natural gas prices at 7 1/2 year high near a 12 year high before falling back; US crude supplies at a 24 month low, gasoline supplies at a 22 month low, total supplies of crude plus all products at a 42 month low; US exports of distillates at a 6 month low; global oil shortage at 2.77 million barrels per day in August as OPEC output falls short of quota by 684,000 barrels per day; vertical rig count at an 18 month high…
oil prices rose for a 4th consecutive week on ongoing hurricane impacts and tightening supplies of crude and fuel...after edging up 0.6% to $69.72 a barrel last week on falling US supplies of crude, gasoline, and distillates, the contract price for US light sweet crude for October delivery advanced in early trading Monday as traders monitored an intensifying storm in the Gulf that was projected to make landfall that night near the refining and oil export hub of Corpus Christi, and settled 73 cents higher at a six week high of $70.45 a barrel, with U.S. supply concerns in the wake of Hurricane Ida still dominating trading...oil prices opened higher Tuesday, after tropical storm Nicholas made landfall south of Houston as a category one hurricane, but pulled back to settle just a penny higher at $70.46 a barrel as the storm spared critical energy infrastructure... oil prices advanced in early trading Wednesday, after preliminary data from the American Petroleum Institute showed domestic petroleum stocks posted a larger-than-expected draw for the second consecutive week, and then jumped over $2 after the EIA reported an even larger than expected drawdown of US crude inventories, and settled $2.15 higher at $72.61 a barrel after the International Energy Agency’s warned that oil supply lost from storms in the U.S. Gulf had offset what OPEC and other producers had added....oil prices edged lower early Thursday on profit taking after Wednesday's price surge, as the threat to Gulf crude production from Hurricane Nicholas receded, but recovered to finish the session unchanged as traders focused on adjusting their positions in U.S. crude options ahead of contract expirations...oil prices turned lower on Friday, as the storm-hit crude supply began to trickle back into the market, and settled down 64 cents at $71.97 a barrel on a stronger US dollar amid Russia’s plans to boost upcoming overseas oil sales, but still finished the week more than 3.2% higher, boosted by tightening supplies of crude and fuel...
natural gas prices also finished higher, but well off the week's highs, as a larger than expected inventory build and cooler forecasts heading into the weekend ameliorated fears of shortages this coming winter....after rising 4.8% to $4.938 per mmBTU last week as three-fourths of Gulf production still remained shut in, the contract price of natural gas for October delivery jumped almost 6% to a seven-year high of $5.231 per mmBTU on Monday on forecasts for higher demand than was previously expected, as air conditioning use remained strong in most parts of the country while heating demand started to pick up in other areas, while more than half of the natural gas produced in the Gulf before Ida remained offline as Nicholas approached...natural gas prices rose 2.9 cents to a fresh seven-year high of $5.260 per mmBTU on Tuesday on worries that Nicholas would delay the already slow return of production in the Gulf, and as record global gas prices kept demand for U.S. exports high. and then jumped another 20.0 cents on a short squeeze on Wednesday to settle at $5.460 per mmBTU, just a half cent short of a 12 year closing high, as traders fixated on sparse supplies of gas in the US and in Europe ahead of winter...but October natural gas fell back 12.5 cents, or 2.3%, to settle at $5.335 per mmBTU on Thursday, pressured by a larger-than-expected storage build and forecasts for slightly cooler temperatures through next week...natural gas prices then gave up more than half the week's gains on Friday, falling 23.0 cents to $5.105 per mmBTU, as weather forecasts for the remainder of September shifted bearish again – after shedding several cooling degree days on Thursday – signaling the potential for solid increases to gas inventories in the coming weeks....even so, natural gas prices still rose 3.4% on the week, pulled higher by prices near $19 in Asia and $23 in Europe....
the EIA's natural gas storage report for the week ending September 10th indicated that the amount of working natural gas held in underground storage in the US rose by 83 billion cubic feet to 3,006 billion cubic feet by the end of the week, which left our gas supplies 595 billion cubic feet, or 16.5% below the 3,601 billion cubic feet that were in storage on September 10th of last year, and 231 billion cubic feet, or 7.1% below the five-year average of 3,237 billion cubic feet of natural gas that have been in storage as of the 10th of September in recent years...the 83 billion cubic foot increase in US natural gas in working storage this week was well above the median forecast for a 70 billion cubic foot addition forecast by a S&P Global Platts' survey of analysts, and a bit more than the average addition of 79 billion cubic feet of natural gas that have typically been injected into natural gas storage during the same week over the past 5 years, but a bit less than the 86 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 10th indicated that our oilfield production, our refinery throughput, our oil imports and our oil exports all remained depressed in the wake of Hurricane Ida, and hence we needed to withdraw oil from our stored commercial crude supplies for the fifteenth time in seventeen weeks, and for the 31st time in the past forty-three weeks….our imports of crude oil fell by an average of 48,000 barrels per day to an average of 5,761,000 barrels per day, after falling by an average of 531,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 282,000 barrels per day to an average of 2,624,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,137,000 barrels of per day during the week ending September 10th, 330,000 fewer barrels per day than the net of our imports minus our exports during the prior week…over the same period, the production of crude oil from US wells was reportedly 100,000 barrels per day higher at 10,100,000 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 13,237,000 barrels per day during the cited reporting week…
meanwhile, US oil refineries reported they were processing an average of 14,387,000 barrels of crude per day during the week ending September 10th, 85,000 more barrels per day than the amount of oil they processed during the prior week, while over the same period the EIA’s surveys indicated that a net average of 993,000 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 157,000 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 (+157,000) 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 (+616,000) barrels per day, that means there was a 459,000 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 also off by that much...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 6,017,000 barrels per day last week, which was still 13.3% more than the 5,312,000 barrel per day average that we were importing over the same four-week period last year…the 993,000 barrel per day net decrease in our crude inventories included 917,000 barrels per day that were pulled out of our commercially available stocks of crude oil, and 76,000 barrels per day of oil that had been stored in our Strategic Petroleum Reserve, part of an emergency loan of oil to Exxon in the wake of Ida….this week’s crude oil production was reported to be 100,000 barrels per day higher at 10,100,000 barrels per day because the EIA"s rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 9,700,000 barrels per day, while a 9,000 barrel per day increase in Alaska’s oil production to 421,000 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 23.1% below that of our pre-pandemic production peak, but 19.8% 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 82.1% of their capacity while using those 14,387,000 barrels of crude per day during the week ending September 10th, up from 81.9% of capacity the prior week, but well below normal utilization for early autumn refinery operations…while the 14,387,000 barrels per day of oil that were refined this week were actually 6.7% more barrels than the 13,488,000 barrels of crude that were being processed daily during the pandemic impacted week ending September 11th of last year, they were 13.9% below the 16,707,000 barrels of crude that were being processed daily during the week ending September 13th, 2019, when US refineries were operating at what was then a near normal 92.1% of capacity…
despite this week’s modest increase in the amount of oil being refined, the gasoline output from our refineries was much lower, decreasing by 851,000 barrels per day to 9,271,000 barrels per day during the week ending September 3rd, after our gasoline output had increased by 237,000 barrels per day over the prior week.…while this week’s gasoline production was still 5.1% higher than the 8,819,000 barrels of gasoline that were being produced daily over the same week of last year, it was 1.9% lower than the gasoline production of 9,451,000 barrels per day during the week ending September 13th, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 29,000 barrels per day to 4,156,000 barrels per day, after our distillates output had decreased by 625,000 barrels per day over the prior week…after this week’s decrease, our distillates output was 5.6% less than the 4,403,000 barrels of distillates that were being produced daily during the week ending September 11th, 2020, and 18.7% below the 5,109,000 barrels of distillates that were being produced daily during the week ending September 13th, 2019..
with the big decrease in our gasoline production, our supply of gasoline in storage at the end of the week decreased for the fourteenth time in twenty-three weeks, and for the 28th time in forty-three weeks, falling by 1,857,000 to a twenty two month low of 218,142,000 barrels during the week ending September 10th, after our gasoline inventories had decreased by 7,215,000 barrels over the prior week...our gasoline supplies decreased this week even though the amount of gasoline supplied to US users fell by 716,000 barrels per day to 8,892,000 barrels per day, as our imports of gasoline fell by 261,000 barrels per day to 838,000 barrels per day while our exports of gasoline fell by 100,000 barrels per day to 634,000 barrels per day…after this week’s inventory decrease, our gasoline supplies were 5.8% lower than last September 11th's gasoline inventories of 231,524,000 barrels, and about 4% below the five year average of our gasoline supplies for this time of the year…
meanwhile, with the decrease in our distillates production, our supplies of distillate fuels also decreased for the fifteenth time in twenty-three weeks and for the 19th time in 39 weeks, falling by 1,689,000 barrels to 131,897,000 barrels during the week ending September 10th, after our distillates supplies had decreased by 3,141,000 barrels during the prior week….our distillates supplies fell the week as the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 110,000 barrels per day to 3,795,000 barrels per day, while our imports of distillates rose by 22,000 barrels per day to 164,000 barrels per day and even though our exports of distillates fell by 323,000 barrels per day to a 6 month low of 767,000 barrels per day…after fifteen inventory decreases over the past twenty-three weeks, our distillate supplies at the end of the week were 26.4% below the 179,306,000 barrels of distillates that we had in storage on September 11th, 2020, and about 13% below the five year average of distillates stocks for this time of the year…
finally, with all major supply and demand metrics remaining lower after Ida, our commercial supplies of crude oil in storage fell for the 20th time in the past thirty weeks and for the 36th time in the past year, decreasing by 6,422,000 barrels over the week, from 423,867,000 barrels on September 3rd to a 24 month low of 417,445,000 barrels on September 10th, after our commercial crude supplies had decreased by 1,528,000 barrels the prior week…after this week’s decrease, our commercial crude oil inventories were about 7% below the most recent five-year average of crude oil supplies for this time of year, but were still more than 27% above the average of our crude oil stocks after the second week of September 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 10th were still 15.8% less than the 496,045,000 barrels of oil we had in commercial storage on September 11th of 2020, but still a bit more than the 417,126,000 barrels of oil that we had in storage on September 13th of 2019, and 5.9% more than the 394,137,000 barrels of oil we had in commercial storage on September 7th of 2018…
with crude inventory and oil products metrics all falling, we're also going to keep tabs on the total of all U.S. Ending Stocks of Crude Oil and Petroleum Products....we find that total inventories fell by 9,312,000 barrels this week, from 1,854,727,000 barrels on September 3rd to 1,845,415,000 barrels on September 10th; which is a 42 month low, and furthermore is on the cusp of a 6 1/2 year low, which we might see as soon as next week..
OPEC's Monthly Oil Market Report
Monday of this week saw the release of OPEC's September Oil Market Report, which covers OPEC & global oil data for August, and hence it gives us a picture of the global oil supply & demand situation in the first month after 'OPEC+' agreed to increase their output by 400,000 barrels per day monthly from the previously agreed to July level, thus beginning the fifth production quota policy reset they've made over the past year and a half, all in response to the pandemic-related slowdown and subsequent recovery...but before we start in, we want to again caution that the oil demand estimates made by OPEC herein, while the course of the Covid-19 pandemic still remains uncertain in most countries around the globe, should be considered as having a much larger margin of error than we'd expect from this report during stable and hence more predictable periods..
the first table from this monthly report that we'll check is from the page numbered 50 of this month's report (pdf page 60), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures...
As we can see on the bottom line of the above table, OPEC's oil output increased by 151,000 barrels per day to 26,762,000 barrels per day during August, up from their revised July production total of 26,611,000 barrels per day...however, that July output figure was originally reported as 26,657,000 barrels per day, which therefore means that OPEC's July production was revised 46,000 barrels per day lower with this report, and hence OPEC's August production was, in effect, just a 105,000 barrel per day increase from the previously reported OPEC production figure (for your reference, here is the table of the official July OPEC output figures as reported a month ago, before this month's revision)...
According to the agreement reached between OPEC and the other oil producers at their 19th OPEC and non-OPEC Ministerial Meeting on July 18th, the oil producers party to that agreement were to raise their output by a total of 400,000 barrels per day in August, which would include an increase of roughly 250,000 barrels per day from the OPEC members listed above...however, as you can see, OPEC's increase of 151,000 barrels per day fell short of that...it's fairly evident that the production decrease of 114,000 barrels per day by Nigeria, due to their ongoing infrastructure problems and technical difficulties, was a major factor in OPEC's August output increase; without which OPEC's production increase would have been pretty close to the agreed to amount...
Recall that last year's original oil producer's agreement was to cut production by 9.7 million barrels per day from an October 2018 baseline for just two months early in the pandemic, during May and June of last year, but that initial agreement had been extended to include July 2020 at a meeting between OPEC and other producers on June 6th, 2020....then, in a subsequent meeting in July of last year, OPEC and the other oil producers agreed to ease their deep supply cuts by 2 million barrels per day to 7.7 million barrels per day for August and subsequent months, which thus became the agreement that governed OPEC's output for the rest of 2020...the OPEC+ agreement for this January's production, which was later extended to include February and March and then April's output, was to further ease their supply cuts by 500,000 barrels per day to 7.2 million barrels per day from that original baseline...then, during a difficult meeting on April 1st of this year, OPEC and the other oil producers that are aligned with them agreed to incrementally adjust their oil production higher each month over the next three months, taking their agreement through July...August's production levels were to be determined by a July 1st meeting, but that meeting was adjourned on July 2nd due to a dispute between the UAE and the Saudis over reference production levels, and a subsequent attempt to restart that meeting on July 5th was called off....so it wasn't until July 18th that a tentative compromise addressing August quotas was worked out, allowing oil producers in aggregate to increase their production by 400,000 barrels per day, and boosting reference production levels for the UAE, the Saudis, Iraq and Kuwait beginning in April 2022...
Unfortunately, it doesn't appear that OPEC has published a table with the new production levels (i've checked every OPEC press release since July 1st), so to determine if all the OPEC members continued to adhere to the production cuts they had committed to for August, we'll have to extrapolate the new quota values from the production adjustments table for May through July that was provided as a downloadable attachment with the OPEC press release following their April 1st meeting with other oil producers...
the above table was included with the press release following the 15th OPEC and non-OPEC Ministerial Meeting on April 1st of this year, and it includes the reference production and expected production levels for the 10 members of OPEC that are expected to adhere to output cuts, as well as the same information for the other major oil producers who are party to what the press calls the "OPEC + agreement"....the first column in the above table shows the reference oil production baseline, in thousands of barrel per day, from which each of the oil producers was to cut their production from, a figure which is based on each of the oil producer's October 2018 oil output, ie., a date before last year's and the prior year's output cuts took effect, and coincidently the highest monthly production of the era for most of the producers who are party to these cuts...the remaining columns show the adjustment, or cut, that each was expected to make from that reference production level, and then the oil output allowed for each producer under the April agreement for the months of May, June and July...
OPEC arrived at these figures by repeatedly adjusting the original 23%, or 9.7 million barrel per day cut from the October 2018 baseline that they first agreed to for May and June 2020, first to a 7.7 million barrel per day reduction from the baseline for the remainder of 2020, then to a 7.2 million barrel per day production cut from the baseline for the first four months of this year, which was actually raised to an 8.2 million barrel per day reduction after the Saudis unilaterally committed to cut their own production by a million barrels per day during February, March, and then later during April of this year....under the prior agreement, OPEC's production cut in April was at 4,564,000 barrels per day from the October 2018 baseline; as you see above, their cut for July was lowered to 3,650,000 barrels per day from the baseline with the latest agreement, which thus set the July production quota for the "OPEC 10" at 23,033,000 barrels per day, with war torn Libya and US sanctioned producers Iran and Venezuela exempt from the production cuts imposed by this agreement....for OPEC and the other producers to increase their output by 400,000 barrels per day from that July level, each producer would be allowed to increase their production by just over 1%...for the OPEC 10, that would mean their August output quota would be roughly 23,275,000 barrels per day...therefore, the 22,591,000 barrels those 10 OPEC members produced in August were 684,000 barrels per day short of what they were expected to produce...more than half of that shortfall was due to falling production in Nigeria, while Angola and the Saudis accounted for the rest of the shortfall..
the next graphic from this month's report that we'll highlight shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from September 2019 to August 2021, and it comes from page 51 (pdf page 61) of OPEC's September Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....
Even with this month's 151,000 barrel per day increase in OPEC's production from what they produced a month earlier, OPEC's preliminary estimate indicates that total global liquids production decreased by a rounded 30,000 barrels per day to average 95.69 million barrels per day in August, a reported increase which apparently came after July's total global output figure was revised up by 30,000 barrels per day from the 95.69 million barrels per day of global oil output that was estimated for July a month ago, as non-OPEC oil production fell by a rounded 180,000 barrels per day in August after that revision, with a 370,000 barrel per day drop in the oil output from North America due to Hurricane Ida responsible for the non-OPEC production decrease in August...
After that modest decrease in August's global output, the 95.69 million barrels of oil per day that were produced globally during the month were still 4.98 million barrels per day, or 5.5% more than the revised 90.71 million barrels of oil per day that were being produced globally in August a year ago, which was the initial month after OPEC and other producers agreed to reduce their output cuts from 9.7 million barrels per day to 7.7 million bpd (see the September 2020 OPEC report (online pdf) for the originally reported August 2020 details)...with this month's increase in OPEC's output, their August oil production of 26,762,000 barrels per day was at 28.0% of what was produced globally during the month, an increase of 0.2% from their revised 27.8% share of the global total in July....OPEC's August 2020 production was reported at 24,045,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 2,717,000 barrels per day, or 11.3% more barrels per day of oil this August than what they produced a year earlier, when they accounted for 26.6% of global output...
After the modest increase in OPEC's and modest decrease in global oil output that we've seen in this report, the amount of oil being produced globally during the month fell far short of the expected global demand, as this next table from the OPEC report will show us..
the above table came from page 26 of the OPEC July Oil Market Report (pdf page 36), and it shows regional and total oil demand estimates in millions of barrels per day for 2020 in the first column, and OPEC's estimate of oil demand by region and globally, quarterly over 2021 over the rest of the table...on the "Total world" line in the fourth column, we've circled in blue the figure that's relevant for August, which is their estimate of global oil demand during the third quarter of 2021... OPEC is estimating that during the 3rd quarter of this year, all oil consuming regions of the globe have been using an average of 98.46 million barrels of oil per day, which as you can see in the green ellipse above, is a rounded 0.22 million upward revision from the 98.23 million they had estimated for the 3rd quarter a month ago, which still reflects a bit of coronavirus related demand destruction compared to 2019, when global demand averaged over 101 million barrels per day during the summer....but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were only producing 95.69 million barrels million barrels per day during August, which would imply that there was a shortage of around 2,770,000 barrels per day in global oil production in August when compared to the demand estimated for the month...
in addition to figuring that August oil shortage implied by this report, the upward revision of 30,000 barrels per day to July's global oil output that's implied in this report, combined with the 220,000 barrels per day upward revision to 3rd quarter demand that we've circled in green means that the 2,540,000 barrels per day global oil output shortage we had previously figured for July would now be revised to a shortage of 2,730,000 barrels per day....
Note that in green we've also circled an upward revision of 120,000 barrels per day to second quarter demand, a quarter when there was already a shortage of oil being produced globally....based on that upward revision to demand, our previous estimate that there was a shortage of 800,000 barrels per day in June would now be revised to a 920,000 barrels per day shortage, the oil shortage of 2,130,000 barrels per day that we had previously figured for May would have to be revised to a shortage of 2,250,000 barrels per day, & the 2,480,000 barrels per day global oil output shortage we had previously figured for April would have to be revised to a shortage of 2,600,000 barrels per day...
Also note that in green we have also circled a upward revision of 210,000 barrels per day to OPEC's previous estimates of first quarter demand....for March, that means that the global oil output surplus of 410,000 barrels per day we had previously figured for March would now be revised to a surplus of 200,000 barrels per day... similarly, the upward revision to first quarter demand means that the 600,000 barrels per day global oil output shortage we had previously figured for February would now be revised to a shortage of 810,000 barrels per day, and that the global oil output surplus of 620,000 barrels per day we had previously figured for January would now be revised to a surplus of 410,000 barrels per day, in light of that 210,000 barrel per day upward revision to first quarter demand...
You might also note that we have also circled an 110,000 barrel per day upward revision to 2020's demand circled in orange....while we're not inclined to go back and recompute the figures for each month of last year in light of that revision, suffice it to say that the quantities of oil produced globally during the pandemic of 2020 averaged over 3 million barrels per day more than anyone wanted, and that an average 110,000 barrels per day upward revision to global demand during that period would be a drop in the bucket in comparison...
This Week's Rig Count
The number of drilling rigs active in the US increased for 44th time out of the past 52 weeks during the week ending September 17th, but they were still 35.4% lower than the pre-pandemic rig count.... Baker Hughes reported that the total count of rotary rigs running in the US increased by nine to 512 rigs this past week, which was also 257 more rigs the pandemic hit 255 rigs that were in use as of the September 18th report of 2020, but was still 1,417 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 10 to 411 oil rigs this week, after they had risen by 7 oil rigs the prior week, and there are now 232 more oil rigs active now than were running a year ago, while they're still just over 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 100 natural gas rigs, which was still up by 27 natural gas rigs from the 73 natural gas rigs that were drilling during the same week a year ago, but still only 6.2% 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...
The Gulf of Mexico rig count remained unchanged at four rigs this week, after falling from 14 rigs the week before Hurricane Ida approached, with all four of those in Louisiana waters...hence, the Gulf rig count is still down by 10 rigs from a year ago, when 12 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters….however, there are still 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 8 rigs from the 14 offshore rigs running a year ago, when there was no drilling off our other coasts...in addition to those rigs offshore, another rig started drilling for oil in Galveston Bay this week which Baker Hughes has classified as an inland waters rig, which matches the inland waters rig count of one from a year ago..
The count of active horizontal drilling rigs was up by 5 ro 466 horizontal rigs this week, which was more than double the 214 horizontal rigs that were in use in the US on September 18th of last year, but was just over a third of the record of 1372 horizontal rigs that were deployed on November 21st of 2014….at the same time, the vertical rig count was up by 3 to an 18 month high of 29 vertical rigs this week, and those were also up by 12 from the 17 vertical rigs that were operating during the same week a year ago…..in addition, the directional rig count was up by 1 to 17 directional rigs this week, but those were still down by 6 from the 23 directional rigs that were in use on September 18th 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 17th, the second column shows the change in the number of working rigs between last week’s count (September 10th) and this week’s (September 17th) count, the third column shows last week’s September 10th 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 18th of September, 2020...
outside of the Gulf, this week's rig count changes are similar to those we've seen in other periods of rising oil prices...checking for the details on the Texas Permian in the Rigs by State file at Baker Hughes, we find that two rigs were added in Texas Oil District 8A, which includes the northern counties of the Permian Midland, and that another rig was added in Texas Oil District 7C, which includes the southern counties of the Permian Midland...with the Texas Permian rig count up by three while the national Permian count increased by five, that means that the 2 rigs that were added in New Mexico had to have been started up in the western reaches of the Permian Delaware...elsewhere in Texas, we find that a rig was added in Texas Oil District 1, and another rig was added in Texas Oil District 2, which apparently account for this week's Eagle Ford shale additions, while a rig was pulled out of Texas Oil District 3, apparently targeting a basin Baker Hughes doesn't track...
other Texas changes include the oil rig that was set up in the Galveston Island area, and a natural gas rig that was pulled out of the Haynesville shale in Texas Oil District 6...the Eagle Ford shale also shed a natural gas rig this week, while adding three oil rigs, and hence the Eagle Ford deployment now includes 34 rigs drilling for oil and two targeting natural gas...while Oklahoma saw three rigs this week, the one added in the Cana Woodford was the only one in a named basin; the other two were targeting a basin Baker Hughes doesn't track..
changes in natural gas drilling activity this week other than those mentioned for Texas include a rig that was added in Pennsylvania's Marcellus, another natural gas rig targeting the Marcellus in Cattaraugus County, New York, in the first drilling of any type in that state since April of 2017; at the same time, the rig that was pulled out of West Virginia had also been targeting Marcellus gas...another natural gas rig was added in Ohio's Utica, while Ohio's Utica had its only oil rig shut down at the same time...the national natural gas count was still negative, however, because a natural gas rig was pulled out of a basin that isn't being tracked by Baker Hughes..
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Update provided on oil leak at Veto Lake - After an oil leak was found at Veto Lake in recent weeks, a meeting was held Tuesday evening at Farmer’s Daughter & Son in Marietta to provide an update on the situation.Zak Zatezalo, with Bordas and Bordas Attorneys PLLC, is working with local people from the oil and gas industry to figure out why the leak happened.“Well, all we know now is that there’s been oil found in the distributor that feeds Veto Lake,” said Zatezalo.Zatezalo said he is working with a team including lawyers, engineers and hydrologists that is looking into the issue in Washington County. “We have a team that takes a look at these situations, tries to assess the nature and scope of any problems that are cropping up in communities and tries to assist where we can in terms of legal intervention, if it becomes necessary, as part of trying to maintain everybody’s property rights,”said Zatezalo.Zatezalo also explained that his team is focused on maintaining a clean and safe environment for the public to enjoy.“We’re still trying to get a sense for the scope of the contamination, the size of it and the status of it,” he said.Zatezalo said his understanding of the issue is that the Ohio Department of Natural Resources has been trying to locate the source of the contamination.“Certainly our clients believe it was from an abandoned well that has become over-pressured, from deep water injection produced fluids, but we’re still waiting on answers from the state,”explained Zatezalo.
Catching Up Ohio's Utica New Well Shale Permits Reports | Marcellus Drilling News - We suppose we should have known. In querying the same Ohio Dept. of Natural Resources (ODNR) database we’ve been querying for years (maintained by ODNR), beginning about two months ago we noticed no new permits had been issued for new Utica Shale wells in the state. A week or two here and there is not all that unusual given the downward trend in drilling new wells. But the trend went on for two months. We were suspicious. A couple of sharp MDN readers emailed to say that ODNR is producing regular reports of new Utica well permits at a different location. We wish the ODNR had posted some sort of notice about the change in not continuing to update their other database. At any rate, we’ve gone back to early July to harvest and present all of the missing Ohio new weekly permit reports below…(embedded weekly tables)
Shell Cracker Plant Update and Impact at Utica Green Conference - -- A decade after Royal Dutch Shell announced it was looking at a Southwestern Pennsylvania site to build an ethane cracker, construction of the $10 billion project is nearing completion.Earlier this year, the latest economic impact study of the Beaver County facility (by a Robert University professor trio) projects an annual kick from operations to the state economy of more than $3.69 billion -- $81.68 billion over the 40-year life of the massive complex.While this study, previous studies on the cracker complex and predictions by economists, academicians, etc. have detailed tax and job impacts, Tom Gellrich says don’t forget the long-term positive benefits to plastic processors.Gellrich, president and founder of consulting firm TopLine Analytics, argues said processors are licking their proverbial chops as the Shell cracker nears completion. Gellrich will be one of the featured speakers at the InauguralUtica Green Conference on October 12, 2021 at the Pro Football Hall of Fame in Canton, Ohio which has Encino Energy as the presenting sponsor. Shale Directories and the Canton Regional Chamber of Commerce are producing the conference.Cost savings using the Shell facility vs. ethylene and polyethylene now shipped from the U.S. Gulf Coast can be huge. One study priced the transportation advantage, pellets shipped from Beaver County vs. the Gulf Coast, at nearly 25%.“The impact of the Shell cracker on plastics processors is immense,” Gellrich told Shale Directories. “We encourage all plastics processors in the Appalachian Basin and beyond to attend the Utica Green Conference,” commented Joe Barone, President and Founder, Shale Directories. He further added, “The opportunities coming to these companies are significant as the result the availability and attractive pricing.”One potential customer fed by the Shell cracker could pursue is the world’s largest retailer. Walmart announced in March it will spend over the next 10 years $350 billion on additional items made, grown, or assembled in the U.S., rather than elsewhere.
One-Third of 45 Active Major Pipeline Projects Located in M-U | Marcellus Drilling News - Even with the onslaught of leftist attacks on the fossil fuel industry–in particular against natural gas pipelines–there are still some 45 major natgas pipeline projects projected to come online over the next five years. Of those 45, we count 16 that are located in the Marcellus/Utica (i.e. Appalachian) region. There’s certainly no guarantee all 16 (or all 45) will end up getting built. But if the 16 pipe projects in the M-U do get built, that will add another 7.9 billion cubic feet (Bcf) of M-U molecules flowing to other markets. Cool.
Industry, greens look to woo Manchin on drilling reforms - As House committees complete their work this week on the $3.5 trillion reconciliation package, environmentalists are already preparing themselves for the likelihood that many of their hard-fought climate victories won’t withstand negotiations with the Senate.One set of priorities, however, stands a strong chance of sneaking through, advocates say: a suite of historic overhauls to the federal oil and gas program.The House Natural Resources Committee approved draft legislation last week, along party lines, containing more than 20 provisions to reform federal oil policies (E&E Daily, Sept. 3).They include raising onshore royalty rates for the first time in a century, imposing new fees on drillers and strengthening the bonding regulations that ensure the cost of cleaning up exhausted wells never falls on the taxpayer.Taken together, both industry and conservationists say the reforms would dramatically change the rulebook for producing oil and gas on public lands. And while advocates say that means fewer emissions and higher revenues, industry allies say the reforms would have the potential to smash the federal oil and gas program.That is, if the reforms survive.Advocates report that they are encouraged, largely because they haven’t yet received a signal the provisions would be opposed by moderate Sen. Joe Manchin (D-W.Va.), Congress’ ultimate swing vote on reconciliation and chair of the Energy and Natural Resources Committee with jurisdiction over the proposals.Manchin has already cast doubt about the survival of the House’s $150 billion Clean Electricity Performance Program, a centerpiece of Democratic leadership’s plans for using the reconciliation process to combat climate change (E&E Daily, Sept. 13). He met with President Biden at the White House yesterday to discuss the package.But when it comes to boosting royalty rates on federal oil and gas leases, for example, Manchin has “historically been on the side of fairness for taxpayers,” according to National Wildlife Federation President and CEO Collin O’Mara.Drew McConville, senior managing director for government relations at the Wilderness Society, agreed. “These are commonsense reforms that are about providing fair return to taxpayers and looking out for communities and fixing a broken system,” McConville said. “We think they’re pretty hard to argue with, and Sen. Manchin and many others have spoken to the fact that this is a system riddled with problems that need reform.”McConville added that given Manchin’s preoccupation with the spending levels, it should give him solace that the oil and gas program changes included in the House Natural Resources bill would generate revenue that would, in turn, “be important for paying for other important investments in the bill.”The problem is, many of the powerful interests that are aggressively lobbying Manchin — a longtime ally of the fossil fuel industry — against the reforms are also confident that the senator is actually in their camp.
A historically Black town stood in the way of a pipeline – so developers claimed it was mostly white -As fracked gas fields in West Virginia boomed over the past decade, energy companies jumped at the chance to build massive new pipelines to move the fuel to neighboring east coast markets. The 600-mile Atlantic Coast pipeline would have been the crown jewel.But Union Hill, Virginia – a community settled by formerly enslaved people after the civil war on farm land they had once tilled – stood in the way. Residents fought against a planned compressor station meant to help the gas move through the pipeline, arguing that because Union Hill is a historic Black community, the resulting air pollution would be an environmental injustice.But Dominion Energy, one of the pipeline’s two developers, kept pushing. Itpledged to invest $5.1m in community services in exchange for the imposition. The company hired a former member of the governor’s cabinet, who grew up in Union Hill, to drum up support from church leaders to landowners. They flew local leaders on a helicopter to Pennsylvania to tour a compressor station there.Dominion’s campaign split the Union Hill community, dividing church congregations, and in some instances, families. While some residents were for the investment, others saw their resolve to fight the pipeline deepen. In response to mounting opposition, Dominion took an unexpected tack: the company hired outside help to argue that the community around the site was, in actuality, mostly white.“No environmental justice community is disproportionately impacted,” the pipeline project told state officials January 2019, arguing that the communities around the project were “not majority minority or low income”. Dominion did not respond to multiple requests for comment for this story.The locals who took on Dominion eventually became the linchpin of a campaign that helped to get the pipeline canceled. But the fight against the Atlantic Coast pipeline is a familiar story now playing out around the country as gas companies expand a sprawling web of pipelines. Even when minoritycommunities say no, the fossil fuel industry keeps saying yes.
Enverus Rig Count @ 635 (+6); Marcellus @ 34 (+2), Utica @ 12 (+0) - The latest weekly Enverus U.S. rig count shows total rigs in use hitting a new post-pandemic high. For the week ending September 15, the rig count stood at 635, up 6 rigs from the previous week. That’s another new high since April 2020. The Marcellus gained two rigs (now at 34 active rigs) while the Utica stayed even from the previous week (12 active rigs). Collectively the M-U currently operates 46 rigs. The M-U’s biggest competitor, the Haynesville Shale in northern Louisiana and eastern Texas, gained 2 rigs and now operates 52 rigs. From S&P Global Platts: The US oil and gas rig count climbed six to 635 in the week ended Sept. 15, as oil-focused drilling activity pushed to a fresh 17-month high. The number of rigs chasing primarily oil climbed one to 499, the highest since the week ended April 8, 2020, while the number basing mostly gas moved up five to 136, a three-week high but still down nine from its mid-August apex. Despite the fresh high for oil-focused drilling activity, rig counts remain 27% behind pre-pandemic levels seen in early March 2020. Meanwhile the gas-focused rig count is down just 8% from the same period. Drillers in the South Texas Eagle Ford basin added two rigs for a total 50, pushing the rig count there to a fresh 17-month high. Drilling activity in the basin appears to have broken out of its recent range following four consecutive weeks of rising rig counts. After having steadily climbed in late winter, the basin’s rig count has hovered in the high 30s, low 40s range from April through early September. Annual production in the Eagle Ford is expected to fall around 55,000 b/d in 2021, but then climb 140,000 b/d year-on-year in 2022, according to S&P Global Platts Analytics. The Permian Basin rig count was also up two at 260, erasing a two-rig slide seen during the week prior. Rig counts in the SCOOP-STACK basin also appeared to have broken out of their recent range after climbing two to 34, the highest since late March 2020. Rig counts were steady across the other major named oil-focused basins. Rig counts in the Bakken were unchanged for a third week at 28, and the number of rigs active in the Denver-Julesburg play held at 13 for a fourth straight week. In the Marcellus Basin, operators added two rigs for a total 34, both rigs were added in the basin’s gas-focused dry portion pushing the total active there to 23. Meanwhile the number of rigs active in the basin’s wet portion was steady at 11. Rig counts in the nearby gas-focused Utica basin were steady at 12 for a third straight week. The Haynesville basin rig count moved up two to 52, holding within a well-worn range that has persisted since early May.
Researcher warns of fracking dangers - The economic boons of fracking are offset by uncalculated costs of ill effects on residents’ health and strains on rural health systems, a University of Rochester Medical Center researcher asserts in a recently published paper calling for tighter regulation of the controversial practice. Short for hydraulic fracturing, fracking is a process used to extract gas or oil from deposits trapped in shale. The method involves drilling into the rock and injecting high-pressure streams of chemical-laden water to break up the shale and free the fossil fuels. Proponents see fracking as bringing prosperity and posing few dangers. Opponents warn of environmental damage and consequent hard-to-reverse ill effects on health. Published in the Aug. 20 issue of the journal Science, a perspective piece by URMC public health economist Elaine Hill and University of Kentucky economist Lala Ma points to research showing increased concentrations of four chemicals used in fracking in water supplies in areas where drillers have used fracking. Hill sees pollution linked to fracking as a factor in increased incidence of heart disease, reproductive health problems, and even mental health and addiction issues. While fracking proponents tout benefits like an estimated average 4.9 percent boost to household income and greater U.S. independence from foreign energy supplies, Hill warns that negative impact on “individual future health, education, and labor market outcomes” offset fracking’s benefits.
NRG Energy oil spill: 90 geese die at Millsboro power plant - About 90 Canada geese have died as the result of an oil spill at NRG Energy near Millsboro."NRG is deeply appreciative of Tri-State Bird Rescue and the Department of Natural Resources for managing that portion of the response, which should wrap up within days," company spokesman Dave Schrader said in a statement.Around 130 geese total were impacted by the diesel fuel spill, all part of a resident flock, according to Schrader.A pressurized hose detached from a diesel fuel storage tank at NRG overnight last week, spilling approximately 30,000 gallons of oil that was discovered the morning of Wednesday, Sept. 8.Schrader said no waterways or public land were affected by the spill. It was contained to "the coal pile" at NRG, he said, the surface of which "is the product of 60 years of compacted material."NRG announced earlier this year that the Millsboro plant would close in June 2022, but that may no longer be the case.The company is working with Mid-Atlantic power grid manager PJM to "support reliability in the region," Schrader said. "How long the (Millsboro plant) might remain operating will depend on the duration of transmission upgrades needed to relieve reliability impacts and the terms of any potential ‘reliability must run’ arrangement."
Center Point Energy plans to invest $280M in natural gas infrastructure improvements (WFIE) - They say the investment is to help continue the company’s natural gas infrastructure improvements during the next five years in southwestern Indiana. CenterPoint Energy officials announced they filed the plans to comply with federal pipeline safety rules, and to ensure the company’s 114,000 natural gas customers in southwestern Indiana receive safe, reliable gas service for decades to come. “We continue the investment in our natural gas infrastructure to ensure we maintain a safe, reliable system,” said Vice President of Natural Gas Distribution, Richard Leger. Officials say if the plan is approved, the customer’s bills will not reflect these investments until 2023. Additional improvements will adjust bills modestly in future years as the projects are completed. They say the work will consist of replacing 108 miles of bare steel and cast-iron distribution mains with new mains, most of which will be plastic, as well as inspecting and upgrading transmission pipelines. They also say over the last seven years, CenterPoint Energy pipeline replacement work has been ongoing in nine cities. These cities include Evansville, Francisco, Loogootee, Montgomery, Oakland City, Petersburg, Princeton, Vincennes and Washington. Pipeline replacement in additional cities throughout the service territory is still to come in future years.
Natural Gas Futures, Cash Prices Soar Above $5.00 as Nicholas Amplifies Production Worries - Natural gas futures surged on Monday as a new tropical storm threatened to further shake the Gulf of Mexico’s (GOM) production foundation, a development that could hamper supply/demand balances at a time when gas in storage for winter is already light. The October Nymex contract cruised 29.3 cents higher day/day and settled at $5.231/MMBtu. November gained 30.0 cents to $5.273.NGI’s Spot Gas National Avg. spiked 36.5 cents to $5.225. Hubs across the country posted double-digit gains.Tropical Storm Nicholas formed Sunday and arrived in the GOM on Monday as production in the region was still reeling from the aftershocks of Hurricane Ida. According to federal estimates, more than one-half of the natural gas produced in the GOM pre-Ida remained offline Monday. Ida made landfall in Louisiana on Aug. 29.Nicholas was forecast to move onshore along the Texas coast by Monday evening as a strong tropical storm or possibly as a Category 1 hurricane, delivering heavy rains and dangerous storm surges, according to the National Hurricane Center (NHC). It could dump 20 inches of rain at times to both Texas and Louisiana.The potential for flooding to force more production offline rattled markets. The National Weather Service forecast torrential rains that could cause flooding from Corpus Christi, TX, to Houston to western Louisiana.Nicholas marked the 14th named storm of the season. The number of storms in an average season typically does not reach 14 until November, the NHC said. Nicholas is the eighth named storm to strike the Lower 48 this year. “More disruptions from extreme weather is a cause of concern for producers and a reason for traders to add price premiums,” said Rystad Energy analyst Nishant Bhushan.The storm also could threaten liquefied natural gas (LNG) exports out of Corpus Christi early this week, analysts at EBW Analytics Group said Monday. However, LNG demand is strong and exports were expected to bounce back quickly, barring massive damage. LNG feed gas volumes hovered around 11 Bcf the past week, near record levels, as demand from both Europe and Asia is consistently elevated amid supply shortages on both continents. “LNG feed gas demand flows are showing a four-month high,” the EBW team said early Monday. Domestic natural gas demand also has held strong into September – after a scorching hot summer — as August-like temperatures persist across swaths of the Lower 48. “Over the weekend, forecasts moved hotter, with some impressive heat for this time of year on tap for much of the eastern two-thirds of the nation,” Bespoke Weather Services said. This would add to consistently lofty temperatures in the Southwest and parts of California. “In fact, a few days over the next couple of weeks will feature near-record” daily gas-weighted degree day (GWDD) totals, the firm said. “The heat we have is still easily bullish, with total GWDDs above even the inflated five-year average.”
U.S. natgas jumps near 6% to 7-year high on rising demand forecast (Reuters) - U.S. natural gas futures jumped almost 6% to a seven-year high on Monday on forecasts for higher demand next week than previously expected, as air conditioning use remains strong in most parts of the country and heating demand starts to pick up in other areas. Traders also noted U.S. futures climbed as record global gas prices keep demand for U.S. exports high at the same time that more than half of U.S. production in the Gulf of Mexico remains shut-in two weeks after Hurricane Ida hit the Gulf Coast, and U.S. gas inventories, like those in Europe, remain lower than normal heading into the winter heating season, when demand for the fuel peaks. Further U.S. supply disruptions from bad weather could also be around the corner, with the U.S. National Hurricane Center projecting Tropical Storm Nicholas will scrape the South Texas coast before making landfall near Corpus Christi Monday evening. Front-month gas futures rose 29.3 cents, or 5.9%, to settle at $5.231 per million British thermal units (mmBtu), their highest close since February 2014. In addition to the front-month, futures for the rest of 2021, 2022 and 2023 were all rising, with calendar 2022 trading at a record high over $4 per mmBtu for a third day in a row. That is much higher than most analysts forecast for 2022. After gas collapsed to a 25-year low in 2020, analysts forecast gas prices in 2021 would average $3.23 per mmBtu before slipping to $3.17 in 2022. Data provider Refinitiv said gas output in the U.S. Lower 48 states fell to an average of 90.1 billion cubic feet per day (bcfd) so far in September, from 92.0 bcfd in August, due mostly to Ida-related losses along the Gulf Coast. That compares with a monthly record of 95.4 bcfd in November 2019. About 1.2 bcfd, or 52%, of gas production in the Gulf of Mexico remains shut-in since Ida, according to government data. U.S. power company Entergy Corp, meanwhile, said about 100,000 of its Louisiana customers were still without service, down from a peak of 902,000 who lost power due to Ida. U.S. gas production from major shale basins, meanwhile, will increase to a record high for a fourth month in a row in October, according to U.S. Energy Information Administration (EIA) projections. Refinitiv projected average U.S. gas demand, including exports, would rise from 87.2 bcfd this week to 87.5 bcfd next week. Next week's forecast was higher than Refinitiv expected on Friday. The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants has risen to an average of 10.9 bcfd so far in September, from 10.5 bcfd in August, as buyers around the world keep purchasing all the super-chilled gas the United States can produce. That compares with a monthly record of 11.5 bcfd in April. Gas in Europe and Asia was trading around $21 and $19 per mmBtu, respectively, compared with just $5 for the U.S. fuel. Gas at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, was at a record high.
U.S. natgas hit 7-year high on Gulf storm worries, soaring global prices (Reuters) - U.S. natural gas futures edged up to a fresh seven-year high on Tuesday on worries Tropical Storm Nicholas could delay the already slow return of production in the Gulf of Mexico and as record global gas prices keep demand for U.S. exports high. Prices rose despite forecasts for less hot weather and lower demand over the next two weeks than previously expected. Traders noted storms in the Gulf of Mexico, like Nicholas and Hurricane Ida, could boost gas prices by cutting Gulf Coast production. But, they can also reduce demand and cut prices by disrupting liquefied natural gas (LNG) exports and knocking out power to homes and businesses, especially the petrochemical facilities that use lots of gas. The storm knocked out power to around 529,000 homes and businesses and the Freeport LNG export plant in Texas. Utilities, however, cut the number of outages in Texas down to around 422,000 by Thursday afternoon. The center of Nicholas was located about 30 miles (55 kilometers) southeast of Houston and could cause life-threatening flash floods across the Deep South during the next couple of days, according to the U.S. National Hurricane Center. Front-month gas futures rose 2.9 cents, or 0.6%, to settle at $5.260 per million British thermal units (mmBtu), their highest close since February 2014 for a second day in a row. Since Hurricane Ida entered the Gulf of Mexico in late August, gas prices have soared over 31% due mostly to the slow return of production after the storm. Traders said gas prices have also been supported by hotter than normal U.S. weather and high air conditioning demand this summer, record global gas prices, and lower than normal gas inventories in the United States and Europe ahead of the winter heating season when demand for the fuel peaks. Data provider Refinitiv said gas output in the U.S. Lower 48 states fell to an average of 90.1 billion cubic feet per day (bcfd) so far in September, from 92.0 bcfd in August, due mostly to Ida-related losses along the Gulf Coast. That compares with a monthly record of 95.4 bcfd in November 2019. About 1.1 bcfd, or 48%, of gas production in the U.S. Gulf of Mexico remains shut-in since Ida, according to government data.
Natural Gas Futures, Already Above $5.00, Could Soar Further Amid ‘Extreme Tightness’ - Following a hot summer that fueled robust domestic cooling needs and strong demand for U.S. exports of liquefied natural gas (LNG), Henry Hub prices surged and could climb even higher this winter if the season is exceptionally cold and supplies of gas in storage prove perilously low.This was a key theme to emerge during a panel discussion at the LDC Gas Forums – Midcontinent on Tuesday in Chicago. NGI’s Price and Markets Editor Leticia Gonzales shared a panel discussion with IHS Markit’s Samuel Andrus, executive director of North American gas.Natural gas futures on Monday surged to a fresh 2021 high – and the highest level in eight years — as supply/demand balances further intensified alongside a fast-developing hurricane season.The latest price action “may be just the tip of the iceberg as to what’s in store this winter,” Gonzales said during the LDC event.Former Hurricane Nicholas, which quickly downgraded after landfall, arrived in the Gulf of Mexico (GOM) on Monday as production in the region was still struggling to come back following the devastation of Hurricane Ida. Ida made landfall in Louisiana on Aug. 29, and more than of the natural gas produced in the GOM pre-Ida remained offline when Nicholas struck Texas late Monday, amplifying already festering output concerns.Production for two weeks held around or below 90 Bcf in Ida’s wake.The October Nymex surged 29.3 cents to $5.231/MMBtu on Monday. The prompt month had advanced 5% last week and 8% the previous week, extending upward momentum gathered over the summer.Demand proved strong throughout the summer months amid scorching heat over much of the Lower 48. At the same time, utilities in Europe and Asia clamored for U.S. LNG because of supply constraints on both continents following a long, cold winter earlier this year followed by a hot summer.LNG exports are soaking up supply and feeding imbalance worries. LNG feed gas volumes topped 11 Bcf on several days in September – hanging near record levels reached earlier in the summer.The unyielding overall demand comes as producers are keeping a lid on production. After closing 2019 at around 96 Bcf/d, U.S. output dropped to an average below 91 Bcf/d in 2020 and has held near that level so far in 2021, Andrus said. U.S. exploration and production (E&P) companies cut back last year after the coronavirus pandemic temporarily crushed demand. The E&Ps have remained conservative this year amid ongoing uncertainty imposed by virus variants.
U.S. natgas jumps 3% to fresh 7-year high on soaring global prices - (Reuters) - U.S. natural gas futures climbedover 3% to a fresh seven-year high on Wednesday, forcing some speculators to exit short positions, as soaring global gas prices kept demand for U.S. exports high and Gulf of Mexico production remained slow to return from Hurricane Ida over two weeks ago.Traders noted U.S. prices gained despite forecasts for less hot weather and lower demand over the next two weeks than previously expected.Much of that expected demand decline came from the shutdown of the Freeport LNG export plant in Texas during Tropical Storm Nicholas on Tuesday and upcoming planned maintenance at Berkshire Hathaway Energy's Cove Point LNG export plant in Maryland that should start early next week.Freeport was expected to take on more gas on Wednesday, which traders said was a sign that the plant was returning to service. Freeport, however, said the plant remains offline while the local power company makes repairs to its system.Despite the Freeport outage, the amount of gas flowing to U.S. LNG export plants has risen to 10.7 billion cubic feet per day (bcfd) so far in September, up from 10.5 bcfd in August, as buyers around the world keep purchasing all the super-chilled gas the United States can produce. That compares with a monthly record of 11.5 bcfd in April. Gas in Europe and Asia traded near $23 and $19 per mmBtu, respectively, compared with just over $5 for the U.S. fuel. Gas at the Title Transfer Facility (TTF) in the Netherlands, the European benchmark, was at a record high earlier in the day. "It’s clear that U.S. LNG exports will remain in high demand this winter, and the aggressive increase in international prices has continually raised the bar at which domestic consumers would need to reach to price out these exports and encourage more gas to stay stateside," analysts said. Front-month gas futures NGc1 rose 20.0 cents, or 3.8%, to settle at $5.460 per million British thermal units (mmBtu), their highest close since February 2014 for a third day in a row. That also keeps the front-month in overbought territory for a sixth consecutive day. Since Hurricane Ida entered the Gulf of Mexico in late August, gas prices have soared 35% due to the slow return of production after Ida, hotter than normal U.S. weather and high air conditioning demand this summer, record global gas prices and lower than normal gas inventories in the United States and Europe ahead of the winter heating season, when demand for the fuel peaks. Data provider Refinitiv said gas output in the U.S. Lower 48 states fell to an average of 90.2 bcfd so far in September, from 92.0 bcfd in August, due mostly to Ida-related losses along the Gulf Coast. That compares with a monthly record of 95.4 bcfd in November 2019.
US natural gas storage fields add more than market expects, prompting price slide - US working natural gas in storage rose more than the market expected for the second consecutive week as demand in the South Central region fell more than anticipated. Storage fields injected 83 Bcf in the week ended Sept. 10, well above the 70 Bcf build that an S&P Global Platts survey of analysts expected. The build was above the five-year average of 79 Bcf, but below an 86 Bcf injection in the corresponding week a year ago. Working gas inventories totalled 3.006 Tcf, the US Energy Information Administration reported Sept. 16. US storage volumes now stand 595 Bcf, or 16.5%, below the year-ago level of 3.601 Tcf and 231 Bcf, or 7.1%, below the five-year average of 3.273 Tcf. The latest injection proved more than the 52 Bcf build reported the week prior. EIA's South Central region drove the bulk of the week-on-week change as storage fields rose 22 Bcf rather than post a withdrawal. The lingering effects of Hurricane Ida once again cast uncertainty over the markets heading into this week's inventory report. While the supply loss can be readily quantified because of extensive tie-ins between offshore Gulf of Mexico production and interstate pipeline systems, the effects on demand are nebulous at best. This is because expansive intrastate systems traversing the Gulf region and connecting with industrial facilities don't fall under the same reporting requirements that interstate systems do. Henry Hub futures remained above $5/MMBtu despite shedding some prior gains following the release of the weekly storage report. The NYMEX Henry Hub October contract slid 13 cents to $5.33/MMBtu. The winter strip — November through March — shed 16 cents to $5.35/MMBtu, still 34 cents above the strip a week ago. Henry Hub spot prices broke above $5/MMBtu Sept. 10 although offshore production returned to slightly over 1 Bcf/d, according to Platts Analytics. It was the first time the benchmark breached $5/MMBtu since March 2014, with the exception of Winter Storm Uri in February 2021 and another two-day spike seen in January 2018. Platts Analytics' supply and demand model currently forecasts a 52 Bcf build for the week ending Sept. 17. This would measure 22 Bcf below the five-year average with less than two months remaining in the injection season. The week after points to a 57-Bcf injection, which would grow the storage deficit by another 15 Bcf. There has been an uptick in power burn demand during the week in progress, which has carried modeled demand estimates higher by 1.2 Bcf/d week on week. Additionally, offshore production has begun to rebound, rising nearly 700 MMcf/d on the week, although current offshore production remains less than half what it was prior to the late August storm.
October Natural Gas Futures, Cash Prices Lose Ground Amid Signs of Waning Demand - Natural gas futures lost momentum on Thursday after a fierce rally that sent the prompt month more than 50 cents higher over the three previous sessions. Traders took profits after weather forecasts shifted cooler and a government inventory report showed a larger storage injection than expected.The October Nymex contract declined 12.5 cents day/day and settled at $5.335/MMBtu. November also fell 12.5 cents and closed at $5.382.Cash prices pulled back as well. NGI’s Spot Gas National Avg. shed 19.0 cents to $5.340.Forecasts backed off “the level of heat projected in the pattern over the next couple of weeks, drastically lowering” expected cooling-degree days without significantly increasing any heating-degree days, Bespoke Weather Services said. “The source of the change comes with more eastern U.S. troughing, erasing above normal temperatures for most areas east of the Mississippi River in the medium range” and “leaving us with what is now a weak overall demand picture” for the rest of September.Liquefied natural gas (LNG) export volumes were also down on the day to around 9 Bcf after hovering near 11 Bcf for much of the summer. This came after power outages caused by former Hurricane Nicholas, which arrived in the Gulf of Mexico (GOM) early this week. The storm knocked out power at the Freeport LNG terminal near Houston, interrupting flows of the super-chilled fuel.Additionally, the U.S. Energy Information Administration (EIA) on Thursday reported an injection of 83 Bcf into natural gas storage for the week ended Sept. 10. The print was higher than expected. Participants on The Desk’s online energy platform Enelyst said the aftershocks of Hurricane Ida – cooling rains and flooding — appeared to impact demand during the covered week more than estimated. That resulted in a solid increase in South Central storage, in addition to gains in the Midwest and East. Ida crashed into Louisiana on Aug. 29.The Midwest and East regions led with builds of 34 Bcf and 29 Bcf, respectively, according to EIA. The South Central build of 22 Bcf followed.Surveys had pointed to expectations for a build in the 70s Bcf. NGI estimated a 72 Bcf increase. The prior five-year average was an increase of 79 Bcf. For the comparable week a year earlier, EIA recorded a build of 86 Bcf.However, “we do not feel this number tells us much, as some of the bigger build is still due to Ida’s impact,” Bespoke said of the EIA print. It is “not something the market is likely to view as a game-changer that solves the storage situation as we head toward the winter season.”
October Natural Gas Futures, Cash Prices Languish as Forecasters See Weather Demand Tapering - Natural gas futures on Friday dipped lower for a second consecutive day as traders mulled forecasts for milder temperatures, the specter of easing demand and the potential for stronger storage injections ahead. The October Nymex contract dropped 23.0 cents day/day and settled at $5.105/MMBtu. November fell 23.6 cents to $5.146. NGI’s Spot Gas National Avg. shed 19.0 cents to $5.150, led lower by declines in Texas. Weather forecasts for the remainder of September shifted bearish again Friday – after shedding several cooling degree days (CDD) on Thursday – signaling the potential for solid increases to stockpiles in the coming weeks. This calmed fears of a low storage trajectory ahead of the peak winter demand season. Such fears had fueled a major rally earlier in the week that lifted futures to 2021 highs. “The reduced CDDs outweigh any minor” gains in heating demand, “giving us a slightly lower demand look, overall, and a below normal demand pattern, in total, for the balance of the month,” Bespoke Weather Services said Friday. The firm said the outlook for October, meanwhile, showed above average temperatures, though at that time of year, warmth translates into mild temperatures that galvanize neither heating nor cooling demand. “It is still early in the weather game, but these trends will start becoming more important the next couple of weeks,” Bespoke said. The latest forecast was “not enough to end the bull story, but, in our view, is pushing things to the point where we will need to see some decent cold” to consistently support futures above $5.00 this fall. “Until we see the weather, volatility likely rules.” U.S. liquefied natural gas (LNG) export levels also declined during the past week – down more than 2 Bcf/d from the prior week – after Hurricane Nicholas struck the Gulf of Mexico (GOM) and knocked out power at the Freeport LNG terminal near Houston. The latest storage report from the U.S. Energy Information Administration (EIA) helped deflate supply worries. EIA on Thursday reported an injection of 83 Bcf into natural gas storage for the week ended Sept. 10, higher than the 70s Bcf print predicted by major surveys. If mild conditions prevail in coming weeks and utilities add similar levels to stockpiles, Bespoke said the market would be on track for 3.5 Tcf in underground supplies for winter. That is well below the year-earlier level of about 3.9 Tcf, but the firm said it could prove sufficient barring an extremely cold winter.
Natural Gas Prices Can Still Double From Here - --Natural gas prices have hit their highest levels since 2014, outpacing oil and many other commodities. On Monday, natural gas futures were trading up 2.6% to $5.09 per million British thermal units (BTUs), their highest settlement price since February 2014. Natural gas prices are up 117.6% in the year-to-date, while the biggest nat. gas benchmark, the United States Natural Gas ETFis up 88.6% over the timeframe. The sticker shock is even greater in other key natural gas markets around the globe, with East Asian benchmark futures and European natural gas spot prices have climbed 4-5 times year-ago levels to $18 per MMBtu.Yet, some experts are now saying that this rally is far from over.Stan Brownell, an analyst at Argus Media, and Luke Jackson, an analyst at S&P Global Platts, figure that Henry Hub prices would have to jump to $10 or more to provide an incentive to fulfill domestic natural gas demand. That would mean a doubling of natural gas prices from current levels to levels last seen in 2008 when the U.S. produced about 40% less natural gas An unusually cold winter in Europe as well as a global rebound from Covid-19 have triggered strong demand and depleted natural gas inventories. Meanwhile, Hurricane Ida has knocked out a considerable amount of gas production, with 77% of oil and gas production still offline in the Gulf of Mexico. According to U.S. government statistics, natural gas inventories are currently 17% lower compared to a year ago and 7.4% below the five-year average.To catch up to the five-year average storage level by early winter, U.S. natural gas producers need to inject roughly 90.4 billion cubic feet each week from now, about 40% higher than the five-year average weekly buildup clip. The latest data by the Energy Information Administration shows that nat. Gas inventories climbed 52 bcf last week, way below what is required to build enough stockpiles for the winter.Interestingly, the analysts note that U.S. consumption isn't really the driving force behind the strong price action. Indeed, according to data from the U.S. Energy Information Administration, domestic natural-gas consumption through June was in line with 2020 levels. The real culprit here is robust international demand for natural gas as well as a fast-growing U.S. LNG sector. Asia and Europe still need to stock up more to prepare for the winter, and much of their supplies will have to come from the U.S. because non-U.S. LNG exporters have mostly been down with maintenance-related snags. For instance, Russia, Europe's most important natural-gas provider, has been slowing its deliveries. Natural gas inventories in Europe are currently a whopping 16% below the five-year average and at a record low for September. Meanwhile, continuous unplanned outages at LNG export facilities in several countries, including Australia, Malaysia, Nigeria, Algeria, Norway, and Trinidad and Tobago, have contributed to increased demand for U.S. LNG.
LNG growth helps support US gas pipeline construction through 2026 - LNG export facilities and their demand for supplies will drive a large portion of U.S. natural gas pipeline construction through 2026, according to an analysis of S&P Global Market Intelligence data. Of the 45 pipeline projects projected to come online over the next five years, at least 16 are tied to liquefaction terminals that are operating or under development on the Gulf Coast, with six export facilities expected to begin commercial service in 2024 alone. Other pipeline projects are designed to bring gas to utility distribution systems, power generation plants and other end uses. Venture Global LNG plans to build just over 400 miles of gas pipelines to serve its proposed Calcasieu Pass, Plaquemines and Delta LNG terminals, which would have a combined production capacity of 50 million tonnes per year of LNG. Tellurian Inc., meanwhile, has 323 miles of pipeline under development for the planned Driftwood LNG LLC terminal, anticipated to begin construction in 2022. The company also said it may buy up more acreage in the Haynesville Shale or enter into a business combination that would allow it to fill out its upstream portfolio. LNG is the fossil fuel poised to have the biggest earnings advantage as the North American midstream sector’s great pipeline build-out cycle winds down, according to a July Sanford C. Bernstein & Co. report. In 2022, capital expenditure for most midstream companies is expected to be minimal, and “in some cases, over 70% lower than 2019 levels for the company,” analysts wrote. With traditional natural gas maintaining a slower growth curve and facing minimal rate reduction risks as hurdles to new infrastructure construction get higher in the U.S., LNG will perform best when it comes to long-term volumes, Bernstein said. Overseas demand for gas supply in Asia and Europe is lifting the prospects for the fuel. Other LNG projects putting pipe in the ground through 2026 will include NextDecade Corp.’s Rio Grande, Sempra’s Port Arthur, and Exxon Mobil Corp. and Qatar Petroleum’s Golden Pass. Delays in the development of Port Arthur, however, recently prompted Polish Oil and Gas Co. to end a deal for buying 2 Mt/y of LNG from the facility and to sign similar agreements to purchase the same amount from Venture Global terminals. Sempra executives also confirmed the expiration of a deal with Saudi Arabian Oil Co. to finalize a supply agreement for 5 Mt/y of LNG from Port Arthur LNG terminal and take a 25% stake in the project’s first phase.
Oil-soaked birds found near oil spill at refinery after Ida (AP) — Louisiana wildlife officials say they have documented more than 100 oil-soaked birds after crude oil spilled from a refinery flooded during Hurricane Ida.The Louisiana Department of Wildlife and Fisheries said Thursday that a growing number of oiled birds had been observed within heavy pockets of oil throughout the Phillips 66 Alliance Refinery in Belle Chasse, Louisiana.Ten oiled birds have been captured and transported to a rehabilitation location for cleaning. Five additional dead birds were recovered and bagged as evidence. Efforts to save more birds are ongoing. The affected species include black-bellied whistling ducks, blue-winged teal and a variety of egrets.Other animals were also seen covered in oil, include alligators, nutria and river otters.
More Than 100 Birds Found Coated in Oil After Ida - More than 100 birds have been found covered with oil following a spill linked to Hurricane Ida's path through the Gulf of Mexico late last month.The Louisiana Department of Wildlife and Fisheries (LDWF) said Thursday that the birds were impacted by a spill at the Alliance Refinery in Belle Chasse, Louisiana."The number of oiled birds documented, with more expected, have been observed within heavy pockets of crude oil throughout the facility as well as nearby flooded fields and retention ponds," the LDWF said. As of Thursday, 10 birds had been captured and taken to a rehabilitation center for cleaning, state biologist Jon Wiebe told The AP. A total of five birds had been found dead. LDWF said that the bird species impacted by the spill included black-bellied whistling ducks, blue-winged teal and a variety of egret species. Alligators, river otters and nutria were also found partly covered in oil. The department said it could take weeks to save the affected wildlife.The news comes as the U.S. Coast Guard investigates hundreds of oil spills in the wake of Hurricane Ida, which made landfall August 29, CNN reported. One example is a miles-long spill about two miles from Port Fourchon, Louisiana that divers believed emerged from a broken pipeline.The Coast Guard is currently prioritizing around 350 of the spills, which range from "minor to potentially notable pollution reporting," Coast Guard Petty Officer Gabriel Wisdom told CNN.The U.S. Environmental Protection Agency further said on Thursday that it had received 43 notifications of significant inland oil spills or chemical releases following the storm, according to The AP.The Alliance Refinery spill was first reported by The AP September 1. The refinery is owned by Phillips 66, which initially downplayed reports of the spill. However, a Louisiana Department of Environmental Quality investigation revealed that a levee had breached during the storm, allowing water to first flood the plant and then rush back out. The crude oil spill was being cleaned with booms and absorbent pads, the department said. Still, a spokesperson for Phillips 66 has continued to minimize the damage."The breach has been secured," spokesperson Bernardo Fallas told The AP Thursday. "Clean-up crews continue to remove oil and sheen contained within some flooded areas of the refinery. There has been no offsite impact. We continue to work with all appropriate regulatory agencies."While there are no official estimates of how much oil has spilled, the refinery has the capacity to process more than 255,000 barrels of crude oil a day. As of Thursday, it remained closed with no date fixed for reopening.
Hurricane Ida oil spills 'mind-boggling,' but likely not as bad as Katrina, Rita -- The seaplane barely lifted off the water before Naomi Yoder spotted the first oil spill. Just south of Belle Chasse, Yoder, a scientist with environmental group Healthy Gulf, pointed to the rainbow sheen covering the floodwaters that Hurricane Ida threw across the 2,400-acre Phillips 66 Alliance Refinery complex. Farther south near the mouth of the Mississippi River, Yoder found shrimp boats chugging past a sheen more than nine miles long. South of Port Fourchon, where Ida made landfall on Aug. 29, was a cluster of rusted and storm-ravaged platforms oozing long, thin trails of oil. On the return trip, the plane flew over at least four patches of oil in the fragile marshes rimming Barataria Bay. “It’s mind-boggling,” Yoder said Friday after Healthy Gulf’s fourth flight to monitor the spills left in Ida’s wake. “It’s definitely a surprise to see what’s out there. It’s always more than you expect to find.” Two weeks after the Category 4 hurricane struck the Louisiana coast, it remains a daunting task to determine the number of spills and the volume of oil and other chemicals that ended up in the water. More than 2,300 spills have been reported to the Coast Guard, and about 900 have yet to be investigated. The spills that have been checked range from small fuel leaks off boats to the miles-long sheens from oil platforms. If there's any good news in the preliminary tallies, it is that the volume confirmed to have been spilled so far is significantly less than the 10.8 million barrels released during hurricanes Katrina and Rita in 2005. Still, the accumulation of spilled oil from repeated hurricanes since then has scientists worried. “A lot of the pictures I’ve seen [of Ida spills] are in coastal areas where there’s a lot of old infrastructure," said Don Boesch, a professor of marine sciences at the University of Maryland. "That indicates a background question of longer-term contamination. Companies are leaving a lot of wells more or less plugged, but they could be releasing oil." Coast Guard setting up pollution response team in Louisiana after reports of dozens of oil spills and sheens Coast Guard setting up pollution response team in Louisiana after reports of dozens of oil spills and sheens Boesch cited a recent federal audit that found energy regulators are letting oil and gas companies abandon pipelines in the Gulf of Mexico at an increasing rate. “About 90% of the time, the regulators have decided to let [companies] leave pipelines in place,” Boesch said. “So now we’ve got about 18,000 miles of pipeline that are not active and just sitting in the Gulf.” The U.S. Government Accountability Office audit also determined that regulators rarely conduct or require underwater pipeline inspections, leaving about 9,000 miles of active pipelines largely unchecked. “There are a lot of questions about how those pipelines are holding up to storms and coastal erosion,” Boesch said. “We often don’t know where those pipelines are. They were put in at a time when companies didn’t have to report [locations] accurately or have the technology to say precisely where they are."
How Much Gulf of Mexico Production is Still Offline? The Bureau of Safety and Environmental Enforcement’s (BSEE) latest estimates show that approximately 48.56 percent of the current oil production and approximately 54.39 percent of the current gas production in the Gulf of Mexico is still shut in as a result of hurricane Ida.This corresponds to 883,755 barrels of oil per day and over 1.2 billion cubic feet of gas per day, according to the BSEE. The organization highlighted that personnel remain evacuated from a total of 63 production platforms, or 11.25 percent of the 560 manned platforms in the Gulf of Mexico, and one non-dynamically positioned rig, which is equivalent to 9.09 percent of the 11 rigs of this type currently operating in the region. A total of two dynamically positioned rigs also remain off location, representing 13.33 percent of the 15 dynamically positioned rigs currently operating in the Gulf.“The Hurricane Response Team continues to monitor offshore oil and gas operators in the Gulf as they return to platforms and rigs after the storm,” the BSEE said in an organization statement. “The team works with offshore operators and other state and federal agencies until operations return to normal,” the organization added in the statement.The BSEE first activated its hurricane response team due to Ida back on August 27, as the storm began entering the Gulf of Mexico. At its peak, Ida shut in 95.65 percent of Gulf of Mexico oil production on August 29 and 94.47 percent of Gulf of Mexico gas production on August 31, BSEE figures show. While Ida is no longer being tracked by the National Hurricane Center, several other weather patterns are. At the time of writing, four other disturbances were being monitored by the group, including tropical storm Nicholas, which had maximum sustained winds of 60 miles per hour and a five mile per hour north-northwest movement as of Monday, 7am CDT, according to the NHC.
IEA: Oil Supply Losses From Hurricane Ida Reach 30 Million Barrels - Hurricane Ida, which stormed through Louisiana at the end of August, has led to oil supply losses of 30 million barrels so far, driving the first decline in global oil supply in five months and pushing global inventories sharply down, the International Energy Agency (IEA) said on Tuesday. Initially, Hurricane Ida shut in as much as 1.74 million barrels per day (bpd) of crude oil production, or 95.65 percent of the total crude pumped in the U.S. Gulf of Mexico. On the day when the hurricane made landfall, a total of 288 production platforms in the Gulf of Mexico were evacuated. This was more than half of the manned platforms in the Gulf.Due to the storm's severity and the damage identified at some offshore platforms and facilities, crude oil production in the Gulf of Mexico has been slow to restart.Two weeks after Hurricane Ida made landfall in Louisiana on August 29, a total of 43.60 percent of the Gulf of Mexico's oil production, or 793,522 bpd, was still shut in as of September 13, according to data from the Bureau of Safety and Environmental Enforcement (BSEE)."Unexpected outages during August forced a decline in supply for the first time in five months and extended the sharp drawdown in global oil stocks. The most severe by far was Hurricane Ida, which wreaked havoc on the key US Gulf Coast oil producing region at the end of August, knocking 1.7 mb/d offline," the IEA said in its Oil Market Report for September published today.The impact of Hurricane Ida "is still causing problems for US and global markets," said the agency. "Offshore installations and refineries have been slow to restart due to the severity of the storm, forcing massive stock draws of both crude and products in key markets. The biggest impact on supply will be seen in September, with total supply losses estimated at around 30 mb," the IEA noted.
Here’s Why U.S. Oil Supplies Took Such Big Hit From Ida – Bloomberg Hurricane Ida unleashed such furious winds and waves that almost two weeks later oil drillers, power suppliers and refiners are still picking up the pieces. They won’t be done any time soon. The damage to offshore platforms, pipelines and even heli-pads was so severe that two out of every three barrels of crude normally pumped from the U.S. sector of the Gulf of Mexico are unavailable. The ripple effects are still playing out as refiners and brokers scour the globe for replacements and the Gulf’s biggest oil producer, Royal Dutch Shell Plc, tells some customers it can’t honor supply commitments. The damage to offshore platforms, pipelines and even heli-pads was so severe that two out of every three barrels of crude normally pumped from the U.S. sector of the Gulf of Mexico are unavailable. The ripple effects are still playing out as refiners and brokers scour the globe for replacements and the Gulf’s biggest oil producer, Royal Dutch Shell Plc, tells some customers it can’t honor supply commitments. It will be weeks -- maybe longer -- before normal conditions can be restored off the Louisiana coast and in the warren of oil-processing and chemical plants that occupies a 100-mile (160-kilometer) corridor from New Orleans to Baton Rouge. Recovery efforts may be hindered by Tropical Storm Nicholas, which gained power Monday as it headed toward the coast of Texas, likely bringing flooding rains to Houston and Louisiana. “What’s different is this is lasting longer,” Bert Winders, 63, a Baker Hughes Co. health and safety director, said in reference to how Ida’s disruption compared with previous hurricanes. “It’s just demanding on people. Three to five days, they can deal with. But when you start talking two, three, even four weeks, that’s really tough on a family.” The recovery efforts are being closely watched around the world in large part because of the unprecedented scale and duration of the oil outages. Within days of the hurricane, traders were seizing on arbitrage opportunities created by the disappearance of some U.S. Gulf grades of oil such as Mars blend. For example, crude from Russia’s Ural Mountains is a popular alternative to Mars because they share similar characteristics. Ida’s drawn-out aftermath offers a chastening glimpse of what may be in store as climate change fuels ever-more furious storms along low-lying coastal regions dotted with heavy industry and vital fuel-making facilities. Typically, when tropical storms and hurricanes menace the oil-producing region of the Gulf, drillers batten down hatches, shut off the subsea wells funneling oil up to platforms and evacuate crews. When the skies clear, they often can chopper inspection teams back out in a matter of hours or days and resume production shortly thereafter. When Louisiana was battered by Hurricane Laura last year, offshore crude output bounced back quickly. Direct Hit After Ida, that wasn’t remotely possible. The monster storm’s direct hit on Port Fourchon a few hours before sundown on Aug. 29 completely disabled the primary jumping-off point for helicopters and vessels that service hundreds of offshore platforms and rigs. Even the lone road connecting Port Fourchon to the rest of the state -- Louisiana Highway 1 -- was knocked out of commission by Ida’s massive wall of sea water and the tons of sand it swept ahead. “When Port of Fourchon is out of service, it breaks a link in the chain,”
Most Louisiana refineries have restarted but oil production lagging -- Most of the nine Louisiana refineries shut by Hurricane Ida have restarted or were restarting on Friday, nearly two weeks after the powerful storm came ashore, a Reuters survey shows.Refiners are coming back faster than oil production, a reverse of past storm recoveries. Just three of the nine refineries were completely idled, accounting for about 7% of Gulf Coast refining, compared to shut-ins of two-thirds of oil output.The state’s two largest refineries—Marathon Petroleum in Garyville and Exxon Mobil Corp.’s Baton Rouge plant—returned to operation. Valero Energy Corp.’s Meraux refinery on the Mississippi River east of New Orleans was restarting units Friday, and the company was also prepping its St. Charles refinery to restart, Reuters reports.Meanwhile, Phillips 66’s plant in Belle Chasse —which had been put up for sale shortly before the storm—faces months of repairs. Get the full update about additional Louisiana refineries from Reuters.Meanwhile, nearly half of U.S. offshore oil production remains out of service two weeks after Ida barreled through the Gulf as a Category 4 hurricane, making it the most damaging storm for the region’s output in more than 15 years, The Wall Street Journal reports. Offshore producers evacuated 288 platforms before Ida, more than half the total platforms in the Gulf.Shell says a significant amount of production remains offline, and the company wouldn’t say when it will be fully restored. The company’s biggest concern is the Mars corridor, its largest source of production in the Gulf, where its three biggest platforms were damaged. Damage onshore has been the primary obstacle to recovery. Key ports and airports were knocked out, slowing the redeployment of staff and equipment. Oil and gas processing plants and other critical onshore facilities were damaged or remain without electricity. Companies are also contending with COVID-19, which has spread through their workforce. Read the full story.
Biden admin ends pandemic-era offshore oil royalty breaks - The Biden administration has ended an offshore oil royalty break approved last year to support operators as the COVID-19 pandemic drove crude prices down.The global freeze on economic activity in 2020 drove oil prices to historic lows. In response, some oil and gas drillers pressed the Trump administration for extensions to their federal leases or a break on paying royalties for producing public minerals (E&E Daily, Sept. 9, 2019).In response, the Bureau of Safety and Environmental Enforcement (BSEE) offered a special case royalty relief option for offshore drillers. That will no longer be available, the agency announced today.Of the 110 requests from offshore oil producers for a royalty reduction though this unique avenue, 70 were granted some form of relief, according to BSEE.The agency said the royalty cut for “non-drilling” activities was offered to stave off “premature abandonment and stranding of oil and gas reserves” and is no longer considered necessary.Since April 2020, the special case royalty relief was granted to roughly 3.5% of active offshore oil and natural gas leases on the outer continental shelf — the federal waters managed by the Interior Department.Interior has two avenues for royalty rate reductions offshore, which are still available under federal law.Royalty cuts during the pandemic came under fire from environmental groups and government watchdog organizations that said the relief, which was also sought by onshore oil drillers on public land and coal producers, would short the public of revenue and encourage production of oil in an already saturated market (Energywire, May 20, 2020).
DOE Awards SPR Oil Sale Contracts - The U.S. Department of Energy’s (DOE) Office of Fossil Energy and Carbon Management has revealed that contracts have been awarded from a recent congressionally mandated Strategic Petroleum Reserve (SPR) crude oil sale. A total of 15 companies responded and 104 bids were submitted for evaluation, following a notice of sale of up to 20 million barrels of SPR crude oil issued by the DOE on August 23. Contracts were awarded to the following eight companies:
- Atlantic Trading & Marketing, Inc.
- Chevron USA
- ExxonMobil Oil Corporation
- Marathon Petroleum Supply and Trading, LLC
- Motiva Enterprises, LLC
- Phillips 66 Company
- Unipec America, Inc.
- Valero Marketing and Supply Company
Oil will be sold from each of the four underground salt cavern SPR sites as part of the latest crude sale. Out of the 20 million barrels of crude oil awarded, 5.1 million will be sold from the SPR’s Bryan Mound site, 6.1 million will be sold from the West Hackberry site, 750,000 will be sold from the Bayou Choctaw site and 8.05 million will be sold from the Big Hill site. The SPR plans to schedule deliveries between October 1 and December 15. The DOE noted that the congressionally mandated sale fulfills requirements of Sections 403 of the Bipartisan Budget Act of 2015 and partially fulfills Section 30204 of the Bipartisan Budget Act of 2018. The proceeds of the sale will be deposited in the U.S. Treasury by the end of the fiscal year, the DOE confirmed.
Would Biden's oil freeze increase emissions? - E&E News - Oil industry backers are bringing an Obama-era report to their playbook against the Biden administration’s drilling policies, warning that a federal leasing freeze could increase greenhouse gas emissions. The argument, from a 2016 Interior Department analysis, is that if the U.S. doesn’t develop oil offshore, where emissions from production are comparatively low, someone else will — potentially with a dirtier oil and gas drilling record. “[Emissions] could, in fact, increase slightly in the absence of new [outer continental shelf] leasing,” the report said. Analysts from Wood Mackenzie and Rystad Energy have reached similar conclusions about the impact of shuttering offshore oil and gas. But other experts and climate activists say the Obama-era analysis is based on a debunked narrative and should be rewritten by President Biden’s Interior, which oversees the oil and gas program. Joel Clement, a senior fellow at the Harvard Kennedy School Belfer Center for Science and International Affairs, said the report is “deeply flawed.” “[Interior] should revise the report to better serve the public interest — and to avoid the embarrassment of having such a flawed report out there,” said Clement, who formerly worked on climate issues at Interior but left the Trump administration in protest of what he saw as suppression of climate science. The spat pits the White House and conservationists against allies of the offshore oil industry and is the latest battle to emerge over Biden’s intent to reform the federal oil and gas program. The differing conclusions about the report stem from different assumptions about factors such as whether demand for oil to fuel cars, planes and power plants will stay constant or decline. Oil and gas interests have amplified the findings in recent months as a defense against perceived plans in the Biden administration to curb federal oil drilling. The White House is aiming to slash economy wide greenhouse gas emissions 50 percent below 2005 levels by 2030, and one of Biden’s first actions in office was to freeze the federal oil and gas leasing program to review its climate impact.
U.S. shale oil firm Pioneer Natural launches land sale - – Top US shale oil producer Pioneer Natural Resources Co. has placed its assets on a block in Texas’s Delaware Basin, aiming to secure more than $2 billion for assets, two sources familiar with the matter said. told Businesshala on Friday. . A strong rebound in crude oil prices after last year’s pandemic crash triggered a wave of shale consolidation and opened a window for producers to offload unwanted assets. After two major acquisitions this year, Pioneer is looking to streamline its business and reduce debt. In March, it sold an oil field services business for an undisclosed amount. There was no guarantee that Pioneer would close the deal. The company did not immediately respond to a request for comment. A sale would leave Pioneer focused on the Midland part of the Permian, its traditional base. The assets now up for sale were acquired with the purchase of Parsley Energy for $4.5 billion, sources said. There are about 350 wells of parsley in four counties in the Delaware Basin. Pioneer Chief Executive Scott Sheffield told investors last week that the company would split some of its less-productive acreage in Delaware and the Midland Basin in Texas. Pioneer completed two multi-billion dollar acquisitions this year. After closing its parsley deal in January, Pioneer struck a $6.2 billion deal for Midland-Bassin rival Doublepoint Energy. According to regulatory filings, the deals pushed Pioneer’s total debt to $6.9 billion at the end of June, up from $3.1 billion six months earlier. As part of a broader industry focus on improving investor sentiment after years of substandard returns compared to other economic sectors, US shale firms are promoting buybacks and dividends.
Carlsbad City Council approves easement for oil pipeline Carlsbad City Councilors approved an easement for a crude oil pipeline operation in Eddy County Sept. 14. Oryx Delaware Oil Transport of Midland, Texas requested a pipeline easement and right-of-way agreement with the City of Carlsbad to place a section of pipeline on city owned property, said City of Carlsbad Administrator John Lowe in a memorandum to councilors. Oryx is building a pipeline crude oil transportation network from Eddy County to Texas. “The easement will be utilized to connect new oil production to an existing Oryx gathering system as part of our continuing commitment to safely and reliably transport crude oil for Eddy County producers and reduce truck traffic on New Mexico roads,” said Meredith Howard, spokesperson for Oryx. In the memo, Lowe said the City owned property was located at Western Farms near the intersection of U.S. Refinery Road and Old Post Road. City of Carlsbad documents cited the easement would have a 50-foot width, a 30-foot permanent easement and a 20-foot temporary construction easement. Length of the easement was scheduled to be 8,863 linear feet across the City owned property south of Carlsbad, per city documents. Oryx offered $188,000 compensation to the City of Carlsbad for the easement, Lowe said in the memo.
Climate scientists argue Line 5 tunnel would emit harmful emissions -Climate scientists on behalf of environmental groups and Native American tribes opposed to a controversial tunnel for Line 5 in the Straits of Mackinac are contending the construction would emit "excessive greenhouse gas emissions" harmful to the climate, according to documents filed with the state. The Environmental Law & Policy Center and the Michigan Climate Action Network filed written testimony from these experts with the Michigan Public Service Commission, which is reviewing whether to approve a permit for the $500 million project proposed by Enbridge Energy. Both groups say they were allowed last spring to present expert witnesses to show how the climate is impacted by Line 5 as part of a meaningful environmental review of the permit request before the commission. Peter Erickson, a greenhouse gas emissions expert and senior scientist at the Stockholm Environment Institute affiliated with Tufts University, said in his testimony that "when compared to a scenario in which the existing Line 5 pipeline no longer operates, construction and operation of the proposed project would lead to an increase of about 27 million metric tons CO2e annually in global greenhouse gas emissions from the production and combustion of oil." \ Another expert, Peter Howard, the economics director at the Institute for Policy Integrity at New York University School of Law, said from 2027 to 2070 the average annual climate costs would approximate $1 billion each year over this period, "plus significant unmonetized climate effects and other unquantified pollution costs to human health and the environment." "The solution to the risk of an oil spill in the Great Lakes is simple: stop operating the existing pipelines," said Margrethe Kearney, senior attorney at the Environmental Law & Policy Center. "The question of what Enbridge can and should do once the existing lines shut down is a separate question, and it is clear that construction of a tunnel under the Straits is not the answer, because it will have a devastating impact on Michigan’s natural resources by contributing to the climate crisis.” Enbridge defended its proposed tunnel as environmentally safe and even cited testimony filed by commission staff that gave support to the soundness of the project. “Staff concludes that the replacement of the dual pipelines with a new pipeline in a tunnel below the lakebed serves a public need, is in the public interest, and is the best option” from the other alternatives, according to Travis Warner, a public utility engineer specialist with the commission.
Memphis aquifer gains protection from Shelby Commission – Nearly a year of protests and political debates culminated in the Shelby County Commission passing a one-of-a-kind ordinance to protect the county’s sole source of drinking water. The Shelby County Commissions voted 10-0—Commissioners David Bradford and Amber Mills abstained—in support of an ordinance to prevent pipelines from being built within 1,500 feet of most residential areas, such as churches and schools, in a move seen by civil rights advocates as a form of environmental justice. The Memphis City Council will vote on a similar ordinance next week to create a joint-motion to amend the Memphis and Shelby County unified development code. Concern for the aquifer started more than a year ago when Plains All American Pipeline and Valero Energy Corporation announced their plans in 2019 to build the 49-mile Byhalia pipeline through a historic Black community in Southwest Memphis into Mississippi. Civil-rights advocates complained that the Black neighborhoods were already burdened by decades of pollution from nearby power plants, leading to cancer risks at four-times the national average. The area’s Memphis Sand Aquifer provides the city with natural drinking water, but because the pipeline would pass through the Davis Wellfield, pipeline critics worried crude oil would seep into the aquifer through the wellfield. Critics also alleged that clear regulatory gaps led to the Byhalia project receiving the necessary permits without needing to conduct environmental impact reports. The Southern Environmental Law Center (SELC) filed suit on behalf of the Memphis Community Against the Pipeline and Protect Our Aquifer, among other organizations, against the U.S. Army Corps of Engineers for issuing a permit to allow the corps to fast track the pipeline project. The SELC eventually dropped its suit against the U.S. Army Corps of Engineers.
Facing a court-ordered pipeline shutdown, Spire aims to take dispute to the Supreme Court — Spire’s push to keep operating a legally imperiled natural gas pipeline now rests on a sudden flurry of three parallel moves. Federal regulators on Tuesday issued an emergency certificate allowing the St. Louis-based natural gas utility to continue running its Spire STL Pipeline for another 90 days. The company hails the two-year-old project as critical to the region’s gas supply, but in June the U.S. Court of Appeals for the District of Columbia revoked the pipeline’s approval. Spire also filed late Monday a motion to stay the decision, which would have otherwise shut down the pipeline on Tuesday, a week after the court denied Spire’s request to rehear the case. Additionally, Spire’s motion indicated that the company would file a petition to bring the case before the U.S. Supreme Court. The utility has hired high-profile lawyers to assist in the fight, including Eugene Scalia, son of the late Supreme Court Justice Antonin Scalia, and Theodore Olson, who has argued for the winning sides in major Supreme Court cases — such as the Bush v. Gore case that decided the 2000 presidential election, and Citizens United, which solidified the role of corporate spending in politics. The 65-mile pipeline runs connects St. Louis with Scott County in Illinois, where it connects to a national network. The company argues that extreme weather events like February’s widespread deep freeze across the central U.S. have illustrated the pipeline’s importance, since the St. Louis region was largely able to avoid gas supply problems and skyrocketing costs that plagued places such as Texas and western parts of Missouri. But that question about the line’s necessity remains at the heart of the case. The D.C. ruling in June said that the need for the project was never adequately demonstrated or justified, thanks to factors including the St. Louis area’s roughly flat demand for natural gas over the past two decades.
AG: Spike in natural gas prices appears to break Kansas law (AP) — Attorney General Derek Schmidt said Monday that sharp spikes in natural gas prices last winter appear to violate Kansas law and he is seeking outside legal help to investigate them.Schmidt’s office said it is looking to retain a law firm with expertise in the natural gas marketplace to help with the probe and any potential civil litigation aimed at enforcing the state’s anti-profiteering law.His office opened an investigation in February to determine whether the price increases violate state law, Schmidt said. “State law prohibits ‘unjustified’ price increases for ‘necessary’ goods and services during a declared state of disaster emergency, and on their face these increases appear to violate Kansas law,” Schmidt said in a news release. “Our investigation has reached a point where additional resources and expertise in the complicated natural gas marketplace are required.”Kansas utility regulators have decided they can’t investigate whether natural gas utilities were price-gouged by interstate suppliers. Instead, the Kansas Corporation Commission is concentrating its efforts on creating payment plans for customers, the Wichita Eagle reported.Utilities are proposing to spread those costs over a five to 10 years to avoid a massive rate shock for consumers.
Concerns Over Oil And Gas Pipeline In Northern Wisconsin - Concerns are flaring over a pipeline that carries crude oil and natural gas from western Canada. Enbridge, a Canadian company, owns the 645-mile line constructed nearly 70 years ago. The line starts in Superior, WI and ends at the southernmost point of Lake Huron. The State of Michigan is worried about a potential leak in the section that crosses under the Straits of Mackinac. In Wisconsin, the pipeline cuts across Ashland County. People there are concerned about the potential risks posed to their water-rich region. Jamie Dunn shared his concerns on a stroll just south of the city of Mellen. He walked along a path through a lush carpet of ferns, under a canopy of old growth trees. Dunn spent a lot of time in this region throughout his 30-year career as a hydrologist with the Wisconsin Department of Natural Resources. “We’re in the upper reaches of the Bad River watershed. Many streams all feed into the Bad River, which then discharges into Lake Superior. [A] lot of sensitive environments, wetlands,” Dunn added, “Most of these are very, very high-class trout streams.” The Enbridge Pipeline, called Line 5, runs north of the area, through the Bad River Band of Lake Superior Chippewa Reservation. An Enbridge spokesperson told WUWM that Line 5 has consistently operated safely since 1953, including within the reservation. Still, in response to the tribe's request, Enbridge is working on re-routing Line 5 outside of the reservation.Over time, storms have eroded and exposed sections of the existing line within the reservation. Enbridge is proposing a 42 mile route that would loop south, skirting the reservation. Hydrologist Jamie Dunn called the proposal untenable. “I couldn’t come up with a worse route for the surface water and the groundwater resources through this area. If there is a release, it is going to be a major impact on the surface water resources, [it] could be a major impact on the Copper Falls aquifer, which is the drinking water for everybody in the basin,” Dunn added, “The risks just outweigh the need for this pipeline. I just don’t see a scenario where it should go in.”
Indigenous Resistance Instrumental in Stopping High-Profile Fossil Fuel Projects, Says Report -The efforts of Indigenous peoples in North America have helped block or delay a long list of major fossil fuel projects over the past decade, successfully leading to the avoidance of a massive amount of greenhouse gas emissions, according to a new report.“The numbers don’t lie. Indigenous peoples have long led the fight to protect Mother Earth and the only way forward is to center Indigenous knowledge and keep fossil fuels in the ground,” Dallas Goldtooth, a Keep It In The Ground organizer for Indigenous Environmental Network (IEN), said in a statement. The report was coauthored by IEN and Oil Change International, a research and advocacy organization focused on transitioning away from fossil fuels.Indigenous resistance has been key in blocking at least eight major projects, including the Keystone XL pipeline, the C$20 billion Teck Frontier tar sands mine in Alberta, the Jordan Cove liquefied natural gas (LNG) project in Oregon, and drilling in the Arctic National Wildlife Refuge, to name a few. Taken together, those delayed and canceled projects would have been responsible for nearly 800 million metric tons of CO2 equivalent, or about 12 percent of the total emissions of the U.S. and Canada in 2019.Another half-dozen projects are currently contested, including the Line 3 pipeline in Minnesota, the Coastal GasLink pipeline in British Columbia, and the Rio Grande LNG project in Texas, for example. These projects represent another 12 percent of total U.S. and Canadian emissions, which, if opponents have their way, would bring the total carbon pollution avoided due to Indigenous resistance to 1.6 billion metric tons of CO2 equivalent. That’s roughly equal to the pollution from 400 new coal-fired power plants or 345 million passenger vehicles.As the report notes, this is likely an underestimate because it only includes 17 of the largest and most iconic fossil fuel projects in recent years.“Indigenous peoples continue to exert social and moral authority to protect their homelands from oil and gas development,” the report stated. “Coupling these expressions with the legal authority of Indigenous Rights, frontline communities, and Tribal Nations have made tangible progress stemming fossil fuel expansion.”
Hope for Line 5 opponents via Line 3’s latest development? - Opponents of the ongoing Line 3 pipeline project in northern Minnesota — an oil-moving cousin of the also-contested, also-Enbridge-owned Line 5 pipeline, which runs under the Straits of Mackinac — just got a heavyweight in their corner: the United Nations Committee on the Elimination of Racial Discrimination. The committee recently announced it is undertaking an investigation into possible violations of Anishinaabe citizens’ treaty rights resulting from Canada-based Enbridge Energy’s tar-sands pipeline reconstruction project in northern Minnesota. If the United Nations finds violations, it would mean a breach of international law — specifically, the International Convention on the Elimination of All Forms of Racial Discrimination — not by Canada or Enbridge, but by the United States. According to a letter written by committee chair Yanduan Li to the Chargé d’Affaires of the Permanent U.S. Mission to the United Nations, the committee has requested, by Oct. 15, information from the United States that would include, among many items, “details on the status of the treaties concluded between the Anishinaabe indigenous peoples and the Government of the United States of America and on measures adopted to guarantee the respect of the rights of the Anishinaabe under such treaties, in particular their usufructuary rights as upheld by the Supreme Court’s ruling [in the 1999 case, Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172].” So what’s that mean for Line 5? Nothing yet. But many Anishinaabe and non-Native America citizens here in Michigan — as well as Gov. Whitmer’s Nov. 2020 order to revoke the easement allowing Enbridge to transport through Line 5 — charge that Line 5 violates the rights accorded to Michigan’s First People in the 1836 Treaty of Washington, reaffirmed in 1855. The United Nations’ findings on Line 3 would be an indication of what’s to come — or not — for Line 5’s legal battles. We — and the world — are watching.
State asks judge to stop mediator from filing report in Enbridge case - The state of Michigan has asked a federal judge to bar a mediator from disclosing details of mediation sessions between state lawyers and Enbridge Energy about the state's attempt to shut down Line 5 in the Straits of Mackinac. Mediator Gerald Rosen, a former Detroit U.S. district judge, plans to file a report within the next few days on the status of mediation, which, as of last Thursday, had failed to yield an agreement, Attorney General Dana Nessel said in a Tuesday filing. But the terms of the mediation agreement establish that the process is "confidential" and prohibit the disclosure of information such as "communications and the conduct of parties in the course of mediation," the filing said. Instead, the terms of mediation allow the mediator to make a report "stating only who participated in the mediation session and whether settlement was reached." In a Tuesday statement, an Enbridge spokesman said the company intends to work with the state "to reconcile interests, resolve disputes and move forward." "We believe in the process and have participated in this mediation in good faith," said Enbridge spokesman Ryan Duffy. "We understand the stakes in this matter are important not only for Enbridge and the state, but for many others throughout the region who have strong interest in its outcome." The two parties have not scheduled any further mediation meetings. They've met four times since April and had hoped to conclude mediation by the end of the month. Rosen led the mediation team that pulled Detroit out of municipal bankruptcy in 18 months through what has become known as the "grand bargain." The mediation seeks an agreement that ends an impasse between the Canadian oil giant and Democratic Gov. Gretchen Whitmover the future of the Line 5 oil pipeline. In November, the state gave Line 5 owner Enbridge 180 days to arrange for a shutdown, a period that expired on May 12. Michigan filed a case in state court seeking to buoy its authority to order the shutdown. Enbridge refused to close by that date and instead filed a competing suit against the state in federal court, asking the judge to rule only federal regulators had any say over the pipeline's closure. We're offering a great deal on a
Treaty People Organize Walk Across Northern Minnesota to Oppose Line 3 — On Sunday, more than three dozen people left Backus, Minn. on a 160-mile walk to raise awareness about the controversial Line 3 tar sands oil pipeline that’s currently being constructed in the northern part of the state. Organizers plan to make the trek over the next two weeks to Wisconsin Point, a 229-acre freshwater sand bar that sits on Lake Superior in northern Wisconsin near the Minnesota border. “We’re walking because Governor Tim Walz made a poor decision to permit Line 3 to violate treaties,” Carrie Chesnik, an enrolled member of the Oneida Nation of Wisconsin, told Native News Online. “We’re walking for the next seven generations." Want more Native News? Get the free daily newsletter today. This isn’t the first organized walk to oppose construction of the Enbridge, Inc. Line 3 replacement project. Last month, dozens of people walked approximately 235 miles from Backus to the Minnesota State Capitol grounds in Saint Paul. They were joined on Aug. 26 by hundreds of other walkers to participate in a rally at the Capitol that included more than 1,000 people. Their collective voice was to demand that President Biden and Governor Walz honor treaties that both the federal and state governments have with tribes. “Treaty is the mechanism that is going to allow all of us to protect the water, the land, and the next seven generations,” Chesnik said. “There is so much destruction going on in our world, and our government can play a role in putting an end to it.” The Minnesota Public Utilities Commission’s (PUC) agreement with opponents of the pipeline was to allow people to monitor construction sites, an agreement that has come with over-policing and misinformation from the state of Minnesota Pollution Control Agency, Chesnik said. To date, there have been more than 800 arrests and citations by various law enforcement agencies near the construction sites and more than $2 million of reimbursements to law enforcement by an escrow account paid for by Enbridge.
DNR says Enbridge broke law, must pay over $3 million for construction mistake - The Minnesota Department of Natural Resources has ordered Enbridge to pay $3.32 million for failing to follow environmental laws during construction of its controversial Line 3 oil pipeline. While working near Clearbrook, Minn., Enbridge dug too deeply into the ground and pierced an artesian aquifer, which the DNR described Thursday as an "unauthorized groundwater appropriation." The incident, which happened in January, has led to a 24 million gallon groundwater leak, endangering a nearby wetland."Enbridge's actions are a clear violation of state law, and also of the public trust," said Barb Naramore, DNR deputy commissioner."That is why we are using all of the tools in our authority to address the situation."The DNR has ordered Enbridge to put $2.75 million into escrow for restoration and damage to the delicate wetland, known as a calcareous fen. The DNR's enforcement orders require Enbridge to pay $300,000 to mitigate the lost groundwater and $250,000 for long-term monitoring of the wetlands.The state also fined Enbridge $20,000, the maximum allowed under state law. Enbridge does not have to pay the fine if it fixes the problem in the time allotted. Enbridge could get some of the $2.75 million in escrow back if remediation costs less, or it could end up paying more if the bill is higher.In a statement, Enbridge said it had "just received" the DNR's complaint and is reviewing it."Enbridge has been working with the DNR since June to provide the required site information and approval of a corrective action plan which is currently being implemented.We share a strong desire to protect Minnesota waters and the environment and are committed to restoration.We will continue to work closely with the agency on the resolution of this matter."Calgary, Alberta-based Enbridge's 340-mile Line 3 pipeline will carry a thick Canadian crude across northern Minnesota to the company's terminal in Superior, Wis. The pipeline, which has been roundly opposed by environmental groups and some Ojibwe tribes, is 90 % complete. Construction started in December. Enbridge pierced the aquifer on the pipeline route near its terminal in Clearbrook sometime the following month, Naramore said.
Enbridge Pipeline Crackdown Led by Ex-Amazon Security Boss -- THE HEAD OF security for the oil transport company Enbridge built his résumé managing Exxon Mobil’s response to community protests in Nigeria and helping oversee Amazon’s Global Security Operations Center, a division that has monitored environmental groups and union organizers. Now, at Enbridge, Troy Kirby oversees efforts to combat a protest movement aimed at stopping construction of the company’s Line 3 pipeline in Minnesota. Enbridge’s security operation has drawn criticism for its efforts to influence the police response to the Indigenous-led movement, whose members are known as water protectors. Enbridge’s close cooperation with police, including payments and intelligence sharing, has been deemed by academics and water protector critics as emblematic of corporate counterinsurgency — a suite of tactics, ranging from public relations campaigns to surveillance and support for armed force, designed to win over communities to controversial profit-making projects. “You have companies that have entire departments dedicated to making sure you stay in your place, that you don’t resist, that you don’t talk about it, and you most certainly don’t act on it,”“These are the people that specialize in the dark arts. Maybe it’s a bit more banal than we might imagine, but these are the spooks.” As this story was being reported, Kirby’s Amazon job description was deleted from his LinkedIn page. Kirbystarted at Enbridge in 2019 after a three-year stint as Amazon’s head of corporate security throughout the Americas, according to LinkedIn. Part of his role included overseeing the online giant’s Global Security Operations Center. Internal Amazon documents dated to the year Kirby left, obtained by Vice, provide clues. According to the report, security personnel with the center used Facebook and Instagram to monitor environmental groups as well as union organizers. In Poland, operatives working for the private security company Pinkerton were sent to an Amazon warehouse to investigate reports of employee misconduct, Vice reported. Pinkerton got its start in the late 19th century, using undercover operatives and agents provocateurs to bust unions. The firm is now a subsidiary of the private security giant Securitas — one of the companies providing security for Enbridge’s Line 3 pipeline in Minnesota. Before Amazon, Kirby spent 16 years doing security work for Exxon Mobil. For at least four years, he worked for Exxon in Nigeria — where there is a history of energy company complicity in human rights abuses. During his time in Nigeria, Kirby was an adviser on “strategic security countermeasures,” which involved managing so-called crises, including pirate attacks and kidnapping, as well as “community protests,” according to a section of his LinkedIn page that has since been deleted. As in Minnesota, the work in Nigeria included collaborating closely with public agencies. Kirby’s LinkedIn page said he “Established a Nigerian based security network with private and public sector security leaders” and was involved in “Oversight of host government security forces.” The Exxon Mobil security operation was heavily militarized and focused in part on Exxon’s offshore oil operations. Kirby described designing a “Security Maritime Operations center including a fleet of 17 military-grade security vessels.”
Permit for oil refinery near national park to stay active after developer secures contract - North Dakota environmental officials have determined a company planning an oil refinery near Theodore Roosevelt National Park has made enough progress this summer to keep its construction permit active after it faced delays and received two extensions. Project developer Meridian Energy Group has entered into what it calls a “critical and central” contract with the engineering firm McDermott to design and construct major pieces of equipment for the Davis Refinery. The project is opposed by environmental groups in part because of its proximity to the national park in the Badlands. The Texas-based companies say the terms of the contract signed in June exceed 10% of the refinery’s total cost. The project is estimated to exceed $1 billion. Meridian would be on the hook for an amount above the 10% threshold if it ever sought to terminate the contract, according to letters the companies recently sent to the North Dakota Department of Environmental Quality. Environmental Engineer David Stroh was among the state's air quality officials who met with Meridian last week to go over the contract to see whether it satisfied the conditions needed to keep the permit active. “They’ve done what they need to do,” he said. “As far as we’re concerned regarding air quality, they’ve commenced construction of a facility.”
North American rig count jumps by 20 - The Baker Hughes rig count for September 17 showed net gains across US and Canada pushed drilling activity higher. Using data from Enverus, Baker Hughes reported the North American rig count improved by 20 from the prior week to reach 666. An increase in upstream activity related to oil led the gains across North America, with a net increase of 18 from the previous week. The US rig count improved by nine from the previous week, to 512, with oil rigs up by 10 to 411 and the natural gas rig count down by one to 100. Most of the US increase came from southern US states, where the Permian basin posted five more rigs working in oil than the previous week. Eagle Ford saw an increase of three rigs in oil, but lost a rig in natural gas. The Appalachia basin, which includes the Marcellus and Utica shales, posted small gains in work in natural gas, though that was offset by declines elsewhere in the primary shale basins in the Lower 48 US states. Nearly 80% of the US upstream activity is focused on oil. This is the second week in a row for gains in the US rig count, despite lingering pressure from storm activity in the Gulf of Mexico. The US Bureau of Safety and Environmental Enforcement reported, as of September 16, nearly 40% of the natural gas production and 28% of total crude oil production remained offline nearly three weeks after Hurricane Ida made landfall as a category 4 storm. The US offshore rig count was unchanged from last week. Canada, for its part, saw gains across the board, with the oil rig count increasing by eight and the gas rig count improving by three. The entire increase of 11 came from Alberta, and while Baker Hughes does not break down oil and gas data to the provincial level for Canada, it can be assumed from the data that oil and gas rig increases for Canada reflect activity in Alberta.
Venezuela Heavy Oil Project Reserves Will be Left Stranded - Venezuela’s heavy oil project reserves will be left stranded as international players divest their interest. That’s what GlobalData said in a statement sent to Rigzone on Friday, which highlighted that TotalEnergies and Equinor had recently divested their respective interests in Petrocedeno to the state-owned Petróleos de Venezuela S.A (PDVSA) company. According to GlobalData, this means that due to high risks and the unstable deteriorating economy in the country, international players no longer see an upside in Venezuelan projects. GlobalData noted that with less investments supplied from the private sector, Venezuela will not be able to sustain its oil and gas industry for long, as its own cash resources are “extremely limited”. “Petrocedeno is a critical project in Venezuela’s portfolio and the largest upgrader in the country with a capacity to process over 200,000 barrels of heavy crude oil per day,” Svetlana Doh, an upstream oil and gas analyst at GlobalData, said in a company statement. “In the past few years, Venezuela faced severe fuel shortages, and this year, in a desperate attempt to solve this problem, the Petrocedeno upgrader is planned to be re-designed to produce naphta as a feedstock for refineries. This essentially means that refineries in the country are in such a desperate need for renovation or even simple upkeep, that now upgraders have to perform a refining step for them,” Doh added in the statement. “The conversion of the upgraders could be very challenging, as it would require new equipment, while cash-strapped PDVSA can barely find the funds to conduct an elementary maintenance of its refineries. The continuous drop of crude oil production in Venezuela, which is a main pillar of the country’s economy, combined with sanctions imposed by the U.S. Government, the Covid-19 pandemic, corruption in the government and lack of investment led the country to collapse,” Doh went on to say. Annual oil production in Venezuela declined from an estimated 2.03 million barrels per day in 2017 to 480,000 barrels per day last year, Doh outlined. On July 29, TotalEnergies announced that, through its affiliate Total Venezuela, it had decided to transfer its non-operated minority participation of 30.32 percent in Petrocedeno S.A. to Corporation Venezonala de Petróleos (CVP), an affiliate of PDVSA. On the same day, Equinor announced that it and PDVSA had completed a transaction that saw it transfer its 9.67 percent non-operated interest in the Petrocedeno project onshore Venezuela to CVP. In a company statement at the time, TotalEnergies’ then president of exploration and production, Arnaud Breuillac, said, “TotalEnergies’ strategy, approved by its shareholders in May 2021, aims at focusing new oil investments on low carbon intensity projects, which does not correspond to extra-heavy oil development projects in the Orinoco Belt”. Equinor stated that the transaction supports its corporate strategy to focus its portfolio on international core areas and prioritized geographies where Equinor can leverage its competitive advantages.
Nord Stream 2 In Limbo As Germany Prepares To Decide On Key License - Germany’s federal networks regulator BNA said on Monday it would decide no later than January 8, 2022 whether it will certify Nord Stream 2 and issue an operating license for the natural gas pipeline.“The Federal Network Agency of Germany announced today that Nord Stream 2 AG has submitted all the documents required for verification by the agency. Thus, the Federal Network Agency has four months to prepare a draft decision and submit it to the European Commission,” the regulator, Bundesnetzagentur, told Russian news outlet Sputnik on Monday.The documents were received on September 8, so the four-month deadline expires on January 8.Last Friday, Gazprom said it had completed the construction of the Nord Stream 2 pipeline, although gas flows on the controversial Russia-led pipeline cannot begin until Germany grants an operating license to the project.Earlier last week, Russia’s Foreign Minister Sergey Lavrov said that the Nord Stream 2 pipeline from Russia to Germany was set to be completed within days and come on stream.But in order to begin shipping gas to Germany, Nord Stream 2 will need the go-ahead from the German regulator via an operational license.Last month, a German court ruled that Nord Stream 2 will have to obey European Union regulations that separate owners of the pipelines from suppliers of gas, dealing a blow to Gazprom, who sought to have EU rules waived for the controversial pipeline.Nord Stream 2 AG, the company behind the pipeline, said on Friday that after the mechanical completion of the construction, “the required pre-commissioning activities will be carried out with the goal to put the pipeline into operation before the end of this year.” Gazprom hopes to start gas flows via the first leg of the pipeline as early as October 1, Bloomberg reported on Wednesday, citing sources with direct knowledge of the Russian gas giant’s plans.
Europe's gas shortage could make the whole world pay more to get warm this winter --Natural gas prices have surged more than 35% in the past month, as worries grow there is not enough gas stored up for the winter should temperatures be especially cold in the northern hemisphere. The usually quiet market for the commodity has become hot in the last couple of weeks, as investors focus on the growth in demand around the world and supplies remain below normal. The biggest problem area is Europe, where supply is at a record low for this time of year. Even in the U.S., the amount of gas in storage is 7.6% below the five-year average, according to recent data from the U.S. Energy Information Administration. Natural gas is an important heating fuel and is responsible for about 35% of power generation in the U.S., the federal agency found. "People are starting to throw the 'crisis' word around" when it comes to Europe, . He said natural gas in storage in Europe is 16% below the five-year average, and the level in storage is a record low for September. "Europe is squarely behind the eight ball going into the winter season. It's going to put the focus on this commodity that's been overlooked for the last several years," The tipping point could come in several months when it becomes clear what type of winter is ahead for Europe, and also the U.S. Some analysts say in an extreme scenario, U.S. prices could double if there is an extended cold spell, particularly in Europe where shortages could get severe. "If the winter is mildly cold, it's going to be problematic for sure," said Francisco Blanch, head of commodities and derivatives strategy at Bank of America. Natural gas futures for October jumped nearly 5.3% Monday, to about $5.20 per one million British thermal units, or mmBtus. Natural gas is up 106% year-to-date and is the highest in more than seven years. But the equivalent gas in Europe and Asian markets is upwards of $20 per mmBtus. "The U.S. is supposed to be an island, but in the last three or four years, there's an increasing link between the U.S. and global market," Blanch said. "We've gone from 50% correlation to 95% correlation. The U.S. market is being dragged around by this." The U.S. has been exporting natural gas, in the form of liquified natural gas shipments. The shipments have grown to about 10% of U.S. production, analysts said. South Korea is the largest customer, followed by China and Japan, according to U.S. government data. But buyers also include Brazil India, Poland, Spain, France and Portugal. "If it's a cold winter, gas will not just be tight. It will be very tight," said Daniel Yergin, vice chairman of IHS Markit. If that's the case, prices could go sharply higher. "It will either be physical shortages, or it will be reflected in price." Europe's winter will depend on a weather pattern that sets up over Greenland. "The early indications do not indicate a big cold winter over there," Lovern said. The market is anxious about a repeat of last year, when a cold winter in Europe resulted in a larger-than-normal drawdown of gas.Supplies were not built back up enough in Europe, and analysts said lately Russia had cut back on some exports into Europe. But the new Nord Stream 2 pipeline, bringing natural gas from Russia to Europe, could resolve some of the supply problems for the continent in the next couple of months.Russia's Gazprom last week announced completion of the pipeline, which had once been opposed by the U.S. The pipeline would allow Russia to double gas exports to Europe. Germany's energy regulator Monday said it has four months to complete certification of Nord Stream 2. . Amos Hochstein, the U.S. State Department's senior advisor for energy security, said U.S. deliveries of liquified natural gas, known in the industry as LNG, can be increased and Russia is coming off the period of low supply."
Natural-Gas Market Conditions Look Unnatural – WSJ - Natural gas could really use an OPEC-style, coordinated production ramp-up right now. U.S. Henry Hub natural-gas prices, at around $5 per million British thermal units (MMBtu), have more than doubled from a year earlier. When the benchmark broke the $4 mark in early August it was a rare milestone—especially so far ahead of the winter heating season. The sticker shock is even greater elsewhere in the world: East Asian benchmark futures are four times where they were a year ago, while European natural-gas spot prices are five times as high. Both benchmarks have exceeded $18 per MMBtu.Europe’s natural-gas prices typically track lower than those seen in Asia, but they have had to rise to attract flexible liquefied natural-gas cargoes. “On any day, Asia and Europe are neck-and-neck in terms of who offers the best economics,” said Anatol Feygin, chief commercial officer at U.S. LNG exporter Cheniere Energy.The prices are more alarming if one considers the fact that the once-glutted U.S. is itself behind on stocking up for winter. Data from the U.S. Energy Information Administration show that natural gas in underground storage last week was 7.4% below the five-year average and only slightly above what it was in 2018, when natural gas inventories were at a record low heading into the winter. How did we get here? U.S. consumption isn’t really the driving force. Overall domestic natural-gas consumption through June was in line with 2020 levels, according to data from the U.S. Energy Information Administration. The real culprit is international demand. Normally, excess natural gas during the summer that isn’t liquefied and exported to foreign markets would go into underground storage, notes Stan Brownell, vice president of business development covering natural gas at Argus Media. That domestic stockpiling hasn’t been happening as much this year as the U.S. flexes its expanded liquefaction capacity. In the first half of the year, the U.S. has exported roughly 10% of its natural gas, or 41% more than a year earlier, according to EIA data.Despite the healthy pace of LNG imports this year, Asia and Europe likely need to stock up more to prepare for winter. Non-U.S. LNG exporters haven’t been pitching in as much supply because of various maintenance-related snags. Europe, in particular, is in a precarious position heading into winter as Russia, its most important natural-gas provider, has been slowing its deliveries.Samer Mosis, analyst at S&P Global Platts, noted that Asia still needs to build more supply than usual over September and October to reach comfortable levels heading into winter. Meanwhile, natural gas in storage in Europe is 16% below the five-year average and at a record low for September, according to the data provider. The hunger of international markets later this year will depend on some unwieldy variables, including how severe winter will be in other parts of the world, how quickly Russia starts up its controversial Nord Stream 2 pipeline and whether it revives its flow of natural gas to Europe. A severe winter in the U.S. could mean that domestic markets may have to compete with hungry Asian and European buyers. If European and Asian natural-gas prices stay at their current levels, both Mr. Brownell and Luke Jackson, analyst at S&P Global Platts, figure that Henry Hub prices would have to jump to $10 or more to provide an incentive to fulfill domestic natural-gas demand. Prices haven’t been that high since 2008, when the U.S. was producing about 40% less natural gas.
European Gas Prices Continue Parabolic Rise As EU Debates Nord Stream 2 Certification - European gas prices continue their unprecedented surge Wednesday as a supply crunch continues to worsen ahead of winter. "The market is super tight, so not much needed to move the needle and blow up the market," Oystein Kalleklev, chief executive officer of shipowner Flex LNG told Bloomberg. Kalleklev said the latest rally in prices had been driven by concerns Germany permitting Russia's Nord Stream 2 could take months. He added LNG cargodisruption from the US Gulf Coast due to the latest tropical activity is another issue. Prices for the Dutch front-month contract jumped as much as 21% on the session to 79 euros per megawatt-hour but has since faded the highs. UK power contracts soared as much as 18% to 194.94 pounds per megawatt-hour German power prices increased by as much as 8.3% to 108 euros per megawatt-hour but has since faded the highs. The timing of Russia's Nord Stream 2 pipeline will be critical for European gas markets. US sanctions have caused multiple delays. However, Russia's state-controlled energy giant Gazprom announced that it had completed construction on the Nord Stream 2 Russia-to-Germany stretch last Friday. Gazprom said gas deliveries for Europe are ready though it could take four months under EU regulators to approve the new pipeline for use. And that may be too long as the winter season approaches and supply crunches could send gas and power prices even higher. Former Austrian Minister of Foreign Affairs, Karin Kneissl, told RT News that prices surges in gas and power markets could persuade regulators to approve the Nord Stream 2 much quicker than previously thought, primarily due to mounting political pressure of the working poor who have seen their power bills skyrocket in the last month. "The [gas] supply contracts are there. And we will see to what extent the German regulator will speed up the certification process for Nord Stream 2, which, construction-wise, is done. Some people say that it could take months. But maybe the current situation will speed things up," Kneissl said As the chart below shows, the amount of gas entering Germany at the Mallnow compressor station has plunged by almost half, signaling Russia is flowing less through the Yamal-Europe line in what may be a Kremlin shot across the European bow, and a reminder who literally keeps the lights open during the winter.
European Manufacturers Halt Production, Citing Natural Gas Prices; Freeport LNG Still Offline — The Offtake - A roundup of news and commentary from NGI’s LNG Insight
- U.S. manufacturer CF Industries Holdings Inc. and Norwegian chemical producer Yara International ASA announced closures of their facilities because of extraordinarily high European natural gas prices, which neared $30/MMBtu this week. Yara said 40% of its European ammonia production capacity would be shut down next week, while CF Industries said its UK facilities in Billingham and Ince would be closed.
- UK Steel Director General Gareth Stace also said earlier this week some steel plants across the country were closed because of high energy prices. The blackouts could finally help curb the meteoric rise in European prices, which rose again on Friday.
- Adding to the energy crunch, Freeport LNG in Texas remained without power Friday as crews worked for a fourth day to restore it. It was unclear when the plant might return to service. Feed gas deliveries to U.S. terminals have declined due to the outage.
- Cheniere Energy Inc. has asked the Federal Energy Regulatory Commission for approval to introduce feed gas and refrigerants to the sixth train at Sabine Pass LNG in Louisiana. Approval was requested by Tuesday (Sept. 21). Train 6 is expected to be complete in 1Q2022.
How Much Oil Is Russia Really Pumping? -Russia has not raised its oil production as much as its increased quota under the OPEC+ deal has allowed in recent months. Estimates show that the leader of the non-OPEC group in the OPEC+ pact has not taken full advantage of the coalition’s past two agreements about raising the production ceilings for members. The quotas are proportionate to baselines, which means that the biggest producers, Saudi Arabia and Russia, get the largest increases in their respective oil output when OPEC+ eases cuts. While OPEC’s top producer Saudi Arabia is strictly sticking to its quota, Russia is estimated to have been pumping below quota since April—the month in which OPEC+ decided togradually increase collective oil production by 350,000 bpd in each of May and June and by more than 400,000 bpd in July. Then in July, the OPEC+ group decided it would start returning 400,000 bpd to the market every month beginning in August until it unwinds all the 5.8 million bpd cuts.Russia, which gets to pump now 105,000 bpd more every single month, looks to be lagging behind other OPEC+ members in producing at quota, Bloomberg’s oil strategist Julian Lee writes in an opinion piece.All in all, analysts are speculating and trying to calculate Russia’s crude oil production based on the opaque data of its energy ministry. The Russian energy ministry reports each month a total figure for oil production for the previous month, without breaking it down between crude oil production and condensate—a superlight oil—production. After years of debates within the OPEC+ group, Russia has won an exemption not to consider its condensate output as part of the production cut agreement. The lack of a straightforward official production number for crude oil makes assessments about Russian crude production and its compliance with the OPEC+ deal difficult. It’s a guestimate every month how much crude Russia pumps, and it is still a mystery whether it really struggles with ramping up crude production or its condensate output has fallen this summer. For example, in July, Russia saw its oil production rise for the first time in three months as OPEC+ continued to ease the output cuts and planned maintenance at some Russian oilfields ended. Russia’s crude oil and condensate production combined stood at around 10.46 million barrels per day (bpd) in July, up by 0.3 percent from June, according to Bloomberg estimates based on preliminary data from Russia’s Energy Ministry.Russian oil production is now estimated to have slightly declined in August, from 10.46 million bpd in July to 10.43 million bpd last month, according to Reuters estimates based on Russian energy ministry data in tons reported in early September.But this more than 10.4 million bpd includes what is estimated to be 800,000 bpd-900,000 bpd in condensate production in Russia each month.
Environmental organizations threaten lawsuit after oil spill - Three environmental organizations threatened to file a lawsuit against the Eilat Ashkelon Pipeline Company after about 100 cubic meters of oil leaked from the pipeline near Mash'en near Ashkelon in August, the organizations announced on Monday in a letter to Environmental Protection Minister Tamar Zandberg and the Nature and Parks Authority. The leak led to the need to clear 5,000 tons of contaminated soil and concerns that the fuel contaminated groundwater. The organizations, including the Society for the Protection of Nature in Israel, the Israel Union for Environmental Defense and Zalul, warned that they would file a lawsuit if no concrete steps are taken to correct the issues in the pipeline and prevent the recurrence of environmental damage. The organizations demanded that the Eilat Ashkelon pipeline deal with Med-Red, responsible for transporting oil in the Gulf of Eilat be canceled and that substantial steps be taken to halt the flow of oil in the Eilat Ashkelon pipeline. The incident occurred shortly after the Eilat Ashkelon Pipeline Company rejected claims that its fuel pipeline was deteriorating, according to the letter. "The latest leak incident, then, is not surprising, but is a disaster that was completely expected to occur," said the organizations. The Green Police of the Environmental Protection Ministry has launched a criminal investigation into the company. At the time of the incident, Zandberg visited the scene and said: "This is a very serious incident, which once again illustrates how dangerous and harmful the transportation of fossil fuel in the heart of the State of Israel can be. "This incident highlights that mishaps happen, all the time, and it is strictly forbidden to allow malfunctions to occur in close proximity to sensitive areas, on land or at sea, such as near coral reefs of global importance. We will examine the circumstances of the incident, and act to enforce proceedings with the company as required," said Zandberg
Turkey cleans up fallout from Syria oil leak killing crabs -The Mediterranean shores of Turkey are still under threat from an oil leak hailing from Syria week after the spill was identified. The leak stemmed from the Baniyas power plant in the eponymous regime-controlled area of Syria south of Turkey. The size of the leak ranges from 2 to 4 tons of fuel, regime officials had said earlier. Initial satellite imagery showed an oil sheen 36 kilometers (22 miles) long, but newer imagery shows that the spill is larger than anticipated and reaches deeper into the Mediterranean. Over the past two days, workers strove to clean up the sea and beaches spanning a 13 kilometer-long coastal strip in the Akdeniz and Tarsus districts of the southern province of Mersin. Crews concentrated their efforts on an area hosting the confluence of the Seyhan and Berdan rivers. Solid waste covered with oil that had washed ashore was collected while corpses of marine creatures such as bluefin crabs were also found on the beach. Hüseyin Özgür Yalçın, head of the Directorate of Environment and Urban Planning in Mersin, which leads cleaning efforts along with local municipalities, said waste originating from the slick started emerging off the coast recently and they acted swiftly to clean it up. Yalçın told Anadolu Agency (AA) on Monday that the pollution was evident in three different locations and that the public should not be worried. “We took all measures. Pollution stemming from leaks has been collected and disposed of in facilities designed for waste disposal without harming the environment." Turkey also sent ships equipped with sea barriers, oil skimmers, oil absorbent pads and containment tanks to the Turkish Republic of Northern Cyprus (TRNC), which also faced risk from the oil slick. Earlier this month, the TRNC’s Minister of Public Works and Transportation Resmiye Canaltay said that shifting winds had temporarily pushed the fuel back toward Syria. But the minister added that he still expected at least some of the oil to reach Turkish Cyprus. "There will be major damage to our habitat," Canaltay told local television. TRNC environmental officials said up to 20,000 tons of fuel oil had spilled from the power plant on Syria's Mediterranean coast. They added that marine life was in particular danger because some of the oil had started to solidify and sink to the bottom of the Mediterranean Sea.
China's Oil Sale Is A Clear Message To OPEC+ -China made headlines last week with the news that it was going to release some crude oil from its strategic petroleum reserve and sell it in a move that Bloomberg called "an unprecedented intervention." Indeed, this was the first time China announced the sale of oil from its strategic reserve. The size of this reserve is unknown as the government never releases that data, but analysts have been using satellite imaging to estimate just how much oil China has in storage.The reason for the move was, of course, oil prices. At over $70 per barrel, crude appears to have become too expensive for Beijing after producer price inflation hit a 13-year high last month, per a Reuters report. The same report cited China's National Food and Strategic Reserves administration as saying the oil sales would "better stabilise domestic market supply and demand, and effectively guarantee the country's energy security."The world's biggest economic hothouse, which has so far this year grown at a rate of 8.44 percent, has been struggling with high raw material prices for months, just like the rest of the world. Unlike the rest of the world, it has levers to pull when it decides it has had enough.What is interesting is that this may not be the first time China has sold oil from its strategic reserve. Yet it is the first time it has made it public, Energy Aspects' Amrita Sen told the Financial Times."This is not new, but the announcement is new and I think it's an attempt on their part to temper domestic prices," Sen explained. The other interesting thing, as noted in the Financial Times report on the news, is that the first-of-its-kind announcement came soon after the latest meeting of OPEC+ where the cartel decided to keep adding production at rates agreed earlier despite calls - including from U.S. President Joe Biden - to add more supply to market to temper the price rise. As Reuters columnist Clyde Russell put it, the oil sale was all about the message, not so much the oil itself.
Oil Glut That Covid Built All But Gone -- Global crude inventories that ballooned during the pandemic have shrunk to the lowest level in 20 months as an economic rebound in top consumers China and the U.S. drive a robust recovery in fuel demand. About 2.97 billion barrels of crude oil were stored onshore globally as of Sept. 5, the least since January 2020 before Covid-19 eviscerated demand, according to data analytics firm Kayrros. U.S. stockpiles are at a two-year low, those in China are the smallest since September 2020, while inventories at the African hub of Saldanha Bay are at the lowest since April last year. Oil consumption in the world’s top guzzlers has surpassed pre-pandemic levels and underpinned a red-hot rally in crude prices, although it’s faltered over the last couple of months due to the delta variant of the virus. China’s depleted inventories also have some in the market predicting that the biggest crude importer will start replenishing its giant reserves again soon. “There was really a surge in crude oil demand, especially in the first half of this year,” said Victor Shum, vice president of energy consulting at IHS Markit. However, he predicted that the draw-down of inventories will slow as OPEC+ pumps more, and that demand surges are “probably turning a corner.” Global inventories swelled in July last year to the highest level since Kayrros started compiling its data in May 2016. Since then, there’s been a steady drop across most regions. Onshore storage in Europe and the Middle East are about 28-to-35 million barrels lower than a year earlier, according to Kayrros. U.S. stockpiles may decline even further if production halted by Hurricane Ida resumes slower than the return of refining capacity, said Sri Paravaikkarasu, head of Asia oil at FGE. The Category 4 storm swept through the Gulf of Mexico and crashed into the coast two weeks ago. Higher crude prices have also encouraged refiners to tap more stored oil, while a bullish backwardation structure has made it uneconomical for traders to hoard crude. China recently took the unprecedented step of offering crude reserves to domestic processors to try and cool prices. The Asian giant’s crude stockpiles were at about 966 million barrels on Sept. 5, the lowest since September 2020, although still around 100 million barrels above pre-pandemic levels, according to Kayrros. Another satellite tracker, Ursa Space Systems, which uses a slightly different methodology, estimates inventories are near the smallest since June 2020. Chinese inventories were mostly depleted by domestic and international traders who had supplied local independent refiners, according to Sengyick Tee, an analyst at Beijing-based SIA Energy. The private refiners, known as teapots, account for about a quarter of China’s oil-processing capacity.
Is Oil Really Doomed? -Two recent reports warned that oil and gas production needs to be significantly reduced if the world is to meet the Paris Agreement goals and curb the effects of climate change. They add to a growing body of research calling on Big Oil to stop pumping. But Big Oil seems to be doing the opposite. At the beginning of September, Italy's Eni—one of the most ambitious oil majors when it comes to emission reduction commitments—announced a new oil discovery offshore Ivory Coast. The company estimated the potential reserves of the new discovery at between .5 billion and 2 billion barrels of crude and 1.8-2.4 trillion cubic feet of natural gas. Last week, Exxon reported yet another discovery off the coast of Guyana - its twentieth in the Stabroek block. It adds to reserves already estimated at 9 billion barrels of crude, which the Guyanese government plans to exploit to the best of its abilities. Meanwhile, a report from University College London has warned that the oil industry must start cutting production at a rate of 3 percent annually by 2050 to meet the 1.5-degree Celsius target of the Paris Agreement, which is the more ambitious scenario of the agreement. This, according to the researchers led by environmental and energy economist Dan Welsby, means some 60 percent of global oil reserves, along with 90 percent of coal reserves, need to remain in the ground. Another report, by Carbon Tracker, calls on oil companies to plan for a future where demand will be much lower. So much lower, in fact, that they needed to plan for 50-percent lower output over the next decade or so if they really want to take part in efforts to curb the rise of global temperatures to 1.5 degrees Celsius above pre-industrial times. "Oil and gas companies are betting against the success of global efforts to tackle climate change," one of the authors of the report, Carbon Tracker's head of oil, gas, and mining, Mike Coffin, said. He couldn't have put it better, and while it is not news that the interests of the oil and gas industry are at odds with a lot of climate change efforts, there is more than one reason for this.Consider another recent news report. Canada's Enbridge paid $3 billion for Moda Midstream Operating, a company that owns the biggest oil export terminal in the United States, the Ingleside Energy Center in Corpus Christi, Texas, to be renamed Enbridge Ingleside Energy Center (EIEC).The deal comes at a time when the United States is making a mad rush for climate change legislation to catch up with Europe, and this rush is largely unfavorable for the oil industry. And yet, Enbridge is betting big on the continued demand for U.S. oil globally. The reason: oil demand outlook. Oil demand, which stunned the energy world last year, sending Big Oil reeling and many small companies sinking, is back with a vengeance, exceeding all expectations, some of which predicted that the shift to renewables would kill oil demand growth pretty soon. It now appears these predictions were premature.
Oil Prices Climb On Shocking OPEC Report --The surge of the Delta variant around the globe is set to partially delay oil demand recovery into the next year when robust economic growth and stronger recovery in fuel consumption will see global oil demand averaging 100.8 million barrels per day (bpd) and exceeding pre-COVID levels, OPEC said on Monday, raising its 2022 demand forecast by a shocking 900,000 bpd.Next year, oil demand worldwide is now expected to jump by around 4.2 million bpd compared to 2021, an upward revision of 900,000 bpd compared to last month’s assessment, OPEC said in its closely-watched Monthly Oil Market Report (MOMR) today.This year, total global oil demand remains unchanged at 96.7 million bpd for the whole of 2021. But the fourth-quarter demand was revised slightly down, by 110,000 bpd from the August estimate of 99.82 million bpd to 99.7 million bpd now, OPEC said in its September report.“Oil demand in 3Q21 has proved to be resilient, supported by rising mobility and traveling activities, particularly in the OECD. At the same time, the increased risk of COVID-19 cases primarily fuelled by the Delta variant is clouding oil demand prospects going into the final quarter of the year, resulting in downward adjustments to 4Q21 estimates,” the cartel noted. The lower estimates for the last quarter of 2021 mean that some of the demand recovery will be pushed into the first half of 2022, according to OPEC.“As vaccination rates rise, the COVID-19 pandemic is expected to be better managed and economic activities and mobility will firmly return to pre-COVID-19 levels. The revisions are based in both the OECD and non-OECD regions, with steady economic developments expected to support the partially delayed recovery in oil demand in various sectors,” OPEC said in its 2022 forecast.Demand for 2022 was revised up by 300,000 bpd for OECD and by 600,000 bpd for non-OECD countries compared to last month’s outlook. Last week, reports emerged that OPEC could cut its 2022 demand forecast, but the organization now says it believes that the Q4 2021 weakness in demand would only delay the recovery to next year.
Oil Finishes on a Six Week High - Oil closed above $70 a barrel for the first time in nearly six weeks as another heavy storm heads to the U.S. Gulf of Mexico, while producers are still reeling from Hurricane Ida. Futures in New York settled 1.1% higher. Tropical Storm Nicholas, which may reach hurricane strength before it makes landfall, is expected to bring flooding rains to Houston, as well as parts of Louisiana still recovering from Hurricane Ida two weeks ago. About 44% of oil supply is down in the Gulf and the volume of shut-in output may start growing once again. Shell has already began removing some staff from one of its platforms to prepare for the storm. Refineries and terminals Texas could also see some curtailments, given the storm’s coastal track. “The threat of more disruptions from extreme weather is also a cause of concern for producers and a reason for traders to add price premiums, as the new Tropical Storm Nicholas in the Gulf of Mexico could turn into a hurricane and hit Texas in coming days,” said Nishant Bhushan, an oil markets analyst for industry consultant Rystad Energy. With crude prices steadily climbing higher this month, major Wall Street banks are assessing the crude market. Goldman Sachs Group Inc. said oil will likely lead a rally in commodities next quarter amid strong demand and “growing scarcity” of supply. Bank of America Corp. said a colder-than-expected winter could push prices up toward $100 at some point early next year. Meanwhile, OPEC on Monday forecast stronger demand for its crude this year and next amid rising global fuel use and output disruptions from the North Sea to the U.S. The group’s monthly report indicated that the world will continue to face a supply deficit in coming months even as OPEC nations revive idle production. West Texas Intermediate crude futures rose 73 cents to settle at $70.45 a barrel in New York time. Brent advanced 59 cents to $73.51 a barrel, after earlier jumping 1.4%. “The broader global oil-demand picture is showing signs of normalizing,” said Stephen Brennock, an analyst at brokerage PVM Oil Associates. “As OPEC+ is firmly in control of supply, and maintaining its cautious stance, the crude market should continue to tighten further in the year-end period.” Traders are also awaiting additional import quotas for China’s private refiners, which could spur renewed purchases in the physical market in the coming weeks. One company was granted permission to import a set volume of crude last week, and quotas for other refiners are expected imminently.
Oil Steady In Wake of Hurricane Nicholas -Oil ended the session little changed as investors tracked U.S. dollar movements and concerns faded around Hurricane Nicholas’ threat to crude supply in the U.S. Gulf of Mexico. Futures in New York erased nearly all gains, yet still managed to close at the highest since early August on Tuesday. The dollar advanced, reducing the appeal of commodities priced in the currency. While Nicholas did not impact offshore output in the U.S. Gulf, storm-related power outages briefly shut the country’s largest gasoline pipeline that sends fuel from Houston to the Northeast. U.S. crude futures have traded near $70 a barrel for most of this month. The International Energy Agency said on Tuesday that the world will have to wait until October for additional oil supplies as output losses from Hurricane Ida wipe out increases from OPEC+. Global oil demand has been falling since July as rising Covid-19 cases prompt mobility restrictions in Asia, according to the IEA. Nicholas, which struck shore as a Category 1 hurricane and has since lost strength, had largely moved east from the Houston area by mid-morning local time, allowing refiners, chemical makers and other industrial concerns to assess the physical impacts of rain and wind. The gasoline crack spread, a rough measure of the profit from refining crude into fuel, rallied about 3% on the temporary outage of Colonial’s Pipeline Co.’s gasoline pipeline. The company’s diesel pipeline is still shut. West Texas Intermediate for October delivery added 1 cent to settle at $70.46 a barrel in New York. Brent for November settlement rose 9 cents to end the session at $73.60 a barrel. Meanwhile, China said it will make the first sale of oil from its strategic reserves on Sept. 24 after announcing the historic move last week. The initial auction will be for about 7.38 million barrels of crude, the National Food and Strategic Reserves Administration said in a statement Tuesday.
Oil Futures Rally as Tropical Storm Nicholas Heads to Texas Refineries -- Extending last week's gains, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange advanced in early trading Monday as market participants monitor an intensifying storm system in the southwestern Gulf of Mexico that is projected to make its landfall tonight near Texas' refining and oil export hub of Corpus Christi, while refiners and oil producers in the region continue to struggle with an uneven infrastructure recovery following a category four Hurricane Ida in late August.Near 7:30 a.m. ET, NYMEX October West Texas Intermediate contract topped $70 per barrel (bbl), up $0.68 on the session so far, and Brent crude for November delivery added $0.55 to trade near $73.47 bbl. NYMEX October RBOB futures rallied 1.45 cents to $2.1691 gallon, and front-month ULSD futures advanced 1.3 cents to $2.1590 gallon.Monday's move higher is underpinned by carryover effects of supply disruption in the Gulf of Mexico for nearly two weeks caused by Hurricane Ida, which made landfall Aug. 29, with over 48% or 883,755 barrels per day (bpd) of offshore oil production in the region still offline, according to the government data from the Bureau of Environmental Enforcement and Protection. Tropical Storm Nicholas, which strengthened this weekend over the western Gulf of Mexico, is currently forecast to bring heavy rains with a peak wind speed of 50 to 60 knots before it makes landfall in central Texas between Corpus Christi and Galveston near Matagorda Bay, according to DTN Weather. DTN Weather gives a 50% probability of intensifying into a category one hurricane, with a category one storm having wind speeds between 74 to 95 miles per hour. Corpus Christi is a key U.S. crude export port and home to several oil refineries, including Citgo's 157,500 bpd refinery, Valero's 200,000 bpd refinery and Flint Hills Resources 260,000 bpd refinery. At the end of last week, Gulf oil producers and logistics companies made gradual progress in bringing back shut-in capacity as power supplies restarted for a number of critical onshore and deep-water infrastructure. The Louisiana Offshore Oil Port said on Thursday that it resumed delivering crude oil to regional refineries. Limiting the upside for the oil complex is a strengthening U.S. dollar index that rallied to a two and a half week high 92.880 against a basket of foreign currencies in overnight index trade. Greenback's move higher is spurred by several comments from top Federal Reserve officials who voiced their support for an earlier withdrawal of fiscal support for the recovering economy. President of Philadelphia Federal Reserve Patrick Harker said in an interview to Nikkei Asia on Sunday that the Fed's asset purchasing programs can only affect the demand side of the labor market and not the slack on the supply side.
Oil Futures Up as Nicholas Slams Texas, IEA Ups Fourth Quarter Demand -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange extended gains into morning trade Tuesday after Nicholas made landfall about 80 miles south of Houston near Sargent Beach as a category one hurricane, likely having disrupted export activity at Corpus Christi, while producers in the offshore U.S. Gulf Coast continue to recover from the disruption brought about by a category four Hurricane Ida 15 days ago.Unlike Ida however, Nicholas is turning out to be more of a rain event, although as of 5 a.m. ET more than 400,000 customers in the Houston area were left without power that could affect refinery operations in the region. Analysts estimate that the biggest impact from Nicholas will be on crude oil exports, with as much as 12 million per barrel (bbl) of oil potentially not exported during the week.Shell said on Monday that it was evacuating nonessential personal from its offshore Perdido platform as a precautionary measure ahead of Nicholas. Bureau of Safety and Environmental Enforcement data shows 43.6% or 793,522 bpd of offshore oil production in the U.S. Gulf of Mexico remains offline.In its monthly oil market report released this morning, International Energy Agency noted the supply disruption from Hurricane Ida is now nearing 30 million bbl, as offshore installations and refineries in the region have been slow to restart due to severity of the storm."Already in August, production outages led to further sharp declines in inventories. Preliminary data show OECD oil stocks falling by more than 30 million barrels (mb) last month, extending steep losses over June and July. OECD total industry stocks drew by 34.4 mb in July and stood at 2 850 mb, 185.7 mb lower than the 2016-2020 average and 120.3 mb below the pre-Covid, five-year average" said IEA.On the demand side, Paris-based agency downgraded its third-quarter projections by 200,000 barrels per day (bpd), mainly driven by mobility restrictions in China and southeast Asia. IEA, however, expects global oil demand to rebound by a sharp 1.6 million bpd in October and continue to grow until end-year as COVID-19 show signs of abating. Global oil demand is now expected to rise by 5.2 million bpd this year and by 3.2 million bpd in 2022. The new projections follow a more upbeat market outlook from the Organization of the Petroleum Exporting Countries that held global oil demand projections for this year steady, forecasting annualized growth of 6 million bpd despite the rapid spread of the Delta variant across major economies. "Oil demand in third quarter 2021 has proved to be resilient, supported by rising mobility and travelling activities, particularly in countries that part of the Organization of Economic Cooperation and Development," said OPEC in their Monthly Oil market Report released Monday. In financial markets, U.S. dollar index reversed off three-week high 92.650 in overnight trade and equity futures edged slightly higher as investors turned cautious ahead of the key reading on U.S. inflation in August. Last month, Consumer Price Index increase 0.5% for a 5.4% annual jump -- making the reading the highest in 13 years. August CPI index is expected to cool off slightly to a 0.4% monthly increase and 5.3% annual gain. A hotter-than-expected August reading could prompt the Federal Reserve to announce the tapering of its $120 billion in monthly bond purchases as early as next week when the Federal Open Market Committee holds its policy meeting on Sept. 21-22.
WTI Extends Gains After Across The Board Inventory Draws - Oil prices ended largely unchanged on Tuesday as tropical storm Nicholas brought heavy rain and power outages in Texas but caused less damage to U.S. energy infrastructure than Hurricane Ida caused earlier this month. "The Gulf situation is not resolving itself quickly," More than 39% of the U.S. Gulf of Mexico's production of crude and natural gas remained shut on Tuesday, the regulator Bureau of Safety and Environmental Enforcement (BSEE) said. Also of note was the fact that the, now infamous, Colonial pipeline, the largest U.S. fuel pipeline, partially resumed operations after shutting due to a power outage early in the day.Details on China's plans to sell crude from strategic reserves pressured prices, but all algos attention will be focused in the short-term on API's inventory data... API
- Crude -5.437mm (-3.5mm exp)
- Cushing -1.345mm
- Gasoline -2.761mm
- Distillates -2.888m
Analysts expected crude inventories to fall for the 6th straight week and were correct with a larger than expected crude draw accompanied by draws at Cushing and across gasoline and distillates...
Oil prices jump over $2 after drawdown in U.S. stocks -Oil prices rose over $2 on Wednesday after industry data showed a larger-than-expected drawdown in U.S. crude inventories and on expectations demand will rise as vaccination roll-outs widen. Brent oil rose advanced $1.86, or 2.5%, to settle at $75.46 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed $2.15, or 3.05%, to settle at $72.61 per barrel. Brent hit its highest levels since late July and WTI since early August. U.S. crude oil, gasoline and distillate stocks fell last week, two market sources said, citing American Petroleum Institute figures, after Hurricane Ida shut numerous refineries and offshore drilling production. Crude stocks fell by 5.4 million barrels for the week ending Sept. 10, compared to a forecast 3.5 million barrel drop. The U.S. Energy Information Administration's oil inventory report is due at 10:30 a.m. EDT (1430 GMT) on Wednesday. "The impact of Hurricane Ida was a lot greater than many anticipated and production in the Gulf of Mexico region might struggle to return until Tropical Storm Nicholas is done punishing the region with torrential rain," said Edward Moya, senior analyst at OANDA. Tropical Storm Nicholas moved slowly through the Gulf Coast on Tuesday, leaving hundreds of thousands of homes and businesses without power, although Texas refineries ran normally. Damage from the storm comes two weeks after Hurricane Ida knocked a significant amount of Gulf Coast refining capacity offline. "This year's hurricane season has a much greater and longer-lasting impact on the global oil balance than in previous years," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. Oil prices also found support from the International Energy Agency (IEA), which said on Tuesday vaccine roll-outs would power a rebound, after a three-month slide in global oil demand due to the spread of the Delta coronavirus variant and renewed pandemic restrictions. But oil price gains were capped by a fall in China's crude throughput in August with daily refinery runs hitting the lowest since May 2020 and overall factory output faltering.
WTI Extends Gains As US Crude Inventories Slump To 2-Year Lows - Oil prices extended gains overnight following across-the-board inventory draws reported by API, as the impact of Hurricane Ida's shut-ins combined with reports from the International Energy Agency this week that the world will have to wait until October for more supply to come online as the Organization of Petroleum Exporting Countries and its allies hike production.“It’s bullish developments left, right and center these days,” said John Kilduff, a partner at Again Capital LLC.“Last night’s report from the American Petroleum Institute that showed an over 5 million barrel draw in crude stocks is helping prices. We should expect more gains in prices if the EIA confirms what the API reported.”All the bulls' eyes will be focused on the official data to confirm API's... DOE:
- Crude -6.422mm (-3.5mm exp)
- Cushing -1.103mm
- Gasoline -1.857mm
- Distillates -1.689mm
Following API's reported draws across all the energy complex, the official data from EIA confirmed big draws for crude, gasoline, and distillates and at the Cushing storage facility... Overall US crude inventory (ex-SPR) is back at its lowest in two years... US Crude production has been slow to recover from Hurricane Ida's shut-ins. According to data from the Bureau of Safety and Environmental Enforcement, shut-ins last week averaged over 1.5 million barrels per day.
Oil Surged Higher Wednesday | Rigzone - Oil jumped to the highest in six weeks amid signs of a rapidly tightening market after a U.S. government report showed a bigger-than-expected decline in crude stockpiles. Futures in New York surged 3.1% on Wednesday and global benchmark Brent closed above $75 a barrel for the first time since July. U.S. crude supplies hit the lowest since September 2019 after falling by more than 6 million barrels, exceeding projections. The data follow the International Energy Agency’s warning that recent supply lost from storms in the U.S. Gulf have offset what OPEC and its allies have added, and the world will have to wait until October for more barrels. “There’s not a lot of new crude supply coming to the market, so the market feels awfully tight,” said Matt Sallee, who helps manage about $8 billion at Tortoise. “That will keep crude prices moving higher. Covid demand worries are taking a backseat for now.” Prices have steadily climbed since late August and were given a further boost when Hurricane Ida shut down a chunk of U.S. Gulf Coast offshore oil production. Meanwhile, the latest analysis from the Organization of Petroleum Exporting Countries shows a looming supply crunch in the summer of 2022. OPEC’s analysts now see global oil demand increasing by 4.15 million barrels a day in 2022, compared to the level expected for this year, an upward revision of 860,000 barrels a day from what they forecast a month ago. West Texas Intermediate for October delivery advanced $2.15 to settle at $72.61 a barrel in New York. Brent for November settlement rose $1.86 to end the session at $75.46 a barrel on the ICE Futures Europe exchange. U.S. supply restraints have caused Brent and WTI benchmark crude’s so called timespreads to strengthen. WTI crude for December delivery settled at $6.23 a barrel higher than that for supply in the same month next year. That’s the biggest premium in more than a month. The Energy Information Administration report also showed that national gasoline and distillate inventories each declined by nearly 2 million barrels. A sharper drop would have likely occurred had petroleum consumption not been affected by recent U.S. Gulf Coast storms. Additionally, offshore natural gas production has been slow to recover since the recent storms, causing prices to rally. That might prompt power companies to use petroleum products such as fuel oil to run as feedstock in their plants, according to Sallee. “That will buoy crude prices even higher,” he said.
WTI Futures Spike 3% as Big Draw Highlights Supply Concerns -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Wednesday's session with gains between 1.5% and 3%. Gains were propelled by a second consecutive week of sharp inventory drawdowns from U.S. commercial crude and petroleum product stocks amid extended production outages in the Gulf of Mexico, while stronger-than-expected industrial data in the Eurozone and domestically fueled optimism over accelerated demand growth in the fourth quarter.This year's Atlantic hurricane season has already proved to be more destructive and having a greater impact on global supply balances than in previous years. More evidence of longer-lasting effects on domestic infrastructure from Hurricane Ida than is typical for a hurricane is found in Wednesday's government inventory report from the Energy Information Administration showing domestic petroleum stockpiles plunged more than 10 million barrels (bbl) for the second consecutive week through Sept. 10, with refiners and producers in the region making slow progress in their recovery from disrupted operations. Bureau of Safety and Environmental Enforcement Wednesday afternoon reported 29.52% or 537,000 barrels per day (bpd) of current oil production in the Gulf of Mexico still remains offline post Hurricane Ida, which made landfall on Aug. 29.Commercial crude oil stockpiles plunged 6.4 million bbl last week compared with calls for a smaller 2.5 million bbl drop. At 417.4 million bbl, domestic crude supplies now stand about 7% below the five-year average. A larger-than-expected crude draw came as refinery run rates nationwide increased just 0.2% compared to calls for a 2.4% jump week-on-week. Gasoline stockpiles fell a less-than-expected 1.9 million bbl with demand for the motor transportation fuel tumbling 7.5% to 8.892 million bpd. Demand for distillate fuels, often seen as a proxy for economic activity, edged higher by 110,000 bpd from the previous week to 3.795 million bpd. Distillate stockpiles declined by 1.7 million bbl to about 13% below the five-year average at 131.9 million bbl. Interestingly, U.S. industrial production increased 0.4% last month despite widespread shut-ins related to Hurricane Ida that held down an expansion in industrial production by an estimated 0.3%, said Federal Reserve this morning. "Although the hurricane forced plant closures for petrochemicals, plastic resins, and petroleum refining, overall manufacturing output still rose 0.2% and was 1% above the pre-pandemic level," the Fed said. Mining production fell 0.6%, reflecting hurricane-induced disruptions to oil and gas extraction in the Gulf of Mexico. The output of utilities increased 3.3%, as unseasonably warm weather boosted demand for air conditioning. Internationally, Eurozone's statistical office Eurostat reported industrial output in the 19 countries sharing the euro rose 1.5% in July compared with calls for 0.5% increase, underscoring a quick rebound in Eurozone manufacturing economy. Elevated energy prices across the EU should be supportive for the broader oil complex heading into the fall and winter seasons, with forecasts pointing to higher-than-usual demand for heating fuels. On the session, NYMEX October West Texas Intermediate contract advanced $2.15 for a $72.61-per-bbl settlement, and Brent crude for November delivery rallied $1.86 to $75.46 per bbl. NYMEX October RBOB futures advanced 3.42 cents to $2.2066 per gallon, and front-month ULSD futures surged 4.40 cents for a $2.2053-per-gallon settlement.
Oil Futures Follow Equities Down Ahead of Key Economic Data -- Following an explosive data-driven rally on Wednesday, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange moved lower in overnight trade, weighed down by a strengthening U.S. dollar index and sagging equity futures as investors turned cautious ahead of the release of key economic data in the United States that could give additional clues on how the Delta-driven surge in coronavirus infections has affected economy's recovery.In early morning trading, the NYMEX October West Texas Intermediate contract slipped $0.23 to trade near $72.38 per barrel (bbl) after adding more than $2 on Wednesday, and Brent crude for November delivery declined to $75.26 bbl. NYMEX October RBOB futures traded little changed near $2.2057 gallon, and front-month ULSD futures slipped 0.64 cents from a $2.2053 a gallon settlement on Wednesday.The U.S. Dollar Index jumped 0.18% against the basket of foreign currencies to trade above 92.7-level, with investors awaiting the release of weekly unemployment claims and U.S. retail sales for August that could help define a direction for markets. Following July's contraction of 1.1%, investors expect retail sales to decline by 0.8% in August, with rising prices joined with the delta-driven surge in coronavirus infections likely to dampen consumer spending in the final weeks of summer.Markets will likely put a lot of emphasis on last month's retail sales ahead of next week's highly anticipated Federal Reserve Open Market Committee meeting, scheduled for Sept. 21-22. Combined with deteriorating consumer sentiment and lower-than-expected August jobs report, which showed an increase of 235,000 in nonfarm payrolls, disappointing retail sales data could force the Fed's hand to delay tapering of asset purchases. The Federal Reserve currently buys $120 billion a month in bond and mortgage-backed securities.Tuesday's inflation data revealed that the Core Consumer Price Index in August edged lower to 4% on a yearly basis from 4.3% in July, supporting the view that the Fed could afford to remain cautious with regards to tapering.Last week's unemployment claims are expected to tick higher but remain near the pandemic low of 310,000, with analysts pointing to a likely increase in new fillings from Hurricane-hit Louisiana and Texas this month. Wednesday's industrial data from the US Federal Reserve showed Hurricane related shutdowns in Louisiana shaved off at least 0.3% from the total industrial output last month. "Although the hurricane forced plant closures for petrochemicals, plastic resins, and petroleum refining, overall manufacturing output still rose 0.2% and was 1% above the pre-pandemic level," the Fed said.Limiting the downside for the oil complex, Wednesday's inventory report from the U.S. Energy Information Administration showed commercial crude-oil supplies fell by a massive 6.4 million bbl last week compared with calls for a smaller 2.5 million bbl drop. At 417.4 million bbl, domestic crude supplies now stand about 7% below the five-year average.
Oil Prices Steady as U.S. Storm Threat Wanes (Reuters) -Oil prices steadied on Thursday after hitting a multi-week high a day earlier as the threat to U.S. Gulf crude production from Hurricane Nicholas receded. Brent crude ended the session up 21 cents, or 0.3%, at $75.67 a barrel. On Wednesday Brent touched $76.13, its highest since July 30. U.S. West Texas Intermediate (WTI) ended the session unchanged at $72.61 a barrel after climbing to the highest since Aug. 2 on Wednesday. U.S. Gulf energy companies have been able to restore pipeline service and electricity quickly after Hurricane Nicholas passed through Texas early this week, allowing them to focus on efforts to repair the damage caused weeks earlier by Hurricane Ida. "As Nicholas spared U.S. production from further disruptions, it is difficult to see how oil prices can increase further in the near term," "Ida-affected oil production capacity continues to recover in the U.S." Oil jumped on Wednesday, supported by figures showing U.S. crude inventories fell by a bigger-than-expected 6.4 million barrels last week, with offshore oil facilities still recovering from Ida's impact. [EIA/S] Brent has rallied about 45% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, plus some recovery from last year's pandemic-related collapse in demand. Oil is also finding support from a surge in European power prices, which have soared because of factors including low gas inventories and lower-than-normal gas supply from Russia. Benchmark European gas prices at the Dutch TTF hub have risen by more than 250% since January.
Gulf of Mexico: Oil falls as storm-hit US supply trickles back into market - Oil prices fell on Friday as energy companies in the US Gulf of Mexico restarted production after back-to-back hurricanes in the region shut output. Brent crude futures fell 33 cents to settle at $75.34 a barrel. US West Texas Intermediate (WTI) crude futures fell 64 cents to settle at $71.97 a barrel. For the week, Brent was up 3.3% and US crude was up 3.2%, supported by tight supplies due to the hurricane outages.Friday's slump followed five straight sessions of rises for Brent. On Wednesday, Brent hit its highest since late July, and US crude hit its highest since early August."The reason oil prices reached such highs in the last few days was clearly supply disruptions and drawdowns in inventories, so now that US oil production is returning, oil as expected trades lower," said Nishant Bhushan, Rystad Energy's oil markets analyst.Gulf Coast crude oil exports are flowing again after hurricanes Nicholas and Ida took out 26 million barrels of offshore production. Restarts continued with about 28% of US Gulf of Mexico crude output offline, Reuters reported on Thursday.US energy firms this week added oil and natural gas rigs for a second week in a row although the number of offshore units in the Gulf of Mexico remained unchanged after Hurricane Ida slammed into the coast over two weeks ago.Fourteen offshore Gulf of Mexico rigs shut two weeks ago due to Ida remained shut, energy services firm Baker Hughes Co said. Last week, four offshore rigs returned to service.The oil and gas rig count, an early indicator of future output, rose nine to 512 in the week to Sept. 17, its highest since April 2020, Baker Hughes said.The dollar climbed to a multi-week high on Friday, making dollar-denominated crude more expensive for those using other currencies. The dollar got a boost from better-than-expected US retail sales data on Thursday.
Oil Drops Friday But Up On The Week | Rigzone - Oil declined amid Russia’s plans to boost upcoming overseas oil sales and as the dollar rallied. Futures in New York ended the session nearly 1% lower on Friday. Russia will increase its oil exports 3% in the fourth quarter, according to Interfax. Meanwhile, gains in the U.S. dollar reduced investor interest in commodities priced in the currency. “There’s been demand destruction starting with higher prices across energy markets broadly and there’s Russian’s plans to raise its global oil sales,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. Despite weaker prices on Friday, U.S. benchmark crude futures gained more than 3% this week due to tightening supplies. In the U.S., crude inventories tumbled to the lowest level since 2019 and fuel supplies also fell, according to government data this week. Investors have been tracking strong rallies in other energy commodities as well, especially natural gas, which has surged by about 45% so far this quarter and spurred the prospect of fuel switching. But as prices climb there are increasing signs governments are growing uneasy with the knock-on effects. U.S. President Joe Biden said Thursday that his administration is looking into high gasoline prices, while China said this week that it will sell oil from its strategic reserve. West Texas Intermediate crude futures for October delivery fell 64 cents to settle at $71.97 a barrel. Brent for November settlement dropped 33 cents to end the session at $75.34 a barrel. Growing supply tightness has made crude markets more backwardated, bullish pattern with near-dated prices more expensive than those further out. Meanwhile, products like propane that are used in heating and rally seasonally in the winter are trading at multiyear highs as natural gas prices surge. “Fundamentals have gotten better and as long as they continue to improve, oil prices will rise,” said Peter McNally, global head of industrials, materials and energy at Third Bridge. “We have not hit a ceiling yet.” With the focus on high energy prices across Europe, the International Energy Agency’s Executive Director Fatih Birol said gas prices could remain high for weeks to come on strong demand. He also said he would be surprised to see oil above $100 a barrel, despite a strong rebound in demand this year. (With assistance from Sharon Cho and Alex Longley. © 2021
UN warns one million Afghan children at risk of starvation before winter hits - U.N. Secretary General António Guterres on Monday warned that millions of Afghans could run out of food by this winter. As The New York Times reported, Guterres gave the warning while speaking in Geneva at a U.N. conference on the matter of Afghanistan's dwindling resources and the livelihood of its people.“After decades of war, suffering and insecurity, they face perhaps their most perilous hour,” said Guterres.According to Guterres, a third of Afghans don't know where their next meal will come from. He added that donors from the international community have pledged over a billion dollars to Afghanistan.Earlier in September, a Taliban spokesperson said the U.N. hadpromised to continue providing aidto the Afghan people following a meeting held in Kabul with the U.N.'s Under-Secretary-General for Humanitarian Affairs Martin Griffiths.Shortly after the Taliban took power in Afghanistan, the international community moved to cut off the country from accessing global resources. The World Bank and the International Monetary Fund blocked Afghanistan from accessing resources and the U.S. froze billions in Afghan funds being held in U.S. banks.Last week, the U.N. called for Afghanistan's frozen funds to be released in order to avoid "a severe economic downturn.""The economy must be allowed to breathe for a few more months, giving the Taliban a chance to demonstrate flexibility and a genuine will to do things differently this time, notably from a human rights, gender, and counter-terrorism perspective," said Deborah Lyons, the U.N. secretary-general’s special representative for Afghanistan. On Monday, it was announced that the U.S. would be sending almost $64 million in humanitarian aid to Afghanistan. The funds will be distributed through the U.N. and independent aid groups.
Senior Taliban figure says women should not work alongside men - A senior Taliban figure in a new interview said women should not be able to work alongside men, raising concerns for women as the insurgent group works to form its government after capturing control of Afghanistan last month. Waheedullah Hashimi, a senior figure in the insurgent group who is close to leadership, told Reuters that the Taliban plan to fully implement a version of Sharia, ignoring pleas from the international community to allow women to have equal rights in the country. “We have fought for almost 40 years to bring [the] sharia law system to Afghanistan,” Hashimi told the news wire. “Sharia ... does not allow men and women to get together or sit together under one roof.” “Men and women cannot work together. That is clear. They are not allowed to come to our offices and work in our ministries,” he added. Hashimi also told Reuters that the ban on women would apply to industries such as media and banking, were women have become increasingly involved in since the Taliban were toppled in 2001 and a new government was established. It is unclear how much Hashimi’s comments reflect the thoughts of the new government, but they do go further than previous statements made about women’s standing in Afghanistan under the new Taliban rule, Reuters noted. Taliban spokesman Zabihullah Mujahid told NBC News last month that women will have “all the rights that Islam promises,” adding that “they can be doctors, teachers, be educated and can work to benefit society.” On Sunday, the Taliban’s new minister of higher education, Abdul Baqi Haqqani, said Afghan women will be allowed to study at universities but only in gender-segregated classrooms. Additionally, they will be required to abide by a strict dress code, which includes hijabs. Hashimi echoed that sentiment, telling Reuters that women would “of course” be needed in sectors such as medicine and education but that separate facilities will be established. “We will of course need women, for example in medicine, in education. We will have separate institutions for them, separate hospitals, separate universities maybe, separate schools, separate madrassas,” he said.
Brother of former Afghan VP killed by Taliban - The Taliban have gunned down resistance fighter Rohullah Azizi, brother to ex-Vice President Amrullah Saleh. The former politician is now one of the leaders of anti-Taliban forces in the holdout Panjshir valley. The brother of Afghanistan's former Vice President Amrullah Saleh has been shot dead by the Taliban, his nephews told news agencies on Saturday.Rohullah Azizi was an anti-Taliban fighter in the last holdout province of Panjshir, and Saleh is now one of the leaders of the resistance movement against their strict new rule. Rohullah Azizi was traveling with his driver on Thursday when Taliban fighters stopped them at a checkpoint in Khanez village in the province of Panjshir, the relatives said."As we hear at the moment [the] Taliban shot him and his driver at the checkpoint.'' nephew Shuresh Saleh told The Associated Press.Saleh said it was unclear where his uncle, an anti-Taliban fighter, was headed when he was stopped. He said phones were not working in the area.Another nephew, Ebadullah told Reuters news agency: "They killed him yesterday and would not let us bury him. They kept saying his body should rot."
How mass killings by US forces after 9/11 boosted support for the Taliban - The men of Zangabad village, Panjwai district lined up on the eve of 11 September to count and remember their dead, the dozens of relatives who they say were killed at the hands of the foreign forces that first appeared in their midst nearly 20 years ago. Their cluster of mud houses, fields and pomegranate orchards was the site of perhaps the most notorious massacre of the war, when US SSgt Robert Bales walked out of a nearby base to slaughter local families in cold blood. He killed 16 people, nine of them children. America’s tragedy, thousands of families’ terrible losses on that September morning in 2001, would indirectly unravel into similar grief for thousands of other families half a world away. Afghans who knew little or nothing about the planes flying into towers in New York, and certainly had no link at all to al-Qaida, were caught up in the war that followed, and that claimed their loved ones year after year.Haji Muhammad Wazir lost almost all his immediate family, apart from his four-year-old son in the early hours of 11 March 2012. It was more than a decade after the twin towers came down, but they were the reason the US military was on his doorstep. Bales killed his wife, four sons, four daughters and two other relatives. He shot the children in the head then tried to burn their bodies.“It is very hard for me, I still feel like these things are happening right now,” Wazir told the Guardian, “I am very happy the American forces have finally left Afghanistan, and very grateful to Allah for making this happen. At last I feel safe.”Those murders were perhaps the most high-profile civilian deaths of the war. But it was not the only time foreign forces killed large numbers of women, children and non-combatant men, in just this one corner of a single district of Afghanistan.Five men from Zangabad who spoke to the Guardian said they lost 49 relatives between them in airstrikes and the massacre, bloodshed spanning nearly a decade. These terrible losses, repeated in many parts of Afghanistan, would prove powerful recruiting tools for the Taliban, as they slowly gathered their forces to retake the country.“I could not go and fight, because I was the only person left from my family to look after my son, but I was supporting them financially and in other ways,” Wazir said of the aftermath of his tragedy.The Taliban commander for Panjwai district, Faizani Mawlawi Sahab, said each mass killing drove more people into their arms, and the slaughter of 2012 provoked particular grief and horror. “Although some people were supporting us before, after this incident everyone joined or helped us in some way,” he said.
China is already sending aid to Taliban-controlled Afghanistan, filling the gap the US left - China is already sending aid to Taliban-controlled Afghanistan, filling the financial gap left by the US and other world powers. Since the Taliban took Kabul on August 15, the Biden administration has frozen as much as $10 billion in Afghan reserves held by US banks. Simultaneously, Western countries like the US, UK, and Germany suspended their aid programs to the country, largely citing the need to not legitimize the Taliban. The World Bank and NATO have also done so. On the ground, Afghan civilians are in desperate need of help, with the United Nations warning on Thursday of a "looming humanitarian catastrophe." It said $200 million was needed to plug the gap. Last week, China pledged $31 million worth of food, medicine, and COVID-19 vaccines, to Afghanistan, the first sizable foreign-aid promise from a major nation since August 15. For China, the new Taliban regime signals a chance to extend its reach and access natural reserves. On September 3, the Taliban said China had promised to keep its embassy open and "beef up" relations. In late July, as the US was withdrawing from Afghanistan, Chinese Foreign Minister Wang Yi hosted Taliban leaders in his country, in a clear sign of warming relations between the two powers. "With the U.S. withdrawal, Beijing can offer what Kabul needs most: political impartiality and economic investment," Zhou Bo, a former colonel in the China's People's Liberation Army, wrote in The New York Times. "Afghanistan in turn has what China most prizes: opportunities in infrastructure and industry building — areas in which China's capabilities are arguably unmatched — and access to $1 trillion in untapped mineral deposits."
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