January 2021 natural gas contract price hits all time low; largest early December draw from natural gas storage in 13 years; biggest ever drop in US oil exports led to largest crude inventory build in 33 weeks; gasoline production was at a 26 week low despite the highest refinery utilization in 20 weeks, but gasoline demand at a 27 week low still led to biggest gasoline inventory build in 35 weeks; distillate exports at a 27 week low led to largest distillate inventory build in 28 weeks..
oil prices managed to increase for a 6th week in a row, despite closing lower 4 out of 5 days this week, as the beginning of the vaccine rollout encouraged oil traders to look past increasing inventories and the current bearish economic news.. after rising 1.6% to a nine month high of $46.26 a barrel last week after OPEC and other oil producers came to a compromise agreement on early 2021 oil output cuts, the contract price of US light sweet crude for January delivery opened lower on Monday as surging coronavirus cases and rising tension between the US and China undermined the positive impact from the OPEC+ deal and finished the session down 50 cents at $45.76 a barrel as near-term demand risks from the resurgent pandemic clouded optimism about the vaccine rollout...oil traded in a narrow range Tuesday as traders weighed near-term demand risks from rising Covid cases against hopes for a stimulus package and a vaccine rollout but closed 16 cents lower at $45.60 a barrel after California tightened its pandemic lockdown through Christmas and Covid-19 cases surged in the US and Europe...oil prices shrugged off the major product inventory builds that were reported by the API to move higher after hours Tuesay after two small Iraqi oil wells were attacked and global markets rose on the prospect of additional U.S. stimulus, but then tumbled more than 1% early in the Wednesday session after EIA data showed that U.S. crude, gasoline and distillate inventories all rose by the most in 7 months; however, they recovered to close just 8 cent lower at $45.52 a barrel as the beginning of mass inoculations in the UK and the prospect of a quick rollout of the coronavirus vaccine in the US pushed markets higher following the report...with the week's huge rise in inventories thus dismissed, oil prices climbed nearly 3% on Thursday, with the international benchmark Brent surging above $50 a barrel for the first time since early March while US crude prices rose $1.26 to settle at $46.78 a barrel, as hopes that safe vaccines could be rolled out by spring boosted the outlook for global oil consumption....US crude prices pulled back on Friday, falling by 21 cents, or nearly 0.5%, to settle at $46.57 a barrel, as new coronavirus-related restrictions on business in New York overshadowed the progress toward vaccination programs, but still notched a small weekly gain as oil traders took their cue from progress on the rollout of the COVID-19 vaccines and an expected economic recovery...
natural gas prices also managed to eke out a small gain this week after the EIA reported the largest early December draw from storage in 13 years...after falling 9.4% to $2.575 per mmBTU last week after the EIA reported the smallest late November draw from storage in nineteen years, the contract price of natural gas for January delivery opened 5% lower on Monday on forecasts for milder weather and never recovered, closing down 16.9 cents, or 6.6%, at $2.406 per mmBTU, a two month low for natural gas prices and an all time low for the January 2021 contract....those records were extended a bit on Tuesday when natural gas prices slipped another seven-tenths of a cent to $2.399 per mmBTU after the latest midday weather data failed to trend meaningfully colder for the coming 15 days...natural gas prices began their recovery Wednesday, rising 4.3 cents or nearly 2% on record natural gas exports, and then jumped 10 cents on the release of the natural gas storage report on Thursday before settling with a gain of 11.1 cents at 2.553 per mmBTU on that bigger-than-expected storage draw and forecasts for cooler weather over the next two weeks...the January natural gas contract then rose another 3.8 cents on a chillier weather outlook to end the week at $2.591 per mmBTU, thus finishing the week fractionally higher than the prior week's close...
the natural gas storage report from the EIA for the week ending December 4th indicated that the quantity of natural gas held in underground storage in the US decreased by 91 billion cubic feet to 3,848 billion cubic feet by the end of the week, which left our gas supplies 309 billion cubic feet, or 8.7% higher than the 3,539 billion cubic feet that were in storage on December 4th of last year, and 260 billion cubic feet, or 7.2% above the five-year average of 3,588 billion cubic feet of natural gas that have been in storage as of the 4th of December in recent years....the 91 billion cubic feet that were drawn out of US natural gas storage this week was higher than the average forecast from an S&P Global Platts survey of analysts who expected a 78 billion cubic foot withdrawal, and was also much higher than the average withdrawal of 61 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 57 billion cubic feet withdrawal from natural gas storage seen during the corresponding week of 2019....this week's withdrawal was also the most gas drawn out of storage during the first week of December in 13 years, although there have been late November draws that were larger during that span..
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending December 4th indicated that because of a big increase in our oil imports and a record drop in our oil exports, we had a large surplus of oil to add to our stored commercial supplies for the 7th time in the past twenty weeks and for the 28th time in the past forty-seven weeks....our imports of crude oil rose by an average of 1,080,000 barrels per day to an average of 6,479,000 barrels per day, after rising by an average of 171,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 1,622,000 barrels per day to an average of 1,834,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,645,000 barrels of per day during the week ending December 4th, 2,702,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was reportedly unchanged at 11,100,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 15,745,000 barrels per day during this reporting week...
meanwhile, US oil refineries reported they were processing 14,436,000 barrels of crude per day during the week ending December 4th, 424,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a net of 2,155,000 barrels of oil per day were being added to 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 and from oilfield production was 846,000 barrels per day less than what our oil refineries reported they used during the week plus what was added to storage....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+846,000) 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 that 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 rose to an average of 5,590,000 barrels per day last week, which was still 10.7% less than the 6,259,000 barrel per day average that we were importing over the same four-week period last year.....the 2,155,000 barrel per day net addition to our total crude inventories was as 2,170,000 barrels per day were added to our commercially available stocks of crude oil, which was sightly offset by the 15,000 barrels per day that was being withdrawn from the oil supplies in our Strategic Petroleum Reserve, space in which is now being leased for commercial use, and hence the recent SPR additions and withdrawals should really be included in our commercial inventories....this week's crude oil production was reported to be unchanged at 11,100,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at 10,600,000 barrels per day, while a 5,000 barrels per day increase to 512,000 barrels per day in Alaska's oil production had no impact on the rounded national total...last year's US crude oil production for the week ending December 6th was rounded to 12,800,000 barrels per day, so this reporting week's rounded oil production figure was 13.3% below that of a year ago, yet still 31.7% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 79.9% of their capacity while using 14,436,000 barrels of crude per day during the week ending December 4th, up from 78.2% of capacity during the prior week, and the highest refinery utilization rate since March...even so, the 14,436,000 barrels per day of oil that were refined this week were still 13.0% fewer barrels than the 16,597,000 barrels of crude that were being processed daily during the week ending December 6th of last year, when US refineries were operating at 90.6% of capacity...
even with the increase in the amount of oil being refined, gasoline output from our refineries was again lower, decreasing by 244,000 barrels per day to 8,340,000 barrels per day during the week ending December 4th, after our refineries' gasoline output had decreased by 266,000 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 14.5% less than the 9,753,000 barrels of gasoline that were being produced daily over the same week of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 84,000 barrels per day to 4,587,000 barrels per day, after our distillates output had decreased by 21,000 barrels per day over the prior week....but since it's also just coming off a three year low, our distillates' production was still 10.7% less than the 5,228,000 barrels of distillates per day that were being produced during the week ending December 6th, 2019...
even with our gasoline production at it's lowest in 26 weeks, our supply of gasoline in storage at the end of the week increased for the 9th time in 23 weeks and by the most in 35 weeks, rising by 4,221,000 barrels to 233,638,000 barrels during the week ending December 4th, after our gasoline inventories had increased by 3,491,000 barrels over the prior week...our gasoline supplies increased by more this week than last because the amount of gasoline supplied to US markets decreased by 373,000 barrels per day to a 27 week low of 7,600,000 barrels per day, and because our imports of gasoline rose by 267,000 barrels per day to 789,000 barrels per day, while our exports of gasoline rose by 216,000 barrels per day to 905,000 barrels per day....with now four big increases in a row, our gasoline supplies were 1.3% higher than last December 6th's gasoline inventories of 234,768,000 barrels, and about 5% above the five year average of our gasoline supplies for this time of the year...
meanwhile, with the modest increase in our distillates production, our supplies of distillate fuels increased for the 2nd time in 12 weeks, for the 20th time in 36 weeks and for the 22rd time in the past year, rising by 5,222,000 barrels to 151,092,000 barrels during the week ending December 4th, after our distillates supplies had increased by 3,238,000 barrels during the prior week....our distillates supplies rose by the most in 28 weeks this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 400,000 barrels per day to 3,389,000 barrels per day, and because our exports of distillates fell by 134,000 barrels per day to 815,000 barrels per day, the lowest in 27 weeks, while our imports of distillates fell by 335,000 barrels per day to 279,000 barrels per day....after this week's inventory increase, our distillate supplies at the end of the week were 22.3% above the 123,587,000 barrels of distillates that we had in storage on December 6th, 2019, and about 11% above the five year average of distillates stocks for this time of the year...
finally, with the record drop in our oil exports and the big increase in our oil imports, our commercial supplies of crude oil in storage (not including the commercial oil in the SPR) rose for the 11th time in the past twenty-six weeks and for the 32nd time in the past year, increasing by 15,189,000 barrels, from 488,042,000 barrels on November 27th to 503,231,000 barrels on December 4th, the biggest oil inventory incease since April 10th...after that big increase, our commercial crude oil inventories were roughly 11% above the five-year average of crude oil supplies for this time of year, and 49.2% above the prior 5 year (2010 - 2014) average of our crude oil stocks as of the first weekend of December, 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 December 4th were 12.3% above the 447,918,000 barrels of oil we had in commercial storage on December 6th of 2019, 13.9% more than the 441,954,000 barrels of oil that we had in storage on December 7th of 2018, and 12.3% above the 448,103,000 barrels of oil we had in commercial storage on December 1st of 2017...
This Week's Rig Count
The US rig count rose for the 12th time in the past thirteen weeks during the week ending December 11th, but for just the 14th time in the past 39 weeks, and hence it is still down by 57.4% over that thirty-eight week period....Baker Hughes reported that the total count of rotary rigs running in the US rose by 15 to 338 rigs this past week, which was still by down 461 rigs from the 799 rigs that were in use as of the December 13th report of 2019, and was also still 66 fewer rigs than the all time low prior to this year, and 1,591 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 12 rigs to 258 oil rigs this week, after rising by 5 oil rigs the prior week, leaving us with 409 fewer oil rigs than were running a year ago, and still 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 4 to 79 natural gas rigs, which was still down by 50 natural gas rigs from the 129 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, one rig classified as 'miscellaneous' continued to drill in Lake County, California, while a year ago there were three such "miscellaneous" rigs deployed...
The Gulf of Mexico rig count was unchanged at 13 rigs this week, with 12 of those rigs drilling for oil in Louisiana's offshore waters and one drilling for oil offshore from Texas...that was 10 fewer Gulf rigs than the 23 rigs drilling in the Gulf a year ago, when 22 Gulf rigs were drilling offshore from Louisiana and one was deployed offshore from Texas...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....however, in addition to those rigs offshore, two rigs continue to drill through inland bodies of water this week, one in Lafourche Parish 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 17 to 306 horizontal rigs this week, which was still 387 fewer horizontal rigs than the 693 horizontal rigs that were in use in the US on December 13th of last year, and less than a quarter of the record of 1372 horizontal rigs that were deployed on November 21st of 2014.....on the other hand, the vertical rig count was down by one to 15 vertical rigs this week, and those were down by 39 from the 54 vertical rigs that were operating during the same week of last year....at the same time, the directional rig count was also down by 1 to 17 directional rigs this week, and those were down by 35 from the 52 directional rigs that were in use on December 13th 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 December 11th, the second column shows the change in the number of working rigs between last week's count (December 4th) and this week's (December 11th) count, the third column shows last week's December 4th 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 13th of December, 2019...
obviously, we have quite a bit more activity this week than in recent weeks, when rig count changes had been in single digits...checking first for the details on the Permian basin in Texas, we find that two rigs were added in Texas Oil District 7C, which roughly corresponds to the southern part of the Permian Midland, and that one rig was added in Texas Oil District 8, which corresponds to the core Permian Delaware, which thus means that Permian basin rigs in Texas were up by a total of three...since the Permian basin rig count was up by four rigs nationally, that means that the rig that was added in New Mexico must have been added in the farthest west reaches of the Permian Delaware, to account for the national Permian basin increase (but note that since a miscellaneous rig was also shut down in the Permian basin in Eddy County, New Mexico this week, New Mexico accounts for an increase of two oil rigs)...elsewhere in Texas, we find that two rigs were added in Texas Oil District 1, and one rig was added in Texas Oil District 4, which together would account for Eagle Ford basin increase, while the rig counts in all other Texas Oil Districts remained unchanged...meanwhile, in Oklahoma we see there was a rig pulled out of the Cana-Woodford despite the one rig increase in the state, which mean that two Oklahoma rigs were added in "other" basins that Baker Hughes does not track...likewise, in Wyoming, we have a rig added in the Denver-Julesburg Niobrara chalk and three more added in Wyoming basins that Baker Hughes does not track...meanhwile, among rigs targeting natural gas, we have the two rigs that were added in Pennsylvania's Marcellus, and two natural gas rigs that were added in Ohio's Utica shale, while the lone oil rig that had been deployed in Ohio's Utica was shut down at the same time...
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Canfield woman appointed to Ohio’s Advisory Council on Oil and Gas - (WKBN) – A Canfield woman has been appointed by Governor Mike DeWine to serve on the state’s Technical Advisory Council on Oil and Gas. Jackie Stewart will begin her term Nov. 9 and will serve until Jan. 31, 2023. The role of the council is to review and make recommendations regarding mandatory pooling requests, variance requests and to advise on matters pertaining to oil and gas production, drilling, plugging and exploration. According to the Ohio Department of Natural Resources, the eight-member council includes three members that must represent independent oil and gas producers operating and producing primarily in Ohio, three members must represent oil or gas producers having substantial production in Ohio and at least one other state, one member must represent the public, and one member must represent persons having landowner royalty interests in oil and gas production. The council holds quarterly meetings.
The Climate Aspect of Plastics (and Other Nasty Tidbits of the Cycle) - While the oil patch has been involved in petrochemicals for years, the expansion of plastics production could present a major problem going forward. Shell Oil has under construction a massive cracking facility in western Pennsylvania. Cracking is the process that turns wet gas derived from unconventional fracked wells into a feedstock for plastic pellet production. The pellets are then turned into anything made from plastic these days. ExxonMobil for years has been debating a plant across the river in Belmont, Ohio, for the same purpose. Several other chemical companies have announced plans in the Ohio River Valley for similar facilities. Shell has proposed a pipeline called ASH, the Appalachian Storage Hub, to collect this wet gas from different areas in the Marcellus and Utica shale formation to be used as a feedstock for plastic production. Down in Cancer Alley in Louisiana, expansion is occurring there with Formosa taking over a sugarcane field to construct a cracking facility as was reported on NBC National News. This is where the climate consequences of continued use of plastics comes into play. There has been a number floated around that I have never seen anybody debate or shoot down, that it takes 1,000 new unconventional gas wells to supply one of these new cracking facilities. This will lead to the expansion of fracking in different areas, not only in the Marcellus Shale and the Utica Shale formations the area I am most familiar with and where most of my data comes from, but also in the Permian Basin in order to supply the new facilities along the Gulf Coast. Increased fracking leads to increased methane production and increased contamination in groundwater. In the case of the Formosa facility in Louisiana, a decrease in the productivity of agricultural lands. More health problems within communities living near these facilities will be experienced both from the fracked wells and also emissions near and downwind of these cracking facilities as they will be releasing a good bit of pollutants into the air, and more greenhouse gas emissions.
Pa. shale gas permitting continues to fall in November - Permits for shale gas wells in Pennsylvania dropped 57% year over year in November, according to the latest state data, continuing a decline in the state's drilling activity that began in April after the bust in the oil markets. November's 17% decline from October's numbers was led by a drop-off in permitting activity in the wet gas counties of Greene and Washington, south of Pittsburgh. Washington County issued just two new drilling permits, to Range Resources Corp. and EQT Corp., an 89% decline from November 2019, according to the Department of Environmental Protection's database Dec. 7. The state's top five producers — EQT, Range, Cabot Oil & Gas Corp., Chesapeake Energy Corp. and Southwestern Energy Co. — pulled 56% of the state's November permits, while publicly traded operators accounted for 78% of the month's permits. While gas prices at the benchmark Henry Hub hovered near $3/MMBtu for the coming winter most of this year, they collapsed in November, losing roughly 50 cents/MMBtu as storage levels stayed high and demand was capped by warmer-than-normal weather. The state's public operators have been skeptical that the $3/MMBtu mark for 2021 futures prices could be sustained and kept telling investors they would stick with drilling plans that kept production flat. "We think a maintenance program is appropriate at this stage," Cabot Chairman, President and CEO Dan Dinges told analysts on the company's Oct. 30 third-quarter earnings conference call. "Right now, the early winter season … there is still a couple of hundred Bcf over comparison between this year's storage levels and the five-year average and last year's storage levels. … So, I think that from our perspective, and looking at what's prudent for the health of Cabot and this industry, that we are better served to stick with a maintenance capital program."
Review of shale gas well at Edgar Thomson steel mill site suspended -The state Department of Environmental Protection has suspended its review of a proposal to drill a deep shale gas well on U.S. Steel Corp.’s Edgar Thomson steel mill property along the Monongahela River in East Pittsburgh and North Versailles. Consideration of the required permits was halted by the DEP because Merrion Oil & Gas has failed to obtain local zoning permits for the project that was first proposed in 2017. The controversial well project, which the Pittsburgh-based steelmaker intends to use to provide a dedicated, low-cost supply of natural gas to its Mon Valley Works mills, is opposed by some residents and environmental organizations because of safety and health concerns. According to the DEP permit applications, the project would disturb 13.4 acres for construction of an unconventional gas well pad, two access roads, five freshwater storage tanks, a 2,770-foot natural gas pipeline and a 2,990-foot freshwater pipeline. Merrion, a company headquartered in New Mexico, was informed of the DEP’s decision to suspend the permit review process in a Dec. 8 letter from Scott Perry, DEP deputy secretary for the Office of Oil and Gas Management. In the letter, Mr. Perry wrote the department was suspending its review “unless and until Merrion obtains zoning approval from the appropriate governmental entity to construct and operate the facility.” The company’s plans show it could drill up to 18 wells on one pad within the 145-year-old steel mill’s industrial footprint. Each well would have been approximately 6,700 feet deep with horizontal laterals in the Marcellus shale formation extending out almost two miles under residential areas of Mon Valley communities.
Transco urges court to dismiss nuns' religious freedom lawsuit over pipeline - Transcontinental Gas Pipe Line Company (Transco) is urging a federal judge in Pennsylvania to toss a lawsuit by Catholic nuns who say the company should pay them damages for defiling the sacred nature of their property in eastern Pennsylvania with a natural gas pipeline it built there. Transco, a unit of Williams Cos Inc, asked the U.S. District Court for the Eastern District of Pennsylvania on Wednesday to dismiss claims by the Adorers of the Blood of Christ, a religious order whose sisters say that the building of a section of the Atlantic Sunrise Pipeline on their land in Lancaster County violates their religious practice under the Religious Freedom Restoration Act (RFRA). To read the full story on Westlaw Today, click here: bit.ly/2W2HquD
Fracking Sites Tied to Increased Heart Failure Hospitalizations - Living near hydraulic fracturing is associated with increased risk of hospitalization in people with heart failure (HF), a new study from Pennsylvania suggests.The link was strongest among those with more severe heart failure but patients with either HF phenotype showed this association of increased risk with exposure to fracking activities, according to the investigators, led by Tara P. McAlexander, PhD, MPH, Drexel University Dornsife School of Public Health in Philadelphia."Our understanding has expanded well beyond the famous Harvard Six Cities study to know that it's not just a short-term uptick in air pollution that's going to send someone to the hospital a couple days later," said McAlexander interview, referring to the study conducted from the mid-1970s through 1991. "We know that people who live in these environments and are exposed for long periods of time may have long-term detrimental effects." Although questions remain about specific mechanisms and how best to assess exposure, the evidence is mounting in a way that is consistent with the biologic hypotheses of how fracking would adversely affect health, McAlexander said. "We have many studies now on adverse pregnancy and birth outcomes, and that's just the tip of the iceberg." Pennsylvania is a hot spot for fracking, also known as unconventional natural gas development (UNGD), with more than 12,000 wells drilled in the Marcellus shale since 2004. The shale extends from upstate New York in the north to northeastern Kentucky and Tennessee in the south and covers about 72,000 square miles. Last year, Pennsylvania pledged $3 million to study clusters of rare pediatric cancers and asthma near fracking operations. A recent grand jury report concluded government officials failed to protect residents from the health effects of fracking. Fracking involves a cascade of activities that can trigger neural circuitry, sympathetic activation, and inflammation — all well-known pathways that potentiate heart failure, said Sanjay Rajagopalan, MD, who has researched the health effects of air pollution for two decades and was not involved with the study. "If you think about it, it's like environmental perturbation on steroids in some ways where they are pulling the trigger from a variety of different ways: noise, air pollution, social displacement, psychosocial impacts, economic disparities. So it's not at all surprising that they saw an association," said Rajagopalan, chief of cardiovascular medicine, University Hospitals Harrington Heart & Vascular Institute, and director of the Case Western Cardiovascular Research Institute in Cleveland, Ohio.
Trump admin wants Supreme Court to take pipeline battle -- Friday, December 11, 2020 -- The Trump administration is calling for the Supreme Court to weigh in on whether the developers of the PennEast natural gas pipeline had the right to seize state-controlled land to build their project in New Jersey.
Fears for safety and climate surround LNG export terminal planned on the Delaware - Plans for a new half-billion-dollar liquefied natural gas export terminal on the Delaware River in South Jersey could be greenlighted by the Delaware River Basin Commission on Wednesday. But opponents say they will challenge the LNG project in federal court, and they’ve gained the support of Hollywood stars like Leonardo DeCaprio and Mark Ruffalo, along with climate leaders like Bill McKibben. One of the people planning to testify at the hearing is Vanessa Keegan, who lives in the small Gloucester County community of Gibbstown. Keegan and her boyfriend, who have three sons between them and work in the restaurant industry, saved up enough to buy their home just a few blocks away from the planned export terminal more than a year ago. She learned about the terminal from a neighbor. “We’re killing our planet. That’s the big existential thing,” said Keegan, who since the pandemic quit her job so she could help with remote learning for her 3-year-old son and 10-year-old niece. “But me personally, you are putting my family in danger. If an accident happens with [liquefied natural gas], we don’t get to show up the next day and say, ‘Look, I told you so.’ We won’t be here. My neighbors won’t be here. This neighborhood will not be here. That’s terrifying.” Pennsylvania’s shale gas is so abundant and cheap right now, producers need to find new markets overseas. The developer of the project, Delaware River Partners, a subsidiary of New Fortress Energy, wants to build the export terminal on the site of a former DuPont dynamite manufacturing plant. The overall plan would ship gas from Pennsylvania’s Marcellus Shale to a new liquefaction plant in Bradford County, where refrigeration units would chill it to negative-260 degrees Fahrenheit to turn it into a liquid. The part of the plan that scares a lot of people like Keegan is the transport. LNG would be shipped 200 miles south down the I-95 corridor by truck and/or rail through some of the most densely populated areas of the East Coast to Gibbstown. Trucks or rail cars full of flammable liquefied natural gas would roll about a block and a half away from Keegan’s home. The company secured a special permit from the federal Pipeline Hazardous Material Safety Administration to move the LNG by rail. The permit allows two 100-car trains to transport the gas each day. It’s the longest permitted LNG rail route in the country because, until recently, using trains to transport LNG required that rarely issued special permit.
Wrong place, wrong time for LNG terminal | Philadelphia Inquirer Editorial - The Delaware River Basin Commission appears ready to green light a liquefied natural gas (LNG) export terminal at a deep-water port in Gibbstown, N.J., resuming what environmental advocates call a less-than-transparent process. The proposed facility would operate on a PCB-contaminated site that was formerly used for manufacturing explosives. Fracked gas produced near Scranton would be transported by rail or truck through densely populated parts of the Philadelphia region to Gibbstown, then loaded on ships bound for markets abroad. Approval would be a win for the developer New Fortress Energy, which has been linked to President Donald Trump, and for the fossil fuel industry — at a time when the destructive impacts of climate change have never been more apparent. A yes vote also clears the way for construction of a second dock to help serve either 300 tanker trucks, or two trains each carrying as much as three million gallons of super-cooled LNG, that would arrive at Gibbstown daily from upstate Pennsylvania. Supporters of the project dismiss fears of so-called ”bomb trains” as overblown, and cite projections of 300 construction jobs and as many as 150 permanent jobs in Gibbstown. Another 500 construction and 50 permanent jobs could be created by an LNG facility being built in Wyalusing, Pa. The Trump administration backs fracking and exporting natural gas, and issued a special permit for a Wyalusing-Gibbstown rail route, and has encouraged the use of specialized rail cars nationally as alternatives to pipelines. Other supporters point out the importance of natural gas in the economy of Pennsylvania, currently the second-biggest producing state in a country facing a glut of the fuel.But more than 100 local, regional, and national advocacy groups, as well as some elected officials in the four states, have questioned the project. A letter issued last week by the Natural Resources Defense Council raised concerns that dredging a 45-acre area of the river to construct the second dock would disperse legacy pollutants, including potentially carcinogenic PCBs, into the water.The Delaware Riverkeeper Network also released a letter from 26 Pennsylvania elected officials, including members of the state legislature and Philadelphia City Council, urging the commission to reject the project because the proposed train route would carry hazardous cargo daily through densely populated neighborhoods, including Black and brown communities. The election of Biden represents an inflection point in this country, especially for climate change and the environment. We can begin to undo the damage of decades — especially heightened in the last four years — and begin to rewrite our reliance on fossil fuels. A yes vote on this project would keep us in the past. The Gibbstown LNG terminal should be voted down.
Enviros fight to take LNG battle to federal court - Environmentalists were dismayed by the Delaware River Basin Commission’s approval on Wednesday of a plan to build New Jersey’s first liquefied natural gas export terminal but they say the fight isn’t over yet. Opponents are now vowing to appeal the vote in federal court while asking state and federal agencies to take another look at some permits that have already been issued and hoping that other still-needed permits won’t be granted. But absent a court injunction soon, it’s not clear whether environmental groups will be able to stop the start of construction of a dock at Gibbstown in Gloucester County, where LNG from Pennsylvania would be loaded on to ocean-going tankers. New Jersey State Geologist Jeff Hoffman, representing Gov. Phil Murphy on the commission, joined Pennsylvania, Delaware and the U.S. Army Corps of Engineers in voting to approve the plan. New York abstained after its representative, Ken Kosinski, unsuccessfully proposed that the commission delay a decision pending an analysis of the project’s effects on water quality and climate change. The vote approved a resolution concluding that dock construction would not “substantially” impair or conflict with the commission’s responsibility for maintaining water quality in the river now or in the future. The decision of DRBC, an interstate water regulator, to give its final go-ahead for construction was a major blow for environmental groups who gathered more than 100,000 signatures from all four basin states calling on the agency to reject the project. The plan by Delaware River Partners, a unit of New Fortress Energy, would ship super-cooled natural gas from a planned liquefaction plant in northern Pennsylvania via truck or train some 175 miles to the Gibbstown port, which is being built on the site of a former DuPont munitions factory.
ENERGY TRANSITIONS: Battle reignites over first East Coast gas bans -- Tuesday, December 8, 2020 -- Massachusetts officials are reviving what would be the East Coast's first ban on natural gas in buildings, months after the state attorney general struck it down.
Natural gas-fired generation has increased in most U.S. regions since 2015 - Natural gas-fired generation has generally increased in most U.S. regions since 2015, according to data from the U.S. Energy Information Administration’s (EIA) Power Plant Operations Report. Annual electricity generation from natural gas power plants in the United States increased by 31% in the Northeast region, by 20% in the Central region, and by 17% in the South region between 2015 and 2019. In the West region of the continental United States, electric power generation from natural gas power plants remained relatively flat during the same period. Through November 2020, the Central, South, and Northeast regions have generated similar amounts of electricity from natural gas power plants. Of these regions, the Central region, which includes three independent system operators, had the largest seasonal summer peak in natural gas-fired generation, reaching 53 million megawatthours (MWh) for the month of July 2020, which is 37% more than the 2015 summer peak month. Growing natural gas-fired generation reflects an increase in natural gas-fired generating capacity. Between 2015 and 2019, nearly 35 gigawatts (GW) of net summer capacity entered service, according to EIA’s latest Electric Power Annual, which was an 11% increase during that five-year period. Most of this new natural gas-fired capacity was added in the Northeast region, particularly in the PJM Interconnection. The largest increases in U.S. natural gas-fired generation have occurred in the Central and Northeast regions, near the natural gas production area in Appalachia in states such as Ohio, Pennsylvania, and West Virginia. Relatively low natural gas prices have made it more economical to generate electricity using natural gas instead of coal. This trend has been most pronounced in regions with competition between coal and natural gas generators, particularly in the Midcontinent Independent System Operator's (MISO) area in the Central region and the PJM Interconnection in the Northeast region. When natural gas and coal are similarly priced on a cost-per-energy-content basis, most natural gas-fired generators can produce electricity more efficiently than coal-fired generators, providing an economic advantage in electricity markets.In the West region, growth in natural gas-fired generation declined 1% between 2015 and 2019. Natural gas-fired generation over that period in California declined 30 million MWh (29%), offsetting the combined growth of 28 million MWh in natural gas-fired generation from the Northwest and Southwest subregions.
Harrison County (West Virginia) Commission to consider extension of agreement with developer of proposed natural gas-fired power plant -- The Harrison County Commission on Wednesday will consider an extension of an option to purchase property at the site of a proposed natural gas-fired power plant in Harrison County. In addition, commissioners will consider proposals for construction oversight on the general services annex project and an interest-free loan request from a municipality for a water project. An option to purchase property that would allow ESC Harrison County Power to purchase property at the proposed site of the approximately 550-megawatt natural gas-fired Harrison County Power Plant, a joint project of Energy Solutions Consortium and Caithness Energy, is set to expire at the end of the calendar year. The terms of the option are laid out in two separate agreements — one between the Harrison County Commission and the Harrison County Development Authority, and the other between the development authority and Energy Solutions Consortium Harrison County Power LLC.
Federal regulators are rewriting environmental rules so a massive pipeline can be built across West Virginia -Last month, a federal appeals court blocked one of the key permits for construction of a massive natural gas pipeline that cuts through West Virginia and that industry officials and their political allies in the state are desperate to see completed.The 4th U.S. Circuit Court of Appeals found that environmental groups are likely to prevail in a case arguing federal and state regulators wrongly approved the Mountain Valley Pipeline through a streamlined review process for which the project isn’t eligible.If this sounds familiar, it is. A strikingly similar thing happened two years ago.In October 2018, the same appeals court blocked the same $5.4 billion pipeline because the developer’s plan to temporarily dam four West Virginia rivers didn’t meet special restrictions that state regulators had put on the streamlined approval process.But rather than pausing or rethinking the project at the time, the state Department of Environmental Protection rewrote its construction standards so that the pipeline would qualify.After their most recent court loss, West Virginia officials are once again rewriting their restrictions to help pave the way for the pipeline to qualify for that streamlined permitting process.“Here we go again,” citizen group lawyer Derek Teaney wrote in frustration in the latest of a series of legal challenges to the government agencies that have bent environmental standards for the pipeline.When it is built, the Mountain Valley Pipeline, known as MVP, will transport natural gas from Wetzel County, near West Virginia’s Northern Panhandle, to Pittsylvania County, Virginia, crossing 200 miles in West Virginia and 100 miles in Virginia. The project is one of several large transmission pipelines in the works across Appalachia, part of the rush to market natural gas from drilling and production in the Marcellus Shale formation.Political leaders and business boosters in West Virginia have been big supporters of such projects, hoping that the rise of natural gas would replace jobs and tax revenues lost as the coal industry declines. But some state residents worry that West Virginia’s drive to encourage gas comes with the same environmental costs as its historic dependence on coal. So far, the promise that natural gas would bring an economic renaissance to West Virginia has not come true.
US natural gas futures slide over 6pc on milder weather, higher output -- US natural gas futures dropped more than 6% to a two-month low on Monday, weighed down by forecasts for warmer-than-usual weather that could result in lower heating demand over the next two weeks amid a steady rise in production. Front-month gas futures for January delivery fell 16.9 cents, or 6.6%, to settle at $2.406 per million British thermal units. The contract touched its lowest since Oct. 2 at $2.381 earlier in the session. "The weather outlook for the rest of December is forecasted to be above normal and there is very little buy-side interest in the market," said Robert DiDona of Energy Ventures Analysis, adding "the other major bearish market driver is total net supply." "When you combine the warmer than normal weather outlook for the rest of December, resilient production estimates and elevated storage levels you find little room for upside for the next two weeks which results in little to no bid-side interest from market participant." Data provider Refinitiv estimated 321 heating degree days (HDDs) over the next two weeks in the Lower 48 US states, well below the 30-year average of 422. HDDs measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius). The measure is used to estimate demand to heat homes and businesses. Refinitiv said output in the Lower 48 averaged 90.9 billion cubic feet per day (bcfd) so far in December. That compares with a seven-month high of 91.0 bcfd in November 2020. "In the absence of some bullish weather forecasts, this market may need to price in some further expansion in the supply surplus that has stretched considerably in recent weeks." advisory firm Ritterbusch and Associates said in a note. Despite mild December forecasts, Refinitiv predicted demand, including exports, would rise to an average of 117.8 billion cubic feet per day (bcfd) this week from 113.4 bcfd in the prior week. The amount of gas flowing to US LNG export plants, meanwhile, rose to an average of 10.4 bcfd so far in December, which would top November's 9.8-bcfd record.
Natural Gas Futures Slip Again and ‘Widow-Maker’ Flips Negative as Traders Losing Hope in Winter WeatherEven with a brief cold blast sneaking back into the December forecast, natural gas futures moved lower again on Tuesday. With a key spread flipping to negative, traders appeared to have closed the book on winter with weeks to go before the first verse of Auld Lang Syne is sung. The January Nymex contract settled at $2.399, off seventh-tenths of a cent day/day. February fell 1.1 cents to $2.422. Spot gas prices were mixed Tuesday but most market hubs posted small changes day to day. NGI’s Spot Gas National Avg. slipped 2.0 cents to $2.385. The price action in the cash market may be temporary as milder weather is on tap for later this week, with potential downside possibly spilling over to the Nymex futures curve. Mobius Risk Group said even with little risk of having “too much gas” at the end of winter, the speculative community remained considerably long and traders looking to exit positions could drive prices lower. The latest Commodity Futures Trading Commission data showed the market as of Dec. 1 was 10,000 lots longer than it was the prior week and well above what would be deemed “equilibrium.” Weather continues to “drive the bus,” according to Mobius, at least until storage inventory numbers show a weather-adjusted tightness which cannot be ignored, “or until the blow torch of a winter eases up.” NatGasWeather said the overnight and latest midday weather data failed to trend meaningfully colder for the coming 15 days, with only a brief period Dec. 14-15 being close to cold enough to satisfy. What continues to make the coming pattern “emphatically bearish,” according to the forecaster, is the back end of the 15-day forecast remains solidly warmer than normal over vast stretches of the United States.
US natgas futures up near 2pc on record LNG exports, rising demand - US natural gas futures rose almost 2% on Wednesday from a 10-week low in the prior session, lifted by record liquefied natural gas (LNG) exports and forecasts for a slight increase in heating demand next week. That move higher came despite forecasts confirming earlier calls for the weather to remain warmer than normal through late December. Front-month gas futures rose 4.3 cents, or 1.8%, to settle at $2.442 per million British thermal units. On Tuesday, the contract closed at its lowest since Sept. 28 for a second day in a row. Even though it's only December, gas traders said mild weather over the past month caused the 2021 March-April spread to switch from backwardation to an unusual contango, a sign that some in the market have already given up on this winter. Data provider Refinitiv said output in the Lower 48 US states averaged 90.8 billion cubic feet per day (bcfd) so far in December. That compares with a seven-month high of 91.0 bcfd in November 2020 and an all-time monthly high of 95.4 bcfd in November 2019. Despite mild December forecasts, Refinitiv projected demand, including exports, would rise from 118.4 bcfd this week to 119.9 bcfd next week due to the usual seasonal cooling of the weather. The amount of gas flowing to US LNG export plants, meanwhile, rose to an average of 10.8 bcfd so far in December, which would top November's 9.8-bcfd record. That increase comes as the third train at Cheniere Energy Inc's Corpus Christi plant in Texas prepares to enter commercial service and as rising prices in Europe and Asia prompt buyers to purchase more US gas.
US working natural gas volumes in underground storage fall 91 Bcf: EIA | S&P Global Platts — US natural gas storage volumes fell at a higher rate for the week ended Dec. 4 than most of the market expected, while the remaining Henry Hub winter strip and the summer strip both jumped by an average of 10 cents following the weekly estimate. Storage inventories decreased by 91 Bcf to 3.848 Tcf the US Energy Information Administration reported Dec. 10. The withdrawal was much higher than an S&P Global Platts survey of analysts calling for a 78 Bcf pull. Responses to the survey ranged from a 65 to a 95 Bcf withdrawal. This was also stronger than the 57 Bcf draw reported during the same week last year as well as the five-year average withdrawal of 61 Bcf, according to EIA data. Storage volumes now stand 309 Bcf, or 8.7%, more than the 3.539 Tcf a year earlier and 260 Bcf, or 7.2%, above five-year average of 3.588 Tcf. The NYMEX Henry Hub January contract jumped 12 cents to $2.57/MMBtu in trading following the release of the weekly storage report at 10:30 am ET. The remaining winter strip, February and March, added 11 cents to average $2.68/MMBtu, an increase of 15 cents from one a week earlier, but still well below the $3/MMBtu averaged during most of October. Natural gas prices remained soft entering into the EIA report, with the prompt-month January contract remaining below $2.50/MMBtu. Moreover, the winter premium has been completely removed from the NYMEX curve, as the March/April spread went negative this week. This is the earliest this spread has turned negative since the 2015 heating season. Bullish sentiment has eroded for more than a month now as very mild temperatures in November and a string of bearish EIA storage surprises dramatically reduced end-March stockout concerns. After the EIA report, natural gas prices jumped, with the January contract up roughly 12 cents day on day near $2.56/MMBtu. The rally was not just confined to the prompt contract. Summer 2021 prices also jumped between 10-12 cents/MMBtu following the report. The week in progress has tightened as colder temperatures boosted residential and commercial demand by nearly 4 Bcf/d on the week, according to S&P Global Platts Analytics. Moreover, increased electric space heating loads and lower wind output caused thermal loads to increase on the week, propelling gas-fired power generation 1.5 Bcf/d higher. Stronger US demand was met with production shifting 800 MMcf/d lower on the week. Lower production was met with a 700 MMcf/d rise in net Canadian imports. Platts Analytics' supply and demand model currently forecasts a 125 Bcf withdrawal for the week ending Dec. 11, which would shrink the surplus versus the five-year average by an additional 20 Bcf as cooler temperatures spike US-level demand week over week.
US natgas futures jump over 4pc on big storage draw - US natural gas futures jumped over 4% on Thursday on a bigger-than-expected storage draw and forecasts for cooler weather and higher than anticipated heating demand over the next two weeks. The US Energy Information Administration said utilities pulled 91 billion cubic feet (bcf) of gas from storage during the week ended Dec. 4. Analysts said that big draw was likely due to record liquefied natural gas (LNG) exports and a small decline in output last week. That was higher than the 83-bcf decline analysts forecast in a Reuters poll and compares with a decrease of 57 bcf during the same week last year and a five-year (2015-19) average withdrawal of 61 bcf. Front-month gas futures rose 11.1 cents, or 4.5%, to settle at $2.553 per million British thermal units. That was the biggest daily percentage increase since Oct. 29. Data provider Refinitiv said output in the Lower 48 US states averaged 90.8 billion cubic feet per day so far in December. That compares with a seven-month high of 91.0 bcfd in November 2020 and an all-time monthly high of 95.4 bcfd in November 2019. Even though the weather is expected to remain milder than normal into late December, the latest forecasts called for slightly cooler temperatures over the next two weeks. That prompted Refinitiv to project demand, including exports, would rise more than previously expected to 120.4 bcfd next week from 118.6 bcfd this week. The amount of gas flowing to US LNG export plants, meanwhile, rose to an average of 10.8 bcfd so far in December, which would top November's 9.8-bcfd record.
Natural Gas Futures Notch Third Straight Gain on Chillier Weather Outlook -- It was a struggle, but natural gas bulls emerged victorious in sending natural gas futures higher on Friday to close out a volatile week. Given the tighter supply/demand balance, the more convincing cold outlook for the coming week lifted the January Nymex futures contract 3.8 cents to $2.591. February settled at $2.603, up 3.3 cents day/day. Cash prices also strengthened, with NGI’s Spot Gas National Avg. climbing 13.5 cents to $2.565. After recent weather model runs indicated the coming week could be colder than previously forecast, bulls attempted to ride the momentum from the latest government storage report. The Energy Information Administration (EIA) reported a larger-than-expected 91 Bcf withdrawal from storage inventories during the week ending Dec. 4. The draw was several Bcf above the median of major surveys and a whopping 90 Bcf more than what was pulled from storage during Thanksgiving week. Analysts at The Schork Group “are of the strong opinion” that the 91 Bcf draw was a function of a “true-up” to the prior week’s abnormally small 1 Bcf pull. The Schork team noted that the winter withdrawal season has gotten off to a slow start across much of the Lower 48. The South Central region pulled a leading 32 Bcf out of storage that included 25 Bcf out of nonsalt facilities and 7 Bcf out of salts, according to EIA. The 7 Bcf draw from salts follows three straight injections and was the first pull since Nov. 6, The Schork Group said. The Midwest isn’t faring much better when it comes to reducing the massive storage overhang in the region.
Enbridge plans to seek dismissal of Gov. Whitmers order --Enbridge Energy plans to ask a federal judge to dismiss Gov. Gretchen Whitmer’s order to shut down the controversial oil and natural gas liquids pipeline, Line 5.“Enbridge is advancing its case in federal court and continues to vigorously defend the validity of the Line 5 easement in the Straits of Mackinac and its right to operate the pipeline,” said Enbridge spokesman Ryan Duffy in a statement.The filing this week is essentially a notice to the judge and the state that it will seek a dismissal of Whitmer’s move to revoke Line 5′s easement to operate the pipeline in the Straits of Mackinac.As of right now, the Canadian company has until May 2021 to stop the flow of oil and natural gas through the line. Whitmer announced the shutdown of the line in November following a review by the Michigan Department of Natural Resources of Enbridge’s compliance with the easement.A portion of the 645-mile pipeline, which travels from Wisconsin to Ontario, across both Michigan peninsulas, runs through the Straits of Mackinac. Built in 1953, the line has been met with continued controversy and calls for its shutdown for years. Enbridge argues in a court filing that the Pipeline and Hazardous Materials Safety Administration (PHMSA), not the state, oversee and regulate the pipelines throughout the U.S., and the organization has said the pipelines are “fit for service.” Enbridge argues in its motion, the state is trying to improperly take over PHMSA’s regulatory role. But PHMSA “is the sole entity responsible for regulating pipeline safety uniformly, and thus expressly preempted states from imposing their own safety regulations,” the filing said.Whitmer’s office did not immediately return a request for comment. Enbridge had already filed an injunction asking a federal judge to block Whitmer’s order to shutdown the line. In a response statement to that filing, Whitmer said the legal challenge, “brazenly defies the people of Michigan and their right to protect the Great Lakes from a catastrophic oil spill.”Despite the ongoing litigation, Enbridge is still working to replace part of the line and house that section in a multi-use tunnel buried under the bedrock of the straits, which is the subject of other ongoing litigation.
Army Corps of Engineers takes comment on Line 5 tunnel proposal -The U.S. Army Corps of Engineers held a public comment period Monday as part of a review of Enbridge Energy’s permit for a tunnel to house a replacement section of the Line 5 pipeline beneath the Straits of Mackinac. As part of the process, the Army Corps will determine whether an additional environmental impact review of the project is necessary. According to the Corps, the governor’s recent announcement that she's revoking the easement for Line 5 has not terminated either state or federal reviews of the tunnel project. Whitney Gravelle is an attorney for the Bay Mills Indian Community. “Given the risks and harm to species, economy, wetlands, economy, cultural resources and most importantly Tribal Treaty rights which are the supreme law of the land, Line 5 is a pipeline that should be decommissioned as quickly as possible and a tunnel project that should not be granted a permit,” says Gravelle. Michael Alaimo is with the Michigan Chamber of Commerce, which supports the project. “The Great Lakes tunnel project will play a vital role in the process of job creation and energy security for years and decades to come. We strongly support its construction,” he says. In a statement, an Enbridge Energy spokesman said the public hearing "shows the process for approving our application with the U.S. Army Corps of Engineers (USACE) is moving forward in a timely manner. We support a thorough, robust regulatory process and believe a diversity of viewpoints and perspectives are important, and we welcome the wide-ranging public input that is part of the hearing." The public comment period for the application will end on December 17.
As Enbridge fights for Line 5, Indigenous activists block Line 3 construction in Minnesota - Gov. Gretchen Whitmer last month ordered Canadian oil company Enbridge’s easement with the state to be revoked, giving Enbridge until May to shut down its controversial Line 5 pipeline in the Mackinac Straits. Enbridge responded in full force with a lawsuit against the state. The outcome of that lawsuit, which will likely end up in the Michigan Supreme Court, could have far-reaching implications for states’ authority to regulate the oil pipelines within their borders. Meanwhile, in Minnesota, a parallel battle rages on. Like Line 5, Enbridge’s Line 3 pipeline has long been at the center of controversy and criticism — particularly by Indigenous peoples whose treaty-protected land and rights could be threatened by a pipeline rupture. Fervent activism and protest from tribal members and other “water protectors” came to a head Friday, when Anishinaabe people physically blocked construction of the replacement Line 3 pipeline at the shores of the Mississippi River. Enbridge received permitting approval from the Minnesota Pollution Control Agency (MPCA) last week and immediately started construction then. Opponents of the project filed a lawsuit challenging the action that same day. Line 3 snakes across Minnesota and converges with Line 5 in Northeast Wisconsin as part of Enbridge’s U.S. Mainline System. Both paths of the original pipeline and the replacement pipeline cross numerous tribal lands. Continuing efforts to block Enbridge machines in the area include tribal members performing Anishinaabe cultural practices like praying, smudging and making tobacco ties to demonstrate their treaty rights in the area. The lawsuit against the new Line 3, filed with the Court of Appeals Monday evening, raises concerns over MPCA’s consideration of climate and tribal impacts, as well as risks to the state’s wetlands and water quality. Petitioners of the suit included the Red Lake Band of Chippewa, the White Earth Band of Ojibwe, the Sierra Club, Friends of the Headwaters and Honor the Earth. “Some big questions need to be asked: What if the Appeals Court sides against Enbridge in the legal cases before it? What if the new Biden administration squashes this pipeline? What is Enbridge’s plan if its workforce gets coronavirus?”
Enbridge says it can keep COVID-19 at bay during Line 3 construction, but some worry project could drive cases in rural Minnesota As Enbridge Energy begins construction of the Line 3 oil pipeline across northern Minnesota, opponents of the project have asked Gov. Tim Walz to halt its progress due to the possibility that an influx of thousands of workers could spread COVID-19 in hard-hit rural areas. Enbridge and labor unions working on the $2.6 billion project contend they’re taking necessary precautions to keep COVID-19 at bay, recently putting out an updated plan for limiting spread of the disease, and the Walz administration has long held that construction personnel are essential workers, allowing the industry to operate through the pandemic. But the request for a halt in building Line 3 — made by environmental advocacy groups along with several tribal governments and some health professionals — has touched off a debate over the safety of moving ahead with one of the state’s biggest projects, one larger than the construction of the $1 billion U.S. Bank Stadium in Minneapolis. Enbridge says the Line 3 project will create about 4,000 jobs over the course of construction, with about half of those positions being filled by local workers. The 36-inch pipeline will run 337 miles through northern Minnesota, ending at a terminal in Superior, Wisc. Enbridge spokeswoman Juli Kellner said about 1,600 people are already working on construction of Line 3, and Enbridge expects its workforce to ramp up over time and hit a peak near the end of January, according to documents the company filed with the Minnesota Public Utilities Commission (PUC). Pipeline opponents have said a rush of workers living in close quarters throughout the region could accelerate COVID-19 spread and strain the health care system in regions that have already been pummeled by the pandemic. Line 3 will cross parts of 13 counties in northern Minnesota, ten of which were above the statewide average for cases per 10,000 residents in mid-November, which is the most recent data available from the state. Several of those 13 pipeline counties have seen a large spike in deaths in November and early December. Hubbard County, for instance, had four deaths between March and Oct. 29, but had reported 31 total deaths through Sunday. Aitkin County had reported just two deaths by Oct. 29 but had reported 30 total deaths through Sunday.
Regulators vote against a stay on Enbridge pipeline with construction underway - State regulators declined Friday to grant a stay on construction of Enbridge's new pipeline across northern Minnesota, leaving little recourse to stop work on the $2.6 billion project while court appeals of key approvals and permits are pending. "Operation of the existing Line 3 is more likely to cause harm than construction of the project," said Minnesota Public Utilities Commissioner Valerie Means, explaining her vote against the stay. "The commission has determined that replacing an old, aging pipeline is the safest option for protecting the environment and Minnesota communities." The move came on a day when about 1,000 workers were ending the first week of work and protesters gathered at two work sites. A pair of protesters camped out in trees in Aitkin County and dozens gathered at a job site near Cloquet to disagree with that sentiment as the legal means of stopping the pipeline are now in the hands of the slow-moving Court of Appeals. It could be several weeks at a minimum before the court could intervene in the project and months before the case is decided. "The PUC's predictable actions today again demonstrate that the regulatory process in Minnesota is brazenly pro-oil industry," said Indigenous activist Winona LaDuke, who joined several other self-described "water protectors" near a planned Mississippi River pipeline crossing on Friday. "Without a stay, Line 3 would be constructed before the court could determine if the PUC broke the law, making the case moot." One of the protesters who climbed a tree set to be cleared to make way for the pipeline, 22-year-old Liam DelMain of Minneapolis, said: "I am here, putting my body on the line, because I have been left with no other choices." The commission issued its final approvals for the Line 3 replacement project earlier this year — and a final construction OK earlier this week after key permits were approved last month. The project had been winding its way through the regulatory process for nearly six years. The vote Friday was at the behest of the Red Lake Band of Chippewa and White Earth Band of Ojibwe. Enbridge began construction on the Minnesota portion of the pipeline this week after receiving its final permit on Monday. The portions in Canada, North Dakota and Wisconsin are already built. Already, about 1,000 workers have reported to job sites along the 340-mile route across northern Minnesota, and 1,000 more are expected to start work next week.
Indigenous-Led Water Protectors Take Direct Action Against Minnesota Tar Sands Pipeline -- Indigenous-led water protectors on Friday engaged in multiple direct actions against Enbridge's highly controversial Line 3 tar sands pipeline in Minnesota, on the same day that state regulators denied a request from two tribes to stop the Canadian company from proceeding with the project. Water protectors blocked pipeline traffic and climbed and occupied trees as part of Friday's actions. Urging other Indigenous peoples and allies to "take a stand," the Anishinaabe activists at one of the protests told other Native Americans that "your ancestors are here too." "Take a moment to speak to her, our Mother Earth is crying out for the warriors to rise again," they said. "Strong hearts to the front!" In a statement, Line 3 Media Collective said that the pipeline "violates the treaty rights of Anishinaabe peoples by endangering critical natural resources in the 1854, 1855, and 1867 treaty areas, where the Ojibwe have the right to hunt, fish, gather medicinal plants, harvest wild rice, and preserve sacred sites." BREAKING: Two water protectors in trees block Enbridge from constructing a Line 3 drill pad under the Mississippi R… https://t.co/hr9raw4X0b "The state of Minnesota does not have the consent of many tribes that will be impacted by construction and spills," the group added. "Last week, the Red Lake Band of Chippewa and the White Earth Band petitioned the Minnesota Public Utilities Commission to pause its approval of Line 3 construction while challenges to the permits are considered by the Minnesota Court of Appeals." On Friday, the MPUC voted 4-1 to reject the tribes' request. According to The Washington Post,the commissioners said that further delays would hurt workers who had traveled to northern Minnesota. They also cited Democratic Gov. Tim Walz's designation of the project as "critical" during the coronavirus pandemic. On Thursday, the Minnesota Chippewa Tribe (MCT) appealed directly to Walz: Indian people have lived along the lakes, rivers, and streams of northern Minnesota since time immemorial. The people of the MCT have flourished in the area for centuries due to the careful conservation of our resources. Clean water and unpolluted land capable of providing sustenance is essential to our survival... [and] Line 3 poses an existential threat to our well-being. The vote and the water protectors' latest act of resistance come just two days after construction began on the$2.9 billion, 1,100-mile extension. According to Indigenous-led environmental group Honor the Earth, the pipeline will have the daily capacity to transport 760,000 barrels of tar sands oil — known as the world's dirtiest fuel — from Alberta, Canada to a port in Superior, Wisconsin. Stop Line 3 says the pipeline will run "through untouched wetlands and the treaty territory of Anishinaabe peoples." "We have the right to practice our treaty rights," stressed Gitchigumi Scout member Taysha Martineau, one of the Indigenous leaders at the Friday action. "We ask you to bear witness and protect our right to do so."
Enbridge holds virtual event as Minnesota Line 3 replacement project gets underway — Enbridge staff and supporters took a virtual victory lap Thursday, Dec. 10, as construction on Line 3 gets underway in Minnesota.In a digital construction kick-off event, elected officials and Enbridge leadership spoke about their excitement in getting the work started and the expected impact on the economy. The event comes after Enbridge received the last of its needed permits last month after about six years of review and legal work.Enbridge's project will build a new oil pipeline to replace the current Line 3, which was installed in the 1960s. Currently, the existing pipeline is operating at half capacity because of its age and condition.Unlike the existing pipeline's 34-inch diameter, the new Line 3 will be 36 inches. More than 1,000 miles long, the new pipeline will carry an average of 760,000 barrels of oil per day from Edmonton, Alberta to Superior, Wis., where a terminal is located. In Minnesota, 337 miles of pipeline will be installed."The Line 3 replacement project is a safety driven project and it's the largest in our history, spanning over 1,000 miles on both sides of the U.S.-Canada border," Leo Golden, vice president of the Line 3 replacement project, said during Thursday's event. "Almost 700 miles of the pipeline are already in service and operating safely. We're about to take that experience and build on our success as we start construction in Minnesota."
Protesters hang on as construction continues on Line 3 pipeline project | MPR News -- Liam Delmain has been living in a tree above the construction zone for the Line 3 pipeline for a week. “I’m hanging in there,” they said, and they are, literally. Their home is platform suspended in a poplar tree dozens of feet off the ground, on an easement about a quarter mile from where the pipeline is supposed to pass underneath the Mississippi River. The easement consists of land running east to west, which has been stripped of its trees and brush, save for the stand where Delmain’s and another activist’s platforms hang. Heavy machinery operators toil beneath during the daylight hours, laying down matting for a drill that will push the pipeline under the river. “The machines are really, really loud. There’s beeping and big engines and motors, and scraping and crashing. I hear trunks snapping and chainsaws. The sonic landscape feels really violent,” Delmain said. “I take a deep sigh of relief every evening when all the machines leave and I can just sit in peace.” Other activists calling themselves water protectors are camped just across the easement. They keep Delmain company by talking and singing with them, but can’t approach the tree without an escort from police. Others chain themselves to construction equipment and trespass to attempt to disrupt construction. “It’s weird when I sit in my sleeping bag all day and my friends on the ground are running onto sites and people are doing lockdowns and protests … it’s a little isolating,” they said. Delmain, who uses they, them pronouns, grew up on the shores of Lake Superior, and so they feel connected to Minnesota’s waterways, especially the Mississippi River. They spent 100 days paddling the river in college, a crucial experience in building their views on climate activism. Occupying a tree was a way to put their body on the line for the health of others. “This pipeline project is really just a continuation of colonial violence and genocide against Indigenous peoples,” Delmain said. Tree sitting is not their first entry into action around Line 3 and climate change activism. Delmain participated in campaigns to block the pipeline through the regulatory process, and watched those efforts fail to halt the project. “We can stop this pipeline, we will stop this pipeline and this is how we’re going to do it.”
Enbridge sets high bar to build pipelines as big projects get riskier - Enbridge Inc. says it will need to be paid a higher “risk premium” to undertake major, capital intensive crude oil pipelines in future. Enbridge chief executive officer Al Monaco told investors during a conference call Tuesday that it has become more difficult to build major oil pipelines, which are “bigger, longer-lead-time, high-capital-intensity projects,” as governments transition towards less carbon-intensive forms of energy. “We’ve been doing this for a little while now, we’ve got to include an additional risk premium to account for those risks,” Monaco said. Monaco’s remarks on risk premiums come as Calgary-based Enbridge, North America’s largest pipeline company, disclosed that expected costs for the final segment of the Line 3 pipeline replacement would rise from a previous target of US$2.9 billion, to account for expensive winter construction and to comply with COVID-19 regulations. The company recently began work on Line 3 in Minnesota after receiving long-awaited state and federal permits.The total cost of the 370,000-barrel per day Alberta-to-Wisconsin project had been pegged at $9 billion, or US$6.7 billion, but the Minnesota portion has been delayed, with new costs expected to be unveiled by the first quarter of 2021. Enbridge expects the pipeline to ship first oil by the fourth quarter of 2021.In addition to Line 3, Enbridge is dealing with challenges on plans to replace its Line 5 pipeline through Michigan, where Governor Gretchen Whitmer has served the company notice that her office is pulling a critical easement for an existing pipeline in the state.Enbridge is preparing to fight the cancellation of the easement in court and has previously won legal battles to shut down the line, which supplies most of Michigan’s propane demand and sends light oil to refineries in Southern Ontario.While Enbridge consistently encounters challenges building new oil pipelines, the company sees natural gas as a key source of growth. “Natural gas has a very long runway for electric generation in North America. Coal is being phased out and the growth in intermittent renewables requires a complementary fuel source,” said Bill Yardley, Enbridge’s executive vice-president and president of gas transmission.
Fifth worker dies from his injuries after Aug. 21 pipeline explosion in Corpus Christi's inner harbor — One of the men who was involved in a barge and pipeline explosion in Corpus Christi back in August has now died from his injuries. 3News learned Monday that Jose Coca has died at the San Antonio Military Medical Center. The Galveston man becomes the fifth victim of the Aug. 21 explosion, which happened in the inner harbor at the Port of Corpus Christi when the Waymon Boyd Barge, owned by Orion Marine, struck a leaking underwater natural gas pipeline and sparked an explosion. "Tragically and unfortunately, Mr. Coca was badly burned and he put up a courageous, long battle in the burn unit in San Antonio, but unfortunately he passed away fairly recently. So it increased the number of deaths from this incident from four to five," said Attorney Chris Leavitt of the Buzbee Law Firm in Houston. Leavitt's firm represents three survivors of that explosion. His firm is also working with the families of Mr. Coca and the two other men killed during that port incident. He said the case has run into a few delays. "There's still a discovery process that all the parties would need to go through to figure out exactly what happened and why it happened," Leavitt said. "Obviously COVID delays things a little bit."
Abandoned Oil Wells Leak Untold Methane From Gulf Floor - More than 30,000 abandoned oil and gas wells litter the floor of the Gulf of Mexico in federal waters, the vast majority of those permanently — with many likely leaking methane and other pollutants in perpetuity, the Environmental Health Network reports.The 28,232 permanently abandoned or decommissioned wells on the floor of the Gulf should be permanently plugged and capped when they are decommissioned.Federal oversight is inadequate, however, and the state of wells after they are decommissioned or abandoned is not monitored.In addition to methane, a greenhouse gas 84 times more potent at trapping heat than carbon dioxide over a 20 year period, abandoned oil and gas wells spew benzene, nitrogen oxides, carbon dioxide, and other pollutants. For a deeper dive: Environmental Health News
Texas Oil Regulator Barred From Waiving Environmental Rules - Texas’s main oil regulator has been prohibited from waiving environmental rules and fees, measures adopted to help drillers cope with the pandemic-driven slump in crude prices. The decision by a state judge means that the Railroad Commission of Texas will not be able to enforce a series of emergency rule-waivers announced in May. District Court Judge Jan Soifer faulted the agency for failing to give the public adequate forewarning, according to a ruling handed down on Thursday. Soifer’s order will remain in effect until a suit by accountability watchdog Public Citizen is heard, or the regulator posts proper notice, the judge said. The Public Citizen case is set to be heard in May. At a May 5 meeting, the Railroad Commission passed rules that waived fees, extended deadlines for environmental clean-ups and expanded the types of locations where companies could store crude. Public Citizen said the suspension of such rules was unlawful and amounted to a “handout to the oil and gas industry” at the expense of public health and safety. Chairman Wayne Christian said at the May meeting that the regulatory relief was designed to help operators through an unprecedented collapse in oil prices. He thanked operators for suggesting what rules needed to be changed. The commission “does not agree with the court’s order and has filed a notice of appeal,” it said in a statement. All actions taken at the May 5 meeting “were approved in accordance with the open meetings act, state and federal law, and Commission rules.”
Bottleneck Blues - Traffic At The Panama Canal And Its Impacts On LNG Economics - On the 8th of October, the LNG carrier Golar Penguin loaded a cargo for RWE at the Freeport LNG terminal in Texas. Five days later, on October 13, the vessel was sitting just north of Panama. But then, the ship abruptly changed direction on the 14th and headed towards the Cape of Good Hope to deliver to the Far East. The reason for the diversion was that the vessel did not have a passage booked in the new locks of the Panama Canal and would have had to wait approximately nine days for its turn to transit, before heading across the Pacific Ocean to Asia. Since then, as queues of LNGCs for Panama Canal transits, both northbound (ballast) and southbound (laden) have developed, more ships have opted for the longer route. In today’s blog, we look at the delays that have developed surrounding the Panama Canal and the implications that its operations hold for global LNG trade. The 2016 expansion of the Panama Canal to accommodate larger vessels with larger beams and greater drafts was a big deal for LNG shippers looking to lower the per-unit costs of delivering to Asia (more on the economics in a bit). But as increasing shipments seek to traverse the canal, wait times have increased and led to a bottleneck that not only affects existing traffic but presents a challenge for future projects hoping to minimize costs in a highly competitive global LNG market. The delays currently being experienced for voyages to Asia via the Panama Canal route were much less of a problem over the summer when shut-ins of U.S. LNG production (see Sultans of Swing) reduced the waiting time for LNG carriers wishing to pass in either direction. However, all first-wave LNG production facilities, with the exception of Corpus Christi Train 3, are now operational, resulting in nameplate production capacity of over 60 MMtpa from the Lower 48 states, or roughly a sixth of the current world production capacity. In November, the U.S. sent out a record number of cargoes — and that number will likely be surpassed this month. Given the determination of project sponsors aiming to develop a second wave of U.S. Gulf Coast LNG export schemes, what constraints and costs will the Panama Canal impose on these projects, and just as importantly, what advantage might the projects under development on the west coast of North America enjoy over their rivals? We’ll get to answering that shortly, but first some historical background on the Canal usage and scheduling.
Permian Highway Start-Up Sending Natural Gas to Gulf Coast - Kinder Morgan Inc.’s hotly contested Permian Highway Pipeline (PHP) is fully operational, moving associated gas volumes through a 430-mile pipeline from Waha in West Texas to Katy, outside of Houston, with connections to the Gulf Coast and Mexico markets. PHP was mechanically complete on Nov. 1, and the 2.1 Bcf/d conduit is expected to be fully in service in the early first quarter of 2021.The pipeline is Kinder’s second out of the Permian. Gulf Coast Express went into service in September 2019. A third Permian pipeline was in the works before the Covid-19 pandemic and the historic oil market downturn dramatically altered the energy landscape.On the company’s third quarter 2020 earnings call, CEO Steven Kean said that although associated gas production in the Permian is expected to remain slow given the weak oil price environment, PHP’s in-service would not be to the detriment of Kinder’s other gas systems in the basin since most of the existing takeaway is under reservation, fee-based contracts.RBN Energy LLC analyst Jason Ferguson said Permian production has generally recovered from the dip it experienced this summer after theunprecedented decline in oil prices, hovering in the 11.5-12.0 Bcf/d range “for some time.”Meanwhile, Permian outflows to the Midcontinent plunged last week as PHP ramped up. That trend, he told NGI, would likely continue through next year as PHP continues to ramp up and Whistler Pipeline comes online.Cash markets on Monday appeared to be pricing in the pipeline in-service, which occurred as winter weather remained absent from forecasts. Waha next-day gas was trading around $2.150/MMBtu, off less than 10 cents from Friday’s level, according to NGI’s midday price data. By comparison, other Texas market hubs were trading between 10.0 and 20.0 cents lower day/day.Kinder was able to bring PHP online slightly ahead of its adjusted schedule despite having to reroute a small portion of the pipeline around a river crossing. The pipeline has been plagued with litigation since it was launched, with the ongoing legal battles cited in management’s decision to push back the targeted startup to early 2021, from this past October.
US Land Permitting Collapses in November, Driven by Permian, Haynesville - Lower 48 oil and natural gas permitting during November plunged by nearly one-third month/month, with activity in the Permian Basin and Haynesville Shale sharply down, according to Evercore ISI. Evercore analysts led by James West compile a monthly review of federal and state permitting. According to the data, exploration and production (E&P) companies requested 32% fewer permits during November than in October. “The U.S. permit count contracted to 1,028,” off by 493 month/month, “which is the lowest monthly result in our dataset going back to 2006,” West said. Permian permitting fell by 35% from October, with large-cap E&Ps approved for only 67 wells, down 63%. Haynesville requests overall fell by 42%. Within the Lower 48 oil formations, 877 permits were approved in November, down by one-third from October. Most of the approvals for oil permits were for the Permian, Bakken and Eagle Ford shales. While the Permian continued to lead the way, there were 310 permits approved, off by 170 from October. The energy majors were awarded only eight oil permits in the Permian during November, down 67% month/month, while the small- to mid-cap E&Ps gained approval for 77, up by 5%. Of the 310 permits given a thumb’s up, 52% were for Texas development. Meanwhile, approved Bakken oil permits fell by 33% from October to 49. Eagle Ford permitting was down 12% to 99. On the natural gas side, E&P permitting also edged lower in November, down by 31% from October. Despite the decline, the gassy Haynesville overall remained 20% above the trough in May, according to Evercore. “Environmental agencies approved 151 permits in gas formations” last month, down 51% from October, with Haynesville permits at 59, down by 43%. Overall, private E&Ps submitted 39 permits to drill in the Haynesville, which was 30% lower than in October. In the Marcellus Shale, E&Ps were awarded 64 permits, 30% fewer than in October, with 75% awarded to public E&Ps. The sister Utica Shale saw its gas permit count inch up 4% month/month to 28. Year-to-date (YTD) through November, overall oil and gas permitting fell year/year by 66% to 17,487, according to Evercore. Eighty-nine percent of the total was to develop oil prospects. The biggest decline YTD has been in the Powder River Basin, “where only 643 permits have been granted,” which is 97% lower than for the first 11 months of 2019. Meanwhile, Permian permitting YTD contracted by 39% year/year to 5,662. Activity mostly decelerated in the heart of the Texas formation, off 47%. There was stronger oil permitting in New Mexico, up 14% year/year to 2,003.
Ring Drilling First Permian Horizontal in 10 Months, but Executive Upheaval Drawing Concerns - Permian Basin producer Ring Energy Inc. said Thursday it has begun drilling its first horizontal well in 10 months on the Northwest Shelf leasehold in West Texas, a positive sign in what is proving to be a year of upheaval for the company. The Badger 709 B No. 6XH oil San Andres well in Yoakum County is to be 1.5 miles long, drilled to a vertical depth of 5,000 feet. “After drilling the Badger No. 6XH, the drilling rig will move to another horizontal San Andres location currently under construction with plans to drill another well after the new year,” said CEO Paul D. McKinney, who took the helm in September. “These wells will be paid for out of cash surplus currently on hand. “We have added more to our hedge position for 2021. It is important during volatile markets like these to protect our future cash flows and strengthen our balance sheet. We intend to allocate the majority of our future cash flow to paying down debt with the remainder being invested in capital projects that maintain or improve our daily production and create additional liquidity.” However, there are concerns by major shareholders about the direction of the Midland, TX-based independent, which was formed in 2012. McKinney, who also was named chairman three months ago, succeeded longtime CEO Kelly Hoffman, who helped guide Ring through a turbulent period this year. McKinney most recently was CEO of SandRidge Energy Inc., where he worked for 11 months before resigning a year ago. One month after McKinney’s appointment, co-founder Stanley McCabe and President David Fowler also resigned. Meanwhile, Thomas Mitchell, John A. Crum and Richard E. Harris in September were appointed to the board. Then last month, Stephen D. Brooks was promoted to executive vice president of Land, Legal, Human Resources and Marketing, assuming roles previously held by Matt Garner. Following the transition, Garner plans to “explore new professional opportunities,” management said.The turnover has drawn the scrutiny of major investors. Houston-based American Resources Inc. and SK Energy LLC, the investment vehicle of Simon Kukes, said at the start of this month they were “very concerned” with some of the board’s actions. SK and American Resources now are urging shareholders to “withhold votes on all members” of the board in the upcoming election.
North Face turns back on West Texas oil and gas company - Innovex Downhole Solutions says it was recently denied an order of jackets by The North Face, a popular outdoor recreation company because they are in the oil and gas business. “I was surprised but not surprised if that makes sense,” Innovex CEO Adam Anderson said. Innovex is based in Houston and has nearly 100 workers in the Permian Basin. Each year, the company gets a Christmas gift for its employees. This year, it was supposed to be a North Face jacket with an Innovex logo, a company Innovex has ordered gear from in the past. The company providing the jackets said The North Face doesn’t want to support the oil and gas industry in the same way they’d reject the porn industry or tobacco industry. “They told us we did not meet their brand standards,” Anderson said. “We were separately informed that what that really meant is was that we were an oil and gas company.”
Oilfield services sector lost 91,680 jobs due to coronavirus - report (Reuters) - The U.S. oilfield services sector lost 91,680 jobs due to pandemic-related oil demand destruction, according to a monthly a report compiled and published by trade group Petroleum Equipment & Services Association (PESA) on Tuesday. Demand for drilling services sank after oil prices collapsed earlier this year, pushing several oilfield services firms to file for bankruptcy, incur heavy losses and cut jobs. Easing of virus-related restrictions, however, has led to a rebound in demand for fuel and related products. Oilfield sector employment rose 0.4% in November as companies sought to balance increasing oil and gas production with the uncertainty caused by a surge in COVID-19 cases, which has led to renewed lockdowns and reduced demand, the report said. Employment rose slightly for a third straight month, with the sector adding an estimated 2,665 jobs in November, compared with 5,091 in October and 1,498 jobs in September, according to preliminary data from the Bureau of Labor Statistics and PESA analysis. However, it was down to 665,836 jobs in November compared to 747,446 a year earlier, a decline of 10.9%. The jobs lost represent annual wages of about $10.3 billion. Within the sector, companies providing support services for oil and gas extraction saw the most job losses during the pandemic at 77,810, 85% of the sector’s total job losses, PESA’s analysis found.
November Showed More Job Gains for U.S. OFS Sector, but Uncertainty Still Prevails - Oilfield equipment and services jobs in the United States climbed slightly in November for the third month in a row, but it’s still a tough slog with pandemic-related job losses down by nearly 92,000, according to a new analysis. The Petroleum Equipment & Services Association (PESA) said the domestic oilfield services (OFS) and equipment sectors added an estimated 2,665 jobs in November, according to preliminary data by the U.S. Bureau of Labor Statistics (BLS). Estimated job losses related to energy demand destruction from Covid-19 “now total 91,680,” according to PESA. “OFS employment is down 81,610 jobs since November 2019.” Listen to the most-recent episode of our podcast NGI’s Hub and Flow via: The BLS data showed the OFS sector gained 1,498 jobs in September and added 5,091 jobs in October, said PESA researchers. “OFS sector employment has increased by approximately 9,254 jobs over the past three months, according to preliminary BLS data, after losing 100,934 due to the pandemic.” PESA represents more than 500,000 people who work in the U.S. OFS and oilfield equipment sectors. Using BLS data, PESA, in consultation with researchers from the Hobby School of Public Affairs at the University of Houston, estimated OFS sector jobs in the United States declined by 12.5% from February to November, or from 757,516 to 665,836. “Losses were heaviest in April, totaling 58,738 jobs — the largest one-month total since at least 2013,” according to researchers. OFS employment in November was down year/year by almost 11%, from 747,446 jobs to 665,836. The jobs lost represented annual wages of $10.3 billion, PESA noted. “Job losses were heaviest among companies providing support services for oil and gas extraction,” researchers said. “This portion of the OFS sector has cut 77,810 jobs during the pandemic,” or 85% of the total job losses primarily because of Covid-19’s impacts. Even with the reported job growth, there are concerns as more lockdowns have begun related to the pandemic. “During November, OFS employment rose 0.4% as operators worked to balance “increasing oil and gas production with the uncertainty caused by the surge in Covid-19 cases, which are causing renewed lockdowns and reduced demand,” according to the PESA team. A report issued earlier this month on Texas energy employment trends by the Texas Independent Producers & Royalty Owners Association (TIPRO) noted other issues that the energy industry is facing. The market destruction caused by the pandemic “has driven a large number of the baby boomer generation out of the industry, many of which will not return, thus expediting the ‘great crew change’ that was already underway,”
Bedrock industry hopes to rebound from ‘absolutely awful’ 2020 — The year 2020 has been the worst in recent memory for the state’s oil and gas industry, the head of the state’s Petroleum Alliance said Tuesday. Brook Simmons, president of oil and gas trade association, said there were currently 13 active rigs, which is actually up from eight or nine earlier this year. However, that’s significantly down from the 148 operating in 2018. “It is absolutely awful,” Simmons said. “It’s awful for Oklahoma’s bedrock industry and the underpinning of the bulk of state economic activity and the tens of thousands of jobs that have been lost in Oklahoma just this year.” Simmons said the last time Oklahoma had eight or nine active rigs was a century ago. He described 2020 as a historic bust even for an industry that is prone to cyclical highs and lows. “It is the worst in recent memory, and you’ve had people live through the bust in the 1980s,” Simmons said. “They cannot remember it being as bad as this.” In an email, State Treasurer Randy McDaniel said gross production tax collections are down more than 50% from last year. He said natural gas prices are down over 35% and oil prices are down 30% since November 2018. The number of active rigs dropped 90% during the same time from a high of 148 to 13, he said. The industry, meanwhile, has shed over 20,000 jobs in the past two years. “The pandemic continues to be a major challenge for both the health and financial well-being of Oklahomans,” he said. “However, we remain encouraged by the overall strength of the state’s economy during these difficult times.” The industry generates a lot of secondary activity like retail consumption and business in hotels and restaurants. The unemployment data sources probably underestimate the extent of the jobs lost. These figures don’t capture the employment losses in closely tied secondary industries like wastewater disposal and construction, All the federal COVID-19 relief flowing into the state, meanwhile, serves as a medicinal narcotic, helping dull and mask the pain from the most recent bust, he said. “Things could get better and still worse,” Evans said. “You could get improving oil and gas, but at the same time as the medicines wear off, we could feel the pain of the contraction a little more acutely.” He said the year has been “remarkably challenging” for the industry. “It was challenging before the pandemic, but the pandemic just almost made it unprecedented,” he said. He said Oklahoma’s current bust cycle happened in two waves. Before the COVID-19 struck, new drilling had already dropped by at least 60%. Then the pandemic struck and jet fuel demand collapsed along with petro chemical production. Both areas were fueling new oil demand. “It’s really prompted a conversation about what the life cycle of oil demand is,” Evans said. “Will we have peak oil demand sooner than we expected? The thought was before the pandemic we would use more oil every year through 2030-2035, then we would use less oil every year.”
US Rig Count Surges Higher on Gains in Both Oil, Natural Gas Drilling -- Notable increases in both oil and natural gas drilling sent the U.S. rig count surging 15 units higher to 338 during the week ending Friday (Dec. 11), according to figures from oilfield services provider Baker Hughes Co. (BKR). The United States added 12 oil-directed rigs along with four natural gas-directed, partially offset by a decline of one miscellaneous unit. The domestic count ended the week 461 rigs behind its year-ago total of 799, according to the BKR numbers, which are based on data provided in part by Enverus Drillinginfo.Land drilling increased by 15 week/week, while the Gulf of Mexico held steady at 13 rigs. Horizontal rigs surged higher by 17, offsetting the departure of one directional unit and one vertical unit.The Canadian rig count climbed nine units to 111 for the week, with the addition of 12 oil-directed rigs offsetting a three-rig decline in natural gas drilling. The Canadian count finished 42 units shy of its year-ago tally of 153.The combined North American count ended the week at 449, versus 952 a year ago.Among major plays, the Permian Basin added four rigs during the week, while the Eagle Ford Shale added three and the Marcellus Shale added two. The Denver-Julesburg Niobrara, Granite Wash and Utica Shale each added one rig week/week, while one rig departed in the Cana Woodford, according to BKR.Broken down by state, Texas led with an additional six rigs for the week, upping its total to 155, versus 400 a year ago. Wyoming added four rigs week/week, while Pennsylvania added two. New Mexico, Ohio and Oklahoma each added one rig to their respective tallies.While the drilling count increased for the week, a recent analysis from Evercore ISI shows Lower 48 oil and natural gas permitting during Novemberplunged by nearly one-third month/month, with activity in the Permian and Haynesville Shale sharply down.Evercore analysts led by James West compile a monthly review of federal and state permitting. According to the data, exploration and production companies requested 32% fewer permits during November than in October. “The U.S. permit count contracted to 1,028,” off by 493 month/month, “which is the lowest monthly result in our dataset going back to 2006,” West said.
Can New Mexico Field Enough Inspectors to Curb Its Massive Methane Leaks? - The oil fields of the Permian Basin in southeast New Mexico are quieter since the COVID-19 pandemic hit. But that hasn’t made the job any easier for oil field inspectors. Co-published by the Santa Fe Reporter As a staff manager and inspector with the New Mexico Oil Conservation Division (OCD), Gilbert Cordero spends his days driving a truck around a region larger than Connecticut, checking for leaks in the tens of thousands of oil and gas wells, connecting pipes and storage tanks. Monica Kuehling, an OCD compliance officer in the opposite corner of the state, inspects wells in the San Juan Basin in northwestern New Mexico. She and the other site inspectors often visit between 20 and 50 well sites a day. Although sometimes, inspectors get to just one.Kuehling has a 4½ hour drive to some wells in her area, and thanks to distances and bad roads, she tries to hit every well every three years. Cordero and Kuehling are two of OCD’s 10 inspectors—responsible for checking on more than 52,000 operational oil and gas wells in New Mexico. Their inspections are key to protecting the health of residents and to monitoring the leaks causing massive methane plumes over the San Juan and Permian basins. They’re also important to ambitious plans by Gov. Michelle Lujan Grisham to reduce greenhouse gas emissions from the state’s oil and gas industry, which make up more than half the state’s total. But at a time when inspections and monitoring should be increasing and becoming more stringent, inspection numbers keep falling short and the number of new wells keeps rising. Furthermore, OCD’s parent, the Energy, Minerals and Natural Resources Department, proposed a 20% cut in funding for the division in the upcoming fiscal year. And even at full capacity, inspectors alone can’t tighten the lid on the oil and gas industry’s impact on climate change.
Boulder County commissioners approve stricter oil and gas development regulations . Future oil and gas well pads in unincorporated parts of Boulder County would generally have to be set back at least 2,500 feet from any residential dwelling, school or licensed child care facility, under updated oil and gas development regulations county commissioners unanimously voted to approve Thursday. That 2,500-setback requirement would also generally apply to the distances well pads would be allowed to be situated from work places in light industrial, general industrial, commercial, business and transitional zoning districts, under the new regulations. Setbacks also would be required from public recreational trails and trailheads owned by the county or any city or town within the county. In no case could the setbacks be smaller than a minimum of 2,000 feet, Kim Sanchez, deputy director of Boulder County’s Community Planning and Permitting Department, told the commissioners. And, depending on the wells’ locations and other factors spelled out in the regulations, the Board of County Commissioners could require even greater setbacks than 2,500 feet, Sanchez said. The new setback requirements are one aspect of a comprehensive set of updates to Boulder County’s well-permitting rules, requirements, restrictions and conditions that have been in place since March 2017. A county moratorium on accepting and processing new oil and gas development and seismic testing is in place through Dec. 31 while the updated regulations were under review. Commissioners are scheduled to consider formal adoption of the comprehensive package of updated regulations on Tuesday, when they vote on a resolution that’s expected to be on the agenda for the board’s business meeting that day. If, as expected, the board approves that resolution, the updated regulations would take effect immediately, county staff said Thursday night.
Energy payments to states in US West plummet in 2020 (AP) — Payments to states in the U.S. West have plummeted for oil, natural gas and coal extracted from U.S. lands after low crude prices and the pandemic slowed drilling and mining in many areas in 2020, according to federal data. Nationwide, payments to states for drilling on public lands and in U.S. waters were down by $630 million, or about 26%, in fiscal year 2020 compared to the previous year, revenue data released by the U.S. Department of Interior on Friday shows. New Mexico suffered the biggest fiscal hit, with U.S. government disbursals for energy production dropping about 40% to $707 million in 2020, the data shows. That compares with almost $1.2 billion in 2019. Private energy companies pay the federal government for the right to drill for fossil fuels on public lands and in U.S. waters. They also pay royalties based on how much oil or gas they produce. The money is split between the U.S government and the state where the drilling occurred. That proved highly lucrative as drilling in the U.S. West boomed in recent years and the payments helped boost state coffers used to pay for schools, roads and other services. As revenues dropped, states that depend heavily on money from energy production, including Wyoming and New Mexico, have grappled with major budget shortfalls. Wyoming Gov. Mark Gordon last month asked lawmakers to slash $500 million in response to weak revenue from coal, oil and natural gas. Wyoming saw its payments under the government’s revenue sharing arrangement decline almost 30% in 2020 to $457 million, compared to $641 million in 2019. North Dakota, Colorado, Utah, California and Montana also saw double-digit percentage drops in revenue. Several Gulf Coast states experienced revenues increases in 2020.
OIL AND GAS: Biden could swing these 5 pipeline battles -- Wednesday, December 9, 2020 -- Some of the most consequential energy decisions facing President-elect Joe Biden are about pipelines. From Montana to Virginia, his administration will be deciding whether to greenlight large projects or press the eject button.
U.S. nets $46,000 on Trump's California oil, gas drilling auction (Reuters) -U.S. taxpayers netted less than $50,000 on Thursday in bids for oil and gas leases in California as the Trump administration held the first federal drilling auction since 2012 in the Democratic and environmentally minded state. The auction for drilling rights on seven parcels covering 4,100 acres (16.6 square kilometers) generated $46,148.64, according to results on the auction site EnergyNet. The average price per acre was $11, far below the nearly $330-an-acre average price federal lease sales have generated throughout the Trump administration, according to data compiled by green group Center for Western Priorities. The parcel with the highest per-acre price of $27 was sold to Standard Oil Company LLC, the U.S. Bureau of Land Management said in a statement. Other winning bidders were not disclosed. Leasing is a key part of President Donald Trump’s agenda to increase fossil fuel development, but many sale results have been lackluster this year as the coronavirus pandemic has slammed energy demand and prices. In a statement, BLM said up to 10 new wells could be developed on the parcels. Asked to evaluate the sale, a BLM California spokeswoman, Serena Baker, said lessees must also pay annual rent and royalties on any oil and gas produced. “America’s free markets will help determine if energy development on public lands is feasible,” Baker said in an email. The auction in the waning days of Trump’s administration represents yet another clash between his pro-fossil fuel agenda and the Golden State’s efforts to combat climate change.Chevron tanker ship spills light cycle oil in Santa Monica Bay (Reuters) - Chevron Corp reported on Tuesday that the Mississippi Voyager oil tanker spilled light cycle oil in the Santa Monica Bay, California, as per a regulatory filing. The spill “has been stopped but is not contained,” the company reported in the fling to the California Emergency Management Agency.
Kinder Morgan Pipeline Spills up to 42,000 Gallons of Gasoline Into California Drainage Canal -A Kinder Morgan pipeline leaked tens of thousands of gallons of gasoline into a waterway in Walnut Creek, California, prompting concerns from residents worried about the company's safety record.Locals are mistrustful of the company after a 2004 explosion on the same line killed five construction workers and injured four others, the San Francisco Chronicle pointed out. In this case, area residents say they saw Kinder Morgan respond to the spill before they were informed of what was happening."They scared quite a few people on this street and no one was saying anything," Matt Dooling told the San Francisco Chronicle. "This happened right where the 2004 explosion happened, so when they say that it's not dangerous, we don't really believe them."The story began Nov. 20 when company officials first noticed a pressure drop on part of the pipeline that runs between Concord and San Jose, The Mercury News reported. They shut down portions of the pipeline at the time, but then a worker reported the smell and appearance of gas in a drainage canal Dec. 2."We immediately shut down the pipeline and isolated the area," Kinder Morgan spokeswoman Melissa Ruiz told The Mercury News. Dooling told the San Francisco Chronicle that he observed Kinder Morgan workers examining the canal Dec. 2 while walking with his daughter, but that he and other neighbors were not given an explanation until days later.Officials first thought the two incidents were not connected, but later determined that tree roots had wrapped around the pipeline, causing it to crack and gasoline to leak out. The gasoline had then travelled about a mile and a half downstream to the canal. It moved along a gravel bed beneath the canal's concrete bottom. All told, an estimated 31,500 to 42,000 gallons of gasoline leaked out, CBS SF reported.The incident has prompted an investigation and cleanup operation involving multiple agencies. There are no reports that wildlife has been harmed, but crews continue to observe local animals.
EPA Can’t Claw Back Names of ‘Happy Hour’ Oil Lobbyists — The U.S. Environmental Protection Agency cannot claw back documents it disclosed by mistake revealing the names of oil lobbyists who planned a chummy “happy hour” outing with EPA officials, a federal judge has ruled. In a decision issued late Tuesday night, U.S. Magistrate Judge Joseph Spero found the EPA failed to show unveiling names and email addresses of lobbyists posed the kind of privacy or safety risk that would justify ordering the documents be returned. The EPA argued that disclosing those details could make the lobbyists targets of harassment by the media or “individual actors.” Spero found no evidence that unmasking other lobbyists’ names in FOIA-requested documents led to the kind of harassment that the EPA feared. He further surmised that oil lobbyists probably know how to handle being contacted by the press, should the disclosure spark media interest. “It is not clear why the government affairs professionals at issue would be unaccustomed to handling a press inquiry or incapable of declining to comment if they so chose,” Spero wrote in his 14-page ruling. Spero’s decision resolved the final dispute in a lawsuit filed by the Sierra Club in 2018 over the EPA’s failure to disclose requested communications records for about 15 EPA employees, including senior officials, intergovernmental relations staff and the executive assistant to former EPA administrator Scott Pruitt.
Federal appeals court rejects Trump administration permit for offshore oil project in Arctic Alaska - A federal appeals court panel on Monday ruled that the Trump administration violated environmental requirements when it issued conditional approval of Hilcorp’s Liberty oil drilling project in federal Arctic waters off Alaska in 2018. The Bureau of Ocean Energy Management “acted arbitrarily and capriciously by failing to quantify the emissions resulting from foreign oil consumption,” or at least by properly explaining its failure to do so, a three-judge panel of the U.S. Ninth Circuit Court of Appeals said in the decision. The panel also found that the agency relied on a “flawed and unlawful” biological opinion from the U.S. Fish and Wildlife Service that in part lacked information about impacts on polar bears, the decision said. Hilcorp has proposed building a 9-acre artificial island in the Beaufort Sea, several miles east of Prudhoe Bay, to drill for oil. Officials have said the site could yield peak production of about 70,000 barrels of oil daily. Kara Moriarty, head of the Alaska Oil and Gas Association that includes Hilcorp as a member, called the court’s decision “disappointing.” “(The project) will have to go back to BOEM to be reworked, adding delay and uncertainty, at a time when Alaska could use as many projects on the books as possible to get us back to some type of economic recovery,” Moriarty said. If the project does not move forward under President-elect Joe Biden, the oil industry could possibly sue to advance the project, said Moriarty said. Biden’s campaign website says he will halt new oil and gas permits on federal lands, starting on his first day in office.
Court Rejects Trump's Arctic Drilling Proposal in 'Huge Victory for Polar Bears and Our Climate' - Climate action advocates and wildlife defenders celebrated Monday after the U.S. Court of Appeals for the 9th Circuit rejected the Trump administration's approval of Liberty, a proposed offshore oil-drilling project in federal Arctic waters that opponents warned would endanger local communities, animals, and the environment. "This is a huge victory for polar bears and our climate," declared Kristen Monsell, oceans legal director at the Center for Biological Diversity, in a statement. "This project was a disaster waiting to happen that should never have been approved. I'm thrilled the court saw through the Trump administration's attempt to push this project through without carefully studying its risks." Marcie Keever, legal director at Friends of the Earth, similarly applauded the ruling, saying that "thankfully, the court put the health of our children and our planet over oil company profits." Both groups joined with fellow advocacy organizations Defenders of Wildlife, Greenpeace, and Pacific Environment for a lawsuit challenging the Hilcorp Alaska project, which was approved in 2018. The energy company planned to construct an artificial island, wells, and a pipeline along the Alaska coast in the Beaufort Sea. Jeremy Lieb, an attorney at the nonprofit law organization Earthjustice, which represented the advocacy groups, praised the court for rejecting the administration's "inaccurate and misleading analysis of this project's impact to the climate." The court determined that the administration hadn't properly considered Liberty's climate impacts as required by the National Environmental Policy Act, specifically taking issue with an economic model claiming the project would benefit the climate. "In the face of a worsening climate crisis, the federal government should not be in the business of approving irresponsible offshore oil development in the Arctic," Lieb said. "The world cannot afford to develop new oil prospects anywhere, but especially in the Arctic where warming is already taking such a significant toll." Research has shown that the Arctic is warming faster than the rest of the world, which has devastating effects on its human and animal inhabitants — including caribou, polar bears, reindeer, and walruses — and the planet more broadly. As one expert put it last year: "What happens in the Arctic does not stay in the Arctic."
Despite risks to polar bears, Trump pushes ahead with oil exploration in Arctic | TheHill --The Trump administration is pushing ahead to greenlight oil exploration in the Arctic, allowing companies to use seismic testing that will disturb polar bears in their dens. The proposal, if finalized, would allow the oil exploration technique in the Arctic National Wildlife Refuge to begin as soon as Jan. 21 — the day after President-elect Joe Biden takes office. There are roughly 900 southern Beaufort Sea polar bears left in the Arctic. “On the way out, the Trump administration is still pandering to its oil industry cronies and jamming through an unpopular push to drill in Arctic National Wildlife Refuge,” Robert Dewey, vice president for government relations at Defenders of Wildlife said in a statement, warning that “polar bear dens are hard to pinpoint in the snowy Arctic.” The Fish and Wildlife Service proposal would allow “harassment” of polar bears, determining that seismic testing would disturb wildlife in the area, “causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering.” The late-filed notice gives the Trump administration little time to take comment and finalize the process before the Biden administration enters, requiring a much-hastened pace over a process that typically lasts several months at a minimum. “Do they have the ability to rush this out the door? Probably. But is it legal or easily defensible in court? I highly doubt it,” said Aaron Weiss, deputy director of the Center for Western Priorities, a public lands watchdog group. The announcement follows an unusual move by the government to open its own study on the risks to polar bears to public comment. Experts said it’s highly unusual for any branch of the Interior Department to post one scientific study for comment rather than a body of peer-reviewed research that accompanies a policy decision. “What it looks like to me is they’re giving industry the opportunity to negate the study,” Andrew Rosenberg, director of the Center for Science and Democracy at the Union of Concerned Scientists, said when the study was first opened for comment in February.
Democrats question legality of speedy Arctic refuge oil lease sales --Three Democratic lawmakers are raising legal questions about the rapid timeline the Trump administration is using to advance oil and gas development at a wildlife refuge in the Arctic. The Bureau of Land Management (BLM) stated in a federal register notice that was published Monday that it must receive bids for land leases by Dec. 31, though they won’t be opened until Jan. 6. In a letter to Interior Secretary David Bernhardt, whose department oversees the BLM, Democratic Reps. Raúl Grijalva (Ariz.), Jared Huffman (Calif.) and Alan Lowenthal (Calif.) argued that requiring bids 23 days after the notice of sale likely goes against the bureau's regulations. They noted that a regulation requires the notice to be published 30 days before the sale date. “BLM appears to be pretending to adhere to the regulation by waiting until January 6, 2021, to open the bids, but simply saying that is the date of ‘the lease sale’ defies common sense and almost certainly violates the regulation,” they wrote. The bureau announced the Jan. 6 sale date for leases at the Arctic National Wildlife Refuge (ANWR) in a statement last week, but the Dec, 31 date was first announced in the new notice of sale. The lawmakers also criticized the fact that the notice asking for bids was released before the end of a period during which the administration is asking for input as to which tracts of land should be sold. “Publishing the Notice of Sale prior to the deadline for comments makes it clear that this call for comments was purely for show, although at least that is an accurate reflection of the amount of value this administration places on public input,” they wrote. In response, a BLM spokesperson said in a statement that “all comments and nominations regarding the lease tracts to be offered will be considered” and that the agency can “withdraw tracts from leasing after nominations and comments are received.” The spokesperson also said that bids will only be accepted between Dec. 21 and 31, after the call for nominations closes, and that the department is “one step closer to fulfilling our Congressionally mandated obligation to hold a lease sale in the Coastal Plain of the Arctic National Wildlife Refuge.”
Bahamas could be held liable in Us for oil spill -- ACTIVISTS from the Only One conservation platform are calling on Prime Minister Dr Hubert Minnis to put a stop to proposed oil exploration, saying The Bahamas can be made liable in US courts should some form of spillage occur. The Only One platform was founded in 2019 by Blue Sphere Foundation, Lonely Whale, and SeaLegacy organisations. It is committed to harnessing the power of media and technology to create and amplify stories that inspire action to protect the ocean, the planet, and each other. The organisation erected an e-billboard on a boat which patrolled a beach in Miami recently which reads: “Stop oil drilling in The Bahamas. Sign the petition at stopbahamasoildrilling.com.” The website has a statement on the proposed oil exploration by Bahamas Petroleum Company, pushing viewers to sign the petition with a message for Dr Minnis. “We are at a pivotal point in Bahamian history,” the statement read. “The Bahamas Petroleum Company (BPC) has announced its intention to begin offshore oil drilling in our pristine waters in a matter of months. Prime Minister Hubert Minnis has one last chance to protect our nation’s economy and precious natural resources from the devastating ravages of oil pollution before it is too late. “We ask you to join us in this urgent petition asking the prime minister to cancel all existing oil exploration licenses, reject all proposed renewals and impose a permanent ban on fossil fuel exploration anywhere within our maritime borders.” The statement noted that this is the 10th anniversary of the Deepwater Horizon disaster, which dumped nearly 200 million gallons of oil into the Gulf of Mexico, fouled 16,000 miles of coastline along five US states, utterly destroyed fisheries and caused an unprecedented and as yet untold level of damage to marine life. “The Deepwater Horizon rig was an exploratory well, just like the one BPC intends to drill,” said the statement. “Even a partial repeat of that disaster would devastate our tourism, commercial fishing, diving, and marine recreation industries. Tourism alone generates 50 percent of our gross domestic product, while these other industries are vital to the survival of many far-flung communities. Simply put, drilling threatens our very way of life.”
Oil Trading Giant Admits Paying Latin America Bribes-- For years, the world’s largest oil trading firm has maintained that it has “zero tolerance” for corruption. Now Vitol Inc. has admitted that it was paying bribes through a network of shell companies and sham contracts. As recently as July 2020, while publicly repeating those assurances, Vitol was bribing government officials in Ecuador and Mexico. In Brazil, a Vitol executive delivered cash to traders at Petroleo Brasileiro SA in exchange for the “gold number” -- the price at which Vitol should bid to win tenders from the Brazilian state oil company. The revelations, from a deferred prosecution agreement between Vitol Group’s U.S. unit and the Department of Justice, are part of Brazil‘s so-called Carwash bribery scandal, that’s described by the Petrobras chief as “an MBA in corruption.” They are a setback for all commodity traders, undermining efforts to cast off a reputation for malfeasance that’s dogged the industry since the days of Marc Rich, the pioneer who spent two decades as a fugitive from American justice. “The risk traders are taking in being compromised in such scandals is enormous,” said Jean-Francois Lambert, a consultant and former trade finance banker. “Bad behaviors are simply not tolerated anymore and such wrongdoings are bound to be exposed sooner or later.” Agreeing to pay just over $160 million to regulators in the U.S. and Brazil, Vitol admitted to having bribed government officials for more than a decade, between 2005 and 2020, DOJ documents show. “We understand the seriousness of this matter and are pleased it has been resolved,” said Russell Hardy, Vitol’s chief executive officer. “We will continue to enhance our procedures and controls.” The company paid more than $8 million in bribes to Petrobras executives between 2005 and 2014, according to the DOJ documents. In exchange, officials from the Brazilian oil company gave the trading house valuable information about its tenders, including the price of the highest bid from competitors. That meant Vitol could bid for Petrobras’s oil products at exactly the price that it knew would win. Within the trading house, this was referred to as the “gold number,” according to the DOJ documents. In internal emails between the Vitol traders, information from the Petrobras officials was marked “PRIVATE AND CONFIDENTIAL_PLEASE”, according to a separate order from the Commodity Futures Trading Commission. Petrobras has said it is the victim of crimes unveiled by the Carwash probe and is cooperating with investigations.
Biggest Iranian Flotilla Yet En Route to Venezuela With Fuel -Iran is sending its biggest fleet yet of tankers to Venezuela in defiance of U.S. sanctions to help the isolated nation weather a crippling fuel shortage, according to people with knowledge of the matter. Some of the flotilla of about 10 Iranian vessels will also help export Venezuelan crude after discharging fuel, the people said, asking not to be named because the transaction is not public. The Nicolas Maduro regime is widening its reliance on Iran as an ally of last resort after even Russia and China have avoided challenging the U.S. ban on trade with Venezuela. The country’s fuel crunch follows decades of mismanagement, corruption and under-investment at state-owned Petroleos de Venezuela since the time of Maduro’s late mentor and predecessor, Hugo Chavez. Inside The Non-Aligned Movement (NAM) Summit Maduro and Iranian President Hassan Rouhani during a summit in Margarita, Venezuela, in 2016.Photographer: Carlos Becerra/Bloomberg The country that was once a top supplier of crude to the U.S. and boasted one of the lowest domestic gasoline prices in the world, now can barely produce any fuel. The last Iranian fuel shipments sent in early October on three vessels are running out, threatening steeper nationwide shortages with hours-long queues at gas stations. The current fleet under sail is about double the size of the one that first startled international observers in May, crossing a Caribbean Sea patrolled by the U.S. Navy, to be greeted by Maduro himself upon arrival. “We’re watching what Iran is doing and making sure that other shippers, insurers, ship owners, ship captains realize they must stay away from that trade,” Elliott Abrams, the U.S. special representative for Iran and Venezuela, said in September. Several vessels that transported fuel to Venezuela earlier this year, including Fortune and Horse, turned off their satellite signal at least ten days ago, according to Bloomberg tanker-tracking data. Turning off transponders is a commonly used method by ships hoping to avoid detection. In other instances of Iranian aid to Venezuela, ship names were painted over and changed to obscure the vessel’s registration. Venezuela Defies U.S. Sanctions With First Iranian Oil Import The oil ministry in Tehran declined to comment on the matter. Messages sent to several officials at PDVSA, as Venezuela’s state oil company is known, weren’t immediately answered.
Maersk Drilling Wins North Sea Contract - OMV (Norge) has awarded Maersk Drilling a one-well contract for the Maersk Integrator low-emission jack-up rig, Maersk reported Monday in a written statement emailed to Rigzone. The rig will drill one exploration well in the Ommandawn prospect in Production License 970 offshore Norway, the drilling contractor noted. It pointed out the contract will likely commence in the middle of 2021 and run for an estimated 52 days. According to Maersk, the firm contract value for the ultra-harsh environment CJ70 XLE jack-up is approximately US$14.3 million. It explained the estimate includes mobilization but excludes integrated services provided and potential performance bonuses. The company added the contract includes an option to add approximately 28 days of well testing. Maersk also stated the rig is undergoing upgrades to combine the use of hybrid power with low levels of nitrogen oxides (NOx) emissions, adding data intelligence to further cut energy consumption and carbon dioxide emissions. The firm pointed out the contract’s performance bonus schemes focus on rewarding reduced fuel consumption and NOx emissions during drilling operations. “The contract further shows the commercial value of our low-emission upgrades,” continued Kelstrup. “By reducing fuel consumption, CO2 emissions and NOx emissions we are not only making contributions towards reaching emissions targets, but also create value for our customer under the incentive schemes established in Norway.” The Maersk Integrator is designed to operate year-round in the North Sea in up to 492 feet (150 meters) of water and drill to 40,000 feet (12,192 meters), Maersk Drilling’s website states.
Jadestone slammed for underestimating oil spill off WA - The oil spill occurred in mid-September when a hose assembly which transported crude from the Stag platform to a tanker became loose causing oil to pour into the ocean. When the hose became detached the pumps should have automatically shut off crude. However, according to an investigation by the national regulator this mechanism failed and instead oil continued to flow through the unsecured hose. It was the Master of the offtake tanker who first observed "traces of oil around his vessel" and notified workers on the Stag platform. Jadestone then implemented its oil pollution emergency plan which included sending a helicopter to estimate the size of the spill. At the time, Jadestone said it was under 80 litres of oil spilled and did not need to be reported to the national regulator, though it did so in any case. Soon after the spill became public, workers aboard the facility told Energy News that the spill was "much bigger" than the company's estimate and closer to 10,000 litres. The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) carried out an investigation of Jadestone's paperwork. It did not visit the Stag facility. On Monday this week, over a month after the spill, NOPSEMA published its findings and slapped the company with six orders to bring the facility, policies, workforce, and plans up to scratch. It estimated that anywhere between 151 litres to 1288 litres of oil was spilled during the event. At most, this would be about eight barrels of oil. Jadestone was not fined for its oil spill but will be if it does not take action to abide by the directions. NOPSEMA measured the size of the spill using an internationally agreed methodology called the Bonn Agreement Oil Appearance Code. This uses aerial and surveillance information to measure the size of the spill. However, skeptics say there are too many unknowns to be sure of the size of the spill. Today, Local WA Greens member of Parliament Robin Chapple said the regulator needed to play a "more proactive role" and prosecute the operator. "The problem here is that NOPSEMA got involved after the event," Chapple said. "Others witnessed the event and their claims would indicate that it was a larger spill… however because the lack of NOPSEMA oversight and the fact that they only deal with the matter after an event has occurred we will never know the true extent of this and future spills." Chapple also raised concerns that if the spill was light crude, it would have dispersed further and may not have been measurable by the time the spill was noticed or the helicopter was launched. The general rule of spills is that the lighter the oil, the thinner the spread. Light crude also tends to weather faster from high wind, heat, and waves.
Iraq to Get China Bailout via Oil Supply Deal- Iraq is poised to sign a multibillion-dollar contract with China ZhenHua Oil Co., a bailout from Beijing for the cash-strapped government which will receive money upfront in exchange for long-term oil supplies. The deal is the latest example of China, via state-controlled trading companies and banks, lending to struggling oil producers such as Angola, Venezuela and Ecuador, with repayment in the form of oil barrels rather than cash. The crash in oil demand and prices has hammered Iraq’s budget, and the government has been struggling to pay salaries. The Iraqi agency in charge of petroleum exports, SOMO, picked ZhenHua, according to people familiar with the matter. Iraq’s cabinet must still approve the deal, according to one of the people. Cabinet spokesman Hassan Nadhim said on Tuesday the offers were being studied and would go to the prime minister for approval. Under the terms of a letter SOMO sent to oil traders last month, the winning bidder will buy 4 million barrels a month, or about 130,000 a day. They will pay upfront for one year of supply, which at current prices would bring in more than $2 billion, according to Bloomberg calculations. The deal runs for five years in total -- but the upfront payment is only for one year. The deal attracted widespread interest among the top names of the oil-trading industry, according to the people. The deadline for the tender was extended from late November to allow market participants more time to bid. ZhenHua Oil didn’t reply to an email seeking comment that was sent to its headquarters in Beijing after normal business hours. All major producers have taken a hit from this year’s coronavirus-triggered crash in oil. But Iraq, where crude accounts for almost all government revenue, is in a worse position than most. Its gross domestic product will contract 12% this year, more that of any other OPEC member under a production quota, according to International Monetary Fund forecasts. The government is struggling to pay teachers and civil servants, many of who have taken to the streets in recent months to protest.
OPEC Wrangle Puts UAE’s Ambitions on Display Just days before a high-stakes OPEC meeting to support an oil market ravaged by coronavirus, the United Arab Emirates’ state oil company told the world it planned to spend $122 billion to boost production capacity.That set the stage for a standoff at a meeting of the cartel this week. A compromise was struck but ambitious plans to maximize energy wealth may keep stirring tension—in particular with its largest neighbor Saudi Arabia.The UAE’s reinvigorated pursuit of petrodollars plays into a wider shift in the dynamic between Abu Dhabi Crown Prince Sheikh Mohammed Bin Zayed and Saudi Arabia’s Crown Prince Mohammed bin Salman over who in the region holds sway on the international stage.For years, the two countries moved in lockstep on both oil and foreign policy, yet they have diverged in recent months on both. They split over the war in Yemen, then the UAE asserted itself with its landmark deal with Israel in September. They also have their differences over efforts to ostracize Qatar, with a U.S. brokered deal to end the rift including only Saudi Arabia. It’s in that context that the UAE went as far as to signal last month it might consider a future outside OPEC. And while the deal reached on Thursday allowed for a show of unity, it will come up again for review in January, meaning the drama could be replayed in 2021 as the cartel charts a path out of the pandemic.“The UAE is increasingly willing to act in its own direct national interests, and where that doesn’t align with Saudi Arabia it’s confident and willing to go it alone,” said Neil Quilliam, associate fellow in the Middle East and North Africa program at the Chatham House think tank. The UAE is OPEC’s third-largest oil producer and holds about 6% of global crude reserves. At the heart of the UAE’s tensions with the Organization of Petroleum Exporting Countries are state-run producer Abu Dhabi National Oil Co.’s plans for growth.
Saudis Raise Crude Prices To Asia For First Time In 4 Months After OPEC+ Deal - Just day after OPEC+ reached an agreement to ease production curbs (in order to keep UAE happy) but assess production levels monthly in order to ensure that oil prices don't slide after reaching an 8 month high on covid vaccine optimism, Saudi Arabia raised oil pricing for customers on Sunday for its main market of Asia. The increase, the biggest in five months, indicates the world's largest oil exporter is confident global - or at least Asian - energy demand is strong enough to absorb the modest increase in output from OPEC+ members next month and that markets will remain tight even with parts of Europe and the U.S. in lockdown. Saudi state producer Aramco raised pricing for Arab Light crude for Asia by 80 cents a barrel to 30 cents above the benchmark from a 50 cent discount the previous month. The price increase comes after price cuts from the Saudis in September, October and December as virus cases surged, sending oil demand sliding and depressing Brent prices. Still, the hike is less than half consensus expectations: Aramco had been expected to increase pricing for the grade by 65 cents, according to a Bloomberg survey of seven traders and refiners. Aramco also increased pricing for light crude grades to the Mediterranean region but kept them unchanged for northwest Europe. Meanwhile, Saudi Arabia lowered pricing for all grades to the U.S. to the lowest since May as Saudi exports to the U.S. have plummeted this year. The price increase comes as Brent rose 2.2% last week to $49.25 a barrel, its highest level since early March, although the price remains down about down about 25% this year.
Oil sheds 1% as coronavirus resurgence sparks demand concerns -- Oil prices slipped on Monday as the positive impact from COVID-19 vaccine news and an OPEC+ deal on oil production cuts was undermined by surging coronavirus cases and heightened tensions between the United States and China. Brent crude fell 46 cents to settle at $48.79 per barrel, while U.S. West Texas Intermediate crude settled 50 cents, or 1.08%, lower at $45.76 per barrel. Both oil contracts gained around 2% last week after OPEC+, comprising of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, agreed to increase output slightly from January but continue the bulk of existing supply curbs. "The beginning of this week is like the morning hangover following a good night out that went a bit too far," "With the OPEC deal in the bag, now traders looked back at fundamentals, demand and supply, and they were forced to come back to earth as things are not looking good in the short-term." Prices also were under pressure after Reuters exclusively reported that the United States was preparing to impose sanctions on at least a dozen Chinese officials over their alleged role in Beijing's disqualification of elected opposition legislators in Hong Kong. Rising tensions between the United States and China, the world's top oil consumers, have weighed repeatedly on the market in recent years. Meanwhile, a surge in coronavirus cases globally has forced a series of renewed lockdowns, including strict new measures in the U.S. state of California and in Germany and South Korea. U.S. gasoline consumption fell during the Thanksgiving holiday week to the lowest in more than 20 years, OPIS said, as lockdowns weighed on fuel consumption. Elsewhere, Iran has instructed its oil ministry to prepare installations for the production and sale of crude oil at full capacity within three months, state media said on Sunday. "Adding to the pressure on oil prices is the potential Iranian increase to production in three months," said Edward Moya, senior market analyst at OANDA. "Iran is optimistic the U.S. will ease restrictions if they return back to the 2015 nuclear deal."
Oil Prices End Winning Streak -- Oil snapped a three-day streak of gains alongside a broader market selloff as near-term demand risks from a resurgent pandemic clouded optimism surrounding a future vaccine rollout. Futures fell 1.1% in New York as equities weakened, with rising Covid-19 cases threatening to strike another blow to demand as the world awaits a widely available vaccine. Prices were under pressure earlier in the session amid supply concerns after Iran said it’s preparing to raise exports in a sign the country expects the U.S. to ease some sanctions under a Joe Biden presidency. “Until or unless we get that vaccine, the growth story remains important for demand,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “We’re seeing in the broader market as well, there are questions around when will we reopen, when do we get significant vaccines, when do we get some easing of social distancing restrictions and therefore more mobility and rising demand.” Crude’s outlook is now heavily dependent on how quickly Covid-19 vaccines can be rolled out, with indications most Americans will be able to get one by the second quarter of next year. While toughening restrictions to curb the spread of the virus remain a near-term headwind, there are some signs of resilience in fuel consumption. U.S. gasoline demand increased last week, though that’s compared to a slow Thanksgiving week, data from GasBuddy showed. “Mobility around the world has been a lot stickier despite this ramp up of the second wave,” said Vikas Dwivedi, a global energy strategist for Macquarie Group Ltd in Houston. “It’s down, but it’s not down anywhere near where you would think given how bad the second wave has been in certain parts of Europe and the U.S.” Crude prices are also finding support from a robust demand picture in Asia, with the latest exports jump in China showing an economic rebound appears to be on track. The strength in Asian demand led Saudi Arabia to raise oil pricing to the region, pointing to the kingdom’s confidence that consumption is strong enough there to absorb next month’s small supply boost agreed last week under OPEC+. West Texas Intermediate for January delivery fell 50 cents to settle at $45.76 a barrel. Brent for February lost 46 cents to end the session at $48.79 a barrel. The worsening coronavirus situation ahead of a widespread vaccine rollout continues to limit any substantial price gains in the near term.
Oil Fluctuates with Demand and Vaccines in Focus -- Oil swung between gains and losses as the market weighed the outlook for demand as coronavirus vaccines begin. Futures in New York traded below $46 a barrel, driven by fluctuations in the dollar and equities. The U.K. issued its first Covid-19 vaccinations on Tuesday and there are signs that European demand is recovering after a renewed wave of lockdowns in the winter. Poland’s road use, for example, has climbed sharply since the start of last month. WTI prices have been capped in the mid $40s since OPEC+ agreed on a slow return of production last week. The United Arab Emirates will provide Asian buyers with a little more crude next month after the deal. Oil is still near a nine-month high after surging last month amid optimism over vaccine breakthroughs and its trajectory over the next few months will depend on how quickly Covid-19 drugs can be deployed. In the near-term there are still ominous signs from the virus -- the U.S. is now seeing hospitalizations rise by almost 2,000 a day and is averaging around as many deaths as during Covid-19’s first surge in April. France is poised to miss a goal to end its lockdown next week. “We are confident that the weak demand will soon move back into the market’s focus,” said Eugen Weinberg, head of commodities research at Commerzbank AG. “The latest price rise has been driven by speculation.” Prices West Texas Intermediate for January delivery fell 14 cents to $45.62 a barrel at 10:30 a.m. in London. Brent for February settlement dropped 15 cents to $48.64. The oil futures curve, meanwhile, is signaling a slight increase in negative sentiment. Brent’s prompt timespread has moved back into contango -- where near-dated prices are cheaper than later-dated ones -- after surging last week. While toughening restrictions to curb the spread of the virus remain a near-term headwind in Europe and the U.S., the recovery in Asia appears to be accelerating.
Oil steady as COVID-19 cases, lockdowns dampen vaccination news (Reuters) -Oil prices were little changed on Tuesday as the most populous U.S. state tightened its pandemic lockdown through Christmas and COVID-19 cases surged in the United States and Europe, counteracting optimism that arose over vaccine advancements. Brent crude futures settled at $48.84 a barrel, gaining 5 cents. U.S. West Texas Intermediate (WTI) crude futures settled 16 cents lower at $45.60 a barrel. “There’s been this back-and-forth between being concerned about the lockdowns for the next few weeks and the expectations for a vaccine coming sooner than anyone had anticipated, which is giving us support,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. Oil prices were buoyed after the world’s first fully-tested COVID-19 vaccine shot was administered to a grandmother in Britain, but investors quickly returned their focus to ebbing fuel demand caused by the pandemic. A sharp rise in coronavirus cases globally has led to a string of renewed lockdowns, including strict measures in California, Germany and South Korea. Investors were also closely watching U.S. lawmakers’ efforts to approve a new economic stimulus package needed to drive jobs growth and energy demand, and Friday was eyed as a possible deadline to avoid a government shutdown. The OPEC+ group of oil producers is likely to hold their next meeting on Jan. 4, after agreeing last week to raise oil output by 500,000 barrels per day (bpd) next month. U.S. crude oil production is expected to fall by 910,000 bpd in 2020 to 11.34 million bpd, the U.S. Energy Information Administration said, a bigger decline than its previous forecast for a drop of 860,000 bpd. Both crude benchmarks eased in post-settlement trade after industry data from the American Petroleum Institute showed U.S. oil inventories rose sharply across the board last week, with crude stocks jumping by 1.14 million barrels, contrary to analyst forecasts in a Reuters poll for a 1.4 million-barrel draw.
WTI Tanks After Massive Crude, Product Builds; Gasoline Demand Slump -- Oil prices shrugged off major product inventory builds (reported by API) to move higher overnight with WTI back above $46 after two tiny Iraqi oil wells were attacked and markets globally rose on the prospect of additional U.S. stimulus. Obviously, demand, or the lack of it, remains the prime driver of sentiment, balances and prices, and bloated inventories remain a drag on market recovery, and this is not unique to U.S. markets. DOE:
- Crude +15.189mm (-700k exp) - biggest build since April
- Cushing 01.364mm
- Gasoline +4.221mm - biggest build since April
- Distillates +5.222mm - biggest build since May
In a shocking print, the DOE data showed a massive 15.189mm barrel crude build last week, with both Gasoline and Distillates also seeing major builds... Source: Bloomberg US Crude Production was unchanged last week... WTI traded around $46.00 ahead of the official DOE data and tumbled on the huge build...
Oil steadies despite massive build in U.S. crude stocks (Reuters) -Oil prices settled little changed on Wednesday as investors weighed an unexpected jump in U.S. crude stockpiles against optimism that a fast rollout of a coronavirus vaccine would fuel a recovery in global oil demand. Prices fell 1% early in the session as data showed U.S. crude inventories rose by 15.2 million barrels to 503.2 million barrels last week, according to the Energy Information Administration, compared with analysts’ expectations in a Reuters poll for a 1.4 million-barrel drop. [EIA/S] U.S. net imports of crude oil rose by 2.7 million barrels per day last week, the biggest increase on record, as exports plunged. [EIA/S] However, the advent of mass inoculations in the United Kingdom and the prospect of the U.S. Food and Drug Administration approving a coronavirus vaccine in the United States pushed markets higher following the report. Brent crude rose 2 cents to settle at $48.86 a barrel. U.S. West Texas Intermediate (WTI) crude fell 8 cents, or 0.2%, to settle at $45.52 a barrel. “The market is definitely in a state of shock, but overall this is looking like a fluke report and the market can detect brighter days ahead,”. A panel of outside advisers will vote on Thursday on whether to recommend the FDA issue an emergency authorization for the use of the vaccine developed by Pfizer Inc and German partner BioNTech SE. Britain began mass vaccinations on Tuesday. Expectations that others will soon follow helped offset fears about a sharp rise in coronavirus cases globally that has led to new restrictions on movements around the world, reducing demand for transportation fuel. U.S. gasoline and distillate stockpiles were markedly higher last week as refineries boosted output. “The significant increase in gasoline and distillate inventories is likely a result of lower oil demand post the Thanksgiving holiday, as well as additional stay at home measures across country,”
U.S. oil prices settle lower after the biggest weekly supply rise since April, but prospects for vaccine rollout limits loss - Oil futures ended on a mixed note Wednesday, with global prices up slightly but U.S. benchmark crude posting a loss on the back of the biggest weekly increase in domestic crude supplies since April that was seen as due to a possible to "one-off" rise in imports.The likelihood that a COVID-19 vaccine will soon be rolled out in the U.S. also helped to ease worries surrounding energy demand, limiting downside moves for oil prices.The Energy Information Administration reported Wednesday that U.S. crude inventories rose (link) by 15.2 million barrels for the week ended Dec. 4. That was the largest weekly climb since April, when the EIA reported a weekly rise of 19.2 million barrels (link) -- the biggest weekly rise on record -- for the week ended April 10. Analysts polled by S&P Global Platts, on average, expected to see a weekly decline of 700,000 barrels. The American Petroleum Institute on Tuesday (link) reported a 1.1 million-barrel rise. "Even though the EIA report shows a large inventory build, a more detailed review tells that the increase in inventory was primarily due to an abnormal increase in imports," Total net petroleum imports, the difference between exports and imports, rose to about 4.6 million barrels a day, from 1.9 million barrels per day a week earlier, the EIA reported. "Since the market is more focused on the fundamentals of supply and demand, it generally disregards one-off imbalances caused due to trade shipments," . "A sustained increase in net imports would be problematic, but a one-time event has no bearings on market fundamentals." "Reasons for crude-oil build could be as simple as cargoes from the thanksgiving week just being delayed and accounted for last week," he said.Against that backdrop, West Texas Intermediate crude for January delivery fell 8 cents, or 0.2%, to settle at $45.52 a barrel on the New York Mercantile Exchange. That was the lowest front-month contract finish since Dec. 2, according to Dow Jones Market Data.Oil futures had turned lower after the significant weekly rise in crude supplies reported by the EIA. "In the decade we have been trading the energy markets, we have never seen this much of a miss from the expectations." "Given how this inventory build has joined the ranks of the one the largest witnessed in 2020, fears are likely to jump over COVID-19 sapping demand for fuel," "Gasoline supplies climbed by 4.2 million barrels, while distillate stockpiles were up by 5.2 million barrels, EIA data showed. The S&P Global Platts survey had forecast supply increases of 2.2 million barrels for gasoline and 1.2 million barrels for distillates.On Nymex Wednesday, January gasoline tacked on 1.6% to $1.2759 a gallon, but January heating oil fell nearly 0.6% to $1.3989 a gallon.
Brent rises above $50/bbl for first time since March on vaccine optimism (Reuters) - Oil prices climbed nearly 3% on Thursday, with Brent surging above $50 a barrel for the first time since early March, fueled by hopes of a faster demand recovery as countries start to roll out COVID-19 vaccines. The bullish sentiment offset a large increase in U.S. crude inventories that showed there was still ample supply available. Britain began vaccinations this week and the United States could start inoculations as soon as this weekend. Canada on Wednesday approved its first vaccine and said initial shots would be delivered starting next week. Brent crude rose $1.39, or 2.8%, to settle at $50.25 a barrel, gaining for a third day. U.S. West Texas Intermediate (WTI) crude rose $1.26, or 2.8%, to settle at $46.78 a barrel. Both benchmarks reached their highest levels since March, with the contracts posting session highs of $51.06 a barrel and $47.74 a barrel, respectively. However, their relative strength indexes showed both had moved into overbought territory. Investors shrugged off Wednesday’s weekly report on U.S. oil inventories that showed a massive 15.2 million-barrel rise in crude stocks. Analysts had expected a 1.4 million-barrel drop. [EIA/S] “It is not every day that the market ignores weekly builds of U.S. crude inventories,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets. “Fast-tracking vaccinations is raising hopes that oil demand will benefit quicker and the North American markets are major consumers.”
Oil Prices Do the Remarkable | Rigzone -- Oil in London climbed above $50 a barrel for the first time since the pandemic ground the global economy to a halt in a remarkable rally that few predicted would happen this soon. Global benchmark futures surged 2.8% Thursday, reaching a nine-month high. The rebound represents a startling turnaround for a market that was brought to its knees earlier this year by an unprecedented loss of demand. With places to store unused oil running out, OPEC and its partners collaborated to stanch outflows and stabilize markets while the world awaited a vaccine. Announcements last month from Pfizer Inc. and others that safe vaccines could be rolled out by spring boosted the outlook for global consumption. Asia is continuing to lead the rebound in physical demand amid robust purchasing by China’s private refiners. The U.S. dollar also weakened, which raised the appeal for commodities priced in the currency and helped thrust Brent past $50. “I am a bit surprised that it happened now,” “I have been advocating $50+ Brent, but I thought that would happen after we see inventories and demand look better.” It’s possible the market is getting ahead of itself though, with key technical indicators signaling benchmarks are overbought and U.S. inventories recently piling higher. U.S. inventories expanded a whopping 15.2 million barrels last week in the biggest build in government data going back to 1982, with the exception of one week in April. At the same time, domestic gasoline demand is the lowest it has been for this time of year since 1997, Energy Information Administration data show. And it will be months before the vaccine is distributed widely enough to fully reopen the economy. Still, supply and demand dynamics have drastically improved from just a few months ago. Inventories are drawing down globally, and there are signs the market is handling increased output better than initially anticipated. “The distinct FOMO-type shift in financial market sentiment is supported by a global physical market that is absorbing barrels at a more robust-than-consensus pace,” RBC analysts including Helima Croft and Michael Tran said in a report. “Asia refinery runs remain firm, global floating storage levels are being dismantled at a vigorous pace and European mobility is accelerating amid loosening regional lockdowns.” West Texas Intermediate for January delivery rose $1.26 to settle at $46.78 a barrel. Brent for February settlement increased $1.39 to end the session at $50.25 a barrel. Both of the benchmarks are at the highest level since early March. In addition to the recent surge in the price for near-term contracts, the swift reshaping along oil’s forward curve underscores the confidence in a long-term recovery. The curve is now trading in a structure known as backwardation that makes it profitable to roll contracts from one month to the next, which is also attracting a rush of new flows to the market.
Oil pulls back amid New York coronavirus curbs, gains for a 6th week - (Reuters) -Oil prices settled lower on Friday, as demand worries due to new coronavirus-related restrictions on business in New York overshadowed progress toward vaccination programs. Brent futures settled down 28 cents, or 0.6% at $49.97 a barrel. The contract rose above $51 a barrel on Thursday to an early-March high. U.S. West Texas Intermediate (WTI) crude fell 21 cents, or 0.5%, to $46.57, having risen almost 3% in the previous session. “Restrictions in New York are weighing on prices,” said Bob Yawger, director of energy futures for Mizuho in New York. On Thursday, funds had placed net long bets as Brent topped $50 a barrel. “As we approach the close, the speculator community is reluctant to go home with a net long position,” he said. Governor Andrew Cuomo ordered New York City restaurants to suspend indoor dining effective Monday, amid an uptick in cases. [L1N2IR1QA] For the week, Brent was up 1.5% and WTI was up less than 1%. That was the sixth consecutive week of gains for the first time since June. Promising vaccine trials have helped lift some gloom over record increases in the number of coronavirus infections and deaths around the world, and Cuomo sounded a note of optimism, saying he expected 170,000 doses of Pfizer’s vaccine to be in New York by Sunday or Monday. Britain began inoculations this week and the United States could start vaccinations as early as the coming weekend, while Canada on Wednesday approved its first vaccine with initial shots due from next week. Outside advisers for the U.S. Food and Drug Administration have voted to endorse emergency use of Pfizer’s vaccine, paving the way for the agency to authorise its use in a nation where COVID-19 has killed more than 285,000.
Oil ends lower, but notches a weekly gain, lifted by vaccine optimism - Oil futures ended lower on Friday, but notched a weekly gain as investors took their cue from progress on the rollout of COVID-19 vaccines which may help the economic recovery. Signs of resilient demand in Asia and elsewhere also helped underpin prices, analysts said. Overall, the fundamental backdrop for the oil market is "mixed with ominous coronavirus trends being offset by vaccine optimism, while faltering economic growth statistics are being shrugged off with continued high hopes for stimulus," said analysts in the latest Sevens Report Research newsletter. West Texas Intermediate crude for January delivery fell by 21 cents, or nearly 0.5%, to settle at $46.57 a barrel on the New York Mercantile Exchange. February Brent crude lost 28 cents, or 0.6%, at $49.97 a barrel on ICE Futures Europe, settling below the key level of $50 after breaching it this week for the first time since March. WTI registered a 0.7% weekly rise though, while Brent tacked on 1.5%. Both benchmarks on Thursday marked their highest front-month contract settlements since March 4, according to FactSet data. Read:Natural-gas prices look to end the year higher for the first time since 2016 (link) The market reaction earlier this week to the largest weekly rise in U.S. crude inventories since April -- and the second largest rise on record -- was particularly impressive, said Michael Tran, commodity analyst at RBC Capital Markets, in a note. "To say that the market shrugged off the bearish data release is a massive understatement. The distinct FOMO type shift in financial market sentiment is supported by a global physical market that is absorbing barrels at a more robust than consensus pace," he said. Oil is building on sharp November gains, attributed largely to progress toward COVID-19 vaccines, which outweighed worries over the potential hit to demand from a surge in cases in the U.S. and Europe. The vaccine developed by Pfizer Inc. (PFE) and BioNTech SE (BNTX) was rolled out in the U.K. earlier this week, while the U.S. Food and Drug Administration was seen moving toward emergency authorization (link) of the vaccine after an advisory panel voted (link) that benefits of the drug outweighed the risk. Tran said the physical market remained resilient, with Asian refinery runs remaining firm and global floating storage falling quickly as European mobility indicators accelerate in response to loosened lockdowns.
Iran Says Nuclear Scientist Was Assassinated Using Satellite-Controlled Gun - Iranian nuclear scientist and military researcher Mohsen Fakhrizadeh was assassinated using sophisticated electronic equipment controlled via satellite link, the semi-official Mehr news agency reported. Mohsen Fakhrizadeh, who was killed in a gun and car bomb attack on the outskirts of Tehran on Nov. 27, was driving on a highway east of the capital when the weapon "zoomed in" on him "using artificial intelligence," Mehr said on Sunday, quoting Commodore Ali Fadavi, deputy commander of Iran’s Islamic Revolutionary Guard Corps. As General Ramezan Sharif, IRGC spokesman added, "the assassination of a scientist on the street with a satellite device can not undermine our security." According to Bloomberg, various accounts of the assassination have emerged since the incident. While early news reports said he was caught in a gunfight between his bodyguards, others said that in a scene seemingly inspired by Breaking Bad, he was fired at by a remote-controlled machine gun mounted on a pick-up truck operated by someone who later fled the country. Last week the secretary of Iran’s Supreme National Security Council, Ali Shamkhani, said a remotely controlled weapon was used in the ambush that claimed the scientist’s life. The operation was "very complicated" and didn’t require human presence on the site at the time of the attack. The incident is the second targeted killing of a high-ranking Iranian official since January, when outgoing U.S. President Donald Trump ordered a drone strike on General Qassem Soleimani. Iranian officials have accused Israel of masterminding Fakhrizadeh’s assassination. Iranian media reported that the remains of the weapon that killed him, which was recovered from the scene, indicated that it originated from the Israeli military. In response, Israeli Intelligence Minister Eli Cohen said his government had no idea who killed Fakhrizadeh, but added that whoever did made the world a safer place because the Iranian physicist took “an active part in creating a nuclear weapon.” Iran has denied trying to militarize its nuclear research, saying it’s purely civilian in purpose.
US B-52 bombers threaten Iran for second time in three weeks -For the second time in three weeks, Washington has sent a pair of B-52 heavy bombers to the Persian Gulf in a provocative threat of military aggression against Iran. The two B-52H Stratofortress bombers carried out a 36-hour round-trip flight from Barksdale Air Force Base in Louisiana. The previous deployment of the bombers, which are capable of carrying both nuclear and conventional weapons, was from Minot Air Force Base in North Dakota, meaning that both B-52 wings of the US Air Force Global Strike Command have conducted rehearsals for airstrikes against Iran. The deployments of the same massive warplanes that were used to devastate Vietnam half a century ago have been conducted in the context of mounting war threats and provocations against Iran from both the Trump administration in Washington and its closest ally in the region, the Israeli government of Prime Minister Benjamin Netanyahu. On November 12, Trump convened a White House meeting of his national security cabinet to discuss a proposal for bombing Natanz, Iran’s main nuclear facility. Top aides, including Vice President Mike Pence and Secretary of State Mike Pompeo, reportedly talked the president out of an act that would represent a world historic war crime, potentially killing thousands, while sickening many more. This was followed by Pompeo’s extraordinary tour of the Middle East, which he preceded by telling a State Department press conference that he was committed to a “smooth transition” to a second Trump administration, making it clear that his foreign policy operations are directed at furthering the US president’s bid to overturn the results of the November elections. Pompeo’s trip, which included extensive talks with Netanyahu and a semi-secret flight by himself and the Israeli prime minister to Saudi Arabia for talks with de facto Saudi ruler Crown Prince Mohammed bin Salman, was directed entirely against what he repeatedly described as the “malign influence” of Iran. Within four days of this meeting, on November 27, Israel’s spy agency, Mossad, carried out the assassination of Iran’s top scientist, nuclear physicist Mohsen Fakhrizadeh. This criminal provocation rivaled that of the US at the beginning of this year with the drone missile murder of top Iranian leader Qassem Suleimani after he had arrived at Baghdad International Airport for an official state visit. It is inconceivable that such an assassination would be ordered without the full support of Washington and preparations for an overwhelming military response to any Iranian retaliation. Indeed, within hours of the murder of Fakhrizadeh, the USS Nimitz aircraft carrier strike group sailed into the Persian Gulf in a highly unusual back-to-back deployment in the region by warships that had been scheduled to return to their US homeport. The US Navy has announced that the length of the latest deployment is indefinite.
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