oil prices rose for a 4th consecutive week in a rally sustained by the belief that one or more of the new vaccines would soon end the pandemic...after rising 5% to $42.42 a barrel last week on the promise of a Covid-19 vaccine and hopes that OPEC would extend their production cuts, the contract price of US light sweet crude for January delivery opened higher on Monday on news of further progress towards developing Covid-19 vaccines and finished 64 cents higher at $43.06 a barrel, the highest settlement since August, after the Saudis confirmed that Houthi rebels from Yemen had targeted one of their oil facilities in northern Jeddah province...the vaccine rally continued on Tuesday as oil prices rose $1.85, or more than 4%, to $44.91 a barrel, an eight month high, as a third promising coronavirus vaccine raised hope for a fuel-demand recovery and as the start of the U.S. presidential transition infused optimism across markets...but oil prices dipped in after hours trading late Tuesday after the API reported a surprise build of US crude supplies and opened lower on Wednesday, but then rallied further on vaccine optimism despite the inventory rise before jumping 80 cents to a new 8 month high of $45.71 a barrel on a weaker dollar and on EIA data that showed a surprise drop in U.S. crude inventories...oil prices were mixed in light post holiday trading on Friday ahead of an OPEC+ meeting early next week, on scuttlebutt that OPEC's allies including Russia are leaning towards delaying next year’s planned increase in oil output, as US prices closed 18 cents lower at $45.53 a barrel, but still posted a 7.3% gain for the week for the 4th straight weekly gain and its largest one-week gain since Oct. 9th...
natural gas prices also moved higher this week on vaccine optimism and on record LNG exports...after falling 11.5% to $2.650 per mmBTU last week as a cold weather outbreak dissipated and gas inventories grew at a near record pace for the season, the contract price of natural gas for December delivery opened 2% higher on Monday and settled with a gain of 6.1 cents at $2.711 per mmBTU, as LNG export levels held strong, heating forecasts increased slightly and continued positive news on Covid vaccines bolstered confidence across markets...the price of the December gas contract moved up another 6.4 cents on Tuesday on forecasts for cooler weather and more heating demand during the first week of December than was previously expected and then rose 12.1 cents to expire at a one week high of $2.896 per mmBTU on Wednesday, despite a smaller-than-usual weekly decline in gas supplies, as LNG exports hit a new record high...however, after the holiday, the contract price of natural gas for January delivery, which had finished Wednesday priced at 2.961 peer mmBTU, opened lower on Friday and tumbled 11.8 cents in holiday shortened trading to finish the week at $2.843 per mmBTU, cutting the week's gain on that contract to 2.6%...
the natural gas storage report from the EIA for the week ending November 20th indicated that the quantity of natural gas held in underground storage in the US decreased by 18 billion cubic feet to 3,940 billion cubic feet by the end of the week, which left our gas supplies 322 billion cubic feet, or 8.9% higher than the 3,618 billion cubic feet that were in storage on November 20th of last year, and 250 billion cubic feet, or 6.8% above the five-year average of 3,690 billion cubic feet of natural gas that have been in storage as of the 20th of November in recent years....the 18 billion cubic feet that were drawn out of US natural gas storage this week was less than the average forecast from an S&P Global Platts survey of analysts who called for a 25 billion cubic foot withdrawal, and was also much less that the average withdrawal of 37 billion cubic feet of natural gas that are typically pulled out of natural gas storage during the same week over the past 5 years, and the 47 billion cubic feet withdrawal from 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 November 20th indicated that because of a big increase in refinery use of crude oil this week, we had to withdraw oil from our stored commercial supplies for the 12th time in the past eightteen weeks and for the 18th time in the past forty-five weeks....our imports of crude oil fell by an average of 26,000 barrels per day to an average of 5,228,000 barrels per day, after falling by an average of 245,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 83,000 barrels per day to an average of 2,831,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,397,000 barrels of per day during the week ending November 20th, 109,000 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 100,000 barrels per day higher at 11,000,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 13,397,000 barrels per day during this reporting week...
meanwhile, US oil refineries reported they were processing 14,263,000 barrels of crude per day during the week ending November 20th, 422,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a net total of 124,000 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 743,000 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 (+743,000) 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 balance sheet fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting that there must have been an error or errors of that magnitude in the oil supply & demand figures we have just transcribed.....however, since most everyone treats these weekly EIA figures as gospel and since these numbers often drive oil pricing and hence decisions to drill or complete wells, we'll continue to report them as published, just as they're watched & believed to be accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....
further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 5,253,000 barrels per day last week, which was 12.4% less than the 5,997,000 barrel per day average that we were importing over the same four-week period last year....the 124,000 barrel per day net withdrawal from our total crude inventories included 108,000 barrels per day that were withdrawn from our commercially available stocks of crude oil and 16,000 barrels per day were 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 inventories.....this week's crude oil production was reported to be 100,000 barrels per day higher at 11,000,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 10,500,000 barrels per day, while a 19,000 barrels per day decrease to 495,000 barrels per day in Alaska's oil production still added the same rounded 500,000 barrels per day to the rounded national total...last year's US crude oil production for the week ending November 22nd was rounded to 12,900,000 barrels per day, so this reporting week's rounded oil production figure was 14.7% below that of a year ago, yet still 30.5% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 78.7% of their capacity while using 14,263,000 barrels of crude per day during the week ending November 20th, up from 77.4% of capacity during the prior week, but excluding the 2005, 2008, and 2017 hurricane-related refinery interruptions, still one of the lowest refinery utilization rates of the past twenty-eight years...hence, the 14,263,000 barrels per day of oil that were refined this week were 12.7% fewer barrels than the 16,334,000 barrels of crude that were being processed daily during the week ending November 22nd of last year, when US refineries were operating at 89.3% of capacity...
even with the increase in the amount of oil being refined, gasoline output from our refineries was again lower, decreasing by 214,000 barrels per day to 8,850,000 barrels per day during the week ending November 20th, after our refineries' gasoline output had decreased by 255,000 barrels per day over the prior week...and since our gasoline production is still recovering from a multi-year low in the wake of this Spring's covid lockdown, this week's gasoline output was also 12.1% less than the 10,065,000 barrels of gasoline that were being produced daily over the same week of last year....but at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 333,000 barrels per day to 4,608,000 barrels per day, after our distillates output had increased by 38,000 barrels per day over the prior week....but since it's just coming off a three year low, our distillates' production was still 9.3% less than the 5,075,000 barrels of distillates per day that were being produced during the week ending November 22nd, 2019...
even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 7th time in 21 weeks and for the 14th time in 43 weeks, rising by 2,180,000 barrels to 230,147,000 barrels during the week ending November 20th, after our gasoline supplies had increased by 2,611,000 barrels over the prior week...our gasoline supplies increased again this week because the amount of gasoline supplied to US markets decreased by 129,000 barrels per day to 8,129,000 barrels per day, while our imports of gasoline fell by 89,000 barrels per day to 441,000 barrels per day, while our exports of gasoline rose by 70,000 barrels per day to 760,000 barrels per day....so despite the gasoline inventory drawdowns of recent weeks, our gasoline supplies were still 1.8% higher than last November 22nd's gasoline inventories of 225,978,000 barrels, and about 4% above the five year average of our gasoline supplies for this time of the year...
meanwhile, even with the increase in our distillates production, our supplies of distillate fuels decreased for the 10th week in a row, for the 16th time in 34 weeks and for the 30th time in the past year, falling by 1,441,000 barrels to 142,632,000 barrels during the week ending November 20th, after our distillates supplies had decreased by 5,216,000 barrels during the prior week....our distillates supplies fell by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 50,000 barrels per day to 4,175,000 barrels per day, and because our exports of distillates fell by 255,000 barrels per day to 825,000 barrels per day while our imports of distillates fell by 99,000 barrels per day to 186,000 barrels per day....but even after this week's inventory decrease, our distillate supplies at the end of the week were still 22.5% above the 116,406,000 barrels of distillates that we had in storage on November 22nd, 2019, and about 8% above the five year average of distillates stocks for this time of the year...
finally, with the big increase in our refinery throughput and a modest increase in our exports, our commercial supplies of crude oil in storage (not including the commercial oil in the SPR) fell for the 14th time in the past twenty-four weeks and for the 20th time in the past year, decreasing by 754,000 barrels, from 489,475,000 barrels on November 13th to 488,721,000 barrels on November 20th ...after that modest decrease, our commercial crude oil inventories were still around 6% above the five-year average of crude oil supplies for this time of year, and about 42% above the prior 5 year (2010 - 2014) average of our crude oil stocks after three weeks of of November, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories had generally been rising over the past two years, except for this autumn and during the past two summers, after generally falling over the year and a half prior to September of 2018, our commercial crude oil supplies as of November 20th were 8.1% above the 451,952,000 barrels of oil we had in commercial storage on November 22nd of 2019, 8.5% more than the 450,485,000 barrels of oil that we had in storage on November 23rd of 2018, and 7.7% above the 453,713,000 barrels of oil we had in commercial storage on November 24th of 2017...
This Week's Rig Count
note: this week's rig count was released on Wednesday ahead of the Thanksgiving holiday, and hence only covers five days...nonetheless, the US rig count rose for the 10th time in eleven weeks during the period ending November 25th, but for just the 12th time in the past 37 weeks, and hence it is still down by 59.6% over that thirty-seven week period....Baker Hughes reported that the total count of rotary rigs running in the US rose by 10 to 320 rigs this past week, which was still by down 482 rigs from the 802 rigs that were in use as of the November 29th report of 2019, and was also 84 fewer rigs than the all time low prior to this year, and 1,609 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 10 rigs to 241 oil rigs this week, after oil rigs fell by 5 the prior week, leaving us with 427 fewer oil rigs than were running a year ago, and less than a sixth 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 increased by 1 to 77 natural gas rigs, which was still down by 54 natural gas rigs from the 131 natural gas rigs that were drilling a year ago, and was also less than a twentieth of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one in Lake County, California, and one in the Permian basin in Eddy County, New Mexico...a year ago, there were three such "miscellaneous" rigs deployed...
The Gulf of Mexico rig count was unchanged at 12 rigs this week, with 11 of those rigs drilling for oil in Louisiana's offshore waters and one drilling for oil offshore from Texas...that was 10 fewer Gulf rigs than the 22 rigs drilling in the Gulf a year ago, when all 22 Gulf rigs were drilling offshore from Louisiana...since there are no rigs operating off of other US shores at this time, nor were there a year ago, this week's national offshore rig figure are equal to the Gulf rig counts....meanwhile, in addition to those rigs offshore, two rigs continue to drill through inland bodies of water this week, one in St Mary county in southern Louisiana and the other in Chambers County, Texas, just east of Houston, while a year ago there were no such rigs drilling on US inland waters..
The count of active horizontal drilling rigs was up by 11 to 283 horizontal rigs this week, which was still 418 fewer horizontal rigs than the 701 horizontal rigs that were in use in the US on November 29th of last year, and less than a quarter of the record of 1372 horizontal rigs that were deployed on November 21st of 2014....at the same time, the directional rig count was up by 2 to 22 directional rigs this week, but those were also down by 31 from the 53 directional rigs that were operating during the same week of last year....on the other hand, the vertical rig count was down by three to 15 vertical rigs this week, and those were also down by 33 from the 48 vertical rigs that were in use on November 29th 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 November 25th, the second column shows the change in the number of working rigs between last week's count (November 20th) and this week's (November 25th) count, the third column shows last week's November 20th 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 29th of November, 2019...
the state totals add up to 11 because a miscellaneous rig that had been drilling on the big island of Hawaii for the past several months was shut down this week, while the basin count comes up short because two horizontal rigs were added in basins that Baker Hughes doesn't track...checking the North America Rotary Rig Count Pivot Table (xls), we find those horizontal rigs weren't the 3 rigs added in California, because all of California's active rigs are either directional or vertical, in Kern and Los Angeles counties...next, checking for the details on the Permian basin in Texas, we find that one rig was added in Texas Oil District 7C, which roughly corresponds to the southern part of the Permian Midland, and another rig was added in Texas Oil District 8, which corresponds to the core Permian Delaware, which thus means that Permian rigs in Texas were up by a total of two...since the Permian basin rig count was up by five rigs nationally, that means that the three rigs that were added in New Mexico must have been added in the farthest west reaches of the Permian Delaware, to account for the national increase...elsewhere in Texas, we find that three rigs were added in Texas Oil District 1, which would account for Eagle Ford basin increase, while one rig was pulled out of Texas Oil District 2, which apparently came from a basin that Baker Hughes doesn't track, while another rig was pulled out of Texas Oil District 6, which would have been a Haynesville natural gas rig, because a Haynesville gas rig was added in northern Louisiana at the same time, thus accounting for the "zero change" on Haynesville rigs we see above...meanwhile, the natural gas rig addition of this week was added in a basin that Baker Hughes doesn't track, and it's not apparent where that was, since the DJ Niobrara rig added in Colorado, the 3 rigs added in California, and every other rig we've mentioned today were all oil rigs...
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Hilcorp Awarded 11 New Well Permits in Columbiana County --– Hilcorp Energy Co., the Houston-based oil and gas exploration-company that was an early producer in the Utica-Point Pleasant shale formation in Ohio, has its eyes on what could be a “sweet spot” in Columbiana County.The Ohio Department of Natural Resources has approved permits for the company to drill 11 new horizontal wells at its Baker pad in Elk Run Township, according to records.These wells would accompany two producing wells at the location, records show. According to ODNR’s latest production data, those two wells – the Baker 6H and 14H – produced a total of 839 million cubic feet of natural gas during the second quarter of 2020. The 6H well logged 408 million cubic feet of natural gas while the 14H produced 431 million cubic feet, well above the average output for non-conventional wells across the state of about 270 million cubic feet, records show.The wells produced zero barrels of oil during the quarter, according to data.While these production numbers pale in comparison to big wells drilled in southeastern Ohio – a single well drilled in Belmont County by Ascent Resources, for example, yielded more than 3.1 billion cubic feet of gas during the second quarter – they are currently among the most productive found in the northern tier of the Utica-Point Pleasant formation, data show. Elk Run Township appears to have emerged as a hot spot for strong wells in this part of the formation, according to ODNR records. Of the 10 wells drilled by Hilcorp in Elk Run, for example, two produced results that were just below average. Also, EAP Ohio LLC, an affiliate of Encino Energy Partners, boasted two strong wells in Columbiana County during the quarter at its Sevak pad in Washington Township. The Sevak 210H well yielded the most natural gas of all the county’s wells with 655.8 million cubic feet during the second quarter, while its Sevak 10H produced the second-highest volume with 516.3 million cubic feet. In 2018, EAP acquired all of bankrupt Chesapeake Energy Corp.’s Utica assets. And just last week, Gulfport Energy Corp., another prominent exploration and production company in the Utica, filed for protection under Chapter 11, citing that its “large legacy debt burden” and transportation commitments “created a balance sheet and cost structure that was unsustainable in the current market environment.” Natural gas output in the Appalachia region – which includes the Utica shale formation in Ohio and Marcellus shale in Pennsylvania – is projected to decline by 133 million cubic feet per day, according to the EIA’s monthly drilling productivity report. Appalachian wells are on target to produce 33.637 million cubic feet of gas in December compared to 33.770 million in November.
Permanent Closure of Frack Waste Well A Win For Ohio Activists - Environmental activists are celebrating a small victory in their fight to protect Ohio communities from the dangers of toxic and radioactive waste stored in open-pit, fracking waste injection wells.In May 2019, the Ohio Department of Natural Resources ordered Carper Well Services to clean up the waste in the Hazel-Ginsburg well, located on Ladd Ridge Road in Alexander Township in Athens County. The order enforced a law already in place to regulate open pit wells that had long been ignored. The company was given the choice to dismantle the well and plug it, or make it operational again. The company chose to dismantle it.Open-pit wells use cement-lined pits to store toxic and radioactive waste fluids. Over time, sludge from the waste accumulates in the bottom of the pits. Open-pit wells were banned by the U.S. Environmental Protection Agency in 1984.The Ginsburg well looked much like an outdoor swimming pool and sat on a well-traveled road flanked by farms and residences, with nothing but a three-sided chain link fence around it and a chain strung between two free standing posts between the toxic waste and the general public and wildlife. It had been idle since 2015.Activists had reported seeing the pit full of waste to within an inch of the top and its cement liner deteriorating with cracks visible.Carper Well Services began cleanup in July 2020, and an October report released by ODNR confirms the well has been permanently closed.“The Ginsburg Injection Well is closed,” says Roxanne Groff, a member of Athens County’s Future Action Network (formerly Athens County Fracking Action Network) steering committee. Groff is one of two women who spearheaded the organization’s more than decade-long effort to close the well. Noting that there is still work to be done, she adds, “[The Ginsburg well is] not plugged as yet and the company did not test the radium in the sludge as required by the state and ODNR claims they do not know where the radioactive material is sent.” The Ginsburg well, as it is more commonly known, is a Class IV injection well. Class IV injection wells consist of an open, cement-lined pit adjacent to a well head that stores and pumps hazardous and radioactive waste fluids at high pressure into or above underground sources of drinking water. The Ginsburg well injected millions of barrels of waste over more than 30 years.
In Pennsylvania, gas drilling is down, but production higher than it has ever been - More natural gas was fracked from Pennsylvania wells in 2019 than in any previous year, although the number of new wells drilled declined, according to the state Department of Environmental Protection.The DEP’s 2019 Oil and Gas Annual Report, released Monday, shows 6.8 trillion cubic feet of natural gas was produced last year from the state’s Marcellus and Utica shale gas formations, topping the 2018 production total of 6.2 trillion cubic feet and continuing an upward trend that has gone on for more than a decade.Pennsylvania is the second-largest producer of natural gas in the U.S., behind only Texas.The department issued 1,705 drilling permits, 1,475 of those for “unconventional” or horizontal shale gas wells, and 230 for “conventional,” or shallower, vertical wells. In 2018, the state issued 2,149 drilling permits, 1,868 for unconventional wells and 281 for conventional wells.There were a total of 787 wells drilled in 2019, 615 unconventional and 172 conventional. Approximately 11,500 shale gas wells are operating in the state.The report, which also touts departmental permitting efficiencies, states that the DEP conducted 35,324 field inspections in 2019, identified 5,496 violations and collected $4.1 million in fines and penalties. Over the past decade, the DEP has collected about $43.7 million for violations at Pennsylvania oil and gas sites.In 2019, violations were found on approximately 14 percent of the field inspections. Half of the violations occurred at pipeline sites, where violation totals have risen steadily for the past three years, a trend the DEP noted in its report. “DEP will continue to improve environmental protections for oil and gas development while providing certainty for operators and the people that live, work, and play near Pennsylvania’s oil and gas communities,” DEP Secretary Patrick McDonnell said in a news release. “We are remaining vigilant in our oversight of the industry and bringing enforcement actions against companies that violate the laws and regulations of Pennsylvania.”
Pennsylvania Natural Gas Production in 3Q Grew at Lowest Rate on Record -Pennsylvania’s unconventional natural gas production in the third quarter hit 1.751 Tcf, an increase of only 2% from the same period last year and the lowest annual growth rate on record as operators continued to pare activity throughout a tumultuous year. Production increased slightly from 2Q2020 volumes of 1.717 Tcf, according to the Pennsylvania Independent Fiscal Office (IFO). Sequential production declined in the first half of the year as gas prices fell. Production has been so robust in Pennsylvania in recent years, driven by the Marcellus, Utica and Upper Devonian shales, that the IFO noted a 1.3% decline in production between September 2019 and September 2020. The office said it was the first year/year decline in monthly production since February 2017.There were 111 horizontal wells spud in 3Q2020, down 17.8% from the year-ago period and the sixth consecutive quarter in which there was a year/year decline in new wells spud. The IFO tracks results from vertical wells drilled to unconventional formations, but they account for a marginal share of quarterly volumes.After peaking at the highest level on record in 3Q2018, horizontal well production growth rates have declined in each of the last eight quarters. This year has been particularly difficult for Lower 48 producers given the impacts of the Covid-19 pandemic on energy consumption and the economy. Producers have made price-related curtailments since the beginning of the year as they’ve grappled with low demand in the United States and across the world. In the Northeast, some producers have kept volumes shut-in, while others have turned production on and off throughout the year. Appalachian pure-play EQT Corp., the nation’s largest gas producer, curtailed more than 1 Bcfe/d from May to July and shut-in another 400 MMcf/d from September to October. Across the country, gas production from seven key onshore regions is set to drop from November to December, extending a trend of falling output that has held for most of 2020, according to the Energy Information Administration’s latest Drilling Productivity Report.
The GOP warned Susquehanna County voters that Biden would ban fracking. Few believe it will happen.— In the doomsday scenario pushed by Republicans during the presidential campaign, a Democratic victory would spell the end of Pennsylvania’s Marcellus Shale industry. Communities enriched by the vast natural-gas reserves beneath them would wither and die if Joe Biden won.Here in Susquehanna County, more than 1,000 active wells have been drilled over the last decade to extract gas from beneath the rolling farmland — the contentious process known as fracking. The GOP’s scare tactics were meant to drive registered voters of both stripes and no stripes, a total of 27,228, into the protective embrace of Donald Trump. But most of the residents interviewed by The Inquirer postelection, people familiar with fracking and the royalty checks it brings in, said they knew it wouldn’t be going away anytime soon, even under a Biden administration. It’s “impossible for Joe Biden to stop fracking,” said. “Now, he might make it tougher and have more laws on it. But that’s a good thing.”
Dimock residents worry about planned fracking waste well - A fracking wastewater treatment company is exploring the possibility of constructing an underground deep injection well in Dimock, Susquehanna County. If approved, it would be the first deep injection well built to handle fracking wastewater in eastern Pennsylvania. The Environmental Protection Agency has permitted at least 36 new underground wells to dispose of fracking waste since 2013, but all are in the western part of the state. A spokesman for EPA said representatives of the company Kendra II have met with agency officials to discuss plans for the well, but have not submitted an application. The state Department of Environmental Protection said it has had no contact with the company about its plans. Calls to an attorney for the company were not returned, but a man who answered the phone at Kendra II said they were “exploring the possibilities.” Deep injection wells can stretch more than a mile below the surface and are used by the oil and gas industry to dispose of the most hazardous waste material, including salty brine, chemicals, radioactive waste and heavy metals. The wells are typically permitted to take between 1,300 to 3,200 pounds per square inch of pressure, which sends the fluid into a sandstone or limestone formation. The U.S. Geological Survey has linked an uptick in earthquakes in Oklahoma to oil and gas wastewater injection wells in that state, at distances up to 10 miles from the site of the disposal well. Earthquakes in Ohio have been linked to deep well injection, and one in New Castle, Pennsylvania was linked to fracking. In Pennsylvania, Class 2 wells are regulated by the EPA through the underground injection control program, via the Safe Drinking Water Act. The DEP also has to sign off on the wells. In early November, people living within 1,000 feet of the planned well began receiving letters from the Springville, Pa.-based company informing them of the project and the state law that requires well water testing. Paul Karpich, who received one of the letters, said he’s worried about ground water contamination. “I moved here in 1982 and it was pristine but no longer,” Karpich said. Gas drilling by Cabot Oil and Gas has damaged some drinking water wells in the area, and the company is still barred from drilling in a 9-square-mile area. The DEP determined that faulty well construction led to methane leaking into the aquifer. Further tests of residential drinking water have also revealed chemicals and heavy metals.
Williams, Chesapeake Clinch Natural Gas Gathering Pact for Eagle Ford, Haynesville, Marcellus and Midcontinent - Tulsa-based Williams has reached a global resolution with one of its biggest customers, bankrupt Chesapeake Energy Corp., to continue to treat and move its natural gas in the Lower 48. Chesapeake filed for Chapter 11 bankruptcy protection in June to wipe out $7 billion of debt. As part of the auction process, Chesapeake last week sold its Oklahoma assets to Tapstone Energy LLC for $130.5 million. Reaching a gas gathering agreement with Williams would allow Chesapeake to continue to have a reliable outlet for its natural gas production from the Eagle Ford, Haynesville and Marcellus shales, as well as the Midcontinent. “Our gathering systems are necessary to realize the full potential of these high value reserves, and we are pleased to have been able to work with Chesapeake toward a mutually beneficial outcome,” said Williams CEO Alan Armstrong. Per the existing contracts, the Oklahoma City independent agreed to pay all pre-petition and past due receivables related to midstream expenses. Chesapeake also agreed to not attempt to reject gathering agreements in the Eagle Ford, Marcellus or Midcontinent. For the Haynesville, Williams plans to reduce its gathering fees in exchange for gaining ownership of a portion of Chesapeake’s South Mansfield producing assets. The assets include 50,000 net mineral acres. In the Haynesville agreement, Chesapeake plans to enter into a long-term gas supply commitment on Williams’ Transcontinental Gas Pipe Line, aka Transco. The agreement would require Chesapeake to provide a minimum 100,000 Dth/d and up to 150,000 Dth/d on the Transco Regional Energy Access (REA) pipeline currently under development. The reduced gathering fees on REA are consistent with incentive rates that Williams has offered previously to attract drilling capital and “are therefore expected to promote additional drilling across Chesapeake’s prolific Haynesville footprint,” Williams management said.
NETL Positions America as World Leader to Convert Natural Gas into Valuable Products - NETL talent and expertise can strengthen U.S. capabilities to serve as a world leader in the conversion of natural gas and its liquid components into the chemical feedstocks to manufacture an extensive list of commodities and consumer products used daily.To maximize growing investment in research and development (R&D), NETL is prioritizing the Lab’s efforts to support projects focused on converting natural gas into the chemical building blocks needed to manufacture higher value products and positioning its multidisciplinary teams to support innovative technologies to transform the petrochemical sector.U.S. energy security is predicated on increasing natural gas usage. The chemicals marketplace also relies predominantly on natural gas, and the petrochemical industry is actively seeking to identify more uses for natural gas as a product feedstock and exploring ways to deliver those products to market faster, at lower cost and with less environmental impact.As home to the massive Marcellus and Utica shale gas formations, Appalachia is positioned to serve as the epicenter for this petrochemical resurgence, which could generate a significant number of good-paying jobs in advanced manufacturing while enhancing the U.S. economy.The region’s abundant levels of shale gas have already spurred construction of the Shell Chemicals petrochemical plant in Beaver County, Pennsylvania, a $6 billion project expected to open in 2021 about 25 miles northwest of Pittsburgh, as well as plans by PTT Global Chemical America to build a petrochemical plant in eastern Ohio.Additional major investments may follow. In its June 2020 report, “The Appalachian Energy and Petrochemical Renaissance: An Examination of Economic Progress and Opportunities,” the U.S. Department of Energy (DOE) stated that “the shale gas revolution has the potential to last for more than a century.”Eliminating roadblocks to maximize the production of higher value products and chemicals using shale gas and natural gas liquids (NGLs) such as ethane and propane, are too complex for any one company to address. That’s where NETL can provide invaluable support and technical expertise.The Lab has decades of experience converting hydrocarbons to various products and the established infrastructure needed for expanded R&D. Also, advancements by NETL’s world-renowned engineers and scientists, coupled with a proven track record of working closely with industry and top research universities to move innovations forward, place NETL in a prime position to help drive and lead this generational opportunity.
December Natural Gas Futures Advance Amid Steady LNG Demand, Strength in Spot Prices — Natural gas futures climbed higher Monday as export levels held strong, prospects for weather-driven demand improved slightly and continued positive news on the coronavirus vaccine front bolstered confidence across markets. The December Nymex contract gained 6.1 cents day/day to start the abbreviated trading week and settled at $2.711/MMBtu. January rose 5.3 cents to $2.823. NGI’s Spot Gas National Avg., meanwhile, advanced 24.0 cents to $2.430 as a blast of cold hit parts of the northern United States and fueled demand. Lower 48 production over the weekend and into Monday hovered around 90 Bcf/day, near six-month highs. On the demand side, liquefied natural gas (LNG) feed gas levels continued near 10 Bcf/d, close to record levels as demand from Europe and Asia for U.S. exports held steady as it has all month. Meanwhile, forecasters said the European model added a few heating-degree days for the coming two weeks, providing a small dose of demand optimism as a bout of cooling moved across the northern United States early this week. Above-normal temperatures are expected throughout the northern part of the country later this week and into next, however, while comfortable conditions are projected across the southern half of the Lower 48 through the first week of December.
US natgas futures rose to one-week high on cooler forecasts - US natural gas futures climbed to a one-week high on Tuesday on forecasts for cooler weather and more heating demand during the first week of December than previously expected. On its second to last day as the front-month, gas futures for December delivery rose 6.4 cents, or 2.4%, to settle at $2.775 per million British thermal units (mmBtu), their highest close since Nov. 13. The January contract, which will soon be the front-month, gained 6 cents to $2.89 per mmBtu. Data provider Refinitiv said output in the Lower 48 US states averaged 90.3 billion cubic feet per day (bcfd) so far in November, up from a five-month low of 87.4 bcfd in October. Traders said some of that output increase was due to higher oil prices. Oil futures were up about 21% so far this month on expectations of a rebound in global energy demand and economic activity as promising coronavirus vaccines are being developed. Rising oil prices over the last few months have encouraged energy firms to drill for more crude. Those oil wells also produce a lot of associated gas. With the weather expected to cool, Refinitiv projected demand, including exports, would rise from 100.3 bcfd this week to 114.4 bcfd next week. The amount of gas flowing to US liquefied natural gas (LNG) export plants has averaged 9.9 bcfd so far in November, up from a five-month high of 7.7 bcfd in October, as rising prices in Europe and Asia in recent months have prompted global buyers to purchase more US gas. That tops the 9.8-bcfd US LNG export capacity and compares with an all-time monthly high for feedgas of 8.7 bcfd in February. LNG plants can pull in a little more gas than they can export since they use some of the fuel to run the facility.
US working gas in underground storage down 18 Bcf on week: EIA | S&P Global Platts — The US natural gas storage withdrawal season started one week later than normal with a below-average draw of 18 Bcf for the week ended Nov. 20 as the Henry Hub winter strip shows slight declines with demand somewhat muted for the week in progress. US natural gas storage inventories decreased to 3.940 Tcf for the week ended Nov. 20, the US Energy Information Administration said Nov. 25. The report was issued one day earlier than normal this week to accommodate the Thanksgiving holiday in the US. The withdrawal was less than an S&P Global Platts survey of analysts calling for a 25 Bcf pull. Responses to the survey ranged from a 4 Bcf injection to a 39 Bcf withdrawal. The build was also less than the 47 Bcf draw reported during the same week last year as well as the five-year average withdrawal of 37 Bcf, according to EIA data. It was a reversal from the 31 Bcf injection announced for the week prior. US supply-and-demand balances were considerably tighter during the week ended Nov. 29, with cooler weather inflating residential-commercial consumption by 9.8 Bcf/d week on week, according to Platts Analytics. Such growth was partially offset by weaker power burns due primarily higher wind generation. Higher demand also led to stronger output, with total US supply up 3.7 Bcf/d as Northeast production and net Canadian imports expanded to meet higher demand. Storage volumes now stand 322 Bcf, or 9%, above the year-ago level of 3.618 Tcf, and 250 Bcf, or 6.8%, above the five-year average of 3.690 Tcf. The NYMEX Henry Hub December contract shed 3.5 cents to $2.74/MMBtu in trading following the release of the weekly storage report at midday ET. The remaining winter strip — January through March — dipped 2 cents to average $2.84/MMBtu, up 17 cents from the week prior. Natural gas prices staged a rebound this week, as cooler weather trends into early December created a bullish backdrop. Notably, the soon to be prompt January NYMEX contract reclaimed the $2.90/MMBtu level after falling to an intraday low near $2.65/MMBtu last week. Higher gas prices are in line with the Platts Analytics forecast, which calls for winter 2020-21 Henry Hub prices to average near $3.20/MMBtu should weather normalize. S&P Global Platts Analytics' supply-and-demand model currently forecasts a 17 Bcf withdrawal for the week ending Nov. 27, which would grow the surplus versus the five-year average by 24 Bcf as demand remains below normal because of mild weather this November. US-level rescomm estimates fell for the week in progress, largely from temperatures in the East storage region climbing from to 54 degrees from an average of 49 degrees.
US natgas: U.S. natgas futures rise over 4% to one-week high on record LNG exports, Auto News -- U.S. natural gas futures jumped 4% to a one-week high on Wednesday as liquefied natural gas (LNG) exports hit fresh records. The price increase came despite a continued rise in output, forecasts for milder weather next week and an expected smaller-than-usual weekly decline in stockpiles. The U.S. Energy Information Administration said utilities pulled 18 billion cubic feet (bcf) of gas from storage during the warmer-than-normal week ended Nov. 20. That was in line with the 18-bcf decline analysts forecast in a Reuters poll, and compares with a decrease of 47 bcf during the same week last year and a five-year (2015-19) average withdrawal of 37 bcf. On its last day as the front month, gas futures for December delivery rose 12.1 cents, or 4.4%, to settle at $2.896 per million British thermal units (mmBtu), their highest close since Nov. 13 for a second day in a row. "This market was able to post one-week highs on what appeared to be pre-holiday short covering," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois. The U.S. Thanksgiving holiday is Thursday. The January contract, which will soon be the front month, gained 6 cents to $2.96 per mmBtu. Data provider Refinitiv said output in the Lower 48 U.S. states has averaged 90.3 billion cubic feet per day (bcfd) so far in November, up from a five-month low of 87.4 bcfd in October. With the weather expected to cool, Refinitiv projected demand, including exports, would rise from 100.8 bcfd this week to 112.9 bcfd next week. The amount of gas flowing to U.S. LNG export plants was on track to hit a record high as Cheniere Energy's Corpus Christi plant in Texas pulled in enough fuel to supply all three of its liquefaction trains.
Hedge fund Citadel doubles down, and more, on shale gas in Q3 -- Legendary hedge fund CEO and investment manager Kenneth Griffin doubled down on shale gas stocks in the third quarter, banking on higher share prices across the sector as investors anticipate a sharp increase in winter commodity gas prices. Griffin's Citadel Advisors LLC more than doubled its stakes in pure-play shale gas exploration and production companies CNX Resources Corp., Antero Resources Corp., Comstock Resources Inc., and National Fuel Gas Co. in the third quarter, according to institutional investor filings with the SEC. All four saw their share prices rise since the third quarter began, led by Antero, which was up 66% through Nov. 23.Griffin's touch was not universally aligned with the sector's improved performers. Citadel trimmed its stake in the largest U.S. gas producer, Appalachian driller EQT Corp., by 68% in the quarter while EQT shares have gained 30% in the second half of the year.Other institutions shared Griffin's confidence in the sector, buying more shares in six companies than they sold in four others.One standout stock buy was hedge fund Zimmer Partners LP's $60 million purchase of 4% of southwest Pennsylvania natural gas and NGL driller Southwestern Energy Co. While the new stake was just beneath the 5% threshold requiring a fund to declare its intentions, Zimmer has no history of activism, according to S&P Global Market Intelligence data. Southwestern's shares have climbed 22% since the third quarter began. Big index funds such as Vanguard Group and Dimensional Fund Advisors LP cut their holdings sharply in Utica Shale driller Gulfport Energy Corp. before Gulfport's Nov. 13 filing for bankruptcy protection, but Charles Schwab Investment Management Inc. and tiny investment adviser Shah Capital Management Inc. were not so quick. Both funds added to their position in the quarter before Gulfport filed.
Gulfport Accuses Midship Pipeline of Illegally Seizing $75.6M - Bankrupt Gulfport Energy Corp. has accused Cheniere Energy Inc.’s Midship Pipeline subsidiary of illegally seizing $75.6 million to hold it “hostage” during contract renegotiations in anticipation of the Chapter 11 filing, according to court filings. “To obtain leverage in ongoing contract negotiations and secure an advantageous cash position prior to Gulfport’s bankruptcy, Midship made false statements to Scotia Bank and wrongfully drew $75.6 million” from the letter of credit, Gulfport said in a complaint earlier this month to the U.S. Bankruptcy Court for the Southern District of Texas in Houston.Gulfport asked the court to order Midship to pay $75.6 million plus exemplary damages for its “egregious and commercially unreasonable” conduct.Oklahoma City-based Gulfport in mid-November filed for bankruptcy protection, joining many other Lower 48 exploration and production companies that have succumbed this year to low commodity prices exacerbated by the Covid-19 pandemic.Gulfport is a major player in Ohio’s Utica Shale, where it holds more than 200,000 net acres and produces about 1 Bcfe/d of oil and gas. The company in 2017 spent $1.85 billion on a deal that closed in 2017 to enter the South Central Oklahoma Oil Province, aka the SCOOP. Gulfport in March 2017 signed a 10-year deal for at least 175,000 Dth/d of firm transportation service on Midship, the first pipeline that Cheniere developed not directly linked to its liquefied natural gas export terminals.The 200-mile Midship system in Oklahoma was placed in service in April, about a year after it was originally scheduled. The 1.44 Bcf/d line moves gas from the SCOOP and the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties (STACK). Gulfport and Midship amended their agreement four times to alter minimum volumes and address construction delays, according to the court filing.
US- Enbridge sues Michigan over oil pipeline shutdown order - Enbridge filed a legal challenge Tuesday to Michigan Gov. Gretchen Whitmer's recent demand that the company shut down its oil pipeline that crosses the waterway connecting Lake Huron and Lake Michigan. The Canadian company accused the state of overstepping its bounds, arguing that Enbridge's Line 5 was under the sole regulatory jurisdiction of the U.S. Pipeline and Hazardous Materials Safety Administration. “This is the latest attempt by the state of Michigan to interfere with the operation of this critical infrastructure by assuming authority it does not possess,” the company said in a statement. In her Nov. 13 order to halt the flow of oil within 180 days, Whitmer said Enbridge had violated an easement granted 67 years ago to run a section of the pipeline along state-owned land below the Straits of Mackinac. Attorney General Dana Nessel sued in state court to enforce the Democratic governor's requirement. Enbridge filed its case in U.S. District Court in Grand Rapids, Michigan, underscoring its contention that the pipeline is a federal matter. It also submitted a notice seeking to transfer the state's suit to the federal court. Vern Yu, the company's president for liquids pipelines, said the state should “stop playing politics with the energy needs and anxieties of U.S. and Canadian consumers and businesses that depend on Line 5." Whitmer spokeswoman Tiffany Brown said Enbridge's suit “brazenly defies the people of Michigan and their right to protect the Great Lakes from a catastrophic oil spill." “In short, Enbridge claims it can continue to pump oil through the Straits of Mackinac indefinitely, posing enormous risk to our economy and way of life — and that the people of Michigan have no say in the matter," Brown said.
Consumers Energy completes $610M, 90-mile Saginaw Trail Pipeline - - Consumers Energy recently finished four years of work replacing a 1940s vintage natural gas pipeline with around 90 miles of new, larger lines collectively dubbed the Saginaw Trail Pipeline. The $610 million project stretches through Michigan’s Saginaw, Genesee, and Oakland counties, providing a safer, more reliable expanse of infrastructure through mostly rural agricultural areas. To accompany the new line, rebuilds were also undertaken on the city gate facilities where gas pressure is regulated. Consumers reported that no service interruptions were needed during construction. “We are pleased to share that the Saginaw Trail Pipeline has been successfully completed,” Dennis Dobbs, vice president of enterprise project management for Consumers Energy, said. “The project was a huge undertaking, and we are grateful for the cooperation and patience shown by affected landowners, community leaders, residents, and other entities throughout construction. We also recognize the outstanding efforts of the hundreds of company and contractor skilled trades employees who worked through the challenge of COVID-19 to bring this project to successful fruition.” While modernizing Consumers’ natural gas infrastructure, the line also took great care on the environmental side of development. Consumers Energy worked with officials from the Shiawassee National Wildlife Refuge and the Kensington Metropark to determine environmentally sensitive construction approaches. Such approaches included non-plastic erosion control blankets; the relocation of more than 100,000 turtles, frogs, snakes; wetland restoration efforts; and wood waste recycling. “The Saginaw Trail Pipeline helped model the way for environmental sustainability efforts for these types of large pipeline projects,” Dobbs said. The pipeline is now running as normal, but some additional restoration work will be undertaken in 2021.
American R&D program seeks to advance offshore energy – The Bureau of Safety and Environmental Enforcement (BSEE) and the US Department of Energy (DOE) have announced a funding opportunity for up to $40 million, over a five-year period, for the operation and maintenance of the Ocean Energy Safety Institute (OESI 2.0) to support improvements in safety and environmental sustainability in offshore energy E&P. OESI was originally envisioned as an entity that would facilitate research and development on, and implementation of, operational improvements in offshore drilling safety and environmental protection, blowout containment, and oil spill prevention and response. Through a five-year project agreement, the agencies will jointly support an R&D program related to offshore oil, natural gas, wind, and marine hydrokinetic energy production, with a focus on safety, environmental monitoring, and operational improvements. OESI 2.0 will expand the scope of OESI to include offshore renewable energy development considerations, as well as oil and gas production and development considerations, through a collaborative initiative involving government, academia, and scientific experts. The recipient institution receiving the award will be responsible for managing the OESI, providing input on yearly objectives, and conducting certain work to further the attainment of those objectives. While the OESI will operate independently of BSEE and DOE, both agencies will be substantially involved in the institute through a joint steering committee (JSC), which will include representatives from each agency with expertise related to oil and gas, offshore wind, and marine and hydrokinetic energy technologies. The JSC will provide input to OESI on its technology roadmaps and annual plans, as well as review and approve its major deliverables. “Our nation’s energy, economic, and national security rely on our all-of-the-above approach to producing safe, reliable, and resilient energy,” said Deputy Secretary of Energy Mark W. Menezes. “Through federal collaboration and a cross-sector approach, we can increase support for offshore energy production while protecting our workers and the marine environment.”
Why The Oil Industry Doesn't Fear Biden : NPR -U.S. oil and gas companies will soon be facing a climate-conscious president who has vowed to transition away from the oil industry. So you might expect a sense of existential dread in the oil world about President-elect Joe Biden. Instead, there's a surprising amount of optimism. The U.S. oil and gas industry has transformed over the last decade or so, as a remarkable shale revolution turned the country into the world's top petroleum producer. Unlike President Trump, who is an ally of the industry, Biden has emphasized the devastating cost of carbon emissions for the climate. Nonetheless, the oil industry sees the president-elect as open to compromise — and likely constrained by a Republican Senate. "The gut reaction [to Biden's win] is that this isn't good news for the industry, but we're actually cautiously positive," says Jen Snyder, a director at Enverus, a company providing data and analytics to oil and gas companies. There are bound to be plenty of disagreements with Biden. He has made tackling climate change a key platform of his agenda, and even without Senate control, he's expected to take actions that would put a damper on oil profits. Environmental regulations rolled back under Trump are likely to return. And the incoming president is also expected to ban or restrict new drilling on federal lands, a change he could institute through an executive order. But none of those changes would spell the end for the industry. Limiting drilling on federal lands seems likely to be the biggest blow for some companies — particularly in New Mexico, a region where federal leases have been particularly lucrative for producers. But a majority of U.S. oil and gas production won't be affected by that change. "On private lands, it's a different story," says Rene Santos of S&P Global Platts. "[The White House does] not have the power to just say to somebody in south Texas, 'You cannot drill anymore.' "
Biden's trans-Atlantic truce? - As pressure grows on European countries to reduce their greenhouse gas pollution, U.S. LNG opportunities are being threatened due to poor emissions controls used to produce the gas in the first place. But it may be President-elect Joe Biden's promise to take quick action to reduce emissions of methane, the main component of natural gas, that could ultimately help rescue U.S. fossil fuel producers, Pro's Ben Lefebvre reports this morning. "If we continue to have high levels of venting and flaring in the Permian, we're going to see more and more scrutiny from Europe," said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and former Obama administration official. "There's growing pressure in the European Union that if they're going to go with gas, they have to hold it to a higher standard and not go with the lowest common denominator" in production standards.A wider European pushback against U.S. gas is real, multiple people at U.S. LNG companies told Ben. The best way to tackle the problem is for a Biden administration to negotiate a shared standard for countries to measure the carbon content of natural gas and, at home, making methane emissions regulations a top policy priority, they said. "There's a real sensitivity in the EU about fracked gas," said one industry executive who asked for anonymity to discuss business discussions. The incoming administration "would be well advised to prioritize that. If [customers] can't use U.S. gas, then they're using Russian gas and Mideast gas."
American oil and gas companies are asleep at the wheel on methane emissions - In the global race to eliminate the world’s greenhouse gas footprint, some sources of emissions are easier to fix than others. One of the lowest-hanging fruits should be methane emissions from the oil and gas industry, which occur at every stage of production and distribution either through leaks or intentional flaring. Yet US oil and gas companies—the world’s largest producers of both products—have demonstrated once again that they’re not interested in fixing the problem. On Monday, 62 oil and gas companies representing 30% of global oil and gas operations joined a new voluntary agreement to report and reduce methane emissions, organized by the Environmental Defense Fund, the UN Environment Programme, the European Commission, and the Climate & Clean Coalition. Not a single one was American. Globally, methane emissions from oil and gas production amounted to about 82 megatons in 2019. That’s much less, by volume, than the industry’s multi-gigaton carbon dioxide footprint (not to mention emissions from actually burning the stuff). But because methane is up to 36 times more powerful than CO2 at capturing heat, it is disproportionately potent. As a result, reducing the oil and gas methane footprint by 75% would shave nearly 10% off the planet’s total greenhouse gas footprint, according to the Environmental Defense Fund. That’s more than taking every vehicle in America off the road. The solutions are neither complicated nor expensive: Plug leaks, replace faulty old compressors and other equipment, and stop venting so much of it during drilling. Because conserving methane also means producers are capturing more gas to sell, solutions largely pay for themselves: According to the International Energy Agency, oil and gas methane emissions could be halved at zero net cost, using existing technology. “This is the most immediate and cost-effective thing anybody can do to slow the rate of warming, now,” said Mark Brownstein, EDF’s senior vice president of energy. In other words, this is a no-brainer. Yet the industry has been slow to recognize this problem or take meaningful steps to curb, or even measure, its methane. And American companies have proved to be more recalcitrant than any.
Expect more consolidation in oil industry through mid-2021 - Mergers will continue to shrink the energy industry as the pandemic rolls into next year, giving fewer companies larger shares of U.S. oil output and threatening to further slash a workforce vital to Texas and Houston. By mid-2021, there will be at least six deals among oil and gas companies, including one or two mergers among oil majors, two to three large independents taking over smaller players, and two or three mergers of equal-size small and midsize companies, according to a forecast by Global consulting firm Accenture. Accenture predicts that half of the country's onshore oil will be in the hands of eight to 12 companies by the end of 2021, down from 16 to 17 now. “You can’t have 5,000 relevant players,” said Muqsit Ashraf, Accenture’s lead energy consultant. “There isn’t room for so many players.” Energy companies have been regularly pairing up since crude prices tumbled from more than $100 a barrel in 2014. The pace of mergers has accelerated after the pandemic strangled demand, sent crude prices to historic lows and squeezed company profits. U.S. benchmark West Texas Intermediate settled Monday at $42.84. Among notable deals are Chevron’s nearly $12 billion acquisition of Houston-based Noble Energy last month and ConocoPhillips’ $9.7 billion takeover of Concho Resources. The oil industry recognizes the benefits of consolidation, Accenture analysts said. Companies need scale to produce oil profitably at low prices, and larger companies can more easily access Wall Street capital and boost their footing in top-producing oil fields to remain relevant, Ashraf said. “Consolidation fortifies these companies to withstand the onslaught of low oil prices,” Ashraf said. But the mergers, while helping to boost production, leave behind a slew of redundant positions that eventually are eliminated, said Manas Satapathy, Accenture’s managing director for energy mergers and acquisitions.
Army Corps of Engineers grants final federal Line 3 permit (AP) — The U.S. Army Corps of Engineers on Monday approved the final federal permit for Enbridge Energy’s planned Line 3 crude oil pipeline replacement across northern Minnesota, bringing the project a step closer to construction. In a release from its St. Paul office, the Corps said it determined the Line 3 project “is compliant with all federal laws and regulations.” Col. Karl Jansen, commander of the St. Paul District, said the decision followed “an exhaustive review” and extensive work with federal and state regulators, Native American tribes, environmental groups and Enbridge. “I believe our decision is based on sound science and strikes the balance between protecting natural resources and allowing reasonable development,” Jansen said. All that remains in the six-year-old process now is for the Minnesota Pollution Control Agency to issue a storm water construction permit to protect surface waters from runoff while it’s being built, and then for the independent Public Utilities Commission to give a final green light. The commission has already approved the project several times. Pipeline opponents, including environmental and tribal groups, are still suing and protesting to try to block the project, and an appeal by the state Commerce Department is pending. But there are no injunctions in place to prevent Enbridge, based in Calgary, Alberta, from beginning construction if it gets final approval from the PUC. Winona LaDuke, executive director of Honor the Earth, an Indigenous-based environmental group, said the opponents will keep up the fight in court. “We’re going to pursue justice. We’d like the system to work,” LaDuke said as she pulled in to view an Enbridge pipe yard in Backus. Construction preparations are well underway and workers are gathering in communities along the route, she said, raising a public health threat amid the COVID-19 pandemic. Line 3 begins in Alberta and clips a corner of North Dakota before crossing Minnesota on its way to Enbridge’s terminal in Superior, Wisconsin. Enbridge wants to replace the Minnesota section because it was built in the 1960s, and its increasing maintenance needs mean the company can run it at only half its original capacity. Replacement segments in Canada, North Dakota and Wisconsin are already complete. Opponents say the pipeline threatens spills in pristine waters where Native Americans harvest wild rice and that the Canadian tar sands oil it would carry would aggravate climate change.
Baker Hughes Reports US Rig Rebound - The total number of rotary drilling rigs operating in the United States rebounded this past week, Baker Hughes Co. reported Wednesday. Less than a week after revealing a slight dip, the service company pointed out the overall number of U.S. drilling units has since risen by 10 to reach 320. Baker Hughes’ latest U.S. rig count reflects a 10-unit gain in oil rigs (to 241) and a one-unit increase in natural gas rigs (to 77). The number of miscellaneous rigs dropped by one to two units. Against the year-ago figure of 802, the latest total U.S. rig count is down by 482 drilling units, Baker Hughes continued. It pointed out that oil rigs are down 427, gas rigs are down 54 and miscellaneous rigs are down one. Baker Hughes added the U.S. offshore rig count remained flat at 12 this week – down 10 from this time last year. Canada netted one additional operating drilling unit this week, bringing the country’s total to 102. The most recent figures comprise 38 oil rigs (down four from last week) and 64 gas rigs (up five), Baker Hughes noted. At this time last year, 126 rigs (77 oil and 49 gas) were operating in Canada, the firm added. Baker Hughes obtains its working rig location information in part from Enervus Drillinginfo, which produces daily rig counts using GPS tracking units.
The Pandemic Has Broken Shale and Left Oil Markets in OPEC Hands OPEC’s oil ministers have a few challenges to consider at a crucial summit next week, but for the first time in years the shale boom won’t be at the top of the list. A devastating global pandemic and a reckoning with Wall Street appear to have broken the resolve of the shale wildcatters who turned the U.S. into the world’s biggest oil producer. Years of breakneck growth, at the expense of crude kingpins in the Middle East and Russia, have come to an end. If there was ever any doubt, it’s now abundantly clear who has the upper hand in the global oil market. “In the future, certainly we believe OPEC will be the swing producer — really, totally in control of oil prices,” Bill Thomas, chief executive officer of EOG Resources Inc., the biggest independent shale producer by market value, said earlier this month. “We don’t want to put OPEC in a situation where they feel threatened, like we’re taking market share while they’re propping up oil prices.” The shale industry’s prudence, also echoed by the CEOs of Pioneer Natural Resources Co. and Occidental Petroleum Corp., means that production will probably flatten after a steep plunge this year. U.S. oil output will end 2021 close to 11 million barrels a day, about the same as it is now, according to forecasters IHS Markit, Rystad EnerÉ’y, Enverus and the U.S. EnerÉ’y Information Administration. “I see no more growth until 2022, 2023, and it will be very, very light in regard to the U.S. shale industry ever growing again,” Pioneer CEO Scott Sheffield, who’ll run the fourth-largest shale operation in the country after his company completes the takeover of Parsley EnerÉ’y Inc., said in an interview. At the start of 2020, the group’s efforts to control prices were facing increasing difficulties. The breakthroughs in horizontal drilling and fracking that ushered in the shale revolution made it look as though U.S. production growth might never end. Output surpassed 13 million barrels a day for the first time in February. Then Covid-19 hit, people around the world stopped driving and flying, and the oil market crashed. President Donald Trump brokered a historic deal with OPEC in April to remove almost a 10th of global production from the market. He said the U.S. contribution would come in the form of market-driven cuts
Tribes have not met 'high bar' for Dakota Access Pipeline shutdown, Corps says -- Shutting down the Dakota Access Pipeline would "cause economic harm and shift oil transport to more risky methods" and should not occur, a federal permitting agency argued in the latest round of legal filings in the ongoing dispute over the oil pipeline. The same judge who ordered the line to cease operations this past summer is considering another a plea from the Standing Rock Sioux and other tribes to shut the line down after a higher court overturned part of the initial ruling. An appellate court said U.S. District Judge James Boasberg "did not make the findings necessary" for a shutdown in his July order, and it kicked the matter back to him for further consideration.Recent legal filings have rehashed familiar arguments from the U.S. Army Corps of Engineers, pipeline developer Energy Transfer, the tribe and others with a stake in the outcome of the pipeline dispute. Standing Rock tribal members are concerned that an oil spill at the pipeline's Missouri River crossing would harm their water supply, while the Corps and Energy Transfer maintain the line is safe. The Corps in a brief submitted Friday said the tribes have not met the "high bar" required for a shutdown, in which they must show they are certain or likely to "suffer an irreparable injury that cannot be remedied and that the balance of hardships tips in their favor." "The scales are not close to evenly balanced," the Corps said. The agency argued the risk of a significant oil spill is low and called tribes' concerns "speculative and abstract." Shutting down the pipeline would prompt the oil industry to rely more on trains to transport crude, which poses risks, the Corps said. Fiery oil train derailments can be deadly, such as when a train carrying Bakken crude derailed in Quebec in 2013, killing 47 people. The North Dakota attorney general's office also filed a brief Friday outlining potential harm to the state if the pipeline were to shut down. The office argued the oil industry would lose billions of dollars and that state tax revenue would see "drastic reductions." A shutdown also would lead to job losses and would stymie the state's economic recovery, the state said.
Biden Has Promised to Kill the Keystone XL Pipeline. Activists Hope He’ll Nix Dakota Access, Too - Only a few months ago, climate activists celebrated the dawn of a "new era," with three major victories in cases involving oil and gas pipelines. After energy companies canceled the proposed Atlantic Coast natural gas pipeline in July, court rulings dealt setbacks to the contentious Dakota Access and Keystone XL Pipelines. Both have sparked protests from climate and Indigenous groups and remained sticking points in climate policy. Climate activists hope the ascendance of President-elect Joe Biden, who has called for a transition away from the oil and gas industry, will now put an end to the Dakota Access and Keystone XL pipelines. The Dakota Access Pipeline, first proposed in 2014 by a subsidiary of the Dallas, Texas-based company Energy Transfer Partners, is a 1,172-mile underground crude oil pipeline which would run from North Dakota, passing just a half mile from the Standing Rock Sioux Reservation, through South Dakota and Iowa to a terminal in Illinois. The U.S. Army Corps of Engineers halted the pipeline's construction under the Obama administration in a win for the pipeline's opponents after months of heated protests. But only days after assuming office, President Trump signed an executive memorandum, instructing the Army to expedite the environmental review and approval process. Today, the Standing Rock Sioux and Cheyenne River Sioux tribes remain in a protracted legal battle over the pipeline, with its fate still uncertainafter a hearing earlier this month in the U.S. Court of Appeals for the District of Columbia. The subject of the hearing was whether a lower court had erroneously concluded that federal regulators' approval of the project failed to satisfy the National Environmental Policy Act. The Keystone XL project, originally proposed by the Canada-based energy company TC Energy in 2008 as an expansion of its existing pipeline system, is a 1,179-mile-long pipeline that would transport 830,000 barrels of Alberta tar sands oil per day to Gulf Coast refineries. Along with theexecutive order he signed almost immediately after taking office to clear the way for Dakota Access, Trump also reversed Obama's 2015 decision to reject the Keystone pipeline.
ConocoPhillips says it will resume drilling in December on Alaska’s North Slope - ConocoPhillips Alaska on Wednesday said it will resume Alaska drilling projects using four rigs starting in mid-December, bringing back several hundred jobs amid reductions that began as the COVID-19 pandemic contributed to a drop in oil prices this spring.The company said the North Slope projects include:
- • A new extended-reach drilling rig working in the Alpine oil field. It’s nicknamed “The Beast.”
- • Two rigs working in the Kuparuk River Unit.
- • A rig working in the Greater Mooses Tooth 2 Unit.
ConocoPhillips announced in early April that it would demobilize its North Slope drilling-rig fleet to help protect workers during the COVID-19 pandemic. It temporarily cut North Slope production in June,citing low oil prices. It reported losing $1.5 billion worldwide through June this year, including $60 million in Alaska.The Alaska oil and gas industry this year has shed about 3,100 jobs, close to one-third of the workforce in January.ConocoPhillips is Alaska’s largest oil producer, with 218,000 barrels of oil produced daily in 2019. The company also has new projects planned on the North Slope’s western frontier for oil development.ConocoPhillips Alaska president Joe Marushack had previously warned that another factor, the potential for Alaska voters to approve a citizen-led oil tax increase on Nov. 3, could force the oil company to keep most of its drill rigs idle.
Biden faces uphill battle to 'permanently' protect Alaska wildlife refuge --President-elect Joe Biden faces several obstacles to fulfilling his pledge to work toward “permanently protecting” the Arctic National Wildlife Refuge, but he’ll also have a few executive tools at his disposal that could thwart drilling across large parts of the Alaskan wilderness. Biden’s climate plan, released during the campaign, included a promise to protect the 1.6 million acres in Alaska that were opened up to oil drilling during the Trump administration. But unlike many Trump-era policies that Biden aims to undo unilaterally through executive action, the authorization for drilling along the Alaskan refuge’s coastal plain became federal law through the GOP’s 2017 tax-cut bill, which required two oil and gas lease sales in the refuge by the end of 2024. Still, there are some avenues Biden can pursue to reduce drilling or make it more difficult for the fossil fuel industry. Some of those options will be determined by whether the Trump administration is successful in completing one of the lease sales before Biden takes office on Jan. 20. This past week, the administration published a “call for nominations” that sought input on which pieces of land should be leased for drilling, noting that a sale was “upcoming.” That came a month after it proposed allowing a company to test for oil deposits in the refuge, home to grizzly bears, polar bears, gray wolves and more than 200 species of birds. Asked if the administration planned to hold a lease sale before Inauguration Day, Bureau of Land Management (BLM) spokesperson Richard Packer said in an email that “a sale may take place after the nomination period has closed and a notice of sale [is] published in the Federal Register.” Legal experts say that if no sale takes place before Biden takes office, there are a range of actions the new administration can take to limit drilling there. The most desirable, though seemingly unlikely, is to sign legislation repealing the provision in the 2017 tax law that required the lease sales. But that would require Democrats winning both runoff elections in Georgia on Jan. 5 to gain control of the Senate. If the leases are sold after Biden is in the White House, he would have more discretion over what land is sold and could also decide the terms of the lease. “They could basically not sell any leases that they think are going to compromise in some significant way the wildlife resources on the refuge and...they can also impose stipulations on the lessee that will make development much harder and much more expensive, but will also be designed presumably to protect the wildlife resources that are on the refuge,” Environmentalists have also suggested Biden should revisit the initial environmental impacts statement behind the record of decision (ROD) that opened up the area to drilling.
Federal agency proposes rule aimed at blocking banks from not financing Arctic drilling - The federal government on Friday released a proposed rule aimed at limiting large banks from pulling their financing from Arctic oil and gas projects, after several banks announced policies that prohibit or limit their investment in such projects, including in the Arctic National Wildlife Refuge. However, some experts and activists said the rule’s impact, if it is finalized, could be muted if banks can show that opting to not finance Arctic oil projects is a financial decision, not a political one. The head of the Office of the Comptroller of the Currency, an independent bureau under the Treasury Department, said on Friday that the banking system’s capital and services must be accessible to everyone on equal terms.Banks can decline to support individual projects or customers based on reviews of their risk, said Brian Brooks, acting comptroller of the bureau. But they cannot take sweeping policy approaches that affect only certain sectors in what is part of a “creeping politicization” of the banking industry, he said.Since late last year, five of the nation’s largest banks — Citigroup,Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo — have announced that they will pull back from supporting Arctic oil and gas projects. The policies followed pressure from conservation groups concerned about climate change. Also, BlackRock, the world’s largest asset manager, urged companies early this year to emphasize steps they are taking to combat global warming.
Interior Department contender says Biden would target Trump Arctic drilling push on first day (Reuters) - President Donald Trump’s last-minute push to allow drilling in a pristine part of Alaska’s Arctic will be an early target for the next administration, according to Senator Tom Udall, a contender to lead the Interior Department under Joe Biden. The New Mexico Democrat was speaking of the Trump administration’s plan to pull off a sale of oil drilling leases in the Arctic National Wildlife Refuge before Biden, who wants to ban new drilling on all federal lands and waters as part of a strategy to fight climate change, becomes president on Jan. 20. “I would expect that there would be real scrutiny and analysis of these last-minute kinds of deals that are being done,” Udall said in an interview, adding that he expects they could be overturned by the courts. “That’s an issue that needs to be looked at on Day One.” The Interior Department, which manages federal and tribal lands, last week issued a request to energy companies to identify tracts in the refuge to be offered for sale. That puts the administration on a timeline that could bring a lease auction by mid-January, only days before Biden takes office. Udall, a long-time member of Congress who is retiring from the Senate chamber early next year - and the son of former Interior chief Stewart Udall - is one of several people in the running to lead Interior under Biden, he confirmed. He said he would accept the post if offered. Udall, however, faces stiff competition from his fellow New Mexican, Representative Deb Haaland, who here would become the first Native American presidential cabinet member if tapped to lead Interior - a federal agency with huge oversight of Indian country. “All I really want to do is help this administration get it right in any capacity I can,” Udall said.
These Days, the Smart Money Is Staying Away From Arctic Drilling - The Trump administration is racing against legal deadlines and a merciless regulatory calendar in its last-ditch effort to sell drilling rights in the Arctic National Wildlife Refuge before President-elect Joe Biden is sworn in at noon on Jan. 20. Even if the White House succeeds in clearing those hurdles, it’ll still face the cold reality of the market: funding for Arctic drilling is becoming harder and harder to find. Both oil companies and banks have decided they can no longer tolerate the risk of drilling in one of the fastest-warming places on the globe. Ben Cushing, who leads the nonprofit Sierra Club’s financial advocacy campaign, put the problem simply: “Smart money is staying away from this kind of development in the Arctic.” Buying the leases—which could go for as little as $5 an acre—is the cheap part of the oil exploration process. Every other step—from enlisting consultants to conduct required environmental studies to mounting industrial operations in a remote wilderness without existing infrastructure—is hugely expensive. The break-even price for the oil that companies would extract could be as high as $80 per barrel, according to Rystad Energy, a level the market hasn’t seen since October 2018. Most of today’s likely bidders would need outside financing to actually get anything out of their Arctic leases. But banks are increasingly worried about damage to their public image from backing drilling in the reserve, which 70% of American voters oppose, according to the Yale Program on Climate Change Communication. Underscoring that perceived risk: Institutions associated with Energy Transfer LP’s controversial Dakota Access oil pipeline lost $4.4 billion in account closures and divestments in 2017, research from the University of Colorado Boulder shows. Activists, Native Alaskans, and more recently large shareholders have worked to persuade lenders they were jeopardizing the climate, their investments, and their reputation by underwriting Arctic drilling. Five major U.S. banks—Goldman Sachs Group Inc., JP Morgan Chase & Co., Wells Fargo & Co., Citigroup, and Morgan Stanley—have already ruled out financing oil and gas projects in the Arctic refuge, leaving Bank of America Corp. the only major holdout. Last week, many of the same activists who worked on the banks issued a similar warning to the world’s top insurers. “The options are dwindling as banks shy away from the Arctic,” said Kathy Hipple, an analyst at the Institute for Energy Economics and Financial Analysis. “Not only because of ESG reasons,” she added, referring to environmental, social, and governance standards for investing, “but because it’s a high-cost, high-risk business.” Cracks were already beginning to appear in the industry’s finances before the coronavirus-spurred plunge in fuel demand, which hastened bankruptcies across the sector. Wells Fargo reported that the oil, gas and pipeline industry was responsible for 47% of its past-due corporate loans in the second quarter, even though it made up just 3% of its commercial loan portfolio. Private equity could help fill the financing gap left by banks, but it would come at greater expense to oil producers already operating on thin margins—and those firms are also retreating from energy financing, Hipple said.
The IMO will ban heavy fuel oil use in the Arctic - The International Maritime Organization (IMO) approved on Friday a ban on the use of heavy fuel oil for ships in the Arctic, but environmental organizations slammed the new regulation as “riddled with loopholes” that would continue to exonerate some polluters well into the end of 2020s. The Marine Environment Protection Committee (MEPC) of the UN’s organization IMO moved to ban the use of heavy fuel oil (HFO) and its carriage for use by ships in Arctic waters after July 1, 2024. The controversy in the new regulation arises from several provisions. One exempts ships with oil fuel tanks inside their double hull, while another gives countries in Arctic waters the right to issue waivers from the HFO ban for vessels flying their respective flags in the Arctic until July 1, 2029.The Clean Arctic Alliance slammed on Friday the approval of “a ban ridden with loopholes on the use and carriage of heavy fuel oil in the Arctic (HFO), saying that it would leave the Arctic, its Indigenous communities and its wildlife facing the risk of a HFO spill for another decade.” “By taking the decision to storm ahead with the approval of this outrageous ban, the IMO and its member states must take collective responsibility for failing to put in place true protection of the Arctic, Indigenous communities and wildlife from the threat of heavy fuel oil”, Dr Sian Prior, Lead Advisor to the Clean Arctic Alliance, said in a statement. “It is now crucial that Arctic coastal states do not resort to issuing waivers to their flagged vessels,” Prior added. According to a 2020 white paper from the International Council on Clean Transportation (ICCT), HFO use in the Arctic jumped by 75 percent between 2015 and 2019. “As newer ships enter the Arctic fleet, especially oil tankers and bulk carriers, more ships will qualify for exemptions. Additionally, if ships reflag to Arctic states, more could qualify for waivers and the effectiveness of the ban would be further eroded,” ICCT said in its paper in September.
More Positive Covid Cases at LNG Canada Project - Northern Health Authority has confirmed additional positive Covid-19 cases at the LNG Canada project site in Kitimat, B.C, LNG Canada and JGC Fluor have revealed in a joint statement. All affected individuals have been placed in isolation and are being cared for in their homes or at the project’s on-site facilities by medical and support staff, the statement noted, adding that contact management and tracing have “gone well” and will continue. All cases were said to have occurred in the same general work location and no public exposures in Kitimat have resulted from the event, according to the statement. In order to manage the situation, the companies announced a series of new actions. As part of these, the firms said thorough disinfection and sanitization, including electro-static cleaning, of the impacted work areas has occurred, a work from home policy has been reinstated for non-essential staff and an active review of the companies’ Covid-19 safety plans is underway. “LNG Canada and JGC I Fluor JV continue to work closely with Northern Health and related health authorities,” the statement posted on LNG Canada’s website said. “As always, we will continue to monitor the situation and adjust our plans and actions as required. Take care and stay safe,” the statement added. On November 19, the companies announced that Northern Health Authority had confirmed positive Covid-19 cases at the LNG Canada Project site in Kitimat. The affected individuals were placed in isolation and were being cared for in their homes or at the project’s on-site facilities by medical and support staff. The companies said at the time that they were working closely with Northern Health to carry out the contact tracing protocols. LNG Canada is a joint venture among Shell, Petronas, PetroChina, Mitsubishi and KOGAS. The project will export Canadian natural gas to Asian markets, and in the process, put Canada on the global map of LNG exporting countries and create a world-class LNG industry in British Columbia and Canada, according to LNG Canada’s website.
Oil spill cleanup continues in Woodland - ALMOST a week since an oil spill in the Godineau River in Woodland, Heritage Petroleum Company Ltd is still cleaning it up. On Wednesday, the company sent workers to Woodland after receiving reports of a spill at New Cut Channel. In a release, it said then, “Company officials were immediately dispatched to the site and quickly determined that the spill was emanating from its 16-inch trunk pipeline. Oil absorbent booms and spill containment Boom placed in the Godineau. On 18 November, there was an oil spill along the New Cut Channel, Woodland. - Marvin Hamilton It said the pipeline was isolated and clamped and the company was "mobilising all available resources including the services of specialised oil spill response contractors to clean up the affected areas.” In addition, it said a wildlife rescue, conservation and rehabilitation team was sent out, and booms were being deployed along the Godineau River to stop the oil spreading. further spread downstream." When Newsday visited the area on Monday, there were several workers there, including senior officials from Heritage. Nearby residents said the 30 or so men began working at approximately 6 am, and when Newsday arrived at approximately 1 pm, they were being rounded up and dismissed for the day. One senior official said, "The weather is against us," while speaking to the workers. Asked for a comment, the workers said they were not allowed to speak to the media. Newsday also went out on the river by boat. Many mangroves had remnants of oil from the spill, which also coated some oysters and fiddler crabs. There were several oil booms along the river and excavators were seen tearing down parts of the riverbank.
Oil-backed trade group is lobbying the Trump administration to push plastics across Africa – A lobby group representing oil and chemical companies, including Shell, Exxon, Total, DuPont and Dow, has been pushing the Trump administration during the pandemic to use a US-Kenya trade deal to expand the plastic and chemical industry across Africa.Documents obtained by Unearthed show the same lobby group – and the US recycling industry – also lobbied against changes to an international agreement that puts new limits on plastic waste entering low- and middle-income countries.Several of the companies in the American Chemistry Council (ACC) – including Shell, Exxon and Total but not BP – were the founders of a $1bn initiative that pledges to create “a world free of plastic waste”.In public letters to top officials at the US Trade Representative and US International Trade Commission, the ACC writes: “Kenya could serve in the future as a hub for supplying U.S.-made chemicals and plastics to other markets in Africa through this trade agreement.”The letters also call for the lifting of limits on the waste trade, a move which experts say amounts to an attempt to legally circumvent the new rules on plastic waste, rules which – the documents reveal – the firms had also vigorously opposed.Kenyan environmentalists said the proposals would mean that “Kenya will become a dump site for plastic waste”.US Democratic Senator Tom Udall, who last year introduced legislation to tackle the plastic waste crisis accused the companies of “double dealing.” He told Unearthed: “It is outrageous that petrochemical and plastic industries claim the solution to our mounting plastic waste crisis is to produce more disposable plastic. These same companies and corporations then point the finger at developing nations for the plastic waste showing up in our oceans. This double-dealing makes clear what the true source of our plastic waste crisis is: companies and corporations off-shoring their responsibilities to make billions of dollars… Requiring these companies to take responsibility for their excessive waste and pollution is the only way we will tackle our colossal plastic waste problem.” The ACC is a major trade association for chemical companies, including Dow and DuPont, as well as the petrochemical arms of some of the oil majors. Although BP is a member, it does not produce any plastics and last month sold off its petrochemicals business to Ineos. A spokesperson told Unearthed that their work with the ACC focuses on Castrol lubricants, which are used in the automotive industry.
Solomon Islands oil spill report leaked to ABC reveals economic losses of up to $50 million - Documents leaked to the ABC have estimated the economic losses caused by an oil spill near a world heritage-listed area of Solomon Islands last year could be as high as $50 million. More than 300 tonnes of heavy fuel oil leaked into the waters of Kangava Bay in February last year from the damaged hull of a bulk carrier after it ran aground on Rennell Island in rough seas. The bulk carrier MV Solomon Trader had been attempting to load bauxite from a nearby mine on the island. The report said the grounding caused the direct loss of more than 10,000 square metres of reef and more than 4,000 square metres of lagoon habitat. Almost 30,000 additional square metres of lagoon habitat was exposed to heavy fuel oil in the weeks following the spill. A team of local and international experts conducted the environmental damage assessment for the Solomon Islands Government four months after the spill. Their report was handed to the Solomon Islands Government more than a year ago, but its contents have never been made public and locals are yet to be compensated. The ABC obtained a copy of the assessment that outlines significant and long-lasting impacts to the nearby marine environment. Images in the report showed a thick black sludge extending across the bay's turquoise blue waters. Surveys of the seafloor detailed in the report found "reduced invertebrate abundance and richness, reduced fish biomass … and reduced live coral cover". "Statistical analysis suggests these impacts extend to within 1 to 3 kilometres of the grounding site," the report said. The MV Solomon Trader ran aground on a reef at Lavangu Bay in East Rennell while trying to load bauxite on the island.(ABC: The Australian High Commission)Rennell Island is recognised as a biodiversity hotspot. The eastern half of the island was designated a UNESCO World Heritage site in 1998, but due to pressures from logging, mining and invasive species, the site is listed as "in danger" by the international group. The majority of the western half of Rennell Island was leased to Asia Pacific Investment and Development Ltd (APID) for a bauxite mining operation in 2015. The report said APID subcontracted mining operations to Bintan Mining Solomon Islands who are "currently exporting approximately 300,000 tonnes per month" of bauxite ore in 34 shipments. The researchers also interviewed locals to gauge the socio-economic impacts of the disaster on the island's 2,500 inhabitants. They found it had affected their physical and mental health, and they also documented concerns about the loss of subsistence fishing, dietary changes and negative impacts on cultural practices.
US, Japan inch toward unlocking vast new source of natural gas – A large volume of untapped natural gas is stored in ice crystals known as methane hydrates, which are found under permafrost and beneath the seafloor. Despite concerns from environmental groups, government researchers from the U.S. and Japan are moving ahead with plans to begin a long-term test of a promising methane extraction technique in Prudhoe Bay, Alaska. They plan to begin drilling in 2021 at a site within a long-used oil field containing two viable hydrate reservoirs. The test will last approximately one year. “Hydrates are the largest reservoir of natural gas that we have available to us. It’s just a question of ‘is it economical to access them?’” says Joseph Stoffa, a technology manager at the National Energy Technology Laboratory, which is collaborating with Japan’s Oil, Gas, and Metals National Corporation on the study. But some worry that continuing to develop new sources of natural gas could prolong the world’s dependence on fossil fuels. “We need to be transitioning to renewable energy instead of just finding better ways of fracking,” says Dominique Thomas, an organizer for the environmental advocacy group 350.org. Activists have also raised concerns that drilling into hydrate reservoirs could release methane, a greenhouse gas which is 72 times more potent than carbon dioxide for the first 20 years it spends in the atmosphere. Natural gas production has long carried the risk of methane leaks from pipes and wells, sometimes called “fugitive emissions.” Stoffa says that any efforts to extract methane from hydrates would aim to minimize escaping methane. The technique they plan to use is standard in the natural gas industry and carries the same risks to the drill site as conventional gas drilling, according to Tim Collett, a senior scientist at the U.S. Geological Survey. Some independent experts also question the economic wisdom of developing hydrates. Clark Williams-Derry, an energy finance analyst at the Institute for Energy Economics and Financial Analysis in Ohio, is skeptical that hydrates will become viable in time to compete with fast-growing sources of renewable energy like solar and wind. Besides, he says, the natural gas industry is suffering from oversupply these days. “They have a lot of problems, but a scarcity of methane is just not one of them right now.”
China set to eclipse America as world’s biggest oil refiner - Earlier this month, Royal Dutch Shell Plc pulled the plug on its Convent refinery in Louisiana. Unlike many oil refineries shut in recent years, Convent was far from obsolete: it’s fairly big by U.S. standards and sophisticated enough to turn a wide range of crude oils into high-value fuels. Yet Shell, the world’s third-biggest oil major, wanted to radically reduce refining capacity and couldn’t find a buyer. As Convent’s 700 workers found out they were out of a job, their counterparts on the other side of Pacific were firing up a new unit at Rongsheng Petrochemical’s giant Zhejiang complex in northeast China. It’s just one of at least four projects underway in the country, totaling 1.2 million barrels a day of crude-processing capacity, equivalent to the U.K.’s entire fleet. The Covid crisis has hastened a seismic shift in the global refining industry as demand for plastics and fuels grows in China and the rest of Asia, where economies are quickly rebounding from the pandemic. In contrast, refineries in the U.S and Europe are grappling with a deeper economic crisis while the transition away from fossil fuels dims the long-term outlook for oil demand. America has been top of the refining pack since the start of the oil age in the mid-nineteenth century, but China will dethrone the U.S. as early as next year, according to the International Energy Agency. In 1967, the year Convent opened, the U.S. had 35 times the refining capacity of China. The rise of China’s refining industry, combined with several large new plants in India and the Middle East, is reverberating through the global energy system. Oil exporters are selling more crude to Asia and less to long-standing customers in North America and Europe. And as they add capacity, China’s refiners are becoming a growing force in international markets for gasoline, diesel and other fuels. That’s even putting pressure on older plants in other parts of Asia: Shell also announced this month that they will halve capacity at their Singapore refinery. There are parallels with China’s growing dominance of the global steel industry in the early part of this century, when China built a clutch of massive, modern mills. Designed to meet burgeoning domestic demand, they also made China a force in the export market, squeezing higher-cost producers in Europe, North America and other parts of Asia and forcing the closure of older, inefficient plants.
Modi says India set to double oil refining capacity in 5 years, earlier than expected - India plans to nearly double its oil refining capacity in the next five years, Prime Minister Narendra Modi said on Saturday, offering a much more aggressive timeline than previously despite the coronavirus pandemic blighting the economy.The country's energy minister was quoted in June as saying India's oil refining capacity could jump to 450-500 million tonnes in 10 years from the current level of about 250 million tonnes. But addressing a petroleum university's convocation, Modi said "work is being done to nearly double the country's oil refining capacity in the next five years". The convocation was also addressed virtually by billionaire Mukesh Ambani, whoseReliance Industries Ltd operates the world's biggest oil refinery in Modi's home state of Gujarat. Modi said India was also aiming to raise the share of natural gas in its energy-consumption mix by up to four times. The cleaner-burning fuel currently accounts for about 6% of the energy consumed in the country. India would achieve its targets of increasing renewable energy capacity to 175 gigawatts by 2022 and 450 gigawatts by 2030 ahead of schedule, Modi added. The country had renewable energy capacity of about 75 gigawatts at the end of 2018.
Renewed Lockdowns Threaten More Refinery Closures In Europe More refineries in Europe are at risk of permanent closures, with fuel demand on the continent falling again as major economies re-imposed lockdowns to fight the spike in coronavirus cases. Gasoline demand in Europe is expected to be between 15 and 20 percent lower in November and December compared to the same months of 2019, Argus reported, citing market participants. The new lockdowns, partial lockdowns, and curfews in the biggest economies in Europe, including the UK, Germany, France, Italy, and Spain, are dragging down oil demand again while a double-dip recession in the Eurozone and wider Europe now looks almost inevitable. Refiners have struggled since the spring with the crash in fuel demand, and many of them are restructuring operations, including closing down permanently crude oil processing capacity. Petroineos, a joint venture of Ineos and PetroChina, said earlier this month it plans to permanently close some units at the 210,000-bpd Grangemouth refinery, the only refinery in Scotland, which will cut the facility’s refining capacity to 150,000 bpd.Neste of Finland said in September that it was exploring the shutdown of its refinery operations in Naantali and transforming the Porvoo refinery operations to co-processing renewable and circular raw materials. “The forthcoming operating and maintenance investments in the Naantali refinery are not viable nor sustainable in a situation where there is large over-capacity for oil refining globally,” Neste’s President and CEO Peter Vanacker said in September. Refiners in the United States are also idling refinery capacity and cutting jobs to cope with the losses from the demand crash. Refiners around the world have been announcing permanent closures of refinery capacity this year, but significant overcapacity still remains, the International Energy Agency (IEA) said in its monthly Oil Market Report last week. Permanent shutdowns of refinery capacity have reached 1.7 million bpd. But more than 20 million bpd crude oil distillation capacity now sits idle, the Paris-based agency said, noting that “there remains significant structural overcapacity.”
EU database raises more questions about Japanese Owner Of Mauritius Oil Spill Ship - The Indian Ocean island of Mauritius continues to face an unprecedented ecological, human health and economic impact from the devastating oil spill in August. At the center of the controversy lies the Wakashio bulk carrier, the cause of the disaster. Now, an important EU Ship Transparency Database, called EQUASIS (Electronic Quality Shipping Information), administered by the European Maritime Safety Authority in Lisbon, Portugal, is raising more questions about the Japanese owner of the Wakashio. With demands growing for a full international inquiry into how the bulk carrier – one of the largest ships in the ocean – came to crash into a network of internationally protected nature reserves along Mauritius’ coral reefs, questions are starting to be asked about the business operations of the vessel owner itself, Japan-based Nagashiki Shipping Co Ltd (reportedly known as Changfeng Steamship company in Japan). This is particularly relevant as Mauritius prepares its multi-billion dollar legal case for damages from the vessel’s insurers. There is a growing mismatch between statements made by the company’s representatives, what is listed on the company’s website and what international shipping databases are showing. Addressing Secretive Shell Companies and ‘Flags of Convenience’ in global shipping One of the biggest reasons for this opaqueness is the widespread use of secret offshore shell companies by the global shipping industry. 70% of global shipping are registered with the six major ‘Flags of Convenience’ countries (Panama, Liberia, Malta, Marshall Islands, Singapore, Hong Kong) whose registration system makes it easy to hide shipping assets and limit how much multi-billion dollar shipping companies have to pay out in the event of an environmental catastrophe as was seen with Mauritius. Although Nagashiki Shipping is based in Japan and presents itself as a Japanese Shipping Company with a long maritime history in Japan, not one of its vessels are registered in Japan. They are all registered in ‘Flags of Convenience’ nations, such as Panama, the Marshall Islands and Liberia. In previous meetings over the past decade, the G20 has taken on free trade, climate change and tax transparency. Global shipping lies at the nexus of all three, and has been left without sufficiently strong and independent international oversight. With 80% of world trade passing through the economies of the G20, and major changes needed to wean the industry off fossil fuels in the next decade, this may be the right window to intervene, especially with a new U.S. Presidential team coming into office. The failure of the UN Shipping Regulator, the IMO, to take action last week on shipping emissions and Arctic pollution once more reminded the world that public trust has been completely eroded with the UN-affiliated shipping institution. Rather than being multilateral institution representing safety of seafarers, coastal communities, tax authorities and the planet, the IMO is now largely regarded as a trade body primarily focused on the interests of the global shipping industry.
Watch- Viral Video Of Water On Fire Reveals A Natural Gas Leak In China - Residents in a natural gas-producing northeastern Chinese province have made a video of tap water being set on fire with a lighter - a video that went viral - prompting an investigation by local authorities and a shutdown of the water supply to part of a city because natural gas had leaked into the groundwater. Videos of tap water in the city of Panjin, in China’s Liaoning province, surfaced on Chinese social media and became so popular that the story was picked up by the People’s Daily, a Chinese state-affiliated media outlet. According to People’s Daily’s tweet: “The odd scene is caused by natural gas infiltration due to temporary underground water supply system error, which is now shut down. Normal supply has resumed.” The local government has said that further investigation would be conducted into the cause of the incident, People’s Daily reported. However, according to media reports in China, carried by Newsweek, flammable tap water is not a new phenomenon in the district of the city of Panjin where the latest video was recorded. Residents in Dawa district have said that they had seen instances of burning tap water since at least 2018. Other residents say that their tap water has always been more “oily”. A report from the CCTV outlet said that residents had first noticed the flammable tap water “three to four years” ago. Chinese authorities said that after a “comprehensive investigation of the tap water sources in the whole district, no such problems have been found in other areas.” The Liaoning province has natural gas reserves, and last year in November, a unit of China National Petroleum Corporation (CNPC)— Liaohe Oilfield—started construction of an $8.5-billion gas storage project in the city of Panjin, which would be the biggest underground natural gas storage center in northeast China.
Khor Fakkan Municipality contains oil spill on beach - A lightweight oil spill on Khor Fakkan’s Al Lulayyah Beach has been successfully contained and cleaned up by a team from the Khor Fakkan Municipality, in coordination with concerned environmental authorities in the emirate. The spill was noticed at the beach on Sunday evening. Upon notification from the coastal guards, the Khor Fakkan Municipality department immediately dispatched an emergency team to tackle the spill. This the third time the municipality has noticed oil slicks on the seashore. The phenomena is increasing and strict measures and tough penalties need to be taken against the violators, said an official from the Khor Fakkan Municipality department. The official cautioned residents from going near the beaches to protect themselves from any harmful effects.
Yemens Ansarullah allows UN team to inspect decaying oil tanker (Tasnim) – The Houthi Ansaruallh movement has allowed an international inspection team to board the decaying FSO Safer oil tanker moored off Yemen’s Red Sea coast, the UN said. - World news - UN spokesman Stephane Dujarric said the Houthis on Saturday sent an official letter to the UN confirming their approval for experts to access the stranded vessel to carry out vital maintenance checks. The 45-year-old ship has been anchored about 60 km north of Hudaydah since the start of the Saudi-led war on Yemen five years ago and is loaded with more than 1 million barrels of crude oil. Officials have warned that the rotting tanker posed “grave risks” to the environment and maritime navigation if left unattended any longer. “The objective of the UN-led expert mission is to assess the vessel and undertake initial light maintenance as well as to formulate recommendations on what further action is required to neutralize the risk of an oil spill,” Dujarric added. During a press briefing in New York, he said that the UN Office for Project Services (UNOPS) would handle picking members of the mission and equipment required for assessing and repairing damage to the Safer. “I think if everything comes together, we would expect the mission staff and the equipment to arrive on site by late January or early February.”
OPEC seeks $12.6tn investments to revamp global oil industry - The Organisation of Petroleum Exporting Countries (OPEC) has disclosed that the global oil industry will require about $12.6 trillion investments in the downstream, midstream as well as upstream to sustain its innovative and production efficiency in the next 25 years. Secretary General of the organisation, Dr Sanusi Barkindo, who spoke at the Crescent Ideas Forum on ‘‘The Outlook on Energy’’ videoconference, also predicted a rash of closure of refineries globally in the next few years as regions develop new capacities. He stated that OPEC’s World Oil Outlook showed that upstream capital expenditure could fall by more than 30 per cent in 2020 alone, but maintained that crude oil will continue to be relevant in the next two decades and a half. Barkindo argued that the oil industry cannot move forward without adequate capital to sustain its historic leadership, stating that it would need financial firepower to grow out of the coronavirus-induced crisis, to sustain technological development and human resources, and to help provide a stable, economic and secure energy supply. “For OPEC and its member countries, stable and timely investment is essential if we are to successfully achieve our cherished goals of economic diversification and development, and importantly, to help diverse our own energy mix. “In fact, OPEC’s World Oil Outlook shows that upstream capital expenditure could fall by more than 30 per cent in 2020, exceeding the annual dramatic declines seen in the industry downturn of 2015 and 2016. “Looking ahead, our projections for the oil industry show that investment of around $12.6 trillion will be needed in the upstream, midstream and downstream between now and 2045. “To get there, it is very important that the policy discussions on energy and investment remain inclusive and supportive of a diverse portfolio of energy options,” he said. According to him: “Turning to the downstream, we anticipate a wave of refinery closures as new capacity comes online in the Middle East and Africa, as well as the Asia-Pacific, with crude distillation capacity expected to increase by 15.6 million b/d until 2045”. The OPEC boss stated that despite the challenges that exist today, OPEC was committed to investments that strengthen the oil industry’s resilience and capacity to meet the world’s demand needs over the long term.
OPEC to decide the fate of oil markets in 2021 - OPEC officials will meet this week on Wednesday, Thursday, and Friday to iron out details ahead of the meeting on November 30 and December 1 that will determine the fate of OPEC’s oil producers for 2021. OPEC sources told Reuters on Monday. Wednesday and Thursday will see OPEC’s economic commission board gather together, and Friday will bring together non-OPEC technical experts. The topic of discussion? In part, the level of production cuts that will be in effect come January 1, 2021. As it stands right now, the current level of production cuts are set to ease as of January 1. But most industry analysts and experts agree that oil demand—which has failed to fully recover from its pandemic levels—does not support OPEC lessening its production cut mandates in January. “The OPEC+ ministers will probably agree to extend current production for the first quarter of 2021,” one OPEC delegate told Reuters. What OPEC is hoping for is that a vaccine will boost economic activity and therefore oil demand. But precious little was said about a vaccine in their MOMR this month. OPEC is currently cutting 7.7 million barrels per day, with plans to decrease those cuts to just 5.7 million bpd in January. Even if a vaccine is approved for emergency use this month, it is unlikely to have any meaningful effect on oil demand until the second half of 2021. OPEC member Libya has stated that it does not intend to be part of the OPEC production cuts until such a time when its oil production has stabilized at 1.7 million bpd. It is currently producing about 1.25 million bpd. This could be a sticking point in the upcoming meetings, along with non-compliant Iraq.
OPEC+ leaning towards oil cut extension, despite rally (Reuters) - OPEC and allies including Russia are leaning towards delaying next year’s planned increase in oil output to support the market during the second wave of COVID-19 and rising Libyan output, despite a rise in prices, three sources close to OPEC+ said. OPEC+ was due to raise output by 2 million barrels per day (bpd) in January - about 2% of global consumption - as it moves to ease this year’s record supply cuts. With demand weakening, OPEC+ has been considering delaying the increase. Russia is likely to agree on a rollover of current output for the first quarter if needed, a source familiar with the issue said, and would prefer to decide later on extending for the second quarter. “It looks like the extension is needed,” the source said, citing “possible price drops and demand uncertainties” amid the second wave of the virus. Oil has rallied in the past week, rising to its highest since March near $49 a barrel on hopes that coronavirus vaccines will lead to higher demand. This hasn’t changed OPEC+ thinking around the extension, delegates said. “This increase in prices is about sentiment, but we need to extend to have solid market fundamentals to support the prices,” said one. “So far, the best choice is the three-month extension.” Still, enthusiasm for extended cuts is not universal, delegates and analysts say. A potential complication is the United Arab Emirates’ wish for a higher OPEC+ quota, Goldman Sachs said this week. Nigeria also wants a higher quota, and Iraq has talked about being exempt from 2021 reductions. But Goldman said it did not expect such a push from the UAE to derail the extension, and Iraq has said it will support any unanimous OPEC+ decision. Christyan Malek, managing director and head of oil & gas research at J.P. Morgan, said he expected OPEC+ to delay the increase by up to six months despite the price rally, with Saudi Arabia possibly offering deeper voluntary cuts until March. “Inventories are not coming down as quickly as expected. And lockdowns are moving east to west, with more lockdowns expected in the U.S.,” he said. Malek said the departure of Donald Trump as U.S. President, who was seen by some in OPEC as a friend after he helped bring Russian President Vladimir Putin into the OPEC+ output cut in April, would actually boost the producer alliance. “Without Trump, OPEC+ is getting stronger rather than weaker,” he said. “Putin is using OPEC+ to get closer to Saudi Arabia, as the departure of Trump creates a bit of a vacuum in U.S.-Saudi relations.”
Nigeria seeks better deal on OPEC quota --THE Federal Government is seeking more crude oil production quota from the Organisation of Petroleum Exporting Countries (OPEC). Nigeria’s huge population and physical development deficits should be considered by the oil cartel when sharing production cuts, President Muhammadu Buhari, said on Thursday.Buhari made the appeal on Thursday at the State House, Abuja, while hosting the Secretary-General of the African Petroleum Producers’ Organisation (APPO), Dr. Omar Farouk.In a statement issued by his Senior Special Assistant on Media and Publicity, Mallam Garba Shehu, Buhari observed that Nigeria needs all the resources she can gather from all sources, considering the weight of the responsibility of the nation with “200 million people, with severe deficit in infrastructure.”He welcomed APPO’s to site the headquarters of the African Energy Investment Corporation in Abuja, pledging Nigeria’s full support in ensuring the successful take-off of the organisation. Buhari also assured that Nigeria will pay her share of the subscription accordingly.The President, who was hailed for the vision of setting up the APPO and the ratification of its charter by Nigeria back in 1985 as Military Head of State, said the peculiarities of the challenges facing African oil producers required them to come together under the association to share experiences and solve their problems collectively, adding that the growing clamour for a reduction in the use of fossil fuels notwithstanding, countries like Nigeria needed to produce more oil to feed the petro-chemical industry and create jobs.The Minister of State for Petroleum Resources, Timipre Sylva told the President that the proposed APPO Energy Investment Corporation to be sited in Abuja will start with $1 billion from the AFRO-EXIM Bank, adding that it is expected to bring employment and other benefits to Nigeria. The APPO Secretary-General, who was accompanied by Dr. Adedapo Odulaji, the OPEC Governor in Nigeria, conveyed the appreciation of both the Congolese President and the Prime Minister for the President’s support in the relocation of the headquarters of the association to its chosen location, Brazzaville, the Congolese capital. He expressed hope that members of the 16-member organisation will surmount the challenges posed by COVID-19 and the receding fossil fuel use as a result of the climate change treaties signed by member states and other nations.
Libya Oil Comeback Has Legs -- Libya’s oil industry, trampled by civil war and chaos, is roaring back. Crude output has surged to nearly 1.25 million barrels a day from almost a dead start in September, thanks to a tentative peace between rival military forces. The OPEC member is already pumping about three-fourths as much as it did before the 2011 uprising that toppled strongman Moammar Al Qaddafi and triggered the country’s political and economic collapse. The speed of the recovery took oil markets by surprise. It’s also causing anxiety for the Organization of Petroleum Exporting Countries and allies such as Russia as they restrict global output to prop up crude prices. Libya is exempt from the cuts and currently supplies more oil than several of its OPEC peers. The so-called OPEC+ alliance is sure to weigh the impact of Libyan oil when it meets next week to assess its strategy as the coronavirus ravages fuel demand in much of the world. The big unknown about Libya’s production -- for traders, analysts and oil minsters alike -- is whether it can be sustained or even increased to pre-conflict levels of around 1.6 million barrels a day. The boost in output over the past two months may have been the easy part. To produce still more crude, the country will need buckets of cash to fix and upgrade its energy infrastructure. That in turn will require a lasting peace and political settlement. “Libya will likely struggle to produce above 1.3 million barrels a day,” said Mohammad Darwazah, an analyst at consultant Medley Global Advisors. “There is not much upside from these levels in the absence of investment.” Libyan officials have hinted that they won’t discuss a potential OPEC quota for the country until it’s pumping at least 1.7 million barrels daily. OPEC typically gives any member suffering from conflict several years to recover before trying to cap its output. Although Libya holds Africa’s largest crude reserves, years of strife and lost production have impoverished the government and state-run National Oil Corp. The NOC must repair damage to its oil fields, pumping stations and other facilities, many of which have been idle for years. The lack of routine nuts-and-bolts servicing has left pipelines corroding and storage tanks collapsing. Remedial work at wells alone could cost more than $100 million, NOC Chairman Mustafa Sanalla told Bloomberg in June. Sanalla said last month that the country targets pumping 1.6 million barrels a day by the end of 2021. The company has ambitions of eventually supplying more than 2 million barrels daily, an NOC official said to Bloomberg on Thursday, asking not to be identified because the matter isn’t public. To achieve that, the NOC will need more money from oil exports as well as investment from foreign energy partners who pulled out amid the fighting.
Why Iraq Isn’t Producing 10 Million Barrels Per Day Yet - Despite its huge oil resources, Iraq’s practical readiness to hit its 7 million barrels per day (bpf) oil production target (by 2025) came into question again last week, with statements from the developers of two of its major fields – BP in Rumaila, and Japan Petroleum Exploration (Japex) in Gharraf – that achieving higher output from their respective developments is not as straightforward as it might appear. Although Iraq could be producing at least 9 million bpd with ease by now – even 12 million bpd – if it were not for the investment and corollary infrastructure constraints that have resulted from the endemic corruption across the country, its ability to attain the 7 million bpd target looks also looks far from certain in the current circumstances. In the case of Rumaila - which lies around 30 kilometres north of Iraq’s southern border with Kuwait and which, together with Kirkuk, has produced around 80 per cent of Iraq’s cumulative oil production to date - BP is currently in talks with Iraq’s oil ministry over plans to push production up to 2.1 million bpd from the current 1.4 million bpd. With an estimated 17 billion barrels in proven reserves, the current output of 1.4 million bpd is nowhere near its optimum production level, and Rumaila is a prime example of a field for which even a relatively small investment could yield significant increases in crude oil output. However, according to a comment last week from BP’s country head, Zaid Elyaseri: “There is an ongoing discussion with the ministry of oil and the Basra Oil Co. on how to proceed [it has asked all international oil companies (IOCs) to cut their capex by 30 per cent this year], given the low oil price environment and the reduction in the activity set that the ministry has requested all IOCs to do this year as a result of low oil prices,…There is a discussion on the timing and all other details….[and] We are working to increase production gradually.” The original plan was for BP to add 100,000 bpd every year up to a total of 2.3-2.4 million bpd of production by the original target date of 2020, a figure which remains entirely achievable within a relatively short space of time in oil development terms. “The main reason that it hasn’t gone according to the original plan was that Rumaila has been one of the fields that the government has looked to when it needs to reduce overall country production,” Richard Bronze, cross-energy analyst for Energy Aspects, in London, told OilPrice.com. “This has happened with the OPEC/NOPEC deal and before that with the difficulties in paying IOCs under the technical service contract [TSC] payment structure,” he added. “As a result, BP has been unwilling to make the extra investments needed in order to meet these incremental output increases, as it did not know whether it would be allowed to pump at these levels on a sustained basis,”
Russia and Saudi Arabia Power Risks OPEC+ Break-Up | Chatham House – The pushback from the UAE over historic supply cuts brought in to offset the fallout from the pandemic comes at a delicate moment for OPEC, threatening the brittle coalition and an already weakened oil market. The news of COVID-19 vaccines alongside the highest oil price since September has lifted sentiments to a more bullish level – and with it, a growing resentment that the OPEC+ policy is driven primarily by ‘bullying’ from Saudi Arabia and Russia, with little consideration of other producing countries. With the OPEC summit imminent, there are clear signs the UAE, Kuwait, and Iraq are all digging in their heels in a reluctance to rollover production cuts which have created winners and losers – with Saudi Arabia and Russia on top and the trio in the latter category. Should the UAE assert its national economic interest and breach the production limit – or more seriously, quit the producers’ alliance – it would have a major impact upon markets and quite radically affect the relationship with Saudi Arabia for some time to come.It is commonplace to put out such messages ahead of summits, but it is striking that at the ADIPEC virtual conference Saudi Arabia energy minster Abdulaziz bin Salman (AbS) chose to say that the OPEC+ group may ‘tweak’ production cuts agreed in April and extend them beyond the December deadline for at least a further three months. He then reiterated this at OPEC’s Joint Ministerial Monitoring Committee (JMMC) and implied markets should not simply expect an extension of production cuts at 7.7mbd past December, but to factor in additional cuts too. Even with news of a COVID-19 vaccine giving some cause for optimism and the potential to change calculations, these are unlikely to materialize quickly so the minister’s signal does ring true. But it is not going to go down well with the neighbours. Saudi Arabia and Russia are certainly coming out on top, mostly due to baselines and quotas, and US shale producers are also benefitting from the current policy. Riyadh’s OPEC+ reference production number, which its quota is based on, is now 370kbd higher – at 11mbd – than it was in October 2018 so it can easily claim compliance and even proclaim underproduction. Since starting the price war, Saudi Arabia has once again cemented its position as market leader and price setter, enabling it to become de-facto OPEC leader, and also make decisions on behalf of the other members which is becoming a sore point as Riyadh and Moscow, not OPEC, are setting policy and benefitting, while others carry the cost.
Oil prices rise on back of COVID vaccine news - Oil prices rose more than 1% on Monday, extending last week's gains as traders eyed a recovery in demand due to successful coronavirus vaccine trials. Sentiment was also bolstered by expectations that the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a group known as OPEC+, might extend a deal to restrain output. Brent crude rose 92 cents, or 2%, to $45.89 a barrel, while West Texas Intermediate crude gained 53 cents, or 1.3%, to $42.97 a barrel. Both benchmarks jumped 5% last week. The contango structure in the market, where the prices of front-month delivery contracts are lower than those for delivery six months later, narrowed to 32 U.S. cents, its smallest since mid June, indicating that concerns about a glut were receding. Outlook for demand has improved with news indicating progress towards developing COVID-19 vaccines. A U.S. official said first inoculations in the United States could start a day or two after regulatory approval was secured. British drugmaker AstraZeneca said on Monday its vaccine, developed along with the University of Oxford, could be around 90% effective under one dosing regimen. PVM analyst Stephen Brennock said the news was detaching sentiment from "gloomy fundamentals." "Investors are ignoring near-term headwinds, chief among which are surging global COVID infections, and instead looking ahead to next summer," he said. On the supply side, OPEC+, which meets on Nov. 30 and Dec. 1. It will look at options to extend their deal on output cuts by at least three months from January. Smaller Russian oil companies are still planning to pump more crude this year, a group representing the producers said. Yemen's Iran-aligned Houthi group on Monday said it fired a missile that struck a Saudi Aramco site in the western city of Jeddah. There was no immediate Saudi confirmation of the claim. Aramco's main oil facilities in are in the east.
WTI Settles Above $43 a Barrel -- Global oil prices hit the highest level since March as hopes for a vaccine rollout within weeks brightened the outlook for fuel consumption. Brent crude futures rose 2.5% in London, following a broader market rally after AstraZeneca Plc became the latest company to report a vaccine that protects most people. Vaccinations will “hopefully” start by Dec. 12, Moncef Slaoui, head of the U.S. government’s Operation Warp Speed program, said on CNN. Strong manufacturing out of the U.S. and Germany also buoyed crude. The prospect of a treatment is starting to reshape the oil futures curve, with some near-term prices rebounding more than later-dated ones, a bullish structure known as backwardation that signals investors expect supply and demand to return to balance. That happened with some so-called timespreads for West Texas Intermediate on Friday, and on Monday Brent’s two nearest contracts flipped to backwardation for the first time since this summer. “The compression of the timespreads along the futures curve has come with the strong gains in the prompt price, fueled by Covid-19 vaccine optimism,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA. The strength at the front of the curve “reflects the tightening of supply availability driven by OPEC+ voluntary supply cuts and strong demand for crude from Asia.” The surge in crude prices has accompanied a slew of positive updates from pharmaceutical companies on their progress toward a Covid-19 vaccine. The broad market euphoria amid vaccine developments has led Brent crude futures to notch a nearly 23% gain so far this month, even as U.S. hospitalizations of Covid-19 patients rises to the most since early April. Renewed virus lockdowns in Europe have pushed the region’s economy into another contraction. Meanwhile, Saudi Arabia confirmed that Houthi rebels in Yemen targeted one of its oil facilities in northern Jeddah province. The early Monday attack caused a fire at an oil tank inside a fuel-distribution center, the kingdom’s energy ministry said. “The overall ‘risk-on’ sentiment is being driven by more positive vaccine news this weekend, and oil prices in particular are being propelled higher by aggressive ‘short’ covering, especially in the ICE Brent contract,” said Ryan Fitzmaurice, commodities strategist at Rabobank. On top of further short covering, “the oil market will be focused on the OPEC+ meeting which is set for next week and which will likely begin to garner a great deal of attention as the week goes on.” West Texas Intermediate for January delivery climbed 64 cents to settle at $43.06 a barrel, its highest since Aug. 26. Brent for January settlement gained $1.10 to $46.06 a barrel.
Oil closes at highest level since March on vaccine trials, Biden transition (Reuters) - Oil rose about 4% on Tuesday to touch highs not seen since March as a third promising coronavirus vaccine raised hope for fuel- demand recovery and U.S. President-elect Joe Biden began his transition to the White House. Brent crude settled at $47.86 a barrel, gaining $1.80, or 3.9%. U.S. West Texas Intermediate crude settled at $44.91 a barrel, rising $1.85 or 4.3%. Both benchmarks ended at their highest close since March 5. AstraZeneca on Monday said its COVID-19 vaccine was 70% effective in trials and could be up to 90% effective, giving the fight against the pandemic another potential vaccine after positive results from Pfizer-BioNTech and Moderna. However, the vaccine will not be readily available for several months, meaning people will likely restrict travel and other activities through next year to try to slow the spread of the disease. “The petroleum complex is the vaccine trade,” said John Kilduff, partner at Again Capital in New York. “Until we can see the other side of the pandemic, the market is going to be mired in slack demand that is going to keep the overhang extensive.” The coronavirus pandemic, coupled with the collapse of an OPEC-led output pact, sent prices crashing in March. After the collapse of that output pact led to a brief Saudi Arabia-Russia price war, the Organization of the Petroleum Exporting Countries and allies agreed a new deal on record production cuts to support prices. The group known as OPEC+ is expected to roll over those cuts into 2021 after meeting Nov. 30 to Dec. 1, following technical talks this week. In addition, the administration of President Donald Trump, a Republican, gave the Democratic president-elect access to resources that will enable him to take over in January after delaying for weeks despite Trump’s loss in the Nov. 3 election. Biden’s early selection of top advisers helped buoy crude futures and equities, which oil often follows. Oil prices pared gains slightly in post-settlement trade after the American Petroleum Institute, an industry group, reported U.S. crude inventories rose by 3.8 million barrels in the week to Nov. 20 to about 490 million barrels, compared with analysts’ expectations in a Reuters poll for a build of 127,000 barrels.
WTI Dips After Surprise Crude Build - Oil prices roared higher today (along with energy stocks) with WTI topping $45 for the first time since March on the heels of ongoing positivity around vaccine timelines and the Biden transition process (as well as hopes for stimulus and uber-easy money for as long as anyone can see). “The fact that we have more certainty on what hopefully is an orderly transition is putting some wind in the sails for crude,” “The biggest issue ahead is how willing they’ll be to cross the aisle and enable a stimulus package to happen. That’s going to be a primary driver” for prices. For now, all eyes are back on inventories as the Cushing hug is rapidly filling. API
- Crude +3.8mm (-300k exp)
- Cushing -1.4mm
- Gasoline +1.3mm
- Distillates -1.8mm
Crude stocks rose for the 3rd week in a row as distillates drew down once again... WTI traded just below $45 ahead of the API print and dipped after the bigger than expected build... “Demand has real potential to pick up rather quickly to the extent that these vaccines roll out,” said John Kilduff, a partner at Again Capital LLC. “If we can get a close above $45, it will be very positive, because we’ve been stuck in this range for months.”
Oil prices rally further on vaccine optimism despite inventory rise - Oil jumps to 8-month high on U.S. inventory drop, vaccine hopes - Oil prices climbed to the highest in more than eight months on Wednesday, after data showed a surprise drop in U.S. crude inventories last week, extending a rally driven by hopes that a COVID-19 vaccine will boost fuel demand. Brent crude was up 47 cents, or 1%, at $48.33 a barrel, having risen almost 4% in the previous session. West Texas Intermediate crude gained 80 cents, or 1.8%, to settle at $45.71 per barrel, after rising more than 4% on Tuesday. U.S. crude inventories fell by 754,000 barrels last week, data from the U.S. Energy Information Administration showed, compared with analysts' expectations in a Reuters poll for a 127,000-barrel rise. Inventories at Cushing, Oklahoma, the delivery point for WTI, fell by 1.7 million barrels. "There was a decent drawdown at Cushing, so that's supportive. It was probably the most bullish aspect of this report," Still, price gains were capped due to lingering concerns over oil demand. U.S. weekly gasoline demand last week dropped by about 128,000 barrels per day (bpd) to 8.13 million bpd, the lowest since June 2020. AstraZeneca said on Monday its COVID-19 vaccine could be up to 90% effective, providing another weapon in the fight to control the pandemic. "Crude oil prices are trading at their highest levels since early March, supported by positive market sentiment as a result of vaccine news and strong oil demand in Asia," . A weaker dollar also supported crude prices as a lower greenback makes oil less expensive for buyers holding other currencies. "The recent depreciation of the U.S. dollar has helped temper the impact of surging oil prices for some of the world's largest consumers of energy," said Stephen Brennock of broker PVM. Brent has moved into backwardation, a market structure in which oil for immediate delivery costs more than supply later. Backwardation encourages inventories to be drawn down and suggests lingering fears about a glut have receded. Brent futures for February delivery were trading about 13 cents above January contracts , the highest since July. "Positive vaccine news and swift deployment views are behind a significant part of this move in the curve, supported by increasingly firm beliefs by the market that OPEC+ will extend its current output targets for Q1 2021,"
Oil Prices Surge Amid Weaker Dollar and Surprise Draw -- Oil closed at an eight-month high amid a weakening dollar and optimism surrounding a surprise decline in U.S. crude supplies and recent breakthroughs on a Covid-19 vaccine. Futures in New York advanced 1.8% on Wednesday after rallying the three previous sessions. An Energy Information Administration report showed U.S. crude stockpiles fell 754,000 barrels last week. At the same time, positive developments on a vaccine have spurred a swift reshaping of oil’s futures curve, with several key markers moving into a bullish backwardation structure in recent days. In addition, Chinese and Indian refiners issued a flurry of tenders seeking crude oil for loading in January, highlighting the strong demand coming from parts of Asia. Meanwhile, the Bloomberg Dollar Spot Index fell as much as 0.2%, boosting the appeal for commodities priced in the currency. “It has been a really good run. We haven’t seen a run like this since the spring after we went to negative prices,” said Peter McNally, global head for industrials, materials and energy at Third Bridge. “Sentiment certainly has changed pretty quickly. At any point, it all could take a breather, but lately it feels like supply and demand fundamentals are heading in the right direction.” While optimism over vaccines has helped lift the U.S. crude benchmark more than 25% so far this month, the swift rally poses yet another headache for OPEC+ ahead of next week’s meeting to evaluate the group’s output strategy. In the latest sign of growing rifts within the cartel, Iraq’s deputy leader said that OPEC should take members’ economic and political conditions into account when deciding production quotas rather than adopting a “one-size-fits-all” approach. West Texas Intermediate prices for 2021 were at their strongest level since March on Wednesday, while those for 2022 were at their highest since September. The higher forward prices are boosting the incentive for oil producers to lock in their supplies for the coming years. Prices have also been supported by renewed geopolitical tensions, with recent attacks on a fuel depot in the Saudi city of Jeddah and on an oil tanker in the Red Sea. West Texas Intermediate for January delivery rose 80 cents to settle at $45.71 a barrel. Brent for the same month advanced 75 cents to end the session at $48.61 a barrel. Both benchmarks are at the highest level since March 5. Aside from the headline crude draw, the EIA report showed a decline in inventories at the nation’s biggest storage hub in Cushing, Oklahoma and the 10th straight draw in distillate supplies. But there were some bearish data points: gasoline stockpiles rose over 2 million barrels and crude production ticked higher.
Oil extends gains on surprise U.S. inventory draw amid vaccine rally - U.S. oil rose for a fifth day on Thursday as a surprise drop in crude inventories extended a rally driven by hopes that vaccines would end the coronavirus pandemic and revive fuel demand. Brent was up by 20 cents, or 0.4%, at $48.81 a barrel, after rising around 1.6% in the previous session. West Texas Intermediate crude was up by 14 cents, or 0.3%, at $45.85, having gained 1.8% on Wednesday. Both benchmarks have risen about 9% this week, getting a boost after AstraZeneca said on Monday its Covid-19 vaccine could be up to 90% effective, adding to the potential armory to end the worst pandemic in a century. U.S. oil stockpiles fell 754,000 barrels last week, data showed, while analysts in a Reuters poll had predicted a 127,000-barrel rise. Stockpiles at the Cushing, Oklahoma delivery point for WTI, fell 1.7 million barrels. But gasoline demand for the week fell by 128,000 barrels per day (bpd) to 8.13 million bpd, the lowest since June. "With new U.S. virus cases still at very high levels, we think that it probably won't be until next year – once vaccines can have a material impact – that demand recovers to more normal levels," Capital Economics said in a note. U.S. President-elect Joe Biden has urged people to forgo big family gatherings, wear protective masks and maintain social distancing for the Thanksgiving holiday in the face of the surging coronavirus pandemic. But Americans are defying pleas from officials to stay home. The United States has recorded 2.3 million new infections in the past two weeks.
Oil Rally Stalls Amid OPEC+ Tensions -- Brent oil edged lower -- but was on track for a fourth weekly gain -- amid signs of division among OPEC+ members just days before a key policy meeting on whether to extend production curbs. Futures in London traded near $48 a barrel after falling 1.7% in the previous session. West Texas Intermediate dropped 2% from Wednesday, with prices not closing on Thursday due to the Thanksgiving holiday in the U.S. While most analysts surveyed by Bloomberg are forecasting OPEC+ will postpone a planned supply hike by three months to March at a meeting early next week, some see a chance of a shorter delay amid resistance from the United Arab Emirates and Iraq, which are eager to resume oil sales. OPEC’s president said the group must remain cautious, with internal data pointing to the risk of a new surplus early next year if output is hiked in January. That came after Iraq’s deputy leader criticized the cartel, saying the economic and political conditions of member countries should be considered before they are asked to withhold production. The recent rally gives leverage to members who want to pump more, Standard Chartered Plc said in a note. Crude is up around 6% this week as signs Covid-19 vaccines could soon be rolled out brighten the consumption outlook, even as a resurgent virus led to more lockdown measures, particularly in Europe. There was also fresh evidence the demand recovery in Asia is gaining traction. Chinese industrial profits rose at the fastest pace in almost nine years in October, while Indian economic growth data due Friday is forecast to show a sharp recovery last quarter. “At this stage it looks like we are looking at a pullback in an uptrend,” said Michael McCarthy, chief market strategist at CMC Markets. It’s “almost certain” there will be some form of OPEC+ agreement, but the meeting is possibly less influential than it might have been given the focus on demand, he said. Brent for January delivery declined 0.4% to $47.59 a barrel on the ICE Futures Europe exchange at 7:43 a.m. in London and is up 5.8% this week. WTI for the same month January delivery fell 2% from Wednesday to $44.80 on the New York Mercantile Exchange. Crude futures on the Shanghai International Energy Exchange rose 0.2% to 289.1 yuan per barrel and have risen around 11% this week. Brent is up 27% this month, with the global benchmark closing at overbought levels on Wednesday, a sign that a possible reversal had been on the cards. Several key oil timespreads have flipped to backwardation this week, a bullish signal where near-dated prices are more expensive than later-dated ones.
Oil prices post weekly gain ahead of OPEC+ meeting (Reuters) - Oil prices were mixed on Friday but posted a fourth straight week of gains ahead of an OPEC+ meeting early next week. Brent crude January futures rose 38 cents to settle at $48.18 a barrel, while the more active February contract gained 46 cents to $48.25. U.S. West Texas Intermediate (WTI) crude futures fell 18 cents to settle at $45.53 a barrel. Brent rose 7.2% over the week, while WTI gained 8% for the week. Encouraging news on potential COVID-19 vaccines from AstraZeneca and others have lifted the markets. However, questions have been raised over AstraZeneca’s “vaccine for the world,” with several scientists sounding caution over the trial results. “While a successful vaccine rollout should break the link between infection and mobility, even then global oil demand will likely only reach its pre-pandemic run rate by mid-2022,” JP Morgan said. The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia are leaning towards delaying next year’s planned increase in oil output, said three sources close to the OPEC+ group. OPEC+ was planning to raise output by 2 million barrels per day (bpd) in January - about 2% of global consumption - after record supply cuts this year. OPEC+ ministers are due to meet from Monday. “The market expects prices to see a limited increase if OPEC+ indeed does what is expected and changes its planned route, postponing a planned supply increase from January,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets A panel of OPEC+ will hold informal online talks on Sunday - a day later than scheduled, a source with the knowledge of the matter told Reuters. Rising Libyan output is also contributing to concerns about oversupply in the market. The OPEC member, which is exempt from the oil cuts, has added more than 1.1 million bpd of output since early September.
Oil prices end mixed Friday but both grades log sharp weekly gain -Crude-oil futures on Friday finished mixed ahead of an important OPEC meeting, after settling on Wednesday at the highest level since early March. U.S. financial markets were closed Thursday for the Thanksgiving holiday and energy markets settled early, at 1:30 p.m. Eastern Time, on Friday. West Texas Intermediate crude for January delivery was down 18 cents, or 0.8%, to end at $45.53 a barrel on the New York Mercantile Exchange, after a 1.8% gain on Wednesday. January Brent crude, the global benchmark, however, climbed 38 cents, or 0.8%, to settle at $48.18 a barrel on ICE Futures Europe, following a 1.6% gain for grade oil in the previous session. For the week, WTI gained 7.3% for its largest one-week gain since Oct. 9 and its fourth straight gain, while Brent picked up 7.2%, and also notched a fourth weekly rise in a row, according to Dow Jones Market Data.
OPEC+ Calls Last Minute Talks-- Saudi Arabia and Russia summoned OPEC+ ministers who oversee their oil production cuts for last-minute talks on Saturday, as the cartel prepares for a decision on whether to delay January’s output increase. A clear majority of OPEC+ watchers expect the group to maintain their supply curbs at current levels for a few months longer due to lingering uncertainty about the strength of demand. However, the decision is by no means certain amid public complaints from Iraq and Nigeria, and private discord with the United Arab Emirates. The two leading members of Organization of Petroleum Exporting Countries and its allies, Russia’s Deputy Prime Minister Alexander Novak and Saudi Energy Minister Abdulaziz bin Salman, requested an informal video conference with their counterparts from the Joint Ministerial Monitoring Committee, which includes Algeria, Kazakhstan, Iraq, Nigeria and the UAE, according to a letter seen by Bloomberg. The unscheduled gathering comes just two days before a full OPEC ministerial meeting on Nov. 30, which will be followed by OPEC+ talks on Dec. 1. The JMMC met online as recently as Nov. 17, but that ended without any kind of recommendation about delaying the January supply increase. On Thursday, Algerian Energy Minister Abdelmadjid Attar -- who this year holds OPEC’s rotating presidency -- told Bloomberg News that the group must remain cautious because the recent surge in oil to $45 a barrel in New York this week could prove fragile. A separate meeting of a committee of OPEC technical experts considered data that pointed to the risk of a new oil surplus early next year if the cartel and its allies decide to go ahead with the production increase. The 23-nation OPEC+ coalition is scheduled to ease its 7.7 million barrels a day of production cuts by 1.9 million barrels a day from Jan. 1
Saudi Aramco’s Landmark IPO Is Costing The Kingdom Billions --The initial public offering (IPO) of Saudi Aramco that was heralded by Crown Prince Mohammed bin Salman (MbS) as being a showcase flotation for raising massive new capital for the Kingdom and anchoring a major expansion of its international equities market presence has proven only to put Aramco into a debt spiral and highlighted a myriad of problems in Saudi Arabia to international investors.Now, Aramco is digging itself further into serious debt through bond issuances simply to pay for the huge dividend payments promised by MbS that were absolutely required to persuade anyone to buy into the omni-toxic IPO. At this rate, the debt taken on by Aramco and other Saudi bond offerings to pay for the dividends will be far more than the amount of money raised in the IPO.As a direct result of MbS deciding to go ahead with yet another oil price war at the same time as the COVID-19 pandemic was gathering pace and destroying demand for oil, Aramco’s finances have suffered a massive hit. For the first half of this year, the company saw a 50 percent plunge in net profit and at the beginning of this month, it reported another massive drop in profits of 44.6 percent for the third quarter, falling to SAR44.21 billion (US$11.79 billion) from SAR79.84 billion in the same period last year.On the other side of the balance sheet, though, is the stark fact that because the company’s IPO was so toxic on so many levels that it was shunned by Western investors and had to be off-loaded to buyers who were either bullied or bribed into buying the stock Aramco is left having to pay massive guaranteed dividend payments for the foreseeable future to those shareholders. This huge guaranteed dividend payment of US$18.75 billion per quarter – US$75 billion for a full year – will have to be paid for through budget cuts over and above the US$15 billion in Aramco’s annual capital spending alluded to by Aramco’s chief executive officer, Amin Nasser, just after the first half profits figures were unveiled. This will take the total down from around US$40 billion to around US$25 billion. Further reports have stated that even this US$25 billion figure is set to be reduced by another US$5 billion, taking the total capital spending in this year from US$25 billion to US$20 billion. Whatever the cuts, it remains the case that the first two dividends together for the first two quarters of this year – US$37.5 billion – far outstripped Aramco’s total free cash flow of US$21.1 billion for the same period. The latest profits number for the third quarter, meanwhile, covers just 62.88 percent of the dividend payment, never mind any other expenses or investment for projects ongoing or planned that Aramco may have had in mind. To put this even more clearly: Aramco’s entire profit for the third quarter cannot even cover the dividend it owes for the same quarter, not even two-thirds of it!
Netanyahu meets with Saudi crown prince: reports - Israeli Prime Minister Benjamin Netanyahu met with Saudi Crown Prince Mohammed bin Salman Sunday night, according to multiple reports, in what would be the first known meeting between the two countries’ top leaders. Israeli media initially reported the covert meeting before Education Minister Yoav Galant confirmed it in a radio interview. “The fact that the meeting took place and was made public — even if it was in only a semiofficial way — is something of great importance,” Galant said in an interview with GLZ Radio, calling the meeting “something our ancestors dreamed about.” Saudi Arabia's foreign minister, however, said no such meeting occurred. The meeting would be the latest sign of thawing relations between Israel and Gulf states, including the United Arab Emirates and Bahrain, largely brokered by the U.S. The moves have caused alarm among Palestinian activists, who say they undermine an agreement among Arab nations to boycott the country in solidarity. Saudi Arabia’s wealth, military position and religious significance within Islam would make it the most significant Middle Eastern nation yet to establish formal relations, but there is no sign yet of any such agreement, The New York Times noted. Reports in Israeli media said Netanyahu and the crown prince discussed Iran, among other topics. Further isolating Tehran, a mutual enemy, has been a point of agreement between Israel and several of the Arab countries with which it has established relations. The crown prince, Saudi Arabia’s de facto ruler, was initially hailed as a reformer due to his relaxation of some of the kingdom’s strict laws. However, the 2018 killing of dissident journalist Jamal Khashoggi in a Saudi consulate in Turkey largely derailed his international goodwill amid widespread reports it was done on the prince's orders.While Saudi Arabia’s King Salman remains a supporter of the boycott of Israel, the crown prince reportedly prefers to move on from the Israeli-Palestinian conflict and considers an alliance against Iran a matter of more pressing importance, The Wall Street Journal reported..
US, Israel and Saudi Arabia meet amid mounting war threats against Iran - Both Israeli and Saudi officials have confirmed an unprecedented secret trip by Israeli Prime Minister Benjamin Netanyahu, accompanied by US Secretary of State Mike Pompeo and Yossi Cohen, the head of the Israeli spy agency Mossad, to Saudi Arabia on Sunday. Israel Army Radio first reported the trip and meeting between the US and Israeli officials and Crown Prince Mohammed bin Salman, which was confirmed by a senior Saudi official speaking to the Wall Street Journal. This marks the first publicly reported talks of this kind, though meetings between Israeli and Saudi military and intelligence officials are believed to have taken place with greater frequency in recent years.Saudi Foreign Minister Prince Faisal bin Farhan subsequently tweeted a denial of the report, saying, “No such meeting occurred. The only officials present were American and Saudi.” The denial reflects the controversial nature of the meeting within Saudi Arabia, where the ruling House of Saud has postured as the guardian of Islam and has formally insisted that “normalization” of ties between Riyadh and Tel Aviv are contingent on the implementation of a Middle East peace deal and the creation of an independent Palestinian state.The Sunni oil monarchies of the United Arab Emirates and Bahrain dispensed with such conditions, however, in signing onto a US-brokered deal in August to recognize Israel. The monarchy in Bahrain, which rules over an oppressed Shia majority population, depends upon Saudi Arabia for its survival and could not have entered the agreement without its approval. The meeting between Pompeo, Netanyahu and bin Salman in the Red Sea city of Neom, like the August deal, was aimed not at achieving Middle East peace, but rather solidifying an alliance between Washington, Israel and the Saudi monarchy, the linchpin of reaction and imperialist domination in the Middle East, in preparation for a war against Iran. This has been the main objective of Pompeo’s extraordinary 10-day foreign tour, conducted barely two months before inauguration day, and what, according to the election results, should be the swearing in of a new administration headed by Democrat Joe Biden. On the eve of his trip, he told a reporter asking whether he anticipated a “smooth transition” at the US State Department that there would indeed be “a smooth transition to a second Trump administration,” openly aligning US foreign policy with the post-election coup attempt being staged from the White House.
Houthi rebels claim attack on Saudi oil facility with cruise missile --Yemen’s Houthi rebels on Monday claimed they carried out a predawn cruise missile attack on a Saudi oil facility hours after the kingdom finished hosting a virtual Group of 20 (G-20) summit.Houthi military spokesman Yehia Sarie tweeted that the group fired a new Quds-2 cruise missile at a Saudi Aramco distribution station in Jeddah on the Red Sea coast. “The attack was very accurate where the ambulances, fire engines rushed to the target location,” Sarie wrote on Twitter. He added that the strike was in response to the Saudi-led coalition's “ongoing blockade and aggression” in Yemen, and that foreign companies and residents in Saudi Arabia should “be away from vital facilities that are important” as “operations are continuing.”He posted a satellite image labeled as Aramco’s North Jeddah Bulk Plant, which can be found on Google Maps.Saudi state-run media did not immediately acknowledge any attack. A Saudi-led coalition has been fighting against Iran-backed Houthi rebels in Yemen since March 2015, when the coalition intervened to restore the Yemeni government ousted by Houthi forces.
British Military Sent On Secret Mission To Protect Saudi Oilfields - The United Kingdom has had troops deployed in Saudi Arabia to protect its oilfields from attacks since February this year, The News reported this week, a local newspaper in Portsmouth in the UK. A small team from the 16th Regiment Royal Artillery, which is based near Portsmouth, were sent to Saudi Arabia to man Giraffe radars, which can track aircraft and missiles up to 75 miles away. After the report, the UK Ministry of Defence confirmed that the mission was to protect oilfields in Saudi Arabia, the world’s largest oil exporter, from attacks, in the wake of the September 2019 attacks on critical Saudi oil infrastructure that affected half of Saudi Arabia’s oil production, or around 5 percent of global oil supply, for weeks. The Saudi oilfields that UK troops help to protect are “critical economic infrastructure,” the UK Ministry of Defence told The Independent. “Following the attacks on the Kingdom of Saudi Arabia’s oil production facilities on 14 September 2019, we have worked with the Saudi Ministry of Defence and wider international partners to consider how to strengthen the defense of its critical economic infrastructure from aerial threats,” a spokesperson for the Ministry of Defence told The Independent. Opposition parties in the UK criticized the government for not only providing assistance to Saudi Arabia but for also failing to adequately inform the public and Parliament of the mission. The report about UK troops helping to protect Saudi oilfields from attacks emerged just after the Houthi rebels in Yemen on Monday said they had fired a missile against a target in the Saudi city of Jeddah and had hit it. The target was a distribution center property of Saudi Arabia’s state oil company Aramco. Saudi Arabia confirmed on Monday, via its Saudi Press Agency, that there was an explosion at the petroleum products distribution terminal in Jeddah.
Yemen: More Damage To World Peace And Security Due To Trump Wrecking Everything As He Exits - Still denying his obvious loss, Donald Trump is trashing everything in sight. Very serious matters of foreign policy are part of this. One of these has been discussed in comments here previously, the removal from the Open Skies Treaty, which right now I am watching Rachel Maddow report that DOD is destroying the planes US used for this. Ack!!! But for this post I am noting another awful thing they are doing along a bunch of others. This involves Yemen, long one of the worst humanitarian disasters on the planet, horrible, but so in place for so long that most people pay no attention anymore because, bore, been there done that snore. But it continues to be a place of ongoing civilian deaths from bombs and economic deprivation. So, just to make things “better,” the Trump admin has decided to declare that the Houthi group who rule not only most of northern Yemen, but also its capitol, Sana’a, to be officially a “terrorist group.” The immediate result of this ruling is that all kinds of humanitarian aid that has been going to people in the parts of Yemen they live in will no longer receive it. This is morally awful and just plain stupid. So this is part of Trump frustrated in his anti-Iran policy. He exited the Iran nuclear treaty, leading to a massive increase in enriched uranium there. Ooops! He killed a top general from there to stop attacks on US forces in Iraq by Iranian militias. But those continue, with more political support in Iraq. Duh. The argument for this move on the Houthis is that they are backed by Iran, which they are. But that is a far secondary matter. The Houthis are Zaydi Shia in contrast with the 12-Iman Shia of Iran, not close at all. While Trump admin has long claimed Iran has armed them, most evidence has suggested not much. Most of the Houthi arms are leftover US arms. The other part of this is the Saudis, who have been waging war against the Houthis, with Trump deeply tied to the murderous Saudi Crown Prince, Mohammed bin Salman, who has been behind this awful war against the Houthis in Yemen, support that dates back to the Obama admin. This makes this a serious issue for the incoming Biden admin. I note that Congress has in recent years moved away from supporting this horrendous war in Yemen that has led to massive deaths among innocent civilians. Those votes that had support from many GOPs in Congress were turned down by Trump vetoes. So, I think it will not be that hard for Biden to finally end this corrupt relation between Trump and MbS to end US support for this war.
Massive Armada Of IRGC Boats Mobilize In Gulf Amid Rumors Israeli Strike Imminent - The naval forces of the Iranian Revolutionary Guard Corps (IRGC) on Thursday conducted large-scale exercises in the Strait of Hormuz at a moment Tehran believes Israel will launch a preemptive strike aimed at drawing Trump into ordering US military action in the region before he leaves office in January. According to state-run English language PressTV, "The event saw sailors, enlisted with the popular volunteer Basij force, taking to the waters aboard more than 1,000 light and semi-heavy-lift vessels."Photos showed an impressive number of small but fast military boats that are typically used by the IRGC Navy (which is separate from the much larger national navy of the Islamic Republic) to harass and encircle larger ships, whether tankers or foreign warships. IRGC Admiral Ali Reza Tangsiri, who oversaw the maneuvers, called it a display of strength and a showcasing of Iran's "maritime power" which provides security in the Arabian and Oman Seas. Crucially the 'show of force' comes amid widespread reports that Trump is mulling some of kind of preemptive action against either Iran or its regional allies, such as the powerful Shia militias in Iraq.Earlier this month The New York Times reported that Trump's advisers talked him down from ordering a strike, which they argued would certainly spiral into a larger war. Included in the "strike options" were most likely plans to hit the Natanz enrichment facility, according to the report, which suffered sabotage and damage last summer in a likely Israeli covert operation but which is being repaired and rebuilt.Israel too is said to be preparing for such a scenario, with its armed forces said to be in a high state of readiness. Iran is apparently taking these reports very seriously.
Head Of Iran's Nuclear Weapons Project Assassinated; Iran Armed Forces Chief Vows Revenge - Amid speculation that Israel is on war footing over a possible strike in Iran in the coming weeks, moments ago Iranian state media reported that the country's top nuclear scientist Mohsen Fakhrizadeh was assassinated in Damavand, east of Tehran. He was reportedly accompanied by his bodyguard when they were attacked by a “suicide” attacker at the entrance of Absard town. According to Iran Front Page News, Fakhrizadeh was killed by shooting, but before the shootout, his car has been stopped with an explosion at Mostafa Khomeini Blvd. Several others are also reportedly killed in the incident, but haven’t been identified yet. Fakhrizadeh was a brigadier general in the Iranian Revolutionary Guards Corp (IRGC) and headed Iran’s nuclear weapons project.He was a professor of physics at the Imam Hussein University in Tehran and was former head of Iran's Physics Research Center.While there has been no official confirmation of the death yet, and Iran Atomic Energy organization has denied the reports, saying that no incident involving nuclear scientists took place according to ISNA News Agency, Iran's revolutionary guards commander wrote on Twitter that Iran will avenge the killing of scientists as it has in the past according to the Jerusalem Post. No one has yet claimed responsibility for the assassination, but the Israeli regime has a history of hiring hit men to assassinate nuclear scientists in Iran. In 2018, Prime Minister Benjamin Netanyahu said "remember that name" after he announced that the Mossad had obtained 100,000 files from Iran's secret nuclear archives. The files retrieved by Mossad focused on the secret Iranian nuclear program that was developed from 1999 to 2003 called Project Amad, which was led by Fakhrizadeh. When Iran entered the 2015 nuclear deal, it denied that such a program existed. After the April 2018 killing of several nuclear scientists in Iran, a "protective shield of secrecy and security" had been thrown around Fakhrizadeh, in an effort to protect him against Israeli assassins.
Iran Accuses Israel Of Seeking To Provoke "Full-Blown War" With Brazen Assassination - Since news broke hours ago of the assassination of Iran's top nuclear scientist, Mohsen Fakhrizadeh, on the streets in a city just east of Tehran, Iranian leaders have blamed an Israeli assassination plot.Iranian Foreign Minister Javad Zarif said there were "Serious indications of Israeli role" in killing of Fakhrizadeh, who subsequently died of his wounds in a hospital. What Iran has dubbed a terrorist attack reportedly involved a hail of machine gun fire and a suicide bomber explosion. And a top military adviser to Iran's supreme leader and former IRGC general issued a similar allegation on Twitter. Hossein Dehghan wrote: "In the last days of their gambling ally’s political life, the Zionists seek to intensify and increase pressure on Iran to wage a full-blown war," Dehghan wrote, appearing to refer to U.S. President Donald Trump. "We will descend like lightning on the killers of this oppressed martyr and we will make them regret their actions!"Terrorists murdered an eminent Iranian scientist today. This cowardice—with serious indications of Israeli role—shows desperate warmongering of perpetrators Iran calls on int'l community—and especially EU—to end their shameful double standards & condemn this act of state terror.— Javad Zarif (@JZarif) November 27, 2020 According to Iran Front Page News, Fakhrizadeh was killed by shooting, but before the shootout, his car has been stopped with an explosion at Mostafa Khomeini Blvd. Several others are also reportedly killed in the incident, but haven’t been identified yet. Tasnim reported further details as follows:At 2:30 PM Iran time, a Nissan commercial vehicle exploded near Fahrizadeh's car. Immediately afterwards the assassins fired at Fahrizadeh & his bodyguard. Fahrizadeh was rushed by helicopter to the hospital where he died of his wounds.Fakhrizadeh was a brigadier general in the Iranian Revolutionary Guards Corp (IRGC) and headed Iran’s nuclear weapons project. He was a professor of physics at the Imam Hussein University in Tehran and was former head of Iran's Physics Research Center.He was widely considered "father of Iran's nuclear program" - but which the Islamic Republic has long insisted has remained for peaceful domestic energy purposes.
Watch- Moment German Commandos Intercept & Raid Turkish Ship Bound For Libya - The Turkish media published a video this week showing the interception and search of a Turkish cargo vessel by German forces which happened Sunday as part of the European Union's "Irini" operation in the Mediterranean. According to reports, the Turkish merchant ship was bound for the Libyan coast before it was stopped by the German naval forces in the eastern Mediterranean. In the video shared by RT, the German forces can be seen approaching the vessel with its warship and helicopters, as they later entered the ship to search its contents.On Monday, the Turkish Foreign Ministry condemned Germany’s attempted inspection, calling it a violation of international law.According to Deutsche Welle:A diplomatic spat erupted between Turkey and Germany on Monday after Ankara accused German troops of carrying out a search of a freighter as part of the EU's Irini mission to enforce the UN's Libya arms embargo.The Turkish Foreign Ministry said it had summoned the envoys to Ankara of Germany, the EU and Italy to protest the "unauthorized" operation."We protest this action, which was conducted without authority and with the use of force," the ministry said. The German army confirmed that Turkey prevented German forces operating within a military mission of the European Union from inspecting a Turkish cargo ship "believed to be transporting weapons to Libya."
