gasoline supplies at a 47 month low; distillate supplies at a 19 mo low; global oil shortage at 1,930,000 barrels per day

natural gas price falls 13% to a 9 week low; gasoline supplies drop to another 47 month low despite diminishing demand; distillate supplies at a 19 month low; global oil shortage at 1,930,000 barrels per day in October as OPEC's output is 588,000 barrels per day short of quota

US oil prices again finished slightly lower for a third straight week, following a record nine straight weeks of​ increasing​ prices that saw ​front month quotes rise more than 36%​​ to a seven year high, as US​ oil​ inventories continued to increase and Biden threatened policy initiatives to lower prices....after falling 2.8% to $81.27 a barrel last week as domestic crude oil inventories grew much more than was expected, the contract price for US light sweet crude for December delivery opened lower on Monday after Biden threatened OPEC with undisclosed "tools in the arsenal" after they refused to pump more oil, but quickly turned around and moved higher after Saudi Aramco raised its official selling prices for December deliveries to Asian and European buyers by larger-than-expected margins and finished the session with a gain of 66 cents​ to $81.93 a barrel, as traders cheered passage of the $1 trillion U.S. infrastructure spending package, which analysts said "screams bullish for oil’'...the oil rally continued into the opening on Tuesday after industry surveys found that OPEC and the 10 producers outside of the cartel led by Russia fell short of their planned production increase last month, finding​ that​ about half of the coalition’s members ​were ​unable to raise output, hamstrung with operational issues and years of underinvestment, and then rallied to settle $2.22 higher at a two week high $84.15 a barrel, as the U.S. lifting of travel restrictions and more signs of a global post-pandemic recovery boosted the demand outlook, even as supplies remained tight...oil prices extended those gains into after hours trading Tuesday, after the API reported a surprise drawdown of crude and gasoline inventories, and hence opened 38 cents higher on Wednesday, but quiclkly turned lower after the EIA's report reversed the API report to show a third consecutive weekly increase in U.S. crude oil inventories, and then dropped sharply at the end of the Wednesday​ ​session​,​ as traders sold out of riskier assets, including stocks and commodities, driven by expectations that central bankers w​ould take steps to curb rising prices​,​ to settle down $2.81 to $81.34 a barrel, as new data had showed US consumer prices were rising at their fastest rate in ​over ​three decades....oil prices extended their losses into morning trading on Thursday, after OPEC's monthly report revised lower its 2021 global demand forecast, citing weaker-than-expected fuel consumption in China and India, but after bouncing around throughout the day traded higher toward the end of the session on confidence that post-pandemic demand would strengthen further in the coming months, settl​ling 25 cents higher at $81.59 a barrel, as traders weighed the odds that Biden, under growing pressure, might tap the Strategic Petroleum Reserve or even ban oil exports in response to rising energy prices...oil prices opened sharply lower on Friday, after a report that U.S. consumer sentiment plummeted to its lowest showing in a decade, with one-in-four American households citing diminished purchasing power and a reduction in living standards....oil then turned lower again after an early afternoon rally to settle down 80 cents or 1% at $80.79 a barrel, a price drop that was enough to leave prices 0.6% lower for the week, with the threat of a possible release of crude from the Strategic Petroleum Reserve also contributing to the week's decline...

meanwhile, the bottom fell out of US natural gas prices this week following falling prices in Europe and on forecasts for contiinued mild weather which assured adequate gas supplies heading into winter....after rising 1.7% to $5.516 per mmBTU last week on a jump in global gas prices and ​greater ​LNG demand, the contract price of natural gas for November delivery opened nearly 2% higher on Monday but quickly turned lower and finished down 8.9 cents at $5.427 per mmBTU, as traders contrasted rising domestic production and mild weather forecasts against strong demand for LNG exports....natural gas prices continued lower without interruption on Tuesday and settled down 44.8 cents or more than 8% at a six week low of $4.979 per mmBTU, after European gas ​prices ​plunged over 10% when Russian gas flows resumed to Germany, and as domestic production held strong and storage levels were projected to prove ample for winter, while weather forecasts pointed to soft demand in both the United States and Europe.... natural gas futures fell another 2% to a seven-week low of $4.880 per mmBTU​ ​on Wednesday as output rose toward a monthly record high and on forecasts for lower heating demand next week than previously expected. but finally turned higher on Thursday as forecasts called for higher demand, European prices rose, and as traders looked toward coming storage reports showing withdrawls from gas stocks, as December natural gas settled with a 5.5% gain of 26.9 cents at $5.149 per mmBTU...however, prices moved lower again on Friday amid unseasonably mild temperatures and light heating demand throughout the eastern United States, and as the warmth was expected to re​t​urn after a brieff shot of cold air, as prices finish​ed​ down 35.8 cents at a nine week low of $4.791 per mmBTU, a loss of 13.1% for the week...

The EIA's natural gas storage report for the week ending November 5th indicated that the amount of working natural gas held in underground storage in the US rose by 7 billion cubic feet to 3,618 billion cubic feet by the end of the week, which still left our gas supplies 308 billion cubic feet, or 7.8% below the 3,926 billion cubic feet that were in storage on November 5th of last year, and 119 billion cubic feet, or 3.2% below the five-year average of 3,737 billion cubic feet of natural gas that have been in storage as of the 5th of November in recent years...the 7 billion cubic foot increase in US natural gas in working storage this week was less than the average forecast for a 15 billion cubic foot addition from a S&P Global Platts survey of analysts, and it was much less than the average addition of 25 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 more than the 2 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 November 5th indicated that even after a big increase in our oil refining, an even larger withdrawall of oil from our Strategic Petroleum Reserve meant we had surplus oil to add to our stored commercial crude supplies for the sixth time in seven weeks and for the eleventh time in the past thirty-two weeks….our imports of crude oil fell by an average of 63,000 barrels per day to an average of 6,108,000 barrels per day, after falling by an average of 83,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 128,000 barrels per day to an average of 3,053,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 3,055,000 barrels of per day during the week ending November 5th, 191,000 fewer barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude oil from US wells was reportedly unchanged at 11,500,000 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 have totaled an average of 14,555,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,366,000 barrels of crude per day during the week ending November 5th, 343,000 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 of 306,000 barrels of oil per day were being pulled out 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 oilfield production, and from storage was 504,000 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 (+504,000) 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 balance sheet 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....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 oil wells, we’ll continue to report this data just as it's published, and just as it's 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 rose to an average of 6,090,000 barrels per day last week, which was 14.3% more than the 5,327,000 barrel per day average that we were importing over the same four-week period last year…the 306,000 barrel per day net decrease in our crude inventories came as 143,000 barrels per day were added to our commercially available stocks of crude oil, which in turn was more than offset by a 449,000 barrels per day withdrawal of oil that had been stored in our Strategic Petroleum Reserve, apparently part of an emergency loan of oil to Exxon in the wake of hurricane Ida….this week’s crude oil production was reported to be unchanged at 11,500,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,100,000 barrels per day, while a 10,000 barrel per day increase in Alaska’s oil production to 444,000 barrels per day had no impact on the reported 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 12.2% below that of our pre-pandemic production peak, but 36.4% 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...

US oil refineries were operating at 86.7% of their capacity while using those 15,366,000 barrels of crude per day during the week ending November 5th, up from 86.3% of capacity the prior week, but a little below normal utilization for mid-autumn refinery operations…the 15,366,000 barrels per day of oil that were refined this week were 14.3% more barrels than the 13,447,000 barrels of crude that were being processed daily during the pandemic impacted week ending November 6th of last year, but still 3.5% less than the 15,916,000 barrels of crude that were being processed daily during the week ending November 8th, 2019, when US refineries were operating at what was then also a below normal 87.8% of capacity...

Despite the big increase in the amount of oil being refined this week, the gasoline output from our refineries was somewhat lower, decreasing by 122,000 barrels per day to 10,054,000 barrels per day during the week ending November 5th, after our gasoline output had increased by 104,000 barrels per day over the prior week.…this week’s gasoline production was still 7.9% more than the 9,319,000 barrels of gasoline that were being produced daily over the same week of last year, but 1.2% less than the gasoline production of 10,173,000 barrels per day during the week ending November 8th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 35,000 barrels per day to 4,868,000 barrels per day, after our distillates output had increased by 252,000 barrels per day over the prior week…after the recent increases, our distillates output was 14.9% more than the 4,237,000 barrels of distillates that were being produced daily during the week ending November 6th, 2020, but 3.4% less than the 5,039,000 barrels of distillates that were being produced daily during the week ending November 8th, 2019..

Despite the increase in our gasoline production, our supplies of gasoline in storage at the end of the week decreased for the eighth time in eleven weeks, and for the seventeenth time in twenty-nine weeks, falling by 1,555,000 barrels to a 47 month low of 212,703,000 barrels during the week ending November 5th, after our gasoline inventories had decreased by 1.488,000 barrels over the prior week...our gasoline supplies decreased this week even though the amount of gasoline supplied to US users fell by 245,000 barrels per day to  9,259,000 barrels per day, as our imports of gasoline fell by 80,000 barrels per day to 587,000 barrels per day, while our exports of gasoline rose by 73,000 barrels per day to 833,000 barrels per day…after this week’s inventory decrease, our gasoline supplies were 5.6% lower than last November 6th's gasoline inventories of 225,356,000 barrels, and about 4% below the five year average of our gasoline supplies for this time of the year…

Even with the increase in our distillates production, our supplies of distillate fuels decreased for the ninth time in eleven weeks and for the 21st time in 31 weeks, falling by 2,613,000 barrels to a 19 month low of 124,509,000 barrels during the week ending November 5th, after our distillates supplies had increased by 2,160,000 barrels during the prior week….our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 594,000 barrels per day to 4,280,000 barrels per day, and because our exports of distillates rose by 211,000 barrels per day to 1,239,000 barrels per day, while our imports of distillates rose by 88,000 barrels per day to 278,000 barrels per day....after twenty-one inventory decreases over the past thirty-one weeks, our distillate supplies at the end of the week were 16.6% below the 149,289,000 barrels of distillates that we had in storage on November 6th, 2020, and about 6% below the five year average of distillates stocks for this time of the year…

Meanwhile, with this week's big crude withdrawal from our Strategic Petroleum Reserve covering the increased refinery demand, our commercial supplies of crude oil in storage rose for the ninth time in the past twenty-four weeks and for the 19th time in the past year, increasing by 1,002,000 barrels over the week, from 434,102,000 barrels on October 29th to 435,104,000 barrels on November 5th, after our commercial crude supplies had increased by 3,290,000 barrels over the prior week…but even after this week’s increase, our commercial crude oil inventories slipped to around 7% below the most recent five-year average of crude oil supplies for this time of year, but were still more than 27.2% above the average of our crude oil stocks as of the first weekend of November 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 November 5th were 11.0% less than the 488,706,000 barrels of oil we had in commercial storage on November 6th of 2020, and are now 3.1% less than the 449,001,000 barrels of oil that we had in storage on November 8th of 2019, and 1.6% less than the 442,057,000 barrels of oil we had in commercial storage on November 9th of 2018…

Finally, with our inventory of crude oil and our supplies of all products made from oil still near multi year lows, we are continuing to track the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....the EIA's data shows that total oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, fell by 4,330,000 barrels this week, from 1,846,463,000 barrels on October 29th to 1,842,133,000 barrels on November 5th, but they are still 506,000 barrels higher than the six year low of five weeks earlier... 

OPEC's October Oil Market Report

Thursday of this week saw the release of OPEC's November Oil Market Report, which ​includes OPEC & global oil data for October, and hence it gives us a picture of the global oil supply & demand situation for the third month after 'OPEC+' agreed to increase their output by 400,000 barrels per day monthly from the previously agreed to July level, which was part of 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 irregular recovery...we'll 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 49 of this month's report (pdf page 59), 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 217,000 barrels per day to 27,453,000 barrels per day during October, up from their revised September production total of 26,236,000 barrels per day...however, that September output figure was originally reported as 27,328,000 barrels per day, which therefore means that OPEC's September production was revised down by 92,000 barrels per day with this report, and hence OPEC's October production was, in effect, just a 125,000 barrel per day increase from the previously reported OPEC production figure (for your reference, here is the table of the official September 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 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 October, which would include an increase of 254,000 barrels per day from the OPEC members listed above...but as you can see from the above table, OPEC's increase of 217,000 barrels per day was a bit less than that....since each OPEC member was expected to raise their output in October, the production decreases of 45,000 barrels per day by Nigeria, 17,000 barrels per day from Gabon, and 13,000 barrels per day from Equatorial Guinea were the reason that OPEC failed to meet their expected output quota...while i heard no news from Gabon or Equatorial Guinea that would account for their production decrease, it's​ likely that an equipment failure and subsequent oil spill at a Bayelsa wellhead on October 17​, as well as persistent domestic sabotage of the country's main oil pipeline, were the reasons for Nigeria's drop in output...

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 2020 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 ​joint output cut ​agreement through July....production levels for August and the following months of this year 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 in August and again​ by that amount​ in each of the later months, and boosting reference production levels for the UAE, the Saudis, Iraq and Kuwait beginning in April 2022...

OPEC arrived at the production quotas for August and September of this year by repeatedly adjusting the original 23%, or 9.7 million barrel per day production 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 output 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 output 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, which was lowered to a cut of 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% per month...for the ten members of OPEC who agreed to impose cuts on themselves, that would mean their August output quota would be roughly 23,27​7,000 barrels per day, then 23,5​31,000 barrels per day in September, and then roughly 23,7​86,000 barrels per day in October....therefore, the 23,197,000 barrels those 10 OPEC members produced in October were 5​88,000 barrels per day short of what they were expected to produce, with Nigeria, Angola and the Saudis accounting for the most of this month's 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 November 2019 to October 2021, and it comes from page 50 (pdf page 60) of OPEC's November 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....

Including this month's 217,000 barrel per day increase in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate indicates that total global liquids production increased by a rounded 1,740,000 barrels per day to average 97.56 million barrels per day in October, a reported increase which apparently came after September's total global output figure was revised down by 110,000 barrels per day from the 95.93 million barrels per day of global oil output that was estimated for September a month ago, as non-OPEC oil production rose by a rounded 1,520,000 barrels per day in October after that revision, with more than two-thirds of the increase coming from OECD countries, predominantly the US, due to the production recovery after Hurricane Ida, while non-OECD countries saw their production increase by 480,000 barrels per day in October, with most of that​ increase coming​ from Kazakhstan...

After that increase in October's global output, the 97.56 million barrels of oil per day that were produced globally during the month were 6.65 million barrels per day, or 7.3% more than the revised 90.91 million barrels of oil per day that were being produced globally in October a year ago, which was the third 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 November 2020 OPEC report (online pdf) for the originally reported October 2020 details)...with this month's relatively small increase in OPEC's output, their October oil production of 27,453,000 barrels per day fell to 28.1% of what was produced globally during the month, a decrease of 0.3% from their revised 28.4% share of the global total in September, which itself was revised down from 28.5%, due to this month's downward revision to OPEC's September output....OPEC's October 2020 production was reported at 24,386,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 3,067,000 barrels per day, or 12.6% more barrels per day of oil this October than what they produced a year earlier, when they accounted for 26.7% of global output...

Even after the increases in OPEC's and global oil output that we've seen in this report, the amount of oil being produced globally during the month again fell short of the expected global demand, as this next table from the OPEC report will show us..

The above table came from page 27 of the OPEC November Oil Market Report (pdf page 37), and it shows regional and total oil demand estimates in millions of barrels per day for 2020 in the first column, and then 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 fifth column, we've circled in blue the figure that's relevant for October, which is their estimate of global oil demand during the fourth quarter of 2021... OPEC is estimating that during the 4th quarter of this year, all oil consuming regions of the globe will be using an average of 99.49 million barrels of oil per day, which as you can see in the green ellipse above, is a rounded 0.33 million barrels per day downward revision from the 99.82 million barrels per day they had estimated for the 4th quarter a month ago, still reflecting a bit of coronavirus related demand destruction compared to 2019, when global demand averaged over 101 million barrels per day during second half of the year....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 97.56 million barrels per day during October, which would imply that there was a shortage of around 1,930,000 barrels per day in global oil production in October when compared to the demand estimated for the month...

in addition to figuring that October oil shortage implied by this report, the downward revision of 110,000 barrels per day to September's global oil output that's implied in this report, combined with the 440,000 barrels per day downward revision to 3rd quarter demand that we've circled in green, means that the 2,400,000 barrels per day global oil output shortage we had previously figured for September would now be revised to a shortage of 2,007,000 barrels per day....in like manner, 440,000 barrels per day downward revision to 3rd quarter demand means that the shortage of 3,020,000 barrels per day we had previously figured for August would now be revised to a shortage of 2,580,000 barrels per day, and that the shortage of 2,600,000 barrels per day barrels per day we had previously figured for July would have to be revised to a shortage of 2,160,000 barrels per day...  

Note that in green we've also circled a modest upward revision of 20,000 barrels per day to the second quarter's demand, a quarter when there was also a shortage of oil being produced globally.... based on that small upward revision to demand, our previous estimate that there was a shortage of 660,000 barrels per day in June would now be revised to a 680,000 barrels per day shortage, the oil shortage of 1,990,000 barrels per day that we had previously figured for May would have to be revised to a shortage of 2.010,000 barrels per day, and that the 2,340,000 barrels per day global oil output shortage we should have figured for April would have to be revised to a shortage of 2,360,000 barrels per day...

Also note that in green we have also circled an upward revision of 100,000 barrels per day to OPEC's previous estimate of first quarter demand....for March, that means that the global oil output surplus of 240,000 barrels per day we had previously figured for March would now be revised to a surplus of 140,000 barrels per day... similarly, the ​upward revision to first quarter demand means that the 770,000 barrels per day global oil output shortage we had previously figured for February would now be revised to a shortage of 870,000 barrels per day, and that the global oil output surplus of 450,000 barrels per day we had previously figured for January would now be revised to a surplus of 350,000 barrels per day, in light of that 100,000 barrel per day upward revision to first quarter demand...

This Week's Rig Count

The number of drilling rigs active in the US increased for the 51st time out of the past 60 weeks during the week ending November 12th, but they remained 30.7% below the pre-pandemic rig count....Baker Hughes reported that the total count of rotary rigs running in the US increased by six to 556 rigs this past week, which was also 244 more rigs than the pandemic hit 312 rigs that were in use as of the November 13th report of 2020, but was also still 1,373 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 4 to 454 oil rigs this week, after they had increased by 6 oil rigs the prior week, and there are now 218 more oil rigs active now than were running a year ago, even as they still amount to just 28.2% of the 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 was up by 2 to 102 natural gas rigs, which was also up by 29 natural gas rigs from the 73 natural gas rigs that were drilling during the same week a year ago, but still only 6.4% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….but last year's rig count also included 3 rigs that Baker Hughes had classified as "miscellaneous', while there are no such "miscellaneous' rigs deployed this week...

The Gulf of Mexico rig count was up by two to fifteen rigs this week, now topping the 14 rigs deployed in the Gulf the week before Hurricane Ida approached, with thirteen of this week's Gulf rigs drilling for oil in Louisiana waters and two more drilling for oil in Alaminos Canyon, offshore from Texas....the Gulf rig count is also up by two rigs from the thirteen rigs in the Gulf a year ago, when 12 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil in Texas waters…since there is now no drilling off our other coasts, nor was there a year ago, the Gulf rig count is equal to the national offshore totals..

In addition to those rigs offshore, we continue to have two water based rigs drilling inland; one is a directional rig targeting oil at a depth of over 15,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, and the other is drilling for oil in the Galveston Bay area, and hence the inland waters rig count of two is up from one from a year ago..

The count of active horizontal drilling rigs was up by 7 to 499 horizontal rigs this week, which was 87% more than the 267 horizontal rigs that were in use in the US on November 13th of last year, but was just 35.8% of the record 1,374 horizontal rigs that were deployed on November 21st of 2014..…at the same time, the directional rig count was up by 2 to 35 directional rigs this week, and those are up by 12 from the 23 directional rigs that were operating during the same week a year ago….on the other hand, the vertical rig count was down by 3 to 22 vertical rigs this week, and those just matched the 22 vertical rigs that were in use on November 13th 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 November 12th, the second column shows the change in the number of working rigs between last week’s count (November 5th) and this week’s (November 12th) count, the third column shows last week’s November 5th 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 13th of November, 2020...

as you can see, this week's changes were driven by that ten rig increase in Texas, so checking Texas first in the Rigs by State file at Baker Hughes, we find that three rigs were added in Texas Oil District 8, which is the core Permian Delaware, and that three more rigs were added in Texas Oil District 8A, which would be the northern counties of the Permian Midland, thus indicating a overall six rig increase in the Texas Permian...since the national Permian rig count was only up by one, that means that all 5 rigs that were removed in New Mexico had been drilling in the western Permian Delaware...elsewhere in Texas, a rig was added in Texas Oil District 1 and another rig was added in Texas Oil District 2., either of which could have accounted for the oil rig addition in the Eagle Ford shale, while yet another rig was added in Texas Oil District 6, which would normally be indicative of natural gas increase in the Haynesville shale, but in this case it was an oil rig in ​the ​​easternmost ​Barnett shale near Dallas...the last Texas rig addition was​ one of those​ targeting oil offshore​ from the state​, and an offshore oil rig increase also accounts for Louisiana's rig pickup this week...elsewhere, an increase of two oil rigs in Oklahoma's Cana Woodford was offset by a decrease of two oil rigs in Oklahoma's Ardmore Woodford, leaving the Oklahoma rig count unchanged, while an increase of two ​rigs in Ohio's Utica shale accounts for national natural gas rig increase....that was not the only natural gas rig change, however, as a shallow vertical rig targeting natural gas was pulled out of Kanawha county, West Virginia, while one of the Texas Permian rig additions was targeting natural gas, and is currently the only natural gas rig in that basin, along with 271 oil rigs...

++++++++++++++++++++++++++++++++++++

Ascent Res. 3Q: Drilled 19 Wells, Produced 1.98 Bcfe/d, Lost $1.3B - Ascent Resources, originally founded as American Energy Partners by gas legend Aubrey McClendon, is a privately-held company that focuses 100% on the Ohio Utica Shale. Ascent is Ohio’s largest natural gas producer and the 8th largest natural gas producer in the U.S. The company issued its third quarter 2021 update yesterday. The company produced 1.98 billion cubic feet equivalent per day (Bcfe/d) during 3Q–nearly all of it, 1.83 MMcf/d–was natural gas, the rest was oil and NGLs. Ascent generated $28 million of free cash flow, but like other M-U drillers, hedging bets on derivatives resulted in a huge loss of $1.3 billion for the quarter.

Republican Ohio Congress members fear shutdown of oil and gas pipeline from Canada — Republican members of Congress from Ohio are warning President Joe Biden that shutting down a pipeline that brings oil and gas from Canada into the upper Midwest could cost tens of thousands of jobs, cause fuel price shocks and jeopardize billions of dollars in economic activity. Environmental groups like the Sierra Club have urged decommissioning the aging Enbridge Line 5 pipeline that traverses Wisconsin and Michigan on its way to a refinery in Sarnia, Ontario. The groups say the pipeline has a long history of spills and poses risks to farmland, natural areas, and waterways. Michigan Gov. Gretchen Whitmer has tried to shut it down by revoking its easement to cross the Straits of Mackinac. However, the company that operates the pipeline, Enbridge Inc., has sued to keep it open. The Canadian government has formally requested negotiations with the United States over the matter under a 1977 transit pipeline treaty. On Monday, White House spokeswoman Karine Jean-Pierre said the U.S. Army Corps of Engineers is preparing an environmental impact statement on the Line 5 pipeline and the construction of a proposed replacement line that Enbridge says would virtually eliminate the chance of a spill in the Straits because it will be bored through rock as much as 100 feet below the lakebed. Jean-Pierre said the Army Corps’ findings “will help inform any additional action or position the government will take on replacing Line 5. “This is consistent with President Biden’s commitment that every infrastructure project, potential pipelines very much included, must undergo a full and fair review that considers the environmental impact that those projects would have,” Jean-Pierre said. Last week, Republican U.S. House of Representatives members Bob Latta of Bowling Green, Troy Balderson of Zanesville and Bill Johnson of Marietta wrote a letter to Biden to caution against shutting down the pipeline, which opened in 1953. They said that “absent any credible data showing that there is a real safety hazard to continuing Line 5 operations, the intrastate, interstate, and international commerce implications of a possible shutdown should be overwhelming evidence that this path should not be followed.” They also said doing so would worsen shortages and price increases in home heating fuels like natural gas and propane.“Line 5 is essential to the lifeblood of the Midwest,” their letter says. “Should this pipeline be shut down, tens of thousands of jobs would be lost across Ohio, Michigan, Wisconsin, and the region; billions of dollars in economic activity would be in jeopardy; and the environment would be at greater risk due to additional trucks operating on roadways and railroads carrying hazardous materials.”

Latta, Gavarone urge Biden administration to keep pipeline open - — State Senators Theresa Gavarone, R-Bowling Green, and Kenny Yuko, D-Richmond Heights, have introduced Senate Resolution 211, urging President Joe Biden to keep the Enbridge Line 5 open. Line 5 is a major oil pipeline connecting Lake Michigan to Lake Huron. A potential shutdown threatens over 1,200 refining jobs at PBF Energy’s Toledo Refining Co. and the BP-Husky Toledo Refinery, and would have a $5.4 billion negative economic impact, according to the senators. Earlier this year, the Senate unanimously passed Senate Resolution 41, which urged the governor of Michigan to keep the Enbridge Line 5 open for business, after she ordered the initial shutdown. Senate Resolution 211 is a result of the Biden administration’s admission this week that they were studying the closure of Line 5. “The closure of Line 5 would be devastating for thousands of Ohio workers and would increase already rising energy costs that Ohioans are paying right now,” Gavarone said. Earlier this week, Congressman Bob Latta, R-Bowling Green, along with Michigan Congressmen Tim Walberg, Jack Bergman and 10 other House members, sent a letter to Biden regarding reports of the Biden Administration exploring the possibility of taking action to terminate the Enbridge’s Line 5 Pipeline. The potential economic devastation was detailed by the Consumer Energy Alliance in a recent report, stating: “Ohio could lose up to $13.7 billion in economic activity, $147.9 million in state revenue and over 20,000 jobs from the shutdown of the Line 5 pipeline.” In July, Gavarone joined workers in Toledo at an event where hard hats were laid, signifying the jobs that would be lost should Line 5 close. Likely repercussions of the Line 5 closure include higher agricultural and energy prices that would immediately increase the cost of living for Ohio households. “We need to ensure our voices are heard on an issue as important as the operation of Line 5 and I am proud to lead that effort,” Gavarone added.

Ascent Res. 3Q: Drilled 19 Wells, Produced 1.98 Bcfe/d, Lost $1.3B - Ascent Resources, originally founded as American Energy Partners by gas legend Aubrey McClendon, is a privately-held company that focuses 100% on the Ohio Utica Shale. Ascent is Ohio’s largest natural gas producer and the 8th largest natural gas producer in the U.S. The company issued its third quarter 2021 update yesterday. The company produced 1.98 billion cubic feet equivalent per day (Bcfe/d) during 3Q–nearly all of it, 1.83 MMcf/d–was natural gas, the rest was oil and NGLs. Ascent generated $28 million of free cash flow, but like other M-U drillers, hedging bets on derivatives resulted in a huge loss of $1.3 billion for the quarter.

16 New Shale Well Permits Issued for PA-OH-WV Nov 1-7 | Marcellus Drilling News - Three weeks ago the total number of permits issued in the Marcellus/Utica was 22. Two weeks ago it fell to 9. Last week the numbers picked up somewhat, with 16 new permits issued, breaking down as: 12 permits issued in Pennsylvania, 2 permits issued in Ohio, and 2 permits issued in West Virginia. Google to see embedded tables:

• Pennsylvania New Shale Permits Issued Nov 1-7
• Ohio New Shale Permits Issued Nov 1-7
• West Virginia New Shale Permits Issued Nov 1-7

In PA, use of oil and gas wastewater on dirt roads kicks up dust -The debate over whether to again allow briny, sometimes radioactive, wastewater pumped from conventional oil and gas wells to be spread on Pennsylvania’s dirt roads has become as salty and charged as the material itself. For more than a half-century, the water used to pump oil and gas from the ground has been a savior for rural road managers, with hundreds of millions of gallons spread for free on thousands of miles of back roads to suppress dust in summer and prevent icing in the winter. A legal challenge led the state to ban the practice in 2018. But now environmentalists are squaring off with drillers and some legislators as the state determines whether or not it should resume. In the meantime, most of the drilling wastewater is being stored and reused in conventional oil and gas wells or taken to wastewater treatment plants. In 2018, Duke researchers discovered a buildup of radioactivity in three sites downstream of a treatment plant that handled wastewater from these conventional oil and gas wells. Approximately 240 million gallons of drilling wastewater were spread on Pennsylvania roads from 1991–2017, according to records, though the practice started before that. Twenty-one of the state’s 67 counties, mainly in northwestern parts of the state, have used the water. The drilling industry thought it was making headway — a bill to allow road spreading passed the state House in May — until a study by Penn State scientists released in August found that the drilling wastewater spread on western Pennsylvania roads was at least three times less effective than commercial alternatives and can actually damage the dirt roads. Also, the salty water is laden with lead, arsenic and other pollutants, and it easily washes off roads into nearby streams and sometimes lingers in the air, the study found. Researchers also measured levels of radium, a naturally occurring radioactive element and carcinogen, and found it at levels higher than regulatory health standards allow.

Diversified Energy CEO Rusty Hutson talks ESG and gas producer's innovation - Diversified Energy Co. is making a major commitment to increasing its ESG efforts in Appalachia, where it has tens of thousands of oil and natural gas wells, many conventionally drilled and decades old.The company is one of the top 20 natural gas producers in Pennsylvania, but it doesn't drill wells. Instead, Diversified takes a different approach: Since its founding in 2001, Diversified has built up a stable of 67,000 conventional and unconventional wells, many conventional gas wells that have been drilled decades ago and dot the landscape particularly in Pennsylvania and West Virginia. By sheer number of wells and the benefits of scale, Diversified has built up its portfolio by acquiring older traditional and now more recent Marcellus and Utica shale wells. It has acquired wells from many of the region's biggest shale companies, including EQT Corp. and CNX Corp., among others. All those wells provide a logistical challenge when it comes to greenhouse gas reduction. Putting continuous monitoring equipment on each of the wells, which is the emerging standard of the bigger shale companies that have pads with six or more wells each, would be cost prohibitive. In an interview Tuesday with the Pittsburgh Business Times, Diversified CEO Rusty Hutson Jr., said it wouldn't be needed: While there are many more legacy conventional wells in Appalachia even a decade and a half of unconventional drilling in the Marcellus and Utica, Hutson said conventional wells aren't the source of the bulk of the greenhouse gas emissions. Hutson calls them de minimis, minor in the larger picture."When you look at the methane that is being emitted on those smaller wells in conventional Appalachia, it's a very small, minute, amount," Hutson said. But Hutson and Diversified are committed to doing their part to reduce greenhouse gas and methane emissions. It began a pilot project to outfit some its field workers — about 100 in Pennsylvania and West Virginia — with portable methane emission detection devices. The field workers, who visit and tend to Diversified's oil and gas wells, bring the devices with them and test each well to determine if there's a leak. Hutson said that he expects it'll be about a year before Diversified can get to every one of the wells with a leak detection check. But the company believes any leak detected will be quickly and easily taken care of: Most leaks on conventional wells can usually be fixed with the turn of a wrench or other small effort, he said.

Abarta Oil & Gas Co. LLC files for Chapter 11 bankruptcy protection - Abarta Oil & Gas Co. LLC, a Pittsburgh-based oil and gas drilling company, filed late Sunday for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Pennsylvania. The company, also known as Abarta Energy and headquartered at 200 Alpha Drive in Pittsburgh, reported liabilities of $25.4 million and assets of $4.2 million. In court filings, Abarta Oil & Gas said it wants to sell its remaining oil and gas assets and wind down its business that stretches back to the late 1970s and included wells in Pennsylvania, West Virginia and Kentucky. It's asking the Bankruptcy Court's approval for the sale of its interest in a 1,722-acre natural gas field and gathering pipeline in Bradford County. Its parent company is Abarta Inc., to which it owes $10 million. By far the largest creditor is Dominion Field Services, a pipeline company based in Pittsburgh whose parent company is energy giant Dominion (NYSE: X). Abarta Oil & Gas owes $2.8 million as part of a settlement to Dominion made in 2016 when Abarta terminated a gas transmission agreement in Pennsylvania. It also owes $170,000 to another pipeline company, BHE Eastern Gas Transmission, from an agreement that wasn't picked up when Abarta Oil & Gas sold oil and gas assets in West Virginia. In a filing Monday, Abarata Oil & Gas said its trouble began in 2015 during an earlier period of natural gas commodity declines, which dragged on the company as well as what it termed in a filing as substantial debt. "(Its) obligation to Dominion under the Dominion Settlement, pushed the limits of the Debtor's ability to sustain the weight of its capital structure," CEO and President James A. Taylor said in a bankruptcy filing. Abarta Oil & Gas, which now has nine employees, posted a net operating loss of $4.8 million on $4.2 million in revenue in 2020 and a net loss of $800,000 on revenue of $3.3 million in the first nine months of 2021. Taylor said the sharp drop in oil and gas prices led the company to decide in 2019 to sell off its oil and gas properties "like many other similarly situated exploration and production companies." While it has sold $5.5 million in assets between then and now worth about $7.7 million in future plugging of old wells, efforts to sell its interest in the 1,722-acre gas field and gathering pipeline weren't successful even though there was a willing buyer. A hearing on the asset sale is set for Nov. 19 in U.S. Bankruptcy Court for the Western District of Pennsylvania.

ISO-NE Move Puts New Gas-Fired Plant in Doubt - The future of a natural gas-fired power plant planned in northeastern Connecticut is in jeopardy after regional grid operator ISO-New England (ISO-NE) asked the Federal Energy Regulatory Commission (FERC) for permission to end a capacity contract with the project. Florida-based NTE Energy’s plan to build the 650-MW Killingly Energy Center has been delayed due to permitting issues. NTE Energy secured an obligation in ISO-NE’s 2019 energy supply auction for the 2022-23 supply period, meaning it agreed to produce a certain amount of power at a specific cost that would be funneled into the larger New England power grid. ISO-NE in a Nov. 4 letter to FERC asked the agency for authorization to cut Killingly from future power considerations, known as Capacity Supply Obligation (CSO) plans. The ISO said its monitoring of the project’s progress found NTE Energy would not hit its “critical path schedule milestones” until more than two years after the start of the agreed-on commitment period. ISO-NE in its filing said, “Killingly was required to achieve commercial operation on June 1, 2022.” The Killingly Energy Center most recently was expected to begin operating in 2024, according to NTE Energy’s project website, which said construction would begin this year, although no ground has been broken. ISO-New England said that projects that secure funding through the auction process must meet development milestones, including financing, permitting, orders for major equipment, and operational startup, but Killingly remains in limbo, prompting the grid operator to ask FERC to end the contract for the plant. The grid operator’s letter to FERC in part says that after discussions with NTE Energy, ISO-NE is “exercising its right to seek to terminate Killingly’s CSO.” FERC’s acceptance of ISO-NE’s request would enable the grid operator to “draw down the financial assurance” NTE Energy was required to provide to back up the utility’s commitment to the project.

Passaic County commissioners delay vote on controversial gas pipeline proposal -Passaic County commissioners will wait at least two more weeks before taking a stance on a controversial proposal to pump more natural gas through a North Jersey pipeline. Commissioners plan to revisit the issue during their Nov. 23 meeting after spending two hours Tuesday night hearing from project representatives and public opponents regarding Tennessee Gas Pipeline's East 300 Upgrade Project. The project would construct a new electric-driven compressor turbine in West Milford. It would also upgrade two existing gas-fired compressor stations. One is in the Sussex County town of Wantage. The other is in Pennsylvania. Project opponents have sent hundreds of emails to county commissioners detailing their short- and long-term safety and environmental concerns. During the commissioners' Tuesday meeting, officials from the pipeline company and union representatives said the low-impact project would create jobs and energy while relying on existing infrastructure. "When we look at expansion of our system, we look at how can we expand that system with the least impacts possible," said Allen Fore, vice president of public affairs for pipeline parent company Kinder Morgan. Commissioners expressed a desire to gather more information and receive more responses from company officials in deciding to delay voting on a proposed resolution opposing the project on Tuesday. Still, Commissioner Terry Duffy said he remains wary of the company, which was fined for not properly managing environmental impacts during the installation of a pipeline segment through the region a decade ago. "We're dealing with a company that didn't do the right thing," Duffy said. "One mishap and everything is for naught. We're talking about drinking water. We're talking about the environment."

More than 14,640 Massachusetts gas pipeline repairs could cost billions of dollars just as state looks to cut carbon emissions in half - In 2020, an estimated 5,753 tons of methane leaked from roughly 24,547 subterranean pipeline leaks across Massachusetts.In addition, over 9,900 pipelines were repaired last year, while 14,640 were still in need of repair. And the total cost of fixing the problem could be over $20 billion, an amount rivaling the Big Dig, according to a study by the Gas System Enhancement Program published in October.This $20 billion estimate is based on current, approved rates of return and unit costs, and assumes that GSEP-funded infrastructure is depreciated by 2050, the year that Massachusetts has targeted to achieve net-zero emissions.The cost of infrastructure replacement in the gas distribution system has been rising sharply, with the cost of replacing one mile of main distribution pipeline increasing on the order of 17% annually for the largest investor-owned gas companies, according to the study.The report warns that the costs of pipeline replacement will ultimately be borne by a shrinking customer base as the state moves away from natural gas.The report was presented to the advocacy group Gas Leak Allies which promotes environmental justice, advocates for quality jobs and focuses on energy solutions. The GSEP was introduced as part of a 2014 gas leaks law that forces gas providers to submit yearly data to the Department of Public Utilities (DPU) on its plans to repair or replace aging natural gas infrastructure in the interest of public safety and to reduce lost and unaccounted for gas.

‘Residents would not reap the benefit’: Longmeadow Select Board chair critiques the Eversource gas pipeline proposal - The chair of the Longmeadow Select Board, Marc A. Strange, issued a statement that was read out during the Eversource Gas open house that was critical of the proposed pipeline and referred to it as “redundant.” “Are we talking about a natural gas disaster, like the once in a lifetime 2010 tornado? Are we talking about an earthquake, an act of terrorism? Any of these hypothetical events seem highly unlikely to occur. So again, without a risk assessment, we’re left with speculation that some event may occur that results in a total loss of the Memorial bridge pipe and necessitate a new pipeline,” said Strange in the statement provided. “The truth is that nothing is broken here that needs to be fixed.” Eversource has stated that the project is not an expansion program and reiterated that costs for the proposals that are still being discussed range from roughly $32.5 million to $44.6 million. The exact costs for each option are still being discussed internally at the energy company. The 16-inch diameter proposed gas pipeline would be constructed underground in state and local streets between the existing Eversource Bliss Street POD (point of delivery) Station in Springfield and the new proposed Longmeadow POD Station, according to the website description. On Oct. 9, 2020, Eversource purchased the former Columbia Gas of Massachusetts for $1.1 billion.

Piedmont Natural Gas selects route for critical Greenville County, S.C., – After months of collaborating with local community leaders, government officials and individual landowners, Piedmont Natural Gas today said it plans to locate its Greenville County Reliability Project in the Department of Transportation (DOT) right of way running along Highway 290. The new infrastructure project is vital to meeting the demand for natural gas resulting from growth in and around Greenville.Those familiar with the project will recognize this as Piedmont’s proposed blue route. The company offered three different routes, labeled as red, green and blue, and invited landowners, business operators along each route and other community stakeholders to submit feedback and share any additional details to consider when evaluating the route options. After reviewing community input as well as environmental impact, safety, cost and reliability, the blue route, which is roughly 12 miles long, beginning near the post office in Taylors, S.C., and ending off Highway 25, emerged as the most preferred route. Construction of the Greenville County Reliability Project is still more than a year away with land surveys set to begin early in 2022. Piedmont says it will communicate directly with landowners and businesses along the route before land surveys begin and throughout the process until the project is complete. The company also will continue posting up-to-date project information on its website at piedmontng.com/Greenville.

Colonial Pipeline buying more land near massive gasoline spill in Huntersville - Colonial Pipeline has bought yet more property in Huntersville, near the site of North Carolina’s largest gasoline spill in history — 25.8 acres for nearly $1.7 million, according to Mecklenburg County real estate records.This brings the total spent by the company on property buyouts near the spill site to roughly $2.5 million.The purchase, which occurred in September, includes land, a house and a barn on Huntersville-Concord Road, just feet from the Oehler Nature Preserve, where a pipeline leak discharged at least 1.3 million gallons of gasoline into the groundwater in August 2020.The properties lie within the groundwater monitoring zone. High levels of benzene, xylene, toluene and other petroleum-related chemicals have been found in monitoring wells at the site.The accident occurred Aug. 14, 2020, when a portion of the pipeline broke, releasing the gasoline. It is unclear how long the pipeline had been leaking; two teenage boys riding ATVs saw gasoline gurgling from beneath the ground and reported it to their parents, who notified the authorities.Colonial Pipeline says no drinking water wells have been contaminated; however, state environmental officials have directed the company to extend residential private well sampling radius an additional 500 feet, to 2,000 feet from the spill site. Petroleum contamination has been found beneath the water table.These are the latest acquisitions by Colonial, which began buying out private landowners a year ago. At that time, the company had bought three houses and their acreage near the spill site for nearly $1 million. “In anticipation of additional work related to the ongoing assessment and remediation activities, Colonial has worked with some landowners to purchase property in the area of the release site,” a Colonial spokesperson wrote in an email at the time. “This will provide us with a safe workspace to support those operations and minimize inconvenience to those living in close proximity to the location.”Last week the NC Department of Environmental Quality took legal action against Colonial in Mecklenburg Superior Court. State officials alleged that the company is “failing to meet their obligations” in its clean up of the spill, the nation’s largest such onshore accident since 1991.

Colonial Pipeline Responds to Gas Pipeline Leak By Buying Up Surrounding Property - One of the most easily understood, but almost never enacted, concepts in environmental protection is that you should clean up your own mess. Your oil company poisons the groundwater, or your pipeline bursts in someone else’s pasture, you pay to make the folks whole again. How is this not the simplest form of justice short of a punch in the nose? Yet, the extraction industries have spent millions of dollars, and thousands of billable hours, devising ways to stick the American taxpayer with the bill for their malfeasance—or, at the very least, tennis-shoe’ing their own responsibility by ducking into bankruptcy, or into a maze of shell corporations and offshore holding companies. Down in North Carolina, however, the company responsible for a massive gasoline leak—kids on ATVs discovered it because gasoline was bubbling out of the ground—has found an even simpler way around its responsibility. Apparently, it has decided that it’s cheaper to buy all the land that its gasoline wrecked than to immediately clean it up. From NC Policy Watch: Colonial Pipeline has bought yet more property in Huntersville, near the site of North Carolina’s largest gasoline spill in history — 25.8 acres for nearly $1.7 million, according to Mecklenburg County real estate records. This brings the total spent by the company on property buyouts near the spill site to roughly $2.5 million. The purchase, which occurred in September, includes land, a house and a barn on Huntersville-Concord Road, just feet from the Oehler Nature Preserve, where a pipeline leak discharged at least 1.3 million gallons of gasoline into the groundwater in August 2020. The company claims that it’s buying the land to clean it up, and it can pretty much money-whip most of the current landowners into selling off their property. But these transactions also mean that the company can take its own sweet time about it. And the state authorities are already looking on the cleanup activities with a decidedly skeptical squint. Colonial Pipeline says no drinking water wells have been contaminated; however, state environmental officials have directed the company to extend residential private well sampling radius an additional 500 feet, to 2,000 feet from the spill site. Petroleum contamination has been found beneath the water table. These are the latest acquisitions by Colonial, which began buying out private landowners a year ago. At that time, the company had bought three houses and their acreage near the spill site for nearly $1 million. I don’t know what’s more aggravating—the arrogance of the company’s believing that its endless bankroll can buy its way out of anything, or the complete confidence with which the company acts as though it can.

St. Louis County Council plans hearing over Spire’s pipeline warning — The St. Louis County Council on Tuesday grilled a Spire Missouri official over an email sent to residents last week warning of potential natural gas outages this winter, with the council later pledging to hold a hearing to get to the bottom of the issue.Spire on Nov. 5 sent an email to its more than 600,000 customers warning of a potential gas shutoff: “While the STL Pipeline continues to operate today, it is now in jeopardy.” The email was sent after the U.S. Supreme Court last monthrejected the company’s emergency request to keep operating a 2-year-old bistate pipeline. The company said it could be forced to stop operating the pipeline on Dec. 13 unless the Federal Energy Regulatory Commission extends an emergency order granted in September. The decision followed a U.S. Court of Appeals ruling in June, in a lawsuit brought by an environmental group, that FERC didn’t adequately demonstrate a need for the 65-mile pipeline.The Environmental Defense Fund, the group that sued over the pipeline, has said Spire’s email warning to customers was overblown because FERC is likely to allow the pipeline to continue to operate through the winter.Under council questioning on Tuesday, David Yonce, a Spire planning manager, said that about 400,000 homes in the region could lose gas supply eventually.Tim Fitch, R-3rd District, asked whether the email was “about putting pressure on FERC.”“What is the purpose of sounding the alarm?” Fitch said. Yonce said Spire believed the email “was the prudent thing to do because if we didn’t, if this does happen ... we would have been put on the spot for not communicating the risk,” he said.

Natural Gas Drilling Picks Up in US as Activity Climbs Onshore and in GOM - The U.S. natural gas rig count rose two units to 102 for the week ended Friday (Nov. 12) as gains both on land and offshore headlined continued gains in domestic drilling activity for the period, the latest Baker Hughes Co. (BKR) data show. Four oil-directed rigs were also added in the United States for the week, lifting the overall domestic tally six units to 556, 244 rigs ahead of year-ago totals. Four rigs were added on land, with two added in the Gulf of Mexico, according to the BKR numbers, which are partly based on data from Enverus. Seven horizontal rigs joined the patch domestically, alongside two directional units. Partially offsetting was the departure of three vertical rigs.The Canadian rig count jumped eight units higher to end the week at 168, with six oil-directed rigs and two gas-directed rigs added for the period. The Canadian count finished the week 79 rigs ahead of its year-earlier count of 89.Broken down by major play, the Cana Woodford and Utica Shale each posted net increases of two rigs week/week, while the Ardmore Woodford dropped two rigs to fall to zero overall. The Barnett and Eagle Ford shales, and the Permian Basin, each added one rig to their respective totals.In the state-by-state breakdown, Texas saw a 10-rig jump in its count for the week, reaching 264 rigs, versus 145 at this time last year. New Mexico, meanwhile, recorded a five-rig decline in the latest BKR count.Elsewhere among states, Ohio added two rigs for the period, while Louisiana added one. One rig exited West Virginia for the week, according to BKR.According to the most recent inventory data from the Energy Information Administration (EIA), domestic oil stocks increased for a third straight week as producers held output at elevated levels – at least by 2021 standards — while high prices curbed gasoline and jet fuel demand.

Near-Record Production, Persistent Mild Outlook Send Natural Gas Futures Lower - Natural Gas Intelligence - Natural gas futures teetered between gains and losses much of Monday as traders contrasted rising production and mild fall weather forecasts against strong demand for U.S. exports of liquefied natural gas (LNG). The December Nymex contract, however, ultimately settled at $5.427/MMBtu, down 8.9 cents day/day amid domestic demand weakness. January fell 12.1 cents to $5.505. NGI’s Spot Gas National Avg. shed 4.5 cents to $5.070. Comfortable weather permeated most of the Lower 48 to start the week, spurring relatively little heating or cooling demand. Additionally, forecasts over the weekend were essentially unchanged from last Friday, leaving modest gas-weighted degree day expectations through mid-November. This left the futures market waiting for more impressive cold to develop, Bespoke Weather Services said. “The modeling still advertises a return to a blocky pattern, one which could deliver some cold as we head into late month, but we have seen this modeled for a while now with no material gains in demand showing up,” Bespoke said. “It is unclear if there is simply a model bias toward showing too much cold potential a couple of weeks out, or if they simply were too quick on the trigger.” Beyond weather, production estimates on Monday hovered near 95 Bcf and around 2021 highs. RBN Energy LLC analyst Sheetal Nasta noted that large publicly traded producers are under pressure from investors to hold the line on oil and gas output and invest instead in renewable sources of energy. But private companies are responding to strong demand in 2021 overall – and expectations for more to come this winter. While sustained production growth remains a wildcard, “U.S. natural gas supply is primed for growth, with the Lower 48 supply/demand balance the most bullish it has been in years,” Nasta said. “On top of that, exports are very strong and poised for growth, with international prices setting records.” LNG feed gas volumes climbed above 11 Bcf Monday, as export destinations in Asia and Europe continued to call for more U.S. supplies of the super-chilled fuel as winter approaches. EBW Analytics Group noted that the strong feed gas demand trends indicated Train 6 at the Sabine Pass LNG terminal is starting up. This makes “a fresh all-time LNG record likely when Freeport returns to full strength,” Goldman Sachs Groups analysts noted that, while overseas prices eased some last week after Russia vowed to ramp up gas deliveries via pipeline to Europe, they expect upward pressure to quickly resume and demand for U.S. LNG to remain elevated.

U.S. natgas drops 8% to 6-week low on rising output, drop in European gas (Reuters) - U.S. natural gas futures fell over 8% to a six-week low on Tuesday on rising output and expected lower demand over the next two weeks because of increased nuclear and wind power generation. In addition, U.S. prices followed global gas prices lower - European gas plunged over 10% - after Russian gas flows resumed to Germany, raising hopes that Moscow is acting on a pledge to increase supplies and ease concerns about shortages and high prices as winter approaches. "Russia’s Gazprom has begun to supply natural gas to several European facilities," which should reduce Europe's reliance on U.S. liquefied natural gas (LNG). Those U.S. LNG exports were rising this week now that the sixth train at Cheniere Energy Inc's Sabine Pass plant in Louisiana started producing LNG in test mode. Analysts have said that European inventories were about 20% below normal for this time of year, compared with 3% below normal in the United States. Gas prices in Europe and Asia were still trading about five times higher than in the United States. Front-month gas futures fell 44.8 cents, or 8.3%, to settle at $4.979 per million British thermal units (mmBtu). That was the lowest close for the contract since Sept. 23 and the biggest daily percentage decline since early October when it dropped over 10%. Data provider Refinitiv said output in the U.S. Lower 48 states has averaged 95.8 billion cubic feet per day (bcfd) so far in November, up from 94.1 bcfd in October and a monthly record of 95.4 bcfd in November 2019. Refinitiv projected average U.S. gas demand, including exports, would jump from 95.8 bcfd this week to 105.1 bcfd next week as the weather turns colder and homes and businesses crank up their heaters. Those forecasts were lower than Refinitiv projected on Monday, owing to a decline in expected power generator gas demand. The amount of gas flowing to U.S. LNG export plants has averaged 11.0 bcfd so far in November, up from 10.5 bcfd in October. That compares with a monthly record of 11.5 bcfd in April. With gas prices near $26 per mmBtu in Europe and $32 in Asia, compared with about $5 in the United States, traders said buyers around the world will keep purchasing all the LNG the United States can produce.

US natural gas storage fields inject 7 Bcf as heating season nears | S&P Global Platts - US natural gas stocks increased by single digits as the East region reported a withdrawal, but at least one more net injection remains while global gas demand keeps domestic prices much higher than normal to start the heating season. Storage fields injected 7 Bcf for the week ended Nov. 5, according to data released by the US Energy Information Administration on Nov. 10. It was much less than the 15 Bcf build expected by a survey of analysts by S&P Global Platts. The 7 Bcf build for the week was also lower than the five-year average injection of 25 Bcf, ending the eight-week streak of larger-than-normal storage injections that began in early September and reduced the storage inventory deficit from minus 231 Bcf to minus 101 Bcf by late October. The inventory deficit has widened once again. Working gas inventories increased to 3.618 Tcf. US storage now stands 308 Bcf, or 7.8%, less than the year-ago level of 3.926 Tcf and 119 Bcf, or 3.2%, less than the five-year average of 3.737 Tcf. US supply and demand balances tightened sharply during the latest storage week, with strong gains in heating demand pushing the market to be nearly 7 Bcf/d tighter compared with the week before, even amid rising production, according to Platts Analytics. Total supplies for the week averaged 700 MMcf/d higher on strengthening output in the Southeast and Texas cell regions. Downstream, total demand increased by about 7.4 Bcf/d as residential-commercial demand picked up 7.1 Bcf/d week over week and industrial demand added 1.1 Bcf/d over the same period, helping soften the blow of a roughly 800 MMcf/d decline in pipeline flows to Mexico. The NYMEX Henry Hub December contract fell 8 cents to $4.90/MMBtu, in trading following the release of the EIA's storage report. The remaining winter strip, December through March, shed 8 cents as well. These latest price developments mark a dramatic shift from just two weeks ago, when the November 2021 Henry Hub contract settled at $6.20/MMBtu. Early cold weather in November this year has been displaced by milder temperatures, and weather forecasts continue to show sustained (relative) warmth possibly through the end of the month, likely paving the way for a prolonged injection season as production has also been rising since the beginning of the month. Platts Analytics' supply and demand model currently forecasts a 20 Bcf build for the week ending Nov. 12. This would stand in contrast to the 12 Bcf withdrawal reported on average over the past half decade.

UPDATE 2-U.S. natgas jumps over 5% on forecasts for higher demand (Reuters) - U.S. natural gas futures gained more than 5% on Thursday, rebounding from the previous session's slide to a seven-week low as forecasts called for higher demand, European prices rose and traders looked toward storage reports showing withdrawls from gas stocks. Front-month gas futures rose 26.9 cents, or 5.5%, to settle at $5.149 per million British thermal units (mmBtu), snapping a four-session losing streak. Data provider Refinitiv projected average U.S. gas demand, including exports, would jump from 96.9 billion cubic feet per day (bcfd) this week to 104.1 bcfd next week on heating demand as the weather turns seasonally colder. "The front month fell 84 cents in 4 trading days, and many traders felt the bearish trend had gone far enough," U.S. prices were also boosted by an uptick in European gas, which spurred earlier strong rallies this year. The Title Transfer Facility in the Netherlands, the European benchmark, rose by about 5% on Thursday. Gas prices in Europe and Asia are trading about five times higher than in the United States. In October, global gas prices hit record highs as utilities around the world scrambled for liquefied natural gas (LNG) cargoes to replenish low stockpiles in Europe and meet insatiable demand in Asia, where energy shortfalls have caused power blackouts in China. "Yesterday's low injection number was marginally friendly as it reflects the market is still pretty tight, so Mother Nature is going to tell us which way this market is going to go next," Refinitiv forecast that the weather over the next two weeks would be in line with seasonally lower temperatures. U.S. gas stocks increased last week, the U.S. Energy Information Administration (EIA) said on Wednesday, but the build was smaller than usual for this time of year and was less than forecast. Analysts said the market was preparing for the next set of storage reports, as they said the week ending Nov. 19 is likely to be the start of the withdrawal season in natgas. Meanwhile, Refinitiv said output in the U.S. Lower 48 states has averaged 96.1 bcfd so far in November, up from 94.1 bcfd in October and a monthly record of 95.4 bcfd in November 2019.

Weekly Natural Gas Prices Wobble as Demand Uncertainty Reins -Weekly natural gas cash prices slumped amid unseasonably mild temperatures and light heating demand throughout the eastern United States.NGI’s Weekly Spot Gas National Avg. for the Nov. 8-12 period dropped 59.5 cents to $4.690.Conditions were comfortable throughout the Lower 48 early in the week and, while colder air blew into the Upper Midwest and Great Lakes by midweek, benign conditions permeated the densely populated eastern reaches of the country through the covered period.Hubs across the Lower 48 had backtracked by the week’s close. Chicago Citygate fell 60.0 cents to $4.740, while Waha shed 49.5 cents to $4.355 andOGT lost 77.0 cents to $4.295.“This time of year it’s all about the weather, and we need to see more cold before these prices can move up and sustain momentum,” The December Nymex contract struggled through most of the week as traders mulled hazy weather outlooks, rising production and a November injection of natural gas into storage. The prompt month settled at $4.791/MMBtu to close the trading week on Friday, down 35.8 cents on the day and down 13% from the prior week’s finish.Forecasters anticipated stronger demand early in the week ahead, with cold air in the Midwest spreading into the East over the weekend, though it was not likely to last long, NatGasWeather said. “National demand will drop to light levels mid-week due to a warm break across the southern and eastern U.S.,” the forecaster said. “Demand will return to seasonal levels Nov. 19-21 as a cool shot sweeps across the Midwest with lows of 10s to 30s. However, a swing back to lighter demand is possible around Nov 23-25 and where the pattern is again not cold enough.”For all the headwinds facing the futures market, spot prices advanced on Friday amid a late-week blast of winter-like weather. NGI’s Spot Gas National Avg. gained 9.5 cents to $4.690 for weekend through Monday delivery.NatGasWeather noted that comfortable highs of 50s to 80s permeated the southern and eastern expanses of the Lower 48 on Friday. However, the wintry conditions that swept across the upper reaches of the nation’s midsection were spreading east and projected to deliver freezing lows to portions of the heavily populated East Coast.This was enough to get furnaces cranking, NatGasWeather said, propelling cash prices, particularly in the East.At the close of trading Friday, Cove Point was up 37.0 cents day/day to average $4.800, while Columbia Gas was ahead 37.0 cents to $4.455 andMillennium East Pool was up 57.5 cents to $4.390. Physical prices in the West proved the exception on the day, with SoCal Citygate down 88.5 cents to $5.090.

US weekly LNG exports increase, Henry Hub spot price falls - LNG exports from the U.S. increased this week, while Henry Hub spot prices fell, according to weekly data from the Energy Information Administration (EIA). In the latest Short-Term Energy Outlook, EIA reports that U.S. LNG exports climbed this week from the last report week. Twenty-two LNG vessels departed the United States in the reporting period of 28 October to 3 November 2021. Six departed from Sabine Pass, five each from Corpus Christi and Freeport, four from Cameron, and one each from Cove Point and Elba Island. The vessels held a combined LNG-carrying capacity of 80 billion cubic feet. On the other hand, the Henry Hub spot price fell from $5.86 per million British thermal units (MMBtu) last Wednesday to $5.59/MMBtu this week. Furthermore, natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 10.9 Bcf/d, or about 0.3 Bcf/d higher than last week.

Cheniere Reports Record LNG Exports, but Steep Loss on Volatile Natural Gas Prices - Cheniere Energy Inc. loaded a record 141 liquefied natural gas (LNG) cargoes in the third quarter as prices skyrocketed and global demand increased ahead of the winter. Management expects more of the same in the coming months. “In the short term, we have witnessed significant volatility and record prices for LNG and natural gas across the globe,” said CEO Jack Fusco during a call to discuss quarterly results. “With storage levels in key demand centers below historic levels as we approach the winter season, we expect demand and prices to remain elevated into 2022. Cheniere said global LNG consumption jumped 7% in the third quarter as markets across the globe competed for energy amid other commodity shortages, a need for cleaner fuels and resurgent demand as economies recover from the Covid-19 pandemic. European and Asian benchmarks touched highs of more than $50/MMBtu during the most chaotic stretches of trading during the period, reversing the historic lows of last year when they traded near $2. Chief Commercial Officer Anatol Feygin warned the market’s volatility could threaten demand for natural gas. “Sustained market volatility could be disruptive for our industry as it potentially incentivizes end-use customers to utilize cheaper, higher polluting fuels in the shorter-term,” he said. Feygin stressed that growing U.S. exports have helped to offset declines at legacy LNG facilities across the world, proving “instrumental in providing much-needed supplies to the market.” He said 28 million tons (Mt) of LNG capacity have come online in the last two years, most of which is in the United States, offsetting the 19 Mt decline in production at legacy plants over the same period. “This new supply has played a critical role in alleviating the global supply shortage while helping mitigate some of the underlying volatility,” Feygin added. A gap in supply that has emerged in recent years with the delay of project final investment decisions and sky high prices has brought long-term buyers back to the table. Cheniere signed agreements for offtake with ENN Natural Gas Co. Ltd. and Glencore plc in recent weeks. About 90% of the output from Cheniere’s nine liquefaction trains are now under contract, management said.

New Fortress Energy Sees Significant Gap in Global LNG Supply - Management for New Fortress Energy Inc. expects liquefied natural gas (LNG) demand to “materially” exceed supply through 2039, saying in the third quarter 2021 earnings report that underinvestment in fossil fuels has left the global market vulnerable. Investment in oil and gas projects, according to NFE, has dropped sharply in recent years, going from $800 billion in 2014 to $400 billion today. Meanwhile, climate-related events like a lack of rainfall in Brazil and inclement weather in China are happening more frequently and jolting the market. Global gas prices have skyrocketed this year in response. The trend has NFE positioned to match growing demand, particularly in underserved markets. Ongoing energy shortages in Brazil have led to emergency power measures, including an auction in the south and southeast part of the country in October. NFE said 1.2 GW of new power projects were awarded at the auction. The company’s Santa Catarina terminal under development in the southern region of Brazil could supply more than 900,000 gallons/day of LNG to the new power plants. “I think our terminal is very well situated,” said NFE managing director Andrew Dete during a call to discuss quarterly results. “Outside of some very limited domestic gas, our LNG terminal is really the main source of supply for fuel to these new power plants.” South America has imported significant amounts of LNG this year, particularly in Brazil. Cargo arrivals have hit record levels amid a historic drought that has left hydropower reservoirs depleted and created power shortages. NFE said 18 million gallons/day of LNG are being imported into Brazil to meet energy needs, compared to historical levels of about 4 million gallons/day.

EOG Eyeing 'Incredible Value' for LNG Exports from Permian, Eagle Ford and Dorado -- Houston-based EOG Resources Inc., one of the Lower 48’s biggest oil and natural gas producers, is looking to give back to shareholders instead of boosting volumes, with discipline still the mantra going into 2022.The independent delivered better-than-expected natural gas, oil and liquids production during 3Q2021, along with sharply higher profits, CEO Ezra Yacob said during a conference call to discuss results. Yacob took the helm last month after working for the Minerals Division at the U.S. Geological Survey.“EOG has never been in better shape,” he told investors. “We extended our track record of reliable execution with better-than-expected production, capital expenditures, operating costs and product prices….“Our high-return business model is sustainable for the long term, underpinned by a deep inventory of double premium drilling locations…We also remain optimistic about the potential of new exploration plays to improve the overall quality of our inventory.”Boosting production in light of higher commodity prices is not yet on the table, though. For EOG, there are no plans to grow “until the market clearly needs the barrels.” Growth is going to depend on “market fundamentals, not price,” in 2021 and beyond. EOG is looking for signs of low spare capacity and oil demand recovering to pre-pandemic levels.

Tomlinson: Big Oil makes big profits sending U.S. energy overseas - If you’re looking to assign blame for rising gasoline and heating prices, don’t get angry at politicians or environmentalists; look at how much energy Big Oil is exporting overseas. Refiners averaged 802,000 barrels per day of gasoline exported in the first eight months of 2021, the highest rate since 2018, according to Energy Department data. Liquefied natural gas companies are setting new records for quantities shipped overseas, almost doubling prices for U.S. customers.The U.S. is one of the world’s largest oil and natural gas producers. After years of lobbying by the industry, the Obama administration loosened export regulations and turned North American companies into international players.Rather than expanding production, these corporations are now reaping the windfall of post-pandemic demand by limiting supply. Anyone blaming regulations or climate change activism is trading in lies. The chief executives even say so on conference calls with investors. Companies specializing in shale oil wells in the Permian Basin talk incessantly about “capital discipline” and returning value to shareholders through dividends and stock buy-backs. After years of disappointing Wall Street, they promise not to drill new wells until investors see some profit.Shale drillers are the bellwether for the industry. Their oil and natural gas wells are relatively inexpensive and quick to get online, even if they don’t produce as long or as much as an offshore well. Companies have thousands of approved permits and drilling plans; all they need to add supply is to hire a rig. CEOs know that adding supply will lower profits, reduce cash flow, and deliver lower returns to investors, so they are reluctant to add much more production. So are international competitors.President Joe Biden called on OPEC and its allies to increase global production to bring down energy prices because the cartel could quickly add a million barrels a day. But Saudi Crown Prince Mohammed bin Salman, OPEC’s de facto leader, has demurred.Mohammed came up with the idea of selling shares in Saudi’s national oil company, Aramco. He wants to see profits rise along with the stock price. High gasoline prices also provided him an opportunity to retaliate against the U.S. for sanctions imposed on him after he ordered the assassination of Washington Post journalist Jamal Khashoggi.When Saudi energy minister Prince Abdulaziz bin Salman insists the supply of oil is “not the problem” and says the “energy complex is going through havoc and hell,” he’s really telling Biden he needs to treat the crown prince with a little more respect. Consumers are paying the price. Gasoline is $1.31 a gallon more expensive on average than a year ago, adding to public fears about inflation and the economy’s future. Biden has promised to lower pump prices, but frankly, he can only do so much to affect the global market.

Florida has rejected a plan to drill for oil in the Everglades -State environmental regulators ruled the proposed well could impact water supplies and endangered species, such as the Florida panther.The state has denied a request to dig exploratory oil wells near the Everglades.A ruling by the state Department of Environmental Protection on Friday rejected the application by Trend Exploration of North Fort Myers. The letter states drilling the wells could adversely impact water supplies and wildlife in the area, which includes habitat for the endangered Florida panther.The ruling determined:

• The proposed well is located in the environmentally sensitive Big Cypress watershed.
• It would be adjacent to areas that would likely be developed.
• The nearest drilling projects to the proposed sites were dry holes and there has been no exploratory drilling there in 40 years.
• There is "insufficient geological data" to indicate the likelihood of oil in the area.
• The company failed to ensure there would be no permanent impact on wildlife in the area, including rare and endangered species.

Opposition has come from people who say it could contaminate the water supply in the area and trucks would disrupt one of the prime habitats of the Florida panther. One person who wrote a letter to state regulators said there have been a large number of panther roadkills in areas surrounding the proposed well. Another person wrote it would be near historical sites on Seminole Tribal lands. The tribe has requested a survey of the area for its cultural significance.

A plan to drill two more oil wells in Big Cypress Swamp is being challenged (video) An environmental advocacy group is challenging a plan to drill two more oil wells near the Everglades in the Big Cypress Swamp. State environmental regulators last week denied a request by an oil company to drill wells near the Everglades. But another company wants to drill two wells in the nearby Big Cypress National Preserve. The drilling is being opposed by the environmental advocacy group Earthjustice. Tania Galloni, an attorney with the Florida office of Earthjustice, says it's part of a larger challenge to a move done at the end of the Trump administration to transfer authority to bulldoze wetlands to Florida. Galloni says the state has been lax in protecting wetlands. "If you consider that Florida is at one of the greatest threats of sea level rise and climate change from intensifying storms," Galloni said, "the idea that we would drill for oil at all — and begin new drilling in the Everglades, one of the most ecologically sensitive parts of the state and for the region — it really makes no sense at all." Galloni said the same oil company did seismic exploration several years ago, and there's concern about how much environmental damage that caused. "We're also in a situation where people are finally starting to recognize the climate crisis that we're in," Galloni said. "And so the idea of — in Florida, of all places — to start new oil drilling, and to do it in the country's first national preserve, is pretty concerning."

Refinery closure sparks concern over oil's future in Belle Chasse — The upcoming closure of a Plaquemines Parish oil refinery is leaving the surrounding community concerned for its future. Phillips 66 announced Monday afternoon it would turn its Alliance Refinery in Belle Chasse to a storage terminal next year. The conversion comes after Hurricane Ida's storm surge caused the property $1.3 billion in damage, and it leaves some 900 jobs in limbo. "We made this decision after exploring several options and considering the investment needed to repair the refinery following Hurricane Ida," Phillips 66 chairman and CEO Greg Garland said in a statement. Word caught on quickly around Belle Chasse, where many people either have worked or know someone who has worked at the refinery. "You're either a fisherman, a shrimper, oysterman or you work in an oil refinery down here," former Alliance Refinery worker Tyler Thompson said Tuesday. "It's part of the way of life here." "It sucks for the parish," owner Bobby Monsted III said. "These workers are really, really good guys. You think of some of the best people you know, and that's them." The Alliance Refinery was built in 1971 and has refined light crude oil into gasoline, diesel and aviation fuels. It also produced feedstocks for other petrochemical products, home heating oil and petroleum. Its conversion into a storage base comes as Phillips 66 furthers its shift toward lower-carbon fuels. The refinery will be Louisiana's second to shutter within a year. In November 2020, Shell closed a facility in St. James Parish, taking 1,100 jobs with it. The recent closures leave Plaquemines Parish Councilman Beau Black concerned that longtime oil workers will find jobs in other states — and leave Louisiana behind. "This is one of the things that keeps me up at night," Black said. Roughly 500 employees and 400 contractors work at the Alliance Refinery, according to numbers Phillips 66 provided.

Analysis: U.S. oil refiners bet the farm Biden will back them on biofuels (Reuters) - U.S. merchant oil refiners like Monroe Energy and PBF Energy (NYSE:PBF) Inc are playing chicken with the White House, taking moves in the biofuels credit market that could force them to close plants and fire union workers unless the Biden administration bails them out by changing the rules on blending biofuels in gasoline.Merchant refiners have long tried to dismantle a U.S. law requiring them to blend biofuels like ethanol into their fuel or buy credits from competitors who do.But until very recently, they largely continued to participate in the multibillion-dollar credit market by buying credits to offset their production, a Reuters analysis of earnings releases shows. Now, some of these refiners are building up record short positions in the credits.They are betting U.S. President Joe Biden will ultimately side with refiners and their union supporters and roll back the law, known as the U.S. Renewable Fuel Standard (RFS), experts interviewed by Reuters said, but this would anger the Farm Belt.Refiners have leverage right now because rising fuel price are hurting Biden's poll ratings."This is nothing more than a political shakedown," Brooke Coleman, executive director of the Advanced Biofuels Business Council, told Reuters. "These refineries are daring the Biden White House to make them lie in the bed they made by intentionally running up massive short positions," on biofuel credits.Refiners who had little outstanding biofuel credit liabilities a year ago have let them climb to record highs in the third quarter, according to a review of their latest financial filings.(Graphic: Refineries' ramped up biofuel debts - https://graphics.reuters.com/USA-BIOFUELS/WHITE-HOUSE/znpnekxowvl/chart.png)* Monroe Energy, a subsidiary of Delta Airlines (NYSE:DAL), , has increased its potential biofuel liabilities to a company record of $547 million by the end of the third quarter, up from just $68 million a year prior, the latest filing shows.* PBF Energy Inc has amassed a $1.3 billion credit liability from halting or slowing purchases, according to its third quarter filing, up from $236 million a year earlier.* CVR Energy (NYSE:CVI), whose majority owner is billionaire Carl Ichan, has a $442 million credit liability, according to the company's third quarter filing, up from $83 million a year earlier.None of the companies responded to requests for comment.“This whole situation is proof of how broken the RFS program is. ... The program is making it more expensive to produce gasoline and diesel in the United States," Chet Thompson, President of American Fuel & Petrochemical Manufacturers said on Thursday.

India's Reliance Exits North America in Eagle Ford Deal with Ensign - A unit of Indian conglomerate Reliance Industries Ltd. reported Monday that it has divested all of its unconventional natural gas assets and has exited North America. Earlier this year Reliance pulled out of Appalachia.The latest exit follows Ensign Natural Resources LLC’s buyout of Reliance Eagleford Upstream Holding LP’s working interest in leases and wells on about 62,000 net acres in the Eagle Ford Shale. Ensign said it now owns 100% of the Eagle Ford acreage in the South Texas counties of Bee, DeWitt, Karnes and Live Oak. The exploration and production company, owned by private equity firms Warburg Pincus LLC and Kayne Anderson Capital Advisors LP, said the assets currently boast net production of 18,000 boe/d.“Through our efforts over the last three years, we have created an asset that generates significant free cash flow and has a deep inventory of highly economic well locations in the core of the Eagle Ford Shale,” said Ensign CEO Brett Pennington. Ensign said it acquired the leases and wells from Pioneer Natural Resources USA Inc. in 2019 and Mexico-based Newpek LLC the following year. Newpek parent Alfa had been seeking a buyer for Newpek’s Eagle Ford stake since 2017. Reliance had also owned interests in the acreage with Pioneer and Newpek, having entered the Eagle Ford 11 years ago in a $1.15 billion deal.

‘This Must Not Happen’: If Unhalted, Permian Basin Fracking Will Unleash 40 Billion Tons of CO2 by 2050 - As activists at the COP26 summit continue to denounce the “massive” gap between wealthy governments’ lofty rhetoric and their woefully inadequate plans for addressing the climate emergency, a new analysis of projected extraction in the Permian Basin in the U.S. Southwest exposes the extent to which oil and gas executives’ refusal to keep fossil fuels in the ground puts humanity’s future in jeopardy. “While climate science tells us that we must consume 40% less oil in 2030, Permian producers plan to grow production more than 50%.”Released Tuesday by Oil Change International, Earthworks, and the Center for International Environmental Law, the second chapter of The Permian Basin Climate Bomb warns that if the drilling and fracking boom that has turned the Permian Basin into “the world’s single most prolific oil and gas field” over the past decade is allowed to persist unabated for the next three decades, it will generate nearly 40 billion tons of carbon dioxide by mid-century.Common Dreams summarized the first chapter of the six-part multimedia series—which includes an introductory video detailing how expanded fossil fuel extraction in the basin endangers vulnerable communities from New Mexico to the Gulf Coast and beyond—when it was published last month. The second installment of the report reveals the stark contrast between global climate targets and the current trajectory of oil and gas production in the Permian Basin.“The Permian Basin has, for the past decade, been the site of an oil and gas boom of unprecedented scale,” Lorne Stockman, research co-director at Oil Change International, said in a statement. “Producers have free rein to pollute and methane is routinely released in vast quantities. Oil exports fuel Permian production growth and today they constitute around 30% of US oil production.”“With global markets flush with Permian oil and gas, it can only be harder to steer the world’s economy toward clean energy.”“While climate science tells us that we must consume 40% less oil in 2030, Permian producers plan to grow production more than 50%” from 2021 to 2030, said Stockman. “This must not happen.”“If left unchecked,” the report notes, “the Permian could continue to produce huge amounts of oil, gas, and gas liquids for decades to come. With global markets flush with Permian oil and gas, it can only be harder to steer the world’s economy toward clean energy.”According to the report, the nearly 40 billion tons of carbon dioxide that would be emitted from burning the fossil fuels that corporate executives expect to extract from the Permian Basin by 2050 represent about 10% of the world’s remaining “carbon budget,” or the amount of pollution compatible with limiting global warming to 1.5°C above preindustrial levels by the century’s end. Moreover, “scientists studying methane emissions in the Permian Basin estimate that as much as 3.7% of gas production is being vented and leaked into the atmosphere,” the report notes. “At this rate, methane emissions in the Permian Basin would emit over 9.5 billion tons of CO₂ equivalent (CO₂e) by 2050,” which the authors compare to “taking 50 standard mile-long trains of coal out into the desert, dumping the coal, and just burning it in a giant pile” every day from 2021 until 2050.

Devon Holding Lower 48 Natural Gas, Oil Production Flat into 2022 Global oil and natural gas demand is forecast to remain tight in the months ahead, but Devon Energy Corp. is holding the line on its Lower 48 production and instead rewarding shareholders. The Oklahoma City-based independent, whose portfolio is concentrated in some of the richest oil and natural gas basins of the country, plans to maintain production in 2022 at 570,000-600,000 boe/d, CEO Rick Muncrief said during the recent third quarter conference call. The preliminary plan is to maintain production flat or below 2021 levels. Production in 3Q2021 averaged 608,000 boe/d, exceeding guidance by 5%. The free cash flow (FCF) instead would be used to increase dividends by 71% and strengthen the balance sheet. A $1 billion share buyback program also has been launched. “As we have stated many times in the past, we have no intention of adding incremental barrels into the market until demand-side fundamentals sustainably recover,” Muncrief said. Devon also wants it to be “evident” that spare oil capacity from the Organization of the Petroleum of Exporting Countries and its allies “is effectively absorbed by the world markets.” Devon is “focused on staying out ahead of the inflationary pressures that are impacting not just our industry, but all aspects of the broader society,” Gaspar said. “The supply chain team is working hard to anticipate issues, mitigate bottlenecks and work with the asset teams to adjust plans to optimize our cost structure and future capital activity.” With operating efficiency gains and improved economies of scale, Devon expects to fund its 2022 program at a West Texas Intermediate oil breakeven of around $30/bbl. During 3Q2021, the Permian Basin’s Delaware formation carried production growth, with rising oil, natural gas liquids (NGL) and natural gas. Oil production rose year/year to 213,000 b/d from 77,000 b/d, with NGLs at 100 b/d from 38 b/d. Natural gas output increased to 578 MMcf/d from 239 MMcf/d. Growth in the Delaware was driven by turning 52 wells to sales across the 400,000 net acres in New Mexico and West Texas. Devon’s other operating areas, including the Anadarko, Powder River and Williston basins, along with the Eagle Ford Shale, showed mixed production results from a year ago. Anadarko oil output fell to 14,000 b/d from 19,000 b/d, with NGLs at 25,000 b/d versus year-ago volumes of 30,000 b/d. Gas production declined to 219 MMcf/d from 242 MMcf/d. During 3Q2021, two drilling rigs were working in the basin, supported by a $100 million drilling carry with Dow Inc.

Fossil Fuel Companies Are Job Killers --A recent analysis from the Norwegian research firm Rystad Energy, published last week, finds that “robotic drilling systems can potentially reduce the number of roughnecks required on a drilling rig” by 20 to 30 percent over the next decade, translating to hundreds of thousands of jobs lost and billions of dollars saved worldwide. In the United States, Rystad Energy predicts that could mean the permanent loss of 140,000 jobs. In the past year, tumult in the oil industry has led to a rash of bankruptcies, consolidations, and layoffs. While the price of oil is starting to rebound, a study released by Deloitte last fall found that some 70 percent of the 107,000 jobs lost between March and August 2020 may not return, and those that do are likely to be weighted toward white-collar office work. Across mining, quarrying, and oil and gas extraction—a U.S. Bureau of Labor Statistics category that also includes support services—unemployment now stands at 15 percent. As of last month, the sector had the highest sectoral rate of unemployment in the country. Executives, contrary to lobbyists’ portrayal of the industry as generous job creators, are eager to let automation take its course, accelerating those trends. In March, at CERAWeek—an annual conference for the oil and gas industry—Chevron CEO Mike Wirth excitedly described how Covid-19 had accelerated the company’s workforce shrinkage. “We had directional drilling going on in people’s homes, where just a couple of years ago we had to have somebody on a rig that was controlling the drill bit. That had been moved to a drilling support center centralized in Houston, and we were able to quickly move that actually to individual employees’ homes,” he said. “There’s been a great acceleration of technologies that had begun to be available to our business, but there was perhaps a bit of reluctance to see them accelerate into use. And now we had no choice.… That will be one of the lasting impacts that I think will be very positive.” Fossil fuel companies are generally happy to take federal money and lay off employees anyway. A study from Bailout Watch finds that 77 oil and gas companies that got a total of $8.2 billion worth of stimulus-related tax breaks last year laid off 16 percent of their combined workforce, totaling 58,000 people. Marathon Petroleum—which raked in $2.1 billion in pandemic tax breaks—got approximately $1 million for each of the 1,920 workers it laid off. As was predicted to happen at the start of the pandemic, bigger producers with more resilient balance sheets are snapping up shakier competitors. In the year’s fourth multibillion consolidation, reported byReuters on Thursday, Pioneer Natural Resources bought the privately held firm DoublePoint Energy for $6.4 billion. But long before the novel coronavirus, his companies had been rapidly automating their operations, contracting with supposedly climate-conscious companies like Microsoft and Amazon to pump out more oil with fewer people via cloud-computing technology.

The vilification of oil producers continues apace at COP26 -Forbes - As the COP26 climate summit in Glasgow wraps up, the oil and gas industries are once again the villains of the piece (coal of course is already beyond the pale). On the eve of the summit, Royal Dutch Shell’s CEO stated that the company would be absent from the climate talks after being told it would not be welcome. Teenage climate icon Greta Thunberg, whose tirades have repeatedly gone viral on social media over the past two weeks, tweeted “I don’t know about you, but I sure am not comfortable with having some of the world’s biggest villains influencing & dictating the fate of the world.” Just prior to the start of the Glasgow summit, the US House Oversight Committee chair Carolyn Maloney accused ExxonMobil in the US of “lying” about climate change since the 1970s “like the tobacco executives were (about smoking and the link to cancer)”. This is par for the course for Biden’s Democratic administration which has demonized the US oil and gas sector since achieving office. In the eyes of the administration, the oil giant had for years raised doubts about climate change, as in 1997 when its then-CEO Lee Raymond said the “case for global warming is far from airtight” and that scientific evidence was “inconclusive.” Perhaps Ms. Maloney in her indignation is unaware that even the highly qualified climate scientist Steven Koonin, undersecretary for science at the U.S. Department of Energy in the Obama administration, finds that climate science is far from “settled” in his masterly survey of the literature. The Western oil majors have long been accustomed to being accused of being the new tobacco lobby, selling poison and destroying lives, with many of them adopting the role of supplicants begging for time to “transition” out of the hated fossil fuels into the sunny vales of “renewable” energy. But for non-Western state-owned oil producers, over which activist shareholders and virtue-signalling Western governments have little influence, the special ire expressed by various commentators is remarkable. Among the group of oil producers, Saudi Aramco, the world’s largest oil company, serves as a lightning rod. Reliably vociferous Greenpeace expressed “grave concern” at “moves by the Saudi government to cripple the COP26 climate talks in Glasgow”. The NGO accused the Saudi government of being “smart, strategic and utterly cynical”, pushing back on including the 1.50 C goal — an arbitrary limit that seems to have taken on a life of its own — at the talks. Indeed, as an arsonist at the talks, the Saudis “light matches, drop them, start fires and walk away”, Greenpeace said.

In Glasgow, COP26 Negotiators Do Little to Cut Emissions, but Allow Oil and Gas Executives to Rest Easy - As the debate continues over whether the global climate summit in Scotland will significantly move the needle on cutting greenhouse gas emissions, one thing is clear: The oil and gas industry still holds its grip on the world’s economic and political systems. Many climate advocates and vulnerable nations entered this year’s conference hoping to address an enduring failure of the Paris Agreement, which said nothing about fossil fuels. But a draft agreement released on Saturday included only one reference, calling on parties to accelerate phasing out “unabated” coal consumption and “inefficient” subsidies for fossil fuels more broadly. Explicit references to oil and gas were absent.The conference produced new pledges and alliances aimed at phasing out fossil fuels, but a look at the details of these promises shows they are likely to result in little, if any, change, at least in the short-term. For example, as the climate meetings came to a close, a group of national and regional governments announced the Beyond Oil and Gas Alliance. Eight core members, including Costa Rica, Denmark and France, pledged to halt new oil and gas leasing and to phase out existing production. But the group collectively represents less than 1 percent of global output. And at least one member, Greenland, produces no petroleum products at all.Many of the most significant commitments to emerge from the summit either omit oil and gas completely or pose little threat to their continued dominance. Nations pledged in one case to end deforestation. In another, they vowed to phase out coal, though China, India and the United States, which collectively consume about 70 percent of the world’s coal, declined to join in. Still another pledge promised to end sales of combustion engine cars and vans over the next two decades, and while the agreement included India, it did not include China or the United States, among the largest markets.A group of developed nations promised to end fossil fuel financing overseas. While that effort could help slow the expansion of oil and gas projects in developing countries in the future, it would do nothing to address current or future development in top producers like the United States, Russia, Saudi Arabia or Canada. China, Japan and South Korea—all major funders of fossil fuel projects—did not join the deal. And, if anything, the pact may further deepen the injustices of climate change, depriving developing countries of money to build gas power plants, for example, even as wealthier countries are free to continue constructing them domestically. Perhaps the most direct impact on the oil industry could come from a pledge by more than 100 countries to curb methane emissions, which are produced by oil and gas development and other activities, including agriculture. But the pledge, which included no specific targets for individual countries, would at best clean up fossil fuel production, rather than winding it down.

Oklahoma environmentalists heat up over storm costs recovery plan that could include natural gas exit fee - Customers of Oklahoma Natural Gas could be hit hard as they pay additional monthly costs to retire the $1.37 billion the utility spent to acquire natural gas during February's winter storm.Monthly costs could be as much as $7.80 per average residential customer, over a 25-year-long period, if the utility is approved to recover those costs through state-sold bonds, according to testimony in a case filed by ONG at Oklahoma's Corporation Commission.Furthermore, customers could be stuck with a hefty "exit fee" if they choose to adjust their home to rely more heavily on electrical power than natural gas. However, electric utilities aren't immune to storm costs, and many customers also face added fees to retire February storm-related costs incurred by their electricity providers.In the case of Oklahoma Gas and Electric, the utility has proposed charging about $2.12 per average residential customer over 28 years to recover $760 million in costs.Public Service Co. of Oklahoma, meanwhile, proposed recovering a $732.5 million cost through a $4.02 charge per month its average residential customer over a 20 year period.So, what could a customer impacted by fees on both electric and natural gas service do?Some customers might be tempted to drop natural gas service, opting instead to convert his or her home or business to operate entirely on electricity.That potential — and a proposed solution to keep that from happening — has people concerned.Some To keep customers from switching, some are calling for an "exit fee" charged to customers who might switch to reduce their natural gas consumption.

Michigan tribes send letter to Biden asking him to back Line 5 shutdown ⋆ All 12 federally recognized tribes in Michigan sent a letter to President Joe Biden and his administration Friday, urging him to lend strong support to the state’s effort to shut down the controversial, 78-year-old Line 5 oil pipeline owned by Canadian company Enbridge.“The Governor, the Attorney General, and our Tribal Nations need your Administration’s help,” the letter reads. “… During your campaign, you promised that you would heed our concerns and act to protect our fundamental interests.“We view Line 5 as an existential threat to our treaty-protected rights, resources, and fundamental way of life as Anishinaabe people of the Great Lakes.”The 12 tribes — the Bay Mills Indian Community (BMIC), Grand Traverse Bay of Ottawa and Chippewa Indians, Hannahville Indian Community, Keweenaw Bay Indian Community, Lac Vieux Desert Band of Lake Superior Chippewa Indians, Little River Band of Ottawa Indians, Little Traverse Bay Bands of Odawa Indians, Match-e-be-nash-she-wish Band of Pottawatomi Indians (Gun Lake Tribe), Nottawaseppi Huron Band of Potawatomi Indians, Pokagon Band of Potawatomi Indians, Saginaw Chippewa Indian Tribe of Michigan and Sault Ste. Marie Tribe of Chippewa Indians — make up the Three Fires Confederacy of the Ojibwe, Odawa and Potawatomi.All are publicly opposed to Enbridge’s Line 5 pipeline and its proposed tunnel-enclosed replacement in the Straits of Mackinac. BMIC President Whitney Gravelle led the effort. The letter was also sent to a list of top state and federal officials, including: U.S. Attorney General Merrick Garland and his assistant attorneys general; U.S. Interior Secretary Deb Haaland; U.S. Secretary of State Tony Blinken; Environmental Protection Agency (EPA) Administrator Michael Regan; Michigan Attorney General Dana Nessel; Gov. Gretchen Whitmer; U.S. Sens. Debbie Stabenow (D-Lansing) and Gary Peters (D-Bloomfield Twp.); U.S. Energy Secretary Jennifer Granholm; U.S. Transportation Secretary Pete Buttigieg and more. Whitmer and Nessel are currently locked in several court battles with Enbridge to shut down the pipeline, all but one of which are on pause right now as a federal judge deliberates if litigation should be heard in state or federal court. Whitmer revoked and terminated Enbridge’s easement with the state last fall and ordered a Line 5 shutdown by the spring, which the company is resisting.In her notice of revocation and termination, Whitmer cited treaty rights and the concerns of Indigenous citizens in the state as one of the main reasons to shut down the pipeline. She specifically mentioned the1836 Treaty of Washington, which ceded Ojibwe and Odawa lands in Michigan in exchange for fishing, hunting and gathering rights on the treaty territory. Biden has so far been silent on the issue of Line 5. It is not clear whether he is supportive of Whitmer’s attempts to shut it down, although the two are close allies.

Biden administration considering shutting down another pipeline despite soaring energy prices: Republicans demand Michigan's Line 5 be kept open to avoid a further rise in energy bills this winter - The Biden Administration is considering shutting down a Michigan oil pipeline in another push to get the U.S, away from fossil fuels, despite warnings from Republican lawmakers who believe the move would result in fuel price shocks throughout the Midwest.The administration is exploring the possibility of terminating the Line 5 pipeline - which links Superior, Wisconsin, with Sarnia, Ontario - and gathering data to determine if shutting down the line will cause a surge in fuel pricing, according to published reports.In a letter dated Thursday, 13 Congress members - led by Ohio Rep. Bob Latta - urged the president to keep the oil line in operation, saying: 'Line 5 is essential to the lifeblood of the Midwest.' 'Should this pipeline be shut down, tens of thousands of jobs would be lost across Ohio, Michigan, Wisconsin, and the region; billions of dollars in economic activity would be in jeopardy; and the environment would be at greater risk due to additional trucks operating on roadways and railroads carrying hazardous materials,' the legislators wrote.'Furthermore, as we enter the winter months and temperatures drop across the Midwest, the termination of Line 5 will undoubtedly further exacerbate shortages and price increases in home heating fuels like natural gas and propane at a time when Americans are already facing rapidly rising energy prices, steep home heating costs, global supply shortages, and skyrocketing gas prices.' Line 5 is part of a network that moves crude oil and other petroleum products from western Canada to Escanaba, Michigan and transports approximately 540,000 barrels each day. Biden told the COP26 conference in Glasgow this weekend that the U.S. will become world leaders in the climate change fight. He is fighting to close pipelines, setting up a conflict between Indigenous groups and environmentalists who want to block them and Republicans trying to stop a further spike in energy prices. He sparked backlash by closing down the Keystone XL Pipeline, costing thousands of American jobs, and has been accused of folding to Russia by allowing Europe's Nord Stream 2 pipeline to remain open.

Biden Mulls Shutting Down Pipeline That Supplies Energy To Midwest --The Biden administration is reviewing the possible ramifications of shutting down a key pipeline transporting crude oil and natural gas from Canada into the Midwest.The White House recently initiated a study of the economic impacts of closing the Line 5 pipeline, principal deputy press secretary Karine Jean-Pierre confirmed at a press conference Monday. She added that the Army Corps of Engineers was preparing an environmental impact study on shutting down the pipeline.President Joe Biden faced significant criticism last week after Politico reportedhis administration’s decision to study Line 5.“As we enter the winter months and temperatures drop across the Midwest, the termination of Line 5 will undoubtedly further exacerbate shortages and price increases in home heating fuels like natural gas and propane at a time when Americans are already facing rapidly rising energy prices, steep home heating costs, global supply shortages, and skyrocketing gas prices,” Republican Ohio Rep. Bob Latta wrote in a Nov. 4 letter alongside a dozen other lawmakers.Line 5 carries about 540,000 barrels of oil and gas per day from Canada to Michigan, according to the pipeline’s operator, Enbridge. The pipeline provides energy to several Midwestern states, including Michigan, Pennsylvania, Ohio and Indiana.Line 5 alone accounts for about 55% of Michigan’s propane supply, Enbridge said. Roughly 320,000 Michigan households primarily rely upon propane for their heating needs. “We should be remembering the people that are going to be going through the upcoming winter months whether it’s in Michigan or other northern states,” Jason Hayes, the director of environmental policy for the Michigan-based Mackinac Center for Public Policy, told the Daily Caller News Foundation.“We have a state in Michigan that uses the most residential propane in the nation,” he continued. “And yet, we’re seriously considering shutting down this pipeline and giving these people not even two or three months notice, just basically saying, ‘well, sorry, you’re gonna be on your own.'”Hayes added that it’s “extremely poor energy policy” to shut down Line 5 and that the move would be dangerous, considering the number of people dependent on the pipeline. Overall, closing the pipeline would cause at least $20.8 billion in economic losses to Michigan, Pennsylvania, Ohio and Indiana, according to a Consumer Energy Alliance study.

Biden Puts Another Pipeline On The Chopping Block - The Federalist - The Biden administration is looking at a shutdown of Michigan’s Line 5 pipeline, White House Deputy Press Secretary Karine Jean-Pierre confirmed to reporters Monday.“The Army Corps of Engineers is preparing an environmental impact to look through this,” Jean-Pierre said in a press briefing, after denying reports that President Joe Biden is preparing to revoke the Canadian pipeline’s permit — as happened to the Keystone XL pipeline on his first day in office.A new environmental impact under this administration, however, is often a precursor to the project’s cancellation. Jean-Pierre said the study would “help inform any additional action or position the U.S. will be taking on the replacement of Line 5.”Politico broke the news Sunday that the White House was actively surveying the market consequences of a shutdown. The Line 5 pipeline operated by the Calgary-based energy company Enbridge transports about 540,000 barrels of crude oil and other petroleum products per day from western Canada through Michigan’s Upper and Lower Peninsula. The pipeline begins in Superior, Wis. and ends in Sarnia, Ontario.Line 5’s shutdown would deal the biggest blow to Michigan residents, where the project supplies 65 percent of the Upper Peninsula’s propane demand and 55 percent of the entire state’s propane, according to Enbridge. As Americans approach winter with repeated warnings from the Energy Department of higher power prices, propane users will be hardest hit, already expected to pay up to 94 percent more than last year over the six-month heating season, according to season projections from the U.S. Energy Information Administration. By comparison, homes heated by electricity are expected to face up to a 15 percent increase and those heated by natural gas face as much as a 50 percent spike from the year prior. The price shocks could mean hundreds of dollars in higher heating bills.The quiet deliberations inside the White House provoked more than a dozen Republican lawmakers on Capitol Hill to send a letter demanding the administration hold back.“As we enter the winter months and temperatures drop across the Midwest, the termination of Line 5 will undoubtedly further exacerbate shortages and price increases in home heating fuels like natural gas and propane at a time when Americans are already facing rapidly rising energy prices, steep home heating costs, global supply shortages, and skyrocketing gas prices,” wrote lead author Rep. Bob Latta, R-Ohio, on Nov. 4, as reported by Politico.

Democrats Threaten to Send Winter Shivers Through Michigan – WSJ - Winter is coming, and President Biden may soon make Michigan’s hardest season even more painful. The White House is reportedly studying the consequences of shutting down Line 5, an oil and natural-gas liquids pipeline that carries heating and transportation fuels from Wisconsin through Michigan to Sarnia, Ontario. A shutdown would be a replay of the Keystone XL cancellation, except this pipeline is already operating, so the damage would be much worse. Media reports earlier this month prompted the White House to admit it was studying a shutdown. This week, however, the administration backtracked, denying it would make such a move. Energy Secretary Jennifer Granholm, a former Michigan governor, has already stated that Americans should expect to pay more for their gasoline and heating fuels this winter. The administration must realize that further price hikes, along with self-imposed energy shortages, will occur if a shutdown moves ahead. But these aren’t normal times. Anti-energy activists have conquered the Democratic Party, demanding that traditional energy sources be stamped out. From her first days in office, Gov. Gretchen Whitmer has fought to shut down Line 5, and in November 2020 she revoked the easement allowing the pipeline to operate and ordered its owner to cease all operations by May 2021. The operator ignored the order, arguing that only the federal government has that jurisdiction. Canada has since invoked a 1977 treaty, contending that closing the pipeline without Ottawa’s consent is illegal.Ms. Whitmer should know better than to cripple a pipeline that powers so much of her state. So should Ms. Granholm, who as energy secretary will play a key role in any White House decision to shutter the pipeline.Families would be hardest hit, since Michigan uses more residential propane than any other state. Line 5 provides nearly two-thirds of the supply in the Upper Peninsula and more than half of statewide propane use. The residential price for propane has already increased 38% since winter 2020-21. Michigan’s own research show that closing Line 5 would lead to a nearly 60% jump in prices, depending on location. Regional natural-gas and gasoline prices would surely rise as well, despite already being up 48% and 59%, respectively, compared with last year.

Biden administration clarifies it's not weighing Line 5 shutdown -The White House on Tuesday clarified that the Biden administration is not considering a shutdown of the Line 5 pipeline in Michigan despite a push from the state to do so. Asked Monday about the pipeline, White House spokesperson Karine Jean-Pierre told reporters that the administration was studying the impact of shutting down the pipeline, but during her Tuesday comments, she appeared to walk back her assertion. Jean-Pierre noted that amid a dispute with the state over the pipeline, Canada invoked a treaty involving the U.S. government. But she said that these negotiations should not be viewed as an attempt to stop the vessel’s operations. “These negotiations and discussions between the two countries shouldn’t be viewed as anything more than that — and certainly not an indicator that the U.S. government is considering shutdown. That is something that we’re not going to do,” Jean-Pierre said. Jean-Pierre noted that part of the line could be replaced and that the U.S. Army Corps will study that potential replacement. The clarification comes after Politico reported last week that the administration was weighing the economic impacts of a potential shutdown. Canadian company Enbridge’s Line 5 pipeline ships Canadian oil and other fuels to the U.S. Earlier this year, the company defied an order from the state of Michigan to shut down the vessel. Gov. Gretchen Whitmer (D) has argued that the vessel’s underwater portion is too risky to remain in operation. The company has argued that it's operating lawfully under federal authorities and brings affordable fuel to the region.

Confusion Over Line 5 Shutdown Highlights Biden’s Tightrope Walk on Climate and Environmental Justice - When Whitney Gravelle saw reports earlier this week that President Biden might be considering the shutdown of Michigan’s controversial Line 5 pipeline, she was elated. For years, she and other Native tribal members in the state had been fighting for the decommission of the 68-year-old fossil fuel pipeline, which they say has long violated their tribal rights and risks contaminating the Great Lakes and other lands that their communities depend on for their livelihoods and traditions. The news reports, denied by White House officials, received fierce criticism from Republicans, who said shutting down such a vital fuel line would only exacerbate the country’salready surging natural gas prices. While climate and Indigenous activists have applauded Biden’s decision to axe the Keystone XL Pipeline, he’s been widely criticized by the same groups for refusing to do the same with other major U.S.-Canada pipelines, such as Michigan’s Line 5 and Minnesota’s recently completed Line 3. Owned by Canada-based Enbridge Energy, Line 5 plays a crucial role in Canada’s energy exports and oil refining industry, while also supplying the state of Michigan with more than half of its propane needs. The pipeline delivers up to 540,000 barrels of Canadian crude and other petroleum products every day from Superior, Wisconsin, to Sarnia, Ontario, passing through Michigan’s Upper Peninsula and under the Straits of Mackinac on the way. Now Line 5 has become the latest symbol for a growing anti-fossil fuel movement in the United States, led by climate activists—who say the country’s network of oil and gas lines play a major role in the rapid warming of the planet—and by Indigenous communities, who warn that any potential spills threaten to contaminate lands where they fish, hunt and gather wild rice—rights guaranteed to them by past treaties. The notion that President Biden might kill Line 5, the way he did with the Keystone XL pipeline earlier this year, was short lived. On Tuesday, White House officials confirmed that they were studying the possible economic ramifications of shutting down Line 5—as first reported last week by POLITICO—but said they had no intention of doing so.And the recent confusion only highlighted the delicate balancing act President Biden has been performing since taking office with pledges to tackle climate change and environmental injustice, while pursuing bipartisan cooperation. It also underscored the high stakes for the Biden administration, and for other Democrats, as they attempt to pass their massive domestic climate agenda.

The Climate Fight Over Line 5, or the Upper Peninsula and Canada Versus Greenhouse Gas Absolutism - A row over Line 5, an oil pipeline running from Superior, Wisconsin to Sarina, Ontario, is the biggest US climate fight you almost certainly haven’t heard of. Doomberg has an excellent post on its role and the stakes, which we are mining liberally. We’re featuring this pipeline fight not just for its own importance but also because it illustrates several issues that climate change activists and politicians don’t seem willing to consider. First, as we have said repeatedly, that plans serious enough to prevent the worst climate outcome will have to include radical conservation. Second is an unwillingness to look hard at existing conditions and figure out where and to what extent it makes sense to create new “green” infrastructure, which may be green in carbon cost terms but not necessarily in terms of other environmental costs. Third is that some elements of modern lifestyles like suburbs with detached single family homes, are untenably bad for the environment (even if their energy needs can be met with solar panels, the people who live in them need to provision their houses, drive to doctors and schools and often to work, and a lot more than if they were housed differently) but no one is willing to say bad things about this American mainstay. For instance, yesterday, OilPrice highlighted Biden’s climate hypocrisy: But what happens when Americans aren’t ready to move on from oil, and new domestic supplies aren’t meeting demand?That’s the position we currently find ourselves in. The Biden Administration could respond in one of two ways.They could say “High oil prices will speed up the transition to renewable energy” — which is certainly how they feel privately. After all, U.S. officials attended the COP26 U.N. Climate Summit in Glasgow this week, where they discussed plans to reduce carbon emissions. They could tell Americans to take their medicine, live with higher gas prices, and then privately hope that hastens the transition to green energy.But people don’t like paying higher gasoline prices. So, the first irony is that the Biden Administration asked OPEC to pump more oil, undermining its COP26 messaging of reducing fossil fuel consumption. At the G-20 meeting in Rome, President Biden complained: “The idea that Russia and Saudi Arabia and other major producers are not going to pump more oil so people can have gasoline to get to and from work, for example, is not right.” Now to the Line 5 case study. Line 5 delivers 540,000 barrels of oil daily, versus US consumption of 18 million barrels a day. It has operated for 70 years with an excellent safety record. As Doomberg explains:There are two main problems with Line 5. The first is that for a four-mile stretch it runs under the Straits of Mackinac, which connect Lake Michigan to Lake Huron. Should a catastrophic leak occur, the pipeline could contaminate priceless shorelines and potentially threaten the Great Lakes themselves, which hold some 20% of the total freshwater on earth. The second is that [current operator] Enbridge had a significant (but unrelated) pipeline spill in Michigan back in 2010. Known as the Kalamazoo River oil spill, the incident resulted in significant local environmental damage. For a period of 17 hours, the company struggled to understand that a leak was even occurring, unwilling to believe what its own sensors were indicating. This slow response exacerbated the damage and crushed Enbridge’s credibility with local authorities. There’s a direct line from that incident to the major push by environmentalists to proactively shutter Line 5 today. Unlike opposition to the Keystone Pipeline, a project which was never completed, Line 5 is a preexisting critical artery of the North American energy infrastructure. This seems like an important precedent in the making. Doomberg also published Enbridge’s defense, which is that the pipeline has never had a spill, was built by Bechtel, and was overengineered as well as sited so as to minimize corrosion risk and is intensively monitored. The wee problem is that even if you initially come down on the side of thinking the pipeline is too risky to be allowed to continue, you are then faced with the fact that the alternatives are worse. People in that part of the world, including Canada, need that oil and related products. If the pipeline were decommissioned, that huge volume of oil would need to be hauled via railroad or truck. Remember the Lac-Mégantic rail car explosion, which killed 47? And that’s before the fact that delivering oil via an existing pipeline is also greener than running trucks and trains around.

Biden Threatens OPEC+ With Undisclosed "Tools" - "There are other tools in the arsenal that we have to deal with other countries at an appropriate time," President Biden said this weekend, referring to OPEC+ and its refusal to boost crude oil supply in response to repeated calls from Washington to that tune.The mentioning of "tools in the arsenal" came in response to a question about whether Washington was considering the release of some crude from the Strategic Petroleum Reserve as a means of reining in retail fuel prices."I'm not anticipating that OPEC would respond, that Russia and/or Saudi Arabia would respond," President Biden said, as quoted by Reuters. "They are going to pump some more oil. Whether they pump enough oil is a different thing.""We can get more energy in the pipeline figuratively and literally speaking," the president added.The U.S. administration has been urging OPEC and its partners in OPEC+ to add more barrels to their combined output since July as recovering demand for oil products pushed prices at the pump to politically uncomfortable highs.Most recently, the calls have turned into demands and accusations of OPEC+ threatening the global economic recovery by withholding barrels from the market."Opec+ seems unwilling to use the capacity and power it has now at this critical moment of global recovery for countries around the world," a spokesperson for President Biden's National Security Council said last week, as quoted by the Financial Times. "Our view is that the global recovery should not be imperilled by a mismatch between supply and demand." The option of releasing crude from the SPR has been mentioned a few times, including by Energy Secretary Jennifer Granholm, but for now, the administration appears to be reluctant to tap the strategic reserve. As to what the other tools are that Washington plans to use to convince OPEC+ to pump more oil, details on those have yet to be shared publicly.

SOS OPEC+ – suddenly, the Western world needs Russian energy amid sanctions - The United Nations 2021 Climate Conference known as COP26 ends on Friday in Scotland, but its climate change problems for 2021-22 might be just beginning. The leaders are calling on Russia and OPEC to turn up the dial on oil and gas to save them from themselves. It’s quite the bind for the West’s climate concerns. But unless manna from heaven can power Madrid hospital rooms and Frankfurt e-bikes, a ramp up in solar and wind won’t do. So, call the Kremlin and see what Gazprom and Rosneft can offer. Europe is increasingly worried that they won’t pick up the phone, Reuters reported on November 8. At COP26 last Tuesday, President Joe Biden blamed the Russians for your gas bill. He said that rising gasoline prices in the U.S. and Europe were “a consequence” of “the refusal of Russia or the OPEC nations to pump more oil.” This while making banning new oil permits on federal land and stopping the extension of the Keystone XL Pipeline from Alberta to the Midwest and the Gulf of Mexico into his first orders of business in January. Some Democrats want the Enbridge pipeline project connecting Wisconsin to Alberta, Canada gas fields to be stopped, as well. Blaming suppliers, like Russia and the Middle East, is a poor policy during a shortage. “Our view is that the global recovery should not be imperiled by a mismatch between supply and demand. OPEC+ seems unwilling to use the capacity and power it has now at this critical moment of global recovery for countries around the world,” a spokesperson for the National Security Council said in a widely reported statement. The statement did not mention Russia by name but said major oil and gas producers need to ‘drill baby drill’ and ‘pump baby pump’ because if the global recovery stalls out (thanks to their lockdowns to fight Covid-19), it’s the fault of oil and gas states like Russia. Biden could not make such a plea to Vladimir Putin as he decided to stay home in Moscow. Germany would love for Russia to send them more natural gas, though. Nord Stream II is almost complete. That is the gas line that the U.S. sanctioned under Trump and then the White House later lifted under Biden as a gift to Angela Merkel. Europe’s oil and gas industry has been deemed an “evil” against the planet. No one is looking for new fields, if there are any left to explore. Europe is also running out of coal, and have abandoned nuclear energy in most states, led by Germany, since the Fukushima Daiichi nuclear reactor accident in 2011 caused by an earthquake off the coast of Japan.

SPR should not be used to manipulate oil market -The Strategic Petroleum Reserve (SPR) should not be used to manipulate the crude oil market or product markets. That is the long-held view of the Independent Petroleum Association of America (IPAA), the organization’s chief operating officer, Jeff Eshelman, highlighted in a statement sent to Rigzone recently. “It should be a safety net in case of disruption of crude oil supplies. Policymakers should oppose all non-emergency sales of oil,” Eshelman said. “We strongly oppose the use of oil stockpiles to affect gasoline prices. Market interference makes us all more vulnerable and is counterproductive to long term adjustments in the marketplace. A better solution is to enhance, not stifle or shut-down, America’s leadership in natural gas and oil production,” the IPAA chief operating officer stated. If the government regularly released SPR oil for sale each time domestic fuel prices rose, it could reduce the country’s ability to address a situation with the potential to seriously injure the U.S. economy, Eshelman noted. In addition, a draw-down of the reserve might not have the desired result, he added. “The sale of SPR oil now could destabilize the fragile oil market. After eighteen months of historically low oil prices that devastated the domestic oil and natural gas industry, oil prices have now returned to the levels they were pre-pandemic,” Eshelman said. “However, the sale of SPR oil at this time when supplies are adequate to meet domestic needs could easily undermine the market and drive the domestic industry back into economic turmoil,” he continued. Over the past few days, several members of Congress have urged the White House and the department of energy to sell oil from the SPR, Eshelman highlighted. In a statement sent to Rigzone earlier this week, Rystad Energy’s senior oil markets analyst Louise Dickson outlined that an SPR release would “likely only have a temporary bearish effect on prompt prices and is not a lasting solution for an imbalance between supply and demand”. In a separate statement sent to Rigzone last week, Rystad Energy’s head of oil markets, Bjornar Tonhaugen, highlighted that OPEC+’s decision to keep its supply policy intact increased the chance of the U.S. and China intervening in the physical market, including tapping of their strategic crude reserves. The SPR is the world’s largest supply of emergency crude oil and was established primarily to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program, according to the U.S. Department of Energy. The federally owned oil stocks are stored in underground salt caverns at four sites along the coastline of the Gulf of Mexico. Established in the aftermath of the 1973-74 oil embargo, the SPR has a maximum nominal drawdown capability of 4.4 million barrels per day, the DOE highlights.

California joins the “we love OPEC” alliance -The state of California – once an energy giant, not beset by supply shortages and high costs – has joined the Beyond Oil and Gas Alliance (BOGA), a group of countries and regional governments that have pledged to end oil and natural gas production. Yet, as Energy in Depth has repeatedly shown, California’s move to restrict the development of their own resources does nothing to shrink its demand for oil, it just shifts the production to other jurisdictions. This recent move to join BOGA is only a doubling down on this flawed strategy that makes the state even more dependent on foreign oil imports, essentially giving more economic and political power to OPEC countries. When Denmark and Costa Rica announced BOGA in August, the two nations earned plenty of headlines, but lost in much of that publicity is their lack of actual production. Costa Rica has never produced oil, and while Denmark is the European Union’s largest producer – that’s not saying much, as the BBC notes it only pumped 103,000 barrels in 2019 and “produces much less than non-EU members Norway or the UK.” In fact, the United Kingdom declined to join the alliance during recent meetings at COP26, and did other major producing countries that dwarf Denmark’s output. For perspective, Texas’ and New Mexico’s Permian Basin alone produced 4.3 million barrels per day in 2019. Since the launch, more governments have joined BOGA, including France, Greenland, Ireland, Sweden, Wales, and the Canadian province Quebec that recently imposed a fracking ban that could expropriate foreign assets, but as Reuters reported: “None of the members, which pledge to stop handing out drilling permits and eventually to ban oil and gas production in their territories, has substantial production.” Moreover, noticeably absent from the BOGA announcements was that none of the countries pledged to phase out the use of oil and natural gas. It’s one thing to commit to stopping production – when there is none in the first place – but it’s quite another to stop using these fuels when people rely on them to fill up their cars with gasoline and generate electricity to power their homes and businesses. In sharp contrast to its fellow BOGA members, California actually has major production, but has chosen to undermine its own ability to stay energy independent. The Wall Street Journal editorial board reviewed the stats: “In 1982 California produced 61.4 percent of its oil consumption and imported 5.6 percent. In 2019 29.7 percent of the oil Californians consumed was produced in the state while 58.4 percent was imported—mostly from the Middle East and South America.”

Why US Shale Won't Go To War With OPEC+ --For years, the Kingdom of Saudi Arabia’s economy has suffered from low oil prices. Since 2014 when it increased supplies to try and break American shale producers, Saudi Arabia has had to struggle with a flooded market. Its cash reserves have been drawn down by hundreds of billions and it had to sell a small percentage of its prize asset, Saudi Aramco. At the same time, Saudi Arabia’s Vision 2030 plan fell behind in its lofty goals of diversifying its economy. I discussed this at some length in a prior Oilprice article. Now with the price of Brent - the benchmark against which Saudi Arabia prices its production - finally back above the $80 mark, the Kingdom is beginning to refill its coffers. So it was no great surprise when the Saudis and the Russians, the two principal members of the OPEC+ cartel, roundly rejected a demand from President Biden to increase production to ease the world’s energy crisis.Up to this point, there had been some lingering concern on the part of OPEC+ that too high a price would reinvigorate the shale industry that had finally come to heel in early 2020. Restraint on the part of shale drillers since then has encouraged them that a new “war” for market share won’t be the result. As the linked Reuters article notes, while some American shale drillers are bumping up their budgets, many are standing pat. Kaes Van't Hof, the CFO of Diamondback Energy (NYSE:FANG) was quoted as saying, "The industry has tried a market share war with OPEC before and it didn't work out." In this article, we will discuss what we see as being the major variables to the oil supply equation and where oil prices might go in the next few months. We think the world is in a new era of higher-priced commodities including oil, and several factors will sustain this condition for a number of years.There are three countries with the significant excess capacity to substantially increase oil supplies in a short period of time, KSA, Russia, and the USA. The IEA projects that KSA has about 12.25 mm BOPD of capacity or about 2.25 mm BOPD above present levels. S&P Global Platts estimates that Russia, currently producing 9.7 mm BOPD under the OPEC+ agreement, has an upper capacity of about 11.5 mm BOPD. Between the two they could quickly add 4-mm BOPD and knock prices down considerably if it was remotely in their best interests. KSA and Russia depend upon oil sales to fund their economies as they produce little else of value for the global market. The USA on the other hand is a giant of international commerce but still depends on its internal production to fund its approximate 21.3 mm BOPD habit. Russia and KSA have the clear objective of wanting to derive the maximum benefit from their production by optimizing the supply/price ratio. The U.S. has for years sent mixed messages to its domestic producers, a trend that’s only increased with the new administration. With its climate goals front and center the U.S. has tied the hands, figuratively speaking, of its domestic energy producers. Whether it’s the canceling of lease sales, denying permits on federal lands, opposing midstream takeaway, or implementing carbon taxes the American government has sent U.S. producers a very clear message.

In big win for Enbridge, most of its old Line 3 pipeline will remain in the ground - For Colleen Bernu and others, the new, larger Line 3 pipeline, which began moving oil on October 1, isn’t the most pressing issue now. They worry about the old pipeline, which for more than 50 years transported oil 1,097 miles from Alberta, Canada, to Superior, Wisconsin.That line, under policies adopted by Canadian owner and operator Enbridge, will mostly remain in the ground, decommissioned, emptied of oil but with the potential for environmental damage in the future.Keeping most of the pipeline in the ground is a win for Enbridge, but environmentalists, activists and some concerned landowners like Bernu say the company has put them at risk for future contamination and only offered them the illusion of choice about the soon-to-be dormant pipeline.“As pipelines wear out, they should be taken out,” Bernu said, adding that if removal is not possible, they should at least be cleaned, disconnected and plugged with cement, to mitigate future impacts on soil or water. “That would create an entire new economic opportunity for people, and it would be a win for the environment as well as a win for families.”Private landowners and the Fond du Lac Band of Lake Superior Chippewa own different parts of the land where the pipeline runs past Bernu’s home, which is on the reservation. Bernu, a Fond du Lac descendant, said she didn’t get a say in whether it should be removed because it isn’t on her property. She still doesn’t know what its fate will be. Pipeline removal could potentially unite those who typically oppose each other on pipeline issues. Removing it would provide jobs for workers in parts of the state that need them, and it would also protect the environment, including surrounding water sources, in the long term.

Will Enbridge's Line 3 Replacement Narrow The WCS/WTI Spread? -- Crude oil production in Western Canada has been rising steadily for most of the past decade. Unfortunately, the same cannot be said for its oil pipeline export capacity to the U.S., which has generally failed to keep pace with the increases in production. Dogged by regulatory, legal, and environmental roadblocks, permitting and constructing additional pipeline takeaway capacity has been a slow and complicated affair, although progress continues to be made. The most recent tranche arrived last month with the start-up of Enbridge’s Line 3 Replacement pipeline, which provides an incremental 370 Mb/d of export capacity and should help to shrink the massive price discounts that have often plagued Western Canadian producers in recent years. In today’s RBN blog, we discuss the long-delayed project and how its operation is likely to affect Western Canada’s crude oil market, now and in the future. In recent years, Western Canada had been chronically short of sufficient oil pipeline capacity to its primary export market: the U.S. At times, the huge mismatch between production and takeaway capacity resulted in enormous price discounts for its flagship Western Canada Select (WCS) heavy-oil blend relative to West Texas Intermediate (WTI) at Cushing — a spread that ballooned to more than $40/bbl in October 2018 and spurred a major rebound in crude-by-rail, a more expensive transport alternative. That painful episode led the provincial government of Alberta, home to the large majority of Western Canada’s heavy oil and oil sands production, to impose a month-to-month curtailment of crude oil production beginning in 2019 to bring production more into line with available pipeline export capacity. The result was a dramatic reduction in the big price discount for WCS, but clearly a better solution had to be found — one that did not involve complicated monthly adjustments to oil production by producers and curtailment limits by the Alberta government. Although changes in the marketplace and massive production cuts in 2020 led to the eventual phase-out of the curtailments by the end of 2020, the best fix would be to expand pipeline capacity to the U.S. to accommodate current oil production and support some degree of future production growth. RBN has blogged many times in the past few years about Canada’s trials and tribulations of expanding its oil pipeline export capacity, including a comprehensive roundup in our two-parter, Oil From The North Country. In sum, TC Energy’s 830-Mb/d Keystone XL pipeline to the Midwest, the government of Canada’s 590-Mb/d Trans Mountain Expansion (TMX) project to Canada’s West Coast, or Enbridge’s Line 3 Replacement (L3R) to the U.S. Midwest all faced major hurdles. KXL was eventually canceled and TMX is still under construction, but the L3R has finally reached completion.

Lawmakers to consider $150M plan to bring Bakken gas to eastern North Dakota – A proposal to use $150 million in federal stimulus money to build another pipeline delivering natural gas from the Bakken to eastern North Dakota is among the issues state lawmakers will consider next week when they convene at the Capitol.Lawmakers plan to divvy up $1 billion from the federal American Rescue Plan Act during the special session, and the money leaders hope to set aside for a pipeline could make the prospect of such a project more attractive to developers."There's been a longstanding desire to see more North Dakota gas be used in the state," North Dakota Pipeline Authority Director Justin Kringstad said.Kringstad is the state official who keeps tabs on oil and gas production and transportation data, and for years he's heard conversations lamenting the disparity between the western and eastern parts of the state in terms of gas access. The Bakken region of western North Dakota produces substantial quantities of gas alongside oil, and some of it is wastefully burned off in flares at well sites rather than piped to a processing plant and put to use due to a lack of infrastructure.Some eastern North Dakota communities have gas service because they happen to be near a limited number of pipelines that extend to that part of the state, but many do not.Much of the gas produced within North Dakota is transported to markets in other states on major pipelines such as Northern Border, which ends in the Chicago area.WBI Energy operates a pipeline that already delivers gas to parts of eastern North Dakota. Cost appears to be the major barrier to building another pipeline that would carry Bakken gas eastward within the state. Such a project comes with a roughly $1 billion price tag. The economics tend to work out better to send gas down existing pipelines into other states rather than build a new project from scratch, Kringstad said.

Grand Forks mayor asks lawmakers to expedite pipeline project -Grand Forks Mayor Brandon Bochenski is asking North Dakota lawmakers to shorten the timeline for constructing a pipeline that would bring Bakken natural gas to the Red River Valley. The legislature is considering a proposal to spend $150 million from the latest federal COVID-19 money for the pipeline, to be built along the U.S. Highway 2 corridor. Money from the state is needed to get the project going. The pipeline is estimated to take about four years to complete, but Bochenski is asking that the timeline be shortened if possible. Bochenski says the announcement by the Fufeng Group to build its first U.S. facility in Grand Forks was based, in part, on natural gas. Fufeng plans to be located in Grand Forks’ agri-business park. The facility is expected to initially require 25 million bushels of corn annually. “We could lose that project. We could lose it to Iowa if we can’t get this done” Bochenski said. Bochenski says a temporary solution is to connect to the Viking Pipeline in Minnesota, but he says there are other companies looking at Grand Forks that would need bigger supplies of natural gas.

Alaska Journal | DEC proposes changes to regulations on oil spill contingency plans --The long list of changes Alaska Department of Environmental Conservation leaders want to make to spill regulations for oil and fuel shippers and handlers is out, and stakeholders are diving in. DEC Commissioner Jason Brune offered some unique language when attempting to describe the department’s objectives for the regulatory reform effort in a Nov. 2 statement, shortly after the 118 pages of long-awaited proposed changes were published. “In the end, we want to see contingency plans that are very effective for preventing and responding to spills and don’t get caught up in things that are duplicative, inefficient, or no longer work,” Brune said. The proposed changes to the state’s rules for spill contingency plans, or C-plans, for entities producing, storing or transporting large quantities of oil and fuels come roughly two years after DEC officials first began soliciting input on C-plans from direct stakeholders and the public, ahead of the likely reforms. Currently, there are 131 active C-plans held by 77 plan holders, according to DEC. Most members of the public then urged DEC officials to maintain the current levels of protections in the regulations, and many questioned why the department would open the regulations to possible changes given the state’s reliance on marine resources and the relative lack of large fuel or oil spills in the state since the Exxon Valdez in 1989. Many expressed concerns that the decidedly pro-business Dunleavy administration would ease environmental standards at the behest of industry. Local government officials by and large also emphasized a general desire for the department to uphold current levels of oversight on the oil and gas industry, while also suggesting some changes to clarify and strengthen the existing regulatory code. Several local and Tribal governments across Alaska submitted resolutions against actions to ease the regulations. Fuel shippers, oil field service companies and Alyeska Pipeline Service Co. at the time all offered numerous ways they feel the regulations are too rigid, unclear or outdated. Stakeholders across a range of interests in the realm of spill prevention and response all said they were actively reviewing the more than 30 detailed regulatory changes, and deferred comments on the proposals to a later time.

Lights Out for All O&G Production in Quebec, Including Utica Shale | Marcellus Drilling News - For years Canadian company Questerre Energy patiently waited to begin drilling on their extensive Utica Shale acreage in the St. Lawrence Lowlands of Quebec, Canada. Quebec has been like New York–completely closed to the oil and gas industry, particularly shale and fracking (see Quebec to Ban Utica Shale Drilling, Most Other Drilling Too). And yet Questerre kept trying. As recently as March of this year the company touted hydrogen (from natural gas) as the reason they should be allowed to drill in the Utica Shale (seeQuesterre Still Trying to Convince Quebec to Let Them Drill Utica). All hope is now gone. Three weeks ago Quebec announced it will expropriate all of the rights for all oil and gas companies in the province to drill and extract oil and natural gas. It’s all being shut down–including actively producing wells.

Canadian Natural Expanding Montney Shale Leasehold with Storm Resources Takeover Canadian Natural Resources Ltd. is scooping up liquids-rich Montney Shale wells and growth prospects in northern British Columbia (BC) with its takeover of Storm Resources Ltd.The acquisition, announced Wednesday, gives the Calgary-based producer 170 square miles of the Montney, where Storm reports liquid byproducts average 20% of well flows. Current production is averaging 136 MMcf/d of natural gas and 5,600 b/d of liquids.The deal is valued at C$960 million ($768 million), including C$766 million for 122 million Storm shares, C$188 million ($150.4 million) in Storm debt, plus transaction costs.“This acquisition provides existing production and infrastructure that complements our current assets in the area,” said Canadian Natural President Tim McKay. “These operating areas provide opportunity for synergies within our current diversified portfolio.”Canadian Natural during 3Q2021 produced 1.7 Bcf/d of natural gas, up from 1.36 Bcf/d in 3Q2020. Oil production, 75% from oilsands, averaged 952,839 b/d, compared with 884,342 b/d in the year-ago period.Storm’s board announced support for the takeover, with directors voting their combined 12.6% of shares for the deal. A stockholder vote is planned for December. Before the takeover, Storm had notified investors that its Montney assets were in an area affected by negotiations between the BC government andBlueberry First Nation on obeying a recent court verdict that requires a strengthened native regulatory role.The merger is not expected to impact free cash flow as it relates to previously announced share repurchases. The incremental cash flow generation from the tie-up would be used for shareholder returns and improvements to the balance sheet.

Keyera Riding Tailwinds on Rising Demand, Pricing for NGLs - Strong demand and rising prices for natural gas liquids (NGL) led to a surge in profits and capacity growth in British Columbia (BC) during the third quarter, Calgary-based Keyera Corp. said. Keyera has set a 2023 target date to complete the C$1.6 billion ($1.3 billion) Key Access Pipeline System (KAPS) in time to serve spin-offs from liquefied natural gas and pipeline projects now under construction in BC. KAPS construction was delayed last year by Covid-19. KAPS, a partnership with Energy Transfer Canada ULC, is a dual-pipe express route for NGLs and lighter byproducts. The system would carry supply from northern BC and Alberta natural gas fields in the Montney Shale and Duvernay formation to a Keyera facility in Fort Saskatchewan near Edmonton. With Canadian demand for gas and byproduct services on the rise, Keyera has canceled a plan to shutter the Nordegg facility — a Central Alberta gas processing plant targeted for closure last year during the industry slump.

Sempra Pushes Second LNG Export Facility on Mexico’s Pacific Coast Ahead in Queue - San Diego-based Sempra Infrastructure said it could sanction a second liquefied natural gas (LNG) export terminal on Mexico’s Pacific Coast ahead of another planned U.S. export project. In discussing third quarter 2021 results, Sempra Infrastructure CEO Justin Bird said the Vista Pacifico LNG export facility would be similar in size to Phase 1 of the company’s Energía Costa Azul LNG (ECA) export terminal, at around 3-4 million metric tons/year (mmty). The Sempra subsidiary is planning a second phase at ECA that would add about 12 mmty of LNG capacity to the project, which was sanctioned last year and expected to enter service in 2024. Vista Pacifico would be a mid-scale liquefied natural gas (LNG) facility located near Sempra’s refined products terminal in Topolobampo, the company said. It would be sourced with “lower-cost natural gas from the Permian Basin for export to high-demand Asian markets,” according to Bird. The project would be connected to two existing pipelines, including a high-pressure pipeline system Sempra owns in Sonora, Mexico. Sempra Infrastructure would need to build “a very small spur-type pipeline” that would connect Vista Pacifico to the existing pipelines, both of which are currently underutilized, the chief executive said.

Belarus leader threatens to shut off natural gas to Europe --Belarusian President Alexander Lukashenko suggested shutting off the flow of natural gas to Europe Thursday amid a threat of potential European Union sanctions imposed on the country for its handling of migrants. “We are heating Europe, they are still threatening us that they will close the border. And if we shut off natural gas there?” Lukashenko said in comments first published by Belarusian news agency Belta, Reuters reported. “Therefore, I would recommend that the Polish leadership, Lithuanians and other headless people think before speaking,” the leader added. The pipeline Lukashenko was referring to, the Yamal gas pipeline, carries Russian natural gas through Belarus to Poland and Germany, according to Reuters. Russia is an ally to Belarus. Europe has experienced gas shortages and price increases in recent weeks, and any interruption to the flow of gas through Belarus could have significant effects for other European countries, the media outlet noted. Lukashenko’s comments follow accusations from the EU against Belarus earlier this week of using “gangster-style” tactics toward migrants gathering on the country’s border with Poland. Belarus is reportedly encouraging migrants to come to the border with promises that they will easily be able to enter the EU, and the country’s security is reportedly giving migrants tools to damage Poland’s border fencing.

QatarEnergy expands LNG carrier fleet - QatarEnergy placed the first batch of LNG shipbuilding orders with Korean shipyards consisting of four vessels from Daewoo Shipbuilding & Marine Engineering (DSME) and two vessels from Samsung Heavy Industries (SHI), as part of QatarEnergy’s historic shipbuilding programme to meet its future LNG carrier requirements. The orders came in the form of QatarEnergy’s declaration of its ship construction options with the two Korean shipyards under its Reservation of Shipyard Capacity agreements signed in May 2020. Commenting on this new shipbuilding order, His Excellency Mr. Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, the President and CEO of QatarEnergy, said: “We are pleased to take this further step with DSME and SHI, which have built 23 Q-Flex and 14 Q-Max LNG vessels for Qatar as part of our previous LNG expansion project.” His Excellency Minister Al-Kaabi added: “These orders, and those that will follow in the near future, constitute a significant part of our programme to expand Qatar’s LNG fleet to meet the requirements of our LNG expansion projects, our existing fleet replacement, as well as our LNG trading arm.” In concluding his remarks, His Excellency the Minister said: “I would like to take this opportunity to thank the management and working teams from DSME, SHI, QatarEnergy, and Qatargas, whose dedicated efforts were instrumental in the realisation of this milestone.” The North Field expansion projects will increase Qatar's LNG production capacity from 77 million tpy to 126 million tpy by 2027. QatarEnergy’s LNG carrier fleet programme is the largest of its kind in the LNG industry and is designed to meet the shipping requirements of QatarEnergy’s LNG expansion projects, as well as replacing part of Qatar's existing LNG fleet.

Nigeria’s Aiteo reports “extremely high order” oil spill from well (Reuters) – Nigeria’s Aiteo Eastern E&P has reported an “extremely high order” oil spill from a jointly owned well in the Niger Delta and has had to abort immediate efforts to control the leak due to the pressure emanating from the well head. The well, which in Bayelsa State and is not in production, is jointly owned by Aiteo and state oil company NNPC. The cause of the leak, which was discovered last Friday, has not yet been determined but Aiteo did not rule out crude oil theft leaks and sabotage. Oil spills, sometimes due to vandalism, sometimes to corrosion, are common in the Niger Delta, a vast maze of creeks and mangrove swamps criss-crossed by pipelines and blighted by poverty, pollution, oil-fuelled corruption and violence. “The magnitude of this incident is of an extremely high order. Immediate efforts to control the leak were aborted due to the high pressure emanating from the well head,” Aiteo said in a statement late on Tuesday. In Nigeria, Africa’s biggest oil producer, oil spills have had a catastrophic impact on many communities where people have no other water supply than creeks and rely on farming and fishing for survival. Aiteo said it had reported the incident to regulators and mobilised a team of local and international control specialists to try to close the leak. The well, is part of the assets that Aiteo purchased from Royal Dutch Shell in 2015, company spokesman Ndiana Matthew said. Oil companies in Nigeria have run into problems trying to clean up spills, sometimes because of obstruction and even violence by local gangs trying to extract bigger payouts, or to obtain clean-up contracts.

Profit-taking hits hedge funds' oil positions: Kemp- (Reuters) - Petroleum-related derivative markets were hit by the largest wave of hedge fund selling last week for almost three months as portfolio managers realised some profits after the recent rally in oil prices. Hedge funds and other money managers sold the equivalent of 45 million barrels in the six most important petroleum-related futures and options contracts in the week to Nov. 2 (https://tmsnrt.rs/3BQfEnr). Most selling was driven by the reduction of existing bullish long positions (-39 million barrels) rather than the creation of new bearish short ones (+6 million), consistent with profit-taking rather than aggressive short selling. Portfolio managers were sellers across the whole complex, including NYMEX and ICE WTI (-15 million barrels), Brent (-10 million), European gas oil (-9 million), U.S. heating oil (-6 million) and U.S. gasoline (-5 million). The formerly most bullish parts of the complex (WTI and middle distillates) experienced the largest sales, again consistent with profit-taking after a strong rally that had taken prices to multi-year highs since the summer. The weekly sales were the largest since the week ending Aug. 10, and in the 18th percentile for all weekly position changes since 2013, implying a small but significant shift in the hedge fund community’s outlook. Portfolio managers are still bullish towards petroleum prices (the ratio of long to short positions is in the 80th percentile) but less than bullish than two weeks ago (when the ratio was in the 87th percentile). Position ratios in crude are still high (72nd percentile) but have retreated modestly from their recent peak on Oct. 19 (77th percentile). The overall picture is one where hedge funds still think prices are more likely to rise further rather than fall, but the balance of risks has shifted somewhat after a strong rally, tempting some to lock in a portion of their profits.

Global Crude Oil Prices to Average $82 to Year's End and $72 in 2022, EIA Says - After averaging $84/bbl in October, Brent crude oil spot prices are on track to remain near current levels through the end of 2021, according to updated forecasting from the Energy Information Administration (EIA). The agency said in its latest Short-Term Energy Outlook (STEO), published Tuesday, that it expects Brent crude spot prices to average $82 during the fourth quarter. The $84 October Brent average represented a $9 sequential increase over September prices. EIA said it expects Brent prices to soften to $72 on average in 2022 as production growth — from the Organization of the Petroleum Exporting Countries and its allies, from U.S. tight oil and from other sources — outpaces slowing growth in global consumption. [Tune In: Join NGI’s Director of Strategy & Research Patrick Rau as he dives into what to expect from third quarter earnings reports. From where U.S. natural gas producers are with regard to boosting production to the next wave of LNG projects, from the industry’s hyper-focus on RSG to M&A activity coming down the pike, get in the down with NGI’s Hub & Flow podcast.] Global consumption reached 98.9 million b/d in October, lagging pre-pandemic October 2019 demand by 1.9 million b/d, according to the latest STEO. “We revised up our forecast for consumption of petroleum and liquid fuels for the fourth quarter of 2021, partially as a result of fuel switching from natural gas to petroleum in the electric power sector in parts of Asia and Europe” resulting from soaring natural gas prices globally, researchers said. Petroleum and liquid fuels consumption is set to average 97.5 million b/d for 2021 overall, up 5.1 million b/d year/year. Consumption is then forecast to climb another 3.3 million b/d in 2022, according to the agency. EIA estimated 11.4 million b/d of domestic crude oil production for October, up from 10.7 million b/d in September. The agency said it forecasts 11.6 million b/d of output for December, with full-year 2022 production on pace to average 11.9 million b/d on growth in tight oil production in the United States. “Growth will come largely as a result of onshore operators increasing rig counts, which we expect will offset production decline rates,” researchers said.Natural gas spot prices are set to average $5.53/MMBtu over the next few months as near-average winter inventory draws and higher liquefied natural gas (LNG) exports figure to help keep prices elevated into early 2022, EIA said. In the latest STEO, EIA reported an average Henry Hub spot price of $5.51 for October, up from $5.16 in September and the $3.25 average seen through the first half of 2021. The steep gains for the domestic benchmark in recent months have coincided with continued power generation demand for the fuel even at higher prices, along with strong demand for LNG overseas, according to EIA. The latest STEO calls for Henry Hub prices to average $5.53 during November through February before declining to an average of $3.93 in 2022 amid higher production and slowing growth in LNG exports.

Global Crude Oil Prices to Average $82 to Year's End and $72 in 2022, EIA Says After averaging $84/bbl in October, Brent crude oil spot prices are on track to remain near current levels through the end of 2021, according to updated forecasting from the Energy Information Administration (EIA). The agency said in its latest Short-Term Energy Outlook (STEO), published Tuesday, that it expects Brent crude spot prices to average $82 during the fourth quarter. The $84 October Brent average represented a $9 sequential increase over September prices. EIA said it expects Brent prices to soften to $72 on average in 2022 as production growth — from the Organization of the Petroleum Exporting Countries and its allies, from U.S. tight oil and from other sources — outpaces slowing growth in global consumption. [Tune In: Join NGI’s Director of Strategy & Research Patrick Rau as he dives into what to expect from third quarter earnings reports. From where U.S. natural gas producers are with regard to boosting production to the next wave of LNG projects, from the industry’s hyper-focus on RSG to M&A activity coming down the pike, get in the down with NGI’s Hub & Flow podcast.] Global consumption reached 98.9 million b/d in October, lagging pre-pandemic October 2019 demand by 1.9 million b/d, according to the latest STEO. “We revised up our forecast for consumption of petroleum and liquid fuels for the fourth quarter of 2021, partially as a result of fuel switching from natural gas to petroleum in the electric power sector in parts of Asia and Europe” resulting from soaring natural gas prices globally, researchers said. Petroleum and liquid fuels consumption is set to average 97.5 million b/d for 2021 overall, up 5.1 million b/d year/year. Consumption is then forecast to climb another 3.3 million b/d in 2022, according to the agency. EIA estimated 11.4 million b/d of domestic crude oil production for October, up from 10.7 million b/d in September. The agency said it forecasts 11.6 million b/d of output for December, with full-year 2022 production on pace to average 11.9 million b/d on growth in tight oil production in the United States. “Growth will come largely as a result of onshore operators increasing rig counts, which we expect will offset production decline rates,” researchers said.Natural gas spot prices are set to average $5.53/MMBtu over the next few months as near-average winter inventory draws and higher liquefied natural gas (LNG) exports figure to help keep prices elevated into early 2022, EIA said. In the latest STEO, EIA reported an average Henry Hub spot price of $5.51 for October, up from $5.16 in September and the $3.25 average seen through the first half of 2021. The steep gains for the domestic benchmark in recent months have coincided with continued power generation demand for the fuel even at higher prices, along with strong demand for LNG overseas, according to EIA. The latest STEO calls for Henry Hub prices to average $5.53 during November through February before declining to an average of $3.93 in 2022 amid higher production and slowing growth in LNG exports.

Seasonal weakness could take some heat out of oil prices: Kemp - (Reuters) - Oil prices are expected to stabilise near current levels over the next few months, then decline progressively over the course of next year, according to the latest forecasts from the U.S. Energy Information Administration. The EIA expects output increases from OPEC+, U.S. shale firms and other oil producers will outpace slowing growth in consumption, helping to bring down prices (“Short-Term Energy Outlook”, EIA, Nov. 9). Front-month Brent futures prices are forecast to decline to less than $70 per barrel by the end of 2022, broadly in line with the current strip of futures prices, putting them close to the long-term inflation-adjusted average. The EIA predicts global liquids production will increase by almost 2.5 million barrels per day (bpd) between December 2021 and December 2022, while consumption will rise by only 0.9 million bpd. As a result, the agency expects production and consumption to be balanced in the first quarter of 2022, moving into a surplus of 0.7 million bpd in the second, 0.5 million in the third, and 0.9 million in the fourth. The production-consumption balance in the first and second quarters is forecast to remain slightly tighter than usual for the time of year, before becoming slightly looser than normal in the third and fourth. But all the anticipated balances are well within historic seasonal ranges, easily absorbed by the market, and unlikely to disturb prices much (https://tmsnrt.rs/3HgmO8K). Nonetheless, there are reasons to think the strong rally in oil prices over the last year may experience at least a pause over the next 3-6 months. Hedge funds and other investment managers have already accumulated a higher-than-average position in crude oil and other petroleum futures and options contracts. From a positioning perspective, the balance of risks has therefore shifted to the downside, with liquidation rather than further accumulation more likely. Crucially, the oil market is moving towards the weaker part of the year. Over the last three decades, Brent futures prices have tended to be strongest relative to other months in September and weakest in March. The probability of a sharp rise in oil prices is roughly equal throughout the year, but the probability of a significant short-term decline is greatest between December and April. The result is an upward bias in prices that reaches a maximum in September and a downward bias in prices that reaches a maximum in March. The market is now moving into the six-month period where seasonal declines are more likely, which could take some of the heat out of prices.

Oil Futures Gain on Saudi OSP Hike; US Lifts Travel Curbs -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange rallied at the start of a new trading week, sending the international crude benchmark above $83 barrel (bbl) after Saudi Aramco raised its official selling prices for Asian and European buyers by larger-than-expected margins for December deliveries, indicating robust demand for its crude as the winter heating season in the Northern Hemisphere begins. In addition, the United States lifted its nearly 20-month ban on international travelers, which is expected to further boost demand for middle distillates.On Monday, the United States scrapped its pandemic-era travel restrictions on vaccinated visitors from more than 30 countries, including the European Union, China, Japan and Southeast Asia. Airlines have reported an immediate surge for inbound flight searches, with United Airlines expecting 50% more international passengers as early as this week. United Airlines will fly 69% of its 2019 international schedule next month, according to representative, up from 63% in November, and its trans-Atlantic schedule is expected to be 87% restored in December. American Airlines' international capacity for November and December is set to be more than double that of a year ago and down 28% from 2019.Oil traders will look for signs of rebounding jet fuel demand this month, with U.S. consumption of jet fuels still trending about 15% lower than the pre-pandemic level. In its latest inventory report, the U.S. Energy Information Administration said jet fuel demand surged to 1.68 million barrels per day (bpd) during the final week of October, up 231,000 bpd from the previous week to the highest weekly rate since the pandemic shut the economy down in March 2020. On a four-week average basis, U.S. jet fuel consumption is about 45% higher compared to the same four-week period last year. Separately, top oil exporter Saudi Aramco raised its official selling prices into Asia by more than double in December versus November, exceeding market expectations and sending a bullish signal to the markets. Aramco's differentials for the flagship Arab Light grade were hiked by $1.40 barrel (bbl) versus Dubai/DME Oman to $2.70 bbl, while Arab Medium was increased to $2.35 bbl. Traders mostly expected a more modest increase between $0.50 and $1 bbl. What makes it even more bullish is the Saudi price move in December follows two consecutive months of OSP cuts, when Aramco slashed prices between $1.40 bbl and $1.70 bbl for Asian crude loadings. Refiners in Northwest Europe and Asia are reportedly seeking more crude for heating supplies as cold weather approaches, which, in turn, has bumped up prices for Middle East light. Lighter grades like Arab Light yield more naphtha and kerosene. As for weather forecasts, two strong cold waves will hit most of China and Korea in the next ten days. An early start to winter has sent temperatures plummeting in cities like Beijing and Seoul, prompting the beginning of centralized heating programs this year ahead of the normal schedule. Near 7:30 a.m. EST, NYMEX West Texas Intermediate for December delivery gained $0.51 to trade at $81.79 bbl, and the ICE January Brent contract added $0.55 to $83.26 bbl. NYMEX RBOB December futures advanced 0.93 cents to $2.3302 gallon and front-month NYMEX ULSD futures gained 1.13 cents to $2.4681 gallon.

U.S. infrastructure bill ‘screams bullish for oil’ as crude futures post back-to-back session gains -- Oil futures rose on Monday, bouncing back from last week’s losses to post back-to-back session gains, as investors cheered passage of a $1 trillion U.S. infrastructure spending package and Saudi Arabia lifted prices for crude exports. West Texas Intermediate crude for December delivery CL00, 0.16% CLZ21, 0.13% rose 66 cents, or 0.8%, to settle at $81.93 a barrel on the New York Mercantile Exchange. The U.S. benchmark fell 2.8% last week, January Brent crude BRN00, 0.18% BRNF22, 0.18%, the global benchmark, gained 69 cents, or 0.8%, to settle at $83.43 a barrel on ICE Futures Europe after falling 1.2% last week. Both contracts ended Monday at their highest since Nov. 2, FactSet data show. Global oil-market conditions became more bullish following last week’s meeting of the Organization of the Petroleum Exporting Countries and its allies, which saw the producers defy pressure to increase the size of planned production increases, she said. OPEC+ has also been “struggling to pump [oil] as promised,” according to an S&P Global Platts survey released Monday. OPEC+ crude-oil production rose by 480,000 barrels per day in October, but only half of the group’s members actually lifted output last month, the survey showed. The 19 OPEC+ members with production quotas were a combined 600,000 barrels per day below their allocations for the month, putting compliance at 113.21%, the survey said. Oil demand is likely to grow in the wake of the $1 trillion infrastructure bill passed by Congress late Friday, Dickson said. “This U.S. infrastructure bill screams bullish for oil,” Dickson wrote. Meanwhile, a decision by Saudi state-run oil company Saudi Aramco to boost crude prices on exports added to the bullish tone, analysts said. Aramco late Friday more than doubled the premium that Asian consumers would pay beginning in December next month for its flagship Arab Light crude to $2.70 a barrel more than the average of Platts Dubai and DME Oman prices. Aramco also raised prices for its sales of light crude to the U.S. to $1.75 a barrel above the Argus Sour Crude Index, which reflects the U.S. Gulf Coast medium-sour crude, and cut discounts it offers Northern European and Mediterranean consumers to $0.30 a barrel less than ICE Brent prices. Oil traders also assessed the latest data on China’s crude oil imports, which slumped below the 9 million barrel-per-day mark to a 39-month low of 8.94 million barrels per day in October, according to a report from S&P Global Platts Monday, At the same time, analysts are watching for clues as to whether the Biden administration, whose pleas for OPEC+ to accelerate production increases were ignored last week, will tap the U.S. Strategic Petroleum Reserve. In other Nymex energy trading, December gasoline tacked on nearly 0.1% to $2.322 a gallon and December heating oil added 0.5% to $2.467 a gallon. Natural-gas futures fell for a second session in a row, with the December contract down 1.6% to $5.427 per million British thermal units.

Oil Futures Higher as OPEC+ Production Target Falls Short - Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange continued higher in early trade Tuesday after industry surveys found that Organization of the Petroleum Exporting Countries and 10 producers outside of the cartel led by Russia fell short of their planned production increase last month, with about half of the coalition members unable to raise output, hamstrung with operational issues and years of underinvestment. Involuntary production outages in Nigeria, Libya, and Angola -- Africa's largest oil producers, held OPEC's output target last month below an agreed to 254,000 barrels per day (bpd), according to private surveys. OPEC pumped 27.5 million bpd in October, a rise of 190,000 bpd from the previous month, but still about 65,000 bpd below the quota allowed under their joint agreement. OPEC+ deal allows for a 400,000-bpd monthly increase that is shared among all 23 members of the alliance. The biggest decline was posted by Nigeria, down 70,000 bpd from the previous month to a five-month low 1.37 million bpd with the country's key pipeline facing persistent sabotage. Nigeria's output of its main crude grades -- Bonny Light and Forcados -- have been mired with production issues this year, while output of other grades such as Qua Iboe, Brass River, Agbami, Akpo and Egina have also remained consistently low. Angola has also been unable to reverse a sharp decline in its oil production. In October, production slipped 40,000 bpd to 1.11 million bpd, well below its quota of 1.362 million bpd. Angola's upstream sector appears to have suffered from technical and operational problems at some fields, aggravated by a lack of upstream investment. Production declines in smaller members offset gains in Saudi Arabia, Kuwait and Iraq, with all three Gulf states believed to have most of OPEC's spare capacity. Saudi Arabia saw the biggest increase month on month, adding 130,000 bpd, from the previous month to 9.79 million bpd in October, the highest level since April 2020 amid strengthening demand for its crude. Saudi Aramco raised its official selling crude prices for all markets in December, nearly doubling the selling price for Asian buyers. Outside the cartel, Russia was the largest producer, with output standing at 9.96 million bpd -- well above its quota of 9.81 million bpd, and the highest output rate since April 2020, the survey showed. In early trade, NYMEX West Texas Intermediate for December delivery added $0.39 to trade at $82.33 per barrels (bbl), and the ICE January Brent contract gained $0.24 to $83.67 bbl. NYMEX RBOB December futures added 2.35 cents to $2.3448 gallon and front-month NYMEX ULSD futures advanced 1.55 cents to $2.4826 gallon.

Oil reaches $84 as lifting of U.S. travel ban boosts demand --Oil rose to around $84 a barrel on Tuesday, gaining for a third session, as the U.S. lifting of travel restrictions and more signs of a global post-pandemic recovery boosted the demand outlook, while supply remained tight. On Monday, travellers took off for the United States again, while the passing of U.S. President Joe Biden's infrastructure bill and better-than-expected Chinese exports helped paint a picture of a recovering global economy. Brent crude was up $1.35, or 1.6%, $84.78 per barrel, after gaining 0.8% on Monday. U.S. oil advanced $2.22, or 2.7%, to $84.15 per barrel also after a 0.8% rise the previous day. "With the re-opening of U.S. borders for vaccinated travellers, jet fuel demand ought to receive a healthy ... boost," said Tamas Varga of oil broker PVM. "The passage of the $1 trillion U.S. infrastructure bill in Congress is also expected to provide additional help." The price of Brent has risen over 60% this year and hit $86.70, a three-year high, on Oct. 25, supported by supply restraint by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, and recovering demand. At a meeting last week, OPEC+ decided to stick to its existing pace of easing record output cuts and rebuff U.S. pleas to pump more - helping to keep supply tight for the near term in the view of some analysts. JPMorgan Chase said global demand for oil in November was already nearly back to pre-pandemic levels of 100 million barrels per day (bpd), following last year's collapse. Biden, however, may take measures as early as this week to address soaring gasoline prices, U.S. Energy Secretary Jennifer Granholm said on Monday. Despite a tight global market, U.S. crude inventories are expected to have risen for a third straight week, possibly helping to cap further gains in prices.

WTI Extends Gains After API Reports Surprise Crude Draw - Oil jumped today on speculation that the Biden administration may pull the plug on any plans to release crude from the nation’s emergency reserves after a U.S. energy report showed supplies rising next year. “The market is clearly looking at this STEO report and determining that odds of a coordinated SPR release are shrinking,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.“However, there is a political element to this issue and prices at the pump remain very high, so I would not discount this chance of SPR release entirely on this report.”WTI rallied for a third straight day as some analysts pointed out that talk of a potential release of crude from the U.S. Strategic Petroleum Reserve highlights a shortage of crude supplies. An SPR release would be a "short-term measure at best," since any inventory drawn from the reserve would have to eventually be replenished, Manish Raj, chief financial officer at Velandera Energy Partners, told MarketWatch.Oil prices may even rise in response to an SPR release, he said, as the move "will be seen as a desperate attempt that highlights the acute shortage of oil."For now, all eyes will be on Cushing (stocks near lower operating limits) and Crude (to see if the builds are continuing). API:

• Crude -2.485mm (+1.6mm exp)
• Cushing
• Gasoline -552k (-1.2mm exp)
• Distillates +573k (-1.1mm exp)

API reported an unexpected crude draw during the prior week... WTI was hovering around $84.25 ahead of the print and pushed modestly higher after the surprise draw... At the end of the day, a White House official said on Tuesday afternoon that the administration reviewed the EIA forecast and welcomes news of moderating prices (the report forecasts U.S. benchmark crude will fall below $80 a barrel by December and reach as low as $62 by the end of next year).

WTI Holds Losses After Official Data Shows Crude Inventory Build - Oil prices are lower this morning, after a brief jump following last night's API-reported surprise crude draw. The weakness followed a U.S. government report which forecast oversupply next year, cooling expectations of an immediate emergency stock release. The U.S. government projected that the global market will become oversupplied and prices will fall by early next year. DOE:

• Crude +1.002mm (+1.6mm exp)
• Cushing -34k
• Gasoline -1.555mm (-1.2mm exp)
• Distillates -2.613mm (-1.1mm exp)

While API reported a draw, official data confirmed a crude inventory build. Cushing crude stocks fell very modestly last week, remaining near operational lows, well below seasonal averages...

Oil Futures Deepen Losses as Crude Inventories Rise - Crude and refined products futures on the New York Mercantile Exchange accelerated losses in mid-morning trade Wednesday. This followed government data from the Energy Information Administration that detailed a third consecutive weekly increase in U.S. crude oil inventories through Nov. 5, offsetting larger-than-expected drawdowns from refined fuels stockpiles and higher crude demand from domestic refineries.U.S. crude oil stockpiles rose by 1 million barrels (bbl) from the previous week to 435.1 million bbl, and are now about 7% below the five-year average, according to EIA data released this morning. Analysts widely expected crude stockpiles would rise by 1.3 million bbl from the prior week. The build was realized even as domestic refiners increased run rates for the third consecutive week through Nov. 5, up by 0.4% to 86.7%, compared with expectations for a 0.7% increase. Oil stored at the Cushing, Oklahoma hub, the delivery point for West Texas Intermediate, fell by 34,000 bbl from the previous week to 26.4 million bbl. Gasoline inventories, meanwhile, declined 2.6 million bbl from the previous week to 211.7 million bbl, well above the calls for a 600,000 bbl draw. The larger-than-expected drawdown came even as gasoline demand weakened, down 254,000 barrels per day (bpd) to 9.259 million bpd.Distillate stocks fell by larger-than-expected 2.6 million bbl to 124.5 million bpd, leaving supply about 5% below the five-year average. Analysts expected a 1.2 million bbl decline.Distillate demand moved up off a three-week low 3.686 million bpd, surging 594,000 bpd last week -- directionally in line with a 3.1% increase seen in DTN Refined Fuel data. Total diesel consumption in the U.S. was up 7.1% relative to the same week in 2019, strengthening further on a relative seasonal basis after being up 4.4% compared to 2019 levels, according to DTN data.Total products supplied over the last four-week period averaged 20.2 million bpd, up by 6.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.4 million bpd, up by 11.2% from the same period last year. Distillate fuel product supplied averaged 4.0 million bpd over the past four weeks, up by 3.0% fromthe same period last year. Jet fuel product supplied was up 45.2% compared with the same four-week period last year. Near 11:30 a.m. EST, NYMEX December WTI futures slumped $1.25 to trade at $82.89 per bbl, and NYMEX December RBOB futures declined $4.31 to 2.3311 per gallon while the front-month ULSD contract traded at $2.4907 per gallon, down 1.82 cents on the session so far.

NYMEX WTI Tumbles 3% on Resurgent US Dollar, Crude Build - Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange fell 3% or more on Wednesday, sending front-month West Texas Intermediate towards $81 barrel (bbl) amid a resurgence of buying interest in the U.S. Dollar Index triggered by higher-than-expected print on domestic inflation for last month, fueling fears that inflation could prove stickier than the U.S. Federal Reserve previously projected.At settlement, NYMEX WTI futures for December delivery plummeted $2.81 or 3.54% to $81.34 bbl, with losses accelerating post-settlement, and the international crude benchmark Brent January futures contract eroded $2.14 for a $82.64 bbl settlement. NYMEX RBOB December futures plunged 7.8 cents to $2.2972 gallon and front-month NYMEX ULSD futures declined 5.6 cents to $2.4521 gallon.The U.S. dollar surged against major peers Wednesday, settling at a 17-month high 94.838 after the U.S. Labor Department reported consumer prices last month rose to their highest rate since 1990. The U.S. consumer price index -- a measure of inflation -- spiked 6.2% in the 12 months ending in October, far above median expectations for a 5.8% year-on-year increase. Alarmingly, consumer prices accelerated gains across various categories including shelter, energy, food, used and new cars, suggesting inflationary price pressures across the economy are broad based.Markets appear to have priced in more aggressive Federal Reserve rate hikes for next year as a result of this data. Last week, Fed officials took a first step in normalizing monetary policy by slowing down the pace of $120 billion a month in bond-buying stimulus -- a measure seen cooling off long-term demand.Ahead of Wednesday's CPI release, Federal Reserve Vice Chairman Richard Clarida conceded this week that inflation is running "much more than a moderate overshoot" of the central bank's 2% target, adding that the repeat of inflation next year "would not be considered a policy success."Further weighing on the oil complex, U.S. crude oil inventories increased for the third consecutive week through Nov. 5, reported the Energy Information Administration Wednesday morning, easing concerns over tightening global oil market. Crude stockpiles rose by 1 million bbl from the previous week to 435.1 million bbl and are now about 6% below the five-year average. Build was realized even as domestic refiners hiked run rates and domestic production remained near a pre-pandemic high of 11.5 million barrels per day (bpd).U.S. gasoline demand, meanwhile, fell 254,000 bpd or 2.5% from the previous week to 9.259 million bpd, suggesting consumers might be pulling back on gasoline purchases amid soaring prices. Earlier this week, EIA lifted its 2021 retail gasoline prices forecast by 3 cents to $3 gallon, with full-year gasoline consumption seen at 8.78 million bpd.

Oil prices plunge into close, roiled by inflation fears - Oil prices slumped on Thursday, Wednesday, hit by a surge in the dollar after US President Joe Biden said his administration was looking for ways to reduce energy costs amid a broader surge in inflation. Brent and US crude futures dropped sharply at the end of the session as traders sold out of riskier assets, including stocks and commodities, driven by expectations that central bankers will take steps to curb rising prices. Consumer inflation data on Wednesday showed US prices were rising at a 6.2 per cent year-over-year rate, their fastest rate in three decades, and may spur both the White House and US Federal Reserve to take action to head that off. That boosted the dollar, which often trades inversely to oil. Brent crude futures settled down US$2.14, or 2.5 per cent, to US$82.64 a barrel. That contract hit a high of US$85.50 on the session before retreating. US crude settled down US$2.81, or 3.3 per cent, to US$81.34 after reaching a high of US$84.97 a barrel, just off seven-year highs touched in the last few weeks. Inflation is heating up as the economic drag from the summer wave of Covid-19 infections fades and supply bottlenecks persist. The Federal Reserve is expected to try to stave the ongoing increase in prices, which has lasted longer than originally anticipated. That sparked a rally in the dollar, which undermines the price of oil as it raises the cost for other nations because oil is largely transacted in dollars. Biden said he asked the National Economic Council to work to reduce energy costs and the Federal Trade Commission to push back on market manipulation in the energy sector in a larger effort to reverse inflation. "Those comments caused the market to tank," . Separately, US crude inventories rose by 1 million barrels in the most recent week, short of estimates for a 2.1 million build in crude stocks. Several traders said on Thursday that prices could continue to rise in coming months, but noted as well that an ongoing rally could spur more shale industry production that would offset demand. The market has rallied in recent days on expectations that the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, along with other exporting allies, would maintain a steady increase in output. Opec+, as the wider exporting group is called, rebuffed calls by the White House to boost production. US output was most recently at 11.5 million barrels per day, still short of the near-13 million bpd reached in late 2019. The White House has tiptoed around the possibility of releasing oil from the US Strategic Petroleum Reserve amid concern over recent soaring petrol prices. Generally, the US taps the SPR in the case of emergencies, like hurricanes.

WTI, Brent Fall After OPEC Downgrades 2021 Demand Outlook - Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange extended losses into morning trade Thursday after Organization of the Petroleum Exporting Countries revised lower its 2021 global demand forecast, citing weaker-than-expected fuel consumption in China and India, while investor concerns that surging U.S. inflation would force the Federal Reserve to hike interest rates as early as next year, making an abrupt departure from expansionary fiscal policies, added to the selling pressure.U.S. dollar cracked above the key 95-level in early index trade Thursday, surging more than 1% against its global peers after sharp appreciation Wednesday after the U.S. Bureau of Labor Statistics reported domestic inflation spiked to 6.2% on an annualized basis in October -- the highest level in three decades. Alarmingly, price increases spread well beyond the parts of the economy that were most affected by the pandemic, like gasoline prices and cars. Economists estimate domestic inflation could breach 7% by year end before gradually easing in mid-2022. This scenario, however, would likely prompt U.S. Federal Reserve to conclude the tapering process of $120 billion of monthly bond-buying stimulus as early as first quarter 2022 -- about three months ahead of consensus.The Fed has already begun to back away from the narrative of "transitory inflation" in recent weeks, with a growing number of officials leaning toward raising interest rates next year instead of waiting until 2023. Wednesday's inflation data could accelerate the timetable.Further weighing on the oil complex, OPEC this morning downgraded global demand projections to 96.4 million barrels per day (bpd) for 2021, down 160,000 bpd from the previous month forecast. Global demand growth is now seen at 5.7 million bpd. A wave of COVID-19 infections that triggered targeted lockdown measures, as well as weaker manufacturing output and power sector challenges in China, reduced third quarter transportation and industrial fuels demand against initial expectations. India's oil demand in the third quarter was also adjusted lower due to a slower recovery in the demand for industrial fuels. Near 7:30 a.m. ET, NYMEX West Texas Intermediate futures for December delivery declined $0.71 to $80.67 per barrel (bbl), and international crude benchmark Brent January futures eroded $0.50 to $82.11 bbl. NYMEX RBOB December futures declined 0.87 cents to $2.2885 gallon and front-month NYMEX ULSD futures fell 2.15 cents to $2.4306 gallon.

Oil Rises as Biden Faces Mounting Pressure to Rein in Prices -- Oil rose in choppy trading as investors weighed the odds that the White House will intervene to cool rising energy prices. Futures in New York climbed 0.3% after swinging between gains and losses on Thursday. U.S. President Joe Biden is facing growing pressure, including from his own party, to address rising prices as gains in consumer costs hit the fastest pace in decades. His options include tapping the Strategic Petroleum Reserve or even banning oil exports. “Where we are at this point is prices have risen because demand is rising and so you need a more permanent supply response,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. Meanwhile, inventories at Cushing, Oklahoma, the delivery point for benchmark U.S. crude futures, fell by about 36,000 barrels Nov. 5-9, according to traders citing data from Wood Mackenzie on Thursday. Oil prices have soared as the global economic recovery from the pandemic boosts demand. Rising prices prompted the Biden Administration to weigh the merits of an emergency crude release. As much as 60 million barrels could be released from the SPR, in part by bringing forward mandated sales from 2022, according to Citigroup Inc. That would be enough to wipe out the supply deficit the Energy Information Administration has forecast for the rest of this year. With the market keenly watching for potential U.S. steps, trading has been highly volatile. One closely monitored market gauge -- the spread between the nearest two December contracts -- has swung by more than a dollar in four of the past six trading sessions, when it would generally move a few cents.

Oil Set For Third Consecutive Week Of Losses - Oil prices fell early on Friday and were headed for a third consecutive week of losses, as the U.S. dollar strengthened and the market continues to guess whether the Biden Administration will act now to try to bring down high gasoline prices. As of 9:55 a.m. EST, WTI Crude was trading down 1.21% at $80.60 and Brent Crude had fallen by 0.93% to $82.10.Oil prices were weighed down by a rise in the U.S. dollar as some investors now see the Fed raising interest rates as early as next year to tame inflation. A stronger greenback makes oil buying more expensive for holders of other currencies.In addition, market participants are weighing the possibility of the U.S. Administration acting now to seek to reduce the highest gasoline prices in America in seven years, with a release from the Strategic Petroleum Reserve (SPR) cited by analysts as the most likely option. On Thursday, OPEC cut its oil demand forecast for 2021, for a second month running, acknowledging that “a slowdown in the pace of recovery in 4Q21 is now assumed due to elevated energy prices,” on top of weaker than expected Q3 demand from China and India. On Thursday, oil prices were supported in part by a shutdown of the giant 535,000-barrel-per-day Johan Sverdrup oilfield offshore Norway after a power outage. Production was fully restored by Friday, the field’s operator Equinor saidtoday.Analysts are also warning of the oil market balance tipping into surplus early next year.“Assuming OPEC+ maintains its current production strategy, the implication is that the string of quarterly declines that began in 3Q20 will come to an end in the next quarter. In other words, the oil market is sleepwalking into a supply surplus,” broker PVM Oil said on Friday.“OPEC and its allies will at the very least need to put a pause on the easing of their supply curbs in the new year. Inaction will result in global oil stocks swelling once again and oil prices making a beeline lower,” analysts at the oil broker noted.

Weekly Losses for WTI, Brent as Inflation Fans Demand Worries -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Friday's session lower, with both crude benchmarks suffering their third consecutive week of losses. Those losses were triggered by the prospects of weaker global demand growth in the fourth quarter, with soaring inflation and a strengthening U.S. Dollar Index further weighing on the energy complex. U.S. consumer sentiment this month plummeted to its lowest showing in a decade, according to the survey from the University of Michigan, with one-in-four American households citing diminished purchasing power and a reduction in living standards. The drop-off in sentiment has been triggered by rising inflation that surged to a 30-year high last month as well as a belief the Biden administration has failed to "develop effective policies to reduce the damage from rising prices," noted Surveys of Consumers Chief Economist Richard Curtin.The consumer price index -- a measure of inflation -- spiked to 6.2% in the 12 months ending in October, delivering a gut-punch to an already slowing economic recovery. The Federal Reserve's long-held inflation target has been around 2%. President Joe Biden vowed this week to address rising gasoline and food prices, but no specific policy has yet been presented. Speculation is swirling the White House might authorize additional sale of crude oil from the Strategic Petroleum Reserve, currently holding about 613 million barrels (bbl) of crude oil, which follows the sale of 20 million bbl that has been underway this fall. Analysts, however, estimate SPR sales would have limited impact on the market as it doesn't structurally change supply-demand fundamentals. Faced with relentless rise in consumer prices, U.S. Federal Reserve could end its bond-buying stimulus program earlier than expected to position the markets for the first interest rate hike since March 2020. The Fed has already begun to back away from the narrative of "transitory inflation" in recent weeks, with a growing number of officials leaning toward raising interest rates next year instead of waiting until 2023. The high level of inflation, now three times above the central bank's targeted 2%, will be a driving force in determining market direction heading into the final weeks of the 2021 trading year. Further weighing on the oil complex this week, U.S. crude oil inventories increased for the third consecutive week through Nov. 5, reported the Energy Information Administration on Wednesday, easing concerns over tightening global oil market. Crude stockpiles rose by 1 million bbl from the previous week to 435.1 million bbl and are now about 6% below the five-year average. The build was realized even as domestic refiners hiked run rates while domestic production remained near a pre-pandemic high of 11.5 million barrels per day (bpd). U.S. gasoline demand, meanwhile, fell 254,000 bpd or 2.5% from the previous week to 9.259 million bpd, suggesting consumers might be pulling back on gasoline purchases amid soaring prices. On the session, NYMEX West Texas Intermediate futures for December delivery retreated $0.80 to $80.79 bbl, and the international crude benchmark Brent contract for January declined to $82.17 bbl, down $0.70 on the session. NYMEX RBOB December futures eased 0.64 cents to $2.3114 gallon and front-month NYMEX ULSD futures fell 4.34 cents to $2.4037 gallon, with both products falling to five-week lows on their spot continuation charts during the session.

UAE reportedly looks elsewhere as Israel hesitates over pipeline deal - A deal between the United Arab Emirates and Israel, signed on Oct. 19, 2020, to transport Emirati crude through existing Israeli pipelines between the port of Eilat on the Red Sea to Ashkelon on the Mediterranean—initially hailed as the first major agreement following the Abraham Accords—is now in jeopardy, with the UAE reportedly sending out feelers for an alternative route. The deal is between MED-RED Land Bridge Ltd., a private Dubai-based company, and Israel’s state-owned Europe Asia Pipeline Co. (EAPC). According to the EAPC, the deal benefited the UAE by letting it deliver its oil more efficiently to Western markets and benefited Israel in ensuring its energy security. On Oct. 21, almost a year to the day after the signing, a Globes article described how the UAE was considering finding a path through Egypt instead as the Israeli government becomes mired in internal disagreement over the deal’s pros and cons, casting doubt that it will allow the agreement to stand. Israeli environmentalist groups have sued the government. Their main argument is that the pipeline deal would lead to a sharp rise in the number of oil tankers visiting the Gulf of Eilat, creating a serious threat to Israel’s coral reefs in the event of a spill. Ironically, the new potential route would run from the Egyptian resort of Taba on the Red Sea, only a short distance from Israel’s pipeline installation, leaving Israel’s coral reefs just as exposed to a potential oil spill, only without any upside for Israel.

Palestinian activists’ mobile phones hacked using NSO spyware, says report The mobile phones of six Palestinian human rights defenders, some of whom work for organisations that were recently – and controversially – accused by Israel of being terrorist groups, were previously hacked by sophisticated spyware made by NSO Group, according to a report. An investigation by Front Line Defenders (FLD), a Dublin-based human rights group, found that the mobile phones of Salah Hammouri, a Palestinian rights defender and lawyer whose Jerusalem residency status has been revoked, and five others were hacked using Pegasus, NSO’s signature spyware. In one case, the hacking was found to have occurred as far back as July 2020. FLD’s findings were independently confirmed with “high confidence” by technical experts at Citizen Lab and Amnesty International’s security lab, the world’s leading authorities on such hacks. The revelation is likely to provoke further criticism of Israel’s recent decision to target Palestinian human rights activists. UN human rights experts have called the designation of the groups as terror organisations a “frontal attack” on the Palestinian human rights movement and on human rights everywhere, and said it appeared to represent an abuse of the use of anti-terrorism legislation by Israeli authorities. Investigations by the Guardian and other media outlets have found multiple cases of governments using NSO spyware to target journalists and human rights advocates who are perceived as threats, often by autocratic regimes such as Saudi Arabia that have been sold the technology. Targets in the past have included the fiancee and wife of the murdered journalist Jamal Khashoggi, as well as Carine Kanimba, the daughter of the jailed Rwandan dissident Paul Rusesabagina. NSO has said it investigates all allegations of abuse and that its technology is meant to be used by governments to fight terrorism and other serious crimes. The case of the six Palestinians also raises new questions about how Israel itself may use spyware to target critics of the government or others who are seen as threatening the country. The Biden administration placed NSO on a US blacklist last week, a move that will make it exceedingly difficult for the Israeli company to buy any US-originating technology or services. The administration said it took the decision after it found evidence that the Israeli spyware maker had acted “contrary to the foreign policy and national security interests of the US”. There is no technical evidence confirming that the state of Israel ordered the hacks of the six Palestinians, but three of the six individuals work for organisations that have been targeted and accused of crimes by Israeli authorities. NSO has said it sells its spyware only to government clients for the purposes of fighting serious crime and terrorism, and the company is closely regulated by the Israeli ministry of defence. A spokesperson for NSO Group said: “Due to contractual and national security considerations, we cannot confirm or deny the identity of our government customers. As we stated in the past, NSO Group does not operate the products itself; the company licence approved government agencies to do so, and we are not privy to the details of individuals monitored. “NSO Group develops critical technologies for the use of law enforcement and intelligence agencies around the world to defend the public from serious crime and terror. These technologies are vital for governments in the face of platforms used by criminals and terrorists to communicate uninterrupted.”