oil at a 13½ year high; US oil supplies at 13 year low; SPR at 19½ year low; total oil + products supplies at 94 month low

oil prices see largest jump on record to a 13½ year high; US oil supplies at a 13 year low; SPR at a 19½ year low, total oil + products supplies at a 94 month low after across the board draws; distillate supplies at a 27 month low; natural gas drilling at a 27 month high

  oil prices increased for the tenth time in eleven weeks this week, and finished at a 13 1/2 year high, after a combination of sanctions, the threat of sanctions, and threats to shipping in the Black Sea had taken more than half of Russian oil off the market...after ending last week up 1.5% at $91.59 a barrel after earlier hitting $100 with the onset of war in Ukraine, the contract price for US light sweet crude for April delivery opened more than 3% higher on Monday, after the U.S. and Western allies imposed sanctions on Russian banks, prompting fears that payment for oil exports would be affected, and quickly spiked more than 7% to trade above $99 per barrel, before settling 4.5%, or $4.13, higher at $95.72 per barrel after an initial round of talks between Russia and Ukraine concluded without an agreement and Russian forces continued their offensives on the Ukraine's two largest cities...oil prices opened more than 3% higher again on Tuesday, after reports suggested a rapid escalation in Russia's assault on Ukrainian metropolitan areas, with indiscriminate shelling ​of the second largest Ukrainian city of Kharkiv -- a shift that could open the door for deeper involvement of Western allies in a confrontation with the world's leading nuclear power, and continued to surge to finish ​the session ​$7.69 higher at $103.41 a barrel, as a decision by the U.S. and other major economies to release emergency stockpiles failed to ease concerns of a major shortfall in supplies...oil prices surged to highs not seen in more than a decade early Wednesday, after OPEC and its oil-producing allies, which included Russia, decided to hold production steady thru April in an OPEC+ meeting that only lasted 13 minutes, their shortest meeting ever...oil prices then extended that surge later Wednesday, after the EIA reported across the board draws from crude and product inventories​, and that oil stocks at the Cushing depot were near tank bottoms, before settling $7.19  higher at $110.60 a barrel on expectations that the market will remain short of supply for months to come, with no alternatives to Russian supply...oil opened higher again on Thursday and surged to a 14 year high at $116.57 a barrel, as trade disruption and shipping issues from Russian sanctions over the Ukraine crisis sparked supply worries, but then tumbled more than 8% to settle at $107.67 a barrel on signs Iran could have an imminent nuclear deal with the US to bring its crude supplies back on the market...however, oil prices again spiked to over $112 a barrel early Friday after reports of a fire at a major Ukrainian nuclear power plant spooked markets before authorities later said the fire in an outbuilding had been extinguished. and then rallied further before the close as traders decided the impact of severe sanctions against Russia's banking sector had already led to a structural disruption to global oil flows, before settling $8.01 higher at $115.68 a barrel, the highest closing price since mid-2008...front month oil prices thus finished more than $24 or 26.3% higher, their greatest one week dollar value increase on record, with the global benchmark Brent trading in its widest range since the beginning of ​its​ futures trading in 1988...

With oil prices breaking out to a near 14 year high this week, we'll include a few graphs of those prices below...the first one will show oil prices over the past 20 years (you can click on it for a better view):

The above is a screenshot of the current interactive and continuously updated oil price chart from barchart.com, which i have set to show front month oil prices monthly over the past 20 years, which means you're seeing the same range of oil prices that were quoted by the media over that stretch....this interactive chart can also be reset to show prices of front month or individual monthly oil contracts over time periods ranging from 1 day to 30 years, as the menu bar on the top indicates, and also to show oil prices by the minute, hour, day, week or month for each...each bar in the graph above represents the range of oil prices for a single month, with months when prices rose indicated in green, with the opening price at the bottom of the bar and the closing price at the top, and months when prices fell indicated in red, with the opening price at the top of the bar and the closing price at the bottom, while the small sticks above or below each monthly bar represent the extent of the price change above or below the opening and closing price during the month in question....meanwhile, the bars across the bottom show trading volume for the front month oil contract for the months in question, again with up months indicated by green bars and down months indicated in red...by setting my cursor over August 2008, when prices were last this high, i was able to bring up a readout of those August 2008​ ​prices in the upper left of the graph...there you can see that prices opened at $124.06 a barrel at the beginning of trading that month, rose to as high as $128.60 a barrel during that August before falling to a low of $111.34 a barrel, and then closed at $115.46 a barrel on the last trading day of August 2008...since oil prices have only been lower thereafter, that establishes this week's $115.68 close as the highest oil price since, and hence a 13 1/2 year high...

what is also particularly noteworthy on the graph above is the downward price spike of April 2020, when US oil prices (at Cushing Oklahoma) fell to negative $40.32 a barrel in the wake of the pandemic and an OPEC squabble...oil prices went negative because ​Cushing ​storage was full at contract expiration that month, and no one would take the oil ​t​hat was available...since oil closed this week priced at $115.68, that means US oil prices have risen $156 a barrel in a little less than 2 years...

the next graph we're including here is formatted the same way as the one above, but instead of showing monthly oil prices for 20 years, this one shows daily oil prices for six months...we include this graph so you can see that oil prices actually hit their high for this past week on Thursday, when they spiked to $116.57 in early trading before falling all the way back to $107.67 a barrel in the wake of the Iran treaty news...you can see that price spike as an upward pointing "wick" above the red bar representing Thursday's falling prices on the right ​side ​of the graph....

natural gas prices also finished higher this week, following Europe's gas prices higher after first rising on a colder forecast for mid-March....after rising 2.1% to $4.470 per mmBTU last week on rocketing European gas prices and on a spate of natural gas well freeze-offs, the contract price of natural gas for April delivery opened more than 3% higher on Monday on intensifying concerns regarding the Russia-Ukraine conflict but reversed to settle 6.8 cents lower at $4.402 per mmBTU, as traders focused on forecasts for less cold American weather over the next two weeks​,​ rather than worries that escalating sanctions against Russia would disrupt global energy supplies...but natural gas prices bounced back Tuesday amid potential for even stronger demand for U.S. LNG exports against the backdrop of Ukraine and the specter of European supply disruptions​,​ and settled 17.1 cents or nearly 4% higher at $4.573 per mmBTU...natural gas rose another 18.9 cents to $4.762 on Wednesday, gaining support from surging global oil and gas prices, as the Russia-Ukraine conflict stoked energy supply concerns...US natural gas prices eased on Thursday, despite a triple digit withdrawal from storage, and settled down 4.0. cents at 4.722 per mmBTU, after the European benchmark price dropped as much as 22%, after soaring over 100% since the Ukrainian invasion on February 24...but natural gas prices jumped more than 6% to a one-month high on Friday, buoyed by global supply fears imposed by Russia’s invasion of Ukraine, resurging European prices and the related prospect of a protracted period of record demand for U.S. liquefied natural gas, and settled 29.4 cents higher at $5.016 per mmBTU, thus logging a 12.2% increase on the week..

The EIA's natural gas storage report for the week ending February 25th indicated that the amount of working natural gas held in underground storage in the US fell by 139 billion cubic feet to 1,643 billion cubic feet by the end of the week, which left our gas supplies 216 billion cubic feet, or 11.6% below the 1,859 billion cubic feet that were in storage on February 25th of last year, and 255 billion cubic feet, or 13.4% below the five-year average of 1,898 billion cubic feet of natural gas that have been in storage as of the 25th of February over the most recent five years....the 139 billion cubic foot withdrawal from US natural gas working storage for the cited week was close the average forecast for a 137 billion cubic foot withdrawal expected by an S&P Global Platts survey of analysts, but it was more than the 132 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, and was much more than the average withdrawal of 98 billion cubic feet of natural gas that have typically been pulled out natural gas storage during the same week over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending February 25th indicated that after a big jump in our oil exports and a drop in our oil imports, we had to pull oil out of our stored commercial crude supplies for the tenth time in 14 weeks and for the 26th time in the past forty weeks…our imports of crude oil fell by an average of 1,061,000 barrels per day to an average of 5,767,000 barrels per day, after rising by an average of 1,038,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 1,110,000 barrels per day to an average of 3,796,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 1,971,000 barrels of per day during the week ending February 25th, 2,171,000 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 11,600,000 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 13,571,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,398,000 barrels of crude per day during the week ending February 25th, an average of 153,000 more barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 709,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US….so based on that reported & estimated data, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from storage, from net imports and from oilfield production was 1,119,000 barrels per day less than what our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+1,119,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for 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.... moreover, since last week’s EIA fudge factor was at (-200,000) barrels per day, that means there was still a 1,319,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the week over week supply and demand changes indicated by this week's report are completely worthless....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)….

This week's 709,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 993,445,000 barrels at the end of the week, the lowest since October 10th, 2008, and therefore at a new 13 year low...this week's oil inventory decrease came as 371,000 barrels per day were being pulled our commercially available stocks of crude oil, while 338,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, part of the Biden administration's original plan to release 50 million barrels from the SPR to incentivize US gasoline consumption....including other withdrawals from the Strategic Petroleum Reserve under similar recent programs, a total of 76,121,000 barrels have now been removed from the Strategic Petroleum Reserve over the past 19 months, and as a result the 580,020,000 barrels of oil remaining in our Strategic Petroleum Reserve is now the lowest since August 16th, 2002, or now at a 19 1/2  year low, as repeated tapping of our emergency supplies for non-emergencies has already drained those supplies considerably over the past dozen years...with Biden's recent announcement that a further 30,000,000 million barrels will be pulled out of the SPR in the wake of the Ukraine situation, the US will have roughly 28 1/2 days of oil supply left in the Strategic Petroleum Reserve when the current withdrawal programs are complete...

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,193,000 barrels per day last week, which was still 9.4% more than the 5,661,000 barrel per day average that we were importing over the same four-week period last year….this week’s crude oil production was reported to be unchanged at 11,600,000 barrels per day even though the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,200,000 barrels per day because Alaska’s oil production was 18,000 barrels per day lower at 440,000 barrels per day and subtracted 100,000 barrels per day from the rounded national production total (by the EIA's math)...US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 11.5% below that of our pre-pandemic production peak, but 37.6% 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 87.7% of their capacity while using those 15,398,000 barrels of crude per day during the week ending February 25th, up from a utilization rate of 87.4% the prior week, but still lower than the historical utilization rate for late February refinery operations…the 15,398,000 barrels per day of oil that were refined this week were 55.5% more barrels than the 9,903,000 barrels of crude that were being processed daily during week ending February 26th of 2021 in the wake of winter storm Uri, but 1.9% less than the 15,696,000 barrels of crude that were being processed daily during the week ending February 28th, 2020, when US refineries were operating at what was then also a lower than normal 86.9% of capacity at the onset of the pandemic...

With the increase in oil being refined this week, gasoline output from our refineries was also a bit higher, increasing by 4,000 barrels per day to 9,274,000 barrels per day during the week ending February 25th, after our gasoline output had increased by 440,000 barrels per day over the prior week.…this week’s gasoline production was 11.7% more than the 8,301,000 barrels of gasoline that were being produced daily over the same week of last year, but 5.0% less than the gasoline production of 9,757,000 barrels per day during the week ending February 28th, 2020....at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 20,000 barrels per day to 4,713,000 barrels per day, after our distillates output had increased by 238,000 barrels per day over the prior week…with those increases, our distillates output was 62.6% more than the 2,898,000 barrels of distillates that were being produced daily during the storm impacted week ending February 26th of 2021, and 1.4% more than the 4,648,000 barrels of distillates that were being produced daily during the week ending February 28th, 2020...

Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fifth time in the past 13 weeks, decreasing by 468,000 barrels to 246,011000 barrels during the week ending February 25th, after our gasoline inventories had decreased by 582,000 barrels over the prior week....our gasoline supplies decreased again this week as the amount of gasoline supplied to US users increased by 84,000 barrels per day to 8,743,000 barrels per day, while our imports of gasoline rose by 187,000 barrels per day to 603,000 barrels per day, and while our exports of gasoline fell by 25,000 barrels per day to 660,000 barrels per day…after this week's inventory drawdown, our gasoline supplies were still 1.0% higher than last February 26th's gasoline inventories of 243,472,000 barrels, when Winter Storm Uri had resulted in a record draw, and about 1% below the five year average of our gasoline supplies for this time of the year…

Meanwhile, even with this week's increase in our distillates production, our supplies of distillate fuels decreased for the nineteenth time in twenty-six weeks, falling by 574,000 barrels to a twenty seven month low of 119,104,000 barrels during the week ending February 25th, after our distillates supplies had decreased by 584,000 barrels during the prior week….our distillates supplies fell again this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 217,000 barrels per day to 4,450,000 barrels per day, while our exports of distillates fell by 211,000 barrels per day to 749,000 barrels per day while our imports of distillates fell by 13,000 barrels per day to 403,000 barrels per day....after thirty-three inventory decreases over the past forty-seven weeks, our distillate supplies at the end of the week were 16.7% below the 142,996,000 barrels of distillates that we had in storage on February 26th of 2021, and about 16% below the five year average of distillates inventories for this time of the year…

Meanwhile, after the jump in our oil exports and the decrease in our imports, our commercial supplies of crude oil in storage fell for the 19th time in 30 weeks and for the 34th time in the past year, decreasing by 2,597,000 barrels over the week, from 416,022,000 barrels on February 18th to 413,425,000 barrels on February 25th, after our commercial crude supplies had increased by 4,514,000 barrels over the prior week…with this week’s decrease, our commercial crude oil inventories fell to about 12% below the most recent five-year average of crude oil supplies for this time of year, but were still 25.6% above the average of our crude oil stocks as of fourth weekend of February 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 spring 2020 and remained elevated for most of a year after that, our commercial crude oil supplies as of this February 25th were still 14.7% less than the 484,605,000 barrels of oil we had in commercial storage on February 26th of 2021, and now also 6.9% less than the 444,119,000 barrels of oil that we had in storage on February 28th of 2020, and also 7.2% less than the 445,865,000 barrels of oil we had in commercial storage on February 22nd of 2019…

Finally, with our inventory of crude oil and our supplies of all products made from ​oil ​remaining near multi year lows, we are continuing to keep track of the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....the EIA's data shows that the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 6,301,000 barrels this week, from 1,741,514,000 barrels on February 18th to 1,735,213,000 barrels on February 25th....that left our total supplies of oil & its products now at the lowest since April 18th, 2014, or at a new 94 month low, following this week's across the board draw from all of our oil & oil product inventories...

This Week's Rig Count

The number of drilling rigs running in the US was unchanged in the week ending March 4th, after rising 64 of the prior 75 weeks, but ​they ​still remain 18.0% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US remained at 650 rigs this past week, which was still 247 more rigs than the pandemic hit 403 rigs that were in use as of the March 5th report of 2021, but was still 1,279 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 market with oil in an attempt to put US shale out of business….

The number of rigs drilling for oil was down by 3 to 519 oil rigs during this week, after oil rigs had increased by 2 during the prior week, while there are still 209 more oil rigs active now than were running a year ago, even as they still amount to just 32.3% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 3 rigs to 130 natural gas rigs, which was the most natural gas rigs drilling since December ​6th, 2019, ​and was ​also up by 38 natural gas rigs from the 92 natural gas rigs that were drilling during the same week a year ago, but ​was ​still only 8.1% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition, Baker Hughes continues to list a rig drilling vertically for a well intended to store CO2 emissions in Mercer county North Dakota as 'miscellaneous', which thus matches the 'miscellaneous' rig count of one of a year ago

The offshore rig count in the Gulf of Mexico was unchanged at twelve rigs this week, with eleven of this week's Gulf rigs drilling for oil in Louisiana waters and another rig drilling for oil in Alaminos Canyon, offshore from Texas....that's down by 2 from the 14 offshore rigs that were active in the Gulf a year ago, when 12 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters…since there is not any drilling off our other coasts at this time, nor was there a year ago, those Gulf of Mexico rig counts are equal to the national offshore totals for both years....

In addition to those rigs offshore, we continue to have 3 water based rigs drilling inland; one is a horizontal rig targeting oil at a depth of between 5000 and 10,000 feet, drilling from inland waters in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, another is a directional rig drilling for oil at a depth of over 15,000 feet in the Galveston Bay area, while the third inland waters rig is a directional rig targeting oil at a depth of between 10,000 and 15,000 feet in St. Mary Parish, Louisiana... during the same week a year ago, there were no inland waters rigs deployed..

The count of active horizontal drilling rigs was up by 2 to 595 horizontal rigs this week, which was also 233 more rigs than the 362 horizontal rigs that were in use in the US on  March 5th of last year, but still 56.8% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014....on the other hand, the vertical rig count was down by 1 rig to 25 vertical rigs this week, which ​is ​equal to the 25 vertical rigs that were operating during the same week a year ago…in addition, the directional rig count was down by 1 to 30 directional rigs this week, but those were still up by 14 from the 16 directional rigs that were in use on  March 5th of 2021….

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 March 4th, the second column shows the change in the number of working rigs between last week’s count (February 25th) and this week’s (March 4th) count, the third column shows last week’s February 25th 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 5th of March, 2021...

with​ a four rig decrease in Texas despite no apparent corresponding decreases in that state's basins, we'll start by checking the Rigs by State file at Baker Hughes to see what's going on there..​.​​first, we find that two rigs were pulled out of Texas Oil District 8, which encompasses the core Permian Delaware, while another rig was pulled out of Texas Oil District 8A, which includes the counties of the northern part of the Permian Midland...with the Texas Permian thus showing a three rig decrease while the national Permian basin count was up by 1, we have to figure that all four rigs ​that were ​added in New Mexico were thus added in the far western Permian Delaware, in the southeast corner of that state...elsewhere in Texas, there was also a rig pulled out of Texas Oil District 10, which includes the Granite Wash basin in that state, but it doesn't appear that rig was targeting that basin, which shows no chang​e...

in Oklahoma, the two rig decrease is easily accounted for by the loss of rigs in the Ardmore Woodford and the Arkoma Woodford, while the two rig increase in Louisiana accounts for the increase of two natural gas rigs in the Haynesville shale...the national natural gas rig count was up by three because one of the three oil rigs which had been drilling in the Haynesville was shut down this week, while a​nother​ natural gas rig was added in its place...since the related rig counts would offset each other, that could have happened in either Louisiana or in Texas Oil District 6,....if you really need to know where that was, you can compare the individual well records for this week to the well records for last week in the North America Rotary Rig Count Pivot Table (Excel) and find out where the change occurred...

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

Eastern Ohio takes center stage at gas and oil convention - — Eastern Ohio’s major role in the energy sector was highlighted last week during the Ohio Oil and Gas Association’s annual meeting.The three-day event included workshops, a trade show, receptions, an awards ceremony, panel discussions and a keynote address by Ohio Attorney General Dave Yost. But a panel discussion Thursday morning, titled Industry Through the Eyes of the Community, brought the experiences of local residents to the fore.Landowner Larry Cain represented Belmont County, whiile Monroe County Commissioner Mick Schumacher and Nick Homrighausen, executive director of community and economic development for Harrison County, also served as panelists. The three men discussed a variety of ways oil and gas development have impacted the local region.One observation they all shared is that area well pads and associated operations are all “so clean.”Cain, a third-generation dairy farmer who works in partnership with his son on the Cain Family Farm, described the land use that is possible despite having two well pads and 11 horizontal wells on their farm. He said the pads — and even their associated pipelines — are far less intrusive than he had expected.“We are able to farm right up to the edge of the pad,” he told the convention attendees.He compared the drilling, fracking and production from the wells to past coal mines that operated in the area for many decades.“Coal mining was way more environmentally damaging, “ he recalled. “We don’t have our cattle dying. We don’t have erosion issues.”He also spoke of allowing people to tour the pad sites.“The first thing we hear is how clean it is,” he added. “People who do not approve go away with a different picture” of the industry. Cain also pointed to the changes — some readily apparent and others a bit harder to see — that have resulted from gas and oil development in Belmont County. He cited improvements to family farms, purchases of tractors and other new vehicles, construction of new buildings, tractors and home remodeling as some examples. He also pointed out that many people who leasd their mineral rights are now better able to invest in an education for their children or grandchildren and to pay down their debt.

Utica Shale Academy beneficiary of $75K donation - Ascent Resources, in partnership with the Ohio Oil and Gas Association, has donated $75,000 to the Utica Shale Academy USA. The money will be used to build an outdoor welding lab. That will allow students to weld in varying weather conditions, the way they would have to on the job.

Ohio Board Reaffirms Tax On Fracking Co.'s Equipment – Law360 - The Ohio Board of Tax Appeals affirmed on remand Friday that a hydraulic fracturing company's equipment purchases were taxable, upholding nearly two dozen sales tax assessments levied against the company....

Modified Air Permit Sought for Proposed Ethane Cracker Plant in Belmont County — An air pollution permit issued for the proposed PTT Global Chemical America ethane cracker in Belmont County expired Thursday, but the company is applying for a modified permit that would be in keeping with a goal of reducing emissions.Groups opposed to the development, though, say the application for a new permit should be denied.“PTTGC America is in the process of drafting an application for an air permit from the Ohio Environmental Protection Agency in accordance with its parent company’s Net Zero commitment,” the company states in a new release issued last week.The Ohio EPA issued the initial air permit-to-install for PTTGCA’s planned petrochemical complex in December 2018.The modified permit application “will be consistent with the ambitious environmental protection goal announced last year by GC, PTTGCA’s Thai-based parent company,” the company continues.“GC announced in October it will reduce greenhouse gas emissions by 20% by 2030 and achieve a net-zero emissions goal by 2050 in order to fight climate change.”A cracker plant is an industrial facility that uses heat and chemical processes to “crack” or break down ethane molecules to produce ethylene, a component of plastics and other products such as textiles, paint, household cleaners and more. If the PTTGCA plant is constructed, it will use locally produced natural gas to fuel its six furnaces. Ethane is one of the abundant “wet gas” components of the local natural gas stream drawn from the Utica and Marcellus shales.This is the second time this particular permit has become an issue for PTTGCA. In June, the OEPA extended the permit that initially was set to expire June 22.Regarding the expiration of the permit on Thursday, the Concerned Ohio River Residents sent a letter to Belmont County commissioners and Port Authority Director Larry Merry, suggesting it is time for the county to pursue other avenues of economic development.“Something to ponder as we move into this new year. The cracker plant’s air permit dies this week and here is some financial information you likely haven’t seen,” Beverly Reed, a community organizer with CORR, wrote in reference to a report from the Institute for Energy Economics and Financial Analysis. “It is important as leaders to look at all the facts, and not just what one side is telling you. … The reason why we do what we do is because we love this Valley. We want long term, sustainable futures for people.“These people have strung you and us along for long enough,” Reed continued. “It is time to start looking in a new direction. There are alternative options out there for the Ohio Valley.”

Pennsylvania Natural Gas Production Growth Slows in Late 2021 -- Unconventional natural gas production volume growth in Pennsylvania decelerated during the fourth quarter according to the state’s Independent Fiscal Office (IFO).IFO reported horizontal gas well production volume of 1.949 Tcf for 4Q2021, representing a 6.7% year/year growth rate. That was lower than the 7.2% uptick that data showed for 3Q2021.For 2021, IFO said Pennsylvania’s production grew by 6.8%, up from 4% in 2020, which was marred by Covid-19 disruptions. The agency also had reported a strong start to 2021.“Despite the increase from prior year growth, the rate of 6.8% still represents a deceleration from pre-pandemic rates,” stated IFO. “From 2016 to 2019, horizontal production volume increased,” climbing on average by about 10.2%/year.The IFO said horizontal wells produce more than 99% of the state’s natural gas.Only five counties accounted for three-fourths of gas production volumes in 2021, with Susquehanna County commanding a 21.4% share, IFO stated. The other top counties were Washington (18.4%), followed by Bradford (15.3%), Green (14.4%), and Lycoming (5.5%). Pennsylvania is the United States’ second-largest natural gas producer, after Texas. Other states rounding out the top five include Alaska, Louisiana and West Virginia.

WhiteHawk Energy Announces Agreement to Acquire Core Marcellus Shale Natural Gas Minerals and Royalty Assets for $52.5 Million -- WhiteHawk Energy, LLC announced today an affiliate's definitive agreement to acquire $52.5 million of natural gas minerals and royalty assets located in Southwestern Pennsylvania. The Marcellus Royalties are primarily focused in Washington and Greene counties Pennsylvania, representing some of the highest quality natural gas reserves in the United States. WhiteHawk's position will cover approximately 475,000 gross unit acres in the Marcellus Shale, with additional upside from the underlying Utica Shale. Approximately 95% of production, cash flow, and present value is anchored by best-in-class natural gas operators EQT Corporation, Range Resources and CNX Resources. Under the Appalachia Agreement, WhiteHawk will acquire up to $52.5 million of the Marcellus Royalties through October 2022. Pro forma for this transaction, the seller owns approximately 45,000 net royalty acres in Southwest Appalachia and both parties expect to continue dialogue around future potential transactions in the region.

Republicans Urge Gov. Wolf: Unleash Pennsylvania's Immense Gas Reserves - Looking at the instability of the European energy markets, Pennsylvania House Republicans are urging Gov. Tom Wolf to unleash Pennsylvania’s natural gas stores to power the world. The largest natural gas reserve in the United States is mostly underground, in Pennsylvania and West Virginia. “If our region was its own country, we’d be the eighth largest natural gas producing country in the world,” Dan Weaver, president, and executive director of the Pennsylvania Independent Oil & Gas Association told The Epoch Times. That includes Pennsylvania, West Virginia, and Ohio. In one of many actions signifying an intentional move to renewable energy sources like wind and solar, President Biden signed an executive order on his first day in office, stopping the construction of the Keystone XL Pipeline. Without pipeline infrastructure, it’s tough to move large amounts of natural gas. “U.S. West Coast refineries rely on imports of light sweet crude oil from other countries, including Russia, because access to U.S. produced light sweet crude oil is challenged by geography, transportation, and logistics,” a recent posting at the American Fuel & Petrochemical Manufacturers website says. Resistance to pipeline construction is costing the United States its energy independence. “For us to shut down or condemn producing oil and natural gas here in the United States, where we can control the environmental standards, and to ask for oil from other countries that don’t have the same stringent standards as we do, is ludicrous,” Weaver said. “They shut down a pipeline on day one, and then six months later basically say, to people that don’t like us very much, would you send us more oil? We have the ability to be completely energy independent, right under our feet, and still have the ability to help our allies in Europe by sending [liquified natural gas] over to them.” The XL Pipeline is not the only roadblock to U.S. energy independence. Republican state Rep. Stan Saylor will soon introduce a resolution to ask New York Gov. Kathy Hochul and New Jersey Gov. Patrick Murphy to end their states’ policies banning the construction of any new natural gas pipelines. Policies that Saylor says have walled off Pennsylvania’s natural gas from accessing markets in New England and forced New England states to rely on liquefied natural gas (LNG) imports from foreign nations, including Russia. “Not only have anti-energy policies from President Joe Biden down to blue-state governors resulted in increased costs to consumers, but they mean that we as a country are helping to finance Vladimir Putin’s unprovoked war on Ukraine through oil and natural gas imports. It’s unconscionable and outright shameful,” Saylor said in a statement. “I also urge Gov. Tom Wolf to call his fellow blue-state governors and urge them to reverse their pro-Putin pipeline bans. Our response, as a commonwealth and as a nation, to Russia’s aggressions toward a sovereign country must go beyond lighting up buildings in blue and gold and pulling Russian vodka from liquor store shelves.” In addition to Saylor’s pending resolution, 15 Pennsylvania House Republicans signed a letter Tuesday demanding Wolf does everything in his power to support the growth and proliferation of Pennsylvania’s natural gas and energy.

Mass. revives gas ban battle with Boston-area 'smackdown' - The attorney general of Massachusetts on Friday shot down a Boston suburb’s attempt to phase down fossil fuel use in buildings, angering local climate activists and adding to a simmering national debate over natural gas bans. Brookline had voted in 2019 to become the first East Coast town to ban fossil fuel hookups in new buildings. That ban was struck down the following year by the office of Massachusetts Attorney General Maura Healey, a Democrat who praised the town’s climate activism but said the ban conflicted with state laws. Last summer, Brookline’s town board passed bylaws with more limited restrictions discouraging new and retrofitted buildings from using fossil fuels for space heat or hot water, when owners applied for zoning permits. Advertisement On Friday, Healey’s office ruled against those new limits, too, saying they violated multiple state statutes, including a zoning act regulating “the use of materials” in building construction, a law giving the state primacy over building codes and a policy that prescribes “uniform” service from utilities. The finding, which came as part of a routine state review of local ordinances, automatically invalidates Brookline’s bylaws. Healey’s office has targeted fossil fuels in the past with climate lawsuits against oil and gas majors. In its Friday decision, it said Brookline’s bylaws were “clearly consistent” with her office’s goal of transitioning away from fossil fuels, but that courts had repeatedly found that the three state statutes would preempt the gas restrictions. “Although the law requires us to disapprove local initiatives inconsistent with our current state statutes, we will continue to lead efforts in Massachusetts and nationally to protect ratepayers and the environment, make our buildings more efficient, and work alongside our communities to reduce the threat of climate change,” Healey said in a statement. Proponents of Brookline’s measure expressed frustration Friday and called on state legislators to pass a bill explicitly requiring all-electric buildings. “It’s deeply unfortunate that one of the bluest states is actively preventing its towns and cities from taking the most basic and necessary steps to address our climate crisis,”

Safety of Sea 3 Providence propane terminal expansion questioned at EFSB hearing - An expert witness warned of potential dangers — including fire and explosions — if a plan by Sea 3 Providence LLC to expand its propane facility on the city’s working waterfront goes through as planned. Edmund “Fred” Millar, a Washington-based environmental safety consultant, told the state Energy Facility Siting Board that the expansion plan constitutes an “alteration to a major energy facility" and requires comprehensive environmental and safety review under state law. Millar testified this morning at an evidentiary hearing as a witness for the Office of the Rhode Island Attorney General. Sea 3 proposes to add freight rail imports — up to 16 tanker cars per day — and build more storage capacity for liquefied propane gas, or LPG, at its ProvPort fuel terminal. The company asserts that the plan is a mere “minor and ancillary modification” that shouldn’t require a lengthy public review process.In his testimony, Millar called for a full review by the board. He warned of serious safety concerns — including possible fire, explosion, and off-site vapor cloud dispersal — if the project goes through as proposed. He argued that existing federal regulations governing the transport of hazardous materials by rail are “pitiful,” and said that a fire safety analysis conducted by Sea 3 was inadequate to protect public safety.

Manchin lashes out at FERC on pipeline permitting - Senate Energy and Natural Resources Chair Joe Manchin yesterday accused the Federal Energy Regulatory Commission of overstepping its legal authority moving to change the natural gas pipeline certification process. Manchin’s (D-W.Va.) comments, made during a radio interview with West Virginia MetroNews, comes as the moderate Democrat looks to promote U.S. energy production following Russia's invasion of Ukraine. And today, he'll get to question FERC commissioners during a hearing. "FERC made a statement which I thought was absolutely out of their domain, and we are going to hold them to task," Manchin said told host Hoppy Kercheval, who frequently interviews West Virginia's top newsmakers. Those comments will only be amplified during his opening remarks today, according to a preview shown to E&E News ahead of the hearing. Manchin intends to also call out what he is deeming a slow walking of lease sales on federal lands by the Biden administration as part of what he sees as “an effort to inflict death by a thousand cuts on the fossil fuels.”

Manchin moves to help speed up finish of natural gas pipeline — With energy independence a goal discussed by every leader in West Virginia now, Sen. Joe Manchin, D-W.Va., is set to meet with FERC (Federal Energy Regulatory Commission) today to find out why guidelines were changed recently that may impede pipeline construction with even stricter regulations. “FERC reversed decades of precedent,” he said of new guidelines that require stricter considerations in several areas. “It is a tremendous drawback … for our energy reliance and reliability,” Manchin said during a virtual press conference from his Washington office Wednesday. “They (the five members of the FERC board) are going to have to explain to me why they have taken these drastic measures … and why they think they have the ability to do that. Why did they … make those changes?” Manchin, Gov. Jim Justice and Sen. Shelley Moore Capito, R. W.Va., all want to pursue energy independence in light of the impact from the Russian invasion of Ukraine and use natural gas from West Virginia to help do so, as well as help countries in Europe who need it. When FERC made the decision (by a 3-2 vote) on guidelines last month, Manchin, who is chairman of the Senate Energy and Natural Resources Committee, was quick to respond. “Today’s reckless decision by FERC’s Democratic Commissioners puts the security of our nation at risk,” he said. “The commission went too far by prioritizing a political agenda over their main mission — ensuring our nation’s energy reliability and security. The only thing they accomplished today was constructing additional road blocks that further delay building out the energy infrastructure our country desperately needs. Energy independence is our greatest geopolitical and economic tool and we cannot lose sight of that as instability rises around the globe.” With the changes, gas pipeline reviews will consider a project’s effect on climate change, look at a wider set of impacts on landowners and environmental justice communities, and scrutinize the economic need related to the public need. On Wednesday, Manchin called the changes “sweeping and ill-informed” and he is now seeking answers, and remedies. “We cannot get a pipeline out of the Marcellus Shale (in north central West Virginia),” he said, referring to the shutdown of the Atlantic Coast Pipeline project and the problems with finishing the Mountain Valley Pipeline (MVP). Both natural gas pipelines were inundated with lawsuits filed by environmental groups that cite the impact on the environment, danger to residents and the validity of going through unwilling landowners’ property because of eminent domain.

Senators question federal regulators on pipeline policy- The Mountain Valley Pipeline was in the spotlight Thursday in Washington, as a Senate committee focused attention on federal regulators and the natural gas projects they oversee.At issue was a recent policy shift by the Federal Energy Regulatory Commission, the agency that regulates projects like the Mountain Valley Pipeline. The new Democratic majority on the commission recently indicated it will consider the impact on climate change as it reviews pipeline projects. US Senator Joe Manchin of West Virginia chairs the U.S. Senate Committee on Energy and Natural Resources.“In my view there is an effort underway by some to inflict death by a thousand cuts,” Manchin said during his opening remarks.During a hearing that called on FERC members to explain their actions, Manchin defended MVP and similar projects.“If the Mountain Valley Pipeline is not completed, and it’s 95% done - over $5 billion, twice the cost because of court interjection -” Manchin said. “If that one is not, there will not be another investment taking the most abundant, plentiful, gas reserves out of an area that could basically backfill, so we don’t have another Texas, so that we have LNG, so that we can do the things we need to.”Russell Chisholm is Coordinator of Mountain Valley Watch and Co-Chair of the Protect Our Water, Heritage, Rights Coalition (POWHR). Chisholm and other pipeline opponents dispute the assertion that the project is almost complete.“We have maps that show it’s roughly three-quarters of a mile, before they come to the first incomplete crossing,” Chisholm said. “That is the distance from mile post zero to where the pipe is not connected together to the rest of the route. And that is true all along the route.”They also cite the key permits MVP lacks, the number of stream crossings that remain and the company’s own status reports that indicate final restoration of the pipeline right-of-way is now about 55% complete.“Our arguments about MVP have been consistent throughout,” Chisholm told WDBJ7 in an interview. “It’s bad for local water sources, it’s bad for land rights issues, for people who have tried to good stewards of the land,” he said. A new argument in favor of projects like MVP is the need to supply European allies with energy following Russia’s invasion of Ukraine. Opponents dismiss that as an industry talking point that doesn’t diminish the environmental concerns.

Proposal to forbid local gas bans dropped in Senate - Virginia Mercury -A controversial proposal to forbid local governments from banning or limiting use of natural gas has been dropped after House Majority Leader Terry Kilgore revamped a bill Tuesday in a bid to ensure legislation providing businesses with certainty about gas service makes it through the Senate. The last-minute change caught many lawmakers and business, utility and environmental groups off guard. “We’ve got a bill that is substantially different than what you were probably looking at an hour ago,” said Sen. Chap Petersen, D-Fairfax City, at a meeting of the Senate Agriculture, Conservation and Natural Resources Committee Tuesday. The new version of House Bill 1257 presented Tuesday would prohibit any “public entity that provides natural gas utility service” from discontinuing service “generally or to any commercial or industrial customers” without providing three years of notice, undertaking certain negotiations and in some circumstances offering the system up for auction to the highest bidder. Only three localities would be affected by the legislation: the cities of Richmond, Charlottesville and Danville, all of which have municipal gas utilities. Bob Shippee of the Sierra Club Virginia chapter called the pared-down legislation “a much improved version of the bill” but said he still believed it was “a solution seeking a problem that doesn’t actually exist.”

Gas pipeline to island could be set by year-end - Peninsula Pipeline Corp. has obtained two of the five major approvals required to construct a natural gas pipeline to Indian River County’s barrier island, and hopes to have the pipeline finished by the end of the year. However, Florida City Gas may be able to provide natural gas service to residents and businesses even before the pipeline is completed if it can find sites for compressed natural gas trailers on the barrier island, a utility spokeswoman said last week. “Where and when is something we have to determine with private land owners, the county and local municipalities, and then we can arrange for temporary land use for the trailers,” Soriano said. “They are very common throughout the industry to transport compressed natural gas.” Construction on the 11.5-mile pipeline is set to start in the second quarter of 2022 and be completed by the end of the year, said Brianna Patterson, a spokeswoman for Peninsula Pipeline, a subsidiary of Chesapeake Utilities Corp. So far, Peninsula Pipeline has obtained permits from the U.S. Army Corps of Engineers and Florida Department of Transportation, Patterson said. The project still needs permits from the Florida Department of Environmental Protection and Indian River County and a license from Florida East Coast Railway, Patterson said. “PPC has procedures in place to protect the environment during and after construction,” Patterson said. “The pipeline will be designed, constructed and operated in accordance with all regulations and environmental permits.

Russian hacking threat hovers over U.S. gas pipelines - - Nearly 40 percent of the nation's electricity comes from plants burning natural gas, almost all of it arriving by pipelines whose systems offer a ripe target for sabotage.The threat of Russian cyberattacks is calling new attention to a crucial weakness in the United States’ electricity supply: the natural gas pipelines that keep many of the power plants running.Nearly 40 percent of the nation’s electricity comes from plants burning natural gas, almost all of it arriving by pipelines whose systems offer a ripe target for sabotage. But U.S. regulators have complained for years that the cybersecurity standards for pipelines are too weak, especially given the power supply’s growing dependence on gas.Last year’s cyberattack on a critical East Coast gasoline, diesel and jet fuel pipeline brought the issue to the forefront by prompting days of shortages and price spikes for motorists. But a shutdown of a natural gas pipeline could cause even more disruption because power plants typically don’t store significant amounts of the fuel on site — unlike gasoline, which can be stored in huge tanks or transported by truck.The May 2021 attack on Colonial Pipeline — thought to be the largest successful cyberattack on oil infrastructure in U.S. history — led the Department of Homeland Security’s Transportation Security Administration to issue the first mandatory cybersecurity standards for pipelines, after years of relying solely on voluntary guidelines. But Democratic lawmakers, regulators and cybersecurity experts say those standards don’t go nearly far enough, and fall short of the binding standards that the U.S. electricity sector has spent years developing.U.S. regulators or the gas pipeline companies themselves need to address that gaping hole in the nation’s energy security, experts say — noting that the gas and electricity sectors increasingly depend on each other.“We say ‘gas and electricity’ as if they’re separate — they aren’t,” said Craig Miller, a research professor of electrical and computer engineering at Carnegie Mellon University, and former chief scientist of the National Rural Electric Cooperative Association. “You don’t move gas without electricity: You need pumps. And you don’t make electricity without gas.”The Russian invasion of Ukraine has only exacerbated fears of a cyberattackon critical energy infrastructure. Energy Secretary Jennifer Granholm urged energy executives last week to prepare “to the highest possible level” for a potential cyberattack from Russia. “While there remains no specific credible threat to the homeland from Russia, that I am aware of, the U.S. Government has been working with energy sector owners and operators to prepare for all geopolitical contingencies,” she wrote in a letter to industry trade organizations.

DT Midstream Trumpets Growth in Haynesville, Carbon-Neutral Pipeline Expansion --Natural gas pipeline and storage provider DT Midstream Inc. (DTM) said it would ramp up investments in new projects over five years and held up as a key example a new endeavor in the Haynesville Shale to capitalize on mounting demand for liquefied natural gas (LNG). The Detroit-based midstream company, with a portfolio that includes 900 miles of regulated interstate gas pipelines and more than 1,000 miles of gathering lines, said Friday it would invest between $1.2 billion to $1.7 billion as part of a five-year growth plan.“We have executed new agreements” that “will result in a multi-year investment in connecting increasing Haynesville supply to growing LNG export demand,” CEO David Slater said Friday during an earnings call with analysts. “The fundamentals around our Haynesville system continue to be strong, with expected growth in both production and LNG exports.”DTM is emphasizing projects that feed into areas ripe for expansion, and the blossoming U.S. export market is central to its efforts. The United States was already poised to become the world’s largest LNG exporter in 2022 before Russia on Thursday launched an offensive on Ukraine.American exports of the super-chilled fuel have hovered near or above 13 Bcf – around record feed gas levels – much of February, with demand strong from both Asia and Europe. Following the assault on Ukraine, demand could mount further because Europe gets roughly a third of its gas from Russia, and amid war, the continent could turn to the United States for more of its supplies.What makes DTM’s new project unique, Slater said, is that it would use electric compression supplied by renewable generation and employ carbon capture and storage (CCS) technology to minimize emissions. This should help both DTM and its LNG clients meet low-carbon initiatives. It would move fuel to Louisiana’s Gillis hub, a key delivery point for export supply.

Southwestern Accelerating Haynesville Natural Gas Development - Southwestern Energy Co. expects to spend more in the Haynesville Shale during 2022 after entering the play last year to become the nation’s second largest natural gas producer. The Houston-based independent also became the Haynesville’s largest operator after acquiring Indigo Natural Resources LLC in September and completed the GEP Haynesville takeover at year’s end. As a result, the fourth quarter results did not include the GEP operations. “Now that we have assumed operations, we see an opportunity to improve on the overall operational execution by leveraging our full field development expertise,” COO Clay Carrell said during a year-end call to discuss the financial results. The company was still active in the play during the fourth quarter, when it turned 21 wells to sales. Carrell said last week that activity had picked up this year. The early data is encouraging, confirming the “Tier One reservoir quality” underlying the new properties in Louisiana. “Our new Haynesville assets complement our premium Appalachia position by deepening the company’s inventory, expanding market optionality and reach, including globally through the liquefied natural gas corridor, while lowering the risk profile of the enterprise,” said CEO Bill Way. Capital expenditures are set at $1.9-2.0 billion this year. About 55% of the budget is earmarked for the Haynesville, with the rest to be spent in the Appalachian Basin assets in Ohio, Pennsylvania and West Virginia. The company’s plans call for turning 70-75 wells to sales in the Haynesville and another 60-65 to sales in Appalachia. The company also said it would continue to spend on environmental, social and governance (ESG) initiatives after recently announcing plans to have a third party certify natural gas production in both plays. The company said it has budgeted up to $20 million for ESG and would prioritize emissions reductions and water conservation efforts. Overall, the company expects to produce 4.7 Bcfe/d this year, up 1.7 Bcfe from year-end 2020 before it entered the Haynesville.

U.S. natgas slides on warmer forecasts, despite Russia supply concerns (Reuters) - U.S. natural gas futures slid almost 2% to a near two-week low on Monday as the market focused on forecasts for less cold American weather over the next two weeks, rather than worries that escalating sanctions against Russia over its invasion of Ukraine will disrupt global energy supplies. Those global supply concerns caused overseas gas and oil prices to soar on Monday. But traders said the U.S. gas market mostly shrugged off what was happening in Europe, where gas prices jumped by as much as 35% at the start of Monday's session. Before Russia's invasion, the United States worked with other countries to ensure that gas supplies, mostly LNG, would keep flowing to Europe. Russia usually provides around 30% to 40% of Europe's gas, which totaled about 16.3 billion cubic feet per day (bcfd) in 2021. So far this year, the U.S. gas market has focused more on domestic weather and supply and demand rather than geopolitics. U.S. gas prices have followed European futures only about 40% of the time so far in 2022, down from about two-thirds of the time in the fourth quarter of 2021. Front-month gas futures fell 6.8 cents, or 1.5%, to settle at $4.402 per million British thermal units (mmBtu), their lowest close since Feb. 15. U.S. oil prices, meanwhile, jumped over 8% earlier on Monday as Western allies imposed more sanctions on Russia. For the month, U.S. gas futures dropped almost 10% in February after rising 31% in January. Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell from a record 97.3 bcfd in December to 94.0 bcfd in January and 93.3 bcfd so far in February, as cold weather froze oil and gas wells in several producing regions earlier in the new year. On a daily basis, however, gas production has climbed on most days since dropping to 86.3 bcfd during a winter storm on Feb. 4. Output on Monday was on track to hit 93.4 bcfd. With warmer weather coming, Refinitiv projected average U.S. gas demand, including exports, would drop from 122.7 bcfd this week to 109.5 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Friday. The amount of gas flowing to U.S. LNG export plants averaged 12.4 bcfd so far in February, which would match January's monthly record high.

Russia-Ukraine Conflict Drives U.S. Export Demand Expectations, Fuels Natural Gas Futures - Natural gas prices bounced back Tuesday amid potential for even stronger demand for U.S. exports of liquefied natural gas (LNG) against the backdrop of Russia’s invasion of Ukraine and the specter of European supply disruptions as the war raged into a seventh day. The April Nymex gas futures contract settled at $4.573, up 17.1 cents day/day. The prompt month had shed 6.8 cents a day earlier. May advanced 17.8 cents to $4.598 on Tuesday. NGI’s Spot Gas National Avg. moved in the opposite direction, shedding 11.5 cents to $4.280 amid modest weather-driven demand. A day earlier, it dropped more than $1.500. European natural gas remained elevated Tuesday – as they have for days – – amid worries that Russia would scale back supplies to the continent. U.S. and European leaders have heaped a bevy of economic sanctions against Russia in the days since it launched the war.. Traders are concerned the Kremlin could respond by cutting off gas supplies. Europe depends on Russia for about one-third of its gas needs – and much of that fuel is delivered via pipelines that traverse Ukraine. Infrastructure damage resulting from Russian bombings and missile strikes on Ukraine could also interrupt gas flows, analysts at Rystad Energy said Tuesday. The increased potential for weaker flows of Russian gas amplifies already lofty calls for U.S. LNG, they said. “At this moment, a disruption in flows is more likely to stem from damage to infrastructure,” Rystad’s Kaushal Ramesh, senior analyst, said Tuesday. “However, as the situation is evolving rapidly, the risk of disruptions due to sanctions on energy remains a real possibility.”

U.S. natgas up 4% as Ukraine war causes global energy prices to soar (Reuters) - U.S. natural gas futures rose about 4% to near a four-week high on Wednesday, gaining some rare support from surging global oil and gas prices as the Russia-Ukraine conflict stokes energy supply concerns. Since the start of the year, the U.S. gas market has mostly shrugged off what was happening in Europe, focusing more on domestic weather and supply and demand. In fact, U.S. prices have moved in the opposite direction of European prices over the past couple of months, following European futures only about 40% of the time since the start of 2022. During the fourth quarter of 2021, U.S. futures followed European prices about two-thirds of the time. But it is hard to ignore the 50% increase in gas futures at the Title Transfer Facility (TTF) in the Netherlands earlier on Wednesday - the European benchmark is up more than 100% since Russia invaded Ukraine on Feb. 24 - especially since those higher overseas prices will keep demand for U.S. liquefied natural gas (LNG) exports strong for months to come. No matter how high global gas prices rise, however, the United States, the world's biggest gas producer, was already producing LNG near full capacity and cannot make much more of the super-cooled fuel. Front-month gas futures rose 18.9 cents, or 4.1%, to settle at $4.762 per million British thermal units (mmBtu), their highest close since Feb. 3. U.S. oil prices, meanwhile, jumped as much as 9% on Wednesday to their highest intraday trade since 2011 on concerns over supply disruptions from Russia, which is also one of the world's top oil producers. Data provider Refinitiv said average gas output in the U.S. Lower 48 states was on track to rise to 93.2 bcfd in March from 92.5 bcfd in February as more oil and gas wells return to service after freezing earlier in the year. That compares with a monthly record of 96.2 bcfd in December. With warmer weather coming, Refinitiv projected average U.S. gas demand, including exports, would drop from 122.2 bcfd this week to 108.1 bcfd next week. The amount of gas flowing to U.S. LNG export plants slid from a record 12.44 bcfd in January to 12.43 bcfd in February and 11.73 bcfd so far in March. Gas futures traded around $54 per mmBtu in Europe and $32 in Asia, compared with around $5 in the United States. But no matter how high global prices rise, the United States only has the capacity to turn about 12.5 bcfd of gas into LNG.

-U.S. natgas futures ease with drop in global oil/gas prices - (Reuters) - U.S. natural gas futures eased on Thursday as the U.S. market continued its three-day streak of following sharp moves in European gas and global oil prices with the Russia-Ukraine conflict stoking energy supply concerns. Gas futures at the Title Transfer Facility (TTF) in the Netherlands dropped as much as 22% on Thursday, after soaring over 100% since Russia invaded Ukraine on Feb. 24. Since the start of 2022, gas prices in the United States have moved in the opposite direction of Europe more than half the time. That is different than during the fourth quarter of 2021 when U.S. futures followed European prices about two-thirds of the time. But it has been hard for the U.S. market to ignore the massive gains in global oil and gas prices in recent days - especially since those higher gas prices will keep demand for U.S. liquefied natural gas (LNG) exports strong for months. Thursday's U.S. price decline came despite an expected bigger-than-usual storage withdrawal last week when colder-than-normal weather boosted heating demand. The U.S. Energy Information Administration (EIA) said utilities pulled 139 billion cubic feet (bcf) of gas from storage during the week ended Feb. 25. That was in line with the 138-bcf withdrawal analysts forecast in a Reuters poll and compares with a decline of 132 bcf in the same week last year and a five-year (2017-2021) average decline of 98 bcf. Front-month gas futures fell 4.0 cents, or 0.8%, to settle at $4.722 per million British thermal units (mmBtu). On Wednesday, the contract closed at its highest since Feb. 3. U.S. oil prices, meanwhile, soared to their highest since 2008 on Thursday on Russian supply concerns before turning negative on rumors that a nuclear deal with Iran was close, which would allow Iran to export more oil.

Russia-Ukraine War Spawns Supply Worries, Sends Natural Gas Futures Above $5.00 - Natural gas prices on Friday forged ahead for the third time in four days, buoyed by global supply fears imposed by Russia’s invasion of Ukraine, surging European prices and the related prospect of a protracted period of record demand for U.S. liquefied natural gas (LNG). The April Nymex gas futures contract spiked 29.4 cents day/day and settled at $5.016/MMBtu. May rose 30.0 cents to $5.036. NGI’s Spot Gas National Avg., however, shed 64.5 cents to $4.495 amid expectations for mild weekend weather and light near-term domestic demand. Russia shelled southern Ukraine late in the week, causing a fire at the largest nuclear power plant in Europe, according to the Associated Press. The blaze was contained but the assault amplified already heightened worries about Russia’s indiscriminate barrage on its eastern European neighbor. As the war extended into a second week, markets priced in the potential for direct Western sanctions against Russian oil and gas that could deplete supplies to Europe during a winter when the continent was already low on natural gas in storage. Dwindling supplies in Europe would intensify calls for U.S. exports of LNG and could, in turn, further drive up global prices. U.S. LNG feed gas volumes topped 13 Bcf Friday and hovered near record levels. The Title Transfer Facility gas contract – the European benchmark – hovered well above $50 over much of the past week, “reflecting the extreme uncertainty in the market as the offensive in Ukraine escalates,” said Rystad Energy’s Kaushal Ramesh. Transit volumes of Russian gas headed for Europe were steady Friday, but “traders are nervous over how long this can continue without disruption,” Ramesh, a senior analyst, said. Already, he noted, the United States “now requires dollar payments for Russian energy exports to be routed through third-country banks, complicating energy transactions.” Absent significant day/day changes in weather or domestic production – output was flat around 95 Bcf Friday — Bespoke Weather Services agreed “escalations in the Russia/Ukraine conflict” and the associated increase in European prices fueled gains for U.S. futures. “Expecting the market to move off the data right now is an exercise in futility, and may remain that way for some time,” Bespoke said. “This movement based on the situation in Europe is very likely to continue for a while, independent of anything shown in the data, which makes it a good time to simply stay neutral and see how the dust settles.” Forecasts Friday showed a “solid mid-month cold shot, relative to the time of year, but hints of rewarming late-month,” Bespoke said. Meanwhile, markets continued to digest the U.S. Energy Information Administration’s (EIA) latest inventory data, released Thursday. EIA reported EIA reported a withdrawal of 139 Bcf natural gas from storage for the week ended Feb. 25, a result that was essentially in line with expectations. Lower 48 storage ended the week at 1,643 Bcf, 255 Bcf below the five-year average, according to EIA. War, however, looms large as a wildcard. “Russia’s invasion of Ukraine and subsequent economic sanctions have increased risks to the global economic outlook,” Moody’s Investors Service said in a report Friday. “The magnitude of the effects will depend on the length and severity of the crisis.” An escalated or prolonged conflict “would put Europe’s economic recovery at risk. The rest of the world will be affected by commodity price shocks at a time when inflation is already high,” the Moody’s team said.

Lawrenceville oil leak: State, federal agencies investigating pipeline spill --A leak from a major pipeline that serves Georgia and other southeastern states spilled hundreds of gallons of fuel into a residential neighborhood in Lawrenceville last week. While residents in the Grayland Hills subdivision had reported smelling an odor for weeks, the oil leak was not discovered until February 22, according to preliminary findings compiled by the federal government’s Pipeline and Hazardous Materials Safety Administration. The source of the spill was identified as the Products (SE) Pipe Line, which transports about 720,000 barrels per day of diesel and gasoline to metro areas along its route from Louisiana to Washington, D.C. The pipeline is operated by Kinder Morgan, the “largest independent transporter of petroleum products in North America,” according to the company’s website. A Kinder Morgan spokesperson said the company estimates the spill resulted in the release of around 420 gallons. Initial findings show that the fuel did not escape into a nearby creek. Kinder Morgan’s vice president of public affairs told the Lawrenceville City Council Monday that six families were evacuated. He said they have returned to their homes. The pipeline was shut off, but the company confirmed that it has since been repaired and restarted. The Pipeline and Hazardous Materials Safety Administration issued a corrective action order, requiring that Kinder Morgan operate the pipeline at reduced pressure, analyze the cause of the leak and submit a work plan for repairing the affected area. A spokesperson for the Georgia Environmental Protection Division confirmed that the agency is also investigating the incident and that remediation work is underway.

EOG CEO Touts Need to Expand Global Reach of US Natural Gas -Citing the United States’ “very vast supply of natural gas,” EOG Resources Inc. CEO Ezra Yacob said “it’s important that we get that gas offshore and into the global market” for geopolitical reasons and to support developing countries’ economic growth. Shell plc has projected a 90% increase in global liquefied natural gas (LNG) demand by 2040. Even before Russia invaded Ukraine, tightening gas supply options, demand for LNG from the United States was strong. Yacob said EOG’s mindset on natural gas globally is “it’s going to be…cost of supply. And we say that we want to be the low-cost producer, and that might sound like we’re talking about oil dominantly, but that goes for gas as well.”The company in February advanced its gas supply aspirations by striking a deal with top U.S. LNG exporter Cheniere Energy Inc., which has proposed expanding its Corpus Christi LNG export terminal in South Texas.EOG is banking on its position in the Dorado natural gas play, with an estimated 21 Tcf bounty, to help sustain growth in LNG exports from the U.S. Gulf Coast. The company has reported a sub-$2.50/Mcf breakeven cost for developing Dorado’s gas reserves in the Austin Chalk and Eagle Ford Shale. “We think Dorado competes in North America, is basically the lowest cost of supply, especially because of its geographic location, close to so many marketing centers, including the Gulf Coast.” Illustrating the growing global reach of U.S. natural gas, the maiden LNG cargo from Venture Global LNG Inc.’s Calcasieu Pass recently departed the Louisiana export facility. Moreover, Cheniere recently added a sixth liquefaction train at its Sabine Pass export facility. EOG’s 2022 capital spending plan, ranging from $4.3-$4.7 billion, would return the company’s oil production back to pre-pandemic levels and maintain flat well costs, management said. The company plans to complete 570 net wells in 2022, up from 519 last year. EOG said the program would include another 20 net wells in Dorado. Helms noted “most of the good equipment is already under employment today. And then bringing in new fleets, both on the drilling side and on the frac side, is also challenged from the standpoint of attracting labor to the market.” EOG’s total average wellhead volumes for 4Q2021 were 863,100 boe/d, up 8% year/year from 801,500 boe/d and up 2% quarter/quarter from 844,400 boe/d. Broken down by segment, EOG’s natural gas production during 4Q2021 averaged 1.534 Bcf/d, up quarter/quarter from 1.422 Bcf/d and year/year from 1.292 Bcf/d. Its full-year 2021 average gas output was 1.436 Bcf/d, up from 1.252 Bcf/d in 2020. Natural gas liquids (NGL) output for 4Q2021 averaged 156,900 b/d, up year/year from 141,400 b/d but down quarter/quarter from 157,900 b/d. On an annual basis, it produced 6% more NGL, to 144,500 b/d in 2021 from 136,000 b/d in 2020. EOG’s crude oil and condensate production for 4Q2021 averaged 450,600 b/d, compared to 449,500 b/d for 3Q2021 and 444,800 b/d for 4Q2020. Year/year, average crude and condensate output increased nearly 9% from 409,200 b/d in 2020 to 445,000 b/d in 2021.

Pipeline spill in Lawrenceville — now being cleaned up — first went undetected – WABE - Cleanup is ongoing at the site of an oil pipeline spill in Lawrenceville that went undetected for weeks before being found. According to company Kinder Morgan, its pipeline was shut down as of last week, but it is now repaired and back in service. The company estimates 420 gallons spilled near the Grayland Hills subdivision, though experts caution that number could change. Residents had reported natural gas smells to local authorities for several weeks, according to a corrective action order from the U.S. Pipeline and Hazardous Materials Association, or PHMSA. On Feb. 22, someone found oil, and the Gwinnett County Fire Department confirmed that it was diesel in a storm drain coming from the pipeline. According to PHMSA, five households were evacuated because of the around-the-clock excavation and heavy equipment use needed to respond to the spill. Sponsor Kinder Morgan had not gotten any alarms or other indications about the leak. That’s not unusual, according to Bill Caram, executive director of the advocacy group Pipeline Safety Trust. He said while there are federal regulations requiring pipeline operators to have leak detection systems, the rules don’t set standards for how strong or sensitive those systems need to be, and it can be tough to pinpoint a leak. “In an ideal world, Kinder Morgan would have a really robust leak detection system on this pipeline. And they would know very quickly when there was product leaking out of their pipeline, and they could respond to it,” he said. “In this case, their leak detection system never detected anything. And they had to rely on a resident spotting it.” The pipeline, which is owned by Kinder Morgan subsidiary Products (SE) Pipe Line Corporation, carries petroleum products from Louisiana to Virginia, delivering jet fuel, gas, diesel and biodiesel to Southern states along the way. The pipeline dates back to 1968. PHMSA said it issued notices in the late-1980s about the potential for failures of pipes of that type that were built before 1970. It also cited the San Bruno, California, natural gas pipeline explosion that killed eight people in 2010 to emphasize the need to monitor older pipes. According to PHMSA, Products (SE) Pipe Line Corporation had previously found two dents in the pipe near where the spill happened, but the company said they were not “actionable.” The last assessment of the pipe was in 2020. Caram said nationwide, there’s a “reportable incident” on a natural gas or hazardous liquids pipeline about once a day, but pipelines are still safer than other options. “When you look at the different ways to transport hydrocarbons, whether it be by rail or by truck or by pipeline, despite that incredible incident rate, pipelines are still by far the safest way to move hydrocarbons,”

Biden administration won’t appeal judge’s ruling revoking Gulf of Mexico drilling leases - The Biden administration will not challenge a federal court ruling that it did not sufficiently consider climate change when it auctioned off 1.7 million acres in the Gulf of Mexico last year, accepting a decision that invalidated the largest offshore oil and gas lease sale in the nation’s history.In a document filed Monday in the U.S. Court of Appeals for the D.C. Circuit, lawyers for the government said they would not appeal the district court’s ruling canceling the lease sale. But they left open the possibility that the leases could still be issued if the decision to throw out the sale’s results is ultimately overturned. The American Petroleum Institute, the oil and gas industry’s largest trade group, has challenged the ruling.The government’s position is not especially surprising. The Interior Department’s environmental analysis justifying the auction was completed under the Trump administration and Biden officials actually did not want to hold the lease sale. Shortly after taking office, President Biden suspended new oil and gas drilling on lands and waters owned by the federal government. But after a Louisiana judge struck down the moratorium last summer, administration officials said they were forced to go through with the sale in November. Although the administration offered up to 80 million acres in the Gulf of Mexico for drilling leases, the Interior Department ultimately sold a fraction of that amount. The sale netted nearly $192 million and ranked as the most profitable offshore auction since March 2019.The federal judge’s ruling invalidating the results of the sale means Interior has to redo its environmental analysis so that it fully accounts for the effects of greenhouse gas emissions associated with future oil and gas drilling in the Gulf of Mexico. Then the administration must decide whether to hold a new auction. However, in its filing, the administration argued that it has run out of time to complete these steps. The government’s five-year offshore drilling plan expires at the end of June, and it’s unlikely that a replacement will be in place by then.

US Announces Emergency Release of 30 Mln Barrels of Crude Oil From Strategic Petroleum Reserve - US President Joe Biden has authorized Washington to release 30 million barrels of oil from strategic petroleum reserves in an effort to stabilize global energy markets disrupted by the military attacks in Ukraine, US Secretary of Energy Jennifer Granholm said in a Tuesday evening statement.The move follows a joint International Energy Agency (IEA) meeting in which the US and 30 other member-nations agreed on the release of 60 million barrels of oil from the nation's emergency reserves. Sanctions-related disruptions to Russian oil trade have created a market "under threat" that demands global attention, the group says."Today, I chaired an emergency ministerial meeting of the [IEA] ... where the United States and 30 other member countries, supported by the European Commission, agreed to collectively release an initial 60 million barrels of oil from strategic petroleum reserves,"Granholm wrote. "This decision reflects our common commitment to address significant market and supply disruptions related to President Putin’s war on Ukraine."The IEA reportedly considered releasing up to 70 million barrels of oil during the emergency discussions."In line with this decision, President Biden authorized me to make an initial commitment on behalf of the United States of 30 million barrels of oil to be released from the Strategic Petroleum Reserve," Granholm said.Washington is committed to blocking Putin from "attempts to weaponize energy supplies" and will continue the advancement of "ongoing efforts to accelerate Europe's diversification of energy supplies away from" Moscow, the US energy secretary noted. The US believes modern-day investment in clean energy is useful in reducing domestic and international dependence on Russian oil and gas, particularly as a means to safeguard energy supplies from "volatile prices and markets."Granholm noted that the US backs "ambitious" clean energy goals, such as the pursuit of a net-zero emissions economy by 2050—a timeline that has been panned as insufficient by many climate experts. At the same time, critics of the Biden administration have argued that Washington's progressive climate change policies have contributed to a decline in US energy production and the present energy situation. The US announcement comes shortly after the Paris-based International Energy Agency (IEA) approved the release via an emergency meeting, amounting to the fourth instance the group has moved to tap into its emergency stockpiles. This particular release comes second to the IEA's release amid the first Gulf War in 1991. A hike in oil prices, as well as a commercial inventory drought rivaling the lows of 2014, comes as the US, Japan, and European IEA countries seek to send a "unified message" to oil producer Russia regarding what they refer to as its "special operation" in Ukraine.

U.S. Oil Industry Uses Ukraine Invasion to Push for More Drilling at Home - Russian troops hadn’t yet begun their full-on assault on Ukraine late Wednesday when the rallying cry came from the American oil and gas industry. “As crisis looms in Ukraine, U.S. energy leadership is more important than ever,” the American Petroleum Institute, the powerful industry lobby group, wrote on Twitter with a photo that read: “Let’s unleash American energy. Protect our energy security.” The crux of the industry’s argument is that any effort to restrain drilling in America makes a world already reeling from high oil prices more dependent on oil and gas from Russia, a rival and belligerent fossil fuel superpower. The industry’s demands have focused on reversing steps the Biden administration has taken to start reining in the production of fossil fuels, the main driver of climate change. The administration should release permits for drilling on federal lands, the lobby urged, and push ahead with leasing more tracts for offshore oil and development. The A.P.I., which condemned the invasion, also The crisis “has the given industry a great talking point,” But the industry misses the point that “we’re overly dependent on fossil fuels,” she said. For one, experts are in agreement that nations around the world need to stop approving new coal-fired power plants, and new oil and gas fields, to avert the most catastrophic effects of climate change, Professor Hipple said. “Does anyone want to continue to be dependent on oligarchs in Russia, Saudi Arabia, Canada’s oil, a handful of private companies in the United States? To my mind, that’s not resilient,” she said. Environmental groups criticized the industry’s logic. “It’s pretty rich for the oil and gas industry to talk about how reliable fossil fuels are when any big storm that happens, any time a war pops up, their reliability is thrown into question,” said Nathaniel Stinnett, founder and executive director of the Environmental Voter Project, a group that mobilizes voters in elections. “Wars aren’t fought over solar energy. You don’t see these huge price spikes in clean energy,” he said. Some Republican lawmakers began to echo the oil and gas industry’s demands. “You need to do much more. You need to get your boot off the neck of American energy producers,” Dan Sullivan, a Republican senator from Alaska said in a video response. The administration, he said, should revive the Keystone XL pipeline, for example — the embattled project that would have carried petroleum from Canadian tar sands to Nebraska — and resume issuing drilling leases in the Arctic National Wildlife Refuge, one of the largest tracts of untouched wilderness in the United States.

U.S. Oil Output Flat; OPEC-Plus Sticks to Modest Production Plan Even as Ukraine War Rages - Despite solid demand and a raging war in Ukraine that could disrupt global supply, U.S. crude producers held the line on output in the final week of February – as they did throughout the month, the Energy Information Administration (EIA) said Wednesday. Production last week was flat with the three prior weeks at 11.6 million b/d, EIA’s latest Weekly Petroleum Status Report showed. This reflected in large measure publicly traded producers’ collective decision to hold steady amid investors’ calls to divert investments away from fossil fuels.On the same day, members of OPEC and an allied group of producers led by Russia – OPEC-plus – agreed to further boost output by a modest 400,000 b/d in March. This would continue a targeted rate of monthly supply increases launched in August 2021 to gradually unwind production cuts of nearly 10 million b/d made in April 2020 amid the pandemic.The cartel’s decision comes amid Russia’s escalating war with Ukraine. With bombing and combat intensifying across Ukraine and sanctions mounting against Russia, analysts said oil supplies, already struggling to catch up with demand, could shrink. The concern is that Russia, a major producer, may lose its ability to export much of its crude as western countries pile punishments atop the Kremlin-controlled Russian economy and financial system.Brent crude, the international oil price benchmark, hovered near $110/bbl on Wednesday – up nearly 40% from the start of 2022.“Investors, traders and politicians alike are scrambling to address the worsening Russia-Ukraine standoff,” said Rystad Energy’s Louise Dickson, senior analyst. “The current realistic scenario is that a large portion of Russian crude oil, as well as refined oil products, will no longer be palpable to the market and create a supply deficit for the duration of the armed conflict.”Sen. Edward Markey, a Democrat of Massachusetts, this week introduced legislation to ban imports of Russian crude, noting that the United States last year imported 198 million b/d of crude and 354 million b/d of unfinished oils from Russia – about 8% of total U.S. imports.Against that backdrop, ClearView Energy Partners LLC analysts said that, absent a surge in either U.S. or OPEC-plus output, supply challenges could prove lasting.“We see a risk horizon of enduringly short supply and potentially long conflict,” the ClearView analysts said. “…Russia’s invasion of Ukraine demolished decades of diplomatic architecture in a matter of days. The global disorder left in its wake could persist for years.”

White House Quietly Calls On US Oil Companies To Increase Production - In a move that likely angered his environment-conscious base, the White House has issued a muted request for U.S. oil companies to increase crude oil production in the wake of high crude oil and gasoline prices. Though words are different than deeds—and President Joe Biden’s deeds have been decisively anti-fossil fuel expansion—a White House official told U.S. oil companies on Tuesday that they could increase production if they want. “Prices are quite high, the price signal is strong. If folks want to produce more, they can and they should,” White House National Economic Council Deputy Director Bharat Ramamurti said in an interview today. While the words fell short of an official request to U.S. oil companies to increase production, it is decidedly different from ignoring U.S. oil companies’ production plans altogether while asking OPEC+ to do the heavy lifting when it comes to oil production—to no avail, no less. Ramamurti also dispelled the notion that the U.S. Administration was somehow curtailing crude oil production. But U.S. oil companies have long held that while the Administration hasn’t directly restricted U.S. output, the energy policies flowing out of the White House have put a damper not only on the attitude involving crude oil production but has made it far more difficult for oil companies to ramp up. The White House has received a lot of pushback in recent days for not tapping what many see as at least a partial solution to the headache that is high oil prices—U.S. shale. Oil companies such as Devon Energy have said they have been perplexed that the White House has not called on them directly to ramp up oil production. And Ramamurti’s comments today still do not rise to the level of asking U.S. producers for more oil.

U.S. shale growth faces headwinds on costs and equipment, EOG says— Inflation and brisk competition for the most-sophisticated drilling gear will hinder U.S. oil-supply expansion this year, according to shale giant EOG Resources Inc. “Inflationary and supply chain pressures” will limit production growth to the lower end of estimates, Chief Executive Officer Ezra Yacob said during a conference call with analysts on Friday. Major forecasters recently boosted estimates for 2022 U.S. oil-production growth to 750,000 and 1 million barrels per day. Most of the best drilling rigs and fracking fleets already are under lease, Chief Operating Officer Billy Helms said: “There are not a lot of new pieces of equipment that can come into the market.” EOG, the second-largest shale-focused explorer, plans to cap output growth to 3.6% this year, following similar pledges from Pioneer Natural Resources Co. and Continental Resources Inc. So-called independent drillers like EOG comprise about 55% of onshore production in the continental U.S., according to IHS Markit Ltd.

Laredo Ups Drilling Count by 50% in West Texas Permian Acreage - Laredo Petroleum Inc. has identified 50% more drilling locations in the Permian Basin acreage it acquired last year than initially envisioned. “These deals initially added about 250 locations, but importantly recent drilling success has added an additional 125 locations across areas where we ascribed no value at the time of the acquisition,” said CEO Jason Pigott in a February call with analysts to review fourth quarter and full-year 2021 earnings. Laredo expanded its Texas footprint in 2021 by acquiring about 41,000 net acres in Howard and western Glasscock counties. The new acreage holds about 250 “high-margin, oil-weighted” Permian locations, management said. Appraisal drilling has since yielded about 35 Middle Spraberry and about 90 Wolfcamp D formation locations. “We now have eight years of oil-weighted high-margin inventory in Howard and western Glasscock counties,” said Pigott. The exploration and production (E&P) firm “grew proved oil reserves by nearly 80% and oil now makes up nearly 40%” of its total reserves, according to Pigott. COO Karen Chandler said the eight-year inventory projection assumes a $55/bbl or less oil price, the current pace of activity and existing development spacing. The company is “currently operating three drilling rigs and two completion crews.” One rig and one crew are set to be released by the end of March. Afterward, “we will maintain two rigs and one crew through the end of 2022, Chandler said. She cited inflationary service cost increases that are being felt across the industry. “From fourth quarter actuals, we have factored in approximately 15% inflation into our 2022 capital budget and have locked in most of our pricing for services through the first half of the year,” including costs for hydraulic fracturing services, sand and casing, she said. Chandler added the E&P is “working to extend our service contracts into the second half of 2022 and optimize our inventory management” to provide the full-year capital budget a buffer against additional inflationary pressures. For fiscal year (FY) 2022, Laredo anticipates about $520 million in capital spending, with 80% for drilling, completions and exploration. The FY2022 guidance assumes about 2.3 operated rigs, 1.2 operated fracture crews, 65 wells spud, 55 completions and 55 turn-in-lines. It also projects total production of 82,000-86,000 boe/d (49% oil cut).

U.S. Oil Rig Count Falls Despite Major Rally In Crude Prices --The number of total active drilling rigs in the United States stayed the same this week—bringing the 18 weeks of increases to a close as pressure mounts on the Biden Administration to do more to increase crude oil production in the United States in an effort to relieve high gasoline prices. The total rig count remains at 650, as the world watches for any signs of increased output from the United States that would allow weaning off from Russian oil—at least in part. Baker Hughes reported this week that the total active rig figure—oil, gas, and miscellaneous—is 247 rigs higher than the rig count this time in 2021. Oil-directed rigs, however, fell by 3 to 519, while gas-directed rigs were up by 3 to 130. Miscellaneous rigs stayed the same. While drilling activity has picked up in the United States, there is a significant lag in the corollary that is U.S. oil production. U.S. weekly production of crude oil stayed the same for the fourth week in a row at 11.6 million bpd, according to the latest Energy Information Administration for the week ending February 25. The rig count in the Permian Basin rose by 1 this week, bringing the total rig count in the Permian basin to 310. Primary Vision's Frac Spread Count, which tracks the number of completion crews finishing off previously drilled wells, shows that completion crews rose also, for the eighth week in a row in the week ending February 25. Completion crews rose by 7 to 290. At 11:40 a.m. EST, oil prices were trending up on the day after Ukrainian reports surfaced stating that Russia had shelled Europe's largest nuclear power complex. WTI was trading at $112 per barrel—up 4.02% on the day and up more than $20 on the week as the oil markets remain concerned about crude supplies after Russia invaded Ukraine. The Brent benchmark traded at $114.40 per barrel at that time, up 3.55% on the day and up $17.40 per barrel on the week

Texas, 14 other states sue EPA over ‘war against Texas oil and gas’ --Texas Attorney General Ken Paxton is leading a 14-state coalition challenging the Biden Administration’s Environmental Protection Agency (EPA) regulations on vehicle emissions. Paxton says President Joe Biden’s ‘bureaucratic decrees’ micromanage cars’ and trucks’ greenhouse gas emissions, which exceeds the EPA’s authority and violates the Constitution’s separation-of-powers principles. “At a time when American gas prices are skyrocketing at the pump, and the Russia-Ukraine conflict shows again the absolute need for energy independence, Biden chooses to go to war against fossil fuels,” Paxton said. “These severe new rules proposed by the EPA are not only unnecessary, but they will create a deliberate disadvantage to Texas and all states who are involved in the production of oil and gas. I will not allow this federal overreach to wreak havoc on our economy or the livelihoods of hard-working Texans.” The new rule seeks to promote the Biden Administration’s radical climate change agenda by promoting electric vehicle usage over other, superior means of transportation that use abundant fossil fuels. If left in place, the regulations will impose major economic harms on Texas by stressing its electric grid and decreasing the need for gasoline by billions of gallons, effectively destroying Texas’s robust energy industry. Other states that would have benefitted from increased production in renewable fuels will also be negatively impacted.

Colorado oil and gas regulators approve ‘strongest in the nation’ financial rules - Colorado regulators on Tuesday approved a sweeping set of new financial requirements for oil and gas companies that operate within the state, completing the last major rule change mandated by a landmark drilling reform law passed by Democrats in the General Assembly three years ago.The five-member Colorado Oil and Gas Conservation Commission voted unanimously to adopt the new rules on financial assurance, also known as bonding. When they take effect in April, the changes willsignificantly increase the amounts of the bonds that oil and gas producers must provide to the state to cover potential cleanup costs, and new fees will raise millions of dollars to fund the plugging of wells that are abandoned, or “orphaned,” typically as a result of bankruptcy. In a press release, COGCC officials called the new rules “the strongest in the nation.” Commissioner John Messner, a former Gunnison County commissioner, said prior to Tuesday’s vote that the rules represent a “paradigm shift.”“I think they fundamentally change how financial assurance for oil and gas activities in the state of Colorado are addressed,” Messner said. “They were an outcome of over a year’s worth of collaboration and input from a really diverse group of individuals and stakeholders.”The financial assurance changes were the last major rulemaking required by Senate Bill 19-181, a law that overhauled the COGCC itself and tasked it with reorienting state oil and gas policy to be more protective of health, safety and the environment. The commission is still set to consider additional rulemakings on worker safety certifications and permit application fees at a later date.“These innovative rules will allow the COGCC to continue its oil and gas regulatory duties in a meaningful, impactful and protective manner for all of Colorado,” agency director Julie Murphy said in a statement. “Staff will begin the work to integrate these new rules into daily operations.”

CenterPoint Energy to replace pipeline underneath Minnesota River - CenterPoint Energy will begin work this spring to replace aging natural gas pipelines underneath the Minnesota River in Burnsville. Over 10,000 feet of pipeline will be replaced under the river, lake and wetlands spanning between Burnsville and Bloomington, according to project plans approved by city officials last month. Thomas Haider, a senior engineer with CenterPoint Energy, said the project connects to a broader pipeline replacement plan nearing completion in the Twin Cities metropolitan area. "We’ve been working over the last 10 years to upgrade all of the primary lines that serve our natural gas system between Fridley and Burnsville," Haider told the Burnsville Planning Commission at a meeting last month. Approximately 10,600 feet of pipeline will be replaced along two existing pipelines in Burnsville, according to project documents. The existing "Lyndale" pipeline marked for replacement was installed by Northern Natural Gas Company in 1953 — roughly a decade before Burnsville became a city. CenterPoint Energy plans to replace approximately 3,200 feet of the Lyndale pipeline located on, and surrounding, the company's property in Burnsville, where the Dakota Station is located. Approximately 7,400 feet of pipeline will be replaced on the Nicollet line, which crosses underneath Black Dog Lake and the Minnesota River before connecting to Bloomington. A special technique called horizontal directional drilling will be used to install new, 24-inch-diameter steel pipeline underneath the lake and river, according to Haider. The same method will also be used to install 920 feet of new pipeline underneath a segment of the Union Pacific railroad tracks in Burnsville. Existing pipelines replaced by new pipeline will be removed, according to project documents. Segments of abandoned pipeline will be filled with grout or a similar material and capped, in accordance with state and federal law.

Land Board stops challenging one part of oil, gas royalty case; state had pursued $69M owed before 2013 - North Dakota officials will not challenge a new law surrounding oil and gas royalties, ending their pursuit of $69 million the state could have sought for energy development prior to August 2013.The state is still pursuing an appeal with the North Dakota Supreme Court on other issues surrounding royalties for the development of state-owned minerals. The Board of University and School Lands, better known as the Land Board, voted unanimously last week to continue with the litigation but halt one aspect -- its challenge to the constitutionality of a new North Dakota law that prohibits the state from collecting unpaid royalties for oil and gas production that occurred before Aug. 1, 2013.At issue are deductions oil and gas companies removed from royalties to account for transportation and processing costs. The Land Board has for several years sought to collect those deductions following a favorable Supreme Court ruling in 2019 in a case involving oil producer Newfield Exploration Co. The case has implications for numerous state oil and gas leases with other companies.The board's attempts to collect the money have faced pushback from the oil and gas industry, which viewed the state's initial efforts as punitive. The industry backedHouse Bill 1080 last year, which passed into law and capped the length of time for which the state in the future could seek to collect unpaid royalties at seven years. It also imposed the cutoff date in August 2013 that would apply to the money the state is seeking to recover from dozens of companies.

Oil driller invests in carbon-capture pipeline for Midwest (AP) — North Dakota’s biggest oil driller said Wednesday it will commit $250 million to help fund a proposed pipeline that would gather carbon dioxide produced by ethanol plants across the Midwest and pump it thousands of feet underground for permanent storage. Continental Resources, headed by billionaire oil tycoon Harold Hamm, discussed the investment into Summit Carbon Solutions’ $4.5 billion pipeline at an ethanol plant in Casselton, in eastern North Dakota. The plant is one of 31 ethanol facilities across Iowa, Minnesota, Nebraska and the Dakotas, where emissions would be captured and piped to western North Dakota and buried deep underground.The Summit project is one of at least two major CO2 pipelines planned for the Midwest. Navigator CO2 Ventures is planning a pipeline that will stretch over 1,200 miles (1,931 kilometers) through Iowa, South Dakota, Nebraska, Minnesota and Illinois.Similar CO2 pipeline plans are being considered elsewhere after the federal government increased tax credits, by 2026, to $50 for every metric ton of carbon dioxide a company sequesters. Ethanol producers are aiming to make the fuel more marketable along the West Coast and especially California which requires distributors in that state buy only ethanol with a low carbon emissions impact; companies that produce such ethanol can get a higher price.

Why Did California Regulators Choose a Firm with Ties to Chevron to Study Irrigating Crops with Oil Wastewater? - In 2015, a California water board suddenly found itself under a microscope for allowing farmers to irrigate their crops with oil field wastewater, a practice it had condoned for decades.The California Council on Science and Technology had just revealed that the testing and treatment of hazardous chemicals in oil field wastewater used for irrigation was inadequate, and legislators were demanding increased oversight. They feared that oil companies’ wastewater was threatening groundwater needed for drinking water and growing crops.Faced with heightened scrutiny, the California’s Central Valley Regional Water Quality Control Board raced to secure a consultant to study the controversial practice and soon settled on GSI Environmental as both qualified and unbiased.Last fall, armed with GSI’s completed studies, the board tried to put concerns about the practice to rest, assuring the public that the firm had found “no identifiable increased health risks” from irrigating crops with water recycled from oil wells. But the board should never have chosen GSI, scientists, public interest activists and former regulators said in interviews, citing the firm’s close ties to the oil industry—ties so close that GSI once listed on its website Chevron, ExxonMobil and Occidental Petroleum as clients “we answer to.” Chevron is the largest producer of oil field wastewater for irrigation in California. The company saves millions of dollars in disposal costs by selling the “produced water” to a local water district, which in turn sells it to farmers in Kern County to irrigate their water-intensive almonds, pistachios and citrus. When the water board retained GSI, the firm had already earned millions of dollars helping Chevron defend its interests in a single court case. In addition to Chevron, GSI had also helped other corporate polluters defend themselves against claims of environmental and health harms by providing litigation support and expert witness testimony, documents filed in state and federal courts show. Beyond its legal defense services, GSI regularly takes research funds from the chemical and fossil fuel industries, and collaborates on research with scientists who work for these industries, a review of the scientific literature shows.And it has published commentaries that cast doubt on evidence that oil and gas extraction or chemical industry products cause harm, without disclosing its litigation support for these industries or its industry funding as a conflict of interest.

Lawsuits over Orange County oil spill escalate - Two cargo ships that allegedly dragged an oil pipeline with their anchors during a winter storm should be held liable for a disastrous October oil spill that sent thousands of gallons of crude into the waters off Orange County, the operator of the ruptured pipeline said in a lawsuit filed Monday.In a 35-page complaint filed in federal court, Houston-based Amplify Energy Corp. accused two shipping companies and their subsidiaries — based in Switzerland, Panama, Liberia and Greece — of improperly allowing their cargo ships to drop anchor near the pipeline and of failing to notify authorities after the damage occurred.Without the presence of the cargo ship anchors, “the pipeline would not have been displaced or damaged and thus would not have failed,” Amplify said in the complaint.The Marine Exchange of Southern California, which monitors and directs traffic inthe busy San Pedro Bay, was also named as a defendant in the lawsuit. The nonprofit should have been aware of the anchor drags and should have notified the company, the lawsuit said.The lawsuit also names as defendants the captains and crews of the two cargo ships, the MSC Danit and the Cosco Beijing.The Coast Guard has designated both ships parties of interest in the federal investigation of the spill, which sent at least 25,000 gallons of crude gushing into the waters off Orange County. An anchor striking and dragging the pipeline could have made the conduit more vulnerable to other damage or to environmental stressors, the Coast Guard said.Amplify’s lawsuit said that, if company employees had been aware of the damage, they would have deployed a remotely operated vehicle to inspect the pipeline, “detected its dislocation and the damage done to it, suspended operations immediately, and undertaken remedial measures that would have prevented the discharge of oil.”“We would have immediately assessed the situation and made any necessary repairs,” company spokeswoman Amy Conway said in a statement Monday.

B.C. government adds red tape to Trans Mountain - The Trans Mountain pipeline expansion, which is on track to cost nearly $9 billion more than it was last estimated to cost, may now face yet more red tape that could add more costs and delays. This week, George Heyman, the B.C. minister of Environment and Climate Change Strategy, and Bruce Ralston, minister of Energy, Mines and Low Carbon Innovation, announced changes to the provincial environmental certificate -- originally issued in 2017 and amended in 2019 -- for the Trans Mountain pipeline expansion project. Whether the changes will have a material impact on the project's cost or timelines is unclear. The changes to the certificate are the result of a federal Court of Appeal decision in 2018, and B.C. Court of Appeal decision in 2019. The project had received federal approval, but was halted when, in 2018, the federal Court of Appeal ruled the National Energy Board (NEB) had failed to properly assess potential impacts on the marine environment from the increased oil tanker traffic that would result from the expansion. The NEB was forced to go back to the drawing board and do an assessment of the potential impacts of increased marine traffic and risks of an oil spill. Once that was done, the federal government again gave the project the green light. The B.C. government also issued an amended provincial environmental certificate in 2019. But in 2019, after the Squamish First Nation and the City of Vancouver appealed a previous decision by the BC Supreme Court, the BC Court of Appeal agreed that, since the original NEB approval had been flawed, the province’s own environmental certificate needed to be reviewed. The B.C. government then began a review in May 2020, and only this week -- more than a year and a half later -- issued an update to its environmental certificate. As part of the environmental certificate reconsideration, the B.C. government invited groups that were opposed to the project to have input, including the Squamish and Tsleil-Waututh First Nations and City of Vancouver. As a result of the reconsideration process, the B.C. government has made changes to the environmental certificate for the Trans Mountain project. They include a requirement that Trans Mountain provide research updates every five years on the behaviour of bitumen in the marine environment. Other conditions include:

• requiring Trans Mountain to develop a shoreline baseline data report that consolidates data at hypothetical incident locations along the oil tanker shipping route;
• identifying exposure pathways in the event of a marine spill;
• identifying roles and responsibilities of local, provincial and federal authorities in the event of a marine spill;
• consulting with First Nations, local governments and relevant agencies to develop a report that will provide information to the federal government and its agencies for plans to address potential human health impacts from spills; and
• adding the Snuneymuxw First Nation to a list of impacted aboriginal groups

Insurance giant AIG joins movement against financing Arctic oil development - New Arctic energy explorative activities will no longer be supported by the insurance giant American International Group, Inc. AIG is one of the worlds largest insurance companies, and will no longer support services or investments for new coal-fired plants, coal mines, or drilling in the Arctic as AIG CEO Peter Zaffino stated in a press release that “AIG is focused on the realities of climate change. The data about climate change is unambiguous and we believe that AIG can be a catalyst for positive change.” The decision comes from AIG in an effort to achieve net zero greenhouse emissions by 2050 or sooner in both their underwriting and investment portfolios as well as within their own operations. The decision is getting mixed reviews here in Alaska. The Wilderness Society, a group that lobbied for financial institutions to make these changes, says oil development commonly threatens Indigenous communities and destroys sacred land. They also stated that the Arctic is ground zero for climate change. Temperatures in the Arctic Circle are rising at four times the rate as the rest of the planet. Melting permafrost is threatening villages and food sources are disappearing. Organizational Lead of the Alaska Wilderness Society Karlin Itchoak feels that AIG’s decision will have positive benefits for the environment. “While everyone recognizes the need for jobs and a healthy economy, we must protect our climate and respect the human rights of Indigenous people as we transition to an economy that isn’t dependent on fossil fuels,” Itchoak said. CEO of The Alaska Support Industry Alliance Rebecca Logan says that AIG’s decision is nothing new, but still disappointing. Their organization supports oil exploration, but focuses on education and how to do it safely. Logan said she feels that these decisions are politically based and prevent responsible resource development. “Oil, gas, and critical strategic minerals are going to be developed somewhere in the world,” Logan said. “We should all be trying to do them here because nobody does it better than we do and more responsibly. So it just makes a broader group that we have to get that message out to.”

‘Major Step Forward’: AIG to Stop Insuring Coal, Tar Sands, and Arctic Drilling --Climate justice advocates celebrated Tuesday in response to insurance giant AIG’s announcementthat it will no longer invest in or provide insurance coverage for any new Arctic drilling activities nor will it finance or underwrite the construction of any new coal-fired power plants, thermal coal mines, or tar sands projects, effective immediately.AIG also said that it will immediately stop investing in or underwriting “new operation insurance risks” of coal-fired power plants, thermal coal mines, or tar sands projects owned by corporations that derive 30% or more of their revenue from those industries or generate over 30% of their energy production from coal.By January 1, 2030 at the latest, AIG said that it will phase out the underwriting of all “existing operation insurance risks” and cease new investments in those clients that still depend on coal or tar sands for 30% or more of their revenue, or coal for over 30% of their electricity generation.The insurance giant’s moves come in the wake of years of pressure from several environmental groups, some of which offered cautious praise following AIG’s announcement.“As one of the last major insurers without restrictions on coal insurance, AIG’s new commitments to reduce underwriting for coal, tar sands oil, and Arctic oil and gas are a major step forward for people and the planet,” Hannah Saggau, insurance campaigner with Public Citizen, said in a statement. “AIG has vaulted itself from a laggard in the industry to a leader in the U.S., and we look forward to working with it to meet and improve on these commitments.”

Republicans are embracing carbon border fees to counter Putin - Following Russia's invasion of Ukraine, Republicans are increasingly voicing support for carbon border fees to weaken Moscow's influence over Europe's energy security.It's a notable shift on climate policy for Republicans, who in recent years have been mostly silent on carbon border fees, which would slap a tax on imports from countries that aren't taking aggressive steps to cut planet-warming emissions.“As a longtime observer of how climate policy and politics evolve on the right, I do see a shift,” Heather Reams, president of Citizens for Responsible Energy Solutions, a right-leaning environmental advocacy group, told The Climate 202. Joint E.U.-U.S. carbon border fees, also known as border carbon adjustments, would levy a tax on polluting goods such as aluminum and cement from countries like Russia and China. They could eventually be broadened to affect oil, gas and coal imports.In theory, the fees would incentivize Europe to import lower-carbon goods made in the United States with higher environmental standards, including U.S. liquefied natural gas, which proponents say is much cleaner than Russian gas.Ultimately, backers say this would undermine Russian PresidentVladimir Putin's power to coerce Europe, which currently relies on Moscow for nearly 40 percent of its gas supplies, amid the unfolding Ukraine crisis.In December, when the possibility of Russian aggression against Ukraine loomed, Sen. Kevin Cramer (R-N.D.) wrote an opinion piece in Foreign Policy with Donald Trump's national security adviser,H.R. McMaster, laying out the case for carbon border fees. Cramer and McMaster noted that the European Commission has already outlined plans to impose a carbon tax starting in 2026 on polluting imports. They added that Igor Sechin, chief of the oil giantRosneft and a close Putin ally, has reportedly told the Kremlinthat carbon border taxes could inflict far greater damage to Russia's economy than sanctions.In an interview with The Climate 202, Cramer said he's trying to convince his conservative base that carbon border fees are consistent with longtime GOP advocacy for “energy independence” and an “America First” approach.“People expect us or want us to deal with climate, but it's not a natural thing for conservative Republicans to talk about,”Cramer said. “Here is an ‘America First’ solution that reduces emissions in a realistic way and has the additional advantage of freezing out Vladimir Putin.”

U.S., other world powers to tap strategic oil reserves in bid to ease gasoline prices - The United States and other world powers have agreed to release 60 million barrels of oil from their strategic reserves, a move intended to reduce gasoline prices that have climbed rapidly in recent weeks, according to the International Energy Agency.The energy agency’s governing board released a statement Tuesday attributing the decision to tight global oil markets that have become further strained by Russia’s invasion of Ukraine. Although the sanctions that countries have imposed on Russia in recent days do not directly target its oil and gas sectors, continued fighting is expected to disrupt supply routes through Ukraine and the Black Sea, shrinking crude oil stocks dramatically.With crude oil prices climbing to well over $100 a barrel — and with some industry analysts predicting prices could hit $130 — the energy agency said its intent is to “send a unified and strong message to global oil markets that there will be no shortfall in supplies as a result of Russia’s invasion of Ukraine.”The IEA release is only the fourth time the international organization has overseen a coordinated drawdown of reserves since it was created in 1974, when Arab members of the Organization of the Petroleum Exporting Countries (OPEC) declared an oil embargo after the Arab-Israeli war. In its announcement Tuesday, the IEA said its initial release is equivalent to 2 million barrels a day for 30 days.“I am pleased that the IEA has also come together today to take action. The situation in energy markets is very serious and demands our full attention,” IEA Executive Director Fatih Birol said. “Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery.”The U.S. Energy Department plans to release 30 million barrels of oil from the Strategic Petroleum Reserve, one of the most aggressive steps available to the White House as it tries to reduce fuel costs for consumers. In separate statements issued Tuesday, Energy Secretary Jennifer Granholm and White House press secretary Jen Psaki suggested that the Biden administration might release more.The United States is “prepared to use every tool available to us to limit disruption to global energy supply as a result of President Putin’s actions,” Psaki said. “We will also continue our efforts to accelerate diversification of energy supplies away from Russia and to secure the world from Moscow’s weaponization of oil and gas.”The release makes up a small percentage of the nation’s total strategic reserves, which held 582.4 million barrels as of Feb. 22. It marks the second time the Biden administration has tapped the reserve in coordination with other countries. The Energy Department released 50 million barrels of oil from the reserve last November in an effort to reduce global prices.Oil industry analysts said it’s unclear exactly what effect the release of stockpiled oil will have on prices. The U.S. oil price rose after Tuesday’s announcement, hitting a seven-year high of $106 a barrel.

Pipeline Imports of U.S. Natural Gas Unhindered Amid Russia-Ukraine Panic – This week was a manic time in natural gas markets globally, and Mexico was not without its share of drama. Last Friday, Mexico’s Cenagas declared a rare critical alert on the Sistrangas national pipeline system, which meant some users would see natural gas restrictions. The alert was related to problems at a gas processing center in the southeast and was an “isolated incident,” a natural gas industry official told NGI’s Mexico GPI. The situation was brought under control quickly, but it added to jitters over natural gas supply amid the Ukraine-Russia conflict. Worry was so high that state utility Comisión Federal de Electricidad (CFE) on Tuesday said it would use fuel oil and other alternate power generation sources in the event natural gas prices in Mexico became uneconomic.“Speculation is that prices are going to rise considerably,” CFE executives said.However, North American natural gas prices have remained relatively in check, albeit with pressure to the upside. Prices rose for a second straight day on Wednesday on the back of global supply worries and record prices for European natural gas.The April Nymex gas futures contract was up 18.9 cents day/day on Wednesday to $4.762/MMBtu. The May contract gained 18.9 cents to close at $4.787.Western powers so far have been hesitant to restrict Russian energy flows, although many major oil and gas firms have announced intentions to dump their Russian assets. Traders have also been hesitant to buy Russian oil and gas, analysts said.“Despite the rising anti-Russian gas sentiment, day on day flows from Russia are largely unchanged,” Rystad Energy analyst Kaushal Ramesh said. Ramesh warned however that “fundamental drivers have by now taken a back seat in driving prices,” and this was likely to be the case for the foreseeable future.Mexico natural gas imports from the United States have not yet been impacted. On Thursday, Mexico imported 5.80 Bcf via pipeline from the United States, and the 10-day average was 5.52 Bcf/d.Mexico’s Central Bank Wednesday, meanwhile, slashed Mexico’s growth forecast for 2022 to 2.4% from a previous forecast of 3.2%, citing the conflict in Europe. New liquefied natural gas (LNG) export buildout appeared as a major topic of interest in both the United States and Mexico in the wake of the conflict in Ukraine. Energy company executives commented on the fact in some quarterly earnings calls. In addition, the International Energy Agency on Thursday issued a 10-point plan to reduce reliance on Russian gas, which could mean more LNG flows into Europe.

Peruvian coastline struggles to recover from oil spill - (video) In mid-January an oil spill hit Peru’s coast just north of the capital Lima. Peru has called it the worst environmental disaster in recent history. It happened when an oil tanker was discharging oil into the La Pampilla refinery controlled by the Spanish energy giant Repsol. The impact of the spill has devastated swathes of Peru’s Pacific coastline.

Amazon and the Peruvian coast ask the UN for help to fight against spills - - Communities from the Amazon jungle and the Peruvian coast came together this Friday in Lima to ask the United Nations for help in dealing with oil spills, a problem that has affected them directly for decades. and it is in force in the country since the accident that occurred last January in the sea of Lima. “The spills that have been verified on the central coast of Peru can help broaden the consciousness of humanity, but that is not enough,” the UN rapporteur on Toxic Substances and Human Rights, Marco Orellana, told Efe, who is conducting a academic visit to Peru and received the demands of the communities. Representatives of native communities from the jungle and the northern coast of the country presented their experiences, requests and complaints to the rapporteur regarding the spills that have affected their way of life linked to nature for decades. Voices with different accents that reflected the diversity of Peru agreed on the importance of the United Nations picking up their message and transferring it to the President of Peru, Pedro Castillo, and to the international community. “There is an element of responsibility, not only of the companies but of the countries where the companies come from. The extraterritorial dimension of human rights and the duty to respect is a universal consideration at this time of the state of international law,” he said. Orellana about it. Associations of artisanal fishermen affected by the spill produced in January at the La Pampilla refinery, which is operated by Repsol, representatives of indigenous Amazonian organizations and communities in northern Peru agreed that the State must provide them with the same rights as other citizens . “A spill had to happen in the capital, something that has been happening in other areas of the country, so that everyone would look to the north and to the Amazon, to see its polluted waters and rivers,” said Macedonio Vásquez, president of the North Region Macro Front. Some of the representatives directly called for the closure of refineries and extraction sites, due to the consequences of spills, especially water pollution, which in turn contaminates fish and causes diseases in populations. “We don’t want any more platforms in our sea because they bring pollution and hunger,” said Vásquez, before affirming that there is much less fishing since the presence of oil companies in his area. Georgina Rivera, president of the Indigenous Council of the Peruvian Amazon and member of the community of Nazareth, in the Amazon region, told Efe that they are asking for the support of the UN, since “they live daily” with the contaminated water of the Chiriaco river, which is their “market and livelihood”, since a spill from the oil pipeline operated by the state-owned Petroperú in 2016. “We ask that the oil companies not work and if they want that they make a consultation in the towns, because we defend our territory and the ILO Convention 169 endorses our cause,” he assured.

Spanish energy giant agrees to compensate thousands over oil spill - Peru on Friday announced an agreement with Spanish energy giant Repsol to compensate thousands of people affected by a devastating oil spill that polluted beaches and killed wildlife. Almost 12,000 barrels of crude spilled into the sea off Peru on January 15 as a tanker unloaded oil at a Repsol owned refinery. Peru’s government said on Twitter it had managed to “get Repsol to sign an agreement of care and economic compensation to those affected by the oil spill” off the coast of Ventanilla, close to the capital Lima. Repsol had blamed the spill on freak waves caused by a volcanic eruption more than 10,000 kilometers away near Tonga. Peru described the incident as an “ecological disaster.” The government says at least 5,000 fisherman and shopkeepers lost their livelihoods due to the polluted sea and beaches. The deal, signed by Chief of Staff Anibal Torres and Repsol Peru president Jaime Fernandez-Cuesta, sees Repsol committing to pay a minimum of 3,000 soles ($789) to those affected within a week of the agreement being finalized. The figure could also rise. Repsol reiterated in a statement its “commitment to remedy the damages provoked by the spill to the communities in the affected area.” The company said it has already donated 3.3 million soles in aid. Last month, Repsol said it had cleaned up 98 percent of the spilled oil, although the government said the figure was far less. The environment ministry says that at least 1,400 hectares of land and sea and 500 hectares of protected nature reserves have been affected. Repsol has paid $363,000 in fines to the Peruvian state over the spill.

Thai government to discuss oil spill compensation with SPRC - The Ministry of Natural Resources and the Environment has directed the governor of Rayong province to meet with representatives from Star Petroleum Refining Plc (SPRC) to determine adequate compensation measures for local fishermen affected by recent oil spills from leaks in SPRC’s undersea pipeline. The meeting, which included representatives from the Pollution Control Department (PCD) and the Department of Marine and Coastal Resources (DMCR), agreed that compensation should be based on a court ruling on Rayong’s worst oil leak, which occurred in 2013. . Jatuporn Buruspat, permanent secretary for the Ministry of Natural Resources and the Environment, said the decision to have Royong Governor Channa Iamsaeng negotiate on behalf of the fishermen was reached during a meeting attended by leaders from the local fishing sector. He also said the most recent official examination of the area’s coastline revealed that the majority of beaches adhered to the government’s pollution regulations, with the exception of those near the oil spill. Sopon Thongdee, director-general of the DMCR, said the agency is currently monitoring tar accumulations at three locations along Mae Ramphueng Beach in collaboration with the PCD, park authorities, Rayong’s Office of Natural Resources and the SPRC. Meanwhile, the SPRC said it will inject additional sealant to prevent leaks from a valve that was found to be damaged during previous tests. According to the company’s most recent statement, the pipeline has been emptied of 37,670 liters of crude in total. That is more than three times the SRPC’s original estimate of approximately 12,000 liters.

Douglas oil pollution likely linked to Irish Sea pipe leak - BBC News - A strong smell of fuel reported by residents of the Isle of Man's capital was likely caused by a recent oil spill, harbour authorities have said. Checks were made across the island's east coast after oil was found in the sea at Douglas breakwater on Sunday. The government's harbour division said a lack of any other information meant it was likely linked to a recent pipe leak off the North Wales coast. No further pollution has been found on the island since then, it added. Isle of Man Coastguard was involved in a patrol of the coastline surrounding Douglas after the "isolated area" of oil was found in the port, which authorities said "appeared to have originated offshore". Multiple reports made on Sunday to emergency services about the smell of fuel, which appeared to have been spread further inland from the island's capital by a southerly wind, the Coastguard added.

Russian LNG Tankers Heading For UK Must Be Stopped, Union Says - The government must immediately intervene to stop two Russian tankers – containing enough liquid gas to supply the UK for up to 12 days – from docking in Kent at the weekend, one of the UK's largest trade unions said. The trade union UNISON said that the Boris Vilkitsky and Fedor Litke are bound for Grain LNG with plans to unload on Sunday, which represents around 200 workers at the Isle of Grain importation terminal owned by National Grid. According to the union, this is despite a law passed in the UK earlier this week banning ships with any Russian connection from all UK ports. UNISON added that a loophole still exists, and it left open the possibility that the Boris Vilkitsky and Fedor Litke could still dock and unload their cargo. Namely, the ban did not cover the origin of cargo, including oil and gas that may ultimately have been bought from Russian state-owned entities. UNISON is calling on transport secretary Grant Shapps to confirm that the ban applies to these two vessels and that both will be prohibited from berthing at the Thames Estuary site, which is 18.5 miles from London. Staff working at Grain LNG are angry that they might be asked to unload the ships’ cargoes. UNISON says they fear losing their jobs if they refuse once the Boris Vilkitsky and the Fedor Litke have anchored off the Isle of Grain. Commenting on the union’s urgent plea to the transport secretary, UNISON head of energy Matt Lay said: “The law passed speedily yesterday should have made the Boris Vilkitsky and Fedor Litke turn back. But both vessels still seem to be very much Kent-bound. “Grant Shapps must send these two ships packing. He needs to make it clear that all Russian ships are banned from every UK port and terminal. The workers at the National Grid terminal don’t want to touch the cargo given the tragedy unfolding in Ukraine. “The staff is determined to show their support for the Ukrainian people and uphold the sanctions imposed against Russia,” Lay added

Operator of Nord Stream 2 denies it filed for bankruptcy - The Swiss-based company behind the Nord Stream 2 pipeline denied on Wednesday that it filed for bankruptcy but confirmed it terminated employee contracts. Long viewed as a Kremlin influence project that would increase Europe's energy dependence on Russia, Nord Stream 2 was one of the first targets of the flurry of Western sanctions triggered by Vladimir Putin's invasion of Ukraine.A local official told Swiss radio broadcaster SRF on Tuesday that the company had filed for bankruptcy and fired all 106 of its employees. German Chancellor Olaf Scholz said the certification of the $11 billion natural gas pipeline would be suspended last Tuesday, a day after Putin ordered Russian troops into eastern Ukraine for a "peacekeeping" mission. The pipeline is fully constructed, but gas had not yet started flowing. The U.S. followed up by rescinding sanctions waivers on Nord Stream 2 AG and its corporate officers, dealing what was likely the death blow to a project that had caused major headaches for President Biden and the trans-Atlantic alliance."We cannot confirm the media reports that Nord Stream 2 has filed for bankruptcy," Nord Stream 2 AG — a wholly owned subsidiary of Russia's Gazprom — said in a statement."The company only informed the local authorities that the company had to terminate contracts with employees following the recent geopolitical developments leading to the imposition of US sanctions on the company," it added.The company told Reuters on Tuesday that it "had to terminate contracts with employees. We very much regret this development."Even as the West and private companies have moved to fully isolate Russia over its unprovoked attack on Ukraine, former German Chancellor Gerhard Schröder — the chairman of the board of Nord Stream 2 AG — has yet to cut his lucrative ties with Russian energy giants. Members of his office staff have quit in protest, according to Politico.

Europe can't stop buying Russian gas. Here's why. -Three days after Russia invaded Ukraine, and after sweeping sanctions were levelled against Vladimir Putin's regime, Europe's appetite for Russian gas shows no sign of diminishing.On Sunday morning, Gazprom, the Kremlin-controlled energy giant, said gas exports from Russia to Europe via Ukraine were proceeding just as expected. On Friday, figures from Ukraine's grid operator showed that European imports of Russian gas through Ukraine jumped by nearly 40% on Thursday, the day the invasion began, according to Bloomberg. Oil and gas have so far been exempted from Western sanctions on Russia. Europe once enjoyed reliable gas supplies from the North Sea field – which is now all but depleted. Russia, meanwhile, has the world's largest reserves of natural gas.The European Union relies on Russia for about 40% of its gas – more than twice as much as Norway, its next-largest import partner. Germany, the largest economy in Europe, relies on Russia for more than half its gas. Germany has been phasing out nuclear power in favour of gas, and has been trying to build a new pipeline to bring in more from Russia. This is the Nord Stream 2 pipeline, which would supplement the existing Nord Stream 1 pipeline and follow a similar route through the Baltic Sea. Germany suspended the Nord Stream 2 project shortly after Russia invaded – but notably, it did not cancel the project altogether. Analysts said increased European imports of Russian gas on the day of the invasion were partly because market forces pushed up the price of non-Russian gas.Stefan Ulrich, a gas analyst at BloombergNEF, said on Thursday that non-Russian gas prices were "well above the likely sales price for many Gazprom import contracts." Europeans have suffered a winter of soaring gas prices, raising home energy bills. European lawmakers are now wary of spooking their voters with the spectre of further price increases. The EU has committed to using renewable energy but the buildout isn't happening fast enough to ease its reliance on Russian energy. Tim Schittekatte, a research scientist at the MIT Energy Initiative,told CNBC: "There is simply not enough grid capacity now to take up more renewables in some parts of Europe."Europe uses gas to make key ingredients for fertilizer, like ammonium nitrate and urea. Disruption to gas supplies therefore also has an impact on the continent's ability to grow crops and feed its population.

BP dumping 20% Rosneft stake, could take a $25 billion hit— BP Plc moved to dump its shares in oil giant Rosneft PJSC, taking a financial hit of as much as $25 billion by joining the campaign to isolate Russia’s economy. The surprise move from the British company is the latest sign of how far Western powers are willing to go to punish President Vladimir Putin for his invasion of Ukraine. BP has been in Russia for three decades and just weeks ago was staunchly defending its presence there. But it was coming under growing pressure from the U.K. government over the alliance with Rosneft. Chief Executive Officer Bernard Looney was summoned by U.K. Business Secretary Kwasi Kwarteng to explain the company’s Russian links last week. Kwarteng welcomed BP’s move on Sunday. “This military action represents a fundamental change,” BP Chairman Helge Lund said in a statement. “It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.” BP didn’t say whether it was planning to sell its roughly 20% stake in Rosneft, or simply walk away. Any potential buyer would have to navigate a tightening web of economic sanctions that would make any transaction extremely difficult. In a memo to employees, Looney said there would be “financial consequences” from the move that would show up in its next quarterly results. A spokesperson said there could be a writedown of as much as $25 billion. The London-based company did confirm that it would no longer account for its share of oil and gas reserves, production and profit from its stake in Rosneft. Looney will also resign with immediate effect from the Russian company’s board, as will his predecessor Bob Dudley. BP will also exit its other business in Russia, which include three joint ventures with a carrying value on its books of about $1.4 billion.

Energy giant Shell to end partnership with Russia's Gazprom as Ukraine conflict intensifies - Shell said Monday it is ending an "equity partnership" with Gazprom, a Russian state-owned energy company, as the Russia-Ukraine conflict continues. Shell said it's selling a 27.5% stake in Sakhalin-II, an integrated oil and gas project located on the Sakhalin island in Russia, as well as a 50% interest in Salym Petroleum Development N.V., "a joint venture with Gazprom Neft that is developing the Salym fields in the Khanty-Mansiysk Autonomous District of western Siberia." The company also said it's ending its involvement in the Nord Stream 2 pipeline project. "We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security," Shell CEO Ben van Beurden said in a statement. "Our immediate focus is the safety of our people in Ukraine and supporting our people in Russia," van Beurden added. "In discussion with governments around the world, we will also work through the detailed business implications, including the importance of secure energy supplies to Europe and other markets, in compliance with relevant sanctions." Shell's announcement comes a day after rival BP said it was offloading its 19.75% stake in Rosneft, another Russian-controlled oil company. Meanwhile, the U.S. — along with other countries — has ramped up sanctions against Russia following its invasion of Ukraine. The company said that it had about $3 billion in "noncurrent assets" through its Gazprom ventures at the end of 2021, noting that exiting these investments will "impact the book value of Shell's Russia assets and lead to impairments."

ExxonMobil Exiting Russia’s Sakhalin-1, Discontinuing New Spending as Ukraine War Rages - ExxonMobil is discontinuing operations and taking steps to exit the Sakhalin-1 oil and natural gas venture, which it operates with Russia’s state-owned Rosneft. In addition, no future investments in new Russian developments are planned in response to the unprovoked attack on Ukraine. The integrated major operates the Sakhalin-1 project with a 30% stake on behalf of an international consortium of Japanese, Indian and Russian companies. “In response to recent events, we are beginning the process to discontinue operations and developing steps to exit the Sakhalin-1 venture,” executives said. “Given the current situation, ExxonMobil will not invest in new developments in Russia.” Because affiliate Exxon Neftegas Ltd. operates Sakhalin-1 with a 30% stake, ExxonMobil has “an obligation to ensure the safety of people, protection of the environment and integrity of operations,” executives said. “Our role as operator goes beyond an equity investment. “The process to discontinue operations will need to be carefully managed and closely coordinated with the co-venturers in order to ensure it is executed safely.” Sakhalin-1’s other partners are represented by Rosneft affiliates RN-Astra (8.5%) and Sakhalinmorneftegaz-Shelf (11.5%). Japan’s Sodeco Consortium has a 30% interest, while India’s Oil and Natural Gas Corp. affiliate ONGC Videsh Ltd. holds a 20% stake.

Exxon to leave Russian energy project, halt new investments in the country - U.S. oil giant Exxon Mobil said on Tuesday it will wind down its operations at a major liquefied natural gas export facility in eastern Russia and halt any new investments in the country. Exxon, the operator of the Sakhalin-1 LNG project that also includes Russian oil company Rosneft as a major stakeholder, will start a “carefully managed” exit, the company said in a press release. Sakhalin-1 has an export capacity of 6.2 million tons a year, and was one of the largest foreign direct investments in the country.“As operator of Sakhalin-1, we have an obligation to ensure the safety of people, protection of the environment and integrity of operations. Our role as operator goes beyond an equity investment. The process to discontinue operations will need to be carefully managed and closely coordinated with the co-venturers in order to ensure it is executed safely.”“Given the current situation, ExxonMobil will not invest in new developments in Russia,” the company added. Exxon owns a 30 percent stake in the project, while Japan’s SODECO Consortium has a 30 percent interest and ONGC Videsh Limited, India’s Oil and Natural Gas Corporation, has 20 percent interest. Exxon is one of the largest foreign investors in Russian energy operations. It’s announcement follows Europe-based energy companies BP, Shell and Equinor who said earlier in the week that they would divest from their own operations in Russia. The energy market has created a de facto embargo of Russian energy exports after nations imposed financial sanctions in response to President Vladimir Putin ordering an invasion of Ukraine. The Biden administration and European allies kicked the country off the SWIFT bank messaging system, sending the ruble into a tailspin and making energy traders wary of dealing in Russian crude oil and natural gas.

TotalEnergies Vows to Withhold Capital in Russia Following ‘Military Aggression’ in Ukraine - The energy industry on Tuesday continued its condemnation of Russia’s unprovoked invasion of Ukraine, with TotalEnergies SE joining BP plc, Equinor ASA and Shell plc in withdrawing capital for new projects. Shunning Russia has been nearly universal, with the western energy majors, some with large interests in the country, pulling back resources. ExxonMobil was one of the few supermajors that had not publicly stated Tuesday afternoon its go-forward plans in Russia, where it has several ventures underway. However, ExxonMobil was said to be evacuating employees from the country. “TotalEnergies supports the scope and strength of the sanctions put in place by Europe and will implement them regardless of the consequences (currently being assessed) on its activities in Russia,” a spokesperson said. “TotalEnergies will no longer provide capital for new projects in Russia.” The French supermajor, like its peers, blasted “Russia’s military aggression against Ukraine, which has tragic consequences for the population and threatens Europe.” The company also said it was standing in “solidarity with the Ukrainian people, who are suffering the consequences and with the Russian people who will also suffer the consequences.” TotalEnergies said it is mobilized “to provide fuel to the Ukrainian authorities and aid to Ukrainian refugees in Europe.” The actions by TotalEnergies followed the initial move by London-based BP plc on Sunday, which announced it would sell its stake in Russia’s state-owned Rosneft. London-based Shell and Norway’s Equinor followed suit on Monday, each announcing they would exit Russian joint ventures and end new investments. Among other things, Shell plans to sell its stake in Russian-controlled Gazprom, which is overseeing the delayed Nord Stream 2 natural gas pipeline that would move Russian supplies to Germany.

Russia Threatens Departing Companies With Prosecution -Foreign companies, including energy firms, which are ditching Russia will be considered pushing their Russian subsidiaries to “deliberate bankruptcy,” which under Russian law includes criminal prosecution for top managers, Upstreamreported on Friday, quoting Russian Deputy Prime Minister Andrey Belousov.Under Russian law, deliberate bankruptcy resulting in damages of over 1.5 million Russian rubles ($13,300 as of March 4) carries a criminal liability.The companies leaving Russia will get fast-track bankruptcy protection, or they transfer their stakes to local managers until they return to Russia, according to aReuterssummary of Belousov’s latest comments.Many international companies, including oil majors, have announced they would end their involvement in Russian projects and Russian companies in recent days over the Russian invasion of Ukraine.BP was the first to announce it would divest from Russia. In just a few days, many other Western oil majors followed suit.BP said on Sunday that it would divest its 20-percent stake in Russian giant Rosneft. BP chief executive Bernard Looney resigned from the board of Rosneft with immediate effect. The other Rosneft director nominated by BP, former BP CEO Bob Dudley, also resigned from the board.A day after BP, Shell also said it would exit its equity partnerships with Gazprom entities, including the Nord Stream 2 gas pipeline project, its 27.5 percent stake in the Sakhalin-II LNG facility, its 50 percent stake in the Salym Petroleum Development, and the Gydan energy venture. Norway’s Equinor also decided to stop new investments into Russia and begin the process of exiting its Russian joint ventures. ExxonMobil discontinues operations at Sakhalin-1 and will make no new investments in Russia, the U.S. supermajor said this week, deploring “Russia’s military action.”Glencore is reviewing all business activities in Russia, including stakes in En+ and Rosneft, and said it has no operational footprint in Russia, while its trading exposure is not material for Glencore.Trafigura immediately froze investments in Russia and is reviewing the options in respect of its passive shareholding in Vostok Oil in which it has no operational or managerial input.

West still reluctant to target Russian energy on economy fears — Global governments remain reluctant for now to sanction Russian energy, seeking to insulate the world economy from a greater shock even as they tighten the financial grip on the country following its invasion of Ukraine. While oil last week briefly passed $100 a barrel for the first time since 2014 and European natural gas prices jumped as much as 62%, the gains were partly reversed as the U.S. and European nations avoided sanctioning Moscow’s massive energy supplies for punishment. They continue to resist doing so despite fresh plans to further annex President Vladimir Putin’s economy from the international monetary system. Although some Russian banks will now be excluded from the SWIFT payment messaging system, one official said the White House is looking at exemptions for transactions involving the energy sector. The current reluctance to crack down on the source of much of Russia’s wealth reflects the fear that doing so would send energy prices surging even higher, transmitting a stagflationary mix of faster inflation and slower growth around an already fragile world economy. The reprieve may support Putin’s under-threat economy, where commodities account for more than 10% of activity and much of the nation’s budget. “Financial sanctions are often there as a signal of disapproval rather than a real attempt to cause pain and damage,” said John Gieve, a former U.K. government official and central banker. “Arguably that is the case now. We are not restricting energy exports because that would mean more pain for us than we are willing to bear.” The avoidance of targeting Russian energy still may fade the longer the conflict rages and the more countries utilize alternative energy supplies. British Foreign Secretary Liz Truss said Saturday that the U.K. would support restricting Russian energy exports to Europe and that the U.K. was working with Group of Seven partners to reduce dependency on Russia. Russia is a commodities-powerhouse, producing more than 10% of the world’s oil and natural gas, with Europe reliant on it for a third of its gas. “Energy sanctions are certainly on the table,” White House Press Secretary Jen Psaki said on ABC’s “This Week” on Sunday. “We have not taken those off, but we also want to do that and make sure we’re minimizing the impact on the global marketplace and do it in a united way.” The invasion-driven surge in energy prices already has economists predicting a higher and delayed peak in inflation as well as a hit to growth as consumers and companies are forced to allocate more of their budgets to fuel and heating. Even with Russian energy being left alone, the war’s first few days have shown there’ll likely be snags maintaining a smooth flow of oil. Many buyers have backed away from buying Russian crude cargoes for fear of getting ensnared in sanctions or damaging their reputation. Urals, Russia’s most important export grade, is trading at a record discount to international benchmarks.

IEA pushes Europe to wean itself off Russian gas after Ukraine invasion - The European Union should not enter into any new gas supply contracts with Russia, in order to lower its dependence on Russian natural gas, the International Energy Agency said Thursday. The recommendation is part of a 10-point plan published by the Paris-based organization following Russia's invasion of Ukraine. Other recommendations from the IEA include:

• Using alternative sources of gas, from the EU itself and countries such as Norway and Azerbaijan.
• Speeding up the rollout of new solar and wind projects.
• Maximizing generation from nuclear and bioenergy.
• Encouraging consumers to lower their thermostat by 1 degree Celsius.
• And accelerating the replacement of gas boilers with heat pumps. The full listcan be read here.

"Nobody is under any illusions anymore," Fatih Birol, the IEA's executive director, said in a statement Thursday. "Russia's use of its natural gas resources as an economic and political weapon show Europe needs to act quickly to be ready to face considerable uncertainty over Russian gas supplies next winter." The IEA's plan provided what he said were "practical steps to cut Europe's reliance on Russian gas imports by over a third within a year while supporting the shift to clean energy in a secure and affordable way." "Europe needs to rapidly reduce the dominant role of Russia in its energy markets and ramp up the alternatives as quickly as possible," Birol said.

Germany to expedite LNG terminals as alternative to Russian gas - Germany has announced plans to press ahead with building its first liquified natural gas (LNG) shipping terminals to reduce the country’s dependence on Russian natural gas. The move was announced by Chancellor Olaf Scholz during a special Sunday session of the Bundestag called to discuss German policy in the wake of Russia’s invasion of Ukraine. The possibility of building an LNG terminal at the port of Brunsbüttel on the mouth of the Elbe was first raised in 2018, and a tender was launched in 2019 (see further reading). However, progress on the scheme had been slow, partly as a result of opposition from environmental activists led by climate justice group Ende Gelände. The government now seems likely to expedite this project, and another to the west at Wilhelmshaven. The Brunsbüttel project, which has a price tag of €500m in 2019, is being developed by Dutch energy infrastructure specialist Gasunie. It released a statement the day after Scholz’s announcement saying talks with the federal government about Brunsbüttel were “in the final stage”. It said: “Gasunie hopes to start construction of the terminal before the end of the year. In addition to LNG, this terminal will be made suitable for importing green hydrogen as well.” Scholz also announced plans to increase the amount of natural gas in long-term storage to 2 billion cubic metres. At present, Germany gets about 40% of its natural gas from Russia. It had aimed to double that by certifying the $11bn Nord Stream 2 pipeline. This process now looks to be off the table for the foreseeable future. The chancellor added that the Ukraine crisis underlined the need to move to renewable energy. “The events of recent days and weeks have shown us that responsible, forward-looking energy policy is not just crucial for our economy and our climate. It is also crucial for our security,” he said.

European Natural Gas Prices Surge as Russian Forces Encircle Ukraine, Deepening Supply Fears European natural gas prices on Wednesday reached their highest level since Russia attacked Ukraine last week, as fighting intensified and fears over supply disruptions continued to grow. The Title Transfer Facility was up across the curve, while the prompt month soared by a record 60% from Tuesday’s close to hit an intraday high of nearly $64/MMBtu. Ultimately, the April contract finished close to $54, not far off a record of $59.550 set in December. Russian troops were moving to encircle key cities in Ukraine and the escalating conflict was pressuring commodity prices across the globe. Brent crude for May delivery hit an intraday high of $115.11/bbl, while Asian spot LNG prices were assessed nearly $10 higher day/day near $41. U.S. natural gas prices also climbed, but are more insulated from the war than others across the globe. Energy exports have been excluded from the West’s sanctions against Russia. But the threat of further actions, plus some self-sanctioning among market participants to avoid Russian commodities or the financing needed to buy them, has spooked the market. The prospect of damaged infrastructure in Ukraine as fighting rages there has also factored into natural gas prices. Europe relies on Russia for about a third of its natural gas imports, and roughly 20% of those volumes move through Ukraine. The Gas Transmission System Operator of Ukraine said on Twitter Wednesday that its administrative buildings in Mykolaiv and Kharkiv had been hit by artillery shelling. Employees were evacuated to safety. Operations were not disrupted. While natural gas flows from Russia to Europe again remained strong Wednesday as they have since fighting broke out, traders are said to be avoiding some deals with Gazprom PJSC affiliates. “Extreme market uncertainty because of Russia’s increasing military operations in Ukraine and the similarly intensifying risk of sanctions – which may soon include energy exports – are likely driving the surge, with traders factoring in the rising probability of sanctions on gas for each day the offensive continues,” said Rystad Energy analyst Kaushal Ramesh in a note on Thursday. Russian ships are turning away from some European ports. PAO Sovcomflot-owned LNG vessel Christophe de Margerie abruptly changed destinations late last week after the UK said it would deny port access to Russian-owned ships, according to ship-tracking data. Calls are growing to deny additional Russian LNG tankers from docking at UK terminals. Italy had also reportedly halted its share of financing for the Arctic LNG 2 project being developed by privately-held Russian natural gas producer PAO Novatek. Russia is the world’s fourth largest LNG exporter. Engie EnergyScan analysts said Wednesday that “the sustainability” of the country’s exports volumes are now being called into question. In another major development that’s seen clouding Europe’s supply outlook, reports surfaced Tuesday that Gazprom affiliate Nord Stream 2 AG had terminated its workforce and filed for bankruptcy. The company said online Wednesday that it could not confirm the bankruptcy, saying only that it had ended the contracts of 106 employees. The Switzerland-based company also shut its website down in the face of what it said were growing cyber attacks. German oil and gas producer, Wintershall Dea AG, also said it would write off its financing of the Nord Stream 2 (NS2) pipeline project for a total of $1.1 billion, stop payments to Russia and halt investments in the country. Shell plc said it would exit the project as well.

EU says it's ready if Russia decides to cut off the gas -The European Union is ready in case Russia decides to cut off gas supplies to the bloc in the wake of the Ukraine invasion and subsequent sanctions, Europe's energy chief told CNBC Thursday. The EU receives most of its natural gas supplies from Russia. In 2020, the country accounted for 43.4% of the EU's natural gas stock, followed by Norway at 20%. However, after Western countries imposed severe sanctions on Moscow for its unprovoked invasion of Ukraine last week, there is concern that the Kremlin could retaliate by cutting natural gas supplies to Europe. "We saw from the previous situation when Russia occupied Crimea and we introduced sanctions that there might be [a] retaliation from the Russian side, so, yes, we are ready that Russia's retaliation might cover the energy sector," Kadri Simson, the EU's commissioner for energy, told CNBC. "We have contingency plans in case of partial or full disruption of natural gas," Simson added. Europe has struggled with higher energy prices for several months and Russia's decision to invade Ukraine has put even more pressure on the sector. The benchmark Dutch front-month gas contract hit a new high on Wednesday at $205 a metric ton. The EU has repeatedly talked up the need to diversity its suppliers, but that has not materialized. Now, amid a war in Ukraine on its eastern flank, the European Commission, the executive arm of the EU, has said it wants to finally put an end to this dependency on Russia. "We simply cannot rely so much on a supplier that explicitly threatens us. This is why we reached out to other global suppliers," European Commission President Ursula von der Leyen said earlier this week.

A Russian oil and gas embargo is in the cards. And analysts warn it will have huge consequences - It may only be a matter of time before the U.S. and Western allies impose full sanctions on Russia's energy exports, analysts say, warning that such a move would have seismic repercussions for oil and gas markets and the world economy. It comes as Russia's onslaught on key Ukrainian cities enters its second week, with fighting raging in the north, east and south of the country. Western sanctions imposed on Russia over the invasion have so far been carefully constructed to avoid directly hitting the country's energy exports, although there are already signs the measures are inadvertently prompting banks and traders to shun Russian crude. Russia is the world's third-largest oil producer, behind the U.S. and Saudi Arabia, and the world's largest exporter of crude to global markets. It is also a major producer and exporter of natural gas. The U.S. has said that sanctions on Russia's oil and gas flows are "certainly on the table," but that going after exports now could be counterproductive in terms of raising global energy prices. Nonetheless, there have been calls for Western governments to ratchet up measures targeting Russia's economy and Ukraine Foreign Minister Dmytro Kuleba has called on foreign governments to impose a "full embargo" on Russian oil and gas. John Kilduff, partner at Again Capital, said the market is already starting to believe that Russia's oil exports will be sanctioned. "Oil from Russia will be foreclosed from the global market here at some point and we are already seeing commercial activity reduced, particularly as it relates to Russia exports via maritime assets and that is already hitting the market," "These are barrels that we cannot make up, so that's why this market is on tenterhooks," he added. Oil prices have surged to multiyear highs in recent weeks, with mounting supply disruptions pushing international benchmark Brent crude toward $120 a barrel. The prospect of cutting off the supply of Russian gas could have profound public health and economic consequences, especially given that it is currently winter and governments are already battling the coronavirus pandemic. Brenda Shaffer, senior advisor for energy at the Foundation for Defense of Democracies think tank, told CNBC via telephone that the prospect of removing Russian energy exports from the market would likely result in "a tremendous jolt" to global oil prices and the world economy. "We're in unknown territory if you pull 13% to 15% of global oil out of the pool. Sanctions on Iran and Venezuela, it's not even comparable to what that could do to the global oil market if you actually pulled away most of Russian production," Shaffer said. The impact of Western oil majors pulling the plug on Russia is also likely to have "huge" economic ramifications, Shaffer said, citing a flurry of announcements from the likes of Exxon Mobil, Shell and BP in recent days. "People are really cheering this as a feel-good moment but it's actually going to be a huge, huge shock to the state of these companies and to the stock market in general," Shaffer said.

Nuclear, Coal, LNG: 'No Taboos' in Germany's Energy About-Face (Reuters) -Germany signaled a U-turn in key energy policies on Sunday, floating the possibility of extending the life-spans of coal and even nuclear plants to cut dependency on Russian gas, part of a broad political rethink following Moscow's invasion of Ukraine. Europe's top economy has been under pressure from other Western nations to become less dependent on Russian gas, but its plans to phase out coal-fired power plants by 2030 and to shut its nuclear power plants by end-2022 have left it with few options. In a landmark speech on Sunday, Chancellor Olaf Scholz spelled out a more radical path to ensure Germany will be able to meet rising energy supply and diversify away from Russian gas, which accounts for half of Germany's energy needs. "The events of the past few days have shown us that responsible, forward-looking energy policy is decisive not only for our economy and the environment. It is also decisive for our security," Scholz told lawmakers in a special Bundestag session called to address the Ukraine crisis. "We must change course to overcome our dependence on imports from individual energy suppliers," he said. This will include building two liquefied natural gas (LNG) terminals, one in Brunsbuettel and one in Wilhelmshaven, and raising its natural gas reserves. These plans will likely be a boon for Germany's top utility RWE, which has been backing efforts by German LNG Terminal, a joint venture of Gasunie, Oiltanking GmbH and Vopak LNG Holding, to build an LNG terminal in Brunsbuettel. Separately, the German government has asked RWE's smaller rival Uniper to revive plans to build an LNG terminal in Wilhelmshaven, Handelsblatt newspaper reported on Sunday, after the company scrapped such plans in late 2020. Earlier this week Germany halted the $11 billion Nord Stream 2 Baltic Sea gas pipeline project, Europe's most divisive energy project after Russia formally recognised two breakaway regions in eastern Ukraine.

Where Heating The Home Breaks The Budget - More than one quarter of the Bulgarian population isn't able to properly heat their homes according to data from Eurostat. With a share of 27.5 percent, the Balkan state tops the EU average by almost 20 percent as the following chart shows.Bulgaria is followed by Lithuania with 23.1 percent and Cyprus with 20.9 percent. As Statista's Florian Zandt notes, most countries on this top list are among the lower rungs of the ladder when it comes to economic power, but there are two major exceptions: Spain and Germany. While the former had a GDP of 1.3 trillion euros in 2020, one in ten residents isn't able to properly heat their home due to financial reasons. Even Germany, the biggest economy in the EU, has a share of nine percent of the population who couldn't afford proper heating in 2020.While these numbers might seem high at first glance, the percentage shares of people not being able to afford heating have actually gone down in most countries. For example, Bulgaria stood at almost 40 percent in 2016. A similar development can be seen in Greece, which almost halved the share of its population who can't afford proper heating from 29.1 percent in 2016 to 16.7 percent in 2020.On the other side of the spectrum, Spain and Germany again stand out on this list. In 2019, 2.5 percent of Germans and 7.5 percent of Spaniards assessed they didn't have the finances to properly heat their home.While there's no way to pinpoint one reason for the jump in these two countries, the coronavirus pandemic likely played a big part due to the job insecurities it created even in richer nations around the globe. With the energy price hike in 2021 and the fallout of Russia's aggression towards Ukraine, the numbers for last year and this year are bound to rise again across the EU.

Ukraine war may leave lasting mark on energy, world economy - The impact of Russia’s invasion of Ukraine rattled global markets. There will be lasting implications for commodities, energy policy and the energy transition, experts from global natural resources consultancy, a Verisk business said. The world’s dependence on Russia for certain commodities cannot be overstated ‒ from gas, coal, oil, iron ore, aluminum, platinum group metals and zinc to copper, lead, petrochemicals and fertilizers. Many major international oil and gas companies, utilities and miners are invested in Russia. Wood Mackenzie’s global team has analyzed the risks to commodities and corporate exposure, as well as the wider economic fallout. War in Ukraine is piling pressure onto a European gas market that was already going through its worst crisis on record. Russian pipeline imports account for 38% of EU demand, making sanctions on Russian flows prohibitive. But if the EU was to stop all Russian gas flows, the long-term implications could be severe. Russia, too, would lose much. At current prices, it would give up $7.5 billion of revenues a month, possibly more. In the tussle between Russia and the EU over gas imports, business as usual remains the most pragmatic, and likely, outcome. Having to replace Russian coal volumes would result in a price shock to global coal markets and a coal shortage in Europe. Russian coal accounts for roughly 30% of European metallurgical coal imports and over 60% of European thermal coal imports. The primary issue with replacing Russian coal exports in Europe is its reliance on Russia’s particular quality of coal. Coal-fired power currently accounts for around 14% of Europe’s generation mix. The impact on European power markets from a Russian coal shortage would not be as significant as gas. Crucially, though, Europe may not be able to depend on coal plants to make up for gas-fired generation losses. As much as 2.3 million bpd of Russia’s 4.6 million bpd of crude oil exports go to the West. The US has made it clear it does not intend to impose direct sanctions on Russia’s oil exports. We are seeing slowdowns in Russian crude purchases. Until payment terms are clarified, further tightening in the supply and demand balance is expected. Russia and Saudi Arabia are partners in an OPEC+ production restraint agreement. In the case of an actual oil supply cut, OPEC would be more likely to consider using spare capacity to help offset losses, rather than raise output above target levels. Russian diesel/gas oil is of greater significance to Europe, as the region imports more than 8% of its demand from Russia. Fuel oil and residues are traded globally and often consumed as feedstocks by US Gulf Coast refiners or as bunker fuel for commercial shipping in Asia. As with crude oil, we do not expect a turn away from Russia’s refined product exports. Ukraine has few metal extraction and processing production facilities of scale, so the disruption to production will have a relatively small impact globally. Ceasing the output and export of certain commodities, such as aluminum, platinum group metals and iron ore, however, would have a disproportionate impact, as markets are already under supply pressure. Of greater consequence are any limits on the ability of Russian producers to import raw materials to or export finished products from Russia. Another concern is whether counterparties are willing or able to transact with their offshore entities. As sanctions ratchet up, any metals and mining companies whose shareholders have links to the Kremlin are at risk.

The world could be on the brink of an energy crisis rivaling the 1970s, says IHS Markit's Yergin -Russia's Ukraine invasion could have set in motion an energy market disruption on the scale of major oil crises in the 1970s, according to Daniel Yergin, vice chairman of IHS Markit. Moscow is one of the world's largest oil exporters. Sanctions by the U.S. and allies on Russia's financial system have already set in motion a backlash against Russian crude from banks, buyers and shippers. Yergin, also an author and energy market historian, said even though Russian energy was not sanctioned by the U.S. and other countries, there could be a large loss of Russian barrels from the market. The country exports about 7.5 million barrels a day of oil and refined products, he noted. "This is going to be a really big disruption in terms of logistics, and people are going to be scrambling for barrels," Yergin said. "This is a supply crisis. It's a logistics crisis. It's a payment crisis, and this could well be on the scale of the 1970s." He said strong communications between governments imposing the sanctions and the industry could head off a worst-case scenario. "Governments need to provide clarity," Yergin said. He noted that members of NATO receive about half of Russia's exports. "Some share of that is going to be disrupted," Yergin said. Wariness toward Russian oil Yergin said there are "de facto" sanctions working to keep Russian oil from the market, even though energy was not specifically sanctioned. Buyers are wary of Russian oil because of pushback from banks, ports and shipping companies that do not want to run afoul of sanctions. JPMorgan estimates that 66% of Russian oil is struggling to find buyers, and that crude prices could reach $185 by the end of the year if Russian oil remains disrupted. "This could be the worst crisis since the Arab oil embargo and the Iranian revolution in the 1970s," Yergin said. Both events were major oil shocks in that decade.

Oil jumps as traders fear disruption in Russia's energy industry --Oil prices jumped early Monday after the U.S. and Western allies imposed sanctions on specific Russian banks, prompting fears that energy supplies will be indirectly affected. Brent crude, the international oil benchmark, rose by as much 7% to trade as high as $105 per barrel. West Texas Intermediate crude futures, the U.S. benchmark, also gained more than 7% to trade above $99 per barrel. Prices later eased slightly. WTI settled the day 4.5%, or $4.13, higher at $95.72 per barrel, while Brent gained 2.7% to trade at $100.55. Both contracts broke above $100 on Thursday for the first time since 2014 after Russia invaded Ukraine. However, the initial spike was somewhat short lived with WTI and Brent retreating throughout Thursday's session and into Friday's trading after the White House's first round of sanctions did not target Russia's energy system. At that point, traders thought the market was out of the woods in terms of a major interruption in supply, but there was a "remarkable escalation across the board" over the weekend and that put a risk premium back into prices, according to Bob McNally, president of Rapidan Energy Group. He pointed to the decision to remove some Russian banks from the global interbank messaging system Society for Worldwide Interbank Financial Telecommunication (SWIFT), impose measures on Russia's central bank that prevents it from deploying its reserves and Russian President Vladimir Putin placing his nuclear deterrence forces on high alert. "We could go to $110 or $115 a barrel before it retraces," he told CNBC's "Street Signs Asia" on Monday. On Saturday, the U.S., European allies and Canada said they would disconnect specific Russian banks from SWIFT. "This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally," the global powers wrote in a joint statement announcing the retaliatory measure. Russia is a key oil and gas supplier, especially to Europe. While the latest round of sanctions do not target energy directly, experts say there will be significant ripple effects. "The various banking sanctions make it highly difficult for Russian petroleum sales to occur now," said John Kilduff, partner at Again Capital. "Most banks will not provide basic financing, due to the risk of running afoul of sanctions." Putin could also decide to retaliate against the U.S. and allies' action by weaponizing energy and turning off the taps directly. "[W]e do think a number of Western firms may decide that it is not worth the risk of continuing to do business with Russia given the uncertainty about enforcement and the trajectory of future coercive action," RBC said Sunday in a note to clients.

Brent Nears 8-Year High as Russia Pushes Deeper Into Ukraine-- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled the last trading day of February with sharp gains. The moves followed an initial round of peace talks between Russia and Ukraine that concluded without an agreement to end the violence across the battered European country, as Russian President Vladimir Putin's forces continued their offensives on the country's two largest cities of Kiev and Kharkiv. Multiple reports indicate that heavy shelling targeting civilian areas across Ukraine's largest cities resumed Monday after peace talks near the Belarusian border failed to produce a ceasefire agreement. Instead, both sides went back to their respective capitals for further consultations and agreed to continue talks later this week. Expectations for a ceasefire agreement at this point of the conflict were extremely low after Putin indicated on multiple occasions that he seeks capitulation of Ukraine's now-seated President Volodymyr Zelensky and to replace him with pro-Russian puppet. Until the invasion began, investors seemed confident the intensifying conflict and sanctions would not disrupt oil exports from Russia. This might be changing. Unprecedented move by the Western allies will no doubt erect major obstacles for Russian banks to process transactions for the country's oil and gas shipments. Russia exports around 4.5 million barrels per day (bpd) of crude oil, which would be challenging to replace. The International Energy Agency estimates spare capacity held by the Organization of the Petroleum Exporting Countries is now 5 million bpd, and expects it to shrink below 3 million bpd in the second half of the year. This suggests OPEC does not have enough room to raise production to cover a shortfall in Russia's oil exports. Russia is also the world's largest exporter of natural gas. European gas prices jumped 33% overnight because of sanctions, further fueling worries of an energy crisis. At this point, traders anticipate economic warfare between the United States and Russia will eventually disrupt global energy flows in one shape or another, even though both the U.S. and Russian governments insist this is not their intention. Goldman Sachs this morning revised its Brent crude oil price forecast to $115 per barrel (bbl) from $95 per bbl, with short-term risks skewed to the upside. On the session, NYMEX West Texas Intermediate for April delivery added $4.13 to settle at $95.72 per bbl, and ICE Brent April futures expired at $100.99 per bbl, up $3.06 per bbl on the session, and the first settlement on the spot continuous chart above $100 per bbl since 2014. Next-month delivery Brent May contract settled the session with a $3.02 per bbl discount to April. March RBOB futures advanced 6.97 cents to expire at $2.7970 per gallon, with the next-month April contact settling at $2.9325 per gallon. NYMEX ULSD March futures expired at $3.0134 per gallon, surging 16.39 cents, and next-month April futures settled at $2.9313 per gallon.

Oil soars as emergency crude release fails to quell supply fears — Oil surged as a decision by the U.S. and other major economies to release emergency stockpiles failed to ease concerns of a major shortfall in supplies as sanctions mount on Russia. West Texas Intermediate West Texas Intermediate crude rose 9.4% to $104.72 a barrel on Tuesday. The International Energy Agency agreed to deploy 60 million barrels from stockpiles around the world, which amounts to less than six days of Russian output. Financial sanctions against Russia continue to mount, raising the specter of a major global supply disruption. “We are quite afraid that we are going to lose supply from Russia,” said Bart Melek, head of commodity strategy at TD Securities. “The release from strategic reserves does not seem to be enough.” The rally was further strengthened by options positioning. As prices blew past key levels like $100, where traders had amassed bullish positions, banks that sold those contracts found themselves exposed. As banks are forced to buy futures to cover their risk, the rally snowballs. The invasion of Ukraine has upended commodity markets from oil to natural gas and wheat, piling inflationary pressure on governments. While the U.S. and Europe have so far stopped short of imposing sanctions directly on Russian commodities, the trade in those raw materials is seizing up as banks pull financing and shipping costs surge. Russia is the world’s third-biggest oil producer and, along with Saudi Arabia, an influential member of the OPEC+ alliance. Wall Street banks including Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. have boosted their oil price forecasts, anticipating possible supply disruptions. Consultant OilX said the probability of heavy disruption of seaborne Russian crude and products is growing, which could push prices above $150 a barrel. The turmoil sparked by the invasion will bring a new challenge in balancing a tightening market for OPEC+, which meets Wednesday to discuss output policy. Delegates said the cartel will probably stick to its plan of only gradually increasing supply. President Vladimir Putin spoke to the leader of the U.A.E. ahead of the meeting, while Saudi Arabia said it supports efforts to reduce escalation in Ukraine. West Texas Intermediate rose $9.03 to settle at $104.75 a barrel. Brent gained $8.04 to settle at $106.01 a barrel. Indications of just how tight supply has been is showing in the market’s structure. Brent remains deep in backwardation, where prompt barrels command higher prices than later-dated cargoes. The benchmark’s prompt timespread was $3.93 a barrel in backwardation after surging on Tuesday.

Crude Oil WTI Spikes: The Storm Today after the Calm Yesterday -- By Wolf Richter --The benchmark US crude oil grade WTI spiked by 11% in early afternoon futures trading, to $106.75 a barrel, the highest since June 2014 ($107.49 a barrel), before beginning to ease off just a tad. This is still far lower than where WTI was back in July 2008, when it closed at $145, and intraday hit the $150-mark.WTI is now up 20% from a month ago and 75% from a year ago. About 66% of crude oil consumption in the US in 2020 was in form of fuels for transportation. About 30% was for industrial and commercial uses, such as by the petrochemical industry. About 3% was consumed by residential users, such as heating oil.A spike in crude oil prices pushes up the prices of transportation fuels, and thereby the cost of transportation, from commuting and flying to shipping goods. Fuel surcharges are common in the shipping industry. Transportation costs are passed on in form of higher prices of goods.A spike in crude oil prices also pushes up the costs for all kinds of things, such as plastics, synthetic fibers for clothing, asphalt, building materials, etc., that manufacturers, in the current inflationary mindset, have no trouble passing on to the next entity in line, and finally to the consumer. A spike in crude oil prices like this are the last thing anyone needs when CPI inflation is already at 7.5%.

Oil Surges 8% as Traders Circumvent Russian Crude Shipments -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange rallied again Tuesday, sending U.S. crude benchmark above $104 barrel (bbl) as intensifying fighting in the Ukraine could lead to additional sanctions on Russian oil shipments at a time when the Organization of the Petroleum Exporting Countries seen unable to quickly boost crude production to bridge a growing shortfall in lost Russian exports. As violence in Ukraine intensifies by the minute, traders are increasingly refusing to deal with Russian oil shipments while banks scrap financing deals, according to industry sources. Vitol and Trafigura Group, two of the world's biggest independent oil traders, said on Tuesday they were unable to sell any of the Russian crude they hold in long-term contracts. Reasonably, market participants fear sanctions on Russia's oil and gas shipments could be announced any minute and stop cargoes in transit before they reach buyers. Traders are offering Urals crude, Russia's flagship oil grade, at massive discounts of around $10 bbl compared to the front-month Brent crude. A sharp drop in the price of ESPO, a grade of Russian crude popular in Asia, suggests refiners in Japan and South Korea are pausing purchases from Russia alongside those in Europe and the United States. Adding further pressure on the oil complex, a growing list of international oil companies have dumped investments and walked away from cooperation agreements with their Russian counterparts in response to the developing situation in Ukraine. London-based Shell plc said Monday it was ditching its joint venture with Gazprom, walking away from its 27.5% stake in the Sakhalin-2 liquified natural gas facility, its 50% stake in a project to develop the Salym fields in western Siberia, and its 50% interest in an exploration project in the Gydan peninsula in northwestern Siberia. Shell's move follows British Petroleum's announcement Sunday that it was abandoning one of Russia's biggest foreign investments by exiting its 19.75% stake in Rosneft and associated joint ventures. Even news released late Tuesday that the U.S. and oil-consuming members of the International Energy Agency will release 60 million bbl of oil from strategic stockpiles didn't tamp down the price rally. While the group said it would "send a unified and strong message to global oil markets that there will be no shortfall in supplies as a result of Russia's invasion of Ukraine," the market clearly sees otherwise. The release of strategic reserves is simply not enough to move the needle on oil prices. Traders now await U.S. President Joe Biden's first State of the Union address when he could announce additional sanctions against Russia in response to the shocking bombing of Ukrainian cities. Frustrated with the slow progress in their offensive, Russian forces seemed to have altered their tactics by terrorizing civilians and targeting Ukrainian city centers in broad daylight. On Monday, the International Criminal Court said it would open an investigation into whether Russia has committed war crimes and crimes against humanity in Ukraine. As the fighting reached beyond military targets on day six of the Russian invasion that has shaken the post-World War 2 century world order, reports have emerged that Moscow has used cluster bombs on three populated areas. If confirmed, that would mean the war has reached a worrying new level. At settlement, NYMEX West Texas Intermediate for April delivery spiked $7.69 to $103.41 bbl, and ICE Brent May contract jumped $7 to $104.97 bbl. NYMEX April RBOB futures rallied 15.62 cents or 5.95% to $3.0887 gallon, with April ULSD futures spiked nearly 22 cents to $3.1511 gallon.

OPEC+ agrees gradual output hike despite oil price rally, intensifying Russia supply fears - OPEC and non-OPEC partners, an influential energy alliance known as OPEC+, agreed on Wednesday to stick to their plans of small output rise in April, defying calls for more crude even as prices rally to multi-year highs on Russia supply disruption fears. It comes as Russia's intensifying war with Ukraine enters its seventh day, with fighting raging across the country. The producer alliance said it had agreed to adjust the upward monthly overall output by 400,000 barrels per day for the month of April. The decision had been widely expected by energy analysts. Oil prices jumped on the news. International benchmark Brent crude futures traded at $113.36 a barrel on Wednesday afternoon in London, up around 8%, while U.S. West Texas Intermediate futures stood at $111.42 a barrel, roughly 7.8% higher. OPEC alone accounts for around 40% of the world's oil supply. Ahead of the meeting, the International Energy Agency said it would move forward with a 60-million-barrel global release to offset energy market disruptions caused by international sanctions against Russia over its war with Ukraine. The U.S. has said 30 million of that total will come from the U.S. Strategic Petroleum Reserve. The release of oil from the U.S. and other IEA members reflects the magnitude of expected disruptions to global energy markets. As a result, he called on de-facto OPEC leader Saudi Arabia to use its spare capacity to help the global market, stand up to its non-OPEC partner Russia, and support Ukraine. The Saudis have it within their power to snuff out some of this rally that we're seeing for sure. They could easily put another 1 million to 2 million barrels per day of oil on the market with almost the flick of a switch," he said. "That's what I think they should be talking about doing and acting towards and be more pro-West and pro-Ukraine, for that matter, rather than with their business partner of Russia." Sanctions imposed on Russia over its invasion of Ukraine have so far been carefully constructed to avoid directly hitting the country's exports, although there are signs the measures are inadvertently prompting banks and traders to shun Russian crude. In the event that Western leaders were to impose sanctions on Russia's energy exports, a move the White House says is "certainly on the table," it would have far-reaching implications for the global economy. Russia is one of the world's largest oil-producing nations and the world's second-largest producer of natural gas. U.S. President Joe Biden warned Russia's Vladimir Putin in a State of the Union speech on Tuesday that he has "no idea what's coming" shortly after a flurry of Western oil majors announced plans to pull the plug on their Russian operations.

Oil Surges Into 'Super-Backwardation' After OPEC+ Sticks To Production Plan, Shuns Biden's Demands - In what one observer called "the fastest one yet" - the meeting lasted just 13 minutes, beating last month’s record for brevity - OPEC+ 23-nation coalition led by Saudi Arabia ratified an increase of 400,000 barrels a day on Wednesday, continuing the gradual restoration of output halted during the pandemic, according to delegate sources. This was merely ratifying the plan - as expected - and notably gives no deference to President Biden's urgings for the cartel to raise production to rescue his approval ratings at home. The quota breakdown is as follows:Source: @Amena_Bakr Have tried twice yesterday to send headlines around the world of a 60mm barrel release from global strategic reserves, and now OPEC+ not helping, oil prices are re-extending gains this morning with WTI back above $110... As we detailed last night, one reason for the continued surge in prices - despite all the hoop-la from Biden - is a rather grim assessment from Goldman which echoes what we said earlier, namely that yesterday's IEA release of 60 million barrels of emergency oil reserves will do exactly nothing to halt oil's tremendous surge higher. As Goldman's Damien Courvalin writes, writing about the release of 60 mb of emergency oil reserves following Russia's invasion of Ukraine "we do not view this as sufficient relief, representing an only 1-month offset to a potential disruption to one-third of Russia's 6 mb/d seaborne oil export flows, for example, consistent with the rally in prices after today's announcement."As such, Goldman reiterates its view - discussed here yesterday - that only demand destruction - through even higher prices - is now likely the only sufficient rebalancing mechanism, with supply elasticity no longer relevant in the face of such a potential large and immediate supply shock.This leaves risk to our one-month $115/bbl Brent price forecast still skewed to the upside, with today's $105/bbl spot prices only at the level we believed was required to balance the oil market prior to any escalation in Ukraine.Furthermore, Courvalin writes that a short-term deescalation or a potentially faster ramp-up in OPEC+ production would also not derail the bank's view for structurally higher prices, with Dec-23 Brent $24/bbl below our forecast; "Similarly, we do not expect a large price sell-off should an agreement with Iran be reached soon. Case in point, the global oil deficit in February is turning out to be twice as large as our above-consensus forecast while Iraq is experiencing 0.5 mb/d of outages, enough - if sustained and combined - to fully nullify Iran's potential return to the global oil market."

WTI Extends Gains After Cushing Stocks Drop Near 'Tank Bottoms', Crude Draws - Oil prices are significantly higher this morning from yesterday's settlement, with WTI around $109 (having topped $112 earlier), as the market shrugs off Biden's plans to release some of the SPR, focusing still on geopolitical risk premia (and the fact that Russia's supply has been implicitly cut from the market as the tender for Urals crude received no bids this morning - it seems buyers are afraid of the potential for forthcoming sanctions to impact any purchases made now).OPEC+ stuck to its plan this morning to increase production by 400k bbl/day: “The situation in energy markets is very serious and demands our full attention,” IEA Executive Director Fatih Birol said in a statement. “Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery.” For now, all eyes will be on the official data to see if API's big crude draw is confirmed...API

• Crude -6.1mm (+2.8mm exp) - biggest draw since September
• Cushing -1mm
• Gasoline -2.5mm
• Distillates +0.4mm

DOE

• Crude -2.597mm (+2.8mm exp)
• Cushing -972k
• Gasoline -468k
• Distillates -574k

Draws across the board. Cushing stocks fell for the 8th straight week and crude inventories confirmed API's report with a sizable (though smaller than API) draw against expectations of a build... Source: Bloomberg This pushes Cushing stocks ever nearer operational lows as 'tank bottoms' are in sight... US crude production was unchanged despite fresh urgings from the Biden admin and rising rig counts...WTI was hovering around $109 ahead of the official data.

Oil blasts through $110/bbl, as few alternatives seen to Russian supply (Reuters) - Oil surged relentlessly beyond $110 a barrel on Wednesday, extending its rally since Russia invaded Ukraine seven days ago, on expectations that the market will remain short of supply for months to come following sanctions on Moscow and a flood of divestment from Russian oil assets by major companies.The market rallied into the close of trading on heavy volume, with global benchmark Brent crude ending the day at its highest close since June 2014, while U.S. crude's settlement was its highest since May 2011.The oil rally has been dramatic, with Brent gaining over 15% this week alone as the West responded to Moscow's invasion with numerous sanctions, which have targeted financial transactions and banks, designed to hammer Russia's economy.While the energy sector was not specifically targeted, the sanctions have hampered exporting capabilities from Russia, whose oil exports account for about 8% of global supply, or 4 million to 5 million barrels per day, more than any nation other than Saudi Arabia."It increasingly looks like the market is pricing in a supply disruption to at least part of the nearly 4 million barrels per day of oil that is sold into the U.S. and EU," said Andrew Lipow, president of Lipow Oil Associates in Houston.Brent crude futures peaked at $113.94 a barrel during the session, before settling at $112.93, up $7.96, or 7.6%.U.S. West Texas Intermediate (WTI) crude futures hit a high of $112.51 a barrel, and closed $7.19, or 7%, higher at $110.60.Relief in the form of more supply is unlikely in the near-term. The Organization of the Petroleum Exporting Countries and allies - which include Russia - stuck to their long-term plan to boost output by just 400,000 barrels per day at a brief meeting on Wednesday. read moreEven as the producer group, known as OPEC+, has increased output for the last several months, member states are routinely falling short of their targets, widening a gap that can only be filled by dipping into stockpiles. Current worldwide demand has roughly reached pre-pandemic levels, and there is inadequate supply, causing large countries to dip into their stockpiles to make up for the shortfall.Refiners and other buyers of oil are scrambling. Prominent grades of crude oil traded worldwide, such as those in the North Sea and the Middle East, are at record premiums above Brent. read more. At the same time, the key Russian Urals grade is being discounted at $18 lower than the benchmark - and prospective sellers are still finding little interest in Russian oil. On Wednesday, Russia's Surgutneftegaz was unable to sell 880,000 tonnes of Urals oil from Russian ports, following cancellations of other proposed sales. read more. Adding fuel to the fire, the White House on Wednesday said it was "very open" to the possibility of targeting Russian oil-and-gas with sanctions. That could drive prices even higher, analysts said, until consumers start to balk at the rising costs. read moreThe United States has attempted to thread the needle between actions that will hurt global oil markets and those aimed at Russia. On Wednesday, the U.S. imposed new export curbs on specific refining technologies, intended to hurt Russia's oil refining sector down the road. read more Trade in Russian oil was already in disarray as producers postponed sales, importers rejected Russian ships and buyers worldwide searched elsewhere for crude as Western sanctions and pullouts by private companies squeezed Russia. read more

"The Market Is Starting To Fail": Buyers Balk At Russian Oil Purchases Despite Record Discounts, Sanction Carve Outs -- While in their unprecedented broadside of sanctions on Russia, the U.S. and Western allies went out of their way to spare Russian energy shipments and keep economies humming and voters warm, the oil market has gone on strike anyway. Acting as if energy were already in the crosshairs of Western sanctions officials, refiners have balked at buying Russian oil and banks are refusing to finance shipments of Russian commodities, the WSJ reports citing traders, oil executives and bankers.This self-imposed embargo which has effectively halted a majority of Russian oil shipments, threatens to drive up energy prices globally by removing a gusher of oil from a market that was tight even before the Russian invasion of Ukraine. Meanwhile, Russia, waging war and in need of revenue with its financial system in turmoil, is taking extreme steps to convince companies to buy its most precious commodity.We previously reported that owners of oil tankers had already started to avoid Russian ports because of both the military invasion of Ukraine and apprehension that sanctions for oil could also come soon, and as a result rates for oil tankers on Russian crude routes had exploded as much as nine-fold in the past few days.But now, amid growing fears they will fall afoul of complex restrictions in different jurisdictions, refiners and banks are balking at purchasing any Russian oil at all, traders and others involved in the market say. Market players also fear that measures that target oil exports directly could land as fighting in Ukraine intensifies.“This is going to make it very complex to trade with Russia,” Sarah Hunt, a partner at law firm HFW who works with commodities traders, said of the sanctions laid out as of Monday. “These sanctions against Russia will have an incredible effect on global trade and on trade finance.”Brent-crude futures, the benchmark in international energy markets, rose nearly 8% Tuesday to above $105 a barrel. But in a sign that demand for Russian oil has evaporated, prices for the country’s flagship Urals crude moved in the opposite direction. On Tuesday, traders offered Urals brent at a record discount of around $15 a barrel below the price of Brent - with the discount at one point hitting as much as $18.60 - and even then not finding buyers. A drop in the price of Espo, a grade of Russian crude popular in Asia, suggests refiners in Japan and South Korea are hitting pause on purchases alongside those in Europe and the U.S.

70% Of Russian Crude Trade Is Frozen As Surgut Again Fails To Sell Any Urals In Big Tenders --As discussed yesterday in "Buyers Balk At Russian Oil Purchases Despite Record Discounts, Sanction Carve Outs" the bevy of Russian sanctions have had the unintended consequence of also freezing Russian oil exports - despite explicit carve outs in terms set by Western nations - as buyers balk and boycott Russian crude sales amid fears that the country's energy supplies may eventually fall under a sanctions regime anyway, leaving buyers stuck with millions in barrels they can't then sell to downstream clients.Today was a clear example of just that: citing traders with knowledge of tenders, Bloomberg reported that Surgutneftegaz (better known as Surgut) failed to award two tenders with combined volume of 880k tons of Urals for March loading.This was the third time that Surgut failed to sell any of the crude it was offering, "highlighting the difficulty for Russian producers to find buyers after the nation’s invasion into Ukraine."In a separate, smaller tender, Surgut was offering 8 cargoes of 100k tons each from Baltic ports, and another 80k tons cargo from Black Sea in a separate tender. It was unclear if any bidders stepped up for those.Of course, the longer Russia, and its roughly 6 mm barrels in daily oil exports remain stuck, the greater the cumulative price shock will be. Commenting on this, Bloomberg's Alaric Nightingale said that there’s a clear and obvious short-term supply shock for Russian oil and that’s why prices are marching ever higher, having hit a decade high of $114 earlier today before stabilizing around $110.As Nightingale continues, "tanker companies don’t want to take it and refineries are looking elsewhere. There is a huge risk in being involved in Russian barrels. Imagine you are a trader of Russian crude. You have to get the barrels and freight cheap enough, and then you have to know you have an end buyer who’ll take the cargo no matter what. Some tanker owners will go at the right price, some won’t. Some refineries are already voting with their feet." In short, there is a sense across the petroleum supply chain that sanctions aren’t done yet or aren’t well-enough understood yet. That’s why things are getting blocked.

Russia’s Oil Exports Are Plunging Even Without Sanctions --Russia's invasion of Ukraine has triggered severe economic sanctions, particularly on its financial sector. Last week, Western leaders slapped a raft of fresh sanctions on Russia, including the exclusion of Russia's largest financial institutions from global financial systems; imposing an asset freeze against all major Russian banks, canceling all export permits with Russia, and prohibiting all major Russian companies from raising financing within their territories, among other measures. The leaders have, however, refrained from sanctioning Russia's pivotal energy sector, presumably because it would throw an already tight global energy market into further disarray. But you wouldn't tell that by looking at the oil markets right now. Oil prices and energy stocks are trading at multi-year highs after international refiners adopted a self-imposed embargo, with many reluctant to buy Russian oil and banks refusing to finance shipments of Russian raw materials. Refiners and banks are unwilling to do business with Russia due to the risk of falling under complex restrictions in different jurisdictions. Market participants are also concerned that measures directly targeting oil exports could soon come into place as fighting in Ukraine escalates. "It's going to make trading with Russia very complex. These sanctions against Russia will have an incredible effect on global trade and trade finance," Sarah Hunt, a partner at law firm HFW who works with commodity traders, has told the Wall Street Journal. The situation is getting desperate for the Russian oil sector, with oil exports falling sharply despite selling at massive discounts. According to Energy Intelligence, Russian oil export flows have fallen by at least one-third - or some 2.5 million barrels per day - despite a discount of $11 per barrel versus dated Brent being offered for distressed cargoes of Russian Urals. Russia normally exports 4.7 million b/d of crude and 2.8 million b/d of products, according to government data. But Energy Intelligence now estimates that ~1.5 million b/d of crude and 1 million b/d of refined products are not making it to the market. Other than the sanctions, European refiners are also reluctant to buy Russian oil due to its high sulfur content. Refiners prefer lighter grades since they need less treatment with expensive natural gas, thus allowing for higher margins.

U.S. oil jumps to highest since 2013, tops $109 a barrel as Russia's war on Ukraine sparks supply fears - U.S. oil climbed to the highest level in more than a decade in Wednesday trade, with global benchmark Brent topping $113 per barrel after OPEC and its oil-producing allies, which includes Russia, decided to hold production steady. The oil market was already tight prior to Russia's invasion of Ukraine, and with countries now shunning oil from key producer Russia, traders are worried that supply shortfalls will follow. West Texas Intermediate crude futures, the U.S. oil benchmark, jumped more than 8% to trade at $112.51 per barrel, the highest level since May 2011. Global benchmark Brent crude rose more than 8% to $113.94 per barrel, the highest level since June 2014. Prices later moved off their highs. WTI settled the day 6.95% higher at $110.60 per barrel, while Brent advanced 7.58% to $112.93. During trading Tuesday WTI gained 8.03% to settle at $103.41 per barrel, while Brent advanced 7.15% to $104.97. OPEC and its allies said Wednesday that they will increase output in April by 400,000 barrels per day above March's level, despite the blistering rally in oil that has pushed prices well above $100. "There's no respite. This is a dramatic moment for the market and the world and supplies," Both WTI and Brent surged above $100 last Thursday for the first time since 2014 after Russia invaded Ukraine, prompting supply fears. "Crude prices can't stop going higher as a very tight oil market will likely see further risk to supplies as the War in Ukraine unfolds," On Tuesday member states of the International Energy Agency announced plans to release 60 million barrels of oil reserves in an effort to alleviate the upward march in oil prices. As part of that, the U.S. will release 30 million barrels. But the announcement did little to calm markets. "We do not view this as sufficient relief," Goldman Sachs wrote in a note to clients following the announcement. "Demand destruction — through still higher prices — is now likely the only sufficient rebalancing mechanism, with supply elasticity no longer relevant in the face of such a potential large and immediate supply shock," the firm added. Both WTI and Brent are now up more than 40% year to date as demand rebounds while supply remains constrained. Global producers have kept output in check, and OPEC and its oil-producing allies have been slowly returning barrels to the market after implementing an unprecedented supply cut of nearly 10 million barrels per day in April 2020. Most recently, the group's been raising output by 400,000 barrels per day each month. "We think the producer group will likely stay the course with the current easing schedule and avoid wading into the deepening security crisis involving the group co-chair Russia," RBC wrote in a note to clients ahead of the meeting. The firm did note that there "could be a strategy shift in the coming weeks" should there be an actual physical supply disruption. Russia is a key oil and gas producer and exporter — especially to Europe. So far the country's energy complex has not been targeted by sanctions directly. However, there are ripple effects from the financial sanctions levied against Russia that have made some foreign buyers reluctant to buy energy products from Russia.

Oil jumps, Brent above $116/bbl as supply issues persist (Reuters) - Oil prices extended their rally on Thursday, with Brent rising above $116 a barrel, as trade disruption and shipping issues from Russian sanctions over the Ukraine crisis sparked supply worries while U.S. crude stocks fell to multi-year lows. The Organization of the Petroleum Exporting Countries and their allies including Russia have decided to maintain an increase in output by 400,000 barrels per day in March despite the price surge, ignoring the Ukraine crisis during their talks and snubbing calls from consumers for more crude. Brent crude futures LCOc1 rallied to $116.83 a barrel, the highest since August 2013. The contract was at $116.60 a barrel, up $3.67 by 0112 GMT. U.S. West Texas Intermediate crude CLc1 was at $113.01 a barrel, up $2.41 after touching a fresh 11-year high of $113.31 a barrel. "The White House ratcheted up pressure on Russia with the announcement that it will apply export controls targeting Russian oil refining," ANZ analysts said in a note. "This raises concerns that Russian oil supplies will continue to hit constraints." The market was reacting to the latest round of sanctions by Washington on Russia's oil refining sector that raised concerns that Russian oil and gas exports could be targeted next. So far, it has stopped short of targeting Russia's oil and gas exports as the Biden administration weighs the impacts on global oil markets and U.S. energy prices. Russia is the world’s No. 3 oil producer and the largest exporter of oil to global markets, according to the International Energy Agency. Russian crude and oil products exports reached 7.8 million barrels per day in December, the agency said.

Oil rises to the highest since 2008 before turning lower - U.S. oil surged to the highest level since 2008 Thursday before reversing course as the market weighs supply disruptions from Russia against a possible Iran nuclear deal. West Texas Intermediate crude futures, the U.S. oil benchmark, traded as high as $116.57 per barrel, a price last seen on Sept. 22, 2008. International benchmark Brent crude hit $119.84, the highest level since May 2012. Prices later turned negative, and traded lower throughout the afternoon. WTI ended the day 2.65% lower at $107.67 per barrel, while Brent declined 2.19% to $110.46 per barrel. Russia's invasion of Ukraine has been driving the narrative for oil, sending prices surging. A possible deal with Iran has been one factor cited that could bring some immediate relief for a very tight market. "Unless there is a palpable thawing in tension in the form of concessions from either side and sanctions are lifted and/or Iran is allowed back to the market pronto so it can start selling its oil from storage until production is ramped up the risk premium is not expected to deflate markedly," brokerage PVM said Thursday in a note to clients. Despite Thursday's decline both contracts are still solidly in the green for the week. WTI is up around 19%, while Brent has advanced 14%. The oil market was already tight prior to Russia's invasion of Ukraine, and with countries now shunning oil from key producer Russia, traders are worried that supply shortfalls will follow. On Monday, Canada said it was banning Russian oil imports, but so far it's the only nation to target Russia's energy complex directly. Still, there are ripple effects, including that buyers will decide to shun Russian oil to avoid any possible risk of violating sanctions.

Oil touches 14-year high, drops due to Iran deal prospects - Oil fell on signs that high-stakes talks to revive a nuclear deal with Iran may soon conclude, potentially raising supply as traders increasingly shun Russian crude. West Texas Intermediate dropped to settle above $107 after touching $116, the highest since 2008, on Thursday. Brent nearly reached $120 before pulling back. Oil swung through a $10 range during the session as most major oil companies continue to implement a de-facto ban against Russian crude. The rally cooled after reports surfaced suggesting Iran may be close to signing an agreement. U.S. and European officials have also said a deal is close, but that there are still sticking points. Crude markets have experienced an extraordinary run of volatility since Russia’s invasion of Ukraine unleashed further uncertainty into global oil markets. JP Morgan & Co. said Brent could skyrocket to as high as $185 by the end of this year if current conditions continue. Buyers have steered clear of doing business with Russia as the U.S and others seek to isolate Russia from financial markets. Traders are offering Russia’s flagship crude at a record discount in an attempt to attract buyers. “The market is selling off due to hopes of Iran deal coming in the next few days along with comments from Germany that they do not want to put an embargo on Russian crude,” s “But the selloff is fairly shallow because the market is self-sanctioning Russian crude and effectively taking 3 million barrels of crude off the market.” Oil markets had already tightened significantly prior to the invasion, after economies rebounded strongly from the pandemic. Surging energy costs have added to inflationary pressures on the global economy, boosting the prices of everything from gasoline at the pump to diesel used by industrial consumers. The International Energy Agency has warned that global energy security is under threat while a planned emergency release of crude reserves by the U.S. and its allies has done little to quell market fears. U.S. lawmaker support for an outright ban of oil and gas imports is growing with Democratic House Speak Nancy Pelosi saying she’s “all for” a bipartisan draft bill to cut off Russian supplies to the U.S. The American Fuel and Petrochemical Manufacturers “fully supports the suspension of all future purchases of crude oil and petroleum products from Russia,” the trade group said in a letter to legislators. The White House reiterated it’s not interested in a Russian oil ban on Thursday. German Economy Minister Robert Habeck is also against the idea of a ban on imports of Russian energy. Prices West Texas Intermediate for April delivery fell $2.93 to settle at $107.67 a barrel in New York. Brent for May settlement dropped $2.47 to settle at $110.46 a barrel. Despite the market turmoil, the Organization of Petroleum Exporting Countries and its allies are sitting on the sidelines. The group stuck with the 400,000 barrel-a-day production increase that was scheduled for April and wrapped up a Wednesday meeting in a record time of just 13 minutes, delegates said.

JPMorgan says $185 oil is in view if Russian supply hit persists - Brent crude could end the year at $185 a barrel if Russian supply continue to be disrupted, JPMorgan Chase & Co wrote in a note Thursday. Oil prices have skyrocketed, with Brent crude approaching $120 earlier Thursday as traders shun Russian oil after Moscow invaded Ukraine. U.S. President Joe Biden is facing calls to ban Russian imports of energy but so far has not imposed full blown sanctions on oil. Currently, 66% of Russian oil is struggling to find buyers, JP Morgan analysts including Natasha Kaneva said in the note. In the short term, the scale of the supply shock is so large that oil prices need to reach and stay at $120 a barrel for months to incentivize demand destruction, the analysts said, assuming there would be no immediate return of Iranian crude barrels. "As sanctions have widened and the shift to energy security takes on an urgent priority, there will likely be ramifications for Russian oil sales into Europe and the US, potentially impacting up to 4.3 million barrels per day," the analysts wrote. The bank maintained its price forecast, which calls for Brent to average $110 a barrel in the second quarter, $100 in in the third quarter and $90 in the fourth quarter. Without a return of Iranian barrels to the market, the bank expects oil prices to average $115 in the second quarter, $105 in the third quarter and $95 by the fourth quarter.

'Economic destruction' may lie ahead as oil prices push higher, analyst says -Oil prices are spiraling higher on supply concerns as the Russia-Ukraine crisis develops, and this could lead to demand destruction and an economic recession, according to an oil analyst. "I'm concerned that we don't have enough oil at all here, and we need to go to $120 to $150 [per barrel], and then we get into economic destruction," said Paul Sankey of Sankey Research. The firm sees oil trading between $100 and $150 per barrel until the situation in Ukraine is resolved, according to a research note. International benchmark Brent crude futures jumped 3.24% to $116.59 per barrel, after earlier crossing the $119 level. U.S. crude futures climbed 3.26% to $114.21 per barrel. Oil cargoes from Russia "simply aren't moving" following the invasion and news of sanctions, despite lower prices, Sankey told CNBC's "Squawk Box Asia" on Thursday. "There's a major, physical, immediate outage that caught an already tight market with very low inventories," he said. Everyone is worried that the elevated prices will be highly recessionary, destroy oil demand and slow down many economies, he added. Despite the extreme oil price moves, Sankey suggested that it may have been the right call for OPEC and its allies to stick to their small production increase in April as planned. "The scale of the emergency here is so severe that you probably don't want to be doing what the Western governments are doing, which is … releasing emergency stocks, leaving yourself with even lower stocks," he said. "By the same token, if Saudi and the UAE run down their spare capacity, well, you don't know what's going to happen next," he added. Pointing to countries such as Libya and Iraq, Sankey said "any risky supply source might go missing," and oil prices could then leap to $200 per barrel. OPEC+ is "probably just sitting on their hands here, to see how this plays out," he said.

Oil rises above $112 as Ukraine conflict offsets Iran supply hope - Oil rose above $112 a barrel on Friday in a volatile session as fears over disruption to Russian oil exports in the face of Western sanctions offset the prospect of more Iranian supplies in the event of a nuclear deal with Tehran. Signs of an escalation in the Russia-Ukraine conflict, with reports of a fire at a Ukrainian nuclear power plant, spooked markets before authorities said the fire in a building identified as a training centre had been extinguished. Brent crude rose as high as $114.23 a barrel and by 1050 GMT was up $1.97, or 1.8%, at $112.43. US West Texas Intermediate (WTI) added $2.21, or 2.1%, to $109.88 after touching a high of $112.84. "Russia's invasion of Ukraine means that fears over supply will remain front and centre," said Stephen Brennock of oil broker PVM, though he added that there is "a new sense of urgency" to revive the Iranian nuclear deal. Crude oil hit its highest in a decade this week and prices are set to post their strongest weekly gains since the middle of 2020, with the US benchmark up more than 18% and Brent 13%. On Thursday prices swung in a $10 range but settled lower for the first time in four sessions as investors focused on the revival of the Iran nuclear deal, which is expected to boost Iranian oil exports and ease tight supplies. Still, Iran's Foreign Minister Hossein Amirabdollahian said on Friday that the west's "haste" to reach a nuclear agreement "cannot prevent the observance of Iran's red lines", including economic guarantees. Oil prices are rising on fears that western sanctions over the Ukraine conflict will disrupt shipments from Russia, the world's biggest exporter of crude and oil products combined. Trading activity for Russian crude has slowed as buyers hesitate to make purchases because of sanctions against Russia while US President Joe Biden comes under growing pressure to ban US imports of Russian oil. More oil supplies are set to be added from a coordinated release of 60 million barrels of oil reserves by developed nations, agreed this week. Japan said on Friday that it plans to release 7.5 million barrels of oil.

Oil Rally Explodes As US Mulls Russia Crude Ban, Saudis Hike Selling Price -- Crude prices posted double-digit weekly gains and closed at their highest in at least nine years after the White House said it was considering a ban on Russian oil imports, adding to the worries of a market already hyped up about sanctions on one of the world’s largest energy exporters. The escalating war in Ukraine and the West’s retaliation with more financial punishments on Moscow further fueled Friday’s crude. Another catalyst was Saudi Arabia’s announcement of a record hike in the selling price for its crude. U.S. crude’s West Texas Intermediate, or WTI, benchmark settled up $8.01, or 7.4%, at $115.68 a barrel, its highest close since 2008. For the week, U.S. crude was up about 26%, its biggest weekly gain since March 2020. Global oil benchmark Brent was up $7.65, or 6.9%, at $118.11 a barrel. For the week, Brent rose 21% for its biggest weekly gain since April 2020. WTI has risen some 54% since the year began and Brent about 52%. Crude’s rally saw a dramatic surge this week on worries that a litany of sanctions against Russia for its invasion of Ukraine would severely impact energy exports from Moscow, which provides some 10% of the world’s oil needs and 40% of Europe’s gas requirements. The White House said on Friday it was considering banning Russian oil imports to add to the global community’s isolation of Moscow over the war in Ukraine. No decision has been made on the matter, it, however, said. Biden administration officials have said over the past week that they did not wish to act rashly and ban oil Russian exports, which could dramatically raise energy prices for Americans already paying the most for fuel since the 2008 financial crisis. Saudi Arabia’s state-owned oil company Aramco (SE:2222), meanwhile, announced the highest hike ever in the official selling price, or OSP, to Asia, raising the premium for a barrel of Arab light crude meant for April delivery by $4.95 versus the Oman/Dubai average which it uses as its base. Aramco said its April Arab light crude oil OSP to the US would go up by $3.45. The lowest increase was for North West Europe, where the premium for April Arab light crude rose by $1.60 versus Brent, which hovered at $114 a barrel. “This is what you call naked exploitation,” John Kilduff, partner at New York energy hedge Again Capital, said, referring to Aramco’s record price hike. “We know it’s business. But at a time when the world is in a dire emergency over the Russia-Ukraine crisis and the need for affordable and higher oil supplies is more than ever, we know we can count on the Saudis to throttle our necks more than ever.”

Oil has wildest week on record with markets jolted by war — Oil posted its biggest weekly gain on record with prices swinging in a $20 range since Russia invaded Ukraine and sparked fears of a major supply crunch. Futures in New York rose by more than $24 this week, the highest weekly dollar increase on record. Oil extended gains Friday on news the Biden administration is weighing a ban on U.S. imports of Russian crude oil. Brent traded in its biggest range since the launch of the futures contract in 1988 -- eclipsing the wild swings in the global financial crisis of 2008 and when demand plunged in the coronavirus pandemic.. To lower prices, the market would need to see OPEC output or U.S. drilling activity to change meaningfully. Prices climbed early in Friday’s session after Ukrainian officials said Russian forces attacked a nuclear plant -- Europe’s biggest. While the likelihood of a major disruption to Russian supply has boosted prices this week, signs that an Iranian nuclear deal may be near added to price volatility. Conversations are taking place within the Biden administration and with the U.S. oil and gas industry on the impact banning Russian oil imports would have on American consumers and the global supply, according to people familiar with the matter. A White House spokesperson said no decision has been made. In a bid to cool prices, the International Energy Agency announced a release of emergency reserves of 60 million barrels, that has so far failed to quell supply concerns. The agency said this is an “initial release” and that it is “ready to recommend additional steps” if necessary, according to a statement Friday. JPMorgan Chase & Co. said global benchmark Brent crude could end the year at $185 a barrel if Russian supply continues to be disrupted, and some hedge funds are eyeing $200. Goldman Sachs says that without Russian barrels on the market, oil could reach $150 in the next three months. While sanctions haven’t been imposed on Russian energy exports, buyers are shunning the nation’s crude as they navigate financial penalties. Germany and the White House oppose a ban on Russian oil imports, though U.S. lawmaker support to prohibit shipments into America is growing. The physical market-- where real barrels are bought and sold-- has also rallied sharply in recent days, as traders rush to supplies at healthy premiums. Saudi Arabia raised oil prices for buyers in Asia for April crude at a record price. Europe’s diesel prompt timespread rose over $30 while BP Plc has taken a key production unit offline at Europe’s second-biggest oil-processing plant. West Texas Intermediate for April delivery gained $8.01 to settle at $115.68 a barrel in New York. Brent for May settlement rose $7.65 to settle at $118.11 a barrel. The head of the world’s atomic watchdog said his trip to Tehran on Saturday could “pave the way” for reviving the Iran nuclear deal, a pact that would see the return of official oil exports. The OPEC producer has millions of barrels of oil stored offshore that could flow quickly into a tight market. Brent remains in deep backwardation, a bullish structure where prompt barrels are more expensive than later-dated cargoes, signaling a tight supply-demand balance. The benchmark’s prompt spread was $3.97 a barrel after touching record levels in recent days.

OPEC+ Faces Reckoning on Russia - OPEC+ is doing its best to ignore the war started by one of its leading members, but it may not be able to manage it for much longer. Russia’s invasion of Ukraine, oil’s surge above $110 a barrel and the resulting mayhem in financial markets barely figured in the cartel’s meeting on Wednesday. The group ratified the 400,000 barrel-a-day production increase that was scheduled for April and wrapped up in a record time of just 13 minutes, delegates said. Mexican Energy Minister Rocio Nahle tried to raise the subject of Russia, but other members of the 23-nation coalition led by Saudi Arabia swiftly moved on to other matters without any discussion, delegates said, asking not to be named because the meeting was private. Mexico’s energy ministry did not respond to a request for comment. “The group believes the current prices are driven by geopolitics and not fundamentals,” said UBS Group AG analyst Giovanni Staunovo. “But if Russian exports and production are lower at the next meeting, things might be different.” Russia’s invasion of Ukraine has triggered one of the strongest packages of economic sanctions every imposed on a major economy, but none of them target energy exports. That’s why OPEC+, which only considers the fundamentals of supply and demand at its meetings and not geopolitics, saw no need to discuss the situation, said a delegate. But there are growing signs that traders and shipowners are shying away from handling the country’s oil, even without sanctions. A cargo of Russia’s Urals crude was offered for sale at a record discount on Tuesday but found no bidders. About 70% of the country’s exports are currently “frozen” due to the risk of further sanctions or reputational damage, according to London-based consultant Energy Aspects Ltd. If this situation were to continue until the next meeting of the Organization of Petroleum Exporting Countries and its allies on March 31, it could place Saudi Arabia and its Gulf neighbors in a tough position. On the one hand, they want to preserve the five-year alliance with Moscow, which is the heart of OPEC+ coalition. The relationship has had its ups and downs -- notably a brief but destructive price war two years ago. But it has kept its unity and is credited for saving the oil markets from the pandemic-induced slump. But the pressure from the U.S. -- a Saudi ally of even longer standing -- and other consumers to raise production faster could become too strong to ignore. The kingdom’s desired image as a responsible steward of a “balanced” oil market could be under threat if crude remains at $110 a barrel, or goes even higher. Russia’s attack on Ukraine is only a week old and the situation is still evolving rapidly. The heaviest fighting may only be beginning as the invading soldiers move closer to Kyiv and other cities. The list of companies ceasing business with or exiting Russia grows longer every day. U.S. President Joe Biden is already talking about a potential a ban on importing Russian oil and gas, a move that may force prices even higher. For all their desire to remain as a neutral and cohesive alliance, members of OPEC+ may struggle to maintain that approach. Riyadh could be under incredible pressure to pick a side.

Russia's Vladimir Putin's Message for Saudi Crown Prince Mohammed bin Salman Amid Western Sanctions Over Ukraine Invasion - President Vladimir Putin spoke by phone with Saudi Arabia's Crown Prince Mohammed bin Salman on Thursday, buttressing a crucial geopolitical alliance as Western sanctions batter Russia's economy. Putin's invasion of Ukraine has left Russia more economically isolated than it has been in decades, with many of its banks cut off from the global financial system and traders reluctant to handle its oil shipments. OPEC+, which is led by Saudi Arabia and Russia, largely ignored this escalating crisis at a meeting on Wednesday. But the cartel is under growing pressure to boost production to ease crude prices, a move that could potentially create tensions between Moscow and Riyadh. "Putin stressed the unacceptability of politicizing global energy supply issues" in the call, according to a statement from the Kremlin. The discussion emphasized "mutual interest in further comprehensive development of the Russian-Saudi partnership."

Iran Beckons Top IAEA Official with Nuclear Deal in Sight - Top Iranian leaders will meet on Saturday with the international official in charge of investigating their nation’s past nuclear activities, suggesting a potential solution to one of the key remaining issues preventing a reboot of Tehran’s atomic agreement with world powers. Iran has demanded the International Atomic Energy Agency conclude its stalled probe of past nuclear work as part of an agreement to reactivate the 2015 accord, which capped the Islamic Republic’s atomic program in exchange for sanctions relief. But western negotiators have said that’s not possible because the IAEA works independently and they don’t have the power to short-circuit an investigation. IAEA Director General Rafael Mariano Grossi said Wednesday that he’s nevertheless “optimistic” that his inspectors can find a solution that preserves his agency’s independence while advancing the possibility of a deal. Reviving the seven-year-old landmark nuclear agreement with Iran often referred to as the JCPOA would mean relief for global energy markets. Oil has surged to $116 a barrel amid Russia’s war on Ukraine and the reluctance of other oil-producing nations to significantly increase production. Traders have been expecting a return of Iranian barrels to global markets this year. The Persian Gulf nation, which holds the world’s No. 2 natural gas and No. 4 crude reserves, could probably raise exports by around 1 million barrels a day within months of any deal, according to traders. The original accord gave IAEA monitors unprecedented supervision over Iranian nuclear facilities, which they partially lost after the Trump administration unilaterally withdrew from the agreement to impose sweeping U.S. sanctions. The agency has been probing the source of uranium particles detected at several undeclared locations in Iran. European and U.S. diplomats have previously threatened to censure Tehran over its lack of cooperation with the IAEA, which convenes its next board meeting on March 7. Negotiators who are in their 11th month of on-and-off diplomacy in Vienna have been consulting with IAEA officials as talks wind to their conclusion, Grossi said. Diplomats, who have repeatedly blown past earlier time limits, have warned there are just days to salvage the accord. “These negotiations are coming to a decisive point,” said Grossi, whose previous attempts to advance his agency’s investigation through negotiations have failed. “We are working very hard to come to an agreement.”

Taliban halt evacuations of Afghans --The Taliban on Sunday announced that Afghans would not be permitted to leave the country without a good reason and women would be forbidden from traveling without a chaperone, rebuffing a key United States demand for lifting sanctions. “The government is obliged to find out a way to protect their people,” Taliban spokesman Zabiullah Mujahid said on Sunday during a press conference, according to The Wall Street Journal. “Especially when their path is not clear and they’re not invited. They should not dive into the unknown,” Mujahid added of the Afghan people seeking to leave the country. He also cited religious laws as the reason that women could not travel alone. The Journal added that Taliban fighters on Monday stopped people traveling on a highway from Kabul to Pakistan and at times pulled families with suitcases aside to ask about the intention of their travel. Thousands of Afghan people who were evacuated on U.S. military and private charter flights following the Taliban's takeover last year remain in third countries awaiting paperwork to be processed. While the State Department has said that it was engaging in talks with the Taliban to resolve the issues, it said it had not officially heard the information regarding barring additional departures, the Journal reported.