natgas price hits 13 year high; US oil supplies at a 14 year low; total oil + products exports at a 2 year high

natural gas prices hit 13 year high; US oil supplies at a 14 year low; SPR at a 19½ year low (w/ graph); distillates exports at a 21 month high; total oil + products exports at a 2 year high; natural gas drilling at a 30 month high

Oil prices ended the week lower for the fourth time out of the last five weeks, as the ​IEA countries joined the US in an unprecedented release of emergency oil reserves....after falling 12.8% to $99.27 a barrel last week after China locked down their largest city and Biden announced an unprecedented release of oil from our Strategic Petroleum Reserve, the contract price for US light sweet crude for May delivery opened somewhat lower again on Monday as traders digested the details on the SPR release amid a ceasefire agreement on the Saudi-Yemeni border, but jumped as much as 4% after Saudi Arabia raised prices for most of its biggest customers to record highs for May, and settled with a $4.01 increase at $103.28 a barrel, after Russian violence against civilians in Ukraine led to renewed calls for the EU to officially ban Russian energy exports...oil prices then rose more than 2% in early trading Tuesday, after some European leaders pushed for a extended sanctions on Russia's oil and coal sectors in response to atrocities in the areas surrounding the capital city of Kyiv, but eased in afternoon trading, pressured by a rising U.S. dollar and growing worries that new coronavirus cases could slow demand, and settled $1.32 lower at $101.96 a barrel, after the European Union proposed a phased-out ban on imports of Russian coal, but brushed aside sanctions against Russian oil and gas exports...oil prices turned lower in late morning trading on Wednesday, with May oil falling below $100, after EIA data showed an unexpected build in commercial oil inventories, along with an increase in domestic crude production, and then tumbled more than 5% after the International Energy Agency, or IEA, said it will release 120 million barrels from the reserves of its members into the open market to bridge a global supply shortage. to settle with a loss of $5.73 at $96.23 a barrel, the lowest close since a week after the ​Ukraine war ​began...oil fell more than 2% in early trading Thursday, pressured by a stronger U.S. dollar following hawkish minutes from the Fed, and details from the IEA of planned coordinated release of 120 million barrels, but recovered to close just 20 cents lower at $96.03 a barrel even as the EU paused on an immediate ban of Russian coal imports, leading to doubts that they would ever be able to effectively sanction Russian oil exports...oil prices recovered somewhat on Friday following wire service reports that China's largest refiners were avoiding Russian cargoes for May loadings, and settled $2.23 higher at $98.26 a barrel, but still ended more than 1% lower on the week, after several countries had announced plans to release crude from their strategic reserves...

​Natural gas prices​,​ on the other hand, ended higher for the seventh time in eight weeks after touching a thirteen year high, on falling ​US ​gas output and ​on ​a bigger than expected decline in gas inventories ...after rising 2.7% to $5.720 per mmBTU last week as wintery weather lingered across the northern tier of states. the contract price of natural gas for April delivery traded in a narrow range Monday and settled eight-tenths of a cent lower at $5.712 per mmBTU, as forecasts for milder weather over the next two weeks offset early expectations for more demand during the period...but prices spurted 32.0 cents to settle at $6.032 per mmBTU on Tuesday, on a preliminary report of a drop in U.S. gas production, on cooler forecasts, and on the possibility that additional sanctions on Russian gas supplies would keep U.S. LNG exports near record highs for months....May natural gas contracts then traded from 5% higher to 5% lower on Wednesday before settling down three-tenths of a cents at $6.029 per mmBTU, despite higher forecasts for gas demand over the next two weeks...natural gas then spiked 33 cents higher to a 13 year high of $6.359 mmBTU on Thursday, on soaring LNG exports after the EIA reported a late season withdrawal from storage was larger than expected...but prices retreated again on Friday and finished 8.1 cents lower at $6.278 per mmBTU, on profit taking following a report of higher output, but still finished 9.8% higher for the week...

The EIA's natural gas storage report for the week ending April 1st showed that we again had to pull natural gas out of storage, a week later into the spring than normal, as the amount of working natural gas held in underground storage in the US fell by 33 billion cubic feet to 1,382 billion cubic feet by the end of the week, which left our gas supplies 399 billion cubic feet, or 22.4% below the 1,781 billion cubic feet that were in storage on April 1st of last year, and 285 billion cubic feet, or 17.1% below the five-year average of 1,667 billion cubic feet of natural gas that have been in storage as of the 25th of April over the most recent five years....the 33 billion cubic foot withdrawal from US natural gas working storage for the cited week was larger than the average forecast for a 27 billion cubic foot withdrawal from an S&P Global Platts survey of analysts, ​and it was in sharp contrast to the average injection of 8 billion cubic feet of natural gas that have typically been added to our natural gas storage during the same week over the past 5 years, and the 19 billion cubic feet that were added to natural gas storage during the corresponding week of 2021... 

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending April 1st indicated that even after a big increase in our oil exports, we were able to add surplus oil to our stored commercial crude supplies for the 6th time in 19 weeks and for the 15th time in the past forty-four weeks, mostly because of a big increase in oil supplies that the EIA could not account for…our imports of crude oil rose by an average of 41,000 barrels per day to an average of 6,300,000 barrels per day, after falling by an average of 227,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 705,000 barrels per day to 3,693,000 barrels per day during the week, after our exports had fallen by 856,000 barrels per day during the prior week...applying our oil exports to offset oil supplies coming from imports to get our effective trade in oil, we find there was a net import average of 2,607,000 barrels of per day during the week ending April 1st, 664,000 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 100,000 barrels per day higher at 11,800,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 14,407,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,948,000 barrels of crude per day during the week ending April 1st, an average of 35,000 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 198,000 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 1,352,000 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 (+1,352,000) 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, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an 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 just (+20,000) barrels per day, that means there was a 1,332,000 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 189,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 978,272,000 barrels at the end of the week, the lowest inventory level since January 25th, 2008, and thus at a 14 year low….this week's oil inventory decrease came even as 346,000 barrels per day were being added to commercially available stocks of crude oil, because 535,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time....that draw on the SPR included the second withdrawal under the recently announced 30,000,000 million barrel release from the SPR to address Russian supply related shortfalls, as well as an ongoing withdrawal under the administration's earlier 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 91,569,000 barrels have now been removed from the Strategic Petroleum Reserve over the past 20 months, and as a result the 564,580,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since April 19th, 2002, or a few weeks short of a 20 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs has already drained those supplies considerably over the past dozen years...with Biden's recent announcement, an additional and unprecedented million barrels per day will be released from the SPR daily starting in May and running up to the midterm elections in November, in the hope of keeping gasoline and diesel prices lower up until that time....that total 180,000,000 barrel drawdown will remove almost a third of what remains in the SPR at this time, as the following graph illustrates...

The above graph comes from a post by oil and gas researcher Rory Johnston at Substack, wherein he discusses the implications of the planned SPR release, and it shows the historical quantity of oil held in our Strategic Petroleum Reserve, beginning from its inception following the Arab Oil Embargo of 1973-74 to the present day...the graph is further annotated to indicate the reasons for major additions to and withdrawals from the SPR, most of which were due to disruptions to oil supplies following hurricanes in the Gulf (you can get a better view of that by clicking on the graph, or even better yet, the enlarged version at substack.com....on the far right, Rory has projected where the strategic petroleum Reserve will end up after the Biden withdrawals are complete, which will take the SPR back to its level of 1983, while it was still being filled...based on an estimated average daily US oil consumption of 18,000,000 barrels per day, the US will have roughly 18 1/2 days of oil supply left in the Strategic Petroleum Reserve this November, after all three of the Biden administration's SPR withdrawal programs have run their course ...

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports slipped to an average of 6,360,000 barrels per day last week, which was 8.9% more than the 5,838,000 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 100,000 barrels per day higher at 11,800,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,400,000 barrels per day, while Alaska’s oil production rose by 3,000 barrels per day to 448,000 barrels per day, but had no impact on the final rounded national total....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 still 9.9% below that of our pre-pandemic production peak, but 40.0% 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 92.1% of their capacity while using those 15,948,000 barrels of crude per day during the week ending March 25th, unchanged from the utilization rate of the prior week, and in line with the historical utilization rate for early April refinery operations, when spring refinery maintenance programs have just about finished up…the 15,948,000 barrels per day of oil that were refined this week were 6.0% more barrels than the 15,044,000 barrels of crude that were being processed daily during week ending April 2nd of 2021, when refineries were still recovering from winter storm Uri, and 17.0% more than the 13,634,000 barrels of crude that were being processed daily during the week ending March 27th, 2020, when US refineries were operating at what was then a much lower than normal 82.3% of capacity at the onset of the pandemic, but 0.9% less than the 16,100,000 barrels that were being refined during the week ending April 5th 2019, when there was no extraordinary circumstance affecting refineries at the time...

With an incremental increase in the amount of oil being refined this week, gasoline output from our refineries was also somewhat higher, increasing by 70,000 barrels per day to 9,124,000 barrels per day during the week ending April 1st, after our gasoline output had decreased by 750,000 barrels per day over the prior week.…this week’s gasoline production was still 1.7% less than the 9,279,000 barrels of gasoline that were being produced daily over the same week of last year, and 10.3% less than the gasoline production of 10,169,000 barrels per day during the week ending April 5th, 2019, the year before the pandemic impacted demand...meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 49,000 barrels per day to 5,042,000 barrels per day, after our distillates output had increased by 459,000 barrels per day over the prior three weeks…with those prior increases, our distillates output was 8.7% more than the 4,639,000 barrels of distillates that were being produced daily during the week ending April 2nd of 2021, and 0.1% above the 5,038,000 barrels of distillates that were being produced daily during the week ending April 5th, 2019...

Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the eighth time in nine weeks, decreasing by 2,041,000 barrels to 236,787,000 barrels during the week ending April 1st, after our gasoline inventories had increased by 785,000 barrels over the prior week....our gasoline supplies decreased this week because the amount of gasoline supplied to US users increased by 63,000 barrels per day to 8,562,000 barrels per day, and because our exports of gasoline rose by 372,000 barrels per day to 980,000 barrels per day, and because our imports of gasoline fell by 172,000 barrels per day to 484,000 barrels per day.…even with 8 inventory drawdowns over the past 9 weeks, our gasoline supplies were 0.9% higher than last April 2nd's gasoline inventories of 234,588,000 barrels, and 1% below the five year average of our gasoline supplies for this time of the year…

Even with this week's decrease in our distillates production, our supplies of distillate fuels increased for the third time in twelve weeks and for the tenth time in thirty-one weeks, rising by 771,000 barrels to 113,530,000 barrels during the week ending April 1st, after our distillates supplies had increased by 1,395,000 barrels during the prior week…our distillates supplies rose again this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 157,000 barrels per day to 3,647,000 barrels per day, even as our imports of distillates fell by 67,000 barrels per day to 88,000 barrels per day, and while our exports of distillates rose by 122,000 barrels per day to a 21 month high of 1,373,000 barrels per day...since oil and gasoline exports were also elevated this week, that meant that our total exports of oil and all products made from it reached a 2 year high of 9,631,000 barrels per day this week, and was also our third highest total exports on record... 

Meanwhile, despite the jump in our oil exports, the increased withdrawal from the SPR meant our commercial supplies of crude oil in storage rose for the 13th time in 36 weeks and for the 19th time in the past year, increasing by 2,421,000 barrels over the week, from a 42 month low of 409,950,000 barrels on March 25th to 412,371,000 barrels on April 1st, after our commercial crude supplies had decreased by 3,449,000 barrels over the prior week…with this week’s increase, our commercial crude oil inventories remained about 14% below the most recent five-year average of crude oil supplies for this time of year, but were still about 28% above the average of our crude oil stocks as of the first of April 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 then jumped again after last year's winter storm Uri froze off Gulf Coast refining, our commercial crude oil supplies as of this April 1st were 17.2% less than the 498,313,000 barrels of oil we had in commercial storage on April 2nd of 2021, and were also 14.9% less than the 484,370,000 barrels of oil that we had in storage on April 3rd of 2020, and 9.7% less than the 456,550,000 barrels of oil we had in commercial storage on April 5th 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, rose by 1,444,000 barrels this week, from 1,706,972,000 barrels on March 25th to 1,708,416,000 barrels on April 1st, after our total supply had decreased by 81,461,000 barrels over the first twelve months of this year...that increase still left our total supplies of oil & its products less than 1.5 million barrels above what would be an 8 year low dating back to April 4th, 2014...

This Week's Rig Count

The number of drilling rigs running in the US rose for the 68th time over the prior 80 weeks and by the most in two months during the week ending April 8th, but it still remained 13.1% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by sixteen to 689 rigs this past week, which was also 257 more rigs than the pandemic hit 432 rigs that were in use as of the April 9th report of 2021, but was still 1,240 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 up by 13 to 546 oil rigs during this week, after rigs targeting oil had increased by 2 during the prior week, and there are now 209 more oil rigs active now than were running a year ago, even as they still amount to just 33.9% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 20.1% from the prepandemic oil rig count….meanwhile, the number of drilling rigs targeting natural gas bearing formations was up by 3 to 141 natural gas rigs, the most since October 11th, 2019, and up by 48 natural gas rigs from the 93 natural gas rigs that were drilling during the same week a year ago, even as they were still only 8.8% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition to rigs targeting oil and gas, Baker Hughes continues to show two active "miscellaneous" rigs; one is a rig drilling vertically for a well or wells intended to store CO2 emissions in Mercer county North Dakota, and the other is also a vertical rig, drilling 5,000 to 10,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track...

The offshore rig count in the Gulf of Mexico was down by two to twelve offshore rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana waters....that's still one more than the eleven offshore rigs that were active in the Gulf a year ago, when ten Gulf rigs were drilling for oil offshore from Louisiana and one was 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 2 water based rigs drilling inland again this week; one is a directional rig drilling for oil at a depth of over 15,000 feet in the Galveston Bay area, while the other 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 of a year ago, there were no inland waters rigs deployed..

The count of active horizontal drilling rigs was up by 18 to 631 horizontal rigs this week, which was also 237 more rigs than the 394 horizontal rigs that were in use in the US on April 1st of last year, but still 54.1% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014....in addition, the vertical rig count was up by one to 26 vertical rigs this week, and those were also up by 6 from the 20 vertical rigs that were operating during the same week a year ago…on the other hand, the directional rig count was down by three to 32 directional rigs this week, while those were still up by 14 from the 18 directional rig that were in use on April 1st 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 April 8th, the second column shows the change in the number of working rigs between last week’s count (April 1st) and this week’s ( April 8th) count, the third column shows last week’s April 1st 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 9th of April, 2021...

With this week's rig increase again concentrated in Texas and in the Permian basin, we'll start by checking the Rigs by State file at Baker Hughes for the Texas changes in the Permian basin...there we find that seven rigs were added in Texas Oil District 8, which encompasses the core Permian Delaware, and that two more rigs started drilling in Texas Oil District 7C, which includes those Texas counties in the southern part of the Permian Midland, at the same time, thus accounting for the nine rig increase in the Permian basin nationally... Elsewhere in Texas, we find that a rig was pulled out of Texas Oil District 1, but that 2 rigs were added in Texas Oil District 2, one of which would have accounted for the net increase of one oil rig in the Eagle Ford shale...Texas also saw two rigs added in Texas Oil District 6, one of which could have been the natural gas rig addition in the Haynesville shale, even as the Haynesville shale area of Louisiana also saw a rig increase...the Texas rig count was reduced by one by the removal of an oil rig from the state's offshore waters, while Louisiana's rig count netted no change, as it also saw the removal of an oil rig from the offshore waters of that state at the same time

other rig changes around the country include the addition of an oil rig to the Williston basin in North Dakota, the addition of an oil rig in the DJ Niobrara chalk of Colorado, the addition of a rig in Oklahoma in a basin that Baker Hughes doesn't track, and the addition of an oil rig in Wyoming, also in a basin that Baker Hughes doesn't track...for rigs targeting natural gas formations, there was the previously mentioned addition in the Haynesville shale, the addition of a natural gas rig in Ohio's Utica shale, and the addition of a natural gas rig in a basin that Baker Hughes doesn't track, which could have been in any of those spots we had not otherwise accounted for...

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Shale Academy keeps adding services - The Utica Shale Academy continues to expand its services, making agreements with other entities to continue training people in the area for more of the jobs available. The school will have a NC3 National Signing Day celebratory event on April 14 for those students preparing to sign up for continuing training or a career. The event is just one of the ways the USA is looking to get their students not just to recover credits and graduate, but to go forward with a career or more training in the future.The USA recently announced an agreement with Youngstown State University, which will allow students attending classes at the Utica Shale Academy to take utilize the YSU Skills Accelerator. The computer based program will allow students to learn new skills such as the masters program in 3-D printing. Additionally, Watson announced the school is working on an agreement with the Columbiana County Jail, where those inmates 22 and older, who have no high school diploma or GED can earn some credits through the USA. Additionally, Watson said they will be looking at providing industry credentials in welding, practicing with the virtual welders. Other programs are being considered. Sign ups will begin in mid-May for the program. Following their release, the students could continue learning and earning credits and skills by attending some evening programming through the USA and the YSU Skills Accelerator program without having to travel to the actual school. The USA is preparing to build an indoor and outdoor welding lab, as well as a facility to store heavy equipment, like the fork lift recently donated to the school by Energy Harbor. The 4-wheel drive machine is capable of lifting 18,000 pounds. Instructors at the USA are already trained in operation and teaching the equipment, Watson said, they only needed the equipment.In preparation of building the welding labs, Watson asked the board to approve having an architectural firm make drawings of what they want to do with an agreed timeline of when it will be completed.Additionally, Watson said they recently learned it was going to cost $175,000 to run a natural gas line to the new facility. He told the board they are looking instead for a natural gas tank and a supplier.In another partnership, Watson said the school recently gave its first class at the Sustainable Opportunity Development Center in Salem in AC/DC Electric with plans to offer the class again this summer.In other matters:

• — The board approved a five-year renewal of the virtual learning agreement with Jefferson County Educational Service Center to continue providing computer graded courses for the USA’s general curriculum.
• — The board approved the new calendar for the 2022-2023 school year, which will more closely align with Southern Local’s calendar. Watson said that will help the school with transportation and cafeteria options for students.

Disposal wells topic of meeting - Marietta Times -A Veto resident talked to the Washington County Board of Commissioners about an upcoming public meeting regarding disposal wells during its Thursday meeting.The meeting is scheduled for 6 to 8 p.m. March 24 at the McDonough Auditorium at Marietta College. The public will be able to comment on applications for proposed disposal wells.Bob Lane said disposal wells are a major concern. He and Bob Wilson have about 40 wells in the Constitution area that are being flooded by these disposal wells.American Geosciences notes disposal wells are used to dispose of wastewater from the oil and gas industry, including produced waters extracted with the oil and gas and flowback waters that return to the surface after hydraulic fracturing. Lane said he and Wilson together are losing about $1,000 a day on these wells.

Utica Shale in southern Ohio is a key part of Encino Energy's operations - – The Utica Shale is proving to be more productive, with oil and natural gas wells exceeding the expectations of Encino Energy Partners. The Houston company claimed a stake in the Utica Shale in eastern Ohio with a $2 billion acquisition of Chesapeake Energy's operations here. Encino partnered with the Canada Pension Plan in 2018 to buy Chesapeake's holdings. Since making the move, Encino has drilled about 150 new wells, giving it roughly 1,000 oil and gas wells in the formation, which extends from Stark and Columbiana counties south to the Ohio River and into Pennsylvania and West Virginia. The wells have performed great and been productive, said Hardy Murchison, co-founder, president and chief executive officer of Encino Acquisition Partners. "We've been able to take something we believed would be good and make it better," Utica operations in Ohio are the most important part of Encino's business, Murchison said. The company has taken a deliberate approach to its development in the Utica Shale. It initially operated a pair of drilling rigs, but added a third. The goal has been to maintain steady growth as it navigates the oil industry's traditional boom or bust business environment. Encino operates much like a general contractor on a construction project. The company supports thousands of jobs because it works with dozens of businesses that provide a variety of services needed for drilling, Murchison said. Wells operated by Encino continue to extract more natural gas than oil, with about 70% of the product as dry gas. One factor is that oil molecules are larger and more challenging to extract from shale. Improved processes could lead to increased oil production in the future, he said. Most of the Utica drilling has been in southeast counties where gas is usually found. Murchison said oil is likely to be found in the northern and western parts of the formation. Oil produced by Encinio's Utica wells usually stays in the region, Murchison said. It's sold to refineries in Ohio, including Marathon Petroleum Co.'s facility in Canton, and processed as gasoline. Roughly half of the natural gas produced in the Utica is shipped to the Gulf Coast, and much of that is shipped to customers in Europe. The rest is used locally at gas-powered electric plants or shipped to Canada, Murchison said. Encino plans to maintain its methodical approach to developing its Utica Shale holdings. There is safety in taking things slowly, Murchison said. Fewer mistakes are made and problems can be avoided. The steady drilling allows Encino to recycle about 80% of the water used to fracture wells. The company has reduced the amount of water it has to source, as well as the amount disposed of after drilling, Murchison said.

Q&A: Federal pipeline regulator fines Energy Transfer $40M, blamed “corporate culture” for large spill into Ohio wetland - The Allegheny Front - The Federal Energy Regulatory Commission issued a $40 million fine to Texas-based energy transfer for a drilling mud spill in the eastern part of the state in 2017. The spill was connected to the company’s Rover pipeline, which carries natural gas liquids from Pennsylvania and Ohio to Canada.According to FERC, the spill revealed a “corporate culture that favored speed” over compliance. New details about the spill were first reported by Mike Soraghan of E&E News. He joined Reid Frazier of The Allegheny Front to talk about it.

• Tell us about the spill and what caused it.
• Mike Soraghan: The spill was a couple million gallons of this thick stuff called drilling mud. On its own, it’s not toxic in and of itself. But the crew had been adding diesel fuel, which is kind of a cheat when they’re drilling to ease things. The drill bit, when things are stuck, it’s maybe like pouring a little WD 40 in there. But diesel fuel is toxic. It presents a problem. You’re just not supposed to put diesel fuel in the stuff you’re pumping underground.When you’re drilling under a river or when you’re drilling a pipeline, you use drilling mud and it is supposed to return back out of the hole you’re drilling. And in this case, it was not circulating back out, which means it’s going somewhere. It’s called an ‘inadvertent return’ or a ‘frack out.’You’re not supposed to ignore it and let it go for a month, and you’re not supposed to put diesel fuel in it. It either stays in the ground where it can contaminate groundwater and turn it brown or it spurts out somewhere. [FERC’s] allegation is that this crew was just kind of being inattentive and using a cheat. They were not getting returns, which means it was not coming back [out of the well bore] for a month. We don’t really know where it was going.When someone finally found it, they had a third-party expert come in and estimated that it had been pumping out of the ground, spurting out of the ground in that location for three or four days.

24 New Shale Well Permits Issued for PA-OH-WV Mar 28-Apr 3 | Marcellus Drilling News - Last week Pennsylvania issued 14 new shale well permits, with EQT Corp. grabbing eight (seven of them on a single pad in Fayette County), and Coterra Energy (formerly Cabot Oil & Gas) receiving three (all on the same pad in Susquehanna County). Ohio issued ten new permits last week, with three going to a relative newcomer, Utica Resource Operating (same pad in Guernsey Count) and three for Encino Energy (same pad in Harrison County). West Virginia got skunked and shows no new shale permits issued last week. Pity.Ascent Resources, Beech Resources, Bradford County, Cabot Oil & Gas, Carroll County, Encino Energy, Energy Companies, EQT Corp, Fayette County, Guernsey County, Harrison County, INR, Jefferson County (OH), Lycoming County, Ohio, Pennsylvania, Seneca Resources,Southwestern Energy, Susquehanna County, Tioga County (PA), Utica Resource Operating,Washington County, Weekly Permits

Sleazy Congressional Democrats Target O&G Stock Buybacks, Dividends | Marcellus Drilling News - For years (more than a decade) we’ve heard the left criticize shale companies as a “Ponzi scheme” that’s not profitable–drilling new wells to make up for declining production in old wells–all the while bilking investors. People like Ian Urbina of the New York Times tried to paint shale companies as fraudsters, going back more than ten years (see Ian Urbina/NYT Continue Journalistic Malpractice Against the Natural Gas Industry – This Time it’s Fracking). The share price of publicly traded stocks for shale companies fell, in some cases losing more than 90% in value. Now that shale drillers–both oil and natural gas–refuse to drill more so they can clear their debt and return to a more healthy status, the left is not happy again! The left isn’t happy when shale finances are bad, and they *really* aren’t happy when shale finances are good. The latest sleazeball tactic by the left (i.e. Congressional Democrats) is to hold sham hearings in the D.C. swamp to accuse shale drillers of hoarding money, using it for stock buybacks and dividend payments to investors. Well duh! That’s what they’re supposed to do!!

Marcellus & Utica Drillers Meet with European Officials re More LNG Exports | Marcellus Drilling News --According to Reuters, at least a dozen U.S. shale gas executives met yesterday in Houston, TX, with European energy officials to discuss expanding U.S. fuel supplies to Europe. Among those in the meeting were “top executives” from Chesapeake Energy, Coterra Energy (formerly Cabot Oil & Gas), and EQT Corp., the largest natural gas producer in the U.S. Individual meetings are planned between the execs and representatives from Latvia, Estonia, and Slovakia. It seems that Europe has finally opened its eyes (and its mind) to the benefits of American natural gas.

Why Pennsylvania natural gas might not be poised to come to Europe's rescue -Europe is clamoring to buy more American natural gas in response to the Russian invasion of Ukraine. As the nation’s second-largest producer of natural gas, Pennsylvania stands to gain, right? Not necessarily. Some oil and gas industry experts say that Pennsylvania, even though it is a major producer in the Marcellus and Utica Shale formations, is not well-positioned to feed gas production into export markets to satisfy demand from Europe. “There has been solid pull for U.S. natural gas exports,” said Dean Foreman, the chief economist of the American Petroleum Institute. “But by and large, producers across Appalachia -- Pennsylvania, Ohio, West Virginia -- do not have a large amount of access to selling their product to international markets.” Foreman says pipeline capacity is constrained between Appalachian gas production areas and the giant Gulf Coast facilities that produce liquefied natural gas (LNG) for export by ships. The result is that gas production is expected to be static or to fall slightly this year in Appalachia, but production is booming in the Haynesville area of Louisiana and East Texas even though gas is more expensive to extract there than in the Marcellus. Its advantage: more pipelines to the Gulf. The East Coast has only one large LNG production plant for export, the Cove Point LNG in Lusby, Md., which was built in 1978 to import gas when U.S. production was in decline. The plant reopened as an export facility in 2016 after Dominion Energy invested $3.8 billion to install cryogenic equipment needed to chill natural gas to minus-260 degrees, at which point it turns into liquid. The plant can liquefy up to 770 million cubic feet of gas a day. Other proposals to build East Coast liquefaction terminals have aroused strong objections from climate advocates, who view LNG as a long-term avenue for expanding greenhouse gas emissions. Gas industry advocates argue that LNG burns cleaner than the carbon-intensive fuels it displaces, like coal and diesel.

Appalachian Natural Gas Output Growth Said Threatened by Long-term 'Uncertainties' - Higher natural gas prices were a positive for natural gas producers in the Appalachian Basin in 2021, but ongoing “uncertainties” threaten the industry’s long-term growth prospects. “These include a number of challenges at the federal level being pushed by the Biden administration and some members of Congress, such as a punitive methane tax, and statewide issues such as Gov. Tom Wolf’s continued efforts to join the Regional Greenhouse Gas Initiative and a pair of rulemaking petitions by activist groups seeking to greatly increase the cost of well bonding,” President Daniel J. Weaver of the Pennsylvania Independent Oil and Gas Association (PIOGA) told NGI.Last year Wolf joined fellow governors in New Jersey and New York to support a permanent ban on hydraulic fracturing in the Delaware River Basin.Weaver also said PIOGA is concerned about state and federal rulemakings to control volatile organic compounds and methane emissions, along with “continued opposition to pipeline expansion projects that limit our region’s ability to deliver natural gas to markets where it is needed.” Infrastructure challenges are creating problems across the domestic natural gas market, according to Marcellus Shale Coalition (MSC) President Dave Callahan. In one case, an expansion of Energy Transfer LP’s Mariner East natural gas liquids pipeline system has faced various regulatory, legal, and construction setbacks. Outside of Pennsylvania, the Equitrans Midstream Partners LP-led Mountain Valley Pipeline (MVP) and MVP Southgate gas pipeline projects have encountered challenges as well.“Americans are facing their own reliability and affordability issues because we lack infrastructure to deliver these resources to where they’re needed and when they are needed,” Callahan said. “For example, Appalachian producers and leaseholders received nearly 25% less for their natural gas in 2021” against leading national index prices versus leading national index prices such as the New York Mercantile Exchange. He said the disparity “results in less investment to Pennsylvania and fewer royalty dollars for leaseholders.”He observed that a dearth of pipeline infrastructure into the New York City region and across New England is costing gas consumers in those markets. New York City plans to ban new gas hookups in certain buildings starting in late 2023.“As energy production and consumption evolves, smart policies that recognize the fundamental, basic human need for clean, reliable, affordable energy can divert disruptive price spikes and reliability challenges,” said Callahan.

Analysts forecast rise in oil and gas impact fees after prices rose in 2021 - Analysts expect oil and gas impact fees in Pennsylvania will rebound for 2021 after hitting a low point in 2020. The state’s Independent Fiscal Office expects drillers to pay about $234 million dollars in impact fees for 2021, nearly $90 million more than 2020. If that figure is correct, it will be one of the highest payouts since the fee started a decade ago. That’s mainly due to the increase in natural gas prices. The IFO says the average price of natural gas on the New York Mercantile Exchange in 2021 was $3.84 per million metric British thermal units (MMBtu). Because the price was between $3-$5, the impact fee schedule increased by $10,000 per horizontal well compared to 2020 levels The U.S. Energy Information Administration says gas prices rose from February to October last year, after falling in 2020 because of pandemic-related shutdowns. They’re expected to stay close to $4 per MMBtu this year. The EIA uses the U.S. benchmark Henry Hub in Louisiana to project prices. The impact fee was designed to benefit the communities where drilling happens. Payments are due in April. Under the fee structure, drillers pay for each operating well, not the amount of gas produced. The payment varies based on the price of gas and age of the well. Chair of the Washington County Board of Commissioners Diana Irey Vaughan said counties like hers have come to rely on the impact fee. “We have a low debt service in the county and we haven’t raised taxes in 12 years, so we’re very grateful to have this revenue stream and very grateful to see that it’s starting to return,” Vaughan said, adding the new money could help pay for a proposed public safety communication system in the county. The IFO estimates the effective tax rate of the impact fee for wells in operation to be 1.3% for 2021, the lowest on record. Pennsylvania is the only major gas-producing state without a severance tax, which would charge producers based on the amount of gas they take out of the ground. Gov. Tom Wolf has repeatedly proposed adding one on top of the impact fee, but the requests haven’t gained traction in the Republican-controlled legislature.

New hope to jump-start the clean up of Pennsylvania's abandoned oil and gas wells -Don Cornell stood in a foot and a half of snow last week in Cornplanter State Forest and pointed through the trees at an old pump jack – the classic see-saw structure used to draw oil out of an underground well. “You can see the jack is rusted apart,” said Cornell, an oil and gas inspector for Pennsylvania’s Department of Environmental Protection. He noted several metal supports that are succumbing to the ravages of time. A two-inch-wide pipe the jack is resting on has started to sag to one side; the whole structure looks like it could fall over. “Over in the next couple of years, that’s going to break apart,” he said. “Things are going to fall down…and this is going to go up in price a lot to take care of this problem.”This oil well in Cornplanter State Forest in Forest County was drilled in the 1970s, state records show but was abandoned decades ago when the company that owned it went bankrupt. That means it’s now Cornell’s problem. Companies are supposed to plug wells when they stop producing. But historically, many companies have walked away when they dissolve or go bankrupt, and the state has had few tools to stop them. Now, the wells are basically open holes in the ground – and pose a number of problems. They can leak gas into people’s homes that can lead to explosions. They can pollute surrounding groundwater. And they can leak stray oil, brine or methane, a greenhouse gas that is 72 times as potent as carbon dioxide at trapping heat over a 20-year period. The EPA estimates the nation’s 2 million abandoned wells are the No. 10 source of methane, after sources like agriculture, oil and gas drilling, and landfills. President Biden’s bipartisan infrastructure law includes $4.7 billion dollars for plugging wells – basically, sealing them with cement. Pennsylvania is slated to get $330 million of that money over the next decade.

NY Democrats have done more than their share of harm to our state's energy industry -President Joe Biden’s war on fossil fuel left America dangerously unprepared for crises like Russia’s invasion of Ukraine, but New York leaders have done more than their part to worsen the problem. Now Gov. Kathy Hochul hopes to deliver still more pain. Start with New York’s ban on fracking, a perfectly safe method for extracting natural gas and oil from shale that accounts for more than half of US oil production and two-thirds of natural-gas output. Brookings Institution researchers estimate that, by 2040, natural gas costs would be 70% higher absent fracking, but that in reality, it will boost gross domestic product 0.9%.New York is one of the few states to have recklessly banned the process — though the Marcellus Shale holds at least 13 trillion cubic feet of gas, and the Utica Shale another motherlode. That’s not only deprived New Yorkers, and Americans generally, of a valuable source of energy; it’s also dealt a blow to the state’s economy, especially the Southern Tier region, where much of the gas sits waiting to be tapped. Meanwhile, across the border, Pennsylvania has enjoyed fracking’s fruits for years: Oil and gas there support more than 500,000 jobs, and the industry contributes $78 billion to the economy, the American Petroleum Institute reports.New York has also nixed natural-gas pipelines, even as the state imports nearly all the gas it consumes. Per the US Energy Information Administration, 60% of New York households heat with natural gas; 40% of electricity comes from gas-fired power plants.More: Then-Gov. Andrew Cuomo forced the closure of the Indian Point nuclear plant (which produced the most climate-friendly electricity known to man). He also pushed through laws that set wholly out-of-touch goals for the state: By 2030, 70% of its juice must come from renewables; by 2040, 100%.It won’t happen: Renewables now account for less than 10 percent of New York’s energy output; expanding that eight-fold in the next eight years, or 11-fold in 18, is utterly impossible. But chasing that vision is driving terrible policy.

D.C. Circuit drama hits FERC, Mountain Valley pipeline - A federal appeals court yesterday sharply scrutinized energy regulators’ handling of the Mountain Valley pipeline, as questions swirl about the fate of the embattled natural gas project. During oral argument, judges of the U.S. Court of Appeals for the District of Columbia Circuit pressed the Federal Energy Regulatory Commission on its two-year extension of the project’s certificate, asking why the agency had not done more to review the “profoundly changed circumstances” of the pipeline’s environmental impact after construction caused additional sediment to settle in waterways along the project’s route. Both Mountain Valley and FERC blamed abnormally high rainfall in 2018 for the increased sediment.“When the commission says that this terrible environmental problem was the result of something, does it have an obligation before it makes that statement to do a causal analysis?” asked Judge Patricia Millett. The D.C. Circuit case is another hurdle for the pipeline developer, which has faced lengthy project delays and a string of legal challenges to its project. Mountain Valley is designed to carry natural gas 304 miles between West Virginia and Virginia. Millett and Chief Judge Sri Srinivasan asked why FERC had not drafted a supplemental environmental impact statement after both states issued consent orders for stronger erosion protections after Mountain Valley developers violated local water quality standards. “Is there a principle that if other entities find significant changed circumstances and they impose their own ways to respond, does that absolve FERC from responding?” asked Millett, an Obama appointee. Srinivasan, another Obama pick, noted that FERC’s response to the state water quality violations seemed to be that the “system was working” when the states had been the ones to implement stricter requirements to prevent erosion. Environmental groups led by the Sierra Club are challenging FERC’s decision in 2020 to extend its certificate authorizing project construction until October after Mountain Valley developers had to push back the project’s planned in-service date. An attorney for the pipeline assured the D.C. Circuit that Mountain Valley’s developers planned to move forward with the project, which he said was 94 percent finished.In contrast to FERC’s rosy predictions, pipeline construction has resulted in “widespread erosion” that led to some water bodies being buried in mud in violation of state water quality standards, said Benjamin Luckett, an attorney for Appalachian Mountain Advocates, who represented the environmental challengers. ‘

US will require valves on new pipelines to stop disasters — US officials, on Thursday, adopted a rule aimed at reducing deaths and environmental damage from oil and gas pipeline ruptures — a long-delayed response to fatal explosions and massive spills that have occurred over decades in California, Michigan, New Jersey and other states. But safety advocates said the move by the US Transportation Department would not have averted the accidents that prompted the new rule. That’s because it applies only to newly constructed or replaced pipelines — and not to hundreds of thousands of miles of lines that already crisscross the country, many of them decades old and corroding. The rule requires companies to install emergency valves that can quickly shut off the flow of oil, natural gas or other hazardous fuels when pipelines rupture. It came in response to a massive gas explosion in San Bruno that killed eight people in 2010, and to large oil spills into Michigan’s Kalamazoo River and Montana’s Yellowstone River and other spills. The National Transportation Safety Board since the 1990s has recommended the use of automatic or remote controlled valves on large pipelines — whether they are existing or new — to reduce the severity of accidents. Following a 1994 gas pipeline explosion and fire that destroyed eight buildings in Edison, Jersey, the safety board urged the Transportation Department to expedite requirements for shut-off valves in cities and natural areas. But pipeline companies for years resisted new valve requirements because of the expense of installing them and concerns they could close accidentally and shut off fuel supplies. Transportation Secretary Pete Buttigieg said the more stringent regulations for the industry were needed because too many people have been harmed by pipeline failures. He said installation of the valves would also protect against large releases of methane, a highly potent greenhouse gas blamed for helping drive climate change.

EIA Says U.S. Needs More Natural Gas Pipes to Boost Output, Stabilize Prices - If U.S. natural gas infrastructure is not expanded to meet growing demand, prices would escalate and more electricity generation is likely from renewables, coal and nuclear sources over the next three decades, according to federal researchers. In the U.S. Energy Information (EIA) Annual Energy Outlook 2022 (AEO2022) issued in March, the reference case – the baseline scenario – forecast strong renewables growth to 2050. However, researchers said natural gas and petroleum were expected to supply most domestic demand over the next three decades. However, the baseline scenario is forecasting more natural gas infrastructure to be built in the coming years. If the infrastructure is not built out, however, there would be few options for generators except for using renewables, coal and nuclear, according to EIA. “We project that restricting interstate U.S. natural gas pipeline capacity would only slightly lower energy-related carbon dioxide (CO2) emissions in the United States relative to the Reference case,” EIA researchers led by Stephen York said. “Total CO2 from all fuel sources in 2050 are 4% lower in the No Interstate Natural Gas Pipeline Builds case than in the Reference case. The relatively small effect on CO2 emissions, despite the decline in natural gas consumption and growth in electric power generation from renewable sources, is due to our forecast of increased coal-fired power generation, which would be more carbon intensive than the natural gas-fired generation it displaces.” The updated note came on the heels of a decision by FERC to increase scrutiny on gas pipeline and liquefied natural gas proposals to ensure they pass muster in the courts.The policies are in flux, following stiff opposition. However, Federal Energy Regulatory Commission Chairman Richard Glick has noted that even after green lighting gas projects, they remain tied up in litigation because the Commission failed to include greenhouse gas emissions data, among other things.

New study: What if there weren't any long distance natural gas pipelines built in U.S.? -- What if there were no more long distance natural gas pipelines built in the United States?What might sound like an unlikely scenario is the subject of a new study by the Department of Energy, which studied what would happen to natural gas demand if no more interstate pipelines were built. In such a scenario, they predict gas demand would be 4 percent less than under normal conditions and prices would be 11 percent higher."Restricting U.S. interstate pipeline builds in our projection results in 7.4 billion cubic feet per day less interregional capacity in 2050," the report reads. "For example, (that restriction) limits the amount of natural gas that can flow from the Appalachia production region to demand areas such as the Midwest."The study comes as the Biden administration has expressed skepticism about the future of natural gas in the United States, promoting policies to get the United States off electricity generated from fossil fuels as quickly as possible in favor of wind and solar energy.In February the Federal Energy Regulatory Commission ordered pipeline developers to provide detail on the greenhouse gas emissions their projects will generate - though later adjusted the order as a draft policy and said it would not apply to projects already under review at FERC.Litigation from environmental groups has already made new pipeline construction a hard sell, with a number of companies canceling projects over the past year, citing rising legal costs.Complicating Biden's clean energy plans are rising energy prices driven by the Russian invasion of Ukraine and booming economic activity as Covid-19 seemingly wanes. Last month Biden committed to expanding U.S. LNG exports to Europe, to aid allies there.But the administration remains committed to getting the nation on the path to net zero emissions by mid century, in lines with other global powers.Hardest hit by an end to interstate pipeline construction would be the electricity sector. The Energy Department forecasts that 11 percent less gas-fired power plants than under normal conditions. That would help renewables to become the largest source of generation, with 4 percent more wind and solar than would be built otherwise. Also, coal generation would be 9 percent higher and nuclear generation 5 percent higher, according to the Energy department.

Fed report: Stopping natural gas pipelines yields tiny carbon cut --U.S. greenhouse gases from the energy sector would drop by less than 1% by 2050 if the nation stops building interstate gas pipelines, according to the U.S. Energy Information Administration. While carbon emissions from natural gas would decrease 4.4%, total emissions would go down by only 0.7% as energy producers burned more coal to offset reduced natural gas supplies, according to a new EIA analysis. “The relatively small effect on CO2 emissions ... is due to our forecast of increased coal-fired power generation, which would be more carbon intensive than the natural gas-fired generation it displaces,” the EIA posted on its website Monday. The EIA, a federal agency, reported in March that based on current laws, and economic and demographic trends U.S. natural gas production will grow by almost 24% by 2050. The agency, however, noted that the Federal Energy Regulatory Commission announced in March that it will consider climate change in approving future interstate pipelines. Interstate natural gas pipeline capacity grew considerably between 1990 and 2020, but several large lines have been canceled in recent years following legal and public opposition, according to the EIA. If the U.S. adopts a permanent moratorium on new pipelines beginning in 2024, natural gas spot prices will be 11% higher in 2050 than the baseline forecast, the EIA estimated. Natural gas is a key ingredient in manufacturing nitrogen fertilizer. Fertilizer prices spiked in late 2021 alongside rising natural gas prices, according to the USDA Economic Research Service. The cost of ammonia more than doubled between 2000 and 2006 as the price of natural gas trended upward, according to the USDA. Under a moratorium, natural gas production would decline 4.6% by 2050, and consumption would fall 4.3% as more electricity was generated by renewable resources, nuclear plants and coal, the EIA projected. Greenhouse gases from energy-related fuel sources would fall by 34 million metric tons, the EIA estimated. The reduction would equal about one-third of Washington’s carbon output. Under current laws and trends, natural gas production in the U.S. will exceed domestic demand by 25% by 2050, the EIA projects. Much of the excess production probably would be exported as liquified natural gas, the agency reported.

U.S. Gas Production Set To Fall On Lack Of Pipelines -U.S. natural gas production will decline by 5 percent by 2050, and consumption will shed 4 percent if no new interstate pipelines are built, the Energy Information Administration said in its latest Annual Energy Outlook. This, in turn, will lead to higher gas prices, the authority also said, and this will, in turn, lead to higher electricity prices.“The higher natural gas prices that result from capacity constraints primarily affect natural gas consumption in the U.S. electric power sector, which is more price-sensitive than the residential, commercial, and industrial sectors,” the EIAexplained.The share of natural gas in power generation is set to decline in the scenario of no new interstate natural gas pipelines but not by much. According to the EIA, in that scenario, the share of gas in 2050 will constitute 31 percent of the total, compared with 34 percent under the agency’s reference scenario.Yet, in absolute terms, the lack of new interstate gas pipelines will reduce gas-fired power generation by 11 percent in 2050 compared to the reference scenario.At the same time, any bans on new interstate pipelines—a prerogative of the federal government—will not lead to any significant carbon dioxide emission declines.“We project that restricting interstate U.S. natural gas pipeline capacity would only slightly lower energy-related carbon dioxide (CO2) emissions in the United States relative to the Reference case,” the EIA wrote. “Total CO2 from all fuel sources in 2050 are 4% lower in the No Interstate Natural Gas Pipeline Builds case than in the Reference case.”

U.S. Natural Gas Will Be The First Energy Crisis Signal - Oil markets got hit by a slew of bearish events last week: Shanghai COVID lockdown and a record-setting SPR release of ~180 million bbls from the US. But the oil market's cousin, natural gas, won't be so easily tamed this year as there is no strategic petroleum reserve. Natural gas is an interesting commodity because unlike oil, where countries hold an ample amount of reserve, natural gas is highly susceptible to boom and bust periods. Because it's one of the few commodities that exhibit pure supply and demand dynamics at play in real time, the only way for supply and demand to change rapidly is for the market to force it (e.g. price increase or decrease). In this case, natural gas is going to be the first energy crisis signal. As we wrote last week in our NGF, natural gas prices by this summer are in for a rude awakening. Global natural gas storages are low with Europe unlikely to get the adequate amount of gas it needs for this upcoming winter. If the summer proves to be warmer than normal, then demand for LNG cargoes will dramatically increase. US LNG exports are largely fixed, but a small portion of LNG exports are influenced by the marginal cargo. As a result, given the low levels of storage in the US and the marginal pricing from global LNG prices, US gas prices are likely to go even higher than we expect. For US refineries, this is going to be somewhat of a headache as this increases the cost of operation. It's a good thing then that refining margins are at record highs. Nonetheless, we see a scenario where US gas prices go to $8 or even $10/MMBtu. This is because the market is going to be forward looking and with EOS expected at just ~3.3 Tcf, the market is going to wonder how we are going to fill storage during winter. Now again, a large part of the price trajectory is going to be dependent on where Lower 48 gas production is headed. We saw a small increase in production over the weekend back to ~95 Bcf/d, but this is still well below the 97-98 Bcf/d needed to balance this market. We think given both the labor and supply shortages we are hearing about in the US shale patch, the supply increases this year will likely be disappointing. If so, natural gas will be the first energy crisis signal.

UPDATE 1-U.S. natgas holds near 9-wk high on forecasts for more demand (Reuters) - U.S. natural gas futures held near a nine-week high on Monday as forecasts for milder weather over the next two weeks offset early expectations for more demand during that time. Traders noted U.S. gas prices failed to hold gains from earlier in the day when the market climbed with oil and other energy futures. Front-month gas futures fell 0.8 cents, or 0.1%, to settle at $5.712 per million British thermal units (mmBtu). On Friday, the contract closed at its highest since Jan. 27 for a third day in a row. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose from 93.7 billion cubic feet per day (bcfd) in March to 94.8 bcfd so far in April as more wells returned to service after freezing over the winter. That compares with a monthly record of 96.3 bcfd in December. Refinitiv projected average U.S. gas demand, including exports, would drop from 98.5 bcfd this week to 93.3 bcfd next week as the weather turns seasonally milder. Those forecasts were higher than Refinitiv's outlook on Friday. The amount of gas flowing to U.S. LNG export plants slipped from a record 12.9 bcfd in March to 12.8 bcfd so far in April. The United States can turn about 13.2 bcfd of gas into LNG. The U.S. gas market remains mostly shielded from higher global prices because the United States, as the world's top gas producer, has all the fuel it needs for domestic use and capacity constraints limit its ability to export more LNG no matter how high global prices rise. European gas slipped about 4% on Monday to around $35 per mmBtu on oversupply concerns. So far this year, the U.S. gas market has followed European prices less than half the time. Since the United States will not be able to produce more LNG soon, the country has worked with allies to divert more LNG exports to Europe to help European Union (EU) countries and others break their dependence on Russian gas. Russia, the world's second biggest gas producer, provided about 30%-40% of Europe's gas in 2021, totaling about 18.3 bcfd. The European Union wants to cut Russian gas imports by two-thirds by the end of 2022 and refill stockpiles to 90% of capacity by Nov. 1. Gas stockpiles in Western Europe (Belgium, France, Germany and the Netherlands) were about 33% below the five-year (2017-2021) average for this time of year, according to Refinitiv. That is about 22% of full capacity and compares with inventories about 15% below the five-year normal in the United States.

U.S. natural gas up 6% on output decline, cooler forecasts (Reuters) - U.S. natural gas futures jumped about 6% to a nine-week peak on Tuesday on a preliminary drop in U.S. output, cooler forecasts and the possibility that additional sanctions on Russian gas supplies will keep U.S. liquefied natural gas (LNG) exports near record highs for months to come. U.S. gas futures have climbed in recent months - average prices in March hit their highest levels in eight years - while global gas prices and demand for LNG soared as several countries seek to wean themselves off Russian gas after Moscow invaded Ukraine on Feb. 24. Russia calls its actions in Ukraine a "special military operation" to disarm its neighbor. Front-month gas futures rose 32.0 cents, or 5.6%, to settle at $6.032 per million British thermal units (mmBtu), their highest close since Jan. 27. Record U.S. LNG demand has kept the front-month in technically overbought territory with a relative strength index (RSI) over 70 for a fifth day in a row for the first time since September 2021, and caused the 12-month futures strip to rise to its highest since February 2010 for a third day in a row. Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 94.6 billion cubic feet per day (bcfd) so far in April, from 93.7 bcfd in March. That compares with a monthly record of 96.3 bcfd in December. On a daily basis, however, output was on track to drop about 1.4 bcfd to 93.5 bcfd on Tuesday due mostly to declines in Texas, according to preliminary Refinitiv data. If that drop is correct - preliminary data is often revised - it would be the biggest one-day decline since extreme cold in early February froze wells. Cold was definitely not the problem on Tuesday. AccuWeather forecast high temperatures in the West Texas Permian shale basin will reach 90 degrees Fahrenheit (32.2 Celsius), about 10 degrees above normal for this time of year. Refinitiv projected average U.S. gas demand, including exports, would drop from 97.4 bcfd this week to 92.7 bcfd next week as the weather turns seasonally milder. Those forecasts were lower than Refinitiv's outlook on Monday. The amount of gas flowing to U.S. LNG export plants has slipped from a record 12.9 bcfd in March to 12.5 bcfd so far in April due to declines at Cheniere Energy Inc's Corpus Christi facility and Freeport LNG's facility in Texas. The United States can turn about 13.2 bcfd of gas into LNG. Despite the threat of more sanctions on Russia, European gas eased about 2% on Tuesday to around $34 per mmBtu on oversupply concerns.

Natural Gas Futures Rally Ahead of Storage Report as American Model Trends Colder - Bolstered by increased demand expectations from one of the major weather models overnight, natural gas futures were trading higher early Thursday as the market awaited the latest government storage report. The May Nymex contract was up 11.5 cents to $6.144/MMBtu at around 8:45 a.m. ET. Expectations for this morning’s Energy Information Administration (EIA) storage report, scheduled for 10:30 a.m. ET, point to a draw in the upper 20s Bcf for the week ended April 1. A Bloomberg survey of seven analysts showed withdrawal estimates from 17 Bcf to 36 Bcf, with a median draw of 27 Bcf. Reuters polled 15 analysts, whose estimates ranged from withdrawals of 3 Bcf to 44 Bcf, with a median decline of 26 Bcf. A tighter range of projections in a Wall Street Journal poll averaged at a pull of 28 Bcf. A print in line with expectations would be bullish compared to historical norms. Last year, 19 Bcf was injected into storage during the similar week, while the five-year average is a build of 8 Bcf. EBW Analytics Group senior analyst Eli Rubin said predictions ahead of the latest EIA print reflect a “narrow consensus” for a withdrawal of around 26-28 Bcf, potentially increasing the risk of a surprise print from the agency. “The counter-seasonal transition from last report’s injection to today’s draw — added to a wide disparity between pipeline flow and supply/demand models — suggests a surprise is possible in either direction,” Rubin said. Meanwhile, looking at overnight changes in the weather data, the American Global Forecast System (GFS) model advertised a “hefty” 22 heating degree day (HDD) increase, reflecting colder trends over the northern United States, according to NatGasWeather. The European model, by contrast, did not mirror the demand gains seen in its American counterpart, the firm said. “With the GFS adding a decent amount of demand, it’s now colder by nearly 15 HDD compared to the European model, a large enough difference that today’s early morning and midday data will be important to see if the GFS is able to hold the gained demand,” NatGasWeather said. In terms of technicals, bears would need to drop prices below resistance at $5.935 to signal a shift in momentum, according to ICAP Technical Analysis.

US natural gas storage reverses flow as final draw drops stocks below 1.4 Tcf - US natural gas storage flipped back to withdrawal mode in the week ended April 1, widening the deficit and delaying the start to injection season as Henry Hub futures held firmly at over $6/MMBtu. Lingering winter weather in late March prompted a surprisingly large drawdown of 33 Bcf in the week ended April 1, according to the US Energy Information Administration's April 7 report. The withdrawal was larger than the 27 Bcf pull expected from this week's survey of analysts by S&P Global Commodity Insights. The drawdown also stood in stark contrast to the five-year historical record which has averaged an 8 Bcf injection for the week ended April 1. Working gas inventories pulled back 1.382 Tcf during the week, setting a new season-ending low for US storage this year, EIA data showed. As of April 1, inventories stood 399 Bcf, or more than 22%, below the year-ago level of 1.781 Tcf and 285 Bcf, or about 17%, behind the five-year average level at 1.667 Tcf. The NYMEX Henry Hub May contract gained as much as 40 cents in April 7 trading before easing back from its session high to settle at $6.36/MMBtu, S&P Global data showed. The late season drawdown from gas storage underscores the impact of chilly weather this spring which has propped up heating demand and further tightened the US supply balance, raising concern in the gas futures and forwards markets. Over the next 14 days, abnormally cool temperatures are expected to dominate across the US West and the Midcontinent, according to a pair of short-term forecasts published by the US National Weather Service April 7. Cooler temperatures could extend the heating through mid-April – potentially leaving intact, or further expanding, the US storage deficit. For the week currently in progress, S&P Global analysts are now expecting a 28 Bcf injection, followed by another paltry 35 Bcf injection in the week ending April 14. Assuming those predictions are accurate, the US storage deficit would widen by 3 Bcf to an estimated 288 Bcf below average by mid-April As US inventories languish, production is now increasingly central to the US supply-demand story. Over the past month, US gas production has stumbled its way into the second quarter averaging just 93.7 Bcf/d, S&P Global Commodity Insights data shows. After trending at a record-high 95.7 Bcf/d in December, domestic output faced a setback this winter exacerbated by a series of freeze-offs across Texas and the US Midcontinent. While rig numbers, new well drilling and well completions have continued to grow in the major US shale basins this year, production has yet to regain earlier momentum seen in fourth-quarter 2021.

U.S. natgas futures jump to 2008 closing high on soaring LNG exports -(Reuters) - U.S. natural gas futures jumped almost 6% on Thursday to their highest close since December 2008 on record global demand for American liquefied natural gas (LNG) exports. Traders also noted prices gained on a bigger than expected storage draw, a preliminary decline in output and forecasts for more demand in the United States over the next two weeks then previously expected. "All this talk of sending U.S. LNG to supply Europe and get them off Russian gas is causing U.S. gas to be repriced because of what lies ahead for LNG exports," Even though the United States is already exporting all the LNG it can produce, "the reality is U.S. gas is getting a lot of investor interest because it is a commodity that can be stored. So, buy now and avoid the rush." U.S. front-month gas futures rose 33.0 cents, or 5.5%, to settle at $6.359 per million British thermal units (mmBtu), their highest close since December 2008. Those gas futures have already soared about 71% this year with much higher prices in Europe keeping demand for U.S. LNG near record highs as several countries try to wean themselves off Russian gas after Moscow invaded Ukraine on Feb. 24, an action the Kremlin calls a "special military operation." Oddly enough, European gas and global crude futures dipped on Thursday. European gas slid about 3% to around $33 per mmBtu on mild weather and ample LNG imports. Record U.S. LNG demand also boosted the 12-month gas futures strip to its highest since January 2009 and helped keep the U.S. front-month in technically overbought territory with a relative strength index (RSI) over 70 for a seventh day in a row. Despite recent gains, the U.S. gas market remains mostly shielded from much higher global prices because the United States, as the world's top gas producer, has all the fuel it needs for domestic use and capacity constraints limit its ability to export more LNG no matter how high global prices rise. Data provider Refinitiv said the amount of gas flowing to U.S. LNG export plants slid from a record 12.9 billion cubic feet per day (bcfd) in March to 12.4 bcfd so far in April due to declines at the Corpus Christi and Freeport facilities in Texas. The United States can turn about 13.2 bcfd of gas into LNG. Gas stockpiles in Western Europe (Belgium, France, Germany and the Netherlands) were about 34% below the five-year (2017-2021) average for this time of year, according to Refinitiv. That is about 22% of full capacity and compares with inventories about 17% below the five-year normal in the United States.

Opposition grows against Commonwealth LNG facility in Cameron Parish - Amid a flurry of planned liquefied natural gas export facilities in southwest Louisiana, environmentalists and residents are pushing back against one LNG project in Cameron Parish, where the channel meets the Gulf of Mexico. The terminal will ship about 8.4 million metric tons of LNG annually. Construction is slated to begin in 2023 with commercial operations starting in 2026. Residents and environmentalists packed a March 17 public hearing in Cameron Parish about the air permit, which Commonwealth applied for in April 2021. Critics of the project say it will have far-reaching impacts on the area’s ecosystem and will spew pollutants well above the recommended federal levels for maintaining air quality.Commonwealth LNG’s initial estimate for carbon dioxide emissions is more than 3.5 million tons annually, according to its permit application with the Louisiana Department of Environmental Quality. The federal threshold for triggering more stringent reviews — known as a prevention of significant deterioration, or PSD, review — is 75,000 tons annually.As a result, Commonwealth LNG will have to use “best available control technology” to limit emissions. The permit application says Commonwealth LNG will use low carbon fuels, carbon capture and “thermally efficient equipment” to manage the carbon dioxide emissions.

Sempra and partners sign agreement for Cameron LNG phase 2 - Phase 2 of the LNG export project in the US involves the addition of a fourth train with a production capacity of up to 6.75Mtpa as well as ramping up of the production capacity of the three operating LNG trains via debottlenecking activities. Sempra Infrastructure has entered into a heads of agreement (HOA) with affiliates of TotalEnergies, Mitsui & Co., and Japan LNG Investment for developing the Cameron LNG phase 2 export project in Louisiana. A commercial framework has been provided by the preliminary non-binding arrangement for expanding the Cameron LNG facility with a fourth liquefied natural gas (LNG) train. The partners will also aim to ramp up the production capacity of the three operating LNG trains by taking up debottlenecking activities. Located in Hackberry and built with an investment of $10bn, the Cameron LNG export facility achieved full commercial operations in August 2020. Currently, the three liquefaction trains have an estimated export capacity of around 12 million tonnes per annum (Mtpa) or nearly 1.7 billion cubic feet per day of LNG. The fourth train under the proposed phase 2 project will have a maximum production capacity of 6.75Mtpa. The Cameron LNG phase 2 export project is likely to incorporate some design enhancements to make it a more cost-effective and efficient facility, while bringing down the overall emissions of greenhouse gases. Under the HOA, a stake of 50.2% is considered to be allocated to Sempra Infrastructure in the projected fourth train production capacity. The Sempra subsidiary could also get 25% of the projected debottlenecking capacity under tolling agreements, with the remaining capacity to be equally allocated to the existing customers of Cameron LNG phase 1. Sempra Infrastructure said that before taking a final investment decision on phase 2, it intends to sell the LNG corresponding to its capacity under long-term sale and purchase agreements.

LNG services provider Excelerate Energy sets terms for $360 million IPO - Excelerate Energy, which operates LNG storage and regasification infrastructure in emerging markets, announced terms for its IPO on Monday. The Woodlands, TX-based company plans to raise $360 million by offering 16 million shares at a price range of $21 to $24. At the midpoint of the proposed range, Excelerate Energy would command a fully diluted market value of $2.4 billion. The company plans to issue a quarterly dividend. Excelerate Energy is expected to be the first $100+ million US IPO in over two months. Excelerate is focused on providing flexible liquefied natural gas (LNG) solutions to emerging markets in diverse environments across the globe. The company has regional offices in eight countries and operations in the US, Brazil, Argentina, Israel, United Arab Emirates, Pakistan and Bangladesh. It is the largest provider of regasified LNG in Argentina and Bangladesh and one of the largest providers of regasified LNG in Brazil and Pakistan, and it operates the largest floating storage and regasification unit in Brazil. Excelerate Energy was founded in 2003 and booked $889 million in revenue for the 12 months ended December 31, 2021. It plans to list on the NYSE under the symbol EE. Barclays, J.P. Morgan, Morgan Stanley, and Wells Fargo are the joint bookrunners on the deal. It is expected to price during the week of April 11, 2022.

NFE seeks permits to build Fast LNG export facility offshore Louisiana, US --New Fortress Energy is seeking necessary permits and regulatory approvals to build and operate a new offshore LNG liquefaction terminal off the coast of Louisiana, US. The company has simultaneously filed applications with the US Maritime Administration, the US Coast Guard and US Department of Energy, for the project. The new LNG terminal will be built in the US federal waters, nearly 16 miles (26km) off the southeast coast of Grand Isle, Louisiana, and will leverage existing infrastructure. It will have an exporting capacity of around 145 billion cubic feet (bcm) of natural gas per annum, equivalent to around 2.8 million tonnes per annum (Mtpa) of LNG. NFE chairman and CEO Wes Edens said: “This announcement demonstrates the flexibility, efficiency and significance of our innovative Fast LNG solution to bring more affordable, reliable and cleaner fuels to customers around the world. an play a significant role in supporting our nation’s commitment to our European allies and their energy security as well as support our efforts to reduce emissions and energy poverty around the world.” NFE said that it has completed procurement of all the long-lead materials for the facility and the modular assembly of equipment is underway. Its Fast LNG liquefaction design combines the latest advancements in modular, midsize liquefaction technology with jack up rigs or similar offshore infrastructure.

Manchin, Kelly urge Biden to open new Gulf oil leasing - - Democratic Sens. Joe Manchin of West Virginia and Mark Kelly of Arizona are urging the Biden administration to develop a new five-year oil and gas leasing plan in the Gulf of Mexico.In a letter yesterday to President Joe Biden, the lawmakers argued that a new schedule for the sale of federal oil and gas drilling rights in the Gulf would help ease high energy prices.“Increasing domestic oil production to meet demand is a critical step to lowering gas prices and reducing our reliance on foreign sources,” Manchin and Kelly wrote.Tapping the Gulf of Mexico should “enable the United States to become more energy independent to meet emerging geopolitical threats,” the letter states.The current five-year plan, inked under President Barack Obama, expires in June, but the Biden administration has yet to release details on what comes next.A Trump administration plan to allow greater oil and gas development in untapped waters in the Atlantic, Arctic and Pacific oceans fell apart after sparking significant resistance from coastal states and a legal battle over potential drilling in waters protected by an Obama-era moratorium. A revised five-year proposal was never released (Energywire, Jan. 5, 2018).The Biden administration froze new oil and gas leasing last year during a review of the federal oil and gas program. It was forced to restart leasing by a federal judge, but its first and only oil auction — in the Gulf of Mexico in November — was overturned by a different judge for not doing a strong enough assessment of climate impacts.The administration has not appealed that ruling.Manchin and Kelly’s letter echoes recent critiques from GOP lawmakers that the Biden administration is slow walking the national leasing program, while also pushing the oil and gas industry to drill more to combat high prices (E&E Daily, April 1).New leasing, or leasing plans, would not have an immediate impact on the global oil supply or the current price hike, experts agree. But industry has warned that a lapse in the offshore oil and gas plan may be unprecedented and have long-term consequences for production and federal revenue (E&E News PM, March 29).

U.S. East Coast jet fuel costs soar on shortage fears(Reuters) -Jet fuel prices are soaring on the U.S. East Coast, home to some of the world's busiest airports, with buyers anticipating a worsening shortage as supply dwindles amid sanctions on Russian energy exports. Following Moscow's Feb. 24 invasion of Ukraine, the United States and allies slapped heavy sanctions on Russia, leading to a tightening in worldwide energy markets. Russia is the world's largest exporter of crude and petroleum products, and the supply crunch is filtering through to global markets. The East Coast largely relies on shipments on the Texas-to-New Jersey Colonial Pipeline for refined products, as well as imports from Europe. However, Europe is dealing with its own supply strains, so distillate exports to the U.S. East Coast - also known as PADD 1 - are down nearly 60% on a year-on-year basis, according to Refinitiv Eikon data. East Coast jet fuel costs have reached record highs in recent days, with spot prices in New York Harbor exceeding $7.30 per gallon on Monday, more than double the seasonal average, according to Refinitiv Eikon data. "It is ridiculous what's going on in PADD I with jet, and it's not sustainable," said Patrick DeHaan, lead petroleum analyst at GasBuddy. Refiners spent most of 2020 blending excess jet fuel into their diesel pool or refining it further into gasoline as the coronavirus pandemic severely hit air travel. Demand for jet fuel is now about 5% below 2019 levels, according to data from the U.S. Energy Information Administration. But U.S. distillate inventories, which include heating oil and jet fuel, are currently about 20% below the average for the 2015-2019 pre-pandemic period, compared with deficits of 11% in crude and 1% in gasoline.

Oil cleanup continues near Edwardsville =— Cleanup workers Friday were removing crude oil from a rain soaked area on Old Alton-Edwardsville Road just south of Illinois 143 in Edwardsville. Rains this week apparently helped to spread some of the 165,000 gallons of crude oil that leaked from a pipeline nearby Marathon Pipe Line LLC has repaired the leak, which was discovered on March 11, but some cleanup of of the area and the Cahokia Diversion Canal are still continuing.

Lawmakers press oil CEOs on high gas prices -Democrats on a subcommittee of the House Energy and Commerce Committee grilled oil executives Wednesday over the disparities between oil and gas prices, while the committee’s Republican members framed high prices as a consequence of Biden administration energy policies. Oversight and Investigations Subcommittee Chair Diana DeGette (D-Colo.) confronted the witnesses, who included executives from BP, Chevron, ExxonMobil, Devon Energy and Shell and Pioneer Natural Resources, directly asking them “Why is there a disconnect between the falling price of crude oil and the fact that the cost of gas is staying the same?” In response, BP Chairman and President David Lawler cited the complicating factors along the supply chain that he said may delay any drop in oil prices being reflected in gas prices. Democrats on the panel repeatedly emphasized the record profits the oil industry reported in 2021. Energy and Commerce Committee Chair Frank Pallone Jr. (D-N.J.) asked each witness for their profits in the previous year as well as whether they would commit to “doing whatever it takes, including increase production and reducing dividends and buybacks, to help American consumers.” While the witnesses generally committed to increasing production, they were noncommittal or outright declined to say they would reduce buybacks. Rep. Paul Tonko (D-N.Y.) noted that domestic U.S. oil production has increased since President Biden took office by about 2 billion barrels a day, while Rep. Ann Kuster (D-N.H.) lambasted the executives for referring back to the financial hardships of 2020. “One bad year does not excuse the practice of ripping off consumers,” she said. The witnesses largely defended their business practices, denying under oath that they had artificially increased prices to profit from the Ukraine conflict when questioned by Rep. Morgan Griffith (R-Va.), the ranking member of the oversight and investigations subcommittee. Pioneer CEO Scott Sheffield said the company’s production was constrained because “we can’t get people back” to work on oil extraction in the Permian Basin. Rep. Cathy McMorris Rodgers (R-Wash.), the Energy and Commerce ranking member, dismissed the hearing as “purely political.” She said gas prices were on the rise before the invasion of Ukraine and the spike was “not the result … of companies suddenly deciding to make money in 2022.” Although a confluence of factors contribute to gas prices, congressional Democrats have targeted the oil industry as the cause ahead of a fraught midterm election season.

Supply Chain Woes, Inflation Crimp U.S. Producers’ Growth Potential --Investor concerns about returns are not the only thing keeping a cap on U.S. oil and gas production growth.Producers are struggling with inflation, supply chain lags, and labor shortages – all things that make it difficult to ramp up quickly and cost-effectively.There’s much confusion out there — in the media, political circles, and the general public — about how U.S. oil and gas producers plan their operations for the months ahead and the degree to which they could ratchet up their production to help alleviate the current global supply shortfall and help bring down high prices.It’s not as immediate or straightforward as some might imagine. There are many reasons why producers are either reluctant or unable to increase their oil and gas production quickly. Capital budgets are up in 2022 by an average of 23% over 2021. That increase seems substantial, but analysts estimate that about two-thirds (15%) results from oilfield service inflation.That means the “real” increase in CAPEX – the dollars going toward actual production growth – is closer to 8%. And this increase is coming off a shallow base in 2021 when producers were still hesitant about investments due to the pandemic’s effects on energy demand. Most opted for “maintenance level” CAPEX levels, primarily designed to keep production flat. Russia’s invasion of Ukraine, and the subsequent super-spike in oil and gas prices, have raised energy security alarms in Washington and Brussels. TheBiden administration has called on U.S. producers to increase output to help alleviate the supply crunch and enhance energy security in Europe, which is finally getting serious about cutting its dependence on Russian oil and gas.But publicly-listed U.S. producers have largely balked. They have finally won over investors with business models focused on cash returns – big dividends and share buybacks – rather than aggressive production growth. Investors got burnt badly by the growth model in past years when shale producers destroyed billions in capital, and shareholders don’t want a return to the “bad old days.”

Scarce steel a reason for flat U.S. output, oil drillers say— Add steel shortages to the growing list of reasons U.S. shale producers aren’t raising output as fast as needed amid a global energy crisis. To drill more wells, they need steel tubes to line the inside of the holes and get the crude out. Those pipes have become more expensive and scarce. Oil and gas producers also have to boost wages to find and retain workers. They say those higher expenses, along with Biden administration’s tough environmental policy and investors’ pressure to keep costs under control, make them reluctant to ramp up production. U.S. price for the pipes, known as oil-country tubular goods, or OCTG, hit $2,400 per ton this month, up 100% from a year ago, according to data from KeyBanc Capital Markets. The increase is driven by demand and concern that Russia’s invasion of Ukraine will sink pipe and tube imports from the region. Russia and Ukraine combined provide about 15% of all of the imported metal to the U.S., according to the U.S. International Trade Administration. Russia also supplies a key ingredient for welded goods, known as coupling stock. “I cannot think of a time prior to this that I’ve seen the market this tight,” said Susan Murphy, publisher of the OCTG Situation Report, which has followed the sector for 36 years. “Everybody is really trying, at least in the tubular goods industry, to manage practically an unmanageable situation.” Oil businesses make drilling plans based on economic forecasts for at least a year out, when OPEC+ may have boosted output and prices may have long since peaked. Shareholders don’t want companies investing capital in robust drilling programs delivering new production in 18 months, Pioneer Natural Resources Co. Chief Executive Officer Scott Sheffield said. “The largest cost increase over the past 12 months for the oil and gas industry is from tubular steel,” one energy executive told the Federal Reserve Bank of Dallas in the survey released in March. “Steel availability and pricing are also delaying quick activity ramp-up among several operators. This is impairing the ability to bring production online faster.” A Standard and Poor’s index of steel companies is up more than 30% since Russia invaded Ukraine. U.S. Steel Corp. and Cleveland-Cliffs Inc. are among the top performers in the index, up 60% and 50% this year, respectively. Oil consuming nations globally, on the other hand, would like the U.S. to produce more oil, to make up for the sanctioned Russian crude. President Joe Biden has urged U.S. oil companies to pump more as the war in Ukraine led to skyrocketing oil and gasoline prices.

More drilling permits needed to ease gas prices, oil companies tell Congress — Executives at some of the world’s biggest oil companies will tell a U.S. congressional hearing on high gasoline prices that they need the government’s help in securing more drilling permits to help lower consumers’ costs. Darren Woods, chief executive officer of Exxon Mobil Corp., and Gretchen Watkins, president of Shell PLC’s U.S. division, said in prepared testimony that their companies don’t own gas stations and therefore don’t set fuel prices. The oil giants said they need the government’s help to produce more crude and meet rising demand, thereby leading to lower gasoline prices. “Government plays a key role in this,” Woods said in written testimony. Effective federal permitting for oil companies to lease acreage, drill wells and build pipelines “will help spur further investment in U.S. oil and gas production.” The hearing, being held by a sub panel of the House Energy and Commerce Committee, comes as congressional Democrats seek to highlight record-breaking profits by oil companies as gasoline over $4 a gallon sets off political alarm bells ahead of the midterm elections. In addition to Exxon and Shell, top executives from BP America Inc., Chevron Corp., Devon Energy Corp. and Pioneer Natural Resources Co. will testify remotely. “The Interior Department should end its pause on federal oil and gas leasing,” Watkins said in prepared testimony. “Additionally, accelerating the permitting of otherwise ready oil and gas projects would bring new supplies of oil and gas online within weeks or months.” Exxon, Chevron, BP and Shell spent $44 billion on stock buybacks and dividends last year and have promised $32 billion to investors this year, according to a letter House Democrats sent Monday to the executives of those companies that asked them to suspend stock buybacks and dividends for the duration of the war in Ukraine. Representative Diana DeGette, a Colorado Democrat who chairs the House Energy and Commerce Oversight and Investigations subcommittee, noted that some the nation’s largest oil companies are reporting record high profits. Testimony from each of the participating executives generally reiterated previous talking points over the past month as gasoline prices have soared, including the need for streamlined regulations, their own investors’ demands for financial austerity and the balance between boosting oil supplies while transitioning to low-carbon energy. They also touched on greater energy security in the wake of Russia’s invasion of Ukraine.

Biggest U.S. oil explorers face investor votes on emission cuts — Exxon Mobil Corp. and Chevron Corp. investors will vote on shareholder demands to curb pollution amid growing pressure on the oil industry to reduce emissions. Exxon holders will consider a proposal from Dutch environmental group that calls on the oil giant to reduce emissions and sales of oil and natural gas in accordance with the Paris Agreement. A separate measure about low-carbon business planning fielded Arjuna Capital also will be on the ballot for the May 26 meeting. Exxon’s board is advising investors to reject all seven shareholder proposals, according to a proxy statement published Thursday. Meanwhile, Chevron shareholders will vote on whether the company should adopt greenhouse- gas reduction targets, study the impact of going net-zero by 2050, and conduct a racial-equity audit, according to a filing. Chevron’s directors are urging investors to reject the proposals when they vote on May 25. Oil and natural gas explores have been under fire for years for not doing more to limit climate-damaging emissions, and activist investors recently have been making significant inroads. At the same time, politicians and consumer advocates have been critical of the industry as record energy prices aggravate rampant inflation. The chief executives of Exxon and Chevron were among a group of oil bosses pilloried by Democratic lawmakers in Washington on Wednesday during a hearing on gasoline prices and oil supplies. For Exxon, the latest shareholder proposals come less than a year after activist investor Engine No. 1 orchestrated the takeover of a portion of the company’s board. In the wake of that boardroom shakeup, Exxon made significant changes to its climate strategy, including adoption of an “ambition” to eliminate emissions from its own operations -- though not of its customers -- by 2050, and ramping up spending on lower-emission investments.

Private Oil Company Values Are Readying For Take Off: While Publics Remain On Runway - As the term “energy security” comes back into the public lexicon, the values of U.S. oil companies are rising. This comes at the delight of some and chagrin of others. Regardless, it represents a foreshadowing of a potential longer-term cycle; whereby U.S. oil production being able to meet energy demands will be increasingly important. Many believe the U.S. is now the world’s “swing” producer (although John Hess disagrees), and it is not due to government action (or inaction). Biden’s third SPR release in the last six months is largely symbolic and more of a political gesture than a meaningful macro-economic needle mover. Demand and supply were drifting apart before Russia’s invasion of Ukraine and this geopolitical dynamic has only widened that gap. The market participants best positioned to seize upon this unexpected gap are private U.S. operators. The current price expectations of oil make a lot of reserves economically attractive. The rate of return on capital deployed for drilling is going to (if not already) outstrip the demand for other capital deployment options such as dividends or debt repayment. However, most U.S. public companies are not shifting their strategies. As I have written before, shareholders have demanded returns from oil companies for years now in forms other than production growth. Oil company valuation in its fundamental form is a function of the present value of future cash flows. Therefore, if capital available today is best served in drilling more wells tomorrow, then production growth is the most efficient path to a higher value. At historical prices from a year ago, the decision to return more capital to shareholders (as opposed to deploying it in capex) made sense. It doesn’t now. However, public companies have yet to change the courses they’ve been setting for the past several years. That’s partly why the public sector (using XOP as a proxy) only rose 62% in the past year while prices nearly doubled.Demand is strong with the anticipated depletion of Russian oil on world markets. U.S. capital budgets would have to quadruple by the end of 2024 for shale to replace Russian oil exports to continental Europe according to Wells Fargo. In addition, break even prices in most basins for new wells are still around where they were a year ago according to the Dallas Fed Survey. That cost is going up and will continue to, but there is still lots of room for profitability at over $100 per barrel. Also, as I have mentioned before as well, DUC wellscontinue to shrink. In summary, there are a lot of signals to public companies to “drill baby drill”, yet they aren’t.

Texas Natural Gas, Oil Drilling Permitting Jumps 38% in February -The Railroad Commission of Texas (RRC) reported that it issued 38% more original drilling permits year/year across the Lone Star State in February. The natural gas and oil industry regulator granted 836 drilling permits in February, compared to 606 during the same month last year.Texas, particularly the Permian Basin, has been leading “the U.S. onshore in completion activity,” Primary Vision’s Mark Rossano, partner/lead analyst, told NGI. “The Permian is operating at levels we saw in 2018/2019 given the pricing and proximity to the coast, but we are currently running at or near full utilization rates in the area.”The most recent Baker Hughes Co. (BKR) rig count for the week ending April 1 showed a 44% year/year increase in Permian drilling units.Of the 836 original drilling permits awarded in February, 700 were permits to drill new oil or gas wells, eight were to re-enter plugged wellbores and 119 were re-completions of existing wellbores, according to RRC. Based on well type, 181 of the original drilling permits were for oil, 81 were gas, 518 were oil or gas, 46 were injection and 10 were other permits. The RRC said that its Midland District, located in the heart of the Permian, accounted for 355 of the 700 February permits to drill new wells – more than any other district. The agency’s data also shows 358 of Texas’ 530 new oil completions for February and 34 of the 101 new gas completions for the month were in the Midland District. In its February report, RRC said that its staff had processed 1,747 total well completions year-to-date across Texas for new drills, re-entries and re-completions. It was a 5% year/year statewide increase from the 1,663 completion total for February 2021.Rossano, whose firm tracks hydraulic fracturing fleets via its Frac Spread Count, said that demand for U.S. crude and natural gas liquids in the global market – particularly from Europe – remains strong and is supporting activity throughout Texas. In addition, he said that liquefied natural gas demand should stay robust and support a significant amount of activity in East Texas, where part of theHaynesville Shale is located.Rossano also predicted that rig activity would outpace completion crews as exploration and production companies focus on stabilizing drilled but uncompleted well drawdowns and building inventory to support completion activity through the summer.He added, however, that supply chain challenges are expanding in scope. “We are seeing more logistical problems across proppant, casing, and steel…availability and just underlying cost,” Although issues tied to diesel fuel and labor costs have been ongoing, “…now the logistic problems and costs are spreading to hit all levels of inputs,” he said. “We don’t see this improving anytime soon and resulting in accelerating costs and putting a cap on the amount of spreads that can operate.”

Tribes oppose risky and unnecessary Line 5 pipeline in northern Wisconsin - The Little River Band of Ottawa Indians opposes the continued operation of Line 5 in northern Wisconsin, including the proposed rerouting of the pipeline around the Bad River Reservation, about 280 miles north of Madison.We also oppose the position taken by tribal member Ron Spoerl in a recent guest column in the Wisconsin State Journal, “Let oil and gas pipeline detour tribal land in northern Wisconsin.” Spoerl's pro-Line 5 opinions are his own and not supported by the tribe.Given what we know about climate change and advances in clean energy technology, there is no good reason to keep Line 5 open. This aging crude oil pipeline runs through the heart of the largest source of fresh water in North America -- Michigan’s beloved Straits of Mackinac. Any claims about the “safety” of this pipeline should be met with the strongest level of skepticism.That is why our tribe must respond to Spoerl's view. While he tried to use his Native American heritage in an attempt to sow division, The Little River Band of Ottawa Indians is united in its opposition to Line 5. Spoerl also could make money by contracting with Enbridge on the pipeline work. The motivation for personal profits is clouding judgment on what is right for protecting our way of life throughout the Great Lakes region. That way of life -- our businesses, homes, farms and even the ways we recreate -- are all at risk if we do not permanently shut down Line 5.The main argument Spoerl gave in favor of keeping Line 5 operational is his claim that we need to have affordable energy sources. But Line 5 has already been shut down once before. In 2020, a Michigan court-ordered shutdown of the pipeline had zero impact on gasoline prices compared to the national average.What’s more, a recent report from Environmental Defense Canada found that the oil running through Line 5 could be rerouted away from the Great Lakes with minimal impact on gasoline prices. This can be done through using other pipelines to their fullest capacity, additional rail cars and one additional marine tanker. With an estimated increase of just $0.018 in the cost of gas, this is a far better solution than pumping millions of gallons of crude oil through the heart of the Great Lakes each day.

The Latest Attempt to Stop Line 3 Hits a Snag in Tribal Court – Earlier this year, I wrote about a unique lawsuit aiming to stop the further construction of Line 3, a tar-sands oil pipeline built in 2021 that stretches for 330 miles across northern Minnesota and has been fought fiercely for nearly a decade by an Indigenous-led movement. The suit had an unlikely plaintiff: Manoomin, a grain known in English as wild rice that grows throughout the wetlands of northern Minnesota and holds immeasurable significance for Anishinaabe people. A 2018 White Earth law gave rights to the plant, part of an internationalrights of nature movement that seeks to flip dominant legal frameworks on their head. According to the complaint filed in August, the construction of the pipeline threatened Manoomin’s “inherent rights to exist, flourish, regenerate, and evolve, as well as inherent rights to restoration, recovery, and preservation.” Through a novel legal maneuver that used the rights of nature, treaty law, and the independent jurisdiction of tribal courts, it seemed possible that Line 3 could be halted, at least for a bit. But the tactic didn’t pan out. On March 10, the White Earth Band of Ojibwe Court of Appeals dismissed the August lawsuit against Minnesota’s Department of Natural Resources filed by tribal leaders on behalf of Manoomin, citing a lack of legal precedent. The lawsuit targeted a permit by the Department of Natural Resources that allowed pipeline owner, Canadian corporation Enbridge, to pump 5 billion gallons of water from the ground to clear the route for the pipeline construction. Not only was this permit given, “abruptly, unilaterally and without formal notice to tribal leaders (quasi-secretly), and without Chippewa consent,” but it would also negatively affect the level and quality of the surrounding waterways where Manoomin grows, the complaint alleged. The crux of the case was whether White Earth would be allowed to raise a legal claim in tribal court about something that happened off-reservation. When the Anishinaabe ceded their land to the United States, they retained what are called “usufructurary rights” to hunt, fish, and gather foods including wild rice as part of a series of treaties. The argument put forth by the mastermind of the case, White Earth tribal attorney Frank Bibeau, was that these treaty-protected rights extend into the ceded territories and could be enforced there by the White Earth Tribal Court. The court disagreed. “Such exercises of sovereignty must take into account the longstanding legal and judicial framework,” wrote Judges George W. Soule, Lenor Scheffler Blaeser, and David Harrington in their conclusion. “A tribal court lacks subject matter jurisdiction to hear claims based on a nonmember’s allegedly unlawful activities that occur off reservation,” and treaty law does not “confer tribal court jurisdiction” off-reservation.

$8.5K in Equipment Stolen From Oil Field Site in Laramie County - Laramie County deputies are asking for the public's help in tracking down whoever stole thousands of dollars worth of equipment from an oil field site.Sheriff's spokesman Brandon Warner says the theft occurred in the 1400 block of County Road 228."Sometime prior to March 15, industrial pumps were taken from that location," said Warner. "One was a 145 horsepower and the other a 30 horsepower." Warner says the pumps are valued at $8,500.

Supreme Court reinstates Trump-era water rule for now - (AP) — The Supreme Court on Wednesday reinstated for now a Trump-era rule that curtails the power of states and Native American tribes to block pipelines and other energy projects that can pollute rivers, streams and other waterways.In a decision that split the court 5-4, the justices agreed to halt a lower court judge’s order throwing out the rule. The high court’s action does not interfere with the Biden administration’s plan to rewrite the rule. Work on a revision has begun, but the administration has said a final rule is not expected until the spring of 2023. The Trump-era rule will remain in effect in the meantime.The court’s three liberal justices and Chief Justice John Roberts dissented. The court’s other conservative justices, including three nominated by President Donald Trump, voted to reinstate the rule.Writing for the dissenters, Justice Elena Kagan said the group of states and industry associations that had asked for the lower court’s ruling to be put on hold had not shown the extraordinary circumstances necessary to grant that request.Kagan said the group had failed to demonstrate their harm if the judge’s decision were left in place. She said the group had not identified a “single project that a State has obstructed” in the months since the judge’s decision and had twice delayed making a request, indicating it was not urgent.Kagan said the court’s majority had gone “astray” in granting the emergency petition and was misusing the process for dealing with such requests. That process is sometimes called the court’s “shadow docket” because the court provides a decision quickly without the full briefing and argument. The liberal justices have recently been critical of its use. As is typical, the justices in the majority did not explain their reasoning.

Quick Context: Strategic Release - by Rory Johnston - The Biden Administration has announced plans for the largest-ever release from the US Strategic Petroleum Reserve (SPR): 1 million barrels per day (MMbpd) sustained for up to 180 days for a maximum of, you guessed it, 180 million barrels. This release will be supported by smaller contributions from US allies, although those specific details are yet to be made clear. Regardless of any complementary actions, 180 million barrels from the SPR is a big release and would bring the SPR back to its lowest level since 1983 (see chart). In this case, the US SPR alone would become, at least temporarily, the 20th-largest oil supplier in the world, neck and neck with the United Kingdom. While this is certainly a significant and historic effort, the big question is will it help—or hurt—the oil market’s increasingly precarious balancing act? In short, this is not the traditional purpose of the SPR—and a traditional, simple emergency sale approach applied here would be self-defeating. But there may be a more sophisticated way for the Biden Administration to deploy the SPR that facilitates both the reduction of current prices and the enhancement of effective producer price signals. The traditional purpose of the SPR is to offset temporary supply losses, like a hurricane—not structural supply scarcity stemming from a historic invasion carried out by the world’s second-largest oil exporter. And it’s hard to think of this disruption as anything resembling a temporary supply loss. If the Russia Shock is truly temporary, then the release will help offset the price pain caused by the anticipated short-term loss of Russian exports in addition to lessening the revenue upside received by Moscow, further pressuring the Kremlin. However, as I pointed out in my last piece (Oil’s Russia-Sized Hole—Part 1), even if peace is reestablished relatively quickly, the Russia Shock cannot just be written-off as a near-term loss of barrels. We could very well see a longer-term enfeebling of one of the world’s largest oil producers that results in a permanent and material loss of Russian production capacity. The efficacy of a strategic release in the face of a persistent Russia Shock is even more unclear. At first glance, I’d say that the release of this much crude to offset a structural shock is self-defeating: it will blunt the price signal needed for US shale producers, and really all non-Russian producers, to begin investing in and bringing on new production capacity.

Biden's Wasteful SPR Release - President Biden’s release of 180 million barrels, one million per day for 180 days, will prove to be a wasteful, futile gesture. Why? Both OPEC and Russia must co-operate and not further reduce oil supplied to the global market to give price relief to the U.S. consumer. They did not co-operate on the prior 50 million barrels that were released in the past few months by President Biden. Oil prices stayed high. Everyone knows the amount of oil that the U.S. has in the Strategic Petroleum Reserve, or SPR, just like you know the stacks of chips on the poker table. It is simple matter to run Biden out of this game. The U.S. imports 6 to 8 million bbls per day of heavy grades of crude oil to match up with our domestic refineries. Consequently, it is the global oil price that we pay domestically. Because the Obama administration eliminated the U.S. oil export ban, the release from the SPR goes into the global market. Foreign oil companies and international oil traders bought oil from the prior releases. The U.S. taxpayer spent the money to build the SPR, but the scheduled release does not directly benefit the U.S. consumer. The SPR was built to alleviate domestic supply shortages, but there are no gasoline lines or crude oil shortages. The Biden administration is just unhappy with the price of war. There is no escape from the fact that the U.S. voter is going to pay this price as consumer or taxpayer. The White House fact sheet demonstrates a shocking lack of understanding of the domestic oil industry and U.S. energy markets. It continues a disingenuous spin advanced by the Trump administration, that of the U.S. being a net energy exporter. So what? We do not fuel our cars or airplanes or tanks with coal and LNG any more than we directly fuel our vehicles with wind or solar energy. It is a false equivalency to state that 9,000 issued permits to drill on federal lands are equal to oil in storage—miles beneath the ground and requiring millions of dollars per well to extract if there really is an accumulation of oil present—and that not drilling these wells is depriving the American consumer of cheap fuel. Let’s review the situation.The domestic oil industry is starved for capital. It has been the worst performing sector in the S&P for more than a decade, and no one on Wall Street is clamoring to invest.The domestic oil industry via the shale plays, Alaska, and deep-water Gulf of Mexico is the highest cost producer in the global market.The domestic oil industry has lost tens of thousands of jobs since the Saudi-led price war that began in December 2014. These workers are not coming back.The cost of drilling wells is up by more than 30% due to the Trump steel tariffs. Steel supply chains are so disrupted that it is exceedingly difficult for oil companies to obtain the pipe and equipment they need—some now harvest pipe from old wells.The White House 2023 budget proposal eliminates tax benefits for the oil industry, and President Biden called for penalties to be levied on oil companies that have not begun drilling federal leases. If the U.S. does change long standing tax law and commercial contracts for the oil industry, the nation will join an infamous pantheon that includes Venezuela, Russia, Mexico, and Israel.Senators Sanders and Warren have called for the return of a Crude Oil Windfall Profits Tax. Such a tax failed to accomplish its goals in the 1980s, drove U.S. producers overseas, and increased our reliance on foreign suppliers. It would be a major cost increase for producers.In view of these facts and risks, put yourself in the place of a U.S. oil company executive—the White House is increasing my costs and now competing directly with me by releasing oil to drive down my price to further reduce my profits. I cannot get capital. The Saudis could just as easily flood the market again after the midterm election. What is my upside? Why take the risk?

How Biden’s Huge Strategic Oil Release Could Backfire - This week, the Biden administration revealed that it will release as much as 180 million barrels of crude oil in a bid to calm oil prices, which have remained above $100 per barrel for an extended period of time. The International Energy Agency, meanwhile, is coordinating a smaller but international reserve release of some 60 million barrels and has called an emergency meeting to discuss how exactly to go about it.It remains unclear whether part of the 180 SPR release in the United States will be a completely separate endeavor or if some of these barrels will be part of the IEA release. Earlier this year, the U.S. had agreed to release 30 million barrels as part of the IEA push. What is clear is that the success of these releases in calming down oil prices is quite unlikely.The United States last year announced the release of 50 million barrels in an effort to bring down prices t the pump, which were eroding Americans’ purchasing power and weighing on the President’s approval ratings.This pressured prices for a few days before they rebounded, driven by continued discipline among U.S. producers, equal discipline in OPEC+, and a relentless increase in demand for the commodity. Then Russia invaded Ukraine, and the U.S. banned imports of Russian crude and fuels. It also sanctioned the country’s financial system heavily, making paying for Russian crude and fuels too much of a headache for the dollar-based international industry. Prices soared again before retreating some, but remain firmly in three-digit territory. As of mid-March, the Department of Energy said, some 30 million barrels of crude from the strategic petroleum reserve had been sold or leased. That’s more than half of the 50 million barrels announced in November, and it appears to have had zero effect on price movements. But the new reserve release is a lot bigger, so it should make a difference, shouldn’t it? It amounts to some 1 million bpd over several months, per reports about White House plans in this respect. Unfortunately, but importantly, oil’s fundamentals have not changed much since November. OPEC has been demonstrating increasingly bluntly that its interests and the interests of some of its biggest clients may not be in alignment right now. It has refused to openly condemn Russia for its actions in Ukraine and has not joined the Western sanction push.On the contrary, OPEC is gladly doing business with Russia. And Saudi Arabia and the UAE, the two OPEC members that actually have the capacity to boost production beyond their quotas, have deemed it unwise to undermine their partnership with Russia by acquiescing to the West’s request for more oil. In this environment, releasing whatever number of barrels from strategic reserves could only provide a very short relief at the pump. Then, it may make matters even worse. As one oil market commentator on Twitter said about the SPR release news, the White House will be selling these barrels at $100 and then may have to buy them at $150. Indeed, one thing that tends to get overlooked during turbulent times is that the strategic petroleum reserve of any country needs to be replenished. It’s not called strategic for laughs. And a 180-million-barrel reserve release will be quite a draw on the U.S. SPR, which currently stands at over 580 million barrels. If oil’s fundamentals remain the same, prices will not be lower when the time to replenish the SPR comes. This seems the most likely development. The EU, the UK, and the United States have stated sanctions against Russia will not be lifted even if Moscow strikes a peace deal with the Ukraine government. This means Russian oil will continue to be hard to come by for those dealing in dollars or euros. According to the IEA, the shortfall could be 3 million barrels daily, to be felt this quarter. OPEC+ is not straying from its course. In some good news, at least, U.S. oil production rose last week for the first time in more than two months, by a modest 100,000 bpd.

Alaska oil field gas leak estimated at 7.2 mln cubic feet- More than 7.2 million cubic feet of natural gas escaped in a leak at a key Alaskan oilfield, forcing workers to evacuate and cutting production last month, operator ConocoPhillips and a state regulatory agency said. ConocoPhillips is working to seal off the leak at its Alpine field, the Alaska Oil and Gas Conservation Commission said in a report, as it determined the gas volume lost in the leak discovered a month ago that brought a cut in oil output. Overall daily Alpine production fell to a low of 36,851 barrels on March 13 from 51,700 on March 1 before the discovery, the state's revenue department said, though latest figures show output has since recovered to more than 50,000 barrels a day. As site remediation work continues, Conoco said it was placing cement in multiple steps to isolate the shallow geologic formation identified as the source of the gas. Then it will plug the source, the company said on its incident website. Last week it also received a permit for seismic surveys at the affected area, a drill site called CD1, the oldest in the Alpine field on the western North Slope. Discovery of the leak led to the temporary evacuation of about 300 of the roughly 400 workers at the field. There has been no detectable gas outside the structures enclosing the wells, though "fluctuating" low levels of gas have been reported inside the wellhouses, the regulatory agency said.

ConocoPhillips Alaska is estimating 7.2M cubic feet of gas released in Alpine leak - ConocoPhillips Alaska is estimating the leak at their Alpine site on the North Slope that started over a month ago has released 7.2 million cubic feet of natural gas.The leak was first observed on March 4, at the CD1 drill site of the Alpine Central Facility on the North Slope, which is operated by ConocoPhillips Alaska. The natural gas was observed releasing from the ground at a well house at the drill site.“Natural gas releases occurred at 7 wells on CD1 drillsite and through cracks on the pad near Doyon Rig 142,” an updated situation report from the Alaska Oil and Gas Conservation Commission.The estimated size of the leak had been unknown until recently, but according to the situation report, ConocoPhillips disclosed that 7.2 million cubic feet of gas had been released in an April 1 letter to the commission. “Once we got it into the hard pipe — the gas into the hard pipe — and piped it into the facility,” said Bruce Kuzyk, vice president of operations for the North Slope. “Then you can meter, monitor it and do the calculation on the actual estimate so that we have it correct.”Kuzyk said the source of the natural gas leak was 3,000 feet below the surface. The company used a “kill fluid” which was the first step, and then they moved through a series of cement injections to plug the well permanently. The leak was confirmed stopped on March 28, but there is still some gas leaking.“So at this point in some of the gravel beds around the wells, there’s minimal amount of traceable gas passing through, Kuzyk said. “But we expect that to go to zero here shortly.”ConocoPhillips initially evacuated about 300 nonessential employees from the Alpine facility when the leak was first reported, leaving a smaller number of essential personnel on site to handle it. This prompted concern among residents of Nuiqsut, just 8 miles away.The Alpine facility provides Nuiqsut with natural gas for heating homes and other buildings. While there has been no disruption to that production, there were fears early on that if ConocoPhillips had to shut down production at the facility over the leak, that could mean the village would be left with only a few days supply of natural gas.The evacuation of the Alpine employees also worried residents in Nuiqsut. The mayor previously said several families opted to leaveout of an abundance of caution.Employees that had been evacuated returned to the facility in mid-March, and Kuzyk said Wednesday things are back to normal at the site as they investigate the situation further.While ConocoPhillips has not released a cause for the gas release, and the cause is still officially listed as “under investigation” in situation reports from the Alaska Oil and Gas Conservation Commission, the company did say the source is a well it was drilling.“We determined the source was coming up through the annular, the outer annulus of one of the wells that we were in the process of drilling,” Kuzyk said. “So we were able to hard pipe that gas into our facility, the Alpine, so to significantly reduce the release, and run it through the process. And then at that point, we go through ... the diagnostics to figure out where the gas is coming from.”

US increased oil supplies from Russia by 43% in a week -Over the past week, US authorities have increased oil supplies from Russia by 43%, Deputy Secretary of the Security Council Mikhail Popov said in an interview with the Komsomolskaya Pravda newspaper. "The United States forced the Europeans to impose anti-Russian sanctions, while they themselves not only continue to import oil from Russia, but also increased the supply of "black gold" by 43% over the past week, to 100,000 barrels per day! In addition, Washington allowed its companies to export mineral fertilizers from Russia, recognizing them as essential goods," he said.According to him, Europe should expect other similar "surprises" from the US . Popov stressed that "Washington does not allow the Europeans to take similar measures yet."Russia launched a military operation on February 24 to demilitarize and denazify Ukraine . In response, Western countries announced large-scale sanctions against Moscow , primarily in the banking sector and the supply of high-tech products.The Kremlin called these measures an economic war like no other. The authorities stressed their readiness for such a development of events and assured that they would continue to fulfill social obligations. The Bank of Russia is taking measures to stabilize the situation on the foreign exchange market. The authorities also announced the transfer of payments for gas supplies to unfriendly countries into rubles. In addition, the government has prepared a plan to counter restrictive measures, which includes about a hundred initiatives. The amount of its funding will be about a trillion rubles.After US President Joe Biden announced a ban on energy imports from Russia, their prices began to rise rapidly. As Russian Deputy Prime Minister Alexander Novak noted , the rejection of Russian oil could lead to catastrophic consequences for the world market and cause its price to jump to $300 per barrel or more.On Thursday, Biden announced a decision to release one million barrels a day from the country's strategic reserve within six months. The President of the United States also demanded that American oil producers increase their oil production more actively.

BC’s Cedar LNG Seeks Four-Year Extension to Build Export Terminal --Risks of delays in British Columbia (BC) have prompted the most advanced native Canadian liquefied natural gas (LNG) project, Cedar LNG, to request a four-year export license extension. The Cedar LNG partnership of Haisla First Nation and Pembina Pipeline Corp. has asked the Canada Energy Regulator (CER) to reset the license deadline to May 2030 for starting shipments from the planned terminal on the northern BC coast at Kitimat. “The anticipated in-service date remains subject to a number of risks and potential delays,” Cedar developers said in the application. The project sponsors cited a long list of potential pitfalls. “These include uncertainty within federal and provincial regulatory processes, global supply chain constraints, constantly evolving restrictions and impacts associated with the Covid-19 pandemic, ongoing commercial negotiations, and third-party impacts such as interruptions in gas or power supplies,” they said. “The requested extension of the license’s early expiry date is necessary to maintain the confidence of financial institutions, tolling customers and off-takers.” The project sponsors reported that difficulties of building a BC LNG industry from scratch already set back the estimated date for completing their terminal until 2027. This is a year after the May 2026 project drop-dead date set by their current export license. The project also has not been sanctioned. A final investment decision is expected next year. The setback resulted from Cedar LNG’s reliance on the Coastal GasLink pipeline for its supply. The pipeline is now under construction to move gas from the Montney Shale for the Shell plc-led LNG Canada terminal, which is also on Haisla territory at Kitimat. Access to gas, according to Cedar sponsors, was dependent upon sanctioning LNG Canada, but it was sanctioned in 2018. .

Canada to approve Equinor’s $12 billion offshore oil plan — Canada has given the green light to a $12 billion offshore oil project proposed by Norway’s Equinor ASA, leading industry groups to express approval for the government's decision and reiterate the project's importance and minimal environmental impact. The government will announce the approval later Wednesday of the Bay du Nord project about 500 kilometers (311 miles) off the coast of Newfoundland, according to a person familiar with the matter, asking not to be named because the matter is still private. It was reported first by CTV News and Canadian Broadcasting Corp. The Canadian Association of Petroleum Producers (CAPP) is pleased the government "relied on the science and supported the Impact Assessment Agency of Canada’s assessment and ultimately approved the environmental assessment for this project," said Paul Barnes, director, Atlantic Canada & Arctic for CAPP. "Ensuring there is a clear, fair and transparent process for the approval of natural resource projects in Canada is critical to building confidence in Canada’s investment climate. Bay du Nord is an environmentally sound project that will provide secure, responsibly developed energy to the world," Barnes said. "CAPP thanks all who vocalized their support for this project and Newfoundland and Labrador’s offshore oil and gas industry in recent weeks, including the Government of Newfoundland and Labrador." It’s a politically-risky move for Prime Minister Justin Trudeau that complicates his efforts to hit aggressive emission targets for the oil and gas sector and could potentially alienate the pro-environment bloc within the governing Liberal Party. Yet Russia’s invasion of Ukraine has also prompted policy makers to reconsider the importance of the nation’s vast oil reserves to Canada’s economic security.

Biden Trade Rep Said Considering All Options as $10B of U.S. Energy Investment at Risk in Mexico --The Biden administration plans to seek recourse under the United States-Mexico-Canada Agreement (USMCA) if concerns over Mexico’s energy policies are not resolved, according to U.S. Trade Representative Katherine Tai.“At the heart of the USMCA are core obligations with respect to trade and investment, including with respect to nondiscriminatory treatment,” Tai wrote in a letter late last month to Mexico’s economy minister Tatiana Clouthier. “For a long time now, the U.S. government has raised concerns about a series of administrative, regulatory and legislative changes in Mexico’s energy policies as violating these core obligations, including the 2021 changes to the Electric Power Industry Law,” Tai wrote.“We have also been very clear that the USMCA applies to Mexico’s energy sector, and have been candid with the Secretariat of Economy about our concerns.”Among the most controversial policies is a proposed legislative overhaul that would consolidate state-owned Comisión Federal de Electricidad’s (CFE) control over the power sector, undoing crucial components of Mexico’s market-opening 2013-2014 constitutional energy reform.Observers including Fitch Ratings Inc. have warned that the reform would cause chaos in the Mexican power market as private generators would see all of their supply contracts with non-state offtakers canceled. Tai said, “We are unable to ignore the growing group of stakeholders also raising their concerns…” They include environmental nongovernmental organizations, aka NGOs, along with “members of Congress, business associations and companies large and small.“Unfortunately,” Tai wrote, “while we have tried to be constructive with the Mexican government in addressing these concerns, there has been no change in policy in Mexico, and U.S. companies continue to face arbitrary treatment and over $10 billion in U.S. investment in Mexico, much in renewable energy installations, is now more at risk than ever.”Leadership of Mexico’s opposition Partido Revolucionario Institucional (PRI) party has signaled it will vote against the bill. That could leave President Andrés Manuel López Obrador’s Morena coalition hard pressed to obtain the two-thirds majority needed to reform the constitution.The president said in a Tuesday press briefing he nonetheless expects enough opposition legislators to buck leadership and vote in favor of the measure.Meanwhile, Mexico’s Supreme Court was scheduled to vote Thursday on the constitutionality of a separate electric power industry law reform that was passed last year, but never implemented because of multiple lawsuits.The American Petroleum Institute (API) also has urged the Biden administration to take action on behalf of U.S. energy companies operating in Mexico.

UK Again Exploring Shale Gas Development in Push to Cut Russian Imports - The United Kingdom’s government has commissioned a study of unconventional natural gas extraction, again opening a door to shale development in the country more than two years after it was shut by regulators. Business and Energy Secretary Kwasi Kwarteng has asked the British Geological Survey for a report by the end of June. The request was made to assess any progress that’s been made since November 2019, when the government suspended test operations in the Bowland Shale following a small earthquake. Specifically, the geological survey has been asked to explore new drilling techniques, geologic modeling or new locations, among other things, that could help minimize the seismic risk associated with unconventional drilling and completion techniques.Kwarteng noted that unconventional natural gas development in the country is years away from yielding commercial output and helping to reduce volatile near-term prices.“However, there will continue to be an ongoing demand for oil and gas over the coming decades as we transition to cheap renewable energy and new nuclear power,” he added. In light of Russian President Vladimir Putin’s “criminal invasion of Ukraine, it is absolutely right that we explore all possible domestic energy sources.”UK oil production has slid by nearly 3% over the last decade or so, while natural gas production has declined by more than 4% over the same time, according to BP plc’s latest Statistical Review of World Energy. Declining oil and gas production across Europe has exacerbated a dependency on Russian fossil fuel that the continent is looking to eliminate. Kwarteng’s request comes ahead of a UK strategy scheduled to be released later this week that’s expected to detail more domestic energy production and a cut in Russian energy imports. European natural gas prices have skyrocketed this year amid the threat of Russia halting supplies to the continent. Russia provides about 40% of Europe’s natural gas imports. The UK imported 2.9 billion cubic meters (Bcm) of liquefied natural gas from Russia in 2020 and 4.7 Bcm of Russian natural gas via pipeline the same year, according to BP.

Why is there a diesel shortage? UK fuel scarcity explained as drivers complain of queues at petrol stations - Drivers in parts of south England are still complaining of a shortage of petrol, following protests outside major fuel depots.Climate activism groups Just Stop Oil and Extinction Rebellion have teamed up to block key terminals across the country in protest of the environmental impact of oil and gas.The action groups said they want to disrupt fuel supplies to London and the South East of England and will continue to do so until the Government agrees to stop all new fossil fuel investments immediately.The British Retail Consortium – a nationwide trade association – said the fuel supply issues are due to the Just Stop Oil protests, but added retailers will do “everything they can” to stabilise supplies.A spokesperson from the UK Petroleum Industry Association said most terminals remain unaffected and expect fuel deliveries to return to normal after the protesters are removed on Monday.Diesel supplies were already tight before these protests, due to an increased demand for oil after Covid-19 lockdowns.Global stocks of diesel and other middle distillates have fallen to the lowest seasonal level since 2008 due to refinery shutdowns during the start of the pandemic and a rise in demand since.Unlike Europe, which is short of diesel, the Middle East usually has a surplus.But increasing flows to Europe from the Middle East and the US will take time, one trader said, adding that for this reason “for now things will have to stay the same”.These issues have been exacerbated by the war in Ukraine.European economies face the risk of a shortage of diesel from sanctions on Russian energy.In the United Kingdom, Russia supplied 18 per cent of the diesel in 2020, and finding alternative supplies to replace this is very difficult as many other countries attempt to wean themselves off Russian energy supplies at the same time.A spokesperson for UK Petroleum Industry Association (UKPIA) told Reuters fuel suppliers are working with the Government to deliver the fuels the UK needs “while adjusting long-term supply routes to reduce reliance on Russian crude oil and oil products”. Moreover, all of these issues have meant prices for diesel have soared.

Ukraine tells EU to play rough with Russia on gas prices – Ukraine is telling the EU to give the Russians a taste of their own strong-arm tactics when it comes to gas prices.EU countries have been quick to condemn Russia over Ukrainian reports of war crimes, but they're still reluctant to introduce sanctions that would cut their gas purchases from Moscow's export monopoly Gazprom for fear of undermining their economies. So, Kyiv is laying out a highly unorthodox gameplan for the Europeans — one that would require legalistic Brussels bureaucrats to be as cavalier toward contracts as Russia is toward international law.Officials from Kyiv say the European Commission should take control of all EU gas purchases by designating one authority to negotiate a new price for Russian gas exports — one significantly lower than current spot rates. This new price would make it worthwhile for Gazprom to keep the gas flowing but drastically reduce the profits that fund its war in Ukraine. The price would also be pitched at a level to allow Ukraine to keep on earning transit fees — worth some $2 billion in 2020."There is a lot of opportunity for the EU to replace Russian gas, but it's really difficult to replace it in a short period of time without huge effects on the economy because its total share is 40 percent," Ukraine's Deputy Energy Minister Yaroslav Demchenkov told POLITICO.The scheme would require the EU to designate a single buyer for Russian gas, instead of the current system of private companies negotiating with Gazprom."This designated entity would be buying gas on specific conditions set by authorities — by the Commission, but it's negotiable — and would release the gas onto an exchange in Europe so that all other traders have access to these volumes on equal terms," he said.If Gazprom didn't like the idea of being deprived of its usual ability to play divide-and-rule among multiple EU buyers, Demchenkov said it would not have any choice but to face the new reality."On the key question, will Gazprom agree to this? Here we argue that Gazprom has no other options than to send gas to the EU," Demchenkov said. "Gazprom needs to export between 140 and 190 [billion cubic meters] of gas a year, and 80 percent plus of this can only go to Europe by pipeline."Those volumes can't be rerouted to China via pipeline, while Russia's liquefaction capacity is still too small to export that amount via ship to Asian markets, he added.

EU weighs ban on Russian oil over war crimes as pressure builds on Berlin – European Union officials are working on a sweeping plan to block all imports of Russian oil, amid an international outcry over alleged atrocities committed by Vladimir Putin’s forces in Ukraine. The big question remains whether countries led by Germany will agree to a ban or seek to delay it, after holding out against an embargo on Russian energy imports in recent weeks. There are signs that Berlin may now be ready at least to consider cutting out Russian oil — even if it is not yet able to abandon imports of gas — in response to what EU officials have described as war crimes in Ukraine. Officials are now aiming to finalize the package of sanctions ahead of a meeting of EU ambassadors on Wednesday, when it would be signed off, though any ban on oil, or even coal, may not be agreed in time. The EU spends tens of billions of euros importing about one-third of its oil from Russia and a ban would directly hit President Vladimir Putin’s ability to finance his war. At the same time, such a policy threatens short-term pain for those EU economies which, like Germany, rely heavily on Russia for their energy. On Monday, four diplomats said that EU countries are considering an embargo on oil imports after leading figures across world united in condemnation at the actions of Russian soldiers.Shocking images emerged over the weekend of mass graves and dead bodies littering the streets, along with accounts of torture, rape and murder as Russian troops retreated from Bucha, outside Kyiv. The reports could mark a tipping point in Europe’s response to the war. The EU’s foreign policy chief Josep Borrell on Monday said countries will advance “as a matter of urgency, work on further sanctions against Russia,” calling the reported atrocities “war crimes.” Imposing an oil ban has been discussed before. Poland and the Baltics have been calling for weeks to stop financing the Kremlin’s war machine via energy payments. But now, public outrage over the atrocities in Ukraine has led to a renewed sense that Brussels needs to go further than just strengthening the current sanctions.

EU proposes ban on Russian coal, working on oil sanctions — The European Commission on Tuesday proposed banning Russian coal as part of a new round of sanctions against the Kremlin for its unprovoked invasion of Ukraine. "We will impose an import ban on coal from Russia, worth 4 billion euros ($4.39 billion) per year. This will cut another important revenue source for Russia," European Commission President Ursula von der Leyen announced Tuesday afternoon, confirming an earlier report from CNBC. It marks another significant escalation in punitive measures against the Kremlin. Imposing sanctions on the Russian energy sector has been a challenge for the bloc given the high level of dependency that some member states have on the country's resources. According to data from the European statistics office, the EU imported 19.3% of its coal from Russia in 2020. It imported 36.5% of its oil from the country in the same year, and 41.1% of its natural gas. However, mounting evidence of possible war crimes committed by Russian forces in Ukraine has pushed the commission to propose that coal be added to a fifth package of sanctions against Moscow. "These atrocities can not and will not be left unanswered. The perpetrators of these heinous crimes must not go unpunished," von der Leyen said. She added, "Clearly, in view of events, we need to increase our pressure further." The new set of measures will be discussed by European ambassadors on Wednesday. Final approval of the sanctions won't happen until after the talks. The new set of sanctions also includes a full transaction ban on four critical Russian banks, among them VTB; a ban on Russian vessels and Russian-operated vessels from accessing EU ports; and targeted export bans worth 10 billion euros that involve quantum computers and advanced semiconductors. There has been growing pressure on Europe to target the Russian energy sector, particularly as energy-importing countries continue to top up President Vladimir Putin's war chest with oil and gas revenue on a daily basis. However, the issue divides the EU, with some nations supportive of banning Russian energy imports, while others contend that such a move would hurt their own economies more than Russia's.

Germany is Dependent on Russian Gas, Oil and Coal: Here's Why -- Last year, Russia supplied more than half of the natural gas and about a third of all the oil that Germany burned to heat homes, power factories and fuel cars, buses and trucks. Roughly half of Germany’s coal imports, which are essential to its steel manufacturing, came from Russia.Russian gas, oil and coal are embedded in the German economy and way of life. The roots run deep.The first natural gas pipeline connecting what was then West Germany to Siberia was completed in the early 1980s. The legacy of the Cold War can still been seen in the energy infrastructure in Germany’s east, which remains directly linked to Russia, making it harder to get oil from other providers into that part of the country.Today, those entanglements loom large as European leaders debate whether energy should be included in more sanctions on Russia amid growing evidence of atrocities committed by Russian troops against Ukrainian civilians. Officials in Germany, Europe’s largest economy, are caught between outrage at Russia’s aggression and their continuing need for the country’s essential commodities.“It was a mistake that Germany became so heavily dependent on energy imports from Russia,” Christian Lindner, Germany’s finance minister, said Tuesday, heading into talks with his European Union colleagues in Luxembourg.He indicated that Germany would support a fifth package of sanctions against Russia, including an import ban on Russian coal, announced Tuesday by the European Union’s president, Ursula von der Leyen. That would be a shift from Berlin’s recent insistence that energy sanctions would hurt Germany more than Russia.From the heads of leading chemical and steel companies to the makers of gummy bears, business leaders have warned that without a steady supply of gas, oil and coal, their production would grind to a halt. Nearly half of all German homes are heated with natural gas, which is also used to generate power in heavy industry. Germany’s powerful labor unions in the chemical, mining and pharmaceutical sectors have warned that serious reductions in gas imports could lead to substantial job losses.A group of economists at the Leopoldina National Academy of Sciences said in a report last month that a short-term stop of Russian gas deliveries would be “manageable” if the country could increase its reliance on other energy sources.Robert Habeck, Germany’s energy minister, is scrambling to do just that, making trips to Qatar and Washington to secure energy partnerships. Already Germany has reduced its dependence on gas from Russia by 15 percent, bringing it down to 40 percent in the first three months of the year, the energy ministry said.But industry leaders have pushed back against imposing sanctions on Russian natural gas. Turning off the taps would cause “irreversible damage,” warned Martin Brudermüller, the chief executive of BASF, the chemical producer based in southwestern Germany. Making the transition from Russian natural gas to other suppliers or moving to alternative energy sources would require four to five years, not weeks, he said.“Do we want to blindly destroy our entire national economy? What we have built up over decades?” Mr. Brudermüller said in an interview with the Frankfurter Allgemeine Zeitung last week. “I think such an experiment would be irresponsible.”The country’s makers of chocolates, snacks and sweets have also warned that gas shortages would spell doom for their ability to produce the high-energy food.“Gas is the most important energy source in most companies in the German confectionery industry,” the Association of the German Confectionery Industry, or B.D.S.I., said in a statement. “The companies in the German confectionery industry produce food and are therefore of outstanding importance for supplying the population in Germany, especially during food shortages or other emergencies.”

Putin Says Russia to Keep Supplying Gas Amid Shift to Rubles - When Putin first announced the ruble-payment demand last week, European officials rejected it, saying the move would violate contract terms. But the Kremlin Thursday published a presidential decree outlining the mechanism to allow foreign buyers to convert their dollars and euros into the Russian currency through a state-controlled bank.The Kremlin decree mandates that deliveries starting from April 1 be paid for in rubles. Foreign buyers need to open special ruble and foreign currency accounts at Gazprombank to handle payment, which can be done remotely. Buyers transfer foreign currency to pay for the gas into their accounts, Gazprombank converts the funds to rubles on the Moscow Exchange and transfers rubles into the buyer’s ruble account for payment on to Gazprom. The payment is considered complete when the rubles reach Gazprom’s account.Putin said the goal of the new mechanism was to prevent western governments from attempting to seize the payments in foreign currency or the accounts through which they went.“If gas is supplied and paid for under the traditional scheme, new dollar and euro payments can be frozen,” he said.“I think ultimately Russia wanted to send a message that as long as its gas is being paid for in time and in full (irrespectively of which currency is used), the gas will continue to flow,” said Katja Yafimava, Senior Research Fellow at the Oxford Institute for Energy Studies. “If Europe were to lose supplies of Russian gas it would be not because of Russia cutting them off but because of Europe not paying for them.”Another motivation may have been to protect Gazprombank, one of the few major Russian banks that’s so far avoided the most severe western sanctions, from future restrictions, she said.

Slovak minister says paying in roubles could be an option as country needs gas (Reuters) - The economy minister of Slovakia, which relies on Russian gas for around 85% of its demand, said the country could not be cut off from Russian gas flows and if it had to pay in roubles it would, although it backed taking a common European Union stance. Russia has demanded payment for gas in roubles, but the European Commission said on Friday European companies whose supply contracts stipulate payment in euros or dollars should not meet this demand. "The gas (flow) must not stop," Slovak Economy Minister Richard Sulik said in a Sunday debate show on public broadcaster RTVS. "If there is a condition to pay in roubles, then we pay in roubles." Sulik added Slovakia would continue to work on a common approach with the EU. Slovakia said this week state gas company SPP had paid its March invoice for gas in euros, as stipulated in its contract. Sulik said the country still had six weeks to find a solution before the next gas payment is due May 20, but Slovakia could not go without deliveries. Kremlin spokesman Dmitry Peskov said on Friday the change would not affect settlements until later this month. The threat of gas shortages comes after the peak demand European winter season, but it comes as European businesses and households are already facing a huge surge in energy prices.

Kremlin warns West: rouble-for-gas scheme is the 'prototype' (Reuters) - President Vladimir Putin's rouble payment scheme for natural gas is the prototype that the world's largest country will extend to other major exports because the West has sealed the decline of the U.S. dollar by freezing Russian assets, the Kremlin said. Russia's economy is facing the gravest crisis since the 1991 collapse of the Soviet Union after the United States and its allies imposed crippling sanctions due to Putin's Feb. 24 invasion of Ukraine. Putin's main economic response so far was an order on March 23 for Russian gas exports to be paid in roubles, however the scheme allows purchasers to pay in the contracted currency which is then exchanged into roubles by Gazprombank. "It is the prototype of the system," Kremlin spokesman Dmitry Peskov told Russia's Channel One state television about the rouble for gas payment system. "I have no doubt that it will be extended to new groups of goods," Peskov said. He gave no time frame for such a move. Peskov said that the West's decision to freeze $300 billion of the central bank's reserves was a "robbery" that would have already accelerated a move away from reliance on the U.S. dollar and the euro as global reserve currencies. The Kremlin, he said, wanted a new system to replace the contours of the Bretton Woods financial architecture established by the Western powers in 1944. "It is obvious that - even if this is currently a distant prospect - that we will come to a some new system - different from the Bretton Woods system," Peskov said. The West's sanctions on Russia, he said, had "accelerated the erosion of confidence in the dollar and euro." Putin has said the "special military operation" in Ukraine is necessary because the United States was using Ukraine to threaten Russia and Moscow had to defend against the persecution of Russian-speaking people by Ukraine. Ukraine has dismissed Putin's claims of persecution and says it is fighting an unprovoked war of aggression. Russian officials have repeatedly said the West's attempt to isolate one of the world's biggest producers of natural resources is an irrational act that will lead to soaring prices for consumers and tip Europe and the United States into recession.

Estonia to stop importing Russian gas by end of 2022 -- Estonia will stop importing Russian gas by the end of 2022, the government agreed in principle on Thursday. Liquified natural gas (LNG) storage capacity in the form of a floating terminal will be created in Northern Estonia in fall. "We must stop buying gas from Putin's regime as soon as we can since they are using the revenue from sales of it to fund their war against Ukraine," said Prime Minister Kaja Kallas (Reform) in a statement. "We have decided to increase our national gas supply and to establish a facility in Paldiski for the storage of LNG so that a floating terminal can be taken into use from autumn. This represents an opportunity not only for Estonia but for our region more widely, to head into winter without any dependence on Russian gas." Kallas said the government's aim is to favor gas produced from LNG in bolstering its supplies. "What we are very much hoping to see from gas sellers is that their moral compass is pointing in the right direction in this regard," she said. "Moreover, our position in principle is that any LNG ship that reaches Paldiski should not be carrying Russian gas."

Kazakh oil production down on Russian transit bottleneck -Oil production in Kazakhstan has fallen in the first days of April as the country continues to see mounting restrictions on its two export routes to international markets. According to data from the country’s Energy Ministry, quoted by Kazakh industry channel Energy Monitor, total oil output was running between 20% and 25% below average production compared with the first days of March. The data shows output running between 1.5 million and 1.57 million barrels per day on April 4 and 5. Exports restrictions are costing about $43 million per day to a domestic oil production sector dominated by three major foreign-led developments, Tengiz, Kashagan and Karachaganak, according to estimates by Energy Monitor. Kazakhstan Energy Minister Bolat Akchulakov issued a statement that the main export pipeline for Kazakh producers, operated by Caspian Pipeline Consortium (CPC), is working at about 60% of its capacity. Two out of three floating tanker loading buoys used by CPC near the Russian Black Sea port of Novorossiysk were damaged during a severe storm two weeks ago and remain out of operation. With CPC signalling that repairs at the damaged buoys are expected to last until the end of April, Kazakh producers are hoping to divert export shipments using the Atyrau–Samara link between Kazakhstan and the Russian trunkline system, operated by Transneft. But Moscow news agency Interfax quoted Transneft as saying that its network was reaching capacity in the first days of April as the inflow of oil put into the system by Russian producers surpassed outflow at export points and domestic refineries, possibly as a result of US sanctions and a reluctance among international buyers to deal with Russian crude. Transneft acknowledged that it had been unable to transit Kazakh oil that has been arriving into its network via the Atyrau–Samara link, to export destinations in the north-west and south of Russia, earlier this month, switching more of it to storage, according to Interfax. Russian authorities have delayed the release of official oil production figures for March after reports said European buyers had been avoiding tankers with Russian oil because of international sanctions against the country and pressure from the public, concerned about continued Russian military aggression in Ukraine.

OPEC+ crude production falls as sanctions take bite out of Russia: S&P Global survey | S&P Global Commodity Insights - Crude oil production by OPEC and its allies fell in March from February for the first time in more than a year, the latest S&P Global Commodity Insights survey found, contributing to a tightening market thrown in flux by the Russia-Ukraine war. Western sanctions began biting into primary non-OPEC partner Russia's oil flows, and sizable disruptions in Kazakhstan and Libya also led the coalition's production lower, the survey found. OPEC's 13 members raised output by 60,000 b/d to 28.73 million b/d, but that was more than offset by a 160,000 b/d decline by the bloc's nine allies, who pumped 13.91 million b/d. With the net decline of 100,000 b/d, the widening gap between the OPEC+ production and quotas jumped to a record-high 1.24 million b/d—casting further doubt on the group's ability to meet growing global oil demand, which many analysts expect to return to pre-pandemic levels in 2022. The drop was the first since February 2021, when Saudi Arabia instituted a unilateral voluntary 1 million b/d cut to help prop up the market that at the time was still wobbly from resurgent coronavirus cases. Since August, with the global economy on firmer footing, the producer group has stuck to a plan of gradually raising quotas by 400,000 b/d each month but has faced mounting pressure from the US, India, Japan, and other major oil-consuming nations for accelerated supplies to cool off rising energy prices. But several countries have not hit their output targets in months, and March's shortfall resulted in a compliance figure of 148% for the 19 members with quotas, according to S&P Global calculations. Iran, Libya, and Venezuela are exempt from quotas under the OPEC+ agreement. Concerns over OPEC+ production capabilities, in combination with the Russia-Ukraine war and recovering oil demand, have helped lift the Platts Dated Brent benchmark to nearly $140/b in recent weeks, although it dropped to $98.28/b April 7 as the International Energy Agency announced a 120 million barrel stock release from strategic petroleum reserves, led by the US. OPEC+ officials have attributed the volatility to geopolitics, and not market fundamentals. OPEC kingpin Saudi Arabia, one of just a handful of countries that appears to hold significant spare capacity, kept its production steady in March at 10.25 million b/d, the survey found. Ship-tracking data indicated its exports fell during the month, but several analysts surveyed cited increased refinery runs and said storage volumes may have also increased. Non-OPEC leader Russia, hit by western sanctions targeting its financial sector, saw its crude production fall to 10.04 million b/d, the survey found. Many traders have stopped transacting with Russian commodities, and analysts expect production shut-ins to build up in April and May, though some flows are shifting to Asian customers. Both Saudi Arabia and Russia had quotas of 10.33 million b/d for the month. Neighboring Kazakhstan saw the biggest fall in production, with storm damage to the loading terminal of the CPC pipeline causing major disruptions. Kazakh output was 1.55 million b/d in March, and officials have warned of further impacts in April from the outage. Libyan output fell 50,000 b/d in March, with the country's largest oil field, Sharara, shut from March 3-8 due to civil unrest. The Elephant, or El Feel, field remains offline due to sabotage, officials have said. Among the gainers, Iraq saw the largest rise, pumping 4.34 million b/d, slightly under its quota of 4.37 million b/d. The country brought back its giant West Qurna 2 field from maintenance about two weeks early in early March and also saw its Nassiriya field disrupted for a few days at the start of the month because of protests. Sources and satellite data indicated considerable inventory builds. Venezuela posted a 40,000 b/d gain in March, the survey found, benefitting from the arrival of two cargoes of Iranian condensate that enabled a production rebound in the Orinoco Belt. Extracting the region's extra-heavy crude requires diluent, which US sanctions have made it difficult for Venezuela to obtain, although Iran has been sending cargoes under a bilateral agreement. The survey figures, which measure wellhead production, are compiled using information from oil industry officials, traders, and analysts, as well as reviewing proprietary shipping, satellite, and inventory data.

Is Today’s Energy Shortage Worse Than The 1970s Oil Crisis? - In the 1970s oil crisis, the price of oil soared fourfold over three months following the embargo. At the time, the United States had thought that the lost market share would hurt the producer states financially. But instead, those producers made up for that market share loss with considerably higher prices. Consumers in the United States, however, suffered a severe blow in the form of fuel shortages and urgent energy conservation measures as the country’s consumption of oil had been growing incessantly for decades thanks to the cheap Middle Eastern oil.Interestingly, although the embargo did not involve Europe, the continent suffered an even more severe blow because of the way prices rose following the Arab producers’ move. Fuel rationing was put in place and national speed limits were introduced to conserve fuel.The latter measure, about speed limits, may sound familiar to those following the International Energy Agency’s recommendations for energy conservation: it is one of the ten steps the IEA listed as necessary to reduce the EU’s reliance on Russian fossil fuels.The fact that today’s shortage involves all the fossil fuels rather than just oil is one of the reasons this crisis could be worse than the one in the 1970s, according to Yergin, who made his comments in an interview with Bloomberg this week.“I think this is potentially worse,” the expert told Bloomberg. “It involves oil, natural gas, and coal, and it involves two countries that happen to be nuclear superpowers.”Leaving aside the understandable unease that the latter part of the statement would spark in anyone in Europe or North America, the first one is telling. Europe depends on Russia for close to half of its coal and natural gas imports and about a quarter of its crude oil imports. And the EU just decided to ban Russian coal imports in an attempt to hurt the Russian economy as punishment for Russia’s actions in Ukraine.Here’s what happened after the announcement of the ban, which has yet to be approved, by the way. Indonesia hiked its own coal prices by 42 percent, Australian coal miners reported they have limited ability to replace Russian coal, and Asian coal prices soared amid reports that European buyers were hunting for replacement coal.What’s happening in coal is pretty much what will be happening in oil and gas. As Yergin noted in his interview with Bloomberg, the global natural gas market is already quite tight, and there is no ready replacement for Russian gas should it stop flowing. That’s despite efforts on the part of U.S. LNG producers to boost exports.

Oil major Shell to write off up to $5 billion in assets after exiting Russia -- Shell has announced that it will write off between $4 and $5 billion in the value of its assets after pulling out of Russia following the country's unprecedented invasion of Ukraine. Thursday's announcement offers a first glimpse at the potential financial impact to Western oil majors of exiting Russia. "For the first quarter 2022 results, the post-tax impact from impairment of non-current assets and additional charges (e.g. write-downs of receivable, expected credit losses, and onerous contracts) relating to Russia activities are expected to be $4 to $5 billion," Shell said in a statement Thursday. "These charges are expected to be identified and therefore will not impact Adjusted Earnings." Shell had previously estimated that Russia write-downs would reach $3.4 billion. Further details of the impact of ongoing developments in Ukraine will be set out in Shell's first-quarter earnings report on May 5, the company said. Shell was forced to apologize on March 8 for buying a heavily discounted consignment of Russian oil two weeks after Russia's invasion. It subsequently announced that it was withdrawing from its involvement in all Russian hydrocarbons. The company said it would no longer purchase Russian crude oil and would shut its service stations, aviation fuels and lubricants operations in Russia. The company had already vowed to exit its joint ventures with Russian gas giant Gazprom and its related entities. In Thursday's update, Shell also said its cashflow is expected to be hit by "very significant working capital outflows as price increases impacting inventory have led to a cash outflow of around $7 billion."

Shells 2021 oil spills double in volume, pays $6bn tax in 5 years - Shell has said the volume of crude oil spills caused by sabotage in Nigeria’s oil-rich Delta more than doubled to 3,300 tonnes last year, a level last seen in 2016. While the volume of spills rose, the number of major spills fell to 106 in 2021 from 122 incidents the previous year, Shell said in its sustainability report. It said in 2020, oil spills in Nigeria stood at 1,500 tonnes. On the other hand, Shell said, it has paid $6 billion as tax to the Federal Government in the last six years through the Federal Inland Revenue Service (FIRS). Shell is the operator of Nigeria’s main onshore oil and gas joint venture SPDC which has struggled for years to contain spills in the Delta caused due to operational incidents, theft and sabotage. A Nigerian court last month stopped Shell from selling any assets in Nigeria until a decision is reached on the company’s appeal of a nearly $2 billion penalty for alleged oil spill. With payment of $6 billion in direct taxes in the five years the Federal Inland Revenue Service, FIRS has named Shell as a “leading tax compliant organisation in Nigeria for 2021.” At an award ceremony in Abuja last week as part of the second annual National Tax Dialogue, Shell companies in Nigeria also won the award for ‘remarkable performance in the remittance of various taxes’ in the same year. The Shell Petroleum Development Company of Nigeria Limited (SPDC), Shell Nigeria Exploration and Production Company Limited (SNEPCo) and Shell Nigeria Gas paid a combined $6 billion in direct taxes between 2015 and 2020 to the government.

NOSDRA raises alarm over increased oil spills The National Oil Spills Detection and Response Agency (NOSDRA) has raised an alarm over rising spate of oil spills caused by sabotage, oil theft and pipeline vandalism. To - this end, the Director-General of NOSDRA, Dr Idris Musa has charged oil operators to tighten security on their assets to avert damage to the environment and loss of oil and gas revenue. Musa in a statement explained that three incidents investigated within the past few days were traced to sabotage. He added that the ongoing gas leak from a gas line operated by Nigerian Agip Oil Company in Yenagoa, Bayelsa State was due to the activities of vandals. The statement reads in part, “The Agency received a report of a Joint Investigation Visit on 6” Nembe/Obama Pipeline at Sabatoru, Nembe L.G.A. Bayelsa State. “The incident occurred proximal to an artisanal refining site which operators are suspected to have vandalised the pipeline to steal crude oil. “Similarly, there was another vandalised pipeline on the 20” Kolo Creek-Rumuekpe pipeline at Otuasega also in Bayelsa State. There was no oil spill in that instance. “A gas pipeline was also vandalised on the 24” Ogboinbiri/OB-OB gas delivery line at Okaka behind Bayelsa Palm Estate in Yenagoa. “This vandalism has a backlash on the main gas delivery pipeline from the OB-OB gas plant of the Nigerian Agip Oil Company. “We implore the oil companies operating in the area to place more surveillance on their assets to avoid wanton destruction of economic assets as well as the environment.”

Gas revenue tops oil export by 1,076% in 3 months - Revenue from a gas feedstock for Nigeria Liquefied Natural Gas (NLNG) export topped crude oil export sales by 1,076.6 percent in the three months of December 2021 to February 2022, the latest figure from the Nigerian National Petroleum Corporation (NNPC) Limited has shown. Checks by Vanguard on NNPC Limited reports to the Federation Account Allocation Committee in the past three months showed that while crude oil export fetched the nation just $10.09 million over the three months, feedstock to NLNG amounted to $108.63 million. With over 204 trillion standard cubic feet of gas reserves, Nigeria has moved toward developing its gas reserves with the declaration of the decade of gas by the Federal Government last year. Speaking on Nigeria’s move towards gas, the Minister of State Petroleum Resources, Chief Timipre Sylva said at the Oloibiri Lecture Series and Energy Forum: “We have embarked on a critical pathway to ensure that the over 200 Trillion Standard Cubic Feet (TSCF) proven reserves of Natural gas in Nigeria is marshaled to engender domestic economic growth and development beyond 2030.

Nigerian oil ship blast followed $200 million debt trail— The owners of an oil-production and storage ship had a history of financial problems before the vessel blew up in Nigerian waters two months ago. The Trinity Spirit, which caught fire on Feb. 2, burned for more than 24 hours and left a stain of crude stretching for miles across the Atlantic Ocean. While the cause of the accident hasn’t yet been determined, the “inferno” meant only a “low level” of crude was spilled, according to Idris Musa, director-general of Nigeria’s National Oil Spill Detection and Response Agency. The Environment Ministry estimates that up to 60,000 barrels of oil were on board the ship at the time of the blaze. The fatal incident occurred amid an ongoing trail of debt. Creditors have filed lawsuits against the company operating the ship, Nigeria-registered Shebah Exploration and Production Co., in at least three countries, accusing the firm of defaulting on multiple financial agreements. These include two bank loans for a combined $220 million and a contract for the management of the vessel itself, according to court documents and corporate statements. Ambrosie Bryant Orjiako, a prominent businessman and president of Shebah, acted as the personal guarantor of a $150 million loan taken by the company in mid-2012 from the African Export-Import Bank and two Nigerian lenders to fund a drilling program on the firm’s oil license. Shebah leased the vessel from one of its shareholders named Allenne Ltd., a company registered in the British Virgin Islands of which Orjiako was a director, according to court filings. Orjiako is best-known as a founder of Seplat Energy Plc, which has grown since 2009 into Nigeria’s largest independent oil producer and in February agreed to pay $1.3 billion for Exxon Mobil Corp.’s shallow-water assets in the country. Seplat has no involvement with the Trinity Spirit or any of Shebah’s legal disputes, Orjiako said by email, declining to comment on any matters that are still in court. He referred questions regarding the vessel to Shebah Chief Executive Officer Ikemefuna Okafor, who didn’t respond to emails or calls. Orjiako announced in November that he will step down as Seplat’s chairman in May. Shebah stopped paying down the Afreximbank loan after meeting a single $6.1 million installment, according to a lawsuit filed by the lenders in the U.K. against the company, Allenne and Orjiako. In February 2016, a judge ruled that the banks were entitled to $143.9 million, which remains unpaid and has doubled with interest, Afreximbank said in a statement. The banks “continue to consider their options for recovery,” Afreximbank said through its law firm Baker McKenzie. Orjiako, 61, had argued that delays by Afreximbank in releasing the funding led to drilling contractors either withdrawing or withholding their services, according to a defense he submitted to the London court in September 2015. A U.K. judge dismissed an appeal by Shebah and Orjiako against the decision in mid-2017.

ExxonMobil reaches FID on $10bn Guyana offshore oil field development - ExxonMobil, together with its partners, has reached a final investment decision for the development of Yellowtail oil field, located in the Stabroek Block offshore Guyana. Discovered in 2019, Yellowtail is a conventional oil development located in ultra-deepwater, and has received all the required government and regulatory approvals. It forms the company’s fourth and largest development project in the Stabroek Block, and is expected to produce around 250,000 barrels of oil per day, starting from 2025. The project will use the ONE GUYANA floating production, storage and offloading vessel (FPSO), for six drill centres, planned with up to 26 production wells and 25 injection wells. Yellowtail is estimated to develop a resource base of around 925 million barrels of oil. ExxonMobil upstream company president Liam Mallon said: “Yellowtail’s development further demonstrates the successful partnership between ExxonMobil and Guyana, and helps provide the world with another reliable source of energy to meet future demand and ensure a secure energy transition. “We are working to maximize benefits for the people of Guyana and increase global supplies through safe and responsible development on an accelerated schedule.” According to ExxonMobil, its ongoing offshore exploration in Guyana showed a recoverable resource of more than 10 billion oil-equivalent barrels. The company plans up to 10 projects on the Stabroek block to develop this resource.

Petrobras reports new oil discovery in the pre-salt -Petrobras, informs that discovered a new oil accumulation in the pre-salt in the southern portion of the Campos Basin, in a wildcat well in the Alto de Cabo Frio Central block. The well 1-BRSA-1383A-RJS (Alto de Cabo Frio Central Noroeste) is located 230 km from the city of Rio de Janeiro-RJ, in a water depth of 1,833 meters. The oil-bearing interval was verified by means of loggings and oil samples, which will later be characterized by laboratory analyses. The consortium will continue drilling the well to the final depth originally planned, in order to assess the dimensions of the new accumulation, and to characterize the quality of the fluids and reservoirs found. The outcome is the result of a successful strategy of the consortium based on maximum use of data, and on the application of new technological solutions in Big Data and Artificial Intelligence, leveraged by the use of supercomputers and HPC (High Performance Computing) resources, enabling the processing of the acquired data in real time and allowing decision making in an agile and safe way.

Company allowed to search for oil and gas off Taranaki coast despite ban --When is a ban on new offshore oil and gas exploration, really a ban? That's the question environmentalists are asking after discovering Greymouth Petroleum has been given permission to conduct a massive seismic survey off the coast of Taranaki - with the likelihood of more activity to come. The crown minerals regulator has allowed Greymouth Petroleum to piggyback off an existing mining permit to survey an adjacent area of more than than 260 square kilometres. The move initially puzzled Climate Justice Taranaki researcher Catherine Cheung. "Why would they allow further seismic survey if, as we understand, there's no new offshore petroleum permits. "Then what's the point in more seismic testing that's outside any existing permit." She said it made a mockery of the 2018 amendment to the Crown Minerals Act which banned any new offshore oil and gas exploration. "At the time of the announcement of the offshore ban we were just so excited but as time goes on we learn that it's nothing like it sounds. "It just has so many loopholes that companies can keep going and can even go further, bigger and longer than they were previously allowed." In a statement, the Ministry of Business, Innovation and Employment said the 2018 amendment preserved many rights for existing permit holders. That included doing seismic surveys in an adjacent area if no other permit was in force there. Cheung reckoned she knew what was happening. Late last year a judicial review found that the regulator, New Zealand Petroleum and Minerals, was wrong to turn down Greymouth's bid in 2017 for what could become the country's last new offshore oil and gas exploration permit. The bid was now being reappraised.

Bangladesh faces natural gas crisis due to supply crisis from Bibiyana -- Bangladesh faces natural gas crisis due to supply crisis from Bibiyana Abrupt fall in gas supply from the country’s largest producing Bibiyana gas field ensued countrywide natural gas crisis affecting gas-guzzling industries, power plants, and household consumers. Household consumers across the country have struggled in making iftar items as gas pressure fell sharply due to the gas crisis, it has been alleged. Natural gas output from US’s oil and gas major Chevron operated Bibiyana gas field dropped by around one-third to around 800 million cubic feet per day (mmcfd) Sunday from around 1,275 mmcfd of Friday, said sources. “Two process trains in Bibiyana gas plant are down due to maintenance since 1:15 am Sunday, which has resulted in lower production of gas from the field,” Chevron’s communications manager Shaikh Jahidur Rahman said. “Our field operations team is working to bring the trains back online. At this moment we are unable to inform about the time required to resume full production from the field,” he said. Energy and Mineral Resources Division (EMRD) and Power Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) expressed sorrow to the consumers due to the natural gas and electricity crisis. They hoped that the problem will be resolved soon.

Oil production in Iran reaches pre-sanction levels | Daily Sabah Iran's oil production has recovered to the level it was at in 2018, before the U.S. unilaterally withdrew from a nuclear deal and reimposed sanctions on the country, a top Iranian official reported Monday. "Oil production has reached pre-sanctions figures, despite economic pressures," said Mohsen Khojastehmehr, CEO of the National Iranian Oil Company (NIOC), quoted by state news agency IRNA on Sunday. Iran is currently engaged in negotiations to restore the 2015 nuclear dealthat would grant it much-needed sanctions relief in return for major curbs on its nuclear program. The U.S., under then President Donald Trump, unilaterally withdrew from the deal in 2018 and reimposed stringent sanctions, prompting Iran to begin rolling back on its commitments under the deal the following year. Production has been restored to the pre-sanctions level of 3.8 million barrels per day (bpd), Khojastehmehr said, after it had sharply declined following the reimposition of sanctions.President Ebrahim Raisi's government invested $500 million to restore facilities and increase production to pre-sanctions levels within six months, he added. Oil Minister Javad Owji said Friday that oil revenues for the last Iranian calendar year, which came to a close on March 20, registered $18 billion, about 2.5 times more than the previous year. In a monthly report, the OPEC group of oil-producing countries estimated that Iran produced 2.54 million bpd of oil in February.

Global oil supply, demand & prices become clear despite the fog of war. - — Enverus Intelligence Research, a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released its latest PetroLogic report, The Fog of War. In it, EIR assesses the outlook for oil supply amid sanctions on Russian energy and what that could mean for prices in the near term. “With oil prices persistently high since Russia’s late February invasion of Ukraine, we have pared by more than 50% of our expectations for demand growth this year. We now expect global oil demand to grow about 1.5 MMbbl/d Y/Y in 2022, subject to further revision as GDP forecasts are adjusted lower,” said Bill Farren-Price, lead report author and director of Enverus Intelligence Research. “Faced with technical challenges and potential reputational damage, European buyers are avoiding Russian cargoes, which were down by ~1.5 MMbbl/d in early March.” Key takeaways from the report:

• EIR now project stock draws through 2022 until Q4, which is mostly in balance as demand growth eases, reflecting lower supply and easing demand as higher prices bite. Our Brent price forecast is now anchored above $100/bbl, reflecting tighter balances on the back of the Ukraine war.
• The March surge in Brent prices towards $140 brings a focus onto the risks to oil demand. EIR has halved its forecast for oil demand growth in 2022 and GDP downgrades will erode that view further in the coming month.

Oil markets pricing in demand loss or more output: Vitol | S&P Global Commodity Insights The global oil markets are pricing in either a demand loss or more output from countries such as the US amid the global release of oil stocks and recessionary threats in some economies, the head of Vitol Asia said April 3. "For the market to trade down as it has done, that's telling you that the market is expecting a demand loss... or a production increase from places like US shale of more than 2 million b/d," Mike Muller told the Gulf Intelligence daily energy markets podcast. The US announced on March 31 plans to sell an unprecedented 1 million b/d from the Strategic Petroleum Reserve for the next six months as part of efforts to rein in gasoline prices that have soared following Russia's invasion of Ukraine. The International Energy Agency followed suit and agreed on April 1 to a second emergency release of oil reserves in response to "market turmoil' caused by Russia's invasion of Ukraine, and said details of the release would come early next week. The news of the global oil stocks release sent oil prices down, with Platts Dated Brent assessed on April 1 at $107.425/b, down 2.42% on the day, according to S&P Global Commodity Insights data. The IEA had previously estimated that Russian oil losses could reach 3 million b/d in the second quarter, but most forecasts are more cautious estimating 1 million b/d - 2 million b/d. S&P Global forecasts 2.8 million b/d of Russian crude production shut-ins due to export dislocations from sanctions and buyer aversion from late April through the end of 2022. Disruptions are estimated to moderate to 2 million b/d by end-2023 as barrels are redirected and/or more cargoes are "cautiously purchased." The crude markets are also dealing with lockdowns in China, the world's second largest oil consumer, which has imposed restrictions on movements in several cities to fight the spread of omicron variants. Moreover, OPEC+ is likely to keep increasing oil production quotas according to previous plans, despite the disruption of Russian supplies, Muller said. "There was a global stock draw that the world is predicting on the basis of OPEC+ continuing to hold their line, not least because there is very little extra production available out of anywhere than core OPEC these days," he said. OPEC+ ministers in their March 31 meeting stuck to their planned 432,000 b/d production hike in May, despite pressure to tap additional spare capacity and boost output further. The OPEC+ alliance, which controls some half of global oil supply, has gradually rolled back the record production cuts it instituted during the worst of the pandemic, saying it aims to balance supply with emerging demand from the recovery. Internal OPEC+ analysis showed that the group pumped 1.053 million b/d below its targets for February, as many members were unable to raise production due to natural field declines, inadequate infrastructure and a general lack of investment exacerbated by the coronavirus market crash. The delay in reaching an Iranian nuclear deal is also another setback for oil markets, which were anticipating a return of their crude in the second quarter of 2022, Muller said.

Hedge funds grapple with triple uncertainties on oil: Kemp - (Reuters) - Investors made few changes to petroleum positions last week as prices remained poised between upside risks from the disruption of Russian exports and downside risks from recession and China's coronavirus outbreaks. Hedge funds and other money managers sold the equivalent of 15 million barrels in the six most important petroleum futures and options contracts in the week to March 29, according to position records. Fund sales reversed purchases of 16 million barrels the previous week - but the reporting deadline came before the announcement of a record release of crude oil from the U.S. Strategic Petroleum Reserve on March 31. The latest changes included liquidation of 10 million barrels of previous bullish long positions and the initiation of 6 million barrels of new bearish short positions. There were small sales of Brent (-8 million barrels), NYMEX and ICE WTI (-4 million), U.S. gasoline (-3 million) and European gas oil (-2 million) partially offset by small purchases of U.S. diesel (+2 million). Net long positions across all six contracts amounted to just 553 million barrels (39th percentile for all weeks since 2013) although the ratio of long to short positions was still relatively high at 4.81:1 (61st percentile). The disparity was consistent with a cautious approach among fund managers amid conflicting pressures on prices, high levels of uncertainty and elevated volatility, which makes taking and holding positions risky and expensive. Reflecting this, the number of open futures positions held by all traders across the six contracts fell by a further 59 million barrels to 5,059 million, the fewest since May 2015. Like other traders, funds were struggling to resolve the triple uncertainty from the disruption of Russia's oil exports, signs of a slowdown in the major economies, and China's worsening outbreaks of coronavirus. Funds were significantly more bullish about the outlook for refined fuels and especially middle distillates rather than crude, reflecting the low level of diesel and gas oil inventories around the world. Even in distillates, however, bullishness stemming from low inventories and the impact of the conflict on Russia's exports was tempered by concerns about economic slowdowns evident in the United States, Europe, China and the rest of Asia.

Oil prices slightly dip after Biden announces largest-ever oil reserve release Global oil prices dipped Sunday amid a ceasefire agreement on the Saudi-Yemeni border, which boosted supply, days after they seemed to stabilize. Last week, oil prices fell around 13 percent after President Joe Biden announced the largest-ever U.S. oil reserves release, intending to help alleviate record-high gas prices across the U.S. Oil prices were higher in early Asian trade, on reports that support for a European Union-wide ban on the purchase of Russian oil is growing inside the bloc. Brent crude futures fell $1.01, or 1%, to $103.38, while WTI crude futures fell 84 cents, or 0.9%, to $98.43 a barrel, Reuters reported. Phil Flynn told Reuters that the truce between the United Arab Emirates and an Iranian group will welcome additional oil supply, easing tensions in the region and in the markets. The truce is the first of its kind amid the two parties' 7-year conflict, Reuters reported. On Thursday, Biden announced that the U.S. would release 180 million barrels from the U.S. Strategic Petroleum Reserve (SPR).

Oil prices fall after truce in Middle East conflict, SPR news (Reuters) - Oil prices fell at the start of Asian trade on Sunday, after the United Arab Emirates and the Iran-aligned Houthi group welcomed a truce that would halt military operations on the Saudi-Yemeni border, alleviating some concerns about potential supply issues. The early losses this week come after oil prices settled down around 13% last week - their biggest weekly falls in two years - when U.S. President Joe Biden announced the largest-ever U.S. oil reserves release. Brent crude LCOc1 futures fell $1.01, or 1%, to $103.38 a barrel by 2223 GMT. WTI crude CLc1 futures fell 84 cents, or 0.9%, to $98.43 a barrel. The United Arab Emirates (UAE) has welcomed the announcement of a U.N.-brokered truce in Yemen, the UAE's state news agency WAM reported on Saturday. The Iran-aligned Houthi group, which has been fighting a coalition including the UAE in Yemen, also welcomed the truce. The nationwide truce is the first for years in Yemen's seven-year conflict and will allow fuel imports into Houthi-held areas and some flights to operate from Sanaa airport, a United Nations envoy said on Friday. "This was a threat to supply, and a ceasefire would reduce that threat to supply," Market participants have been concerned about global supplies since Russia's invasion of Ukraine in late February. Sanctions imposed on Russia over the invasion disrupted oil supplies and drove oil prices to nearly $140 a barrel, the highest in about 14 years.

Saudi Arabia Raises Oil Prices To Record Premiums - The world’s largest crude oil exporter, Saudi Arabia, raised its official selling prices for its flagship crude to the Asian market in May to a fresh record against regional benchmarks, in a move widely expected by traders and refiners.The Saudis hiked the OSP for May for Asia for Arab Light—the Kingdom’s flagship grade—to a record premium of $9.35 per barrel above the Oman/Dubai benchmark, off which Middle Eastern crude is priced in Asia.The price for May is raised by a massive $4.40 a barrel over the April OSP for Arab Light of $4.95 a barrel premium over Oman/Dubai, per Bloomberg’s estimates.Last week, a Bloomberg survey showed that Asian refiners and traders expectedSaudi Arabia to once again hike significantly the prices of its crude going to Asia in May to a record premium over the Middle Eastern benchmarks. For May, Saudi Arabia’s oil giant Aramco hiked the prices of all its crude going to all markets.The soaring oil prices and the “buyers’ strike” over purchasing Russian crude could be an opportunity for Russia’s key ally in the OPEC+ pact, OPEC’s de facto leader Saudi Arabia, to hike its official selling prices to another all-time high over the Oman/Dubai benchmark.Saudi Arabia generally sets the pricing trends of the other major Middle Eastern oil producers, and it usually sets the OSPs of its crude for the following month around the fifth of each month, typically after the monthly OPEC+ meeting.Last week, the OPEC+ meeting concluded that no change in production plans was needed, and agreed to lift the group’s production by another 432,000 barrels per day starting in May.The 32,000 bpd above the originally agreed to 400,000 bpd is due to shifting baselines of five of its members.Saudi Arabia’s production quota has been lifted to 10.549 million bpd, and Russia’s quota was raised to the same amount.

Futures Jump on News of Saudi Price Hikes: Report --Oil jumped on Monday, rising by as much as 4% after Saudi Arabia raised prices for some of its biggest customers to record highs for May, according to a Bloomberg report. Brent crude futures were up 3.4% on Monday at $107.88 a barrel, having risen to a session high of $108.19, while West Texas Intermediate was up 4% at around $103.25 a barrel. Oil prices soared to 14-year highs in March, as Russia's invasion of Ukraine threw uncertainty around oil supply, as the country is the world's second largest oil exporter. Surging cases of COVID in China, the world's largest importer of energy, has dampened some of that bullishness, as investors have grown concerned about the potential impact to demand. Saudi Aramco, the country's state oil producer, will raise the selling price for its flagship Arab light crude for next month's shipments to Asia to $9.35 a barrel over its benchmark, Bloomberg said. This represents a price hike of $4.40 a barrel from the previous month, which was already a record high. Traders tend to view a price rise as a sign that a seller is not worried about a drop-off in demand. Saudi Aramco's price increase follows last week's OPEC+ meeting at which the group decided to stick to its existing supply plan and resisted international pressure to raise output more quickly to help tame sky-high energy prices. The US and UK are banning imports of Russian oil and gas, while the European Union has yet to make a decision on the matter as the importance of Russian energy to several member states holds the union back. With lockdowns in place in various big Chinese cities to control the spread of COVID, fewer people than usual will be travelling over the Qingming festival this week, when millions of people take to the roads and the skies to visit relatives and friends. This could dent demand even further. "The China holiday is definitely muting trading volumes in Asia today, leaving Brent crude unchanged at USD 104.50, and WTI unchanged at USD 99.35.

Oil Spikes After Saudi Hiked OSPs, EU Mulls Russian Oil Ban - Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange powered higher in afternoon trade Monday, with both U.S. and international crude benchmarks gaining more than 4% after Saudi Aramco raised its official selling prices for Asian and European buyers next month, signaling strong demand growth despite signs of demand destruction in some major oil-consuming economies, while escalating violence in Ukraine against civilians led to renewed calls to enforce an official ban on Russian energy exports. The war in Ukraine continues to drive the narrative in the oil market after grim images of battered bodies left in the open on the streets of Bucha in the outskirts of Kyiv sparked calls for tougher sanctions against the Kremlin, namely a cutoff of fuel imports from Russia. French President Emmanuel Macron said on Monday there is "clear evidence of war crimes" in Bucha that demand new punitive measures, adding "I'm in favor of a new round of sanctions and in particular on coal and gasoline." Germany, however, maintained its posture that phasing out Russian energy exports is simply unattainable at the moment due to a high degree of reliance on Russian oil, gas, and coal imports. For reference, about half of Germany's imports of gas and hard coal, and about one-third of its oil imports originate from Russia. In total, Germany depends on Russia for about one-third of its total energy consumption. Within the German economy, gas is predominantly used for industrial production, accounting for roughly 36% of demand, followed by households with 31%, and trade and commerce at about 13%. Should Germany cut off Russian gas imports, it would mostly affect the industrial backbone of the German economy -- a step politicians have been reluctant to take. Separately, Saudi Aramco raised its official selling prices (OSP) across the board for May loading cargoes, with Asia-bound barrels seeing the largest increases, between $2.70 and $4.40 barrel (bbl), according to a pricing document Aramco released Monday. For Northwest Europe-bound crude, Aramco lifted its extra light grade the most, by $3.80 to an $8.10 bbl premium to ICE Brent, and its light grade increased $3 to a $4.60 bbl premium. Arab medium was increased $1.40 to a $1.90 bbl premium, while Arab heavy rose 30 cents to a $1.10 bbl discount to ICE Brent. For U.S.-bound crudes, Aramco increased all grades by $2.20 from April. The April extra light OSP was set at a $7 bbl premium over ASCI. Arab light, medium, and heavy grades were up as well at premiums of $5.65 bbl, $4.95 bbl, and $4.50 bbl, respectively. On the session, NYMEX May West Texas Intermediate futures advanced $4.01 to settle at $103.28 bbl, and the ICE June Brent contract gained $3.14 to $107.53 bbl. NYMEX May ULSD futures rallied 12.21 cents to $3.5461 gallon, and the May RBOB contract jumped 4.46 cents to a $3.1981 gallon settlement.

Global cash crude prices tumble from record premiums versus futures (Reuters) -Cash prices for key crude oil grades produced in the Middle East, Europe and the United States have slumped in recent weeks from record premiums to futures benchmarks, as refiners balk at higher operating costs and major economies get set to release a flood of oil from strategic reserves. Crude benchmarks traded in spot markets around the world are often predictive of the direction of global futures prices. Right now, declining premiums for grades from the Middle East, the North Sea and west Texas all suggest that the decision from big consumers to release crude reserves is having a dampening effect on prices, offsetting some of the anticipated loss of Russian exports. In recent days, the premiums for Middle East benchmarks Dubai, Oman and Murban crude have fallen to a third of their early March peak. North Sea's Brent and Forties are down 80% to 100% from when the United States banned Russian oil imports after the Feb. 24 invasion of Ukraine. U.S. grades like Mars sour are weakening as the U.S. reserve releases more medium heavy sour crude into the market. The International Energy Agency has warned that the world may lose 3 million barrels per day of Russian crude and oil products starting in April. Russia exports between 4 and 5 million bpd, making it the second-largest crude exporter behind Saudi Arabia. To cover that loss, the United States announced its largest-ever release from the Strategic Petroleum Reserve (SPR) at 1 million bpd for six months from May, or about 180 million barrels, the third such release in six months. Other IEA members agreed on Friday to release oil following a March 1 release. "Refineries are cautious and shopping around to the last minute; SPR certainly makes the market a bit less strained over the next six months and, of course, there are worries of demand destruction," a senior European trader said. West African crude offers slipped again on Tuesday as Asian buyers had largely filled their requirements for the trading cycle and European buyers held off as supply overhangs lingered, traders said. Supplies from top exporter Nigeria were piling up, with an overhang of April and May-loading crude reaching at least 40 cargoes, they said. Oil for April loading from Africa’s No. 2 oil exporter Angola has yet to sell out along with at least 10 cargoes for May, the slowest sales in years, due to poor demand from top buyer China, traders said. China recently extended a lockdown in Shanghai due to coronavirus infections. India has turned to cheap Russian Urals crude, reducing its demand for supplies from the Middle East and Africa, they said. "It's unclear if we are really facing tight supplies because Russian barrels are still flowing," The U.S. SPR release is expected to pump more medium sour crude into the market, weighing on spot Mars crude, traders said. Mars Sour is trading at a $3.05-per-barrel discount to U.S. West Texas Intermediate (WTI) futures, from a $1.25-per-barrel premium hit in late February. Rising freight costs, however, are making U.S. exports less attractive, traders said. Easing crude prices could encourage refiners to increase output to meet peak summer demand at a time when global diesel inventories are at their lowest levels in more than a decade.

WTI, Brent Advance as EU Targets Russia With New Sanctions-- Oil futures extended gains into early trade Tuesday, with the U.S. and international crude benchmarks adding to Monday's gains after some European leaders pushed for a discussion on the possibility of extending sanctions to Russia's oil and coal sectors in response to egregious atrocities witnessed against Ukraine's civilian population in the now liberated areas surrounding the capital city of Kyiv. French President Emmanuel Macron said on Monday there is "clear evidence of war crimes" in Bucha that demand new punitive measures, adding that "I'm in favor of a new round of sanctions and in particular on coal and gasoline." Germany, however, remains a key opponent of stricter measures, with about half of Germany's imports of gas and hard coal, and about one-third of its oil imports originating in Russia. In total, Germany depends on Russia for about one-third of its total energy consumption. . The United States and United Kingdom have already moved to ban Russian oil and mounting civilian casualties in Ukraine is piling pressure on governments to take further steps against Russia. Further supporting the oil complex, Organization of the Petroleum Exporting Countries continued to struggle to meet their production quota in March, with the producer group managing to raise output by just 90,000 bpd, according to surveys from Reuters and Bloomberg. The alliance agreed to increase production by 400,000 bpd last month -- a rolling monthly target that has been consistently missed since the second half of 2021. Outages in some African members partly offset increases by Saudi Arabia and other Gulf producers. Near 7:30 a.m. ET, NYMEX May West Texas Intermediate futures advanced $0.63 to $103.89 bbl, and the ICE June Brent contract gained $0.56 to $108.09 bbl. NYMEX May ULSD futures declined 2.45 cents to $3.5235 gallon, and the May RBOB contract jumped 2.19 cents to $3.2200 gallon.

Oil eases on COVID-19 pandemic worries, strong US dollar (Reuters) – Oil prices eased in volatile trade on Tuesday, pressured by a rising U.S. dollar and growing worries that new coronavirus cases could slow demand but losses were limited by supply concerns due to sanctions on Russia for alleged war crimes. Early in the session, prices rose over $2 a barrel after Japan’s Industry Minister said the International Energy Agency (IEA) was still discussing a coordinated release of oil reserves that many traders thought was a done deal. After that, prices traded either side of unchanged for most of the day. read more Demand worries mounted after authorities in top oil importer China extended a lockdown in Shanghai to cover all of the financial center’s 26 million people. read more“Early dollar weakness today gradually gave way to strength in providing additional impetus behind today’s oil price swing back to the downside,”Brent futures fell 89 cents, or 0.8%, to settle at $106.64 a barrel. U.S. West Texas Intermediate (WTI) crude fell $1.32, or 1.3% to settle at $101.96.Oil prices could gain support after settlement if analysts’ forecasts are correct and U.S. crude inventories declined by around 2.1 million barrels last week. ,The American Petroleum Institute (API), an industry group, will issue its inventory report at 4:30 p.m. EDT (2030 GMT). On Wednesday, the U.S. Energy Information Administration (EIA) will issue the official report at 10:30 a.m. EDT.The dollar (.DXY) strengthened a fourth day in a row to its highest since May 2020 against a basket of other currencies. A stronger dollar makes oil more expensive for holders of other currencies. read more The United States and the European Union (EU) proposed sweeping new sanctions against Russia over civilian killings in Ukraine, including an EU ban on coal imports. read more read more. German Foreign Minister Annalena Baerbock said the ban on coal will be followed by oil and then gas.Moscow, which calls its action in Ukraine a “special operation,” said Western allegations of war crimes in the Ukrainian town of Bucha were a “monstrous forgery” aimed at denigrating the Russian army. read more To calm oil prices, U.S.-allied countries agreed last week to a coordinated oil release from strategic reserves for the second time in a month. read moreMizuho executive director of energy futures Robert Yawger said the U.S. plan to release 180 million barrels of oil from its Strategic Petroleum Reserve has narrowed the spread between current and later-dated crude futures. read moreYawger noted WTI futures were only trading in “super backwardation” with each month at least $1 a barrel below the prior month through October 2022. A month ago, he said the curve was in super-backwardation through November 2023.

WTI Turns Lower After Crude Stocks Unexpectedly Increased - Oil futures traded on the New York Mercantile Exchange turned lower in late morning trade Wednesday, with the front-month West Texas Intermediate falling below $100 barrel (bbl) after government data from the U.S. Energy Information Administration showed an unexpected build in U.S. commercial oil inventories along with a 100,000 barrels per day (bpd) increase in domestic crude production for the week ended April 1, while a larger-than-expected drawdown in commercial gasoline inventories offset losses for the RBOB contract. Near 11:30 a.m. EDT, NYMEX West Texas Intermediate May futures plummeted $2.84 to $99.09 bbl, and the international crude benchmark Brent June contract declined $2.70 to $104 bbl. NYMEX RBOB May futures weakened 5.44 cents to $3.1093 gallon, and the front-month ULSD futures fell 7.01 cents to $3.4033 gallon. EIA data released at midmorning show commercial crude stockpiles climbed 2.4 million bbl from the previous week to 412.4 bbl and are now about 14% below the five-year average. The draw was bullish against expectations of a 1.6 million bbl decrease and countered estimates of a 1.080 million bbl increase by the American Petroleum Institute in data released late Tuesday afternoon. Oil stored at Cushing, Oklahoma, the delivery point for the WTI contract rose by 1.7 million bbl from the previous week to 25.9 million bbl, EIA said in its weekly report. Domestic refiners once again increased run rates, up 0.4% from the previous week to 92.5% compared with analyst estimates for a 0.3% increase. Oil producers, meanwhile, increased output by 100,000 bpd from the previous week to 11.7 million bpd. In the gasoline complex, commercial inventories unexpectedly fell by 2 million bbl to 236.8 million bbl compared with analyst expectations for inventories to have decreased by 200,000 bbl from the previous week. After declining for three consecutive weeks, demand for motor gasoline in the United States gained 63,000 bpd from a three-month low 8.562 million bpd. Distillate stocks rose 771,000 bbl from the previous week to 114.3 million bbl, and are now about 15% below the five-year average, EIA said. Analysts expected distillates inventories would fall by 200,000 bbl. Demand for distillate fuels continued lower in the reviewed week, falling by 157,000 bpd last week to a 2-1/2 month low 3.647 million bpd. Total products supplied over the last four-week period averaged 20.4 million bpd, up 5.5% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.7 million bpd, down 0.3% from the same period last year. Distillate fuel product supplied averaged 3.9 million bpd over the past four weeks, up by 1.8% from the same period last year. Jet fuel product supplied was up 28.9% compared with the same four-week period last year.

Oil Tumbles 5% on Global Reserves Release; U.S. Crude Breaks Below $97-- Will big reserve releases bring crude prices down in a severely undersupplied market? No, say oil longs, and they’re right if the market remains in deficit over the longer term. But in the short term, the actions of the Biden administration and other governments have started hurting this year’s energy rally. Crude prices tumbled for a second day in a row after the Paris-based International Energy Agency, or IEA, said it will release 120 million barrels from the reserves of its members into the open market to bridge a global supply shortage. “Those long oil can keep denying that these reserves releases don’t matter to the longer-term price in this market. Maybe. But on a daily basis, they are causing havoc to the market’s volatility,” said John Kilduff, partner at New York energy hedge Again Capital. London-traded Brent, the global oil benchmark, settled down $5.57, or 5.3%, at $101.07 per barrel. Its low for the session was $100.68. Brent fell 13% last week for its biggest weekly decline since April 2020 after finishing the first quarter up 39%, demonstrating the recent volatility in oil. New York-traded U.S. crude benchmark West Texas Intermediate, or WTI, settled down $5.73, or 5.6%, at $96.23, after an intraday low of $95.86. The IEA announcement came after the Biden administration said last week it will release 180 million barrels of its own from the U.S. Strategic Petroleum Reserve over the next six months, averaging one million barrels per day. According to the IEA on Wednesday, half of the 120 million barrels from its release will come from the United States. Sources familiar with the situation said the 60 million barrels of the U.S. share were already included in the 180 million barrels release cited by the Biden administration last week. That effectively meant that a new 60 million barrels would come from non-U.S. members of the IEA. Cumulatively, some 240 million barrels would be landing on the open market for oil over the next six months, or 1.33 million barrels per day. That would be more than triple the monthly increments of 400,000 barrels per day that global oil producers under the Saudi-controlled and Russian-steered OPEC+ alliance have been doing. OPEC+ is keeping at least four million barrels of regular daily supply needed by consumers off the market to ensure that crude prices stay at above or around $100 per barrel, which has been the norm since the U.S. and EU sanctions imposed on Russia for its Feb. 24 invasion of Ukraine. Separately, the delivery of some 3.0 million barrels per day of Russian oil exports is being delayed by sanctions, with some being denied altogether.

Crude oil futures rise on fresh buying after IEA news sparks overnight plunge -Crude oil futures were higher in mid-morning Asian trade April 7 as investors returned to buy the dips after news of IEA members agreeing to a 120 million barrels oil reserve release sent oil prices tumbling overnight. At 10:15 am Singapore time (0215 GMT), the ICE June Brent futures contract was up $1.61/b (1.59%) from the previous close at $102.68/b, while the NYMEX May light sweet crude contract rose $1.43/b (1.49%) to $97.66/b. IEA member countries agreed to release 120 million barrels of oil from storage, which includes 60 million barrels already pledged from the US, as part of its overall draw from its strategic petroleum reserve, IEA Executive Director Fatih Birol tweeted April 6. This comes after the US pledged to tap 180 million barrels of oil last week, effectively releasing 1 million b/d for six months from May, in a bid to alleviate market concerns over potential shortages from a drop in Russian oil exports. The reports sent ICE Brent and NYMEX crashing by more than 5% on the day, effectively erasing all of its gains for the week. "In addition to the enormous global reserves release, demand destruction and recession are currently the only price-lowering mechanism in a world devoid of inventory buffers," Financial markets have been on shaky ground this week as US Federal Reserve officials called for an aggressive tightening of monetary policy in the months ahead to waylay rising inflation. This has stirred fears of a hard landing that could send the economy into recession. The latest minutes of the Federal Reserve April 6 showed several Fed officials supporting raising interest rates by half a percentage point at least once in the future, while also reducing its swollen balance sheet by $95 billion per month. Putting further pressure on prices, US crude oil stocks rose 2.42 million barrels in the week ended April 1 to 412.37 million barrels, as US crude output climbed 100,000 b/d to 11.8 million b/d, the highest since December 2021, US Energy Information Administration data showed April 6. Total US gasoline stocks meanwhile, fell 2.04 million barrels to 236.79 million while distillate stocks edged 770,000 barrels higher to 114.3 million barrels, the EIA said.

Oil Futures Soften as US Dollar Hits 2-Year High, Emergency Oil Stocks Release News - Oil futures nearest delivery settled Thursday's session with modest losses, aside from a larger 2.3% decline by the ULSD contract. Futures were pressured by a stronger U.S. dollar following hawkish minutes from the Federal Open Market Committee's March meeting released Wednesday and details announced Thursday by the International Energy Agency of a planned coordinated release of 120 million barrels (bbl) from emergency oil stocks in response to supply disruptions stemming from Russia's invasion of Ukraine. On the session, NYMEX May West Texas Intermediate futures slipped $0.20 to settle a tad above $96 per bbl, and the ICE June Brent contract declined $0.49 to $100.58 per bbl. NYMEX RBOB fell 0.64 cent to $3.0398 per gallon, and NYMEX ULSD dropped 7.74 cents to $3.2678 per gallon. The U.S. dollar continued higher for the sixth straight session Thursday, spurred Thursday by revelations Fed officials are aiming to target rising inflation through aggressive monetary tightening, FOMC minutes from the March 15-16 meeting detail. Greenback made a new cycle high Thursday at 99.850 against a basket of foreign currencies in index trading. Minutes show most Fed officials would have preferred to raise the federal funds rate by 50 basis points last month instead of the 25-point hike if not for the Russian invasion of Ukraine. The 25-point increase in March was the first rate hike since 2018. On Thursday, St. Louis Federal Reserve President James Bullard said the central bank is "behind the curve" in lifting interest rates to fight inflation but is making progress towards a corrective course. "Even if you're very generous to the Fed in interpreting what the inflation rate really is today ... you'd have to raise the policy rate a lot." U.S. consumer price index in February came at its highest in 40 years at 7.9%, with prices for gasoline, shelter and food behind the increases. Further weighing on the oil complex, IEA on Thursday confirmed the release of 120 million bbl over a six-month period, making it the largest release in their IEA history. The unanimous agreement among IEA member countries on April 1 for a second collective action this year came in response to the significant strains in oil markets resulting from Russia's invasion of Ukraine, IEA wrote. The two IEA collective actions this year of 62.7 million bbl, agreed upon on March 1, and the latest 120 million bbl amount to 9% of total emergency reserves. According to IEA estimates, Russian oil production could fall by as much as 3 million barrels per day (bpd) this month as a result of the reluctance by Western banks and traders to deal with Russian energy exports. Although the combined SPR release is unprecedented in its scale and scope, analysts are skeptical that it would have a long-term "cooling effect" on prices.

Oil settles lower on doubts about Russia oil sanctions -Oil settled lower on Thursday, adding to weekly losses on uncertainty that the euro zone will be able to effectively sanction Russian energy exports and after consuming nations announced a huge release of oil from emergency reserves. Prices were also pressured by fears that lockdowns in China due to a new wave of COVID-19 would slow the recover in oil demand. Brent crude futures fell 49 cents, or 0.5%, to settle at $100.58 a barrel while U.S. West Texas Intermediate (WTI) crude fell 20 cents, or 0.6%, to settle at $96.03 a barrel. The previous session, both benchmarks plunged more than 5% to their lowest closing levels since March 16. The European Union's top diplomat, Josep Borrell, told a NATO meeting that new EU measures, including a ban on Russian coal, could be passed on Thursday or Friday and the bloc would discuss an oil embargo next. However, the coal ban would take full effect from mid-August, a month later than initially planned. India has continued purchases of discounted Russian crude oil imports, pushing out what analysts had predicted would be a loss of 2-3 million barrels per day of Russian oil from the global market. "While such a loss is still possible once contracts roll off and India's required refinery needs or storage is satisfied, such a development could still be weeks if not a couple of months away," s In China, multiple outbreaks of the virus have prompted widespread lockdowns in Shanghai, the most populous city. On Wednesday, International Energy Agency (IEA) member countries agreed to release 60 million barrels on top of a 180 million-barrel release announced by the United States last week to help drive down fuel prices. Japan will release 15 million barrels of oil from state and private reserves, Japan's Kyodo news agency reported. "Although this is the biggest release since the stockpile was created in 1980, it will fail to ultimately change the fundamentals in the oil market," ANZ bank said of the U.S. release Other analysts saw the stocks release as a big relief amid concerns over market tightness. .

Oil Falls 4% Week Over Week as Traders Assess Strategic Oil Reserve Releases - Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange gained ground Friday afternoon, although all petroleum contracts registered losses for a second consecutive week. The moves came after announcements of planned oil releases from strategic reserves by the United States and International Energy Agency countries eased near-term concerns over supply availability tied to sanctions on Russian crude exports. China's largest refiners -- Sinopic, PetroChina and CNOOC, among others -- are staying on the sidelines as they avoid buying Russian cargoes for May loadings, according to wire service reports, adding pressure on Russia's energy complex reeling from Western sanctions. While state-owned refiners refrain from purchasing new Russian cargoes, independent "teapot" refineries in China continue to scoop up the discounted cargoes amid limited exposure to international markets. Russia's flagship Urals crude is being offered at a historic discount of $35 bbl against the international benchmark Brent contract, effectively bringing the price to its pre-war levels. India, another large buyer of Russian oil, may soon face tougher pressure from the international community to sever ties with Russia after the Biden administration warned New Delhi not to align itself too closely with Moscow. Traders are closely monitoring the political response in the West and Asia to the conflict in Ukraine that is quickly descending deeper into a bloodbath. On Friday, the European Union announced a fifth package of Russian sanctions that includes a phased-out ban on imports of Russian coal with EU leaders warning that the next step would be oil and gas. It is increasingly clear Russia's energy industry will suffer a heavy blow from Western sanctions that have already shaved off between 4% and 5% from Russian oil production, according to Russia's Deputy Prime Minister Alexander Novak, meaning the loss of roughly 500,000 to 600,000 barrels per day (bpd) of output. IEA estimates Russian crude and petroleum products exports would plummet between 2.5 million and 3 million bpd this month from 7.8 million bpd in February. Further weighing on the complex this week is more evidence of China's economic slowdown after authorities in the nation's largest city, Shanghai, extended a citywide lockdown into the end of April as COVID-19 cases there reset record highs. The World Bank and some investment banks have recently warned the economic damage caused by China's zero-COVID policy is growing, with China the world's second-largest economy. On the session, NYMEX May West Texas Intermediate futures gained $2.23 to $98.26 per bbl, and the ICE June Brent contract rallied to $102.78 per bbl. NYMEX RBOB advanced 9.18 cents to $3.1316 per gallon, and NYMEX ULSD rallied 4.98 cents to $3.3176 per gallon.