US oil prices finished lower for the first time in three weeks last week, despite a 5% price spike midweek, as the same deep freeze that shut off US oil production also shut down US refineries, reducing demand for oil....after rising 4.6% to a thirteen month high of $59.47 a barrel last week on progress towards a US economic stimulus package and on a big drop in US crude inventories, the contract price of US light sweet crude for March delivery rose in holiday trading on Monday after the Saudis said they had intercepted an explosive-laden drone fired by the Yemeni Houthis, and thus opened 51 cents higher on Tuesday and rose to as high as $60.95 a barrel as a deep freeze shut wells and refineries in Texas, and held above $60 to settle with a gain of 58 cents at $60.05 a barrel, as traders tried to assess the impact the country’s cold blast would ultimately have on the oil supply and demand balance...oil prices jumped more than $1 a barrel on Wednesday, as the Texas freeze shut down oil production across the state, with the unusually cold weather expected to hamper output for days or even weeks, and settled $1.09 higher at $61.14 a barrel after fading during the day’s session when Dow Jones reported that Saudi Arabia planned to boost oil output in the coming months...oil prices extended the day's gains in Wednesday evening trading after the American Petroleum Institute reported a larger than expected draw from crude stocks and opened higher on Thursday, and then jumped to a dollar plus gain after the EIA reported a crude production drop and an even larger draw from inventories in the week before the storm, but then tumbled to settle 62 cents lower at $60.52 a barrel amid talk of a possible OPEC+ output increase as traders began to cash in on this week’s “freeze trade" that had sent crude prices higher than they might have otherwise been...oil prices opened lower and slid as much as 2% in early trade on Friday on worries that refineries shut by the big freeze would take some time to revive operations and dent crude demand and held below $60 before settling down $1.28 at $59.24 a barrel and posting a fractional loss for the week as traders resigned to the likelihood that Saudi Arabia would roll back some of their output cuts in light of higher prices...
natural gas prices also retreated late in the week but held on to solid gains, as demand for heating far outstripped the cold-curtailed supply...after rising 1.7% to $2.912 per mmBTU last week as forecasts for bitter cold over most of the continental US threatened the natural gas supply surplus, the contract price of natural gas for March delivery opened 4% higher on Tuesday and climbed to a 7.5% gain at $3.129 per mmBTU as large swaths of the U.S. struggled with subzero temperatures and rolling blackouts hit several states and next-day gas in Oklahoma surged to as high as $999.00 per mmBTU...prices rose another 9 cents or 3% to $3.219 per mmBTU on Wednesday as record low temps continued to wreak havoc on gas supplies while fueling soaring demand for heating...natural gas opened higher again on Thursday, but reversed course after the EIA reported a smaller-than-expected draw from storage and forecasts called for a reprieve from the Arctic blast and closed 13.7 cents lower at $3.082 per mmBTU....after another day of volatile trading on Friday natural gas prices settled 1.3 cents lower at $3.069 per mmBTU, as traders tried to digest the long-term implications of the week’s crippling Arctic blast, but still finished 5.4% higher on the week..
the natural gas storage report from the EIA for the week ending February 12th indicated that the amount of natural gas held in underground storage in the US fell by 237 billion cubic feet to 2,281 billion cubic feet by the end of the week, which left our gas supplies 105 billion cubic feet, or 4.4% below the 2,386 billion cubic feet that were in storage on February 12th of last year, but 57 billion cubic feet, or 2.6% above the five-year average of 2,224 billion cubic feet of natural gas that have been in storage as of the 12th of February in recent years....the 237 billion cubic feet that were drawn out of US natural gas storage this week was less than the average forecast of a 251 billion cubic foot withdrawal from an S&P Global Platts survey of analysts, but much more than the 141 billion cubic foot withdrawal from natural gas storage seen during the corresponding week of a year earlier, as well as the average withdrawal of 142 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 February 12th indicated that because of a record jump in our oil exports, we had to withdraw oil from our stored commercial crude supplies for the eleventh time in the past thirteen weeks and for the 24th time in the past thirty-six weeks.... our imports of crude oil rose by an average of 41,000 barrels per day to an average of 5,898,000 barrels per day, after falling by an average of 650,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 1,245,000 barrels per day to a 47 week high of 3,862,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,036,000 barrels of per day during the week ending February 12th, 1,204,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells decreased by 200,000 barrels per day to 10,800,000 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 12,836,000 barrels per day during this reporting week...
meanwhile, US oil refineries reported they were processing 14,819,000 barrels of crude per day during the week ending February 12th, 27,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a total of 1,058,000 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 925,000 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 (+925,000) 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....furthermore, since last week's fudge factor was at (-420,000) barrels per day, there was a 1,345,000 barrel per day balance sheet difference in the unaccounted for crude oil figure from a week ago, which renders the week over week supply and demand changes we have just transcribed nonsense....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 fell to an average of 5,831,000 barrels per day last week, which was 13.0% less than the 6,700,000 barrel per day average that we were importing over the same four-week period last year.....the 1,058,000 barrel per day withdrawal from our crude inventories was due to a 1,037,000 barrels per day withdrawal from our commercially available stocks of crude oil, and a 21,000 barrel per day withdrawal from our Strategic Petroleum Reserve, space in which is being leased for commercial purposes....this week's crude oil production was reported to be 200,000 barrels per day lower at 10,800,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 200,000 barrels per day lower at 10,300,000 barrels per day, while a 9,000 barrel per day decrease to 498,000 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 February 14th was rounded to 13,000,000 barrels per day, so this reporting week's rounded oil production figure was 16.9% below that of a year ago, yet still 28.1% above 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 83.1% of their capacity while using those 14,819,000 barrels of crude per day during the week ending February 12th, up from 83.0% of capacity during the prior week...however, since US refinery utilization had averaged the lowest on record through 2020 and has barely recovered, the 14,819,000 barrels per day of oil that were refined this week were still 8.6% fewer barrels than the 16,210,000 barrels of crude that were being processed daily during the week ending February 14th of last year, when US refineries were operating at an also low 89.4% of capacity...
with the increase in the amount of oil being refined, the gasoline output from our refineries was higher for the 5th time in 13 weeks, increasing by 375,000 barrels per day to 9,031,000 barrels per day during the week ending February 12th, after our gasoline output had increased by 236,000 barrels per day over the prior week...but 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 5.2% lower than the 9,525,000 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) decreased by 86,000 barrels per day to 4,574,000 barrels per day, after our distillates output had increased by 38,000 barrels per day over the prior week...and since our distillates' production is also recovering from a three year low, that output was 5.7% less than the 4,852,000 barrels of distillates that were being produced daily during the week ending February 14th, 2020...
with the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 10th time in thirteen weeks, and for 14th time in 31 weeks, rising by 672,000 barrels to 257,084,000 barrels during the week ending February 12th, after our gasoline inventories had increased by 4,259,000 barrels over the prior week...our gasoline supplies increased by less this week because the amount of gasoline supplied to US users increased by 550,000 barrels per day to 8,407,000 barrels per day, even as our exports of gasoline fell by 161,000 barrels per day to 576,000 barrels per day, while our imports of gasoline rose by 13,000 barrels per day to 670,000 barrels per day....but even after this week's inventory increase, our gasoline supplies were still 0.8% lower than last February 14th's gasoline inventories of 259,078,000 barrels, but about 1% above the five year average of our gasoline supplies for this time of the year...
meanwhile, with the decrease in our distillates production, our supplies of distillate fuels decreased for the 17th time in 25 weeks and for the 29th time in the past year, falling by 3,422,000 barrels to 157,684,000 barrels during the week ending February 12th, after our distillates supplies had decreased by 1,732,000 barrels during the prior week....our distillates supplies fell by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 146,000 barrels per day to 4,454,000 barrels per day, and because our exports of distillates rose by 15,000 barrels per day to 971,000 barrels per day while our imports of distillates rose by 6,000 barrels per day to 362,000 barrels per day...but even after this week's inventory decrease, our distillate supplies at the end of the week were still 12.2% above the 140,587,000 barrels of distillates that we had in storage on February 14th, 2020, and about 6% above the five year average of distillates stocks for this time of the year...
finally, with the record jump in our oil exports, 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 weeks, but for just the 23rd time in the past year, decreasing by 7,257,000 barrels, from 469,014,000 barrels on February 5th to 461,757,000 barrels on February 12th, the lowest oil inventory level since March 20th...after that decrease, our commercial crude oil inventories were back to near the five-year average of crude oil supplies for this time of year, but still about 36% above the prior 5 year (2011 - 2015) average of our crude oil stocks as of the second weekend of February, 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 during the lockdowns this spring after generally rising over the past two years, except for during the past 10 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 February 12th were still 4.3% more than the 442,883,000 barrels of oil we had in commercial storage on February 14th of 2020, 1.6% above the 454,512,000 barrels of oil that we had in storage on February 15th of 2019, and also 9.4% more than the 422,095,000 barrels of oil we had in commercial storage on February 9th of 2018...
This Week's Rig Count
The US rig count was unchanged over the week ending February 19th, after rising 21 times out of the prior 22 weeks, while it still remains half of what it was 49 weeks ago....Baker Hughes reported that the total count of rotary rigs running in the US remained at 397 rigs this past week, which was still down by 394 rigs from the 791 rigs that were in use as of the February 21st report of 2020, and was also still 7 fewer rigs than the all time low rig count prior to 2020, and 1,532 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 decreased by 1 rig to 298 oil rigs this week, after rising by 7 oil rigs the prior week, leaving us with 374 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 increased by 1 rig to 90 natural gas rigs, which was still down by 19 natural gas rigs from the 110 natural gas rigs that were drilling a year ago, and 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 two such "miscellaneous" rigs deployed...
The Gulf of Mexico rig count decreased by 1 to 16 rigs this week, with 14 of those rigs now drilling for oil in Louisiana's offshore waters and 2 drilling for oil in Alaminos Canyon offshore from Texas...that was 6 fewer Gulf of Mexico rigs than the 22 rigs drilling in the Gulf a year ago, when 19 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, while a year ago there was one rig drilling on US inland waters..
The count of active horizontal drilling rigs was up by 1 to 345 horizontal rigs this week, which was still less than a half of the 714 horizontal rigs that were in use in the US on February 21st of last year, and less than a third of the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count was also up by 1 to 24 vertical rigs this week, but those were still down by 8 from the 32 vertical rigs that were operating during the same week a year ago....on the other hand, the directional rig count was down by 2 rig to 16 directional rigs this week, and those were also down by 29 from the 45 directional rigs that were in use on February 21st 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 19th, the second column shows the change in the number of working rigs between last week's count (February 12th) and this week's (February 19th) count, the third column shows last week's February 12th 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 21st of February, 2020..
as you can see, there were just a few 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 2 new rigs added in Texas Oil District 8, which corresponds to the core Permian Delaware, while one rig was pulled out of Texas Oil District 8A, which encompasses the northern counties of the Permian Midland basin, thus accounting for the 1 rig increase both in Texas and in the Permian nationally....other changes nationally include the oil rig that was pulled out offshore from Louisiana, an oil rig addition in North Dakota's Williston basin, and an oil rig pulled out of an Alaskan basin that Baker Hughes does not identify...meanwhile, this week's natural gas rig addition was in the Permian, the first natural gas rig in that basin in 22 weeks, while the Permian saw no net increase in oil rigs for the first time in 5 weeks...
DUC well report for January
Tuesday of this past week saw the release of the EIA's Drilling Productivity Report for February, which includes the EIA's January data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions....that data showed a decrease in uncompleted wells nationally for the 19th time in the past twenty-three months in January, as completions of drilled wells and drilling of new wells both increased, but still remained far below the prepandemic levels....for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 159 wells, falling from 7,334 DUC wells in December to 7,177 DUC wells in January, which was also 12.2% fewer DUCs than the 8,176 wells that had been drilled but remained uncompleted as of the end of January of a year ago...this month's DUC decrease occurred as 417 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during January, up from the 373 wells that were drilled in December, while 576 wells were completed and brought into production by fracking, up from the 545 completions seen in December, but down by nearly half from the 1,087 completions seen in January of last year....at the January completion rate, the 7,177 drilled but uncompleted wells left at the end of the month represents a 12.5 month backlog of wells that have been drilled but are not yet fracked, down from the 15.2 month DUC well backlog of a month ago, with the understanding that this normally indicative backlog ratio is being skewed by a completion rate that is one-third of the previous norm...
both oil producing regions and natural gas producing regions saw DUC well decreases in January, and again there were no basins reporting DUC increases...the number of uncompleted wells remaining in the Permian basin of west Texas and New Mexico decreased by 38, from 3,506 DUC wells at the end of December to 3,468 DUCs at the end of January, as 187 new wells were drilled into the Permian, while 225 wells in the region were completed...at the same time, DUC wells in the Niobrara chalk of the Rockies' front range fell by 36, decreasing from 503 at the end of December to 467 DUC wells at the end of January, as 40 wells were drilled into the Niobrara chalk during January, while 76 Niobrara wells were being fracked....in addition, DUCs in the Eagle Ford of south Texas decreased by 27, from 990 DUC wells at the end of December to 963 DUCs at the end of January, as 41 wells were drilled in the Eagle Ford during January, while 68 already drilled Eagle Ford wells were completed...there was also a decrease of 24 DUC wells in the Bakken of North Dakota, where DUC wells fell from 769 at the end of December to 745 DUCs at the end of January, as 20 wells were drilled into the Bakken during January, while 44 of the drilled wells in that basin were being fracked...meanwhile, the number of uncompleted wells remaining in Oklahoma's Anadarko decreased by 20, falling from 666 at the end of December to 646 DUC wells at the end of January, as 21 wells were drilled into the Anadarko basin during January, while 41 Anadarko wells were being fracked....
among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 9 wells, from 577 DUCs at the end of December to 568 DUCs at the end of January, as 66 wells were drilled into the Marcellus and Utica shales during the month, while 75 of the already drilled wells in the region were fracked....at the same time, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory decrease by 5 to 320, as 42 wells were drilled into the Haynesville during January, while 47 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of January, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a total of 145 wells to 6,289 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 14 wells to 888 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...
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More Ohioans Want Some Say On Location Of Wastewater Injection Wells – WOSU - Each well drilled using hydraulic fracturing, or fracking, for oil and gas production creates tens of millions of gallons of wastewater, called produced water or brine.In Ohio, much of that wastewater is disposed of in underground injection wells, including waste from Pennsylvania and West Virginia. As the number of injection wells grows in Ohio, local communities want some control over where these wells are located. In Belmont County, Ohio, Judy Burger’s husband is getting ready to retire. After 25 years, their peaceful home near the highway is quickly changing, “I’m a nervous wreck, I’m on blood pressure medicine,” she said. “I have my Venetian blinds closed in my house so I don’t have to look across the street to see the mayhem and the destruction and the coming reality.” Across the street, OMNI Energy Group of New Jersey has been drilling two frack waste injection wells. Heavy construction equipment has torn up the ground, and some days loud drilling noises remind her of what’s coming. When the work is done, wastewater from oil and gas operations in Ohio, West Virginia and Pennsylvania will be trucked here. According to a state transportation study, 48 trucks will enter and exit the site during peak hours in the morning and afternoon to inject waste into the wells, a salty brine that the U.S. EPA says can be toxic and radioactive. Burger doesn’t want to live here anymore, and she doubts anyone else would either. “It’s beyond description, how horrible it is to feel like you’re stuck. We were told we have no property value,” she said. “Nobody would buy our property.” Burger wants it known that she is not an environmentalist. She voted for the past two Republican governors. “Yes, I’m a Republican. I voted for Mike DeWine. I voted for John Kasich,” she said. But she blames those same Republicans for supporting industry over local communities. “Why the state favors somebody who comes in here from out of state over its own citizens?” Burger asked. “That’s what’s happening.” For years, many Republican leaders in southeastern Ohio have lined up to support the oil and gas industry. They’ve seen some residents make good money from land leases and royalties, and find good-paying jobs in things like machinery rentals and pipeline construction. But, like Burger, some of those same leaders in Belmont County are flummoxed by the lack of local control in citing the OMNI injection wells, and two others nearby by another company. “We’ve got the township trustees don’t want it. We’ve got the county commissioners don’t want it. We’ve got the state rep don’t want it. We’ve got the locals that don’t want it,” said state Sen. Frank Hoagland (R-Mingo Junction), who represents the area. “And I myself put in a letter saying we don’t need it there.”
Rep. Balderson calls report stating decline of oil, gas industry “misleading” - U.S. Rep. Troy Balderson (R-OH) criticized a recent report from the think tank Ohio River Valley Institute that said 22 counties in Ohio, Pennsylvania, West Virginia responsible for 90 percent of the oil and gas production in the Appalachian region saw their share of jobs, personal income, and population all decline since the start of the fracking boom in 2008.“This so-called report is nothing more than a scam to undermine the energy sector, which has long withstood slanderous labels and stereotypes that demean the livelihoods of blue-collar workers,” Balderson said. “In reality, thousands of Ohioans rely on energy jobs to support their families, and in turn, these jobs lay the foundation for the regions’ total economy by supporting small local suppliers, restaurants, and more.” Balderson and a group of key Ohio stakeholders found the report misleading and said it does not present all relevant data, such as figures showing per capita income increasing for residents of the seven Ohio counties included in the report. According to Ohio Development Services Agency data from 2008-2018, all seven counties – Belmont, Carroll, Jefferson, Harrison, Guernsey, Noble, and Monroe – experienced an increase in per capita income by an average of 36.67 percent. From 19 micro-sized refineries with a combined capacity of just 68 Mb/d in the late1940s, the refining sector in Western Canada has undergone decades of expansion and eventual consolidation to reach the final tally of nine refineries (green numbered diamonds in Figure 1) with a total capacity of 770 Mb/d as of 2020. Of that, the combined capacity of the refineries in Alberta (#1 to #5) is 546 Mb/d, while those in Saskatchewan (#6 and #7) total 147 Mb/d and British Columbia’s (#8 and #9) refining capacity adds up to 67 Mb/d. Note that Alberta’s and Western Canada’s total refinery capacity are slightly higher than we stated in Part 1 due to a subsequent year-end disclosure by one of the refiners — more about this in a moment.
Is fracking helping or hurting? Oil & gas industry weighs in on new report - WTRF– Is fracking helpful or harmful? That’s the question surrounding a new report from the Ohio River Valley Institute. It claims counties in our area suffered as production increased in oil and natural gas, but those working in the industry have a very different view. “This report is nothing more than once again, someone who is out of town and out of touch talking bad to the Ohio Valley.” That’s basically how the Ohio Oil and Gas Association said it feels about the Ohio River Valley Institute’s fracking counties economic impact report called “Appalachia’s Natural Gas Counties: Contributing more to the U.S. economy and getting less in return”. While the report claims that the industry’s promises of jobs and money to local economies weren’t delivered, others say that’s not what’s happening in our area. Unless you’ve been here and seen it it’s easy to drive through and think ‘oh nothing’s ever happened here look how bad it is’. If they’d seen it before versus where it is now there’s a big difference. The Ohio River Valley Institute’s report says natural gas counties are suffering. So, 7News took their data for the last ten years to those representing the oil and gas industries and local counties for comparison. Let’s start with jobs. The report claims that jobs in the 22 county region covered didn’t live up to the 450,000 jobs that were expected in Ohio, Pennsylvania and West Virginia. It goes on to say that, according to the U.S. Bureau of Economic Analysis, jobs increased by 1.7%. That’s compared to the nationwide 10%.”Don’t take it from me. Take it from the Ohio Department of Jobs and Family Services and their numbers say over 200,000 Ohioans work in the Ohio oil and gas industry. Now, you add this to the Pennsylvania number and the West Virginia that becomes several hundred thousand very quickly. MIKE CHADSEY, Ohio Oil and Gas Association What about impact on the economy? The report says while economic output grew by 60%, little of that money actually made it into local economies. The Ohio Oil and Gas Association countered with numbers from the state. They tell us that the average wage in the oil and gas industry is higher than the overall wage in the state of Ohio. That’s a really good thing. We also know that $86 billion has been invested in Ohio over the last 10 years because of shale development.
DEP gives OK to public comment on fracking wastewater permits --The Pennsylvania Department of Environmental Protection has agreed to allow public comment on permits at 49 fracking waste facilities. The sites include tank farms, industrial treatment plants, and well pads that use, store or process liquid fracking waste. The agency approved the permits in December and January without public comment. But environmental groups protested, saying the DEP’s own rules required a notice-and-comment period. The DEP agreed, in a signed settlement. The 49 permits were renewals of existing permits, made after the agency updated its wastewater reuse and storage permitting program at the beginning of the year. Without public comment, the environmental groups said people would not have been able to scrutinize the permits for 10 more years, the life of the new permit. Over that time, much of the facilities’ operations could change, said Lisa Hallowell, an attorney for the Environmental Integrity Project, one of the groups that lobbied for the public comment period. “It’s possible that there’s new infrastructure that’s been added (to a site) that would bring additional dangers or concerns that the community might want to know about,” Hallowell said. “The permit renewal cycle allows for all of this information to be packaged together and submitted to the people to scrutinize it. And in some cases, maybe not much has changed. But there’s certainly the potential for many, many components of the process to change.” David Callahan, president of the Marcellus Shale Coalition, said in a statement the groups’ push for more public comment was “another activist attempt to halt natural gas development” and said the facilities “have been rigorously reviewed and subject to regular inspection.” But leaks or spills can pose a public risk. The waste contains carcinogenic chemicals, heavy metals, and high levels of radioactive materials. A 2011 analysis by federal scientists found concentrations of radium, a radioactive element found naturally underground, roughly 40 times what the federal Nuclear Regulatory Commission classifies as “hazardous” or “radioactive” waste. (Federal law exempts oil and gas waste from being classified as “hazardous waste.”)
Pipelines Make Uncomfortable Neighbors in Appalachia -- 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, because 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.
Neighbors still haunted 10 years after deadly gas explosion - The emptiness across the block still unsettles Elsa Reyes after midnight, when she returns from work to her North 13th Street home in Allentown. During the first five years Reyes lived on the east side of the 500 block, eight row homes stood across the street. Her son Joel would walk to school with a girl, Katherine Cruz, who lived at 542 N. 13th St. But for a long time now, Reyes has turned the corner at Allen Street to see nothing but five small white crosses on the end of a vacant lot. Ten years ago, a natural gas explosion leveled the homes, killing 16-year-old Cruz; her 4-month-old son, Matthew Manuel Vega; and her 69-year-old grandmother, Ofelia Ben. A couple living next door — William Hall, 79, and his wife, Beatrice, 74 — also died. Long after the debris was cleared, the site has remained subdivided into eight undeveloped plots. At night, the emptiness plays mind games with the neighbors who lived through the disaster. Cathy Royack, who lives a few doors down from Reyes, sometimes sees the Halls’ Christmas lights. And Reyes revisits the moment her son ran out into the bitter cold Feb. 9, 2011, to see if he could rescue his friend. “We are still traumatized,” Reyes said last week. “You see the lot, and you see the crosses, and you remember: People died there.”
150 years of spills: Philadelphia refinery cleanup highlights toxic legacy of fossil fuels (Reuters) - Wearing blue hard hats, white hazmat suits and respirator masks, workers carted away bags of debris on a recent morning from a sprawling and now-defunct oil refinery once operated by Philadelphia Energy Solutions (PES). Other laborers ripped asbestos from the guts of an old boiler house, part of a massive demolition and redevelopment of the plant, which closed in 2019 after a series of explosions at the facility. Plans call for the nearly 1,400-acre site to be transformed into a new commercial hub with warehousing and offices. All it will take is a decade, hundreds of millions of dollars, and confronting 150 years’ worth of industrial pollution, including buried rail cars and a poisonous stew of waste fuels poured onto the ground. A U.S. refinery cleanup of this size and scope has no known precedent, remediation experts said. It’s a glimpse of what lies ahead if the United States hopes to wean itself off fossil fuels and clean up the toxic legacy of oil, gas and coal. It’s a transition fraught with challenges. Among the biggest is what to do with the detritus left behind. The old PES plant is just one of approximately 135 oil refineries nationwide, to say nothing of the country’s countless gas stations, pipelines, storage hubs, drill pads and other graying energy infrastructure. In recent months, at least six other large U.S. oil refineries - from New Jersey to California - have announced they will close or cease oil refining as the coronavirus pandemic has sapped global fuel demand.
Fire at Oil and Gas Waste Site Raises Safety Concerns Around Possible Radioactive Accidents – DeSmog - On the evening of February 1, a fire erupted at a West Virginia facility that processes radioactive oilfield waste generated from nearby fracking operations, injuring two workers. A video of the fire captured by local news station WTRF shows a raging nighttime inferno billowing out of the collapsed building.Initial news reports described the facility — located in Dallas Pike, 50 miles southwest of Pittsburgh — as a truck stop cleaning station. However, the West Virginia Department of Environmental Protection (WVDEP) confirmed to DeSmog that the facility, which the agency says is owned and operated by Ohio-based company Petta Enterprises, does a lot more than clean trucks: It processes oil and gas waste. And the agency confirmed that it was the volatile nature of this waste — transported inside trucks arriving at the site — that helped cause the blaze.The blast raises concerns about the risk to health and the environment from waste processing facilities like this which continue to pop up around the Marcellus and Utica shale region, not just in West Virginia, but also Ohio and Pennsylvania. Community members, advocacy groups, and some industry workers fear that the government, whether local, state, or federal, is not properly regulating or monitoring the toxic and radioactive waste produced from fracking and being processed at sites like the Dallas Pike facility.Lou Vargo, Director of West Virginia’s Wheeling-Ohio County Homeland Security and Emergency Management Agency, told DeSmog the blaze occurred when a type of worksite space heating unit called a torpedo heater ignited vapors leftover in an oil and gas waste truck that was being cleaned at the facility. The heater apparently was being used to warm the workspace on a cold, snowy night. “We got there at 8:00 p.m. that night and everything was pretty well burnt up,” said Vargo. “We believe that when the workers opened the truck hatch to start cleaning inside the truck, there must have been enough vapors left in there that came out, and it was in close enough range that they came in contact with the flame from the torpedo heater.”Video of the February 1 fire at Petta's Dallas Pike, West Virginia, oil and gas waste processing site, from local news station WTRF.Two workers suffered burns. One of them, according to a brief summary of the incident provided to DeSmog by theWVDEP, was “badly injured.” Vargo said this worker was transported to a burn center in Pittsburgh, but had no further details.The Department of Environmental Protection summary indicates that the torpedo heater caused the explosion by igniting condensate gas and petroleum that was “mingled” with the fracking flowback matter and brine in the truck. Flowback and brine are both fluid byproducts from oil and gas extraction with toxic and radioactive constituents.
Manchin Letter To The President Highlighting The Importance Of Fracking -Last week, Senator Manchin of West Virginia sent a letter to President Joe Biden, urging him to carefully consider the benefits of natural gas as Biden forms his energy policy: “Responsible production of natural gas and practices like hydraulic fracturing have improved our nation’s energy security while supporting the nearly 1.5 million hard working Americans the industry employs.”Manchin highlights the role that the “shale revolution” played in America’s energy security and which resulted in the “U.S. becoming a net total energy exporter in 2019 for the first time in 67 years.”The letter continues: “The U.S. Geological Survey recently estimated that there are still 214 trillion cubic feet of undiscovered, technically recoverable continuous resources of natural gas in the Marcellus and Utica shale formations alone. Responsible production of our abundant resources is critical. That includes using existing technologies and continuing to innovate new ways to reduce methane flaring and leaks from oil and gas systems and expanding our energy infrastructure and gathering lines to instead get that product to market. I also strongly support advancing carbon capture, utilization, and sequestration technologies, including for natural gas applications, to further reduce emissions.”
Residents asked to reduce natural gas usage as frozen pipes cause shortage across Midwest - — Fulton residents are being asked to reduce their natural gas usage due to a massive spike in natural gas prices caused by frozen natural gas wells in Oklahoma and Texas. The City of Fulton held a special press briefing on Friday to urge residents to reduce their natural gas usage. The city said frozen natural gas wells in Oklahoma and Texas are causing a shortage of available natural gas, leading to an increase of as much as 100 times the typical purchase price. The City says it has reserves in its natural gas fund to cover unexpected costs so natural gas customers won't necessarily see an increase in their utility bills. However, costs could eventually be passed on to consumers if prices remain high. The City said this problem is not only impacting the City of Fulton but other natural gas utilities throughout the Midwest. Lowering a home’s thermostat by only a couple of degrees can have a significant impact on natural gas consumption and costs, the City said. Ameren a Mid-Missouri natural gas provider and Columbia's provider stated in communications with KRCG-13 that they are aware of the impact cold temperatures can have on natural gas service, however their supplies are adequate at this time. They suggest prudent use of natural gas would be best given the low temperatures which will help customers save money during this extended cold period.
Weekend Freeze to Set Records in US as Energy Prices Spike (Bloomberg) -- There’s no respite this weekend for much of the U.S. with temperatures likely to hit new lows. Arctic cold is already gripping much of the interior, freezing natural gas pipelines and threatening snow as far south as Houston. Nearly 300 new daily temperature records could be set mainly across the Great Plains from Canada to Texas through Tuesday, said Marc Chenard, a senior branch forecaster at the U.S. Weather Prediction Center. The frigid air is heating up gas and electric markets as U.S. residents turn up thermostats to stay warm. “One of the main stories is the very cold temperatures and the expanse of the cold,” Chenard said. “Most of the country will be at or below average except Florida.” Furthermore, a series of winter storms will ride along the leading edge of the cold from the Pacific Northwest to the East Coast. That could bring 6 to 12 inches (15 to 30 centimeters) of snow across western Washington and Oregon, including Seattle, while ice and sleet could touch Houston before coming up the East Coast early next week. The Electric Reliability Council of Texas, which oversees the state’s main power grid, warned of record power demand due to extreme temperatures. The average spot price for electricity in North Texas climbed 738% to $289.40 a megawatt-hour Thursday at 2 p.m. local time, after much of the region spiked briefly to about $1,900 earlier, according to data compiled by Genscape Inc. Prices for gas, propane and heating oil, fuels used to heat homes, are also surging, and not just because of elevated demand. Temperatures are low enough to trigger so-called freeze-offs, when wells shut down because of liquids freezing inside pipelines. Texas facilities operated by pipeline companies DCP Midstream LP and Targa Resources Corp. were reported shut on Thursday due to the cold. The impact on regional gas prices has been dramatic. The rate for next-day delivery at the Oneok hub, which hauls Oklahoma gas to networks serving the Midwest, rose sixfold Thursday. Gas for next-day delivery to Houston and Chicago climbed to the highest in seven years. Chenard said the country can expect a mix of ultra-cold lows, with high temperatures that struggle to be anything but frigid. What makes the outlook all the more remarkable is that it’s the dead of winter, so the air has to really chill to set new marks. Also noteworthy is how far into Texas the cold will get, along with the potential of snow, sleet, and freezing rain reaching Houston lateNew Tab Sunday into Monday. In Lubbock, Texas, Monday’s forecast high will be 14 degrees Fahrenheit (minus 10 Celsius), which will shatter the old record of 30 for the date. “You don’t often see records being broken by that much,”
US oil and natural gas prices rise as freezing temperatures leave millions without power in Texas- U.S oil and natural gas prices rose on Tuesday, as freezing cold weather battered Texas's energy infrastructure, leaving millions without power.WTI crude oil was up 0.52% to $59.77 per barrel as of 6.10am ET. That was just off a more than one-year high of more than $60.80 touched on Monday as plunging temperatures hit Texan oil plants.Natural gas futures were up 5.8% to $3.079 per million British thermal units on Tuesday, trading at around the highest levels since November.More than 3 million people have been left without power in Texas and close to 5 million around the US as a whole, according to poweroutage.us, as a rare winter storm sweeps the country.Temperatures fell to 4F (-16C) overnight in Dallas, Texas, and have plunged across Oklahoma, Kansas, New Mexico, Colorado and elsewhere.It has been challenging for Texas's energy grid, which does not pay generators to keep capacity in reserve. The weather has forced many generators to stop production.Wholesale energy prices have skyrocketed, at times above the market cap of $9,000 per megawatt hour, compared to prices of around $25 to $50 per MWh before the winter storms.The frigid temperatures have hit oil production and natural gas supplies and led to a surge in demand for energy, causing prices to spike.Heating oil futures - a proxy for diesel - were up 2.58% to $1.817 per gallon on Tuesday morning. Gasoline futures were up 4.11% to $1.7621 a gallon.Texas is also home to some of the country's biggest oil refineries, as well as the heart of the shale basin. Jeffrey Halley, senior market analyst at currency firm Oanda, said he thought the US oil market had been due a correction after a surge in prices in recent weeks. But he said the current weather situation "will likely continue to offset that."
Natural-gas prices soar amid freezing U.S. temperatures, while oil prices settle at a more than one-year high --Natural-gas futures mark highest finish since November Natural-gas futures led an across-the-board surge in energy prices on Tuesday, as swaths of the U.S. struggled with subzero temperatures and rolling blackouts hit several states. "Elevated, weather-driven demand across much of the nation" supported the rally for natural gas, said Tyler Richey, co-editor at Sevens Report Research. "Supply has also become an issue in some locations as the storage infrastructure has literally frozen, preventing physical delivery to various consumers," including utility companies, which contributed to some regional power issues. March natural gas climbed 22 cents, or nearly 7.5% to settle at $3.129 per million British thermal units, with front-month contract prices logging their highest settlement since early November of last year, according to Dow Jones Market Data. The surge in prices came as the Southwest Power Pool, a group of utilities covering 14 states, ordered utilities to start rolling blackouts (link) to cope with an exhausted supply of reserve energy. That came as a winter storm swept from the Ohio Valley to the Gulf Coast of the U.S., bringing freezing temperatures as far south as San Antonio.Extreme winter weather forced wind power generators in Texas offline and caused spikes in electricity prices. The Electric Reliability Council of Texas estimated two million people were without power on Monday evening, The Wall Street Journal reported (link). President Joe Biden declared a state of emergency in Texas, at the request of Gov. Greg Abbott, paving the way for emergency aid to reach the state. The storm has killed two people so far in Texas. "Since many well sites are frozen, there is little gas to feed pipelines," . "Any available gas is being prioritized for heating rather than for electricity generation, further exacerbating the shortage for electric generation in Texas." "For natural-gas producers, it is a 'theoretical windfall', but practically just a missed opportunity," said Raj. "Even though prices have skyrocketed beyond anybody's belief, little gas is actually available to trade at these prices."
U.S. natgas gains 3% as winter storm persists (Reuters) - U.S. natural gas futures rose nearly 3% on Wednesday to a more than three-month high, extending its rally to a third session as a cold snap continued to wreak havoc on the energy industry and fuel soaring demand for heating. Front-month gas futures NGc1 rose 9.0 cents, or 2.9%, to settle at $3.219 per million British thermal units, shaking off initial declines, which analysts attributed to forecasts suggesting a likely reprieve from the deep freeze next week. Prices jumped over 10% on Tuesday to hit a high since Nov. 3 at $3.214. "The current cold snap is expected to take a heavy toll on amount of gas available now and also down the road," "The spike in the consumption coupled with the continued decline in production makes the gas market tighter than before." Unusually freezing weather is likely to wreak havoc on U.S. oil and gas production for several days, if not weeks, according to industry experts, as companies deal with frozen equipment and a lack of power to run operations. The deep freeze left millions without power along the U.S. Gulf Coast, causing power prices to surge, especially in Texas - the country's biggest oil and natural gas producer. Next-day power for Wednesday at the ERCOT North hub, which includes the cities of Dallas and Fort Worth, spiked to a record of $8,800 per MWh, a nearly sixfold jump from $1,490 on Tuesday. Next-day prices at Waha hub in the Permian basin in West Texas also hit an all-time peak of $209.75 per mmBtu. Power at PJM Western Hub hit a high since January 2018. Daily U.S. natural gas production has fallen by roughly 17% from the end of last week to 72.1 billion cubic feet per day on Wednesday, according to preliminary data from Refinitiv Eikon. nL1N2KL0HR Data provider Refinitiv estimated 401 heating degree days (HDDs) over the next two weeks in the Lower 48 U.S. states, slightly down from Tuesday's forecast of 425 HDDs. The normal is 374 HDDs for this time of year. HDDs measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius). The measure is used to estimate demand to heat homes and businesses. Prices will be susceptible to selling in the coming days as temperatures ease, said Daniel Myers, market analyst at Gelber & Associates in Houston. Meanwhile, Refinitiv projected average demand, including exports, would ease to 122.2 to billion cubic feet per day (bcfd) next week from this week's 144.4 bcfd, while staying above the five-year average of 107.2 bcfd.
Natural Gas Prices Hit Historic $999/MMBtu High as Unrivaled Cold Strains Supply, Fuels Record Demand - Natural gas futures soared Tuesday following a historic Arctic freeze that crippled much of the nation’s natural gas infrastructure as demand soared to unprecedented levels. The March Nymex gas futures contract settled at $3.129/MMBtu, up 21.7 cents from Friday. April prices lagged a bit, climbing 10.7 cents to $2.983. Cash prices remained volatile after the weekend, with next-day gas in Oklahoma surging as high as $999.00 amid the unparalleled winter blast that slammed the region. NGI’s Spot Gas National Avg. rose $18.800 from Friday’s levels to $80.760. The American Gas Association said 151.7 Bcf of natural gas was delivered in the United States on Sunday and 149.8 Bcf was delivered on Monday, setting a record for demand over the two-day period. Monday was the second highest delivery day ever. However, the record demand was not without its challenges. Operational issues on more than 30 natural gas pipelines, as well as numerous storage facilities and gas plants, were reported amid the multi-day stretch of bitter weather, reducing supplies as extreme cold blanketed the country’s midsection. Northern Natural Gas declared a critical day across its system for Wednesday. The pipeline indicated it is at “imminent risk” of experiencing reduced receipts at pipeline interconnects in its market and field areas. A standard operating limit was in place by late Tuesday. “It is uncertain when this situation will improve. As this situation continues, Northern’s pipeline system integrity will be negatively impacted if deliveries are in excess of receipts, resulting in low line pack levels across the entire system,” it said.
Deep cold puts pinch on natural gas, drives Missouri prices sky-high — Natural gas providers urged St. Louis customers to minimize their usage of heat Monday, even as single-digit temperatures and subzero windchills gripped the region and a huge portion of the U.S. The widespread cold has sent gas demand soaring — and prices skyrocketing — while simultaneously creating supply problems, such as frozen gas wells. The multi-sided crunch is prompting calls from utilities for their customers to conserve. “It’s just straining the entire system,” said Scott Carter, the president of Spire Missouri, the St. Louis-based natural gas utility. Spire issued a statement Sunday requesting that its gas users reduce consumption. Ameren, the St. Louis-based energy monopoly, also issued similar advisories Monday for its 132,000 natural gas customers. In parts of Missouri, market prices for natural gas have risen more than 200 times compared with their levels from just last week, said Ewell Lawson, the vice president of external affairs for the Missouri Public Utility Alliance, which helps coordinate a natural gas supply pool for 11 municipalities in the state. Other states faced a similar plight: Kansas Gov. Laura Kelly, for example, said the subzero temperatures have driven wholesale prices 10- to 100-times higher than normal. There’s a chance that customers could be shielded from the exorbitant prices. Many natural gas providers buy the bulk of their supply in advance, and store it. But as reserves dwindle, utilities will likely need to turn to the sky-high prices on the wholesale market. “We don’t want to get to that point where we have to tap into those market prices,” said Lawson. “That’s not to say that we won’t have to.” Spire said its local operations are holding up just fine. But Carter said a primary issue is that extreme cold has frozen natural gas wells in places like Texas and Oklahoma, choking off the gas they would typically supply to national distribution systems. Wells in those locations aren’t designed for such conditions, he explained, and the loss of their production creates a void in the system that can domino.
Ford shuts F-150 plant as winter storm creates natural gas shortage - Ford is shutting its Kansas City assembly plant, which makes its best-selling F-150 pickup, because of a shortage of natural gas caused by severe winter weather hitting much of the country."To ensure we minimize our use of natural gas that is critical to heat people's homes, we decided to cancel operations for a week, beginning Saturday, February 13," Ford said in a statement. "We expect to return to normal operations on Monday, February 22."About 200 million people were under some sort of weather-related alert Tuesday as a winter storm pummeled much of the United States. After hitting Texas and Oklahoma especially hard, the storm was expected to move out through the Northeast late Tuesday, leaving a trail of heavy snow and ice in its path, CNN Meteorologist Tyler Mauldin said.Oil and natural gas prices rose sharply this week as the storm disrupted normal operations in the Permian Basin, the fracking capital of the United States. The price of natural gas jumped more than 5% Tuesday.General Motors confirmed that it canceled the first shift at four plants Tuesday, but that was due to the weather and not a shortage of natural gas. The plants are located in Spring Hill, Tennessee; Ft. Wayne, Indiana' Bowling Green, Kentucky; and Arlington, Texas. The company said it would make a decision on the second shift later Tuesday, based upon local weather conditions. Stellantis, the new name of the company previously known as Fiat Chrysler, confirmed it shut its Toledo, Ohio, Assembly plant, also due to weather.
No Easy Answers as Texas Power Grid, Natural Gas Market Rocked by Unprecedented Cold Snap - Rotating power outages continued to impact Texas end-users on Tuesday as the Electric Reliability Council of Texas (ERCOT) scrambled to restore service amid a blast of arctic cold that sent the electric grid and natural gas markets into chaos. Texas power prices About 10,500 MW of customer load, equal to the demand of about 2 million homes, was shed at the highest point on Monday as the extreme weather caused “many generating units – across fuel types – to trip offline and become unavailable,” ERCOT said. The independent system operator, which manages the flow of electricity to more than 26 million Texas customers, said that while it was “already contending with frozen wind turbines and limited gas supplies to generating units on Feb. 14, a significant number of additional generating units tripped offline when the weather worsened overnight.” [Want to know how global LNG demand impacts North American fundamentals? To find out, subscribe to LNG Insight.] The outages extended south of the border as well, with Mexican grid operator CENACE enacting rolling blackouts across the northern states of Chihuahua, Coahuila, Nuevo León and Tamaulipas. “The number of controlled outages we have to do remains high,” said ERCOT’s Dan Woodfin, senior director of system operations in a tweet posted at 8:23am CT on Tuesday. “We are optimistic that we will be able to reduce the number throughout the day.” Around 11:30 am CT Tuesday, ERCOT said it had directed local utilities to restore power to 400,000 households, in addition to 500,000 households whose electricity had been restored as of Monday evening. ERCOT said it expected to restore more customers by the afternoon as additional wind, solar and thermal output became available. However, “the amount we restore will depend on how much generation is actually able to come online.” ERCOT urged Texans without power to turn off their thermostats and unplug appliances, warning that too much load on restored circuits at once could cause another outage. The bitter cold blast and shortage of natural gas pushed natural gas prices into the stratosphere on Tuesday. At midday, Texas natural gas prices were up $238.835 to $400.000 at Houston Ship Channel, and ahead $55.280 to $204.680 at the Waha hub.
East Is East, West Is West - U.S. Natural Gas Spot Prices Race To $600/MMBtu As Midcon Runs Out Of Gas --Physical natural gas spot prices in the U.S. Midcontinent trading as high as $600/MMBtu, while Northeast prices barely flinch – that was the upside-down reality physical traders were contending with Friday in trading for the long weekend, with Winter Storm Uri bearing down on large swaths of the Lower 48 and spreading bitter-cold, icy weather from the Midwest and Northeast to Texas and the Deep South. The record-shattering, triple-digit spot prices, mostly all west of the Mississippi River, were indicative of some of the worst supply shortages the market has seen during the generally oversupplied Shale Era, or ever. But the East vs. West price divergence also marks the culmination of years of shifting gas supply and flow patterns that have redefined regional dynamics. The market will be digesting the various impacts of this still-unfolding event for days, but some of the effects and implications can be gleaned already from daily pipeline flows. In today’s blog we provide an early look at the market impacts of the polar plunge. Last Friday, February 12, as most of the Lower 48 was cranking up the heat and hunkering down for some of the coldest weather in decades, the physical gas market went absolutely berserk. You wouldn’t know that from futures trading — the CME/NYMEX Henry Hub prompt futures contract last week dallied just under $3/MMBtu for March delivery and settled at $2.912/MMBtu Friday. But prices for physical “next-day” delivery of gas at the dozens of hubs across the U.S., which reflect the immediate and localized market for the long, holiday weekend, skyrocketed to previously unimaginable levels, with volumes trading at hundreds of dollars per MMBtu at many physical trading hubs — in some cases 200x the price just days earlier and three times the previous all-time highs (which were also in the triple-digits).
US working natural gas volumes in underground storage decline 237 Bcf: EIA | S&P Global Platts -- US natural gas storage inventories posted the largest withdrawal of the winter last week with the largest pull ever possible for the week in progress as an arctic storm sweeps across the nation, propelling summer strip prices. Storage inventories decreased by 237 Bcf to 2.281 Tcf for the week-ended Feb. 12 the US Energy Information Administration reported the morning of Feb. 18. Natural gas prices gained ground this week, with the March NYMEX contract touching near $3.30/MMBtu earlier this week – although prices backed off to near $3.09/MMBtu following the storage report. Temperatures across key producing regions of the country plummeted for the week ended Feb. 12 – sparking massive production curtailments. Record levels of production losses and heightened demand sparked huge gains in spot natural gas prices across the country – with multiple locations getting deep into the triple digits – with Henry Hub cash establishing an all-time high too. The call on storage increasing by 13.3 Bcf/d week over week. On the demand side of the ledger, US consumption increased by roughly 13 Bcf/d as heating degree days jumped sharply. Outside of residential and commercial, gas-fired generation demand grew 1.7 Bcf/d week over week as lower wind generation and higher total loads pushed the call on thermal generation nearly 10% higher week over week. LNG sendouts decreased by nearly 50% week over week – with milder temperatures in the Northeast sparking the reduction, according to Platts Analytics. The withdrawal was less than the 251 Bcf draw expected by an S&P Global Platts' survey of analysts. The pull proved much stronger than the 141 Bcf draw reported during the same week last year as well as the five-year average withdrawal of 142 Bcf, according to EIA data. Storage volumes now stand 105 Bcf, or 4.4%, less than the year-ago level of 2.386 Tcf and 57 Bcf, or 2.6%, more than the five-year average of 2.224 Tcf. Platts Analytics' supply and demand model expects a 369 Bcf draw for the week-ending Feb. 19, which would register as the largest weekly withdraw from working gas stocks in US history, according to EIA data. US production was down 10 Bcf/d – with much of the losses stemming from weather induced curtailments in Texas, Southeast and the Midwest regions. Losses could be greater than current modeled output suggests, as sample declines have been pronounced. The largest weekly storage decline on record stands at 359 Bcf, which was set for the week-ended Jan. 5, 2018. During that week, a "bomb cyclone" blasted its way across the US, prompting freeze-offs and pipeline-related outages, dropping supply by 3 Bcf/d. At that time, when the freeze-offs primarily hit the Midwest and Texas, production bounced back within a week.
US natural gas falls on smaller storage draw - US natural gas futures fell more than 4% on Thursday, snapping a three-day gaining streak, as a smaller-than-expected storage draw last week and forecasts for a reprieve from an Arctic blast weighed on prices. Front-month gas futures fell 13.7 cents, or 4.3%, to settle at $3.082 per million British thermal units. In the previous session prices hit their highest since Nov. 2 at $3.316 per mmbtu. The US Energy Information Administration (EIA) forecast US utilities pulled 237 billion cubic feet (bcf) of gas from storage during the week ended Feb. 12. That was lower than the 252-bcf draw analysts forecast in a Reuters poll, but above a decrease of 141 bcf in the same week last year and a five-year (2016-2020) average withdrawal of 142 bcf. The data covers the period that ended Friday, just before blistering cold and snow hit most of Texas, New Mexico and other big energy producing areas, shuttering millions of barrels of production and refining output. Thomas Saal said this week’s draw, announced next Thursday, would likely be a big number although it could be offset by forced blackouts in Texas and Oklahoma. “Last week’s weather was cold but not as much as it is now.” Texas produces the most gas - almost a quarter of the US total. It is also the biggest consumer of gas in the nation, accounting for about 15% of the total, and it exports more gas to other states and nations than it pulls in. Natural gas production in the Lower 48 US states fell to 72.9 billion cubic feet per day (bcfd) on Wednesday, its lowest since August 2017, according to Refinitiv data. On Thursday, preliminary data from Refinitiv showed output is expected to edge up to 73.5 bcfd. Refinitiv estimated 397 heating degree days (HDDs) over the next two weeks in the Lower 48 US states, down from Wednesday’s forecast of 401 HDDs.
Head-Spinning Week Culminates with Natural Gas Futures, Cash Lower Again -- After a week in which the term “volatile” may be the understatement of the year, natural gas prices in both the futures and spot gas markets ended Friday on a much quieter note. Still trying to digest the past week’s crippling Arctic blast and the long-term implications it may have on natural gas, traders pushed the March Nymex gas futures contract down 1.3 cents to $3.069. April finished at $2.991, up 2.1 cents. working gas in storage Spot gas action continued to slow as temperatures throughout the Midcontinent and Texas were forecast to climb from the record lows experienced over the past week. NGI’s Spot Gas National Avg. fell $4.385 to $4.475. An unbelievable week in the natural gas market that all started with an Arctic blast that gripped the country’s midsection down into Texas fittingly ended with power restored to nearly all Texas homes and businesses. That said, the storm, on a more figurative level, is far from over. The lack of clarity was likely what kept futures traders content with leaving their positions relatively intact ahead of the weekend. “It’s difficult to know if futures are trading on impacts from the recent/current Arctic blast or are looking to late February and early March patterns to decide if April prices are worthy of $3 or not,” said NatGasWeather. If the latter, the forecaster said there is more cold weather forecast late in the coming week. The latest Global Forecast System (GFS) was trending even colder across the central and northern United States, and it was also a little colder into the Northeast March 1. However, the model was “a bit too mild” over most of the country March 3-6.
Jerry Jones' Company Hits 'Jackpot' As Storms Send Gas Prices Surging - The winter storms gripping much of the United States have devastated many families and businesses, with frigid temperatures and power outages causing particularly dire conditions in Texas. But for oil and gas producers that have managed to keep production going, this is proving to be a big payday. Jerry Jones, the billionaire owner of the Dallas Cowboys, appears to be one of the beneficiaries. Comstock Resources Inc., a shale driller that operates in Texas and Louisiana, told investors on an earnings call this week that the surge in natural gas prices was providing it with a major — albeit almost certainly temporary — financial boost. The company is publicly traded but Jones holds a majority of the shares. "Obviously, this week is like hitting the jackpot," President and Chief Financial Officer Roland Burns said Wednesday. The storm has reduced natural gas output at the same time that demand — for both home heating and power generation — has skyrocketed. That's resulted in catastrophic shortages, as well as some truly eye-popping prices for natural gas in the affected regions. Many in the oil and gas industry have taken a blow because wells and pipelines have stopped working in the unexpected cold. But Comstock was already ramping up production in anticipation that natural gas prices would increase, and now finds itself benefiting from what it described as "super-premium prices" of "anywhere from" $15 per thousand cubic feet to as much as $179 per thousand cubic feet. For comparison, the company had sold the same gas last quarter for an average of $2.40 per thousand cubic feet.
Bedlam in U.S. Energy Markets Sends LNG Feed Gas Deliveries Spiraling Downward — U.S. liquefied natural gas (LNG) export terminals were struggling to bounce back Tuesday after feed gas deliveries in recent days plummeted to their lowest point since the fall amid a historic cold snap gripping much of the country that’s created unprecedented energy demand. Deliveries to the terminals via interstate pipelines fell to 5.45 Bcf Monday, down from 9.16 Bcf on Friday, according to NGI data. The declines have been driven by facilities along the Gulf Coast, where some of the worst winter weather has touched down in an otherwise temperate part of the country. Nominations had bounced back by 2 Bcf day/day on Tuesday and were at 7.70 Bcf. However, a return to normalcy is tenuous for now as record cold was again expected in Texas on Tuesday. The forecast in the South and along the East Coast is expected to remain cold in the coming days, which is likely to fuel more volatility in the U.S. gas market. The weather has sent pipelines into emergency mode, with many declaring force majeures, operational flow orders and other restrictions. “Other declarations were made by multiple systems putting in place ‘human needs’ requirements,” Wood Mackenzie analysts said. The American Gas Association said 151.7 Bcf of natural gas was delivered in the United States on Sunday and 149.8 Bcf was delivered on Monday, setting a record for demand over the two-day period. Monday was the second highest delivery day ever.
LNG Loading Disrupted as Weather Continues to Upend U.S. Export Operations -U.S. liquefied natural gas (LNG) operations were again disrupted on Wednesday as wintry weather continued to grip the Gulf Coast, forcing traders to shuffle cargoes as American exports continued to decline. Power has been restored at Cameron LNG in Hackberry, LA, after a problem with the transmission grid knocked it offline Monday. But the terminal was still working to ensure it could safely restart operations, a spokesperson said. Meanwhile, two of three liquefaction trains remained offline at Freeport LNG on Quintana Island in Texas in order to cut natural gas and electricity consumption in compliance with the state’s emergency declaration. Cheniere Energy Inc. also was said to be diverting cargoes away from Corpus Christi in South Texas to its Sabine Pass terminal in Louisiana for similar reasons. Emstream LNG broker Melissa Lindsay told NGI that traders were likely working through operational management issues to accommodate the disruptions, saying it’s likely that a handful of cargoes from the Gulf Coast have for now been canceled. Energy Aspects analyst James Waddell said his firm expects up to 10 cargoes would be lost or delayed because of U.S. outages, or a roughly 1 billion cubic meter bite out of global supply that should be spread between European and Asian markets. The loss, he added, is small compared to the number of cargoes that were drawn away from Europe last month when Asian LNG prices soared amid historic cold in the region and left European inventories depleted. While Waddell told NGI that the latest U.S. outages should help drive some restocking demand on the continent, Lindsay added that Europe is for now comfortable on supply. She said LNG bids for March were trading in the price range of the Title Transfer Facility benchmark minus about 30 to 40 cents. After jumping on Monday, gas benchmarks in Europe fell Tuesday. Meanwhile, spot prices in North Asia stopped falling. But significant gains in overseas prices aren’t expected because of the Arctic blast in the United States. “I think these outages would have to be prolonged” to see any meaningful increases in European or Asian prices.
Natural Gas Market Chaos Continues as Texas Governor Bans Producers From Selling Outside State - The fallout of the prolonged Arctic freeze that’s draped over the central United States and into Texas is still unfolding, with a temporary ban on gas exports out of the Lone Star State the latest development in the ongoing crisis. Hours before the surprising announcement, steep decreases in production and large swings in demand fueled Nymex gas futures prices for a second day. Facing what potentially could be the largest storage withdrawal of the winter so far, the March Nymex natural gas futures contract settled Wednesday at $3.219, up 9.0 cents from Tuesday’s close. April picked up 4.9 cents to $3.032. Action in the cash markets remained volatile midweek as Oklahoma added another digit to next-day prices, while prices in other parts of the country also started to tack on more meaningful gains than in recent days. However, other areas tumbled in dramatic fashion, helping to send NGI’s Spot Gas National Avg. down $40.135 to $40.625. The energy crisis in Texas is far from contained, with additional prolonged power outages implemented across the state early Wednesday as temperatures remained not far above freezing. The state’s electric grid operator, the Electric Reliability Council of Texas, said some 185 generating units have tripped offline for one reason or another amid the unprecedented freeze. Until more generation comes back online, power restoration efforts would be hampered. [NGI’s natural gas price indexes have included trade data from both price reporters and the Intercontinental Exchange (ICE) since 2008. Find out more about our price index data here.] In a media address on Wednesday afternoon, Texas Gov. Greg Abbott noted that some natural gas produced in Texas is currently being shipped to locations outside of the state. In response, the governor issued an order prohibiting those producers from transporting that natural gas beyond state lines. “I have, earlier today [Wednesday], issued an order effective today through Feb. 21 requiring those producers that have been shipping to locations outside of Texas to instead sell that natural gas to Texas power generators,” Abbott said. “That will increase the ability of gas power generators in Texas to increase power sent to the Texas power grid.” In addition, Abbott said that President Biden has assisted Texas with orders that “allow additional power generation or have accelerated nuclear plant restoration.” In Texas, some 28,000 MW of thermal generation has been forced off the system during the extreme weather event, according to ERCOT. Another 18,000 MW of wind and solar also have been kicked off the grid. Overnight, ERCOT was able to restore around 3,500 MW of load, which is roughly 700,000 households. However, some of that was lost when the Midwest went into a power emergency of its own, and the grid operator was no longer able to import around 600 MW. As of 9 a.m. CT, ERCOT instructed local utilities to shed 14,000 MW of load representing around 2.8 million households. “The ability to restore more power is contingent on more generation coming back online,”
With Worst of Energy Crisis Likely in Rear-View Mirror, Natural Gas Futures, Cash Prices Plummet -Despite the lack of clarity on the long-term impacts from this week’s Arctic storm, news that power had been restored to most Texas residents on Thursday and warmer weather seen moving into the Lower 48 by next week sent natural gas futures prices crumbling. A huge bearish miss in the latest government storage data sealed the drop, with the March Nymex futures contract tumbling 13.7 cents to settle the day at $3.082. A dramatic fall also occurred in the spot gas markets, where Oklahoma next-day gas plunged back to the single-digits after surging well into the thousands on Wednesday. Texas prices also fell hard, helping to send NGI’s Spot Gas National Avg. tumbling $31.765 to $8.860. With temperatures slowly starting to climb from the unprecedented lows experienced earlier this week, gas prices too began to normalize on Thursday. Futures action was still volatile, though, with large decreases seen early in the trading session as the latest weather models teased at a more variable, rather than downright bitter, pattern beginning next week. Bespoke Weather Services said although there remains some North Atlantic Oscillation (NAO) blocking that typically leads to colder conditions, a warmer signal is developing that portends at least some variability in the 15-day outlook. The southern United States is expected to see warmer weather, finally, as is the East, but there remains “cold air on the maps” from western Canada down into parts of the Rockies and Plains. Regardless of the forecast, market fears related to the energy crisis in Texas appeared to be subsiding on Thursday. As of Thursday morning, the state’s electric grid operator had restored power to all but around 500,000 households and businesses. The Electric Reliability Council of Texas (ERCOT) said it made “significant progress” overnight restoring power, although some outages still remain throughout the state.Meanwhile, several gas pipelines continue to face operational issues. El Paso Natural Gas and Kern River Gas Transmission both posted forces majeure on Wednesday related to the performance of several locations along the system and mechanical issues at compressor stations, respectively. Northern Natural Gas Pipeline also continued to operate Thursday with restrictions across its system. On the other hand, Golden Pass Pipeline lifted its force majeure at more locations in a sign that it continues to gradually return to normal operating conditions.Production freeze-offs, meanwhile, remain exceptionally high, and revisions in the data have shown even lower output levels than previously reported. Production came in at around 71 Bcf on Tuesday, down 3.4 Bcf day/day, according to Wood Mackenzie. The firm said, however, these low production numbers could be understated, as there could be a fair amount of gas in the Permian Basin and on intrastate pipelines that are being delivered directly to meet local demand rather than showing up as production in its models.
U.S. LNG Exports Bouncing Back as Weather Finally Shifts Along Gulf Coast - U.S. liquefied natural gas (LNG) exports were slowly recovering Friday, but the impacts of brutal cold along the Gulf Coast that nearly halted shipments altogether were lingering. Eighteen empty LNG vessels were floating in the Gulf of Mexico Friday, up from 12 on Thursday, Kpler economist Reid I’Anson told NGI. Another two tankers were diverted away from Cheniere Energy Inc.’s Corpus Christi LNG (CCL) terminal in South Texas to its Sabine Pass LNG plant in Louisiana. Both CCL and Cameron LNG in Louisiana remained offline Friday. Freeport LNG on Quintana Island, TX, was still operating at partial capacity. However, following disruptions at Gulf Coast ports caused by the unusual winter weather conditions, The Maran Gas Troy left Freeport LNG and the Gaslog Galveston departed Sabine Pass on Thursday, according to Bloomberg ship-tracking data. Along with the Seri Balhaf, which left Freeport LNG on Wednesday, only three tankers have set sail from Gulf Coast LNG terminals since Feb. 14. LNG traders, brokers and executives expect up to 10 LNG cargoes to be lost because of the disruptions, according to a Bloomberg survey. The extreme cold impacted U.S. natural gas supply more than demand, according to Morgan Stanley analysts. Supply fell by 20% to 75 Bcf/d as the weather impacted production operations. The supply declines, analysts said, have been partially offset by demand disruptions, largely from reduced LNG exports. Total U.S. gas demand fell by 8 Bcf/d during the cold snap, with 70% of the demand decline caused by the loss of LNG exports. Feed gas nominations to U.S. terminals appeared to be recovering Friday at near 6 Bcf. Deliveries were well below that level throughout the Arctic blast and hit a low point of 2.20 Bcf on Tuesday, according to NGI data. Morgan Stanley analysts said LNG exports were expected to recover quickly. Temperatures were already rising in Texas and Louisiana on Friday and were forecast to continue climbing through the weekend. Given a warmer forecast and a lack of clarity on longer-term impacts from the storm, Henry Hub prices fell on Thursday. The March contract shed 13.7 cents to settle at $3.082/MMBtu on Thursday and finished lower at $3.069 on Friday. In North Asia, spot prices remained steady around $6.00/MMBtu as the region continued to assess the impact of U.S. outages. In Europe, prices fell on a warmer forecast and an improving outlook for U.S. LNG imports.
Energy Transfer to Take Out Enable Midstream for $7.2 Billion, Expand Natural Gas Footprint -Major U.S. pipeline operator Energy Transfer LP said Wednesday it would pay $2.6 billion in an all-stock deal to acquire Enable Midstream Partners LP. Including debt, the transaction is valued at $7.2 billion.Energy Transfer, whose plan to expand the controversial Dakota Access crude oil pipeline has been met with repeated court challenges and setbacks, would pick up natural gas gathering and processing assets across parts of Oklahoma, Arkansas, Texas and Louisiana, while also combining Enable’s assets with its own existing gas operations on the U.S. Gulf Coast.The deal is a bid to bolster its natural gas transportation operations and offset the legal and political woes that threaten to imperil the Dakota Access Pipeline. The Standing Rock Sioux Tribe, the Cheyenne River Sioux Tribe and other plaintiffs have opposed the pipeline that stretches from North Dakota to Illinois because of pollution concerns.The pipeline’s future is uncertain under a new Democrat administration that has vowed to ramp up efforts to safeguard the environment.President Biden, who took office in January, revoked a permit for the construction of the Keystone XL pipeline, which would have transported oil from Canada to the Lower 48. Opponents are pressing Biden to similarly halt Dakota Access, which transports 570,000 b/d of crude from the Bakken Shale in North Dakota through South Dakota and Iowa to a terminal in Illinois. The Biden administration has said it is currently studying the project and may take until April to decide next steps. A federal appeals court in Washington, D.C. this year ruled that government officials under former President Trump failed to conduct an environmental impact statement before moving ahead with the pipeline. The court upheld an earlier ruling that vacated a key federal permit.
Natural Gas Production from Seven Key U.S. Shale Plays to Fall from February to March, EIA Says - Natural gas production from seven key U.S. shale plays is set to fall by a combined 560 MMcf/d from February to March as output from most major producing regions is expected to slow over the next month, according to the U.S. Energy Information Administration (EIA). Combined natural gas output from the Anadarko, Appalachian and Permian basins, as well as from the Bakken, Eagle Ford, Haynesville and Niobrara shales, is set to fall from 82.586 Bcf/d in February to 82.026 Bcf/d in March, according to EIA’s latest Drilling Productivity Report (DPR), published Tuesday. Only the Haynesville is expected to grow gas output month/month, increasing 96 MMcf/d to 11.647 Bcf/d in March. The Appalachian Basin is expected to see the largest month/month decline, projected to lower output 260 MMcf/d to 34.250 Bcf/d; the Anadarko is on track to post the next largest decline, projected to drop 142 MMcf/d to 6.021 Bcf/d, according to the February DPR. Last month’s DPR modeled a similar monthly decline in natural gas output from the seven plays for the January-to-February time frame. Meanwhile, oil production from the plays is projected to drop a combined 77,000 b/d month/month to just over 7.5 million b/d. The Anadarko is projected to post the largest decline at 19,000 b/d, with the Bakken (down 18,000 b/d), the Eagle Ford (down 16,000 b/d) and the Niobrara (18,000) also projected to slow output. EIA expects the Permian, the most active U.S. onshore play, to slow output by 5,000 b/d to 4.315 million b/d in March. EIA’s latest tally of drilled but uncompleted wells (DUC) showed inventories dropping a combined 159 across the seven regions from December to January. The Permian depleted its backlog to 3,468, down 38 month/month, while the Niobrara backlog fell 36 units to 467. The Anadarko (down 20), Appalachia (down 9), Bakken (down 24), Eagle Ford (down 27) and Haynesville (down 5) also saw DUC inventories fall from December to January, EIA data show. Across the seven regions, new-well natural gas production per rig is set to fall by an average 94 Mcf/d from February to March to 6,876 Mcf/d. That includes a projected 244 Mcf/d decline in per-rig productivity in the Niobrara. On the other hand, per-rig productivity in Appalachia is set to climb 272 Mcf/d month/month, according to the February DPR.
Gas utilities deliver record volumes during cold snap, but not out of woods - Natural gas utilities were able to deliver record volumes during a historic cold snap in parts of the U.S., even as vulnerabilities in parts of the broader gas complex and electric grid posed ongoing risk to local distribution companies and their customers. Several days into an energy crisis afflicting the southern and central U.S., missed opportunities to harden thermal power plants following past cold weather events emerged as a contributing factor. The freeze has also led to natural gas production and transmission disruptions, though serious problems do not appear to have materialized in the downstream gas utility sector. The U.S. set a two-day record for natural gas deliveries, pumping 151.7 Bcf to residences, businesses and power plants on Feb. 14 and meeting 149.8 Bcf of demand on Feb. 15, according to figures provided by the American Gas Association, or AGA. The Valentine's Day deliveries marked the second-highest single-day demand figures on record, going back to Jan. 30, 2019. The record figures showed up on the company level, too. CenterPoint Energy Inc. said it had delivered record gas volumes during the week's extreme weather conditions. Gas systems face challenges Still, gas utilities in affected areas urged consumers to conserve gas. CenterPoint issued advisories for six of the eight states where it delivers gas, including Texas. Atmos Energy Corp., which also operates in Texas, advised customers to set thermostats no higher than 68 degrees Fahrenheit, lower their water heater temperature, reduce bathing time and avoid using large appliances or natural gas fireplaces. Power outages impacted heating for customers with both gas-fired and all-electric systems, since gas-fired furnaces typically require electric power. One Gas Inc. on Feb. 17 reminded customers in its Texas, Kansas and Oklahoma service territories that furnaces will not operate during a blackout and advised them to turn off power to the equipment until shortly after electric service returns. It also warned that a sudden surge in demand as thousands of furnaces turn on simultaneously can put stress on the gas system. One Gas on Feb. 15 stressed the importance of conservation, noting that should an area lose service, it would take an extended length of time to restore service due to the need to check each home for leaks and reestablish service. The company said its suppliers' gas wells were freezing due to prolonged extreme cold, limiting the volumes they could provide to One Gas and raising the prospect of widespread gas outages to ratepayers. "The demand for natural gas continues to outpace supply, and it is going to take time for our suppliers to get their natural gas wells back online," the company said in a Feb. 16 update. The gas distribution arm of Black Hills Corp. issued similar conservation bulletins to customers in Arkansas, Colorado, Iowa, Nebraska, Kansas, South Dakota and Wyoming. Black Hills Energy reported on Feb. 16 that about 2,300 customers in Pea Ridge, Ark., were without service following reports of loss of gas pressure.
Oil spill has long-term immunological effects in dolphins --A study published in Environmental Toxicology and Chemistry has found long-term impacts of the 2010 Deepwater Horizon oil spill in the northern Gulf of Mexico on bottlenose dolphins' immune function.Bottlenose dolphins from an area that received prolonged and heavy oiling were temporarily captured, sampled, and released as part of health assessment programs. The animals were compared with dolphins from an area where no oil was observed.Investigators documented immunological alterations in bottlenose dolphins tested up to a decade following the oil spill that were similar in nature to those immediately following the spill. The effects were seen even in dolphins born after the spill. The nature of the immunological effects observed in dolphins were also similar to those in mice experimentally exposed to oil in the lab.The findings suggest that there are long-term consequences of oil exposure on the mammalian immune system, with possible multigenerational effects."The parallel between findings in dolphins exposed following the Deepwater Horizon spill and laboratory mice experimentally exposed to oil was impressive and really helped build the weight of evidence between oil exposure and specific effects on the immune system," said corresponding author Sylvain De Guise, PhD, of the University of Connecticut. "However, the long-term effects and potential for multigenerational effects raise significant concerns for the recovery of dolphin populations following the spill," he added.
Biden administration cancels March oil lease sale in Gulf of Mexico - Oil and environmental interests reacted Friday to the federal government's cancellation of March's oil lease sale in the Gulf of Mexico. The action was widely expected after President Joe Biden signed an executive order Jan. 27 halting new leases in the Gulf as his administration makes plans to deal with climate change. The Bureau of Ocean Energy Management cited the order in canceling the lease sale, in which companies bid for the right to explore for and produce oil in specific areas offshore. Officials had been scheduled to open bids March 17 in New Orleans. “We remain hopeful that the administration will proceed with the lease sale upon completion of its review," said Erik Milito, president of the National Ocean Industries Association, which represents oil service companies across the U.S. Business and industry officials have expressed concern that Biden's restrictions will cost Louisiana and other oil-dependent states jobs and damage their economies.The Obama Administration subjected the oil and gas leasing plan for 2017-22 to numerous environmental reviews, Milito said in a prepared statement. The Interior Department determined greenhouse gas emissions "would be higher without these lease sales because energy production would be outsourced to foreign counties resulting in a higher carbon footprint," he said. "Offshore oil production has the lowest carbon intensity of the oil-producing regions and supports more than 345,000 jobs, many of which are accessible, high-paying and cannot be easily substituted,” Milito said.Environmentalists counter such restrictions are an essential step toward fulfilling Biden's pledge to reduce the pollution, rising seas and other ill effects greenhouse gasses from fossil fuels are wreaking on the planet.
Louisiana coastal worker alleges dredge company ordered coverup of 2016 oil spill - A marine contractor who ruptured an oil pipeline during a Louisiana coastal restoration project – itself stemming from the BP oil disaster – blames the company leading the operation for the resulting spill and says it directed him to cover up evidence and keep quiet. James Tassin, a heavy equipment operator from Harvey, is providing evidence to federal prosecutors for possible water pollution charges against Great Lakes Dredge and Dock Co., the Houston-based company that the government hired to rebuild a Plaquemines Parish island six years after the 2010 Deepwater Horizon disaster oiled it.Last month, the U.S. attorney's office in New Orleans charged Tassin with violating the Clean Water Act when he “negligently discharged” an estimated 5,250 gallons of oil into the south edge of Barataria Bay. That happened during the 2016 restoration of Chenier Ronquille Island, a sandy, uninhabited barrier island that was saturated with oil after BP’s rig exploded. Tassin faces as long as a year in prison and a fine of as much as $100,000 if convicted. He has agreed to plead guilty to misdemeanor charges in exchange for cooperation in the larger case against Great Lakes Dredge, said his attorney, Anthony Staines. “James was not a lone ranger driving a marsh buggy over a pipeline and releasing oil,” Staines said. “He was directed by Great Lakes. All direction came from Great Lakes. He had no knowledge the pipeline wasn’t buried properly.”On Sept. 5, 2016, Tassin was operating a shallow water excavator known as a marsh buggy when he punctured a 12-inch underground pipeline owned by Arrowhead Coast Pipeline. The Coast Guard said more than 20 boats, eight skimmers and 10,000 feet of boom were deployed to contain the spill. At least 200 birds were oiled before a large share of the oil was recovered, Coast Guard officials said in 2016. Tassin, who worked for Great Lakes Dredge subcontractor Shallow Water Equipment Co., of Morgan City, asserts that Great Lakes directed him to dig a channel near the pipeline on Sept. 2. He later learned the channel had not been permitted by government regulators or approved by Arrowhead.
EIA forecasts the U.S. will import more petroleum than it exports in 2021 and 2022 - -(EIA) Throughout much of its history, the United States has imported more petroleum (which includes crude oil, refined petroleum products, and other liquids) than it has exported. That status changed in 2020. The U.S. Energy Information Administration’s (EIA) February 2021 Short-Term Energy Outlook (STEO) estimates that 2020 marked the first year that the United States exported more petroleum than it imported on an annual basis. However, largely because of declines in domestic crude oil production and corresponding increases in crude oil imports, EIA expects the United States to return to being a net petroleum importer on an annual basis in both 2021 and 2022.EIA expects that increasing crude oil imports will drive the growth in net petroleum imports in 2021 and 2022 and more than offset changes in refined product net trade. EIA forecasts that net imports of crude oil will increase from its 2020 average of 2.7 million barrels per day (b/d) to 3.7 million b/d in 2021 and 4.4 million b/d in 2022.Compared with crude oil trade, net exports of refined petroleum products did not change as much during 2020. On an annual average basis, U.S. net petroleum product exports—distillate fuel oil, hydrocarbon gas liquids, and motor gasoline, among others—averaged 3.2 million b/d in 2019 and 3.4 million b/d in 2020. EIA forecasts that net petroleum product exports will average 3.5 million b/d in 2021 and 3.9 million b/d in 2022 as global demand for petroleum products continues to increase from its recent low point in the first half of 2020.EIA expects that the United States will import more crude oil to fill the widening gap between refinery inputs of crude oil and domestic crude oil production in 2021 and 2022. U.S. crude oil production declined by an estimated 0.9 million b/d (8%) to 11.3 million b/d in 2020 because of well curtailment and a drop in drilling activity related to low crude oil prices. EIA expects the rising price of crude oil, which started in the fourth quarter of 2020, will contribute to more U.S. crude oil production later this year. EIA forecasts monthly domestic crude oil production will reach 11.3 million b/d by the end of 2021 and 11.9 million b/d by the end of 2022. These values are increases from the most recent monthly average of 11.1 million b/d in November 2020 (based on data in EIA’s Petroleum Supply Monthly) but still lower than the previous peak of 12.9 million b/d in November 2019.
Cold Weather Cuts Permian Oil Output by 1 Million Barrels a Day - Permian oil production has plunged by as much as one million barrels a day as the coldest weather in 30 years brings havoc to a region that seldom faces frigid Arctic blasts.Oil traders and company executives, speaking on condition of anonymity, lifted their estimate of supply losses in the region as the temperature in Midland, the capital of the Permian basin, dropped to -1 Fahrenheit (-18 Celsius), the lowest since 1989, according to the U.S. National Weather Service. Traders had previously estimated losses at several hundred thousands barrels per day.The supply hit is expected to be short-lived, as temperatures are due to start recovering on Tuesday.“Loss of U.S. production looks substantial,” said Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors LLC.The Permian oil outage helped to push West Texas Intermediate, the crude benchmark in the U.S., above $60 a barrel for the first time in more than a year. The shape of the oil market curve also stepped up, a condition known as backwardation that denotes market tightness. The prompt backwardation in WTI reached as much as 25 cents per barrel, the widest since May.Texas and New Mexico, home of the Permian region, produce about 5.8 million barrels a day in normal circumstances, about half of the country’s total crude output, according to data from the U.S. Energy Information Administration.The current losses are due to a combination of well shutdowns, flow-line outages, and disrupted road transport, all due to the extreme cold weather. Small Permian producers pick up crude every few days using trucks, but bad weather is making it hard for vehicles to get out, forcing companies to close wells.While oil production continues in many regions despite the cold, including the Bakken basin in North Dakota, the kit used in the Permian isn’t built to withstand extremely low temperatures, executives said. For example, flow lines, which link individual wells to gathering centers, are laid overground, rather than buried, as in colder regions.The low temperatures have already caused equipment failures at multiple natural gas processing plants in the Permian basin and in the Anadarko basin in Oklahoma, sending regional natural gas prices to record highs.
U.S. Oil Output Slumps by Record One-Third as Permian Freezes - Total U.S. oil production has plunged by one-third -- the most ever -- as an unprecedented cold blast freezes well operations across the central U.S., according to traders and industry executives with direct knowledge of the operations.Crude output has now fallen by about 3.5 million barrels a day or more nationwide, they said, asking not to be identified because the information isn’t public. Before the cold snap, the U.S. was pumping about 11 million barrels a day, according to last government data. Production in the Texas’s Permian Basin alone -- America’s biggest oil field -- has plummeted by as much as 65%. Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said the production losses were “much higher than initial estimates” and warned that Permian output may not return to pre-freeze levels until Feb. 22.“As producers need pipes to be fully running and power prices to normalize before they return production, a substantial return in production may not occur until this weekend at the earliest,” she said in a note to clients.Operations in Texas have stumbled because temperatures are low enough to freeze oil and gas liquids at the well head and in pipelines that are laid on the ground, as opposed to under the surface as practiced in more northerly oil regions. The big question now is how quickly temperatures return to normal. The huge scale of the disruption has helped oil prices to rise to their highest so far this year. It’s also threatening to starve oil refineries, although such is the chaos in Texas right now that many of the largest plants have already had to shut down. Among the companies hit by outages is Occidental Petroleum Corp., the second-largest producer of oil in the Permian, which has issued a force majeure notice to suppliers, and Chevron Corp., which has shut in compression and production at wells in Culberson County in West Texas due to cold weather.
Occidental Issues Force Majeure as Cold Shuts in Permian Oil - Occidental Petroleum Corp., the second-largest oil producer in the Permian Basin of West Texas and New Mexico, told buyers it will be forced to curtail deliveries due to complications from the historic freeze in the region. The company said weather disrupted transportation facilities and forced delays in the receipt and delivery of oil by carriers, according to a force majeure notice to customers seen by Bloomberg. Occidental also expects curtailments of downstream shipments because of limited deliveries into Midland, Houston and Corpus Christi in Texas. A company spokeswoman declined to comment. U.S. oil wells, refineries shut as winter storm hits energy sector (Reuters) - A deep freeze across the United States is taking a toll on the energy industry in the largest U.S. crude-producing state, halting Texas oil wells and refineries on Monday and forcing restrictions from natural gas and crude pipeline operators.The rare deep freeze prompted the state’s electric power suppliers to impose rotating blackouts, leaving nearly 3 million homes and businesses without power. U.S. President Joe Biden issued an emergency declaration, unlocking federal assistance to Texas.Texas produces roughly 4.6 million barrels of oil per day and is home to some of the nation’s top gasoline and diesel producing refineries.In Midland, heart of the West Texas shale region, a record snowfall and temperatures that hit a 32-year low closed offices and businesses. Temperatures are expected to rise above freezing on Tuesday.“Some producers, especially in the Permian Basin and Panhandle, are experiencing unprecedented freezing conditions which caused concerns for employee safety and affected production,” the state’s energy regulator said on Monday. Oil refiner Motiva Enterprises said it was shutting its 607,000 barrel-per-day Port Arthur, Texas, refinery, the largest in the United States. Valero Energy Corp and Total SE separately moved to shut their 335,000 and 225,000 bpd plants in Port Arthur, Texas, due to Monday’s severe cold, sources familiar with plant operations said.Exxon Mobil also began shutting its 369,024 bpd Beaumont refinery and 560,500 bpd Baytown refinery and chemical plant in Texas, sources familiar with plant operations said. Its Baton Rouge, Louisiana, plant also suffered operational issues.Citgo Petroleum Corp said some units at its 167,500 bpd Corpus Christi, Texas, oil refinery were shutting due to weather-related power disruptions.The plant’s crude distillation unit, a reformer and a hydrotreater were shut by cold weather, sources familiar with plant operations said, with all other units also being powered down.The cold snap forced LyondellBasell’s 263,776 bpd Houston refinery to operate at minimum production and shut most units at Marathon Petroleum’s 585,000 bpd Galveston Bay plant.Reports of power outages across the Permian may result in a moderate impact on Permian oil production for the month, Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said in a note. Energy distribution was stalled across large parts of the United States. Kinder Morgan reported gas-pipeline capacity constraints at locations in Arkansas, Illinois, Louisiana, New Mexico and Texas, while Enable Gas Transmission said it was taking measures to ensure adequate supply for customers.
Texas deep freeze hits energy sector, Houston ship channel shut (Reuters) - A deep freeze that hit Texas over the weekend wrought more havoc on the U.S. energy sector on Tuesday, curbing output in the largest U.S. oil field, knocking out a fifth of the nation’s refining capacity, and shutting a key shipping channel in Houston. Historic cold has knocked out roughly 4 million barrels per day of refining capacity, more than one-fifth of national capacity, according to Reuters calculations. About 500,000 to 1.2 million bpd of crude production has also been affected, and it could be weeks before it is fully restored, industry analysts said. Around 5.3 million customers were without power nationwide due to winter storms. Texas was hardest hit with around 4.4 million customers affected, according to local power companies, as the state’s electrical grid operates largely independent of other states and therefore cannot draw power from nearby operators. “The entire Texas system from the wellhead to the electric meter on a home is more designed to deal with multiple 100 degree days than multiple single-digit days,” said Todd Staples, president of the Texas Oil & Gas Association. Many refiners, including the biggest in the United States, have shut down due to the freeze. Around 4 mln bpd, or 21% percent of U.S. refining capacity, is shut, the biggest weather-related hit since Hurricane Harvey rumbled through the Gulf in 2017. “We’re talking about a major portion of the U.S. Gulf Coast refining capacity currently being offline, in all likelihood, above 4,000,000 barrels a day,” said Marc Amons, senior research analyst with Wood Mackenzie. The cold snap sent U.S. oil prices to near 13-month highs, while front-month gas futures jumped to an over three-month high.
Texas Frozen Chaos Becomes Global Oil Market Nightmare With 40% Of US Crude Production Offline -- One week ago, when virtually nobody was following the sudden surge in certain obscure mid-continent nat gas prices... […] ... we warned that the ripple effects of the freezing vortex-induced calamity, which led to near record-low temperatures across the plains states, would ripple far and wide sparking logistical and commodity shockwaves not only in Texas and the continental US, but also around the world. Sure enough, just a few days later, Texas has been hit by a humanitarian crisis the likes of which it has never before seen with millions of people without electricity and increasingly without running water.And even though Texas is doing everything in its power to contain the fallout that, it appears that the crisis is now spreading, because as a result of the persistent freeze and rampant "force majeueres" across the industry, more than 4 million barrels a day of output - almost 40% of the nation’s crude production - is now offline, Bloomberg reports citing traders and executives.This is because not only has Texas - one of the world’s biggest oil refining centers - seen output drastically cut back but the waterways that help U.S. oil flow to the rest of the world have been disrupted for much of the week. The country’s largest refiner, Motiva in Port Arthur, has closed and at least 3 million barrels a day of processing got taken offline.“The market is underestimating the amount of oil production lost in Texas due to the bad weather,” said Ben Luckock, co-head of oil trading at commodity giant Trafigura Group.As a result of the collapse in output, late on Thursday night Brent briefly surged above $65 a barrel, a level not seen since last January. Spreads indicating supply tightness also soared.
Arctic blast delivers historic blow to U.S. oil output -- The Arctic blast wreaking havoc across Texas has caused the largest disruption to U.S. oil production in history, pushing crude prices over $60 a barrel. U.S. oil production has fallen by a third, or an estimated 3.5 million barrels per day, after freezing temperatures immobilized well equipment, knocked out communications to remotely operated wells and made travel treacherous for oil-field workers looking to restart or repair facilities. Norwegian energy research firm Rystad said the U.S. production disruption was one of the world’s largest, eclipsed only by a Yemeni drone attack on a Saudi Arabia oil field in September 2019 that knocked out 5.7 million barrels per day of oil for several days. The drop in U.S. production sent global crude prices soaring this week. West Texas Intermediate crude was up nearly one percent to $61.61 in early Thursday trading. “Remember how the market reacted when Saudi Arabia offered voluntary cuts of 1 million barrels per day? Well double that number and see what happens,” said Artem Abramov, Rystad’s head of shale research, referring to the oil price rally bolstered by Saudi Arabia’s voluntary production cuts in February. “It’s exactly the same market reaction now with the U.S., although the cuts are not voluntary.” The Arctic blast brought one of the worst cold spells in over a half-century to the Permian Basin of West Texas, the biggest driver of U.S. oil production. Temperatures across Texas this week were about 40 degrees below average, with many parts of the state approaching or hitting record lows. Some parts of the Permian Basin have been without power since Friday while other sections are experiencing rolling blackouts like the rest of the state.
Oklahoma regulators open flow on wells to help address natural gas shortage - Members of Oklahoma’s Corporation Commission on Monday voted to remove a cap on natural gas production from wells inside the state, at least temporarily. The removal marks the first time the commission has allowed a well operator to produce natural gas from a well at 100% of its open flow potential without a cap since at least 1999. Between then and March 2020, commissioners routinely had set proration formulas for natural gas production from the state’s most prolific unallocated wells at 65% of open flow potential, or 2 million cubic feet per day (mmcf/d), whichever is greater. Most wells don’t produce that volume for extended periods of time. In March 2020, commissioners adopted a proration formula impacting those wells at 50% of open flow potential, or 2 million cubic feet per day. They were set to make a semi-annual review of that limit later this week, until things changed. Commissioners called an emergency meeting Monday to consider suspending the cap in response to a critically low supplies of natural gas available for consumption. Available supplies fell over the past week as consumption rates spiked across the central U.S. between the Gulf Coast and Canada.
NatGas Prices Plunge 99% In Oklahoma -- The Oneok natgas network connects Great Plains gas fields and major metro areas in the Midwest and East. The natgas network is massive, spans about 2,400 miles of pipe, connecting 130 natgas fields, six storage centers, and a dozen interstate systems. Last week, as the polar vortex poured Arctic air into the central US and down into the Gulf of Mexico, Oneok's network experienced a catastrophic meltdown as frigid temperatures caused equipment failures. As natgas wellheads froze and supply halted, Oneok OGT nat gas spot exploded from $3.46 to $9 on Wednesday, $60.28 on Thursday, and an insane $377.13 on Friday, up 32,000% in a few days. Next-day delivery at the Oneok Gas continued to erupt early this week. On Wednesday, spot prices at Oneok jumped to $1,250. This is one of those markets where having a limit-up circuit breaker could actually be helpful, even though there is nowhere near enough product to satisfy demand at any price hence the explosive move. Limit-down circuit breakers would have been good today on Thursday as Oneok NatGas Spot prices crashed down 99% to 'norms' around $4 as temperatures rose. NatGat futures (Henry Hub) prices also tumbled, erasing the spike from earlier this week as more supply came online and weather conditions improved. Earlier today, we showed the worst is likely over as warmer temperatures could be seen by the weekend.
New Mexico Families in Oil and Gas ‘Waste Zone’ Seek Help - -- “Something just blew up!” Cora Gonzales was in her room on Jan. 4 when she heard her father yell. In the evenings he watches TV while sitting by the living room window, and that’s where she found him, looking outside and not at the tube. The rest of the family quickly joined them and they stared through the picture window as flames shot into the night sky from a nearby well pad. This particular fire was uncommon. That’s because it was quiet. “Usually whenever things blow up,” she says, “we can feel the house shake and also hear a boom.” Gonzales and her family live on a 160-acre ranch outside Loving, New Mexico. Their land is dotted with drilling pads and tank batteries that hold and pump oil and natural gas. A couple of times a year, she says, the whole house shakes when one of those pumps or batteries catches fire and goes “boom.” “It’s just the normal thing around here … just another day,” Gonzales says. “We look and watch and we get tired of watching it and then go back to our normal program.” It’s unclear how common these explosions are here in the Permian Basin in southeastern New Mexico. About 129,000 people live amid more than 20,000 wells actively churning out oil and gas in this panthecake-flat stretch of the Chihuahuan Desert. Despite state regulations that require operators to report accidents, what triggered them, and how much oil, gas and water were lost or spilled, it’s not clear operators always file those reports. Furthermore, the state of New Mexico still lacks comprehensive regulations covering leaks, spills and other accidents in the oil and gas production process. That leaves families like the Gonzaleses scratching their heads. A security camera on the front of the Gonzales home caught the explosion and subsequent fire. In stark black and white it shows the darkness explode into a burning white light. Caza Petroleum of Texas operates the facility and filed an incident report with New Mexico’s Oil Conservation Division (OCD). In a phone call, Tony Sam, vice president of operations at the company, says that he doesn’t know exactly what happened that night or why, but he thinks it was a stack fire – when a flare that burns off natural gas and impurities from a well malfunctions and burns out of control. According to the OCD report, the fire was considered a “major release” since it included a fire or explosion. It also spilled 47 Mcf of natural gas, two barrels of oil and two barrels of produced water. Sam did not respond to follow-up questions about the accident.
Peoples Gas pipeline replacement costing Chicagoans more - The average Peoples Gas customer in Chicago paid $131 last year on top of their monthly bills for the utility’s massive pipe-replacement work, according to a report the utility filed Tuesday. And that figure could hit $174 by the end of this year if it keeps rising at its current pace, a consumer group says. The added cost amounted to about 11% of the typical customer’s bill. The Illinois Public Interest Research Group, a nonprofit advocacy group, says consumers are now paying about 10 times the original $1.14-per-month estimate given to the Illinois Legislature when it passed a law in 2013 allowing the utility to bill customers via an added “rider” on their bills for the work. And the work is behind schedule. About 51 miles of deteriorating gas pipes were replaced last year, fewer than the planned 70 miles, according to the quarterly report Peoples Gas filed with the Illinois Commerce Commission. The program has been plodding along for well over a decade. Originally pegged at $1.4 billion in 2007, it could end up costing $8 billion to $11 billion by the time the work is finished in 2040. Illinois PIRG says that what began as a necessary project to replace aging gas lines for safety reasons has ballooned into a much larger and more expensive program that’s also moving the entire natural gas system from low pressure to medium pressure.
Hawkins County Gas Utility in negotiations to get 82 percent pipeline rate increase reduced — Hawkins County Gas Utility general manager Patrick Lund admits that a letter his customers received with their bills this week announcing an 82% increase from their pipeline provider likely came as quite a shock. In July 2020, the Canadian-based Enbridge Inc., which operates the transmission lines that transfer natural gas to HCGU, filed the 82% rate increase with the Federal Energy Regulatory Commission (FERC), but it was automatically stayed for six months to allow time for a hearing. FERC hadn’t been able to hear the case due to COVID-19 delays, and as of Jan. 1 the Enbridge rate increase automatically took effect. Lund told the Times News on Thursday that he and other natural gas providers in Tennessee are negotiating with Enbridge for a lower rate increase. If those negotiations are unsuccessful, the FERC hearing is scheduled for this July. “Enbridge has to justify their rate increases to FERC, but that hearing is not until July,” Lund told the Times News. “It will probably be reduced. They’re justified in going up some, because the Feds have massive requirements for pipeline integrity and safety, so it’s costing everybody a lot more money. But that much, I don’t think so.”
Enbridge raises Line 3 Replacement project costs, touts confidence as protests escalate — Enbridge increased the cost of its large Line 3 Replacement project by nearly $1 billion and touted its confidence in bringing the heavy oil sands system online in late 2021 amid escalating environmental protests and heightened political scrutiny under the new Biden administration. Enbridge said during its Feb. 12 earnings call that capital costs for its major Canadian heavy oil artery to the US have risen from more than $6.5 billion to $7.3 billion because of more construction time concentrated in the snowy winter weeks, additional environmental mitigation, enhanced coronavirus protocols and higher regulatory and legal costs. The Line 3 Replacement project would more than double crude pipeline capacity from 370,000 b/d to 760,000 b/d as it moves Canadian crude from Alberta to Superior, Wisconsin. The pipeline runs more than 1,000 miles, including its largest 337-mile segment in Minnesota where construction is currently concentrated, and would serve as a larger avenue to move more heavy crude from Canada to the Midwestern US and, ultimately, to the major refining corridor along the US Gulf Coast. "This increase really stems from our revised execution plan," Enbridge CEO Al Monaco said. "So, not surprising, costs have come up." However, with President Joe Biden having essentially canceled the competing Keystone XL Pipeline on the first day of his presidency, the Line 3 project is now on the precipice of becoming the epicenter of the anti-fossil fuel movement in the US as opponents aim to pressure Biden into action. The Canadian portion of the pipeline is already complete and the US portion is expected to come online in the fourth quarter, making for a race against the clock. Energy analysts are counting on the pipeline project to be completed, but Biden's win against the industry-friendly Donald Trump has kept it from becoming a certainty. While Biden publicly opposed the more famous Keystone XL Pipeline project in his campaign, he has not weighed in on Line 3. As recently as Feb. 4, construction temporarily was impeded by protesters locking themselves to barrels of concrete and even a piano.
Urging Biden to Stop Line 3, Indigenous-Led Resistance Camps Ramp Up Efforts to Slow Construction - The Biden administration may have finally put the Keystone XL pipeline to rest, but Tara Houska has hardly had time to celebrate. Just a week after President Biden revoked Keystone’s border-crossing permit, Houska was on a video call in late January with a dozen other Indigenous activists and over a thousand spectators. She was calling on them to join her fight in northern Minnesota to stop another trans-U.S.-Canada oil pipeline: Line 3. After obtaining the final necessary permits in November, and with a Minnesota appeals courton Feb. 2 denying a request to stay construction, Enbridge Energy is speeding forward with its Line 3 replacement project, hoping to finish building the 1,031-mile-long pipeline from Alberta’s tar sands to the Midwest before the end of the year. That has Houska, and other Indigenous and environmental activists who have long fought Line 3 and similar fossil fuel infrastructure, scrambling to delay construction as they await rulings on several legal challenges to the project and call on President Biden to intervene.Over the last couple months, opponents to Line 3 have been ramping up their efforts to stop it, marching down streets, blocking roads and chaining themselves to construction equipment. In one encounter, an individual spent more than a week in a tree, suspended dozens of feet above the frozen ground, to delay work in the area.Resistance camps and protests, where activists call themselves “water protectors” and “land defenders,” have cropped up near half a dozen cities and small towns along the pipeline’s proposed route in northern Minnesota. “Just under 100 people have been arrested out defending our beautiful territory here, defending our wild rice, trying to protect the sacred with our bodies and with our freedom,” Houska said during the Jan. 26 call.
'It's cultural genocide': inside the fight to stop a pipeline on tribal lands --- Tara Houska gazed down at the trickling waters of the Mississippi near its headwaters. The great American river that eventually flows into the Gulf of Mexico is just a stream in these parts of northern Minnesota. A pipeline will soon burrow underneath this part of the Mississippi and its surrounding wetlands. It is one of hundreds of water crossings, including wild rice fields, that lie in the path of a new stretch of Line 3, a pipeline bringing nearly 1m barrels of tar sands a day from Alberta, Canada, to Superior, Wisconsin. But opposition to the pipeline is considerable, and is supported by environmental organizations and activists resisting pipelines such as the Dakota Access pipeline, and Keystone XL – a project that Joe Biden cancelled on his first day in the White House. The on-the-ground activists are called “water protectors”, who are against the pipeline because of its impact on the climate crisis, oil spills and infringement on Native treaty rights. There are numerous sites in Minnesota, along the new Line 3 route, where water protectors have set up camp. Much of the route goes through tribal lands, as well as Minnesota’s iron range and areas popular for recreation, including hunting, fishing and people enjoying the outdoors. It is a lush, wooded part of the state, thick with birch and pine trees, pristine lakes, rolling creeks and lakes filled with wild rice, an agricultural product that is historically significant to the Ojibwe.For the past three years, Houska, an attorney, has set up camp here with the resistance group Giniw Collective, which she founded. Last week Houska met with the congresswoman Ilhan Omar at the bridge overlooking the river, along with a group of other Native female leaders. “We need Biden to revoke the water-crossing permit,” Omar told the Guardian. “That is one of the greatest opportunities that can be given to this community.” Omar sent a letter to Biden calling on him to cancel the permits allowing the pipeline to cross under the river. Among the objections are that the line will bring an expansion of tar sands, which have higher emissions than other types of crude oil. In addition, opponents say the line is a violation of indigenous territory, as it causes pollution in lands and waters that the Ojibwe were promised to be able to use for ever.
3 arrested after locking themselves inside a Line 3 pipe -- Around 11 a.m. Tuesday, Feb. 16, three self-described "water protectors" locked to one another inside of a Line 3 pipeline segment near the Crow Wing River, while dozens more rallied in support. According to a Northern Lights Task Force news release, the Wadena County Sheriff’s Office received a report of demonstrators on the pipeline right-of-way in section 4 of Huntersville Township, northeast of Huntersville. The reporting party stated there were approximately 30 individuals demonstrating and some of them were climbing on equipment and pipes at the work site. The Northern Lights Task Force is a law enforcement coalition formed to address public safety needs posed by the installation of the Line 3 pipeline across northern Minnesota. The task force reports that law enforcement arrived on scene and demonstrators got off the equipment. Enbridge construction workers told officers that four individuals climbed into the pipe “with cold weather gear and sleeping bags.” “Dispersal orders were given to the group of demonstrators that were trespassing on pipeline property. Most left the area, but three remained inside the pipe. The section of pipe was approximately 2,250 feet long and the three individuals were approximately 70 feet inside the east end of the pipe,” said the release. Three individuals – identified as Trinity Shaw-Stewart, 20, of Medford, Ore.; Bonnie Hoekstra, 22, of St. Paul, and Jack Keenan, 26, of Stevens Point, Wis. – refused to comply and stayed in the pipe for approximately six hours, according to the task force. At approximately 5:30 p.m., they exited the pipe without incident. The task force says they were taken into custody, medically cleared by medical personnel on scene, and transported to the Wadena County Jail. They were held in custody on probable cause for gross misdemeanor trespassing.
FINANCE: Groups push to 'choke off' funds to Line 3 pipeline project -- Tuesday, February 16, 2021 -- Environmentalists are pressuring big banks to stop lending to a Canadian energy company behind a controversial pipeline project in the Midwest.
Texas oil company agrees to pay $1.9m for Wyoming spills (AP) — A Texas oil company has agreed to pay almost $2 million for spilling crude oil and wastewater at two central Wyoming oilfields. The spills happened between the fall of 2016 and spring of 2018. One was in the Linch Complex Field in Johnson County and five were in the Salt Creek Field in Natrona County, according to the U.S. Environmental Protection Agency. The biggest spill was about 300,000 gallons (1.1 million liters). The rest were 23,000 gallons (87,000 liters) or less. Irving, Texas-based Fleur de Lis Energy, LLC, has agreed to pay a $1.9 million settlement, EPA officials said in a release Wednesday. A phone message left with the company seeking comment wasn't immediately returned Wednesday. Fleur de Lis didn't have adequate plans to prevent and respond to spills but recently has submitted plans that meet regulatory requirements, according to the EPA. The penalty goes into the Oil Spill Liability Trust Fund used by the U.S. government to respond to spills of oil and hazardous substances.
Biden administration stops half-million-acre Wyo oil and gas sale - President Joe Biden’s Jan. 27 order to pause oil and gas leasing on federal lands hit Wyoming on Friday as the BLM postponed the auction of 383 parcels covering almost half a million acres. The leasing pause will enable a review that’s part of an all-government fight against “a profound climate crisis” exacerbated by the burning of fossil fuels, Biden’s order states. The BLM had scheduled the first-quarter 2021 sale of development rights on 476,506 acres for March 15 after deciding the sale would not “significantly affect the rate of change” in the environment. The agency did not say when a lease sale might be rescheduled. The BLM’s first quarter sale last year brought in $3.4 million after energy companies leased 75 parcels covering 71,689 acres. Wyoming received about half the sale’s proceeds and will also get a share of future production royalties, if production ever occurs. The auction last year sold less than a sixth of the acreage that had been proposed for sale this March. Wyoming lawmakers last year, reacting to Biden campaign positions that threatened leasing, funded a report that says Wyoming would lose $304 million in annual tax revenue if leasing stopped on federal lands. That report has been much-touted in the wake of the official pause. But a critic who reviewed the report for The Wilderness Society says it overestimates impacts by up to 85%. This pie graph from 2018 shows the portion of greenhouse gasses emitted from fossil fuels extracted from federal lands in individual states and Wyoming’s 57% share. (USGS) The state-commissioned drilling-ban impact report by a University of Wyoming energy economics professor predicts production and investment losses in Wyoming, plus the lost tax revenue, would amount to $640 billion through 2040.
How Keystone XL politics have changed -- Friday, February 12, 2021 -- Last week, two Senate Democrats joined with all 50 Republicans to adopt a nonbinding budget amendment backing construction of the Keystone XL pipeline. Hours later, Democratic leaders stripped out the amendment and reversed the show of support for the pipeline, which would bring crude oil from Canada into the United States (E&E Daily, Feb. 5). It was the latest example of how the Keystone XL project, which once had bipartisan backing on Capitol Hill, has become a partisan environmental lightning rod. The recent Senate action marked the first significant stand-alone vote on Keystone XL since early 2015, when Republicans were in control of both legislative bodies and then-President Obama, who opposed the project, was completing his final term. That year, 28 House Democrats voted in favor of completing the pipeline, with eight Senate Democrats voting similarly in their own chamber. Although the Keystone XL project in 2015 was backed by Congress, it was ultimately vetoed by Obama. Six years later, a survey by E&E News found that of the 17 Democrats who still serve in the House today, only a small handful were willing to say definitively that they would vote to support the Keystone XL project again. Only one member said he had changed his mind, while the others declined to comment. In the Senate, six of the 2015 Democratic Keystone XL backers remain in office today. Only two of them voted with Republicans on the initial amendment of support last week.
To Keep Indigenous Women Safe Joe Biden Must Go Beyond Keystone XL - Population booms caused by resource extraction sites and nearby temporary housing, or man camps, create a "hotbed" for criminal activity that disproportionately harms Indigenous communities. When Indigenous activist Angeline Cheek learned President Joe Biden revoked the permits for the Keystone XL pipeline on his first day in office, relief washed over her, even if only for a moment. For Cheek, a member of the Fort Peck Assiniboine and Sioux Tribes in Montana, halting what would have been a 1,897-kilometre pipeline carrying 830,000 barrels of crude oil a day from Alberta’s oil sands into Nebraska, is about keeping Indigenous women safe. “I’m relieved the man camps won’t be here,” said Cheek, referring to the temporary housing erected near job sites. Fort Peck is located on the northeastern edge of Montana, and the Keystone XL would have travelled near the community. If the project were to have gone ahead, thousands of hired workers would have stayed in man camps. During the last oil boom, “it was really scary to live in our area,” said Cheek, who organizes and educates people about the dangers of resource extraction and man camps. She recalled how a teacher, Sherry Arnold, was abducted by oil workers in North Dakota, just across the state border, while out for a run. Years later, in 2017, Cheek said oil workers chased two teenagers in Fort Peck until the girls managed to duck into an unlocked house. During a walk denouncing man camps and Keystone XL, organized by Cheek, white men approached the group and threatened to scalp her, she said. “We heard all of these stories about women getting abducted, and we'd hear about sexual assaults happening,” Cheek said. “You hear this stuff and it triggers you.” Biden’s decision to stop Keystone XL’s expansion limits the number of new transient workers who will flow into the area, ultimately quelling some fears that violence targeting nearby Indigenous communities will spike as a result of the pipeline. But more needs to be done to keep Indigenous peoples safe, especially since these problems are replicated across North America, Cheek said.
Black Hills CEO Says ‘Lethal’ if Natural Gas Bans Enacted in Service Territories - Rapid City, SD-based Black Hills Corp. is undeterred by increased pressure from climate change advocates to phase out fossil fuel use, CEO Linn Evans said Wednesday. During a conference call to discuss fourth quarter results, Evans discussed the impact by opponents to fossil fuels and whether that could impact the natural gas utilities. He said he was “very comfortable” with the company’s local distribution companies (LDC). “Our service territories are very cold climates that are below zero degrees right now, so life would be lethal without the gas that we serve,” he said. “We have not had any local bans on gas within our service areas, but we are certainly aware of conversations going on and we have highly engaged teams executing outreach programs within those individual communities.” Black Hills utility personnel are in contact with state legislators and working with various industry associations on the issue of natural gas bans. “We’re making sure our communities and stakeholders understand the value and necessity of gas and what it brings to the table,” he said. “We’re watching it closely and see a strong future for gas.” CFO Rick Kinzley said the impacts from Covid-19 on gas and electric loads “were not substantial at all” as most of the territory did not have prolonged lockdowns. “We’re about halfway through our heating season, and the first one with the pandemic, and the impact on our gas loads is what we call immaterial,” Evans said. Regulatory relations in the territories served in Arkansas, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming remain strong, executives said. However, that’s not the case in Colorado. “We’re disappointed that the Colorado Public Utilities Commission dismissed our rate review filing,” Evans said. “We’re seeking a rehearing, and the commission should decide on that by the end of this month.”
ND oil production falls slightly in December -– North Dakota’s oil production made a slight dip again with 1.192 million barrels of oil produced in December 2020. In November 2020 the state produced 1.227 million barrels of oil. The most recent figures were released by the North Dakota Department of Mineral Resources on Friday. Lynn Helms, director of the Mineral Resources Department, said in his report the OPEC+ agreement to cut 7.2 million barrels per day expired. He said OPEC+ met on Feb. 3 “emphasizing the ongoing positive contributions of the Declaration of Cooperation in supporting a rebalancing of the global oil market and noting the significant additional voluntary supply adjustment made by Saudi Arabia, taking effect on 1 February, 2021, for two months. Overall conformity with the original production adjustments was 101 per cent.” He said they will discuss production again at their March 2021 meetings “with a general consensus to maintain $45-$55 WTI (West Texas Intermediate.” “The two biggest uncertainties are COVID and Biden administration policies on Iran,” Helms also said in his report.
Equipment failure causes crude oil release near Williston -An equipment failure at a saltwater disposal well in the Williston area released 25,200 gallons of crude oil on Monday. The North Dakota Oil and Gas Division was notified of the release at the WISCO 1 saltwater disposal well, about 16 miles west of Williston. WISCO reported the incident on Monday. The product was contained on-site and at the time of reporting all of the crude oil had been recovered. A state inspector has been to the location and any additional cleanup will be monitored.
U.S. Army Corps attorneys withdraw from Dakota Access Pipeline case - (Reuters) - The U.S. Army Corps of Engineers said two federal attorneys representing it in an ongoing legal battle over the Dakota Access Pipeline are withdrawing from the case, according to court filings, as opponents fight for the line’s closure. The case is being closely watched by native groups and the energy industry, particularly after the Biden administration canceled a permit for the long-gestating Keystone XL project and has taken other steps to limit oil-and-gas exploration. Jeffrey Clark Sr and Eric Allen Grant, who represented the Army Corps, are withdrawing from the case between the Standing Rock Sioux Tribe and the Corps, the filing said. The tribe is seeking the closure of the Dakota Access pipeline, which can carry roughly 550,000 barrels of oil daily from North Dakota’s shale region to the Midwest. Clark left the U.S. Justice Department at the end of former President Donald Trump’s term. Divisional heads at the U.S. Department of Justice frequently change hands with the onset of a new administration. It is unclear whether President Joe Biden, who was sworn in last month, will seek to close the pipeline. A judge in January revoked the line’s permit to operate under Lake Oahe, a water source for the Standing Rock tribe.
The Dakota Access Pipeline continues to operate, but under an unclear future - (KFYR) - A decision on whether the Dakota Access Pipeline would be shut down was supposed to take place on Feb. 10, but the deadline has been extended. The Army Corps of Engineers said they need more time to discuss what to do regarding the pipeline with the new Biden administration. Oil and gas industry leaders said this buys them more time, but offers no clarity on what’s ahead. The impact on North Dakota if Dakota Access were to shut down would be dramatic. About 570,000 barrels of oil per day would need to find a new, more expensive route to market, which could cost the state about half a million dollars per day. “That is of enormous concern to the state,” said Department of Mineral Resources Director Lynn Helms. Those numbers are why state officials have been writing to the Army Corps and the administration in a plea to keep the pipeline operating. Industry leaders said finding an alternative way to market right now, like returning to rail, would be tough. “It would likely take several months at least before the industry could start shifting and transitioning those barrels more and more onto the rail cars. So there would certainly be production and economic shock,” said North Dakota Pipeline Authority President Justin Kringstad. The current decision extension, however, does buy the industry some time with no surprise shutdowns expected from the executive branch, at least not before the next hearing on the matter. ADVERTISEMENT “It was actually the Biden administration that asked for the extension so they could give it some review before that hearing,” said Helms. Helms added it’s also been helpful to have MHA Nation leaders on their side, reaching out to the administration asking for the pipeline to continue operating. However, the Standing Rock Sioux Tribe is still fighting for the opposite outcome, to have the pipeline shut down. The hearing deciding whether the Dakota Access Pipeline will be able to continue operating while another environmental review happens will take place on April 9.
Probe into Dakota Access protest continues 4 years later — A violent clash four years ago between Dakota Access Pipeline protesters and law enforcement is still being investigated, and one protester has been arrested for contempt of court after refusing to provide grand jury testimony, his attorneys said. No one has been criminally charged in the November 2016 clash that severely injured Sophia Wilansky, 21, of New York. She has sued law enforcement officers and Morton County, alleging police intentionally targeted her with a concussion grenade. Officers have denied wrongdoing. Federal authorities arrested fellow protester Steve Martinez on Feb. 3 for contempt of court, according to his attorneys, who said his detainment is tied to Wilansky’s lawsuit and government attempts to blame protesters, the Bismarck Tribune reported. Assistant U.S. Attorney Gary Delorme did not respond to a Bismarck Tribune request for comment. In 2016 and 2017, American Indian tribes and environmental advocates tried unsuccessfully to halt construction of the Dakota Access Pipeline under the Missouri River, fearing an oil leak would contaminate the water. Pipeline operator Energy Transfer and federal officials who approved the $3.8 billion line maintain it’s safe. The pipeline has been moving Bakken oil since June 2017. More than 750 people were arrested during six months of protests. On Nov. 20, 2016, protesters tried to push past a blocked highway bridge but were turned back by authorities with tear gas, rubber bullets and water sprays. Police say protesters threw rocks and other objects at officers. Wilansky’s left arm was injured in an explosion and her father said at the time that doctors considered amputation because her forearm was nearly torn off. Protesters allege the blast was caused by a concussion grenade thrown by officers; police say protesters rigged a propane canister to explode. So far, neither theory has been proven.
Chevron estimates up to 750 gallons of mixture spilled into the Bay - The California Department of Fish and Wildlife said Wednesday that the impact from Tuesday's petroleum product leak at the Chevron refinery long wharf in Richmond appears to be centered near the city's Keller Beach, but no oiled wildlife or public health impacts have been found.In an update Wednesday evening, Chevron said as much as 750 gallons of the product were leaked. "Lab analysis and technical review determined that approximately 12-18 barrels (500-750 gallons) of a low-sulfur diesel fuel and flush water mix was released," the company said in their updated statement. Initial estimates said that 600 gallons went into the Bay between 2:40 p.m. Tuesday and about two hours later when the leak was stopped, according to Contra Costa County Supervisor John Gioia. Petroleum leaked from a quarter-inch hole in an unpressurized wharf pipeline.For its part, Chevron has not yet disclosed the size of the hole, nor the exact duration of the spill. Much of this information is already in the company's possession. "We're getting very close on an estimate and we'll release that as soon as we can," said Chevron refinery executive Lynsi Crain just before the evening update.
New Bill Seeks to Ban Fracking in California -- California state senators introduced a bill Wednesday that would ban fracking and other controversial oil and gas extraction techniques in the state by 2027. The bill, SB467, would prohibit the government from issuing new fracking permits or renewing old ones as of Jan. 1, 2022, The Guardian reported. The bill's authors also plan to amend it to outlaw any new oil or gas production within 2,500 feet of a school, home, healthcare facility or any form of long-term accommodation, including prisons, by Jan. 1, the San Francisco Chronicle reported."Fracking & other destructive oil extraction methods are deeply harmful to our environment & public health," Sen. Scott Wiener, who introduced the bill with fellow Democratic Senator Monique Limón, wrote on Twitter. "They contaminate water, increase particulate in the air, & make people sick. And oil is at the heart of climate change. California must lead on climate & public health."The new bill also promotes environmental justice with the pending addition restricting oil and gas production near schools and homes."Overwhelmingly, it's happening in communities of color and low-income communities," Wiener told the San Francisco Chronicle concerning oil production. "Communities that are already struggling with health outcomes — we're allowing them to be poisoned, and that's just not OK."California possesses a progressive reputation on environmental issues, but it also contains a powerful fossil fuel industry that has successfully lobbied against legislation that would limit its operations, The Associated Press reported. However, the state's oil production has declined since the 1980s, partly because the oil that remains requires measures such as fracking, cyclic steaming, acid well stimulation and water and steam flooding to extract it from deeply buried rock. "It's some of the dirtiest oil in the world," Hollin Kretzmann, an attorney at the Center for Biological Diversity's Climate Law Institute, told The Associated Press. The new bill would ban all of these methods, which its authors view as environmental and public health threats, according to the San Francisco Chronicle. Cyclic steaming in particular has been linked to oil spills that harm wildlife, the Palm Springs Desert Sun reported.
Federal appeals panel stops work on ConocoPhillips’ Willow project - A federal appeals court has sided with conservation and Indigenous groups and halted winter work at a major ConocoPhillips oil project on Alaska’s North Slope.The 9th U.S. Circuit Court of Appeals on Saturday issued the six-page decision, by 9th Circuit Judges William Canby and Michelle Friedland, on Saturday.The decision will halt on-the-ground work at Willow for the year, said Natalie Lowman, a spokeswoman with ConocoPhillips, in an email Sunday.Winter activity at developing projects on Alaska’s North Slope is supported by ice roads that melt in the spring, sharply reducing on-the-ground activity for all but a handful of months. The project, among the most promising North Slope prospects, was expected to employ about 120 people this year.Lowman did not say if the company plans to appeal the decision. Other questions must be answered later, she said.Sovereign Iñupiat for a Living Arctic, the Center for Biological Diversity, Friends of the Earth and other groups sued last fall to stop the project, not just in winter, but altogether. They argue that federal agencies under the former Trump administration did not follow environmental laws before approving the project.The Willow project is located in the National Petroleum Reserve-Alaska in northern Alaska, near the village of Nuiqsut.ConocoPhillips had planned to break ground at a mine site early this month, blasting away the surface to reach gravel, according to court records. The company had planned to haul gravel and start gravel road construction in mid-March. If developed, the field could produce 600 million barrels of oil over 30 years, boosting state revenues and jobs, estimates say.
Western Canada's refineries provide a bonanza of fuels, part 2 - Long established as an oil-producing region, Western Canada has also become a major producer of refined products. With enough oil available to serve the nine refineries in the region, there is no need to import crude oil, making Western Canada one of the few parts of the world where the refineries are completely self-sufficient regarding oil supply. The region is also noteworthy in that, like the U.S. Gulf Coast, its refining capacity and gasoline, diesel, and jet fuel output is vastly greater than its own demand, resulting in a large surplus of refined fuels that can be sent across Canada and exported to the U.S. Today, we look westward, focusing on the nine refineries located in the Canadian West. Although the presence of crude oil in Western Canada had been known to First Nations inhabitants for centuries, oil production did not really pick up momentum and scale until just after the end of World War II. The celebrated Leduc No. 1 oil discovery in 1947 near Leduc, AB — just south of the provincial capital of Edmonton — kicked off the modern oil industry across Western Canada, resulting in a steadily growing supply of crude oil to its own refineries, those in other Canadian provinces, and the U.S. That growing production has allowed all 17 of Canada’s refineries, which we summarized in Part 1, to partly or fully wean themselves off imported crude oil. In 2020, Canada’s crude oil imports averaged 435 Mb/d, down from 800 Mb/d 10 years earlier, with most of the imported crude now being sourced from the U.S. With crude runs to Canadian refineries averaging 1.59 MMb/d in 2020, the roughly 1.15-MMb/d difference between those runs and imports (1.59 – 0.435) is largely supplied by Western Canada.
Power Outages Hit Mexico as U.S. Natural Gas Prices Reach Historic Highs - Mexico’s electric power operator Centro Nacional de Control de Energía (Cenace) said 2,200 MW of power was still offline in the northern states of Chihuahua, Coahuila, Nuevo León and Tamaulipas, and pleaded Tuesday for the efficient use of energy as the crisis was still days from being over. Rolling blackouts were planned on Tuesday evening throughout Mexico in Aguascalientes, Colima, Estado de México, Guanajuato, Guerrero, Jalisco, Michoacán, Nayarit, Puebla, Querétaro, San Luis Potosí and Zacatecas. Cenace and Mexican state utility Comision Federal de Electricidad (CFE) blame limited natural gas imports and surging natural gas prices for the outages. Mexico imports 70-80% of its natural gas from the United States and 60% of the nation’s power plants run on the fuel. Due to “bitterly cold air” making its way into the Midcontinent and Deep South of the United States, “massive amounts” of natural gas production were offline as of early Tuesday, as were numerous gas-fired power plants, EBW Analytics Group analysts said in a note to clients. The “extreme cold” has “brought chaos to the U.S. oil, gas and power markets,” the EBW analysts said. “Texas has been hardest hit… More than 30 natural gas pipelines have declared force majeure and at least 7 Bcf/d of natural gas production has been shut in due to freeze-offs, gas processing plant shut-ins and pipeline outages.”
Abbott Nixes Gas Exports Outside of Texas as Mexico Already Facing Cold-Induced Supply Crunch - A clearer picture was emerging on Wednesday of a massive natural gas shortage facing Mexico amid the extreme cold gripping Texas, Mexico’s main source for the fuel. The supply shortfall was punctuated by a late-breaking announcement Wednesday from Texas Gov. Greg Abott that he was prohibiting the sale of natural gas produced in Texas outside of the state, and ordering producers to instead supply gas to local power generators in order to curb the extended power outages plaguing the state amid a severe cold snap. The order will remain in effect through Feb. 21, Abbott said during an afternoon news conference.Abbott said that about 19,800 MW of gas-fired generation remained offline in Texas because of either mechanical issues or insufficient gas supply, necessitating the order to keep locally produced gas within state lines. Abbott’s announcement was met with disbelief from observers of the energy market in Mexico, which relies on U.S. gas supply, mostly from Texas, for up to 80% of its natural gas needs. Gas-fired plants account for about 60% of power generated in Mexico. Meanwhile, Mexico’s Centro Nacional de Control del Gas Natural (Cenagas), operator of the Sistrangas national pipeline grid, declared a systemwide state of critical alert on Tuesday until further notice, citing scarce gas supplies from Texas due to the inclement weather.The alert came amid rotating blackouts enacted by power grid operator Centro Nacional de Control de Energía (CENACE) for the same reason.Cenagas said that due to the arctic air mass in the southern United States, injections into the Sistrangas remained below the amounts scheduled, restricting the availability of the molecule for system users, a situation “outside the control” of the operator.“The polar vortex is indeed taking its toll on Mexico’s natural gas market,” Genscape Inc.’s Ricardo Falcón, natural gas analyst, told NGI’s Mexico GPI on Wednesday. He said that based on Genscape’s estimates, U.S.-to-Mexico pipeline gas exports had averaged 4.7 Bcf/d over the last six days, about 1.1 Bcf below the average of the preceding 30 days.“Several border crossing points are showing weaker-than-normal flows, especially those linking to pipes in Mexico’s north and northeast,” Falcón said.Apart from the Sistrangas, Falcón highlighted that most of Mexico’s major privately-owned pipelines had declared critical alerts as well due to the pervasive supply restrictions, operational flow orders (OFOs) and force majeures north of the border.The privately-owned systems include, but are not limited to, Fermaca’s Waha-to-Guadalajara system, as well as pipelines owned by TC Energy Corp. and Infraestructura Energética Nova (IEnova), Falcón said. “We believe that industrial users may face the strongest short-term impact under the Cenagas contingency, given the supply cuts imposed by the system operator.”
Texas mandate to bar natural gas exports during power crisis likely unenforceable - official -(Reuters) - The Texas oil and gas regulator on Thursday alerted state natural gas producers of a directive to reserve their supplies for in-state electric generation even as one member questioned whether the directive could be enforced. Governor Greg Abbott on Wednesday issued an executive order restricting gas exports and asked the state regulator to “take all reasonable steps” to keep fuel in Texas until Sunday, a decision challenged by gas importer Mexico. Days of freezing temperatures shut in about one-fifth of the region’s refining capacity, shuttered oil and natural gas wells and affected power generation in Mexico, which imports Texas natural gas. The Texas Railroad Commission, the state’s oil and gas regulator, likely does not have the authority to interfere with contracts between companies to sell gas out of state, Commissioner Jim Wright said in an interview on Thursday. Producers “are certainly focused on selling everything they can into Texas, but they’re obligated under contract,” said Wright, one of three elected commissioners. “I’m not sure we have authority to mess with that, nor do I really want to.” There has been no practical impact from Abbott’s order on the gas market, said Bernadette Johnson, vice president at data firm Enverus. Less natural gas has been leaving Texas, but that was because producers had to shut in wells because they lost power and equipment froze. “You can’t just stop a pipe at the border and turn it around. That’s not a thing,” said Johnson. “The systems are not designed with these crazy orders in mind.”
Natural Gas Flows from Texas to Mexico Taking Hit, but Worst Appears to be Over - Despite a Wednesday evening order from Texas Gov. Abbott to prioritize in-state consumption, natural gas continued to flow from Texas to Mexico Thursday, albeit at reduced levels. Scheduled deliveries of piped gas to Mexico from Texas hit 1.6 Bcf/d Thursday, up from 1.3 Bcf/d on Wednesday and 1.1 Bcf/d on Tuesday. Typical export volumes from the state generally exceed 2 Bcf/d. As a percentage of total pipeline deliveries, natural gas exports to Mexico were 16.3% on Thursday, compared to an average of around 25% for the first week of February. “Both the absolute volumes of gas sent to Mexico and the relative percentage of gas shipped to Mexico versus total deliveries from Texas pipelines have fallen in recent days. Texas shippers are definitely doing more to keep domestic customers whole than they are consumers in Mexico,” said NGI’s Director of Strategy and Research Patrick Rau. Matthew Lewis, senior director of research at East Daley Capital Advisors said that based on pipeline nominations Thursday “there are still significant gas flows into Mexico. There also appears to be gas flowing West on El Paso leaving the state of Texas.” He added that despite the governor’s order, the language may leave room for certain types of customers to still transport gas out of the state. “Whether or not the governor has the authority to allow producers to not fulfill existing contracts is still unclear,” Wood Mackenzie analysts said. The order is effective through Sunday. But improving weather conditions in Texas and power being turned back on in homes on Thursday may also have eased the potential strain.
LNG Import Terminals in India, Europe to Add Capacity as Demand Grows -Belgian midstreamer Fluxys said Monday that it has made a positive final investment decision to nearly double the regasification capacity at its Zeebrugge liquefied natural gas (LNG) import terminal after a successful open season. The company said the full 6 million metric tons/year (mmty) of additional regasification capacity at the facility in Belgium was fully subscribed during a binding open season. Fluxys said it would move ahead on construction of the infrastructure required to expand the terminal. The expansion would be completed in two phases. Another 4.7 mmty would be made available in early 2024, while the full 6 mmty would become available in early 2026, almost doubling the terminal’s capacity, Fluxys said. Europe remains a top destination for U.S. LNG exports, accounting for roughly 40% of all cargoes that left the country between January 2020 and January 2021, according to NGI calculations. Fluxys’ announcement followed another from Petronet LNG, India’s top LNG importer, at a news conference Friday. Petronet CEO A.K. Singh reportedly said the company plans to increase capacity by 29% from current levels to 22.5 mmty at its Dahej terminal in western Gujarat state. Capacity at the terminal is to be added in two phases. The first 2.5 mmty expansion is set for the next three to four years, while a similarly-sized expansion would be completed sometime after that. Indian LNG imports have been increasing steadily in the last decade, hitting a record high early last year, according to data intelligence firm Kpler. India has typically been a consistent home for Qatari cargoes, but those sourced from the United States have increased in the last year, Kpler said recently. India is aiming to curb emissions by increasing the share of natural gas used in its energy mix to 15% from current levels of 6.2%.
Failed valve on cargo ship causes oil spill in bay - A valve problem on a bulk carrier anchored in British waters in the Bay of Gibraltar caused an oil spill on Friday, some which drifted into the harbour basin. As boat marinas inside the harbour deployed booms to stop the spill damaging boats, the Gibraltar Port Authority implemented its counter pollution plan and liaised too with Spanish authorities, who assisted in containing the spill. As clean-up operations got under way inside the harbour and in the bay, two vessels from Spain including a large salvage tug operated by Salvamento Maritimo deployed booms at sea to contain the spill as it drifted toward La Linea. Crew on the AM Ghent confirmed that the spill was caused after one of its venting valves failed. The GPA’s Bunkering Superintendent attended to investigate the issue further and coordinate the clean-up. “The Captain of the Port contacted his counterpart in Algeciras to inform him of the situation and although assistance was offered, it was declined but special permission was granted for two Spanish assets to come into BGTW to prevent oil from transgressing the median line in the bay,” a government spokesman said.
Oil spill ship detained as clean-up continues - The ship that caused an oil spill last Friday will be detained in Gibraltar waters until the Gibraltar Government can recover the costs of a clean-up operation over the bank holiday weekend. Specialist vessels and teams on land have been busy scooping up fuel oil from the sea and the shoreline following the spill. Much of the oil drifted into the harbour basin but there were patches spotted out in the bay including in the area of Rosia Bay. Dr John Cortes, the Minister for the Environment, acknowledged the impact of the spill on wildlife, particularly inside the harbour. “Over the last ten years the marine life in our harbour had come back in strength and it was becoming a key wildlife area,” he said. “This is a significant setback which we are monitoring closely and we are working hard to minimise the impact as much as possible.” “But it will take time to recover.” The spill appears to have been caused by a valve problem on the Liberian-flag bulk carrier AM Ghent during a bunkering operation while anchored in British waters in the Bay of Gibraltar. An anti-pollution operation involving vessels from Gibraltar and Spain tried to contain the spilt fuel to prevent it from reaching shore. But an oily sheen stretched across much of the north end of the bay over the weekend, while inside Gibraltar harbour thick tendrils of black gunk floated on the water emitting a powerful fuel smell. Booms were stretched across the entrance of marinas inside the harbour to limit the amount of spill that could drift inside and damage boats. A specialist vessel sucked up the fuel floating on the surface, although the size of the spill is significant and the was work was ongoing on Monday. “I am very satisfied with the work being done by all those involved and this will not stop until the oil has been cleaned up fully,” said Vijay Daryanani, the Minister for the Port. “I will make sure that we carry out a full investigation into how this accident occurred as soon as possible.”
Oil spill stops shiploading at W Australias Geraldton - Australian iron ore mining firm Fenix Resources has stopped loading the Ya Tai 2 bulk carrier after mechanical issues caused an oil spill at the port of Geraldton in Western Australia's (WA) MidWest region. The cargo, the first loaded by Fenix from its 1.25mn t/yr Iron Ridge project, was under contract to Chinese firm SinoSteel International. SinoSteel is responsible for chartering the vessel as part of an fob contract under the offtake agreement between SinoSteel and Fenix, according to the Australian firm. Fenix had loaded 5,004 wet metric tonnes (wmt) of 64pc Fe lump onto the 76,000 deadweight tonne (dwt) capacity Ya Tai 2 before the mechanical issues stopped loading. It is unclear if the rest of the cargo can be loaded onto the ship and Fenix is looking at other export options. The firm's second shipment is due be loaded at Geraldton from 27 February. Geraldton is becoming increasingly busy, with new iron ore mining firm GWR making its first shipment last week and shipments of wheat and other grains increasing because of higher WA rainfall. WA iron ore mining firm Mount Gibson also plans to restart shipping through the port from mid-2021 when its begins sales from its 1.5mn t/yr Shine project. It is unclear if the oil spill has affected shipping from other firms using Geraldton.
Oil spill from TTPL sparks environmental concerns --A leakage in the pipeline carrying furnace oil to the boiler at Travancore Titanium Products Ltd (TTPL) on Wednesday caused oil spill in the sea along Shanghumugham-Veli coast forcing a temporary ban on visit to tourism spots and fishing activities for 48 hours. Tourists will be prohibited from entering Veli, Sanghumugham and Vettucaud beaches on Thursday too. The pipeline carrying the furnace oil runs above the drainage line and the spilled oil directly flowed into the drainage line leading to the sea. About 5,000 litres of oil is estimated to have been leaked. High-pressure pumping caused excessive leakage following the pipe burst. The authorities said approximately 2,000 litres of oil must have spilt into the sea. Later in the day, the TTPL stopped operations following a directive from the pollution control board. PCB issued a letter to TTPL expressing strong objection over the company’s failure to inform it about the oil spill. The agency has instructed PCB instructed TTPL not to resume operations until containment, cleansing and disposal measures are completed. An emergency response team has managed to contain the flow by blocking the drainage line. The recovery of spilt oil has also been initiated. With sea waves washing ashore the oil, thick tar has been formed on the beach. Saw dust is being sprayed over the tar which is then scooped up and stored at TTPL and will be disposed of scientifically. The team is also in talks with technical firms to engage machinery for the recovery of oil sediments. The damaged pipeline will be replaced. Generally, around 26,000 litres of furnace oil are stored at TTPL and 12,000 litres are used daily to generate steam and for other burning purposes. Such an oil leakage has been reported at TTPL for the first time and the company has initiated an internal inquiry. An acid plant is generally used to generate steam but as it was shut down, furnace oil was used for the purpose. A Coast Guard ship and an aircraft conducted surveillance over the coastal area following the oil spill. The officials of pollution control board visited the site and assessed the situation. District authorities havedirected TTPL to remove the sand littered with oil on the beach from Vettucaud to Veli.
Shell reports Nigeria to WBank panel over oil spill dispute - Royal Dutch Shell Plc along with its Nigerian subsidiary, the Shell Petroleum Development Company (SPDC), has launched arbitration proceedings against the federal government over a long-running dispute with a Rivers community.The oil major’s Netherlands-registered holding company and SPDC filed the case at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) on February 10.This is coming as the Joint Venture (JV) between the Nigerian National Petroleum Corporation (NNPC) and Total E & P targets to hit first oil in the $500 million Ikike Oilfield from the last quarter of 2021.A post on the website of the Washington-based World Bank dispute resolution body, indicated that the hearing of the case marked “Shell Petroleum N.V. and The Shell Petroleum Development Company of Nigeria Limited v. Federal Republic of Nigeria (ICSID Case No. ARB/21/7)” was still pending.It listed the claimant’s representative as Debevoise & Plimpton, London, UK and New York, NY, U.S.A, while the respondents representatives were named as the Attorney-General of the Federation and Minister of Justice, Abuja, Nigeria, Solicitor-General of the Federation and Permanent Secretary to the Federal Ministry of Justice, Abuja, Nigeria as well as the Federal Ministry of Justice.The World Bank’s arbitration body is a leading institution devoted to international investment dispute settlement, having administered the majority of all international investment as agreed to by participating states.It was set up under a multilateral treaty formulated by the executive directors of the World Bank to further its objective of promoting international investment. It was established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) and has handled over 700 cases.
Nigerians can now sue Shell in the UK for oil pollution --Nigerians can sue Shell in English courts for damage to communities caused by oil spills in the Niger Delta, the UK’s Supreme Court said on Friday, allowing the communities to bring their claims for compensation and clean-up in UK courts. The Supreme Court ruled in favor of the Ogale and Bille communities who have contended that Shell should be held liable for the oil spills under the supervision of its Nigerian subsidiary SPDC.The UK Supreme Court overturned a split decision of the Court of Appeal and held that the two cases brought by the Ogale and Bille communities are arguable and can proceed in the English courts.The Supreme Court ruling adds another precedent for oil companies who can be sued in their domicile for oil spills and other harm to communities in other countries. Last month, The Hague Court of Appeal ordered Shell to compensate Nigerian farmers for two oil spills in the country 13 years ago, in the first lawsuit in which a company has been held liable in the Netherlands for its actions abroad. Shell hasn’t argued that the oil spills did not happen, but has always said that the spills happened in communities with rampant oil theft and infrastructure sabotage.“Regardless of the cause of a spill, SPDC cleans up and remediates. It also works hard to prevent these sabotage spills, by using technology, increasing surveillance and by promoting alternative livelihoods for those who might damage pipes and equipment. Unfortunately, such criminal acts remain the main sources of pollution across the Niger Delta today,” a spokesperson for Shell said, as carried by Sky News. Persistent issues with theft and sabotage in the Niger Delta could prompt Shell to take a hard look at its operations onshore Nigeria, the supermajor’s chief executive Ben van Beurden said last week. Daniel Leader, a partner with law firm Leigh Day representing the Nigerian communities, said, commenting on Friday’s ruling: “This Supreme Court judgment gives real hope to the people of Ogale and Bille who have been asking Shell to clean up their oil for years. We hope that now, finally, Shell will act. But it also represents a watershed moment in the accountability of multinational companies.”
Funds bought U.S. crude ahead of big freeze: John Kemp - (Reuters) - Hedge funds purchased more petroleum last week, but buying was almost entirely concentrated in WTI, which suggests it was driven by the prospect of freezing weather temporarily hitting U.S. oil production. Hedge funds and other money managers purchased the equivalent of 33 million barrels in the six most important petroleum-linked futures and options contracts in the week to Feb. 9. But the buying was concentrated in NYMEX and ICE WTI (+30 million barrels) and to a lesser extent European gas oil (+7 million), according to ICE Futures Europe and the U.S. Commodity Futures Trading Commission. There were only very minor changes in Brent (+2 million) and U.S. diesel (+1 million) while U.S. gasoline (-5 million) saw selling for the second week running (https://tmsnrt.rs/3tY3c2l). Combined positions across all six contracts are now just over the 80th percentile for all weeks since 2013, implying most portfolio managers anticipate further price increases in the short term. Fund managers have increased their bullish positioning for 14 weeks running, by a total of 531 million barrels, the longest and largest increase in bullish positions since the first four months of 2019. The hedge fund community remains bullish even though crude prices have increased by more than half in less than three months since the first successful coronavirus vaccines were announced in early November. But the concentration of buying in WTI implies that much of the buying in the most recent week was fuelled by U.S.-specific factors, while the more internationally-oriented Brent contract saw little change. Forecast freezing weather, which has now arrived, was expected to hit oil and gas production across the Great Plains and down into the Permian Basin of Texas, temporarily curbing crude supply in the United States. On the other side of the Atlantic, buying in European gasoil was likely driven by the prospect of colder weather across much of Europe as well as the strong recovery in global freight and manufacturing consumption.
Oil rises on fears of heightened tensions in Middle East - Oil prices rose to their highest in more than a year on Monday, after a Saudi-led coalition fighting in Yemen said it intercepted an explosive-laden drone fired by the Iran-aligned Houthi group, raising fears of fresh Middle East tensions. Hopes for more U.S. stimulus and an easing of coronavirus lockdowns helped support the rally, after prices gained around 5% last week. Brent crude was up 66 cents, or 1.1%, at $63.09 a barrel at 0004 GMT, after climbing to a session high of $63.44, the highest since Jan. 22, 2020. U.S. West Texas Intermediate (WTI) crude futures gained 86 cents, or 1.5%, to $60.33 a barrel. It touched the highest since Jan. 8 last year of $60.77 earlier in the session. The Saudi-led coalition fighting in Yemen said late on Sunday it intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group toward the kingdom, state TV reported. "An early spike in oil markets was triggered by the news," said Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co. "But the rally was also driven by growing hopes that a U.S. stimulus and easing of lockdowns will boost the economy and fuel demand," he said. WTI may be pulled back by profit-taking as it reached a key $60 level, he added. U.S. President Joe Biden pushed for the first major legislative achievement of his term on Friday, turning to a bipartisan group of local officials for help on his $1.9 trillion coronavirus relief plan. Oil prices have rallied over recent weeks also as supplies tighten, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the group OPEC+.
Oil hits pandemic high as winter storm pushes demand and poses production risk - Freezing weather in regions across the U.S. sparked another rally in energy prices and put West Texas Intermediate crude on pace to settle above $60 a barrel for the first time since the early days of the coronavirus pandemic. WTI crude futures rose 67 cents, or 1.1%, to $60.14 a barrel Monday morning around 10:08 a.m. ET. The jump brings WTI crude futures up 24% so far in 2021. It touched $60.77 a barrel earlier in the session, its highest level since January 2020. Brent crude, the international benchmark, climbed 1.3% to $63.26 after hitting its own 13-month high. The latest pop in the energy market came as cold weather racked portions of the U.S. and fostered demand for power and fuel while simultaneously threatening to hamstring production in Texas. "Winter storm and arctic blast of cold weather that is making its way south to Houston may have some severe impacts on the oil industry," oil analyst Andy Lipow wrote over the weekend. "Frigid weather means that many oil wells may be shut in. Water is produced along with oil, that water can freeze up equipment," he added. "The cold air affects oil production in Canada, North Dakota, Oklahoma, Texas and elsewhere." More than 150 million Americans are currently under some category of winter weather advisory, according to the National Weather Service. As of early Monday morning, the agency was predicting a "major winter storm" to dump heavy snow and significant ice from the southern plains and Ohio Valley into the Northeast. Lipow, president of Texas-based Lipow Oil Associates, added that while the winter storm likely isn't as severe as the Category 5 hurricanes the Gulf Coast has come to know, odds are good refineries will slow operations and prepare for outages. He also noted that the storm is partly to blame for a steady rise in gasoline prices over the last week. Analysts expect that the EIA's next weekly report, due Tuesday, will show that retail gas prices climbed further. The recent rally in crude prices also marks an extension of the oil market's rebound since the coronavirus pandemic gutted demand for petroleum products throughout much of 2020 and sent crude prices reeling in April.
Oil price rally points to more OPEC+ easing from April -sources (Reuters) - OPEC+ oil producers are likely to ease curbs on supply after April given a recovery in prices, OPEC+ sources said, although any increase in output will be modest as producers are wary of fresh setbacks in the battle against the pandemic. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, slowed the pace of a planned output increase in January to match weaker-than-expected fuel demand due to continued restrictions on population movement because of the pandemic. Saudi Arabia made additional voluntary cuts to supply for February and March. An oil rally since then to a 13-month high to almost $64 per barrel has boosted confidence among producers that the market could absorb more supply. Forecasters, including OPEC, are predicting a record rise in demand this year as vaccines are rolled out, despite current weakness. [OPEC/M] “Yes, if demand recovers as we expect, OPEC+ will ease the production adjustments gradually, always thinking about reducing the inventory overhang,” said an OPEC delegate, asked if the oil rally would make easing more likely from April. OPEC+ meets to set policy on March 4. The two key questions for the group will be whether Saudi Arabia rolls back its voluntary cut of 1 million barrels per day (bpd) - which is due to end next month - and whether there is room for an additional increase in supply from the whole group. Saudi Arabia’s voluntary cut of 1 million barrels per day (bpd) ends next month. While Riyadh hasn’t shared its plans beyond March with its OPEC+ partners, expectations in the group are growing Saudi Arabia will bring back the supply from April, perhaps gradually. “Oil prices are very good now so there is no need for the Saudis to continue with the voluntary cuts beyond March,” an OPEC+ source said. “But it is not clear if the Saudis will bring back the 1 million bpd gradually or not.” Iraq’s oil minister said on Feb. 10 Saudi Arabia would likely abandon the voluntary cut after the March meeting, and also said OPEC+ would keep its output cuts policy unchanged. Still, with prices rising, some in OPEC+ are likely to propose a modest rise in output, although this could depend on whether Saudi Arabia ends the voluntary cut all at once.
Oil prices climb as deep freeze shuts U.S. oil wells, curbs refineries (Reuters) - Oil prices rose on Tuesday as a cold front shut wells and refineries in Texas, the biggest crude producing state in the United States, the world’s biggest oil producer. Prices also gained as Yemen’s Iran-aligned Houthi group said it struck airports in Saudi Arabia with drones, raising supply concerns in the world’s biggest oil exporter, and on optimism for a global economic recovery amid accelerated COVID-19 vaccine rollouts. Brent crude was up 14 cents, or 0.2%, at $63.44 a barrel at 0740 GMT, after rising to its highest since January 2020 in the previous session. U.S. West Texas Intermediate (WTI) crude futures gained 61 cents, or 1%, to $60.08 a barrel. WTI did not settle on Monday because of a U.S. federal holiday. Prices will settle at the close of trading on Tuesday. “The unexpected U.S. supply disruption provides another short term price recovery bridge that has likely taken oil prices to a level where markets were eventually heading but just a little bit quicker than expected,” Stephen Innes, chief global markets strategist at Axi said in a note on Tuesday. The cold weather in the United States halted Texas oil wells and refineries on Monday and forced restrictions on natural gas and crude pipeline operators. The rare deep freeze prompted the state’s electric power suppliers to impose rotating blackouts, leaving nearly 3 million homes and businesses without power. Texas produces roughly 4.6 million barrels of oil per day and is home to 31 refineries, the most of any U.S. state, according to Energy Information Administration data, including some of the country’s largest. In the Middle East, Yemen’s Iran-aligned Houthi group said on Monday it had struck Saudi Arabia’s Abha and Jeddah airports with drones. The Saudi-led coalition fighting the Houthis in Yemen said early on Monday morning it had intercepted and destroyed an explosive-laden drone fired by the Houthis toward the kingdom. The World Health Organization (WHO) on Monday listed AstraZeneca and Oxford University’s COVID-19 vaccine for emergency use, widening access to the relatively inexpensive shot in the developing world. Capping prices gains, Norway’s oil industry employers struck a wage bargain with the Safe labour union on Tuesday, preventing a strike at the Mongstad crude terminal and shutdowns of major offshore oil and gas fields.
Oil steady amid Texas supply disruptions, potential OPEC+ moves -- Oil extends rally on Texas supply disruptions - Oil prices rose on Wednesday, underpinned by a major supply disruption in the southern United States this week where a winter storm hit Texas. Benchmark Brent crude gained 22 cents, or 0.35%, to trade at $63.56 per barrel. U.S. West Texas Intermediate (WTI) crude rose 15 cents, or 0.28%, to $60.22 per barrel. Both contracts were at their highest level since January 2020. "WTI clocked in at $60 a barrel this week, joining its transatlantic peer (Brent) above the psychological level for the first time since January 2020. At this price point, any oil production is profitable," Oil has been supported in the past few weeks by OPEC+ supply curbs and hopes of a demand rebound due to COVID-19 vaccinations, but severe cold weather in Texas, the country's largest oil producing state, has boosted the prices in recent days. The U.S. deep freeze is expected to disrupt production for several days if not weeks, industry experts said, as wellheads have frozen and refineries have been shut. ANZ and Citigroup analysts estimated at least 2 million barrels per day (bpd) of U.S. shale oil production had been curtailed. Citi estimated a cumulative production loss of around 16 million barrels through early March. The stronger price environment has put more attention on OPEC+, which groups OPEC, Russia and allied producers. It meets to set policy on March 4. "The impact on crude oil prices will largely depend on how long the power crisis will last, but eventually prices will likely return to the fundamentals with a focus on the global energy demand and OPEC+," OPEC+ oil producers are likely to ease curbs on supply after April given a recovery in prices, OPEC+ sources told Reuters. "We believe that OPEC+ will likely take a more conservative approach, and ease output more modestly," . U.S. oil inventory data from the American Petroleum Institute and the U.S. Energy Information Administration (EIA) will be released on Wednesday and Thursday respectively, a one day delay for each after this week's U.S. holiday. Analysts polled by Reuters estimated, on average, that crude stocks fell 2.2 million barrels in the week to Feb. 12.
Oil jumps US$1/barrel as Texas freeze prompts US output drop,-- Oil prices gained more than US$1 a barrel on Wednesday, as frigid Texas temperatures shut production across the largest US crude producing state, with the unusually cold weather expected to hamper output for days or even weeks. Brent crude settled at US$64.34 a barrel, gaining 99 cents, or 1.6 per cent, while US West Texas Intermediate (WTI) crude settled at US$61.14 a barrel, rising US$1.09, or 1.8 per cent. Both benchmarks were at their highest levels since January last year. Oil has been supported by Opec+ supply curbs, Saudi Arabia's additional cuts and hopes of a demand rebound due to Covid-19 vaccinations. Historic cold weather since the weekend in Texas, which supplies the bulk of US crude and is part of the main US refining hub, has propelled prices even higher. The US deep freeze has shut an estimated 1 million barrels a day of production and is expected to disrupt production for several days if not weeks, industry experts said, as wellheads have frozen over and pipelines have shut. At least a fifth of US refining output has been knocked offline, which is hampering demand for crude at the same time production is down,. "This will all thaw out and things should ramp up rather quickly," he said. In a statement that helped ease fears that Opec and allied oil producers would announce plans to raise output after meeting next month, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said it was too early to declare victory against the Covid-19 virus and oil producers must remain "extremely cautious." The stronger price environment has put more attention on Opec+, which groups Opec, Russia and allied producers. It meets to set policy on March 4. US crude oil stocks fell by 5.8 million barrels in the week to Feb 12 to about 468 million barrels, compared with analysts' expectations in a Reuters poll for a draw of 2.4 million barrels, American Petroleum Institute data showed.
Oil Prices Advance Amid US Energy Crisis | Rigzone -- Oil rose to the highest in over a year as U.S. oil output plunged by a record 40% amid the ongoing energy crisis in the country. Futures climbed 1.8% in New York after flipping between gains and losses earlier on Wednesday. The deep freeze causing historic power outages across the central U.S. has led oil output to fall by more than 4 million barrels a day nationwide. Meanwhile, Brent’s nearest contract is trading at its strongest premium to the following month in over a year, with North Sea traders this week frantically bidding for the region’s cargoes as replacements are sought for U.S. crude exports. However, a spate of refinery outages from the freezing temperatures has curbed demand for crude in the U.S., while gasoline consumption also decreased as the cold kept even more Americans off the road. WTI’s nearest time spread flipped back into a bearish contango structure this week amid refinery closures and infrastructure issues associated with the freeze in the U.S., indicating oversupply. “This arctic blast is really delivering a key surprise that’s elevating prices,” “The short-term disruption underlines the fragility of where we are with supplies, and we could see a number of different events that could provide us with another surge higher.” Crude’s rally faded briefly during Wednesday’s session after Dow Jones reported that Saudi Arabia plans to boost oil output in the coming months, citing unnamed advisers to the kingdom. While Saudi Arabia’s unilateral supply cuts this year came as a surprise to the market when initially announced, many investors had expected the producer to raise output come April. Meanwhile, Saudi Arabia is urging fellow members of the OPEC+ alliance to remain cautious as they prepare to consider further supply increases. West Texas Intermediate for March delivery rose $1.09 to settle at $61.14 a barrel. Brent for April settlement gained 99 cents to end the session at $64.34 a barrel. Both benchmarks are at the highest since January 2020 Temperatures in Texas are now low enough to freeze oil and gas liquids at the well head and in pipelines laid on the ground. Before the crisis, the U.S. was pumping about 11 million barrels a day, according to government data. Production in the Permian Basin alone -- America’s biggest oil field -- has plummeted by as much as 80%. A slew of crude pipelines were also shut earlier this week due to the freeze, including those that transport oil from the nation’s largest storage hub at Cushing, Oklahoma, to the U.S. Gulf Coast, according to data-provider Genscape Inc. Multiple pipelines remained offline as of Tuesday.
WTI Extends Gains After Bigger Than Expected Crude Draw -- Oil prices ended a roller-coaster day higher (WTI above $61) after the deep freeze shut in a stunning 40% of US crude production (prices higher), headlines reported that the Saudis plan to boost production going forward (prices dived), and a late-day buying panic post-FOMC Minutes (ignoring transitory inflation factors). “We’re at a very delicate point here,” said Bob Yawger, head of the futures division at Mizuho Securities. OPEC+ has “to make sure the associated demand is there before increasing the barrels and not kill the golden goose here, which is what they’ll do if they add everything at once.” Today's reported inventory data is unlikely to show any of the affects from the current storm (although potentially some stockpiling may have occurred)... API
- Crude -5.8mm (-2.15mm exp)
- Cushing -3.00mm
- Gasoline +3.90mm (+1.397mm exp)
- Distillates -3.50mm (=1.57mm exp)
As analysts expected, crude stocks drew down for a 4th straight week (and more than expected). Gasoline stocks rose for the 6th week of the last 7... WTI was hovering around $61.20 (highs of the day) ahead of the API print, and extended gains after the bigger than expected draw... “This arctic blast is really delivering a key surprise that’s elevating prices,” said Edward Moya, senior market analyst at Oanda Corp. “The short-term disruption underlines the fragility of where we are with supplies, and we could see a number of different events that could provide us with another surge higher.”
Saudi Arabia May Reverse Course, Respond to Rise in Oil Prices with Increased Production --Saudi Arabia, which leads the Organization of the Petroleum Exporting Countries (OPEC), may quickly ramp up production this spring, following the recent momentum in oil prices and its own expectations for increased demand in the second half of 2021. It would mark a stark shift from its current stance. OPEC and its allies, aka OPEC-plus, this month maintained lower near-term production targets. The cartel had previously called for its members to keep supply levels steady this month, with the exception of leader Saudi Arabia. The kingdom agreed to voluntarily trim output by 1.0 million b/d in February and March to further align global supply with demand that has been under pressure from pandemic fallout. [NGI’s natural gas price indexes have included trade data from both price reporters and the Intercontinental Exchange (ICE) since 2008. Find out more about our price index data here.] Saudi Arabia, however, is preparing a plan to reverse course in April and could announce the shift in policy when OPEC-plus meets early next month, the Wall Street Journal reported Wednesday, citing advisers to the cartel. Oil prices reached 13-month highs in recent days. The Saudis’ plan had not otherwise been made public or formally communicated to OPEC delegates. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman, while speaking at a virtual conference on Wednesday, said it was too soon to assess with confidence the trajectory of the pandemic or to make any new announcements. “We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he said. “Those who are trying to predict the next move of OPEC-plus, to those I say, don’t try to predict the unpredictable.” Virus outbreaks during the winter months have kept travel in check and, by extension, muted demand for gasoline and jet fuel. OPEC-plus ministers are scheduled to meet March 4 to determine output quotas for April and potentially ensuing months.
JPMorgan says two factors could drive up oil prices by another $5 to $10 per barrel— JPMorgan says crude prices could see further upside ahead as oil continues to see strong gains so far this year. It comes against the backdrop of an improving global outlook as major economies press ahead with their ongoing coronavirus vaccination campaigns. "I think there's room for oil prices to move a little bit higher in this environment but, you know, not thinking about a price of $80 or $90 a barrel. Maybe it goes up by $5 or $10 more from here," Kerry Craig, global market strategist at JPMorgan Asset Management, told CNBC's "Street Signs Asia" on Friday. In the afternoon of Asia trading hours on Friday, international benchmark Brent crude futures were at $62.91 per barrel. U.S. crude futures changed hands at $59.34 per barrel. Both Brent and West Texas Intermediate crude futures have risen more than 20% each so far in 2021. Oil prices have moderated in recent days after surging to their highest in more than a year. Just this week, a deadly winter storm in southern U.S. resulted in days of power outages in Texas, wrecking havoc on the state's energy infrastructure and taking millions of barrels per day of oil production offline. Energy prices popped as a result of that development. There are two things that will likely drive oil prices going forward, according to Craig. Firstly, demand for oil is expected to pick up as the global economy recovers from the hit of the coronavirus pandemic, he said. However, that will be "curtailed to a certain extent" due to the low likelihood of international travel coming back in a big way soon. Travel is an "important source of demand," he added. On the supply side, he said: "We're still relying on those OPEC+ members to keep that supply relatively curtailed and I think there's still a question about that in terms of the amount of supply coming on relative to demand." OPEC and its allies, known collectively as OPEC+, have sought to navigate their way through a historically tumultuous period that has included an unparalleled collapse in oil prices as well as a major fuel demand shock amid the pandemic.
WTI Rebounds Above $61 After Big Crude Draw, Production Drop - Oil prices are lower this morning ahead of the official inventory data (after spiking on Permian shut-ins and a bigger than expected crude draw reported by API) as stocks sank: “The outage will be temporary but it will still help to accelerate U.S. oil inventories down towards the five year average quicker than expected,” Estimates for how long the U.S. outages may last have risen in recent days as analysts try to figure out the timespan involved in thawing out infrastructure.One million barrels per day of production are offline due to the winter storm, according to Wood Mackenzie analysts. At least 6% of Permian Basin production was hit by freezing weather, and 225,000 barrels per day of Eagle Ford production. Meanwhile, Citigroup analysts have estimated a cumulative production loss of 16 million barrels through early March. This week's inventory data is unlikely to reflect any effects of the storm (except the possibility of some stockpiling ahead of it). DOE
- Crude -7.257mm (-2.15mm exp)
- Cushing -3.028mm
- Gasoline +672k (+1.397mm exp)
- Distillates -3.422mm (-1.57mm exp)
After API's big draw, analysts expected 9th weekly drop in crude stocks in the last 10 weeks and were right as crude inventories dropped a far greater than expected 7.25mm barrels. Gasoline stocks rose for the 6th week in the last 7...
Oil prices dip after surpassing $65 a barrel amid Texas cold snap --Oil prices fell on Thursday despite a sharp drop in United States crude inventories, as market participants took profits following days of buying spurred by a cold snap in the largest US energy-producing state. Brent crude fell 41 cents, or 0.6 percent, to settle at $63.93 a barrel. During the session it rose as high as $65.52, its highest since January 2020. US West Texas Intermediate (WTI) crude futures fell 62 cents, or 1 percent, to settle at $60.52 a barrel, after earlier reaching $62.26, the highest since January 2020. Brent had gained for four straight sessions before Thursday, while WTI had risen for three. “The market probably got a little bit ahead of itself,” said Phil Flynn, a senior analyst at Price Futures Group in Chicago. “But make no mistake, this selloff in oil doesn’t solve the problems. The problems are going to persist.” Though some Texas households had power restored on Thursday, the state entered its sixth day of a cold freeze. It has grappled with refining outages and oil and gas shut-ins that rippled beyond its border into Mexico. The weather has reduced the nation’s refining capacity by one-fifth and closed oil and natural gas production across the state. “The temporary outage will help to accelerate US oil inventories down towards the five-year average quicker than expected,” SEB chief commodities analyst Bjarne Schieldrop said. Prices dropped despite a decrease in US oil inventories. Crude stockpiles fell by 7.3 million barrels in the week to February 12, the Energy Information Administration (EIA) said on Thursday, compared with analysts’ expectations for a decrease of 2.4 million barrels. Crude exports rose to 3.9 million barrels per day, the highest since March, EIA said. “The big nugget was the big jump in exports of crude oil,” said John Kilduff, partner at Again Capital in New York. “We’ll have to see what happens with that next week [related to] weather in Texas, but I have been looking for a pickup there for a while.” Oil’s rally in recent months has also been supported by a tightening of global supplies, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the OPEC+ grouping, which includes Russia. OPEC+ sources told Reuters news agency that the group’s producers are likely to ease curbs on supply after April given the recovery in prices.
Oil Prices Dip as Some Cash in on US ‘Freeze’ Trade - The one-way move in oil prices snapped on Thursday as some cashed in on this week’s “freeze” trade that sent crude markets higher than they might have otherwise gone. New York-traded West Texas Intermediate crude settled down 1%, or 62 cents, at $60.52 per barrel as players took profit on its run to 13-month highs of $62.27 after the Arctic freeze that crippled part of the oil production in Texas, the heartland of U.S. energy. London-traded Brent, the global benchmark for crude, settled down 0.6%, or 41 cents, at $63.93, after briefly breaking above $65 — its highest since January 2020. After an unseasonably warm start to the 2020/21 winter, a hail of snow storms have descended upon central and eastern United States in recent weeks. This has slowed or, in some cases, shut altogether energy production in some places, particularly in Texas, where the freeze was so severe this week that oil and gas just couldn't flow like normal. Analysts at ANZ Bank and Citigroup (NYSE:C) estimate that at least 2 million barrels barrels per day of US shale oil production has been curtailed by the Texas storm. Citigroup also expects a cumulative production loss of around 16 million barrels through early March. Typically known for its sweltering weather most of the year, Texas now looks more like a white blanket after this week’s storm in the state known temperatures of between 60°F (15.6°C) and 70°F (21.1°C). At least 500,000 homes in Texas had no power on Thursday morning after as many 3.1 million were impacted a day earlier by the worst snowstorm in 30 years to hit the state.
Oil drops as investors gauge big chill impact on U.S. refineries --Oil prices slid as much as 2% in early trade on Friday, adding to overnight declines, on worries that refineries shut by a big freeze in the U.S. South will take some time to revive operations and dent crude demand. U.S. West Texas Intermediate (WTI) crude futures fell $1.21, or 2%, to $59.31 a barrel at 0157 GMT, after declining 1% on Thursday. Brent crude futures dropped $1.07, or 1.7%, to $62.86 a barrel, after declining 0.6% on Thursday. Both benchmark contracts rallied to 13-month highs on Thursday driven by the historic freeze in U.S. southern states. While analysts estimate the extreme cold has shut in as much as one-third of U.S. crude production, attention has now turned to the impact on refiners. "The market is concerned about the refinery outages in Texas, where arctic weather has caused power outages and frozen wells and pipes," ANZ Research said in a note. The lack of demand from refineries will likely lead to builds in crude stocks over coming weeks, even though around 3.5 million barrels per day (bpd) of U.S. oil output has been shut, ANZ said. Citi analysts said in a note that some U.S. refineries might bring forward maintenance work normally scheduled for the spring, ahead of the summer driving season. "Refinery outages could be deeper and longer lasting, especially ahead of the spring maintenance season, as some plants could decide to anticipate planned turnarounds of roughly 500-k b/d on aggregate over the next month," Citi analysts said. U.S. crude stockpiles fell more than expected in the week to Feb. 12, before the freeze, with inventories down by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday.
Light Crude Ends Week Below $60 | Rigzone -- Oil fell to the lowest in a week as output slowly resumed in Texas, while margins for processing gasoline surged as Gulf Coast refineries are seen taking weeks to restart operations after the deep freeze. Crude futures in New York plunged $1.28 on Friday, its biggest decline in dollar terms since late December. Producers including Marathon Oil Corp. are using restored power from grids or generators to resume output that was halted by the frigid weather this week in the Eagle Ford shale basin. Meanwhile, fuel margins jumped with four of the biggest refineries in Texas seen taking several weeks to resume operations, raising the potential for fuel shortages. “Crude production is going to come back up a lot faster than refineries, leaving more crude available than there will be demand for it coming up over the next few weeks.” Oil is still up more than 20% this year due to Saudi Arabia’s unilateral output cuts in February and March and an improving demand outlook. The market largely expects Saudi Arabia to roll some of the output cuts back, “but how much they try and bring back is the question mark we’re all waiting for,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy. “We don’t see them discontinuing the cut entirely. We still haven’t seen the recovery in global demand, even though there’s all kinds of positive outlooks.” West Texas Intermediate fell $1.28 to settle at $59.24 a barrel, falling less than 1% over the week. Brent for April settlement slipped $1.02 to end the session at $62.91 a barrel, posting its largest daily drop since Jan. 15. The contract eked out a slight weekly gain. Gasoline futures rose by 1.26 cents per gallon to $1.8069. The refining margin for Nymex gasoline versus WTI futures surged as much as over 16% on Friday, rising to the highest since April. There should be only a small and transitory impact on global oil prices from the U.S. freeze as the supply and demand impacts balance out, Goldman Sachs Group Inc. said. Still, Brent’s nearest timespread remains at one-year highs in a structure indicating tighter supplies and WTI’s discount to Brent has widened further past $3 a barrel this week, as replacements are sought for U.S. crude exports.ng The cold snap and power cuts affected more than 20 refineries in Texas, Louisiana and Oklahoma. Crude-processing capacity fell by about 5.5 million barrels a day, said Amrita Sen, chief oil analyst for Energy Aspects Ltd. Meanwhile, the White House said it would be willing to meet with Tehran to discuss a “diplomatic way forward” in efforts to return to the nuclear deal that the U.S. quit in 2018, adding further pressure to prices. Iran is pressing the U.S. to lift sanctions and rejoin the deal if talks are to resume.
A shot at Dubai? Saudi Arabia issues dramatic ultimatum to pull global head offices into the kingdom— Saudi Arabia, in a bold and unexpected move, announced late Monday that by 2024 its government would cease doing business with any international companies whose regional headquarters were not based within the kingdom. The news has investors, bankers and expat workers buzzing — and scratching their heads. Saudi Arabia in recent years has pitched itself as a location for HQ offices in its campaign to create private sector jobs and diversify its economy as part of Crown Prince Mohammed bin Salman's Vision 2030. But what began as a pitch to global head offices has now become an ultimatum for some: either relocate your headquarters to the kingdom, or lose out on lucrative government contracts. And the move, regional analysts and finance professionals say, appears to be targeted at the region's current headquarters hub: Dubai. "The Kingdom of Saudi of Arabia intends to cease contracting with companies and commercial institutions with regional headquarters not located in the Kingdom. The cessation will include agencies, institutions and funds owned by the government and will take effect January 1st, 2024," Saudi state agency SPA reported on Monday. So far, the policy appears only to apply to firms doing business with the government; those that don't move their head offices to Saudi Arabia can still work in the private sector. Riyadh vs. Dubai The Saudis are "trying to lure companies out of Dubai, I expect, and elsewhere," Ryan Bohl, a Middle East analyst at risk consulting firm Stratfor, told CNBC. One UAE-based financier, who spoke anonymously due to having business operations in Saudi Arabia, described the move as "clearly targeting the UAE" and a "jab in the face" to Dubai. "It's a terrible decision," the financier, a longtime veteran of the region, added. "It's anti-common market, it's anti-competition, and it's essentially corporate bullying."
After Qatar, Belligerent Saudi Takes on the UAE -- Will the world go to Riyadh if coerced to do so by the Saudi government? Upon taking power, Crown Prince Mohammed bin Salman was seen as a reformist, market-friendly leader able to take Saudi Arabia forward into a post-fossil fuel future. This impression has taken a big hit in recent years with the 2017 embargo on Qatar as well as the still-unresolved 2018 murder of journalist Jamal Khashoggi at Saudi Arabia's Turkish consulate. Taking endless potshots at its fellow Gulf Cooperation Council (GCC) members doesn't seem to be the way to signal that Saudi Arabia is open for business. More recently, Saudi Arabia has come up with its most outlandish power play yet: It has cautioned multinationals that, unless they place their regional (read: Middle East) headquarters in Saudi Arabia, they will not be able to ink government contracts. Obviously aimed at Dubai in the UAE which vastly outstrips Saudi Arabia in "ease of doing business" indicators that you would naturally think companies would gravitate to when siting regional headquarters, the outcry has been understandably strong: Saudi Arabia, in a bold and unexpected move, announced late Monday that by 2024 its government would cease doing business with any international companies whose regional headquarters were not based within the kingdom. The news has investors, bankers and expat workers buzzing — and scratching their heads. Saudi Arabia in recent years has pitched itself as a location for HQ offices in its campaign to create private sector jobs and diversify its economy as part of Crown Prince Mohammed bin Salman’s Vision 2030. But what began as a pitch to global head offices has now become an ultimatum for some: either relocate your headquarters to the kingdom, or lose out on lucrative government contracts. And the move, Middle East analysts and finance professionals say, appears to be targeted at the region’s current headquarters hub: Dubai. Mind you, the UAE joined Saudi Arabia in the embargo on Qatar. Although regional economic rivalry is expected, punching below the belt in this way over restricting government procurement lest they headquarter in Saudi Arabia is widely perceived as unfair, especially since they are all supposedly part of a customs unionin the GCC: The Saudis are “trying to lure companies out of Dubai, I expect, and elsewhere,” Ryan Bohl, a Middle East analyst at risk consulting firm Stratfor, told CNBC. One UAE-based financier, who spoke anonymously due to having business operations in Saudi Arabia, described the move as “clearly targeting the UAE” and a “jab in the face” to Dubai. The truth of the matter is that Saudi Arabia is a less attractive place to site your regional HQ with its more restrictive environment--economically and socially. The latter is of particular concern to Western expats:
Over 700 detained after Turkish invasion of Iraq targets PKK -- Yesterday, the Turkish Interior Ministry announced that 718 people, including officials and members of the legal Kurdish nationalist Peoples’ Democratic Party (HDP), have been detained as part of “terror operations” carried out in 40 different cities across the country. As part of an already advanced drive towards dictatorship that is eliminating basic democratic rights and constitutional guarantees, this state crackdown launched by President Recep Erdoğan’s Justice and Development Party (AKP) government is a massive witch-hunt aimed at suppressing any kind of opposition. It is unprecedented in its scope since the NATO-backed attempted military coup in 2016. These police operations came immediately after Defense Minister Hulusi Akar’s announcement Sunday that 13 Turkish nationals, including soldiers and police officers, were killed by the Kurdistan Workers’ Party (PKK) in the mountainous Gara or Gare region of the Iraqi Kurdistan Regional Government (KRG) during a recently launched Turkish military invasion. They had reportedly been held as prisoners by the PKK since 2015. After this announcement, a feverish government and media campaign was unleashed, blaming the HDP for deaths. Meanwhile, the HDP had announced on Saturday that at least 143 of its members had been detained over the past two days. According to Defense Minister Akar, “It has been established that one of our innocent and unarmed citizens was shot in the shoulder, and the remaining 12 were shot in the head. They were killed in a cave where the Turkish forces arrived to carry out a search.” He also said that the operation, conducted in a 75 kilometers-wide and 25 kilometers-deep area in Iraq, had been successfully concluded. “With the operation, all the elements that had been settled in this area and were preparing to attack our borders, security forces and people have almost been eliminated,” he said. Three Turkish soldiers and 48 PKK militia members lost their lives in the military clash, according to Akar. The Defense Ministry had announced last Wednesday that it had launched a new military invasion dubbed Operation Eagle Claw 2 into northern Iraq targeting PKK forces on the ground, claiming that there was a growing threat against Turkey from a PKK presence in the area. Dozens of warplanes and drones were used in the military operation, along with ground forces deployed to the area by helicopter.
Turkey Summons US Ambassador As Erdogan Blasts Biden's Support For "Kurdish Terrorists" Turkey's President Recep Tayyip Erdogan is once again blasting what he's deemed US support of "terrorists" after a major incident in which Kurdish militants reportedly executed 13 kidnapped Turks in northern Iraq. Ankara on Monday summoned the US ambassador to express outrage at the lukewarm American statement on the killings which appeared to question the credibility of the Turkish claims. "The United States said it stood by fellow NATO member Turkey and that it condemned the killings if it was confirmed that responsibility lay with the PKK," according to a Reuters summation of the State Department statement. Erdogan and top officials were outraged, with the president in a speech before AK Party supporters calling the US official stance "a joke"and "ridiculous". "Now there is a statement made by the United States. It's a joke. Were you not supposed to stand against the PKK, the YPG? You clearly support them and stand behind them," Erdogan said, enraged by what's being perceived as US skepticism over Turkey's version of events. The summary execution allegation against the outlawed Kurdistan Workers Party (PKK) was leveled on Sunday, and included claims the PKK had killed Turkish military and police which had been previously captured. Turkish officials described some of its forces were captured on Feb.10 during an operation against Kurdish militants in which 48 PKK members were killed. Below is the US statement that Erdogan accused of being intentionally weak: "We stand with our NATO Ally Turkey and extend our condolences to the families of those lost in the recent fighting. The United States deplores the death of Turkish citizens in the Kurdistan Region of Iraq," U.S. State Department spokesperson Ned Price said in a statement.Price said that if reports that the PKK was responsible were confirmed, they "condemn this action in the strongest possible terms."Erdogan was visibly angry in a Monday speech he gave to supporters at an event in a coastal Black Sea town: Tensions between the US and Turkey have already been on edge for years given the US backing for the Kurdish-led Syrian Democratic Forces (SDF) in northern Syria. Addressing this, Erdogan continued: "If we are together with you in NATO, if we are to continue our unity, then you will act sincerely towards us. Then, you will stand with us, not with the terrorists."
Rocket attack on US base in Iraq underlines continued Middle East militarism under Biden -A rocket attack Monday on the heavily fortified American military base in Erbil, the capital of Iraqi Kurdistan, has underlined the continued US intervention in the Middle East under the Democratic administration of President Joe Biden. The attack, which killed one military contractor, initially identified as a Syrian Kurd, and wounded nine others, including an American soldier, came as the Pentagon is formally evaluating US troop deployments in the Middle East and Afghanistan. US Secretary of State Antony Blinken declared Washington “outraged” by the attack. Tehran, meanwhile, angrily refuted allegations that Iran was in any way involved in the rocket strike. A little-known group calling itself Saraya Awliya al-Dam, or Guardians of the Blood Brigade, claimed responsibility for Monday’s attack. A wall is damaged in a residential complex after rockets attack in Irbil, Iraq, Tuesday, Feb. 16, 2021.(AP Photo/Salar Salim) A similar attack on a US base in Iraq last December led to a spiral of US retaliation that included the bombing of Iraqi Shia militia positions and the criminal US drone strike assassination of senior Iranian leader Qassem Suleimani and a top Iraqi militia leader at Baghdad international airport last January. While in the course of his election campaign, Biden criticized this assassination and promised to “end the forever wars in Afghanistan and the Middle East,” there is no indication of any move toward a de-escalation of American militarism in the region. In a press conference last Friday, Pentagon spokesman John Kirby said that the ongoing review of US deployments was aimed at assuring “that we have a robust enough deterrent capability in the Middle East,” including “both the fixed and the rotational capabilities in the region to deal with the threats that are posed by Iran.” Officially, Washington has 2,500 troops deployed in Iraq and approximately 900 in Syria, along with 2,500 more in Afghanistan. The real US military footprint is undoubtedly far larger, however. The Pentagon stopped releasing figures on the number of uniformed forces and military contractors deployed in the three countries in 2017 on the order of the Trump White House. Moreover, other military units are rotated in and out of the war zones on a regular basis. Meanwhile, as many as 40,000 more troops are deployed across the region at US military bases in Kuwait, Qatar, Bahrain, the United Arab Emirates, and other countries. US aircraft carrier strike groups have carried out continuous threatening maneuvers in and near the Persian Gulf, while the Biden administration has continued menacing Iran with the overflight of the region by B-52 Stratofortress heavy bombers.
In Major Nuke Deal Breakthrough, Biden Tells Iran 'We're Ready For EU-Sponsored Talks' -A first potential major breakthrough which so far has proved elusive after Biden has stalled on prior promises to 'immediately' restore US participation in the Iran nuclear deal, the United States appears to have just changed its tune. An admin official has said 'maximum pressure' could come to an end if Iran agrees to engage through a broader EU-hosted meeting base in the P5+1 framework. "The United States would be ready to hold talks with Iran if the European Union extended an invitation, a senior U.S. official said on Thursday, sketching out a possible diplomatic path to restore the 2015 Iran nuclear deal," Reutersreports late in the day Thursday. Further the official said the administration's "goal is to get both sides back into compliance with the nuclear deal" and has extended the invitation to Iran: "Let's talk about how to get there."Previously the administration appeared to balk when initially just such an offer was made two weeks ago by Iranian Foreign Minister Javad Zarif for the European Union to coordinate a piecemeal approach for dropping sanctions and Iran's return to conformity. But now Reuters has cited a top admin official to say "We are ready to show up if such a meeting were to take place" - in what's clearly an invitation for Iran to signal the same. Iran has indicated it will begin blocking IAEA inspectors from its nuclear facilities starting Sunday, February 21st, hence this new scramble out of the Biden administration to find a way forward before this next escalation measure that many fear would be hard to roll back takes effect. Both the US and Europe are warning against such a step.The US has lately been in direct talks with allies Britain, France, and Germany - the key European signatories to the JCPOA - and it appears they've finally struck up a common strategy in getting the frozen communications between Tehran and Washington going again.
NATO summit stresses anti-China strategy as wars in Middle East, Afghanistan continue - The two-day NATO defense ministers meeting that concluded Thursday was marked by the attempt of the Biden administration and its defense secretary, retired General Lloyd Austin, to adopt a new “tone and approach, a desire to work with our allies and partners,” as a senior Pentagon official put it. Whatever the claims that “America is back” after the four years of Donald Trump, the US used the meeting, held via a secure videoconference because of the pandemic, to press for the same essential policies: continued imperialist operations in the Middle East and a strategic shift toward the preparations for “great power” confrontation with China and Russia. This was combined with a continuation of Washington’s insistence that the European powers devote a greater share of their budgets—two percent of GDP—to military spending, including buying American-made hardware, a demand that has remained consistent from Obama to Trump to Biden. The most pressing immediate issue confronting NATO, a May 1 withdrawal deadline for 10,000 NATO and allied troops occupying Afghanistan, was left unresolved, waiting for a decision to be made in Washington. The deadline is part of the peace agreement signed last year in Qatar between the US and the Taliban, which was supposed to trade the withdrawal of US and other foreign troops for the Taliban’s commitment to denying the use of Afghan soil to Al Qaeda or any other forces seeking to attack the US and its allies. In the year since the negotiation of the accord, not a single US soldier has been killed in the country. Now, the Pentagon is claiming that the level of “violence” in the country makes it impossible to move forward. The US-backed security forces of the puppet regime in Kabul are facing a debacle, giving up bases and checkpoints to the Taliban, which is encircling major regional capitals. The insurgent movement’s traditional spring offensive is still to come. While European forces account for the majority of the foreign troops still in Afghanistan—officially, the US has only 2,500 soldiers deployed in the country—the occupation is wholly dependent upon US airpower, supply lines and logistical support.
Biden team a takes major step in offering to start talks with Iran as Tehran’s sanctions deadline approaches - Iran and the U.S. are in a standoff. President Joe Biden's administration wants to revive the 2015 nuclear deal, but is demanding to see changes from Tehran before it will lift the heavy sanctions imposed on the country by the Trump team. Meanwhile, Iran says it wants Washington to step up its game and make the first move, refusing to budge until those sanctions are lifted. But the Biden administration on Thursday took a major step, joining with European partners in offering to begin talks with the Iranians for the first time in four years. "The United States would accept an invitation from the European Union High Representative to attend a meeting ... to discuss a diplomatic way forward on Iran's nuclear program," State Department spokesman Ned Price said in a statement. The Biden team also rescinded the former Trump administration's efforts to reimpose U.N. sanctions on Iran. Secretary of State Antony Blinken told European ministers in a call Thursday that it would work with them to restore the 2015 accord, which he described as "a key achievement of multilateral diplomacy," according to a New York Times report. It remains unclear whether Iran will agree to the talks. Iran previously set a deadline of Sunday, Feb. 21, vowing that if oil and banking sanctions are not lifted by then, it will expel the U.N.'s nuclear inspectors from the country, ending outside access to its facilities. The political brinkmanship raises questions over Biden's plans to salvage a deal which has effectively been on life support since former President Donald Trump pulled the U.S. out of it in 2018. The Iranian nuclear deal, also called the Joint Comprehensive Plan of Action (JCPOA), was spearheaded by the Obama administration and involved several other world powers. It lifted international sanctions on Iran, offering the country of 83 million economic relief, in exchange for curbs to its nuclear program, which included mandated inspections by the U.N.'s International Atomic Energy Agency (IAEA). Any removal of IAEA inspectors "would make an agreement much more difficult to achieve; without mechanisms for monitoring Iran's nuclear program, mistrust from the U.S. and the remaining parties to the JCPOA would deepen," Torbjorn Soltvedt, principal MENA analyst at Verisk Maplecroft, wrote in a research note this week.#160;
Iran, Russia and China launch joint naval exercises in Indian Ocean -On February 16, as NATO prepared its summit to prosecute “strategic rivalry” with Russia and China, Iranian and Russian warships launched ongoing naval drills in strategic waters of the Indian Ocean, south of Iran and the oil-rich Persian Gulf. They are to soon be joined by Chinese warships which were reportedly delayed by the Chinese New Year festival. The drills highlight the global war tensions that are at explosive levels as the Biden administration takes office. These are the second such exercises, continuing a format inaugurated by joint Iranian-Russian-Chinese “Maritime Security Belt” naval drills held in December 2019. Shortly afterwards, Washington ordered the brazen assassination of top Iranian General Qassem Soleimani, who was murdered in a US drone strike at the Baghdad airport on January 3, 2020. A warship sails while approaching Iran’s southeastern port city of Chahbahar, in the Gulf of Oman. Iran’s navy on Friday kicked off the first joint naval drill with Russia and China in the northern part of the Indian Ocean. (Iranian Army via AP) This year’s Iranian-Russian-Chinese exercises take place as Iran’s economy reels under the impact of US sanctions and the COVID-19 pandemic. As he maintains devastating financial sanctions that Trump imposed on Iran after unilaterally scrapping the 2015 Iranian nuclear treaty, Biden ordered last month a provocative flyover of the Persian Gulf by a lone B-52 Stratofortress bomber escorted by Saudi F-15 fighter jets. The Iranian-Russian-Chinese drill underscores that with its threats against Iran, Washington is prosecuting a far broader, global conflict that threatens to erupt into war. This drill comes shortly after the larger Malabar 2020 naval exercise in November with US, Indian, Japanese and Australian ships including aircraft carriers USS Nimitz and INS Vikramaditya. This joint naval mobilization of the so-called “Asian Quad” of US allies was, as Voice of America reported citing Indian naval spokespersons, an “effort to contain China.” Shortly after these exercises, top Iranian nuclear scientist Mohsen Fakhrizadeh died on November 27, near Tehran, in what US intelligence officials described as an Israeli assassination. Iran’s Navy Chief Rear Admiral Hossein Khanzadi announced that the current drill aims to “ensure collective security in the region and in the northern Indian Ocean.” Khanzadi implied that the drill aims to expel US influence from the region: “It means that global arrogance which until today dominated the region must realize that it needs to leave it.” While Khanzadi also initially reported that Indian warships would join the joint exercise, Indian navy officials subsequently denied that India is participating in the exercises.
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