oil prices rose every day this week while rallying to a one year high, on ongoing OPEC production cuts and on an economic stimulus package making its way through Congress....after inching down 0.1% to $52.20 a barrel last week as increasing coronavirus concerns outweighed a large drop in crude inventories, the contract price of US light sweet crude for March delivery opened lower on Monday amid news of patchy vaccine rollouts and new coronavirus variants, but rebounded off the day's lows to settle $1.35 higher at $53.55 a barrel, supported by expected drawdowns from the Cushing depot, a sudden rise in winter fuel demand amid colder weather, and further talks about new stimulus checks...oil prices rose more than 2% again on Tuesday, on signs that the world’s biggest oil producers were heeding to their agreement not to overproduce, and settled with a $1.21 gain at $54.76 per barrel, after touching a session high of $55.26, the highest in a year...oil prices extended their gains overnight, with WTI topping $56 for the first time in a year, after the American Petroleum Institute reported a significant draw from crude inventories, and then opened higher and continued to rally Wednesday, closing up 93 cents to $55.69 a barrel after OPEC and its allies pledged to continue reducing global crude inventories...oil prices were up for a fourth straight session on Thursday, buoyed by expectations that OPEC and their allies' commitment to cut output would contribute to tighter global supplies of crude, with March oil rising 54 cents to $56.23 a barrel with prices also buoyed by stronger U.S. equities as global oil inventories from China to the U.S. continued to decline...oil prices rose more than 1% again on Friday as U.S. stock markets hit record highs on signs of progress toward more economic stimulus and settled up 62 cents at $56.85, after reaching $57.29 a barrel, its highest since January 22nd of last year....US crude prices thus rose around 9% on the week, but global prices fell short of the $60 per barrel mark targeted by oil bulls, suggesting the market may be overbought in the short-term and could consolidate, even if it hits that high point...
natural gas prices also posted large gains this week after jumping 11% on monday, on forecasts for continuing below normal temperatures through the end of the month.....after rising 4.4% to $2.564 per mmBTU last week after an outbreak of much colder temperatures reappeared in the weather forecasts., the contract price of natural gas for March delivery opened 12% higher at $2.868 per mmBTU on Monday morning as a major winter snowstorm battered the Northeast and forecasts suggested much colder weather over the next two weeks than was previously expected, and held on to settle 11% or 28.6 cents higher at $2.850 per mmBTU...after volatile trading after the latest run of the European weather model erased a decent chunk of the projected demand, natural gas prices settled a half cent lower on Tuesday, and then fell 5.6 cents to $2.789 per mmBTU on Wednesday on forecasts for less heating demand next week than had been previously expected...however, natural gas surged 14.6 cents or almost 5% on Thursday after the natural gas storage report pointed to a shrinking surplus and LNG exports continued to be strong...but natural gas prices gave up half of that gain on Friday, falling 7.2 cents to $2.863 per mmBTU after the European weather model trended a bit milder for the upcoming week and also stalled the frigid cold’s arrival in the South and East by a few days, but still finished the week with an 11.7% gain.. ..
the natural gas storage report from the EIA for the week ending January 29th indicated that the amount of natural gas held in underground storage in the US fell by 192 billion cubic feet to 2,689 billion cubic feet by the end of the week, which left our gas supplies 41 billion cubic feet, or 1.5% higher than the 2,648 billion cubic feet that were in storage on January 29th of last year, and 198 billion cubic feet, or 7.9% above the five-year average of 2,491 billion cubic feet of natural gas that have been in storage as of the 29th of January in recent years....the 192 billion cubic feet that were drawn out of US natural gas storage this week was a bit less than the average forecast of a 195 billion cubic foot withdrawal from an S&P Global Platts survey of analysts, but more than the 155 billion cubic foot withdrawal from natural gas storage seen during the corresponding week of a year earlier, and also more than the average withdrawal of 146 billion cubic feet of natural gas that have typically been pulled out of natural gas storage during the same week over the past 5 years...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending January 29th indicated that despite a big jump in our oil imports, we still had to withdraw a modest amound of oil from our stored commercial crude supplies for the ninth time in the past eleven weeks and for the 20th time in the past twenty-eight weeks.... our imports of crude oil rose by an average of 1,443,000 barrels per day to an average of 6,507,000 barrels per day, after falling by an average of 981,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 128,000 barrels per day to 3,483,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,024,000 barrels of per day during the week ending January 29th, 1,315,000 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 10,900,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production appears to total an average of 13,924,000 barrels per day during this reporting week...
meanwhile, US oil refineries reported they were processing 14,641,000 barrels of crude per day during the week ending January 29th, 80,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a net of 142,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US....so based on that reported & estimated data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from storage, and from oilfield production was 575,000 barrels per day less than what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+575,000) 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 figures often drive oil pricing and hence decisions to drill or complete wells, we'll continue to report them as published, just as they're watched & believed to be accurate by most everyone in the industry.....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....
further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 5,964,000 barrels per day last week, which was 9.2% less than the 6,565,000 barrel per day average that we were importing over the same four-week period last year.....the 142,000 barrel per day net withdrawal from our crude inventories was due to a 142,000 barrels per day withdrawal from our commercially available stocks of crude oil, while the oil supplies in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported to be unchanged at 10,900,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at 10,400,000 barrels per day, while a 1,000 barrel per day decrease to 508,000 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 January 31st was rounded to 12,900,000 barrels per day, so this reporting week's rounded oil production figure was 15.5% below that of a year ago, yet still 29.3% 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 82.3% of their capacity while using those 14,641,000 barrels of crude per day during the week ending January 22nd, up from 81.7% of capacity during the prior week...however, since US refinery utilization had averaged the lowest on record through 2020 and has barely recovered, the 14,641,000 barrels per day of oil that were refined this week were still 8.3% fewer barrels than the 15,972,000 barrels of crude that were being processed daily during the week ending January 31st of last year, when US refineries were operating at an also low 87.4% of capacity...
with the decrease in the amount of oil being refined, the gasoline output from our refineries was lower for the 8th time in 11 weeks, decreasing by 253,000 barrels per day to 8,420,000 barrels per day during the week ending January 29th, after our gasoline output had decreased by 212,000 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-related lockdowns, this week's gasoline output was still 15.0% lower than the 9,903,000 barrels of gasoline that were being produced daily over the same week of last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 104,000 barrels per day to 4,622,000 barrels per day, after our distillates output had decreased by 11,000 barrels per day over the prior week....but since our distillates' production is also just coming off a three year low, that output was 7.1% less than the 4,976,000 barrels of distillates that were being produced daily during the week ending January 31st, 2020...
even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 8th time in eleven weeks, and for 13th time in 30 weeks, rising by 4,467,000 barrels to 252,153,000 barrels during the week ending January 29th, after our gasoline inventories had increased by 2,469,000 barrels over the prior week...our gasoline supplies increased by more this week because the amount of gasoline supplied to US users decreased by 63,000 barrels per day to 7,770,000 barrels per day, and because our exports of gasoline fell by 24,000 barrels per day to 780,000 barrels per day, and because our imports of gasoline rose by 103,000 barrels per day to 568,000 barrels per day....but even after this week's inventory increase, our gasoline supplies were 3.4% lower than last January 31st's gasoline inventories of 261,144,000 barrels, and about 1% below the five year average of our gasoline supplies for this time of the year...
meanwhile, even with the increase in our distillates production, our supplies of distillate fuels decreased for the 3rd time in 10 weeks and for the 29th time in the past year, but just by 9,000 barrels to 162,838,000 barrels during the week ending January 29th, after our distillates supplies had decreased by 815,000 barrels during the prior week....our distillates supplies fell this week even as the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 102,000 barrels per day to 4,300,000 barrels per day, because our exports of distillates rose by 134,000 barrels per day to 943,000 barrels per day while our imports of distillates rose by 44,000 barrels per day to 518,000 barrels per day....and even after this week's inventory decrease, our distillate supplies at the end of the week were still 13.7% above the 143,235,000 barrels of distillates that we had in storage on January 31st, 2020, and about 8% above the five year average of distillates stocks for this time of the year...
finally, even with the big jump in our oil imports, our commercial supplies of crude oil in storage (not including the commercial oil being stored in the SPR) fell for the 22nd time in the past thirty-four weeks, and for the 23rd time in the past year, decreasing by 994,000 barrels, from 476,653,000 barrels on January 22nd to 475,659,000 barrels on January 29th, again the lowest inventory level since March 27th...but even after that decrease, our commercial crude oil inventories were about 4% above the five-year average of crude oil supplies for this time of year, and about 42% above the prior 5 year (2011 - 2015) average of our crude oil stocks as of the end of January, 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 jumped this spring after generally rising over the past two years, except for during the past 8 weeks 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 January 29th were still 9.3% more than the 435,009,000 barrels of oil we had in commercial storage on January 31st of 2020, 6.4% above the 447,207,000 barrels of oil that we had in storage on February 1st of 2019, and also 13.2% more than the 420,254,000 barrels of oil we had in commercial storage on February 2nd of 2018...
This Week's Rig Count
The US rig count rose for the 20th time in the past twenty-one weeks during the week ending February 5th, but for just the 22nd time in the past 47 weeks, and hence it is still down by 50.6% over that forty-seven week period....Baker Hughes reported that the total count of rotary rigs running in the US rose by 8 to 392 rigs this past week, which was still down by 398 rigs from the 790 rigs that were in use as of the February 7th report of 2020, and was also still 12 fewer rigs than the all time low rig count prior to 2020, and 1,537 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 4 rigs to 299 oil rigs this week, after rising by 6 oil rigs the prior week, still leaving us with 377 fewer oil rigs than were running a year ago, and still less than a fifth 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 also rose by 4 rigs to 92 natural gas rigs, which was still down by 19 natural gas rigs from the 112 natural gas rigs that were drilling a year ago, and still just 5.7% 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 or gas, one rig classified as 'miscellaneous' continued to drill in Lake County, California this week, while a year ago there were three such "miscellaneous" rigs deployed...
The Gulf of Mexico rig count was unchanged at 16 rigs this week, with 14 of those rigs drilling for oil in Louisiana's offshore waters and now 2 drilling for oil in Alaminos Canyon offshore from Texas...that was 7 fewer Gulf of Mexico rigs than the 23 rigs drilling in the Gulf a year ago, when 20 Gulf rigs were drilling for oil offshore from Louisiana, one rig was drilling for natural gas in the Mississippi Canyon offshore from Louisiana, another rig was drilling for natural gas in the West Delta field offshore from Louisiana, and one rig was drilling for oil 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 figures are equal to the Gulf rig counts....however, in addition to those rigs drilling in the Gulf, one rig continues to drill through an inland body of water in Lafourche Parish, south of New Orleans, after two other inland waters rigs were shut down this week... a year ago, there were no rigs drilling on US inland waters..
The count of active horizontal drilling rigs was up by 10 to 344 horizontal rigs this week, which was still less than a half of the 711 horizontal rigs that were in use in the US on February 7th of last year, and less than a third 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 2 to 20 vertical rigs this week, and those were still also down by 13 from the 33 vertical rigs that were operating during the same week a year ago....meanwhile, the directional rig count was unchanged at 18 directional rigs this week, and those were also down by 28 from the 46 directional rigs that were in use on February 7th of 2020....
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 February 5th, the second column shows the change in the number of working rigs between last week's count (January 29th) and this week's (February 5th) count, the third column shows last week's January 29th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday 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 7th of February, 2020..
again, we just have a handful of fairly straightforward changes this week...checking first for the details on the Permian in Texas from the Rigs by State file at Baker Hughes, we find that there were 4 new rigs added in Texas Oil District 8, which corresponds to the core Permian Delaware, and three more rigs added in Texas Oil District 7C, which encompasses the southern counties of the Permian Midland basin, and hence the Permian basin in Texas saw a net increase of 7 rigs this week, which also accounts for all of the land based rig changes in Texas...since the national Permian rig count was up by 6, that means that the rig that was pulled out in New Mexico must have come from the far west reaches of the Permian Delaware, to account for the net national Permian basin rig increase...elsewhere, there was a rig pulled out of the Cana Woodford in Oklahoma, while a rig was concurrently added in Oklahoma in a basin that Baker Hughes doesn't identify...finally, to account for the 4 natural gas rig additions this week, two were added in Ohio's Utica shale, and two more were added in northern Louisiana's Haynesville shale...the Louisiana rig count remains unchanged, however, due to the shutdown of an oil rig offshore, and one which had been drilling through an inland body of water in Saint Mary parish in southern Louisiana...
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Residents Raise Firestorm About Akron's Fracking Plans for LaDue - Geauga Maple Leaf - A local energy company’s proposal to lease the mineral rights under 475 acres of LaDue Reservoir from the City of Akron has met with an avalanche of outrage from local residents and environmental groups. DP Energy Auburn LLC, organized Jan. 1, according to Ohio Secretary of State’s office records, wants to drill under LaDue and surrounding properties for oil or natural gas in what many called “fracking,” or drilling deep in a vertical direction, then horizontally into shale layers far below the surface.An Akron Beacon Journal article said DP Energy plans to drill under 475 acres of watershed land at LaDue, which straddles southern Geauga and northern Portage counties.The energy company told Akron Public Service Director Chris Ludle that DP was organized Jan. 1 by Akron attorney and former City Councilman Patrick D’ Andrea, who served as councilman from 1979-1989 and as Summit County director of development, according to his law firm’s website.Efforts to reach D’Andrea at his law office were unsuccessful and a recording stated his voice mailbox was full and could not receive messages.D’Andrea told Ludle because the LaDue land will be adjacent to parcels that DP already owns, there will be no need for equipment, tanks or access roads on the LaDue portion. If no oil or gas is found within three years, the well must be capped and the mineral rights forfeited back to the City of Akron.DP would pay Akron $500 per acre, or $237,500 plus 15 percent of any royalties, for the mineral rights. If Akron did not agree to the deal, the company would drill on adjacent property anyway.According to a Jan. 21 Cleveland.com article, the city has been in negotiations to sell the mineral rights for about a year. LaDue Reservoir, in Auburn and Troy townships, was completed in 1962 to provide a water source for the City of Akron. The lake was formed by damming two tributaries of the Cuyahoga River — Black Brook and Bridge Creek. The proposed contract agreement with DP was scheduled to come before Akron City Council on Jan. 25, but one council member referred it back to committee, halting the process temporarily. According to another council member, the issue could be voted upon as early as Feb. 1. As the proposal sat in committee, council has been bombarded with voice messages and emails, mostly opposed to the fracking. Many have made their opinions known on social media outlets such as Facebook, Next Door and Twitter. “I learned about it through an article I saw in the Akron Beacon Journal and one on Cleveland.com,” Russell Township resident Shelly Chernin told the Geauga County Maple Leaf last week. Chernin serves as a trustee for Protect Geauga Parks and said she is opposed to fracking at LaDue. “I’m frustrated because Geauga is impacted by what is decided by the City of Akron,” Chernin said via phone interview. “I wrote to our county commissioners and heard back from County Administrator Gerry Morgan that there isn’t much they can do.”
Letters to the Editor - Geauga Maple Leaf --SAFEGUARD OUR DRINKING WATER - The League of Women Voters of Geauga stands with the League of Women Voters of the United States in calling for stringent controls to protect the quality of current and potential drinking-water supplies, including protection of watersheds for surface supplies and of recharge areas for groundwater. For more than 100 years, the City of Akron has endeavored to secure a reliable source of drinking water by channeling upstream rainfall and snowmelt into a series of carefully constructed reservoirs. Rockwell Reservoir in Portage County, along with Geauga’s East Branch and LaDue reservoirs, together supply clean drinking water to nearly 300,000 Akron customers. Developed by William LaDue, the ambitious public water system called for protection of the upstream waterways that feed into each reservoir. Accordingly, Akron purchased watershed property along the Upper Cuyahoga River and today is the largest land owner in Geauga County.On its website, Akron boasts of protecting more than 18,000 acres of watershed property. Such mindful stewardship of ecologically critical resources protects both Akron’s drinking water as well as the groundwater that so many people in Geauga rely upon to supply their private wells.It is against this backdrop that Akron officials propose allowing gas and oil extraction from watershed property buffering the southeast corner of LaDue Reservoir. DP Energy Auburn, LLC seeks to use a horizontal drilling process known as fracking to drill under the city-owned lands. All of the proposed drilling sites are in watersheds. One stretches under LaDue Reservoir. The risk to the Akron water supply is readily apparent. Of equal concern is the risk to Geauga’s groundwater, which supplies drinking water to the vast majority of our households and businesses. Any threat to our shared water supply is an urgent matter of public health to both communities.We urge residents of Geauga and Akron to voice their concerns to their elected leaders. We ask the City of Akron to reject this short-sighted proposal and to fulfill their duty to safeguard our drinking water.Shelly Lewis, President League of Women Voters of Geauga
Critics of proposed fracking under Akron-owned watershed flood City Council with complaints - - Akron Deputy Clerk of Council Sara Biviano read in the first public comment sent via email Monday night. It began like most of the 130 minutes worth of complaints council would hear during the public meeting, which up until that point took little more than a half hour to get through all the regular business.“No oil or fracking in any backyard. Stop the madness,” the email began.After 10 minutes of emails, Biviano told council: “I do have voicemails to play. There are over 100 of them.”As she queued up the voice messages, Councilman Donnie Kammer’s eyes bulged. Councilwoman Tara Samples dropped her face into her hands to conceal a smile. Colleagues settled in for an earful. The flood of public comments included about 10 emails and 115 voicemails. By the Akron Beacon Journal’s tally, 88% of the complaints related to a proposal by Public Service Director Chris Ludle to sell the mineral rights under 475 acres of watershed land around the La Due Reservoir in Geauga County for gas and oil extraction. The deal would not allow construction or drilling activity on the surface of the city-owned property.The company trying to buy the rights, DP Energy Auburn LLC, used the name of the township in the limited liability company created for the transaction. And Auburn Township residents of that township, along with even more from Akron, made their voices heard. The calls came from neighboring Chesterland and Bainbridge Township and as far south as Wadsworth and Norton.In all, 110 people called or wrote to council to express opposition to the plan, which Ludle said last week would involve horizontal drilling to get under the city-owned watershed property and hydraulic fracturing, or fracking, to unlock oil and gas trapped in a shale formation thousands of feet below the city’s primary drinking supply.
Akron pulls fracking proposal following public outcry over drilling at LaDue Reservoir in Geauga County - – Akron Mayor Dan Horrigan announced during a virtual town hall Thursday that the city has pulled legislation before city council to lease mineral rights for a private company to drill and frack under city-owned land near the LaDue Reservoir in Geauga County.“I’ve listened to a lot of the concerns from both people inside of Akron and outside, and a significant amount of concern on Akron City Council, and I have decided to withdraw the LaDue oil and gas proposal from the Akron City Council agenda at this time,” Horrigan said. “There won’t be a vote on it. We’re not moving forward, definitively, with the project.”The proposal had garnered widespread criticism from Akron residents concerned about water quality and environmental issues, as well as from Geauga County residents who rely on groundwater, which can be impacted by fracking. During Monday’s City Council meeting, more than 100 voicemails were played during the public comment period, the vast majority of which criticized the fracking proposal. The deal would have allowed the company – DP Energy Auburn, LLC – to frack under 475 acres of city-owned land at LaDue, which is upstream from Akron’s drinking water supply on the Cuyahoga River. The city was considering leasing the mineral rights for $237,500, or $500 per acre, along with 15% of potential royalties for any oil or gas produced by the wells.DP Energy Auburn was seeking to drill horizontally under the city-owned land through wells on adjacent properties.Public Service Director Chris Ludle previously told City Council’s Planning and Economic Development Committee that the city had been negotiating with DP Energy Auburn for “about a year,” despite the company only becoming incorporated on Jan. 1, according to Ohio Secretary of State records.DP Energy Auburn is registered to Akron attorney Patrick D’Andrea, who was an Akron City Councilman from 1979 to 1989 and a former Summit County director of development. He currently represents landowners and businesses regarding oil, gas and mineral rights, according to his law firm’s website. D’Andrea did not immediately respond to an inquiry from cleveland.com and The Plain Dealer
Akron mayor pulls plan to drill for oil and gas at LaDue Reservoir - Akron Beacon Journal - Akron Mayor Dan Horrigan is withdrawing a proposal to allow fracking for gas and oil beneath city-owned watershed land at the LaDue Reservoir in Geauga County.While defending the environmental safeguards and economic necessity of the proposed deal, Horrigan told the public during a Facebook Live town hall Thursday that the city is abandoning a tentative deal with DP Auburn Energy LLC to lease mineral rights for 475 acres of watershed land.The deal would have required approval from council, which passed the plan out of committee before Councilwoman Tara Samples pulled the issue back into committee for reconsideration. On Monday, council took no action on the proposal but heard hundreds of complaints from neighbors of the reservoir in Auburn Township, Akron residents who rely on the drinking water supply and environmentally concerned citizens across the region, including members of the Democratic Socialists of America and Our Revolution Akron, an offshoot of the national progressive movement championed by Vermont Sen. Bernie Sanders."Drilling under Lake Le Due Reservoir was a bad idea from the onset," said Samples, an Our Revolution supporter who called the mayor's decision to abandon the deal a "win" for the people whose voices were heard "loud and clear.""Whether you call it mineral drilling or something (else), it's still fracking," she said. "And the bottom line is you can't take back poisoning people's water. That lasts a lifetime."Horrigan said good points were made on either side of the issue, and he's willing to have a fact-based debate about whether fracking is the right way to generate revenue for Akron. "I completely understand the public’s concern about irresponsible fracking practices that have occurred in this country, but I’m also troubled about the misinformation used to stir up community concern, when our primary objective is to safeguard the health, economic mobility, and safety of our residents," Horrigan said in a statement following his town hall. “I understand you’re concerned about the irresponsible fracking practices that have happened around the country. But it’s also kind of troubling sometimes to look at some of the misinformation that is out there — really, sometimes, just to stir up community concern — when our primary concern is always to keep our drinking water and our citizens safe … This isn’t Flint. It’s not even a comparison. … We’re not selling the water rights … And, quite frankly, I haven’t been bought by campaign donors. I want to make that clear.”
Akron Mayor Dan Horrigan withdraws proposal to allow fracking at LaDue Reservoir - — Akron Mayor Dan Horrigan announced Thursday that he has withdrawn his proposal to lease underground oil and gas rights for well sites just outside the city's property lines. Horrigan originally introduced the proposal as a solution to generate funds for upcoming water and sewer needs, but was met with pushback from residents over the potential risks and the negative reputation of fracking. "I completely understand the public’s concern about irresponsible fracking practices that have occurred in this country, but I’m also troubled about the misinformation used to stir up community concern, when our primary objective is to safeguard the health, economic mobility, and safety of our residents," Mayor Horrigan explained in a press release.Horrigan says that with the proposal, tight control over the project and the ability to put the highest of restrictions and protections in place, would have been allowed.Without the additional revenue, Mayor Horrigan says the city is in a "precarious spot" when it comes to funding. The city of Akron is being crippled by its current consent decree and ratepayers are already facing sizable sewer fees due to the federally mandated $1.2 billon sewer project. Additionally, the pandemic has resulted in a "significant reduction" in revenue from municipal sewer and water revenue due to lack of business activity. According to the Mayor, the project was expected to immediately generate a quarter of a million dollars in revenue and maintain a "significant royalty revenue over the life of the project.""The City of Akron needs revenue to maintain our vast water infrastructure and to continue to eliminate lead services in this city to get us closer to our goal of zero lead service lines in Akron," said Horrigan. Mayor Horrigan maintains that he and his staff will continue to evaluate creative ways to safely and responsibly leverage the city's assets to raise the necessary funding.
Thousands of gallons of fracking waste spilled from Noble County well for four days - -Thousands of gallons of fracking waste spilled from an oil and gas well in Noble County for four days before it was stopped, Ohio Department of Natural Resources confirmed Thursday."Containment measures have been put in place to prevent the flow of fluid into a nearby tributary," said Sarah Wickham, an ODNR spokeswoman. "The Ohio Environmental Protection Agency and local officials were notified and have assisted the Division in the response."The spill was first reported by an adjacent landowner on Alfred Brown Road in Dexter City on Jan. 24 to the state’s incident notification line, Wickham said. The cause of the spill was not immediately known and is under investigation. ODNR said preliminary tests show the fluid appears to be fracking waste. "There have been no injuries or evacuations and the extent of impact to the environment has not yet been determined," Wickham said in a statement.A nearby tributary, Taylor Fork, was initially affected by the spill, with an unknown amount of fish getting killed off.Containment measures included ODNR overseeing contractors to build emergency containments to collect fluid flowing from the well. On Tuesday, a system of containment structures including pipes and storage tanks were installed to stop the fluid from entering the environment, Wickham said. By Thursday the flow of fluid was stopped. About 39,000 barrels of fluid were collected and disposed of, she said. (42 gallons per barrel)The well, which is named Gant Florence/Ohio Power Co., had its first year of production in 1986, according to ODNR records. However, the last time the well produced a sizeable amount of gas was in 2012. The well has a depth of more than 6,000 feet.Records show the well is still labeled as a producing well even though it hasn't been in use for some time. "Moreover, this well should have been plugged once it was determined to be non producing, according to ODNR’s own regulations," said Teresa Mills, executive director of Buckeye Environmental Network.
In Ohio, regulators respond to suspected frack waste spewing from unused gas well, causing fish kill - Ohio regulators are working at a gas well that started spewing what’s believed to be brine water from fracking into the environment more than a week ago. The Ohio Department of Natural Resources, which regulates the oil and gas industry, said in an email that it was notified on Sunday, January 24 that fluid, what the agency called “produced brine,” was spraying out of an oil and gas well in the Crooked Tree area near Dexter City in Noble County. Brine is a salty byproduct of gas and oil production and can contain toxic metals and radioactive substances, according to US EPA. This video posted to Facebook by Amber Deem shows liquid spraying out of the well and pooling on the ground. Deem told The Allegheny Front in a phone call that the Parkersburg, West Virginia company where she works owns this well, and that it hadn’t produced gas in years. Deem has now said she is awaiting advice from her attorney before commenting further. Chasity Schmelzenbach, director of Noble County Emergency Management, was informed by Ohio DNR about the incident at the well, which is owned by Genesis Resources LLC of Parkersburg. On Wednesday, January 27, the state was able to contain the spray in a collection system on-site, Schmelzenbach said, but not before the suspected brine killed fish in Taylor Fork, a small tributary. She said state regulators had wildlife experts at the scene. “The chloride counts are really high, that’s why the fish kill happened, they believe,” Schmelzenbach said. “Typically brine doesn’t kill fish, so the concentrations had to be pretty high in that small area.” By the next day, Schmelzenbach said the state reported that the pressure of the emerging liquid had dropped. Ohio DNR said brine continues to flow at the wellhead. So far it has collected, and disposed of more than 30,000 barrels of fluid from the site. The agency has not determined where the liquid originated, or why it suddenly started spewing from the old gas well. There have been no injuries or evacuations and the extent of impact to the environment is not yet known. Noble County is home to around ten frack wastewater injection wells, according to Schmelzenbach and state mapping, some a few miles from the incident. In late 2019, brine from an injection well in Washington County, Ohio migrated to several producing gas wells, some more than five miles away. Since 2017, there have been seven spills of frack waste in Noble County, including this one, according to Ohio EPA records.
Reps disagree on Biden drilling order - Warren Tribune Chronicle --U.S. Rep. Tim Ryan said President Joe Biden, a fellow Democrat, did the right thing by suspending new oil and gas drilling on federally owned lands and waters, while U.S. Reps. Bill Johnson and Dave Joyce, both Republicans, said the decision damages the nation’s energy supply. Biden recently issued executive orders including a halt to new drilling on federal property as part of his plan to address climate change. It came a week after Biden ordered a 60-day suspension of new drilling and follows through on a campaign pledge to halt new drilling on federal property.Federal leases make up about 22 percent of the nation’s oil production and 12 percent of gas, according to the U.S. Energy Information Administration. Ryan, D-Howland, stressed this doesn’t stop fracking or drilling and only restricts new drilling on federally owned property.“You don’t want to necessarily be drilling in Yosemite or some of these other national parks. But we still need to pursue a cracker plant in Belmont County that the same people criticizing Biden about this haven’t lifted a finger to get that thing done,” Ryan said. “That’s about jobs and putting us at the center of the natural gas industry. Biden is supportive of that.” Ryan called the moratorium “the bridge to the renewable energy sector.” Biden’s executive orders double energy production from wind turbines, call for a move to an all-electric federal vehicle fleet, conserve 30 percent of the country’s lands and waters in the next decade, seek to reduce carbon emissions and make climate change a national security priority.Johnson, R-Marietta, said: “I’m disappointed but not surprised that Joe Biden is coming after our domestic energy supply and the jobs that come with it.” Johnson described it as “the start of a war against domestic energy that will target not only jobs, but also the cost of living for those who use electricity and drive a car. These policies are bad for America and will impact everyone. They will especially hurt the Mahoning Valley and rural Appalachia.”
Monroe County, OH Developing Ohio River Site to Help Utica Shale...The Monroe County, OH Port Authority has scored close to $3 million in grants and loans to fund a development project located at a former CONSOL Energy coal mining site south of Clarington, OH. The money will be used to build an access road and repair eight of 12 existing barge cells on the Ohio River. The end game is to “lease the property to companies that provide support services to the shale gas industry.” Please Login to view this content.
Speak out for our rights to a safe region and planet - Athens NEWS --To the editor, We are reaching out to Athens Countians to join in the protest and fight against another oil and gas industry assault on our region. A Class III injection well project is being reviewed by ODNR Division of Oil and Gas. The Powhatan Salt Company LLC has applied to the Ohio Department of Natural Resources for three Class III solution-mining well permits to create storage caverns in the Salina salt formation, 2.5 miles north of Clarington, Ohio, along the Ohio River in Monroe County. The caverns will be immediately adjacent to the river. With the number of abandoned mines and fracking operations in the immediate area, there is significant risk of subsidence, explosions, and fissures created by the increasingly frequent earthquakes in the region. The storage caverns will initially be used to produce brine from the Salina formation 6,000 feet below the surface. The brine will be piped under the Ohio River to Natrium, West Virginia, and a chemical plant that produces chlorine from brine. To create these storage caverns, Powhatan Salt Company would inject millions of gallons of freshwater underground at high pressures to carve out cavities in the salt. Powhatan would withdraw approximately 1,928,000 gallons of freshwater/day from the Ohio River to carve out the first cavern. More caverns could be constructed to increase storage capacity, which could require withdrawal of as much as 380,200,000 gallons of freshwater. The application does not disclose that, as Powhatan Salt Co. LLC and its sister company Mountaineer NGL Storage LLC have stated in numerous news stories, they have been intending to use the caverns for the storage of natural gas liquids like ethane, propane, butanes, and possibly hydrogen extracted from fracking. This use not only creates additional explosive and contamination hazards but also supports proliferation of fracking and its climate impacts and increases the massive amount of toxic, radioactive waste generated by this industrial process. Ohio Underground Injection Control Program (UIC) Class III well permitting does not require modification of an application or permit even if this drastic change of use occurs.
Will The Fracking Boom Ever Translate Into Jobs And Income For Appalachia’s Residents? - The U.S. fracking boom has delivered record amounts of shale gas — fuel used not just for electric generation but also as a feedstock for the manufacturing sector. But despite that explosive growth, the Appalachian region has failed to realize corresponding economic benefits. What gives? On Wednesday, the Ohio River Valley Institute readily acknowledged that the oil and gas industry has produced an abundance of oil, natural gas and natural gas liquids that are comprised of ethane, methane and propane — the elements that go into finished products. The region, in fact, now accounts for 30% of the nation’s natural gas production. But the growth in both jobs and incomes never followed.That is because much of the wealth creation has gone to those who often live outside those local areas and who then reinvest their profits elsewhere. And the conference also disputed the notion that the creation of one energy job leads to several others, noting that the “multiplier effect” in Appalachia’s shale gas area and is virtually one-for-one. The Ohio River Valley represents Ohio, Pennsylvania and West Virginia. The Bureau of Economic Analysis says that while the gross domestic product in the fracking counties of the three Ohio Valley states grew by 96%, jobs in those fracking counties only expanded by 1.7%, all between 2008 and 2019. The Ohio River Valley Institute says that 90% of the wealth created from fracking comes from the sale of shale gas and only about 10% of that money stays local.
Opponents of Plum injection well appeal to Pennsylvania Gov. Tom Wolf - Pittsburgh Business Times - Environmental activists and residents against a Plum Borough wastewater well have stepped up their campaign against the well, appealing to Gov. Tom Wolf to cancel the permit to operate. Protect PT, Breathe Project and Citizens for Plum expressed in the letter to Wolf what they called serious concerns regarding the Penneco Sedat #3A waste disposal well about the risks to drinking and surface water supplies, radioactivity of the wastewater and the potential for small earthquakes. The disposal well was approved by the U.S. Environmental Protection Agency and the Pennsylvania Department of Environmental Protection in 2018. Ben Wallace, COO of Penneco Environmental Solutions LLC in Delmont, told the Business Times on Thursday that the wastewater injection well should be operational in the late spring. The waste, also known as brine, is used heavily in natural gas drilling and hydraulic fracturing. The industry reuses the liquid for the most part in an extensive recycling effort but, eventually, the water — which includes radioactive materials and heavy metals from underground — has to be disposed of. There aren’t that many wastewater injection wells in Pennsylvania; most of the wastewater is disposed of in Ohio, where it is trucked. In the letter to Wolf, the groups say the well, which has been producing natural gas since 1989, wasn’t designed to take waste injected into it instead. Anthony Ingraffea, an emeritus engineering professor at Cornell University, said the circa 1985 well design for Sedat #3A for a natural gas well doesn’t fit its new purpose. He said the well’s casing and cement weren’t tested in 1989 when the well was drilled and a non-state-of-the-art inspection and test was conducted in 2015. “It’s a 32-year-old well designed for one purpose that is now being called upon for an entirely different purpose,” Ingraffea and Melissa Troutman, a research and policy analyst at Earthworks, said that there’s a chance of contamination of local water wells. The well is within about 1,000 feet of privates and some in the area have water wells that could be impacted. Troutman raised the issue of radioactivity from radium 226, a carcinogen, if there was to be a leak.
Supreme Court will hear case on PennEast pipeline | TheHill - The Supreme Court on Wednesday agreed to take up a challenge from a pipeline project seeking to use eminent domain to build a natural gas pipeline between Pennsylvania and New Jersey.The PennEast Pipeline Co. LLC is seeking to overturn a decision from the 3rd Circuit Court of Appeals that blocks it from seizing New Jersey state land to build its 116-mile project.The state of New Jersey has opposed the project, as have environmental groups, but under the Trump administration, the White House sided with the pipeline.It is the federal government who has the “primary authority to determine whether additional pipelines and related facilities are needed and, if so, where they should be located and whom they should serve,” the solicitor general’s office wrote in a December brief.But those opposed to the pipeline argue states should have a say.“The law is clear, and the Eleventh Amendment protects New Jersey from seizures by private companies using eminent domain. The Supreme Court should uphold the Third Circuit ruling and protect states from federal overreach,” Maya van Rossum, leader of the Delaware Riverkeeper Network, which opposes the project, said in a statement. Last summer, 20 states sued the Trump administration in a separate suit, challenging an Environmental Protection Agency rule that weakens states’ ability to block pipelines and other controversial projects that cross their waterways.
OIL AND GAS: Biden expected to back pipeline in Supreme Court battle -- Thursday, February 4, 2021 -- The Biden administration's Justice Department may keep supporting a pipeline company's eminent domain power in the latest energy fight to land before the Supreme Court, legal experts say.
After an order raises issues with Vermont Gas pipeline, activists push for penalties - After a state order last week detailed issues with a Vermont Gas pipeline, the company filed with state regulators Wednesday requesting more time to respond. “Today we’ll be filing for a little more time so we can review the ruling,” Vermont Gas spokesperson Beth Parent told VTDigger. The Public Utility Commission order found that Vermont Gas had failed to bury the 41-mile natural gas pipeline through Addison County at the 4-foot depth required by a construction permit. The ruling also pointed to the failure of the company to ensure a licensed professional engineer signed off on the construction plan. “Vermont Gas did not build the project as approved,” the commission wrote, listing five failures that were considered “substantial changes” from the 2013 Final Order. “It’s just astounding that you could have a major project like this that was constructed without the oversight of an engineer,” said Jim Dumont, an attorney for five area residents who oppose the $165 million pipeline completed in 2017. Dumont said neighbors have serious safety concerns, especially after the 2018 explosion of a pipeline in Lawrence, Massachusetts. In Massachusetts, utilities projects aren’t required to have an engineer sign off on construction plans, while in Vermont they are. The order finds that Vermont Gas didn’t comply with the requirement. Hinesburg resident Rachel Smolker, who Dumont represents in the case, said she sees a disturbing pattern in the recent construction of pipelines. She described a “slam it in the ground” approach, which she connects to a recent uptick in incidents. “A lot of corners were cut,” she said. “I really do fear for the people who live close to the pipeline, and I have friends who live within a few hundred feet.”
Living With Natural Gas Pipelines: Appalachian Landowners Describe Fear, Anxiety and Loss - More than 2 million miles of natural gas pipelines run throughout the United States. In Appalachia, they spread like spaghetti across the region. Many of these lines were built in just the past five years to carry natural gas from the Marcellus Shale region of Ohio, Pennsylvania and West Virginia, where hydraulic fracturing has boomed. West Virginia alone has seen a fourfold increase in natural gas production in the past decade.Such fast growth has also brought hundreds of safety and environmental violations, particularly under the Trump administration's reduced oversight and streamlined approvals for pipeline projects. While energy companies promise economic benefits for depressed regions, pipeline projects are upending the lives of people in their paths.As a technical and professional communication scholar focused on how rural communities deal with complex problems and a geography scholar specializing in human-environment interactions, we teamed up to study the effects of pipeline development in rural Appalachia. In 2020, we surveyed and talked with dozens of people living close to pipelines in West Virginia, Ohio and Pennsylvania.What we found illuminates the stress and uncertainty that communities experience when natural gas pipelines change their landscape. Residents live with the fear of disasters, the noise of construction and the anxiety of having no control over their own land.Appalachians are no strangers to environmental risk. The region has a long and complicated history with extractive industries, including coal and hydraulic fracturing. However, it's rare to hear firsthand accounts of the long-term effects of industrial infrastructure development in rural communities, especially when it comes to pipelines, since they are the result of more recent energy-sector growth.For all of the people we talked to, the process of pipeline development was drawn out and often confusing. Some reported never hearing about a planned pipeline until a "land man" – a gas company representative – knocked on their door offering to buy a slice of their property; others said that they found out through newspaper articles or posts on social media. Every person we spoke with agreed that the burden ultimately fell on them to find out what was happening in their communities.
Natural gas production far exceeded consumption in West Virginia in 2019 - In West Virginia in 2019, 5.9 billion cubic feet per day (Bcf/d) of marketed natural gas was produced and 0.6 Bcf/dwas consumed. No other state had a higher ratio of natural gas production to consumption in 2019. West Virginia’s natural gas production ranked 6th out of the 50 states in 2019, according to the U.S. Energy Information Administration’s (EIA) Natural Gas Annual. West Virginia ranked third for proved natural gas reserves in 2019, behind only Texas and Pennsylvania.In 2019, only 10% of the natural gas produced in West Virginia was consumed in the state. The industrial sector accounted for 37% of the natural gas that was delivered to consumers in West Virginia, followed by the residential and commercial sectors, which each accounted for 24%.The electric power sector, the largest natural gas-consuming sector nationwide, accounted for 15% of the natural gas deliveries in West Virginia in 2019. The natural gas that is not consumed in state moves through an extensive pipeline network to other states, often those in the Northeast, or is stored underground. About 240 Bcf of natural gas working storage capacity is located in West Virginia, which is 5% of the Lower 48 states’ total natural gas working storage capacity.Electricity generation from natural gas has displaced coal-fired generation in many parts of the nation, but the shift has been less noticeable in West Virginia. Coal-fired power plants accounted for 91% of the electricity generated in West Virginia during 2019, a larger share than in any in other state, although it was coal-fired generation's lowest share in more than 20 years. Natural gas and wind each accounted for about 4% of West Virginia’s power sector electricity generation in 2019. Additional state-level analysis for all types of energy is available in EIA’s State Energy Portal.
WV Office of Oil and Gas Short on Inspectors - West Virginia has a lot of gas wells—giant horizontal fracking wells, smaller conventional wells and old gas and oil wells that have been abandoned.The state Office of Oil and Gas (OOG), within the state Department of Environmental Protection, reports West Virginia has approximately 60,000 active wells and about 15,000 abandoned wells under its jurisdiction.According to its website, OOG “is responsible for monitoring and regulating all actions related to the exploration, drilling, storage and production of oil and natural gas.” The staff at OOG includes an inspection staff, which responds to complaints and gathers information at well sites.You would think, given the size of the state’s gas and oil industry, that the inspection unit would be large and well-funded, but it is not. In fact, just the opposite.The OOG is funded primarily through permitting ees, but as the industry has slowed down and fewer wells are needed to produce more gas, the funding has been “significantly reduced,” according to OOG.As a result, the size of the inspection staff has steadily declined from 40 to just 11. That is 11 field inspectors for 75,000 active and abandoned wells.The West Virginia Surface Owners’ Rights Organization and several state lawmakers are alarmed by that ratio. Delegate Evan Hansen (D-Monongalia) and Senator Bill Ihlenfeld (D-Ohio), along with the Surface Owners are proposing a $100 per year fee on every well that has not yet been plugged to fully fund OOG. “There is a range of public health and environmental concerns if oil and gas wells and the tanks that store the fluids from those wells are not properly regulated,” Hansen said.
WV should beef up staff of gas, oil inspectors (Opinion) - West Virginia has a lot of gas wells — giant horizontal fracking wells, smaller conventional wells and old gas and oil wells that have been abandoned. The Office of Oil and Gas, within the state Department of Environmental Protection, reports that West Virginia has approximately 60,000 active wells and about 15,000 abandoned wells under its jurisdiction. According to its website, Oil and Gas “is responsible for monitoring and regulating all actions related to the exploration, drilling, storage and production of oil and natural gas.” The staff at Oil and Gas includes an inspection staff, which responds to complaints and gathers information at well sites. You would think, given the size of the state’s gas and oil industry, that the inspection unit would be large and well-funded, but it is not. In fact, it’s just the opposite. Oil and Gas is funded primarily through permitting fees but, as the industry has slowed down and fewer wells are needed to produce more gas, the funding has been “significantly reduced,” according to Oil and Gas. As a result, the size of the inspection staff has steadily declined from 20 to just 14. And, with anticipated staff movement, that number will be reduced to 11. That will be 11 field inspectors for 75,000 active and abandoned wells. The West Virginia Surface Owners’ Rights Organization and several lawmakers are alarmed by that ratio. Delegate Evan Hansen, D-Monongalia, and Sen. Bill Ihlenfeld, D-Ohio, along with the surface owners, are proposing a $100-per-year fee on every well that has not yet been plugged, to fully fund Oil and Gas. “There is a range of public health and environmental concerns, if oil and gas wells and the tanks that store the fluids from those wells are not properly regulated,” Hansen said Thursday on Talkline. The gas industry opposes the annual fee. One industry official told me the majority of the existing gas wells are “marginal wells” that might net only a few dollars a day in profit. One possible solution would be to use a portion of the severance tax to hire more inspectors. Given the size and importance of West Virginia’s gas industry, having only a handful of field inspectors is woefully short of what is necessary for Oil and Gas to do its job properly. How and where to find the funding is a public policy matter, and it is one the Legislature should seriously consider in the session that starts next week.
Diversified Gas & Oil announces opening of gas control center in Charleston — Diversified Gas & Oil Corporation announced the opening of its state-of-the-art natural gas control center in its Charleston regional office. The new facility will initially support the monitoring of the Cranberry Pipeline network, which transports 70 million mcf (thousand cubic feet) of natural gas per day across approximately 3,000 miles of gathering, midstream and transmission pipeline in West Virginia, the company said in a news release Tuesday.
U.S. natgas jumps 11% on colder weather outlook, rising demand (Reuters) - U.S. natural gas futures soared over 11% on Monday to a two-month high as a major winter snowstorm battered the Northeast and with forecasts suggesting much colder weather and higher heating demand over the next two weeks than previously expected. Commodity traders are watching closely for extraordinary price moves after a series of volatile moves in numerous markets attributed to retail traders using social network Reddit. Those traders were responsible for big moves in smaller stocks in the last several days, while a big swing in silver prices had investors concerned that those traders were starting to migrate to commodities markets. Silver prices were up more than 11% earlier on Monday. Front-month gas futures rose 28.6 cents, 11.2%, to settle at $2.850 per million British thermal units, their highest settle since Dec. 1 and their biggest daily percentage gain since September. "The shift in the forecasts during the past couple of days has been dramatic with consensus of views now favoring some extreme cold due to move across the country later this week and continuing through next week and likely beyond," Gas stockpiles last week were 9.3% above the five-year average. Energy traders said they have not heard that Reddit users were having much of an impact on the gas market, a much bigger asset than individual equities. However, the U.S. Natural Gas Fund (UNG) was also having a big day with daily volume near 9.1 million lots traded versus a daily average of around 5.1 million lots over the past year. Exchange-traded funds are viewed as more vulnerable to herd-like activity than underlying futures contracts. "I would not rule out that the Reddit crowd is having some impact - possibly in pushing up volumes in UNG - but we're used to seeing lots of volatility in the gas market." In 2020, gas futures rose or fell over 10% in intraday trade a little more than once a month on average. Data provider Refinitiv projected average gas demand, including exports, would rise from 128.4 billion cubic feet per day (bcfd) this week to 138.1 bcfd next week as the weather turns colder and heating use increases. That was much higher than Refinitiv's outlook on Friday.
Wild Intraday Pricing Behavior Ends with Natural Gas Futures Nearly Flat; Cash Still Strong Natural gas futures settled nearly flat on Tuesday, but not before the March Nymex contract surged over the $3.00/MMBtu threshold. The prompt month reached an intraday high of $3.005 as the frigid air blanketing much of the eastern United States this week was seen continuing through at least the first half of the month. However, with the latest run of the European weather model erasing a decent chunk of projected demand, the March contract retreated back to a $2.845 settlement. April closed the day at $2.818. Spot gas continued to strengthen, with prices nearing $15.000 in New England. NGI’s Spot Gas National Avg. climbed 44.5 cents to $3.750. [Plan for natural gas pricing 10 years out with NGI’s Forward Look – forward curve data.] Weather models made huge changes to the colder side over the weekend and on Tuesday, continued updates added demand to the 15-day outlook. The European model gained 23 heating degree days (HDD) for Saturday (Feb. 6) through Feb. 16. The midday American Global Forecast System, meanwhile, added another 5 HDDs, with the model showing a frigid pattern across much of the northern half of the country during that time period, including bouts of subfreezing air into Texas and the South, according to NatGasWeather. “With the supply/demand balance already tight, the natural gas markets have been impatiently waiting for sustained winter cold to arrive, and this is the first time the past two winters it’s likely to finally come through,” NatGasWeather said.
U.S. natgas futures fell 2% on forecasts for less heating demand next week (Reuters) - U.S. natural gas futures fell 2% on Wednesday on forecasts for less heating demand next week than previously expected. That small decline comes despite forecasts for a little more heating demand this week and an outlook that continues to call for temperatures to remain well below normal across much of North America through late February. Front-month gas futures fell 5.6 cents, or 2.0%, to settle at $2.789 per million British thermal units. In the spot market meanwhile, cold weather boosted next-day gas NG-CG-BS-SNL and power EL-PK-NPMS-SNL in New England to its highest since December 2019. It also took gas at the Henry Hub benchmark NG-W-HH-SNL in Louisiana, the Dominion South hub NG-PCN-APP-SNL in southwest Pennsylvania and the AECO hub NG-ASH-ALB-SNL in Alberta, Canada, to the highest since March 2019. Data provider Refinitiv said output in the Lower 48 U.S. states has averaged 89.8 billion cubic feet per day (bcfd) so far in February. Traders said that was down from 91.0 bcfd in January, due in part to the freezing of some wells. Output hit an all-time monthly high of 95.4 bcfd in November 2019. With colder weather coming, Refinitiv projected average gas demand, including exports, would rise to 139.8 bcfd next week from 127.4 bcfd this week. That forecast for next week was lower than Refinitiv's outlook on Tuesday. The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants averaged 10.7 bcfd so far in February, up from January's 10.4 bcfd average and on track to tie December's 10.7 bcfd record high. That LNG record came as buyers around the world purchased near record amounts of U.S. gas because prices in Europe and Asia remain much higher than in the United States.
US working natural gas volumes in underground storage decline 192 Bcf: EIA | S&P Global Platts -- A string of massive weekly US natural gas storage withdrawals, starting with the 192 Bcf pull reported Feb. 4, have the potential to unravel recent forecasts, and prompt stocks to enter next year's heating season more than 600 Bcf below the five-year average, marking a dramatic year over year reversal. Natural gas storage inventories fell 192 Bcf to 2.689 Tcf for the week ended Jan. 29, according to the US Energy Information Administration. The withdrawal was below the 195 Bcf pull an S&P Global Platts' survey of analysts expected, but it proved to be the largest weekly draw of the heating season. Storage volumes now stand 41 Bcf, or 1.5%, more than the year-ago level of 2.648 Tcf and 198 Bcf, or 7.9%, more than the five-year average of 2.491 Tcf. The NYMEX Henry Hub March contract added 11 cents to $2.90/MMBtu in afternoon trading on Feb. 4. The upcoming summer strip, April through October, added 7 cents to average $2.93/MMBtu. S&P Global Platts Analytics' supply and demand model currently forecasts a 181 Bcf withdrawal for the week ending Feb. 5, which would shrink the storage surplus to the five-year average by 56 Bcf. Milder temperatures reduced demand by nearly 2.5 Bcf/d. Unsurprisingly, residential and commercial demand paced the losses, averaging about 2.2 Bcf/d below the prior week. Moreover, gas-fired power generation fell about 600 MMcf/d as wind generation ramped up. A draw of at least 230 Bcf looks probable for the week ending Feb. 12 as artic temperatures are forecast to blanket much of the country. It would measure nearly 100 Bcf stronger than the five-year average. A recent cold snap in both the Midwest and Northeast regions has pulled hard on storage inventories. Heavy withdrawals are expected to continue with the 14-day weather forecast calling for US temperatures to average 2 degrees below normal. While the main impact of the colder temperatures is being felt in the Northeast, prices across the Southeast and Texas have also strengthened considerably this week due to stronger Henry Hub prices, which rallied 19 cents on Feb. 1. The trickle-down impacts of the prolonged heavy withdrawals pushed the March Henry Hub contract higher as well, gaining 25 cents on Feb. 1. Prior to the cold snap, Platts Analytics was forecasting total inventories to end the winter at 1.79 Tcf. However, with the recent pull, inventories could trend closer to 1.5 Tcf. This poses issues for the Summer 2021 build, which Platts Analytics is forecasting to total 1.6 Tcf over the season.#160;
Natural Gas Futures Whipsaw After EIA Storage Figure Points to Shrinking Surplus - Natural gas traders appeared to have a bit of sellers’ remorse on Thursday, quickly sending futures prices higher after an initial dip ahead of the latest government storage report. After slipping to a $2.734/MMBtu intraday low, the March Nymex futures contract settled Thursday at $2.935, up 14.6 cents on the day. April jumped 11.7 cents to $2.889. Spot gas prices also moved higher across much of the United States, but the Northeast cratered from recent highs. NGI’s Spot Gas National Avg. plunged 29.5 cents to $3.250. After Wednesday’s move into the red, market observers were quick to criticize the decline along the Nymex futures curve. Although weather models had pulled back some of the projected demand seen for the 15-day period, the pattern overall remained far colder than normal. Structural demand, mainly in the form of liquefied natural gas (LNG) exports, also continued to be strong. Early Thursday, the March Nymex contract treaded water ahead of the Energy Information Administration’s (EIA) weekly storage inventory report. Ahead of the report, analysts had pegged the withdrawal coming in the lower 190 Bcf range. NGI had called for a steeper pull of 197 Bcf. A minute before the EIA print crossed trading desks, the prompt month dipped into negative territory, trading at $2.788, off one-tenth of a cent. However, once the EIA’s 192 Bcf draw hit the screen, March futures recovered to $2.806.
Polar Vortex Drives Massive Gains for Natural Gas Forwards, but Rally Loses Momentum - Massive snowstorms and intensifying frigid air in the coming weeks amped up the gains for natural gas forwards in the final days of January into early February. March prices averaged 19.0 cents higher for the period, while solid export demand seen this summer (April-October) lifted the strip an average 8.0 cents, according to NGI’s Forward Look. Smaller increases were seen for next winter (November 2021-March 2022), but prices were barely changed for the summer 2022 months. Although this winter was heading toward one of the warmest on record, a string of bitter storms that started circulating through the Lower 48 in late January have revived demand and fueled prices. The latest weather system was forecast to push into the Rockies and Plains into Friday, then spread across the northern and eastern United States, according to NatGasWeather. The forecaster said daytime temperatures this weekend may fall close to zero in some areas, while overnight lows in North Texas and the South could fall into the 20s. What’s even more impressive, though, is the Arctic blast that’s forecast to follow. Bespoke Weather Services said even after trending colder on Thursday, weather models intensified the biting weather on tap beginning over the weekend. The forecaster added a decent chunk of demand to its outlook, but it said the weather model consensus suggests that may not be cold enough. The issue is the development of a “very cold” Arctic air mass in Canada, which is forced fully into the United States underneath the strong North Atlantic Oscillation block on the Atlantic side, according to Bespoke. This block had been forecast to wane after mid-month, but the timing has slowed, keeping colder momentum going for longer. However, potential sentiment wary of $3.00 prices may limit upside price realization over the next seven to 10 days. Indeed, after an early run past $3.050, the March Nymex contract settled Friday at $2.863, off 7.2 cents from Thursday’s close. April fell 4.8 cents to $2.841. NatGasWeather said the sell-off aligned with the European weather model’s afternoon run, which not only trended a bit milder for the upcoming week by stalling the frigid cold’s arrival into the South and East by a few days, but also by not being quite as cold. Regardless, the outlook is still a “massive” 110 heating degree days colder than normal, according to the forecaster.
Marathon to fund projects in southwest Detroit to settle refinery emissions violations — Marathon Petroleum Co. will invest more than $500,000 into community projects and pay the state nearly $82,000 in fines as part of a consent order finalized this week to settle emissions violations. The state Department of Environment, Great Lakes,and Energy on Wednesday released the final terms of its agreement with the southwest Detroit refinery that includes an anticipated investment of $539,000 into environmental safeguards for the neighborhood in the 48217 ZIP code. The agreement, signed Jan. 22, lays out costs that exceed what was an anticipated $360,000 investment in a tentative deal from August. The order was effective on Monday. The majority of the supplemental funding — or about $500,000 — will go toward installing an air filtration system at Mark Twain School for Scholars in southwest Detroit. The school is located about two miles from the refinery in the community that ranks among the state's most polluted.
In pushing for Line 5 shutdown, Bad River Band points to alternative route - The Chippewa tribe in northern Wisconsin says Enbridge could reduce the risk to the Great Lakes by diverting Line 5 oil to another line that runs south to Illinois. As legal battles continue over Enbridge’s Line 5 pipeline, tribal leaders in Wisconsin say the company is ignoring a safer alternative that’s already in the ground — though the company disagrees. “The notion that Enbridge is somehow going to be stranded without Line 5 is ludicrous,” said Mike Wiggins, tribal chair for the Bad River Band of Lake Superior Chippewa, whose reservation on the south shore of Lake Superior is crossed by Line 5. The 30-inch pipeline originates in Superior, Wisconsin, and carries crude oil 645 miles across Wisconsin and Michigan to Sarnia, Ontario. Michigan Gov. Gretchen Whitmer recently ordered Enbridge to shut down the pipeline where it crosses the Straits of Mackinac, citing risk to the Great Lakes. As the company seeks permits for its proposed reroute south of the reservation, Bad River Band leaders say the company is failing to acknowledge the potential to decommission the 67-year-old pipeline altogether and divert its contents through other routes. Line 5 is part of a network of Enbridge pipelines called the Lakehead System. As Line 5 cuts east and then south around Lake Michigan, Line 61 runs south from Superior into Illinois before connecting with smaller lines that cross Indiana and Michigan and ultimately reach the same destination: Sarnia, Ontario. Line 61 is newer and larger — the 42-inch pipeline was completed in 2009 and has already undergone multiple upgrades and expansions. The line carries about 996,000 barrels per day to Pontiac, Illinois — about 75% of its capacity. “The elephant in the room is that Enbridge has invested heavily in their route from Superior down through Chicago,” Wiggins said, in contrast with Line 5, which he calls “the forgotten pipe.” The environmental risk posed by the pipeline was highlighted in August 2019 when tribal officials discovered 49 feet of Line 5 unearthed less than 5 miles from Lake Superior. The pipeline itself has contributed to the erosion of a steep bank as an oxbow is forming, according to a February 2020 report from the Bad River Natural Resources Department.
Michigan grants Enbridge key permits to build Line 5 tunnel under Straits --Enbridge Energy is one step closer to building a tunnel to transport petroleum beneath the Straits of Mackinac, after Michigan environmental regulators approved key permits for the Line 5 project. The decision by the Michigan Department of Environment, Great Lakes and Energy comes months after Gov. Gretchen Whitmer ordered the pipeline to shut down this May, underscoring the complicated road ahead for both Enbridge and its detractors in Michigan. In an announcement Friday, state officials acknowledged wide-ranging public concerns about the tunnel, but said state law limited their nine-month review to a narrow question: Will the tunnel project comply with Michigan’s environmental laws ? They concluded the answer is yes, and granted Enbridge permits to discharge wastewater into the Great Lakes and conduct its tunnel-building work in protected wetlands. “Although this proposed tunnel project has illuminated numerous related policy issues, the basis for our decision is required to be limited to compliance with the relevant environmental statutes created by our legislature,” said Liesl Clark, director of the Michigan Department of Environment, Great Lakes and Energy, in a statement. Environmentalists, tribal leaders and others who oppose the tunnel plan had urged the agency to go beyond a simple review of construction and operation impacts and consider broader questions impacts on Michigan’s environment, such as the climate implications of approving new fossil fuel infrastructure.
Burnett Oil Seeks Permit to Drill in Florida’s Big Cypress National Preserve -Conservation groups sent a letter to state and federal agencies today opposing Burnett Oil Company’s request to the state of Florida for permits to develop oil infrastructure to facilitate new oil drilling in the Everglades, inside Big Cypress National Preserve.The permits would allow the company to construct oil wells and access roads in wetlands and Florida panther habitat.In its final days, the Trump administration approved the state of Florida’s request to assume the federal government’s Section 404 permitting authority under the Clean Water Act.While Big Cypress National Preserve is a unit of the national park system, some of the oil and gas beneath the preserve is privately owned. Burnett Oil Company — which according to the application package, leases from Collier Resources Company the right to explore for and extract oil — is planning further harmful oil and gas activities inside Big Cypress.The company’s seismic testing operations in 2017 and 2018 severely damaged wetlands and cypress trees in the delicate ecosystem, a crucial habitat for the endangered Florida panther, Florida bonneted bat and other imperiled species.Burnett Oil’s hunt for oil created massive soil ruts — some as deep as two feet — altering natural vegetation, wetland soils and hydrology in this incredibly important part of the River of Grass. This damage can still be seen in the preserve today. Expanding oil infrastructure inside the country’s treasured public lands would be inconsistent with the climate initiatives being championed by the Biden-Harris administration.
Burnett Oil Inching Towards Drilling At Big Cypress National Preserve -- An oil company that in 2017 and 2018 did seismic testing in a search for oil at Big Cypress National Preserve has applied for Florida permits to construct well pads and access roads in the preserve, a precursor to additional permitting that could allow the company to drill there. Burnett Oil Co. filed the initial permitting applications on January 22. However, even if the state approved those requests the company would still need an environmental resource permit from the Florida Department of Environmental Protection and an access permit from the National Park Service before it could commence drilling.Pedro Ramos, superintendent of Everglades National Park to whom Big Cypress Superintendent Tom Forsyth reports to, declined to discuss the matter, and Forsyth did not immediately respond to questions pertaining to the project, which reportedly calls for two pads and access roads up to 33 feet wide and approximately 1.5 miles long.Officials from the National Parks Conservation Association and Natural Resources Defense Council were drafting a press release Tuesday evening and had no immediate comment.Matthew Schwartz, executive director of the South Florida Wildlands Association, was greatly concerned by the company's move. He said Forsyth told him earlier Tuesday that there were two pads involved, and each would have several wells. "This is coming as no surprise that Burnett is doing this," Schwartz said during a phone call Tuesday evening. "I'm extremely disappointed that they're moving forward on this. I'm very curious to see how the Biden administration responds, since they just recently put out a statement regarding a moratorium on oil and gas projects on federal lands. The problem here is that although the land is federally owned, these are not federal oil rights. They're privately owned by the Collier family. A split estate."
US crude exports hit record high in 2020 - US crude exports reached a record high in 2020, showing resilience in the wake of the Covid-19 pandemic. Total domestic crude exports averaged about 3.2mn b/d in 2020, up from 2.98mn b/d in 2019, the previous record high, according to trade data released today by the US Census Bureau and monthly figures from the Energy Information Administration. In December, US crude exports averaged 3.35mn b/d, up by about 23pc from 2.73mn b/d in November with China regaining its position as the top destination. US crude exports destined for China averaged about 719,000 b/d in December. China had been the top destination for US crude loaded in May-October, but its intake fell sharply in November when India took the top spot. India in December was the second top destination for US crude, with about 560,000 b/d, a record high for US exports headed to that country. State-controlled Indian refiners in December expanded their import portfolios to include more US grades, with IOC now including West Texas Light (WTL) as an eligible grade in their weekly import tenders and Hindustan Petroleum (HPCL) issuing a unique tender that sought Mars for its Vizag refinery in January and February. Meanwhile, US ultra-low sulphur diesel (ULSD) exports to Mexico surpassed year-earlier levels in December as overall shipments edged higher. Total US gasoline and diesel exports climbed in December from the previous month while trailing volumes shipped in December 2019. But diesel shipments to Mexico, the largest foreign customer of US fuels, reported the largest year-to-year increase of any major fuel. Shipments increased by 20pc from November and by 16pc from December 2019 to about 295,000 b/d. Total US ULSD exports averaged 920,000 b/d, higher by 20pc from the previous month and lower by 7.1pc compared to December 2019. Exports to Mexico, Chile and France all increased compared to the previous year, while Brazilian, Colombian and Peruvian shipments fell. Total conventional gasoline exports averaged about 930,000 b/d in December, higher by 9.7pc from November but 2.8pc lower than December 2019.
U.S. drillers add oil and gas rigs for 11th week in a row -Baker Hughes (Reuters) - U.S. drillers this week added oil and natural gas rigs for an 11th week in a row for the first time since June 2017 as crude prices hit pre-pandemic highs. The U.S. oil and gas rig count, an early indicator of future output, rose by eight to 392 in the week to Feb. 5, the highest since May, according to data on Friday from energy services firm Baker Hughes Co. Despite rising for six months in a row, that count is still 398 rigs, or 50%, below this time last year. The total count, however, has soared since hitting a record low of 244 in August, according to Baker Hughes data going back to 1940. U.S. oil rigs rose four to 299 this week, also their highest since May, while gas rigs rose four to 92, their highest since April, according to Baker Hughes data. Coronavirus travel restrictions last year crushed oil demand and prices, but U.S. crude futures climbed over $57 a barrel this week, their highest since January 2020. [O/R] The pace of recovery in output in the world’s top producer, however, is slow. The government this week projected U.S. crude output will not to top its 2019 record of 12.25 million barrels per day until 2023. Production in 2020 tumbled 6.4% to 11.47 million bpd. Looking forward, U.S. crude futures were only trading around $55 a barrel for the balance of 2021 and $51 for calendar 2022, which could prompt some producers to reduce activity in the future. Most energy firms plan to continue cutting spending for a third year in a row in 2021 as they keep focusing on improving earnings rather than increasing output. U.S. financial services firm Cowen & Co said the 45 independent exploration and production (E&P) companies it tracks plan to cut spending by about 6% in 2021 versus 2020. That follows capex reductions of roughly 48% in 2020 and 12% in 2019.
Rep. Jay Dean files bill to protect access to natural gas from local bans - State Rep. Jay Dean has filed a bill to protect consumers access to natural gas and prevent local governments from prohibiting or restricting the use of natural gas or propane in residential or commercial buildings. According to a press release, House Bill 1501, dubbed “the Natural Gas Protection Act,” is meant to ensure local bans on natural gas and propane usage do not happen in Texas. “These local bans on natural gas are misguided and have no place in Texas,” said Rep. Dean. Citing cities such as Berkeley, CA, the press release said as many as 50 cities across the country have studied or passed local natural gas or propane bans. “Government should not remove consumers’ access to the affordable, reliable energy of natural gas. Especially now, we should be expanding consumers’ options and supporting all aspects of our state’s economy. A ban on natural gas would do the opposite.” Rep. Dean added, “The energy industry in Texas has already been hit hard this past year. We need to support this industry that powers our daily lives, not kick them while they’re down. Plus, consumers want more, not fewer, affordable and energy-efficient fuel options, like natural gas. I am proud that HB 1501 protects both consumer choice and the natural gas industry here in Texas.”
Will Texas go along with Joe Biden's oil and gas cleanup plans? - In East Austin, one plot of land near a decommissioned natural gas and oil-fired power plant now produces fruits and vegetables in a community garden. In South Houston, land that was contaminated by an old landfill will soon be occupied by a commercial solar farm.Based on his recent executive order on climate, President Joe Biden wants to see more projects like these that combine efforts to reduce greenhouse gas emissions with jobs cleaning up contaminated sites that are disproportionately located in communities of color. In Texas, the president’s directive to prioritize such projects could present opportunities for neighborhoods that have been left with the toxic legacies of the early days of the oil, gas and chemical industries. According to the Environmental Protection Agency, Texas has 69 Superfund sites, which are extremely toxic sites the federal government has prioritized for cleanup. The state also has several recently mothballed natural gas plants and thousands of old and abandoned oil and gas wells.“Such work should include efforts to turn properties idled in these communities into new hubs for the growth of our economy,” Biden’s order said. It directs a slew of federal agencies to identify and coordinate federal resources to revitalize the economies of communities where coal, oil and gas and power plants provided jobs for decades, but now have either shuttered or could soon be jeopardized by a transition to low-carbon energy sources.But Biden’s vision is at odds with Republican leadership in Texas. Gov. Greg Abbott and the state’s GOP members of Congress have mostly criticized it for prioritizing renewable energy sources over the oil industry, which remains a pillar of the state’s economy.“Texas is not going to stand idly by and watch the Biden administration kill jobs in Midland, in Odessa or any other place across the entire region,” Abbott said last week during a visit to the Permian Basin, one of the most productive oil fields in the world. He signed his own executive order that directs state agencies to “use all lawful powers and tools to challenge any federal action” that threatens the energy sector in Texas.
Disturbing the Peace - Fort Worth Weekly - In early January, the rumblings of 18-wheelers brought back memories that Bobby Pickard would prefer to forget. A decade ago, the multinational gas company EnCana agreed to a truce of sorts. Instead of sending semitrucks within feet of Pickard’s property — the vehicles kicking up fine dust, dirtying the air, and damaging nearby roads — EnCana leaders diverted their water-laden trucks down nearby 4500 White Settlement Rd., which is devoid of residences. At the time, it was an all-too-rare victory against Big Oil (“ Trail Dust,” Nov. 2008). That informal deal appears to be off.On a recent frigid morning, Pickard pointed east and down his fence line toward a long stretch of dirt road.“They usually send the first round of trucks around 9:30 a.m.,” he said. “To access this road, they have to drive past school buses and children. It looks so outrageous.” The roads that lead to the dirt road, as he showed me later that morning, are also used by the residents of Chisholm Heights. Pickard said the massive trucks, which can weigh 80,000 pounds when laden with water, are slowly destroying the residential streets. Pickard said he enjoys the relative peace and quiet of living on the unincorporated land just northeast of Weatherford, but those freedoms also mean that road repairs would come from the pockets of nearby residents, not the oil company. “They do whatever they want to because they can.” A sign near the entrance of the dirt road that leads behind Pickard’s home and several other houses reads, “Bedrock Production, LLC, Beggs Lease.” Pickard believes that the Houston-based oil company recently took over ownership of the wells from EnCana. The fact that the trucks changed delivery routes 10 years to the day suggests that Bedrock Production did not want to renew the contract that allowed the trucks to access the well sites via 4500 White Settlement Rd.
Oil, gas and earthquakes: The role of wastewater disposal wells and fracking - (Yahoo News video) - Oil, gas and earthquakes: The role of wastewater disposal wells and frackingChesapeake Energy cuts 15% of workers as it emerges from bankruptcy (Reuters) - U.S. shale oil and gas producer Chesapeake Energy Corp plans to cut 15% of its workforce, an email sent to employees revealed, as it closes on new financing that will allow it to emerge from bankruptcy court protection next week. Once the second-largest U.S. natural gas producer, Chesapeake was felled by a long slide in gas prices. The company is “resetting our business to emerge a stronger and more competitive enterprise,” according to the email to employees by Chief Executive Doug Lawler dated Tuesday, and reviewed by Reuters. Most of the 220 layoffs will happen at the Oklahoma City headquarters, the email said. Chesapeake on Tuesday said it planned to raise $1 billion in notes to complete its bankruptcy exit. The company’s bankruptcy plan was approved by a U.S. judge last month, giving lenders control of the firm and ending a contentious trial. Chesapeake filed for court protection in June, reeling from overspending on assets and from a sudden decline in demand and prices spurred by the coronavirus pandemic.
Appeals court refuses to stop construction of oil pipeline (AP) — The Minnesota Court of Appeals on Tuesday denied a request by two American Indian tribes to shut down construction of a contentious crude oil pipeline project in northern Minnesota. Opponents of the Enbridge Line 3 replacement project, led by the Red Lake Band of Chippewa and White Earth Band of Ojibwe, said in their petition that construction would destroy land that is protected by treaty agreements and would violate cultural and religious rights. Enbridge said the petition had no merit and did not “recognize the exhaustive and meticulous review” of the project. The Minnesota Public Utilities Commission on Dec. 9 denied the tribes’ motion to halt construction and on Dec. 23 denied a petition for reconsideration of that decision. Other cases seeking to halt the project remain in the appeals court and the tribes had asked the court to intervene in the meantime. Line 3 starts in Alberta, Canada, and clips a corner of North Dakota before crossing northern Minnesota en route to Enbridge’s terminal in Superior, Wisconsin. The 337-mile (542-kilometer) line in Minnesota is the last step in replacing the deteriorating pipeline that was built in the 1960s.
Line 3 will improve safety and provide a huge economic benefit to Minnesota - We write in response to a recent Community Voices commentary by Caroline Frischmon against the Enbridge Line 3 Pipeline. It is important that readers look at the full picture. On Dec. 1, after six years of permitting, reviews and studies, construction began to replace Line 3 and to date, nearly 20 percent of the project is complete. The author compared the aging pipeline that was built in the 1960s to a friend’s old car and stated that fixing something past its prime is worthless. But just look around you anytime you drive across Minnesota and you will see that we are constantly repairing and addressing aging infrastructure. We fix roads, replace pipes and upgrade power utilities to make sure they are working at full capacity and are as safe as they can be. Line 3 is no different. This pipeline was built in the 1960s and under the Obama/Biden administration it was agreed that Line 3 needed to be replaced in order to improve safety. In this piece, the author mentions that the pipeline is in disrepair and that leaks could be catastrophic – two of the primary reasons why this project is so crucial. Left untouched, the risks are great. While we always need to learn more about alternative and clean energy, for the time being, oil is here to stay and we need to do what we can to ensure that it’s transported safely. Many Line 3 opponents have turned their vitriol on Gov. Tim Walz. Thankfully, Walz has shown that he understands the need to both plan for the future and make sure we have a safe and efficient way to get from today to what is next. There will be a time when we use less oil, but we also need to make sure we have the right path to get there.
Biden Revokes Oil Drilling Permits for Additional Review -The Biden administration is revoking dozens of invalid drilling permits issued by agency workers without the approval of political appointees, despite a temporary order for such reviews.The Interior Department on Friday notified affected oil and gas producers that roughly 70 permits governing onshore wellswere improperly issued and that the companies need to seek new approvals.Although the companies may swiftly obtain the new authorizations, the move is likely to further sour relations between the Biden administration and the oil industry, which is bearing the brunt of the president’s early efforts to fight climate change. President Joe Biden canceled a permit for the Keystone XL oil pipeline his first day in office, and on Wednesday he ordered a pause in the sale of new oil and gas leases on federal land.The drilling permits fell afoul of a temporary Interior Department order that for two months puts those decisions in the hands of top agency officials, rather than delegating them to workers in Bureau of Land Management offices around the country. “Approximately 70 permits were approved without proper review following the issuance of a department directive that temporarily elevates review of permitting activities,” said Interior spokeswoman Melissa Schwartz. “Operators have been notified that those applications for permits to drill must be resubmitted for appropriate and timely review. Interior continues to approve permits and will transmit final decisions as soon as possible.” The approvals were invalid under the Interior Department’s Jan. 20 secretarial order requiring agency brass to authorize drilling permits, easements, hiring and other decisions, according to a notification letter seen by Bloomberg News.Companies also are being assured they do not face penalties for any drilling or other activities they started under the invalidated permits, though they are being ordered to cease those operations while seeking new approvals.Top Interior Department officials have used the temporary new process to approve dozens of drilling permits since Jan. 20, when Biden was inaugurated. At least 33 have been authorized for offshore oil and gas wells in the Gulf of Mexico, according to a Bloomberg News review of government data. The permit changes are separate from agovernment pause on new oil and gas leasing that was ordered by Biden on Wednesday. That leasing moratorium doesn’t affect permitting and other activity on existing oil and gas leases.
U.S. Oil Executives Pushing ‘Clean Shale’ as Joe Biden Mounts Climate Attack – American oil executives began a pushback against some of President Joe Biden’s climate policies by making the case that fossil fuels from U.S. shale have a lower carbon footprint than imports. Since taking office this month, the Biden administration has made swift moves to pause sales of oil and gas leases on federal land, cancel the Keystone XL pipeline and expand the government’s fleet of clean-energy vehicles. The U.S. oil industry, already under pressure from low prices and investor pessimism, is particularly concerned about limiting access to resources on federal acreage in New Mexico, Wyoming, Alaska and the Gulf of Mexico. “We don’t think it’s good policy to be overly restrictive on federal land,” Chevron’s Chief Financial Officer Pierre Breber said in an interview with Bloomberg TV on Friday. “That will just move energy production to other countries. We know that we can develop energy in this country responsibly.” America is the world’s biggest consumer of crude and any restrictions of domestic production will mean more will have to be shipped in from other countries, which may produce higher-carbon oil and have less stringent environmental laws, the argument runs. U.S.-produced shale emits less carbon per barrel than the global average for both onshore and offshore, according to Rystad Energy. “Reducing domestic production will not only raise costs at the pump, but will also ensure international producers, operating with fewer environmental regulations, will meet the global demand for petroleum products,” Pioneer Natural Resources Co.’s Chief Executive Officer Scott Sheffield said by email. “That scenario is inconsistent with the administration’s choice to rejoin the Paris Accord.” The Oil-Climate Index, a 2016 model funded by the Carnegie Endowment, shows that shale plays including the Eagle Ford in South Texas and the Bakken in North Dakota have some of the lowest emissions per barrel globally. But key to shale’s climate impact is how operators manage natural gas that is produced alongside the crude and the industry has come under intense criticism for excessive flaring and venting of methane, an extremely harmful practice.
Steil says he has introduced a bill to overturn Biden's halting of construction on Keystone Pipeline expansion – As he indicated he would, U.S. Rep. Bryan Steil, R-Wis., on Tuesday announced that he had introduced a bill in Congress that, if passed, would overrule President Joe Biden’s executive order and allow construction on the Keystone XL Pipeline expansion to continue.However, with House Speaker Nancy Pelosi, a Democrat, in control of what comes up for a vote, it is unlikely the bill will see a vote any time in the near future. According to the company that owns the pipeline, TC Energy, as many as 13,200 jobs (more than 10,000 of which were American) equaling more than $2 billion in total payroll were immediately lost and/or will never be created because of the order.“I’ve spoken to Wisconsin workers who were laid off by Joe Biden on Jan. 20. These men and women just want to do their jobs, and President Biden’s order has put them out of work. If the President will not reverse course and allow the Keystone XL Pipeline’s construction to continue, Congress must act. Today, I am taking action,” Steil said in a statement Tuesday. “The Keystone XL Pipeline provides good-paying jobs for Wisconsin workers, employs thousands across the country and shores up American energy production. I am working to ensure these men and women receive a paycheck and get back to work. At a time when unemployment is far too high, we need to put in place policies that create jobs. I urge Speaker Pelosi to bring this bill to a vote immediately.”
GOP moves to save Keystone XL, sink Democrats on energy -- Wednesday, February 3, 2021 --House and Senate Republicans readied legislation yesterday to resurrect the controversial Keystone XL pipeline from Canada into the United States by granting the needed approvals, which President Biden moved to scrap last month.
Oil, Gas Experts Differ on Effects of Closed Pipeline - Spectrum News 1 — As the pandemic keeps oil supply high and demand low, the U.S. continues its reign of energy independence for the first time since the 1950s. However, new actions by President Joe Biden have some in the industry concerned. “We are facing some really strong headwinds from the new administration out of Washington. We fear that there's going to be additional things that are going to come down the pike that are not going to be pro-industry. And as much as we advocate and make the case that natural gas is clean, and abundant and reliable, that message may not resonate in Washington,” said Mike Chadsey of the Ohio Oil and Gas Association. On his first day in office, Biden signed an executive order that included revoking a permit for the Keystone XL pipeline. The pipeline delivers as much as 800,000 barrels of oil a day from Alberta, Canada to refineries along the Texas Gulf Coast. Even without the Keystone pipeline, the U.S. relies on Canada for more than half of its imported oil.Here in Ohio, Chadsey said 200,000 people work in the state's oil and gas industry and in the last 10 years, $86 billion in private funds has been invested in our state to help in drilling, leasing, pipeline and fracking. The Buckeye State currently ranks 5th in the nation in oil production with 60,000 active oil and gas wells according to the U.S. Energy Information Administration.Dr. Brent Sohngen is a Professor of Environmental and Resource Economics at Ohio State University. He said stopping the Keystone pipeline is not expected to reduce current oil output below what we need, and that the U.S. will maintain its independence. “They XL Keystone pipeline is really a long time proposition aimed at a world there's really high oil prices. It seems like there's a lot of oil that's a lot lower cost in other parts of the world. Off the coast of Guyana, in the Gulf of Mexico, which is a lot lower cost than that, and a lot closer to those same refineries in Houston,” said Sohngen. The oil and gas industry is also concerned about another of Biden's executive orders, one that sets a moratorium on leasing federal land. Chadsey said that will restrict energy development, increase prices, impact low income families and may lead to layoffs.“And there's certainty talk about, oh well folks can just go and find another job. That sounds good but that may not be a reality. Particularly when you have generational folks who are in t his business for years and years and this is really what their passion is. This is what these communities rely on,” said Chadsey.
Colorado farmers' land polluted by pipeline leak, bemoan "toxic spaghetti" of underground network - For years, Julie and Mark Nygren have hosted school children on field trips to their farm near Johnstown. But recent visitors to their property saw what looked more like a strip mine than a farm. On a recent day, bulldozers, backhoes and large trucks drove around big piles of dirt, down and out of a pit and through the spot where the Nygrens’ house once stood. Speaking over the roar of the engines, the couple talked about the upending of their lives, starting in 2016 with the dying off of trees in front of their home, worsening health problems and the discovery in April 2019 of green liquid in a ditch 130 feet from their house. The liquid was connected to a widespread underground leak from a natural gas pipeline running below the western Weld County farm. The Nygrens are suing the pipeline’s owner and a construction company that dug in the area to put in a culvert. And the Nygrens, their lawyers and others are calling for more oversight of the thousands of miles of oil and gas pipelines under Colorado homes, schools, roads and farm land. “I call it the subterranean toxic spaghetti,” said Lance Astrella, one of the lawyers representing the Nygrens in their lawsuit against DCP Midstream Operating Co. and Mountain Constructors Inc. The “spaghetti,” or network of oil and gas pipelines, includes flowlines, gathering lines, longer transmission lines that run within the state and transmission lines that cross state lines. Flowlines, typically shorter and smaller in diameter, connect a well to surrounding equipment and are regulated by the Colorado Oil and Gas Conservation Commission. Gathering lines, the kind that spilled on the Nygrens’ farm, generally carry oil or natural gas to a collection point. Along with the larger transmission lines, they are regulated by the Colorado Public Utilities Commission and the federal government in a manner that sometimes seems as much of a labyrinth as the physical structures. A deadly house explosion in Firestone in 2017 led to tougher rules for flowlines. It was an impetus for Senate Bill 181, passed in 2019 to overhaul how oil and gas is regulated in Colorado.
Small oil spill reported near Parshall Sunday; all product recovered - The North Dakota Oil and Gas Division was notified of a spill which occurred Sunday, January 31 at the Parshall 52-1114H well, about 3 miles northwest of Parshall, North Dakota. EOG Resources, Inc reported Sunday that 300 barrels of produced water and 50 barrels of crude oil were released due to an equipment failure within containment on location. At the time of reporting all product had been recovered. A North Dakota Oil and Gas inspector has been to location and will monitor the investigation and any continued remediation.
North Dakota oil spill near Parshall under investigation– North Dakota energy officials are reporting that 2,100 gallons of oil and 12,600 gallons of produced water spilled at a well near Parshall has been recovered. State Oil and Gas Division officials say EOG Resources, Inc. reported the spill on Sunday. It was released due to an equipment failure within the containment system. Produced water is a byproduct of oil extraction and is typically taken from the well to a disposal site. A state inspector has been sent to the site to investigate and monitor the well.
Fracked With 34 Million Gallons Of Water -- February 2, 2021 - This was an extended long lateral, three sections long; one section longer than a typical two-section well in the Bakken. The Maddy Federal wells are tracked here. 32070, A/F, XTO, Maddy Federal 24X-34D, North Fork, first production, 7/20; t--; cum 253K 12/20; re-entered on December 4, 2018; TD reached on December 21, 2018; fracked 3/30/20 - 4/20/20; 33.660 million gallons of water; 93.3% water by mass;
After Court Rules Dakota Access Pipeline Operating Illegally, Dems Demand Biden It Shut Down - Five Democratic lawmakers on Friday encouraged President Joe Biden to order an immediate shutdown of the Dakota Access pipeline after the U.S. Court of Appeals for the D.C. Circuit last week delivered a victory to the Standing Rock Sioux Tribe by ruling that DAPL is operating illegally.The three-judge panel upheld a lower court's ruling that the U.S. Army Corps of Engineers (USACE) violated the National Environmental Policy Act when it granted an easement for DAPL to cross a federal reservoir along the Missouri River, less than a mile from the Standing Rock Sioux Reservation.The court ordered a full environmental impact statement examining the threats posed by the oil pipeline. The Standing Rock Sioux Tribe, as the Democrats' letter to Biden notes, "rightfully fears an oil spill could disproportionately affect their drinking water, as well as hunting and fishing rights."Standing Rock Sioux Tribe Chairman Mike Faith said in a statement that "we are pleased that the D.C. Circuit affirmed the necessity of a full environmental review, and we look forward to showing the U.S. Army Corps of Engineers why this pipeline is too dangerous to operate."Despite mandating the review, the panel did not order DAPL to stop operating. Jan Hasselman, the EarthJustice attorney representing Standing Rock, said after the ruling that "this pipeline is now operating illegally.""The appeals court put the ball squarely in the court of the Biden administration to take action," Hasselman said. "And I mean shutting the pipeline down until this environmental review is completed." Five lawmakers are now backing that call: Reps. Nanette Diaz Barragán (D-Calif.), Raul Ruiz (D-Calif.), and Raúl Grijalva (D-Ariz.) as well as Sens. Jeff Merkley (D-Ore.) and Elizabeth Warren (D-Mass.). The Democrats note that Biden has taken "bold early actions ... to prioritize climate action and environmental justice," including withdrawing permits for the Keystone XL pipeline.In addition to urging him to "build on this promising start" by shutting down DAPL during the review, they detail some of the pipeline's history, including the "egregious environmental racism" in 2016, when "North Dakota law enforcement officials violently removed protestors from the path of DAPL, many of them from the nearby Standing Rock Sioux Tribe." While former President Barack Obama—under whom Biden was vice president — denied DAPL permission to cross beneath Lake Oahe on unceded ancestral tribal lands, former President Donald Trump, the letter notes, "reversed course and granted the easement while ignoring the concerns of the Standing Rock Sioux Tribe."
Buoyed by Keystone XL, pipeline opponents want Biden to act (AP) — After President Joe Biden revoked Keystone XL’s presidential permit and shut down construction of the long-disputed pipeline that was to carry oil from Canada to Texas, opponents of other pipelines hoped the projects they’ve been fighting would be next. The Biden administration hasn’t specified what action it might take on other pipelines, but industry experts doubt there will be swift changes like the one that stopped Keystone. They say the Keystone XL move on Biden’s first day fulfilled a campaign promise and was symbolic for a president who has made climate change a national security priority and has called for a dramatic increase in cost-competitive renewable and clean-burning energy. “I think generally we can expect more rigorous environmental reviews, more scrutiny and so forth. But I would be very surprised if Biden were to take any action of the executive order type,” said Ben Cowan, an environmental law attorney who advises clients on permitting for pipelines and other energy projects. A look at some other high-profile pipeline projects and what actions Biden might take: Opponents of the Dakota Access pipeline, which carries oil from North Dakota to a shipping point in Illinois, want Biden’s U.S. Army Corps of Engineers to shut it down. A federal appeals court ruled last week that the project must undergo a more thorough environmental review, known as an environmental impact statement, but it declined to shut the line down while the review is completed. Texas-based pipeline owner Energy Transfer maintains the line is safe. But pipeline opponents say the ruling means it is operating with an invalid permit. The Army Corps faces a Feb. 10 hearing where it must tell a federal judge how it expects to proceed without a permit granting easement for the 1,172-mile (1,886 kilometer) pipeline to cross beneath Lake Oahe, along the Missouri River. The Standing Rock Sioux, who draw water from the river, have said they fear the line will someday fail and pollute the water and land.
Alberta to pursue compensation through NAFTA for U.S. decision on Keystone XL, Kenney says - Alberta Premier Jason Kenney says the province intends to seek compensation for U.S. President Joe Biden’s veto of the Keystone XL pipeline through remaining provisions of the North American free-trade agreement. Mr. Kenney has railed against Mr. Biden’s decision, which he warned sets a dangerous precedent that could imperil other cross-border pipelines. He vowed a continued fight to either convince Mr. Biden to reverse his decision or attempt to recover some of the more than $1-billion the province has committed to the project. The Alberta government would likely need the support of the pipeline owner, Calgary-based TC Energy Corp., to mount such a legal case. The company has yet to say what it plans to do, and the federal government has appeared reluctant to spend any more energy on the Keystone XL file. Mr. Kenney was asked during a Facebook Live question-and-answer session on Tuesday evening whether his government planned to sue under NAFTA. “Yes,” Mr. Kenney said. “We are absolutely going to use every legal tool at our disposal to protect our interests. This was, in my view, a clear violation of the investor protection provisions in the North American free-trade agreement.” While NAFTA has been replaced by the United States-Mexico-Canada Agreement, the previous trade agreement’s Chapter 11 provisions allowing investors to sue the U.S., Canadian or Mexican governments for compensation remain in force for three years, or until July, 2023.
As Democrats take charge in Washington, lawmakers introduce bills to stop oil drilling in ANWR - As Democrats take control of the U.S. Senate and House, lawmakers introduced legislation on Thursday to permanently protect the coastal plain of the Arctic National Wildlife Refuge from oil drilling by declaring it a wilderness area.Sen. Ed Markey, D-Massachusetts, Rep. Jared Huffman, D-California and Rep. Brian Fitzpatrick, R-Pennsylvania, introduced the legislation weeks after the former Trump administration held the government’s first-ever oil lease sale in the refuge’s 1.6-million-acre coastal plain.The administration issued leases to three small entities, primarily the Alaska Industrial Development and Export Authority, a state agency. AIDEA said it planned to hold the leases for possible future development if private partners express interest.Democratic President Joe Biden, on his first day in office, issued an order temporarily halting oil and gas activity in the 19-million-acre refuge in northeast Alaska. He has said he hopes to permanently protect the refuge. Major banks also have vowed not to finance oil and gas projects there.Republicans held sway in 2017 when Congress approved drilling in the refuge after decades of attempts by Alaska’s congressional delegation, and Republican President Donald Trump signed the provision into law. Huffman has said Alaska Republican Sens. Lisa Murkowski and Dan Sullivan need to meet with Democrats to discuss how Alaska can receive value from the federal government for the potential state revenue that will be lost if oil development in the refuge is banned.Murkowski, Sullivan and Alaska Republican Rep. Don Young have said they will fight to maintain the oil leasing program in the refuge.
Exxon Mobil reports a $20 billion loss, fourth straight quarter in the red - Exxon Mobil said Tuesday it lost $20.1 billion during the most recent quarter, its fourth-straight quarter of losses as the energy giant grapples with the pandemic's impact on the industry. Exxon said it earned 3 cents per share excluding items during the fourth quarter, which was ahead of the 1 cent profit analysts surveyed by Refinitiv expected. Revenue, however, came up short of expectations at $46.54 billion. The Street consensus was for $48.76 billion. In the same period a year earlier, the company earned 41 cents per share on an adjusted basis, on $67.17 billion in revenue. During the third quarter of 2020, Exxon lost 18 cents per share on an adjusted basis, while generating $46.2 billion in revenue. Shares of Exxon advanced 1.6% on Tuesday. "The past year presented the most challenging market conditions ExxonMobil has ever experienced," Chairman and CEO Darren Woods said in a statement. He said the company's aggressive cost-cutting measures are expected to deliver structural expense savings of $6 billion per year by 2023. "We've built a flexible capital program that is robust to a range of market scenarios and focused on our highest-return opportunities to drive greater cash flow, cover the dividend, and increase the earnings potential of our business in the near and longer term," Woods added. On Monday, Exxon announced plans to invest $3 billion in carbon capture and other emissions-cutting technology. The move is too little too late for fighting climate change, according to some, who say Exxon should have prioritized investing for the future. Peers including BP have also set net-zero targets. Oil has steadily climbed during the last year following the unprecedented demand loss from the coronavirus pandemic. U.S. West Texas Intermediate crude futures advanced more than 2% on Tuesday to trade at high as $54.96 per barrel, the contract's highest level since January 2020. Still, the energy industry continues to feel the impacts of depressed demand. Shares of Exxon are up 9% this year, but down 27% over the last 12 months through Monday's close. Rival Chevron on Friday said it lost 1 cent during the fourth quarter on an adjusted basis, compared with the consensus estimate for a 7 cent profit. Revenue also came up short of analysts' expectations.
BP reports its first full-year loss in a decade after 'brutal' year — Energy giant BP on Tuesday reported a weaker-than-expected full-year net loss, following a tumultuous 12-months in which the global oil and gas industry faced a torrent of bad news. The U.K.-based oil and gas company posted a full-year underlying replacement cost loss, used as a proxy for net profit/loss, of $5.7 billion. That compared with a net profit of $10 billion for the 2019 fiscal year. Analysts polled by Refinitiv had expected a full-year net loss of $4.8 billion. BP also posted fourth-quarter net profit of $115 million, missing analyst expectations of $285.5 million. The company said its full-year results were driven by lower oil and gas prices, significant exploration write-offs, pressure on refining margins and depressed demand. It warned the ongoing coronavirus pandemic would continue to impact its performance. "It is definitely a tough quarter at the end, I guess, of a really tough year for everyone. And our full-year results were hit hard by Covid," Bernard Looney, CEO of BP, told CNBC's "Squawk Box Europe" shortly after the results were published. "We have had the worst recession, I guess, in the world since the '40s. It was a brutal year, I think, for the oil business — negative prices, fuel demand down 14%, aviation down 50%, and of course we had adjustments to our planning prices which resulted in impairments and write-offs." BP's latest figures come as energy companies attempt to prove to investors that they have gained a more stable footing on stronger commodity prices. The oil and gas industry was sent into a tailspin last year, as the coronavirus pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-downs and tens of thousands of job cuts. It will likely become known as the worst year in the history of oil markets, the head of the International Energy Agency has previously said. The world's largest oil and gas companies are now seeking to put it behind them, pointing instead to the prospect of an economic rebound in 2021 and hopes for a fuel demand recovery in the coming months.
Exxon, BP announce billions in losses for 2020 --Both ExxonMobil and BP announced Tuesday that they had sustained major losses in 2020 amid low demand for oil due to the coronavirus pandemic. Exxon posted $22.4 billion in losses for 2020, posting a loss of $20.1 billion for the fourth quarter. According to Reuters, this was Exxon’s first annual loss. BP reported $20 billion in losses for 2020, including nearly $1.4 billion in the fourth quarter. Chevron, meanwhile, announced last month that it had lost $5.5 billion in 2020, including $665 million in the fourth quarter. During the pandemic, oil prices plummeted, particularly early in the year as demand slowed for oil amid a significant decrease in travel and foreign disputes. However, in recent months, oil prices have been recovering, and U.S. crude was selling at about $55 per share on Tuesday afternoon. Demand is expected to recover somewhat if the pandemic is brought under control. “The past year presented the most challenging market conditions ExxonMobil has ever experienced,” ExxonMobil CEO Darren Woods said in a statement. Woods added that “reorganizations” and initiatives “enabled us to respond decisively to permanently improve our cost structure, drive greater efficiencies across our businesses, and emerge a stronger company.” In October, the company announced plans to lay off about 1,900 U.S. employees. Around the same time, it was reported that BP would cut 7,500 jobs after an additional 2,500 took voluntary severance. In a statement, BP CEO Bernard Looney characterized the changes including job losses as “reinventing” the company. “The underlying operations of the company remained safe – one of our safest years – and reliable, and major new projects were brought on line,” Looney added.
Chevron and Exxon discussed merger last year after Covid pandemic devastated oil prices, reports say - The CEOs of Chevron and ExxonMobil last year discussed the possibility of merging the two companies, The Wall Street Journal reported Sunday, citing unnamed people familiar with the talks. The newspaper reported that Chevron CEO Michael Wirth and Exxon CEO Darren Woods spoke about the prospect after the Covid-19 pandemic began to negatively impact oil prices. The talks are not ongoing and were described as preliminary, according to the Journal. Representatives from the two companies declined to comment. The talks were later reported by Reuters. A merger between Chevron and Exxon would be among the largest in history, and would likely face antitrust scrutiny from President Joe Biden's Department of Justice. Both companies descend from John D. Rockefeller's Standard Oil, which was broken up by the Supreme Court in 1911. Chevron's market cap is $164 billion, and Exxon's is $189 billion, meaning that the combined company would be worth north of $350 billion. The combined firm would be the second largest oil and gas company in the world, after Saudi Aramco. Oil prices have recovered much of their losses since cratering in March, though they have remained somewhat depressed amid a slower-than-expected vaccine roll out and worries of new coronavirus variants.
Oil major Shell reports sharp drop in full-year profit, raises dividend— Oil giant Royal Dutch Shell on Thursday reported a sharp drop in full-year profit as the coronavirus pandemic took a heavy toll on the global oil and gas industry. Shell reported adjusted earnings of $4.85 billion for the full-year 2020. That compared with a profit of $16.5 billion for the full-year 2019, reflecting a drop of 71%. Analysts polled by Refinitiv had expected full-year 2020 net profit to come in $5.15 billion. For the final quarter of 2020, Shell reported adjusted earnings of $393 million, missing analyst expectations of $470.5 million. The company said it would raise its first-quarter dividend to $0.1735 per share, an increase of 4% from the previous quarter. Shell CEO Ben van Beurden described 2020 as an "extraordinary" year. "We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers and communities. We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy," van Beurden said in a statement. Income attributable to Shell shareholders collapsed by 237% to a loss of $21.7 billion in full-year 2020, down from a profit of $15.8 billion in full-year 2019. Shell said this was the first full-year headline loss since the unification of Royal Dutch Petroleum Company and Shell Transport & Trading Company to one parent company in 2005. Energy supermajors endured a dreadful 12 months by virtually every measure in 2020 and the industry faces significant challenges and uncertainties as it seeks to recover. Last year, the Covid pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-downs and tens of thousands of job cuts. Shell said it had reduced its net debt by $4 billion to $75 billion over the course of 2020. Shares of the company are up more than 3% year-to-date, having plummeted over 44% last year.
ANALYSIS: Higher prices lead to better returns, but producers still cautious: Platts Analytics | S&P Global Platts — Stronger natural gas and crude prices have boosted internal rates of return across most US shale plays, but major operators have signified their intent to maintain level production moving forward despite the spike. The average 12-month forward curve for the US domestic crude price benchmark, WTI, sharply increased to $52/b in January as OPEC agreed to reduce production by 1 million b/d through March. With WTI back above the $50/b mark, crude-focused plays saw another strong month of improvement in wellhead internal rate of return. The Permian Delaware, Midland, Bakken, Denver-Julesburg, Eagle Ford, SCOOP/STACK and Powder River all shifted above the 10% cost of capital mark, suggesting new wells coming online should be able to realize cash flow neutrality at a minimum, according to S&P Global Platts Analytics. Platts Analytics IRRs are based on a half-cycle, after-federal corporate tax analysis, which excludes sunk costs such as acreage acquisition, seismic and appraisal drilling. For gas-directed plays, the Henry Hub average 12-month forward curve settled at $2.68/MMBtu for January. At this price point, only the Utica-Dry and Haynesville plays are bringing wells online with an IRR of over 10%, as regional gas differentials continue to hurt the Northeast's ability to price gas at all close to Henry Hub. Dominion-South and Columbia Gas-App. Hubs, which are associated with the Marcellus and Utica, were discounted on average by 67 cents/MMBtu and 49 cents/MMBtu to the Haynesville's Henry Hub price point for the month of January, hurting operator's ability to produce strong revenue results on their new horizontal wells. The jump in crude prices has also closed the profitability gap between the wet and dry pockets of West Virginia and Pennsylvania as IRRs for the Marcellus-Wet and Marcellus-Dry both hovered around 7.5% for January. This suggests more rigs may be reallocated to West Virginia-Wet and Pennsylvania-Southwest Wet plays for 2021, assuming crude prices remain strong, according to Platts Analytics. The Delaware continues to lead all US shale plays as a stronger Waha price has boosted most of the region's robust wellhead gas revenue, pushing this region's IRRs into the 25% area. With IRRs of 20% to 30%, operators will likely start to increase their completion activity quickly in the near term, according to Platts Analytics. Hydraulic fracturing of the approximately 200 drilled-but-uncompleted wells will help Texas and New Mexico operators stabilize the region's production after the reduction in activity experienced in 2020. Other crude plays such as the Midland, Bakken and Eagle Ford are each obtaining 20% IRRs as a solid gas environment with over $50/b oil will drive operators to bring on frack crews in the short term with these favorable economic conditions. While a $50/b WTI environment provides respectable returns for most of the crude shale plays at a theoretical asset level, it would likely take $60/b WTI to change the recovery trajectory of drilling and completion activity in US shale.
EIA estimates that global petroleum liquids consumption dropped 9% in 2020 - Responses to the coronavirus disease (COVID-19) caused global demand for petroleum products to fall significantly in 2020. The U.S. Energy Information Administration (EIA) estimates that the world consumed 92.2 million barrels per day (b/d) of petroleum and other liquid fuels in 2020, a 9% decline from the previous year and the largest decline in EIA’s series that dates back to 1980. A supplement to EIA’s Short-Term Energy Outlook (STEO) describes developments in global oil consumption during 2020, methods for estimating and forecasting global oil consumption, and expectations for oil consumption in 2021 and 2022.In its short-term outlook, EIA forecasts changes in U.S. petroleum consumption in response to variables including economic growth, employment growth, vehicle fleet fuel efficiency, and oil prices. For the rest of the world, EIA uses a combination of available real-time data and models based on the relationship between gross domestic product (GDP) and oil consumption. Because of the unique effects of the pandemic in 2020, EIA relied on a wider set of other indicators to assess non-U.S. energy demand, including third-party indexes that tracked mobility, flights, and government stay-at-home orders and their stringency across countries.A previous Today in Energy article described how EIA uses data series from our Weekly Petroleum Status Reportand our Petroleum Supply Monthly (with a two-month lag in the data) to inform short-term forecasts of U.S. petroleum markets. The United States is the world’s largest consumer of petroleum liquids, accounting for 20% of the global total in 2019.Other countries in the Organization for Economic Cooperation and Development (OECD) provide monthly consumption data after a two- to three-month lag. Collectively, the 37 OECD member countries consumed 47% of global petroleum liquids in 2019.Data from non-OECD countries can vary from a two- to three-month lag (in the case of Brazil and India, for example) to a year or more. For this reason, EIA will have near-final data on about half of world oil consumption for 2020 by the first quarter of 2021, with values from the United States, OECD countries, and some non-OECD countries. EIA will add finalized data to its published estimates as information becomes available throughout 2021 and 2022. The effects of the pandemic continue to present challenges in forecasting global petroleum liquids consumption. More context on these uncertainties is available in the STEO supplement Developments in Global Oil Consumption.
Pipe laying for Nord Stream 2 restarts in Danish waters (Reuters) - The consortium behind the Russia-led Nord Stream 2 natural gas pipeline has resumed laying pipes in the waters of Denmark, it said on Saturday, despite mounting pressure on the project from Washington. Construction of the link, which would double the capacity of the existing Nord Stream pipeline to 110 billion cubic metres of gas per year, was suspended in December 2019 due to the threat of sanctions from Washington.However the German government has stood by the project and late in December a vessel called the Fortuna, which was subsequently put under sanctions by Washington, laid a 2.6 km (1.6 mile) portion of the pipeline in German waters. Construction of the pipeline is mostly complete but around 120 km is left to be laid in Danish waters as well as 30 km in German waters, before it makes landfall at the northern German coastal town of Lubmin, near Greifswald.
Venezuela’s PDVSA seeks to export oil offloaded from floating facility - Venezuela’s state-run oil company PDVSA has begun marketing about 570,000 barrels of Corocoro medium crude recently offloaded from a floating facility that was listing last year, two sources with knowledge of the offer said. Crude onboard the Floating Storage and Offloading facility (FSO) Nabarima, operated by a joint venture between PDVSA PDVSA.UL and Italy’s Eni ENI.MI, started to be transferred to a tanker late last year amid environmental concerns from neighboring countries over a potential spill. About 1.3 million barrels of oil had remained stored at the FSO since early 2019, when sanctions imposed by the United States on PDVSA deprived the joint venture of its main customer for that crude grade, Houston-based refiner Citgo Petroleum. PDVSA-owned tanker Icaro, which received the first parcel of the offloaded crude, earlier this week set sail almost fully loaded to the Amuay ship-to-ship hub off Venezuela’s western coast, according to Refinitiv Eikon vessel tracking data. The sources said PDVSA plans to sell the first parcel of 570,000 barrels to a customer that has not yet been determined. If it cannot allocate the oil for exports in the coming days, it would transfer it to a larger vessel, the Suezmax Rio Caroni, where it would remain until sold or transferred to one of PDVSA’s refineries, the sources said. PDVSA did not respond to requests for comment. Eni said that Nabarima’s crude is owned by PDVSA. “Eni is not involved in decisions pertaining to its commercialization,” the company said in a statement. PDVSA has previously dismissed concerns by environmental groups and the governments of Trinidad and Tobago and Brazil that the facility could be prone to a spill. PDVSA’s oil exports have soared again this month as a growing group of customers with no experience in oil trade have been able to find vessels to carry exports, mainly to Asia. The shipments are poised to increase if the U.S. government authorizes a handful of PDVSA’s established customers to resume trading with PDVSA, after ordering a halt to oil swaps in the last quarter of 2020.
Shell ordered to compensate Nigerian farmers affected by oil spills - A Dutch court has delivered a major victory to a group of Nigerian farmers in their 13-year-long effort to hold Shell's Nigerian subsidiary accountable for oil spills on their lands. The Court of Appeal in The Hague sided with farmers and environmentalists on most of their legal claims, ruling that the Nigerian subsidiary owes the farmers financial compensation for the oil spill pollution in two villages. "The court ruled that Shell Nigeria is liable for the damage caused by the spills. Shell Nigeria is sentenced to compensate farmers for damages," Senior Justice Sierd Schaafsma said, as reported by Agence France-Presse. The parent company, Royal Dutch Shell, and its subsidiary must also install a leak detection system to one pipeline to prevent further spills. The court is still considering whether to hold Shell responsible for spillage in a third village, which was caused by sabotage. The spills happened between 2004 and 2007. "Three of the four Nigerian plaintiffs and their fellow villagers must now be compensated for the damage caused and Shell must ensure that there is a leakage detection system in the pipelines in Nigeria," Friends of the Earth, the environmental organization that sued Shell, said in a statement. "It is the first time that a court has held Dutch transnational corporation accountable for its duty of care abroad." The court has not yet set the amount of compensation the farmers will receive, and the verdict can be appealed to a higher court.
Dutch Court Orders Shell Oil to Pay for Harm Done to Nigerian Farmers -- Global environmental justice campaigners heralded a Dutch court's ruling Friday that Royal Dutch Shell's Nigerian subsidiary must pay punitive restitution to Nigerian villages for oil spill contamination that brought death, illness, and destruction to Nigerian farmers and communities."After 13 years, justice!" tweeted Friends of the Earth Europe.The legal effort seeking accountability for the oil pollution in the Niger Delta, as Agence France-Presse noted, was brought forth by the Netherlands branch of Friends of the Earth, and "has dragged on so long that two of the Nigerian farmers have died since it was first filed in 2008." One of those farmers was the father of Eric Dooh. "Finally, there is some justice for the Nigerian people suffering the consequences of Shell's oil," Dooh, who became a plaintiff in the case, said in a statement. "It is a bittersweet victory," he continued, "since two of the plaintiffs, including my father, did not live to see the end of this trial. But this verdict brings hope for the future of the people in the Niger Delta." As Reuters reported, Friday's decision went a step further than a 2013 ruling by a lower court, saying that Shell's Nigerian subsidiary was responsible for multiple cases of oil pollution. The appeals judge sided with the farmers in four of six spills covered by the lawsuit and postponed a verdict in the remaining cases, where the lower court had previously found SPDC responsible. The appeals court "also held the Anglo-Dutch parent company Royal Dutch Shell liable for installing new pipeline equipment to prevent further devastating spills in the Niger Delta region," AFP added. The devastation, as Friends of the Earth International (FOEI) has previously described, has been vast: Between 1976 and 1991, over two million barrels of oil polluted Ogoniland in 2,976 separate oil spills. While oil production has ceased, pipelines operated by Shell still traverse the land, creeks and waterways. Leakages—caused by corroded pipelines as well as bandits—mean that the area is still plagued by oil spills. Describing the scene in 2019 at a few of the sites affected by oil spills in the Niger Delta, FOEI added that the "horror of the vast stretch of black, lifeless landscape stretching out in front of us is something that has to be seen in order to be believed." Nigerian environmental justice advocate Nnimmo Bassey, in a tweet welcoming the new ruling, drew attention to the late Ken Saro-Wiwa, who, along with other Ogoni rights activists, was executed by the country's military in 1995 after leading an uprising against Shell's ecological damage in the region.
Oil jumps more than 2% as supply cuts take effect - Oil prices rose more than 2% on Monday, buoyed by falling U.S. crude inventories and rising winter fuel demand as a one of the worst snowstorms in years hits the U.S. Northeast. Brent crude was up $1.22 cents, or 2.2%, at $56.26 a barrel. U.S. crude settled 2.59% higher at $53.55 per barrel. Both benchmarks gained nearly 8% in January. U.S. government data last week showed a 2.3 million-barrel drawdown in stocks at the Cushing, Oklahoma, delivery hub for crude futures. Another 2.3 million-barrel weekly decline is expected since then, analysts and traders said citing a Wood Mackenzie report. "Crude is being supported by many small factors this week - expected drawdowns in Cushing, a sudden rise in winter fuel demand amid colder weather, and further talks on Capitol Hill about stimulus checks," The U.S. Northeast has been hit by a powerful winter snow storm, pummeling a vast swath stretching from Pennsylvania through New England, causing widespread disruption in New York City and other major urban centers in the region. Goldman Sachs said prices could rise to $65 by July, forecasting an oil market deficit of 900,000 barrels per day (bpd) in the first half of 2021, a higher level than its previous prediction of 500,000 bpd. OPEC oil output rose for a seventh month in January, a Reuters survey found, after the group and its allies agreed to ease supply curbs further, although the production growth was smaller than expected. Russian oil and gas condensate production also increased in January, two sources told Reuters on Monday, but the increase was in line with expectations, following Moscow's deal with OPEC on output cuts. U.S. oil and gas drillers are gearing up for a pick-up in demand. As higher prices make new wells profitable again, they added rigs for a sixth month in a row in January. U.S. production data from the Energy Information Administration showed output rose above 11 million bpd in November, the first time it has exceeded that figure since April.
Oil settles up more than 2% as U.S. inventories fall, demand picks up -Oil prices settled more than 2% higher on Monday, buoyed by falling U.S. crude inventories and rising winter fuel demand due to one of the worst snowstorms to hit the U.S. Northeast in years. Brent crude settled up $1.31 cents, or 2.4%, at $56.35 a barrel. U.S. crude gained $1.35 cents, or 2.6%, to settle at $53.55. Both benchmarks gained nearly 8% in January. U.S. government data last week showed a drawdown of 2.3 million barrels in stocks at the Cushing, Oklahoma, delivery hub for crude futures. Another 2.3 million-barrel weekly decline is expected, analysts and traders said citing a Wood Mackenzie report. “Crude is being supported by many small factors this week - expected drawdowns in Cushing, a sudden rise in winter fuel demand amid colder weather, and further talks on Capitol Hill about stimulus checks,” said John Kilduff, partner at Again Capital LLC in New York. The U.S. Northeast has been hit by a powerful winter snow storm, pummeling a vast swath stretching from Pennsylvania through New England and causing widespread disruption in New York City and other major urban centers in the region. Goldman Sachs said oil prices could rise to $65 by July, forecasting an oil market deficit of 900,000 barrels per day (bpd) in the first half of 2021, a higher level than its previous prediction of 500,000 bpd. OPEC oil output rose for a seventh month in January, a Reuters survey found, after the group and its allies agreed to ease supply curbs further, although the production growth was smaller than expected. “It looks like OPEC compliance is really pushing the complex higher, as well as the expectation that we will see U.S. inventories tighten over the next few weeks,” said Phil Flynn, an analyst at Price Futures Group in Chicago. Russian oil and gas condensate production also increased in January, two sources told Reuters on Monday, but the increase was in line with expectations, following Moscow’s deal with OPEC on output cuts. U.S. oil and gas drillers are gearing up for a pick-up in demand. As higher prices make new wells profitable again, they added rigs for a sixth month in a row in January. U.S. production data from the Energy Information Administration showed output rose above 11 million bpd in November, the first time it has exceeded that figure since April.
Oil jumps 2% to highest level in a year amid output cuts -Oil prices rose more than 2% on Tuesday, reaching their highest in 12 months after major producers showed they were reining in output roughly in line with their commitments. The U.S. and global benchmarks rallied as optimism about more U.S. economic stimulus added to market bullishness from supply cuts. Brent crude was up $1.22, or 2.2%, at $57.57 a barrel for its third straight day of gains, touching $58.05, the highest levels since January last year. U.S. oil gained 2.26%, or $1.21, to settle at $54.76 per barrel, after touching a session high of $55.26, the highest in a year. The rally began as OPEC production increases were less than expected. OPEC crude production rose for a seventh month in January but the increase was smaller than expected, a Reuters survey found. Voluntary cuts of 1 million bpd by OPEC's de facto leader, Saudi Arabia, are set to be implemented from the beginning of February through March. Russian output increased in January but is in line with the supply pact, while in Kazakhstan oil volumes fell for the month. The rally picked up steam as the U.S. Congress looked ready to adopt an economic stimulus package, and as cold U.S. weather boosted heating oil demand. "You got the U.S. economic stimulus package that no one thought we would get," said Bob Yawger, director of energy futures at Mizuho in New York. A cold snap and heavy snow in the U.S. northeast drove the margin for heating oil to an 8-month high of $15.88, lending further support to crude. However, energy giant BP flagged a difficult start to 2021 amid declining product demand, noting that January retail volumes were down about 20% year on year, compared with a decline of 11% in the fourth quarter. Oil demand is nevertheless expected to recover in 2021, BP said, with global inventories seen returning to their five-year average by the middle of the year.
WTI Slips Back Below $56 After Smaller Than Expected Crude Draw -- Oil prices extended their gains overnight, with WTI topping $56 for the first time in a year, as declines in U.S. (API last night)and Chinese crude stockpiles added impetus to a rally driven by tightening global supplies.“The crude oil market is getting close to a frenzy,” said Bjarne Schieldrop, chief commodities analyst at SEB AB.“A reflection of the tightening global crude oil market is the continued strengthening of the Brent crude oil curve.”A big draw confirming API's report could be enough to extend these gains even further. API
- Crude -4.261mm (-2.4mm exp)
- Cushing -1.885mm
- Gasoline -240k (+1.5mm exp)
- Distillates -1.622mm (-1.3mm exp)
DOE
- Crude -994k (-2.4mm exp, -4.84mm Whisper)
- Cushing -1.517mm
- Gasoline +4.467mm (+1.5mm exp)
- Distillates -9k (-1.3mm exp)
Analysts expected yet another crude draw in the last week, following the prior week's big drop (and API's bigger than expected draw)., but were disappointed as crude stocks only fell 994k barrels (vs a whisper number of a huge 4.84mm drop)...
Oil rises to highest level in more than a year after U.S. stock drawdown - Oil prices rose almost 2% on Wednesday and hovered near their highest levels in about a year, after government data showed U.S. crude stockpiles fell to their lowest since March, while OPEC+ maintained its supply cut agreement. Brent crude futures rose 1.74% to $58.46 a barrel. The benchmark earlier hit $58.94 a barrel, its highest since last February. U.S. West Texas Intermediate (WTI) crude settled 1.7% higher at $55.69 per barrel, after hitting a high of $56.33 earlier in the session, the highest level since Jan. 2020. Both benchmarks' backwardation, where contracts for near-term delivery are more expensive than later supplies, hit their highest in just over a year at around $2.30, indicating expectations of tighter supply. U.S. crude oil stockpiles fell last week to 475.7 million barrels, the Energy Information Administration said on Wednesday, their lowest since March. Refiner utilization rates, meanwhile, rose by 0.6 percentage points. "Refineries are back in business, which is supportive for crude," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "On net, this is a supportive report." The market has been bolstered by deep supply cuts from the Organization of the Petroleum Exporting Countries and allies, which on Wednesday, maintained their oil output policy. The day before, a document seen by Reuters showed that OPEC+ expects the oil market to be in deficit throughout 2021, peaking at 2 million barrels per day in May. "Underpinning the bullish sentiment are tightening fundamentals. Ahead of today's ministerial meeting, OPEC+ hinted that global oil stockpiles will decline below the five-year average by June," PVM analysts said. The market was also bolstered by news that Democrats in the U.S. Congress took the first steps toward advancing President Joe Biden's proposed $1.9 trillion coronavirus aid plan without Republican support.
Oil Futures Surge on Assurance from OPEC+ --- Oil climbed to the highest in more than a year in New York as OPEC and its allies pledged to continue whittling down global inventories. Futures in New York surged 1.7% to near $56 a barrel on Wednesday. A committee of OPEC+ ministers said the group will keep pushing to quickly clear the oil surplus left by the pandemic-induced demand slump. The alliance’s effort appears to be working despite a still tenuous recovery in demand: Chinese stockpiles are at the lowest in almost a year and a U.S. government report on Wednesday showed crude stockpiles fell nearly 1 million barrels. There’s a sense that “the risk is much more on the upside than the downside at this point,” “We certainly still have a lot of inventories sloshing around the system, but people feel like that’s going to decline from here on out until we get back to a balanced market.” Alongside OPEC+’s efforts to limit crude supply, driven by Saudi Arabia’s commitment to extra cutbacks, the oil market’s structure has firmed significantly. The premium of West Texas Intermediate’s nearest December contract to December 2022 has widened to more than $3 a barrel. “OPEC is holding the line on production, the vaccine rollout is progressing, Covid cases are rolling over and the stimulus package is making some progress.” West Texas Intermediate for March delivery rose 93 cents to settle at $55.69 a barrel, at the highest since late January 2020. Brent for April settlement advanced $1 to $58.46 a barrel. The contract is at the highest since last February. Despite the downtrend in crude inventories, a recovery in fuel demand remains shaky as lockdown measures limit mobility. The combined refining margin for gasoline and diesel, which provides a rough profit gauge for processing a barrel of crude, fell back toward $14 a barrel on Wednesday. The Energy Information Administration report showed gasoline stockpiles at the highest since June. A rolling average of gasoline demand ticked up slightly last week, but still remains at its weakest seasonally in more than two decades.
Crude Oil Extends Rally -- Oil jumped to the highest in more than a year, extending this week’s rally to above $56 a barrel, with investors confident that OPEC+ producers are committed to restraining global supplies. Futures in New York climbed nearly 1% on Thursday, also buoyed by stronger U.S. equities. OPEC+ producers have pledged to keep draining a pandemic-driven oil surplus, while global inventories from China to the U.S. continue to decline. Saudi Arabia is keeping oil pricing unchanged for Asia, while raising prices for all grades for buyers in the U.S. and Europe. “It looks like, at every turn, Saudi seems to want to support the market,” said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Futures. “If demand really picks up, we could be short oil pretty quickly, because U.S. production isn’t going to come back fast.” Key technical indicators suggest crude is due for a pullback, though. The 14-day Relative Strength Indexes for both Brent and West Texas Intermediate futures are showing the commodity in overbought territory. Meanwhile, a buying binge in the North Sea market seems to have subsided, with no bids or offers Thursday on an S&P Global Platts pricing window for the first time since late November. The expectation for stronger oil demand is also supporting prices, with governments worldwide distributing Covid-19 vaccines. While a full-fledged recovery still has yet to take shape, oil consumption is poised to return to 2019 levels by the end of the year, according to Citigroup Inc. “At the moment we are seeing pretty good oil prices,” Shell Chief Executive Officer Ben van Beurden said in a Bloomberg Television interview. “Demand is not back where it was a year ago, but then again we see a lot of discipline also from OPEC+ and therefore the market is being held in balance quite well.” West Texas Intermediate for March delivery rose 54 cents to settle at $56.23 a barrel. Brent for April settlement gained 38 cents to settle at $58.84 a barrel, the highest since February 2020. Meanwhile, money is flooding back into the market. Total holdings of WTI crude futures are now at their highest level since July 2018, surpassing levels seen during the frenzied trading of April last year. That influx of funds comes as the crude futures curve continues to indicate strength. The so-called Dec.-Red-Dec. spread, a favored trade of the world’s hedge funds, has topped $3 a barrel this week to reach its strongest level in a year.
Oil climbs after OPEC+ maintains oil output cuts, U.S. stock draw -- Oil prices extended gains on Thursday after the OPEC+ alliance of major producers stuck to a reduced output policy, and as crude stockpiles in the United States fell to their lowest levels since March last year. Brent crude futures gained 47 cents, or 0.8%, to $58.93 a barrel, by 0317 GMT, having earlier hit their highest since Feb. 21, 2020 in the wake of the OPEC+ decision. U.S. West Texas Intermediate (WTI) crude futures climbed 49 cents, or 0.9%, to $56.18 a barrel after reaching its highest settlement level in a year on Wednesday. "Crude prices have been rising higher now that OPEC+ has convinced the energy market that they are determined in accelerating market re-balancing without delay," said Edward Moya, senior market analyst at OANDA. The Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, extended its current oil output policy at a meeting on Wednesday, a sign that producers are happy that their deep supply cuts are draining inventories despite an uncertain outlook for a recovery in demand as the coronavirus pandemic lingers. A document seen by Reuters on Tuesday showed OPEC expects the output cuts will keep the market in deficit throughout 2021, even though the group cut its demand forecast. Also supporting prices, U.S. crude oil stockpiles fell by 994,000 barrels last week to 475.7 million barrels, their lowest since March, the U.S. Energy Information Administration said on Wednesday. Analysts in a Reuters poll had forecast a 446,000-barrel rise. Continued progress in rolling out COVID-19 vaccines is also an important driver of oil prices, OANDA's Moya said. "The world now has several effective COVID vaccines that should really force energy traders to upgrade their return to pre-pandemic behaviour forecasts," he said. The market was also bolstered by news that Democrats in the U.S. Congress took the first steps toward advancing President Joe Biden's proposed $1.9 trillion coronavirus aid plan. In a separate development, the United States has filed a lawsuit to seize a cargo of oil it says came from Iran rather than Iraq, as stated on the bill of lading, and contravenes U.S. terrorism regulations.
Oil prices rise to highest in a year on U.S. growth optimism, crude supply restraint - Oil hit its highest level in a year on Friday, closing in on $60 a barrel on economic revival hopes and supply curbs by producer group OPEC and its allies. New orders for U.S.-made goods rose more than expected in December, pointing to continued strength in manufacturing. The U.S. Congress is also moving ahead on President Joe Biden's COVID-19 relief plan. Brent crude was up 64 cents, or 1.1%, at $59.48 after hitting its highest since Feb. 20 last year at $59.75. U.S. crude was up 48 cents, or 0.9%, at $56.72, after reaching $57.09, its highest since Jan. 22 last year. "The conditions still remain supportive for oil markets," said Jeffrey Halley, analyst at brokerage OANDA. "Oil should find plenty of willing buyers on any material dip." Brent is on track to rise more than 6% this week. The last time it traded at $60, the pandemic had yet to take hold, economies were open and people were free to travel, meaning demand for gasoline, diesel and jet fuel was much higher. The rollout of COVID-19 vaccines, however, is fuelling hopes of lockdowns being eased, boosting fuel demand. But even demand optimists such as OPEC do not expect oil consumption to return to pre-pandemic levels in 2021. Oil also gained support from supply curbs by major producers. OPEC and its allies, collectively known as OPEC+, stuck to their supply tightening policy at a meeting on Wednesday. Record OPEC+ cuts have helped to lift prices from historic lows last year. "OPEC+ discipline has been a real positive," said Michael McCarthy, chief market strategist at CMC Markets. Further boosting the market, a weekly supply report showed a drop in U.S. crude inventories to their lowest since March, suggesting that output cuts by OPEC+ producers are having the desired effect.
Oil rises 1%, hits highest in a year on growth hopes, OPEC+ output cuts (Reuters) - Oil prices rose about 1% on Friday, after hitting their highest in a year and closing in on $60 a barrel, supported by economic revival hopes and supply curbs by producer group OPEC and its allies. people want to get something done, Oil was also supported as U.S. stock markets hit record highs on signs of progress toward more economic stimulus, while a U.S. jobs report confirmed the labor market was stabilizing. Brent crude ended the session up 50 cents, or 0.9%, at $59.34 after hitting its highest since Feb. 20 at $59.79. U.S. crude settled up 62 cents, or 1.1%, at $56.85, after reaching $57.29, its highest since Jan. 22 last year. U.S. crude futures gained about 9% this week, the biggest percentage gain since October, in part due to U.S. inventories last week dropping to levels last seen in March. [EIA/S] Brent rose about 6% for the week. The last time Brent traded at $60 a barrel, the pandemic had yet to take hold, economies were open and demand for fuel was much higher. The rollout of COVID-19 vaccines has fed hopes of demand growth, but even optimists, such as the Organization of the Petroleum Exporting Countries which expects a market deficit throughout 2021, do not expect oil consumption to return to pre-pandemic levels until 2022. “What is really helping the market today, and is a more valid reason for the price rise we see, once again comes from Saudi Arabia and its top firm, Aramco,” Aramco raised its Arab Light official selling price (OSP) to Northwest Europe for March by $1.40 a barrel from the previous month. This could signal Saudi Arabia is more confident in the demand outlook, feeding bullish sentiment, Tonhaugen said. OPEC and allies, collectively known as OPEC+, stuck to their supply tightening policy at a meeting on Wednesday. Record OPEC+ cuts have helped lift prices from historic lows last year. “OPEC+ discipline has been a real positive,” said Michael McCarthy, chief market strategist at CMC Markets. The U.S. oil rig count, an early indicator of future output, has risen for five straight months. This week, the number of rigs rose by four to 299, the highest since May, according to energy services firm Baker Hughes Co. The pace of recovery in the world’s top producer, however, is slow. The government this week projected U.S. crude output will not to top its 2019 record of 12.25 million barrels per day until 2023. Production in 2020 tumbled 6.4% to 11.47 million bpd.
Crude Oil Prices up 9%. But Struggle With $60 Resistance -- Crude prices rose some 9% on the week but fell short of the $60 per barrel mark targeted by oil bulls, suggesting the market may be overbought in the short-term and could consolidate even if it hits that high point. New York-traded West Texas Intermediate, the key indicator for U.S. crude, settled up 62 cents, or 2.2%, at $56.85 per barrel. For the week, WTI gained some 9%. London-traded Brent, the global benchmark for crude, settled up 50 cents, or 0.8%, at $59.34. For the week, Brent gained about 6%. U.S. gasoline RBOB futures meanwhile traded as high as $1.6729 a gallon, their highest since mid-February last year, when world oil demand began to collapse under the weight of the Covid-19 pandemic. The market has been cheered this week by the way OPEC’s monthly meeting on output policy played out, with no extra output agreed and plenty of evidence of output quotas being observed. Nigerian output in particular has now fallen to a level that almost compensates entirely for its overproduction last summer, partly due to disruptions at some of its export facilities. In addition, another week of clear drawdowns in U.S. and international inventories has convinced many that the market is set to tighten meaningfully as demand picks up in the course of the year, pushing back-month futures contracts sharply higher. “The market is increasingly pricing in a belief that last year’s price crash together with an increased investor focus on environmental, social and corporate governance (ESG) could led to a future shortfall due to lack of investments towards exploration,” Saxo Bank head of commodity strategy Ole Hansen said in a morning note. “However, before we reach that stage, global demand needs to recover from the current 94 million barrels/day and back towards 100 million seen a year ago, while OPEC+ slowly returns 7 million barrels/day of still capped production.”
The end of the Qatar blockade will boost the Middle East economy, IMF says— The International Monetary Fund has raised its economic outlook for the Middle East and North Africa region's growth in 2020 by 1.2 percentage points to an overall contraction of 3.8%, showing that despite some progress since the coronavirus pandemic began, it's still been a brutal year by any account. Recovery will be varied and based largely on countries' investments and strategies for vaccine distribution. But there has been one bright spot for the Gulf states in particular — the lifting of the political and economic blockade of Qatar by other GCC countries, the IMF's Middle East and Central Asia Director Jihad Azour told CNBC on Wednesday. While the full details of the reconciliation accord between blockading states — Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt — and Qatar are not publicly known, Azour told CNBC's Hadley Gamble that "any improvement in terms of opening up borders, improving economic relationship will provide an additional potential for growth." "Of course, this will improve trade, especially at rates in goods and services," he added. "It will reduce the cost of procuring for example, for Qatar, it will also help the airlines by reducing the cost. Therefore, there is always benefit from improving economic relationships, especially that we are now entering into a new phase in terms of globalization." The news, which saw a dramatic 3 ½-year dispute come to an end, is a likely boon for investment as well, Azour said. "I think this is good for business in the short term, but also in the long term, in terms of providing a bigger space for investors. And this is something that will be valued." Qatar's Financial Centre alone aims to attract $25 billion of foreign direct investment inflows by 2022 as a result of the rapprochement, CNBC reported in January. Airlines, manufacturing and food production are among the other areas that are likely to see major boosts.
Triple shock of US sanctions, oil price collapse and the pandemic decimates Iranian living standards -- Iranian workers and their families are reeling under the combined impact of US sanctions, the oil market collapse and the COVID-19 pandemic. Iran’s GDP had already fallen by 6.8 percent in the financial year before the pandemic-induced recession took its toll, as oil revenues halved following the expiry of the Trump administration’s short-term waivers of sanctions on those countries importing Iranian oil. The Trump administration’s punitive sanctions were imposed in 2018, after the US scuttled the 2015 Iran nuclear accord, with the aim of crashing its economy and provoking “regime change.” The sanctions effectively bar Iran from selling its oil—the lifeblood of the Iranian economy—causing crude oil production to fall to its lowest level in 40 years and oil storage facilities to be filled to capacity and depriving the government of a major source of its revenues. Just five days before leaving the White House, President Donald Trump expanded Washington’s punitive sanctions to other key industries, including Iran’s marine, aerospace, aviation and steel sectors. Revenues fell even further in 2020 following the global oil market collapse, with oil production now less than 2 million barrels per day, about half that in 2018. This contraction, expected to lead to a further 3.7 percent decline in GDP for 2020-21, comes in the wake of a decade-long decline in per capita GDP income. Iran’s currency, the rial, has lost 43 percent of its value against the dollar. This, together with years of austerity imposed by successive governments with the support of all factions of Iran’s political establishment, has led to inflation rising to 46 percent, mass unemployment, with a devastating impact on household budgets as the cost of food and housing soared, and ever-deepening social inequality, with the Gini coefficient of inequality reaching 35.6, according to the Iran Economic Monitor. These rising living costs have eroded wages, driving many young people out of the city centres where rents are high into the outer suburbs, satellite towns or back to their families in the impoverished rural areas. They have decimated the value of the government’s cash transfers to those with little or no income, despite an increase announced last autumn. At least 55 percent of Iranians are poor, with half of these living in extreme poverty, a five-fold increase since the reimposition of US sanctions in 2018, because wages are totally inadequate to meet their basic needs. Last November, a video went viral on Iranian social media showing Bandar Abbas municipal officials demolishing a single mother's rickety shed, erected without a permit. The destruction of the shack that was home to herself and three children, one of whom is disabled, drove 35 year old Tayyebeh to attempt suicide by setting fire to herself, by no means an isolated phenomenon. The furore that followed forced the municipality to pay for her hospitalisation and local commanders of the Islamic Revolutionary Guard Corps (IRGC) to offer to build her a home if the city provided the land, although such promises are rarely fulfilled.
Iranian-Backed Forces Receive New Missiles As Tensions Grow In Iraq - The second month of 2021 began with preparations by Iraq’s Popular Mobilization Units (PMU) for new round of hostilities. Kata’ib Hezbollah received short and medium range rockets through Syria, according to the Syrian Observatory for Human Rights. Kata’ib Hezbollah is a key member of the PMU, actively participates in the fight against ISIS since the emergence of the group in Iraq, and is a vocal supporter of the current attempts to oust the US presence from Iraq. At the same time, the PMU are subject to more and more frequent ISIS attacks in recent days. As the terrorists appear to be popping up all around. On January 31st, the PMU said they repelled an ISIS attack in the region of Jurf al-Sakhar in the province of Babil. These apparent appearances by ISIS members coincide with reports by pro-Iranian sources blaming the US for airlifting them. On January 31st, in an interview with the al-Maloumeh news website, Sabah al-Akili claimed that the US military airlifts ISIS units into areas behind PMU positions in the Jurf al-Sakhar region. So far, US President Joe Biden’s policy for the Middle East is incredibly unsurprising. Any potential withdrawals appear to be nothing more than a pipe dream. The first-ever African American Defense Secretary Lloyd Austin said that the Trump Administration’s decision to withdraw was being reconsidered. Not only that, but it is likely that the deployments need to be increased. Attacks on US supply convoys have become commonplace, all of them being blamed on the PMU. However, responsibility for the most recent attack was assumed by the Qasim Al-Jabbarin group, which does not declare its affiliation with the PMU. With the US still leading the way for NATO in the entire region, any exit also from Afghanistan becomes more fiction than reality. This will, in turn, lead to increased Taliban activity, since the peace deal is not being honored.
Biden Orders USS Nimitz Aircraft Carrier Home in Possible Signal to Iran - Secretary of Defense Lloyd Austin instructed the carrier and and the 5,000 sailors and Marines of its strike group to return home after being deployed for over 240 days. Over the course of its deployment, the USS Nimitz was responsible for providing air cover during the troop drawbacks in Afghanistan, running operations and exercises to strengthen US Central Command and US Indo-Pacific Command areas of responsibility, according to the Pentagon. It has also conducted brief missions in Somalia carrying out air raids on extremists in the country and it was involved in training the Indian Navy's 7th Fleet. The Nimitz is 100,000 tons of power. Laid down in 1968, it is one of the largest American warships. It is one of 10 similar ships in its class: the Eisenhower, Vinson, Lincoln, Roosevelt, Washington, Stennis, Truman, Reagan and Bush. US Naval Institute News says that the Nimitz was operating within the US 7th Fleet off the coast of west India when it got the order to go home after nearly eight months on the water. Just prior to the beginning of the year, the Nimitz was ordered to come "directly" home by the acting US Acting Secretary of Defense Chris Miller. Ninety-six hours later, the carrier got another order to “halt its routine redeployment” and remain in the area of US Central Command following threats from Tehran on the anniversary of the killing of the Iranian Revolutionary Guards Commander Qasem Soleimani.
New U.S. stand on Yemen war can be 'step towards correcting past mistakes' - Iran (Reuters) - Iran’s foreign ministry said on Saturday a new U.S. stand on the Yemen war can be a “step towards correcting past mistakes”, after President Joe Biden said this week Washington was ending its support for a Saudi Arabia-led military campaign in Yemen. “Stopping support ... for the Saudi coalition, if not a political maneuvre, could be a step towards correcting past mistakes,” Iranian Foreign Ministry spokesman Saeed Khatibzadeh was quoted as saying by state media. Biden said on Thursday that the more than six-year war, widely seen as a proxy conflict between Saudi Arabia and Iran, “has to end.” He also named veteran U.S. diplomat Timothy Lenderking as the U.S. special envoy for Yemen in a bid to step up American diplomacy to try to end the war.
U.N. bid to avert oil spill off Yemen uncertain as Houthis mull review (Reuters) - Yemen’s Houthi group has advised the United Nations to pause preparations to deploy a team to assess a decaying oil tanker threatening to spill 1.1 million barrels of crude oil off the war-torn country’s coast, a U.N. spokesman said on Tuesday. The tanker Safer has been stranded off Yemen’s Red Sea oil terminal of Ras Issa for more than five years, and U.N. officials have warned it could spill four times as much oil as the 1989 Exxon Valdez disaster off Alaska. Houthi authorities gave long-awaited approval in November for a visit to assess the tanker. A U.N. team, which includes a private company contracted by the world body to do the work, was aiming to travel to the tanker early next month. But U.N. spokesman Stephane Dujarric said that time line was now uncertain amid U.N. concerns about signals from the Houthis that they are considering a “review” of their formal approval of the tanker mission. “Houthi officials have advised the U.N. to pause certain preparations pending the outcome of such process, which would create further delays to the mission,” he said in a statement. He said the United Nations had so far spent $3.35 million on preparing for the mission. The world body also has to lease a technically equipped vessel, but needs a letter from the Houthis with security assurances. “We regret that, to date, we have not received a response to our multiple requests for this letter, the lack of which would increase the cost of the mission by hundreds of thousands of dollars,” Dujarric said. Houthi-run Al Masirah TV last week quoted a senior Houthi official as saying the United Nations had made additional requests that had not been part of an agreed framework. “Their new requests are related to their financial relationship with insurance firms and we will not get involved in matters that do not concern us,” the Houthi official said. Last month, former U.S. President Donald Trump’s administration designated the Houthis as a foreign terrorist organization. The United Nations is also reviewing whether that could affect the tanker mission. A Saudi Arabia-led military coalition intervened in Yemen in 2015, backing government forces fighting the Houthis. U.N. officials are trying to revive peace talks to end the war as the country’s suffering is also worsened by an economic crisis, currency collapse and the COVID-19 pandemic.
Biden Ends “Offensive Support” for Saudi War in Yemen — President Biden delivered a foreign policy speech on Thursday and vowed to end US support for Saudi Arabia’s “offensive” operations in Yemen. “We are ending all American support for offensive operations in the war in Yemen, including relevant arms sales,” Biden said. Last week, the administration halted planned arms sales to Saudi Arabia and the UAE. While Biden vowed to end “offensive” support, he promised to keep supporting the Saudis militarily in other ways. “At the same time, Saudi Arabia faces missile attacks, UAV strikes, and other threats from Iranian-supplied forces in multiple countries. We’re going to continue to support and help Saudi Arabia defend its sovereignty.” Framing the move as an end to support for “offensive” operations could give the US some wiggle room to continue some support for the Saudi-led coalition. And since the coalition is more capable now than it was in 2015, when the Obama administration first backed the Saudis in Yemen, operations could still continue.The US often blames Iran for Houthi attacks in Saudi territory. But the reality is, these attacks wouldn’t be happening if it wasn’t for the over five-year US-backed Saudi siege on Yemen, where the coalition’s targeting of civilian infrastructure and the blockade on the country has caused widespread disease, and mass starvation.Biden did mention the humanitarian crisis in Yemen and said USAID will work to ensure that aid is being delivered. He announced the appointment of Timothy Lenderking as the US special envoy to Yemen, a veteran diplomat who will work to end the fighting between the Saudis and the Houthis. Biden said Lenderking will “work with the UN envoy and all parties of the conflict to push for a diplomatic resolution.”One thing Biden did not bring up is the designation of Yemen’s Houthis as a foreign terrorist organization, one of the last moves from the Trump administration. The UN and international charities have warned that the designation will cause mass famine since it criminalizes doing business with the Houthis, who control territory where about 70 percent of Yemen’s population lives.
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