oil prices fell for the 4th time in 5 weeks last week on rising coronavirus cases globally, including that of POTUS Donald Trump and several of his associates...after falling 2.6% to $40.25 a barrel last week as coronavirus concerns outweighed supply disruptions and falling inventories, the contract price of US light sweet crude for November delivery opened lower on another surge in virus cases on Monday, but recovered to end 35 cents, or almost 1% higher at $40.60 a barrel, as global equities rallied on hopes for another U.S. stimulus package...but oil prices reversed those gains and slid early Tuesday as coronavirus related demand concerns outweighed hopes for a new stimulus package and US crude ended down $1.31, or more than 3%, at $39.29 a barrel, on worries about the outlook for fuel demand as Europe and the US grappled with a surge in new coronavirus infections...but oil prices rebounded overnight as stocks rallied on fiscal stimulus hope and on an API report of an unexpected inventory draw, and then ended 93 cents higher at $40.22 a barrel on Wednesday after Energy Dept data showed a third consecutive weekly decline in domestic crude supplies....but oil prices opened lower on Thursday on a resumption of Libyan oil exports and a Reuters report showing rising OPEC supplies and tumbled $1.50 to close at $38.72 a barrel, the lowest settlement since mid-September, as worries about rising cases of COVID-19 worldwide fed expectations for a slowdown in energy demand....oil prices were in the tank again Friday after Trump tested positive for coronavirus and finished down $1.67 at $37.05 a barrel, as rising global crude output threatened to overwhelm the market’s weak recovery...oil prices were thus down 8% on the week, with Brent, the international benchmark, at it's lowest since June, driven by fears that COVID-19 cases would drive demand lower, even as U.S. supply tightened...
natural gas prices also fell this week, even as an early in the week switch to quoting the more expensive November gas contract created the impression that prices had finished higher...after rising 4.4% to $2.139 per mmBTU last week on a smaller-than-expected weekly storage build and a decline in gas output, the contract price of natural gas for October delivery opened lower on Monday, the last day of trading for that contract, and slipped 3.8 cents to finish at $2.101 per mmBTU on a continued supply surplus as the threat of storms in the Atlantic had dissipated...at the same time, the contract price of natural gas for November delivery, which had finished last week at $2.807 per mmBTU, fell just 1.2 cents on the same news to settle at $2.795 per mmBTU...but prices for that November gas contract tumbled 23.4 cents or more than 8% on Tuesday to settle at $2.561 per mmBTU, on forecasts for less demand than was previously expected, and on a rise in natural gas output...natural gas prices were then 3.4 cents lower on Wednesday as the increase in output offset raised forecasts for demand, but ended unchanged after swinging in a 15-cent range on Thursday after the EIA's storage report was within the range of estimates ahead of the report...natural gas prices then fell 8.9 cents or more than 3% to $2.438 per mmBTU on Friday after Trump tested positive for the coronavirus and negotiators failed to agree on a new stimulus package....while Reuters reported "the contract was still up about 14% [this week] after rising 4% last week", that's incorrect, because as we've just documented, the price of November natural gas didn't rise on any day this week and ended 13.1% lower than where it had closed the prior Friday...
the natural gas storage report from the EIA for the week ending September 25th indicated that the quantity of natural gas held in underground storage in the US increased by 76 billion cubic feet to 3,756 billion cubic feet by the end of the week, which left our gas supplies 471 billion cubic feet, or 14.3% greater than the 3,285 billion cubic feet that were in storage on September 25th of last year, and 405 billion cubic feet, or 12.1% above the five-year average of 3,351 billion cubic feet of natural gas that have been in storage as of the 25th of September in recent years....the 76 billion cubic feet that were added to US natural gas storage this week was roughly in line with expectations for a 78 billion cubic foot increase from an S&P Global Platts'' survey of analysts, and it was also close to the average of 78 billion cubic feet of natural gas that has been added to natural gas storage during the same week over the past 5 years, but it was much lower than the 109 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 September 25th showed that because of an increase in our oil exports and an increase in our refinery throughput, we needed to withdraw oil from our stored supplies for the 9th time out of the past ten weeks and for the 14th time in thirty-seven weeks...our imports of crude oil fell by an average of 45,000 barrels per day to an average of 5,122,000 barrels per day, after rising by an average of 160,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 490,000 barrels per day to an average of 3,512,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 1,610,000 barrels of per day during the week ending September 25th, 535,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was reportedly unchanged at 10,700,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 12,310,000 barrels per day during this reporting week...
meanwhile, US oil refineries reported they were processing 13,670,000 barrels of crude per day during the week ending September 25th, 300,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a total of 540,000 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 819,000 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 (+819,000) 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 be an error or errors of that magnitude in the oil supply & demand figures we have just transcribed...however, since most everyone treats these weekly EIA figures as gospel and since these figures 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... (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 rose to an average of 5,180,000 barrels per day last week, which was still 21.6% less than the 6,764,000 barrel per day average that we were importing over the same four-week period last year....the 540,000 barrel per day net withdrawal from our total crude inventories was as 283,000 barrels per day were being pulled out of our commercially available stocks of crude oil and 257,000 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 unchanged at 10,700,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at 10,300,000 barrels per day, while a 36,000 barrels per day increase to 444,000 barrels per day in Alaska's oil production had no impact on the rounded national total....last year's US crude oil production for the week ending September 27th was rounded to 12,400,000 barrels per day, so this reporting week's rounded oil production figure was 13.7% below that of a year ago, yet still 27.0% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 75.8% of their capacity while using 13,670,000 barrels of crude per day during the week ending September 25th, up from 74.8% of capacity during the prior week, but excluding the 2005 and 2008 hurricane-related refinery interruptions, one of the lowest refinery utilization rates of the last thirty years...hence, the 13,670,000 barrels per day of oil that were refined this week were 14.7% fewer barrels than the 16,017,000 barrels of crude that were being processed daily during the week ending September 27th of last year, when US refineries were operating at 86.4% of capacity....
even with the increase in the amount of oil being refined, gasoline output from our refineries was much lower, decreasing by 423,000 barrels per day to 8,892,000 barrels per day during the week ending September 25th, after our refineries' gasoline output had increased by 496,000 barrels per day over the prior week (when refinery throughput had decreased by 119,000 barrels per day)... 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 11.8% less than the 10,081,000 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 112,000 barrels per day to a three year low of 4,358,000 barrels per day, after our distillates output had increased by 67,000 barrels per day to 4,470,000 barrels per day over the prior week...after this week's decrease in distillates output, our distillates' production was 9.5% less than the 4,813,000 barrels of distillates per day that were being produced during the week ending September 27th, 2019....
even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 3rd time in 13 weeks and for the 10th time in 35 weeks, rising by 683,000 barrels to 228,182,000 barrels during the week ending September 25th, after our gasoline supplies had decreased by 4.025,000 barrels over the prior week...our gasoline supplies increased this week because our imports of gasoline rose by 258,000 barrels per day to 732,000 barrels per day and because our exports of gasoline fell by 48,000 barrels per day to 668,000 barrels per day, while the amount of gasoline supplied to US markets increased by 14,000 barrels per day to 8,529,000 barrels per day....but after the big gasoline inventory drawdowns of recent weeks, our gasoline supplies were 0.8% lower than last September 27th's gasoline inventories of 229,976,000 barrels, but still roughly 1% above the five year average of our gasoline supplies for this time of the year...
meanwhile, with our distillates production at a three year low, our supplies of distillate fuels decreased for the 8th time in 26 weeks and for the 29th time in 51 weeks, falling by 3,184,000 barrels to 172,758,000 barrels during the week ending September 25th, after our distillates supplies had decreased by 3,364,000 barrels during the prior week....our distillates supplies fell again this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 304,000 barrels per day to 3,655,000 barrels per day, because our exports of distillates rose by 171,000 barrels per day to 1,299,000 barrels per day, while our imports of distillates rose by 5,000 barrels per day to 141,000 barrels per day....but even after this week's inventory decrease, our distillate supplies at the end of the week were still 31.6% above the 131,267,000 barrels of distillates that we had in storage on September 27th, 2019, and about 21% above the five year average of distillates stocks for this time of the year...
finally, with the increase in our oil exports and the increase in our refineries's oil consumption, our commercial supplies of crude oil in storage (not including commercial oil in the SPR) fell for the 10th time in the past sixteeen weeks and for the 17th time in the past year, decreasing by 1,980,000 barrels, from 494,406,000 barrels on September 18th to 492,426,000 barrels on September 25th...but even after that decrease, our commercial crude oil inventories were still around 13% above the five-year average of crude oil supplies for this time of year, and about 50% above the prior 5 year (2010 - 2014) average of our crude oil stocks for the fourth weekend of September, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories have generally been rising over the past two years, except for 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 September 25th were 16.5% above the 422,642,000 barrels of oil we had in commercial storage on September 27th of 2019, 21.9% more than the 403,964,000 barrels of oil that we had in storage on September 28th of 2018, and 4.6% above the 470,986,000 barrels of oil we had in commercial storage on September 22nd of 2017...
This Week's Rig Count
the US rig count rose for the 4th time in the past 5 weeks during the week ending October 2nd, but for just the 5th time in 30 weeks, and hence it is still down by 66.5% over that thirty week period....Baker Hughes reported that the total count of rotary rigs running in the US rose by 5 to 266 rigs this past week, which was still down by 589 rigs from the 855 rigs that were in use as of the October 4th report of 2019, and was also 138 fewer rigs than the all time low prior to this year, and 1,663 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 189 oil rigs this week, after increasing by 4 oil rigs the prior week, still leaving us with 540 fewer oil rigs than were running a year ago, and less than a eighth of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by one to 74 natural gas rigs, which was also down by 70 natural gas rigs from the 144 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 remained unchanged at 14 rigs this week, with 12 of those rigs drilling for oil in Louisiana's offshore waters and two drilling for oil offshore from Texas...that was 8 fewer Gulf rigs than the 22 rigs drilling in the Gulf a year ago, when all 22 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 were also two rigs deployed offshore from Alaska, so this week's national offshore count is down by 10 from the national offshore rig count of 24 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 no rigs drilling on inland waters..
The count of active horizontal drilling rigs was up by 5 to 224 horizontal rigs this week, which was still 520 fewer horizontal rigs than the 749 horizontal rigs that were in use in the US on October 4th of last year, and less than a sixth of the record of 1372 horizontal rigs that were deployed on November 21st of 2014....on the other hand, the directional rig count was unchanged at 21 directional rigs this week, and those were down by 33 from the 54 directional rigs that were operating during the same week of last year....at the same time, the vertical rig count was also unchanged at 16 vertical rigs this week, and those were down by 36 from the 52 vertical rigs that were in use on October 4th 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 2nd, the second column shows the change in the number of working rigs between last week's count (September 25th) and this week's (October 2nd) count, the third column shows last week's September 25th 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 4th of October, 2019...
as you can see from those tables, there weren't very many changes at all this week; actually just 7 additions and two removals nationally...first, by checking the rig counts in the Texas part of Permian basin, we find that one rig was added in Texas Oil District 7C, which roughly aligns with the southern part of the Permian Midland, and another rig was added in Texas Oil District 8A, which corresponds to the northern Permian Midland, while 1 rig was pulled out of Texas Oil District 8, which is largely the core Permian Delaware, thus leaving the rig count in the Texas Permian up by one...since the national Permian basin rig count was up by four, that means that the three rigs that were added in New Mexico must have been set up to drill in the far western Permian Delaware, in order to balance the national rig count on that basin...elsewhere in Texas, another rig was pulled out of Texas Oil District 6, which is the natural gas producing Haynesville shale; however, a natural gas rig was also added in the Haynesville in northern Louisiana at the same time, and hence the Haynesville rig count remained unchanged...but natural gas rigs were down by one nationally because the rig that had been pulled out of Texas Oil District 8 had been targetting gas, leaving only oil rigs in the Permian basin once again...the only other rig addition this week was an oil rig in the Bakken shale, in North Dakota's Williston basin, also shown above....
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3yr investigation shows Ohio regulators ignore public oil & gas pollution complaints, work closely with polluters — A three-year investigation released today by Earthworks and endorsed by 15 regional groups in Ohio and Pennsylvania — Loud and Clear: what public regulation complaints reveal about Ohio’s oversight of oil and gas pollution and whom it serves — shows that the Ohio Environmental Protection Agency (OEPA) and Ohio Department of Natural Resources (ODNR) failed to act on 38% of public complaints filed regarding oil and gas air pollution. The investigation also shows the public complaint system is effectively impossible for the public to use.From 2018-2020, Earthworks’ certified thermographers recorded optical gas imaging video of otherwise invisible air pollution — methane and toxic volatile organic compounds (VOCs) such as benzene — from oil and gas production in Ohio. Earthworks staff used that evidence to file regulatory complaints with the OEPA and ODNR. Regulators responded to only 70% of our complaints (22 of 31), took no action on another 38%, and have yet to respond on 29% (9 of 31).Loud and Clear found that Ohio has no requirements for inspectors and other staff to respond to complainants, resulting in complaint replies that came — after repeated follow up — only after weeks, months, or in 9 cases, never. In contrast, OEPA provides oil and gas operators with extensive information about how inspections are conducted and how to prepare for one.In August, the Trump Administration’s Environmental Protection Agency gutted federal safeguards governing oil and gas production’s methane pollution and associated VOCs, meaning little regulatory protection exists for Ohioans from this type of pollution. At the same time, initial steps by OEPA in 2018 to regulate the industry’s pollution have stalled. “Who do Ohio regulators serve? For Ohioans harmed by oil and gas pollution, it’s a full time job just to get an answer from the agency whose mission it is to protect them. For oil and gas operators, regulators take pains to make government oversight as easy as possible. It’s becoming clear the only way to reliably protect Ohioans air, water, health and climate from oil and gas pollution is to stop permitting oil and gas production altogether.” — Earthworks OH/PA Field Advocate, certified optical gas imaging thermographer, and report co-author Leann Leiter “In 2018, a 20-day leak of methane resulting from an explosion of an XTO well pad in the neighboring county of Belmont, Ohio was measurable from space. The Tropospheric Monitoring Instrument detected methane emissions of over 120 metric tons per hour, one of the largest methane leaks ever recorded in the USA. The failure of the Ohio EPA and ODNR to really regulate the oil and gas industry leaves Ohio’s residents at risk from toxic air emissions.” –– Dr. Randi Pokladnik, Harrison County (3rd most fracked county in Ohio) resident
Pennsylvania lawmakers, industry officials optimistic about new natural gas tax credit legislation – On the heels of its recent passage, a cross-section of Pennsylvania legislators and private industry representatives gathered recently to discuss how a new law could pump new revenue into the state’s economy and dually create new jobs. The state Senate and House Majority Policy committees held a joint hearing and discussed Act 66, which provides tax credits to up to four businesses manufacturing dry natural gas products. Democrat Gov. Tom Wolf signed the bipartisan effort into law in July after vetoing a version of it in March. This spring, Wolf cited multiple reasons for his initial decision, including concerns with the financial stimulus provisions and job creation specifics. Wolf reversed course this summer after striking an agreement with state Republican lawmakers in both branches on what had been House Bill 732. Revisions expanded financial relief, particularly as COVID-19 upended the economy. “It was passed after a long, hard effort,” state Sen. David Argall, R-Mahanoy City, said at the hearing. “It was months of hard work. The end result is a product that is going to provide a lot of reinvestment into communities.” A number of lawmakers sitting on the committee expressed optimism in the long-term impact Act 66 could have on the state’s economy with new, modern efforts to maximize one of Pennsylvania’s natural resources. “The opportunity this legislation has is truly a transformative game-changer,” state Rep. Aaron Kaufer, R-Luzerne, said as he referenced the projected 4,400 jobs that could arise from Act 66’s provisions. While Act 66 has been a bipartisan effort, concerns over the state’s use of a traditional power source in lieu of solar have been raised throughout the legislative process. But from his vantage point, state Sen. John Gordner, R-Bloomsburg, said the use of natural gas does not have to be an “either or” proposition as environmental protective measures are factored into the equation. “You can choose both,” Gordner said. “This is a good example of it.”
No natural gas-driven boom here - When statistics fly in the face of what we see around us, we usually don’t reject the statistics. We just assume we see only a tiny part of a bigger picture and that, in the bigger picture, the statistics are probably true even if they don’t jive with our reality. So when people in Greene County, which has seen a huge surge of natural gas production but almost no growth in jobs, hear U.S. Secretary of Energy Dan Brouillette claim the oil and gas industry is employing 300,000 people in Pennsylvania, they probably assume all that job growth is happening in other big gas-producing counties like Susquehanna and Bradford in Northeast Pennsylvania.Meanwhile, when folks in Susquehanna and Bradford, who have also seen huge growth in gas production and little in jobs, hear Brouillette’s claims, they assume he’s referring to Greene County and Southwest Pennsylvania.The problem is that the natural gas-driven economic revival Brouillette is talking about isn’t happening anywhere in the region and most certainly not in the counties mentioned above that bear most of the costs of fracking. That’s even more true in Ohio, where seven counties that produce over 90% of that state’s natural gas havelost over 7,000 jobs since the beginning of the fracking boom in 2007. That’s as of the end of 2019, before the covid-19 crisis made the losses even greater. Our eyes really are more reliable than Brouillette. The vacant retail spaces in Waynesburg, Wheeling, Steubenville and Bellaire tell the truth. The natural gas boom has manifestly failed to deliver jobs and prosperity. But rather than look at the reality of our communities or check actual employment figures, which are readily available from the Bureau of Labor Statistics, Brouillette quotes from disproven and debunked industry-funded economic impact studies to including most recently one from the petrochemical industry, which he says is poised to generate another 100,000 jobs in the region … except it’s not.
What The Purchase Of Marcellus Shale Assets Means To EQT Corporation - On Wednesday, September 16, 2020, it was reported that natural gas-focused EQT Corporation has offered to pay $750 million to acquire Chevron's natural gas acreage. This would represent a continuation of the company's expansion into this very resource-rich region. EQT is already the largest producer of natural gas in the United States and this acquisition would help it to maintain this position. Natural gas itself is an excellent place to be as the demand for it continues to grow both domestically and abroad so this will likely improve EQT's overall appeal. Chevron announced last year that it was considering selling off its interests in about 800,000 acres in the Marcellus and Utica shale plays in Pennsylvania and the surrounding states as well as its 31% stake in Laurel Mountain Midstream. Laurel Mountain Midstream is largely confined to Pennsylvania as it operates various gathering and intrastate pipelines throughout the Marcellus basin. EQT offered to pay $750 million for all of this. Unfortunately, this is substantially less than what Chevron originally paid to acquire these properties, but Chevron already took an $8.13 billion write-down last year to account for this, so hopefully it will not need to take another one following the sale. As mentioned in the introduction, the Marcellus shale is one of the most natural gas-rich regions in the United States. The formation largely covers the Allegheny Plateau in Southern New York, Western Pennsylvania, Eastern Ohio, Western Maryland, and most of West Virginia and is estimated to contain approximately 144.145 trillion cubic feet of undiscovered technically recovered natural gas: This is sufficient to make the Marcellus the richest individual basin in the United States in terms of natural gas. As might be expected, energy producers have been moving to take advantage of these enormous resources. In 2019, for example, the state of Pennsylvania alone produced approximately 6.8 trillion cubic feet of natural gas: As might be expected from the largest natural gas producer in the country, EQT has a very significant position in the basin. The company currently has 630,000 acres in the Marcellus and another 60,000 acres in the neighboring Utica basin for a total of 690,000: This acquisition would therefore more than double the company's position in the region. Unfortunately though, it is not specified where exactly the Chevron acreage is located. As some parts of the basin are richer than others, we cannot be completely certain how large of an impact the acquisition would have on the company's reserves. We can be certain though that it would have a very positive effect on EQT's reserves as well as provide the company with more drilling locations to grow its production.
Developers of controversial LNG port seek special order from federal agency - A controversial plan to export liquified natural gas out of a South Jersey port could move forward as the developers attempt to get a special order to get the project approved. Delaware River Partners LLC, the company behind the Gibbstown Logistics Center in Gloucester County, has petitioned the Federal Energy Regulatory Commission for a declaratory order that would make LNG operations at the site not subject to the approval of the federal agency. Such an order would remove one regulatory hurdle for a plan to export of LNG from Gibbstown to destinations in Europe and the Caribbean. That plan, being pushed by New Fortress Energy, would see fracked natural gas liquified in Pennsylvania, then shipped to Gibbstown in trucks and trains. Critics worry such a plan poses a danger to public safety and threatens environmental health by furthering the use of fracking and fossil fuels. In the petition, Delaware River Partners argues FERC has no jurisdiction over LNG exports at the port because it is not directly connected to a natural gas pipeline and no gas will be liquified at the site. The Delaware Riverkeeper Network, an environmental organization that opposes the LNG plan, has filed to intervene against the developer’s petition. The group said in its filing that FERC must be allowed to keep its authority over the LNG proposal to ensure the environmental health of the river and surrounding area are protected.
Downstate gas plants make a hydrogen pitch in bid to stay afloat — Two downstate fossil fuel plants facing tougher emissions limits and eventual extinction are making a longshot promise that they could someday burn hydrogen produced from sun and wind energy. But clean energy groups say the pitch is a mirage — a last-ditch effort by the plants to avoid closure by suggesting they can make the switch from burning fossil fuels to a technology that is, so far, not available for widespread use and would present enormous costs to implement. “It’s so unrealistic that it’s almost laughable,” said Carlos Garcia, with the NYC Environmental Justice Alliance. Last year, New York enacted the Climate Leadership and Community Protection Act — a sweeping emissions reduction and renewable energy measure that created a legal mandate for cutting greenhouse gases. It requires an 85 percent reduction from 1990 levels over the next three decades and a carbon-free electric system by 2040. That has threatened the future of traditional fossil-fuel generators that will have to find clean burning fuels or eventually shut down. Developers at Danskammer in the Hudson Valley and NRG’s Astoria in Queens plant are trying to gain state approval for low-emission, gas-fired plants to replace older facilities on their existing sites. They argue the plants will displace dirtier facilities in New York City and the Lower Hudson Valley in the interim because they would be called on to provide power during times of peak demand, before older dirtier plants. And they are pitching their ability to ultimately run on hydrogen made from excess renewable electricity, arguing such a move would help the state achieve its goal of carbon-free electricity by 2040.
Second 'Unplanned' Gas Release At Weymouth Compressor This Month -For the second time this month, something triggered the Weymouth Natural Gas Compressor Station's emergency shutdown system and caused an "unplanned release" of at least 10,000 standard cubic feet (scf) of natural gas into the nearby area.The venting happened around 10:30 a.m. Wednesday and occurred in a "controlled manner," according to the company that operates the compressor, Enbridge. "We are gathering additional information to determine what caused the Emergency Shutdown system to activate, though we have found no issues which would indicate there was a safety concern," Enbridge spokesman Max Bergeron said in an email.In a letter to the Massachusetts Department of Environmental Protection (MassDEP), the company said it would "follow up with more information in 3 business days, including an estimate of the actual volume of gas released." It is legally required to notify MassDEP and the towns around the compressor about any unplanned gas releases that exceed 10,000 scf. But while Enbridge says it's "proceeding with safety as our priority," opponents of the project are furious about the lack of details and terrified about what a second shutdown before the facility even goes into operation portends for the future.Less than three weeks ago, a gasket failure at the facilitycaused a shutdown that forced operators to vent the entire contents of the station — about 265,000 scf of gas, which includes about 35 pounds of volatile organic compounds. It remains unclear how much of that gas was vented through a tall stack and how much was released at ground level, a distinction opponents of the project say is important because gas at ground level is more likely to ignite and explode."We still don’t know how much they released at ground level from the first accident, and now we have a second accident?" said Alice Arena of the Fore River Residents Against The Compressor (FRRACS). Enbridge did not respond to a question asking whether this second shutdown and subsequent release will affect the company's plan to put the compressor into service on Thursday.
Enbridge Agrees To Pause Weymouth Compressor Station Startup - The energy company Enbridge will pause its planned start of operations at its natural gas compressor station in Weymouth after the facility required twoemergency shutdowns in the past three weeks, imposing a delay that surprised its critics. A spokesperson for Enbridge, which built the facility as part of its Atlantic Bridge pipeline, said Thursday that the station will not yet be placed into service despite receiving final federal approval one week ago. On Wednesday, the station's emergency shutdown system automatically triggered, venting an unspecified amount of natural gas into the air near a densely populated community. "Following the activation of the Emergency Shutdown (ESD) System at the Weymouth Compressor Station on September 30, 2020, we have decided to temporarily pause the commencement of operations of the station to ensure we can complete a thorough review and be certain the facility is fully ready for service before proceeding," spokesperson Max Bergeron wrote in an email. "Safety will always be our top priority." Bergeron declined to say how much gas was vented or what caused the automatic shutdown, saying the company is "gathering additional information," but Enbridge is legally required to notify authorities of any unplanned release surpassing 10,000 cubic feet.It was the second incident at the station this month, following a gasket failure on Sept. 11 that prompted crews to deploy the emergency shutdown system and release up to 265,000 cubic feet of natural gas.Less than two weeks after that shutdown, the Federal Energy Regulatory Commission granted Enbridge approval to begin service at the station by Oct. 1.The compressor is designed to play a key role in the company's larger pipeline, helping pump gas northward to utility companies in Maine and Canada. The project received all of its state and federal permits, despite years of intense opposition from local leaders and community groups who warn that it poses environmental, safety and health threats to the area.
U.S. Energy Secretary: New England needs natural gas for energy choice, cost reduction (Guest viewpoint) - By Dan Brouillette - Boston and the surrounding area were the scene of the most memorable moments in the early years of the American Revolution. The city was a crucible for the rising American spirit of independence, from which the revolution against overbearing British taxes and colonial oppression was born. Ultimately, after years of struggle, America achieved independence. Now, America has also achieved energy independence, but few in Massachusetts, New Hampshire, and the entire New England region would recognize it, especially considering that in 2018 a tanker carrying Russian liquefied natural gas (LNG) docked in Boston Harbor, providing desperately needed fuel to power and heat homes during a winter cold snap.This development seemed strange to many, especially since the United States is the world’s leading producer of natural gas. The Appalachian Region, just several hours drive southwest, is home to such abundant natural gas reserves that if it were a country, it would be the world’s third largest producer of the fuel. How did it come to this? How is it that a city nicknamed “the birthplace of the American Revolution” needed Russian fuel to meet its winter power needs? How is it that as countries in Eastern Europe are desperate to reduce their reliance on Russian gas and the geopolitical muscle that often comes with it, the U.S. was importing it? The answer is simple: Plans to build the critical energy infrastructure necessary to benefit from our Nation’s abundant natural resources have been routinely blocked or delayed, at least in some parts of the country, by radical environmentalists, activist judges, and opportunistic politicians. Decisions to stop or slow down new energy infrastructure, like portions of the Access Northeast Pipeline project, are cheered as a win for the environment and for energy consumers. But blocking these projects is a win for neither the environment nor consumers.
DEEP responds to oil spill in Brook in Danbury - The Department of Energy and Environmental Protection responded to an oil spill in Sympaug Brook in Danbury. DEEP officials said the spill resulted from a hose failure at a manufacturing facility owned by Stanley Engineered Fastening on Shelter Rock Lane. About 1,800 gallons of waste oil containing metals was assumed lost, and while some waste was recovered from a secondary containment, some released into the brook, DEEP said. The spill resulted in a milky-white color, according to DEEP.The manufacturing facility took responsibility for the clean-up and Moran Environmental Recovery and Full & O'Neill are assisting, DEEP officials said. DEEP said they will continue to assess the situation and issue updates as needed.
Connecticut oil spill halts recreational activities - Nearly 1,800 gallons of waste oil spilled into a brook that flows into Connecticut’s Still River this week. Waste oil containing metals spilled into Sympaug Brook in Danbury after a hose failed at a manufacturing facility owned by Stanley Engineered Fastening. Some oil was recovered in the cleanup but some was also released into the brook. State health officials recommend people refrain from fishing, bathing and other recreational activities until remediation is complete.
Mountain Valley Pipeline regains permit to cross streams, wetlands - A path across nearly 1,000 streams and wetlands was cleared Friday for the Mountain Valley Pipeline.The U.S. Army Corps of Engineers reissued three permits for the natural gas pipeline being built in Virginia and West Virginia, nearly two years after they were invalidated by a federal appeals court.“Effective immediately, you may resume all activities being done in reliance upon the authorization” first given in January 2018, William Walker, chief of the Army Corps’ regulatory branch in Norfolk, wrote in a letter to Mountain Valley.With the long-awaited decision, the company moved one step closer to resuming construction of a massive project that has stirred deep controversy in Southwest Virginia since it was first proposed six years ago.Also on Friday, the U.S. Forest Service released its proposal for the 303-mile pipeline to pass through the Jefferson National Forest, an approval that was struck down in a separate ruling by the 4th U.S. Circuit Court of Appeals. A decision on that permit is not expected until the end of the year.
Mountain Valley Pipeline foes file challenge to reissued stream-crossing permits - Foes of the Mountain Valley Pipeline were back in court Monday, before idled construction workers could return to the long-delayed and deeply divisive project.In a petition filed with the 4th U.S. Circuit Court of Appeals, the Sierra Club and seven other environmental groups challenged permits reissued last week to allow Mountain Valley to cross nearly 1,000 streams and wetlands along its 303-mile path.The joint venture of five energy companies has been barred from active construction of the natural gas pipeline for nearly a year. But after legal logjams began to clear, with two key sets of federal permits being restored, Mountain Valley asked the Federal Energy Regulatory Commission last week to lift its stop-work order.Before that could happen, the environmental groups requested that the U.S. Army Corps of Engineers stay its new permits for waterbody crossings, pending another legal challenge. That came Monday, when senior attorney Derek Teaney with the nonprofit law firm Appalachian Mountain Advocates filed a petition on behalf of the Sierra Club, the Center for Biological Diversity, Wild Virginia, Appalachian Voices, the Chesapeake Climate Action Network, the West Virginia Rivers Coalition, the West Virginia Highlands Conservancy and the Indian Creek Watershed Association. At issue is Mountain Valley’s plan to cross streams and rivers by one of two ways: either by boring under them or using dams and pumping systems to temporarily divert water, dig trenches along dry beds, bury the 42-inch diameter pipe some 6 feet deep and then restore the current to its original flow.Mountain Valley says there is a public need for the 2 billion cubic feet of natural gas a day to be pumped at high pressure through the pipeline, which will run from northern West Virginia, through Southwest Virginia, and connect with an existing pipeline near the North Carolina line.But the project is two years behind schedule, in large part because of litigation from those who say it is polluting a scenic part of the country.“The Corps has gone ahead and authorized MVP to dig and blast through our streams despite its full knowledge that it has not met its legal obligations or done what’s necessary to protect some of our most valuable and sensitive species,” David Sligh, Wild Virginia’s conservation director, said in an email. “That’s deplorable.”
More Federal Permits Handed Down as MVP Presses FERC for Construction Restart - The Mountain Valley Pipeline LLC (MVP) told FERC late last week that it has received a series of key federal waterbody crossing permits, bolstering its case to restart construction on the 300-mile, 2 million Dth/d natural gas conduit. The Huntington, WV, Pittsburgh and Norfolk, VA, districts of the U.S. Army Corps of Engineers have all completed Nationwide Permit 12 reviews for the pipeline, MVP said in a letter filed with the Federal Energy Regulatory Commission on Friday. The developer submitted the information to supplement its request filed last Tuesday to restart construction on the pipeline. As with other federal approvals for the embattled MVP project, the NWP 12 permitting came under scrutiny in the U.S. Court of Appeals for the Fourth Circuit, which vacated a key permit in 2018. That decision sent the Army Corps back to the drawing board to reevaluate MVP’s authorization to cross hundreds of streams and wetlands. The NWP 12 approvals bring MVP closer to restarting construction on the Appalachia-to-Southeast transmission line.Work has been stalled since last fall, a result of setbacks concerning MVP’s Endangered Species Act approvals. Earlier this month, the U.S. Fish and Wildlife Service updated its review of protected species, removing another regulatory roadblack for the project. Meanwhile, the U.S. Forest Service has released a draft supplemental environmental impact statement concerning MVP’s proposed crossing through the Jefferson National Forest in Monroe County, WV, and Giles and Montgomery counties, VA. MVP told FERC last month that it expects to have all remaining permits in hand by the end of this year. The 42-inch diameter MVP is designed to transport Marcellus and Utica shale gas from West Virginia into Virginia, where it would interconnect with the Transcontinental Gas Pipe Line’s Station 165 compressor in Pittsylvania County.
NextEra, other Mountain Valley Pipeline developers, race to resume construction amid new challenges Mountain Valley Pipeline (MVP) permits are slowly being reissued, bringing new confidence to the project and its developers. The U.S. Army Corps of Engineers reinstated verifications for stream crossings in three West Virginia districts on Friday, allowing construction to resume in one of the districts. While MVP is waiting to regain other federal permits, opponents of the development seek to undo the latest progress. Sierra Club and six other environmental groups filed suit on Monday with the Fourth Circuit Court of Appeals over two of the Army Corps' Nationwide Permit 12 verifications for MVP. MVP developers claim the main section of the pipeline will be in service in early 2021. "Over the last several months we have been explaining to clients that we expected MVP was likely to complete construction based on the fact regulatory re-approvals were coming together," Christi Tezak, managing director of research at ClearView Energy Partners, said in an email. Gas pipelines are meeting a barrage of challenges from community stakeholders and environmental groups. Although developers pulled the plug on the Atlantic Coast Pipeline (ACP) this summer, the same fate doesn't necessarily await MVP, power sector analysts say.ACP was more sensitive to state regulatory approval, while MVP is "supported by upstream producers," Tezak said. MVP is a joint venture of EQM Midstream Partners, NextEra Capital Holdings, Con Edison Transmission and gas transmission groups including WGL Midstream and RGC Midstream. The pipeline is intended to deliverup to 2 million dekatherms per day of firm transmission capacity from the Marcellus and Utica shale region to markets in the Mid- and South Atlantic. The developers did not reply to requests for comment on the path forward for the project or comparisons to other pipeline proposals. MVP developers maintain that the mainline project construction is 92% complete, a figure that opposing groups have questioned as an exaggeration. According to ClearView's Tezak, the MVP project continued construction for nearly a year longer than the ACP, before beginning to lose permits. "It looks like the pipeline's only about halfway complete to restoration," said Joan Walker, senior campaign representative for Sierra Club's Beyond Dirty Fuels Campaign. "The sections that are yet to be trenched and laid are the steepest, most difficult, most challenging terrain, so it's literally an uphill battle for developers," she said. That means if the project received all the necessary permits to restart construction and meet its early 2021 target, the work would have to take place during the winter, which could further complicate matters for developers, according to Walker. MVP developers, aware of the challenges of winter construction, asked FERC to lift its 2018 stop-work order, so that construction efforts will be maximized ahead of winter.
Virginia regulators accused of slow-walking new turbidity standard - As work on Mountain Valley Pipeline remains stalled, state officials are also moving at a sluggish pace to develop a standard that would help Virginia regulate muddied waters like those that have dogged the project. “My recollection is that this was first requested by the board about 18 months ago,” State Water Control Board member Paula Jasinski said to Department of Environmental Quality officials at a meeting Sept. 24. “Does it take that long?” DEQ leaders said yes. While acknowledging a five- to six-month delay due to the COVID-19 pandemic, top officials emphasized the complexity of developing such a standard, known as numeric turbidity criteria, in a state with wide geographic and ecological diversity. But other environmental stakeholders say the department is slow-walking the process, writing its own regulations from the ground up instead of leaning on standards already adopted in many other states. “If we were starting from scratch here, that would be one thing,” said David Sligh, a former Virginia environmental regulator and conservation director of Wild Virginia, which along with 55 other state organizations is pushing for a slate of regulatory reforms by the State Water Control Board, including accelerated development of the numeric turbidity standards. But, he continued, there’s already “decades of knowledge” on the subject. “As they pointed out, 30 states have already done it,” he told the Mercury. “We may question whether what those states did is the best way to do it, but EPA approved every one of those states’ methods. So we can’t say it hasn’t been looked at or thought about.” Narrative vs. numeric At its most basic level, turbidity can be thought of as the degree to which waters are clouded or muddied. Technically, it’s “a measure of water clarity and the degree to which the water loses its transparency,” according to a definition provided by DEQ at a July turbidity work group. In regulating turbidity, Virginia has long relied on a set of “narrative criteria” laid out in the state code that among other things control the deposition of “substances that produce color, tastes, turbidity, odors, or settle to form sludge deposits.” But those criteria “are too subjective and as such are pretty much unenforceable,” said Bob Burnley, a former DEQ director and an advocate for the Virginia chapter of Trout Unlimited who is a signatory of the reform platform being spearheaded by Wild Virginia.
Litigation that targets pipelines seen adding uncertainty to capital return timelines — Litigation around the permitting of long-haul US oil and gas projects has made timing of returns for large capital investments uncertain, leading some midstream companies to avoid such projects, industry officials said Tuesday. Their comments came during a Sept. 29 panel discussion on legal challenges affecting major oil and gas pipeline projects at the Shale Insight conference, organized by the Marcellus Shale Coalition. "I can tell you from our perspective in a lot of instances, we try to stay out of the regulatory arena," said Christopher Rimkus, assistant general counsel of MPLX, while noting the company does have an equity interest in the Dakota Access Pipeline. "It's just something that from a capital perspective it's hard to consider putting a billion dollars up when you don't have a sense of when your project will actually be done, when you can start getting a return on that investment." Ashley O'Neil, senior counsel at Williams, said she agreed about challenges facing the sector. "The uncertainty just makes the planning and the capital process of these types of projects much, much more difficult," she said. Overall, Rimkus said, litigation from nongovernmental organizations has less of a day-to-day impact on the gathering-and-processing end of the business. But litigation targeting distribution lines or transmission pipelines affects the ability for producers to market from large fields liked the Marcellus and Utica shales to end-use customers, he said. "And it's incredibly disruptive. In our case, we've deployed over $10 billion of capital up here," he said. If the ability to move product up and down the eastern seaboard is degraded, then "that initial investment is degraded, and you'll see an economic slowdown, and a slowdown in construction and drilling," he added. Appeals court rulings Recent appeals court rulings have resulted in some significant setbacks for major oil and gas projects in the eastern US. In one case with potential impacts for other interstate projects, the 3rd US Circuit Court of Appeals found PennEast Pipeline could not condemn lands in which New Jersey held an interest in federal court. Separately, a US Army Corps of Engineers' general permit for stream crossings often used by oil and gas pipelines also was thrown into question earlier this year by a Montana federal district court and remains the subject of appeals court litigation. The Atlantic Coast Pipeline saw multiple permits sent back to agencies by the 4th US Circuit Court of Appeals before Dominion Energy canceled the project. Williams tangled with New York state in various venues before shelving the Constitution Pipeline project amid altered market conditions. Regulatory efforts Lawyers on the panel acknowledged several Trump administration initiatives aimed at ensuring greater regulatory consistency, such as the June US Environmental Protection Agency regulation aimed at setting limits on the timing and scope of state water quality certifications under the Clean Water Act. Still, Lisa Bruderly, shareholder at Babst Calland, pointed out that litigation has since been brought by the attorneys general of 21 states, including New York, who argued the CWA regulation unlawfully curtailed the state's authority to fully review the projects. (State of California, et al., v. Andrew Wheeler, 3:20-cv-04869).
COVID-19 Bombshell: As Thousands of Out-of-State Mountain Valley Pipeline Workers Prepare to Descend on SW Virginia, Dept. of Health Declines to Review Company’s COVID Mitigation Plan - The Commissioner of the Virginia Department of Health rejected the idea of conducting a thorough review of Mountain Valley Pipeline’s plan to bring thousands of out of state workers to a concentrated area of Southwest Virginia during the COVID-19 pandemic. Instead, he directed staff to limit their efforts to providing “public health guidance” to MVP.A lobbyist for Mountain Valley Pipeline expressed reservations about submitting its COVID-19 response plan because it might be made public under the Freedom of Information Act. He also dismissed concerns raised by Virginia legislators about MVP’s plan and apparently misled the Virginia Department of Health regarding the status of pending legislation that could stop construction.And the lobbyist, using ties he had to the Governor’s office, sought VDH approval of MVP’s plan sight unseen in a Zoom meeting that included a company lawyer, VDH leadership and staff and a top official in the office of Virginia Governor Ralph Northam. These are some of the troubling revelations contained in internal emails released by VDH in response to a Freedom of Information Act request. They are published here,here, here, here, here, here, here, here and here exclusively for the first time. (References below are to these documents and include page numbers.) The Mountain Valley Pipeline is a $6.2 billion corporate boondoggle that would bring fracked methane gas from West Virginia to Virginia along a 300-mile route that includes mountainous terrain and the crossing of more than 1,000 rivers, streams and wetlands. It is intended to connect to an extension called MVP Southgate for which North Carolina has refused to issue a permit. The most expensive pipeline per mile ever conceived, MVP has been plagued by trouble since it was first proposed in 2014. Billions of dollars over budget and more than two years behind its original in service date, MVP was stopped from doing further construction in 2019 after multiple permits were lost as a result of legal challenges. Its certificate from the Federal Energy Regulatory Commission is set to expire in mid-October. MVP has asked for a two-year extension and more than 43,000 people in Virginia and West Virginia have filed comments with FERC urging that the renewal be denied. see also: COVID-19 Bombshell, Part 2: Mountain Valley Pipeline Refuses to Release Its COVID-19 Preparedness Plan to Virginia Department of Health | Blue Virginia
Natural gas growth has driven emissions reductions but made it a target for environmentalists - Declining coal power and the switch to increasing amounts of natural gas drove down U.S. energy-related emissions over the past decade, to dip about 1.3% on average each year since 2007, according to the latest analysisfrom the Energy Information Administration. But the EIA also finds natural gas producing an increasing share of U.S. energy emissions, underscoring the pressure from environmentalists and Democrats that is coming to bear on the fuel as they attempt to put the U.S. on a path to dramatically cut emissions by mid-century. Energy-related emissions from coal fell more than 50% from 2007 to 2019, the EIA said in a report released Wednesday. And the pace of decline is only accelerating. In 2019 alone, carbon emissions from coal power fell 15%, compared to 2018. That’s despite efforts from the Trump administration to prop up the coal sector, which have been largely unsuccessful. Just this week, Texas-based Vistra Energy announced it would shutter its entire Midwest coal fleet by 2027, which the company said has become uneconomic, marking one of the largest coal power retirement announcements in the U.S. The EIA says a significant portion of electricity sector emissions cuts between 2005 and 2019 came from fuel switching — from coal power to either natural gas or renewable energy. Nearly two-thirds of those emissions reductions, though, came specifically from switching coal to natural gas power, giving the industry new data points to use as they argue their fuel is the major reason the U.S. has been able to cut emissions over the last decade. But emissions from natural gas are increasing: More consumption means greater emissions, the EIA notes, finding U.S. natural gas emissions have risen 35% from 2007 to 2019. In 2019 alone, natural gas emissions in the electric power sector rose 6.9%, the report says. Those types of increases are making the natural gas industry the next target of environmentalists and Democrats and will ultimately pose hurdles for the many utilities that are setting goals to reach net-zero emissions by 2050.
Nat Gas Prices Set To Soar As First Cold Blast To Strike Eastern US Next Week - A significant cooldown has arrived, with the jet stream from Canada plunging this weekend, which will allow the eastern United States to experience its first taste of fall for much of next week. The ten-day outlook in terms of the thermal aspect shows a cold airmass will encompass all U.S. Plains, Midwest, Southeast, and Northeast, where temperatures could hover 8 to 15 degrees below normal through the first week of October. E.C. Operational Forecast (with gray 32 degrees Fahrenheit line) shows the blast of cold air pouring in from Canada this weekend and will cover much of the eastern U.S. through Oct. 6. As for frost risks over the next ten days, Reuters' commodity desk said: "Although the greatest cool anomalies should be observed in Missouri and surrounding states, the risk for occasional and short-lasting overnight frost risks are on the rise across the upper Midwest. As for now, confidence in frost appearance is rather low, but the situation should be monitored and updated over the next week." The National Weather Service announced a moderate to high risk for cooler temperatures from the Midwest to the Mid-Atlantic between Oct. 1 and 7. According to The Washington Post, "the surge of cold set to enter the eastern U.S. just one week after scores of locations in interior New England and western New York set record lows in the 20s and 30s. The chill even reached the Mid-Atlantic, where Washington observed lows in the 40s on four straight days in September for the first time since 1950." A chilly start to October will result in energy usage demand to increase. Heating degree day (HDD), the measure designed to quantify the demand for energy needed to heat a building, is set to rise in the Midwest, Southeast, and Northeast in the coming days. Oilprice.com says the "coming winter season and the end of the hurricane season that has disrupted LNG operations and exports along the U.S. Gulf Coast, coupled with recovering gas demand for industrial activities in Asia and Europe, are likely to send natural gas prices to above $3 per million British thermal units." The latest "rollercoaster" in nat gas prices was "indicative of a demand/supply picture in a so-called 'shoulder season' when power demand for air conditioning begins to wane, but demand for heating is not there yet. So prices reacted to the immediate drivers—storage, feed supply for LNG, and storm-induced shut-ins," said the energy blog.
U.S. natgas futures fall about 2% on surplus, contract expiry | Reuters - (Reuters) - U.S. natural gas futures slid nearly 2% in volatile trading on Monday, their last day as the contract for October delivery, on a continued supply surplus and as threat of storms in the Atlantic Ocean dissipated. The decline in futures prices came despite a projected increase in LNG exports. Front-month gas futures for October delivery fell 3.8 cents, or 1.8%, to settle at $2.101 per million British thermal units (mmBtu). The October contract rose as much as 1.7% and fell as much as 5.6% in Monday's session. "It is expiration jiggling," November futures, which will be the front-month beginning on Tuesday, were down 1.2 cents, or 0.4%, to settle at $2.795 per mmBtu. "Although the long-standing supply surplus will likely be contracting significantly next month, we still see a possible season ending supply of almost 4.1 tcf should next month's temperatures remain mild," advisory firm Ritterbusch and Associates said in a note. "... The Atlantic remains devoid of any threatening tropical storm development in possibly forcing the complex to erase some additional storm premium." Data provider Refinitiv projected supply would rise from 91.1 billion cubic feet per day (bcfd) last week to 91.2 bcfd this week, before contracting to 91.1 bcfd again in the next week. LNG exports were forecast to reach 6.2 bcfd this week, according to Refinitiv data, as vessels returned to Gulf Coast terminals after Tropical Storm Beta dissipated.
U.S. natgas futures fall over 8% on lower demand, rising output (Reuters) - U.S. natural gas futures for the most active month fell over 8% on Tuesday on forecasts for less demand over the next two weeks than previously expected and a rise in output. For the front-month, however, the contract was up over 21% to a three-week high due to the roll of the less expensive October future into the much more expensive November. That is the biggest one-day percentage gain for the front-month since 2009 when a similar October to November contract roll caused it to jump 31%. On its first day as the front-month, gas futures for November delivery fell 23.4 cents, or 8.4%, from where the November contract traded on Monday to settle at $2.561 per million British thermal units, their highest since Sept. 4. Data provider Refinitiv said output in the Lower 48 U.S. states rose to a one-week high of 86.1 billion cubic feet per day (bcfd) on Monday from a four-month low of 84.4 bcfd last week. With cooler weather coming, Refinitiv projected demand, including exports, would rise from 82.9 bcfd this week to 84.7 bcfd next week due to higher heating usage and liquefied natural gas (LNG) exports. That, however, is lower than Refinitiv forecast on Monday because higher gas prices were expected to cause some power generators to burn more coal and less gas to produce electricity. The amount of gas flowing to LNG export plants averaged 5.6 bcfd so far in September. That was the most in a month since May and was up for a second month in a row for the first time since hitting a record 8.7 bcfd in February as rising global gas prices prompted buyers to reverse some cargo cancellations. Cameron LNG's export plant in Louisiana started taking in small amounts of gas over the past few days.
U.S. natgas futures ease as rising output offsets higher demand forecasts (Reuters) - U.S. natural gas futures eased on Wednesday as an increase in output in recent days offset raised forecasts for demand over the next two weeks. Front-month gas futures fell 3.4 cents, or 1.3%, to settle at $2.527 per million British thermal units (mmBtu). That puts the contract down about 4% in September after rising by a 10-year monthly high of 46% in August. For the quarter, the contract gained about 44%, the most in a quarter in four years. The premium of futures for December over November NGX20-Z20, meanwhile, hit a record high of 61 cents per mmBtu on Wednesday. Data provider Refinitiv said output in the Lower 48 U.S. states rose to a two-week high of 87.2 billion cubic feet per day (bcfd) on Tuesday from a four-month low of 84.4 bcfd last week. For the month, however, output was on track to decline for a second time in a row in September to a 23-month low of 86.7 bcfd as storms in the Gulf of Mexico, pipeline maintenance and low prices earlier in the year due to coronavirus demand destruction caused energy firms to shut wells and cut back on new drilling. With cooler weather coming, Refinitiv projected demand, including exports, would rise from 83.7 bcfd this week to 85.3 bcfd next week due to higher heating usage and liquefied natural gas (LNG) exports. That was higher than Refinitiv's forecast on Tuesday. The amount of gas flowing to LNG export plants averaged 5.7 bcfd in September. That was the most in a month since May and was up for a second month in a row for the first time since hitting a record 8.7 bcfd in February as rising global gas prices prompted buyers to reverse some cargo cancellations
US working natural gas volumes in underground storage rise by 76 Bcf: EIA | S&P Global Platts - US natural gas in storage rose roughly in line with analysts' expectations and the five-year average last week, but the Henry Hub winter strip continues to slip as power demand fades entering the shoulder season. Storage inventories rose 76 Bcf to 3.756 Tcf for the week ended Sept. 25, the US Energy Information Administration reported the morning of Oct. 1. After the survey missed the mark widely in both directions over the past two weeks, this injection was only slightly less than an S&P Global Platts' survey of analysts calling for a 78 Bcf build. Responses to the survey proved wide though, ranging from injections of 61 Bcf to 102 Bcf. The injection measured less than the 109 Bcf build reported during the same week a year ago, as well as the five-year average gain of 78, according to EIA data. The injection was below the 109 Bcf build reported during the same week a year ago, as well as the five-year average increase of 78 Bcf, according to EIA data. The US supply-and-demand balance during the week ended Sept. 25 saw little net change week on week. Supply was down 1.1 Bcf/d week on week to average 89.4 Bcf/d, led by an 800 MMcf/d decline in onshore production, mainly stemming from reduced Northeast output, according to S&P Global Platts Analytics. Downstream, total demand fell by 1.4 Bcf/d to an average of about 80 Bcf/d for the week. A 1.8 Bcf/d drop in power burn demand and a 1.4 Bcf/d drop in LNG feedgas deliveries were partly counterbalanced by a combined 1.7 Bcf/d increase in residential-commercial and industrial demand. Storage volumes now stand 471 Bcf, or 14%, above the year-ago level of 3.285 Tcf and 405 Bcf, or 12%, more than the five-year average of 3.351 Tcf. The surplus versus last year has been reduced by more than 400 Bcf over the course of the injection season. The NYMEX Henry Hub November contract shed 6 cents to $2.47/MMBtu following the release of the weekly storage report. Declines extended through the winter strip, with December through March trading roughly 3 cents lower. S&P Global Platts Analytics' supply-and-demand model currently forecasts a 66 Bcf injection for the week ending Oct. 2, which would lower the surplus to the five-year average by 20 Bcf as about six net injections remain before the flip to the winter withdrawal season. Total supplies this week are up 1.1 Bcf/d to average 90.5 Bcf/d, mainly from a nearly 1 Bcf/d rise in production that has been split among both onshore and offshore production wells. Downstream, total demand is up 1.7 Bcf/d on the week to an estimated 81.6 Bcf/d, led by a 1 Bcf/d recovery in LNG feedgas deliveries, and further bolstered by a 600 MMcf/d recovery in power plant deliveries.
November Natural Gas Prices Flat as Market Weighs EIA Data, Lower Production - November Nymex natural gas futures swung in a 15-cent range Thursday before ultimately finishing the day exactly where they started. After government data showed an on-target storage report, the prompt month went on to settle Thursday flat at $2.527. December, however, fell 5.5 cents to $3.062. storage sept. 25 The stability at the front of the Nymex curve came despite continued weakness in the cash market, where NGI’s Spot Gas National Avg. fell 21.5 cents to $1.310. After weeks of erratic price behavior, November futures settling the day unchanged may be a bit surprising to market observers. That could be because traders were still trying to digest the latest Energy Information Administration (EIA) storage report. The EIA recorded a 76 Bcf injection into inventories for the week ending Sept. 25, which was within the range of estimates ahead of the report. The 76 Bcf build was considered by analysts to be rather tight from a supply/demand perspective. It compared with a 109 Bcf injection for the similar week last year and the five-year average build of 78 Bcf. However, traders’ struggle to determine where to send November prices from here may stem from the stark reality that inventories still are at risk of exceeding capacity before withdrawals begin. In particular, stocks continue to swell at salt facilities in the South Central region and are nearing capacity. “Nationally, we are on pace to have enough room, but need to alleviate the surplus especially in salts,” Bespoke said.South Central inventories rose by 21 Bcf, including a 9 Bcf injection into salt facilities and an 11 Bcf build in nonsalts, according to EIA. Salt capacity is reported to be around 400 Bcf, with four more weeks remaining in the traditional injection season. Builds often continue into November. Elsewhere across the Lower 48, the Midwest added 24 Bcf into storage, and the East added 21 Bcf, EIA said. Mountain inventories climbed 6 Bcf, and the Pacific rose 4 Bcf. Total working gas in storage as of Sept. 25 stood at 3,756 Bcf, 471 Bcf above year-ago levels and 405 Bcf above the five-year average, according to EIA. NatGasWeather said the EIA report provided “little drama” and was on par with expectations, but liquefied natural gas (LNG) feed gas deliveries were higher day/day and production was lower. This tightening of the balance may have provided some support to prices.
U.S. natgas futures fall after Trump's positive coronavirus test (Reuters) - U.S. natural gas futures fell over 3% on Friday, following the crude market lower after President Donald Trump tested positive for the coronavirus and U.S. negotiators failed to agree on a new economic stimulus package. Traders noted that gas prices were also pressured by continued weakness in cash NG-W-HH-SNL prices, which have traded below futures since August, and forecasts for milder weather and less demand over the next two weeks than previously expected. With all the bearish news, the market ignored a small decline in gas output and continued increases in liquefied natural gas (LNG) exports. Front-month gas futures were down 8.9 cents, or 3.5%, at $2.438 per million British thermal units at 9:16 a.m. EDT (1316 GMT). For the week, the contract was still up about 14% after rising 4% last week. 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, down from a four-month low of 87.2 bcfd in September. Those production declines come as low prices earlier in the year due to coronavirus demand destruction caused energy firms to shut wells and cut back on new drilling so much that output from new wells was no longer able to offset declines from existing wells. With cooler weather coming, Refinitiv projected demand, including exports, would rise from 83.3 bcfd this week to 85.6 bcfd next week and 85.7 bcfd in two weeks. That, however, was lower than Refinitiv's forecasts on Thursday. The amount of gas flowing to LNG export plants, meanwhile, has averaged 6.7 bcfd so far in October, up from 5.7 bcfd in September. Traders expect LNG exports to keep rising as Cameron and Cove Point return over the next week or two and rising global gas prices prompt buyers to reverse some earlier planned cargo cancellations.
With ACP canceled, Nelson residents look to environmental recovery - About 2½ years ago, tree felling began at the entrance of Wintergreen to facilitate drilling underneath the mountains. Remnants of felled trees are consumed by overgrowth in a roughly 120-foot-wide swath that climbs up the mountainside, concealing the make-ready work the Atlantic Coast Pipeline performed to pave the way for the pipeline in Nelson County.But the pipeline never came. After years of construction, constant legal challenges, delays and inflating costs, ACP canceled the project in early July.Dominion and Duke Energy had teamed up on the proposed 605-mile pipeline that would have traversed parts of West Virginia, Virginia and North Carolina, with 27 miles crossing through Nelson County where public opposition was fierce. Environmental preservation became one of many points of contention for pipeline opponents, and the county became the only locality ACP sued over the rights to the county’s floodplains.Jay Roberts, executive director of the Wintergreen Property Owners Association, said letting the forest recover would help property owners move forward, but he does not believe bulldozing over the path or removing the trees is the right approach moving forward for the land. Roberts said he thinks the Federal Energy Regulatory Commission should allow ACP to work with individual landowners to see how best to restore land that was disturbed for construction. This is reflected in a filing on the FERC docket Aug. 3 in response to ACP’s request for a time extension on the project; the property owners association does not object to the request and wants ACP to have more time to fix land disturbed for the route.
Trump administration plan to allow drilling along the Atlantic coast has fallen apart - The Washington Post - The Trump administration’s plan to drill off the Atlantic Coast for the first time in more than half a century is on the brink of collapse because of a court development Thursday that blocked the first steps to offshore oil and gas exploration, as well as the president’s recent actions that undermine his own proposal.Opponents of the drilling declared victory on Thursday after the government acknowledged that permits to allow seismic blasting in the ocean — the first step toward locating oil deposits for drilling — will expire next month and not be renewed.Nine state attorneys general and several conservation groups filed a federal lawsuit early last year to block seismic blasting, arguing it could harm endangered whales and other marine animals. The court battle dragged out so slowly that, in the meantime, time ran out on the permits. Donna Wieting, director of the National Marine Fisheries Service, a division of the National Oceanic and Atmospheric Administration, said in a court declaration, released Tuesday, that her agency “has no authority to extend the terms of those [permits] upon their expiration. Further, NMFS has no basis for reissuing or renewing these [permits].” The five companies that were granted permits would have to restart the months-long process leading to approval or denial, Wieting said.Also on Thursday, U.S. District Judge Richard Gergel of South Carolina held a telephone conference with all parties of the lawsuit to determine how to move forward. The judge is expected to declare the case moot because the seismic mapping cannot occur without the permits, said Michael Jasny, who was on the call and is director of the Marine Mammal Protection Project at the Natural Resources Defense Council.The attorneys and conservationists are focused on protecting the North Atlantic right whale, which is “one step from extinction,” the International Union for Conservation of Nature determined in July. Only about 250 adults remain, including 100 breeding females after collisions with ships, entanglements in fishing nets and underwater noise pollution, according to an assessment by the group.“It’s most definitely a win. There’s no question,” Jasny said. “Given the broad bipartisan opposition that the threat of seismic blasting and drilling has stirred in communities up and down the coast, it should be the nail in the coffin for oil and gas exploration on the coast.”The American Petroleum Institute saw the issue differently. “In the long-run, the world is going to demand more energy, not less, and our industry’s priority is ensuring that demand is met by energy produced here in the United States,” said Andy Radford, a senior policy adviser for API, the largest oil and gas lobbying group in Washington.
Trump’s Offshore Oil Ban to Halt Coastal Wind Farms Too – Bloomberg -President Donald Trump’s decision to rule out energy development along the coasts of Florida, Georgia and the Carolinas will bar not just offshore oil and gas drilling -- but coastal wind farms too.The broad reach of Trump’s recent orders, which was confirmed by the Interior Department agency that oversees offshore energy development, comes as renewable developers are spending hundreds of millions of dollars snapping up the rights to build wind farms along the U.S. East Coast.At issue are recent Trump memos ruling out new oil and gas leasing along Florida, Georgia and South and North Carolina from July 1, 2022 until June 30, 2032, issued after some Republicans pressed for a drilling ban and as the president courts voters concerned about the environment. On Friday, Trump said he would expand the offshore energy moratorium to include Virginia, though he has not yet issued a directive encompassing the territory.On the campaign trail, Trump highlighted his moves as a way to block offshore oil and gas drilling, even though the orders will affect future sale of renewable energy rights in U.S. coastal waters too. “The withdrawal includes all energy leasing, including conventional and renewable energy, beginning on July 1, 2022,” Bureau of Ocean Energy Management spokeswoman Tracey Moriarty said by email.
USD 215m in BP oil spill money to restore Louisiana marshes(AP) Louisiana will get nearly USD 215 million in BP oil spill money for two projects planned to restore more than 4,600 acres of marsh and other habitat in the New Orleans area, Gov. John Bel Edwards said. Work should begin next year on the projects, Edwards said in a news release Tuesday. The money is from BP''s USD 8.8 billion settlement for natural resources damage caused by the blowout that killed 11 men and spewed more than 100 million gallons (380 million liters) of oil into the Gulf of Mexico in 2010, leaving long-lasting effects. Both are part of larger restoration plans, the group overseeing Louisiana''s share of that settlement noted. Each project will set a record, said Chip Kline, president of Louisiana''s Coastal Protection and Restoration Authority. He said the Lake Borgne project near Shell Beach in St. Bernard Parish will create more than 2,800 acres (1,100 hectares) of marsh, making it the largest area ever bid by the agency. The Louisiana Trustee Implementation Group approved USD 114.7 million for the project. “This project will have immediate benefits to habitat for fish and birds by reinforcing the degrading southwestern shoreline of Lake Borgne and Lena Lagoon,” St. Bernard Parish President Guy McInnis said. “And we need all the natural marsh buffer we can build to lessen the damaging effects of tidal action and storm surge.” The USD 100.3 million Spanish Pass project, near Venice in Plaquemines Parish, will use an estimated 16 million cubic yards (12 million cubic meters) of dredged material to create about 132 acres (53 hectares) of ridge and 1,700 acres (688 hectares) of marsh. That will be the authority''s largest dredging volume so far, Kline said. “The Mississippi River created our parish and the many historic ridges of our landscape,” said Plaquemines Parish President Kirk Lepine. “These features protect against storm surge, reduce saltwater intrusion, provide key habitats and also help retain sediment. The marsh west of Venice has been in need of this level of attention for some time, and I know the people and businesses near Venice will appreciate this massive project and this tremendous investment.” The Oil Pollution Act settlement was part of a 2016 agreement totaling more than USD 20 billion. It was based partly on the judge''s estimate that the 87-day Deepwater Horizon spill spewed nearly 134 million gallons (507 million liters) of crude into the Gulf — enough to fill the U.S. Capitol rotunda 13 times.
Chevron streamlining and reducing production to compensate for less demand for products | MS Business Journal - Demand is down for products manufactured at Chevron’s largest refinery in the U.S., the Chevron Pascagoula Refinery. “Although I can’t address specific details about our Pascagoula operations, I can share that crude oil input at our U.S. refineries decreased 39 percent in the second quarter to 581,000 barrels per day from the year-ago period, as the company cut refinery production in response to the reduced market demand for our products,” said Alan Suddeth, corporate affairs manager for Chevron in Mississippi. “Chevron has taken action to better position the company to compete in any operating environment and address current market conditions. This includes reducing our operating costs and capital investments, driving efficiencies in our workflows and processes, and streamlining our organizational structures to reflect the efficiencies and to match projected activity levels.” Suddeth said the new organizational structures will, unfortunately, require approximately 10-15 percent fewer positions across their global operations. Impacts in each location, business segment and function will vary. “This is a difficult decision, and we do not make it lightly,” Suddeth said. “In recognition of these extraordinary times, we have enhanced the resources available to those leaving Chevron to provide a stronger safety net as they transition out of the company.”
Yet Another Shale Producer Files For Bankruptcy - Eagle Ford producer Lonestar Resources filed for bankruptcy protection under Chapter 11 this week, becoming the latest casualty in the string of bankruptcies in the U.S. shale patch this year. Lonestar Resources filed for relief under Chapter 11 in the United States Bankruptcy Court for the Southern District of Texas, as a growing number of U.S. oil and gas producers – from small players to giants – are saddled with debt they cannot repay with oil prices so low.This week, Oasis Petroleum Inc also filed for a voluntary Chapter 11 process aimed at restructuring that is expected to reduce its debt by US$1.8 billion. Oasis Petroleum has enough liquidity to maintain operations and expects to emerge from the restructuring process in November 2020, subject to Court approval, the company said.Dozens of shale producers have already filed for bankruptcy protection this year, with Chapter 11 filings accelerating after oil prices crashed in March and U.S. shale producers curtailed production in the following months.Notable bankruptcies included Permian producer Rosehill Resources, California Resources, and Denbury Resources. Shale giant Chesapeake Energy also filed for bankruptcy at the end of June. According to data from law firm Haynes and Boone as of August 31, a total of 13 producers filed for protection in July and August, which, combined with the rest of the filings this year, represents a 62-percent increase over this time last year.
Big Spring residents worried about their water following oil spill - A crude oil spill has residents north of Big Spring concerned about where the oil could end up. A Delek US company spokesperson says that an employee discovered the spill Sunday night. According to the spokesperson, actions were immediately taken to clean up the spill. Bobby Doe, the owner of the property where the spill happened, says he’s concerned that the groundwater on which they live will be contaminated. “The oil’s been sitting here for going on about twenty-something hours, so that does concern me and the residual effects later. You know as well as I do water is an essential thing for us to have,” said Doe. Rory Worthan, another resident in the area, says he’s also concerned for many residents who benefit from the aquifer. Environmental groups are already involved and are working to help with the cleanup.
Cleanup of abandoned oil and gas wells could cost Texans $117 billion - Plugging and cleaning up the open oil and gas wells in Texas could cost companies and taxpayers as much as $117 billion, according to a new report. Carbon Tracker, a nonprofit financial think tank that studies the effects of climate change on financial markets, estimates there are some 3.8 million unplugged oil and gas wells nationally, including more than 783,000 across Texas. As the coronavirus pandemic forces more oil and gas companies into bankruptcy, Carbon Tracker fears more of these unplugged wells could be abandoned, leaving taxpayers on the hook for plugging and cleaning up so-called “orphan wells.” “Texas by far has the highest number of wells of any state in the U.S. and orphan wells are going way up,” said Greg Rogers, a special advisor and co-author of the Carbon Tracker report. “We’re seeing a lot of operators go bankrupt and they can’t afford to fulfill their legal obligations to plug in abandoned wells.” More than 30 oil and gas producers have filed for bankruptcy protection since the coronavirus began widely spreading in the U.S. broke out nationally in March, according to Haynes and Boone. The Dallas-based law firm said bankruptcy filings this year are up 62 percent compared with the same period last year. There are more than 6,200 abandoned oil and gas wells in Texas, according to the Texas Railroad Commission, which oversees oil and gas companies operating in the state.
US oil, gas rig count jumps 18 to 326 for second week of double-digit gains: Enverus— The US oil and gas rig count jumped 18 to 326 in the week ended Sept. 30, rig data provider Enverus said, marking a second consecutive week of double-digit gains and a sign of a bold reversal for a fleet that has wobbled for months within a narrow range amid low oil prices and sluggish activity. Oil-weighted rig totals were up 17 to 234, while rigs chasing gas gained one for a total of 92, Enverus said. The nationwide increased followed a 15-unit gain the previous week. Upstream operators' eagerness to spend the last dollars of 2020 capital budgets before the new year, which eventually is expected to bring higher oil prices than the roughly $40/b that oil has lingered at since late June, was the likely reason behind the startling leap forward in drilling activity, analysts said. Most of the eight largest domestic basins gained rigs in the week; none lost any. Rigs in the Eagle Ford Shale of South Texas rose by five to 17, while in the Permian Basin of West Texas/New Mexico rigs were up four to 139. "I think every basin is up because operators were bottomed out," S&P Global Platts Analytics analyst Matt Andre said. Three large basins rose by one rig each: the SCOOP/STACK of Oklahoma went to a total of 12; and two gas-prone plays, the Haynesville Shale in East Texas/Northwest Louisiana and the Marcellus Shale mostly in Pennsylvania, increased to 36 and 27, respectively. The Williston Basin in North Dakota/Montana, the DJ Basin in Colorado and the Utica Shale mostly in Ohio were unchanged on the week at 11, five and seven rigs, respectively. "All these North American and US E&P operators are getting ready for 2021," Tudor Pickering Holt oilfield service analyst Taylor Zurcher said. "They're setting their budgets next year at maintenance level, meaning they'll try to hold their 2020 exit production levels flat over the course of 2021. So, it's a matter of what rig count these guys need to keep their year-end 2020 production flat next year." Zurcher figures a count of 360 to 460 US land rigs are needed to keep domestic production flat. "These operators were so focused in 2020 on cutting costs and maximizing cash flow, so in many ways operators overshot to the downside," he said. "So, to get to where their budgets will be set next year, the rig count will need to increase," he said.
Expert says EGLE doesn't have enough information to approve Line 5 tunnel - A scientific expert says Canadian pipeline company Enbridge Energy has not submitted enough information to the state for permits to build a tunnel under the Straits of Mackinac. The groups Oil and Water Don’t Mix and the National Wildlife Federation included a geological engineer who build tunnels in an online news conference. Brian O’Mara reviewed the reports in the tunnel proposal submitted to the Michigan Department of Environment, Great Lakes, and Energy. O’Mara says Enbridge did not take nearly enough core samples of bedrock along the route of the tunnel, and what they did take showed it’s not solid bedrock all the way across. “What has been submitted is in no way adequate for EGLE to complete a review, let alone approve,” O’Mara said. When preparing to dig a tunnel, he said it’s typical to take core samples for a tunnel every 50 to 200 feet. Enbridge took samples every 950 feet. He also noted a number of other issues including the risk of a methane explosion underground, or a sink hole immediately below one of the existing Line 5 twin pipelines (Line 5 splits into two pipelines in the Straits). “What Enbridge has submitted to the state of Michigan at this point doesn't come close to what you need to properly design and prepare for a tunnel beneath open water,” he said.
No, Nessel’s Line 5 lawsuit isn’t over ⋆ All parties involved in Nessel vs Enbridge et al, the ongoing suit brought against Canadian oil company Enbridge by Attorney General Dana Nessel last year, agreed Thursday to resolve two pending motions related to damage discovered along the controversial Line 5 pipeline earlier this summer. Although the pending motions for a temporary restraining order and preliminary injunctions are now resolved, Nessel’s lawsuit seeking to decommission Enbridge’s Line 5 remains open and active, contrary to some news reports. After both lines were inspected following significant damage to a support anchor discovered in June, federal regulators and an expert retained by the state “determined there was no damage to the pipeline itself from the recent events that would justify requiring Line 5 to remain closed, so we are only resolving the motions for the temporary restraining order and preliminary injunction we filed based on those events,” said Nessel spokesperson Ryan Jarvi. “However, that does not in any way change the attorney general’s position in the lawsuit she filed last year, that the pipelines are a clear and present danger and that this recent incident, along with the anchor strike in 2018, demonstrate the continuing risk that a catastrophic accident could occur. The attorney general’s office continues to pursue the decommissioning of Line 5 to protect the public health, safety and welfare of Michigan’s residents and its natural resources,” Jarvi added. Circuit Court Judge James Jamo signed off on the stipulation agreement Thursday, according to court records. The motions for a preliminary injunction and temporary restraining order (TRO) were brought by Nessel in late June, soon after Enbridge revealed it had found damage to an anchor support that props up the east leg of the dual underwater pipelines. Jamo granted the TRO on June 25 and ordered the west leg shut down until July 1, when Jamo allowed the segment to restart as long as an in-line inspection was performed. Expedited results the following week showed that the west leg was not damaged. The east segment remained shut down from June 25 until Sept. 10 — nearly three months. An amended TRO from Jamo allowed the line to restart in late August for an in-line inspection. That inspection also showed no signs of damage, and with both the court’s approval and the OK of federal regulators at the Pipeline and Hazardous Materials Safety Administration (PHMSA), Line 5’s east leg began normal operations once again at 7:30 p.m. on Sept. 10. Since the TRO and preliminary injunction were filed based on support anchor damage and the possibility that there could have been further damage to either leg of the pipeline, there was no need to keep those legal motions in play after no damage had been found.
Devon Energy Absorbs WPX In Oil Industry 'Merger Of Equals' -In what’s being billed as a merger of equals, Devon Energy will acquire WPX Energy in an all-stock deal that gives WPX shareholders five out of 12 board seats and .5165 Devon shares for each of theirs, amounting to 43% of “New Devon.” With a combined capital structure involving $6 billion in debt against $6 billion in equity, and daily production volumes of roughly 525,000 barrels per day of oil (and natural gas equivalents), the new Devon will be bigger than Apache Corp APA -7.1%and Marathon Oil MRO -3%, and just a notch below EOG Resources. The deal, first rumored over the weekend, comes on the heels of Chevron’s CVX -2.7%takeover of Noble Corp. NE +10%, and features a popular new recipe for consolidating America’s beleaguered oilpatch — the stock-for-stock deal gives WPX just a 3% premium. In a ringing endorsement, Devon shares closed up 11% Monday, while WPX was up 16% (both issues are down by more than 2/3rds YTD). More consolidation has to happen, because without it companies will keep shrinking and disappear. With oil prices too low to incentivize new investment, companies have all but stopped drilling and fracking new wells. Devon cut Capex early in the down cycle, and has watched production volumes drop 40% since 2018. The flip side is that when you stop drilling suddenly cash begins to build up. Devon’s cash pile has grown to $1.5 billion.Devon and WPX are a good match, with overlapping acreage holdings in key oil basins that will enable the companies to find upwards of $500 million in combination synergies, including layoffs. According to analysts at Tudor, Pickering & Holt, the new Devon will have enough low-cost oil prospects to target that it will be able to break even at an oil price as low as $33/bbl. The company is forecasting production growth of no more than 5% a year, while reinvesting no more than 80% of cash flow.
Judge removes Trump public lands boss for serving unlawfully (AP) — A federal judge ruled Friday that President Donald Trump’s leading steward of public lands has been serving unlawfully, blocking him from continuing in the position in the latest pushback against the administration’s practice of filling key positions without U.S. Senate approval. U.S. Interior Department Bureau of Land Management acting director William Perry Pendley served unlawfully for 424 days without being confirmed to the post by the Senate as required under the Constitution, U.S. District Judge Brian Morris determined. The ruling came after Montana’s Democratic governor in July sued to remove Pendley, saying the former oil industry attorney was illegally overseeing an agency that manages almost a quarter-billion acres of land, primarily in the U.S. West. “Today’s ruling is a win for the Constitution, the rule of law, and our public lands,” Gov. Steve Bullock said Friday. Environmental groups and Democratic lawmakers from Western states also cheered the judge’s move after urging for months that Pendley be removed. The ruling will be immediately appealed, according to Interior Department spokesman Conner Swanson. He called it “an outrageous decision that is well outside the bounds of the law,” and he said the Obama administration had similarly filled key posts at the agency with temporary authorizations. The agency will abide by the judge’s order while the appeal is pending, officials said. It will also have to confront questions over the legitimacy of all decisions Pendley had made, including his approval of land use plans in Montana that Morris said Pendley was not authorized to make. The land bureau regulates activities ranging from mining and oil extraction to livestock grazing and recreation. Under Trump, it has been at the forefront in the administration’s drive to loosen environmental restrictions for oil and gas drilling and other development on public lands.
More than 40,000 gallons of brine spill in McKenzie County — An estimated 42,000 gallons of produced water leaked from a pipeline near Mandaree in McKenzie County, N.D., on Tuesday, Sept. 29, according to a news release from the state Department of Environmental Quality.Produced water, or brine, is a mixture of saltwater, oil and sometimes, drilling fluids, that is created during oil and gas production. Oklahoma-based Enable Midstream Partners reported the leak, which is not believed to have impacted nearby water sources. Department officials say they will continue inspecting the site and monitoring cleanup efforts.
North Dakota leaders approve revisions to flaring policy (AP) — North Dakota’s Industrial Commission on Tuesday approved a revised gas capture policy that aims to encourage investment in infrastructure but doesn’t change targets for burning excess natural gas at well heads. Current gas capture policy requires companies to capture 88% of the Bakken natural gas they produce. The target increases to 91% on Nov. 1. The remainder of the gas is burned off in a practice known as flaring, which releases carbon dioxide emissions that worsen global warming. State Mineral Resources Director Lynn Helms said the Oil and Gas Division has “relaxed the policy slightly in a few places and tightened it significantly in other places” after months of consultation with industry and environmental groups, The Bismarck Tribune reported. The changes approved unanimously aim to ensure industry compliance with flaring regulations amid future gas production growth, the commission said. “We believe that the revisions that we’ve made to the gas capture policy are the right step at the right time, but I do think every two or three years, we are going to have to look at this thing and modify it as time goes on,” Helms told the three-member, all-Republican panel chaired by Gov. Doug Burgum. Helms said future gas capture requires “a monumental effort” and billions of dollars in infrastructure such as natural gas processing plants and pipelines. North Dakota’s gas production is projected to hit 5.3 billion cubic feet a day 18 years from now. The state produced a record of more than 3.1 billion cubic feet per day in November 2019. Companies have met or exceeded gas capture goals in recent months, largely due to decreased production amid the coronavirus pandemic and several new processing facilities and expansions coming online in the last year
The US Oil and Gas Industry's Methane Problem Is Catching up With It - For years, the oil and gas industry has been able to downplay, or outright ignore, the problem of methane. Methane is an invisible gas, and lax state and federal regulations in the U.S. have allowed oil and gas producers to self-report how much of this potent planet-warming gas leaks from its supply chain, which researchers have repeatedly found is a lot more than the industry was admitting to.But improved technologies, particularly from satellites, have allowed the world to increasingly fact-check industry numbers, shining a light on the true climate impact of natural gas, which is primarily methane. These days, methane emissions have become an industry black eye, to the point that major players are now clamoring for regulations after the Trump administration recently finalized the rollback of Obama-era rules meant to reduce methane leaks from oil and gas.On August 24, the Houston Chronicle published an op-ed arguing for the United States to regulate methane emissions for the oil and gas industry, and it was co-written by two influential voices in the industry, Antoine Halff and Andrew Gould. Halff was formerly the head of oil analysis at the International Energy Agency, an independent, intergovernmental organization focused on energy research and policy — and notorious for its overly optimistic (and inaccurate) outlooks for fossil fuels and overly pessimistic views on renewables. Gould is the former CEO of Schlumberger, the world’s largest oilfield services company. Gould also currently serves on the board of Occidental Petroleum Corporation — one of the largest fracking companies among the Permian oilfields of Texas.Halff and Gould were writing in response to the Trump administration’s repeal of existing methane regulations. However, as a sign of the changing times, they argued that regulating the greenhouse gas is simply good business for the oil and gas industry.“Producers will find it increasingly difficult to stay in business while visibly spewing methane into the air,” they wrote.Major oil companies including Shell, BP, and ExxonMobil have spoken out against the repeal of the existing rule or even voiced support for new emissions rules. “Shell has consistently urged the Trump Administration to directly regulate methane emissions from existing onshore oil and gas assets,” Shell U.S. President Gretchen Watkins said in a statement reported by The Hill. “The negative impacts of leaks and fugitive emissions have been widely acknowledged for years, so it’s frustrating and disappointing to see the Administration go in a different direction.”
Tank Full Of (Butane) - Summer Gasoline, Winter Gasoline, And Reid Vapor Pressure - If you’ve filled up the tank in your car, SUV, or pickup in the past few days, you probably bought your first batch of winter-blend gasoline since the spring. It’s unlikely that you noticed a difference — only a refining geek with a nose for this sort of thing would — but winter gasoline has a higher Reid Vapor Pressure than summer gasoline, and therefore evaporates more quickly and emits more fumes. There’s a logic to EPA’s mandated switchover from lower-RVP gasoline to higher-RVP gasoline each September, and their switch back to lower-RVP each April/May. For one thing, using different gasoline blends during the colder and warmer months helps ensure that your engine runs well year-round; for another, reducing gasoline vapor pressure in the summer reduces emissions that contribute to smog. Today, we discuss gasoline RVP, why it matters, and how refineries ramp it up and down. (A hint is in the blog’s title.) Like oxygen, electricity, and a good internet connection, we all tend to take gasoline for granted nowadays. Open gas cap, insert credit card, pick octane level — somewhere between 85 and 93, depending on the vehicle you drive and the region you live in — stick nozzle in the tank, and squeeze-and-lock the trigger. But there’s a lot more to the gasoline that we depend on than you might think, including the fact that gasoline is actually composed of a long list of hydrocarbons that refiners blend up to meet mandated specifications for octane, RVP, and sulfur (see Down Gasoline Alley for more on sulfur and the Tier 3 mandate). Like alchemists, refiners mix and match an assortment of ingredients, each with different properties and costs. Among other blendstocks (naphtha, isomerate, pyrolysis gasoline, raffinate), the blend pool notably includes:
- FCC gasoline, the primary product of a refinery’s fluid catalytic cracker (FCC) unit, which has octane and RVP levels similar to finished gasoline but is high in sulfur;
- Light, straight-run naphtha, which has low octane levels and is inexpensive but has higher RVP than the summer limitation;
- Alkylate, which is high in octane and low in RVP and sulfur — everything that refiners want — but is very pricey;
- Reformate, another relatively expensive gasoline blending stock; it is produced via catalytic reforming and has high octane, low sulfur, and low RVP. However, it also is high in aromatics, a quality that comes with some limitations of its own.
And then there’s normal butane, which is generally cheap, but has a particularly high RVP. As we’ll get to, that latter characteristic makes butane a problematic gasoline ingredient during the summer months, but from mid-September through mid-spring, when RVP limits are relaxed, butane’s low cost makes it a go-to gasoline blendstock (see Days of Wild for more on butane’s seasonality).
Oil and Gas Companies Indirectly Bailed Out by the Fed - A new report shows the U.S. government bought more than $350 million in bonds issued by oil and gas companies and induced investors to loan the industry tens of billions more at artificially low rates since the coronavirus pandemic began, Bloomberg reported. The Federal Reserve itself bought debt from 19 fossil fuel companies, including 12 that have since been downgraded by independent credit-rating agencies, according to the report, released Wednesday by Public Citizen, Friends of the Earth and Bailout Watch. Since the Federal Reserve began bailing out corporate debt markets in March, a total of 56 oil and gas companies have issued $99.3 billion in debt, including some to companies that have said they may have failed without the cash. By announcing it would buy corporate debts, the reports authors write, the Fed effectively reduced the risk to investors who might otherwise not have purchased the oil and gas companies' debt. "The Treasury and Fed have provided a massive safety net for the oil industry, whose business model was failing before the pandemic," Alan Zibel, research director of Public Citizen's Corporate Presidency Project, told Bloomberg. According to the report: “The bailouts engineered by Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell are just the latest example of how corporate-friendly Trump appointees have scrambled to help the fossil fuel industry. The dirty-energy sector has been a key source of support for Republicans as well as a consistent pipeline for Trump administration staffers."
U.S. oil refiner Marathon Petroleum cuts 12% of staff because of pandemic -Refiners and oil producers have been dismissing staff, slashing spending and reducing production to cope with weak prices and a global glut of fuel. U.S. gasoline futures are down 26% from a year ago and oil is trading down a third from where it began the year. Marathon will incur an up to $175 million charge to third quarter earnings for the 2,050 job cuts, it reported to the U.S. Securities and Exchange Commission. About 20% of the charge will be recouped from its publicly traded pipeline unit, the company said. The Findlay, Ohio, firm disclosed the workforce cuts after Reuters on Tuesday reported employees across the company had been notified of impending layoffs. The cuts includes staff at its Martinez, California, and Gallup, New Mexico refineries, which in July were designated to close. The shutdowns and job cuts will lower overall costs beginning next year, Marathon said in a statement. Employees of its retail gasoline business are not included in the 12% reduction. Marathon in August agreed to sell its Speedway unit to Japan's Seven & i Holdings Co Ltd 3382.T, a deal expected to close next year. Red ink and job cuts are expected across the oil industry as results start rolling out next month. U.S. refiners typically gear up for winter heating oil demand after summer driving season ends. This year, heating oil and gasoline consumption are both depressed. “The pandemic has resulted in near-record lows on diesel margins, the go-to product for refineries as we enter into the winter heating season,” said Andrew Lipow, president of consultancy Lipow Oil Associates. “The glut in refining capacity has forced these downstream companies into layoffs,” he said.
Shell to cut thousands of jobs as it shifts toward focus on renewable energy - The oil company Royal Dutch Shell has announced plans for significant job losses as it shifts its focus to more low-carbon alternatives. CEO Ben van Beurden announced in an interview on Wednesday that the company would remain dedicated to its promise to combat climate change by reducing carbon emissions. As a consequence of that promise to be carbon neutral, van Beurden said the company would be shedding between 7,000 and 9,000 jobs before 2022. "As a society, we need to keep global warming below two degrees Celsius, and ideally below 1.5 degrees Celsius. That means society needs a net-zero emissions energy system," van Beurden said. "In that context, a company like Shell has a choice. It can choose to produce oil and gas with the lowest possible emissions. Or it can say: 'If society wants to get to net-zero emissions and we really want to be an integral part of that society, then we need to get to net zero as well.'” Van Beurden noted that the company would need to make a "dramatic change" to become a carbon-neutral company by 2050. He said the company would be shifting away from oil to produce "predominantly low-carbon electricity" and "low-carbon biofuels." He noted that the decision will cause "painful" job losses. "This is an extremely tough process. It is very painful to know that you will end up saying goodbye to quite a few good people. I know I, and many others in Shell, will be saying goodbye to people we know well and really like and who have great loyalty to the company. But we are doing this because we have to, because it is the right thing to do for the future of the company," van Beurden said. "We do not have an exact figure because the details are still being worked out, and we have never had a target to reduce a particular number of jobs. But we can say that, because of the efficiencies we expect to gain, we will reduce between 7,000 and 9,000 jobs by the end of 2022. This includes around 1,500 people who have already agreed to take voluntary redundancy this year, but excludes any who may leave Shell because of divestments," he later added.
U.S. oil producers on pace for most bankruptcies since last oil downturn (Reuters) - Oasis Petroleum Inc and Lonestar Resources US Inc’s bankruptcy filings are the latest in a slew of restructurings that put oil-and-gas producers on track for their biggest year of bankruptcies since the 2016 shale downturn. Thirty-six producers with $51 billion in debt filed for bankruptcy protection in the first eight months of the year, according to the law firm Haynes and Boone. The coronavirus pandemic crushed fuel demand and left debt-laden producers without access to credit. The number of companies filing still lags 2016, when 70 companies filed for bankruptcy. However, those firms were generally smaller and left a total of $56 billion in debt. Oil and gas producer bankruptcies on track for most since 2016: Reuters Graphic. The United States grew to become the world’s largest oil producer at nearly 13 million barrels per day (bpd), led by shale companies. However, those companies, in order to maintain high levels of production, need to keep drilling new wells to offset the swift decline rates from each site. Many shale producers took on heavy debt to finance their operations. Despite the industry’s growth, investor returns have been weak for years, and share prices struggled even as the broader Standard & Poor’s 500 stock index set ever-higher records. “It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy before this year is over,” Haynes and Boone said in its bankruptcy report. Oasis, which operates in the Bakken formation of North Dakota and Permian in Texas, announced the news on Wednesday. Lonestar said it was going to file for bankruptcy on Thursday.
Why Oil Giants BP, Chevron, and ConocoPhillips Stocks Tumbled More Than 10% in September - Oil market volatility returned with a vengeance last month. Crude oil prices tumbled as rising coronavirus cases caused concerns that demand will remain under pressure. Brent, the global oil benchmark price, plunged 9.6% on the month, while WTI, the U.S. benchmark, slumped 5.6%. The slump in oil prices walloped oil stocks as most sold off sharply last month. Among the notable decliners were leading global producers BP (NYSE:BP), Chevron (NYSE:CVX), and ConocoPhillips (NYSE:COP), which have lots of exposure to Brent. All three oil giants declined by more than 10% in September, according to data provided by S&P Global Market Intelligence. As major oil producers, BP, Chevron, and ConocoPhillips live and die with oil prices. Because of that, when crude prices tumble, so does their cash flow. Thus, all three will likely report weaker third-quarter earnings following last month's decline, since Brent's sell-off pushed it down 0.5% for the quarter. On a positive note, WTI did end the third quarter up 2.4%, which will benefit the U.S. operations of these oil giants. This year's turbulence caused most oil producers to reevaluate their strategy. BP has basically thrown in the towel on the oil market. The company unveiled its revised long-term outlook on the energy market last month, with a chilling forecast that oil demand has peaked. That's leading the company to shift capital spending from oil to renewable energy. As a result, BP anticipates that its oil output will decline by 40% over the next decade, while its renewable energy production will grow 20-fold. ConocoPhillips and Chevron aren't going quite that far in their strategy shifts. ConocoPhillips provided investors with a glimpse of what's likely ahead. Despite last month's volatility, the oil market has stabilized a bit in recent months, giving oil companies more visibility into their future cash flows. Usually, that leads them to boost spending on capital projects. But ConocoPhillips chose to bring back its stock buyback program instead, aiming to repurchase $1 billion of its shares during the fourth quarter. That move suggests that the company is prioritizing returning cash to shareholders instead of investing in its oil business' growth. Meanwhile, Chevron has been tweaking its portfolio following the initial COVID-19 crash in crude oil prices. It tried to jump-start a consolidation wave in the sector earlier this summer by agreeing to acquire Noble Energy in an all-stock deal valuing the target at $13 billion. Meanwhile, EQT proposed to pay $750 million for 800,000 acres in the Marcellus and Utica shale as well as an interest in a pipeline company. That's well below the $3.4 billion Chevron paid for Atlas Energy and its position in the region a decade ago. This prospective swap suggests that the oil company wants to focus on bulking up its best assets while cutting its losses on others.
An update on Alberta's two PDH-PP plants and their appetite for propane. - In the past three years, two major commitments were made to construct propane dehydrogenation and polypropylene plants in Alberta to take advantage of the rising bounty and generally low cost of propane supplies in Western Canada. Two Calgary-based midstream companies, Inter Pipeline Ltd. and Pembina Pipeline, each started developing PDH-PP plants in Alberta’s Industrial Heartland area northeast of Edmonton. But then came COVID-19, which set back the timeline for one of the projects and put the other on ice. All this comes as Western Canada’s propane market is in greater flux than usual, and facing a tightening supply/demand balance as exports to Asia ramp up. Today, we provide a status check on the development of these two plants, and what the increase in demand might portend for propane balances in the next few years. The increased role of unconventional oil and gas plays in Western Canada in the past decade has resulted in substantial growth of NGL supplies, including propane — too much propane, it often seemed. To make fuller use of burgeoning propane supply, Alberta’s provincial government in December 2016 initiated a royalty incentive program to promote investment in projects that would upgrade propane into value-added products. Taking advantage of abundant low-cost propane supplies and the government’s royalty incentives, two projects eventually came forward: one by Inter Pipeline Ltd.’s (IPL) Heartland Petrochemical Complex (HPC) and the other by a joint venture of Pembina Pipeline and Kuwait Petroleum Corp. (KPC). Both plants rely on the process of propane de-hydrogenation (PDH) to create polypropylene (PP), a primary chemical building block for everyday products such as automotive parts, plastic containers, and reusable shopping bags. If you love inorganic chemistry, the basic steps behind this process are explained in Things Can Only Get Better.
Nord Stream 2 Nears Completion After Clearing Another Hurdle - Denmark cleared on Thursday the final hurdle to Nord Stream 2 potentially starting operations in Danish waters, while the U.S. continues its attempt to stop the Russia-led natural gas pipeline project. On Thursday, the Danish Energy Agency said it had granted Nord Stream 2 AG, the company behind the project, an operations permit for the Nord Stream 2 pipelines on the Danish continental shelf, on a number of conditions. “Commissioning can only take place when at least one of the pipelines has been tested, verified and when relevant conditions in the construction permit and the operations permit have been met,’’ the Danish agency said.Meanwhile, U.S. Secretary of State Mike Pompeo said an interview with a German daily last week that the U.S. was building a coalition aimed at preventing the completion of the Nord Stream 2 pipeline that will substantially increase the flow of Russian gas into Europe. “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 told German daily Bild.Germany, the endpoint of Nord Stream 2, has been looking at the economic benefits of the project, while the United States, including President Donald Trump, has been threatening sanctions on the project and even on Germany over its support for the project.The United States, several European countries including the Baltic states and Poland, as well as the European Union (EU), have expressed concern about Russia using gas sales and its gas monopoly Gazprom as a political tool. The United States views Nord Stream 2 as further undermining Europe’s energy security by giving Gazprom another pipeline to ship its natural gas to European markets. In July, the United States warned companies helping Russia to complete Nord Stream 2 that they should ‘get out now’ or face consequences, as the Trump administration steps up efforts to stop the construction of the controversial Russia-led pipeline in Europe. In recent weeks, German Chancellor Angela Merkel has come under pressure from some of her coalition partners to drop the German support for Nord Stream 2 after the poisoning of Russian opposition leader and Putin critic, Alexey Navalny.
Europe’s Oil Refineries Struggling to Cope With Diesel Glut The coronavirus is destroying the profitability of Europe’s oil refiners and the industry is hunkering down for a tough winter. Owners of plants in Finland, France and the Netherlands made announcements in recent weeks that point to the likely closure of facilities in those countries. While that would take out some surplus refining capacity, there’s a more pressing issue: the region’s refineries will operate about 25% below capacity this month, according to IHS Markit. With virus cases surging and diesel trading near its weakest in at least nine years, few are optimistic for a meaningful recovery. Diesel is under pressure from almost every angle. Refineries, responding to still-collapsed jet fuel demand, are making more of the road fuel instead. Another challenge is that gasoline markets are holding up as people avoid public transport by driving their cars to work. That puts pressure on the plants to continue processing crude even if it means churning out more diesel at a time when demand remains lackluster. “It’s very difficult for anyone to make money when diesel cracks are at this level,” said UBS Group AG analyst Henri Patricot, referring to the price gap between the fuel and crude oil in Europe. “We continue to see a demand recovery, but it has slowed.” Diesel now costs about $4 a barrel more than crude in Europe, after falling recently to the lowest in at least nine years. That’s particularly difficult for Europe’s refiners since the fuel represents almost half a typical plant’s output. Gasoline traded at just over $4 a barrel more than crude in Europe on Wednesday. That’s a big improvement on recent months, but still a very low level by historic standards. “We don’t see any scope for strong recovery in refinery utilization through next spring,” said Eleanor Budds, an analyst at IHS Markit. “Demand recovery will be hampered by restrictions on movement and very subdued jet demand.” While refiners can re-jig what they make depending on seasonal changes in demand, European producers would normally expect demand for heating oil, a similar product to diesel, to support margins in winter. The current weakness also coincides with maintenance season in the industry, when the idling of capacity should also offer some support.
Emergency declared at oil spill site on Russias Taymyr Peninsula --The authorities of Russia's Taymyr Peninsula declared an emergency situation as a result of an oil spill that occurred due to the depressurization of a temporary pipeline during oil pumping, the press service of the local authorities said on Wednesday. The prosecutor's office of the Krasnoyarsk Territory previously said that an inspection was launched after almost one tonne of crude oil got on the soil and into the Khatanga river. "By the decision of the commission for the prevention and elimination of emergencies and ensuring fire safety of the municipal district, the spill of crude oil in the territory of the Khatanga village was recognized as an emergency. The fuel was spilled while it was being pumped from Lenaneft-2060 tanker to an oil products warehouse. Municipal emergency regime ... has been introduced ... To take urgent measures to eliminate the emergency spill, a local level of emergency response has been established, its zone is determined by the territory of the spill," the statement said. On Thursday, a special commission will arrive in Khatanga to assess the damage.
Venezuela Sees Oil Revenue Fall By 99% As U.S. Sanctions Sting -Venezuela’s foreign currency revenues—almost all of which come from crude oil sales—have plunged by 99 percent since 2014, Nicolas Maduro said, blaming most of the losses on the “persecution and criminal blockade” of Venezuela’s oil exports.“In six years of persecution and criminal blockade against Venezuela, the country lost 99 percent of its foreign currency income,” Maduro said on Twitter, sharing a graph showing that Venezuela’s foreign currency income slumped from US$56.6 billion in 2013 to just US$477 million as of September 28, 2020. The decline of 99 percent was attributed in the graphic to the drop in oil prices in that period and the ‘blockade’ of Venezuela’s oil exports. Venezuela’s exports have significantly slumped since the U.S. imposed sanctions on its crude oil exports in early 2019, essentially prohibiting U.S. refiners from buying Venezuelan crude, which was a large part of the imports of crude for U.S. Gulf Coast refiners.U.S. sanctions have exacerbated the already dire state of the Venezuelan oil industry, which is suffering from years of mismanagement, corruption, lack of investment, and the inability of the financially weak state oil firm PDVSA to invest in new production or find customers willing to risk secondary U.S. sanctions if they purchase Venezuelan oil. Venezuela’s oil production and exports have been in freefall for several years, but the U.S. sanctions on its industry and exports, the crash in demand, and the COVID-19 pandemic further accelerated the decline.Venezuela’s oil industry was collapsing even before the oil price crash and the pandemic, due to the increasingly stricter sanctions in the U.S. maximum pressure campaign against Maduro’s regime and its sources of revenues. Oil income is pretty much the only hard currency that Maduro gets, so the U.S. is looking to stifle as much of Venezuela’s oil trade as possible. At the end of August, U.S. Special Representative for Venezuela Elliott Abrams told Reuters in an interview that the U.S. Administration is considering a tightening of the sanctions against Venezuela in the near future.
Mauritius still evaluating Oil Spill damage - Two months after a cargo loaded with fuel ran aground off Mauritius, the shores are still taking stock of the damage. The rich fishing grounds and sensitive marine habitats have been severly damaged by the oil. Conservationists are particularly concerned about the long-term ecological damage to the island's marine ecosystems. "There is visible pollution, and invisible pollution. Some of the oil doesn't float but dissolves in the sea. The fish eat it, the coral absorbs it, it goes into the ecosystems", environmental expert Sunil Dowarkasing said. The oil itself is known as VLSFO -- a fuel oil less viscous and lower in sulphur than conventional fuel oils. But this newer generation oil is poorly understood in terms of its environmental impact, said Ware. "They are quite new to us, compared to the heavy fuel oils that we mostly used to deal with... That is why we need to study this, and this will certainly help for future oil spills elsewhere." The tourism industry, crucial to the country's economy, has suffered a heavy blow, in what is the worst environmental disaster ever witnessed in the Indian Ocean archipelago. "This oil spill is the worst environmental disaster that Mauritius has ever faced. We are still assessing the damage to the mangroves and the coastal areas. Thousands of volunteers marshalled along the coast in the early days wearing rubber boots and gloves, scrubbing the shoreline clean and stringing together makeshift cordons to contain the oily tide. Since then the government has identified 26 affected sites around the coastline and commissioned the clean-up operation to French company Le Floch Depollution and Greek outfit Polyeco SA. "The work is progressing satisfactorily, but it is a very delicate clean-up operation, we must make sure that it is done in a methodical and systematic way", Environment Minister Kavydass Ramano said. The clean-up is divided into four phases, and some sites are already in the second or third stage. The ship eventually split in two and the bow and hull of the wreck were towed 15 kilometres (nine miles) offshore and sunk. The stern remains on the reef and the government expects to announce a contract to remove it within days, Ramano said.
Controversial Mauritius ship involved in Operation To Tow Broken Sri Lanka Oil Supertanker -- The Panama- flag oil supertanker that had an explosion off the coast of Sri Lanka earlier this month, the MT New Diamond, is being helped by a controversial support vessel that led the operation to deliberately sink a large, Japanese iron ore vessel Wakashio in the coastal waters of Mauritius last month. Satellite analysis by global maritime analytics firm, Windward has revealed that the Malta-flagged fire-ship, Boka Expedition, sailed from the scene of the controversial scuttling of the Wakashio on 24 August, an event that sparked national protests in Mauritius and outside its embassies around the world. Photos taken by the Mauritian Coastguard were shared but the location of the sinking was never disclosed. Within days, a second vessel sunk in Mauritian waters, the Sir Gaetan Duval with the loss of four crew on 31 August. Satellite analysis from Windward reveals that the Boka Expedition was also involved in the Search and Rescue operation there too. Five days later, the Boka Expedition then sailed straight to the MT New Diamond that was on fire for several days off the coast of Sri Lanka. The complex mission to save the MT New Diamond took almost a week and involved a dozen ships from several nations. The Panama-flagged oil supertanker was carrying 2 million barrels of crude oil from Kuwait to India when an onboard explosion 40 miles off the coast of Sri Lanka killed a crew member and put the entire Southeast coastline of the large Indian Ocean island at risk. SMIT Salvage has been involved in the salvage operation in Mauritius with the Wakashio since the start, and the same company is also engaged in the operation for the MT New Diamond that is now off the coast of India and unable to be towed into a port. The Malta-flagged Boka Expedition had been singled out by Greenpeace, who identified several international laws that may have broken with its role in the sinking of the Japanese oil spill ship the Wakashio.
Vietnam approves Exxon's $5 billion LNG-to-power project - The port city of Hai Phong in Vietnam has approved a liquefied natural gas (LNG) project for power generation, expected to be developed by U.S. supermajor ExxonMobil and to cost US$5.09 billion. The people’s committee of the city of Hai Phong approved the project which is expected start electricity generation in 2026 or 2027, Reuters reported on Friday, citing a statement from the Vietnamese city. The power plant is expected to have an initial capacity of 2.25 gigawatts (GW) when it becomes operational. Capacity will be doubled to 4.5 GW by 2029-2030, the city of Hai Phong said. In June this year, Vietnam’s Prime Minister Nguyen Xuan Phuc told Irtiza Sayyed, President of ExxonMobil LNG Market Development, that Vietnam welcomes the U.S. supermajor’s plans to invest in the Southeast Asian country. Exxon is exploring the possibility of investing in new projects to develop LNG-to-power plants in Vietnam, the local government said at the time. The plans included a 4-GW LNG-to-power plant in Hai Phong, which could start generating power between 2025 and 2030, and a 3-GW gas-fired power complex in the Mekong Delta province of Long An. While LNG-to-power projects led by Exxon in Vietnam could become reality only in the latter half of this decade, the U.S. oil giant is doubling down in the more immediate future on its operations in Guyana—one of its key focus areas. Earlier this week, Exxon made the final investment decision on the Payara offshore oilfield in Guyana.. Payara is expected to yield up to 220,000 bpd of crude oil when commercial production begins in 2024. This would be the third offshore development project of the supermajor in Guyana, which rose to fame thanks to a string of discoveries in the Stabroek block made by Exxon and its partner Hess Corp. So far, the discovered recoverable resources in the block have been estimated at more than 8 billion barrels of oil equivalent.
Chevron resumes arbitration in Thai gas dispute (Reuters) - U.S. energy major Chevron Corp has resumed arbitration proceedings with Thailand to try to resolve a dispute over who should pay for removing offshore assets in the country’s Erawan gas field, the company told Reuters on Friday. The move comes a year after the company suspended the legal process to allow more time for talks with Thailand’s energy ministry, ahead of the end of its concession in April 2022. “For the last 12 months we have been seeking a solution on this issue ... in order to reach agreement that protects our rights as an investor,” a company spokesman told Reuters. “With no such solution likely in the near term, we are regretfully compelled to reinstate arbitration.” Thailand’s energy ministry was not immediately available for comment, but has said it would be ready to enter arbitration if needed. The dispute resulted from a retroactive Thai law in 2016 requiring gas field operators to pay the costs of decommissioning assets they have installed, including those they will transfer free of charge to a next operator. Last year, Thailand asked Chevron to pay the full decommissioning costs of around $2 billion for assets in the Erawan gas field, including those it will hand over to PTT Exploration and Production Pcl, a unit of the state-owned PTT Pcl. Chevron argues that, under the terms of its initial contracts from 1971, it is only liable for infrastructure that is no longer deemed usable and the transferred assets are the responsibility of the new operator.
Saudi Aramco ships first cargo from Jizan refinery, heading to Singapore: Kpler - — Saudi Aramco is sending its first cargo from its new Jizan refinery on the kingdom's west coast to Singapore, the clearest indicator that the 400,000 b/d facility is in advanced phases of startup. Aramco chartered the UACC Eagle to send 475,000 barrels of gasoil to Singapore from Jizan, according to data analytics firm Kpler. Aramco CEO Amin Nasser said in August that first processing at Jizan was expected to begin by the first quarter of 2021. Aramco declined to comment. The UACC Eagle was heading for the Bab el-Mandeb strait, a sea route chokepoint between the Horn of Africa and the Middle East that connects the Red Sea to the Gulf of Aden and Arabian Sea. Kpler said the destination is Singapore. Saudi Arabia sent two shipments of crude to Jizan last year in preparation for startup, with 2.03 million barrels arriving in October and another 2 million barrels in November, according to Kpler data. The newly constructed 400,000 b/d refinery, also spelled Jazan, will start with crude runs of 200,000 b/d before ramping up to 400,000 b/d, Nasser said in August. It had previously been expected to be commissioned at the end of 2019 and be ready for full operations in the second half of 2020. The refinery, in the far south of Saudi Arabia on the Red Sea about 60 km from the Yemeni border, has been targeted in several missile attacks by Iran-backed Houthi rebels in Yemen, though Saudi officials say they have intercepted each attempted strike. The Bab el-Mandeb is 18 miles wide at its narrowest point, limiting tanker traffic to two 2-mile-wide channels for inbound and outbound shipments, according to the US Energy Information Administration. It estimated 6.2 million b/d of crude oil, condensate and refined petroleum products flowed through the strait toward Europe, the US and Asia in 2018, an increase from 5.1 million b/d in 2014.
Oil steady as surging virus cases cloud demand outlook - Oil prices were largely steady on Monday but on track for their first monthly fall since April as rising coronavirus cases continued to spur concerns about demand. Brent crude was unchanged at $41.92 per barrel. West Texas Intermediate was at $40.13 a barrel, down 12 cents or 0.3%. "The rise in daily infections has accelerated and the total number is now very close to 33 million. The most impacted countries are the populous ones," PVM analyst Tamas Varga said. "The speed with which the virus is spreading is the main concern for both health officials and financial investors." Russian Energy Minister Alexander Novak said on Monday that the global oil market has been stable for the past few months and the demand-supply balance restored, but warned of the risks of a second wave of COVID-19 cases. Meanwhile one of the heaviest clashes between Armenia and Azerbaijan since 2016 broke out over the weekend, reigniting concern about stability in the South Caucasus, a corridor for pipelines carrying oil and gas to world markets. Despite efforts by the Organization of the Petroleum Exporting Countries and their allies to limit output, more crude is being exported from OPEC producers Iran and Libya. OPEC Secretary General Mohammad Barkindo said on Sunday that commercial oil inventories in OECD countries are expected to stand only slightly above the five-year average in the first quarter of 2021, before falling below that level for the rest of the year. A factor that may offer some support to the market is the prospect of industrial action in Norway, where a workers' strike that may take place on Sept. 30 is threatening to cut its production by 900,000 barrels per day, the Norwegian Oil and Gas Association (NOG) said on Friday.
Oil up 1% on economic hope; virus fears check price gains (Reuters) - Oil prices rose 1% on Monday as global equities rallied on hopes for another U.S. stimulus package, but rising virus cases fed concerns about fuel demand and kept oil futures from moving higher. Brent crude LCOc1 settled at $42.43 a barrel, up 51 cents, or 1.22%. U.S. West Texas Intermediate CLc1 settled at $40.60 a barrel, rising 35 cents, or 0.87%. “In my opinion, the most likely event capable of moving the crude oil market to the next level would be the passing of a coronavirus stimulus package,” said Bob Yawger, director of energy futures at Mizuho. Oil followed Wall Street higher as American political talks continued for another COVID-19 relief bill after U.S. House Speaker Nancy Pelosi on Sunday said she thought a deal could be reached with the White House. A weaker U.S. dollar, which moves inversely with oil prices, also helped crude futures. Still, the global health crisis, which has slashed global fuel consumption, kept oil prices from pushing much higher. “The speed with which the virus is spreading is the main concern for both health officials and financial investors,”
Oil falls as demand worries counter U.S. stimulus hopes - Oil prices fell on Tuesday, paring gains from the previous session, as persistent demand concerns due to the coronavirus pandemic outweighed hopes for a new U.S. stimulus package. More than 1 million people have died of Covid-19 as of Tuesday, a Reuters tally showed, with fatalities and infections surging in several countries. U.S. West Texas Intermediate crude futures dropped 21 cents, or 0.52%, to $40.39. The more-active Brent crude futures for December fell 19 cents, or 0.4%, to $42.68 a barrel. The November contract, which expires on Wednesday, fell 13 cents to $42.30 per barrel. Commodities markets crept up earlier in the day as Democratic lawmakers unveiled a new $2.2 trillion coronavirus relief bill, which U.S. House of Representatives Speaker Nancy Pelosi said was a compromise measure. "If it happens, the U.S. stimulus checks will go a long way to shoring up U.S. oil demand at a most critical juncture and could move oil prices back into a pre-September frame of mind," Brent and WTI in August hit their highest levels since early March on optimism over rising fuel demand and major oil producers' strong compliance with promised supply cuts. Since then, though, they have dropped about $3 on demand worries. "The rally (overnight) has quickly run out of steam in Asia," "The price action suggests that although the speculative community is still short ... the underlying bearish drivers are still ascendant," he said, pointing to reduced consumption and a global oversupply. Investors will be looking for signs of U.S. demand growth in data from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday. Five analysts polled by Reuters on average estimate U.S. crude oil inventories rose by 1.4 million barrels in the week to September 25. They expect gasoline stockpiles fell by 1.6 million barrels and distillate inventories, which include diesel and jet fuel, fell by 800,000 barrels. Traders were also keeping an eye on clashes between Armenia and Azerbaijan over the Nagorno-Karabakh region. If the conflict escalates it could affect oil and gas exports from Azerbaijan, analysts said. Meanwhile, data from Japan's Ministry of Finance showed that the country's imports of crude oil in August fell more than 25% from a year earlier.
Oil drops 3% on weak demand outlook and higher OPEC supplies (Reuters) - Oil prices fell over 3% on Tuesday to their lowest in two weeks on worries about the outlook for fuel demand as Europe and the United States grappled with a surge in new coronavirus infections. Investors in stocks and commodities also remained cautious ahead of the first U.S. presidential debate between Democrat Joe Biden and Republican Donald Trump later on Tuesday. .DJI.SPX “Today’s lower trade generally followed declines in the equities,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois. On its second to last day as the front-month, Brent LCOc1 futures for November delivery fell $1.40, or 3.3%, to settle at $41.03 a barrel, while the more active Brent contract for December LCOc2 fell 3.1% to settle at $41.56. U.S. West Texas Intermediate (WTI) crude CLc1 fell $1.31, or 3.2%, to settle at $39.29 per barrel. Those price declines came ahead of the release of U.S. oil inventory data from the American Petroleum Institute (API) on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday that is expected to show crude stockpiles increased 1.6 million barrels last week. [API/S] [EIA/S] More than a million people worldwide have died from COVID-19, according to a Reuters tally, a bleak milestone in a pandemic that has devastated the global economy and demand for fuel.
WTI Holds Stimulus-Hope Gains After Surprise Crude Draw -- Oil prices rebounded overnight as stocks rallied on fiscal stimulus hope and the API-reported inventory data sank in. “Traders see oil demand as fragile,” said Paola Rodriguez-Masiu, senior oil-market analyst at Rystad Energy. “We may see some production needing to be sent to inventories in 2020’s last quarter.” DOE
- Crude -1.98mm (+1.9mm exp)
- Cushing +1.785mm
- Gasoline +683k (-1.3mm exp)
- Distillates -3.184mm (-1.7mm exp)
A surprisingly large crude draw combined with a big distillates draw... Source: Bloomberg Most of the storm-impacted noise has now left the data. WTI hovered around $39.50 ahead of the official data and maintained those levels immediately after... Finally, we note that Bloomberg Intelligence Senior Energy analyst Vince Piazza warns that "daily U.S. crude output has crept close to 11 million barrels a day from the May low of 10 million, adding supply to a market whose downstream demand remains depressed by the effects of Covid-19. Well completions could drive production higher, and that would be compounded by any move of WTI into the high $40s. Coronavirus outbreaks in Europe and elsewhere add to the pressure on demand, and we believe adjusted storage remains high and limits long-term rally prospects."
Oil prices settle higher as U.S. supplies fall a third week - U.S. oil futures settled higher Wednesday after U.S. government data showed a third consecutive weekly decline in domestic crude supplies. Prices, however, still suffered their first monthly decline since April as concerns persist about the global economic outlook and its impact on demand. The Energy Information Administration reported Wednesday that U.S. crude inventories fell for a third straight week, down by 2 million barrels for the week ended Sept. 25. That compared with an average climb of 1.9 million barrels expected by analysts polled by S&P Global Platts, while the American Petroleum Institute on Tuesday had reported a fall of 831,000 barrels. The data revealed an unexpected draw in crude oil, but traders should “definitely take note of the large build” at the trading hub in Cushing, Okla., Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch. The EIA data showed crude stocks at the Cushing, Okla., storage hub rose by 1.8 million barrels for the week. Overall, the risk for oil prices is to the downside, with another wave of the coronavirus impacting demand as the market goes through the fourth quarter, said Zahir. “Couple that with additional supply that has come back to the market from Libya,” following the recent lift of a months-long blockade on crude exports.
Oil drops 3% on weak demand outlook and higher OPEC supplies (Reuters) - Oil prices fell 3% on Thursday as rising coronavirus cases around the world dampened the demand outlook, and a rise in OPEC output last month also pressured prices. Brent crude LCOc1 futures fell $1.37, or 3.2%, to settle at $40.93 a barrel after dropping to a low of $39.92. U.S. West Texas Intermediate (WTI) crude CLc1 futures ended down $1.50, or 3.7%, at $38.72 after sliding more than 6% to a session low of $37.61. “It has become evident that the virus has not been contained. Infection rates are going up, the global death toll has surpassed the 1 million mark and the world is becoming a gloomy place once again,” said PVM Oil analyst Tamas Varga. In the United States alone the pandemic has infected more than 7.2 million and killed more than 206,000. Europe’s worst COVID-19 hot spot, Madrid, will go into lockdown in coming days and Moscow’s mayor ordered employers to send at least 30% of their staff home, as several European countries reported records in new infections. Standard Chartered analysts said they now expect global demand to fall 9.03 million bpd in 2020 and recover by 5.57 million bpd in 2021, leaving the 2021 average slightly below the 2016 average. Increasing oil supply from the Organization of the Petroleum Exporting Countries (OPEC) also weighed on the market, with output in September up 160,000 barrels per day (bpd) from August, a Reuters survey found. The rise was largely on the back of higher supplies from Libya and Iran, both exempt from an oil supply pact between OPEC and allies led by Russia, a grouping known as OPEC+.
Oil settles at lowest price in more than 2 weeks – Oil futures were sharply lower Thursday, with prices logging their lowest settlement since mid-September, as worries about rising cases of COVID-19 worldwide fed expectations for a slowdown in energy demand. West Texas Intermediate crude for November delivery dropped $1.50, or 3.7%, to settle at $38.72 a barrel on the New York Mercantile Exchange, following a 2.4% gain on Wednesday. Prices for the U.S. benchmark, based on the front-month contracts, saw monthly fall of 5.6%, but ended 2.4% higher for the quarter, according to Dow Jones Market Data. Oil prices in September suffered their first monthly decline since April. December Brent crude shed $1.37, or 3.2%, at $40.93 a barrel after trading as low as $39.92 on the ICE Future Europe exchange. Prices for both WTI and Brent marked the lowest front-month settlements since Sept. 15 reported MarketWatch. “The oil market can’t shake its demand fear funk even though U.S. oil supply continues to tighten,” said Phil Flynn, senior market analyst at The Price Futures Group. The Energy Information Administration on Wednesday reported an unexpected decline of 2 million barrels in U.S. crude supply. That marked three weekly declines in a row. “Lingering demand concerns makes the market less concerned about the trend of tightening supply,
Oil loses 4% after Trump gets coronavirus and economies wobble (Reuters) - Oil prices fell more than 4% on Friday, and posted a second weekly decline after U.S. President Donald Trump tested positive for COVID-19, roiling risky assets, and as rising global crude output threatened to overwhelm the market’s weak recovery. Benchmark Brent and U.S. crude each posted a second straight week of losses. The uncertainty surrounding the U.S. president’s health added to a series of jitters, including a lackluster U.S. unemployment report and increased supply from major world oil producers. “It’s been a rough week, and now the president’s diagnosis sends a shudder through markets,” . “The COVID-19 pandemic has weighed more on the oil market than any other asset class.” This week marked the grim milestone of 1 million deaths and several countries are tightening restrictions and contemplating lockdowns as infections accelerate. Brent crude was down $1.66, or 4.1%, at $39.27 a barrel. Brent was down 7% on the week. U.S. oil settled down $1.67, or 4.3% at $37.05 a barrel, an 8% drop on the week. Both benchmarks were down for a second consecutive week. The U.S. labor market recovery slowed in September, as non-farm payrolls increased by 661,000 jobs last month after advancing 1.49 million in August, the U.S. Labor Department said. Trump’s announcement that he and First Lady Melania Trump had tested positive for COVID-19 prompted sell-offs in equity markets worldwide. Increasing supply also weighed on the market. U.S. energy firms added oil and natural gas rigs in the latest week, according to energy services firm Baker Hughes Co, a signal of more supply to come. The increase was the third in a row, and came as price increases in recent months prompted some producers to start drilling again. Crude supplies from the Organization of the Petroleum Exporting Countries (OPEC) rose in September by 160,000 barrels per day (bpd) from a month earlier, a Reuters survey showed.
Oil sells off after Trump's coronavirus diagnosis, sending U.S. prices down 8% for the week - Oil prices were hit Friday by news that President Donald Trump said he contracted coronavirus, adding to the industry’s concerns about rising cases of the disease worldwide which may dent demand for the commodity. The news that Trump and First Lady Melania Trump tested positive for Covid 19 “creates a new round of market uncertainty and reinforcing fears of a second wave of the virus, which will harm the economy and projected energy demand,” “Broader implications of the diagnose for energy, not only for the short term but for the long-term, cannot be understated. “ West Texas Intermediate crude for November delivery tumbled $1.67, or 4.3%, to settle at $37.05 a barrel on the New York Mercantile Exchange, the lowest finish since Sept. 8, according to Dow Jones Market Data. December Brent crude futures slid 4.1%, or $1.66, to $39.27 a barrel on ICE Futures Europe, settling at the lowest front-month contract price since June 12. Based on the front-month contracts, WTI futures lost about 8% and Brent futures declined by 7.4% for the week. Oil prices had logged their lowest settlement since mid-September on Thursday, driven by fears that COVID-19 cases will drive demand lower, even as U.S. supply tightens up. The Energy Information Administration on Wednesday reported a surprise fall of 2 million barrels in U.S. crude supply, the third straight weekly decline. Still, data from Baker Hughes Friday showed the number of active U.S. rigs drilling for oil rose by 6 to 189 this week, marking as second straight weekly rise and implying an upcoming rise in output. The crude market was already breaking down “before the announcement of the president’s COVID diagnosis,” . “Fears around demand growth through the 4th quarter have undermined market sentiment.” Investors in oil markets have been keeping close watch on the disease’s expansion, which has worsened in parts of Europe, because it has a direct effect on the commodity if economies begin to slow down. Among other petroleum products, November gasoline RBX20, -0.40% lost 2.5% to $1.1235 a gallon, with prices ending 5.6% lower for the week, and November heating oil HOX20, -0.09% declined by 3.6% to $1.085 a gallon, for a weekly loss of 4.3%.
Oil prices likely to continue to struggle in the fourth quarter as demand lags - Oil prices are expected to rise just slightly in the final quarter of the year, held back from further gains by a deep chill in global travel and a still healing economy. Analysts forecast the prices of Brent and West Texas Intermediate should rise to the low to mid-$40s per barrel, but they also see risks tilted toward another drop in oil prices. "If anything, they're vulnerable to falling into the low $30s. The oil market is taking Covid the hardest of all of the asset classes out there," . "Demand is just not coming back, especially for jet fuel." Oil prices have clawed back from a crushing decline earlier this year, as the global economy shut down. Oil futures prices were even temporarily negative, as the market reacted to huge oversupply and a big drop in global demand. WTI futures fell below $40 this week and settled at $38.71 Thursday, falling 3.9% amid worries about the coronavirus and reports of a rise in OPEC output. "It looks really bleak right now. This was a bust for the ages," "The demand just isn't picking up." Bank of America expects oil prices to remain range bound in the mid $40s to year end. "In terms of downside risks, a big second Covid-19 wave was always going to rank first, but a warm winter now ranks second given the persistent surplus in distillate fuels," Blanch expects little price movement even though he expects the oil market could move into a 4.9 million barrel a day deficit, due to OPEC cuts if demand does rise. "Yet diesel and jet fuel/kerosene make up by far the largest petroleum product group in the oil market," notes Blanch. He said that means crude oil prices cannot gain real traction until distillate demand, including jet fuel, recovers to a more normal level. The oil industry has been cutting back on production and spending on further development. Royal Dutch Shell, for instance, is looking to slash up to 40% of the cost of producing oil and gas in an effort to preserve cash so it can overhaul its operations and focus more on renewables and power, according to Reuters. The industry is also debating how much of the Covid-related cutbacks could be permanent. A recent report from BP supported a longer-term view that fossil fuel demand may have already hit its limit and may not be likely to fully recover from the impact of the virus. The Organization of Petroleum Exporting Countries (OPEC) recently cut back its near-term demand outlook, and now expects demand to average 90.2 million barrels a day in 2020, down 400,000 barrels a day from its last forecast and a decrease of 9.5 million barrels a day from a year ago. "There are still these serious headwinds for oil in terms of the macro outlook," "OPEC is very focused on compliance. It's just a question to me of how much more can you get out of these producers in terms of compliance."
Saudi Arabia’s Economy Hit Hard By The Oil Price Crash - Saudi Arabia’s economy shrank by 7 percent, with the unemployment rate hitting a record high in the second quarter as the combined effect of the oil price crash and the coronavirus pandemic hit the world’s largest oil exporter hard. Saudi Arabia’s gross domestic product (GDP) slumped by 7.0 percent year over year in Q2, the Kingdom’s General Authority for Statistics said on Wednesday. The oil sector contracted by 5.3 percent, while the non-oil sector shrank by 8.2 percent due to the restrictions and lockdowns to curb the pandemic. In Q2, the value of exports of goods and services plunged by 55.8 percent from a year earlier, mainly due to a 61.8-percent plunge in the value of oil exports, the statistics authority said. Meanwhile, the Saudi unemployment rate increased to 15.4 percent in the second quarter of 2020, a record high and 3.1 percentage points higher than in the same period of last year. Among the unemployed Saudis, 63.1 percent belonged to the age group of 20-29 years, the General Authority for Statistics said. The collapse in oil prices—to which Saudi Arabia itself contributed when it flooded the market with oil during the worst demand crash in April—has forced the Kingdom to take some very unpopular measures such as tripling the value-added tax (VAT), reducing payouts to poorer households, and discontinuing cost-of-living allowances for state workers. Saudi Arabia’s economic outlook for this year remains uncertain amid the pandemic-driven economic slowdown and the collapse in oil prices that led to the Kingdom slashing its oil production as part of the new OPEC+ pact, Ahmed al-Kholifey, governor of the Saudi Arabian Monetary Authority (SAMA), said earlier in September.
Difficult days await Saudi citizens – Middle East Monitor -Deflation, increased unemployment, expanding poverty rates, a growing deficit in the public budget, a significant decline in general revenues, foreign exchange reserves and public reserves, stagnation in the markets, paralysis in vital activities, expatriate workers fleeing, a sharp decline in the profits of banks and major companies and salaries being paid late – these are some of the most significant recent indicators of the state of the Saudi economy.These factors also confirm that worse may be coming for the kingdom and that a financial and economic crisis is imminent. This crisis will directly affect the living conditions of citizens who may find themselves facing a difficult reality.Some of Saudi’s most critical tribulations are the increase in the cost of living and the rise in the prices of basic commodities, including gasoline and diesel, in a country that is the largest oil producer in the world. Moreover, the cost of water, electricity, public transport and telephone bills have magnified, while taxes have risen, especially VAT. Perhaps imposing new taxes previously unknown to the kingdom, such as income tax, may follow, as well as other austerity measures.Saudi Arabia may need to take other steps including the government’s acceleration of the privatisation policy, such as the sales of companies and vital facilities to the private sector and foreign investors, especially healthcare and education – including schools, hospitals and pharmacies.It may also need to sell all flour mills, desalination companies, electricity production and 27 airports, while reducing spending, expediting the pace of external and internal borrowing, and therefore increasing public debt, while continuing to withdraw from cash reserves deposited abroad. Saudi may also postpone the implementation of many major investment projects that aid the economy, create new jobs and augment the rate of economic growth.The latest indicators issued on Wednesday by the kingdom signal a jump in the unemployment rate among Saudis, as the rate increased during the second quarter of this year to 15.4 per cent, compared to 11.8 per cent during the first quarter of the year.It is noteworthy that the rise in the unemployment rate occurred despite around 2.5 million expatriate workers leaving the kingdom since 2017, and there are 1.2 million expatriate workers expected to leave the kingdom during the current year, due to the outbreak of the coronavirus. Major companies have also stopped paying salaries, while private sector companies are lowering them, while continuing to implement the Saudisation policy of replacing foreign workers with national workers, as well as localising many economic sectors. This growth in unemployment rates is occurring in Saudi Arabia, one of the richest Arab countries and the largest oil producer in the world. It may disturb the calculations of the decision-maker who had planned to reduce the unemployment rate among Saudis to only seven per cent, according to the Saudi Vision 2030, and to about 10.6 per cent for the year 2020, according to the expectations of the Ministry of Economy.
Kuwait calls for end to Israeli occupation of Palestine - The Kuwaiti Prime Minister reaffirmed his country’s principled and firm position in supporting the choices of the Palestinian people to obtain their legitimate rights, Anadolu Agency reports. “The Palestinian cause still occupies a central historical and pivotal position in Arab and Islamic worlds,” Sabah Khaled Al-Hamad Al-Sabah told the 75th session of the UN General Assembly via video link. Al-Sabah stressed the importance of continuing efforts to relaunch negotiations to reach a just and comprehensive peace in accordance with the Arab Peace Initiative. He called for an end to the Israeli occupation and the establishment of an independent Palestinian state with East Jerusalem as its capital. READ: The UAE’s ‘Hope Probe’ offers no hope to the Palestinians Al-Sabah also reasserted Kuwait’s position that the political solution is the only solution to the ongoing crisis in Yemen. He called on all parties to agree to the proposals put forward by Martin Griffiths, the UN’s special envoy for Yemen. The Kuwaiti prime minister also urged all parties to the Libyan conflict to exercise restraint and allow peaceful solutions based on dialogue.
Rocket Attacks On Baghdad's Green Zone Stepped Up Amid US 'Warning' It'll Shutter Embassy -Rumors seemed to fly all day Sunday on Mideast social media channels based on unnamed US sources that a major attack on the US Embassy in Baghdad's Green Zone was imminent.This at the same time it's being widely reported that the State Department is actually considering shuttering the embassy's operations altogether, angry at the Iraqi government's inability to reign in the Shia paramilitary groups likely responsible for repeat mortar and missile attacks on the area. And now Monday more Katyusha rockets have been launched targeting the embassy, though they are being reported to have landed somewhere in the Green Zone off target.This after the prior day The Wall Street Journal reported the following: The Trump administration has warned Iraq it is preparing to shut down its embassy in Baghdad unless the Iraqi government stops a spate of rocket attacks by Shiite militias against U.S. interests, Iraqi and U.S. officials said Sunday, in a fresh crisis in relations between the two allies. Secretary of State Mike Pompeo delivered the warning in recent calls to Iraqi President Barham Salih and Iraqi Prime Minister Mustafa al-Kadhimi, the officials said.We doubt the majority of Iraqis will miss the American presence, given in recent years anti-American demonstrations have grown, demanding the end of US troop presence. Given the US "warning" to Baghdad, it's now much more likely the rocket attacks and rumors of a Benghazi style ground assault upon the embassy complex will grow. The pro-Iranian militias, seeing the Americans are "on their way out" will only attempt to hasten the swift exit.
Yemens FM blames Houthis for looming Safer oil tanker disaster - Yemen’s Foreign Minister Mohammed Al-Hadhrami blamed the Houthi militia for the Safer oil tanker’s looming disaster as the militia continued to block the United Nation’s help to access the damage. Al-Hadhrami stressed the importance of pressuring the Houthis to allow technicians from the international organization to access the tanker during a meeting with senior British diplomats on Thursday, state news agency Saba New reported. Meanwhile, Saudi Arabia warned the UN Security Council that an “oil spot” has been sighted in a shipping lane 50 km west of abandoned and decaying Safer oil tanker off the coast of Yemen. Experts fear it could spill 1.1 million barrels of crude into the Red Sea. The tanker has been moored near Ras Issa oil terminal for more than five years. The UN previously warned that it could leak four times as much oil as was spilled during the 1989 Exxon Valdez disaster off the coast of Alaska. UN Secretary-General Antonio Guterres and the Security Council have repeatedly called on Houthi insurgents in Yemen to grant access the tanker for a technical assessment and emergency repairs. UN humanitarian chief Mark Lowcock said last week that a new UN proposal to assess and carry out initial repairs on the Safer oil tanker was being discussed with the Houthis. “We hope the new proposal will be quickly approved so the work can start,” he said. Meanwhile President Abed Rabbo Mansour Hadi on Thursday urged Houthis to stop impeding the flow of urgently needed humanitarian aid following a warning from the UN humanitarian chief last week that “the specter of famine” has returned to the conflict-torn country. His plea came in a pre-recorded speech to the UN General Assembly’s ministerial meeting being held virtually because of the COVID-19 pandemic. “We are trying to save our country and establish a just and lasting peace,” Hadi said, blaming Iran for meddling in his nation. “The objective is to stop the bloodletting in Yemen,” he said. Lowcock told the UN Security Council last week that famine in Yemen, the Arab world’s poorest country, was averted two years ago because donors swiftly met 90 percent of the UN’s funding requirements. But the UN’s latest figures show that the current $3.4 billion appeal is less than 38 percent funded.
Armenia Stands ‘Ready’ To Trigger Defense Pact With Russia As Azerbaijan Fighting Intensifies - Armenia could trigger its collective defense pact with Russia, the latter which also has a sprawling military base at Gyumri in the northwest part of the country, but on Monday the Armenian Ambassador to Moscow, Vardan Toganyan, has said the escalation of fighting with Azerbaijan has not reached that point yet. Russia's TASS, however, has underscored that this remains a distinct possibility at a moment Armenia has reported at least 31 of its troops killed in the contested Nagorno-Karabakh border region, which it says its forces are protecting from Azerbaijan's shelling and aggression: According to him, Yerevan and Moscow continue to boost defense cooperation. "We believe that should the need arise, we will request Russia [for additional military assistance]," the envoy pointed out. "As of today, we don’t think that we need additional troops or other forces," he added. "However, we do believe that Russia has a major role in the Caucasus and is capable of using political methods to put an end to bloodshed," Toganyan emphasized.Putin held a phone call with Armenian Prime Minister Nikol Pashinyan over the situation which began this weekend in the historically restive autonomous region which though claimed by Azerbaijan (and internationally recognized as such), declared independence in 1991 as an Armenian ethnic enclave. President Trump also weighed in, calling for an immediate halt to fighting and deescalation of tensions. Congressional leaders have also condemned the violence.
Deadly Armenia-Azerbaijan clashes unlikely to cause an oil spike, analyst says - - Deadly clashes between Armenia and Azerbaijan are unlikely to result in major disruptions to energy production and supplies, analysts say, despite the region being a critical corridor for pipelines transporting oil and gas to the global markets. "There is not really much anticipation that this will boil over into something more serious for oil and commodity markets," "If the geopolitical premium is not already in the price, I don't think we're going to see much reaction here on in," Bell added, despite a worry that recent clashes could impact production or pipeline facilities, which have been subject to illegal taps, attack and sabotage during periods of heightened tension in the past. The clashes between the two former Soviet republics in the South Caucasus are the latest flare-up of a long-running conflict over Nagorno-Karabakh, a breakaway region of Azerbaijan run by ethnic Armenians. At the weekend, Armenia said Azerbaijan had carried out an air and artillery attack on Nagorno-Karabakh, but Azerbaijan said it had responded to Armenian shelling, according to NBC News, which has not been able to independently confirm the number of injuries or fatalities. Azerbaijan is the 24th largest crude oil producer in the world and a significant producer of natural gas, which both account for more than 90% of Azerbaijan's exports. Its pipelines make it a strategic gateway to oil and gas in the Caspian and a growing source of energy security for Europe. Azerbaijan has three crude oil export pipelines. The largest is the 1,768-km-long Baku-Tbilisi-Ceyhan (BTC) pipeline, which transports crude and condensates through Azerbaijan, Georgia and Turkey. It has two main gas export pipelines, including the 693 km South Caucasus Pipeline (SCP) that transports gas from the Shah Deniz field through Georgia to Turkey parallel to the BTC crude oil pipeline, according to the IEA. Even so, Bell says the risk of further military action might not be enough to prompt a commodity price spike. "I think oil markets have become very attuned and very good at pricing in what is an actual disruption to output that would prompt prices going higher," he said, suggesting that even a brief interruption to output or disruption to a pipeline would easily be recovered given the vast amount of spare crude and gas production capacity elsewhere around the world.
Armenian-Azerbaijani War Rages In South Caucasus -- On September 27, a new regional war in South Caucasus arose from the Armenian-Azerbaijani conflict over the contested Nagorno-Karabakh region. Pro-Armenian forces captured the region in the early 90s triggering an armed conflict between Armenia and Azerbaijan. Further development of the hostilities and the expected offensive by pro-Azerbajian forces were stopped by a Russian intervention in May of 1994. As of September 2020, the Nagorno-Karabakh region and nearby areas are still under the control of Armenian forces, de-facto making it an unrecognized Armenian state – the Republic of Artsakh (more widely known as the Nagorno-Karabakh Republic). The 2018 political crisis in Armenia the led to a seizure of power in the country by de-facto pro-Western forces led by current Prime Minister Nikol Pashinyan which did not strengthen Armenian positions over the territorial dispute. The double standard policy of the Armenian government, which was de-facto conducting anti-Russian actions but keeping public rhetoric pro-Russian, also played its own role. For years, Russia has been the only guarantor of Armenian statehood and the only force capable to rescue it in the event of a full-scale Azerbaijani-Turkish attack. Nonetheless, the Armenian leadership did pretty well in undermining its strategic partnership with its neighbor. On the other hand, the political and economic situation in Azerbaijan was more stable. Baku also was able to secure good working relations with Russia. Together with the developing strategic partnership with Turkey, a natural historical ally of the country, and the strengthening of Turkish positions in the Greater Middle East, led to an expected attempt by Azerbaijan to restore control over the contested territories. The Azerbaijani advance started on in the morning of September 27 and as of September 28, the Azerbaijani military said that it had captured seven villages and several key heights in the Fuzuli and Jabrayil areas. The military also announced that Azerbaijan captured the Murov height of the Murovdag mountain range and established fire control of the Vardenis-Aghdar road connecting Karabakh with Armenia. The Ministry of Defense said that this will prevent the transportation of additional troops and equipment from Armenia along the route in the direction of the Kelbajar and Aghdar regions in Karabakh. The Azerbaijani Defense Ministry also claimed that over 550 Armenian soldiers were killed and dozens pieces of Armenian military equipment, including at least 15 Osa air defense systems, 22 battle tanks and 8 artillery guns, were destroyed. All statements from the Armenian side about the casualties among Azerbaijani forces were denounced as fake news. Azerbaijan calls the ongoing advance a “counter-offensive” needed to put an end to Armenian ceasefire violations and to protect civilians. President Ilham Aliyev signed a martial law decree and vowed to “restore historical justice” and “restore the territorial integrity of Azerbaijan” Turkey immediately declared its full support to Azerbaijan saying that it is ready to assist it in any way requested, including military support.
Turkey's Erdogan calls on Armenians to stand against leadership amid clashes with Azerbaijan (Reuters) - Turkish President Tayyip Erdogan on Sunday called on Armenia’s people to take hold of their future against “leadership that is dragging them to catastrophe and those using it like puppets”, following clashes between Armenian and Azeri forces over the breakaway region of Nagorno-Karabakh. Armenia on Sunday declared martial law and mobilised its male population after the clashes. Turkey has condemned Armenia for what it said were provocations against Azerbaijan. “While I call on the Armenian people to take hold of their future against their leadership that is dragging them to catastrophe and those using it like puppets, we also call on thire world to stand with Azerbaijan in their battle against invasion and cruelty,” Erdogan said on Twitter, adding that Turkey will “increasingly continue” its solidarity with Baku.
Full-Blown War In Caucuses Rising As Turkey Vows To Help Azerbaijan Take Back "Occupied" Lands - Already Azerbaijan and Armenia are locked in their worst fighting in decades in the disputed Nagorno Karabakh region. Now only three days into fighting, at least 100 people have been killed, which includes soldiers and civilians on both sides, amid tank warfare and the deployment of infantry and artillery units. There's also increasing signs of direct aerial combat.Raising the likelihood of a full-blown regional war in the Caucuses, Turkish President Erdogan's office shocked on Tuesday with a direct threat of intervention on its ally Azerbaijan's behalf:Turkey raised the spectre of full-blown war in the flashpoint Caucus region of Nagorno Karabakh on Tuesday after vowing to help its ally Azerbaijan seize the disputed territory back from Armenian control.As fighting in the region raged for a third day, Turkey said it was “fully committed” to helping Azerbaijan take back its “occupied” lands, which Azeris were driven out of during the civil war of the early 1990s.Azerbaijan fired artillery against Armenian forces on Wednesday in the biggest eruption of their decades-old conflict since the mid-1990s https://t.co/0DHlqLeZf7 pic.twitter.com/G22DxIxU6b— Reuters (@Reuters) September 30, 2020The spokesman for the Turkish president made the statements already as Azerbaijan is poised for a full-scale military incursion into Nagorno Karabakh, which would trigger a national Armenian armed forces response.Yereven already on Sunday into Monday gave a nationwide 'full troops mobilization' order, and additional forces are flooding into the breakaway region which Armenia has for decades protected, despite the territory being officially within Azerbaijan's borders.Tensions ran high between Ankara and Yerevan after on Tuesday Armenia's Defense Ministry claimed a Turkish F-16 shot down an Armenian SU-25. While Turkey immediately denied the claim, slamming it as "fake news" and "propaganda," Armenia the following day published photographs of wreckage it says proves the aircraft downing over Armenian airspace.
Armenian-Azeri war threatens to trigger Russia-Turkey clash - Uncontrolled military clashes between Armenia and Azerbaijan in the South Caucasus involving artillery, tanks, helicopters and drones have continued for a third day after fighting erupted over the disputed Nagorno-Karabakh region on Sunday. It marks the bloodiest Armenian-Azeri fighting since the 1988-1994 conflict between the two former Soviet republics, which erupted in the run-up to the Stalinist dissolution of the Soviet Union in 1991. While Yerevan claims its forces have caused 500 deaths of Azeri forces, Baku says Armenian forces have lost 550. However, officials in Nagorno-Karabakh (who call it by the Armenian name Artsakh) only acknowledged that “80 servicemen were killed and nearly 120 were wounded in Artsakh” as well as four civilians. On the other hand, Baku claims 12 civilians have been killed in Armenian attacks. Russia’s Sputnik news agency reported that “hostilities are not only taking place in Karabakh, but also in other areas of Armenia and Azerbaijan.” While Azeri Defense Ministry Colonel Vagif Dargahli stated that “the 3rd Martuni motorized rifle regiment of the Armenian armed forces, stationed in Khojavand region, was destroyed,” the Armenian Defense Ministry has released a footage purportedly showing the “of the destruction of an entire Azerbaijani military unit.” Baku has declared that it will destroy Armenian S-300 missile systems if they are deployed in the Nagorno-Karabakh. Though severe clashes continued yesterday, and Baku has claimed that it has seized certain villages around Nagorno-Karabakh, several Russian military experts speculated that “neither of them is capable of achieving a significant military success.” The fighting further escalated yesterday, when Armenian Defense Ministry spokesperson Shushan Stepanyan claimed that “a Turkish Air Force F-16 fighter jet shot down an on-duty SU-25 jet of the Armenian Air Force in Armenian airspace,” killing the pilot. Both Azeri and Turkish officials rapidly denied this allegation, denouncing it as a “lie”. While Baku said that “The report alleging Armenia’s Sukhoi-25 was destroyed by an F-16 fighter is a lie,” Turkish President Recep Tayyip Erdoğan’s Communications Director Fahrettin Altun told Bloomberg: “The claim that Turkey shot down an Armenian fighter jet is absolutely untrue.” He added: “Armenia should withdraw from the territories under its occupation instead of resorting to cheap propaganda tricks.”Whether or not allegations of Turkish involvement are true, it is clear that the war between these two former Soviet republics could rapidly spiral out of control, engulfing both a NATO member state, Turkey, and nuclear-armed Russia, Yerevan’s main backer. Both Turkey and Russia have bilateral military pacts with their allies in Baku and Yerevan, respectively, ensuring military support in case of a war with a third party. With Armenian officials leaving the door open to ask support from Russia and other allies, such a case would inevitably raise the prospect of an all-out regional or global war.
Russia, France denounce Turkey as Armenian-Azeri war escalates - Four days after fighting broke out between Armenia and Azerbaijan over the disputed Nagorno-Karabakh region, tensions between the major powers are escalating. Amid reports that Turkey and Syrian Islamist militias are sending mercenaries to Azerbaijan to fight a war on Russia’s borders, the risk is growing of a clash between Russia and Turkey, launching a regional or global war. While Azeri forces do not appear to have advanced far into Nagorno-Karabakh, casualties are mounting as precision weapons rain down on towns across the region. Armenian officials said yesterday they had lost 104 troops and that at least seven civilians had been killed since the fighting began. Azeri officials gave no statistics on military losses but confirmed that 15 Azeri civilians were killed. Online videos show air and drone strikes inflicting substantial losses to military units and equipment. Armenian officials claim to have destroyed 83 drones, seven helicopters, 166 armored vehicles, one warplane and one missile battery, and to have caused 920 casualties. Azerbaijan claims to have destroyed 130 armored vehicles, 200 artillery and missile launch systems, 25 air defense missile batteries and one S-300 air defense system, while inflicting 2,300 casualties. Arayik Harutyunyan, the president of the unofficial Armenian authority in Nagorno-Karabakh, warned: “We must be prepared for a long war. … The war will end with the defeat of Azerbaijan, or at least not with a victory.” Significantly, Harutyunyan added that Iran is one of the main targets of Turkish-backed Azeri operations. He said, “I want to say that one of the targets of this war (fighting on the contact line) is Iran because this war is directed, among other things, against Iran. We are aware of regional problems related, in particular, to the north of Iran,” where there is a substantial Azeri population. Iranian officials fear separatist sentiment could emerge among Iranian Azeris in favor of possibly seceding from Iran and joining Azerbaijan. This is the bloodiest Armenian-Azeri fighting since the 1988–1994 war between the two ex-Soviet republics, which erupted shortly before the Stalinist regime dissolved the Soviet Union in 1991. It is now however deeply enmeshed in the innumerable geopolitical rivalries, imperialist wars and local ethnic conflicts that have spread across the Middle East and Central Asia in the three decades since the dissolution of the Soviet Union. In particular, the war is unfolding amid a growing campaign by US imperialism to isolate and threaten both Iran and Russia. Turkish officials are aggressively supporting the ethnically-Turkic Azeris against Armenia. President Recep Tayyip Erdoğan has called on Azeris to expel Armenia from Nagorno-Karabakh and pledged that the “Turkish people stand with their Azeri brothers with all our means.” This intensifies tensions with Armenia’s main regional backer, Russia, under conditions where Russia and Turkey are already waging bloody proxy wars against each other in the civil wars triggered by NATO regime-change operations in Libya and Syria over the last decade. Armenian officials said that they are discussing military aid with Russia and the Collective Security Treaty Organization (CSTO), which includes the post-Soviet republics of Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. Armenian Prime Minister Nikol Pashinyan called Russian President Vladimir Putin and French President Emmanuel Macron to discuss the war. On Russia’s Rossiya1 channel, he called the war “a threat to the Armenian people’s very existence.”
Turkey rejects 'superficial' Caucasus ceasefire calls - (Reuters) - Turkey rejected “superficial” demands for a ceasefire on Saturday in the South Caucasus, where it backs Azerbaijan, after a week of fierce fighting with ethnic Armenian forces in the breakaway Nagorno-Karabakh enclave. While Russia, the United States and France have called for an end to hostilities, regional power Turkey has staunchly supported the Azeris and has repeated that what it called Armenian “occupiers” must withdraw.Armenia said on Friday it would work with the three big powers toward a ceasefire. But Turkish President Tayyip Erdogan has said they should have no role in peacemaking and on Saturday said Ankara backs the “oppressed” in the South Caucasus. Turkey’s foreign minister, Mevlut Cavusoglu, told Italian newspaper La Stampa that Russia could play an intermediating role in a ceasefire “only if it is neutral”. “Superficial demands for an immediate end to hostilities and a permanent ceasefire will not be useful this time,” he was quoted as saying by Turkish state-run Anadolu news agency. Moscow has a defence pact with Armenia, but also good relations with Azerbaijan. Nagorno-Karabakh, where ethnic Armenians are the vast majority, said on Saturday that 51 more service personnel had been killed in the war with Azerbaijan, a sharp rise in the death toll from a week of fierce fighting.
French peace call to Armenian and Azeri leaders falls on deaf ears (Reuters) - Armenia said on Saturday it would use “all necessary means” to protect ethnic Armenians from attack by Azerbaijan, as the opposing sides pounded each other for a seventh day and the latest international peace call fell on deaf ears. Azerbaijan said Armenia bore full responsibility for the new outbreak of the decades-old conflict, which threatens to drag in regional powers such as Russia and Turkey. The death toll rose to at least 230 in the fighting over Nagorno-Karabakh, an ethnic Armenian enclave inside Azerbaijan that broke away from its control in the 1990s. A day after French President Emmanuel Macron phoned Armenian Prime Minister Nikol Pashinyan and Azeri President Ilham Aliyev with a new proposal for mediation, the rhetoric on both sides appeared if anything to be hardening. “The president of Azerbaijan placed the entire responsibility on the leadership of Armenia for the break-off of negotiations and the armed confrontation,” Aliyev’s press service said in its summary of the call. Armenia’s armed forces have so far held back from entering the war alongside those of Nagorno-Karabakh. But Pashinyan, in a televised address, portrayed the conflict as a national struggle and compared it to the country’s war with Ottoman Turkey in the early 20th century. “This is a new Sardarapat, and each of us should be ready to dedicate himself to one aim, the name of which is victory,” he said. The Armenian foreign ministry said Armenia, as the guarantor of Nagorno-Karabakh’s security, would take “all the necessary means and steps” to prevent what it called “mass atrocities” by the forces of Azerbaijan and its ally Turkey. Both those countries have repeatedly denied the involvement of Turkish forces, as well as assertions by Armenia, Russia and France that Syrian rebels are fighting on the Azeri side. Azerbaijan hit back, saying ethnic Armenians from Syria, Lebanon, Russia, Georgia, Greece and the United Arab Emirates had been deployed or were on their way to operate as “foreign terrorist fighters” on the ethnic Armenian side.
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