.
- GPOR investors will want to keep an eye out for any further bankruptcy news over the next few days.
Fracking in the shale fields slows for the first time since 2017 – Crain's Cleveland Business - Frackers are blasting less sand into shale wells for the first time in almost three years as oil explorers adjust to lower oil demand and prices amid the coronavirus pandemic. Shale explorers are pumping an average of roughly 2.9 million pounds of sand a day during the current quarter, marking the first time since the final three months of 2017 that growth has subsided, according to Coras Research LLC. Sand per well is a key measurement of frack efficiency because more sand typically means more of the rock fissures that allow crude to flow. "E&Ps are not getting the same bang for their frack buck this quarter," Daniel Cruise, founder of Coras, wrote in a report on Thursday. If frack efficiency continues to decline, it "would put more pressure on U.S. shale production going forward." Frackers and other hired hands of the oil patch have been among the most beaten up during the historic crude crash as the global pandemic saps demand for oil-derived products. Global service giants Schlumberger and Halliburton Co. are turning their attention outside of North America, with expectations for international sales to make up more of their business going forward. After the number of active U.S. frack crews bottomed out at 100 in mid-May, 40 crews have been put back to work, mostly in the Permian Basin of West Texas and New Mexico, according to Coras.
Regulators deny quick approval of new Great Lakes pipeline (AP) - A Michigan regulatory panel on Tuesday refused to grant quick permission to run a new oil pipeline beneath a channel that connects two of the Great Lakes, deciding instead to conduct a full review. The state Public Service Commission's decision involved a proposed replacement for a segment of Enbridge's Line 5 that extends beneath the Straits of Mackinac, which links Lakes Huron and Michigan. The Canadian energy transport company wants to replace dual pipelines that rest on the lake floor with a new pipe that would be placed in a 4-mile-long (6.4-kilometer-long) tunnel to be drilled in bedrock beneath the waterway. Also Tuesday, a state judge heard arguments on whether to extend an order he issued June 25 to shut down the existing underwater segment after damage was discovered on a support piece at the lake bottom. Circuit Judge James Jamo promised to move quickly but made no immediate ruling. That means Line 5 - which carries 23 million gallons of crude oil and natural gas liquids daily between Superior, Wisconsin, and Sarnia, Ontario - will remain closed for now. The 645-mile-long (1,038-kilometer-long) pipeline supplies refineries in Michigan, Ohio and Pennsylvania, as well as the Canadian provinces of Ontario and Quebec. Enbridge said halting its flow even temporarily threatens fuel supplies in those areas, while the state of Michigan and environmental groups contend a major spill would do considerably worse economic damage.
Activist's Lawsuit Targets Private Pipeline Contract With Livingston Sheriff's Office - A lawsuit filed in federal court alleges that the Livingston County Sheriff’s Office was compromised in its duties when it entered into a contract with the security company hired to protect the installation of a controversial natural gas pipeline through Livingston County.The suit, filed October 13th in U.S. District Court in Detroit, was brought by Flint resident Matthew Borke against Texas-based Leighton Security, it’s CEO Kevin Mayberry and Operations Manager Gary Washburn, along with Energy Transfer Partners, the company behind the ET Rover pipeline, and it’s Chairman Kelcy Warren. Borke is a member of Michigan Residents Against the ET Rover Pipeline, a grassroots group that opposed the construction of Energy Transfer Partners’ Rover gas pipeline in 2017. The 42-inch diameter pipeline carries 3.25 billion cubic feet of natural gas per day up from the Marcellus and Utica Shale through West Virginia, Pennsylvania and Ohio, crossing into Michigan in Lenawee County, then proceeding north through Washtenaw and Livingston counties before joining the Vector Pipeline in Fowlerville, where it crosses the state into Ontario, Canada.Borke claims that he was targeted by Leighton Security starting in 2016 when he was “an activist participant” in the Native American protest and occupation against construction of ET’s Dakota Access Pipeline (DAPL) in North Dakota. Leighton was ET’s general contractor providing security for that effort. In the filing, Borke says a subcontractor for Leighton, Tiger Swan, used overly-aggressive methods to disrupt the protestors, culminating in his being arrested by “15 men in military fatigues (who) had submachine guns trained on him.” He alleges they wore no insignia, badges or name tags and handcuffed him with zip ties and confiscated his phone. Charges of “interfering with a government function” were later dropped. While a state administrative board found Tiger Swan guilty of working without a state-required license to perform security operations in North Dakota, an injunction to prevent the company from operating in that state was later dismissed. However, Borke says because the tent encampment in North Dakota he was living in was bulldozed and most of belongings destroyed, he ”reluctantly” returned to his parent’s home in Michigan. Borke says beginning in March of 2017 the Livingston County Sheriff’s Office entered into an agreement with “agents or contractors” of Energy Transfer Partners and began providing security at the ET Rover pipeline sites for $60 an hour, utilizing deputies in uniform and departmental vehicles. Borke claims that over the next several months, he and other member of the group were subjected to harassment and intimidation by employees of Leighton Security, which the lawsuit alleges was supported in its activities by the Livingston County Sheriff’s Office through its contract.
EQT reports $601M loss in 3Q 2020 - EQT, the largest producer of natural gas in the United States, reported a net loss of $601 million or $2.35 in the third quarter 2020, Kallanish Energy reports. That compares to a loss of $361 million or $1.41 per share in 3Q 2019. That loss was smaller than had been expected with lower operating costs helping offset a drop in demand and prices in the wake of the coronavirus pandemic. Sales volumes in the quarter ending Sept. 30 fell about 4% to 366 billion cubic feet of equivalents with about 15 billion cubic feet of production curtailed. It reported the production curtailed in September was returned on-line starting in early October and all curtailed production has been returned to service, it said in Thursday’s announcement. It had also curtailed production from mid-May to mid-July. The Pennsylvania-based company said its average realized price fell 5.7% to $2.33 per thousand cubic feet equivalent. EQT said its 3Q results “continue to see meaningful step changes in efficiencies, as we continue to find ways to increase performance and enhance results,” said president and CEO Toby Rice in a statement. The company reported net cash provided by operating activities of $184 million and free cash flow of $47 million in the quarter. It announced that it is cutting its full-year 2020 capital budget by $50 million at the midpoint of its guidance. That budget will be between $1.05 billion and $1.1 billion, it said. In the quarter, the company spent $248 million on its capital budget. That is $55 million lower than 2Q 2020 and $227 million lower than 3Q 2019. It raised the bottom end of its full-year 2020 adjusted core earnings by $50 million to a range of between $1.55 billion and $1.6 billion. EQT said it expects full-year sales volumes of between 1.48 billion cubic feet equivalent and 1.5 bcfe, slightly higher than its previous full-year estimate. It reported that horizontal drilling speeds improved by 19% and completion stages/day improved by 15%, compared to 2Q 2020. It reported well costs of $660 per foot in the Marcellus Shale in Pennsylvania, surpassing its target price by $70 a foot. EQT spud 30 wells in the quarter in Pennsylvania and West Virginia, drilled 27, completed 23 and turned in line 22 wells. In the fourth quarter, it plans to spud 13 wells, drill 25 wells, complete 19 wells and turned in line 26 wells in the two states. It drilled one Utica Shale well in Ohio in the third quarter and has no fourth quarter plans in Ohio.
OIL AND GAS: Criminal charges, FBI probe roil $3B Pa. pipeline -- Monday, October 19, 2020 -- Can regulators police a natural gas project with an active FBI inquiry and charges looming?
PUC doesn’t have to disclose its estimates of Mariner East ‘blast zone,’ court rules | StateImpact Pennsylvania -Official estimates of the impact of any rupture of the Mariner East pipelines will remain under wraps following an appeals court ruling that rejected a disclosure request by a longtime anti-pipeline campaigner. The Commonwealth Court ruled Wednesday that the Public Utility Commission does not have to disclose its calculations on any explosion of natural gas liquids from the pipelines, overruling Pennsylvania’s Office of Open Records’ decision that some of the requested information could be released.The court said the OOR erred when it ruled in June last year that some of the requested data was not “confidential security information” (CSI) under a state law, and so should be released by the PUC. The OOR excluded the PUC’s calculations on the “blast radius” of any explosion from its ruling but directed the PUC to release a report by its Bureau of Investigation and Enforcement on Mariner East 1, an old gasoline pipeline that has been repurposed as part of the Mariner East project. “OOR acted outside of its authority when it determined that the requested information is not CSI and therefore subject to disclosure under the RTKL,” the court wrote in its ruling on an appeal of the OOR decision by the PUC and Energy Transfer, the pipeline’s builder. The court was referring to the Right to Know Law. The PUC has the authority under the Public Utility Confidential Security Information Disclosure Protection Act to determine disclosure, the court wrote in a 12-page opinion, saying it wasn’t about to “disrupt” that authority. The PUC declined to comment on the ruling.Eric Friedman, a resident of Delaware County, has been fighting the construction of the pipelines that run alongside the Andover development in Thornbury Township where he lives with his family. He and other opponents argue that the siting of natural gas liquids pipelines in such densely populated areas represents a grave threat to public safety because of the highly explosive nature of the fuels. He asked for information from the PUC in February 2019 after Paul Metro, the regulator’s former manager of gas safety, told a public meeting the previous month that the PUC has its own estimates of the “buffer zone” or “blast radius” from accidents on highly volatile liquids pipelines such as Mariner East. Although the PUC’s calculations will not now be made public, Friedman said the public knows the potential impact of a Mariner East explosion from a risk assessment published by Delaware County Council in November 2018. The study concluded that a worst-case explosion from the pipelines would kill anyone within about a mile but that the likelihood of dying from such of explosion was about equal to dying in a car crash or falling down stairs.
Editorial: Pipeline protection needs common sense update -- There is a difference between security and secrecy. Security is making sure that dangerous things are protected. Secrecy is making sure things — dangerous or otherwise — are hidden. Those might seem related, but they aren’t the same.A $5.1 billion pipeline that transmits millions of gallons of natural gas 300 miles across Pennsylvania should be kept secure. But secrecy isn’t the way to do it. A Spotlight PA investigation recently explored just how safe Sunoco’s huge pipeline project is, uncovering that many communities in the 17 counties it crosses don’t really know what to do if something happens.On the western side of the state, it starts near Canonsburg, travels across southern Allegheny County and then snakes a path near Westmoreland areas including Jeannette and Delmont. That is a lot of schools, hospitals, nursing homes, water, roads and just plain old houses near a lot of fuel.But do the emergency services that take care of those areas have all the information they need about the pipeline, its risks and its impacts? Probably not. In December 2018, the Downington school board in Chester County asked for more information about the pipeline, because of its proximity to five schools. When asked for information, Sunoco said that was confidential and “highly protected.” Paul Metro, the former pipeline safety manager for the Public Utility Commission, urged the district to “actively partner with the county emergency manager to ensure that your ‘all-hazards’ plan and evacuation plans are up to date and incorporate all pipeline hazards.” But that depends on the counties having the right information, too. Keeping specifics out of the hands of criminals and terrorists is a good idea. But information isn’t black or white. There is a lot of middle ground to consider, especially in a state where so many of the emergency responders are volunteers. We cannot protect people from drug abuse by making it illegal to talk about any drugs. That would make it impossible to treat someone for an overdose or prevent someone else from getting an infection. Pipeline information needs to be treated the same way. It needs to be secure. But keeping it secret may hurt more than it helps.
Fracking project at US Steel Plant denied local permit extension - A controversial natural gas well at a US Steel Plant near Pittsburgh suffered a setback Thursday night. The East Pittsburgh Borough zoning hearing board denied an appeal by a fracking company to have a lapsed permit for the well reinstated. New Mexico-based Merrion Oil and Gas received a permit from East Pittsburgh Borough for a conditional use to drill and frack a well at US Steel’s Edgar Thomson Works in 2018. But the company didn’t drill the well because it did not receive permission from the state Department of Environmental Protection to begin work. In several deficiency letters sent to the company, the DEP outlined problems with the company’s plans. The local conditional use permit expired earlier this year, but the company appealed to have it extended. The East Pittsburgh zoning board voted by a 3-2 margin Thursday night to deny the appeal. It was a victory for some local residents and environmental groups who have been fighting to have the project killed over health and safety concerns. The Edgar Thomson facility is one of Allegheny County’s largest polluters. “We are sick and tired of our lives being put on the line in order to make profits for giant corporations,” said Megan McDonough, Pennsylvania Organizing Manager at the group Food & Water Action, in an emailed statement. “Not only had Merrion never drilled a well in Pennsylvania, they could not even fill out the permit paperwork correctly.”
Report: EQT makes offer for CNX Resources - EQT Corp. has reportedly sent an unsolicited bid to acquire Canonsburg-based CNX Resources Corp. in a deal that if consummated would bring together two significant players in the Marcellus Shale. Bloomberg, which first reported the bid, had few details. It isn’t clear what the status is at CNX nor how much the offer was for. It’s the second big potential deal in the Marcellus and Utica that EQT has been linked to in recent weeks. Reuters reported in September that EQT (NYSE: EQT) had made a $750 million bid for the Appalachian assets of Chevron Corp., which announced last December that it was divesting its gas drilling operations here.EQT declined comment.EQT is the biggest independent natural gas driller in the United States, with significant operations south of Pittsburgh in Greene County as well as West Virginia and Ohio. A little more than a year ago, it was taken over by former Rice Energy President Toby Z. Rice who has, with his team, made significant improvement in costs and remade its operations even amid the low gas prices.CNX has a long history in the natural gas industry and has extensive operations in southwestern Pennsylvania as well as eastern Ohio. Its CEO, Nicholas J. DeIuliis, has led CNX through the shaky energy economy with a strict focus on costs and has, unlike other drillers, laid out a seven-year plan that includes a modest pace of drilling and little growth on production unless commodity prices make it worthy.CNX’s acreage and wells in the Marcellus and Utica Shale would be complementary to EQT and CNX has something that EQT doesn’t have: Extensive midstream infrastructure that has been built up over the years. Owning those gathering pipelines, which take natural gas from the field to transmission pipelines, has been touted by CNX as one of its competitive advantages. EQT, on the other hand, has been in a very public battle with its midstream supplier, Equitrans Midstream Corp., on the ownership of a gathering pipeline.
CNX CEO addresses rumor about EQT bid, Marcellus 'reckoning' and the secret to success - CNX Resources Corp. CEO Nicholas J. DeIuliis, one of the strongest voices for natural gas, believes the region’s natural gas industry is about to undergo a massive change to the next phase of its development.DeIuliis, in an interview with the Pittsburgh Business Times on Friday morning, declined to comment on a Bloomberg report that said Pittsburgh-based EQT Corp. (NYSE: EQT), the nation’s largest independent natural gas producer, had made an unsolicited bid for CNX (EQT also declined to comment about the rumor).“I don’t want to comment on rumor or speculation,” DeIuliis said.But it’s not hard for observers of the Marcellus Shale industry to see the logic behind any bid that EQT may or may not have made. CNX, much smaller than EQT, has long hewed to the strategy of living within its cash flow and scientifically determining its strategy based on commodity prices and value to shareholders. It’s also got the lowest production costs in the Appalachian basin, with all-in costs of about $1 per million cubic feet compared to $1.70 or so for many of its peers. It owns its own midstream company, which helps keeps costs down. And earlier this year it released a seven-year plan that outlines something that a lot of other producers can’t say in this environment, how CNX will generate free cash flow and profit no matter what the price of natural gas.“I will say that with respect to that (rumor), it’s maybe not much of a surprise for us,” DeIuliis said. “I think we’ve got a great business and a great opportunity in front of us. So some of this is part of being a public company, particularly one that has the ability and the opportunity that we’ve laid out for the next seven years. In many ways, it’s gratifying to see others, whether it’s media or capital markets or peers, whoever is picking up on the opportunity and the excitement that we see with respect to what we’re going to do here in coming years.”The bigger story, in DeIuliis’ view, is the turning point that’s now evident in the Marcellus and Utica shale over the past months that is starting to accelerate. He said that it’s something that has been talked about before, but it’s more important and timely than ever. “If you look at the basin today, it’s closing one chapter out and it’s starting another one,” DeIuliis said.Gone are the days of rig counts in the Marcellus and Utica shale, less than a decade ago, that could be counted in the many dozens and hundreds. The billions of dollars of investment — often on the back of the private investors and Wall Street — have now proven what’s underground here in terms of natural gas and the Appalachian basin has grown to what is likely the largest gas field in the world. Pennsylvania is the second-largest natural gas producing state in the nation. And the drillers have become exponentially more efficient, in terms of time and production and cost. It’s the end of what DeIuliis has often in the past called the disruption and innovative phase.“I call it more of a reckoning within Appalachia, and it’s now coming,” DeIuliis said.
Trump’s Fracking Fixation Is Not Landing in Pennsylvania —Mike Baltzer comes from a blue-collar family in western Pennsylvania. But he barely hears anyone talk about fracking—long hyped as a local economic engine—positively anymore. For his part, Baltzer, 42, staunchly opposes fracking because of its potential to harm the environment. “I’m not coming at this from a tree-hugger, hippy background,” Baltzer told The Daily Beast. “I’m a Yinzer. And I know better.” Donald Trump has taken on a hardline pro-fracking stance against Democrat Joe Biden in their final, frenetic push to capture the Keystone State’s 20 electoral votes, which flipped red as part of the president’s shock 2016 victory. At a rally in Erie on Tuesday and again at the final debate on Thursday, Trump tore into the former vice president, mocking what he described as the Democrat’s flip-flop on the practice. “You know what Pennsylvania? He’ll be against it very soon, because his party is totally against it,” Trump said Thursday. Biden has carefully avoided bashing fracking for some time, saying that he doesn’t want to ban it, but has opposed it on federal land. That seems to reflect a stubborn consensus among the Democratic political class that the issue is some kind of third-rail in the state. And it still is important to some voters, especially in more rural parts of a state infamously described by Democratic strategist James Carville as “Paoli and Penn Hills, with Alabama in between.” But conversations with actual residents, local politicians, and a comb of public opinion data suggest perspectives on fracking in Pennsylvania are changing faster than top Democrats—and the president who seems to think it will save him—realize. Recent polls show Pennsylvanians generally are mixed on the practice. A jointCBS and YouGov poll from August showed 52 percent of Pennsylvanians oppose fracking with 48 percent approving. Another August poll prepared by Democratic firm Global Strategy Group for the advocacy group Climate Power 2020 showed that while 61 percent of Pennsylvanians had a favorable view of the natural gas industry, only 32 percent had a favorable view of the fracking industry, compared to 50 percent unfavorable.
Presidential debate: Pennsylvanians are divided on fracking. Here’s why. – Vox - Natural gas fracking has been getting a lot of air time on the campaign trail in recent weeks.In the final presidential debate, President Donald Trump once again claimed that former Vice President Joe Biden would ban fracking. “I have never said I oppose fracking,” Biden replied. “What I will do with fracking over time is make sure we can capture the emissions from fracking, capture the emissions from gas.”Trump tried to make the same claim in Pennsylvania, a key swing state, earlier this week. In front of a crowd of thousands gathered in Erie, Pennsylvania, on Tuesday, Trump played a compilation of video clips in which former Biden and Sen. Kamala Harris described their plans to transition away from fossil fuels.“Joe Biden will ban fracking and abolish Pennsylvania energy,” Trump told the crowd, followed by a chorus of boos. Biden’s plan to tackle climate change sets a target for the country to bring greenhouse emissions to zero by 2050, but it doesn’t call for banning fracking.Trump, who has no climate plan of his own, has been taking shots at Biden’s climate and energy initiatives as part of a broader effort to attract voters in battleground states. But his campaign has not seen a dramatic turnaround in Pennsylvania. Biden has maintained his lead in the polls — and is currently ahead by 6 percent on average, according to FiveThirtyEight. Whether Trump’s pro-fracking talk will help his chances of reelection is unclear. Natural gas fracking is concentrated in Pennsylvania’s Republican-leaning counties, and 77 percent of Republicans said they supported the industry in an August CBS/YouGov poll. This means Trump’s rhetoric could energize his base; on the other hand, the same poll showed that 52 percent of sampled registered voters oppose fracking, so it may not win over suburban residents.
Delaware Bay oil spill now covers up to 7 miles of coastline, including Lewes - As the Delaware Department of Natural Resources and Environmental Control continued assessing and cleaning an oil spill that came ashore Monday afternoon at Broadkill Beach, the agency has determined the affected area has grown. The spill is now estimated to affect up to 7 miles of coastline, including Beach Plum Island near Cape Henlopen, the Roosevelt Inlet and Lewes, DNREC said Tuesday afternoon in a news release. Local residents informed a Delmarva Now reporter Tuesday there is also oil on Prime Hook Beach. “We’ve found oil on the shore so far; we’ve not really seen it in the water per se," said James Bethard, chief of state emergency prevention and response for DNREC's Emergency Response & Strategic Services Section. "It’s all been brought in by the high tide, deposited up in the rack line area." DNREC crews are just now beginning to explore beaches to the north, Bethard said. Updates will come about whether areas such as Slaughter Beach are affected. The initial estimate given by DNREC was that the spill affected three-quarters of a mile of coast at Broadkill Beach. But Monday night's high tide carried out some of the oil into the Delaware Bay and then dispersed it elsewhere on the coast by noon on Tuesday, Bethard said. Suspected oil appears in globs in the Roosevelt Inlet area of Lewes Beach on the morning of Tuesday, Oct. 20, 2020. An oil spill was reported the day before at Broadkill Beach, and Delaware's Department of Natural Resources and Environmental Control warned that the oil would likely migrate elsewhere along the Delaware coast because of the tide. Suspected oil appears in globs in the Roosevelt Inlet area of Lewes Beach on the morning of Tuesday, Oct. 20, 2020. An oil spill was reported the day before at Broadkill Beach, and Delaware's Department of Natural Resources and Environmental Control warned that the oil would likely migrate elsewhere along the Delaware coast because of the tide. (Photo: Marta Nammack submitted image) Most of the visible oil is in small spots: the tide has fragmented the oil from larger pools to smaller speckles on the beaches, the release states. In a release of their own, the Coast Guard referred to the spots as "oil patties" and said they range from the size of a quarter to the diameter of a manhole cover. The cleanup has already started, but is expected to last through the end of the week or longer, as the globs and pools of oil must be removed from beaches manually, Bethard said. "Progress is slow," Bethard said. "It’s a very tedious job, and they’re going to work very, very hard to get it done. ...(The length of time) just depends on what happens to our tidal cycles and the amount of staffing that we’re able to put onto the spill.”
Two tons of oily sand removed as Delaware Bay coast spill as spreads to 11 miles - Two tons of oily sand and debris along the Delaware coast had been removed as of 7 p.m. Tuesday, after an oil spill was first spotted Monday on a three-quarter mile stretch of Broadkill Beach, according to officials from the state Department of Natural Resources and Environmental Control. The spill now spans more than 11 miles of coastline off the Delaware Bay, DNREC officials said Wednesday. This is an increase over the 7 miles it was estimated to have been affecting the shoreline on Tuesday. Each passing day, the tides have dispersed the globs of oil over an increasingly wider area, even as state and federal crews work to clean it up. The 11-mile area extends from Fowler Beach (bordering Prime Hook National Wildlife Refuge) to the ocean side of Cape Henlopen State Park at Gordon's Pond, DNREC wrote on Twitter. The 4-wheel drive surf fishing crossing at Delaware Beach Plum Island Preserve is closed so crews can continue cleaning the shoreline. More than 75 contractors, DNREC responders and U.S. Coast Guard personnel are on the scene cleaning up the spill, assessing its shoreline and waterway impact and responding to impacted wildlife. “Expediency is key," DNREC Secretary Shawn Garvin said Wednesday in a statement. "We want to capture as much of the oil as we can before it disperses further and causes more environmental harm." The first reports of wildlife affected by the oil spill arrived late on Tuesday: some sea gulls had oil on their breasts, DNREC tweeted. The nonprofit Tri-State Bird Rescue is on hand to clean the birds up, the agency said. As of Wednesday afternoon, the rescue organization had responded to 24 oiled seagulls.
Lewes Beach closed as Delaware Bay oil spill cleanup continues - Lewes Beach is closed as crews continue cleanup of a Delaware Bay oil spill discovered Monday afternoon that now stretches at least 11 miles. A notice published on the city of Lewes website said signs would be posted Thursday and Friday at beach crossovers and on the dune fence at beaches 1 and 2 to inform people about the closures. Public access to the beach will be restricted until the U.S. Coast Guard and Delaware's Department of Natural Resources and Environmental Control advise officials that it can be safely opened. The oil spill was initially reported along a three-quarter-mile stretch of Broadkill Beach, but by Tuesday morning had migrated with the tides to other areas of the Delaware coast. It was estimated that about 215 gallons of oil — approximately five barrels' worth — had washed ashore. As of Wednesday, DNREC said the spill spanned 11 miles from Fowler Beach (bordering Prime Hook National Wildlife Refuge) to the ocean side of Cape Henlopen State Park at Gordon's Pond. Crews have already removed 2 tons of oily sand and debris as part of the ongoing cleanup effort. While the source of the oil spill is unknown, samples have been provided for the Coast Guard to analyze for a “petroleum fingerprint” that might determine where it came from.
Federal court delays stream crossings for Mountain Valley Pipeline - The on-again, off-again pace of building the Mountain Valley Pipeline is off again. A temporary administrative stay of stream-crossing permits was issued Friday by the 4th U.S. Circuit Court of Appeals. In a brief order, the court said the delay — which was requested Thursday by conservation groups concerned about environmental damage from the massive natural gas pipeline — will remain in effect until it has time to consider a full stay that was sought earlier. “Our streams and wetlands get at least a temporary reprieve from MVP’s destruction,” said David Sligh of Wild Virginia, one of eight environmental groups fighting the pipeline in court. After the U.S. Army Corps of Engineers reissued the permits Sept. 25 and a stop-work order was lifted last week, Mountain Valley said it would resume construction “in the coming days.” While burrowing the 42-inch diameter pipe under nearly 1,000 streams and wetlands is now back on hold, it was unclear whether Mountain Valley is free to resume clearing the right of way and digging trenches to bury the pipe in upland areas. Asked Friday whether any such work had begun, Mountain Valley spokeswoman Natalie Cox did not answer directly. “With MVP’s upland construction now scheduled to begin, and as we receive additional information” about other areas being cleared for work, “MVP will continue to evaluate its current construction plans, budget and schedule,” Cox wrote in an email.
Grants for Appalachian Trail communities to come from Mountain Valley Pipeline gift - The Appalachian Trail Conservancy is offering $150,000 in grants to strengthen the ties between the scenic footpath and eight Virginia and West Virginia counties through which it passes. And there’s more money where that came from. Community impact grants announced this week by the conservancy will be funded by a $19.5 million contribution from Mountain Valley Pipeline, which is building a natural gas pipeline that will pass under the Appalachian Trail as it runs along the state line in Giles County. In August, Mountain Valley entered into a voluntary stewardship agreement with the conservancy and The Conservation Fund. Money from the joint venture of five energy companies constructing the pipeline will be used for sustainability efforts such as the grants and the purchase of land near the trail to preserve scenic views. The gift — the largest of its kind to the conservancy for a single region — came after discussions about the environmental damage caused by running the 303-mile pipeline over panoramic mountain ridges and through unspoiled forests. “Through these grants, the Appalachian Trail Conservancy aims to advance environmental health, land stewardship, education, green infrastructure planning and outdoor economies to better support marginalized communities,” Julie Judkins, the conservancy’s director of education and outreach, said in the announcement.
Opponent's scuffles with pipeline workers bring $1,000 fine, year-long ban — Physically interfering with Mountain Valley Pipeline workers will cost a protester $1,000, a Montgomery County judge ruled Tuesday. Also, Emma Howell, known as “Ash” among pipeline opponents at the tree stands near Yellow Finch Lane, must stay off Mountain Valley Pipeline’s construction sites for a year, the judge said. “You have the right to protest, these gentlemen have the right to go to work,” General District Court Judge Randal Duncan told Howell. “… Just because you may be smaller in a physical stature doesn’t give you the right to assault them and try to provoke them.” Howell, who was 22 when she was arrested in February, was convicted of three misdemeanor counts of assault and battery. The charges came from separate incidents in which Howell was accused of scuffling with two workers. In the first, on May 29, 2019, Howell was among protesters who confronted a crew seeking to cut down the tree stands that block the pipeline’s route through the eastern part of Montgomery County. For more than two years, opponents of the pipeline have occupied platforms positioned some 50 feet above a steep slope so that the trees cannot be cleared. The group Appalachians Against Pipelines calls the Yellow Finch protest the longest continuing blockade of a natural gas pipeline on the East Coast. William Arroyo, a security contractor with the pipeline, testified Tuesday that he and other workers hoped to find the tree stands unoccupied and to cut them down so that other crews could then clear the pipeline right-of-way. He said that the first platform was occupied but the second was not, and most of his group headed toward it. In the May 2019 incident, Arroyo said he hung back to watch as other workers moved toward the second tree stand. Suddenly a rope descended from the first stand. Arroyo said he could see a woman donning climbing gear. He said that he wanted to prevent more protesters from moving into the trees, so he grabbed the rope and hung onto it. The struggle that followed was captured on a video, with several protesters trying to pull the rope away and shouting that Arroyo was going to hurt someone because the rope was a safety line. After watching the video, Duncan said that Howell, who is perhaps a foot or more shorter than Arroyo, had pushed between the security guard and the rope, so that he ended up with his arms around her. She reached up and tugged at his hand. Arroyo testified that the protesters were trying to push him down the hill and as the tussle got more intense, he let go of the rope to end the conflict.
EQT looks to sell Mountain Valley Pipeline capacity as upland line construction gets ready to begin -The chief financial officer for EQT Corp. announced Thursday that the Pittsburgh-based natural gas producer is in discussions to offload some or all of its Mountain Valley Pipeline capacity. The 303-mile natural gas pipeline from Northwestern West Virginia to Southern Virginia is unfinished. But EQT financial chief, David Khani, said during the company’s third-quarter results conference call with analysts Thursday that EQT doesn’t believe striking a deal is dependent on the pipeline being in service. “This is a very important financial catalyst for the company,” Khani said, “one which will drive material improvement to margins and free cash flow.” Khani reported that EQT wants to “have something in place at the end of the year.” “Our team is very focused on this opportunity,” Khani said. The Mountain Valley Pipeline project is about two years behind its original schedule and about $2 billion above budget. In August, Equitrans Midstream announced that it is targeting an early 2021 full in-service date and that total project costs could increase 5% over the project’s updated $5.4 billion budget. In 2018, EQT split into two companies, EQT and Equitrans Midstream. The latter is the primary interest owner of the Mountain Valley Pipeline and will operate it. EQT reported a third-quarter net loss of $601 million, primarily from decreased operating revenue, increased interest expense and decreased dividends and other income. EQT curtailed gross production earlier this year as prices have lowered. Khani said EQT is negotiating with four or five parties. Substantial work has been done on the Mountain Valley Pipeline, which is to cross Wetzel, Harrison, Doddridge, Lewis, Braxton, Webster, Nicholas, Greenbrier, Fayette, Summers and Monroe counties in West Virginia. However, the project faces continued legal challenges from conservation groups and requires further regulatory approval. Natalie Cox, spokeswoman for Equitrans Midstream, said crews have been deployed to begin upland construction work after the Federal Energy Regulatory Commission lifted a stop-work order on Oct. 9.
EQT targets sale of some or all of its capacity on Mountain Valley Pipeline by end of year -CFO David Khani said discussions with multiple unnamed parties were ongoing to offload either some or all of EQT's capacity on the Mountain Valley Pipeline, which has yet to be completed. EQT has been a major part of the controversial pipeline project that would carry Marcellus and Utica natural gas from West Virginia to Virginia, and until the 2018 split had owned what is now the separately owned Equitrans Midstream Corp. (NYSE: ETRN), which is building and will operate MVP. But EQT, the nation's largest independent natural gas producer, has also been locked in several battles with Equitrans over the course of the year over contracts and the rights to a gathering pipeline. CFO David Khani said discussions with multiple unnamed parties were ongoing to offload either some or all of EQT's capacity on the Mountain Valley Pipeline, which has yet to be completed. It's planned to go into operation sometime in early 2021, although the $5.3 billion pipeline is two years behind schedule and still not out of the regulatory woods yet. A circuit court last week announced a temporary stay on a permit that would allow waterbody crossings, one of the last things to be done before completion. "We do not believe striking a deal is dependent on MVP being in service and that the viability of executing a transaction continues to improve," Khani told analysts Thursday morning during the Pittsburgh-based natural gas producers 3Q conference call. Khani termed any deal "a very important financial catalyst for the company." "Our team is very focused on the opportunity and continue to strive to have something in place by the end of the year," Khani said. The company didn't provide too much detail when it came to the negotiations, other than to say it involved up to five separate companies. Some interested in the Mountain Valley Pipeline capacity had been part of the Atlantic Coast Pipeline, a project that was canceled after several years and multiple court battles. EQT's attempts to sell future capacity on the pipeline comes at a time when the Appalachian natural gas industry has been cutting back on production instead of the rapid growth in the Marcellus and Utica Shale over the past decade or so. EQT itself has at least twice curtailed significant amounts of production temporarily to respond to lower prices this year, and said it wouldn't hesitate to do so again. And, EQT said Thursday, it wasn't planning to grow production any time soon unless there's high and sustained natural gas prices. So EQT wouldn't necessarily need the space on the MVP pipeline that it is already locked into.Khani said EQT was trying to decide whether it wanted to keep some of the MVP capacity. "We can probably also replicate that to some degree with a sales agreement as opposed to owning all the pipe, too," he said. "So there are multiple things we're thinking through here."
Supervisors tackle stormwater erosion, grant bonuses to school staff - The seven-hour meeting began with an address about another controversial subject: the construction of the Mountain Valley Pipeline through the county. An October 2019 stop work order prohibiting further construction of the natural gas pipeline was lifted by the Federal Energy Regulatory Commission earlier this month. Speaking on behalf of North Carolina-based Blue Ridge Environmental Defense League and a Franklin County group, Preserve Franklin, organizer Ann Rogers implored the board to demand that MVP submit erosion and sediment control and stormwater management plans specifically for Franklin County sites to the Virginia Department of Environmental Quality. Rogers asserted that considerable damage has already been done by the pipeline construction and the continuation risks tons of excess sediment washing into the Blackwater River and Smith Mountain Lake. In a Wednesday phone interview she said she believed an attempt by MVP to come up with specific stormwater plans for the county would show that the potential problems could not be managed. At the meeting, board members were on board with her. “When we have all these rains, it seems like our rivers and streams are a lot more dirty, a lot more mud running through those,” said Blackwater District Supervisor Ronnie Mitchell. “Everywhere you see the pipeline, it’s bare ground. There’s very little vegetation growing on it.” Rocky Mount District Supervisor Mike Carter pointed out flooded pipeline sites that drain into the town’s water system. “I do not understand why Mountain Valley cannot get this route under control,” he said. A resolution requesting exactly the things from DEQ that Rogers advocated was already included in the meeting’s consent agenda in response to the letter Rogers sent Oct. 6. However, officials expressed skepticism that the measure would help, and also vented their frustration. County Administrator Chris Whitlow noted that the county made a similar request in 2015, which was not fulfilled. Assistant County Administrator Steve Sandy explained that the county has no enforcement power over MVP’s erosion control measures. “This board has done this in the past,” said Boone District Supervisor Ronnie Thompson. “They’re not doing what they promised they’re doing, and our hands are tied, and it’s very frustrating, it’s very aggravating.” The board passed the resolution unanimously.
Natural Gas Futures Eke Out Small Gain, but Demand Outlook Still Clouded - Natural gas futures started off the week lower amid further uncertainty surrounding the pace of liquefied natural gas (LNG) export recovery. A “complicated” weather outlook also left traders unsure of where to price gas, but a chillier turn in Monday’s midday models ultimately lifted the November Nymex contract up 2.2 cents to $2.795. December nudged nine-tenths of a cent higher to $3.280. Spot gas prices were sharply higher after the weekend, with chilly air hitting the Midwest and Great Lakes, while heat lingered from California to Texas. NGI’s Spot Gas National Avg. climbed 16.5 cents to $2.160.After keeping futures prices intact at the end of last week, traders were looking for some clarity on the weather and LNG fronts before making big price moves. Instead, the demand outlook grew murkier as a new obstruction blocked the waterway near the Sabine Pass LNG terminal, while the barge submerged in the Calcasieu Ship Channel also has not been recovered. As of Monday, draft restrictions remained in place, and there was no timeline as to when the waterways would be fully reopened.Reports started circulating after hours on Friday that the waterway near the Cameron LNG terminal would remain blocked for a few more weeks. Bespoke Weather Services noted that Cameron’s volumes had only been around 0.5 Bcf, but there seemed to be expectations that they would rise to more than 2.0 Bcf soon.“Fast forward to now, and the market no longer seems concerned, even though nothing has changed that we are aware of as far as the timeline is concerned,” Bespoke said.NGI data showed feed gas volumes remaining elevated at slightly under 8 Bcf, but many analysts had expected LNG demand to j ump to around 9.5 Bcf in the fourth quarter..
U.S. natgas edges up on rising LNG exports, cold forecasts (Reuters) - U.S. natural gas futures edged up on Monday as the market focused more on rising liquefied natural gas (LNG) exports and colder weather next week than an increase in output. Front-month gas futures rose 2.2 cents, or 0.8%, to settle at $2.795 per million British thermal units. Data provider Refinitiv said output in the Lower 48 U.S. states jumped to 88.6 billion cubic feet per day (bcfd) on Friday from a 26-month low of 82.4 bcfd on Oct. 10 as wells return after shutting for Hurricane Delta. As LNG exports rise and the weather turns colder, Refinitiv projected average demand would jump from 89.2 bcfd this week to 98.2 bcfd next week. The amount of gas flowing to LNG export plants has averaged 6.9 bcfd so far in October, up from 5.7 bcfd in September. Traders, however, noted ship traffic into Sabine and Cameron in Louisiana was still limited by obstructions from Delta. That would be the most LNG exports in a month since April and puts exports on track to rise for a third month in a row for the first time since February when feedgas hit a record 8.7 bcfd as rising global gas prices prompted buyers to reverse cargo cancellations. U.S. exports fell from March to July as coronavirus-related demand destruction caused prices in Europe and Asia to collapse to record lows and buyers to cancel around 175 U.S. cargoes. But now, front-month gas prices in Europe and Asia were trading at their highest since November 2019, putting them both more than $2 per mmBtu over the U.S. Henry Hub benchmark. In Texas, mild weather and low demand caused next-day gas at the Waha hub to fall into negative territory for the first time since April, while power at the Ercot North hub dropped to its lowest since May 2017.
U.S. natgas jump to 20-month high on rising LNG exports, cold weather (Reuters) - U.S. natural gas futures jumped over 4% to their highest close in 20 months on Tuesday on rising liquefied natural gas (LNG) exports and forecasts for colder weather and more heating demand over the next two weeks than previously expected. Front-month gas futures rose 11.8 cents, or 4.2%, to settle at $2.913 per million British thermal units, their highest close since January 2019. Data provider Refinitiv said output in the Lower 48 U.S. states slipped to 88.4 billion cubic feet per day (bcfd) on Monday from a six-week high of 88.6 bcfd last week. As LNG exports rise and the weather turns colder, Refinitiv projected average demand would jump from 90.0 bcfd this week to 98.7 bcfd next week. Tankers were entering and leaving Cheniere Energy Inc's Sabine Pass LNG export plant in Louisiana despite draft limitations in the Sabine-Neches Waterway after a rig ran aground in the channel over the weekend. The amount of gas flowing to LNG export plants has averaged 6.9 bcfd so far in October, up from 5.7 bcfd in September. That would be the most LNG exports in a month since April and puts exports on track to rise for a third month in a row for the first time since February when feedgas hit a record 8.7 bcfd as rising global gas prices prompted buyers to reverse cargo cancellations. U.S. exports fell from March to July as coronavirus-related demand destruction caused prices in Europe and Asia to collapse to record lows and buyers to cancel around 175 U.S. cargoes. But now, front-month gas prices in Europe and Asia were trading at their highest since November 2019 and October 2019, respectively, putting both more than $2 per mmBtu over the U.S. Henry Hub benchmark.
U.S. natgas jumps to 20-month high over $3 on rising LNG exports (Reuters) - U.S. natural gas futures climbed almost 4% to a 20-month high on Wednesday as liquefied natural gas exports rise and output eases. Front-month gas futures rose 11.0 cents, or 3.8%, to settle at $3.023 per million British thermal units. That was their first close over $3 since January 2019 and puts the contract up almost 70% from a recent low of $1.795 on Sept. 21. Data provider Refinitiv said output in the Lower 48 U.S. states averaged 86.2 billion cubic feet per day (bcfd) so far in October. That would be the lowest in a month since September 2018 and puts output on track to drop for a fourth month in a row for the first time since June 2016, according to Refinitiv and federal energy data. Output hit an all-time high of 95.4 bcfd in November 2019. Those production declines come as low prices earlier in the year due to coronavirus demand destruction caused energy firms to shut oil and gas wells and cut back on new drilling by so much that output from new wells no longer offsets existing well declines. As LNG exports rise and the weather turns colder, Refinitiv projected average demand would jump from 90.0 bcfd this week to 97.7 bcfd next week. The amount of gas flowing to LNG export plants has averaged 7.0 bcfd so far in October, up from 5.7 bcfd in September. That would be the most in a month since April and puts exports on track to rise for a third month in a row for the first time since February when feedgas hit a record 8.7 bcfd as rising global gas prices prompt buyers to reverse cargo cancellations. Gas prices in Europe and Asia were trading at their highest since November 2019 and October 2019, respectively.
US working natural gas volumes in underground storage rise by 49 Bcf: EIA | S&P Global Platts — US natural gas storage volumes rose by 2 Bcf less than an S&P Global Platts survey of analysts anticipated, but once again much less than the five-year average as the Henry Hub prompt month price has gained 50 cents since the beginning of October. Storage inventories increased by 49 Bcf to 3.926 Tcf for the week-ended Oct. 16 the US Energy Information Administration reported Oct. 22. The injection was less than an S&P Global Platts survey of analysts calling for a 51-Bcf build. The injection measured much less than half the 92-Bcf build reported during the same week last year as well as the five-year average rise of 75 Bcf, according to EIA data. Total supplies were down 1.5 Bcf/d on the week at an average 88.6 Bcf/d, led by a combined 1 Bcf/d decline in onshore and offshore production, according to S&P Global Platts Analytics. Net Canadian imports to the Lower 48 also declined 500 MMcf/d week over week due to maintenances and colder temperatures in West Canada. Downstream, total US demand fell by 1.7 Bcf/d, with the majority of the decline stemming from weaker residential and commercial demand in the Midwest and Northeast regions. LNG feedgas demand also slipped by 600 MMcf/d. Storage volumes now stand 345 Bcf, or 9.6%, higher on the year and 327 Bcf, or 9%, more than the five-year average. The NYMEX Henry Hub November contract remained flat at $3.02/MMBtu in trading following the release of the weekly storage report at 10:30 am ET. It has increased by 50 cents since the beginning of October. The remaining winter strip, December through March, slipped 3.5 cents to $3.35/MMBtu. This is up 30 cents, or around 10%, from where the strip traded at the beginning of October. Total supplies are up 3.4 Bcf/d on the week to an average 92.1 Bcf/d, led by a 2.5 Bcf/d rise in onshore production, and bolstered by an additional 1.3 Bcf/d increase in offshore production. Total demand is up even higher , jumping by 4.8 Bcf/d to average 87.6 Bcf/d. Residential and commercial demand made a strong recovery in the Midwest and Northeast regions, rising by 4 Bcf/d this week in those two regions alone. However, gas-fired power generation demand has fallen by 2.7 Bcf/d on the week as US-level temperatures have cooled. The injection season might end earlier than usual as the last week of October is likely to show a single-digit net build, which is well below the five-year average gain of 52 Bcf.
U.S. natgas holds near 20-month high on small storage build, rising LNG exports (Reuters) - U.S. natural gas futures traded within a few cents of a 20-month high on Thursday on a slightly smaller than expected weekly storage build and as liquefied natural gas (LNG) exports keep rising. Gas prices have also soared in recent days as output slowed and on forecasts for colder weather and higher heating demand over the next two weeks. The U.S. Energy Information Administration (EIA) said U.S. utilities injected 49 billion cubic feet (bcf) of gas into storage in the week ended Oct. 16. That was slightly lower than the 52-bcf build analysts forecast in a Reuters poll and compares with an increase of 92 bcf during the same week last year and a five-year (2015-19) average build of 75 bcf. The increase boosted stockpiles to 3.926 trillion cubic feet (tcf), 9.1% above the five-year average of 3.599 tcf for this time of year and keeps overall inventories on track to get close to a record high over 4.0 tcf by the end of October. Front-month gas futures fell 1.6 cents, or 0.5%, to settle at $3.007 per million British thermal units (mmBtu). On Wednesday, the contract closed at its highest since January 2019, putting it up about 68% from a recent low of $1.795 on Sept. 21. As LNG exports rise and the weather turns colder, Refinitiv projected average demand would jump from 90.0 bcfd this week to 98.2 bcfd next week. The amount of gas flowing to LNG export plants has averaged 7.1 bcfd so far in October, up from 5.7 bcfd in September. That would be the most in a month since April and puts exports on track to rise for a third month in a row for the first time since February when feedgas hit a record 8.7 bcfd as rising global gas prices prompt buyers to reverse cargo cancellations. Gas benchmarks in Europe and Asia traded their highest since November 2019 and October 2019, respectively, putting both more than $2/mmBtu over the U.S. Henry Hub.
U.S. natgas futures slip as power generators burn more coal (Reuters) - U.S. natural gas futures slipped on Friday on forecasts for demand to decline in early November when gas price increases were expected to cause power generators to burn more coal and less gas to produce electricity. Front-month gas futures fell 3.6 cents, or 1.2%, to settle at $2.971 per million British thermal units (mmBtu). Earlier in the week, the contract closed at its highest since January 2019 on rising liquefied natural gas (LNG) exports and slowing output. For the week, the front-month was on track to gain about 7%, putting it up for a fifth week in a row for the first time since November 2018. Data provider Refinitiv said output in the Lower 48 U.S. states averaged 86.4 billion cubic feet per day (bcfd) so far in October. That would be the lowest in a month since October 2018. Output hit an all-time high of 95.4 bcfd in November 2019. Refinitiv projected average demand would jump from 89.9 bcfd this week to 97.5 bcfd next week before easing to 97.1 bcfd in two weeks when power generators were expected to burn less gas. The amount of gas flowing to LNG export plants has averaged 7.1 bcfd so far in October, up from 5.7 bcfd in September. That would be the most in a month since April and puts exports on track to rise for a third month in a row for the first time since February when feedgas hit a record 8.7 bcfd as rising global gas prices prompt buyers to reverse past cargo cancellations. Gas benchmarks in Europe and Asia traded at their highest since November 2019 and October 2019, respectively, putting both more than $2 per mmBtu over the U.S. Henry Hub. U.S. pipeline exports to Mexico, meanwhile, averaged 6.037 bcfd so far in October, topping September's 6.022-bcfd record.
Peak Gas Is Coming to the U.S. Sooner Than Anyone Expected -- One of the largest utilities in the U.S. put $8 billion into a bet that natural gas would dominate American electricity much like coal had before as Southern Co set on its landmark acquisition: natural-gas distributor AGL Resources Inc. Gas looked to be on the verge of generational dominance at the time. The American fracking boom had made the fuel superabundant and cheap, hastening coal’s rapid decline, while energy from wind and solar had higher costs and lower reliability. A giant utility like Southern would naturally see gas pipelines and storage as the key to a durable and lucrative future, meeting demand that would continue to grow. Now those expansive time horizons are in deep doubt. In fact, there are flashing signs that the U.S. power sector is approaching peak gas, with demand topping out decades ahead of schedule. “The era of robust growth in the U.S. natural gas market is likely coming to a close,” says Devin McDermott, an analyst at Morgan Stanley. “It doesn’t mean the market falls apart. It doesn’t mean gas demand falls off of a cliff. It means that we need less new supply going forward.”Natural gas only fulfilled its destiny as the nation’s top power source in 2016, backed by hundreds of billions of dollars invested in the creation of a gas-based economy. Renewables could take over as the No. 1 power source on the grid as soon as 2028, according to projections by McDermott and Morgan Stanley analyst Stephen Byrd. The American gas peak will mark a critical juncture—and it may have already been reached. McDermott expects overall U.S. gas demand growth in the U.S. slow to between 1% and 2% per year through 2030 as use by power generators shrinks by 2% to 3%. Overall demand could flatline or fall slightly if the Democrats win in November, a dramatic shift after years of record growth. “It’s a gradual trend, but it does add up over time,” he says. By the end of the decade, McDermott forecasts that gas will no longer be the largest producer of electricity in the U.S. And the pace of the gas decline could be accelerated if the presidential election goes to Joe Biden, who has campaigned on the goal to eliminate carbon emissions from America’s power grids by 2035.Some in the industry are making moves that indicate the writing is on the wall. Dominion Energy Inc., one of America’s biggest power companies, this summer agreed to sell substantially all of its gas pipeline assets. “To state the obvious, permitting for investment in gas transmission and storage has become increasingly litigious, uncertain and costly,” said Tom Farrell, Dominion’s executive chairman, in July. “This trend, though deeply concerning for our country’s economic growth and energy security, is a new reality, which threatens the pace at which we intended to grow these assets.”Natural gas emerged out of the 2008-2009 recession as the fuel best suited to reduce U.S. emissions from electricity. It’s cleaner and more efficient than coal, and fracking’s success ensured it would be cheap and plentiful. That helped unlock coal’s grip on electric grids and supercharged gas economies in Pennsylvania and on the Gulf Coast. The U.S. soon switched from being a gas importer to one of the world’s leading exporters. Renewables, meanwhile, still carried the stigma of hippie-ish science experiments that depended on government support and couldn’t provide around-the-clock electricity as long as the sun set and the wind ebbed. But the arrival of big-storage batteries has meant that wind and solar power will slowly be less dependent on the whims of weather, calling into question assumptions that there would be plenty of need for new gas alongside renewables. Solar farms backed up by batteries are already beating out gas on costs in parts of the U.S. Southwest , thanks in part to sharply falling prices of lithium-ion systems.
Louisiana lawmakers advance oil tax break and protection from new business taxes for unemployment benefits - – Louisiana legislators on Tuesday gave final passage to three instruments that will prevent the low balance of the unemployment trust fund from triggering higher business taxes and lower benefits, at least for next year. They also approved a tax break meant to stimulate the oil and gas industry that, while scaled back from its original form, could reduce state tax collections by tens of millions of dollars. Senate concurrent resolutions 9 and 5 and Senate Bill 55, taken together, will freeze the amount of employers’ wages that are taxable to pay for unemployment benefits at their current level, keep benefits at their current level, and suspend a “solvency tax” employers would otherwise have to pay now that state officials have begun borrowing from the federal government to keep paying benefits. Click here for details 2:02 The Louisiana Workforce Commission has borrowed at least $61 million so far and expects to need about $233 million in federal money. Lawmakers don’t yet have a plan to pay back all of the money, though they voted to set aside $85 million in a spending bill during the current special session. Many hope a future federal stimulus bill will provide money to shore up the unemployment trust fund that won’t need to be paid back. Senators also approved House Bill 29 by Rep. Phillip DeVillier, which would provide a severance tax exemption for companies that rework abandoned wells for 24 months or until the cost of investment is paid off, whichever comes first. As amended Tuesday, the program would end in three years, though it could be extended after that point. advertisement The bill could subtract nearly $25 million from state coffers over three years, according to Legislative Fiscal Office estimates. Meanwhile, out-of-state taxpayers would benefit, critics say. “Our citizens have to make up the difference in tax dollars,”
With Bankruptcies Mounting, Faltering Oil and Gas Firms Are Leaving a Multi-Billion Dollar Cleanup Bill to the Public - Amid a record wave of bankruptcies, the U.S. oil and gas industry is on the verge of defaulting on billions of dollars in environmental cleanup obligations.Even the largest companies in the industry appear to have few plans to properly clean up and plug oil and gas wells after the wells stop producing — despite being legally required to do so. While the bankruptcy process could be an opportunity to hold accountable either these firms, or the firms acquiring the assets via bankruptcy, it instead has offered more opportunities for companies to walk away from cleanup responsibilities — while often rewarding the same executives who bankrupted them.The results may be publicly funded cleanups of the millions of oil and gas wells that these companies have left behind. In a new report, Carbon Tracker, an independent climate-focused financial think tank, has estimated the costs to plug the 2.6 million documented onshore wells in the U.S. at $280 billion. This estimate does not include the costs to address an estimated 1.2 million undocumented wells.Greg Rogers, a former Big Oil advisor, and co-author of a previous Carbon Tracker report on the likely costs of properly shutting down shale wells, suggested to DeSmog that oil and gas companies have factored walking away from their cleanup responsibilities into their business planning.“The plan is that these costs will be transferred, these obligations will be transferred to the state at some point,” Rogers told DeSmog, “Why would a company want to go out and spend hundreds of millions of dollars plugging all of these wells when it could instead pay its executives?” Despite federal and state laws requiring oil and gas companies to clean up and properly cap and abandon wells, there is overwhelming evidence that this is not happening. One major reason why is that often, regulators lack the power to enforce compliance once the permits to drill the wells have been issued. The best method to guarantee the wells are properly capped and abandoned is for regulators to require the companies to put up the money to do that before the well is drilled. This is most often done via a process known as surety bonding. However, if the amount of money required for bonding is small enough, there is no incentive for companies to spend the additional money to properly cap the wells once the wells are no longer producing oil or gas. From a business standpoint, it is smarter for the well owner to walk away from the obligations at that point. The new report from Carbon Tracker also notes that current bonding monies allocated for well cleanup are equal to roughly only 1 percent of that total expected cost.
Minnesota groups highlight financial and environmental risks of natural gas | Energy News Network - A coalition of 10 environmental groups is trying to change the perception that natural gas is cheap or clean. With a billion-dollar gas-fired power plant proposal on the horizon, a new campaign in Minnesota is attempting to shift public opinion on the fuel by highlighting its ties to fracking and potential financial risks. The strategy: challenge the perception that gas is cheap or clean. Or natural. Once embraced by utilities and environmentalists as a cleaner-burning and less-expensive alternative to coal, natural gas transformed the nation’s electricity system over the last decade and a half, replacing more than 100 coal plants and smoothing the path for a surge of new wind and solar capacity. Now, with the clock ticking to dramatically decrease climate emissions, growing awareness about its environmental side effects, and the economics of renewables and storage nipping at its heels, natural gas has lost its luster among many environmentalists. Yet utilities maintain that the fuel is still necessary in the near term to balance intermittent renewables. The coalition of environmental and clean energy groups behind the “Energy We Can’t Afford” campaign believe utilities in the state have been too slow to recognize these trends, and they’re preparing to mobilize the public to help lobby against the approval of new natural gas power plants. Minnesota’s utilities have pledged to close all but one of the state’s remaining four coal plants, but their long-term plans call for building new natural gas plants while adding significantly to their renewable energy portfolios. Utilities have long argued gas offers the least polluting and least expensive option for providing baseload power that allows for greater renewable energy integration.
Administrative law judge deals loss to Line 3 pipeline critics - An administrative law judge has found that Minnesota pollution regulators properly considered the construction impacts of Enbridge’s controversial new pipeline, a blow to the oil pipeline’s opponents.The ruling by Judge James LaFave stems from a challenge to the draft water permits for the pipeline’s construction, which were approved by the Minnesota Pollution Control Agency (MPCA) in February.Three environmental groups and two Ojibwe bands asked for a “contested case” hearing over the draft permits. The MPCA agreed and a hearing was held this summer before LaFave.In an opinion released Friday, LaFave wrote that the challengers “failed to prove” that construction of the pipeline — a replacement for Enbridge’s current Line 3 — would permanently impact water quality and wetlands. Also, that there was no proof that the MPCA and Enbridge had undercounted the amount of wetland affected by the construction. The $2.6 billion, 340-mile pipeline across northern Minnesota would cross 212 streams and affect more than 700 acres of wetlands. Enbridge Energy has already built a 14-mile stretch of its new pipeline in Wisconsin and another short portion in North Dakota. It is still waiting for permits to build the part across northern Minnesota.
Bay Mills Indian Community submits comments urging state to reject Line 5 tunnel permits -- The Bay Mills Indian Community have submitted formal comments to the Michigan Department of Environment, Great Lakes and Energy, in opposition to Enbridge’s permit applications for its Line 5 pipeline tunnel project. BMIC said they have concerns over lack of information Enbridge has provided to the state, specifically, information they said is required to determine whether or not the tunnel project satisfies the state’s legal requirements. “We have said all along that this pipeline poses an existential threat to our rights under treaties we have signed with the United States,” said Bryan Newland, BMIC tribal chairman. “This pipeline also poses a grave danger to the watersheds of three of the five Great Lakes. We are going to make sure that the state has a clear picture of these risks, and of their responsibility to protect our waters and our rights.” BMIC is urging the state to reject Enbridge’s applications for permits in accordance with the Clean Water Act and Michigan’s Natural Resources and Environmental Protection Act.
Enbridge's Line 5: an unnecessary and imprudent investment - What are the full costs of our continued dependence on fossil fuels? The answer should inform the Whitmer administration’s decisions on the future of Line 5 — the 67-year old pipeline system transporting crude oil across Michigan and under the Straits of Mackinac. The burning of fossil fuels affects the environment and public health in ways that are well documented by scientists, economists, and public health officials. The impact from fossil fuel uses include respiratory diseases from air pollution, environmental degradation of surface and groundwater, and acidification of oceans and lakes. The combustion of fossil fuels also accounts for 80 percent of anthropogenic greenhouse gas emissions — by far, the predominant cause of the evolving climate crisis. Economists call these effects of fossil fuel development and combustion “negative externalities” that are not accounted for in the commodity prices of fossil fuels but are, nevertheless, very real costs that are ultimately passed along to the public. The International Monetary Fund (IMF) classifies negative externalities attributed to fossil fuels as “subsidies” that totaled over $4.4 trillion in 2017 alone. But the IMF’s accounting of the environmental and health costs associated with the use of fossil fuels is incomplete. As the improved economics of clean energy technologies like wind and solar energy, electric vehicles, and battery storage begin to displace fossil fuel-based technologies, fossil fuel companies are leaving new categories of costly environmental and health liabilities to the public.The oil development industry lost an estimated $280 billion between 2007 and 2018. Since 2015, more than 200 North American oil and gas producers have filed for bankruptcy protection, leaving $130 billion in debt. As these oil and gas developers terminate operations, they leave a legacy of hugely expensive problems to the public.In addition to devalued landscapes and contaminated water and soils, failed oil and gas companies will leave an estimated 2.6 million abandoned oil and gas wells to the public requiring an estimated $280 billion to properly close. Until properly closed – a highly unlikely occurrence in the foreseeable future —the wells will leak millions of tons of residual methane, a greenhouse gas 28 times more potent than carbon dioxide.
DNR Approves Two Permits for Line 3 Project - The Department of Natural Resources has approved two permits for the proposed Enbridge Line 3 pipeline planned to run across northern Minnesota to connect oil pipelines in Canada and Wisconsin.Both permits address the Gully 30 Fen in Polk County, and the DNR says the project meets the applicable environmental regulatory requirements for these particular permits. One of the permits, the Gully 30 Fen Calcareous Fen Management Plan, requires monitoring during and after construction to ensure minimal impact and mandates "practices to protect the fen such as wetland mats to prevent compaction," the DNR outlines in a Monday press release.The second permit, which addresses groundwater appropriation, sets "pumping rate and volume restrictions necessary to ensure sustainable use," The Line 3 pipeline must receive the go-ahead on eight other DNR-required permits, which are under consideration. The proposed pipeline, if built, would replace Enbridge's current Line 3 system.The permit approvals come less than a week after an administrative law judge ruledthat state pollution regulators properly weighed the pipeline's construction impacts on the environment.
Black Americans in ‘Cancer Alley’ disproportionately exposed to toxic pollution - (NBC video) In St. James Parish, Louisiana, residents face some of the highest cancer risks in the country due to air pollution from the nearby 85-mile industrial corridor. Taiwanese plastics company Formosa plans to build a 2,400 acre site that could double the toxic emissions in the parish.
Suit: Feds ignore risk of huge spills to endangered species (AP) — Environmental groups asked a federal court Wednesday to throw out the Trump administration’s assessment of oil and gas activity’s likely effects on endangered species in the Gulf of Mexico, saying it dismisses the chance of another disastrous blowout like the BP spill of 2010. The National Marine Fisheries Service’s 700-page analysis greatly underestimates both the likely number and size of oil spills, according to the suit filed by Earthjustice for the Sierra Club, the Center for Biological Diversity,Friends of the Earth, and Turtle Island Restoration Network. Even though the study was prompted by the 2010 spill, it “essentially pretends the Deepwater Horizon spill never happened — that there was nothing to learn from that disaster,” Earthjustice attorney Chris Eaton said in an interview Tuesday. The federal agency said it left the possibility of an extremely large spill like BP’s out of its calculations of likely effects because a Bureau of Offshore Energy Management analysis found little chance of another during the next 50 years. The previous analysis, in 2007, also estimated that “such a large spill was extremely unlikely,” the lawsuit noted. That analysis had estimated that “the largest spill possible would be at most 15,000 barrels,” or 630,000 gallons (2.4 million liters). The 2010 spill, which started with a blowout that killed 11 men, was hundreds of times bigger than that. Estimates of the amount of oil spewed into the Gulf for 87 days varied from from nearly 176 million gallons (666 million liters) to less than 103 million gallons (390 million liters). A federal judge calculated damages based on 134 million gallons (507 million liters) in the Gulf. The chance of such a spill is even higher now, the lawsuit said, because “Gulf drilling is moving into deeper waters, which increases the possibility of a catastrophic well blowout and extremely large oil spill.”
CAMPAIGN 2020: Oil and gas industry goes in big for Trump -- Friday, October 16, 2020 -- The oil and natural gas industry has a clear favorite in the 2020 presidential election: Republican Donald Trump. Trump's reelection campaign has brought in at least $1.9 million from donors in the oil and gas industry since his 2016 election, according to the Center for Responsive Politics' analysis, which includes Federal Election Commission data on donations through the end of August. That total, with more than two months left in the election season, exceeds the $1.2 million industry executives and workers gave Trump in the entire 2016 campaign cycle, CRP records show. Joe Biden, Trump's Democratic challenger, has gotten just $623,700 from oil and gas as of August. By comparison, Hillary Clinton, the 2016 Democratic nominee, wasn't far behind Trump's receipts from the industry, with $1 million. The totals don't include outside groups like super political action committees and hybrid PACs, such as America First Action, the Great America PAC and the Committee to Defend the President on the GOP side, and Priorities USA Action and Unite the Country on the Democratic side. Those organizations can raise and spend unlimited amounts of money. While they have to disclose donors, they can also take cash from "dark money" groups that do not disclose donors. With super PACs and hybrid PACs included, Trump's total oil and gas support would be $12.8 million in the 2020 cycle, the Center for Responsive Politics said, not accounting for the hidden dollars. In the wider money race — which is nearly certain to be the most expensive one in history — Biden is ahead. The Democrat has taken in $531 million, while outside pro-Biden groups have raised $177.6 million, as of the end of August. Trump has raised just $476.3 million, while his outside groups have raised $119.2 million. Among Trump's biggest financial backers in the oil and gas world is Kelcy Warren, the chairman of pipeline giant Energy Transfer LP and its CEO until earlier this month. Warren cut a $10 million check to America First Action, a pro-Trump super PAC, in August; gave the president's campaign $720,000 with his wife, Amy, last year; and held a fundraiser for Trump at his Dallas home this summer. Energy Transfer developed the Dakota Access pipeline with the help of a Trump order in 2017, and while Biden hasn't said whether he would seek to shut the line down if elected, he is under significant pressure to do so. Energy Transfer didn't return a request for comment for Warren.
Texas Governor Says Biden 'Just Killed' Family Paychecks With Oil Comments - Texas Governor Greg Abbott said Joe Biden had "killed" the paychecks of families working in the oil industry after the Democratic nominee said he would "transition" away from the fossil fuel if he were elected president. Gov. Abbott claimed the former vice president's pledge marked a "transition away" from Texas—a state where he is running neck-and-neck with President Donald Trump, according to state polls. Texas is the largest producer of crude oil and natural gas in the U.S., making the energy industry a major employer in the Lone Star State. According to the U.S. Energy Information Administration, 41 percent of U.S. crude oil production took place in Texas last year.
Oil Industry Outlook Still Grim — Especially in Texas - Texas has been hit especially hard by the economic downturn since the start of the coronavirus pandemic thanks to a catastrophic drop in oil prices. Unfortunately, the industry is not poised for a comeback yet.Jobs are on everyone’s minds as the unemployment rate sits at 8.3%, which is down from the peak of 13.5% in April thanks to so many Texans no longer looking for work,according to the Texas Workforce Commission. The oil and gas industry has lost 107,000 jobs during the pandemic, the fastest number of layoffs in industry history. As it stands now, Texas oil field operators employ only 162,000 workers, down by half from a peak of 297,000 in December 2014.Global consulting firm Deloitte crunched the numbers on oil and gas industry jobs, and people hoping for more hiring are likely to be disappointed for quite a while.“Our multivariate statistical analysis on employment and market data suggests that as much as 70% of jobs lost during the pandemic may not come back by the end of 2021 in a consensus business-as-usual scenario,” the latest report says.Job recovery will be slow, but if the price of oil raises back to $45 per barrel as it is expected to do, then Deloitte expects to see at least some significant rehiring.However, new data may indicate bad news for Texas oil and gas workers. Giant mergers are likely to slash jobs further. This week, both ConocoPhillips and Pioneer Natural Resources announced takeovers of other energy companies with combined totals of more than $15 billion. The move is likely a way to combine efforts and slash costs, but as with all mergers that also means eliminating redundancies. This is in addition to Chevron buying Houston-based Noble Energy earlier this month and Devon Energy’s plans to purchase WPX Energy soon.That is a lot of consolidation, and it’s going to put more workers off payrolls.“Everybody knows that when two companies come together, the sum of the two is not going to survive,” said Karr Ingham, a petroleum economist with the Texas Alliance of Energy Producers, to the Houston Chronicle. “If Company X has 1,000 employees and Company Y has 1,000, you’re not going to have a combined company with 2,000 employees. The tendency is that consolidation causes job loss.” Of course, mergers are better than bankruptcies, where we lead the nation in oil and gas. Even before the pandemic and the oil crash, the Federal Reserve Bank of Dallas projected that more Texas oil and gas business would fail because of the Russian-Saudi Arabian price war. Combined with a lack of demand, the fall of many businesses was inevitable. At least 10 companies in Texas have filed for bankruptcy. As the job market shrinks, so do worker opportunities.
Merit SI completes first solar power plant to directly power pipeline compressor station - Merit SI, LLC, a leading sustainable infrastructure company, has announced that it, along with a subsidiary of Enbridge Inc., has completed project development and construction of the first solar power plant in the US designed to directly help power an interstate natural gas pipeline compressor station. Merit SI completes first solar power plant to directly power pipeline compressor station The innovative, clean energy project was sponsored by and will serve Texas Eastern Transmission, LP, a subsidiary of Enbridge. Enbridge’s renewable energy projects (operating or under-construction) across North America and Europe have the capacity to generate approximately 4600 MW of zero-emission energy (more than 1750 MW net, based on equity stake). The 2.25 MW AC project, located in West Amwell Township, NJ, at Texas Eastern’s Lambertville Compressor Station, is estimated to reduce associated GHG emission by 58 500 metric t over its operating life and unburden the electric transmission grid during high demand, higher cost, summer months. “Powering our compressor stations in part with behind-the-meter solar helps us manage electricity costs and improve our environmental performance. Additionally, these projects bring incremental economic development into the communities we serve,” said Caitlin Tessin, Director of Market Innovation at Enbridge.
ConocoPhillips to Acquire Permian Operator in $9.7B Deal-- ConocoPhillips agreed to buy Concho Resources Inc. for about $9.7 billion in stock, the largest shale industry deal since the collapse in energy demand earlier this year and one that will create a heavyweight driller in America’s most prolific oil field. Investors will get 1.46 Conoco shares for each Concho share, the companies said Monday in a statement. The transaction represents a 15% premium over Concho’s closing price on Oct. 13, the last trading session before Bloomberg News first reported the companies were in talks. The pandemic-induced price crash and lackluster global economic recovery have accelerated the push for consolidation across the shale patch, which is under severe financial strain after years of debt-fueled growth. The combination of Conoco and Concho will be one of the dominant operators in the Permian Basin of West Texas and New Mexico, rivaling only the likes of Occidental Petroleum Corp. and Chevron Corp. in terms of crude output. The deal may also signal further mergers and acquisitions in the sector. Despite a compelling rationale for more consolidation in order to cut costs, a lack of cash and Wall Street’s antipathy toward the sector has, until recently, made it hard to get deals across the line. But with oil stable at around $40 a barrel, there are signs that M&A is now gaining momentum. Chevron Corp. completed its acquisition of Noble Energy Inc. in early October, and in late September Devon Energy Corp. announced it was buying Permian operator WPX Energy Inc. Unlike some shale deals in 2019, Devon’s tie-up with WPX was well-received, with both companies agreeing on a small deal premium. That follows investor criticism of some deal premiums last year for being excessive. The Concho takeover is Conoco’s biggest under its current chief executive officer, Ryan Lance, who until now has sought to position the company almost as an anti-shale option for Wall Street, touting little-to-no-growth, steady cash flow and disciplined spending. While Lance has made no secret of his desire to take advantage of the downturn to expand in shale, he said in July that any transaction must meet Conoco’s criteria of having a low cost of supply while being able to compete with the rest of the company’s portfolio. Houston-based Conoco emerged from the oil market slump in a relatively strong position with about $7 billion of cash on hand. It recently resumed share buybacks. But its growth outlook is challenged: second-quarter production was down by almost 25% from a year earlier after it joined many other U.S. drillers in curbing output in response to lower prices. Conoco and Concho said on a conference call that the deal didn’t arise from a need to fix anything but rather a desire to bulk up. “Evaluating the go-forward size and scale really becomes more and more important,” Concho CEO Tim Leach, who will be executive vice president and president of the merged companies’ operations in the lower 48 U.S. states, said on the call. “The ‘why now’ is that we have common vision on this, and creating a company that can attract capital and be a leader in that regard is the compelling reason why we wanted to move now.” Adding Concho will dramatically alter Conoco’s production profile. The Midland, Texas-based shale company is entirely focused on the Permian and pumped 319,000 barrels in the second quarter, about six times what Conoco produced there. The combination will save $500 million a year by 2022, and hand shareholders more than 30 percent of cash from operations through dividends and other distributions, the companies said.
ConocoPhillips Doubles Down On The Permian Basin And Fracking With Concho Acquisition - As anticipated, ConocoPhillips COP -0.4% announced Monday morning that it has agreed to a deal to acquire big independent Permian Basin producer Concho Resources in an all-stock transaction valued at $9.7 billion. As such, it represents the largest U.S. shale-focused acquisition thus far in 2020, far surpassing the $5 billion Chevron CVX +0.6% paid to acquire Noble Energy NBL +1.4% in July. “Together, ConocoPhillips and Concho will have unmatched scale and quality across the important value drivers in our business: an enviable low cost of supply asset base, a strong balance sheet, a disciplined capital allocation approach, ESG excellence and great people,” ConocoPhillips Chief Executive Ryan Lance said Monday morning in a press statement. Shareholders of Concho will receive 1.46 shares of ConocoPhillips for each Concho share owned, which amounts to a 15% premium above current valuation. That level of premium had been widely anticipated by market analysts as rumors about the pending deal circulated since last Wednesday. ConocoPhillips said in its release that the combined company would sport an asset base consisting of 23 billion barrels of oil equivalent and “an average cost of supply below $30 per barrel WTI.” Although that enterprise-wide average cost of supply is not specific to the new company’s Permian/Delaware Basin shale holdings, it would enable ConocoPhillips to continue to develop those rich underground assets at current market prices. Given that Lance also expects the deal to result in about $500 million in annual cost and capital savings through 2022, it creates a very positive story for the company to communicate. Gauging by initial analyst and investor reactions, that story is playing quite well so far. Robert Clarke, vice president, Lower 48 upstream, at Wood Mackenzie, said in a statement that “The combination is remarkable. Just in regards to scale, ConocoPhillips is adding enough Permian production to nip at the heels of ExxonMobil’s XOM +0.8% massive programme. We like the distinctives each firm brings too. Concho has a history of acquisitions in the region and brings a considerable amount of incumbent Permian knowledge. ConocoPhillips has proven itself as a leader in shale technology...The combination bodes well for the Permian’s longer-term outlook.”
Modest Deals Reflect Slide for US Shale-- There is no more dramatic sign of the U.S. shale industry’s fall from grace than one of the best in the business being sold off for less than a third of its peak value. Concho Resources Inc., an early explorer of the Permian Basin’s once-coveted oil riches that was worth $32 billion just two years ago, is selling for $9.7 billion in stock. ConocoPhillips is paying a meager 15% premium over Concho’s closing price on Oct. 13, the last trading session before Bloomberg News first reported the companies were in talks. Concho is not alone: More than half of the shale deals this year came with a premium of less than 10% over stock prices that had already plunged in the past couple of years, according to data compiled by Bloomberg. Shale explorers have rapidly lost favor with Wall Street after years of high debt, poor shareholder returns and value-destroying deals. The devastating impact of the Covid-19 pandemic on oil demand made matters worse, pushing many into bankruptcy. Private equity firm Kimmeridge Energy is among investors urging the highly fragmented industry to seek low-premium deals, gain scale and cut costs. “To sell out at a 15% premium I think sends the message that it’s going to be a lot harder to be a stand-alone” oil company, Jennifer Rowland, an analyst at Edward Jones, said Monday in a phone interview. In just the last few weeks, Chevron Corp. concluded the purchase of Noble Energy Inc. for a modest 12% premium, while WPX Energy Inc. agreed to merge with Devon Energy Corp. for a benefit of just 4.2% above its pre-deal share price, according to data combined by Bloomberg. Both deals, like Conoco-Concho, were all-stock transactions, meaning there’s no golden parachute for investors. Pioneer Natural Resources Co. is in talks to buy rival U.S. shale driller Parsley Energy Inc. in an all-stock deal that could be finalized by the end of the month, a person familiar with the matter said Monday. Dow Jones earlier reported the talks. The more down-to-earth deals of late are in stark contrast to Occidental Petroleum Corp.’s $37 billion acquisition of Anadarko Petroleum Corp. last year. The purchase raised the ire of billionaire investor Carl Icahn and left Occidental, which is now worth little more than $9 billion, saddled with about $40 billion of debt. “We looked at the way the world was changing and the need for size and scale,” Concho Chief Executive Officer Tim Leach said in an interview. “The fact that this transaction is 100% stock -- on a relative basis all our shareholders are still exposed to all the upside of the combined company.” While executives like Leach point to the value of being able to participate in an oil-price rally with an all-stock deal, it’s also a sign that buyers are not willing to fund purchases with cash, which would often mean taking on debt. And tapping shareholders for funds is out of the question. Energy has slumped to less than 2% of the S&P 500 Index, down from more than 11% a decade ago, even as the wider market rose to record levels. U.S. oil production has tumbled to around 10.5 million barrels a day from a record 13 million earlier this year. That’s the equivalent of removing more than the current production of OPEC member Kuwait. The industry is unlikely to make that back anytime soon, and more declines may be on the way next year. Occidental Petroleum Corp. CEO Vicki Hollub last week said the U.S. may never again reach those record production levels. This is in part due to shale wells’ rapid decline rate -- as much as 70% within the first year -- and the need for new wells, and money to drill them, to offset the production drop-off.
Pioneer Natural Resources Is in Talks to Buy Parsley Energy – WSJ - Pioneer Natural Resources Co. is in talks to buy Parsley Energy Inc., according to people familiar with the matter, as a wave of consolidation takes hold in the beleaguered oil patch. The two oil-and-gas companies, shale producers that operate in the Permian Basin of Texas and New Mexico, are discussing an all-stock deal that could be completed by the end of the month assuming the talks don’t fall apart, the people said. Austin, Texas-based Parsley has a market value of about $4 billion. It also has more than $3 billion of debt. The combination would be the latest in a series of tie-ups among energy producers seeking to scale up amid the coronavirus pandemic, which has eroded oil demand. That has caused a historic collapse in U.S. benchmark oil prices, which briefly plunged below zero in April and have since rebounded to around $41 a barrel. A deal would follow close on the heels of ConocoPhillips’s $9.7 billion agreement Monday to buy Concho Resources Inc. Devon Energy Corp. agreed last month to a $2.6 billion merger with WPX Energy Inc., while Chevron Corp. agreed in July to buy Noble Energy Inc. for about $5 billion. Buying Parsley would give Pioneer additional acreage in the Permian, solidifying the company’s place as one of the largest oil producers in America’s top oil field. Pioneer Chief Executive Scott Sheffield is the father of Parsley’s co-founder and chairman, Bryan Sheffield. Based in Irving, Texas, Pioneer has a market value of roughly $15 billion after its shares dropped by nearly two-thirds from a high in mid-2014. The elder Sheffield previously ran Pioneer from 1997 to 2016. He returned to the company in 2019 after Pioneer strained to meet production goals and its costs soared under his successor. The company recently said Chief Financial Officer Richard Dealy would become president and chief operating officer early next year, likely setting him up to eventually take over.
Pioneer Natural Resources to Buy Parsley Energy for $4.5 Billion – WSJ - Pioneer Natural Resources Co. as agreed to buy Parsley Energy Inc. for $4.5 billion, the latest in a flurry of U.S. oil tie-ups as companies seek to weather low prices brought about by the coronavirus pandemic.The all-stock deal, which values Parsley at a 7.9% premium to its closing value Monday, would solidify Pioneer’s place as one of the largest producers in the Permian Basin of Texas and New Mexico, the top American oil field. The long-anticipated string of transactions is expected to continue for healthier companies in the country’s most prolific oil fields, investors said, while many smaller, debt-burdened companies that are hoping for a deal may draw few offers. Pioneer Chief Executive Scott Sheffield said in an interview Tuesday that size and scale would be key to surviving as an independent oil-and-gas producer as the world transitions away from fossil fuels, and for his company would help it return more cash to shareholders. But he said additional combinations of industry players may take time.“I do not see much more coming until these other companies can deliver with excess cash flow over the next two or three years,” he said.“The combination of Parsley and Pioneer creates an organization set to thrive as we forge a strong new link at the low end of the global cost curve,” Parsley Chief Executive Matt Gallagher said in a statement. He is poised to join the combined company’s board of directors
Landowners living near shuttered oil and gas drilling sites worry economic crisis will leave behind environmental hazards --About a year ago, Schell bought a 310-acre farm in Mead that he leases to someone else to raise crops. But he was spending more and more time there, trying to get Occidental Petroleum to clean up, or “plug,” old wells the company inherited when it bought Anadarko Petroleum in 2019.“(Occidental) started plugging these in April and then they told me they weren’t going to plug the rest of them. One of the guys flat out told me the reason they’re not going to do the rest of them is because they don’t have the money,” Schell said.Last week, Occidental told Schell that it will close the five remaining wells. He’s glad for the news, which follows an inspection by the Colorado Oil and Gas Conservation Commission, but said not everyone has time to keep after a company or the money to hire a lawyer like he did. Schell is not alone in wondering what the industry’s economic downturn, driven by low prices and sinking demand due to the coronavirus pandemic, might mean for Colorado landowners and communities. Is there a danger that struggling companies will walk away rather than pay tens of thousands of dollars to clean up just one well site? Will companies going through bankruptcy have the resources to safely maintain operations and adhere to agreements they’ve struck?Public concern boiled to the point that in May the oil and gas commissionissued a paper saying that it is “prepared for and continues to protect public health, safety, welfare, and the environment through the economic downturn” in the industry and changes due to the coronavirus pandemic. In early September, the Denver-based company Ursa Piceance Holdings, with 41,000 acres of oil and gas properties in western Colorado and about 580 active wells, filed for Chapter 11 bankruptcy protection. It has wells in Battlement Mesa and wants to drill more. Another Denver company, Extraction Oil and Gas, filed for Chapter 11 protection in June. Cristen Logan of Broomfield, who lives within a mile of an 18-well pad owned by Extraction, is worried about the company’s move to end a contract with a pipeline business that ships oil, gas and water from the wells, a system designed to reduce emissions.
Judge denies tribes' bid to halt Keystone oil pipeline work (AP) — A federal judge has denied a request by Native American tribes to halt construction of the Keystone XL oil pipeline from Canada over worries about potential spills and damage to cultural sites. Work started this spring on the long-stalled pipeline that would carry oil sands crude from Hardisty, Alberta to Steele City, Nebraska. The Assiniboine and Gros Ventre tribes of the Fort Belknap Indian Community in Montana and Rosebud Sioux Tribe in South Dakota have challenged President Donald Trump’s 2019 permit for the project. The tribes say Trump’s permit violated their rights under treaties from the mid-1800s. U.S. District Judge Brian Morris said in an Oct. 16 ruling that the tribes did not show they would suffer irreparable harm from the work that’s been done so far. Morris said he had “serious questions” about the legal claims being made by the tribes. He did not make a final ruling, and invited further arguments. More than 1,000 people are working on the $9 billion project including building 12 pump stations for the 1,200-mile (1,900-kilometer) line, said Terry Cunha with TC Energy, the Calgary-based company behind the project. However, work on much of the pipeline itself remains stalled. That’s because the U.S. Supreme Court in July upheld a lower court ruling that invalidated a permit needed for the pipeline to cross hundreds of rivers and other water bodies along its route. Keystone XL was first proposed in 2008 and rejected under former President Barack Obama. It was revived by Trump as part of the Republican’s efforts to boost fossil fuel industries.
Tribes again ask federal judge to shut down Dakota Access Pipeline - American Indian tribes who oppose the Dakota Access Pipeline have again asked a federal judge to stop the flow of oil while the battle over the line’s future plays out in several venues. The Standing Rock Sioux and other tribes in the Dakotas succeeded on their first attempt, only to have an appeals court overturn U.S. District Judge James Boasberg's shutdown order earlier this year. Now, they're asking the judge to clarify his earlier ruling to satisfy the appellate judges and then order the line to cease operations. The tribes argue that potential harm to their water supply outweighs any economic impacts of shutting down the line that’s been moving North Dakota oil to a shipping point in Illinois for more than three years. “The Tribes are irreparably harmed by the ongoing operation of the pipeline, through the exposure to catastrophic risk, through the ongoing trauma of the government’s refusal to comply with the law, and through undermining the Tribes’ sovereign governmental role to protect their members and respond to potential disasters,” attorneys Jan Hasselman and Nicole Ducheneaux wrote. The Friday filing in U.S. District Court in Washington, D.C., came as the federal agency that permitted the pipeline was wrapping up a two-day public meeting to help determine the scope of an environmental study U.S. District Judge James Boasberg ordered in March. The U.S. Army Corps of Engineers launched the study about a month ago. It’s expected to take more than a year to complete, and will help determine whether the Corps reissues an easement for the pipeline’s Missouri River crossing in the Lake Oahe reservoir just north of the Standing Rock Reservation. Tribes fear a spill into the river would pollute their water supply. Pipeline operator Energy Transfer and the Corps both maintain the pipeline is safe. Prolonged protests in 2016 and 2017 drew thousands of people to camps near the river crossing and resulted in hundreds of arrests. “From the beginning of this litigation, the Tribes have sought to reinforce the centrality of Lake Oahe to their ceremonies, their economy, and their identity,” Hasselman and Ducheneaux wrote. Boasberg, who is overseeing the four-year-old lawsuit filed by the tribes, ordered the extensive environmental study last spring because he felt previous, less-extensive environmental analysis by the Corps left lingering questions. Boasberg in July revoked the easement that allows for the river crossing and ordered the pipeline shut down until its environmental soundness was proven. A federal appeals court allowed oil to keep flowing, however, ruling that Boasberg hadn’t justified a shutdown. That same appeals court is now determining whether to uphold his decision regarding the study.
North Dakota's oil output up 12% in Aug as more wells resume output (Reuters) - North Dakota’s oil production rose about 12% to 1.16 million barrels per day (bpd) in August as more wells and drilling rigs resumed production after a drop earlier this year, the state’s regulator said on Friday. Producers in the state shut about 5,000 wells pumping 300,000 bpd as prices tumbled into negative territory in April. Output in the United States, while still well below the peak 13 million bpd reached in January, has been gradually rising with U.S. crude futures holding around $40 a barrel over the past several months. The additional U.S. oil production is adding to uncertainty over what the Organization of the Petroleum Exporting Countries will do next month. OPEC and allies are scheduled to meet Nov. 30 to review a plan to ease curbs on production, potentially adding 2 million bpd next year. North Dakota’s crude oil output rose to 1.16 million bpd from 1.04 million bpd in July, state regulator North Dakota Department of Mineral Resources reported. Peak production in the state was 1.4 million bpd in 2019. Officials said 16 drilling rigs are active in the state, up from 10 in July. Crude oil produced in the state was selling for $31.75 a barrel, compared with $9.16 per barrel in April when the COVID-19 pandemic and a market glut knocked prices lower.
Regulators report 12,180-gallon oil spill near Watford City . (AP) — North Dakota regulators say an equipment failure at a well near Watford City led to the release of about 12,180 gallons of oil. The state’s Oil and Gas Division said it was notified of the spill on Sunday at the Newfield Production Co. well located about 5 miles west of Watford City. Regulators said none of the oil escaped the oil well site. The company reported that it has recovered all but about 420 gallons of the oil. Regulators said a state inspector has been at the site and is monitoring cleanup.
State looks to put $16M in federal virus funds toward fracking grants - State officials say there isn’t enough time left to clean up every abandoned oil field well site they had intended to this year using federal coronavirus aid, so they want to repurpose $16 million and put it toward grants for fracking. Regulators present the proposal as a way to create jobs and help stabilize state revenue, while some in the environmental community view it as a bailout for the oil industry. Under the proposal that the North Dakota Emergency Commission will consider Friday, oil companies would be eligible for a $200,000 reimbursement per well they complete. The money would go toward acquiring and disposing of water used in the hydraulic fracturing process, in which water, sand and chemicals are injected deep underground to crack rock and release oil. The proposal evolved through discussions between state officials and oil industry representatives. State Mineral Resources Director Lynn Helms said he recently spoke to oil companies who have been hit hard by the price drop brought on during the pandemic, which has curtailed global travel and oil demand. “They had been talking about how slow work was and how bad it was going to get during the coming winter months,” he said. “They were really excited by this. That’s what this really is, to generate these jobs for the next couple months.” A representative with the Sierra Club, however, called it “totally inappropriate” to put some of the $1.25 billion the state received through the federal Coronavirus Relief Fund toward fracking. “A direct subsidy payment to oil companies to drill for oil is outrageous,” said Wayde Schafer, spokesman for the organization in North Dakota. State leaders have doled out the money from the fund, which was established by the CARES Act, throughout the course of 2020. It must be used by the end of the year. When the six-member Emergency Commission meets Friday, members will consider proposals from a host of state agencies to spend another $221 million in fund dollars. If approved by the all-Republican commission, which consists of the governor, secretary of state and legislative leaders, the proposals then go to the larger legislative Budget Section for a final vote.
Testing for oil in Arctic wildlife refuge proposed for this winter - Testing for oil deposits at the Arctic National Wildlife Refuge (ANWR) could begin in December, according to a proposed plan for such testing that was posted online Friday. The government posted a plan submitted by the Kaktovik Iñupiat Corporation to conduct seismic testing in the refuge, including in an area where polar bears and other wildlife may be found. Seismic testing uses acoustic waves that bounce off formations beneath the surface, generating images that help detect oil deposits. This type of surveying can cause damage to tundra vegetation and soils. According to the plan, the Kaktovik Iñupiat Corporation hopes to conduct the surveys in a 847.8 square mile area of the refuge. Politico first reported on the corporation’s application earlier this month. The Alaska-based corporation anticipates conducting surveys in December and January. It said that wildlife that can be found in the area during the winter might include polar bears, caribou, grizzly bears, wolverines and arctic foxes. “Although encounters with polar bears or grizzly bears are unlikely, the operator and its contractors will exercise caution during the project,” the plan states. Critics have expressed concern that drilling could harm animal species that are found there, negatively affect the landscape, exacerbate climate change and harm the Gwich’in people who hunt caribou there. “Allowing huge thumper trucks and camps onto sacred lands where they leave deep and lasting wounds is a threat to my people, the animals, our food, and our way of life,” Bernadette Demientieff, the executive director of the Gwich’in Steering Committee, said in a statement. “We have raised concerns repeatedly about this administration rushing the process and shortcutting our review.” A provision in the 2017 Trump tax bill approved by a GOP-controlled Congress opened ANWR to drilling following years of debate over the matter.
Judge tosses land management plans after ousting Pendley from role - A federal judge unraveled the work of former Bureau of Land Management (BLM) acting director William Perry Pendley, throwing out land management plans in Montana in a case that could have consequences for the agency’s work elsewhere across the country.The late Friday ruling is a win for the state of Montana, with Montana-based U.S. District Court Judge Brian Morris criticizing the Department of the Interior for “novel and last-ditch legal arguments.” It’s the second major decision in the case after Morris last month determined Pendley had violated federal vacancy laws by "serv[ing] unlawfully ... for 424 days" through a series of temporary orders. He gave the Department of the Interior 10 days to justify why it shouldn’t throw out many of the decisions Pendley has made during his tenure.The decision holds promise for environmental groups, who have a list of at least 30 land management plans overseen by Pendley they’d like to see reversed, many of which limit the scope of national monuments or open up significant portions of federal lands to oil and gas drilling. Pendley, a controversial figure due to his history of opposing federal ownership of public lands, remains with the agency in a deputy role after his nomination to lead the BLM was withdrawn from the Senate this summer.Pendley “had not been properly appointed to the position, and instead had exercised authority as acting BLM director through a series of unlawful delegations,” Morris wrote in reference to the maneuvers that kept him in the acting director role for over a year.“Any exclusive function of the BLM director performed by Pendley is invalid.”Morris’s decision invalidates three land management plans Pendley supervised in Montana, including one that would open 95 percent of 650,000-acres of BLM land to resource extraction like mining and drilling. But he stopped short of applying the ruling to any of Pendley’s other decisions, despite devoting much of the decision to castigating Interior for failing to comply with his order to supply a list of actions that he may have taken illegally. “Despite Federal Defendants’ disagreement with the exercise and apparent refusal to engage in such a search in good faith, it remains probable that additional actions taken by Pendley that should be set aside as unlawful,” Morris wrote. Interior had argued that Pendley took “no relevant acts . . . within the director’s exclusive authority.”
INTERIOR: Wave of lawsuits coming over Pendley's BLM decisions -- Monday, October 19, 2020 -- A federal judge's order invalidating three land use plans approved by the Bureau of Land Management during William Perry Pendley's "unlawful" tenure could spark a wave of litigation challenging oversight of millions of acres.That's according to legal experts and Montana District Chief Judge Brian Morris, who wrote in his order issued late Friday that it is "probable" there are "additional actions taken by Pendley that should be set aside as unlawful" across the West."Conservation Groups remain free to file suit in the appropriate federal district court to challenge land management decisions they have identified as potentially unlawful," Morris wrote.They're planning to do so. "We'll go to court to make sure Pendley's illegal decisions end up in the dumpster where they belong," said Taylor McKinnon, a senior campaigner at the Center for Biological Diversity.The center and other groups have already put Interior Secretary David Bernhardt on notice in a letter that detailed dozens of amended land use plans and other BLM policy decisions that may now be invalid (E&E News PM, Oct. 6).They include numerous "rulemakings, guidelines, programs and internal memorandum" issued since July 2019, when Bernhardt delegated "exercising the authority of director" to Pendley.Morris' latest order is the second in less than a month. The judge ruled last month that Pendley had illegally performed the duties of BLM's director for more than a year, and barred him from continuing to do so (Greenwire, Sept. 25). BLM has since removed "exercising the authority of director" from his formal title of deputy director of policy and programs. Specifically, Morris' latest order tossed aside the amended Lewistown, Missoula and Miles City resource management plans (RMPs) because, the judge wrote, Pendley lacked the authority to resolve dozens of protests that were filed against the amended plans. Montana Gov. Steve Bullock (D) and the state — which filed the original lawsuit against Pendley that led to Morris' September order — asked the judge to throw out the three RMPs covering about 800,000 surface acres and 12 million acres of subsurface mineral estate. The Interior Department, which has vowed to appeal, has labeled Morris' orders "outrageous," and it maintains that Pendley did not sign the protest resolutions at issue. But legal scholars who have read Morris' latest order say BLM is now exposed to legal challenges that could undermine numerous other RMPs and planning documents approved during Pendley's tenure as de facto acting director. It's likely that "other judges could rule similarly to Morris and possibly upset a number of plans,"
Biden calls for 'transition' from oil, GOP sees opening - Democrat Joe Biden’s remark that he would “transition” away from oil in the U.S. in favor of renewable energy drew quick attention Thursday night from President Donald Trump, who saw it as a boon to his election chances in key states.“I would transition away from the oil industry, yes,” Biden said in the presidential debate’s closing minutes under peppering from Trump. “The oil industry pollutes, significantly. It has to be replaced by renewable energy over time.”The Biden campaign’s climate plan calls for the U.S. to have net-zero greenhouse gas emissions by 2050. And he repeated his pledge to end federal subsidies for the oil and gas industry. However, Biden’s plan does not call for a ban on climate-damaging fossil fuels, focusing instead on technologies that can capture pollution from oil and other sources.ADStill, Trump seemed surprised and pleased by Biden’s comment, declaring it a “big statement,” and suggesting it would come with political blowback in oil-producing states that stand to lose jobs.“Basically what he is saying is he is going to destroy the oil industry,” Trump said. “Will you remember that Texas? Pennsylvania? Oklahoma? Ohio?”Trump won all four states in 2016, but Pennsylvania in particular is a pivotal swing state this cycle, with both candidates investing heavily. Ohio is also in play, and Democrats even see Texas as a longshot pickup on an expanded electoral map.After the debate, Biden told reporters he would not “ban” fossil fuels or move away from them for “a long time.”Tackling climate change means sharply cutting oil, gas and coal emissions, scientists say, and that means eliminating most burning of fossil fuels. Biden talks of a 30-year transition to a carbon-free economy, by encouraging more wind and solar power and more energy efficiency.AD
Here's Why Biden Couldn't Ban Fracking, But Could Restrict It - BNN-- While Biden has called for prohibiting new oil and gas projects on federal land, the candidate has made it clear he does not support a widespread ban on fracking. Even if Biden wanted to, he couldn’t unilaterally ban fracking on private lands. Under a 2005 law, the Environmental Protection Agency has almost no regulatory power over fracking. Changing that would require an act of Congress. There are several ways Biden could halt fracking on federal lands using executive power. He could ban new oil and gas leases, halt new permits, or seek a specific regulatory ban on fracking, all of which Biden has telegraphed at one point or another on the campaign trail. That doesn’t mean it will be easy. A regulation banning fracking on federal land would have to go through a process that would likely be challenged in court as a violation of federal law that encourages oil and gas development. Even an Obama-era Interior Department rule that merely set standards for fracking on federal lands -- while still allowing the activity -- was tossed out. Instead, it’s more likely Biden would go through the “side door” that could include a combination of rewriting drilling and land management plans and the use of emergency authority to achieve a cessation on leasing and permitting, Book said. “With the stroke of a pen without any delay Bureau of Land Management staff could be allocated away from leasing and permitting activities,” said Book. “It takes people to write permits, it takes people to write production and drilling plans.” The impact of Biden’s plan would be limited since most fracking occurs on private land, not public. Onshore oil production on federally owned land was approximately 6.5% of the U.S. total in 2019, and onshore federal gas production made up 10% of the U.S. total, according to consulting firm ClearView Energy Partners. The impact would hit at least one blue state hard. In New Mexico, roughly 90% of all production in the in the state’s portion of the oil rich Permian shale basin was on state and federal lands last year, according to the New Mexico Oil & Gas Association. In 2017 more than half of New Mexico’s oil production and nearly 67% of its natural gas production occurred on federal lands, according to the same group. In the swing state of Pennsylvania the amount of gas produced from federal land accounts for less than a one hundredth of 1%, according to ClearView. A ban on offshore drilling in federal waters, which Biden has also proposed, would be much more impactful nationwide. It accounts for roughly 16% of total production. A more narrow ban on fracking solely focused on federal land, could provide Biden political cover among progressive environmental groups and others stringently opposed to fossil fuels. At the same time the limited nature of the ban means it is unlikely to hurt him among voters in swing states where fracking takes place on private lands such as Pennsylvania and Ohio.
EPA Chief: You Don't Have To Ban Fracking If You Regulate It To Death -The Federalist - 2020 Democratic presidential candidate Joe Biden wants to ban fracking.He doesn’t say it like he used to a few months ago, but he doesn’t have to. He made his position clear enough to the American people throughout the 12-month primary.Since capturing the Democratic nomination however, the former vice president has appeared to shift his tone on the innovative practice for oil and natural gas extraction as not to spoil his chances in the critical rust-belt swing states such as Pennsylvania and Ohio. “I do not propose banning fracking,” Biden tried to clarify during last week’s ABC town hall with former Clinton White House Communications Director George Stephanopoulos, going on to argue that emissions just have to be eliminated if its going to continue under a Biden administration. “It has to be managed very, very well.”In other words, Biden is going to regulate it into oblivion.Ban or no ban, EPA Administrator Andrew Wheeler told The Federalist in an exclusive interview published Monday it doesn’t matter given the rhetoric from the Democratic ticket.“I’ve heard him talking about fracking multiple times and every time it seems a little different,” Wheeler said. “But you don’t have to ban something if you regulate it to death. And the Obama administration was regulating it to death.”Wheeler’s right of course. There are endless ways an administration run by Biden and California Sen. Kamala Harris could effectively weaponize federal regulatory agencies to functionally ban the the controversial practice without ever crafting explicit legislation doing so. They can tighten rules under the Clean Air Act, draw out permit application processes, axe tax incentives, pass burdensome red tape, halt the construction of new pipelines, and perhaps most consequentially, bar it on federal lands. The Democratic ticket’s platform indeed prominently endorses the elimination of new oil and gas permits on public lands and waters while setting a goal for net-zero emissions by 2050, an ambitious and nearly impossible timeline set 30 years from now.According to the Bureau of Land Management, onshore federal lands provide 8 percent of the nation’s oil and 9 percent of its natural gas, while offshore production produces 15 percent of American oil and 3 percent of its gas. Myron Ebell, an energy and environmental expert at the conservative-leaning Competitive Enterprise Institute (CEI), agreed with Wheeler’s assessment and emphasized that the Biden-Harris platform is more about eliminating oil and natural gas altogether, which, in turn, includes fracking. He highlighted how a potential Biden-Harris administration would already have all the regulatory tools at their disposal to crack down on fossil fuel production. “My expectation is that it will be at least as bad as the Obama-Biden administration, but probably quite a lot worse.”
Barrett punts on climate, oil industry recusals in written responses - Supreme Court nominee Amy Coney Barrett declined to weigh in on climate change or say whether she’d recuse herself from cases involving the oil industry in written responses to questions from the Senate Judiciary Committee ahead of its Thursday vote on her confirmation. In response to several questions on climate, Barrett gave responses including “The Supreme Court has described ‘climate change’ as a ‘controversial subject’ and ‘sensitive political topic.’ ’’ “As a sitting judge, it would be inappropriate for me to weigh in further on the matter,” she added. The response echoed statements that Barrett made during her confirmation hearing last week, when she said that she did not hold "firm views" on climate change. She added that her opinion on climate is not “relevant” and called the subject a "contentious matter of public debate." The vast majority of scientists believe that climate change is happening and human-caused. Barrett also punted on questions about whether she’d recuse herself from oil companies other than Shell and why the American Petroleum Institute, which her father was involved with, was not on her recusal list. She said that four Shell entities were on her recusal list “in an abundance of caution” because her father worked for Shell Oil Company. She did not directly say why she didn’t similarly recuse herself from any other oil or energy companies or the American Petroleum Institute, saying that “the question of recusal is a threshold question of law that must be addressed in the context of the facts of each case.” “As Justice [Ruth Bader] Ginsburg described the process that Supreme Court justices go through in deciding whether to recuse, it involves reading the statute, reviewing precedents, and consulting with colleagues. As a sitting judge and as a judicial nominee, it would not be appropriate for me to offer an opinion on abstract legal issues or hypotheticals. Such questions can only be answered through the judicial process,” she added.
Indigenous Women to Financial CEOs: Stop Abetting 'Climate-Wrecking' Tar Sands Industry - A group of Indigenous women and their allies on Monday urged the heads of major global financial institutions to stop propping up the tar sands industry and sever all ties with the sector's "climate-wrecking pipelines, as well as the massively destructive extraction projects that feed them." The demand to the CEOs comes in an open letter signed by more than 40 Indigenous leaders including Rebecca Adamson, Cherokee and founder of First Nations and First Peoples Worldwide; Tara Houska, Couchiching First Nation and founder of the Giniw Collective; and Winona LaDuke, White Earth Nation and executive director of Honor the Earth. Supporting the call is a diverse group of over 150 organizations such as Another Gulf Is Possible Collaborative, Global Exchange, and Indigenous Environmental Network. "It's time to move on. The most destructive and expensive oil in the world needs to stay in the ground," LaDuke said in a statement. Beyond the tar sands sector's "grave threats to Indigenous rights, cultural survival, local waterways and environments, the global climate, and public health," the open letter says continued financing and insuring of tar sands projects just makes bad economic sense, noting that "no subsector has had a worse financial prognosis than tar sands oil." "Tar sands is one of the most carbon-intensive, expensive extraction processes in the industry, and these pipelines are likely to be stranded assets soon after they are built," the women wrote, referring to a scenario in which fossil fuels will have to stay in the ground. While the ecological harm of tar sands extraction and infrastructure has been repeatedly noted by fossil fuel critics, the letter points to new threats brought by the coronavirus crisis. The signatories point to the multiple work sites in Alberta that have seen outbreaks of COVID-19 as extremely bad news for Indigenous communities who "are uniquely vulnerable to the virus' spread due to historically underfunded healthcare programs and significant health disparities." In addition, an influx of project workers and so-called "man camps" brings particularly acute harm to Indigenous women: Indigenous women in these rural areas are in peril. There is growing evidence that the epidemic of missing and murdered Indigenous women (MMIW) is directly linked to fossil fuel production. Workers relocate to construction sites to build pipelines, creating temporary housing communities known as "man camps" near the pipeline route, which is oftentimes on or next to tribal nation lands. Studies, reports, and Congressional hearings have found that man camps lead to increased rates of sexual violence and sexual trafficking.
Stena to Drill Offshore Canada Well for CNOOC - CNOOC International Petroleum North America ULC has contracted the Stena Forth drillship for a one-well campaign offshore Atlantic Canada, vessel owner Stena Drilling reported Monday. Under the approximately 90-day drilling program, the Stena Forth will mobilize to the Flemish Pass offshore Newfoundland and Labrador, according to a post on Stena Drilling’s LinkedIn page. The drilling contractor noted the region is classified as a harsh environment, with unpredictable weather conditions and water depths ranging from 1,083 to 3,937 feet (330 to 1,200 meters). As Rigzone reported last December, CNOOC owns a 100-percent working interest in the Flemish Pass acreage – located in exploration licenses 1144 and 1150, east of St. John’s, Newfoundland and Labrador. CNOOC’s website states the company had planned to spud its first exploration well within Exploration License 1144 in the second quarter of this year but had to defer it as a result of the COVID-19 pandemic. “The Flemish Pass Basin has proven world-class source rocks, providing a large hydrocarbon potential on which we aim to build long-term, sustainable success in the region,” CNOOC notes on its website. The Stena Forth is one of Stena Drilling’s four drillships. The UK-flagged, harsh-environment, dynamically positioned drillship can operate in 10,000 (3,048 meters) of water and drill to 35,000 feet (10,668 meters), according to the drilling contractor’s website.
80 Million Gallons of Oil, Larger Than Exxon Spill, Dangerously Close to Pouring into Caribbean - The U.S. embassy in Trinidad and Tobago has urged "immediate actions" to prevent a potentially catastrophic oil spill in the Gulf of Paria, off the coast of Venezuela, where a floating storage and offloading facility is reportedly undergoing repairs. The Venezuelan-flagged Nabarima vessel has been sat idle off the Venezuelan coast since January 2019. Pictures recently emerged showing the FSO vessel floating at an incline, raising fears that it could spill its load into the gulf devastating the regional fishing industry and delicate ecosystems. The Nabarima is operated by the Petrosucre company, a joint venture between the Venezuelan state oil company Petroleos de Venezuela (PDVSA) and the Italian Eni oil giant. Petrosucre froze oil extraction in January 2019 after being sanctioned by President Donald Trump's administration, leaving 1.3 million barrels of crude oil, some 80 million gallons, aboard the Nabarima. The infamous Exxon Valdez oil spill—widely considered the worst in history by the amount of environmental damage done—involved around 10.8 million gallons of crude. The U.S. embassy in Trinidad and Tobago released a statement Friday expressing its unease at the Nabarima's situation. "The United States remains concerned by the potential risk to safety and environment posed by the Venezuelan-flagged vessel, Nabarima, in the Gulf of Paria," the statement said. "We strongly support immediate actions to bring the Nabarima up to international safety standards and avoid possible environmental harm, which could negatively impact not only the Venezuelan people but also those in nearby countries. PDVSA has a responsibility to take action to avoid an environmental disaster in Venezuelan waters."
Trinidad continues to press for access to tilting oil vessel - The Ministry of Foreign and Caricom Affairs has dispelled any thoughts that it has not been taking action on the tilting Nabarima. In a statement yesterday, the ministry detailed the action taken by the Government, after it learned about the impending environmental danger the vessel poses. It said it communicated swiftly with the Venezuelan Government and has been pressing for information regarding the status of the vessel. According to the ministry, it along with the Ministries of Energy and Energy Industries, and the Ministry of National Security has been actively working on solutions to the Nabarima issue. It said Venezuelan claimed it conducted initial stabilisation works on the Nabarima and that it is no longer in any danger. However, the ministry said it has been persistently pressing the Venezuelan government for Trinidad and Tobago to do its own verification but laments that without permission this cannot happen. The ministry said this Government has also engaged discussions with several Ambassadors including the Ambassador of the United States of America to Port of Spain on the matter. It added, while Venezuela agreed to permit a team of local experts to cross the border and assess the Nabarima, it later moved the date from the end of September to the current position that the inspection team would receive permission to visit on 20th October. It added that Venezuela has also denied a recent photograph circulating which purports to represent severe tilting of the Nabarima. The ministry said this country will continue to lobby to assess the vessel itself.
PDVSA vessel approaches floating facility to load crude (Reuters) - An oil tanker operated by Venezuelan state oil company Petroleos de Venezuela [PDVSA.UL] on Tuesday approached a floating oil facility where it is expected to receive crude via transfer at sea amid environmental concerns, Refinitiv Eikon data showed. Environmental groups have in the past two weeks expressed concern about a potential spill of the 1.3 million barrels of crude aboard the Nabarima oil facility - part of the Petrosucre joint venture between PDVSA and Italy’s Eni SpA - after images showed the vessel tilting to its side. PDVSA now plans to offload some of the crude on board via a ship-to-ship (STS) transfer involving the Icaro, an Aframax vessel it owns, a person familiar with the matter told Reuters on Monday. The Refinitiv Eikon data showed the Icaro approached the Nabarima at 2:37 p.m. local time (1837 GMT). The Venezuela-flagged barge Inmaculada was also expected to participate in the STS operation, which carries its own set of risks, according to a person familiar with the matter and a document seen by Reuters. PDVSA did not immediately respond to a request for comment. Authorities in neighboring Trinidad and Tobago have said they planned to inspect the vessel, which is located in the Paria Gulf separating the two countries. Petrosucre, which is 74% owned by PDVSA and 26% owned by Eni, suspended output shortly after Washington sanctioned PDVSA in January 2019, as the sanctions deprived the company of its former main crude buyer, PDVSA’s U.S.-based refining subsidiary, Citgo Petroleum Corp [PDVSAC.UL.] The United States in December 2019 placed additional sanctions on the Icaro vessel itself for delivering Venezuelan petroleum products to Cuba, one of President Nicolas Maduro’s main overseas allies. The Trump administration is trying to oust Maduro, whom it labels a dictator.
Caribbean threatened by 1.3 million barrels of oil from sinking oil tanker - A state of environmental emergency is being called for by fishermen in Trinidad and Tobago over a sinking oil tanker with 1.3 million barrels of oil. If the oil spills, it would threaten the entire Southern Caribbean. At 264 meters in length and a capacity of 1.4 million barrels, the spill would be five times worse than the Exxon Valdez oil spill in Alaska in 1989, which was the worst in history until the 2010 BP Deepwater Horizon. Officials have been criticized for allowing the situation to evolve for three months without taking sufficient action. The Nabarima is a Venezuelan oil tanker but part-operated by Italian energy giant, $55 billion ENI, and has been caught up in US sanctions since disputed elections questioned the legitimacy of the Venezuelan President. The tilting had been of concern since it was first noticed in July and crews later discovered water leaking on board. The situation has gotten progressively worse since then. It was only last week that a representative of the fishing community in Trinidad, Gary Aboud, was able to get close enough to the heavily listing Venezuelan oil tanker to show first hand how serious the risk is, especially with the Caribbean in a particularly active 2020 hurricane season that is only due to end by November 30. Combined with drone footage to show the angle of tilting, his two and a half minute video (link below) shows the risk that poor weather would have on the tanker, and what he highlights as a lack of urgency by the Trinidad and Tobago Government or the international community to act. Gary Aboud, Corporate Secretary of Trinidad and Tobago based environmental group, Fishermen and Friends of the Sea, went to the site of the Nabarima, moored in Venezuelan waters, to highlight the risk posed to the over 50,000 fishermen of Trinidad and Tobago that rely on the sea, the potential long term ecological harm to species in this coral reef and biodiversity rich region, as well as the broader regional risk to the Caribbean given the direction of the currents and wind at this time of year.. Reports from the Trinidad and Tobago Guardian had been calling for action since early September. An emotional video by Gary Aboud first posted on September 7, six weeks ago, had highlighted the growing risk of the tilting oil tanker, combined with the ongoing hurricane season - the second most active on record. The Nabarima has a capacity of 1.4 million barrels, and was abandoned without a crew by the Venezuelan state and a joint venture with Italian energy giant, ENI, following sanctions from the United States in late 2019.
Damaged Venezuelan oil tanker poses minimal spill risk -A damaged Venezuelan oil tanker recently tilting to one side in the Caribbean after taking on water poses no significant risk of spilling and causing an environmental catastrophe, officials of Trinidad and Tobago said Thursday. Minister of Energy and Energy Industries Franklin Khan said a team of experts from his country inspected the Nabarima – a floating storage and offloading facility (FSO) – on Tuesday, allaying previous fears that it was on the brink of sinking and spewing 1.3 million barrels of oil. The double-hulled tanker is “intact and poses a minimum risk of any oil spills at this time”, Khan said. He said Venezuela had started the slow process of unloading oil to further avoid disaster, an operation expected to take up to 35 days. “The team confirm that major maintenance is ongoing,” Khan said. “Pumps and electrical motors are being repaired and replaced as needed.” Trinidad officials said they will continue to monitor the effort, and have applied for permission from Venezuela for a follow-up inspection in a month.
US Expands Nord Stream 2 Sanctions As Germany Vows Pipeline Completion Not If, But When --Secretary of State Mike Pompeo has long vowed he'll "do everything" to stop Nord Stream 2, last month indicating the US is building a coalition of countries to fight against it, given Washington sees it as a massive compromise to Russia, giving it leverage over Europe as well as Ukraine. “From the US point of view, Nord Stream 2 endangers Europe because it makes it dependent on Russian gas and endangers Ukraine - which in my opinion worries many Germans,” Pompeo said weeks ago.On Tuesday the State Department expanded US sanctions targeting companies working on the Russia to Germany gas pipeline. While sanctions already target the specific European companies and their executives directly at work on the project, they've now been extended to include sanctions even on firms upgrading, servicing, or installing equipment on the ships laying the pipeline. "Such activities subject to sanctions pursuant to PEESA (the Protecting Europe's Energy Security Act of 2019) or other authorities may include, but are not limited to, providing services or facilities for upgrades or installation of equipment for those vessels, or funding for upgrades or installation of equipment for those vessels."There remain some exceptions, however, out of environmental concerns. The State Department says the sanctions "will not apply to persons providing provisions to a relevant vessel if such provisions are intended for the safety and care of the crew aboard the vessel, the protection of human life aboard the vessel, or the maintenance of the vessel to avoid any environmental or other significant damage."Likely this would be the loophole any such company put on notice over the new sanctions will use to evade punishment, given any repair or upgrade to a ship could be argued necessary over future "safety" and "environmental" concerns.Though Washington in a sense has won particular "battles" on the NS2 front, Russia and Germany have indicated the US will not win the "war" given that by all appearances the pipeline will be pursued to completion.One major victory for US sanctions was that Swiss pipelay company Allseas had abandoned its central roll in the project in December 2019 under threat of US punitive action. Russian gas giant Gazprom then outfitted its own ships to lay the last 100 miles of the pipeline.
Losing control? Norway's oil workers fear for future as rigs go remote (Reuters) - A shift to operating oil rigs remotely from land, which has been accelerated by lower crude prices, has rekindled concerns among Norwegian unions over the impact on the safety of offshore workers and the loss of well-paid jobs. These fears were highlighted by Lederne, one of three unions representing offshore workers, which this month shut six fields in a strike that threatened a quarter of Norway’s oil and gas output, rattling global oil markets. “The strike was not against moving controls onshore. But we needed to get the deal for our members to also be a part of the discussions about moving controls onshore and their safety,” Lederne leader Audun Ingvartsen told Reuters. Lederne, whose strike ended on Oct. 9, is the only Norwegian oil and gas workers union which did not have an agreement for its members at onshore control rooms. Oil companies started experimenting with remote controls about seven years ago, first with smaller, unmanned installations off the coast of Norway. Europe’s largest oil and gas producer has since become a testing ground for industry attempts to turn this technology to larger, manned platforms. Lower oil prices and the coronavirus crisis are accelerating this shift, prompting concerns about the safety of staff still working offshore on rigs. “Our members still wonder whether this (onshore controls) is good enough, whether it is safe enough,” Ingvartsen said.
Total Delivers First Carbon Neutral LNG Shipment - Total announced Tuesday that it has delivered its first shipment of carbon neutral liquefied natural gas (LNG) to the Chinese National Offshore Oil Corporation (CNOOC). The loading operation was carried out at the Ichthys liquefaction plant in Australia and the shipment was delivered on September 29 to the Dapeng terminal in China, Total revealed. The company noted that the carbon footprint of the LNG shipment was offset with Verified Carbon Standards emissions certificates financing two projects; the Hebei Guyuan Wind Power Project and the Kariba REDD+ Forest Protection Project.“We are proud to have completed this first shipment of carbon neutral LNG with CNOOC, a long-standing partner of Total,” Laurent Vivier, the president for gas at Total, said in a company statement.“This first LNG shipment, whose carbon emissions have been offset throughout the value chain, represents a new step as we seek to support our customers towards carbon neutrality,” Vivier added.“The development of LNG is essential to meet the growth in global demand for energy while reducing the carbon intensity of the energy products consumed,” the Total president went on to say. Total is the second largest private global LNG player, according to its website, which highlights that the group has made natural gas a “cornerstone” of its strategy to meet a growing global demand for energy while helping to mitigate climate change. The company is present across the entire LNG value chain, from production and liquefaction of natural gas to LNG shipping and trading, regasification using terminals and floating storage regasification units.
Emergency declared as oil spill spotted in Russian river Authorities in the Komi region in the north of Russia have declared a regional emergency after oil spilled into the Kolva river, a major water artery in the neighboring hydrocarbons-producing Nenets region. Energy explored: Gain valuable insight into the global oil and gas industry's energy transition from Accelerate, the new weekly newsletter from Upstream and Recharge. Sign up here. A regional subsidiary of Russian oil producer Lukoil said the accident occurred at a crossing between the river and a pipeline carrying oil from the Kharyaga field. According to the company's estimate, only a small number of barrels of oil spilled into the river. However, according to accounts on a Russian social network, oil was spotted on the water surface some 40 kilometres downstream from where the spillage occured. The regional department of the Russian Emergency Situations Ministry said that four rows of containment booms have been installed at the Kolva river since the accident was publicly revealed on 17 October. Preparations to put in a fifth row of booms are ongoing, the department said. The Kolva river starts in the Nenets region and flows into the Usa river that in turn flows into the Pechora river in the Komi region. Via Pechora, the spilled oil could potentially reach the Barents Sea. The emergency measure applies mainly to the city of Usinsk, which is home to about 37,000 people, and whose water supply system is based on the Usa river. Lukoil-Komi is the operator of the Kharyaga oilfield, which is one of the largest deposits in the Nenets region, however, part of the field is being developed by a consortium of Russian state Zarubezhneft and France’s Total.
In the Tomsk region, oil spilled on the river after a collision of barges - On October 18, barges collided in the backwater of the Ob River in the Tomsk Region, one of which was carrying oil products, according to the website of the West Siberian Transport Prosecutor’s Office. According to the ministry, an empty barge, standing near the coast, was blown away by a gust of wind to the loaded one. One of the reservoirs of oil products has received a hole. It is noted that no one was injured as a result of the incident. At the moment, the spill has been localized, the spilled oil products are being collected, “no significant environmental damage was allowed”.
Oil Steady Before OPEC+ Meeting -- Oil was steady near $41 a barrel in New York before an OPEC+ meeting to assess the state of the market as demand comes under pressure once again from a resurgent coronavirus. The Joint Ministerial Monitoring Committee, which typically reviews compliance to the group’s pledged output cuts, will meet online Monday. While no supply decisions are expected until the conclusion of a gathering on Dec. 1, leading members Saudi Arabia and Russia are stepping up diplomacy as the market faces more crude from Libya and OPEC predicts less demand for its oil. House Speaker Nancy Pelosi, meanwhile, set a Tuesday deadline for more progress with the White House on a fiscal stimulus deal before the Nov. 3 election, raising optimism a relief package may finally be completed. Oil is holding around current levels after briefly dropping below $40 a barrel earlier this month with rising infections raising concerns about a sustained recovery in consumption. OPEC Secretary-General Mohammad Barkindo last week described demand as anemic, while the International Energy Agency said the outlook for the market remains fragile due to the pandemic. It’s looking increasingly likely that OPEC+ will have to scrap the idea of easing cuts from next year given the resurgence in Covid-19 cases and stalling demand, said Warren Patterson, head of commodities strategy at ING Group. U.S. stimulus talks continue to go back and forth but it’s looking a bit more positive in terms of a potential deal, he added. West Texas Intermediate for November delivery fell 0.3% to $40.76 a barrel on the New York Mercantile Exchange as of 7:50 a.m. London time after dropping 0.2% on Friday. Brent for December settlement slid 0.3% to $42.81 on the ICE Futures Europe exchange after losing 0.5% in the previous session. Crude futures was little changed at 271.6 yuan a barrel on the Shanghai International Energy Exchange after slipping 0.6% Friday. Brent’s prompt timespread was 33 cents a barrel in contango, compared with 48 cents a week earlier. The narrowing spread indicates that concerns about over-supply have eased. President Vladimir Putin and Saudi Arabia Crown Prince Mohammed Bin Salman have spoken twice by phone in a week, the first time the leaders have done that since the depths of the oil crisis in April, when they were hashing out a deal to cut supply and bring a price war to an end. Larger ministerial meetings that will decide the direction on output cuts are scheduled for Nov. 20-Dec. 1.
Oil little changed, despite OPEC+ members stressing compliance - Oil steadied on Monday, weighed by concerns over surging coronavirus cases globally and by Libya's plan to boost output, but supported by hopes for a U.S. fiscal package. Analysts also focused on an OPEC+ ministerial monitoring committee meeting on Monday. Russian Energy Minister Alexander Novak said the committee recommended to stick in full to the group's global deal to reduce oil production. Brent crude futures fell 22 cents to $42.71 a barrel. U.S. West Texas Intermediate (WTI) crude futures settled 5 cents, or 0.1%, lower at $40.83 per barrel. Saudi Arabia, the biggest member of the Organization of the Petroleum Exporting Countries, said no one should doubt the group's commitment to providing support, while three sources from producing countries said a planned output increase from January could be reversed if necessary. OPEC+, a grouping of OPEC and allies including Russia, is curbing oil production by 7.7 million barrels per day (bpd), down from cuts totaling 9.7 million bpd, and are due to reduce the cuts by a further 2 million bpd in January. "This group has shown, especially in this year, that it has the flexibility to adapt to changing circumstances when required. We will not dodge our responsibilities in this regard," Saudi Energy Minister Prince Abdulaziz bin Salman said. Weighing on markets, Libya has significantly boosted its output after the easing of a blockade by eastern forces in September. The 70,000-bpd Abu Attifel oilfield was expected to begin its restart on Oct. 24 after being shut down for months, two engineers said. Meanwhile, worldwide coronavirus cases crossed 40 million on Monday, according to a Reuters tally. Many European governments are tightening lockdowns to curb the spread of the virus, renewing concerns about oil demand. "This latest swathe of stringent restrictions will inevitably impede economic growth and undermine the fuel demand recovery," said Stephen Brennock of oil broker PVM. Hopes for a new U.S. stimulus package lent some support to prices as House Speaker Nancy Pelosi said on Sunday she was optimistic that legislation on a wide-ranging relief package could be pushed through before the election. Bank of America projected Brent and WTI would average $44 and $40 per barrel in 2020, respectively, and $50 and $47 per barrel in 2021. Meanwhile, China's oil-buying frenzy earlier this year is expected to slow in the fourth quarter. Chinese refiners slowed their processing rates in September.
Oil Traders Struggle to Make up Minds - Tuesday found oil traders struggling to make up their minds on how to interpret the result of the previous day’s OPEC+ meeting. That’s what Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said in a statement sent to Rigzone today, adding that prices have swung from gains to losses and back to gains. “Members said that they will do what is needed if the situation requires, that they would do whatever it takes,” Tonhaugen said in the statement. “But are words providing a relief on their own? No, action is needed and the lack of it is the reason that prices are not seeing any meaningful increase today,” he added. According to Tonhaugen, uncertainty is now the word and until new demand indicators signal a direction, he believes prices are not likely to move significantly. “Another reason for uncertainty is the outcome of the coming U.S. election, as the two candidates have conflicting plans for the future of energy,” Tonhaugen stated. “The election is around the corner and it could also have consequences for foreign policy depending on the results. This uncertainty is probably also a reason that OPEC+ chose to wait rather than take an early decision to continue the current deep cuts into 2021,” he added. “Furthermore, markets are still left guessing if the U.S. stimulus negotiations will bear fruit today before Nancy Pelosi’s self-imposed deadline,” Tonhaugen went on to say. The Rystad Energy representative highlighted that a stimulus deal would be a positive surprise for markets and could also support oil prices if confirmed. “It seems unlikely though as the presidential candidates are preoccupied with preparing for the final debate on Thursday ahead of the elections,” Tonhaugen said. Tonhaugen outlined that the next thing on oil traders’ calendars is how U.S. oil stocks were altered last week. Should there be a build on crude stocks, this will be a warning sign that supply is overflowing again because demand can’t take more oil, he noted. If we see draws prices could rise on confidence about the market’s resilience, Tonhaugen said.
Oil rises on U.S. stimulus hopes, but Covid-19 cases keep gains in check - Oil edged up on Tuesday on hopes that the United States was nearing a stimulus deal, but the threat to demand from rising coronavirus cases worldwide and increased Libyan output kept prices from moving higher. Brent crude futures gained 20 cents to $42.82 a barrel. November U.S. West Texas Intermediate crude futures settled 63 cents, or 1.54%, higher at $41.46 per barrel. Investors are following negotiations between U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over another U.S. coronavirus aid package, said John Kilduff, partner at Again Capital in New York. "If we get a deal, I think that would be supportive, and if we don't get a deal, I think that's going to be somewhat punishing for prices," Kilduff said. Prices ticked up after Pelosi said in an interview with Bloomberg TV on Tuesday she was optimistic Democrats could reach a deal with the Trump administration and aid could go out by early next month. The rebound in COVID-19 cases in Europe and North America that has sparked renewed lockdown measures is weighing on oil prices, Kilduff said. "It undermines sentiment, it undermines economic activity, it undermines demand," he said. A ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, pledged on Monday to support the market. However, those countries plan on scaling back the size of its production cuts in January from a current 7.7 million barrels per day (bpd) to roughly 5.7 million bpd in January. OPEC member Libya, which is exempt from the cuts, is also ramping up production after armed conflict shut almost all of the country's output in January, pumping more oil into an oversupplied market. Output from its biggest field, Sharara, resumed on Oct. 11 and is now at about 150,000 bpd, about half its capacity, two industry sources told Reuters. Another 70,000 bpd oilfield is expected to restart on Oct. 24.
Oil up on U.S. stimulus hopes, rising virus cases keep prices in check (Reuters) - Oil gained more than 1% on Tuesday on the prospect the United States was nearing a deal on coronavirus relief, but the threat to demand from rising COVID-19 cases worldwide and increased Libyan output kept prices from moving higher. November U.S. West Texas Intermediate (WTI) crude futures settled at $41.46 a barrel, up 63 cents, or 1.54%. The more active December contract settled at $41.70, gaining 64 cents. Brent crude futures for December delivery settled at $43.16 a barrel, rising 54 cents, or 1.27%. Investors are following negotiations between U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over another U.S. coronavirus aid package, said John Kilduff, partner at Again Capital in New York. “If we get a deal, I think that would be supportive, and if we don’t get a deal, I think that’s going to be somewhat punishing for prices,” Kilduff said. Prices picked up after Pelosi said she was optimistic Democrats could reach an agreement with the White House that could get aid out by early next month. She added there should be an indication of a possible agreement later on Tuesday. Still, skepticism over the impact of a deal on oil markets lingered. “Even allowing for a fresh stimulus package, risk appetite could take a hit from an unfolding of the ‘buy the rumor/sell the news’ phenomena,’” said Jim Ritterbusch of Ritterbusch and Associates. “With this possibility in mind, we will be looking to short December crude at or above the $42 mark for a trading turn to the downside.” The rebound in COVID-19 cases in Europe and North America that has sparked renewed lockdown measures kept prices from moving higher. A ministerial panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, pledged on Monday to support the market in the face of the pandemic’s hit to demand. However, those countries plan on scaling back the size of its production cuts in January from a current 7.7 million barrels per day (bpd) to roughly 5.7 million bpd in January. OPEC member Libya, which is exempt from the cuts, is also ramping up production after armed conflict shut almost all of the country’s output in January, pumping more oil into an oversupplied market. Adding to supply worries, crude inventories rose by 584,000 barrels in the week to Oct. 16 to about 490.6 million barrels, data from industry group the American Petroleum Institute showed, compared with analysts’ expectations in a Reuters poll for a draw of 1 million barrels.
WTI Dips After Surprise Crude Build -Oil prices rallied to seven-week highs today (WTI above $41.50) on the back of hope-filled headlines about US stimulus talks (and nothing out of the OPEC+ discussions). “Anything that helps the economy do better is going to be helpful for crude,” said Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis.“Still, driving activity is down and people are not as global as they were. It may get better, but not back to where it was before.” API
- Crude +584k (-1.9mm exp)
- Cushing +1.174mm
- Gasoline -1.622mm (1.6mm exp)
- Distillates -5.938mm (-3.0mm exp)
Analysts expect more inventory draws (even after the previous week's big drop in crude and distillates stocks), but API reports that crude stocks actually rose by 584k barrels. API also reported another big distillates draw.Notably, according to the EIA’s Today in Energy report, increased demand from the agricultural and residential sectors will help draw down distillate fuel stocks in coming months but not by enough to boost prices:“These initially relatively high inventories, along with lower crude oil prices, will continue putting downward pressure on distillate fuel oil prices through the 2020–21 winter season,” EIA says.EIA says inventories remained high through the summer as production outpaced demand.As Bloomberg notes, U.S. crude futures have struggled to make a sustained break above $40 as governments try to control new flareups of the virus. The worsening virus in Europe is sapping momentum from an already fragile demand recovery. Still, the prospect of a long-awaited stimulus deal in Washington would provide a much-needed boost to demand in the U.S.
WTI Extends Losses After Smaller Than Expected Crude Draw - prices extended their losses overnight after API reported a surprise crude build, and while stocks are rebounding on stimulus "optimism", WTI refuses to chase it as a resurgent COVID-19 and expanding Libyan supply are keeping oil in check.Brent “remains stuck in the low $40s with the weaker dollar and the potential for a stimulus having no positive impact,” said Ole Hansen, head of commodities strategy at Saxo Bank. The market is focusing on inventories, and “overall it makes sense that crude is struggling while the demand outlook remains murky.” DOE
- Crude -1.002mm (-1.9mm exp)
- Cushing +975k
- Gasoline +1.895mm (1.6mm exp) - biggest build since May
- Distillates -3.832mm (-3.0mm exp)
Official inventory data shows that crude stocks fell by a modest 1mm barrels last week (less than expected) but still a draw compared to API's build. Additionally, there was a noteworthy Gasoline build (the biggest since May)... US crude production remains noisy due to the storm-driven shut-ins (most recently Hurricane Delta) and saw a 600k b/d drop last week... WTI was hovering around $41 ahead of the official inventory data. Bloomberg Intelligence Energy Analyst Fernando Valle concludes that "concerns over global trade and the ramp-up in coronavirus cases in Europe and the U.S. may continue to weigh on refiners. Crack spreads have dipped despite last week’s report of a massive drop in diesel inventories. The market may keep looking past short-term indicators until there’s more clarity on fiscal stimulus, and on whether a second virus wave will lead to further lockdowns.”
Oil prices slip as U.S. inventory build stokes fears of supply glut - Oil drops 4% on weak U.S. gasoline demand - Oil prices dropped Wednesday after U.S. inventory figures showed demand weakening for refined products as global COVID-19 cases spiked. Brent crude futures were at $41.64 a barrel, down $1.51, or 3.5%. West Texas Intermediate (WTI) crude futures settled 4%, or $1.67, lower at $40.03. Both benchmarks rose in the previous session. Crude inventories fell by 1 million barrels in the week to Oct. 16 to 488.1 million barrels, while gasoline stocks rose in another weak showing for fuel demand. Overall product supplied, a proxy for demand, remained down 13% on the year and over the past four weeks when compared with the year-ago period. "The market is seriously grappling with demand in the wake of a continued rise in COVID-19 cases," said Tony Headrick, energy markets analyst at CHS Hedging. Adding to pressure, worldwide COVID-19 cases crossed 40 million on Tuesday, with some parts of Europe imposing renewed lockdown measures. "Brent is particularly exposed to European regions which are undergoing new lockdowns," Headrick said, On the supply side, Russia's energy minister said on Tuesday it was too early to discuss the future of global oil production curbs beyond December, less than a week after saying plans to scale back existing output restrictions should proceed. Earlier this year the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia - together known as OPEC+ - agreed to trim production cuts in January from a current 7.7 million barrels per day (bpd) to roughly 5.7 million bpd. At the same time, OPEC member Libya, which is exempt from the cuts, is also ramping up production after armed conflict shut almost all its output in January. Production has recovered to about 500,000 bpd with Tripoli expecting that figure to double by year-end. The battle over a hefty, new U.S. coronavirus aid bill was set to spill into Wednesday as the White House and Democrats try to strike a deal before the Nov. 3 presidential and congressional elections, now with the encouragement of President Donald Trump.
Oil Prices Slump on US Fuel Supply Build - -- Oil and gasoline futures tumbled the most in more than two weeks after a U.S. government report showed swelling fuel stockpiles and slowing demand as the coronavirus pandemic rages. Both crude and gasoline futures in New York declined 4% on Wednesday. Domestic gasoline inventories rose 1.9 million barrels last week, the biggest increase since May, while a measure of gasoline consumption slid to the lowest since late September, according to an Energy Information Administration report. The mounting fuel supplies and lackluster demand may worsen during the normally sluggish winter driving months. “The lockdowns, the higher Covid cases and travel restrictions in Western Europe and elsewhere are clearly bearish for petroleum demand,” said Andrew Lebow, senior partner at Commodity Research Group. “That trend doesn’t look like it’s going to get any better in the upcoming weeks. If anything, it’s probably going to get worse.” Rising coronavirus infections worldwide are putting a damper on an already murky demand outlook, with governments imposing or considering tighter restrictions. Milan, Italy’s financial capital, will be under night-time curfew beginning this week, while Germany’s new infections reached a record. In the U.S., New York posted more than 2,000 new Covid-19 cases for the first time since May. JBC Energy cut its outlook for oil-products demand this year and early 2021, saying that “the persistent lack of recovery in U.S. gasoline demand remains particularly worrisome.” Flagging fuel demand highlights the importance of ongoing discussions over the next round of U.S. virus aid to reviving energy consumption. House Speaker Nancy Pelosi said she “has a prospect for an agreement” with Treasury Secretary Steven Mnuchin on a coronavirus stimulus package, although it may not come together in time to pass both chambers before the Nov. 3 election. “There’s concern about the growing virus caseload in a lot of places hitting demand, especially if there’s not some fiscal stimulus,” said Michael Lynch, president of Strategic Energy & Economic Research. “Global inventories are still quite high and they’re not going to come down until we get a stronger demand recovery. Now, it looks like that will be pushed further out into the future.” West Texas Intermediate for December delivery fell $1.67 to settle at $40.03 a barrel. Brent for December settlement lost $1.43 to end the session at $41.73 a barrel. Both crude benchmarks dropped to the lowest since Oct. 12. Gasoline futures fell 4% to settle at $1.1403 a gallon. The surprise gasoline build led to another leg lower for refining margins. The so-called crack spread for combined gasoline and diesel against WTI futures slumped to the lowest since early April, providing little incentive for refiners to churn out more product in the midst of depressed demand. “There’s no reason for these guys to run the refinery. It’s a losing proposition,” said Bob Yawger, head of the futures division at Mizuho Securities. “There’s nobody that’s in a hurry to bring refinery utilization rates back up.”
Oil prices end at 1-week low as demand worries overshadow decline in U.S. crude supplies - Oil futures declined Wednesday, sending U.S. and global benchmark prices to their lowest settlements in over a week. U.S. government data showed that domestic crude supplies fell for a second week in a row, but by less than the market expected and failing to ease pressure from concerns over weaker demand. The rising cases of COVID-19 in the U.S. and Europe, in particular, have led to the potential for more economic shutdowns, which can impede demand for energy. The less-than-expected crude inventory draw reported by the U.S. Energy Information Administration Wednesday is “relevant” to the market, Lukman Otunuga, senior research analyst at FXTM, told MarketWatch. However, “oil prices remain more concerned with rising coronavirus cases across the globe and demand-side fears.” West Texas Intermediate crude for December delivery fell $1.67, or 4%, to settle at $40.03 a barrel on the New York Mercantile Exchange. From a technical perspective, a “move back below $40 could re-open the doors towards $38,” said Otunuga. December Brent crude, the global benchmark, lost $1.43, or 3.3%, at $41.73 a barrel on ICE Futures Europe. Both WTI and Brent crude saw their lowest front-month settlements since Oct. 12, according to Dow Jones Market Data. On Wednesday, the EIA reported that U.S. crude inventories fell by 1 million barrels for the week ended Oct. 16. That followed a 3.8 million-barrel decline the week before. On average, analysts polled by S&P Global Platts forecast a weekly decrease of 1.9 million barrels, while the American Petroleum Institute on Tuesday reported an increase of 584,000 barrels.
Oil struggles to recover after U.S. gasoline stocks build - Oil prices ticked up on Thursday but struggled to fully recover from the previous session's losses when a build in U.S. gasoline inventories signaled a deteriorating outlook for fuel demand as coronavirus cases soar. Brent crude futures were up 44 cents at $42.17 a barrel. U.S. West Texas Intermediate (WTI) crude futures ticked up 43 cents to $40.46 a barrel. Both contracts shed more than 3% on Wednesday in their steepest daily falls in three weeks. U.S. gasoline stocks rose by 1.9 million barrels in the week to Oct. 16, the Energy Information Administration (EIA) said on Wednesday, compared with expectations for a 1.8 million-barrel drop. Overall product supplied, a proxy for demand, averaged 18.3 million barrels per day in the four weeks to Oct. 16, the EIA said - down 13% from the same period a year earlier. New daily COVID-19 infections hitting records in several U.S. states and in Europe, new lockdowns and China's clamp-down on outbound travel to help stem the spread of the disease, all bode ill for fuel demand. Worsening the outlook, hopes that U.S. lawmakers would reach an agreement with the White House on an economic stimulus package dimmed late on Wednesday after President Donald Trump accused Democrats of holding up a compromise deal. "(A deal) might improve the demand tone for a week or two," said Lachlan Shaw, head of commodity research at National Australia Bank. Adding to the supply concerns, Libyan oil exports are quickly accelerating into October as loading restarts following the easing of a blockade by eastern forces. Libya has seen production recover to about 500,000 barrels per day and the government in Tripoli expects that to double by year-end. Goldman Sachs said it saw average Brent prices rising from $43.9 per barrel this year to $59.4 next year, and WTI from $40.1 to $55.9 per barrel.
Oil ends higher, boosted by U.S. stimulus hopes (Reuters) - Oil prices ticked up on Thursday, boosted by the possibility of an economic stimulus package in the United States, but struggled to recover fully from the previous session’s losses when higher U.S. gasoline inventories signalled a deteriorating demand outlook as coronavirus cases soar. Brent crude futures settled 73 cents higher at $42.46 a barrel and U.S. West Texas Intermediate (WTI) crude futures gained 61 cents to $40.64. Both crude contracts shed more than 3% on Wednesday in their steepest daily falls in three weeks. Futures gained momentum early Thursday as U.S. House Speaker Nancy Pelosi said the two sides were nearing an economic stimulus package, boosting expectations that demand could improve, said Bob Yawger, director of Energy Futures at Mizuho in New York. Shares on Wall Street also gained on Thursday in choppy trading, as investors cheered the prospect of more fiscal stimulus to support a pandemic-damaged U.S. economy, with more data pointing to a slowing labor market recovery. U.S. gasoline stocks rose by 1.9 million barrels last week, the Energy Information Administration (EIA) said on Wednesday, compared with expectations for a drop of 1.8 million barrels.[EIA/S] Overall product supplied - a proxy for demand - averaged 18.3 million barrels per day (bpd) in the four weeks to Oct. 16, the EIA said, down 13% from the same period a year earlier. Record new daily COVID-19 infection numbers in several U.S. states and in Europe, along with further coronavirus lockdowns and China’s crackdown on outbound travel, all bode ill for fuel demand. Worsening the outlook, hopes that U.S. lawmakers would reach agreement with the White House on an economic stimulus package dimmed late on Wednesday after President Donald Trump accused Democrats of holding up a compromise deal.
Oil steady as Russia holds out prospect of output cut extension (Reuters) - Oil prices held on to gains made on the previous session on Friday, after Russian President Vladimir Putin indicated he would be prepared to extend record supply cuts in the face of the COVID-19 pandemic. Brent crude was off 1 cent at $42.45 a barrel by 0040 GMT having risen 1.7% on Thursday, while U.S. oil was 2 cents lower at $40.62, following a 1.5% gain in the previous session. Both contracts are heading for their first weekly loss in three. Putin said on Thursday that Russia did not see a need for major oil producers to alter a deal on cutting global supply, but did not rule out extending oil cuts if market conditions warranted. His comments were the clearest indication so far from Russia, one of the world’s top oil producers, that it is prepared to extend unprecedented curbs on output to meet the demand slump caused by the pandemic. Russia has allied with the Organization of the Petroleum Exporters (OPEC) led by Saudi Arabia in making the cuts to production that are due to be lifted at the end of year. “Putin is reinforcing that Saudi/Russian unity is firmly intact and that they will continue to keep the oil prices firm,”
Oil falls about 2% on Libyan output, COVID-19 demand concerns (Reuters) - Oil fell nearly 2% on Friday, finishing lower for the week, in anticipation of a surge in Libyan crude supply and demand concerns caused by surging coronavirus cases in the United States and Europe. Crude prices sank after Libya’s National Oil Corp (NOC) said it lifted force majeure on exports from key ports and output would reach 1 million barrels per day in four weeks. “As soon as that came out, the market cratered,” . U.S. crude settled at $39.85 a barrel, falling 79 cents, or 1.9%. Brent crude settled at $41.77 a barrel, losing 69 cents, or 1.6%. For the week, U.S. crude futures lost 2.5% and Brent futures shed 2.7%. Italy and several U.S. states reported record daily increases in infections, while France extended curfews for about two-thirds of its population as the second wave of the COVID-19 pandemic sweeps across Europe. “What’s holding us back is the uncertainty about demand - when we’re going to get a vaccine, when things are going to get back to normal, concerns about more shutdowns,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. Russian President Vladimir Putin on Thursday said Moscow did not rule out extending OPEC+ oil output cuts, but that assurance did not offset the expectations for rising Libyan output and demand worries, analysts said. “They need to say, ‘We are not going to bring back those two million barrels,’” Yawger said. OPEC+, which includes Russia and the Organization of the Petroleum Exporting Countries, is due to increase production by 2 million bpd in January 2021. U.S. energy companies added five oil rigs to raise the total rig count to 287 in the week to Oct. 23, the highest since May, energy services firm Baker Hughes said. The rig count is an indicator of future supply.
Oil drops nearly 2% on demand concerns, snaps 2-week win streak - Oil fell nearly 2% on Friday and headed for a weekly drop as demand concerns raised by surging coronavirus cases in the United States and Europe overshadowed the prospect of an extension to OPEC-led supply curbs. Italy and several U.S. states reported record daily increases in infections, while France extended curfews for about two thirds of its population as the second wave of the COVID-19 pandemic sweeps across Europe. Brent crude lost 69 cents, or 1.63%, to settle at $41.77 a barrel. U.S. crude shed 79 cents, or 1.94%, to settle at $39.85 per barrel. "What's holding us back is the uncertainty about demand - when we're going to get a vaccine, when things are going to get back to normal, concerns about more shutdowns versus concerns about tightening supplies," said Phil Flynn, senior analyst at Price Futures Group in Chicago. Also weighing on the market, Libyan output, which had been mostly offline since January, has reached 500,000 barrels per day (bpd) and will rise further by the end of October. Comments by Russian President Vladimir Putin on Thursday that Moscow did not rule out extending OPEC+ oil output cuts supported oil prices. "The only bullish piece of news comes from Russia," said Bjornar Tonhaugen of Rystad Energy. OPEC+, a group that includes Russia and the Organization of the Petroleum Exporting Countries, is due to increase production by 2 million bpd in January 2021 as part of a plan to pump more as demand recovers. However, the second wave of the pandemic and resulting slowdown in the demand recovery have raised the question of whether the increase is premature. OPEC+ made a record supply cut from May, which boosted prices from historic lows. Brent is up from a 21-year low below $16 in April.
Oil Prices Finish Lower for the Week -- Oil retreated as a further increase in Libyan output threatens to return more supply to a market that’s already grappling with a pandemic-induced slump in demand. Crude futures fell 1.9% in New York on Friday and posted their first weekly decline in three. Libya lifted force majeure on its Ras Lanuf and Es Sider ports and oil output will surpass 1 million barrels a day in four weeks, according to the state-run National Oil Corp. The announcement came as prospects for more Libyan output increased following the signing of a permanent cease-fire agreement. Prices were already on the decline as talks appeared to stall on a U.S. stimulus deal before the election, with House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin trading blame for the impasse. A deal would have injected a sorely needed boost to demand, with positive catalysts for prices harder to come by heading into the end of the year. “The apparent nationwide ceasefire in Libya is only going to encourage more production there and keep it steady, at least for a while,” said John Kilduff, a partner at Again Capital LLC. Meanwhile, “the Covid situation is not really improving, if not getting worse. So we’re continuing to deal with that as well.” U.S. benchmark crude futures declined 2.5% over the week as a resurgence of coronavirus infections spurred governments around the world to renew tighter lockdown restrictions. While comments from Russian President Vladimir Putin signaling openness to delaying a planned OPEC+ output hike helped bolster prices, the continued return of Libyan production complicates the group’s tapering strategy. “Until we get a vaccine, prices are probably going to hang out around this range,” said Jay Hatfield, CEO at InfraCap in New York. “We need airline travel, and we’re not going to have airline travel until we have a vaccine.” West Texas Intermediate for December delivery declined 79 cents to settle at $39.85 a barrel. Brent for the same month declined 69 cents to end the session at $41.77 a barrel. The contract fell 2.7% over the week. Despite the prospect of more Libyan supply returning to the market, Brent’s structure remained firm. The spread between the global benchmark’s nearest contracts strengthened on Friday to its narrowest contango since late July.
Saudi Arabia Is Suffering The Consequences Of Its Failed Oil Price War --Nine months on from Saudi Arabia’s second major oil price war in the last five years, more negative consequences are manifesting themselves. Aside from the irrevocably damaged core relationship with the U.S., the permanent distrust of international investors, and the further alienation of many of its fellow OPEC members, Saudi Arabia is now beginning to discover the true depth and breadth of damage that it has done to its own economy, which will endure for many years to come. Figures released at the end of September show that Saudi Arabia’s economy contracted 7 per cent year-on-year (y-o-y) in the second quarter of 2020, with the Kingdom’s private sector showing a negative growth rate of 10.1 per cent, while the public sector recorded negative growth of 3.5 per cent. Saudi’s oil revenue in the first half of the year was 35 per cent lower than a year earlier, while non-oil revenue fell by 37 per cent. Moreover, in the second quarter of 2020 alone, the Kingdom’s petroleum refining activities recorded a 14 per cent y-o-y drop. All of this resulted in a current account deficit of SAR67.4 billion (US$18 billion), or 12 per cent of GDP, in Q220 compared with a surplus of SAR42.9 billion, or 5.8 per cent of GDP, a year earlier, according to Saudi Arabia’s General Authority for Statistics. The official line being peddled by various Saudi agencies to explain these appalling numbers is that they are the result of the COVID-19 pandemic outbreak that destroyed demand for oil around the globe. That, of course, is only partly true, as the key element that made this factor exponentially worse was that Saudi Arabia decided to launch yet another oil price war at the same time, the key feature of which was to crash oil prices by ramping up oil production from itself and other OPEC members, plus Russia. For a market already saturated with oil as demand continued to fall away, the price effect on the supply side of the oil price equation was catastrophic and led to unprecedented negative pricing on WTI futures contracts for May. The additional factor that has been overlooked by market commentators is that by the beginning of March, when Saudi launched the last oil price war, it was becoming clear that the COVID-19 outbreak would not be as containable as many had thought even a month or so before. It would have been entirely understandable to the senior Saudis with whom Saudi Crown Prince Mohammed bin Salman (MbS) had shared his plan to try to destroy and/or disable the U.S. shale oil sector again (albeit with exactly the same strategy that had failed so disastrously just four years earlier) that the new oil price war would be put on hold.
IMF reveals 2021 forecasts for oil prices and the Middle East economy— The International Monetary Fund downgraded its outlook for Middle East and Central Asian economic recovery, predicting a 4.1% contraction for the region as a whole — 1.3 percentage points worse than its previous assessment in April — in its latest regional outlook report released Monday. Jihad Azour, director of the IMF's Middle East and Central Asia department, noted a large disparity in economic loss between oil importing and exporting countries as the region has been hit by the coronavirus pandemic and a plunge in oil prices. "Combined together, those two shocks led to a sharp decline in economic activity that is different between oil exporting and oil importing countries," Azour told CNBC's Hadley Gamble via video call on Sunday. "On average, we will see growth going negative by 6.6% for oil exporting countries, and negative growth of 1% for all importing countries," he said, adding that there will be differences between the countries within each group. Oil prices will be the most important factor for oil exporters' recovery, particularly states like Saudi Arabia, Iraq, Iran, the UAE, Bahrain and Kuwait, for whom the commodity makes up the majority of revenue. While prices have recovered from their historic plunge in March of this year, international benchmark Brent crude is still trading nearly 40% below pre-pandemic levels. Brent stood at $42.87 per barrel on Monday morning in London. And the IMF doesn't see oil prices staging a dramatic recovery anytime soon, predicting prices in the $40 to $50 range in 2021. That's still half the $80 per barrel figure OPEC kingpin Saudi Arabia needs to balance its budget, according to the fund. "The projections for oil prices are in the corridor between $40 to $45 for ... early next year, and will be between $40 to $50" next year overall, Azour said. "I think what is going to be also important to watch is the recovery in demand. That proved to be an important factor in what we saw this year, in addition to the supply that could come from alternative energies." The oil demand outlook remains grim amid new waves of coronavirus gripping regions of the world and uncertainty about U.S. fiscal stimulus and the U.S. presidential election. The International Energy Agency in September cut its outlook for worldwide oil demand to 91.7 million barrels per day this year, a daily contraction of 8.4 million barrels year-on-year and more than the contraction of 8.1 million predicted in the agency's August report. OPEC posted an even worse outlook for this year, slashing its view for global oil demand last month to an average of 90.2 million barrels per day in 2020, a contraction of 9.5 million barrels per day year-on-year. The group of 13 oil-producing countries described the outlook for the commodity's demand as "anemic," and warned that risks remain "elevated and skewed to the downside."
Switzerland of the Middle East: Economic crisis threatens Oman’s neutrality - Sandwiched between Saudi Arabia and Iran, Oman has long prized its neutrality, garnering a reputation as the Middle East’s Switzerland. But the Gulf state’s ability to steer clear of regional power struggles has been put at risk by economic woes that have been exacerbated by the coronavirus pandemic and the slump in oil prices. The IMF forecasts an economic contraction of 10 per cent this year, far steeper than the Middle Eastern average. The crisis has been a baptism of fire for Sultan Haitham bin Tariq Al Said, who succeeded Qaboos bin Said Al Said in January after the death of the leader who shaped modern Oman during his half century on the throne. Archived. The sultanate’s budget deficit is forecast to hit 20 per cent of gross domestic product this year after revenues tumbled. With modest hydrocarbon resources, Oman has around $16bn in foreign exchange reserves and another $16bn in readily available overseas assets, but the fiscal shortfall and maturing global bonds amount to more than $13bn a year for the next three years. The sultanate, which borrowed $2bn from global banks in August, will need to draw down domestic deposits including from the sovereign wealth fund, asset sales and more loans in order to steady the budget. It is considering a return to bond markets to raise $2bn-$4bn.
OPEC+ Kingpins Try to Sell Obedience - Saudi Arabia and Russia, de factor leaders of the OPEC+ alliance of oil-producing countries, have been urging fellow members of the group to comply with agreed-upon output levels for the benefit of oil market stability. How successful the OPEC+ kingpins’ efforts will be should become clearer this week after an OPEC+ panel meets to discuss the matter. In this installment of what to watch in the oil market, two of Rigzone’s regular panelists offer their perspectives on the OPEC+ issue. Keep reading for their insights, along with other views on near-term oil market trends.
- Tom McNulty, Houston-based Principal and Energy Practice leader with Valuescope, Inc.: The Saudis and the Russians will continue to cajole all oil-producing countries to keep to the OPEC+ agreement to maintain production levels where they are so that prices do not fall further. They will not succeed.
- Tom Seng, Director – School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business: Will anything of substance come out of OPEC’s Compliance Committee meeting on Monday that would change the global supply/demand balance? Will $40 hold and, if so, could that support level lead to a rally?
- Andrew Goldstein, President, Atlas commodities LLC: Consolidation within the oil and gas industry has started, dating back to last year with Occidental’s purchase of Anadarko. More recently the merger of Devon Energy and WPX Energy, and talks of ConocoPhillips’ potential acquisition of Concho Resources, have started the long-anticipated consolidation within the shale patch.
Israeli Pipeline Operator Signs Preliminary Deal to Transport UAE Oil to Europe -In what could become one of the most significant deals to emerge since Israel and the United Arab Emirates normalized relations, the Israeli state-owned pipeline company Europe Asia Pipeline Company, or EAPC, said on Tuesday that it had signed a memorandum of understanding to store and transport oil and distillates from the UAE to Europe.Under the preliminary agreement with MED-RED Land Bridge, a company controlled by Israelis and Emiratis, EAPC will manage storing and transmitting the oil. The oil will be shipped via EAPC’s pipeline, which connects the Red Sea city of Eilat and the Mediterranean port of Ashkelon. The MOU was signed in Abu Dhabi on Monday during a ceremony attended by U.S. Treasury Secretary Steve Mnuchin.“ MRLB will deliver petroleum distillates originating in the Gulf through the EPAC pipeline and sell them to European customers. MRLB will also source petroleum products for delivery through the pipeline to and from other countries.MLRB is a closely held company, jointly controlled by Petromal, a unit of the Abu Dhabi-based firm National Holding; Israeli-based AF Entrepreneurship, which develops energy projects; and Lubber Line, a Gibraltar-based group focused on infrastructure and energy.EAPC operates its eponymous pipeline, and deals in oil storage and the export and import of distillates. It was formed in 1968 as a joint venture between Israel and the National Iranian Oil Co., to build and operate an oil pipeline from Eilat to Ashkelon, plus ports for tankers and storage facilities.
US Oversees Unprecedented Preliminary Deal To Transport UAE Oil To Europe Via Southern Israel - It didn't take long for the historic US-brokered peace and 'normalization' of ties between Israel and the United Arab Emirates to shift focus to a potential major oil pipeline project in the works.Israel's Haaretz newspaper reports, "In what could become one of the most significant deals to emerge since Israel and the United Arab Emirates normalized relations, the Israeli state-owned pipeline company Europe Asia Pipeline Company, or EAPC, said on Tuesday that it had signed a memorandum of understanding to store and transport oil and distillates from the UAE to Europe."Below is the EAPC route through southern Israel from the Red Sea to the Mediterranean port of Ashkelon. This is unprecedented considering that up until just months ago the Arab Gulf states and Israel were official enemies, as they had been for decades especially over the fate of Palestinians. Haaretz reports further that the memorandum of understanding was signed in Abu Dhabi on Monday, in a ceremony attended by US Treasury Secretary Steve Mnuchin.“This is a historic agreement that will increase cooperation between EAPC and regional and international players. Without a doubt, this agreement has great importance for the Israeli economy both economically and strategically, because it involves long-term joint investments,” EACP Chairman Erez Kalfon said.The Saudi-owned media outlet based on Dubai, al-Arabiya, also confirmed the preliminary deal. And Reuters cited an inside source who speculated it could be worth an estimated $700-$800 million in the coming years. The arrangement “is likely to increase the transferred quantities by tens of millions of tons per year,” the source said. Supplies could start being delivered via the Red Sea to Mediterranean route by early 2021.
Armenian Forces Use Their Last Chance To Turn Tide Of War With Azerbaijan --The Azerbaijani Armed Forces have been developing their advance on Armenian positions in the contested Nagorno-Karabakh region. On October 19, they captured 13 more villages in the Jabrayil district. The capturing of Soltanli, Amirvarli, Mashanli, Hasanli, Alikeykhanli, Gumlag, Hajili, Goyarchinveysalli, Niyazgullar, Kechal Mammadli, Shahvalli, Haji Ismayilli and Isagli was personally announced by Azerbaijani President Ilham Aliyev. Early on October 20, Azerbaijani forces also reached the town of Tumas and engaged Armenian units deployed there. Pro-Azerbaijani sources insist that the town already fell into the hands of Baku.The country’s defense ministry claims that in the recent clashes Azerbaijani forces destroyed a number of enemy troops, at least 2 T-72 tanks, 2 BM-21 “Grad” MLRS, 1 D-30, 1 D-20 gun-howitzers, and 11 auto vehicles.On October 19, pro-Armenian sources for the first time provided video evidence that they had shot down at least one of the Bayraktar TB2 combat drones operated by the Azerbaijani military and Turkish specialists. Meanwhile, the Armenian Defense Ministry claimed that 5 unmanned aerial vehicles were shot down during the evening of that day only.According to the Armenian side, the total number of Azerbaijani casualties in the war reached 6,259. 195 UAVs, 16 helicopters, 22 military planes, 566 armoured vehicles and 4 multiple rocket launchers of the Armed Forces of Azerbaijan were allegedly destroyed. Yerevan claims that the Armenian forces have repelled two powerful attacks in the northern part of Karabakh, while intense fighting has been ongoing in the south. Nonetheless, Armenian military officials avoid confirming the recent Azerbaijani advances and insist that the recent developments are just a part of modern maneuver warfare. By these claims, the political leadership of Armenia tries to hide that the Azerbaijani advance along the Iranian border faced little resistance.The Azerbaijani progress was mostly complicated by a limited number of mobile Armenian units, which were avoiding a direct confrontation and focusing on ambushes and mine warfare. According to reports, the Armenian side is now reinforcing its positions in the area of the Akari River seeking to prevent the further Azerbaijani advance towards the Armenian state border and the Lachin corridor.On the other hand, the goal of the Azerbaijani-Turkish bloc is to overcome this resistance and to develop the current momentum to reach the Lachin mountain pass thus threatening to cut off the shortest route between Armenia and the Republic of Artsakh. In the event of success, this would predetermine the Azerbaijani victory in the war. Military hostilities are ongoing amid another round of international diplomatic efforts to de-escalate the situation and return the sides to the negotiating table.President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan declared that they are ready to meet in Moscow. The Azerbaijani leader even said that his country is ready to halt the operation if Armenia demonstrates a constructive approach. Nonetheless, the ‘constructive approach of Armenia’ in the view of Azerbaijan is the full and public surrender of Karabakh. Such an agreement will mark the collapse of the current political leadership of Armenia and is unlikely to be accepted.Therefore, the war will likely continue until the military victory of one of the sides and that side would likely be Azerbaijan.
Iran rules out weapons ‘buying spree’ as UN embargo is set to expire - Iran said it was self-reliant in its defense and had no need to go on a weapons buying spree as a United Nations conventional arms embargo was due to expire on Sunday despite strong U.S. opposition. "Iran’s defense doctrine is premised on strong reliance on its people and indigenous capabilities ... Unconventional arms, weapons of mass destruction and a buying spree of conventional arms have no place in Iran's defense doctrine," said a Foreign Ministry statement carried by state media. The 2007 Security Council arms embargo on Iran was due to expire on Sunday, as agreed to under the 2015 nuclear deal among Iran, Russia, China, Germany, Britain, France and the United States that sought to prevent Tehran from developing nuclear weapons in return for economic sanctions relief. Tensions between Washington and Tehran have soared since U.S. President Donald Trump in 2018 unilaterally withdrew from the deal, however. In August, the Trump administration triggered a process aimed at restoring all U.N. sanctions, after the U.N. Security Council rejected a U.S. bid to extend the conventional arms embargo on the country. "Today's normalization of Iran’s defense cooperation with the world is a win for the cause of multilateralism and peace and security in our region," Iranian Foreign Minister Mohammad Javad Zarif said on Twitter. Days after triggering the process, U.S. Secretary of State Mike Pompeo warned Russia and China not to disregard the reimposition of all U.N. sanctions on Iran which Washington has demanded. When asked whether the United States would target Russia and China with sanctions if they refuse to reimpose the U.N. measures on Iran, Pompeo said: "Absolutely."
Iran To Import North Korean Missiles In 25-Year Military Deal With China -Following the end on the 18th of October of the 13-year United Nations’ embargo on Iran buying or selling weapons, the roll-out of the military component of the 25-year deal between China and Iran will begin in November, as exclusively revealed by Oil Price.com. After a series of meetings in China on the 9th and 10th of October between Iran’s Foreign Minister, Mohammad Zarif, and his China counterpart, Wang Yi, this military component may now also feature the deployment in Iran of North Korean weaponry and technology, in exchange for oil, according to sources very close to the Iranian government spoken to by OilPrice.com last week. Most notably this would include Hwasong-12 mobile ballistic missiles, with a range of 4,500 kilometres, and the development of liquid propellant rocket engines suitable for intercontinental ballistic missiles (ICBMs) or satellite launch vehicles (SLVs). This will all be part of a broader triangular relationship co-ordinated by Beijing and further facilitated by the imminent launch of a new digitised currency system by China. This sort of co-ordination – between North Korea and Iran and also between North Korea, Iran, and China – is nothing new, although its resumption at such a scale and in such products is. According to a number of defence industry sources - and recorded in various ‘Jane’s Intelligence Reviews’ (JIR) - over the first five-year period from the onset of Iran’s ballistic missile program in 1987, Iran bought up to 300 Scud B missiles from North Korea. Pyongyang, though, did not just sell Iran weapons but it was also instrumental in helping Iran to build-out the infrastructure for what has become an extremely high-level ballistic missile program, beginning with the creation in Iran of a Scud B missile plant that became operational by the end of 1988.According to JIR and other defence sources, this early-stage co-operation in this area between North Korea and Iran also included Iranian personnel travelling to North Korea for training in the operation and manufacture of these missiles and the stationing of North Korean personnel in Iran during the build-out of missile plants. This model of knowledge and skills transference, of course, has been a key part of the 25-year deal between Iran and China since it was formally agreed back in 2016, including the training of up to 130 young, fast-tracked officers from the Islamic Revolutionary Guard Corps (IRGC) every year at various military institutions across mainland China. The simple idea of paying North Korea in oil is also far from new, having been a key method by which Iran helped to fund the development of North Korea’s more powerful Nodong series of missiles as early as the 1990s, according to Kenneth Katzman, Middle Eastern affairs specialist at the Congressional Research Service, in Washington. According to sources close to Iran’s Petroleum Ministry spoken to by OilPrice.com last week, oil shipments are the number one suggestion from North Korea to any country that has oil and wants weapons as a means of payment for any weaponry that Pyonyang has available.
Exclusive: Indonesia rejected U.S. request to host spy planes - officials (Reuters) - Indonesia rejected this year a proposal by the United States to allow its P-8 Poseidon maritime surveillance planes to land and refuel there, according to four senior Indonesian officials familiar with the matter. U.S. officials made multiple “high-level” approaches in July and August to Indonesia’s defence and foreign ministers before Indonesia’s president, Joko Widodo, rebuffed the request, the officials said. Representatives for Indonesia’s president and defence minister, the U.S. State Department press office and the U.S. embassy in Jakarta did not respond to requests for comment. Representatives for the U.S. Department of Defence and Indonesia’s foreign minister Retno Marsudi declined to comment. The proposition, which came as the U.S. and China escalated their contest for influence in Southeast Asia, surprised Indonesia’s government, the officials said, because Indonesia has a long-standing policy of foreign policy neutrality. The country has never allowed foreign militaries to operate there. The P-8 plays a central role in keeping an eye on China’s military activity in the South China Sea, most of which Beijing claims as sovereign territory. Vietnam, Malaysia, the Philippines and Brunei have rival claims to the resource-rich waters, through which $3 trillion worth of trade passes each year.Indonesia is not a formal claimant in the strategically important waterway, but considers a portion of the South China Sea as its own. It has regularly repelled Chinese coast guard vessels and fishing boats from an area to which Beijing says it has a historic claim. But the country also has growing economic and investment links with China. It does not want to take sides in the conflict and is alarmed by growing tensions between the two superpowers, and by the militarisation of the South China Sea, Retno told Reuters.
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