oil prices ended fractionally higher again this week, mostly due to falling US supplies of crude, gasoline, and distillates...after rising 0.8% to $69.29 a barrel last week as oil traders judged that Hurricane Ida's damage to oil production was marginally greater than the storm's damage to refining and to fuel demand, the contract price for US light sweet crude for October delivery fell below $69 a barrel in overseas trading on Labor Day after Saudi Arabia cut prices for its Asian customers, and as worries lingered following last week’s weaker-than-expected U.S. jobs data, and hence opened lower in New York on Tuesday, and continued sliding despite the ongoing disruption to supply in the wake of Hurricane Ida to settle 94 cents lower at $69.35 a barrel after Goldman Sachs trimmed their 2021 GDP forecast by 30 basis points, the Chinese services PMI saw its sharpest contraction in 16 months, and eurozone retail sales fell 2.3% month over month...but oil prices reversed those losses on Wednesday, rallying on ongoing Gulf of Mexico outages and widespread protests at oil ports in Libya to close 95 cents higher at $69.30 a barrel, after the EIA said it expected U.S. crude oil production to fall by 200,000 barrels per day in 2021, a bigger decline than their previous forecast...oil prices moved higher early Thursday after the American Petroleum Institute reported major across-the-board draws from U.S. commercial crude and refined product supplies, but then swung wildly ahead of the official inventory data following reports that China would release some of its strategic crude reserves, and settled $1.16, or 1.7% lower at $68.14 a barrel on the China news, despite the EIA's report of storm-induced draws from crude and fuel stockpiles...oil continued to trade in a choppy but range-bound manner early Friday, as a Biden/Xi phone call and an easing of the US dollar mitigated the impact of the Chinese move, but then rallied to settle 1.58 higher at $69.72 a barrel, supported by longer-than-expected production outages in the Gulf of Mexico and outsized drawdowns from domestic petroleum inventories in the wake of the storm...oil prices thus managed to eke out a 0.6% gain on the week, the 3rd weekly gain in a row, with traders focused on the ongoing million barrel per day production shut-ins in the Gulf of Mexico, as more refineries had fnally resumed operations nearly two weeks after Hurricane Ida tore through the region...
natural gas prices also rose during the holiday shortened week as three-fourths of Gulf production still remained shut in as the weekend approached... after rising 7.8% to $4.712 per mmBTU last week on an unseasonably low inventory build while hurricane Ida disrupted both production and exports, the contract price of natural gas for October delivery opened lower and fell more than 3% on Tuesday, as new forecasts projected milder weather and firms continued efforts to restart facilities along the Gulf Coast, with gas settling down 14.4 cents at $4.568 per mmBTU...but natural gas prices jumped on Wednesday, spiking to a 10% gain over $5 at one point, on a warmer than normal forecast for the eastern half of the nation, and closed 34.6 cents or 7.6% higher at $4.914 per mmBTU as traders mulled ongoing production outages in the Gulf, robust domestic demand, and intensifying competition for US LNG exports...natural gas prices rose another 11.7 cents to a 7 year closing high of $5.031 per mmBTU on Thursday, despite forecasts for less hot weather next week and a bigger than expected storage build, as hefty production outages lingered following Hurricane Ida, creating more uncertainty about whether U.S. supplies would be sufficient for the winter...but prices pulled back on Friday, slipping from their 7-year high despite record prices globally, and ending down 9.3 cents at $4.938 per mmBTU, as traders took profits following the frenzied rally that saw the front month contract surge more than 10% over the two prior trading sessions...despite that Friday retreat, natural gas prices slill finsihed 4.8% higher on the week, and ended with the highest weekly close since February 2014...
with a new interim high for natural gas prices, we'll include a graph of their history that takes in the last time prices have reached this level:
the above is a screenshot of the interactive natural gas price chart from barchart.com, which i have set to show front month natural gas prices monthly over the past 10 years, which means you're seeing the range of natural gas prices over that time as they were quoted by the media...this same chart can be reset to show prices of front month or individual monthly natural gas contracts over time periods ranging from 1 day to 30 years, as the menu bar on the top indicates, and also to show natural gas prices by the minute, hour, day, week or month for each...each bar in the graph above represents the range of natural gas prices for a single month, with weeks when prices rose indicated in green, and weeks when prices fell indicated in red, with the small sticks above or below each monthly bar representing the extent of the price change above or below the opening and closing price for the month in question....likewise, the bars across the bottom show trading volume for the weeks in question, again with up weeks indicated by green bars and down weeks indicated in red...it's clear that prices have now risen well above the price spike during the November-December 2018 period, and it almost looks as if they are exceeding the 2014 highs...but since this graph is monthly (necessitated due to the 10 year span it covers), those mid-February 2014 days when prices exceeded this week's prices aren't clearly shown...but if you go to the interactive 10 year graph itself at barchart.com, you can see that February 2014 saw natural gas prices rise as high as $5.737 per mmBTU, well above this week's high...
the EIA's natural gas storage report for the week ending September 3rd indicated that the amount of working natural gas held in underground storage in the US rose by 52 billion cubic feet to 2,923 billion cubic feet by the end of the week, which left our gas supplies 592 billion cubic feet, or 16.8% below the 3,515 billion cubic feet that were in storage on September 3rd of last year, and 235 billion cubic feet, or 7.4% below the five-year average of 3,158 billion cubic feet of natural gas that have been in storage as of the 3rd of September in recent years...the 52 billion cubic foot increase in US natural gas in working storage this week was was well above the median forecast for a 33 billion cubic foot addition forecast by a S&P Global Platts' survey of analysts, but was less than the average addition of 65 billion cubic feet of natural gas that have typically been injected into natural gas storage during the same week over the past 5 years, as well as less than the 65 billion cubic feet that were added to natural gas storage during the corresponding week of 2020…
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending September 3rd indicated that after major decreases in our oilfield production, our refinery throughput, our oil imports and our oil exports due to Hurricane Ida, we needed to withdraw oil from our stored commercial crude supplies for the forteenth time in sixteen weeks, and for the 30th time in the past forty-two weeks….our imports of crude oil fell by an average of 531,000 barrels per day to an average of 5,810,000 barrels per day, after rising by an average of 183,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 698,000 barrels per day to an average of 2,342,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,468,000 barrels of per day during the week ending September 3rd, 167,000 more barrels per day than the net of our imports minus our exports during the prior week…over the same period, the production of crude oil from US wells was reportedly 1,500,000 barrels per day lower at 10,000,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to total an average of 13,468,000 barrels per day during the cited reporting week…
meanwhile, US oil refineries reported they were processing an average of 14,302,000 barrels of crude per day during the week ending September 3rd, 1,636,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA’s surveys indicated that a net average of 218,000 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 616,000 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 plugged a (+616,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed…furthermore, since last week’s EIA fudge factor was at (+114,000) barrels per day, that means there was a 502,000 barrel per day difference in the EIA's crude oil balance sheet error from a week ago, and hence the week over week supply and demand changes indicated by this report are fairly useless...however, since most everyone treats these weekly EIA reports 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 they’re published, just as they’re watched & believed to be reasonably 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 6,154,000 barrels per day last week, which was still 12.2% more than the 5,492,000 barrel per day average that we were importing over the same four-week period last year…the 218,000 barrel per day net decrease in our crude inventories was all pulled out of our commercially available stocks of crude oil, while the quantity of oil stored in our Strategic Petroleum Reserve remained unchanged….this week’s crude oil production was reported to be 1,500,000 barrels per day lower at 10,000,000 barrels per day because the EIA"s rounded estimate of the output from wells in the lower 48 states was 1,500,000 barrels per day lower at 9,600,000 barrels per day, while a 8,000 barrel per day increase in Alaska’s oil production to 412,000 barrels per day had no impact on the rounded national production total….US crude oil production had hit a pre-pandemic record high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 23.7% below that of our pre-pandemic production peak, but 18.7% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016…
meanwhile, US oil refineries were operating at 81.9% of their capacity while using those 14,302,000 barrels of crude per day during the week ending September 3rd, down from 91.3% of capacity the prior week, and way below normal utilization for late summer refinery operations…while the 14,302,000 barrels per day of oil that were refined this week were actually 11.9% more barrels than the 12,779,000 barrels of crude that were being processed daily during the storm and pandemic impacted week ending September 4th of last year, they were 18.3% below the 17,495,000 barrels of crude that were being processed daily during the week ending September 6th, 2019, when US refineries were operating at what was then a near normal 95.1% of capacity…
despite this week’s decrease in the amount of oil being refined, the gasoline output from our refineries was higher, increasing by 237,000 barrels per day to 10,122,000 barrels per day during the week ending September 3rd, after our gasoline output had decreased by 364,000 barrels per day over the prior week.…while this week’s gasoline production was 13.3% higher than the 8,930,000 barrels of gasoline that were being produced daily over the same week of last year, it was 2.3% lower than the gasoline production of 10,360,000 barrels per day during the week ending September 6th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 625,000 barrels per day to 4,185,000 barrels per day, after our distillates output had decreased by 178,000 barrels per day over the prior week…after this week’s decrease, our distillates output was 4.8% less than the 4,398,000 barrels of distillates that were being produced daily during the week ending September 4th, 2020, and 21.6% below the 5,341,000 barrels of distillates that were being produced daily during the week ending September 6th, 2019..
even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week decreased for the thirteenth time in twenty-two weeks, and for the 27th time in forty-two weeks, falling by 7,215,000 to a twenty two month low of 219,999,000 barrels during the week ending September 3rd, after our gasoline inventories had increased by 1,290,000 barrels over the prior week...our gasoline supplies decreased this week because the amount of gasoline supplied to US users rose by 30,000 barrels per day to 9,608,000 barrels per day and because our exports of gasoline rose by 268,000 barrels per day to 734,000 barrels per day, and because our imports of gasoline fell by 239,000 barrels per day to 899,000 barrels per day…after this week’s inventory decrease, our gasoline supplies were 5.1% lower than last September 4th's gasoline inventories of 231,905,000 barrels, and about 4% below the five year average of our gasoline supplies for this time of the year…
meanwhile, with the big decrease in our distillates production, our supplies of distillate fuels also decreased for the fourteenth time in twenty-two weeks and for the 18th time in 38 weeks, falling by 3,141,000 barrels to 133,586,000 barrels during the week ending September 3rd, after our distillates supplies had decreased by 1,732,000 barrels during the prior week….our distillates supplies fell week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 705,000 barrels per day to 3,685,000 barrels per day, because our imports of distillates fell by 224,000 barrels per day to 142,000 barrels per day and because our exports of distillates rose by 58,000 barrels per day to 1,090,000 barrels per day…after fourteen inventory decreases over the past twenty-two weeks, our distillate supplies at the end of the week were 24.0% below the 175,845,000 barrels of distillates that we had in storage on September 4th, 2020, and about 12% below the five year average of distillates stocks for this time of the year…
finally, with all major supply and demand metrics lower after Ida, our commercial supplies of crude oil in storage fell for the 19th time in the past twenty-nine weeks and for the 36th time in the past year, decreasing by 1,528,000 barrels over the week, from 425,395,000 barrels on August 27th to a 23 month low of 423,867,000 barrels on September 3rd, after our commercial crude supplies had decreased by 7,169,000 barrels the prior week…after this week’s decrease, our commercial crude oil inventories were about 6% below the most recent five-year average of crude oil supplies for this time of year, but were still about 29% above the average of our crude oil stocks after the third week of August over the 5 years at the beginning of the past decade, 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 to record highs during the Covid lockdowns of last spring and remained elevated for most of the year after that, our commercial crude oil supplies as of this September 3rd were still 15.3% less than the 500,434,000 barrels of oil we had in commercial storage on September 4th of 2020, but still 1.9% more than the 416,068,000 barrels of oil that we had in storage on September 6th of 2019, and 7.0% more than the 396,194,000 barrels of oil we had in commercial storage on September 7th of 2018…
This Week's Rig Count
The number of drilling rigs active in the US increased for 43rd time out of the past 51 weeks during the week ending September 10th, but they were still 36.6% lower than the pre-pandemic rig count.... Baker Hughes reported that the total count of rotary rigs running in the US increased by six to 503 rigs this past week, which was also 249 more rigs the pandemic hit 254 rigs that were in use as of the September 11th report of 2020, but was still 1,426 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global oil market in an attempt to put US shale out of business….
The number of rigs drilling for oil was up by 7 to 401 oil rigs this week, after they had fallen by 16 oil rigs the prior week, but there are still 221 more oil rigs active now than were running a year ago, while they're still less than a quarter 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 fell by one to 101 natural gas rigs, which was still up by 30 natural gas rigs from the 71 natural gas rigs that were drilling during the same week a year ago, but still only 6.4% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….in addition to oil and gas rigs, a horizontal rig that Baker Hughes classifies as "miscellaneous' is still drilling in Kern county California, while a year ago there were three such "miscellaneous' rigs reported to be active...
Four of the oil rigs that had been shut down in the Gulf of Mexico as Hurricane Ida approached last week were restarted this week, but the Gulf rig count is still down by 11 rigs from a year ago, when 12 Gulf rigs were drilling for oil offshore from Louisiana and three were deployed for oil in Texas waters….however, there are also 2 rigs drilling for natural gas off the shore of the Kenai peninsula in Alaska this week, and hence the total national offshore rig count of 6 rigs is down by just 9 rigs from the 15 offshore rigs runnng a year ago, when there was no drilling off our other coasts...
The count of active horizontal drilling rigs was down by 2 to 461 horizontal rigs this week, which was still more than double the 214 horizontal rigs that were in use in the US on September 11th of last year, but was just over a third of the record of 1372 horizontal rigs that were deployed on November 21st of 2014….on the other hand, the vertical rig count was up by 3 to 26 vertical rigs this week, and those were also up by 7 from the 19 vertical rigs that were operating during the same week a year ago…..in addition, the directional rig count was up by 5 to 16 directional rigs this week, but those were still down by 5 from the 21 directional rigs that were in use on September 11th 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 September 10th, the second column shows the change in the number of working rigs between last week’s count (September 3rd) and this week’s (September 10th) count, the third column shows last week’s September 3rd 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 11th of September, 2020...
the Louisiana rig count was up by four with the return of four rigs in the state's offshore waters this week, and there were no changes elsewhere in the state...the Rigs by State file at Baker Hughes shows us that two rigs were added in Texas Oil District 8, which is the core Permian Delaware, that one rig was added in Texas Oil District 7B, which includes the easternmost county of the Permian Midland, and that another rig was added in Texas Oil District 7C, which includes the southern counties of the Permian Midland, thus accounting for this week's Permian basin increase....also in Texas, an oil rig was shut down in Texas Oil District 2, which accounts for the Eagle Ford decrease we see above...in Oklahoma, we have the addition of an oil rig in the Cana Woodford, the addition of another oil rig in the Mississippian basin and the shutdown of 2 oil rigs in the Ardmore Woodford, and hence the state shows no net change for the week....the addition of a rig in Utah was in a basin not tracked by Baker Hughes, most likely in the Uintah, where other Utah drilling activity is centered...meanwhile, there were two natural gas rigs pulled out of the Marcellus in Pennsylvania, while a natural gas rig was added in a basin not tracked separately by Baker Hughes...
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Ohio to search for orphan wells at Lake Veto after crude oil spill -- After an out-of-use oil well dating back to the 1930s began leaking into a state-owned lake, the Ohio Department of Natural Resources plans to use a detector to search for other orphan wells. The inspectors likely will use a drone, which will have be equipped with a magnetometer, to check for other orphan wells at Lake Veto in Washington County, according to a staff member at the cleanup site. "Wells located in the lake, but determined not to be leaking would be classified as high-priority wells. The current well was classified as an emergency because it leaked in the lake," said Stephanie O'Grady, a spokeswoman for the department. The state continues to clean up a crude oil spill from a leaking orphan well found in Plum Run, which empties into Veto Lake. The 160-acre lake used for fishing and recreation was constructed by the state in the 1950s. However, a former landowner remembers wells that his family installed dating back to the 1930s. The state has no record of the wells, including the one at the edge of Plum Run that began leaking oil last month. That's an issue that's true for the entire state. No one knows how many orphan wells exist in Ohio. ODNR has on record as many as 972 wells, according to an annual report. However, academic studies estimate that there are between 158,000 and 183,000 wells. The average cost to plug a well in Ohio is between $85,000 and $100,000. That cost means many landowners have a liability on their property that they likely can't afford to fix. Orphan wells can leak methane, contributing to climate change, crude oil and in some instances have had hydraulic fracturing waste migrating from class II injection wells that results in widespread contamination.A bipartisan infrastructure bill would spend $21 billion to clean up Superfund and brownfield sites, reclaim abandoned mine land, as well as plug orphaned gas wells.Rains from Hurricane Ida have slowed down the cleanup process for the leaking well, O'Grady said.
Ohio bills call for a ‘radioactive subsidy’ for one company’s oil and gas byproduct, critics say - Ohio law allows produced water pumped out of wells alongside oil and gas to be spread on roads to control ice or dust, but its sale and application are tracked and regulated. Now Senate Bill 171 and House Bill 282 would do away with those requirements for one company’s processed oil and gas byproduct.Due to its high salt content, the produced water is often called brine, although it can contain heavy metals and naturally occurring radioactive materials, such as radium 226 and 228. Critics see both the proposed bills and current law as giving improper competitive advantages to the state’s fossil fuel industry.The bills’ proposal is “literally a radioactive subsidy … that all Ohioans would pay for with our health,” said Rep. Casey Weinstein, D-Hudson. And in critics’ eyes, even current law lets companies more cheaply dispose of a byproduct without proper regard for health and environmental risks. Ohio is one of several states that allows oil and gas wastewater to be spread on roads for de-icing or dust suppression, according to a July 2021 review by the Natural Resources Defense Council. The practice has been allowed for brine from conventional drilling wells since 1985, but not from fracked, horizontal wells, said Ohio Department of Natural Resources spokesperson Stephanie O’Grady. Nature’s Own Source, LLC, is the only Ohio company that currently stands to benefit from the pending bills. Customers for its processed AquaSalina de-icer have included the Ohio Department of Transportation, which used more than a million gallons of AquaSalina in 2018 and more than half a million in 2019, WKYC has reported. Those figures don’t include dozens of other local governments that have used it or untreated oil and gas brine on roads.The legislation now under consideration would help to make AquaSalina more competitive with those other choices by treating its processed oil and gas wastewater brine as an unregulated commodity once it’s sold. The product could be sold to a wider range of customers, including over the counter in hardware stores without further regulatory oversight after someone buys it.“Oil and gas waste is toxic and radioactive,” said Shelly Corbin, the Beyond Dirty Fuels campaign representative for the Ohio Sierra Club. And the Department of Transportation’s decision will just eliminate one purchaser of AquaSalina, versus banning the use of brine on roads statewide, she noted.Radium in brine spread on roads “will eventually build up in the soil. It will build up in creeks, in rivers. And its half-life is 1,600 years,” Corbin said. “When we’re all dead and gone, this stuff is going to be around for many, many, many generations.”
Seneca Resources seeks certification for Appalachian production - - Pennsylvania natural gas producer Seneca Resources Co. recently announced it entered into an agreement with Project Canary, a company aiding the oil and gas industry to operate cleaner and more efficiently, to obtain an independent responsibly sourced gas (RSG) certification for approximately 300 million cubic feet per day of the company’s Appalachian production. Project Canary’s certification process focuses on air, land, water, and community impacts and analyzes more than 600 unique operational and environmental, social, and governance (ESG)-related data points. The certification process will cover nearly one-third of Seneca’s natural gas production. “Sustainability, continuous innovation, and best-in-class environmental performance are embedded in our guiding principles and culture,” David Bauer, National Fuel president and CEO, said. “Seneca’s commitment with Project Canary seeks to independently verify our existing operational practices and further strengthen the Company’s ESG commitments. We are excited to work towards independent validation of our leading operational and environmental practices, many of which are standard across our Appalachia assets.” Seneca plans to install continuous monitoring devices at three well-pad locations to provide real-time, site-level emissions data.
Shell Partners with Crowley for LNG Bunkering Barge on East Coast - Shipowner Crowley Maritime Corp. said Wednesday it is partnering with Royal Dutch Shell plc to construct a liquefied natural gas (LNG) bunker barge to serve vessels powered by the super-chilled fuel on the East Coast starting in 2024. The 416-foot-long barge is designed to offer capacity for 12,000 cubic meters of LNG and product supply equipment to “fully serve ocean carriers,” Crowley said. Subsidiary Shell NA LNG LLC has signed a long-term charter for the barge, which is expected to be the largest Jones Act-compliant vessel of its kind once built. Financial terms of the contract were not disclosed.“Shell is dedicated to growing our LNG bunkering network across key trade routes, and this barge supports our commitment to helping provide our customers with the energy solution they are looking for,” said Shell’s Tahir Faruqui, general manager of global downstream LNG. “The shipping sector is making progress toward decarbonization, and LNG offers immediate emissions reduction with the potential to become a net-zero emission marine fuel given the possible roles of bio-LNG and synthetic LNG.”The bunkering vessel would be constructed at Fincantieri Marine Group’s shipyard at Sturgeon Bay, WI. The design includes a “state-of-the-art solution” developed by Shell and Crowley “to flexibly deliver LNG to various types of LNG containment systems,” Crowley said.The announcement comes as LNG bunkering is expected to grow in the United States. Small-scale player Stabilis Energy Solutions Inc. said in August it expects its first LNG marine fueling event to take place later this year on the Gulf Coast. More recently, the Port of New Orleans inked a memorandum of understanding with Cleancor Energy Solutions LLC to explore developing LNG fueling services for ships. For its part, Fincatieri Bay is set to deliver an LNG barge later this year to Polaris New Energy, a subsidiary of private equity-backed Northstar Midstream Holdco LLC. The 5,400-cubic meter vessel is set to operate initially on the East Coast and provide bunkering services to NorthStar customers.
DNR, Environmental Groups Concerned About Proposed Pipeline Underneath Ohio River - The Indiana Department of Natural Resources, the Sierra Club, and Citizens Action Coalition have concerns about a proposed natural gas pipeline that would run underneath the Ohio River. The pipeline would bring gas from other states to two small natural gas plants in southern Indiana that CenterPoint Energy intends to build.In comments to the Federal Energy Regulatory Commission, the DNR said pipeline construction could harm endangered species of mussels as well as the endangered Indiana bat and federally threatened Northern long-eared bat.The company that wants to build the pipeline, Texas Gas Transmission LLC, said because the project will help CenterPoint move away from coal — the federal government doesn’t need to assess what effect it would have on the climate.But Tony Mendoza, a staff attorney for the Sierra Club, said that’s not true because CenterPoint was going to retire its coal units whether the pipeline got built or not. “What do we replace them with? Do we need more new polluting gas units or can we do an entirely new clean energy replacement like NIPSCO is doing?” he said.
Mountain Valley Pipeline seeks the identity of its anonymous critics - Very little is publicly known about a very public critic of the Mountain Valley Pipeline. Appalachians Against Pipelines established a Facebook page in February 2018, about the time that tree-sitters began their efforts to block construction of the massive natural gas pipeline. Since then, the group has used social media as a megaphone to promote its agenda, while otherwise remaining largely invisible. Mountain Valley is trying to find out who they are. In a subpoena recently filed in Roanoke’s federal court, the company asks Facebook to reveal the names and telephone numbers of those who established and maintain a page that has more than 21,000 followers. Appalachians Against Pipelines says the subpoena is nothing more than an effort to intimidate and silence them — a position shared by the Electronic Frontier Foundation, a nonprofit group that advocates for privacy and free speech on the internet. “It generally gives us concern when we see a company like MVP trying to unmask its critics,” said Adam Schwartz, a senior attorney with the San Francisco-based foundation. In order for a company like Mountain Valley to acquire the names of the administrators of a Facebook page, it must meet a high standard of showing that its needs or concerns outweigh the First Amendment rights of the commenters, Schwartz said. “The right to stay anonymous is not absolute,” he said. Schwartz said it is not unheard of for a company to seek information about its opponents from the social media outlets they use. When a subpoena is contested, judges make case-by-case decisions. Mountain Valley declined to comment Friday, saying that “details regarding any pending or potential litigation efforts cannot be provided at this time.” The subpoena was filed Aug. 20 in connection with a pending case in U.S. District Court in Roanoke, where the company has been at odds for years with the owners of a Bent Mountain property through which the pipeline needs to pass. Coles and Theresa “Red” Terry became concerned when construction crews began drilling through bedrock on their land last month in preparation for blasting to clear a path for the buried, 42-inch pipe. They filed a request for an injunction to stop the blasting, saying that it threatened to contaminate their well water. The request was denied Aug. 13 by District Judge Elizabeth Dillon. One week later, Mountain Valley filed its own request for an injunction, asking Dillon to order that protesters of the pipeline not interfere with work on the Terry property. “On Aug. 11, in order to prevent the blasting from proceeding, protesters were invited to the property to position themselves along the edge of the easements,” the motion states. “Messages were posted on social media asking readers to join the protest.” Mountain Valley contends that the protesters — some of whom stood within 50 feet of live explosives while smoking cigarettes — were creating a risk to themselves and pipeline workers.
Mountain Valley seeks to unmask critical Facebook group - — The Mountain Valley Pipeline is trying to find it who some of its very public online critics are. The Roanoke Times reported Saturday that the company filed a subpoena in federal court last month to try to find out who is behind a Facebook group called Appalachians Against Pipelines.The group established a Facebook page in 2018. That’s about the time that tree-sitters began to try to block construction of the natural gas project.Mountain Valley is asking Facebook to reveal the names and telephone numbers of those who established and maintain the page.The group says the subpoena is an an effort to intimidate and silence it. Mountain Valley declined to comment.Mountain Valley’s efforts has been criticized by the Electronic Frontier Foundation. The nonprofit advocates for privacy and free speech on the internet.Adam Schwartz, a senior attorney with the San Francisco-based foundation, said the rights of critics to often remain unnamed has been established in the courts. Schwartz said that Mountain Valley must prove to the court that its needs or concerns outweigh the First Amendment rights of the commenters. The planned 303-mile (488-kilometer) mile pipeline will take natural gas drilled from the Marcellus and Utica shale formations and transport it through West Virginia and Virginia. The project has faced legal challenges from environmental groups. A 75-mile extension into central North Carolina also has been proposed.
U.S. Army Corps Grants LG&E Permit For Gas Pipeline Through Bernheim Forest – Louisville Gas & Electric has cleared another hurdle to constructing a natural gas pipeline that crosses through conservation lands and farms in Bullitt County on its way to serve its primary user — the makers of Jim Beam bourbon. The U.S. Army Corps of Engineers approved LG&E’s permit to build the nearly 12-mile-long pipeline in late August. A spokesperson for LG&E said the company has now received the major state and federal permits necessary for construction, though several obstacles remain. “LG&E will begin construction of the project once it obtains all remaining land rights currently in litigation; completes a competitive bidding process and selects a contractor to perform the work; and obtains any remaining minor authorizations required closer to construction,” said Natasha Collins, LG&E spokesperson. The utility says the current pipeline has run out of capacity and a second pipeline is necessary to improve reliability and keep up with growth in the area around Mt. Washington, Shepherdsville, Clermont and Lebanon Junction. The gas pipeline would cut through Bernheim Arboretum and Research Forest’s Cedar Grove Wildlife Corridor and several farms. On it’s path, it would cross at least six major waterways impacting wetlands, sinkholes and habitat for more than a half-dozen threatened or endangered species, in addition to removing nearly 40 acres of forest, according to an LG&E stormwater pollution prevention plan. The proposed path has sparked protests and advocacy campaigns, in addition to legal challenges.
Natural gas developer asks SCC to rule it doesn't need state approval to build Chickahominy Pipeline - A pipeline company linked to a planned natural gas plant in Charles City County is asking state regulators to rule that it doesn’t need their approval to build a pipeline to channel gas from existing lines to the facility. Chickahominy Pipeline, LLC “has determined that it is impracticable and unfeasible to procure an adequate supply of natural gas from” utility Virginia Natural Gas, its lawyers wrote Friday in a petition to the State Corporation Commission. Consequently, the company plans to buy natural gas from a third-party provider “with upstream and midstream operations in Virginia.” Besides Virginia Natural Gas’ intrastate line between Northern Virginia and Tidewater, Columbia Gas, Transco and East Tennessee Natural Gas operate interstate pipelines across the state. Under state law, the SCC is responsible for regulating gas service provided by public utilities as well as “non-utility gas service,” a term defined as the sale and distribution of gas by someone other than a utility to two or more customers through underground or aboveground pipelines. In its filing with the commission, Chickahominy Pipeline argues that it “does not need commission approval to construct the pipeline because (a) Chickahominy will not serve two or more customers; and (b) Chickahominy is not a ‘public utility’ that requires a certificate of public convenience and necessity to construct the pipeline.” Chickahominy Pipeline “has arranged for the purchase of natural gas from a natural gas supplier that will be transported to its certificated facility by Chickahominy,” the company contends. “These are transactions involving private parties over which the commission has no authority to require regulatory approval.” The facility, Chickahominy Power, has been under development since 2016. While the Charles City County Board of Supervisors embraced the project, granting it a local permit that same year, the plans have also provoked sharp backlash from some residents of the county and surrounding areas, as well as environmentalists committed to a transition away from fossil fuels.
Shelby committee approves pipeline setbacks – The Shelby County Commission Land Use Planning, Transportation & Codes Enforcement committee members voted in favor of an ordinance to create distance between all future pipeline developments and residential areas, leading the way for an anti-pipeline ordinance to pass in the full commission meeting next week. On Wednesday, an ordinance to create 1,500-foot setbacks for pipelines from all residential areas was up for a final committee vote. Amendments made include exceptions for existing and new oil pipelines located within the property boundaries of specific developments, such as processing facilities and retail service stations. New pipelines within existing rights of way could seek permission through a special exception process. For decades, Shelby County communities in Southwest Memphis have dealt with having their neighborhoods located near industrial sites, including an oil refinery and a coal ash pond, dealing with cancer rates four times the national average. Shelby County’s remaining untouched assets included a sand aquifer that provides most of Memphis resident’s drinking water. In 2019, Plains All American Pipeline and Valero Energy Corporation announced a joint venture to build a 49-mile pipeline that would travel through Memphis into Mississippi. Because the pipeline would cross through the Davis Wellfield, an area where water is pumped from the aquifer, critics believed the pipeline posed a risk to the county’s drinking water. Months of protests ensued with support nationwide. Groups such as Memphis Community Against the Pipeline and the Southern Environmental Law Firm urged county officials to take action, and in March, commissioners struck down the sale of several land parcels required by the Byhalia project to continue. When the moment came to stand up and do something beyond symbolic support, said Justin Pearson, co-founder of the organization Memphis Community Against the Pipeline, commissioners showed their support and voted against the sale on March 22, “which provided a lot of wind in our backs and provided an opportunity for us to continue to galvanize and organize as a community to stop the Byhalia Connection Pipeline.”
EIA Now Predicting $4 Handle for Henry Hub Natural Gas in 4Q2021 - Coming off a strong run to close out the summer cooling season, Henry Hub natural gas spot prices would likely go on to average $4/MMBtu during the fourth quarter, the Energy Information Administration said in updated projections released Wednesday. The $4.00 forecast for 4Q2021 prices, published in the agency’s latest Short-Term Energy Outlook, comes as higher-than-expected power sector demand and production impacts from Hurricane Ida helped send prices surging to an average of $4.07 in August. July prices averaged $3.84, the agency said. In last month’s report, EIA forecast an average Henry Hub price of $3.42 for 2021 overall and $3.71 for 3Q2021. “We expect the Henry Hub spot price will average $4 in 4Q2021 as the factors that drove prices higher during August lessen,” researchers said. “Forecast Henry Hub prices this winter reach a monthly average peak of $4.25 in January and generally decline through 2022, averaging $3.47 for the year amid rising U.S. natural gas production and slowing growth” in liquefied natural gas exports. EIA said it expects GOM production to “gradually come back online” during the first half of September, eventually averaging 1.5 Bcf/d for the month overall before rising back to 2.1 Bcf/d for the fourth quarter. U.S. dry natural gas production is set to average 92.7 Bcf/d for the second half of this year, versus 91.7 Bcf/d for the first six months of 2021. Output is set to continue rising to 95.4 Bcf/d in 2022 as stronger crude oil and natural gas prices incentivize enough drilling to sustain output growth, according to the agency. Storage inventories exited the month of August at an estimated 2.9 Tcf, or 7% below the five-year average, EIA said
Until Production Settles, Natural Gas Prices Will Continue Their Uptick - One luxury of our country’s shale boom is the way it has created really low natural gas prices. Prices were once up to $13 per MMBtu as recently as the last decade, but since 2014, they have mostly stayed in the two-to-three dollar range.Yet this year, domestic natural gas prices have again been climbing up, even though predictions remain that we have enough natural gas resources to last us decades.Last month, the Henry Hub natural gas spot price hit $4.07 per MMBtu, the highest summertime rate since 2014. And even that’s not the highest rate at the Henry Hub this year - it reached $5.35 per MMBtu in February, driven by the cold spell that month in several central states. In Texas, Houston Ship Channel spot prices shot up to $400 per MMBtu on February 16, raising financial chaos in the Texas power markets.Yet, the persistence of these higher prices, long after the cold spell, indicates that more than just a freak storm is at play. “During this hot summer across the U.S., natural gas supplies - including stored natural gas - have been drawn down more than usual,” . “These relatively higher prices are likely to persist through to the spring as natural gas storage facilities replenish their supplies.”Domestic natural gas comes from two types of sources. The first category consists of hydrocarbon reservoirs that are predominantly natural gas such as Haynesville shale, the Marcellus shale, and the Utica shale. But it is also an associated product of crude oil in places like the Permian Basin, meaning that a significant portion of natural gas supply is tied to the production of oil and drilling in the oilfields.The shale revolution drove the drilling of many such wells with the associated gas produced, creating a glut of natural gas.During the pandemic, the contraction of oil production in places like the Permian shale last year also reduced the supply of accompanying natural gas.Despite this contraction, prices quickly fell to $1.63 per MMBtu in June 2020. It was triggered by the drop in manufacturing that had been caused by the pandemic-related disruption to supply chains. Yet this where the reasons behind natural gas pricing gets a little more complicated. For while the pandemic had an immediate downward impact, the overall U.S. demand for natural gas has been growing. The U.S. currently produces and consumes about 31.5 quadrillion British thermal units (Btus) of natural gas, up from 24.5 quadrillion Btus in 2010. This raises the question of how domestic supply is responding to this expected demand increase. If the Permian does not recover to prior levels of activity, and it is not expected to do so, those companies that are primarily natural gas producers in the Haynesville, Marcellus, and Utica will increase their drilling activity. Even George Mitchell’s original gas shale play in the Barnett shale will see new activity. If oil prices remain in the $70 per barrel level, growth in oil production may resume and may increase the supply of natural gas.
U.S. natgas slides 3% on milder weather view, post-Ida restarts - (Reuters) - U.S. natural gas futures slipped about 3% on Tuesday as forecasts projected milder weather and energy firms continued efforts to restart facilities along the U.S. Gulf Coast after Hurricane Ida. Front-month gas futures for October delivery fell 14.4 cents, or 3.1%, to settle at $4.568 per million British thermal units, ending a session down for the first time in five sessions. Energy companies continued efforts to restart facilities with Royal Dutch Shell Plc, the largest U.S. Gulf Coast producer, redeploying personnel to its Auger asset and Enchilada/Salsa assets. "There are some expectations that more offshore production will be returning this week in the Gulf of Mexico," said Marshall Steeves, energy markets analyst at IHS Markit, adding that fewer cooling degree days with the summer season coming to a close further weighed on gas prices. "But storage is still tight and we're probably going to see more lower-than-average injections as long as Ida remains a force and as offline production is going to be slow to return over the course of this week," Steeves added. Data provider Refinitiv said total U.S. production has averaged 89.4 billion cubic feet per day (bcfd) so far in September, down from 92.0 bcfd in August. Goldman Sachs also said in a note that recent tighter-than-consensus storage injections added to existing winter storage concerns and further increased the winter risk premium priced in the market. The bank raised its price forecasts for summer and winter 2022 and winter 2023 by $0.15. U.S. pipeline exports to Mexico rose to an average 5.9 bcfd so far this month, from 6.2 bcfd in August, but were slightly lower than June's monthly record of 6.7 bcfd. With European and Asian gas both trading over $18 per mmBtu, compared with just under $5 for the U.S. fuel, analysts expect U.S. liquefied natural gas exports to remain elevated.
U.S. natgas futures jump 7.6%, hit $5 for the first time since 2014 -(Reuters) - U.S. natural gas futures soared about 10% on Wednesday, hitting $5 during the session on expectations that warm weather would lift demand for gas-fired generation to power air conditioners, with sustained production outages due to Hurricane Ida also driving prices to a level last seen in late February 2014. Front-month gas futures NGc1 for October delivery jumped 34.6 cents, or 7.6%, to settle at $4.914 per million British thermal units. The session high was $5.010 per mmBtu. The short-term weather forecast has more weighted cooling degree days, and multiple regions in the United States are still pretty hot. "There's a good demand story there," said Robert DiDona of Energy Ventures Analysis. Analysts said prices also drew support from a slow return to production in the Gulf of Mexico after Ida. "Yesterday was a strong day in Europe and that ended up potentially bleeding into United States gas markets, and with where international prices are trading right now, net backs are massive, so we don't see any decline soon in U.S. prices," Didona said. With European TRNLTTFMc1 and Asian JKMc1 gas both trading well over $18 per mmBtu, compared with just about $5 for the U.S. fuel, analysts expect U.S. liquefied natural gas exports to remain elevated. Temperatures over the next two weeks are estimated to be warmer than usual with 150 cooling degree days (CDDs) projected compared with a 30-year average of 122 CDDs for the period. This is also higher than the 10-year normal and the same time last year. CDDs, used to estimate demand to cool homes and businesses, measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18 degrees Celsius). "Mexico has been strong and they are pulling a lot of demand so the net export picture in the U.S. should remain rather robust right on through the winter season,"
US natural gas storage fields adds 52 Bcf, over market expectations | S&P Global Platts - US natural gas storage fields added 52 Bcf of working gas for the week ended Sept. 3, according to an Energy Information Administration report released Sept. 9. The addition was much more than the market expected for the week, however, the report failed to quell the rally at Henry Hub as futures sustained highs not seen since 2008. The addition was well above the 33 Bcf expected by an S&P Global Platts' survey of analysts and was completely outside the wide range of estimates that spanned from 24 to 48 Bcf. However, it still trailed the five-year average injection by 13 Bcf. The working gas inventories stood at 2.923 Tcf following the addition, according to the EIA report. US storage stands at 592 Bcf, or 17% less than previous year's level of 3.515 Tcf. It was also 7.4%, or 235 Bcf, less than the five-year average of 3.158 Tcf. The injection was more than the 20 Bcf build reported in the previous week. Even as the inventory report painted a more bearish picture of US supply-demand balances week over week, bullish price momentum continued in the Sept. 9 trading session. Henry Hub futures continued to build on prior gains following the release of the weekly storage report. The NYMEX Henry Hub October contract rose 8.5 cents to $5.00/MMBtu during trading Sept. 9. The prompt month contract in September has not averaged this high since 2008. The winter strip -- November through March -- rose 7 cents to average $5.01/MMBtu, with only March trading below $5. This followed a massive rally Sept. 8 that saw winter gas prices rise by over 30 cents, propelling the benchmark to multiyear highs. At the root of the increases is the decline in production, which stood at at 89 Bcf/d on Sept. 9 as offshore production levels remained below 800 MMcf/d, struggling to rebound following Hurricane Ida, according to S&P Global Platts Analytics. A heat wave throughout the Southwest is also pressuring an already tight market, pushing prices along El Paso South Mainline over $28/MMBtu. While Ida led to a price spike in the near term, reliability concerns this winter are becoming more apparent, particularly in the Southeast and Texas as storage continues to be withdrawn from, widening the deficit to over 100 Bcf behind the five-year average and 300 Bcf below 2020. Most regional hubs are at a premium to Henry Hub this winter, with prices in the mid-to-high-$5/MMBtu range. Prices can still climb higher as gas-to-coal switching reaches capacity. That would place fuel oil as the next possible switching channel. However, gas at above $12/MMBtu would be needed for that to happen. Platts Analytics' supply and demand model currently forecasts a 55 Bcf build for the week ending Sept. 10. This would be 24 Bcf less than the five-year average with less than two months remaining in the injection season.
U.S. natgas futures hit 7-year high again, despite big storage build (Reuters) - U.S. natural gas futures rose to a seven-year high on Thursday as production remains slow to recover after Hurricane Ida battered the Gulf Coast, despite forecasts for less hot weather next week and a bigger than expected storage build last week. Since Ida started targeting the U.S. Gulf Coast in late August, gas futures have surged over 25% due mostly to the combination of low Gulf of Mexico production, rising liquefied natural gas (LNG) exports continued hot weather across much of the country. That heat has been especially extreme in the U.S. West, where another heat wave is baking California. The U.S. Energy Information Administration (EIA) said utilities added 52 billion cubic feet (bcf) of gas into storage during the week ended Sept. 3. That was more than the 40-bcf build analysts forecast in a Reuters poll and compares with an increase of 65 bcf in the same week last year and a five-year (2016-2020) average increase of 65 bcf. Last week's injection boosted stockpiles to 2.923 trillion cubic feet (tcf), or 7.4% below the five-year average of 3.158 tcf for this time of year. That means U.S. utilities have stored less gas than normal for the winter heating season when demand for the fuel peaks. Front-month gas futures rose 11.7 cents, or 2.4%, to settle at $5.031 per million British thermal units (mmBtu), their highest close since February 2014 for a second day in a row. On Wednesday, the contract soared almost 8%. In the power market, prices for Thursday topped $300 per megawatt hour (MWh) at the Mid Columbia (Mid C) hub in Washington State and at Palo Verde in Arizona, and over $200 at South Path 15 (SP-15) in Southern California as consumers crank up their air conditioners to escape another heat wave. Those are the highest prices for Mid C since July, Palo Verde since June and SP-15 since February. The California Independent System Operator (ISO), which operates the power grid for most of California, declared a flex alert for Wednesday and Thursday evenings, urging consumers to conserve energy when solar power stops working as the sun goes down and the drought-parched grid becomes more reliant on gas-fired generators and imports from other states that are also suffering from the heatwave. Data provider Refinitiv said gas output in the U.S. Lower 48 states had fallen from an average of 92.0 billion cubic feet per day (bcfd) in August to 89.6 bcfd so far in September, with most of the losses in the Gulf Coast area. That compares with an all-time monthly high of 95.4 bcfd in November 2019. Refinitiv projected average U.S. gas demand, including exports, would hold near 86.9 bcfd this week and next. The forecast for next week was lower than Refinitiv projected on Wednesday as a cooler outlook will cause power generators to burn less gas to keep air conditioners humming. The amount of gas flowing to U.S. LNG export plants has risen from an average of 10.5 bcfd in August to 10.7 bcfd so far in September as buyers around the world buy all the super-chilled gas the United States can produce. That compares with a record 11.5 bcfd in April. Gas in Europe and Asia was trading around $19 per mmBtu, compared with near $5 for the U.S. fuel. That put gas prices at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, at a record high.
Natural Gas Forward Prices Flirt with $5 as Slow Production Recovery Intensifies Supply Concerns -- Natural gas forward prices exploded higher through the trading period ending Sept. 8 as hefty production outages lingered following Hurricane Ida, creating more uncertainty about whether U.S. supplies would be sufficient for the winter. October fixed prices rallied by an average of 26.0 cents, while prices for the November and winter (November 2021-March 2022) strips each rose by an average 30.0 cents, according to NGI’s Forward Look. In a midday update Thursday, the Bureau of Safety and Environmental Enforcement said about 77% of the natural gas and 76% of the oil produced in the Gulf of Mexico remained offline after Ida crashed ashore near Port Fourchon, LA, Aug. 29 as a Category 4 storm. Crews were still evacuated from 71 production platforms, or around 13% of the manned infrastructure that remains in the same location throughout a project’s duration. Four moored rigs also remained unmanned, equivalent to around 36%. In addition, two dynamically positioned rigs, which are unmoored, had not returned to their drilling locations. Meanwhile, Entergy Corp. said it had restored power to nearly 80%, or 728,000 of the 948,000 total customers that lost power after the storm. Most of the affected transmission lines also had been returned to service. Full power restoration, however, was expected to take a few more weeks. Though more than 1,000 miles away, West Coast markets had their share of volatility this week thanks to tight supplies and continued heat. The hot weather prompted calls for power conservation and resulted in an energy storage facility being forced offline after batteries overheated and were damaged. SoCal Citygate October fixed prices jumped 63.0 cents from Sept. 2 to 8 to reach $7.216/MMBtu, Forward Look data showed. Basis for the prompt month was up 35.0 cents to plus $2.302. Steeper increases were seen further out the forward curve amid the dire storage picture that’s been exacerbated by the ongoing drought and impact on hydroelectric generation. SoCal Citygate November fixed prices shot up 94.0 cents during the period to reach $8.646, while the winter strip picked up 92.0 cents to average $9.43. Gains moderated a bit for next summer (April-October), which climbed 34.0 cents to $5.960. What are not yet moderating are the sweltering conditions in the region.
October Natural Gas Futures Retreat, but Supply Concerns Fester; Cash Slides - The October Nymex contract fell 9.3 cents day/day and settled at $4.938/MMBtu. November lost 9.9 cents to $4.973. Spot gas prices dipped lower as well. NGI’s Spot Gas National Avg. shed 5.5 cents to $4.860. After crashing ashore in Louisiana Aug. 29 as a Category 4 hurricane, Ida left in its path severe wind and flooding damage that curbed production in the Gulf of Mexico (GOM) in the days since. As of Friday, nearly three-quarters of the natural gas produced in the GOM, 1.68 Bcf/d, remained offline, according to the Bureau of Safety and Environmental Enforcement (BSEE). Based on data as of midday on Friday, 65 oil and gas production platforms still were unmanned, which was more than 11%, BSEE said. Personnel also had not been returned to three moored rigs, or 28% working in the offshore. In addition, two unmoored rigs, or 13%, remained off location from where they were positioned before the hurricane. Output was already modest ahead of Ida, with production averaging about 92 Bcf/d over the summer months – below the levels prior to the coronavirus pandemic and roughly 1 Bcf/d below what many analysts have said is needed to align supply with demand before winter. NatGasWeather noted Friday that “a new tropical disturbance will attempt to strengthen” in the far western GOM and then track toward the South Texas/Mexico border by Tuesday, “with heavy showers.” The system could force further delays in GOM production, the firm said. On the other side of the equation, domestic demand proved strong throughout the summer months amid stifling heat over much of the Lower 48,. At the same time, utilities in Europe and Asia clamored for U.S. exports of liquefied natural gas (LNG) because of supply constraints on both continents. LNG exports continue to soak up excess supply and feed imbalance worries. LNG feed gas volumes topped 11 Bcf on Friday – within striking distance of record levels.
Natural gas prices are rising and could be the most expensive in 13 years this winter - Natural gas prices have doubled this year and are expected to continue to rise, resulting in larger winter heating bills for some consumers and higher costs for electric utilities. Natural gas is plentiful in the United States and has been cheap for years, so the jump in prices this year is eye popping. In the futures market, the natural gas contract for October rose above $5 per one million British thermal units, or mmBtus, for the first time since February, 2014. Besides electricity and heating demand, natural gas is an important feed stock and is used in the processing of chemicals, fertilizers, paper and glass, among other products. "We haven't had tight supplies of natural gas in years. We're staring that down this year," Natural gas prices have been caught in their own perfect storm, of lower supplies and rising demand. Prices raced higher, first as unprecedented heat stoked air conditioning demand across the U.S., particularly in the Northwest. As a result, less gas was put into storage for winter months, during the key summer injection period. Add to that any colder than normal winter weather and prices could jump more. "Anything closer to [or colder than] a full standard-deviation form average would likely trigger a price spike to cause demand destruction with gas above $10/mmBtu," Goldman Sachs analysts note. Gas prices were last that high in 2008. Kilduff said natural gas is tied tightly into the economy, and for a long period prices did not matter. Now, utilities will pay more and so will some consumers who have real-time pricing schemes. "You could easily see it reach $6 and you could see it get to $8 to $10," he said. "Any early season cold weather outbreak will juice this thing." The upward pressure on gas prices is global, and since the U.S. is an exporter, prices in North America are now more influenced by prices in other markets. "We've seen it all over the last year with the pandemic. We saw natural gas prices around the world at $2. It was $2 here in the U.S., $2 in Europe and $2 in Asia," said Cheniere Energy CEO Jack Fusco on CNBC. "As the economies began to ramp back up, and countries and companies worldwide decided natural gas was the fuel of choice for clean energy transmission, the demand has just skyrocketed." Fusco said prices for the same gas that is $5 in the U.S. is now $20 or more in Europe and Asia. He also said his company, which exports liquified natural gas, is sold out of 90% of its production for the next 20 years. Now, the U.S. industry is also suffering from lower production due to Hurricane Ida, with 77.3% of Gulf of Mexico production still shut-in. According to the Energy Information Administration, the level of gas in U.S. storage is 7.4% below the five-year average and 16.8% below the level last year at this time. Natural gas prices are flaring as the Biden Administration is pressing for higher dependence on renewable energy in the electricity market.
‘Violent Price Upside’ Potential Seen for Winter Natural Gas Prices - Recent market tightness could herald “violent price upside” for U.S. natural gas this winter if temperatures are colder than average, according to analysts at Goldman Sachs Commodities Research. In a recent note to clients, Goldman analysts led by Samantha Dart, Damien Courvalin and Huan Wei said bullish Energy Information Administration (EIA) storage data and strong power burns in August have added to “existing winter storage concerns, further increasing the winter risk premium priced in the market.” Henry Hub prices “have broken out of the $3.85-$4.15/MMBtu trading range seen since late July,” rallying about 20% over the past week to $4.71 as of last Friday, they noted.“The move was initially triggered by a large tight surprise in storage injections released by the EIA on Aug. 26, at the same time that hotter-than-average weather kept late-August burns at the highest levels for the month.”Under an average winter weather scenario, the Goldman team believes the market can balance at $3.65, about $1.10 below current winter 2021-2022 forwards. Likewise, “a small colder deviation from average would likely be solved” through gas-to-coal (G2C) substitution against “Appalachia coal in a $5.00-6.50 gas price range,” the analysts said. Winter temperatures that are one standard deviation colder than average though, could trigger a price rally above $10.00, with U.S. average gas demand increasing by more than 3 Bcf/d. “This suggests that gas-to-Appalachia-coal substitution alone is likely insufficient to rebalance the U.S. gas market under a colder-than-average winter, in which case U.S. gas prices would continue to move higher, looking for further demand destruction,” the analysts said. “Such a price level could be well above $10, in order to reduce export margins from U.S. industrial users relative to users of global gas prices, currently priced at $17-20 for the winter.” Shutting the U.S. arbitrage (arb) window to reduce liquefied natural gas (LNG) export demand “would require an initial $10 rally in Henry Hub prices to about $15, given current global gas prices,” the analysts said. However, unless Europe and Asia “experience a warm winter and do not require U.S. supplies, we would expect global gas prices to rally following Henry Hub in this scenario in order to keep the U.S. LNG export arb open.” Therefore, “Given this risk asymmetry for winter natural gas prices and the potential for violent price upside under colder-than-average weather, we recommend that consumers protect themselves using far-out-of-the-money options to compensate for the sharp increase in implied volatility in recent months and weeks,” the Goldman team said.
Give Us Regulation, Not a New Tax, Gas Groups Beg Congress - The threat of a new fee on methane emissions has put the oil and gas industry in the unusual position of pleading with lawmakers for more federal regulation instead. More than 100 trade groups, local chambers of commerce and other organizations from New Mexico to Pennsylvania are warning that the fee proposed to help pay for Democrats’ $3.5 trillion spending plan would roil energy markets and boost consumer bills nationwide. In a letter to Senate leaders Tuesday, they argued a far better approach is to rely on existing federal regulations and tougher new mandates the Environmental Protection Agency is set to proposewithin weeks.
For a livable future, 60% of oil and gas must stay in the ground -To achieve the goals of the Paris Agreement, countries will likely need to set hard limits on the extraction of fossil fuels in addition to supporting the deployment of clean energy. That’s one of the key takeaways of a new study published in the journal Nature on Wednesday by energy and climate modelers from University College London. The researchers set out to estimate how much of the world’s fossil fuel reserves must remain in the ground in order to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above preindustrial temperatures — the target named in the Paris Agreement that would prevent the most catastrophic impacts of climate change. They found that in order to have a 50 percent chance of achieving this target, 58 percent of known oil reserves, 59 percent of natural gas reserves, and 89 percent of coal reserves cannot be extracted. This means that global oil and gas production must decline 3 percent on average every year until 2050. “I think there’s an increasing recognition that policy measures and action targeted at production itself is going to be needed to get the kind of decline rates that we’re thinking about here,” said Steve Pye, one of the study’s authors, during a press call on Tuesday.In their presentation to reporters, the authors stressed that these numbers are likely an underestimate of the scale and speed of fossil fuel production cuts required for two reasons. The first has to do with the carbon budget — the amount of carbon that can be emitted before the planet warms more than 1.5 degrees C. Because of the uncertainty built into climate modeling, there is no universally agreed upon carbon budget, but rather a range that scientists estimate will give us a better or worse chance of achieving temperature targets. The paper uses a carbon budget of 580 billion metric tons, an amount that is estimated to give only a 50 percent chance of stabilizing the global climate at 1.5 degrees C above preindustrial temperatures. “If we want a higher chance of staying below 1.5 C, then we have to of course keep more carbon in the ground,” James Price, a co-author of the study, said during the press call. Secondly, the model that the authors used to arrive at their fossil fuel quota actually allows the world to emit more than 580 billion metric tons of carbon and for temperatures to temporarily rise to 1.8 degrees C before settling back down to 1.5 degrees C by the end of this century. Fossil fuels don’t go away entirely in this scenario — oil and gas are still used for chemical feedstocks and aviation past 2050. Climate stabilization at 1.5 degrees C is made possible by “negative emissions technologies” that remove carbon dioxide from the atmosphere and compensate for the overshoot in emissions. “There is substantial uncertainty as to whether these largely unproven technologies can be deployed as quickly, and at the scale required, and just how sustainable they are,” Price continued.
Port Fourchon - major oil and gas hub - still in 'Recovery Phase' after a direct hit by Ida, causing gas prices to rise, U.S. Category 4 Hurricane "Ida" made a direct hit to Port Fourchon, the most important oil and gas hub in the Gulf of Mexico on August 29, 2021, causing extensive damage and putting the facility in 'Recovery Phase.' Ida's impacts to Port Fauchron included extreme and hurricane-force winds up to 240 km/h (150 mph) and a storm surge of 3.6 to 4.3 m (12 - 14 feet) in places.1 The damage is extensive. It's far-reaching and we have a long recovery ahead of us, said Chett Chiasson, executive director of the port, serving over 90% of the Gulf of Mexico's deep-water oil production.2 "What we're seeing is tons of damage, obviously, being exactly where the landfall was for Hurricane Ida. There are vessels, you know, in places that they're not supposed to be," Chiasson told NPR. "There is no electricity. There will not be electricity for a long time. And in our area, in our community [Lafourche Parhis, population ~100 000], we have no running water." Chiasson estimated it's going to be weeks to get things back and running. Asked about the ripple effects on fuel production expected across the state of Louisiana, Chiasson said: "With Port Fourchon services, day-to-day, efficient services, the most efficient in the world in terms of servicing offshore energy, the prices are going to go up because we're - day to day, we service about 16 to 20% of the nation's entire oil supply." "Every day that that production does not get back up and running is every day our supply is limited and is going to continue to cause prices." "And what everybody looks at mainly is prices at the pump for fuel for vehicles. It is going to go up because there's no efficient services for the offshore oil and gas industry. And it's certainly not back up and running as of yet." "There is a $46 million loss to the oil and gas industry and a $500 million loss toward the national gross domestic product each day the port is closed," Chiasson said.3 The South Lafourche Leonard Miller Jr. Airport in Galliano, which is owned by the Port Commission and primarily serves the oil and gas companies by flying workers to and from platforms, is operational since August 30, 'so helicopters and assessment teams were coming in to do things by air.' As of Friday, September 3, more than 93% of the Gulf's oil and 89% of natural gas production remained shut down as companies assessed the platforms and rigs for damage, according to the federal Bureau of Safety and Environmental Enforcement. Workers had begun to return, with about half the platforms and a quarter of the rigs still evacuated.3 "Port Fourchon remains in Recovery Phase in the aftermath of Hurricane Ida," port authorities said in a statement made September 3.4 "Port and tenant assessment teams have been on the ground and have been actively working toward gaining access TO and WITHIN Port Fourchon, clearing storm debris and ensuring safe passage.
US offshore oil output lags as Louisiana refiners restart after Ida --Damage to oil production facilities in the US Gulf of Mexico kept output largely halted on Sunday, a week after Hurricane Ida made landfall, according to offshore regulator the Bureau of Safety and Environmental Enforcement (BSEE). Energy companies have been coping with damaged platforms and onshore power outages and logistical issues, slowing efforts to restart production. Some 88% of crude oil output and 83% of natural gas production remained suspended. About 1.6 million barrels of crude oil remained offline, with only about 100,000 barrels added since Saturday. Another 1.8 billion cubic feet per day of natural gas output also was shut-in, the regulator said. According to Press TV, a total of 104 oil and gas platforms and five rigs remain evacuated on Sunday, down from the 288 originally evacuated. Royal Dutch Shell Plc (RDSa.L), the largest US Gulf Coast producer, on Sunday began redeploying staff to its Enchilada and Salsa platforms, while 80% of the company's operated production remained shut. Shell was evaluating on Sunday the damage to its West Delta-143 offshore platform, which transfers about 200,000 barrels of oil and gas per day from three offshore oil fields. The lower Mississippi River and New Orleans ports were reopened to traffic and cargo operations, the Coast Guard said on Saturday, allowing the resumption of grain, metal and energy shipments. Four oil refineries in Louisiana have initiated restart processes after Hurricane Ida knocked out most of the state's oil processing. Five others have yet to resume operations, the US Department of Energy said on Sunday. Three oil refineries in the Baton Rouge area and one near New Orleans have begun to restart units, the DOE said, without naming the facilities. The four account for 1.3 million barrels per day of US refinery capacity. Utilities have restored electric power to seven of the impacted refineries since Friday, the DOE said.
U.S. offshore oil recovery begins with ports, refineries restarting - U.S. Gulf Coast energy companies on Saturday got a boost from the reopening of ports and restart of oil refineries shut by Hurricane Ida, but damage to key facilities still crimped oil production. The ninth named storm of the 2021 Atlantic hurricane season has cut more U.S. oil and gas production than any of the eight named storms to strike the U.S. Gulf Coast last year. After landfall in Louisiana last Sunday, Ida raced to the U.S. northeast, causing deadly flooding. Royal Dutch Shell Plc, the largest U.S. Gulf Coast producer, was still evaluating damage to its West Delta-143 offshore platform, which when operating transfers about 200,000 barrels of oil and gas per day from three offshore oil fields. Shell’s work on a replacement heliport needed to ferry offshore continues, Shell said. Damage to its original facility prevented a return of offshore workers to platforms. Several Louisiana heliports were damaged or without power and access to fuel, slowing crew returns at several major oil producers. Shell’s 230,611 barrel-per-day (bpd) Norco, Louisiana, oil processing plant also remained knocked out by the storm. The refinery sustained damage and assessments continue on its status and at a Geismar, Louisiana, chemical plant, the company said. The White House this week agreed to provide a combined 1.8 million barrels of crude oil from the nation’s Strategic Petroleum Reserve (SPR) to refiners Exxon Mobil Corp, and Placid Refining Company to produce gasoline. Nine refineries were knocked offline by Ida’s winds and utility power losses. Five, including those owned by Exxon, Placid and Marathon Petroleum Corp, could be back online by within two weeks, estimated Robert Campbell, head of oil products research at consultancy Energy Aspects. About 21% of offshore platforms remained unoccupied, and 93% of oil production and 86% of natural gas output were offline, government data released on Saturday showed. Some wells in the Gulf of Mexico, which accounts for about a fifth of U.S. output, could be shut for weeks, analysts said. The lower Mississippi River and New Orleans ports were reopened to traffic and cargo operations, the Coast Guard said, allowing the resumption of grain, metal and energy shipments. “It was imperative for the economy of the region and entire United States that the river be reopened in a timely manner,” said Brett Bourgeois, executive director of maritime trade group New Orleans Board of Trade. Over 5,000 deep drafts vessels bring cargo in and out of the five major ports, he said. The Louisiana Offshore Oil Port (LOOP), near to where Ida made landfall with 150 mile per hour (240 kph) winds, was continuing repairs and assessments of its facilities, it said on Saturday. The LOOP is the only U.S. deepwater oil port, with an offloading platform that can receive more the 1 million barrels a day of crude. Its marine terminal sits 18 miles south of Grand Isle, Louisiana. Utility Entergy Corp said on Saturday most of Baton Rouge should have power restored by Tuesday, followed by most of New Orleans by Wednesday. However, areas between the two could be without electricity through month’s end. More than 700,000 Louisiana homes and businesses remain without power, according to PowerOutage.com.
Noble Declares Force Majeure On Drillship Damaged By Hurricane Ida -- Offshore rig owner Noble Corporation has given a force majeure notice to the customer of the Noble Globetrotter II ultra-deepwater drillship due to sustained damages during Hurricane Ida. Noble said on Thursday that its management was in frequent communication with the ship's crew and was working to facilitate additional transport for some crew members to shore, if needed, as well as replacement personnel to support marine operations. The company added that a small number of crew members were treated for minor injuries. According to Noble, the living quarters of the vessel continue to operate normally with food service, climate control, water, power, and internet systems functional. The vessel's helideck is fully operational, and teams are working through logistical challenges across the Gulf Coast region to resume normal levels of transportation to and from shore. Initial findings from the ship's ongoing condition assessment confirm that several riser joints and the lower marine riser package separated from the rig during the storm and sank to the seabed. Noble stated that efforts were underway to locate and recover that equipment, and the company believes that, if necessary, it can replace any missing or damaged equipment promptly. Additionally, one of the ship's cofferdams in the moonpool area sustained damage during Hurricane Ida. The damaged cofferdam does not compromise the stability or structural integrity of the rig nor the safety of personnel onboard. The vessel successfully secured the well and detached from the blowout preventer in place on the well as part of its departure procedures. Noble provided a force majeure notice to its customer in accordance with the governing drilling services contract. The contract does not contain a right of termination for force majeure. Although the company did not reveal the client in its statement, data in its latest fleet status report shows that the Noble Globetrotter II is under contract with Shell until early September 2023. The company does not expect any impact to its previously issued preliminary 2022 financial guidance and is currently unable to estimate the impact on its 2021 guidance. Noble said that it had insurance coverage for property damage with a $10 million deductible.4:08 AM
Near 90 Percent of GOM Oil Production Still Down -The Bureau of Safety and Environmental Enforcement (BSEE) estimated that approximately 88.32 percent of oil production and 82.72 percent of gas production in the Gulf of Mexico (GOM) remained shut in on September 5, as a result of storm Ida. According to the BSEE, the percentages amount to over 1.6 million barrels of oil per day and more than 1.8 billion cubic feet of gas per day. A total of 104 production platforms remained evacuated as of Sunday, equating to 18.57 percent of the 560 manned platforms in the Gulf of Mexico, as did five non-dynamically positioned rigs, which is equivalent to 45.45 percent of the 11 rigs of this type currently operating in the GOM. A total of three dynamically positioned rigs remained off location. “The Hurricane Response Team is monitoring offshore oil and gas operators in the Gulf as they return to platforms and rigs after the storm,” the BSEE said in a statement posted on its website. “The team works with offshore operators and other state and federal agencies until operations return to normal,” the BSEE added. “Facilities are being inspected. Once all standard checks have been completed, production from undamaged facilities will be brought back online immediately. Facilities sustaining damage may take longer to bring back online,” the BSEE went on to say. On September 5, the BSEE noted that it will continue to update evacuation and shut-in statistics each day, as appropriate. The National Hurricane Center (NHC) has now stopped showing notifications for storm Ida. Two other weather patterns are currently being tracked by the NHC though, including Hurricane Larry, which is forecasted to approach Bermuda during the next few days as a “large and powerful hurricane”, according to the NHC. The other pattern comprises “disorganized showers and thunderstorms over the northern portion of the Yucatan Peninsula,” the NHC highlighted. At the time of writing, this pattern has a zero percent chance of cyclone formation within 48 hours, the NHC outlined.
Initial Ida Hit to Production Surpasses Katrina- Hurricane Ida may not have been the deadliest or most damaging weather system ever to smash into the U.S., but its initial impact on Gulf of Mexico oil supply has been greater than any other storm in history. Ida has been responsible for the loss of 16.8 million barrels of output in the ten days since the first production platforms were evacuated. That’s 32% more crude than was lost to Katrina, and 42% more than to Gustav/Ike in comparable periods. The prolonged disruption caused by the 2005 storms eventually led to the deferral of more than 160 million barrels of Gulf of Mexico production. Back then, the disruption caused by Katrina and Rita lasted well into the following year, with some output never restored. How long Ida will continue to curtail Gulf of Mexico production won’t be known until damage assessments are completed.
Clean-up crews respond to large oil spill in the Gulf of Mexico after Hurricane Ida - The US Coast Guard has confirmed that clean-up crews are responding to a large oil spill in the Gulf of Mexico in the wake of Hurricane Ida. US National Oceanic and Atmospheric Administration satellite images, first reported by the Associated Press on Wednesday, showed a kilometres-long brownish-black slick spreading in coastal waters about 3 kilometres off Port Fourchon, Louisiana, an oil and gas hub. So far, the growing spill appears to have remained out to sea and has not impacted the Louisiana shoreline. There is not yet any estimate for how much oil is in the water, but recent satellite images reviewed by AP appear to show the slick drifting more than 19 kilometres eastward along the Gulf Coast. A satellite image shows an oil slick at a flooded refinery in Louisiana Oil slicks at the flooded Phillips 66 Alliance Refinery in Louisiana. (AP: NOAA) Coast Guard spokesman Lieutenant John Edwards said response teams were monitoring reports and satellite imagery to determine the scope of the discharge. He said the source of the pollution was located in Bay Marchand, Block 4, and was believed to be crude oil from an undersea pipeline owned by Houston-based energy company Talos Energy. Talos leads the clean-up but denies responsibility Talos said it was investigating the cause of the leak, but a statement provided by its spokesperson said field observations indicated the company's assets were not the source. Talos previously leased Bay Marchand, Block 5, but ceased production there in 2017, plugged its wells and removed all pipeline infrastructure by 2019, according to the company. Spokesperson Brian L Grove said it had hired Clean Gulf Associates to respond to the spill, even though the company believed it was not responsible for the oil in the water.
Rush to contain large oil spill in Gulf of Mexico after Storm Ida - Clean-up crews and the US Coast Guard are trying to locate the source of an oil spill spotted in the Gulf of Mexico after deadly Hurricane Ida. Recent satellite photos by the National Oceanic and Atmospheric Administration (NOAA) showed the slick about two miles (3km) off Port Fourchon, Louisiana. It appears to be coming from a source underwater at an offshore drilling site, the Associated Press reports. Ida hit Louisiana last week, leaving about one million people without power. The hurricane then moved north-east, killing dozens of people and causing devastation in a number of US states. The source of the miles-long oil spill was believed to be in the Bay Marchand area of the Gulf of Mexico, the US Coast Guard said. Spokesman Lt. John Edwards said it was thought to be crude oil from an undersea pipeline owned by Talos Energy. Houston-based Talos Energy said it did not believe it was responsible for the oil in the water, according to the Associated Press. The company has nonetheless hired Clean Gulf Associates, a non-profit group that responds to oil spills, to help contain the pollution. A team of private divers are also trying to locate the source.
Divers identify broken pipeline as source of Gulf oil spill - — Divers at the site of an ongoing oil spill that appeared in the Gulf of Mexico after Hurricane Ida have identified the apparent source as one-foot diameter pipeline displaced from a trench on the ocean floor and broken open. Talos Energy, the Houston-based company currently paying for the cleanup, said in a statement issued Sunday evening that the busted pipeline does not belong to them. The company said it is working with the U.S. Coast Guard and other state and federal agencies to coordinate the response and identify the owner of the ruptured pipeline. Two additional 4-inch pipelines were also identified in the area that are open and apparently abandoned. The company’s statement did not make clear if oil was leaking from the two smaller pipelines, but satellite images reviewed by The Associated Press on Saturday appeared to show at least three different slicks in the same area, the largest drifting more than a dozen miles (more than 19 kilometers) eastward along the Gulf coast. The AP first reported Wednesday that aerial photos showed a miles-long brown and black oil slick spreading about 2 miles (3 kilometers) south of Port Fourchon, Louisiana. The broken pipe is in relatively shallow water, at about 34 feet (10 meters) of depth. Talos said the rate of oil appearing on the surface had slowed dramatically in the last 48 hours and no new heavy black crude had been seen in the last day. So far, the spill appears to have remained out to sea and has not impacted the Louisiana shoreline. There is not yet any estimate for how much oil was in the water. The Coast Guard said Saturday its response teams are monitoring reports and satellite imagery to determine the scope of the discharge, which is located in Bay Marchand, Block 4. Talos previously leased Bay Marchand, Block 5, but ceased production there in 2017, plugged its wells and removed all pipeline infrastructure by 2019, according to the company. The area where the spill is located has been drilled for oil and gas for decades. Federal leasing maps show it contains a latticework of old pipelines, plugged wells and abandoned platforms, along with newer infrastructure still in use. With the source of the oil unclear, Talos hired Clean Gulf Associates to respond to the spill. Clean Gulf, a nonprofit oil-spill response cooperative that works with the energy exploration and production industry, has had two 95-foot vessels at the scene of the spill since Wednesday attempting to contain and recover crude from the water. The Bay Marchand spill is one of dozens of reported environmental hazards state and federal regulators are tracking in Louisiana and the Gulf following the Category 4 hurricane that made landfall at Port Fourchon a week ago. The region is a major production center of the U.S. petrochemical industry. The AP also first reported Wednesday on images from a National Atmospheric and Oceanic Survey that showed extensive flooding and what appeared to be petroleum in the water at the sprawling Phillips 66 Alliance Refinery located along the Mississippi River south of New Orleans. After AP published the photos, the Environmental Protection Agency tasked a specially outfitted survey aircraft to fly over that refinery on Thursday, as well as other industrial sites in the area hardest hit by the hurricane’s 150-mph (240-kph) winds and storm surge. The Louisiana Department of Environmental Quality said a state assessment team sent to the Alliance Refinery observed a spill of heavy oil being addressed with booms and absorbent pads. A levee meant to protect the plant had breached, allowing floodwaters to flow in during the storm and then back out as the surge receded.
Gulf of Mexico Oil Spill Not from Our Assets, Talos Energy Says - Following reports of an oil spill in Bay Marchand Block 5, off Louisiana in the U.S. Gulf of Mexico, oil company Talos Energy said its assets were not the source of the oil release. "As a responsible operator, Talos has chosen to continue to lead response efforts to contain and control the release to protect the safety of the public and the environment," the company said. "Talos was initially notified of a release observed on Bay Marchand Block 5 in Louisiana state waters on Tuesday, August 31st due to its status as a prior lessee of the block. The Company ceased production from the block in 2017. Subsequently, all Talos wells were appropriately isolated from the producing reservoir according to regulatory standards, and all Talos pipeline infrastructure was removed by 2019," the company said. Following Tuesday's notification, Talos said it quickly activated its response team, and vessels began arriving on site on Wednesday, September 1, to begin oil containment and recovery operations using booms and skimmers. On Saturday, September 4, a lift boat with a dive spread arrived on site, and divers were sent on Sunday to examine possible origins of the discharge. Coast Guard Probing 350 Reports of Oil Spills in Wake of Hurricane Ida "Talos conducted both physical inspections and subsea sonar scans that confirmed Talos assets were not the source or cause of the release. The company has observed several non-Talos-owned subsea pipelines that were likely impacted by Hurricane Ida, including a 12" diameter non-Talos-owned pipeline that appears to be the source of the release. On Monday, September 6th, response personnel installed a containment dome on the affected pipe, which allows for the recovery of the release and transfer to surface vessels," Talos said.
U.S. regulators investigating nearly 350 oil spills after Hurricane Ida -- The U.S. Coast Guard said on Monday it was investigating nearly 350 reports of oil spills in and along the U.S. Gulf of Mexico in the wake of Hurricane Ida. Ida's 150 mile-per-hour (240 kph) winds wreaked havoc on offshore oil production platforms and onshore oil and gas processing plants. About 88% of the region's offshore oil production remains shut and more than 100 platforms unoccupied after the storm made landfall on Aug. 29. The Coast Guard has been conducting flyovers off the coast of Louisiana looking for spills. It is providing information to federal, state and local authorities responsible for cleaning the sites. Flights on Sunday found evidence of a new leak from an offshore well and reported another leak responsible for a miles-long streak of oil was no longer active. A third report of oil near a drilling platform could not be confirmed, it said. Offshore oil producer Talos Energy Inc, which hired divers and a cleanup crew to respond to an oil spill in Bay Marchand, said old pipelines damaged during the storm were apparently responsible. The source of the Bay Marchand leak remains unknown, said Coast Guard spokesman Lieutenant John Edwards. A Coast Guard-led team "will be looking at all potential sources in order to ensure any future risk is mitigated," he said. The spill off the coast of Port Fourchon, Louisiana, had decreased substantially since it was first discovered last week, Talos said. The company is not the owner of the pipelines and had ceased production operations in the area four years ago, said spokesman Brian Grove. An offshore well belonging to S2 Energy was discharging oil about five miles (8 km) away from the Bay Marchand site, the Coast Guard said. The company told the Coast Guard it has secured the wellhead and it was no longer discharging oil.
Coast Guard: No Active Discharge Near Reported Oil -Following reports of oil spills found along the Southeast Louisiana coast in the aftermath of Hurricane Ida, the U.S. Coast Guard said Monday it had conducted overflights Sunday that focused on two locations previously identified for further investigation."Members of the National Strike Force aboard a Coast Guard HC-144 flew over Bay Marchand, south of Port Fourchon, Louisiana, and the Enterprise Offshore Drilling rig in the Gulf of Mexico, in a continued effort to track and monitor any threats they may pose to the environment," the U.S. Coast Guard said.Coast Guard said its crews had observed no active discharge at the Bay Marchand site or near the Enterprise site."During the flight, it was discovered that a wellhead belonging to S2 Energy was discharging oil approximately five miles away from the Bay Marchand site. The S2 Energy facility reports they have since secured the wellhead and it is no longer discharging oil," Coast Guard said."S2 Energy has contracted an Oil Spill Response Organization to boom the area in order to mitigate the spread and collect any recoverable product. The impacted area is approximately 100-yards long by 100-yard wide. Estimates of release are yet to be determined," Coast Guard said.The Coast Guard said it was prioritizing nearly 350 reported incidents for further investigation by state, local, and federal authorities in the aftermath of Hurricane Ida.
Oil-soaked birds found near oil spill at refinery after Ida --A summary issued Thursday by the Environmental Protection Agency said it had received 43 notifications of significant inland oil spills and chemical releases in its jurisdiction after Ida. The agency’s compliance arm has issued 10 requests to facility operators seeking information to determine whether federal environmental laws were violated during the storm, potentially triggering penalties and fines. That is a small fraction of the 1,539 reports of pollution a U.S. Coast Guard hotline has received since the Category 4 storm made landfall made landfall Aug. 29 at Port Fourchon, the primary port for the offshore oil and gas industry. The Coast Guard said Thursday it was actively supervising the cleanup and mitigation efforts at 564 sites. Another 197 reports were listed as unverified because there was no remaining evidence of pollution. The Associated Press first reported the spill at the Alliance Refinery on Sept. 1 after reviewing aerial images captured by a National Oceanic and Atmospheric Administration aircraft. In the days after the hurricane, Phillips 66 repeatedly sought to downplay reports of damage at the company’s sprawling refinery. Asked about reports of levee failures near the refinery the day after Ida hit, Phillips 66 spokesman Bernardo Fallas told AP there was “some water” in the facility and stressed that operations were shut down in advance of the storm. Asked two days after the storm about potential environmental hazards emanating from the facility, Fallas referred a reporter to a statement on the company’s website saying its response is focused “on ensuring the safety and well-being of our employees and our surrounding communities.” On Day Three, after the AP sent Phillips 66 aerial photos showing extensive flooding at the refinery and what appeared to be petroleum in the water, Fallas conceded the company could had “discovered a sheen of unknown origin in some flooded areas” of the refinery and that all pollution had been “secured and contained within refinery grounds” at that time. A Louisiana Department of Environmental Quality assessment team sent to the refinery last week reported a sizable spill of heavy crude oil at the site was being addressed with booms and absorbent pads. A levee meant to protect the plant had breached, allowing floodwaters to flow in during the storm and then back out as the surge receded. Despite the gap in the levee remaining open for days after the storm, Fallas once again asserted Thursday no oil spilled beyond the land owned by Phillips 66.
Reports of Hurricane Ida oil, chemical spills escalate in Louisiana waters –Less than half the reports have been investigated by the Coast Guard The number of reported oil and chemical spills linked to Hurricane Ida has exploded this week, growing from 350 on Monday to more than 2,000 by Wednesday, according to the Coast Guard. While less than half of the spills reported to the National Response Center have been investigated, the number of incidents eventually confirmed seems likely to top the 540 individual spill reports after Hurricane Katrina in 2005. “Two thousand spills is an amazing and sad amount,” said Darryl Malek-Wiley, an organizer with the conservation organization Sierra Club. “It shows that our oil and gas infrastructure is not prepared for hurricanes.” Ida blasted a region chock-full of oil pipelines and wells, refineries and other industrial infrastructure, much of it in or near the Gulf of Mexico. The Coast Guard set up a pollution response team in Baton Rouge after Louisiana and U.S. officials were flooded with reports of oil spills in Ida’s wake. Coast Guard personnel are checking on reported spills via boat and airplane. Most of the pollution incidents are oil spills in the Gulf or Mississippi River. “These can range from an oil drum, a gas can or something more major,” Coast Guard public affairs specialist Sydney Phoenix said. Some of the noteworthy incidents include a broken oil pipeline near Port Fourchon, which produced an 11-mile long sheen, and the flooding of the Phillips 66 refinery at Alliance, below Belle Chasse, which has oiled at least 90 birds. In both cases, the release of oil appeared to have been stopped or contained by Tuesday, nine days after Ida struck. Talos Energy was alerted to the pipeline rupture near Port Fourchon. On Monday, the company installed a containment dome to catch and recover escaping oil. Talos later determined the pipeline was owned by another company.
Photos: Some damaged oil and gas structures leak after Hurricane Ida == The number of reported oil and chemical spills linked to Hurricane Ida has exploded this week, growing from 350 on Monday to more than 2,000 by Wednesday, according to the Coast Guard. While less than half of the spills reported to the National Response Center have been investigated, the number of incidents eventually confirmed seems likely to top the 540 individual spill reports after Hurricane Katrina in 2005.
Shell Returning Workers To GOM Oil Platform - Supermajor Shell has started redeploying workers evacuated due to Hurricane Ida to the Enchilada/Salsa asset but around 80 percent of its production in the Gulf of Mexico is still offline. Shell said on Sunday that it was still monitoring the impact of Hurricane Ida on its assets in Louisiana and in the communities where it operates. The company added that it began the process of redeploying personnel to the Enchilada/Salsa asset. The Perdido asset in the southwestern Gulf of Mexico was never disrupted by the hurricane and Shell’s floating production, storage, and offloading vessel (FPSO) the Turritella – also known as Stones – is currently back online. In the case of personnel working on those particular assets who reported personal impacts from the storm, Shell returned them to shore so they can focus on home and family. Shell’s remaining deepwater assets – Appomattox, Mars, Olympus, Ursa, Auger, and Enchilada/Salsa – remain shut-in. Approximately 80 percent of Shell-operated production is currently offline. Inspections on board confirm that there is no significant structural damage to these deepwater assets impacted by the storm. Damage assessments continue at our West Delta-143 (WD-143) offshore facility, operated by Shell Pipeline. The company stated it was working to understand the full extent of the damage and the degree to which production in the Gulf of Mexico will be impacted. Other Shell Pipeline offshore assets remain evacuated, and the ability to send personnel to them has been impacted by disruption to the logistics network in Southeastern Louisiana. As for the Norco manufacturing facility, Shell continues to assess impacts. The site is still without electrical power and remains in the elevated flare with visible smoking. Air monitoring is being conducted on the fence line and Shell is utilizing a 3rd party resource for air monitoring in the community. According to the latest report by the Bureau of Safety and Environmental Enforcement (BSEE), some 88.32 percent of oil production and 82.72 percent of gas production in the Gulf of Mexico remain shut-in due to storm Ida.M
U.S. loans Exxon another 1.5 million barrels of oil from emergency reserve --The U.S. Energy Department said on Thursday it has approved a second loan of 1.5 million barrels of oil to Exxon Mobil Corp from the Strategic Petroleum Reserve (SPR) after damage from Hurricane Ida devastated offshore oil production. “The SPR’s ability to conduct exchanges is a critical tool available to refiners to strengthen the fuel supply chain and mitigate disruptions following emergencies, like Hurricane Ida,” the department said on its website. The department has now authorized loans totaling 3.3 million barrels to help refiners cope with the dearth of oil coming from the U.S. Gulf. Last Thursday, U.S. Energy Secretary Jennifer Granholm authorized a loan of 1.5 million barrels to Exxon’s Baton Rouge refinery.
Hurricane "Ida" among the costliest for oil production since 2005 - Gulf of Mexico oil producers are still struggling to restart operations after the devastating impact made by Category 4 Hurricane "Ida" on August 29, 2021. With Port Fourchon still in 'Recovery Phase' and the majority of the region's offshore production shut, U.S. crude futures have risen more than 10% since August 29.Nearly 79% of the region's offshore oil production remains shut and 80 production platforms are still unoccupied.1According to Facts Global Energy, nearly 18 million barrels of oil have been lost to the market, and the company fears that could rise to 30 million before the end of the year. "Still, that's far less than the 162 million barrels lost in a three-month period in 2005 after back-to-back hurricanes Katrina and Rita."The slow progress in restoring production drove oil prices higher Wednesday, September 8. U.S. crude futures have risen more than 10% since August 29 when Hurricane "Ida"2 made a direct hit to Port Fourchon, the most important oil and gas hub in the Gulf of Mexico, causing extensive damage and putting the facility in 'Recovery Phase.' Ida's impacts to Port Fauchron included extreme and hurricane-force winds up to 240 km/h (150 mph) and a storm surge of 3.6 to 4.3 m (12 - 14 feet) in places.As of September 8, Port Fourchon was still in the 'Recovery Phase.'3 Port authorities said the Lafourche Parish Water District is planning to start sending water to Fourchon on September 9, 2021. Because it may take a day to build up water pressure to adequate levels for mass usage, tenants are asked to keep their facilities' 2” water meters closed for the next 48 hours. That will help to restore water supply for all port users.Bayou Lafourche is closed north of Leeville per US Coast Guard. This portion of Bayou Lafourche north of the port is closed to marine traffic due to multiple obstructions in the channel, especially between the Ted Gisclair Floodgate in Larose and the Leon Theriot Lock in Golden Meadow.NOAA Coast Survey is finalizing the survey process in Bayou Lafourche but is working with limited access due to shoaling and obstructions throughout the channel from Leeville to Larose.’
Natural-gas futures at highest since 2014, oil prices rise on slow Gulf output recovery - Natural-gas futures marked their highest finish since 2014 on Wednesday, while U.S. oil prices posted their first gain in three sessions, with both commodities buoyed by a slow recovery in Gulf of Mexico energy production about 10 days after Hurricane Ida made landfall on the Gulf Coast. The Bureau of Safety and Environmental Enforcement reported Wednesday that an estimated 76.88% of oil production and 77.25% of natural-gas production in the Gulf remains shut in. Weekly U.S. data on oil and natural-gas supplies from the Energy Information Administration will be released on Thursday morning. On the New York Mercantile Exchange, October natural gas tacked on 35 cents, or 7.6%, to $4.914 per million British thermal units, the highest front-month finish since February 2014, according to Dow Jones Market Data. West Texas Intermediate crude for October delivery CLV21, +2.30% rose 95 cents, or 1.4%, to settle at $69.30 a barrel.
USCG Hunts for Source of Mysterious Oil Spill in San Juan Harbor - For the past three weeks, the U.S. Coast Guard has been trying to determine the source of a mysterious oil leak that is contaminating a stretch of the waterfront in San Juan Harbor. The active oil discharge is affecting Pier 4 (the San Juan cruise terminal) and Pier 6, both adjacent to the Old San Juan district. The Coast Guard first learned of the oil discharge on July 18, when the Puerto Rico Ports Authority reported an oily sheen in the water just off Pier Four. The responders spotted a storm drain system that was heavily oiled with what appeared to be bunker oil, similar to Bunker C. The USCG activated the Oil Spill Liability Trust Fund and contracted environmental response specialist Clean Harbors to remove the spill. Cleanup crews have been regularly using vacuum trucks to suck up the oily waste, and they have installed absorbent boom inside manhole openings to collect discharged oil. To date, the responders have collected and removed about 12,000 gallons of oily water with a petroleum content of about 50 percent. Cleanup crews have also installed containment boom across the length of the piers in order to prevent any more oil from spreading inside the harbor. Sector San Juan said that it has brought in Resolve Marine to try to find the source of the discharge. The salvor has completed its initial survey and presented its first assessment, but the source has not yet been identified. The response crews are now planning an underground survey to find and assess the condition of long-abandoned oil pipelines that were buried in the area in the early or mid-1900s. The lines are no longer in service, but they may well have some residual oil inside. This effort will be somewhat complex because of permitting and access control requirements, and it will mean mobilizing some specialized equipment to San Juan from the mainland. The additional work may take six weeks or longer, depending upon what the team finds. “We are responding and making the necessary notifications throughout the Puerto Rico Government and the City of San Juan to identify the source and stop it from further discharging oil into the San Juan Harbor waterway,” said Capt. Gregory H. Magee, Coast Guard Sector San Juan commander. “We are making every effort to address this concerning situation responsibly and diligently."
US oil, gas rig count rises 6 to 629 on week; Eagle Ford highest since April 2020: Enverus - The US oil and gas rig count rose by six on the week to 629, Enverus said Sept. 9, with the biggest change in the growing Eagle Ford Shale play. The Eagle Ford of South Texas gained five rigs on the week to 48, marking the highest level in the basin since early April 2020, when counts were plummeting as the pandemic’s initial impacts to oil prices and demand deepened. The Eagle Ford had 80 rigs in late February 2020 before totals fell to 58 by early April that year. Operators reined in spending and called a halt to most new activity in response to oil prices that dipped from the $50s/b to the $20s/b. For the week ended April 15, 2020, just 46 rigs were working in the play, and from July and September that year, Eagle Ford rigs totals bottomed out at nine in three separate weeks times. Oil production from the Eagle Ford, which had been 1.3 million b/d in the first two months of 2020, was barely more than 1 million b/d by midyear, according to S&P Global Platts Analytics data. Output hasn’t crept up much since, totaling about 1.1 million b/d in August 2021. “The Eagle Ford is a more mature play with fewer economic resources,” said Taylor Cavey, a Platts Analytics analyst. Moreover, market conditions over the last few years don’t support much in the way of exploration, especially when there is lower hanging fruit in the Permian, For the week ended Sept. 8, 498 oil rigs were active in US basins, up nine from the previous week, with the number of rigs chasing natural gas falling three to 131. The SCOOP-STACK play in Oklahoma also reached a new high not seen since April 2020, gaining three rigs for a total 32. The play had 44 rigs working in its fields around the start of 2020, but as oil prices became more volatile, operators preferred to focus more on the Permian Basin in West Texas/Southeast New Mexico where returns were higher. Current average half-cycle post-tax return rates for the Permian range from about 33% in the eastern part of the basin to about 40% in the western Permian, while in the SCOOP-STACK they are about 25%, according to Platts Analytics. The Permian lost two rigs week on week, leaving 258. The play, which by far is the largest oil basin in the US, had 429 rigs working when oil prices plunged starting in early March 2020. The Haynesville Shale, in East Texas/Northwest Louisiana, lost two rigs on week, leaving 50. Rig counts in the four other major basins were unchanged on the week: the Williston (28 rigs), in North Dakota/Montana; the Denver-Julesburg (13) mostly in Colorado; the Marcellus Shale (32 rigs), mostly in Pennsylvania; and the Utica Shale (12 rigs), largely in Ohio.
Enbridge Slaps Down $3 Billion for North America’s Largest Oil Export Terminal - After scrapping its own plans to construct a deepwater crude oil facility, Enbridge Inc. is set to acquire North America’s largest crude export terminal after agreeing to pay $3 billion in cash for rival Moda Midstream Operating LLC. Under an agreement with EnCap Flatrock Midstream, Enbridge on Tuesday said it would acquire full operating interest in the Ingleside Energy Center near Corpus Christi, TX. The facility, built in 2018, is capable of loading very large crude carrier vessels and comprises 15.6 million barrels of storage and 1.5 million b/d of export capacity. It loaded 25% of all U.S. Gulf Coast exports in 2020, according to Enbridge.“Over the last several years, we’ve been building a strong position in the U.S. Gulf Coast through both natural gas and crude infrastructure,” said Enbridge CEO Al Monaco. “Our strategy is driven by the important role that low cost, sustainable North America energy supply will play in meeting growing global demand.”Enbridge had sought to build its own crude export terminal offshore the Upper Texas coast. The Texas Colt project was being developed with Oiltanking GmbH and Kinder Morgan Inc. Weak demand, however, prompted the company to scuttle the plans in January 2020.Enbridge also had partnered with Enterprise Products Partners LP on the Sea Port Oil Terminal (SPOT). However, that project has failed to gather much momentum and remains off Enterprise’s backlog.Monaco touted Ingleside terminal’s close proximity to Permian Basin reserves, along with the cost-effective and efficient export infrastructure in place. The terminal is underpinned by 925,000 b/d of long-term take-or-pay vessel loading contracts and 15.3 million barrels of long-term storage contracts, “providing visibility to future cash flows,” according to Enbridge.“Its direct connection to globally competitive Permian and Eagle Ford basins will assure the sustainability of cash flows for many years to come,” management said. Moda CEO Bo McCall called the Ingleside terminal a “flagship asset.” The site of the facility was originally designed by the U.S. Navy to support a carrier battle group, he said, and despite the uncertainty following its closure, “has developed into the nation’s largest exporter of crude oil, creating jobs and economic prosperity for the Coastal Bend.”
Moda Ingleside Deal Propels Enbridge To Leading Role In Crude Exports --In the three years since Moda Midstream acquired Occidental Petroleum’s marine terminal in Ingleside, TX, the company has developed millions of barrels of additional storage capacity, connected the facility to a slew of Permian-to-Corpus Christi pipelines, and increased the terminal’s ability to quickly and efficiently load crude onto the super-size Suezmaxes and VLCCs that many international shippers favor. Moda’s fast-paced efforts have paid off big-time, first by making its Ingleside facility by far the #1 exporter of U.S. crude oil and now with a $3 billion agreement to sell the terminal and related pipeline and storage assets to Enbridge. The transaction, which is scheduled to close by the end of this year, will make Enbridge — already the co-owner of the Seaway Freeport and Seaway Texas City terminals up the coast — the top dog in Gulf Coast crude exports. Today, we discuss the Moda agreement and how it advances Enbridge’s broader Gulf Coast export strategy.One of the most fascinating developments of the Shale Era has been the U.S.’s emergence as a leading crude oil exporter. The transformation, which began in earnest with the lifting of the ban on most crude exports in December 2015, hasn’t been easy — or cheap. Marine terminals designed to receive imported oil needed to be reworked and expanded; existing pipelines had to be repurposed and new pipelines built; and ship channel dredging projects needed to be planned and financed to accommodate larger supertankers. We’ve been chronicling this build-out in a number of blogs, blog series, and Drill Down reports, including How Much More Can She Stand and, more recently, Leaders of the Pack, which focused on the three leading export terminals in 2020 — the Moda Ingleside Energy Center (MIEC) near Corpus Christi, the Enterprise Hydrocarbons Terminal (EHT) in Houston, and the Louisiana Offshore Oil Port (LOOP) — which together accounted for nearly half of export volumes last year. In the first eight months of 2021, South Texas Gateway (MIEC’s neighbor in Ingleside), has moved up to the #3 spot, displacing LOOP (at least for the time being), but MIEC is still way out front, sending out an average of 656 Mb/d in the January-through-August period, compared with runner-up EHT’s 366 Mb/d and South Texas Gateway’s 257 Mb/d.As shown in Figure 1, the Moda Ingleside terminal (striped yellow-and-white bar segments) regularly accounts for a substantial share of Corpus Christi’s total crude export volumes (yellow bar segments plus striped yellow-and-white bar segments) and often equals or exceeds the volumes being exported by all the terminals in the Houston area (green bar segments).
Rep. Ilhan Omar, 'Squad' urge Biden to stop Line 3 pipeline - U.S. Rep. Ilhan Omar stood with three congressional colleagues along the shore of the Mississippi River on Friday and asked President Joe Biden to stop construction on the nearly complete Enbridge pipeline built to transfer oil from Canada to Superior, Wis."We have been encouraged by Joe Biden's boldness so far," Omar said, referencing his January decision to cancel a border-crossing permit for the Keystone XL pipeline that would have carried oil from Canada to Nebraska. "Now we have another chance to reject a moving pipeline. We hope you will act."Her message to Biden marked an intensified political push for federal intervention in the $3 billion project, the subject of a letter to the presidentsigned by 63 elected officials Monday. In that letter, and again during a news conference Friday at Minneapolis' Boom Island Park, Omar and other Democrats said the Enbridge project has raised concerns about violations of Indigenous land treaties, violence against Indigenous women and environmental impacts.Members of Gov. Tim Walz's administration, which handled a large portion of the project's permitting, on Wednesday sent a point-by-point response to members of Congress and the Legislature calling some of those claims "false or misleading."Minnesota Republican legislators condemned the visit from the four members of Congress — all women of color who are part of the progressive "Squad" in Washington — saying the trip "will only serve to incite the obstructionists."Along with U.S. Reps. Cori Bush, D-Mo.; Ayanna Pressley, D-Mass.; Rashida Tlaib, D-Mich.; and state Sen. Mary Kunesh, Omar will visit Bemidji and other parts of northern Minnesota this weekend to speak with members of Indigenous communities and others who have been protesting construction of the pipeline, which crosses the Mississippi River twice near its headwaters."The water that flows from this point will carry whatever dirty fossil fuels it picks up right on down to my district," said Bush, who represents the St. Louis area.Tlaib lambasted Enbridge for a massive 2010 oil spill in her home state, as well as for defying Michigan Gov. Gretchen Whitmer's orders to shut down the company's Line 5 pipeline out of concern for environmental effects on the Great Lakes. The pipeline replaces the 1960s-vintage original Line 3, which is corroding and can run at only 51% capacity. Enbridge has repeatedly said the new pipeline is a significant safety improvement; it will restore the full flow and boost the company's earnings.
Two Line 3 protests yield different police responses --A week of protests in St. Paul over the Enbridge Line 3 pipeline project last month ended in a pair of law enforcement encounters with vastly different outcomes.Public Safety Commissioner John Harrington hailed his department's work on Aug. 27 negotiating the removal of a teepee that no longer had a permit to be on the Capitol grounds as a "triumph" of community-centered policing.The next day, however, police arrested 69 people outside Gov. Tim Walz's residence as a demonstration escalated to levels state law enforcement leaders say they have not seen in past protests outside the Summit Avenue mansion."From a public safety standpoint we are simply trying to hold the ground so that public conversation, that civil conversation, can take place without anyone being in fear and without anyone being intimidated unnecessarily," Harrington said.Taken together, the multiple protests and police actions both in preparation and response offer a glimpse at how state authorities are navigating a wave of demonstrations, ranging from the controversial pipeline to police reform.Harrington's department and the Minnesota Department of Administration agreed to install another security fence around the Capitol days ahead of last week's Treaties Not Tar Sands event at the Capitol, which drew 2,000 people one day.Event organizers criticized the decision to erect the fence — which has since been removed — and the increased police presence throughout the week. Tensions escalated as demonstrators kept a teepee on the Capitol grounds a day after the event's permit expired.
Sheriff: 23 pipeline protesters arrested in northwestern Minnesota - – Authorities say 23 people were arrested following a pipeline demonstration Tuesday in northwestern Minnesota. The Clearwater County Sheriff’s Office received a call regarding protesters blocking a road. The initial call reported that they were setting up a tee pee and barrels in the roadway and vehicles could not pass through. An early estimate of protesters was between 75-100 people. Several items had been placed in the road, spread out for approximately one mile. The items included a tri-pod, three 55-gallon barrels filled with concrete, an overturned car, a boat and a group of six people in chairs connected with sleeping dragon devices. After dispersal orders were given, 23 people were arrested after refusing to leave. Six people were attached to the 55-gallon barrels, four people attached to the tri-pod, seven attached or near the boat and six that were in chairs connected with sleeping dragons. The sheriff’s office says the process to remove the protesters took about seven hours. A large mess of debris was left to clean up after the extrications and oil had run onto the ground at the overturned car. The people arrested were from Massachusetts, Oregon, Maine, Illinois, South Dakota, Washington D.C., Washington, New York and Texas. They were were being held on probable cause public nuisance and obstructing legal process charges.
Feds, North Dakota to negotiate pipeline policing costs (AP) — Federal and state lawyers will meet in North Dakota next week to negotiate a settlement for money that the state claims it spent on policing protests against the Dakota Access oil pipeline.North Dakota filed a lawsuit against the U.S. Army Corps of Engineers in 2019, seeking to recover more than $38 million in damages from the monthslong pipeline protests almost five years ago.State Attorney General Wayne Stenehjem and other state lawyers will meet with attorneys from the Corps and Justice Department at the federal courthouse in Bismarck on Sept. 16. U.S. Magistrate Judge Alice Senechal will preside over the negotiations, which are closed to the public.“We will know on the 16th if they are serious in settling,” Stenehjem said.It’s the first sit-down meeting with state and federal lawyers to work out a settlement, Stenehjem said. Federal judges handling the case have “strongly suggested” the negotiations, he said.If no settlement can be reached, a trial is set for May 1, 2023.Thousands of pipeline opponents gathered in southern North Dakota in 2016 and early 2017, camping on federal land and often clashing with police. Hundreds were arrested over six months.Stenehjem has long argued that the Corps allowed and sometimes encouraged protesters to illegally camp without a federal permit. The Corps has said protesters weren’t evicted due to free speech reasons.The Army Corps of Engineers had argued that it has “limited authority to enforce its rules and regulations” on land it manages.
Interior will launch review of Trump's Arctic oil plan - The Biden administration will review a Trump-era decision to greenlight oil drilling access in most of the National Petroleum Reserve of Alaska, the Interior Department revealed in a court filing yesterday. Management of the NPR-A has become a challenge for the administration, which aims to reform the federal oil and gas program to reduce climate impacts but also recently supported a contested $6 billion oil and gas project within its boundaries. The Trump administration expanded oil and gas developers’ access last year to 84% from 50% of the 23 million-acre reserve. Environmental groups promptly sued, claiming Interior failed to conduct a sufficient analysis under the National Environmental Policy Act and performed a weak assessment of its climate implications. The Biden administration will now examine those issues and could change where drillers can lease and develop crude oil and natural gas. While the review is underway, Interior won’t permit new oil and gas leases on land that the Trump administration opened for oil exploration. Laura Daniel-Davis, Interior’s principal deputy assistant secretary, instructed the Bureau of Land Management last week to begin a review of the NPR-A management plans, tasking the agency to assess whether they complied with President Biden’s climate ambitions. That memo was made public when filed in the U.S. District Court for the District of Alaska case last night. In it, Daniel-Davis said the department had yet to decide if it should “withdraw or replace” the final decision document approving the Trump-era management plan. She ordered Interior to complete its review by the new year. Interior spokesperson Tyler Cherry said in a statement yesterday the department was “committed to protecting public health, conserving land, water, and wildlife, and ensuring that management of our public lands and oceans is guided by science, equity, and community engagement.”
Indigenous Group Seeks Trans Mountain Stake | Rigzone -- Natural Law Energy, the Canadian indigenous group that sought a stake in the now defunct Keystone XL pipeline, has shifted its focus to owning part of the Trans Mountain oil sands pipeline to the Pacific. The group is participating in meetings with the Canadian government and has spoken with Project Reconciliation, another organization of First Nations that seeks to own the oil pipeline currently being expanded in Alberta and British Columbia, Travis Meguinis, chief executive officer of Natural Law, said by phone. Meguinis didn’t say how big a stake or how much the group aims to invest. The coalition of Western Canadian First Nations sprang to prominence late last year when it signed a memorandum of understanding with TC Energy Corp. to pursue an equity stake worth as much as C$1 billion ($799 billion) in Keystone XL. U.S. President Joe Biden rescinded a key permit for that pipeline on his first day in office and TC Energy scrapped the project a few months later. British Columbia-based Western Indigenous Pipeline Group, which partnered with Pembina Pipeline Corp. in June, is also among other First Nations groups seeking a stake in Trans Mountain. Canada’s federal government bought Trans Mountain from Kinder Morgan Inc. for C$4.5 billion in 2018 after the company threatened to scrap the line’s expansion amid environmental opposition. The government has pledged to sell the system once the expansion is completed. Alberta’s oil sands industry badly needs more conduits to export its crude, and many hope that indigenous participation will help quell objections to the project.
Talos Files Dispute Notice Against Mexico-- Talos Energy Inc., the U.S. offshore explorer behind Mexico’s largest oil discovery in years, is taking the first step toward an international dispute after control of the field was given to state producer Petroleos Mexicanos. The Houston-based driller sent the Mexican government a dispute notice Friday, a required step before moving to arbitration under the U.S.-Mexico-Canada Agreement. The takeover of the Zama oil field in July was a violation of the USMCA, Talos said in a statement, urging negotiations to avoid further legal action and arbitration. The government of Mexican President Andres Manuel Lopez Obrador, who has pledged to put the country’s oil riches back in the hands of the state, named Pemex Zama’s operator and gave it a 50.4% stake. It was one of his latest moves to backtrack on the previous administration’s historic reforms to open up Mexico’s energy industry to private investment. “We are still hopeful that a negotiated outcome that fully respects the rule of law is achievable,” Talos Chief Executive Officer Timothy Duncan said in the statement. “We respectfully call upon the Government of Mexico to engage with Talos in meaningful negotiations and consultations.” The company and its partners discovered Zama in 2017 after winning the block in Mexico’s first-ever competitive oil auction, before Lopez Obrador rose to power in late 2018. His government later determined that the Zama field extended past the boundaries of Talos’s block and into a neighboring field belonging to Pemex, and Mexico officials ordered Talos and Pemex to unify the shared reservoir. The Talos-led consortium said it has invested nearly $350 million in the project to date. In November, Mexico’s oil regulator approved Talos’s $875 million capital spending budget for Zama in 2021. Wintershall DEA and Premier Oil Plc are also partners in the oil find. While emphasizing that it wants to resolve the issue without going to court or arbitration, Talos argues that the energy ministry has not shown how it has followed the legal principles required for granting operatorship to Pemex. Those principles include considering competitiveness, transparency and best industry practices. The ministry gave Pemex control of the field only three days after receiving a letter from the state oil producer arguing for operatorship, Talos said. While Pemex won control of the field, it doesn’t have the nearly $2 billion needed to develop the prospect, according to people familiar with the matter.
UK gas output slump helps fuel price rally - UK gas production is down 28% year to date, helping fuel the current European gas price rally, said global natural resources consultancy Wood Mackenzie on Wednesday. Total UK gas production for the January to August period amounted to just 17 billion cubic meters (bcm) down from 24 bcm over the same period last year. Other factors have also contributed to the price rally, including record-high coal and carbon prices, booming Asian LNG demand, and limited growth in Russian pipeline supplies. A production drop of the scale seen in the UK was driven by maintenance and new project delays. In particular, the three-week maintenance of the Forties Pipeline System in June resulted in the shutdown of supply from all 67 field users. Additional work on other parts of the system throughout the year meant groupings such as Elgin/Franklin, Shearwater and ETAP have all been offline for much longer. Operators have also been using this downtime to conduct their own maintenance programs, which has extended the three-week shutdown period at multiple hubs. However, Wood Mackenzie expects UK gas production to recover through the remainder of the year. Indeed, August output has already climbed 72% over July. Still, the summer slump means overall 2021 production will be slightly over 27 bcm compared to 34 bcm in 2019 and 35 bcm in 2020. 'We forecast a rebound to 35 bcm in 2022. The recovery will be driven by the start-up of new gas projects such as Saturn Banks, and others that were deferred from 2020 as a result of the coronavirus pandemic. These include Arran, Columbus and Finlaggan. Infill drilling at large producers such as Elgin/Franklin, Tolmount reaching peak production in 2022 and Culzean remaining on plateau throughout 2022 will further contribute,' explained Wood Mackenzie. The consultancy said that Norwegian gas production has also been affected by planned and unplanned maintenances. Continental Europe has been struggling to fill its gas storage ahead of winter and will continue to face tight market conditions throughout winter. Booking additional LNG cargoes on a short-term basis amid growing Asian LNG demand will prove challenging. The UK’s coal capacity has shrunk to just 4 gigawatts - offering less switching potential in periods of high gas prices than previously.
Last Nord Stream 2 Pipe Welded Into Place - The pipelaying vessel Fortuna welded into place the last pipe of the Gazprom-led Nord Stream 2 gas pipeline on Monday, September 6, 2021. The vessel lowered pipe number 200,858, the last pipe of the two strings of the Nord Stream 2 pipeline, onto the seabed in German waters. This comes some three months after the first line of the gas pipeline to Germany was completed. As the next step, the section of the pipe coming from the German shore will be connected to the section coming from the Danish waters in a so-called above water tie-in. Nord Stream 2 AG plans to carry out the required pre-commissioning activities with the goal to put the pipeline into operation before the end of this year. As for the $11 billion-worth Nord Stream 2, it is designed as two parallel 48-inch lines, roughly 745 miles long, each starting southwest of St. Petersburg and ending at the German coast at Greifswald. The Nord Stream 2 project is led by Russian giant Gazprom with half of the funding coming from five European partners – Germany’s Uniper, BASF’s Wintershall, Anglo-Dutch Shell, Austria’s OMV, and Engie. The gas pipelines will have the capacity to transport 55 billion cubic meters of Russian gas a year to the EU, for at least 50 years. Nord Stream 2 will be doubling the capacity of the existing Nord Stream gas pipeline and take gas to Europe via Germany, bypassing Ukraine which would deprive it of lucrative transit fees. The project has been a point of contention between Moscow and Washington for years. The United States, which is looking to sell its liquefied natural gas to Europe, claimed several times that Nord Stream 2 would increase Russia’s economic and political leverage over Europe while Moscow and Germany both claim that it is nothing more than a commercial project.
Gazprom not to be able to fully use Nord Stream 2 under European regulations – Poland’s PGNiG chair --The Nord Stream 2 gas pipeline, if put into operation, must be subject to European regulations. In this case, Gazprom will not be able to operate it at full capacity and will be forced to use Ukraine's gas transmission system for transit. This was stated by the Chairman of the Board of the Polish oil and gas company PGNiG, Pawel Majewski, who spoke at the XXX Economic Forum in Karpacz (western Poland), an Ukrinform correspondent reports. "Completion of the pipeline, taking into account that it will operate in accordance with European regulations, will mean that Gazprom will not be able to use it at full capacity. If it fails to do so, it will have to continue transmitting gas via Ukraine. This is very important. Ukrainians are our allies in the struggle for energy solidarity and its application in the context of the Nord Stream 2 project," Majewski stressed. On the issue of Ukrainian-Polish cooperation in the gas sector, the PGNiG chair stressed that over the past five years, the Polish company had exported to Ukraine more than 3 billion cubic meters of natural gas, including part of it after regasification from the LNG terminal. He noted that gas deposits in Ukraine are currently estimated as Europe’s largest – at about 1 billion cubic meters. Therefore, the Polish company together with its Ukrainian partner, ERU (Energy Resources of Ukraine), sees significant prospects of gas production in Ukraine. "We have previously signed a memorandum on gas exploration in Ukraine. We have an agreement on the use of Ukrainian gas storage facilities, we also have a concession for gas production in western Ukraine near the border with Poland. These deposits are similar to the Polish ones in Podkarpackie Voivodeship and we hope for success," Majewski emphasized. He added that PGNiG has agreements with Polish companies Geofizyka Torun and Exallo Drilling, which are engaged in gas exploration, seismic research, and drilling, so they are allowed to perform this work in Ukraine. "Therefore, we perceive the Ukrainian market as very promising," said the chairman of the board of PGNiG.
High Natural Gas Prices Strain Europeans, Weighing on Recovery As the world struggles to recover from the pandemic, soaring natural gas prices threaten to become a drag on the economies of Europe and elsewhere. Wholesale prices for the fuel are at their highest in years — nearly five times where they were at this time in 2019, before people started falling ill with the virus. The high costs feed into electric power prices and have begun showing up in utility bills, weighing on consumers whose personal finances have already been strained by the pandemic. The price jumps are unusual because demand is typically relatively low in the warmer summer months, raising alarms about the prospects for further increases when demand jumps in the winter. Spanish households are paying roughly 40 percent more than what they paid for electricity a year ago as the wholesale price has more than doubled, prompting angry protests against utility companies. “The electricity price hike has created a lot of indignation, and this is of course moving onto the streets,” said MarÃa Campuzano, spokeswoman for the Alliance against Energy Poverty, a Spanish association that helps people struggling to pay energy bills. The pain is being felt across Europe, where gas is used for home heating and cooking as well as electric power generation. Citing record natural gas prices, Britain’s energy regulatory agency, Ofgem, recently gave utilities a green light to increase the ceiling on energy bills for millions of households paying standard rates by about 12 percent, to 1,277 pounds, or $1,763, a year. Several trends are to blame for soaring prices, including a resurgence of global demand after pandemic lockdowns, led by China, and a European cold snap in the latter part of winter this year that drained storage levels. The higher-than-expected demand and crimped supply are “a perfect storm,” said Marco Alverà , chief executive of Snam, the large gas company in Milan. The worry is that if Europe has a cold winter, prices could climb further, possibly forcing some factories to temporarily shut down. “If it is cold, then we’re in trouble,” Mr. Alverà said.
Global gas price surge threatens to dent economic recovery: Report - Natural gas prices are experiencing a historic surge, and that’s bad news as fuel costs are already at record seasonal highs in most major markets and are likely to rise further, threatening the recovery from the Covid-19 pandemic. The coming winter could give the world a painful lesson in how gas has become widespread and vital to the economy, reported Bloomberg. Affordable prices can lower households’ spending and lower their wages through inflation, giving central bankers some tough policy choices. Worse yet, real supply shortages could disable large parts of the industry, or even trigger blackouts in developing countries, potentially leading to social unrest. “Energy lies at the base of the economy,” said Bruce Robertson, an analyst at the Institute for Energy Economics and Financial Analysis. “High energy prices reverberate through the supply chain” and could put a dent in the nascent recovery, he said. Energy costs are rising around the world as an improvement in demand from the worst of the Covid-19 lockdowns is hit by a supply crunch. Oil has already gone through a protracted rally that began in late 2020 and ended in July at a multi-year high above $75 a barrel. The gas began to rise in the early summer in the Northern Hemisphere, when it became increasingly clear that Europe did not have enough supplies to allow normal refilling of storage sites in winter. The continent’s largest supplier, Russia, is limiting pipeline exports for a number of reasons, including high domestic demand, production disruptions and a deal to reduce fuel transit through Ukraine. The LNG market is one that connects Europe, Asia and the Americas, and higher prices there feed into the domestic US market by encouraging more exports of the super-chilled fuel. Natural gas futures in New York have risen as much as 80% this year since 2018, although they are still very low compared to other major global markets. Around the world, the economic consequences of the natural gas rally are becoming clearer. In China, the world’s biggest gas importer, ceramics factories have been forced to reduce production due to high prices in Guangdong and Jiangxi provinces, according to local reports. According to Chief Operating Officer Shakeel Ahmed, the rise in utility bills has “ruined” Mughal Steels’ business in Pakistan. “We consume gas first and get a higher bill later,” he said. “How do I get back to a customer saying I need to add an additional cost to the steel I sold you?” Some poor countries, such as Bangladesh, cannot procure enough energy supplies to keep their economies thriving. In Pakistan, the government has been critical of the purchase of the country’s most precious LNG shipments since it began importing the fuel in 2015.
Black Sea Oil & Gas project a litmus test for Romanian offshore gas investment - Black Sea Oil & Gas (BSOG) is pressing ahead to be the first company to tap Romania’s offshore gas fields despite a disputed tax that has stymied other projects, but if the levy remains it could impact its operations in the country, its chief executive said. The company’s project to extract an estimated 10 billion cubic metres of gas will become a litmus test of the European Union state’s ability to attract investors and tap its estimated 200 billion cubic metres in the Black Sea. Several gas producers have spent years and billions of dollars preparing to tap those reserves, but all except BSOG put a final investment decision on hold three years ago when the previous government imposed an extra tax on offshore projects. “The start of production is not contingent on In February, Beacom said production could start in November, but that deadline could now be delayed slightly as construction works at the project’s onshore treatment plant may not be completed by the year-end, he said. He added BSOG was analysing renewable energy projects using its existing infrastructure, including onshore solar and wind parks and an offshore pilot green hydrogen power plant. The tax is preventing companies such as OMV Petrom, majority-controlled by Austria’s OMV from moving forward with its deepwater project where it discovered 1.5-3 trillion cubic feet of gas, and contributed to Exxon Mobil’s exit from it. Russia’s Lukoil and Romanian state producer Romgaz also had a separate offshore project. Gas producers, the energy regulator and analysts have said Romania needs to press ahead with tapping offshore reserves as its onshore gas fields are dwindling and the country needs to phase out coal in line with EU targets. The centrist government has said offshore legislation would be amended in parliament this year. But its plans might be further delayed as tensions in the ruling coalition escalated and the government is now at risk of collapse. Failure to change legislation would undermine Romania’s credibility, put billions of dollars of revenue at risk and increase the country’s reliance on Russian gas imports. Beacom said he did not believe the legislation will remain in place for long, “given the current natural gas demand, the significant rise of gas imports and prices in Romania, as well as in the EU, and offshore law’s counterproductive nature for Romania that ensures no further investments will be undertaken.”
OODA Loop - Syrian oil spill spreads across the Mediterranean and could reach Cyprus on Wednesday --Last week, a tank filled with 15,000 tons of fuel was discovered to have been leaking since August 23 at a thermal power plant on the Syrian coastal city of Baniyas. Although Syrian officials claimed to have brought the leak under control, the oil spill is growing and spreading across the Mediterranean Sea and could reach the island of Cyprus by Wednesday, according to authorities. Satellite imagery analysis conducted by Orbital EOS indicates that the spill was much larger than originally thought, spreading across 800 square kilometers. This means that the size of the oil leak is roughly the same as the area of New York City. On Tuesday, the oil was just 4 miles from the coast of Cyprus. The Cypriot Department of Fisheries and Marine research conducted their own investigation, determining that the oil would likely reach the shore at around 11 a.m. local time today. Photos have circulated across social media showing the oil slick along the coastal areas of Syria, in the cities of Baniyas and Jableh. Officials have warned that the oil leak could pose a serious threat to marine life.
DOE grants permit-to-construct for AG&P’s LNG facility – Manila Bulletin - The Department of Energy (DOE) disclosed that it already approved the permit-to-construct application of Atlantic Gulf & Pacific Company (AG&P), and the agency is eyeing that this will be the first liquefied natural gas (LNG) import facility that will reach commercial operations by second quarter of 2022. Energy Undersecretary Donato D. Marcos said the LNG import terminal project of AG&P, which is also utilizing floating storage and regasification unit (FSRU) technology, has been the second project granted with PCERM or permit to construct, expand, rehabilitate and modify — that serves as the second layer of permitting for LNG projects in the country. The first permit to be secured by LNG project proponents from the DOE is the notice-to-proceed (NTP), which is good for six months; and can be extended for another six months. AG&P’s NTP was issued on February 24, 2021. Under the NTP permitting phase, the LNG facility proponent will have to secure all project approvals it will be needing from various government agencies; and it shall also work on its financial closing as well as off-taker (buyer) of its gas commodity. If all of those requirements are fully complied with, the LNG project proponent will have to go back to the DOE and apply for PCERM – and upon securing the agency’s go-signal, construction of the gas import facility can already commence. According to the energy department, the initial phase of AG&P’s LNG project will be FSRU; but its longer-term project blueprint calls for the establishment of a more permanent onshore LNG terminal. The targeted market of the LNG import facility will be the gas-fired power plant developments of SMC Global Power Holdings Corporation, although it was noted by DOE sources that no definitive power supply contracts had been reported or conveyed yet to the agency. AG&P has its main corporate office base in Manila; but its ownership is of various international firms that include Asiya Investments of Kuwait; Osaka Gas; and Japan Bank for International Cooperation. The company has planned its LNG investment in the country for several years already, but it is finally concretizing that venture into commercial fruition because of the ongoing race among project developers for an asset that will replace the gas output of the Malampaya field. The Philippines currently has over 3,200 megawatts of gas-fired power fleets; and there are also targeted expansions in gas capacities that need to be catered to by LNG that will be imported into the country starting next year.
Saudi Aramco unit wins Guyana oil tender, in line for contract --Guyana awarded a unit of Saudi Aramco 2222.SE a tender to purchase a portion of the country’s oil production, and the two parties will likely enter into a one-year marketing deal, an official said on Tuesday. The South American country last month received bids from 15 companies aiming to market its allocation of light crude produced off the coast by a consortium led by Exxon Mobil Corp XOM.N. Guyana, a nascent oil producer, is entitled to a portion of the oil, but lacks capacity to refine it. While Guyana had initially been seeking a partner to market its oil for one year, the government has for now awarded Aramco Trading Ltd only the next loading, which is scheduled for Sept. 21-22 and will be the government’s fourth of 2021, Natural Resources Minister Vickram Bharrat told Reuters. Aramco will likely be awarded the one-year contract, but that process is not yet complete, Bharrat added. The firm submitted the lowest compliant bid for a comission of $0.025 per barrel. Guyana and neighboring Suriname have emerged as the world’s newest hotspots for offshore oil exploration. The Exxon-led consortium, which also includes China’s CNOOC Ltd 0883.HK and New York-based Hess Corp HES.N, has discovered more than 9 billion barrels of recoverable resources off Guyana’s coast. India, the world’s third largest crude consumer and importer, had sought a long-term supply arrangement with Guyana in part to diversify its suppliers away from OPEC countries, dominated by Saudi Arabia. But Guyana ruled that possibility out last month, deciding instead to go through with a competitive bidding process.
OPEC+ decision to keep increasing oil output feeds expectations for a 2022 surplus A decision by the Organization of the Petroleum Exporting Countries and their allies on Wednesday to stick to its plan to gradually increase production each month may lead to a surplus in global supplies as early next year, according to Capital Economics.The decision may also help to pull Brent crude prices down by around 15% by the end of 2022, the economic research consulting firm said.On Wednesday, the oil collective known as OPEC+, including Russia, said it would keep the agreement it made in July, to raise overall production by 400,000 barrels a day each month from August and eventually erase the output curbs put in place last year to offset weaker demand driven by economic restrictions tied to the pandemic.The group had faced a “number of conflicting pressures” ahead of the meeting, including pressure from the Biden administration, which called for a faster return of OPEC+ output than the group currently planned in an effort to lower prices, said Caroline Bain, chief economist at Capital Economics. There were also concerns about a “drop-off” in oil demand, given the rapid spread of the Delta variant in Asia, she said in commentary following the OPEC+ meeting.Oil prices were volatile in the last month, but Brent crude BRNX21, 0.62% BRN00, 0.62% was “comfortably” over $70 a barrel going into Wednesday’s meeting, Bain said, “exactly where it was at the time of the last OPEC+ meeting.” With the group’s policy unchanged, Bain said Capital Economics expects the gradual return of OPEC+ oil supply in the coming year to put “downward pressure on prices.” The market will likely remain in a deficit in the fourth quarter of this year, then swing into a supply surplus early next year, she said.In a report Tuesday, the OPEC+ Joint Technical committee forecast a 900,000 barrel-per-day global oil-supply deficit this year amid a recovery in oil demand, according to Reuters, which cited OPEC+ sources. Reuters said the report initially forecast a surplus of 2.5 million barrels a day in 2022, but that it was later revised to a surplus of 1.6 million barrels a day due to stronger demand. Given expectations for a supply surplus next year, Capital Economics forecasts a fall in Brent crude prices to $60 a barrel by the end of 2022, down from current prices of around $71.
Nigeria Struggles to Meet OPEC’s Crude Oil Quota - Despite requesting for a higher baseline in August, Nigeria failed to meet the existing crude oil supply quota allocated to it by the Organisation of Petroleum Exporting Countries (OPEC) during the month, THISDAY’s investigation revealed yesterday. The country lost 90,000 barrels per day in August, or roughly 2.8 million barrels in the month, making last month’s production of 1.43 million bpd one of the lowest in five years. While Saudi Arabia and Iraq were the main drivers of OPEC’s production for August, with additional production of 290,000 bpd and 200,000 bpd, respectively, Nigeria, which can produce two million bpd, other things being equal, slumped from its July figure of 1.520 million bpd, according to an OPEC document. Production growth in Nigeria, Africa’s highest oil producer, going by recent data, is proving a major challenge due to infrastructure challenges and technical difficulties, leading to shut-ins.In addition to the above problems, there have also been instances of community or workers’ protests, which incessantly disrupted operations, leading to severe losses. A document obtained by THISDAY showed that the Nigerian National Petroleum Corporation (NNPC) and its partners lost 6.035 million barrels of crude oil to emergency shutdowns in the previous month.In its August presentation to the Federation Account Allocation Committee (FAAC), which was held between the 18th and 19th of August, the corporation recorded 32 such incidents throughout its facilities in the country. A breakdown of the losses, according to the document, indicated that the highest combined shortage of 1.62 million barrels was from Qua Iboe, with 200,000 barrels due to production shut-in arising from flare management and low wellhead pressure.Additional 530,000 barrels were lost to shut-ins on Qua Iboe following tank top concerns, 650,000 barrels as a result of production cut-back as directed by the Department of Petroleum Resources (DPR) as well as a loss of 240,000 barrels due to a gas leak on one of the assets. This was followed by losses from the Forcados facility, which shed 200,000 barrels, 84,000 barrels, 30, 000 barrels, and 80,000 barrels respectively on different days, with reasons ranging from leak repairs, tank top issues, a fire incident, and declaration of a force majeure. Forcados continued its shut-ins, shedding an additional 405,000 barrels of crude oil at the Uzere/Afisere/Kokori axis following a shutdown as a result of protests by community workers as well as a loss of 80, 000 barrels due to a fire incident.In the same vein, Anyala Madu shed 105,000 barrels, Bonny suffered total shut-ins of 335,000 barrels, Ugo Ocha lost 30,000, Okono’s shutdown led to the loss of 96,000 barrels, while Sea Eagle lost 750,000 barrels.Usan shed 585,000 barrels, Brass lost 200,000 barrels, Erha lost 230,000 barrels and Yoho lost a cumulative 280,000 barrels during the mon Due to Nigeria’s inability to meet its quota, in addition to the challenges in Angola, OPEC produced about 10 per cent below its overall quota but kept output from its 13 members at about 27.11 million barrels a day in August.But Iran, Venezuela, and Libya continue to be excluded from the OPEC production quota deal, which has led to steady stability in the oil market.
Oil Down on Limited Trading - Oil extended losses after Saudi Arabia cut crude prices for Asian buyers, raising the prospect of fierce competition among sellers as the resurgence of Covid-19 continues to cloud the demand outlook. Futures in New York fell 0.6% to below $69 a barrel. The kingdom cut the price of its flagship crude for October just days after OPEC+ agreed to continue boosting production. Traders were caught off guard by the Saudi move, attributing it to factors including increased competition and a desire to retain market share. “The Saudis cut the price to Asia by more than expected,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “This obviously raises speculation whether they’re looking for market share or whether they see a weak demand situation that requires a lower price in order to stay competitive.” Oil’s sizzling rally over the first half of the year has been interrupted by the delta variant of the virus, which has led to renewed restrictions on mobility. Adding to bearish sentiment recently has been the readiness of governments to release strategic reserves, reducing the need for supplies from the market. Still, a significant chunk of U.S. production remains offline in the Gulf of Mexico following Hurricane Ida. Last month, some Asian customers requested less crude from Saudi Arabia due to the demand impact from delta. For October, Saudi official prices for cargo sales to the U.S., northwest Europe and the Mediterranean were stable or little changed, pointing to the producer’s intent on prioritizing oil flows to Asia. West Texas Intermediate for October delivery dropped 40 cents to $68.89 a barrel by 12:59 p.m. in New York; trading limited due to U.S. Labor Day holiday. Brent for November settled 39 cents lower at $72.22. Traders are closely watching for the return of oil production and refineries affected by Ida. The U.S. gave a second refiner in Louisiana access to the country’s emergency crude stockpiles as most oil-producing platforms in the Gulf of Mexico aren’t back up.
Oil Futures Again Fall After Saudi Cut Asia OSP, US Dollar Gains -- At the beginning of a holiday-shortened week in the United States, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange fell in early trade Tuesday after Saudi Aramco sharply cut official selling prices for crude contracts to Asian and European buyers, reviving concerns over laggard demand growth in major oil consuming countries.State oil giant Saudi Aramco said on Sunday that it will reduce October OSPs for all crude grades sold to Asia, its biggest buying region, by at least $1 a barrel (bbl). Documents detail that the cuts were much deeper than the $0.13 bbl month-on-month decline in the Dubai futures cash/paper spread in August, which is said to be a key element in OSP calculations. Saudi's move on its crude selling price comes on the heels of an agreement among Organization of the Petroleum Exporting Countries and Russia-led partners announced Sept. 2 that they would continue with a 400,000 barrels per day (bpd) production hike in October. OPEC+ agreed in July to increase their production 400,000 bpd monthly until the 9.7 million bpd in output cuts made in April 2020 are restored, meeting monthly to affirm or adjust the policy should market conditions change.Domestically, Goldman Sachs trimmed its 2021 U.S. gross domestic product growth forecast by 30 basis points to 5.7% in the wake of both the August jobs report and a series of data releases that could suggest slower growth in the months ahead. Last month's employment report showed 235,000 new jobs were added by U.S. employers, a sudden deceleration from an upwardly revised 1.053 million in new jobs in July, suggesting a more muted pace of recovery over the final months of the year as the impact of government stimulus fades and the rate of infections of the Delta coronavirus variant continue to surge.In China, the Caixin/Markit services Purchasing Managers' Index fell to 46.7 in August from 54.9 in July, its sharpest contraction in 16 months, while eurozone retail sales in July also dipped 2.3% month on month.News late last week that the damage from Hurricane Ida to Port Fourchon, which sits at the southeast tip of Louisiana, was less than initially assessed joined a disappointing reading on the domestic labor market to send oil contracts lower. Port Fourchon and the Port of Houma reopened with restrictions, with Port Fourchon in particularly critical for offshore oil producers as it serves as a key transportation artery in delivering oil onshore. Analysts estimate about 90% of Gulf of Mexico oil production goes through the port.
Oil Prices Slide Despite Supply Disruption - Oil prices fell on Tuesday morning as fears grew that Asian demand would not recover as quickly as originally expected. Supply disruptions from Hurricane Ida were not significant enough to counter this bearish news. Saudi Arabia’s drastic cuts to its October 2021 OSPs have sparked fears of a potential slower-than-anticipated demand recovery in Asia as OPEC+ continues to gradually bring part of its idled production back online. Whilst US outages are still hindering crude production in the Gulf of Mexico, the supply constraints appear to be insufficient to stop oil prices from sliding, albeit marginally. As of Tuesday, global benchmark Brent traded below $72 per barrel, whilst WTI was changing hands around $68.5 per barrel.Chinese customs data shows that Chinese buyers have ramped up imports over the last month, bringing in 10.5 mbpd of crude, up 8% month-on-month. With teapot refiners still constrained by unavailable import quotas, state-owned companies did most of the buying. US major Chevron is reportedly trying to sell its oil and gas assets in Texas’ Eagle Ford Basin, a legacy of its taking over Noble Energy last year, foreseeing a selling price as high as $3.8 billion. The forthcoming concession model licensing round of Brazilian oil regulator ANP has seen only 9 companies qualifying for the bidding, the lowest number ever, though the list contains oil majors like ExxonMobil, Chevron, Shell \and TotalEnergies. Russian gas giant Gazprom (MCX:GAZP) finished the subsea laying of its $11 billion gas conduit, with only some welding works between the German and Danish sections remaining. Gazprom stocks soared on Monday, adding almost 4% on the day. French oil major TotalEnergies signed a monster deal with Iraq that would see it build several seawater injection facilities at southern oil fields, a $2 billion gas processing plant to curb Iraq’s dependence on Iranian gas imports as well as a solar plant.
Oil slips as slower demand expectations weigh - Oil prices fell on Tuesday, extending losses from the previous session, as Saudi Arabia's sharp cuts in crude contract prices for Asia sparked fears over slower demand, but strong Chinese economic data and U.S. output outages capped losses. Brent crude futures declined 53 cents, or 0.73%, to $71.69 per barrel, after falling 39 cents on Monday. U.S. West Texas Intermediate crude settled 94 cents, or 1.36%, lower at $68.35 per barrel, with no settlement price for Monday due to the Labor Day holiday in the United States. "The deep cut in Saudi OSP and the aftershock of Friday's disappointing U.S. jobs data that strengthened the dollar yesterday were enough to put bulls on the backfoot," Tamas Varga of oil brokerage PVM said. Saudi Aramco on Sunday cut October official selling prices (OSPs) for all its crude grades sold to Asia by at least $1 a barrel. The deep price cuts, a sign that consumption in the world's top-importing region remains tepid, come as lockdowns across Asia to combat the Delta variant of the coronavirus have clouded the economic outlook. At the same time, the U.S. economy created the fewest jobs in seven months in August as hiring in the leisure and hospitality sector stalled amid a resurgence in COVID-19 infections, which weighed on demand at restaurants and hotels. Oil prices, however, were underpinned by strong Chinese economic indicators and continued outages of U.S. supply from Hurricane Ida. China's crude oil imports rose 8% in August from a month earlier, customs data showed, as refiners resumed purchases following the issue of new import quotas. China's economy got a boost as exports unexpectedly grew at a faster pace in August thanks to solid global demand, helping take some of the pressure off the world's second-biggest economy as it navigates its way through headwinds from several fronts. More than 80% of oil production in the Gulf of Mexico remained shut after Ida, a U.S. regulator said on Monday, more than a week after the storm made landfall and hit critical infrastructure in the region. Hedge funds purchased petroleum last week at the second-fastest rate this year after Ida disrupted offshore oil wells and onshore refineries in the Gulf.
Oil Drops as Stronger Dollar Overshadows Bullish Data | Rigzone - Oil closed lower for a second session as the dollar rose, offsetting bullish Chinese trade data and continued production outages in the U.S. Gulf of Mexico. Futures in New York fell 1.4% with a stronger dollar making commodities priced in the currency less attractive. Meanwhile, the industry was still assessing the impact on oil assets from Hurricane Ida. Nearly 80% of crude oil production in the U.S. Gulf of Mexico remains offline. “WTI is basically getting thumbed down by the rising U.S. dollar,” said Bart Melek, head of commodity strategy at TD Securities. Fears of slower-than-expected economic growth due to the delta-variant of the coronavirus and the impending Federal Reserve’s asset tapering later in 2021 may be prompting a pull back in risk appetite, he added. he fast-spreading delta variant has raised demand concerns in recent weeks, though China was able to swiftly contain its latest outbreak. The Asian country’s overall imports also rose, with crude purchases climbing to a five-month high, pointing to a revival in the region’s biggest economy following a recent wave of Covid-19 infections. There are expectations that the global oil market will tighten over the rest of 2021, with the Organization of Petroleum Exporting Countries and its allies deciding last week to keep boosting supply on a bet that the recovery will accelerate. Prices: West Texas Intermediate for October delivery lost 94 cents from Friday’s close to settle at $68.35 a barrel in New York. Brent for November settlement slipped 53 cents to end the session at $71.69 a barrel. Post-Ida recovery efforts are still continuing with the storm’s initial impact to oil greater than any other storm in history. Royal Dutch Shell Plc said it’s returning staff to its Auger and Enchilada/Salsa oil and natural gas platforms in the Gulf though those assets and others remain shut. Prices for regional sour crude benchmark Mars Blend surged to a seven-month high due to supply uncertainty. Among Louisiana refiners, Exxon Mobil Corp. and Marathon Petroleum Corp. said parts of their respective crude processing plants were back in service.
Oil holds steady on slow return of U.S. supplies after Hurricane Ida (Reuters) - Oil prices were little changed on Wednesday following overnight losses from a stronger dollar and demand concerns, with a slow production restart in the U.S. Gulf of Mexico providing some support. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 11 cents, or 0.2%, to $68.46 a barrel at 0429 GMT, after sliding 1.4% on Tuesday following the Labor Day holiday. Brent crude LCOc1 futures fell 2 cents to $71.67 a barrel after falling 0.7% on Tuesday. "The market is ... weighing up the impact of ongoing delays to the resumption of operations in the Gulf of Mexico," ANZ Research analysts said in a note. Producers in the U.S. Gulf of Mexico are still struggling to restart operations nine days after Hurricane Ida swept through the region with powerful winds and drenching rain. About 79% of U.S. Gulf production remained offline on Tuesday, with 79 production platforms still unoccupied. About 17.5 million barrels of oil has been lost to the market so far. The Gulf's offshore wells make up about 17% of U.S. output. "Refinery operations appear to be making a quicker recovery," ING analysts said in a note. Only about 1 million barrels per day of capacity was temporarily closed, down from a peak of more than 2 million bpd, ING said, citing the latest situation report from the Department of Energy. "However, those refiners that have restarted are unlikely to be operating at full capacity at the moment," the note added. Traders will be closely watching inventory data from the American Petroleum Institute industry group due on Wednesday and the U.S. Energy Information Administration on Thursday for a clearer picture of the storm's impact on crude production and refinery output. API/SEIA/S Analysts polled by Reuters expect, on average, that crude stocks fell by 3.8 million barrels in the week to Sept. 3, and see gasoline stocks down by 3.6 million barrels and distillates down by 3 million barrels.
WTI, Brent Futures Rally on Gulf of Mexico Outages, Protests in Libya -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent traded on the Intercontinental Exchange settled Wednesday's session higher, with both the U.S. and international crude benchmarks rallying as much as 1.5%. The gains followed reports of widespread protests at oil ports in Libya, with demonstrators blocking loadings from the two key terminals of Ras Lanuf and Es Sider, while the slower-than-expected return of deep-water oil production in the U.S. Gulf of Mexico fueled additional buying interest. The Bureau of Safety and Environment Enforcement reported Wednesday afternoon operators in the federal waters of the Gulf of Mexico brought back less than 2% of shut-in production on Wednesday, with some 1.4 million barrels per day (bpd) in regional oil output remaining offline following Hurricane Ida's landfall on Aug. 29. A combination of factors has likely contributed to the slow progress in restoring GOM production, including potential damage to underwater pipelines and widespread power outages at refineries and oil terminals across southeastern Louisiana that could preclude the facilities from receiving oil.Shell, the largest producer in the Gulf, said on Wednesday that 80% of its production remains offline and return is contingent on "availability of downstream infrastructure." "Our remaining Shell Deep Water assets -- Appomattox, Mars, Olympus, Ursa, Auger and Enchilada/Salsa -- remain shut in. Our inspections on board confirm that there is no significant structural damage to these Shell Deep Water assets impacted by the storm. Our crews will focus on making necessary repairs in a safe, sustainable manner," said the company.Many offshore operators have been able to return some personnel to platforms, with 73 remaining evacuated, about 13% of all platforms in the Gulf, according to the BSEE data. S&P Global Platts Analytics estimates Ida has already kept about 20 million barrels (bbl) of oil off the market, which makes it the costliest hurricane in the GOM since hurricanes Katrina and Rita in 2005. Should recovery from Ida extend into next week, the disruption could knock off as much as 30 million bbl. In its latest Short-term Energy Outlook, U.S. Energy Information Administration said it doesn't expect a speedy return of GOM output, with production to average 1.2 million bpd in September before jumping back to 1.7 million bpd in the fourth quarter. U.S. Department of Energy said on Wednesday that five refineries in Louisiana with roughly 1 million bpd of oil refining capacity, or about 6% of nationwide capacity, remained shut, with all three refineries in the Baton Rouge area and one near New Orleans having initiated the restart process. Internationally, Libya's two key oil ports -- Es Sider and Ras Lanuf -- were closed Wednesday due to escalating demonstrations that blocked a crude tanker from loading its cargo. It's unclear what sparked the protests, but media reports indicate demonstrators are calling for the dismissal of Mustafa Sanalla, chairman of state-owned National Oil Company.
Oil Futures Gain on Bullish API Data, Libya Port Closures -- Following Wednesday's advance triggered by a potential supply disruption in Libya and the slow return of deep-water production in U.S. Gulf of Mexico, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange advanced in pre-inventory trade Thursday after industry data from the American Petroleum Institute reported across-the-board draws from U.S. commercial crude and refined product supplies in the week ended Sept. 3. Near 7:30 a.m. ET, NYMEX October West Texas Intermediate contract gained $0.44 to $69.74 per barrel (bbl), and Brent crude for November delivery jumped above $73 bbl, advancing $0.52 in early trade. NYMEX October RBOB futures added 1.8 cents to $2.1491 gallon, and front-month ULSD futures gained 0.75 cents to $2.1439 gallon. Operators in the offshore U.S. Gulf of Mexico managed to restore about 400,000 barrels per day (bpd) out of a total 1.8 million in daily production that was shut-in by the Hurricane Ida on Aug. 29. Ida has already kept about 20 million bbl of oil off the market, according to analysts, and should the disruption continue into next week that could well exceed 30 million bbl. A combination of factors has likely contributed to the slow progress in restoring GOM production, including potential damage to underwater pipelines and widespread power outages at refineries and oil terminals across southeastern Louisiana that could preclude the facilities from receiving oil. Entergy -- the regional power supplier, said on Wednesday 62% of customers that lost power following the hurricane's landfall are now receiving power, with some parts of the transmission system requiring a total "rebuild." Many offshore operators have been able to return some personnel to platforms, with 73 remaining evacuated, about 13% of all platforms in the Gulf, according to the BSEE data. The unprecedented supply disruption veered its head in weekly inventory data released by the American Petroleum Institute late Wednesday, showing domestic gasoline inventories decreased by a massive 6.414 million bbl in the week ended Sept. 3 compared with calls for a drop of 2.9 million bbl. API data also showed distillate inventories dropped 3.748 million bbl, above estimates for a 2.3 million bbl draw. Commercial crude oil inventories declined by 2.882 million bbl in the profiled week versus an anticipated 2.5 million bbl draw. Data show stocks at the Cushing, Oklahoma hub increased 1.794 million bbl. Analysts estimate that large product draws last week are constructive in light of the 2.5 million barrels per day (bpd) in refining capacity initially knocked offline in Louisiana by Ida. On Wednesday, U.S. Department of Energy said that five refineries in Louisiana with roughly 1 million bpd of oil refining capacity remained shut, with all three refineries in the Baton Rouge area and one near New Orleans having initiated the restart process.
Oil Price Chaos Continues After Record Crude Production Plunge, Major Gasoline Draw - Oil prices have swung wildly this morning ahead of the official inventory data following reports that China will release some of its strategic crude reserves.In a late announcement on Thursday, Beijing said it had tapped its giant oil reserves to "to ease the pressure of rising raw material prices." The Chinese government didn't offer further details, but people familiar with the matter said the statement referred to millions of barrels the government offered in mid-July.“On its face, it’s a pretty clear statement of an intent to use the SPR to dampen oil prices for domestic refiners,” said Bob McNally, a former senior White House policy adviser who now runs Rapidan Energy Group, a consulting firm in Washington.For now, the algos will be focused on the inventory data for signs of Delta's impact... but perhaps it is Ida's impact that will confound most. Hurricane Ida may not have been the deadliest or most damaging weather system ever to smash into the U.S., but its initial impact on Gulf of Mexico oil supply has been greater than any other storm in history. Ida has been responsible for the loss of 20.7 million barrels of output in the 13 days since the Bureau of Safety and Environmental Enforcement issued its first assessment of production shut-ins as a result of the storm. That’s 40% more crude than was lost to Katrina over the same period in 2005.API
- Crude -2.882mm (-3.8mm exp)
- Cushing +1.794mm
- Gasoline +6.414mm (-3.6mm exp)
- Distillates -3.748mm (-3.0mm exp)
DOE
- Crude -1.528 (-3.8mm exp)
- Cushing +1.918mm
- Gasoline -7.215mm (-3.6mm exp)
- Distillates -3.141mm (-3.0mm exp)
API reported a smaller than expected crude draw and wholly unexpected gasoline build last week but the official data showed an even smaller crude draw but a huge gasoline draw Rig counts dropped last week, likely impacted by Ida's imminent arrival but production crashed by a record 1.5mm barrels/day... Currently only 20% of the offshore platforms are still evacuated, but 77% of oil production remains shut-in. One of the drivers behind the slow return of oil and gas has been Louisiana’s Port Fourchon -- a key hub for oil and gas platforms handling more than 18% of its entire oil supply. As of Sept. 7, work to restore operations at the port is still ongoing. A chaotic morning in crude saw WTI plunge to a $67 handle only to rip back up near a $70 handle ahead of the official DOE data, and dipped a little after...
Key Reasons for Oil's Lower Settlement Despite Supply Drop --U.S. oil prices fell on Thursday, as investors looked past the Energy Information Administration’s ("EIA") storm-induced draws in crude and fuel stockpiles, instead turning their attention to China’s surprise announcement to auction off oil from its national reserve to soften spiraling feedstock costs for domestic refiners.On the New York Mercantile Exchange, WTI crude futures lost $1.16 or 1.7%, to settle at $68.14 a barrel. Below we review the EIA's Weekly Petroleum Status Report for the week ending Sep 3. The federal government’s EIA report revealed that crude inventories fell by 1.5 million barrels compared to the expectations of a 7.4-million-barrel decline per the analysts surveyed by S&P Global Platts. The combination of a drop in domestic production and lower imports — both related to the Hurricane Ida-led shut-ins in the Gulf of Mexico facilities — accounted for the stockpile draw with the world’s biggest oil consumer. However, the magnitude of decrease was far lower than expected as the storm knocked out refinery demand too. This puts total domestic stocks at 423.9 million barrels — 15.3% less than the year-ago figure and 6% lower than the five-year average. On a somewhat bearish note, the report showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) were up 1.9 million barrels to 36.4 million barrels.Meanwhile, the crude supply cover was up from 26.5 days in the previous week to 27.2 days. In the year-ago period, the supply cover was 35.8 days. Gasoline supplies decreased for the sixth time in eight weeks. The 7.2-million-barrel plunge is attributable to the hurricane fallout on the Gulf Coast’s widespread refinery network. Analysts had forecast that gasoline inventories would fall by 2.4 million barrels. At 220 million barrels, the current stock of the most widely used petroleum product is 5.1% less than the year-earlier level and 4% below the five-year average range. Distillate fuel supplies (including diesel and heating oil) fell for the second week in a row. The 3.1-million-barrel drop reflected refineries sidelined by Hurricane Ida. Meanwhile, the market looked for a supply decline of 2 million barrels. Current inventories — at 133.6 million barrels — are 24% below the year-ago level and 12% lower than the five-year average. Refinery utilization, at 81.9%, was down 9.4% from the prior week. Oil prices settled lower yesterday after China’s plans to release stockpiles from reserves stoked fears of a supply glut even as global oil consumption remain strong following the relaxation of movement curbs. Besides, analysts cited this week’s hefty inventory declines as temporary as most production platforms in the Gulf were evacuated in anticipation of Hurricane Ida.
Oil rallies towards $73 on tight U.S. supplies, Biden-Xi call - Oil rose on Friday, supported by growing signs of supply tightness in the United States as a result of Hurricane Ida and as U.S.-China trade hopes gave riskier assets a boost. About three-quarters of the U.S. Gulf's offshore oil production, or about 1.4 million barrels per day, has remained halted since late August. Figures this week showed U.S. crude inventories fell to the lowest since September 2019. "With the restart in offshore crude production lagging, the odds are that the Ida effect will still be felt in the coming weeks," said Stephen Brennock of oil broker PVM. Brent crude rose $1.47, or 2%, to $72.92. U.S. West Texas Intermediate (WTI) crude settled 2.32%, or $1.58, higher at $69.72 per barrel. Oil and equity markets also got a boost from news of a call between U.S. President Joe Biden and his Chinese counterpart Xi Jinping. The call raised hopes for warmer relations and more global trade, analysts said. Brent was on track to end the week with a small gain and has rallied almost 40% this year, driven by supply cuts by the Organization of the Petroleum Exporting Countries and some demand recovery from the pandemic. On Thursday, both crude contracts had fallen more than 1% after China said it would release crude oil reserves via public auction to help ease high feedstock costs for refiners, a move described as a first.
NYMEX WTI Nears $70 on Tightening US Supplies - -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange finished the holiday-shortened trading week higher, with the U.S. crude benchmark gaining as much 2.3% on Friday, supported by longer-than-expected production outages in the offshore U.S. Gulf of Mexico, with over 66% of regional output remaining offline 12 days after Hurricane Ida's Aug. 29 landfall, and outsized drawdowns from domestic petroleum inventories last week. On the session, NYMEX October West Texas Intermediate contract advanced $1.58 to $69.72 barrel (bbl), while posting a modest gain since last Friday's settlement. Brent crude for November delivery moved up $1.47 to finish the week 8 cents below $73 bbl. NYMEX October RBOB futures rallied 5.43 cents or 2% to $2.1540 gallon and front-month ULSD futures advanced 3.23 cents for a $2.1460 gallon settlement. Friday's advance came despite the U.S. dollar reversing higher in afternoon trading after several Federal Reserve officials indicated the world's most powerful central bank is prepared to reduce the pace of bond buying programs as early as November. President of Cleveland Federal Reserve Bank Loreta J. Mester said Friday the U.S. labor participation rate may never return to its pre-pandemic level despite the remarkable progress the job market has made in the past 18 months. Currently, over 8 million Americans remain unemployed despite U.S. employers having a record-high 10.9 million job openings this summer. This mismatch was echoed in earlier comments from St. Louis Fed President James Bullard, who said there is plenty of demand for workers and "if we can get the workers matched up and bring the pandemic under better control, it certainly looks like we'll have a very strong labor market going into next year." The U.S. dollar strengthened 0.14% against the basket of foreign currencies to settle the volatile week of trading at 92.590. The U.S. Federal Reserve came under increasing pressure in recent weeks from central banks in industrialized and emerging economies that withdrew fiscal stimulus amid surging inflation. The European Central Bank announced on Thursday that it would slow the pace of the bond purchases under its 1.85 trillion-euro Pandemic Emergency Purchase Program, making the first step in withdrawing 80 billion euros a month it bought over the previous two quarters. Last month, The Bank of Korea announced a first interest rate hike in three years, indicating rising inflation poses a greater risk to the economy than the latest virus outbreak. In the short-term, however, market participants continue to monitor the slow return of offshore oil production in the U.S. Gulf of Mexico, with about 66% or 1.2 million barrels per day (bpd) still offline nearly two weeks after Hurricane Ida's landfall, according to government data from the Bureau of Safety and Environmental Enforcement. There have been signs of progress, with a majority of workers returning to offshore platforms and power supply restored for much critical onshore and deepwater infrastructure. The Louisiana Offshore Oil Port said Thursday it has resumed delivering crude oil to regional refineries.
Oil Up for Third Week as USA Refinery Restarts Outpace Production - Rigzone - Oil gained a third week as investors focused on the ongoing production shut-ins in the U.S. Gulf of Mexico as more refineries have resumed operations nearly two weeks after Hurricane Ida tore through the region. Futures in New York posted its longest set of weekly gains since July after ending Friday 2.3% higher. More than a million barrels a day of U.S. offshore crude production remains shut in after Ida swept through the area nearly two weeks ago. Meanwhile, more Louisiana refineries are resuming operations, raising demand for crude oil. The slow return of offshore production led to Exxon Mobil Corp. to secure approval for a second load of crude from the Department of Energy’s Strategic Reserves for use at Baton Rouge plant. “The market is now laser focused on the supply situation in the U.S.,” said Andrew Lebow, senior partner at Commodity Research Group. “The losses from the extended outage in the Gulf are being felt more.” Even after China made an unprecedented move to intervene in oil markets this week, crude in New York has traded in a $4 band since late August. The market has been pulled in different directions with the majority of Gulf of Mexico production still shut from Hurricane Ida and falling American stockpiles acting as bullish triggers, countered by the ever-present pandemic. Marathon Petroleum’s 578,000-barrel-a-day refinery in Garyville, Louisiana, is back in operation for the first time since before Ida slammed into the coast. Exxon Mobil Corp. secured another 1.5 million barrels for the Strategic Petroleum Reserve for its Baton Rouge refinery, which was operating normally as of Thursday. West Texas Intermediate for October delivery climbed $1.58 to settle at $69.72 a barrel in New York. Brent for November settlement rose $1.54 to $72.99 a barrel. China’s bold but vague declaration to release oil reserves from its massive strategic stockpiles has some traders questioning the lasting impact of such a move by the world’s biggest crude importer. The National Food and Strategic Reserves Administration also said this week that a “normalized” rotation of crude oil in the state stockpiles is “an important way for the reserves to play its role in balancing the market,” indicating that it may continue to release barrels. It added that putting reserves on the market through open auctions “will better stabilize domestic market supply and demand.” “China’s SPR is very healthy because they bought so much last year when prices were significantly lower,” said Lebow. “They may wait to replenish it.
US backs plan to bring badly-needed gas to Lebanon from Syria | Cyprus Mail -- The US has backed a plan to bring desperately needed gas to Lebanon from Syria.Syria said on Saturday that it welcomed Lebanon’s request to import Egyptian gas for energy generation via its territory after Lebanese ministers made the highest level visit to Damascus in years.The United States has said it is in talks with Egypt, Jordan and the World Bank to help find solutions to Lebanon’s energy crisis. The Lebanese presidency said last month Washington had decided to help through this plan.Lebanon is suffering energy shortages that have forced even essential services including hospitals to shut down or scale back operations. The crisis is the result of a wider financial meltdown that has devastated the economy since 2019.The delegation, led by Zeina Akkar, who holds several positions in Lebanon’s caretaker government including the foreign minister, aimed to pave the way for a U.S.-backed plan to ease the power shortages in Lebanon by transmitting electricity via the Syrian grid.“The Syrian side welcomed the request and assured it was ready to oblige it,” Nasri Khoury, secretary general of the Lebanese Syrian Higher Council, said in a brief statement after the meeting.The plan involves using Egyptian gas to generate electricity in Jordan that will then be transmitted via Syria to Lebanon.US sanctions on Damascus are a complicating factor in any effort to help Lebanon via Syria, but congressmen visiting Beirut this week have said Washington is looking at ways to urgently deal with those hurdles.US ambassador to Lebanon Dorothy Shea has also said there was a will to make the plan happen.Syrian Foreign Minister Faisal Mekdad received the Lebanese delegation at the border on arrival Saturday, which also included the ministers of energy and finance. Lebanese government officials had mostly avoided Syria since war began there in 2011 as Beirut adopted a policy of staying out of regional conflicts, even as the Shi’ite group Hezbollah fought in support of Damascus.
Jordan to host meeting for Lebanon gas supplies - Jordan will host a meeting with some of its neighbours on 8 September to find a way to alleviate Lebanon's ongoing electricity shortages by supplying the country with Egyptian gas, state-run Petra news agency reported today. Jordanian energy and mineral resources minister Hala Zawati has invited her Syrian, Lebanese and Egyptian counterparts to Amman to discuss ways to deliver Egyptian gas to Lebanon via Jordan and Syria. It would follow a meeting between Lebanese and Syrian delegations in Damascus yesterday in which Syria said it "welcomed" a request by the Lebanese to import gas from Egypt and electricity from Jordan through its territory. The discussions likely revolve around the 10bn m³/yr Arab Gas Pipeline (AGP), which transports gas from Egypt to Jordan, Syria and Lebanon. Lebanon had previously taken gas from Egypt via the pipeline in 2009 and 2010, but supplies ended soon after as Egypt's gas production dwindled. And although Egypt restarted exporting gas through the pipeline in 2018, these volumes have overwhelmingly been going to Jordan. According to the World Bank, Egypt has previously indicated its willingness to supply gas to Lebanon. But, among other things, this would have to address the geopolitical complexities of the Syrian civil war. Transit through Syria could be difficult, and with Damascus under US oil sectoral sanctions, that could complicate relations for all involved. Lebanon has been experiencing an acute power shortage that has resulted in severe rolling blackouts. Last week it awarded its first ever tender to swap 84,000t (542,000 bl) of Iraqi fuel oil with 30,000t of a specific fuel oil grade and 33,000t (246,000 bl) of gasoil to Dubai's state-owned Enoc. This tender is part of a deal that allows Lebanon's government to buy and resell 1mn t of heavy fuel oil from Iraq through monthly spot tenders — in cargoes of 75,000-85,000t — for one year on behalf of Lebanon's main power provider Electricite du Liban (EDL). The deal, which was signed in late-July, should cover around one third of EDL's fuel needs, and therefore tie the country over for around four months.
Saudi Arabia foils missile attack on its oil facilities Saudi Arabia said early today that it intercepted a ballistic missile and several armed drones fired by Yemen's Houthi rebels at the country's oil-rich eastern province. One of the missiles intercepted over the eastern city of Dammam overnight scattered shrapnel that injured two children and caused minor damage to 14 houses, according to the Saudi defence ministry. Yemen's Iran-aligned Houthi group, which has been fighting a Saudi-led coalition in Yemen since 2015, said it had fired the missiles, targeting state-controlled Saudi Aramco facilities in Ras Tanura, close to Dammam, as well as in Jizan and Najran provinces. The Houthi movement said its attack on Ras Tanura, which is home to Aramco's largest oil export loading facilities and a 550 b/d crude and condensate refinery, involved firing eight armed drones and a missile. Both the Saudi defence ministry and Aramco made no mention of any damage to oil facilities as a result of the attack. A missile attack in 2019 on Aramco's largest 7mn b/d crude oil processing Abqaiq plant in eastern Saudi Arabia and on the 1.2mn b/d Khurais field forced the temporary shut-in of over 5.5mn b/d of crude output. Although the Houthis claimed responsibility for that attack, it is widely accepted that those missiles were fired from a location north-west of Saudi Arabia, rather than from Yemen to the south of the country. The Houthi group has stepped up its drone attacks on Saudi Arabia recently, with the Saudis announcing interceptions on an almost daily basis. Saudi Arabia and its allies, chiefly the UAE, intervened in Yemen in 2015 following the Houthi movement's 2014 ouster of the country's Saudi-backed president Mansour Abd Rabbo Hadi. The UAE has largely withdrawn from the conflict, pursuing its own agenda in southern Yemen through proxy forces. Saudi Arabia's role is confined to an air campaign and to enforcing a blockade under the UN Verification and Inspection Mechanism for Yemen, which was established in 2016 at the request of Hadi's internationally recognised Yemeni government. It covers vessels sailing to ports not under its control, such as Hodeidah and Saleef, with the aim of preventing arms reaching the Houthis. The Hadi government must approve all vessels for entry to the ports. Civilian casualties have been high, and the blockade has contributed to widespread hunger and malnutrition in Yemen.
Afghan women and girls were forced into marriages in order to escape the country as it fell to the Taliban, report says -- Some Afghan families forced women and girls into marriages at Kabul's airport to secure them safe passage out of the country after the Taliban takeover last month, according to a report from CNN. Two sources familiar with the matter told CNN that US officials processing Afghan refugees in the United Arab Emirates wrote a diplomatic cable on the issue recently. The cable said that there were some instances of women and girls who were forced into marriage with men who were on the list of evacuees, or arrived in the UAE with men posing as their husbands to get out of Afghanistan, according to CNN. CNN reported that families paid eligible men thousands of dollars to marry or pose as husbands for women to flee. The report said it was unclear how widespread of an issue this was. Women suffered under the last Taliban regime in the 1990s, where they weren't allowed to go to school or hold jobs. The Taliban has hinted that they may be more open to women's education and roles in society now that they are back in power, but many Afghan women remain skeptical and have sought to escape the country.
Women stage protest in Taliban-controlled Kabul - A group of Afghan women activists staged a small protest in Taliban-controlled Kabul Friday calling for equal rights and full participation in political life, CNN has confirmed. In spite of the risk, a group called the Women's Political Participation Network marched on the street in front of Afghanistan's Finance Ministry, chanting slogans and holding signs demanding involvement in the Afghan government and calling for constitutional law. Footage showed a brief confrontation between a Taliban guard and some of the women, and a man's voice could be heard saying, "Go away!" before chanting resumed. The gathering was relatively small -- video of the scene livestreamed by the group showed just a few dozen demonstrators -- but represented an unusual public challenge to Taliban rule. The militant group are involved in internal discussions about forming a government, but have already signaled that working women should stay at home, and militants have in some instances ordered women to leave their workplaces. Taliban leaders insist publicly that women will play a prominent role in society and have access to education. But the group's public statements about adhering to their interpretation of Islamic values have stoked fears that there will be a return to the harsh policies of Taliban rule two decades ago, when women all but disappeared from public life.
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