oil & natural gas prices hit 13 year highs; US oil supplies at a 17½ year low & SPR at a 35 year low; refinery utilization highest since 2019, refinery throughput highest in 17 months; gasoline supplies at a 6 month low even with gasoline imports at a 46 week high
oil prices rose for a seventh consecutive week as record high fuel prices showed no signs of dampening demand... after rising 3.3% to $118.87 a barrel last week as China ended their lockdowns and the EU banned 90% of Russian oil imports, the contract price for US light sweet crude for July delivery jumped to over $120 a barrel in early trading Monday, after Saudi Aramco unexpectedly raised its selling prices for oil to Asia, sparking concerns over tightening global supplies, but faded in afternoon trading to settle 37 cents lower at $118.50 per barrel, as traders weighed risks of a potential US recession against supply disruptions in Russia and Libya....but oil prices moved higher again on Tuesday, on reports of an expected demand recovery in China and settled 91 cents higher at a three month high of $119.41 a barrel, as traders anticipated that the weekly US inventory data would show commercial crude oil inventories had declined again...oil prices then dipped in after hours trading after the American Petroleum Institute unexpectedly reported a crude inventory build, but moved higher early Wednesday despite the likely rise in U.S. oil supplies, on the easing of Chinese lockdowns and on a possible strike by Norwegian oil workers, and then jumped to a 13 week high after the EIA reported US demand for gasoline kept rising despite record pump prices, and on expectations China's oil demand would rise amid supply concerns in several countries, and settled $2.70 higher at $122.11 a barrel, after the EIA's monthly Short-Term Energy Outlook forecasted that oil prices would stay above $100 per barrel through the whole year....however, oil prices pulled back early Thursday as renewed Covid-19 controls in parts of Shanghai outweighed the robust demand for refined fuels in the US, but still hovered near three-month highs before settling 60 cents lower at $121.51 a barrel, with RBOB (gasoline) and ULSD (diesel) futures advancing more than 1.5%, supported by low inventory levels in the US and globally, as summer travel demand was seen recovering to pre-pandemic highs....oil prices moved higher in early trading Friday ahead of the release of the consumer price index, which was expected to show persistently high inflation continued in May amid an ongoing surge in prices for retail gasoline. but turned lower after the report as traders weighed the impact of China’s bumpy return from its virus curbs and settled down 84 cents on the session at $120.67 a barrel as higher than expected inflation had suggested even more aggressive rate hikes that sent the dollar flying, making commodities priced in the greenback, including crude, costlier for non-holders of the currency...oil prices still managed a 1.5% increase on the week, with the week ending closing price the highest since 2008, on signs of persistent shortages despite the Chinese lockdowns, more OPEC supply and the US SPR release....
natural gas prices also reached their highest level since 2008 this week before falling back, as a rally on record high temperatures was cut off after an explosion at an LNG export terminal...after falling 3.3% to $8.523 per mmBTU last week as June forecasts had turned cooler, the contract price of natural gas for July delivery opened almost 6% higher on Monday and rose 79.9 cents to a 13 year high of $9.322 per mmBTU, on record power demand in Texas, and on forecasts for hotter weather and higher demand than had been expected, while pipeline maintenance concurrently impacted supplies...prices eased a bit on Tuesday, slipping 2.9 cents to $9.293 per mmBTU, as an early rally faded as traders took profits while low wind power forced Texas power generators to burn more gas to keep the air conditioners running...however, natural gas prices plunged 59.4 cents or 6% to $8.699 per mmBTU on Wednesday on news of an explosion at the Freeport liquefied natural gas (LNG) export terminal on the Texas coast...however, despite the loss of demand from that plant, prices moved higher again on Thursday on ongoing record power demand in Texas, a smaller-than-usual storage build, rising spot gas prices, low wind power and a decline in gas production for the month.and settled 26.4 cents higher at $8.963 per mmBTU...but prices eased 11.3 cents to $8.850 per mmBTU on Friday, as traders continued to weigh the implications of a potentially prolonged outage at the Freeport LNG terminal, which would make the gas intended for export available for domestic consumption or lead to storage increases...but prices still ended 3.8% higher on the week, albeit off 47.2 cents or 5.1% from Monday’s close....
The EIA's natural gas storage report for the week ending June 3rd indicated that the amount of working natural gas held in underground storage in the US rose by 97 billion cubic feet to 1,999 billion cubic feet by the end of the week, which still left our gas supplies 398 billion cubic feet, or 16.6% below the 2,299 billion cubic feet that were in storage on June 3rd of last year, and 340 billion cubic feet, or 14.5% below the five-year average of 2,339 billion cubic feet of natural gas that have been in storage as of the 3rd of June over the most recent five years....the 97 billion cubic foot injection into US natural gas working storage for the cited week was close to the average forecast for a 96 billion cubic foot injection from an S&P Global Platts survey of analysts, and just a bit less than the average injection of 100 billion cubic feet of natural gas that had typically been added to our natural gas storage during the same week over the past 5 years, and also a bit less than the 98 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 June 3rd indicated that after a major drop in our oil exports and another big oil withdrawal from the SPR, we had oil left to add our stored commercial crude supplies for the 6th time in 10 weeks, and for the 21st time in the past 48 weeks, even after an increase in demand that could not be accounted for…our imports of crude oil fell by an average of 64,000 barrels per day to an average of 6,154,000 barrels per day, after falling by an average of 266,000 barrels per day during the prior week, while our exports of crude oil fell by 1,758,000 barrels per day to 2,232,000 barrels per day, after falling by 351,000 barrels per day during the prior week, which meant that our trade in oil worked out to a net import average of 3,922,000 barrels of oil per day during the week ending June 3rd, 1,694,000 more barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude from US wells was reportedly unchanged at 11,900,000 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 15,822,000 barrels per day during the cited reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,387,000 barrels of crude per day during the week ending June 3rd, an average of 355,000 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 749,000 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 184,000 barrels per day more 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 (-184,000) 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 error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed.....however, since last week’s unaccounted for oil factor was at (+406,000) barrels per day, that means there was a 590,000 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 pretty useless.... however, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete 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)….
week's 749,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 936,081,000 barrels at the end of the week, our lowest oil inventory level since October 15th, 2004, and therefore a 17 1/2 year low….our oil inventory decreased this week even though 289,000 barrels per day were being added to our commercially available stocks of crude oil, because 1,036,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time....that draw on the SPR would now include the initial emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump", that is expected to supply 1,000,000 barrels of oil per day to commercial interests from now up to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising further at least up until that time, as well as the previous 30,000,000 million barrel release from the SPR to address initial Russian supply related shortfalls, and 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 recent release programs, a total of 136,826,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 22 months, and as a result the 519,323,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since March 27th, 1987, or at a 35 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's releases....so now, the total 180,000,000 barrel drawdown expected over the next six months will remove almost a third of what remains in the SPR, and leave us with what would be less than a 20 day supply of oil at today's consumption rate...
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,357,000 barrels per day last week, which was still 1.9% more than the 6,238,000 barrel per day average that we were importing over the same four-week period last year….this week’s crude oil production was reported to be unchanged at 11,900,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,500,000 barrels per day, and as Alaska’s oil production was 5,000 barrels per day lower at 445,000 barrels per day andand has 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 9.2% below that of our pre-pandemic production peak, but was 41.2% 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 94.2% of their capacity while using those 16,387,000 barrels of crude per day during the week ending June 3rd, up from the 92.6% utilization rate of the prior week, and the highest refinery utilization rate since December 2019…the 16,387,000 barrels per day of oil that were refined this week were the most since January 2020, and 2.9% more barrels than the 15,925,000 barrels of crude that were being processed daily during week ending June 4th of 2021, but still 4.0% less than the 17,064,000 barrels that were being refined during the prepandemic week ending June 7th, 2019, when refinery utilization was at a fairly normal 93.2% for the first weekend of June...
With the increase in the amount of oil being refined this week, gasoline output from our refineries was also higher, increasing by 73,000 barrels per day to 9,968,000 barrels per day during the week ending June 3rd, after our gasoline output had increased by 545,000 barrels per day over the prior week.…this week’s gasoline production was 6.5% more than the 9,431,000 barrels of gasoline that were being produced daily over the same week of last year, but 2.3% below our gasoline production of 10,276,000 barrels per day during the week ending June 7th, 2019, ie, during the year before the pandemic impacted US gasoline output....at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 17,000 barrels per day to 5,001,000 barrels per day, after our distillates output had decreased by 169,000 barrels per day over the prior week…but after other recent production increases, our distillates output was still 1.7% more than the 4,918,000 barrels of distillates that were being produced daily during the week endingJune 4th of 2021, but 4.5% less than the 5,239,000 barrels of distillates that were being produced daily during the week ending June 7th, 2019...
Even with the recent increases in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the seventeenth time in eighteen weeks, decreasing by 812,000 barrels to a six month low of 218,184,000 barrels during the week ending June 3rd, after our gasoline inventories had decreased by 711,000 barrels over the prior week....our gasoline supplies decreased again this week because the amount of gasoline supplied to US users increased by 222,000 barrels per day to 9,199,000 barrels per day, even as our exports of gasoline fell by 106,000 barrels per day to 957,000 barrels per day, and as our imports of gasoline rose by 286,000 barrels per day to a 46 week high of 1,176,000 barrels per day....after 17 inventory drawdowns over the past 18 weeks, our gasoline supplies were 9.5% lower than last June 4th's gasoline inventories of 241,026,000 barrels, and 10% below the five year average of our gasoline supplies for this time of the year…
With the small increase in our distillates production, our supplies of distillate fuels increased for the 6th time in twenty-one weeks and for the 13th time in forty weeks, rising by 2,592,000 barrels to 108,984,000 barrels during the week ending June 3rd, after our distillates supplies had decreased by 529,000 barrels during the prior week….our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 319,000 barrels per day to 3,650,000 barrels per day, and because our exports of distillates fell by 152,000 barrels per day to 1,201,000 barrels per day, while our imports of distillates fell by 43,000 barrels per day to 220,000 barrels per day....but after forty-two inventory withdrawals over the past sixty weeks, our distillate supplies at the end of the week were 20.6% below the 137,214,000 barrels of distillates that we had in storage on June 4th of 2021, and about 23% below the five year average of distillates inventories for this time of the year…
Meanwhile, after this week's big release of crude from our Strategic Petroleum Reserve, our commercial supplies of crude oil in storage rose for the 11th time in 28 weeks and for the 20th time in the past year, increasing by 2,025,000 barrels over the week, from 414,733,000 barrels on May 27th to 416,758,000 barrels on June 3rd, after our commercial crude supplies had decreased by 5,068,000 barrels over the prior week…after this week’s increase, our commercial crude oil inventories remained roughly 15% below the most recent five-year average of crude oil supplies for this time of year, but were still 17% above the average of our crude oil stocks as of the first weekend of June 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 US Gulf Coast refining, our commercial crude oil supplies as of this June 3rd were 12.1% less than the 474,029,000 barrels of oil we had in commercial storage on June 4th of 2021, and were also 22.5% less than the 538,065,000 barrels of oil that we had in storage on June 5th of 2020, and 14.2% less than the 485,470,000 barrels of oil we had in commercial storage on June 7th of 2019…
Finally, with our inventories 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 3,682,000 barrels this week, from 1,681,261,000 barrels on May 27th to 1,684,943,000 barrels on June 3rd, after our total inventories had fallen by 4,803,000 barrels during the prior week....that still left our total liquids inventories down by 103,490,000 barrels over the first 23 weeks of this year, and less than 4 million barrels from a 13 1/2 year low..
This Week's Rig Count
The number of drilling rigs running in the US rose for the 1st time in three weeks and for the 75th time over the prior 89 weeks during the week ending June 10th, but still remained 7.6% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by 6 to 733 rigs this past week, which was still 272 more rigs than 461 rigs that were in use as of the June 11th report of 2021, but was also 1,196 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 increased by 6 to 580 oil rigs during this week, after rigs targeting oil were unchanged during the prior week, and there are now 215 more oil rigs active now than were running a year ago, even as they still amount to just 36.0% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 15.1% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 151 natural gas rigs, which was up by 55 natural gas rigs from the 96 natural gas rigs that were drilling during the same week a year ago, even as they were still only 9.4% 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 "miscellaneous" rigs still active; 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...a year ago, there were no such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was down by one to fourteen rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana waters....that's still one more than the count of offshore rigs that were active in the Gulf a year ago, when all 13 Gulf rigs were drilling for oil offshore from Louisiana…in addition to rigs drilling in the Gulf, we also have an offshore rig drilling in the Cook Inlet of Alaska, where natural gas is being targeted at a depth greater than 15,000 feet, while year ago, there were no offshore rigs other than those deployed in the Gulf of Mexico....
in addition to rigs offshore, we now have 3 water based rigs drilling through inland bodies of water this week, up from one a week ago...the legacy rig is a directional rig, drilling for oil at a depth between 10,000 and 15,000 feet, inland in the Galveston Bay area, while we have two new directional inland water rigs drilling for oil in Terrebonne Parish, Louisiana, one of which is targeting a formation greater than 15,000 feet in depth, while the other is shown drilling to between 10,000 and 15,000 feet... during the same week of a year ago, there was just one such "inland waters" rig deployed...
The count of active horizontal drilling rigs was up by two to 668 horizontal rigs this week, which was 248 more rigs than the 420 horizontal rigs that were in use in the US on June 11th of last year, but still 51.4% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014....at the same time, the directional rig count was up by two to 38 directional rigs this week, and those were up by 14 from the 24 directional rigs that were operating during the same week a year ago…in additiom, the vertical rig count was also up by two to 27 vertical rigs this week, while those were up by 10 from the 17 vertical rigs that were in use on June 11th 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 June 10th, the second column shows the change in the number of working rigs between last week’s count (June 3rd) and this week’s (June 10th) count, the third column shows last week’s June 3rd active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 11th of June, 2021..
to figure out what the 5 rig increase in New Mexico was, we first check the Rigs by State file at Baker Hughes for the changes in the Texas Permian basin...there we find that there was a rig pulled out of Texas Oil District 8, which includes the core Permian Delaware, and that there were 2 rigs pulled out of Texas Oil District 7C, which includes the southern counties of the Permian Midland, and that there were 3 rigs pulled out of Texas Oil District 7B, which includes the easternmost Permian Midland, but that there were 3 rigs added in Texas Oil District 8A, which covers the northern counties of the Permian Midland at the same time...since that leaves us with the possibility that the Texas Permian count could have been down by 3 rigs, we can't say for sure that all 5 New Mexico rigs were in the western Permian Delaware in the southeast corner of that state...at any rate, one of the rig additions we have just noted was not targeting the Permian, and the only way to find out which would be to tediously check the hundreds of relevant individual well records in the North America Rotary Rig Count Pivot Table from Baker Hughes...
elsewhere in Texas, we find that five rigs were added in Texas Oil District 1, but that three rigs were pulled out of Texas Oil District 2 and another rig was pulled out of Texas Oil District 3...at least two of the District 1 rigs were in the Eagle Ford, to account for the increase shown above, while others could have also been, if some of the rigs concurrently removed from other basins were also targeting the Eagle Ford...again, to find out which, one would need to check the individual well records in the North America Rotary Rig Count Pivot Table, which provides county level details.....Texas also had a rig added in Texas Oil District 9, which was apparently targeting a basin that Baker Hughes doesn't track....meanwhile, in activity outside of Texas, a rig was added in Utah's Uintah basin, which Baker Hughes doesn't track, despite the presence of 14 oil and gas rigs in that basin, while the one rig increase in the Louisiana rig count came about after the two inland waters rigs were added in Terrebonne Parish were offset by the rig pulled out of the state's offshore waters..
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Reopening of Valley injection well under deep scrutiny - Youngstown Vindicator-— AWMS Water Solutions of Howland, the company that owns two oil and gas wastewater injection wells along state Route 169 in Weathersfield Township just north of Niles, says the outcome of its case being heard by the Ohio Oil and Gas Commission will set precedent in Ohio for regulations governing seismic activity associated with injection wells. Seismic activity refers to earthquakes produced by injection wells, which inject the wastewater from the oil and gas industry deep underground as a means of disposal. The Ohio Oil and Gas Commission is reviewing the parameters set by the Ohio Department of Natural Resources under which the injection well will operate when it reopens. On May 21, 2021, Eric Vendel, chief of the ODNR Division of Oil and Gas Resources, issued orders stating after the AWMS well reopens, it must shut down again if an earthquake of a magnitude 2.1 or greater occurs within a 3-mile radius of the facility, as occurred in 2014 not long after it first opened. “AWMS also shall depressurize and not resume operations until a full evaluation of the data from the seismic event is performed by AWMS,” the orders state. The orders indicate they can be appealed to the Ohio Oil and Gas Commission — which AWMS did. The company’s appeal focuses on the requirement that the well close again if an earthquake of magnitude 2.1 or larger occurs, which AWMS found to be too restrictive. An appeal hearing took place in Columbus in February, and the company and ODNR filed followup briefs in March in which they again debated the parameters under which the well would reopen. The Ohio Oil and Gas Commission continues to review the issues but has not issued a ruling. AWMS Water Solutions, LLC. Is a wholly owned subsidiary of Avalon Holdings Corp. of One American Way in Howland. The AWMS No. 2 well was shut down in September 2014 after it caused multiple earthquakes, including a magnitude 1.7 earthquake July 28, 2014, about two months after the well started operation, and a magnitude 2.1 quake Aug. 31, 2014, according to ODNR. AWMS Water Solutions says ODNR set the level at which the facility would be shut down at 2.1 magnitude “arbitrarily.” The ODNR filing states that it chose 2.1 magnitude because that is the level where an earthquake “may be felt by the community and raise anxiety over safety.” The company’s brief, filed by attorney Matthew Vansuch, cites testimony from the hearing in which ODNR expert witness and consultant Ivan Wong testified that there was “nothing magical” about the 2.1 magnitude level ODNR has selected. Vansuch is also a Howland Township trustee. “None of these levels are going to cause the ground to shake such that there is a concern for persons or property,” Vansuch stated. He added, “Injection wells, blasting and fracking are allowed to occur at levels that cause the ground to shake, as long as they don’t exceed some acceptable level of tolerance,’ Vansuch stated. “Ohio has said it is OK for people to feel those activities without those activities being stopped.”
Upstream Investments in Ohio's Utica Saw Post Covid-19 Rebound Early Last Year - Upstream investments from Ohio’s natural gas and oil producers rebounded at the beginning of last year, making up the lion’s share of the $2.3 billion spent in the Utica Shale in the first six months of 2021. JobsOhio recently released an update to its Shale Investment Dashboard, noting producers spent about $2.2 billion during the first half of last year. It was an around $361 million increase over the last half of 2020. Researchers noted that rising gas and oil prices during the period helped boost royalties paid to the state. Royalties accounted for more than $1 billion of the investments tracked during the period.Cleveland State University’s (CSU) Andrew Thomas, director of the Energy Policy Center in the Maxine Goodman Levin College of Urban Affairs, said Covid-19 and the impact on gas prices still represented “significant challenges to the industry” during the study period.“Even so, total investment, including midstream and downstream, was only down 4% from the second half of 2020,” Thomas said. “We anticipate that our next reports will show a marked increase in total investment.”Drilling data from the Ohio Department of Natural Resources Division of Oil and Gas (ODNR) showed 74 wells were drilled between January and June 2021. The total was six fewer than were drilled in the second half of 2020. The total volume of gas-equivalent shale production in the first half of last year was 7% less than in the second half of 2020.Ascent Resources Utica Holdings LLC was the top producer during the six month period, with 389 Bcf. It was followed by Encino Energy LLC with 196 Bcf and Gulfport Energy Corp. at 173 Bcf. The top six producers during the first half of last year made up around 89% of the total production, according to ODNR data.The June update is the 11th report CSU has prepared for Ohio’s economic development corporation on Utica investments. Each report compares upstream, midstream and downstream investments during a six-month period. Together with previous investment to date, cumulative oil and gasinvestment in Ohio through June 2021 was estimated to be around $95.3 billion. Upstream accounted for $65.9 billion, with $21.4 billion from midstream and $8 billion in downstream industries.Midstream investment took a significant dip compared to the second half of 2020. The first six months of last year were absent any pipeline or processing capacity developments, with researchers citing continued Covid-19 impacts. The report noted $29.1 million spent on gathering system buildout for pipelines and $13.8 million on compression systems.Researchers wrote that the impacts to midstream investment could likely change within the next two reports with “rising commodity prices approaching 10-year highs” that will likely “put upward pressure on investment spending across all natural gas segments.”In downstream developments, two compressed natural gas refueling stations with a combined investment total of $31.3 million were installed by transit agencies in Cleveland and Columbus. Additional capacity was added at the Marathon Petroleum Corp. refinery in Canton, OH, totaling an estimated $15.8 million.
Utica Shale graduates largest class — The Utica Shale Academy graduated its largest class to date with more than 40 seniors receiving their diploma on May 31. Forty-two new alumni turned their tassels after gaining certifications for the workplace during dinner and a ceremony at Southern Local High School, which sponsors the academy. More than 250 people attended the event including family members and school leaders. USA Superintendent Bill Watson said class members impressed him by earning nearly double the credits in only one year as well as many certificates to get them ready to work. “We have a group of 15 graduates that have completed 10 or more credits in one year, on average 21.5 industry credential points instead of 12 needed for graduation, which is almost double,” he said. “This is also the first senior class to utilize work-based learning. They get credits to utilize their skills at work.” Instructor Nick Woods said the graduates gained 250 industry-recognized credentials through the NC3 program while all 83 students in the academy yielded a total of 870 credentials.
In Ohio, researchers find EPA data doesn’t tell the whole story on fracking pollution - -- A recent study in a heavily fracked Ohio county found that regional air quality monitors failed to capture variations in pollution at the local level, spotlighting the need to address gaps in data on fossil fuel emissions. Existing Environmental Protection Agency monitors track broad regional trends in air quality. But they don’t reflect differences from place to place within an area. And their reporting often misses short-term spikes that can affect human health, said lead study author Garima Raheja at Columbia University.“Health is not a broad regional effect,” Raheja said. Health impacts from pollution often depend on more local conditions and can vary “day to day, hour to hour,” she noted. The project began when co-author Leatra Harper at the FreshWater Accountability Project and others asked the American Geophysical Union’s Thriving Earth Exchange for help in establishing current baseline emissions for the area. The program connected them to Raheja and other scientists. In addition to Raheja and Harper, study authors are at the AGU Thriving Earth Exchange, Columbia University, Carnegie Mellon University, the Massachusetts Institute of Technology and Wayne State University. Additional researchers are at community advocacy organizations, including the FreshWater Accountability Project, FracTracker and the Environmental Health Project. The team developed a grassroots, community-based network of low-cost air monitoring stations. Each monitoring station used PurpleAir monitors. The monitors cost a couple hundred dollars each, compared to up to $100,000 or more for equipment at the regional EPA air monitoring stations, Raheja said. The equipment measures levels of fine particulate matter, or PM. Corrected data from PurpleAir monitors correlate strongly with those from reference-grade monitors,studies have found. Tweaks to the monitors also let the network track levels of volatile organic compounds, or VOCs. And community members kept logs about physical symptoms or things they noticed in the area. Additionally, the researchers made an inventory of all pollution emissions already permitted for the area. The data let them model how pollution could travel in the area.“We wanted to show what people are actually experiencing,” Raheja said. “And we wanted to show some examples of plumes from different sources.”General trends in emissions levels were similar for the EPA monitoring stations and the local monitors. However, there were substantial variations in the emissions levels recorded by the two types of stations. Those results showed that exposure to pollutants varies throughout the study area. The results also showed multiple cases when spikes in certain emissions tracked closely with log entries about residents’ health symptoms or other events in the area, such as pipeline pigging or compressor station blowdowns. The researchers’ study was in the journal Environmental Research Letters on May 25. Belmont County had more than 700 oil and gas wells completed from 2011 through 2021, state records show. Most of those wells were drilled into the Utica Shale to produce wet gas. It includes methane along with other petroleum compounds. Fugitive methane emissions are a potent greenhouse gas. Other emissions from the oil and gas industry fall into the category of air toxics or produce ground-level ozone, which irritates the lungs. A variety of health impacts can result from both chronic, long-term pollution and from shorter-term spikes in emissions.“We’re seeing some of those health impacts already with the oil and gas industry,” Harper said. Several studies have shown health impacts among people living near fracked, horizontal wells. And people in the area have reported anecdotal symptoms, she said.“We really need to establish accountability for the polluters,” Harper said. Regulatory authorities often come out too late to detect emission spikes that have happened on nights or weekends. Or, regulators have been dismissive about residents’ concerns when they lacked data on local emissions levels, she said.
Ohio Utica Shale Dashboard Shows 73% of New Drilling Done by 2 Cos. - Marcellus Drilling News - On May 24, Cleveland State University researchers quietly published the “Shale Investment Dashboard in Ohio Q1 and Q2 2021” (full copy below). The new report details shale-related investment in Ohio, looking at upstream, midstream, and downstream activities. The investment estimates are from January through June of 2021–the first half of last year. The report shows investment in the Ohio Utica continued to increase last year, during the height of the pandemic. It also shows just two companies drilled 73% of Ohio’s new shale wells and 69% of the money invested in drilling new shale wells in the Buckeye State in 1H21. Which two companies? Please Login to view this content.
Is natural gas a clean energy source? This Ohio Congressman thinks so. - There is no doubt that natural gas transformed the U.S. energy landscape in the last decade. Production hit a record high again last year. Natural gas replaced coal as the top source of energy for electricity generation.All the while, the industry decreased its greenhouse gas emissions by 12% compared with 1990 levels. Does that make it a clean energy source? Congressman Troy Balderson, of Zanesville, Ohio, and others in the fossil fuels industry think so.Balderson, R-12, introduced a resolution last week to the U.S. House of Representatives to recognize American natural gas as a clean and green energy source.“I support the all above approach to meeting our energy needs, but renewables are not yet ready for primetime,” Balderson said. “We must reject the false notion that a cleaner environment can only be achieved at the peril of the United States energy security and its independence. Natural gas is a key to our path to the American energy independence.”He announced the resolution at a Knox Energy well pad in Licking County, Ohio on June 1, alongside energy industry officials, including those from the Ohio Oil and Gas Association, the Ohio Oil and Gas Energy Education Program, the Consumer Energy Alliance and Utica Energy Alliance.The resolution is meant to lump natural gas in with other clean energy sources so that it gets the same preferential treatment Balderson feels the Biden administration is giving to renewable energy.“This administration has made crystal clear that they are unwilling to work with anything that strays from the green agenda,” Balderson said. “So, let’s finally call it what it truly is. Natural gas is both clean and green.” The resolution also encouraged the Biden administration to remove barriers to natural gas production. The resolution was referred both to the Energy and Commerce and Natural Resources committees.
Pitt engineers using membrane distillation to recycle water used in fracking and drilling -As demand for new energy sources grows, the wastewater co-produced alongside oil and gas (produced water) shows no signs of slowing down: The current volume of wastewater—the result of water forced underground to fracture rock and release the deposits—is estimated at 250 million barrels per day, compared to 80 million barrels per day of oil. Engineers at the University of Pittsburgh Swanson School of Engineering are using membrane distillation technology to enable drillers to filter and reuse the produced water in the oil and gas industry, in agriculture, and other beneficial uses. The method is already being tested in Texas, North Dakota, and most recently in New Stanton, Pa. The project is led by Radisav Vidic, professor and chair of the Department of Civil and Environmental Engineering. Produced water contains many impurities that prevent its treatment in municipal facilities: it can be eight times saltier than seawater and harbor bacteria, sand, mud, oil and grease, as well as naturally occurring radioactive materials. Current management strategies for produced water include injections into disposal wells; processing to recover more oil from the water; and beneficial reuse after treatment. Injection into a disposal well is the least expensive option and therefore the most common, but it leads to a permanent loss of water from the ecosystem. While drought is less of an issue in Pennsylvania than in other parts of the country where drilling is prevalent, the produced water that is not reused for hydraulic fracturing is transported to Ohio for disposal, adding to environmental concern of fuel usage and emissions in transport, as well as cost.
Gas boom reboot predicted - Scranton Times-Tribune - An area law firm that has built a solid practice representing gas drilling companies in Pennsylvania is predicting a resumption of the gas boom following the COVID-19 slowdown.Pennsylvania is the second highest-producer of natural gas in the country, thanks to the Marcellus shale, where gas companies are employing hydraulic fracturing, or fracking, at well sites in the Northern Tier and in western commonwealth counties.The Myers, Brier & Kelly law firm, of Scranton, represents drilling companies in legal disputes over property and mineral rights, violation allegations and other issues.While the state seemingly has stepped up its oversight of the gas drilling industry, critics say state regulators aren’t doing enough.“There’s a lot of problems out there our government isn’t addressing,” said Scott Cannon, of Action Together NEPA, which advocates for the environment and women’s rights, civil rights and the rights of voters. “Pennsylvania is doing a horrible job of regulating the natural gas industry and addressing and fixing the problems.” Attorney Dan Brier of the firm said Pennsylvania is second behind Texas in production of natural gas.“In the 10 counties where production is the highest (In Pennsylvania), six are in the Northern Tier or Northeastern Pennsylvania,” Brier said.Bradford, Lycoming and Susquehanna counties with their fertile rock formations are driving a huge amount of economic development. .“We’re in and out of the courts in these Northern Tier counties,” Brier said.. “We’ve litigated these cases in most of the state and federal courthouses that are situated where these cases played out.” .. The gas drilling industry has not been without its problems. The 2020 report notes that DEP filed 9,363 compliance violations against drilling companies that year. They include infractions at conventional and unconventional well sites and linear project sites such as pipelines, in addition to well site and administrative issues such as failure to meet reporting requirements. DEP also lists on its website 382 letters to property owners from 2008 to 2022 confirming their wells were contaminated by gas drilling activities. The owners whose wells had not returned to pre-drilling conditions were told the company responsible would install water treatment equipment, according to the letters.Brier said three counties on this side of the state are in the top five of natural gas production. Susquehanna County is number one, Bradford is third and Lycoming is fifth. Wyoming, Tioga and Sullivan counties are sixth, seventh and 10th, respectively. “Susquehanna, Washington, Bradford, Greene and Lycoming are the top five and account for 76 percent of the production of natural gas statewide,” Brier said. The drilling areas have narrowed over time, but 36 out of the 67 counties have at least one producing well, Thatcher said. He said there still is a high demand for natural gas, not only in the United States, but internationally. “My sense is it’s going to be a primary economic driver in Northeastern Pennsylvania for decades,” Brier said.
Mountain Valley Pipeline seeks new panel for challenges - The Washington Post -A company building a natural gas pipeline in Virginia and West Virginia is seeking a new panel of judges to hear the next round in its legal battle with environmentalists. Mountain Valley Pipeline filed a motion last month requesting the 4th U.S. Circuit Court of Appeals to assign a new panel at random, The Roanoke Times reported. The 303-mile (487-kilometer) pipeline, which is mostly finished, would transport natural gas drilled from the Marcellus and Utica shale formations through West Virginia and Virginia. Legal battles have delayed completion by nearly four years and doubled the pipeline’s cost, now estimated at $6.6 billion. The company argues that the three-judge panel that has presided over 12 challenges of government approvals for it and the now-defunct Atlantic Coast Pipeline has vacated or stayed all but two of the permits. It argues that effectively killed the Atlantic Coast project and threatening to do the same for Mountain Valley. Advertisement “The perception created by this Court’s deliberate formation of a special ‘pipeline panel’ – actually a ‘Mountain Valley panel’ – threatens public confidence in the Court’s legitimacy,” the motion states. Three-member panels are randomly assigned for incoming cases, but rules sometimes allow for the same judges to remain with a case when it comes up again. However, the company asserts that the Fourth Circuit didn’t follow its internal operating procedures. The rule states, in part: “Every effort is made to assign cases for oral argument to judges who have had previous involvement with the case” to preside over a motion made before oral arguments or a prior appeal in the matter. Mountain Valley contends that the current cases involve neither a pre-argument motion nor a prior appeal and asks that the court to “correct this departure from its own procedures.” The Sierra Club and other environmental groups, which are contesting the latest permits for water crossings, urged the court not to grant the request. Mountain Valley’s calculations that it won only two of the 12 cases decided by the panel omits most of some half-dozen cases that involved eminent domain, distorting the panel’s record, a motion from the Sierra Club states.
Mountain Valley Pipeline seeks new appellate court panel to hear legal challenges - Unhappy with the way it has been treated by a three-judge panel of an appellate court, Mountain Valley Pipeline is asking for a new slate of judges to hear the next round of its long-running legal battle with environmentalists. In an unusual move, the company building a natural gas pipeline through Southwest Virginia filed a motion last month requesting the 4th U.S. Circuit Court of Appeals to assign a new panel at random.Mountain Valley is hoping for better luck than it had with a panel that presided over 12 earlier challenges of government approvals for it and the now-defunct Atlantic Coast Pipeline. Those three judges, it says, vacated or stayed all but two of the permits, effectively killing Atlantic Coast and threatening to do the same for Mountain Valley.“The perception created by this Court’s deliberate formation of a special ‘pipeline panel’ – actually a ‘Mountain Valley panel’ – threatens public confidence in the Court’s legitimacy,” the motion reads. The Richmond-based Fourth Circuit, which consists of 15 active judges and three senior judges to hear appeals from five states, has a computer program that randomly assigns three-member panels for incoming cases.However, the court’s rules allow for the same judges initially appointed at random to remain with a case when it comes up again, under certain circumstances.When the Fourth Circuit was first asked to decide a case involving Mountain Valley – an appeal of a Roanoke judge’s 2017 decision on the company’s powers of eminent domain – the court’s program indiscriminately selected three judges.The luck of the draw went to Chief Judge Roger Gregory and Judges Stephanie Thacker and James Wynn. That led to their assignment to most, but not all, of the future cases in which federal and state permits issued to Mountain Valley were contested repeatedly by environmental groups and local opponents.But the Fourth Circuit did not follow its internal operating procedures, which only allow such assignments in limited cases, Mountain Valley asserts.The rule states, in part: “Every effort is made to assign cases for oral argument to judges who have had previous involvement with the case” to preside over a motion made before oral arguments or a prior appeal in the matter.Mountain Valley contends that the current cases – which involve petitions from environmental groups seeking the reversal of approvals for the 303-mile pipeline to cross streams and wetlands in Virginia and West Virginia – involve neither a pre-argument motion nor a prior appeal.The company “therefore respectfully asks the Court to correct this departure from its own procedures,” George Sibley, a Richmond attorney who represents Mountain Valley, wrote in court papers.The Sierra Club and other environmental groups, which are contesting the latest permits for water crossings, urged the court not to grant Mountain Valley’s request.“The crux of MVP’s motion is that MVP has grown dissatisfied with that i nitial assignment because it has lost more often than it thinks it should have,”
U.S. Coast Guard responding to 5,300-gallon oil spill in St. Marys River -– U.S. Coast Guard crews are responding to an oil spill in a river near the Soo Locks in the Upper Peninsula.The 5,300-glallon spill originated from Algoma Steel in Sault Ste. Marie, Ontario around 10:30 a.m. on Thursday. Oil was spilling into the St. Marys River, officials said.The 74.5-mile river connects Lake Superior and Lake Huron and serves as a border between Michigan and Ontario, Canada.Initial Coast Guard estimates show a sheen that covers an area from the steel mill to the north side of Sugar Island. No injuries have been reported and the river has since reopened for commercial traffic, the Coast Guard said.“We’re working in lock-step with our Canadian, American, and tribal partners to ensure the sanctity of our river,” Captain Anthony Jones, Commander, Sector Sault Ste. Marie said.Coast Guard pollution responders are monitoring the situation and will coordinate the containment with environmental clean-up organizations.“A quantity of oil left our site early this morning and entered the adjacent waterway. The source of the spill has been safely contained,” Brenda Stenta, manager of communications and branding for the steel company, said in a statement to CTV.“The Ministry of Environment, Conservation and Parks, the Spills Action Centre, the Canadian Coast Guard, and the City of Sault Ste. Marie have been notified. We are currently coordinating with officials, deploying equipment, resources, and personnel to mitigate any possible impact to the environment.”Sean McBrearty, campaign coordinator for the nonprofit Oil & Water Don’t Mix, heard about the spill while he was at the Michigan Climate & Clean Energy Summit in Traverse City.“It’s terrible to see a large oil spill in a waterway so close to the Great Lakes,” McBrearty said, adding his thoughts go out to the first responders and authorities who are working to contain the spill and handle the cleanup. “This is going to be a big blow to the Great Lakes ecosystem, especially up at the St. Marys River.” And while a 5,000-gallon spill is large, McBrearty said it’s nothing compared to the 23 million gallons of oil that run through Enbridge’s controversial Line 5 pipelines along the bottom of the Straits of Mackinac every day. McBrearty’s group is one of several vocal environmental organizations that have been warning of the dangers of a Line 5 spill for years.
Almost 20,000 litres of oil spilled in the Sault -The U.S. Coast Guard says more than 5,300 gallons – or about 20,000 litres – of oil spilled Thursday in Sault Ste. Marie. Ontario's Ministry of Environment said earlier in the day most of the oil spilled at Algoma Steel fell on the ground, but some also entered the city's wastewater system. The U.S. Coast Guard said in a news release it was notified at 10:30 a.m. of a "5,300-gallon gear oil spill into the St. Marys River. "Initial Coast Guard estimates show a sheen that covers an area from the steel mill all the way to the north side of Sugar Island," the release said. "No injuries or deaths have been reported by Algoma Steel. The Coast Guard is requesting all traffic to stay clear of the impacted area." The Coast Guard said it has established an incident command team to manage the U.S. response efforts. “We’re working in lockstep with our Canadian, American, and tribal partners to ensure the sanctity of our river," Capt. Anthony Jones said in the release. In a statement, Ontario's Ministry of the Environment (MOE) said the substance that spilled into the water was 'Morgoil,' a heavy oil used for lubrication of heavy machinery. MOE is on-site heading up cleanup efforts, the statement said, which are in the early stages. "Most of the oil was spilled to the ground," ministry spokesperson Gary Wheeler said in a statement. "Some of the oil entered the wastewater treatment plant where it was then discharged to the river." Algoma Steel has hired cleanup contractors that have deployed absorbent booms on the river to contain the spill, Wheeler said. "Algoma Steel is using vacuum trucks to remove oil from inside the wastewater treatment plant," he added. The spill prompted a drinking water advisory from Algoma Public Health. Not affected is the municipal water supply from the City of Sault Ste. Marie. "Please be advised that if your drinking water intake is located in the St. Marys River downstream (east) of Algoma Steel Inc. and Great Lakes Power and/or you have a dug a well close to the shoreline, there may be risk of contamination resulting from this spill." The river also shouldn't be used for recreation (swimming, fishing, etc.) Pets and livestock should also not drink from St. Marys. "Do not drink, swim, bathe, or shower with this water," the health unit said. "Use alternative water sources such as bottled water or from the municipal drinking water system."
Oil spill closes shipping on St. Marys River — An oil spill temporarily closed shipping traffic on the St. Marys River between Ontario and Michigan's Upper Peninsula, the U.S. Coast Guard said Thursday. The 5,300-gallon spill originated from Algoma Steel in Sault Ste. Marie, Ontario, around 10:30 a.m. Thursday. The 75-mile river connects Lake Superior and Lake Huron and serves as part of the border between Michigan and Ontario. The Coast Guard asked for all traffic to stay away from the affected area. “We’re working in lock-step with our Canadian, American, and tribal partners to ensure the sanctity of our river,” Capt. Anthony Jones, commander of Coast Guard Sector Sault Sainte Marie, Michigan, said in a statement. Coast Guard pollution responders are monitoring the situation and will coordinate the containment with environmental cleanup organizations, MLive.com reported. Algoma spokeswoman Brenda Stenta said in a statement that "the source of the spill has been safely contained.” “The Ministry of Environment, Conservation and Parks, the Spills Action Centre, the Canadian Coast Guard, and the City of Sault Ste. Marie (Ontario) have been notified. We are currently coordinating with officials, deploying equipment, resources, and personnel to mitigate any possible impact to the environment,” Stenta said.
States that outlaw gas bans account for 31% of US residential/commercial gas use - A legislative push to prohibit gas bans in buildings has protected access to natural gas utility service in states that account for almost a third of U.S. natural gas demand in the residential and commercial sectors. The 20 states that passed such legislation have together consumed 30% of residential gas volumes and 33% of commercial gas supplies in 2020, according to analysis of U.S. Energy Information Administration data by S&P Global Commodity Insights. The states' combined residential and commercial gas use was 31% in 2020, the last year for which the EIA data was available. Meanwhile, four states where policymakers have passed measures that restrict building gas use — California, Colorado, New York and Washington — accounted for 24% of the nation's residential gas use and 20% of its commercial gas demand in 2020. Three states where local governments have advanced similar restrictions — Massachusetts, Oregon and Vermont — accounted for nearly 4% of combined U.S. residential and commercial gas use. While these policies stand to curb gas utility customer growth, they do not immediately put existing gas demand at risk. With the exception of Denver's policy, the ordinances and building codes largely restrict gas use in new residential and commercial buildings but do not address retrofits. The residential and commercial sectors accounted for 15% and 11% of total U.S. gas consumption in 2021, according to the EIA. Only Washington has passed statewide all-electric construction requirements. New York policymakers are considering statewide mandates for both new and existing buildings. New York and California were the nation's largest gas consumers in the residential and commercial gas sector. New York City adopted a gas ban in December 2021. More than 50 California towns, cities and counties have passed gas bans or electrification reach codes since 2019.Colorado, Massachusetts and Washington ranked in the top 20 for gas use in both sectors. Several states with policies supportive of building electrification were also large gas consumers. Illinois, the nation's third-biggest residential and commercial gas consumer, passed 2021 climate legislation that allows utilities to promote and offer building electrification to achieve required energy savings. New Jersey ranked in the top 10 for both sectors, but there has been little progress codifying the state's aspirations for "maximum electrification" into law. Maryland, where the legislature recently declared that the state would move toward building electrification, also ranked in the top 20.
Natural Gas Futures Hit 13-Year High As Traders Expect "Blistering Hot Summer" -- Natural gas futures have hit an 13-year high on higher temperatures to come in the next week combined with lower production levels. On Monday, Henry Hub natural gas futures were up nearly 10% at a 13-year high. At 5:00pm EST, Henry Hub prices for July contracts sat at $9.368, up 9.91%. August contracts were at $9.350, up 9.87%. A key reason for the sudden surge is heat, with temperatures expected to rise significantly in the middle part of this month, with production declining and demand threatening to exceed supply. Natural Gas Intelligence (NGI) quoted EBW analyst Eli Rubin as saying in a note to clients that a “blistering hot summer” is first and foremost among fears. Rubin said the increasing demand for natural gas for cooling in the coming weeks “could ignite another substantial rally in Nymex futures into mid-summer”. Texas, in particular, is expected to see demand for natural gas soar to a historical record this week–even before the hottest part of summer sets in. Also driving natural gas futures upward is rising demand, declining production, and soaring exports of liquefied natural gas (LNG) from the U.S. Gulf coast, diverting domestic supplies. In its 2022 outlook released in late May, the Federal Energy Regulatory Commission (FERC) projected that U.S. demand for natural gas would outpace supply this summer. As reported by NGI, FERC sees U.S. dry natural gas production increase by 3.4% over the summer months, compared to a projected 4.8% increase in consumption during that same period. Over the winter period from November 2021 through March 2022, 2,264 billion cubic feet of natural gas was withdrawn from U.S. storage, according to the Energy Information Administration (EIA). That withdrawal is 10% higher than the previous five-year average. Already this winter, U.S. demand for natural gas exceeded supply by 14.9 billion cubic feet per day.
Natural Gas Futures Price Gains Mount as Traders Advised to ‘Buckle Up’ - In one of the most explosive sessions in recent weeks – and that’s saying a lot – natural gas futures rocketed higher Monday as production struggles to gain momentum and heat is starting to intensify ahead of what’s expected to be a hot summer. The July Nymex gas futures contract jumped 79.9 cents to $9.322/MMBtu. August futures climbed 79.6 cents to $9.306. Spot gas prices also strengthened as temperatures across Texas are poised to touch record levels this week. NGI’s Spot Gas National Avg. shot up 67.0 cents to $8.565. With forecasts calling for heat to become more widespread later this month, traders took notice of the potential for highs in Texas to surpass the century mark for the next seven days in some cities. The electric grid operator for most of Texas – the Electric Reliability Council of Texas – said the sweltering conditions could drive loads to a near-record level above 74,000 MW on Monday and Tuesday. At the same time, wind generation was expected to falter, dropping by more than 100 gigawatt hours/day. “Strong loads, particularly when paired with falling wind output, often require increasingly inefficient gas-fired generation to keep the lights on, creating increased chances for elevated spot gas market demand and upside power burn surprises later this week,” said EBW Analytics Group senior analyst Eli Rubin. Meanwhile, production has been a source of frustration for the gas market. After nearing late-2021 highs early last week, output softened later in the period and failed to recover over the weekend. Estimates showed production at around 95 Bcf on Monday, 2 Bcf shy of the highs largely viewed as needed to loosen up supply/demand balances. What’s more, Tennessee Gas Pipeline (TGP) said it would be performing major pig runs on a part of its system on Tuesday and Thursday, limiting gas flows heading toward the Northeast. TGP said operating capacity on segment 321 FH would be limited to 880 MMcf/d from 1.93 Bcf/d on those two days. The increase in gas demand and lower production comes amid a mostly steady rise in exports following spring turnarounds. NGI data showed feed gas deliveries to U.S. liquefied natural gas (LNG) terminals sitting at around 12.8 Bcf at the start of the week. This was off slightly from the 13 Bcf level reached over the weekend, but generally in line with volumes seen the rest of the past week.
U.S. natgas futures near 13-year high on rising air conditioning use (Reuters) - U.S. natural gas futures held near a 13-year high on Tuesday on forecasts for hotter weather and higher demand than previously expected, a decline in output, low wind power and record power demand in Texas. Power demand in Texas broke the June record on Monday and will continue rising until it breaks the all-time high later this week as economic growth boosts overall usage and hot weather causes homes and businesses to crank up their air conditioners. Low wind power forces generators, including those in Texas - the state with the most wind power - to burn more gas to keep the lights on. Front-month gas futures for July delivery fell 2.9 cents, or 0.3%, to settle at $9.293 per million British thermal units (mmBtu). On Monday, the contract closed at its highest since August 2008. U.S. gas futures were up about 151% so far this year as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since Russia's Feb. 24 invasion of Ukraine stoked fears that Moscow might cut gas supplies to Europe. Gas was trading around $25 per mmBtu in Europe and $23 in Asia. Traders also said U.S. futures have soared in recent months due to low U.S. gas stockpiles - about 15% below normal for this time of year - and high U.S. coal prices, which make it uneconomical for electric companies to switch from gas to coal for power generation. Futures for July briefly traded at a premium over December NGN22-Z22 over the past week, prompting traders to note that speculators would make more money selling gas now rather than storing it for winter. That could make it harder to refill gas stockpiles this summer - though utilities will continue putting gas into storage to meet their winter heating demand. Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 94.7 billion cubic feet per day (bcfd) so far in June from 95.1 bcfd in May. That compares with a monthly record of 96.1 bcfd in December 2021. On a daily basis, U.S. output was on track to drop 1.4 bcfd to a preliminary 93.8 bcfd on Tuesday, its lowest since late April. That would be the biggest one-day decline since early February, but preliminary data is often revised. With hotter weather coming, Refinitiv projected average U.S. gas demand, including exports, would rise to 93.9 bcfd next week from 90.7 bcfd this week. Those forecasts were much higher than Refinitiv's outlook on Monday.
U.S. natgas drops 6% on explosion at Texas Freeport LNG plant (Reuters) - U.S. natural gas futures dropped about 6% on Wednesday on reports of a fire at the Freeport liquefied natural gas (LNG) export plant in Texas. Police in Quintana, Texas, said they were evacuating residents near the Freeport LNG plant following an explosion. The plant can turn about 2.1 billion cubic feet per day (bcfd) of natural gas into LNG. It was pulling in about 2.0 bcfd of pipeline gas earlier on Wednesday, according to data provider Refinitiv. LNG exports have been the fastest growing source of new demand in the United States in recent years. The possible loss of any facility would cut overall U.S. gas consumption and could boost global gas prices as many countries around the world seek to reduce their dependence on Russian energy after Moscow's invasion of Ukraine. Earlier in the day, gas futures rose to a fresh 13-year high on forecasts for hotter weather and higher demand next week, a decline in output, low wind power, and record power demand in Texas. Power demand in Texas broke the June record on Monday and Tuesday and is expected to keep rising this week until it tops the all-time high as economic growth boosts usage and hot weather causes homes and businesses to crank up their air conditioners. Low wind power forces generators, including those in Texas - the state with the most wind power - to burn more gas to keep the lights on. Front-month gas futures for July delivery fell 59.4 cents, or 6.4%, to settle at $8.699 per million British thermal units (mmBtu). In the minutes after the Freeport news broke, gas futures dropped by around 9%. Earlier in the week on Monday, the contract rose to its highest level since August 2008. Despite the drop, U.S. gas futures were still up about 133% so far this year as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since Russia's Feb. 24 invasion of Ukraine stoked fears that Moscow might cut gas supplies to Europe. Gas was trading around $25 per mmBtu in Europe and $23 in Asia. Traders said U.S. futures also soared in recent months due to low U.S. gas stockpiles - about 15% below normal for this time of year - and high U.S. coal prices, which make it uneconomical for electric companies to switch from gas to coal for power generation.
US natural gas storage rises 97 Bcf to 1.999 Tcf as NYMEX futures rebound | S&P Global Commodity Insights - US natural gas in storage modestly widened its deficit to the five-year average in early June in a weekly stock build that was largely neutral to market expectations but still bullish for NYMEX gas futures. The US Energy Information Administration on June 9 reported a 97 Bcf injection to US inventories for the week ended June 3. The addition to stocks was closely aligned with S&P Global Commodity Insights' storage survey result, which called for an injection of 96 Bcf. The weekly build was also much closer to historical averages, just barely undershooting the year-ago injection of 98 Bcf and the five-year average of 100 Bcf in the corresponding week, data from the EIA showed. As a result, US working gas inventories climbed to 1.999 Tcf, while the shortfall to 2021 widened to 398 Bcf, leaving stocks about 17% below the year-ago level of 2.397 Tcf. The inventory deficit to the prior five-year average also expanded to its widest yet this season, pushing stocks to 340 Bcf, or almost 15%, below the historical average of 2.339 Tcf. Immediately following the EIA storage report's release, the Henry Hub July contract jumped about 25 cents to $8.45/MMBtu, followed by continued price gains throughout the morning and early afternoon that left the prompt-month contract just shy of $9/MMBtu at settlement, data from CME Group showed. The sharp rebound in NYMEX gas prices on June 9 came following a prior-day and overnight selloff to the low-$8s, apparently sparked by news of an explosion at the Freeport LNG export facility in Texas. On June 9, feedgas deliveries to the terminal were down for a second consecutive day to an estimated 235 MMcf/d. On June 8, deliveries to the terminal plunged below 400 MMcf/d as Freeport's three liquefaction trains were shut down for inspection and possible repair. During the prior week, feedgas deliveries to Freeport had averaged just under 2 Bcf/d, Platts Analytics data shows. With feedgas demand from Freeport LNG offline, the additional 2 Bcf/d in gas supply could potentially be redirected to storage over the coming days or even weeks, temporarily loosening spot market supply and casting a shadow of uncertainty over the NYMEX futures rally. During the week ended June 3, rising temperatures across the Northeast, the central US and the Rockies fueled a combined drop of 3.1 Bcf/d in US residential-commercial and industrial gas demand. In all three regions, flows into inventory either matched or outpaced the prior five-year average for the week and were only partially offset by a weaker net injection in the South Central region where hotter weather fueled an increase gas-fired power demand. As of June 9, Platts Analytics storage model is now estimating a net injection to US inventory of 95 Bcf for the week in progress – up 11 Bcf from the model's weekly prediction on June 7. Assuming the storage model estimate is accurate, the EIA's coming report would narrow the inventory deficit by 16 Bcf, potentially fueling a steep drop in NYMEX futures prices back toward the low-$8 or even upper-$7 range.
U.S. natgas gain 3% as hot weather offsets Freeport LNG shutdown (Reuters) - U.S. natural gas futures gained about 3% on Thursday, erasing earlier losses, on record power demand in Texas this week, a smaller-than-usual storage build, rising spot gas prices, low wind power and a decline in gas production so far this month. Earlier in the day, futures were down about 7% on expectations the fire and explosion that shut the Freeport liquefied natural gas (LNG) export plant in Texas on Wednesday for at least three weeks, raising the risk of global gas shortages especially in Europe. But shortages of LNG around the world means more gas will remain in the United States, giving utilities a chance to rapidly rebuild extremely low stockpiles. Freeport, the second biggest U.S. LNG export plant, consumes about 2 billion cubic feet per day (bcfd) of gas, so a three-week shutdown would result in about 42 billion cubic feet (bcf) more gas being available to the U.S. market. U.S. storage was currently about 15%, or 340 bcf, below normal levels for this time of year, its lowest since April 2019. The U.S. Energy Information Administration (EIA) said utilities added 97 bcf of gas to storage during the week ended June 3. Traders said the build was slightly smaller than usual because power generators burned more gas last week to keep air conditioners humming during a heatwave. That was in line with the 96-bcf build analysts forecast in a Reuters poll and compares with an increase of 98 bcf in the same week last year and a five-year (2017-2021) average increase of 100 bcf. After dropping 6% on Wednesday, front-month gas futures for July delivery rose 26.4 cents, or 3.0%, to settle at $8.963 per million British thermal units (mmBtu). "Natural gas ... seems to have already put the Freeport incident in the rear view mirror," said Robert Yawger, executive director of energy futures at Mizuho. Power demand in Texas will likely set fresh all-time highs every day from June 10-13 as economic growth boosts usage and homes and businesses keep their air conditioners cranked up to escape a lingering heatwave. Even though the weather was seasonally mild in both Pennsylvania and Chicago, next-day gas for Thursday rose to its highest since February 2014 at the Dominion South hub in Pennsylvania and its highest since the February freeze in 2021 in Chicago . Despite this week's drop, U.S. gas futures were still up about 139% so far this year as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since Russia's Feb. 24 invasion of Ukraine stoked fears Moscow might cut gas supplies to Europe. Gas was trading around $27 per mmBtu in Europe and $23 in Asia. That was a 9% gain for European gas prices due to worries about LNG supplies now that Freeport was shut. Refinitiv said average gas output in the U.S. Lower 48 states fell to 94.8 bcfd so far in June from 95.1 bcfd in May. That compares with a monthly record of 96.1 bcfd in December 2021. The average amount of gas flowing to U.S. LNG export plants fell to 12.4 bcfd so far in June from 12.5 bcfd in May, according to data from Refinitiv. That compares with a monthly record of 12.9 bcfd in March. The United States can turn about 13.6 bcfd of gas into LNG. With the shutdown of Freeport, LNG feedgas fell from a recent high of 12.9 bcfd on Tuesday to around 11.0 bcfd on Wednesday and Thursday, the lowest since mid April. Freeport was pulling in about 2.0 bcfd before the fire.
Natural Gas Futures Resume Losses as Freeport LNG Outage Seen Benefiting U.S. Balances - After a brief reprieve, natural gas futures continued to slide Friday as traders continued to weigh the implications of a potentially prolonged outage at the Freeport liquefied natural gas (LNG) terminal. With tight balances firmly intact, the July Nymex gas futures contract slipped 11.3 cents to $8.850/MMBtu. August futures fell 11.1 cents to $8.867. Spot gas prices were overwhelmingly higher ahead of the weekend, with thunderstorms rolling through the northern United States but oppressive heat baking the South. NGI’s Spot Gas National Avg. jumped 33.5 cents to $8.215. Two days after an explosion at Freeport LNG, the market was still unclear about how the subsequent outage would impact balances. Freeport officials have indicated the terminal would remain shut down for at least three weeks. This means that gas would be available for domestic consumption or be put into storage. The Schork Group team said these “found molecules” are expected to offset the decline the market typically sees from May storage injections to June builds. The analysts noted, however, that the loss of Freeport LNG cargoes would strain an already tight global gas market and underpin European gas prices relative to U.S. prices. The longer Freeport remains offline, the greater the price differential between the two markets. “Freeport could be a game changer this season,” Schork analysts said. “Should the plant stay out of commission through the dog days of summer, then about 200 Bcf of LNG will remain in the U.S.” That would be ideal for Lower 48 balances. The Energy Information Administration (EIA) reported a 97 Bcf injection into underground storage inventories for the week ending June 3. This was in line with expectations, but fell short of the triple-digit mark to which some estimates had pointed. Total working gas in storage rose to 1,999 Bcf, which is 398 Bcf below year-earlier levels and 340 Bcf below the five-year average, according to EIA. Mobius Risk Group analysts noted that this year, the week following the Memorial Day holiday had almost identical total degree days as compared with the same week last year. As a result, the lack of any clear sign of loosening in a $9.00 pricing environment is a concern for market bears. Notably, salt storage inventories, which increased by only 3 Bcf during the reference week, also were worrisome and may have been the reason prices bounced as feverishly as they did after the EIA data was published.
Scorching Heat Wave Lifts Weekly Natural Gas Cash Prices, but Freeport LNG Outage Pressures Futures - Record-breaking temperatures and a precipitous drop in wind generation fueled impressive gains for natural gas prices across the Lower 48 during the June 6-10 trading week. NGI’s Weekly Spot Gas National Avg. picked up 36.5 cents to reach $8.510/MMBtu. Futures, however, finished lower on the week as traders struggled with how an outage at the Freeport liquefied natural gas (LNG) facility following an explosion may impact supply/demand balances. The July Nymex gas futures contract ultimately closed the week at $8.850, off 47.2 cents from Monday’s close.Despite the Freeport incident snagging most of the headlines in the latter part of the week, Mother Nature’s scorching temperatures were pretty notable as well. The National Weather Service said sweltering heat will rule vast stretches from California to the Southern Plains through the weekend. Daytime temperatures are expected to soar 10-20 degrees above normal from California and the Desert Southwest to Texas and the southern High Plains.“Daytime temperatures will reach the triple digits in many locations with numerous records also expected to be broken,” said NWS forecasters. “Overnight lows are forecast to remain abnormally hot as well.”By the start of next week, a pair of Pacific fronts was forecast to bring precipitation and much cooler weather into California by the latter half of the weekend. This would force the dome of exceptionally hot temperatures to shift over the nation’s heartland.In Texas, the stifling heat was expected to stick around, lifting electricity consumption to record levels. The Electric Reliability Council of Texas, the grid operator for most of the state, projected loads to reach 73,415 MW on Friday and soar to 76,122 MW by Monday. For reference, the current all-time peak is 74,820 MW peak, which was set on Aug. 12, 2019.The sweltering heat boosted Houston Ship Channel prices by 41.0 cents week/week to average $8.625. Similar prices were seen farther south in the Lone Star State, but slightly lower prices were seen in West Texas. Waha, for example, was up 38.0 cents on the week and averaged $8.120.Henry Hub climbed 40.5 cents week/week to $8.930, while prices on the West Coast surpassed $10.000 in some locations. SoCal Citygate prices were up 91.5 cents on the week to $9.865. There were a handful of U.S. locations that finished the week in the red. With a line of thunderstorms moving through the region and little cooling demand in place, Algonquin Citygate dropped 30.0 cents to $8.045.
Wondering Why the Price of Natural Gas is Suddenly so Damn High? The Booming US LNG Export Industry - by Wolf Richter - Exports of Liquefied Natural Gas (LNG) from the US to the rest of the world jumped by 18% over the first four months of 2022, to an average of 11.5 billion cubic feet per day (Bcf/d), compared to the annual average in 2021, according to the EIA today.Exports of LNG have been increasing at huge rates – by 49% in 2021, by 31% in 2020, by 68% in 2019, by 53% in 2018, and by 279% in 2017. This growth comes as a function of the completion of new LNG export terminals.The US has become the largest natural gas producer in the world. In 2016, large-scale LNG exports started, much of it shipped to Asian destinations, with China, Korea, and Japan at the top in 2021. But due to the massive demand from Europe so far in 2022, and higher prices at the trading hubs in Europe, US exports have shifted to European destinations. In 2021, the US shipped 34% of its annual LNG production to Europe. But over the first four months this year, a massive shift occurred, when 74% of US LNG was exported to Europe, tripling the volume to 7.3 Bcf/d, and accounted for 49% of total LNG imports, according to the EIA today.There has long been a small LNG export terminal in Alaska. But the first large-scale export terminal began operating in 2016, by which time fracking had created a natural gas glut in the US, and its price had collapsed. LNG export operators arbitraged the cheap price of natural gas in the US and the much higher prices they could get globally by exporting LNG. The increase in LNG exports in 2022 so far is the result of additional export capacity coming on line so far this year:
- Train 6 at the Sabine Pass LNG export facility added up to 0.76 Bcf/d of peak export capacity. Began operating at the end of 2021.
- The first five blocks of Calcasieu Pass. The facility will have 18 liquefaction trains with a total peak capacity of 1.6 Bcf/d. All of them are expected to be operational by the end of this year.
The small terminal at Kenai, Alaska has been operating for years; the other seven started operating in 2016 and later (FERC data):
- Kenai, AK: 0.2 Bcf/d (Trans-Foreland)
- Sabine, LA: 4.55 Bcf/d (Cheniere/Sabine Pass LNG –Trains 1-6)
- Cove Point, MD: 0.82 Bcf/d (Dominion–Cove Point LNG)
- Corpus Christi, TX: 2.40 Bcf/d (Cheniere – Corpus Christi LNG Trains 1-3)
- Hackberry, LA: 2.15 Bcf/d (Sempra–Cameron LNG, Trains 1-3)
- Elba Island, GA: 0.35 Bcf/d (Southern LNG Company Units 1-10)
- Freeport, TX: 2.14 Bcf/d (Freeport LNG Dev/Freeport LNG Expansion/FLNG Liquefaction Trains 1-3)
- Cameron Parish, LA: 0.74 Bcf/d (Venture Global Calcasieu Pass Units 1-4)
Natural gas falls prey to Biden's war on the energy grid - Improvements in the nation’s natural gas infrastructure are getting more difficult as President Joe Biden wages war against the United States’s energy grid . Regulatory burdens have plagued new pipelines and shale fracking operations under previous administrations, and Biden is intentionally making it worse.Russia’s invasion of Ukraine is cited by the administration as the primary cause of the U.S.’s energy crisis. “ Putin’s price hike ,” according to former press secretary Jen Psaki, is why the public is facing rising prices across various sectors of the economy.The U.S. domestic natural gas market is not facing a rise in prices because of Russian President Vladimir Putin. Pipeline projects aiming to transport natural gas from the Marcellus and Utica shale basins have been canceled, delayed, or halted because of court challenges launched by environmentalist groups and state administrations.The Mountain Valley Pipeline project seeks to transport gas extracted from the Marcellus and Utica shales across the states of Virginia and West Virginia. A January 2022 ruling from the Fourth Circuit Court of Appeals rejected permits issued for the pipeline by the Forest Service and Bureau of Land Management because of environmental concerns. MVP has raised the costs of the project while delaying the start date, as it attempts to get new permits for constructing the pipeline.Developers of the PennEast pipeline, which sought to transport natural gas between Pennsylvania and New Jersey, successfully defended their project in a legal fight that went to the Supreme Court. In a 5-4 decision, the nation’s highest court ruled PennEast could seize land owned by the state of New Jersey for the pipeline’s construction. The pipeline was canceled despite this victory because the state dragged its feet and refused to issue the required permits.President Donald Trump’s administration tried to support America’s pipelines by revising the Environmental Protection Agency’s rules for the water permitting process. Under Trump, states could block projects if they proved a project would be directly responsible for polluting bodies of water. The time frame for permit reviews was one year in order to prevent delays to projects.Cue the Biden administration.On June 2, 2022, the EPA proposed a new rule that would undo the Trump-era reforms. Under the rule, states can now exercise more flexibility when conducting their permit reviews and determine a “reasonable period of time” rather than a set period of one year.Production is stagnating, but the growth of fossil fuels is not part of the Biden administration’s agenda despite natural gas being cleaner than coal and oil for energy production. “Burning natural gas for energy results in fewer emissions of nearly all types of air pollutants and carbon dioxide than burning coal or petroleum products to produce an equal amount of energy,” accordingto the U.S. Energy Information Administration.Despite proposing new rules to stonewall the American supply of natural gas, Biden wants to provide the resource to our European allies as they decouple from Russia. Domestic production is stagnating in the northeast because of pipeline projects being halted and delayed, but we are telling allies to rely on our liquid natural gas. Promises are being made that cannot be kept.
U.S. LNG Exports To Europe Increased During 1Q Of 2022 -During the first four months of 2022, the United States exported 74 percent of its liquefied natural gas (LNG) to Europe, compared with an annual average of 34 percent last year, according to the U.S. Energy Information Administration (EIA) recently released Natural Gas Monthly and EIA estimates for April 2022. In 2020 and 2021, Asia had been the main destination for U.S. LNG exports, accounting for almost half of the total exports. U.S. LNG exports averaged 11.5 billion cubic feet per day (Bcf/d) during the first four months of 2022, an 18 percent increase compared with the 2021 annual average. The increase in U.S. LNG exports was driven by additional export capacity from Sabine Pass Train 6 and the first five blocks of Calcasieu Pass that came online this year and by high LNG demand, particularly in Europe. Since December 2021, the European Union (EU) and the United Kingdom have been importing record-high levels of LNG, primarily because of low natural gas storage inventories. High spot natural gas prices at the European trading hubs incentivized global LNG market participants with destination flexibility in their contracts to deliver more LNG supplies to Europe. Additional LNG imports in Europe and a mild winter offset lower natural gas pipeline imports from Russia. The United States became the largest LNG supplier to the EU and United Kingdom in 2021, accounting for 26 percent of total imports. In the first four months of 2022, LNG imports from the United States to the EU and the United Kingdom have more than tripled, compared with 2021, averaging 7.3 Bcf/d and accounting for 49 percent of total imports, according to data from CEDIGAZ. LNG imports from Russia and Qatar accounted for 14 percent each – 2.1 Bcf/d. During the first four months of 2022, U.S. LNG exports to Asia declined by 51 percent, averaging 2.3 Bcf/d compared with 4.6 Bcf/d – annual average in 2021. China and South Korea were top destinations for U.S. LNG exports in 2021. This year, however, China received only six LNG cargoes from the United States in January – April 2022 – 0.2 Bcf/d, compared with 1.2 Bcf/d in 2021 – because of pandemic-related lockdown measures, as well as a mild winter and high LNG spot prices, reduced demand for spot LNG imports. U.S. LNG exports to South Korea and Japan also declined by 0.6 Bcf/d and 0.5 Bcf/d, respectively.
U.S. LNG Exports Stay Near Record Levels In May --U.S. exports of liquefied natural gas remained close to record levels last month, at 7.29 million tons, or the second-highest since records of such exports began. According to Refinitiv Eikon data, Reuters reported that the May total was a 12-percent increase on the year and also a substantial increase on April, when U.S. LNG exports totaled 6.93 million barrels.The United States is on track to overtake Qatar and Australia as the world’s largest LNG exporter this year as producers rush to boost capacity amid strong demand for the commodity.However, gas production would also need to grow if the U.S. is to meet the global demand for its LNG, Reuters’ John Kemp wrote in a recent column. And it would need to grow substantially.Kemp noted that over the first three months of the year, U.S. LNG exports rose by 674 billion cu ft. At the same time, however, production of natural gas only grew by 433 billion cu ft, while domestic consumption remained flat.This prompted producers to tap reserves, which resulted in a solid draw in gas inventories: at the end of March, gas inventories were 318 billion cu ft below the pre-pandemic five-year average.The strong and quite fast increase in LNG exports has also had some industry observers worried about price developments at home. Natural gas prices have already almost tripled, and some expect them to rise further, putting a strain on domestic consumers.Europe remained the top destination of U.S. LNG shipments for yet another month in May, taking in two-thirds of total exports.“All factors remaining constant - such as no further cuts in Russian gas to Europe - we may see a rebalance of LNG vessels away from the region, which has become a black hole for LNG - drawing in all and every available cargo,” Rystad Energy analyst Lu Ming Pang told Reuters.
US Firms Secure 19 Deals to Export Liquified Natural Gas, Driven in Part by the War in Ukraine - War has been good for U.S. companies that liquefy natural gas and send it overseas in giant, ocean-going vessels, raising the possibility of a significant climate liability, according to an environmental nonprofit that’s been tracking LNG trends across the country. Since the Russian invasion of Ukraine on Feb. 14, there has been a bustle of business activity, as American companies have secured at least nineteen agreements to supply nearly 24 million tons of LNG per year, the Environmental Integrity Project reported in a report released on Thursday. At least a quarter of that would go to European buyers facing an energy market in turmoil caused by Russia’s aggression. In addition to those 19 agreements, construction continues on four new LNG export terminals expected to begin operating by 2026. “There is a strong financial incentive for LNG now,” said Alexandra Shaykevich, the Environmental Integrity Project’s research manager and a co-author of the report, “Playing with Fire: The Climate Impact of the Rapid Growth of LNG.” “Natural gas prices are high, and that enables them to move quickly with these projects, after a delay during Covid,” she said. “The flurry is noteworthy. I haven’t seen anything like this in the last couple of years.” The environmental group maintains Oil and Gas Watch, a website that monitors oil and gas-related projects in the United States. LNG produced in the U.S. is exported from seven terminals that were built or expanded within the last decade—three in Louisiana, two in Texas and one each in Georgia and Maryland. These facilities have the capacity to produce up to 104.5 million tons per year of LNG and are authorized to emit up to 28.3 million tons of greenhouse gases per year, according to the report. In all, the Environmental Integrity Project counts 25 LNG projects that are either under construction or in the planning stages. Combined, these facilities could boost annual greenhouse gas emissions by more than 90 million tons per year, or the equivalent of 18 million gasoline-powered cars, according to the environmental group. That number does not include emissions released from drilling and piping the gas to the export facilities, or ultimately burning the gas at power plants, homes or businesses. An industry expert at Louisiana State University said it remains uncertain how many of the planned projects will secure the permits and financing they need for such an industry build-out. An LNG export facility can cost billions of dollars.
Liquefied natural gas is booming, but at what cost to climate? - The expansion of liquefied natural gas export terminals in the United States — up to 25 projects currently underway — could end up emitting more than 90 million tons of greenhouse gases in a year, according to the Environmental Integrity Project, a non-profit that analyzed state and federal permits. That figure is roughly equivalent to the carbon pollution produced by 20 coal-fired power plants, and does not include emissions that would result from the extraction and end use of the gas itself.The Environmental Integrity Project calculated emissions from LNG projects that are proposed and seeking permits, fully authorized and soon to begin construction, or currently under construction. There are seven LNG export terminals operating in the United States today, which would mean — should all of the new projects become operational — more than a four-fold increase in such facilities by 2028. Since the start of the Ukraine conflict in March, a number of legislators have demanded an immediate increase in domestic natural gas production, ostensibly to cut into Russia’s power in the oil and gas market and to reduce pressure on household budgets strained by high gas prices. Some European nations have found themselves in a challenging position with regard to imposing sanctions on Russia, because they are highly dependent on Russian fossil fuel exports to meet their energy needs.However, as Grist reported last month, environmental justice activists are concerned that American legislators are using the Ukraine crisis as a reason to secure new oil and gas contracts to appease corporate interests. Increased production, processing, and transportation of LNG poses a significant threat to frontline communities who live near the facilities. Just this week, anexplosion at the Freeport LNG plant in Quintana, Texas provoked great alarm within the surrounding community. Furthermore, Russian sanctions have contributed to gas prices shooting up continuously since March, but they’re not the sole reason for $5-a-gallon. Another major contributing factor is simply an uneven road to recovery from the COVID-19 pandemic. In 2020, OPEC cut production of oil to balance plummeting prices due to global lockdowns, and global producers have not been able to ramp up production enough to meet the demand of a world returning more or less to normal activity. All but one of the 25 LNG projects analyzed by the Environmental Integrity Project were underway in some form before the Ukraine conflict began, although the report details a significant increase in new international contracts for the existing and under-construction facilities over the past three months. The one new project proposed since February, a New Fortress Energy export terminal proposed to be built off the coast of Louisiana, is currently seeking approval and permitting with an ambitious goal of being operational by early next year. It would be the first offshore export terminal in the United States.Another processing facility included in Environmental Integrity’s report, a LNG plant proposed in Wyalusing, Pennsylvania by New Fortress Energy, has been at least temporarily blocked. In late March, the environmental interest groups Clean Air Action, Penn Future, and the Sierra Club sued to have the plant’s air emissions permit revoked, due to concerns about air and water pollution. In a settlement, New Fortress Energy agreed to stop construction and let its current permit lapse, which would require the company to restart the permitting process anew to be able to resume construction. This development has thrown a wrench in plans for a LNG export terminal in Gibbstown, New Jersey, which is largely dependent on the Wyalusing facility and is also included in the Environmental Integrity report.
Louisiana Investigating Methane Cloud Spotted From Space -Louisiana is investigating the source of a cloud of methane that was spotted from space near multiple natural gas pipelines. The state began its probe after Bloomberg News contacted the Louisiana Department of Natural Resources about a concentration of the planet-warming gas detected May 28 by a European Space Agency satellite. The plume had an emissions rate of 44 tons of methane an hour and was the most severe detected in the US since March 19, according to an analysis of the data by Kayrros SAS. If the release lasted an hour at the rate estimated by the geoanalytics firm, it would have roughly the same short-term impact as the annual emissions from about 800 US cars. A second plume identified the same day by the satellite that was roughly 25 miles (40 kilometers) southwest of the original release didn’t have enough information for Kayrros to estimate its emissions rate. Halting methane releases from fossil fuel operations is one of the most important steps that can be taken to slow global warming. Venting and non-emergency flaring of methane from oil and gas should be significantly reduced or eliminated to keep global temperatures from rising more than 1.5 degrees Celsius (2.7 degrees Fahrenheit), according to the International Energy Agency. The release under investigation likely originated within 6 miles of gas pipelines owned by Kinder Morgan Inc. and Boardwalk Pipelines LP and about 8 miles from an Energy Transfer pipeline, according to Kayrros. None of the three operators contacted by Bloomberg said they were responsible. Louisiana’s Department of Natural Resources said it was first made aware of the methane cloud by Bloomberg. “We are currently trying to see if there are any potential sources (wells or pipelines) that look to be close enough to have caused such a release,” Patrick Courreges, a representative for the state department, said in an email Friday. He said the agency is reaching out to the nearby operators and its field agents are looking for any physical evidence, such as a ruptured pipeline or disturbed ground.
Fire Knocks Out Billionaire-Owned Natural Gas Export Plant In Texas, Nation’s Second-Biggest --A fire Tuesday at Freeport LNG, near Galveston, Texas, has knocked out America’s second-largest liquefied natural gas export facility for at least three weeks. According to a spokeswoman, no employees or contractors were injured in the incident, which sent black smoke into the sky before being brought under control. As news of the outtage spread Tuesday afternoon, natural gas prices plummeted by a dollar, to around $8.10 per thousand cubic feet. The sprawling plant on Quintana Island, 90 minutes south of Houston, became operational in 2021 and had been exporting 2 billion cubic feet per day of natural gas, about a sixth of total LNG exports. Freeport LNG is majority owned by billionaire Michael S. Smith, who spent two decades building the plant, which was on track this year to export some 15 million tons of LNG, the energy equivalent of about 130 million barrels of oil. Smith operates the facility kind of like a tollroad — offtakers including BP, Osaka Gas, Jera, SK Energy have signed long-term contracts to take a certain number of tanker cargoes per year from Freeport, in return for set fees. Trading house Trafigura has a shorter-term contract for 5% of LNG production. Freeport’s revenues are on the order of $2.5 billion per year. The plant cost roughly $14 billion to build, and carried $13 billion in project finance debt upon completion last year.
Texas LNG Export Terminal Shuttered For Three Weeks After Explosion -- The explosion at Freeport LNG at Quintana Island has forced operations at the oil and gas export facility to be halted "for a minimum of three weeks," according to local news KPRC.UPDATE: Explosion shuts down Freeport LNG’s liquefaction facility for next 3 weeks, officials say https://t.co/7oKRbn6F4u pic.twitter.com/cU65zFR5fV— KPRC 2 Houston (@KPRC2) June 8, 2022 Freeport receives about 2 billion cubic feet of gas per day or roughly 16% of the total US LNG export capacity. This means LNG exports will shrink and result in more supply on the grid, pushing down natural gas prices.Here's earlier footage of the explosion. A "small explosion" at Freeport LNG terminal in Surfside Beach, Texas, resulted in the plunge of natural gas futures on Wednesday afternoon. Local news KHOU reports the incident occurred around 1140 local time in the 1500 block of Lamar Street at the facility on Quintana Island. "We are in the process of monitoring the situation and will provide information accordingly," Freeport's Director of Corporate Communications Heather Browne told The Facts. The Facts posted a picture of the export terminal showing black smoke rising from the facility. Houston-based energy firm Criterion Research shared more views of the facility via local news KPRC's live aerial view.
Freeport LNG to shutter for at least 3 weeks --The Freeport LNG export terminal in Texas will be shuttered for at least three weeks following an explosion there earlier today that roiled natural gas markets. Even a temporary loss of exports from the terminal just south of Houston could leave about 2 Bcf/d (57mn m³/d) of gas available to meet gas demand for power generation or for injection into gas storage. The US exported about 11.6 Bcf/d of LNG in May, up by 15pc from a year earlier. That sharp increase in exports, resulting from robust demand in international markets, helped drive Nymex prompt-month prices on 6 June to a 13-year settlement high of $9.322/mmBtu. The prompt-month contract tumbled today by 6.4pc from, dropping below $9/mmBtu, after news of the incident. Gas flows on Gulf South, a key conduit for supplies to the terminal, fell today to zero. The disruption at the 15mn t/yr Freeport terminal could help balance the US gas market and put additional downward pressure on prices. Injections into gas storage so far this year have lagged average levels on higher exports, sluggish production growth and strong demand for gas in the US power sector. Freeport LNG did not disclose if there was damage from the incident or the cause. No one was injured, and the incident is under investigation, Freeport said.
US Refining Bottleneck The Culprit For Your Gas Pump Pains - There is no quick fix to ease America's pain at the pump because refiners struggle to meet the demand for diesel and gasoline, sending fuel prices soaring due to declining national stockpiles and fears of shortages. The latest Energy Information Administration (EIA) data shows the U.S. refining capacity is structurally short and down 1 million barrels from April 2020 (a month after the lockdowns began) to 17.95 million bpd as of June. "When the coronavirus pandemic occurred, demand for global oil was not expected to fall for a long time, and yet so much refining capacity was cut permanently," Ravi Ramdas, managing director of energy consultancy Peninsula Energy, told Reuters. Goldman Damien Courvalin wrote in a note (available to professional subs) that "rising dislocation between crude and petroleum product prices finally reflects the current extreme tightness in global refining, driven by seasonality, disruptions as well as large-capacity closures." He said refinery tightness would keep refined product prices higher throughout the year and also noted more refinery closures are slated by the end of next year. "The Covid demand shock, the accompanying excessively weak future demand expectations and the diversion of energy capital by ESG have led to c.4.2 mb/d of refinery capacity closures since 2019 with another 1 mb/d planned to be closed by end-2023. This resulted in near mid-cycle utilization rates of 82% at the start of the year, even before the China and Russia disruptions and in spite of partially IMO2020 related capacity expansions, as demand also quickly normalized. Looking forward we expect net capacity to fall -0.5 in 2022 and rise 1.5 mb/d in 2023 (YoY Dec-Dec) outside of China and Russia," Courvalin noted. The Goldman analyst maps out that available global refinery capacity has been in a downward sloping curve since early 2020. This means as long as demand for refined products stays elevated, prices at the pump will remain higher because of the bottleneck in no new capacity coming online for a few years. The worsening refining bottleneck, especially in the U.S., was explained by Mike Wirth, the CEO of oil giant Chevron, who recently told Bloomberg TV that there's not enough refining capacity to meet the demand for gasoline and diesel because no new refinery will ever be built in the U.S. again. Wirth explains his reason: "You're looking at committing capital ten years out, that will need decades to offer a return for shareholders, in a policy environment where governments around the world are saying, 'We don't want these products to be used in the future.'" The crisis in refined products is because of the green energy transition forcing oil/gas companies, like Chevron and other majors, to not just shutter refineries but not invest and expand refinery capacity. This colossal failure has resulted in the national average for regular fuel approaching $5 a gallon by the end of this week.
Texas adds more than 3,000 oil field services jobs in May -The country’s oil field services sector continued to add jobs last month as oil and gas companies move forward with planned increases in drilling. Texas added about 3,160 oil field services jobs in May for a total of 306,411, according to an analysis of preliminary federal data from the industry trade group Energy Workforce and Technology Council. Overall the country added close to 4,775 jobs in the sector last month for a total of 628,793, according to the preliminary data. Demand for oil and gas was already on the rise as the global economy recovers from the pandemic. Now, as countries sanction Russian oil in retaliation for Moscow’s war on Ukraine, officials are pushing for U.S. oil and gas producers to ramp up production to help ease soaring gasoline and utility prices. While companies are working to increase production overall this year, analysts have said drillers are sticking to planned increases instead of quickly ramping up output – even with West Texas crude oil at more than $110 per barrel. Instead companies have remained focused on increasing shareholder returns. “It's almost value destruction if you try to accelerate anything now,” Occidental Petroleum CEO Vicki Hollub told investors last month. “And some of the longer term projects just can't can't get started because of the cost involved. Now, for those of us that had plans in place – and there are other companies that have done this, too – but those of us that had plans in place and had those plans in place early enough, we've been able to mitigate some of the impact of the inflation and all that.”
Oil, gas companies underreported methane leaks, new study shows - Big oil and gas companies have internal data showing that their methane emissions in the vast Permian Basin “are likely significantly higher than official data” reported to the Environmental Protection Agency, says a new report by the House Committee on Science, Space and Technology.The companies should adopt tougher surveillance measures to detect and control methane leaks, especially giant super-emitters that contribute to the greenhouse gases that cause climate change, says the report.“A very significant proportion of methane emissions appear to be caused by a small number of super-emitting leaks,” the report says, noting that a single leak experienced by one company may have accounted for more than 80 percent of the methane emissions that company reported to the EPA from its Permian oil and gas production in 2020.The report was written by the committee’s Democratic staff using materials requested by Science Committee Chairwoman Rep. Eddie Bernice Johnson (D-Tex.) in a letter to 10 oil and gas companies on Dec. 2. Johnson said the United States could not achieve its goals for reducing methane emissions without a “swift and large-scale decline in oil and gas sector methane leaks.”The companies were invited by name to provide information, but their results remained anonymous in the final report.The committee, which will hold a hearing at 10 a.m. Wednesday on detecting and quantifying methane emissions in the oil and gas sector, zeroed in on the Permian Basin because it extends across 55 counties in West Texas and southeastern New Mexico and accounted for 42.6 percent of U.S. oil production and 16.7 percent of U.S. natural gas production in December 2021.
Oil and gas air pollution in Permian Basin draws concern from Congress - A congressional committee investigated some of the largest oil and gas companies in the Permian Basin, finding they were likely under-reporting their emissions of methane air pollution to the federal government. The U.S. House Committee on Science, Space and Technology convened Wednesday to discuss the finding of its report focused on the Permian and strategies to address fossil fuel's environmental impact. Three findings came from the inquiry: oil and gas companies are failing to address “super-emitting” gas leaks and to use proper data to mitigate methane emissions while they are “inconsistently” using monitoring technology throughout the U.S.’ main oil fields. The 18-month study conducted by committee members analyzed methane emissions and efforts to mitigate leaks from 10 companies, including major Permian Basin oil and gas companies Chevron, ConocoPhillips, Devon Energy, ExxonMobil, Occidental Petroleum and Pioneer Natural Resources. The Permian Basin, about 75,000 square miles stretching from southeast New Mexico to West Texas is the U.S.’ busiest oilfield, accounting for about 40 percent of the nation’s oil production, per the Texas Railroad Commission. U.S. Rep. Melanie Stansbury (D-NM), a member of the committee who represents the state’s First Congressional District which after last year’s redistricting includes parts of Chaves and Otero counties in southeast New Mexico near the Permian Basin oil fields said the results of pollution were already proving dire to her state. She attributed a recent rash of wildfires in the state, including the two biggest in New Mexico's history, as a direct result of climate change driven by the emission of greenhouse gasses (GHGs) like methane. Stansbury said the oil and gas industry must be held accountable, arguing the global oil and gas industry produced more methane than the total GHG emissions of "164 countries combined." "Across New Mexico, our communities are experiencing a devastating drought and our firefighters are battling unprecedented wildfires, weeks before wildfire season begins," read Stansbury's prepared remarks for the hearing. "We must take decisive action now to address the causes of climate change while investing in the sustainability and resilience of our communities. "This means tackling the main offenders among greenhouse gases." David Lyon, senior scientist with the Environmental Defense Fund testified before the committee that the oil and gas industry was the nation’s largest industrial source of methane emissions, but also had the most “cost-effective” solutions. “Capturing methane often allows companies to sell more natural gas,” he said. “Additionally, the methane mitigation industry provides many high paying jobs and is rapidly growing. However, delaying the widespread adoption of mitigation measures will substantially worsen climate impacts and cause continuing harm to communities and workers.”
Texas' Anti-Business, Pro-Fossil Fuel Law Is Spreading - The Texas law that seeks to stop companies from being mean to fossil fuels is getting popular—even if its execution and implications are still murky. States across the country are looking at adopting similar bills to one passed in Texas that forbids the state from doing business with any institutions that “boycott” fossil fuels.The original bill was passed last year, but its enforcement mechanisms are just now coming into play. The bill instructs the Texas comptroller to create a list of businesses that “boycott” fossil fuels. It’s unclear what exactly qualifies a “boycott” or how the state plans on cutting ties with financial institutions, banks, and other companies it deems aren’t being nice enough to Big Oil. The bill was modeled after a separate bill that banned the state from doing business with any entity that did not support Israel; that law has beenblocked by judges twice since its passage in 2017.Despite these lingering questions, other states are following Texas’ lead. Last month, Oklahoma’s governor signed its own version of the bill, called the Energy Discrimination Elimination Act, into law. In a local news report, supporters of the bill cited Texas’ “success” in implementing anti-anti-fossilfuel regulation, claiming that that state hasn’t seen any higher costs as a result of passing its law. (Again, it’s important to note that Texas hasn’t actually taken any actions yet against companies that it has decided are being unfair to fossil fuel companies, so the true implications of laws like these haveyet to be seen.)“Oklahoma is the state that fossil fuels built,” State Rep. Mark McBride (R)told KFOR News. “If you are boycotting them, the state is not going to do business with you.”Elsewhere in the country, lawmakers in other oil and gas states are also eyeing the Texas law as a model. West Virginia passed a bill earlier this year that would restrict the state from working with banks that “have been shown to refuse, terminate or limit commercial activity with coal, oil or natural gas companies.” Meanwhile, a similar bill introduced this year in Indiana would prohibit the state from making investments in companies that “boycott energy companies.” And a bill working its way through the Louisiana House would establish the state as a “fossil fuel sanctuary” and forbid enacting certain policies that would specifically tax or financially hamper the industry.
U.S. Oil Rig Count Jumps As Crude Holds At $120 --The number of total active drilling rigs in the United States rose by 6 this week, after drilling increases stalled out in the week prior, according to new data from Baker Hughes published on Friday. The total rig count rose to 733 this week—272 rigs higher than the rig count this time in 2021, but insufficient to ease market fears in the current tight oil market. Oil rigs in the United States rose by 6 this week to 580. Gas rigs stayed the same, at 151. Miscellaneous rigs also stayed the same at 2. The rig count in the Permian Basin rose by 3 this week, to 345. Rigs in the Eagle Ford rose by 2, to 68. Oil and gas rigs in the Permian are 109 above where they were this time last year. While there is more drilling activity in the Permian than this time last year, the increase in activity in U.S. shale has been outpaced by demand. With ESG concerns giving oil and gas companies pause in upping serious long-term investments in oil production and refining, and as companies fear depleting their reserves too quickly, we have failed to see a large and speedy uptick in drilling activity. Primary Vision's Frac Spread Count, an estimate of the number of crews completing unfinished wells—a more frugal use of finances than drilling new wells--fell for the second week in a row last week, from 283 to 279 in the week ending June 3. U.S. crude oil production was unmovable at 11.9 million bpd for the week ending June 3—the same level it's been at for the three weeks prior, according to the latest Energy Information Administration. At 12:29 a.m. ET, oil prices were trending down on the day. WTI was trading at $119.30—down $2.22 per barrel (-1.83%) on the day, but up roughly $0.60 per barrel on the week. The Brent benchmark traded at $120.70 per barrel, down $2.40 (-1.95%) on the day, but up roughly $1.40 on the week, with Brent barely hanging onto its edge over WTI. At 1:06 pm ET, WTI was trading at $119.60, while Brent was trading at $121.20 per barrel—both up on the day.
US set to resume onshore leasing next week - US oil and gas companies next week will get their first chance since January 2021 to acquire new drilling rights on federal land, but with a slimmer pick of parcels and a far higher royalty rate. The competitive sales will be the first federal onshore oil and gas lease sales since President Joe Biden took office. Leasing will begin on 14 June and 16 June for acreage in Nevada and Colorado, followed by sales later this month in Wyoming, New Mexico, Oklahoma, Montana, North Dakota and Utah. But the US Interior Department, which is holding the six sales to comply with a court order, cut back on the acreage up for leasing to avoid disturbing wildlife habitat and cultural areas. It intends to offer 173 parcels on 144,000 acres, about one-fifth of the acreage considered under former president Donald Trump. It also raised the royalty rate to 18.75pc, the first-ever increase from the longstanding rate of 12.5pc. The limited acreage up for lease and the 50pc higher royalty rate could diminish bidding, industry officials say, even with Nymex WTI crude futures topping $120/bl in recent days. Industry officials say royalty rates should have been kept low to offset the costs related to litigation and complying with stringent federal rules. Bidding is likely to be muted in the first sale on 14 June in Nevada, in large part because of geology. The two latest lease sales in Nevada, held in 2020, raised just $93,000 on the sale of 13 parcels of 56 offered. The Interior Department plans to only offer five parcels in next week's Nevada sale. The next sale, on 16 June in Colorado, could draw more interest but is likely to be limited by only offering nine parcels, down from 119 parcels. The two latest Colorado sales, also held in 2020, raised nearly $2.1mn in bonus bids by leasing 87 parcels of 100 parcels that were offered. Oil industry officials plan to more closely watch the 21 June sale in Wyoming that will offer 129 parcels. Bidding on acreage in Wyoming has recently been high, with the last federal lease sale in December 2020 raising $7mn on the sale of 181 parcels. But industry officials have balked at the administration's decision earlier this year to defer leasing on 61 parcels. "Deferral of these parcels will actually result in additional surface disturbance because companies will not be able to effectively develop their leases with longer horizontal wells," trade group the Western Energy Alliance said in an 18 May protest.
Biden faults lack of new drilling by ExxonMobil - President Joe Biden is ramping up criticism of the oil sector for holding back on investment on new production, as record-high gasoline prices become a growing political liability for Democrats. Biden, in remarks during a visit to the Port of Los Angeles in California, singled out ExxonMobil as an example of an oil company keeping its capital expenditures flat, despite higher profits as Nymex WTI crude futures climbed to $120/bl from $72/bl in December. "We're gonna make sure that everybody knows Exxon's profits," Biden said. "Exxon made more money than God this year." ExxonMobil in late April reported a $5.5bn profit in the first quarter and said that its quarterly capital expenditures declined to $4.9bn, from $5.8bn in the fourth quarter. ExxonMobil plans to spend $20bn-$25bn/yr through 2027, it said late last year. ExxonMobil did not immediately respond to a request for comment. High gasoline prices and inflation have added to political headwinds against Democrats heading into midterm elections, while increasing the difficulty for Democrats to reach a budget deal expected to include clean energy tax credits. Biden has blamed the jump in fuel prices largely on Russia's invasion of Ukraine but says oil companies are not doing enough to increase production. "One thing I want to say about the oil companies," Biden said. "They're not drilling. Why aren't they drilling? Because they make more money not producing more oil. The price goes up." Biden's criticism toward the oil sector comes as retail fuel prices continue to set new records, hitting $4.88/USG for regular grade gasoline in the week ending 6 June, according to the US Energy Information Administration. Fuel prices have been a leading contributor to rising price inflation, which hit a four-decade high of 8.6pc annually in May. The White House has repeatedly urged domestic producers to increase production Biden said that oil companies are holding back on new investment partly so they can reward investors through share repurchases. ExxonMobil on 29 April said it would triple the size of its existing share buyback program to $30bn through 2023. North American oil and gas producers are poised to increase capital spending by 26pc this year after two years of limited investment, but that will lead to just a 4pc increase in output volume, credit ratings service Moody's said in a research note on 6 June. Inflation, supply chain issues, labor shortages and shareholder demands for capital discipline are likely to constrain volume growth through at least 2023, it said.
Court upholds 'terrorism' sentencing of pipeline saboteur A federal appeals court on Monday upheld an eight-year prison sentence for an environmental activist who tried to sabotage the construction of the Dakota Access Pipeline. Jessica Reznicek pleaded guilty in June 2021 to a charge of conspiracy to damage an energy facility for vandalizing construction sites on the 1,200-mile (1,930-kilometer) pipeline in 2016 and 2017. Iowa U.S. District Judge Rebecca Goodgame Ebinger included a terrorism-related enhancement in her sentencing, finding that the crime was “calculated to influence or affect the conduct of government." Reznicek appealed that enhancement, arguing that she was acting against a private company. But the appeals court found that “any error was harmless” in Ebinger's sentencing because the judge had noted she would have imposed the eight-year sentence regardless of the terrorism enhancement, the Des Moines Register reported. An attorney for Reznicek declined to comment on the court's decision. Ruby Montoya, another activist who acted with Reznicek, has pleaded guilty to a charge in the incident. But she has attempted to withdraw that plea, arguing she was unfairly pressured into entering it.
Production, conversation groups challenge oil and gas leases – A Wyoming production group submitted a protest to the Bureau of Land Management regarding oil and gas leases on the same day a coalition of environmental groups also petitioned the BLM for the same reason. While these petitions all centered on President Joe Biden’s administration’s plans to resume oil and gas leasing sales on public lands in late June, they are for vastly different reasons. A litany of environmental groups submitted a formal protest to the Bureau of Land Management’s Wyoming office in reference to 129 nominated parcels across various locations, including Pinedale. That came the same day as a protest from the Petroleum Association of Wyoming, which took issue with the diminished amount of parcels for sale. The BLM is offering less than a third of requested parcels in the sale later this month. “The leases that they did offer for sale, many of them are in some of the most remote, most difficult places to reach,” PAW President Pete Obermueller said. Because of this, he argued the leases for sale might not be financially beneficial to the industry. The PAW argued the BLM does not have the legal authority to deny the sale of other land parcels. “(Federal Land Policy and Management Act) is the vehicle that determines which lands are and are not available and is accomplished during the development of a resource management plan,” the protest letter reads. The letter goes on to argue the BLM cannot outright deny a parcel’s availability for competitive bid. Linda Baker, executive director of the local Upper Green River Alliance, told Wyoming Public Radio that, under the National Environmental Policy Act, leases could be legally deferred for further review. “It makes common sense to review the necessity of leasing some of those parcels, especially some of those that are in the most sensitive wildlife habitats that we have,” she said. “For example, the Red Desert to Hoback mule deer migration corridor is one of the longest overland migration corridors in the Western Hemisphere. And, some of those leases are directly in the middle of that migration corridor.” Dan Ritzman – lands, water and wildlife campaign director for the Sierra Club – said the coalition’s filed protest is critical for the Biden administration to meet its established climate goals. “One of the biggest single sources of greenhouse gases across the country is fossil-fuel leasing on our public lands,” Ritzman said. “So to address climate change, we need to keep those fossil fuels in the ground, keep them from being burned.”
9th Circuit Court blocks permits for fracking off California coast - The U.S. 9th Circuit Court of Appeals on Friday blocked fracking off the California coast, ruling that the federal government must complete a full environmental review before approving permits for such offshore oil drilling platforms. The decision prevents the Interior Department and other federal agencies from issuing permits for “well stimulation” through hydraulic fracturing until a complete environmental impact statement is issued “rather than the inadequate [environmental assessment] on which they had relied.” “Today’s decision is a win for our communities, our environment, and the rule of law,” California Atty. Gen. Rob Bonta said in a news release. “Offshore drilling — particularly fracking — pollutes our waterways, damages our environment, and exacerbates climate change. We saw the risks of offshore drilling firsthand with the Huntington Beach oil spill last year, and we see it every day in the form of the climate crisis.” Kristen Monsell, oceans program legal director at the Center for Biological Diversity, called the ruling an “amazing victory for California’s coast and marine life.” “This decision will prevent more toxic chemicals from poisoning fish, sea otters and other marine life. And it brings us a step closer to ending offshore drilling once and for all,” Monsell said. The decision stems from a 2016 lawsuit brought by the state, the California Coastal Commission and environmental groups alleging that “federal agencies violated environmental laws when they authorized unconventional oil drilling methods on offshore platforms in the Pacific Outer Continental Shelf off the coast of California,” according to court records. The plaintiffs argued that the environmental assessments of fracking done by federal agencies, including the Interior Department, were inadequate and incomplete. See the big picture with monday.com PAID CONTENT See the big picture with monday.com By Project-Management.com 14-day free trial | No credit card needed “Environmental groups learned through Freedom of Information Act requests that agencies within the U.S. Department of the Interior had authorized permits for offshore well stimulation treatments without first conducting the normally-required environmental review,” the judgment said. Federal agencies “failed to take the hard look required” by the National Environmental Policy Act when issuing their environmental assessment, the 9th Circuit panel wrote.
Big Oil tees up next Supreme Court climate showdown - Climate liability lawsuits from state and local governments against fossil fuel companies could be headed to the Supreme Court for a second time.Suncor Energy Inc. and Exxon Mobil Corp. yesterday petitioned the justices to review a lower court decision that delivered a procedural victory to Colorado governments suing fossil fuel companies for climate damages (Climatewire, Feb. 9).The February finding by the 10th U.S. Circuit Court of Appeals that the case should be heard by a state judge — rather than a federal bench, as industry wants — was the first in a string of legal losses for oil and gas companies after the Supreme Court said last year that appellate judges could consider a larger set of arguments in favor of federal jurisdiction. In Suncor v. Board of County Commissioners of Boulder County, the companies argued yesterday that the Supreme Court must step in once again. “Given the stakes in the climate-change litigation, the questions presented here are some of the most consequential jurisdictional questions currently pending in the federal courts,” the companies’ petition states, noting that as of now, 23 similar cases are active nationwide. Attorneys for the companies told the Supreme Court that given “the significant stakes for the parties, the questions presented here will continue to bedevil the lower courts until this court intervenes.” It takes the vote of four justices to grant a petition, and the court rejects most cases that come its way. The fight over whether climate liability lawsuits belong before state or federal judges has stymied action for years as municipalities across the country have gone to court seeking payment from the oil and gas industry for the effects of planet-warming emissions. The suits were filed in state courts, but industry has sought to move them to federal benches, where a judge could find that the municipalities’ claims are preempted by the Clean Air Act. The Supreme Court has already engaged in the debate once, with a decision last May that sent a host of cases back to federal appeals courts, instructing judges to consider a broader range of factors when deciding whether the liability lawsuits should be heard in state or federal court.
U.S. To Ease Venezuela Oil Restrictions For Europe: Report -Italy’s Eni and Spain’s Repsol will get the green light to start shipping Venezuelan crude to Europe from next month, Reuters has reported, citing five unnamed sources in the know.The sources cited a letter written by the U.S. State Department to Eni and Repsol, signaling that Washington’s firm stance on Venezuelan sanctions may not be so firm after all now that its strategic partners in Europe are facing a shortage of crude because of sanctions against Russia.Yet the Reuters sources said the volumes that Eni and Repsol will be allowed to ship from Venezuela to Europe will not be significant and will only likely have a minor effect on global prices. It will also be exclusively shipped to Europe and cannot be resold elsewhere, according to them.The U.S. began signaling a readiness to ease Venezuelan sanctions as early as March when Washington first said it would ban all Russian oil and fuel imports and then sent a delegation to Caracas to discuss oil exports.The visit did not produce results, but two months later, the Washington Postreported that the U.S. would lift restrictions on Chevron’s business in Venezuela, allowing the supermajor to negotiate directly with the Venezuelan government and PDVSA on future production. Venezuela is home to the largest proven oil reserves in the world but has been unable to make much of them over the last few years since the Trump administration stepped up sanction pressure on the South American country. A relaxing of sanctions could unleash another 400,000 bpd per day at a time when global crude oil consumers are scrambling for less expensive crude.
UK Petrol Prices Closing In On $125+ to Fill Family Cars -The cost of filling up a 55-liter family car with petrol has topped £98 ($122.58) for the first time in history, according to the RAC motoring organization. The average price of unleaded petrol in the UK rose to 178.5 pence per liter on June 6, while diesel increased to 185.2 pence, the group said. Both prices are record highs. “With analysts predicting that oil will average $135 a barrel for the rest of this year drivers need to brace themselves for average fuel prices rocketing to GBP 2 a liter, which would mean a fill-up would rise to an unbelievable GBP 110,” said spokesman Simon Williams. UK fuel prices have set a string of new records in recent weeks, with oil prices soaring since Russia began its invasion of Ukraine. The start of peak summer driving season in Europe and the US, as well as the easing of Covid restrictions in China, has also boosted demand, the RAC noted. The cost of filling cars with diesel already passed £100 at the end of May.
Environmental Organizations Protest Jackdaw Development -Environmental organizations from the UK have protested the Government giving the green light to Shell for the development of the Jackdaw offshore project. It started with nine supporters of the Just Stop Oil coalition throwing red paint over the Queen Elizabeth Building in Edinburgh, demanding the Government protects the ‘livable planet’ and halts all new oil and gas licenses and consents. Several activists were arrested for criminal damage while the action itself follows a rally attended by Stop Cambo, Extinction Rebellion, and others calling for No New Oil and Gas in response to the Business Secretary Kwasi Kwarteng approving Shell’s Jackdaw North Sea gas field. “Antonio Gutterres, the UN secretary-general stated that investing in fossil fuels is ‘moral and economic madness’, the IEA said last year that ‘if Governments are serious about the climate, there can be no new fossil fuels from today’. Commissioning new fossil fuel facilities are the morally bankrupt plans of a criminal cartel protecting oil and gas over life on earth. That is why this announcement has been made the night before the Queen’s Jubilee, they think we won’t notice, they think we won’t care, we are here to show them that they are wrong,” one of the activists said – listed only as Alex. “I believe that we must do anything in our power to show that we’re not ok with these destructive policies. New oil and gas is not the solution, it’s not providing energy security or dealing with the cost of living crisis. If this government wanted that they would be insulating homes and investing in renewables,” another activist stated. “We are demanding an affordable, reliable energy supply that doesn’t destroy the economy, doesn’t cause a cost of living crisis, and doesn’t destroy the livable planet for generations to come. I refuse to stand by as my government’s policies cause countless millions of people to die.” Another protest followed a few days after as a coalition of groups opposed to new oil and gas gathered outside Edinburgh Sherrif Court to show support for two women held in custody since the initial protest. Namely, six Just Stop Oil supporters were arrested after throwing over the paint throwing on the Queen Elizabeth Building. Four were released the next day, however, two were held in custody.
Petroleum Wars in the Age of Climate Disaster: a Bridge Fuel Too Far -- Today, Europe is again at war, albeit a proxy war between Russia and the West after Russia crossed NATO’s red line by invading Ukraine or NATO crossed Russia’s redline after expanding to its borders depending on your allegiances. There may be a simpler explanation, however, that harkens back to the age of Standard Oil and the Nobel Brothers: the fight over the supply of petroleum and the control of imported energy to Europe. One thing for sure, Big Oil or indeed Big Gas is calling the shots, never mind the devastation in Ukraine where real people are dying and cities are being turned into rubble. Or that global warming is perilously increasing. Climate crisis? What climate crisis?Having relied on Russia for 40% of its imported oil and gas, much of it via a tangled web of cross-border pipelines, Europe is now scrambling for fuel and warmth. Europe’s “4-corridor” policy of sourcing energy imports from Russia, MENA, central Asia, and Scandinavia is hurriedly being re-written. Russia is being given the economic boot as the global number-1 (US 21%) and number-2 (Russia 15%) natural gas producers fight it out over who controls the sale of trillions of cubic feet of natural gas per year to Europe and beyond. [1] At the same time, we’re being told the earth is heating up beyond repair, thanks to increasing atmospheric carbon dioxide from ongoing fossil-fuel burning. The main bridgehead is in northeast Germany, terminus of the $10-billion, Nord Stream 1 (NS1) natural gas pipeline that snakes its way underneath the Baltic Sea from Vyborg near Saint Petersburg to Greifswald. NS1 brings roughly a quarter of Europe’s piped energy, primarily Arctic and Siberian natural gas. The attempted certification of a parallel, $11-billion NS2 would have doubled Russian supplies to the same location, but was nixed by the United States, the first shot in the Great Russian Gas War. The US can’t sell its own fracked natural gas to Europe if Russia holds a monopoly, while NATO isn’t keen for the Kremlin to reassert its iron-handed influence in a post-Soviet world via expanded energy exports that already account for almost $200 billion in annual export revenues and 60% of the Russian budget. Most importantly, there is little point to a military alliance if your opponent is supplying the energy to your members. NATO would cease to be if Team Europe ran on Russian fuel. Perhaps the confusion over the motivation for the latest petroleum war is an unfamiliarity with natural gas, whose main component, methane (CH4), is a potentially worse greenhouse gas than carbon dioxide (CO2). Associated hydrocarbon gases are typically found wherever there is oil, mostly methane (70-90%), with some ethane, propane, butane, and hexane. After 70 years of interventions in the Middle East, we’re used to the black stuff gushing from the ground, but fighting over an invisible gas is new.
Environmental groups challenge EU support for gas projects - ABC News -- Campaigning groups have launched legal action to challenge a decision by the European Union’s executive arm to include 30 gas projects in a list of operations considered as beneficial to the 27-nation bloc’s energy market. The campaigners said on Tuesday that the European Commission has given “these climate-destructive projects VIP status, in contradiction of its legal obligations.” They said the projects are worth 13 billion euros and will lock the region into dependency on the fossil fuel that EU institutions say that they want to get rid of. The projects, which include the Baltic Pipe Project designed to bring Norwegian gas to Poland and the development of gas infrastructure in Cyprus, are part the so-called list of Projects of Common Interest. They are eligible for funding from a program designed to boost energy, transport and digital infrastructure. The fund for the 2021-2027 period allocates a budget of €5.8 billion to the energy sector. “Billions of euros are bound to be wasted on 30 major pieces of gas infrastructure," campaigners said, highlighting the EastMed pipeline — a project to create a 1,900-kilometer (1,180-mile) pipeline to connect Eastern Mediterranean offshore gas fields to Greece and Italy. Supporters of the gas projects argue that they would improve Europe’s energy security, particularly in the context of energy sanctions taken against Russia for its war in Ukraine. The bloc is seeking alternatives to decrease its dependence on Russian gas, which accounts for about 40% of the EU’s gas consumption. The environmental groups said they have launched their action using a procedure allowing individuals and independent organizations to request an administrative review of legal acts adopted by EU institutions or bodies. They requested that the EU commission review the decision that justified the inclusion of gas projects, and threatened to ask the Court of Justice of the EU to rule on the matter if it does not amend its decision “This list amounts to a VIP pass for fossil gas in Europe, when we should be talking about its phase-out,” said Guillermo Ramo, a lawyer for the ClientEarth group. “The Commission did not consider the impact of methane emissions derived from gas infrastructure projects — in spite of evidence that these are substantial. That’s unlawful as it directly clashes with the EU’s own climate laws and its legal obligations under the Paris Agreement.”
Environmentalists Taking Legal Action On 30 EU-Backed Gas Projects -Four environmentalist organizations are starting legal action to end support for 30 EU-backed proposed gas projects. The four organizations – Friends of the Earth Europe, ClientEarth, Food & Water Action Europe, and CEE Bankwatch Network – said that the EU Commission has given these climate-destructive projects VIP status, in contradiction to its legal obligations. According to a statement by Friends of the Earth Europe, the EU Commission draws up a list of priority energy infrastructure projects deemed beneficial to the whole bloc every other year. Infrastructure on the “Projects of Common Interest” list gains fast-tracked permits and eligibility for EU funds. “Billions of [dollars] are bound to be wasted on 30 major pieces of gas infrastructure like the EastMed pipeline – a $7.5 billion, a 1,180-mile gas pipeline that will connect Eastern Mediterranean offshore gas fields from Israel and Cyprus to Italy via Greece,” the organization said. The groups have been able to start legal action through a request for internal review – a mechanism now open for use by NGOs and the public after a major reform of EU access to justice laws last year. The four organizations requested that the EU Commission review the decision that approved the PCI list and gave 30 proposed gas projects priority status. If the Commission refuses to amend its decision, the organizations will be able to ask the Court of Justice of the EU to rule. “This list amounts to a VIP pass for fossil gas in Europe when we should be talking about its phase-out. The Commission did not consider the impact of methane emissions derived from gas infrastructure projects – despite evidence that these are substantial. That’s unlawful as it directly clashes with the EU’s climate laws and its legal obligations under the Paris Agreement,” ClientEarth lawyer Guillermo Ramo said. Friends of Earth added that methane was the main component of fossil gas, with a global warming potential over 85 times higher than that of CO2 over 20 years. Yet, its impact when planning gas infrastructure is not considered. The environmental organizations argue the EU’s decision to support gas infrastructure puts the EU’s climate and energy goals under threat. Experts have clearly said no new gas or other fossil fuel developments should be built if we are to limit warming to 1.5C. The list also comes as Europe faces a gas price crisis, caused in part by over-reliance on price-volatile gas. Despite this, the EU Commission’s REPowerEU strategy plans to unleash over $10 billion in new fossil gas infrastructure. Some studies point out that the EU can end imports of all Russian fossil gas by 2025 – two years earlier than the European Commission’s current target of 2027 – without building new gas infrastructure or delaying the phase-out of coal, the organization explained. “The EastMed pipeline is a disaster for communities and the climate. It is not in the interests of local people in the region who will bear the costs of fossil fuel lock-in and the harm to the ecologically sensitive Mediterranean Sea. All along the route of the EastMed pipeline people are saying no to new fossil fuel infrastructure and yes to climate justice and peace. EU funding must focus on supporting projects that implement just, fair, safe, and renewable energy solutions,” Natasa Ioannou, climate campaigner with Friends of the Earth Cyprus, said. The European Commission now has up to 22 weeks to reply. The result could be a judgment clarifying how the EU should take the climate impacts of infrastructure into account.
Huge mystery spill detected in Baltic off Swedish coast - A massive spill of an unknown substance has been detected in the Baltic Sea off the coast of Sweden, the country’s coastguard said on Thursday. Covering a surface area of 30 sq miles (77 sq km) in both Swedish and Finnish waters, the spill was detected on Wednesday in the Bothnian Sea. “What the spill consists of is still not clear but it is not mineral oil, and there is currently no immediate threat of landfall,” the coastguard said in a statement. It said it had mapped the spill using planes and collected samples, adding that it would not be able to comment on which measures to deploy until after the samples had been analysed. A preliminary investigation into environmental crimes has also been launched. “Among other things, it is being investigated which ships have been in the area and what cargo they have had,” the coastguard said. Later on Thursday, it said the spill was no longer visible and that spills other than oil were increasing. “New types of fuel being transported at sea are increasing - for instance biofuel - and when in contact with water, they exhibit a great variety of behaviours which makes it more complicated to quickly establish what substance it is,” Jonatan Tholin, head of the coast guard investigation, said in a statement.
France Looking To UAE As Replacement For Russian Oil, Diesel - France is talking to the United Arab Emirates about the supply of oil and diesel as it seeks alternatives to Russian energy sources, Finance Minister Bruno Le Maire said on Sunday. The minister said France also planned to accelerate investment in the transition to cleaner energy, such as speeding up the roll-out of offshore wind farms, to increase the country’s independence. “We are looking for substitutes to the supply of gas or diesel from Russia,” Le Maire said during an interview with CNews TV and Europe1 radio. “For example, the United Arab Emirates can be a solution, at least temporarily, to replace Russian oil and diesel. These are discussions that have already begun with the United Arab Emirates.” The European Union approved a sixth package of sanctions against Russia over the war in Ukraine last week that included a partial ban on Russian oil imports. French President Emmanuel Macron said that Russian oil imports to the EU would be cut by about 92% by the end of the year as a result of the agreement. He also said an embargo on Russian gas must not be ruled out. “We must also free ourselves from gas, because Russian gas today, we must get our autonomy back as quickly as possible as Vladimir Putin doesn’t like the European project,” Breton said. “For years, he’s done everything to divide Europe. Now he’s using gas precisely to divide us.”
Gas traders rush to secure LNG tankers - The world’s largest gas traders are scrambling to secure liquefied natural gas tankers ahead of winter after sanctions on Russia following its invasion of Ukraine triggered a reshaping of global energy flows. LNG shipowners and brokers say an unusually early annual rush is under way for the likes of the UK’s Shell, France’s TotalEnergies and China’s Unipec to secure enough shipping capacity to transport the superchilled fuel during the peak winter demand season. Rates to charter an LNG tanker for a year are trading near their highest level in a decade at $120,000 per day, up more than 50 per cent on a year ago, according to Clarksons Platou Securities.The market boom comes after the EU vowed to reduce its dependence on Russian gas by two-thirds by the end of the year and import an extra 50bn cubic meters of LNG. Shipowners say Total has been particularly active in shopping for LNG carriers to rent for between three and five years, a longer period than usual. Total said it did not comment on market rumours.“The market has exploded. It’s very hard to find any ships with length [of availability] in the market. It’s going through the roof,” said Oystein Kalleklev, head of Flex LNG and Avance Gas, two LNG shipping groups. As the capacity crunch worsens, the success of LNG traders this winter will hinge on securing enough ships to maximise profits from high prices. “We have cargoes we can’t find ships for,” said one shipbroker. In recent years shipping bottlenecks have hindered the delivery of LNG to consuming markets in Asia and Europe. The rush for ships usually takes place in late summer in the northern hemisphere but this year it has already kicked off and traders are seeking to lower rates by agreeing to longer rental periods, according to industry executives. The scramble to secure LNG vessels comes ahead of new global shipping emission regulations next year, potentially decreasing supply further, and as East Asian shipyards struggle to launch new LNG carriers quickly enough. Brokers say the higher-value cargo resulting from the rise in gas prices has pushed up demand for modern vessels. Older vessels have fallen out of favour because they use turbine engines powered by the boil-off vapour from the LNG — essentially using their cargo as fuel. “It’s getting quite complex to get the right ships for the cargoes,” said another shipbroker, referring to trading companies’ demands for the larger modern ships. Golar LNG this week leased a floating storage and regasification unit — a special subset of LNG vessels used as import terminals — to Italian gas grid operator Snam for $350mn. Staubo said limited availability of FSRUs meant conversions of LNG carriers would be needed to meet the surge in European demand for regasification, adding to pressure on the LNG shipping market.
EU Sanctions on Russia Oil Will Sustain Inflationary Pressures -EU sanctions on Russian oil will sustain current inflationary pressures, though exemptions and the potential for piecemeal enforcement could weaken their impact. That’s according to a report from Fitch Solutions Country Risk & Industry research sent to Rigzone earlier this month, which outlined that the EU’s sixth sanctions package on Russia, combined with existing plans, implies an end to over 90 percent of Russian oil sales to the EU by the end of 2022. The report noted that this will further constrain energy supply, sustaining inflationary pressures in Europe. It added however, that the latest sanctions include multiple exemptions, grace periods, and caveats. “For example, Hungary will still be permitted to purchase Russian oil via tankers in the event that its pipeline exports via Ukraine are disrupted,” the report stated. “While these are designed to shield the more vulnerable European economies in Central and Eastern Europe from a sudden supply shock, they also create space for national authorities seeking to effectively circumvent some of the sanctions,” the report added. The report also warned that divisions over further sanctions will grow, adding that the partial oil ban “brings the political willingness of the EU to sanction Russia close to its apex”. “While some EU officials said they will seek to expand the oil embargo to pipeline exports as well, this continues to be resisted by the Hungarian, Slovak, and Czech governments (each of which wields a veto power),” the report stated. “Similarly, calls for an additional sanctions package to ban Russian gas imports by more hardline states such as Estonia were met with pushback from most other states. This suggests that the EU will increasingly struggle to pass any significant new sanctions, and will instead focus on enforcement of existing sanctions,” the report added. Fitch Solutions’ report highlighted that the risk of Russian retaliation via gas cut-offs will increase somewhat but added that Germany, Italy, and other large and/or dependent economies will likely maintain their supplies. “The oil embargo will prove financially painful for Russia over the medium term, given that Moscow depends on oil revenues for a significant share of government finances,” the report stated. “This will lead the Russian government to seek to ease sanctions pressure, potentially by threatening to disrupt gas exports to Europe,” the report continued. “Russia could be forced into economically damaging shut-ins of its gas wells in the event of a full-scale stoppage of gas exports to Europe, making it unlikely,” the report went on to state.
Goodbye gasoline cars? EU lawmakers vote to ban new sales from 2035 - European lawmakers have voted to ban the sale of new diesel and gasoline cars and vans in the EU from 2035, representing a significant shot in the arm to the region's ambitious green goals. On Wednesday, 339 MEPs in the European Parliament voted in favor of the plans, which had been proposed by the European Commission, the EU's executive branch. There were 249 votes against the proposal, while 24 MEPs abstained. It takes the European Union a step closer to its goal of cutting emissions from new passenger cars and light commercial vehicles by 100% in 2035, compared to 2021. By 2030, the target is an emissions reduction of 50% for vans and 55% for cars. The Commission has previously said passenger cars and vans account for roughly 12% and 2.5% of the EU's total CO2 emissions. MEPs will now undertake negotiations about the plans with the bloc's 27 member states. The U.K., meanwhile, wants to stop the sale of new diesel and gasoline cars and vans by 2030. It will require, from 2035, all new cars and vans to have zero tailpipe emissions. The U.K. left the EU on Jan. 31, 2020. Dutch MEP Jan Huitema, who is part of the Renew Europe Group, welcomed the result of Wednesday's vote. "I am thrilled that the European Parliament has backed an ambitious revision of the targets for 2030 and supported a 100% target for 2035, which is crucial to reach climate neutrality by 2050," he said. Others commenting on the news included Alex Keynes, clean vehicles manager at Brussels-based campaign group Transport & Environment. "The deadline means the last fossil fuel cars will be sold by 2035, giving us a fighting chance of averting runaway climate change," Keynes said. He also argued that the plans provide the car industry with the certainty it needed to "ramp up production of electric vehicles, which will drive down prices for drivers." For its part, the European Automobile Manufacturers' Association said it was "concerned that MEPs voted to set in stone a -100% CO2 target for 2035." Oliver Zipse, who is the president of the ACEA and CEO of BMW, said his industry was "in the midst of a wide push for electric vehicles, with new models arriving steadily." "But given the volatility and uncertainty we are experiencing globally day-by-day, any long-term regulation going beyond this decade is premature at this early stage," Zipse added. "Instead, a transparent review is needed halfway in order to define post-2030 targets." The EU has said it wants to be carbon neutral by 2050. In the medium term, it wants net greenhouse gas emissions to be cut by at least 55% by the year 2030, which the EU calls its "Fit for 55" plan.
Hungary says it's impossible for Europe to ban Russian gas anytime soon. Putin agrees - Hungarian Foreign Minister Peter Szijjarto has ruled out the prospect of a Russian gas ban in the European Union's next package of sanctions, saying it would be "impossible." Landlocked Hungary is overwhelmingly dependent on Russian hydrocarbons.Szijjarto's comments come as President Vladimir Putin says he believes the West will not be able to wean itself off Russian oil and gas for several years.The EU had sought to impose a total ban on Russian crude in a bid to cripple Putin's war machine over the Kremlin's onslaught in Ukraine. The bloceventually agreed late last month to a partial oil embargo in its long-delayed sixth package of sanctions against Russia.The compromise will see a ban on Russian oil brought into the bloc by sea, with an exemption carved out for imports delivered by pipeline following opposition from Hungary.Speaking to CNBC's Charlotte Reed on Thursday on the sidelines of the OECD's Ministerial Council Meeting in Paris, France, Szijjarto said: "When we impose sanctions, then we have to make sure that those sanctions are hurting more those against whom we impose the sanctions than ourselves.""We have to have a very clear position on the war, which we do have, we condemn Russia for this military aggression. We stand with Ukraine. But we have to take into consideration reality as well," he added. Szijjarto spoke of his frustration that Hungary had been portrayed as a country reluctant to punish Russia's war in Ukraine, pointing to the fact that Russia currently supplies 65% of Hungary's oil and 85% of its gas supplies.Putin on Thursday said Russia would not be "concreting over their oil wells" at a time when the West remains reliant on its energy sources, according to comments translated by the BBC."The volume of oil is decreasing on the world market, prices are rising," he said. "Company profits are rising." Moscow pledged to find other importers for its oil shortly after the EU imposed a partial embargo on Russian crude.Roughly 36% of the EU's oil imports come from Russia, a country that plays an outsized role in global oil markets. Russia is the world's third-largest oil producer, behind the U.S. and Saudi Arabia, and the world's largest exporter of crude to global markets. It is also a major producer and exporter of natural gas.
Kazakhstan Sees Oil Exports Constrained Due To Sanctions On Russia - Rising costs and sanctions on Russia have lowered the profitability of oil exports for Kazakhstan’s state oil and gas firm KazMunayGas, which has been forced to accept discounts on its crude being carried via the Russian pipeline network. The CPC pipeline carries oil from Kazakhstan’s Tengiz oilfield to export infrastructure along the Black Sea coast. Most of the crude oil carried by the CPC pipeline belongs to Russia, Kazakhstan, and international oil majors such as Chevron. It remains a vital crude oil artery for Kazakhstan, accounting for two-thirds of the country’s crude oil exports. However, after the Western sanctions against Russia over Putin’s invasion of Ukraine, Kazakhstan has had to accept discounts on the crude it sells as buyers have generally shunned exports out of Russia, KazMunayGas’s deputy executive chairman Dauren Karabayev said earlier this week, as carried by Upstream. KazMunayGas reported on Tuesday increased revenues and profits for the first quarter of 2022, but the net profit rose by just 9 percent year over year despite soaring crude prices, as operating and tax costs other than income tax soared in Q1. KazMunayGas and Kazakhstan also went through a month-long outage at two out of three terminals loading crude via the Caspian pipeline between the end of March and the end of April. Kazakhstan is now rebranding the name of its crude to avoid being associated with crude from Russia when it loads exports from Russian ports. Kazakhstan exports are not under sanctions, but buyers have been cautious about the origin of crude loading from Russian ports.
Kazakhstan Could Be Forced To Halt Gas Exports In 2023 -The head of Kazakhstan’s national gas company sounded the alarm bells Monday over a looming energy crisis, suggesting that the country may be forced to halt gas exports in 2023. Citing expectations of a gas shortage in 2023-2024, QazaqGaz CEO Sanzhar Zharkeshov told the Kazakh parliament on Monday that the country would not be able to meet soaring demand. "We expect a shortage of gas starting from 2024. The domestic demand is anticipated to be 1.7 billion cubic meters higher than the existing gas resources. If no urgent measures are taken, the exports of gas will need to be stopped in 2023,"Russian Interfax quoted Zharkeshov as saying.The QazaqGaz head cited mounting requests for gas supply from large customers ranging from coal-to-gas power plant conversion projects to new gas and chemical complexes and other large commercial customers. Citing the need for “urgent measures”, Zharkeshov is calling for an increase in Kazakhstan’s commercial gas reserve base from 2022 to 2030, with a shifting of available reserves to the domestic market this year. At the same time, Kazakh Energy Minister Bolat Akchulakov told parliament that domestic gas consumption growth is rising 7% annually. The Energy Minister predicted that the country would suffer from domestic gas shortages and be forced into dependency on imports by 2025, Kazinform reported. Gas consumption in Kazakhstan grew by 4.8 billion cubic meters between 2017 and 2021, the Minister said. In an effort to boost gas production and stave off a domestic gas crisis, the Kazakh Energy Ministry has proposed apackage of measures to reduce the tax burden on new gas projects. Those measures would include fiscal preferences for gas projects with exemption from tax. More specifically, they would include exemption from corporate income tax for 10 years from the start of production, as well as exemption from export customs duties for the same period.
Israel Moving Energean Power FPSO To Karish Field Angers Lebanon Israel has moved a production vessel to a natural gas field that’s partly claimed by Lebanon, as the Israeli government looks to boost supplies of the fuel to Europe. The ship -- known as a floating production, storage and offloading vessel -- arrived at the Karish offshore field on Sunday and should start operating by September, the Israeli energy ministry said in a statement. The gas flows will “significantly strengthen Israel’s supply surplus and energy security,” said Energy Minister Karine Elharrar. The field “positions Israel as a natural gas power, and will make it possible to increase natural gas exports” to Egypt and other countries in the region. Lebanon criticized the move, though Israel says the FPSO is outside of a disputed border area. Lebanese President Michel Aoun said in a tweet on Sunday that negotiations to demarcate the maritime boundary are ongoing and that “any activity in the disputed area” would be a “hostile act.” Hezbollah Threat Israel’s navy is preparing for possible attacks on the vessel from Hezbollah, Israeli public broadcaster Kan News reported. Hezbollah, a Lebanese political party and militant group, is classified as a terrorist organization by the US. The area will be secured by missile-defense systems, ships and submarines, according to Kan News. Israel and Lebanon have held a series of US-brokered talks in recent years to try and resolve the dispute. The negotiations are complicated by the fact Lebanon doesn’t officially recognize Israel. London-listed Energean Plc, set to operate Karish, has said gas should start flowing by the third quarter. The field will complement Israeli production from the nearby deposits of Leviathan and Tamar.
India Seeks Even More Russian Oil - India’s demand for cheap Russian crude is insatiable as some of the largest Indian refiners are looking to negotiate six-month supply deals with Russia’s oil giant Rosneft at a time when Western buyers avoid dealing with Moscow’s crude, sources with knowledge of the Indian firms’ plans told Bloomberg on Monday.State-owned refiners Indian Oil Corporation, Hindustan Petroleum, and Bharat Petroleum, and private firms including conglomerate Reliance Industries, as well as partly-Rosneft-owned Nayara Energy, are among those seeking additional supply from Rosneft, Bloomberg’s sources say. The terms of the deals are still being negotiated, but it is expected that Rosneft would handle the insurance and shipping coverage. The additional purchases, if agreed, would add to the other deals under which India buys Russian crude, according to Bloomberg’s sources.Indian imports of Russia oil are not illegal per se, but India has drawn the attention of the Western allies that seek to cripple Russian oil revenues.With Russian crude selling at a record discount relative to Dated Brent, the cheap Russian oil is attracting India’s price-sensitive buyers to the point that Russia became the fourth largest oil supplier to India in April, moving up from the 10th place in March, according to shipment-tracking data compiled by Reuters.The significant increase in India’s purchases of Russian crude has already drawn the attention of the United States, which has reportedly sent a U.S. federal government official to discuss U.S. sanctions on Russia and try to convince India to reduce its purchases of Russian oil.India, the world’s third-largest crude importer which relies on imports for more than 80 percent of its oil consumption, has seen a surge in its imports of Russian crude since the Russian invasion of Ukraine in late February.
India Looking To Increase Russian Oil Imports From Rosneft -India is looking to double down on its Russian oil imports with state-owned refiners eager to take more heavily-discounted supplies from Rosneft PJSC as international buyers turn down dealings with Moscow over its invasion of Ukraine. State processors are collectively working on finalizing and securing new six-month supply contracts for Russian crude to India, said people with knowledge of the companies’ procurement plans. Cargoes are being sought on a delivered basis from Rosneft, with the seller set to handle shipping and insurance matters, they said. These supply agreements, if concluded, will be separate and on top of shipments that India already buys from Russia via other deals. Details on volumes and pricing are still being negotiated with Indian banks set to fully finance all cargoes, said the people who asked not to be identified as discussions are confidential. Indian refiners will increasingly procure supplies directly from Russian companies such as Rosneft as top international traders like Glencore Plc wind up their dealings, they added. The state refiners include Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum, while private processors are Reliance Industries and Nayara Energy, which is partly owned by Rosneft. Procurement activities for state and private companies are done independently. Spokespeople at the three largest state-owned companies couldn’t immediately comment when contacted. Both state and privately-owned refineries in India have been ramping up purchases of Russian crude as sanctions and trade restrictions rolled out by the US, UK and European Union have caused most buyers to flee and offer levels to crash. An unprecedented amount of Russian crude was heading to India and China last month as European buyers scrambled for replacements and reached as far as the United Arab Emirates for alternatives. The ensuing panic and rerouting of global oil flows have lifted prices by more 20% since late-February when Russia invaded Ukraine. Refiners in Asia’s second-largest oil consumer have been enjoying elevated profits from turning cheap crude into fuels that are sold domestically and also in the export market to customers in Europe and the US. Russian supplies form just part of India’s overall basket of crude oil feedstock, alongside other long-term as well as spot purchases from the Middle East and Africa. The potential ramp-up of Russian crude purchases will likely weigh on the South Asian nation’s spot imports, said the people. India has bought more than 40 million barrels of Russian oil between late-February and early-May, which comes to about 20% more than flows for all of 2021, according to Bloomberg calculations based on trade data. Russian oil arrivals into India for May were at 740,000 barrels a day, up from 284,000 barrels in April and 34,000 barrels a year earlier, according to data from Kpler. Although India’s purchases of Russian crude aren’t illegal or in breach of any sanctions, the country has come under pressure from the Biden administration and EU to stop doing business with Moscow in order to cut off the Kremlin’s access to oil revenue and funds. The Asian nation has reiterated that its volume of Russian imports are minuscule as compared to Europe’s purchases, and just a tiny fraction of the country’s total consumption. “We don’t send people out there saying go buy Russian oil, we send people saying go buy oil,
Cash-Strapped Sri Lanka Turns To Russia To Quench Thirst For Oil -A broke and extremely cash-strapped Sri Lanka has turned to Russia for cheap oil, as much of the western world shuns Moscow over its invasion of Ukraine while savvy eastern nations such as India and China take advantage of a bifurcated oil market to buy as much crude as they can at a price that is roughly $30 below spot. Trapped in the worst economic crisis in its history, the South Asian country said last weekend that it would pay $72 million for 90,000 tons of Russian crude ordered via a Dubai-based company and docked at Colombo for weeks, the Nikkei reported. Sri Lanka's first purchase of Russian oil since the outbreak of the war in Europe gave a new lease of life to a refinery in Sapugaskanda, just outside the commercial capital, which had been shut since March.It also highlighted how the country's woes have given Russia an opening. Sri Lanka has already kicked off discussions with Moscow about directly importing crude oil, although it is unclear where the funds for such shipments would come from (spoiler alert: China). Russia has yet to announce any credit line for its South Asian customer.Sri Lanka needs $554 million to import oil for the month of June alone, according to Power and Energy Minister Kanchana Wijesekera.Experts say that while Sri Lanka's move to take Russian oil may raise eyebrows, the country has little room to be choosy about its trade partners as it suffers from a severe fuel shortage, daily power cuts and surging living costs. Furthermore, Russian oil continues to be traded at a steep discount to global prices.
No Gas, Oil In Highly Anticipated Sasanof Well Off Australia Australia’s Western Gas hasn’t found any commercial hydrocarbons in its highly anticipated exploration Sasanof-1 well located offshore Australia. The Sasanof-1 exploration well is in exploration permit WA-519-P, in Commonwealth waters approximately 130 miles northwest of Onslow Western Australia. Western Gas is the operator of this prospect with a 52.5 percent interest and its partners are Global Oil and Gas with a 25 percent, and Prominence Energy with a 12.5 percent. The remaining 10 percent interest was acquired by Clontarf Energy in May, just before the drilling of Sasanof began. The Valaris MS-1 rig spud the well in late May and drilling through the target reservoir section happened over the weekend. Prominence Energy, Western Gas’ partner, said that the Sasanof-1 exploration well was drilled to a total depth of 7,840 feet RMDT by the Valaris MS-1 rig without incident. The company added that no commercial hydrocarbons were intersected and that the well would now be plugged and permanently abandoned. Rig de-mobilization activities will begin after that. “We are obviously disappointed with the result of the well but would like to thank our shareholders for their support, and to commend Western Gas and all the service providers that have enabled the drilling of this well,” .
Authorities hold emergency meeting over “heavy oil spill” - The National Environment Agency (NEA), Gambia Maritime Administration (GMA), Public Utility and Regulatory Authority (PURA), and other key stakeholder institutions recently held an emergency meeting amid the incidence of Heavy Fuel Oil (HFO) spill during the discharge operations from the vessel (MT FT STURLA) which was conducted on Saturday, 28th May. 2022. A statement obtained by The Point stated that upon receipt of the information from various sources, the NEA, GMA, and PURA sent personnel to confirm the situation and conducted an initial assessment of the incident. Through the coordination of PURA, an emergency meeting of stakeholders was held on Sunday 29th May 2022, where the management of Gam Petroleum was summoned to explain the circumstances leading to the oil spill. During the briefing, stakeholders were informed from preliminary figures indicated that 1,501.334 metric tons HFO were discharged from the ship but the fuel depot just recorded 1,430.469 metric tons as received. The statement indicated that based on the fact that the difference between the quantities pumped by the ship and the amount received by the depot was roughly 70.865 metric tons which approximately translates to 70,865 liters, it is assumed that the difference is the quantities of HFO discharged into the sea, caused by a ruptured submerged pipe through which the HFO was discharged to the shore tank GP. The authorities informed the public that GMA, NEA, PURA, GPA, and other relevant stakeholders are aware of the incident and necessary actions are being taken to address the situation.
Nam Dairies faces N$24m lawsuit over oil spill - The Namibian THE City of Windhoek is suing Namibia Dairies for N$24 million over alleged negligence and causing an oil spill that contaminated Windhoek's water three years ago. The municipality – through its lawyer Patrick Kauta from Dr Weder, Kauta & Hoveka Inc – claims in a summons dated 18 January 2022 that it had suffered the loss of production of water for the city and damages as a result of the oil spill. Namibia Dairies, which is owned by Ohlthaver & List (O&L) is defending the lawsuit in the High Court. The company, headed by Sven Thieme as chairman, has appointed Mark Kutzner of Engling, Stritter & Partners as its lawyers in this case. The spill took place on 3 February 2019 after a safety valve in a boiler room at Namibia Dairies' Avis factory in Windhoek failed. According to the city, around 24 000 litres of heavy fuel oil spilled through a filter and filled the boiler room, the city said. “This in turn caused heavy fuel oil to drain into the storm water drains and into the municipal sewer line and heavy fuel oil to spill into the river adjacent to the factory,” Kauta said in the summons. A municipality assessment at the time said that fish in the maturation ponds at the Gammams water treatment plant died due to a lack of oxygen, and the operations of two contractors at water works to produce renewable energy and fertiliser were stopped. “The oil spill caused physical damage to the sewer line in the form of residual heavy fuel oil which was attached to the concrete surfaces of the sewer line leading to damage to the sewerage system and the environment,” Kauta said. The city said the oil spill was unlawful as it contravened the Water Resources Management Act and resulted in damage to the city's property. The city wants the payment of N$24 million at an interest rate of 9,75% from the date of summons to date of payment. The city also wants Namibia Dairies to pay for the costs it incurs during the lawsuit. The summons shows that the oil spill led to the complete shutdown of the Gammans sewer line for 19 days and as a result, no water treatment could be carried out. “Contaminated sewage flooded the lower lying areas of the Gammams sewer line premises, which in turn caused flooding to two other processes (biogas production and sludge belt press) to be shut down for 32 days,” Kauta wrote. The summons added that the oil spill caused the city to suffer damages of around N$7 million as a result of cleaning up the spill and fixing the damage caused. The city is said to have suffered damages of N$17 million in water lost for production from 3 to 22 February 2019 for 20 days at waste water treatment tariff. The Namibian reported in February 2019 that the closure of the two plants had forced the city to buy 25% of its water directly from NamWater. The city accused Namibia Dairies of being negligent.
Libya’s Biggest Oilfield Resumes Production -- Libya’s largest oilfield, Sharara, restarted oil production this weekend following weeks of shutdown over protests, sources in Libya told Argus on Monday.Sharara, with a capacity to pump 300,000 barrels per day (bpd), was closed in the middle of April after a blockade from protesters demanding a transfer of powers from Prime Minister Abdul Hamid Dbeibah, who has been refusing to step down for newly sworn-in eastern Prime Minister Fathi Bashaga. Disputes over the distribution of oil revenues have also led to blockades at several Libyan oilfields, including Sharara.In April, Libya loaded just 819,000 bpd of crude from its ports, down from nearly 1 million in March and the lowest volume since October 2020, per tanker-tracking data that Bloomberg is monitoring.Oil exports from the OPEC producer exempted from the OPEC+ deal were depressed in May, too, as the blockade and political disputes continued.Libya expects to open all its oil loading terminals after it sets up a mechanism for a fair distribution of the country’s oil revenues among the regions, Parliament Speaker Aqila Saleh told U.S. ambassador and Special Envoy to Libya, Richard Norland, Benghazi-based news outlet The Libya Update reported last month.The Parliament-backed Libyan Prime Minister Fathi Bashagha, who was elected in February, said on Twitter in early May that Libya’s oilfields were expected to reopen soon, after militias agreed to lift the siege on oil facilities.However, it took another three weeks for production at Sharara to resume.According to Argus’ sources, production at the biggest Libyan oilfield restarted at a rate of 180,000 bpd on June 4. Sharara’s nearby 70,000 bpd El Feel oilfield remains closed as of Monday. Volatile production in Libya has added to the huge uncertainties in the global oil market in terms of supply. Just last week, Libya lost 22,000 bpd of production due to a pipeline leak at the Sarir Tobruk oilfield, blamed on delayed budgets that have left the operating company unable to maintain its oil transport infrastructure.
Libya’s Oil Exports To Dip Again Amid Renewed Port Blockades - Libyan oil production and exports are set to drop again after two export terminals were blocked on Thursday, and protesters threatened on Friday to close another oil port. Groups of protesters closed the Ras Lanuf and Es Sider oil export terminals on Thursday, demanding a transfer of powers from Prime Minister Abdul Hamid Dbeibah, who has been refusing to step down for newly sworn-in eastern Prime Minister Fathi Bashaga. The Parliament-backed Bashagha has the support from eastern Libya and its east-based parliament, while Dbeibah is based in Tripoli. The Parliament voted in Bashaga for prime minister earlier this year, but Dbeibah has refused to step down. The political rift, also because of the distribution of oil revenues, has already crippled Libyan production and exports in April and May.Libya’s largest oilfield, Sharara, restarted oil production this weekend following weeks of shutdown over protests, but was closed again just a day after reopening.The blockades are now spreading to the Ras Lanuf and Es Sider terminals, while a group threatened to close the Hariga port on Friday, engineers told Reuters on Friday. According to analysts and diplomats who spoke to Reuters, the blockades of oil ports have been mostly instigated by factions in the east, including eastern strongman Khalifa Haftar and the Libyan National Army (LNA) he leads. According to Reuters estimates, Libya’s oil production had already halved to around 600,000 barrels per day (bpd) in May, after the Sharara and El Feel oilfields were closed and added to other blockaded oil infrastructure in the country. The resumption of mass oil port blockades in the wild-card OPEC producer exempted from the OPEC+ deal comes at a time of a tight global market, bans on Russian oil in the West, and robust global demand in the summer driving season despite record-high fuel prices.
UAE Says Oil Prices Are Nowhere Near Peak Yet -Oil prices are “nowhere near” their peak as an impending rebound in Chinese demand threatens to strain a global market already pinched by tight supplies, said key OPEC member the United Arab Emirates. The comments serve as an acknowledgment that last week’s decision by the OPEC+ coalition to bolster output will give consumers little respite from the soaring cost of energy this summer. The Organization of Petroleum Exporting Countries is struggling to restore production as planned, with spare capacity confined to just a few members, the UAE minister conceded. “With the pace of consumption we have, we are nowhere near the peak because China is not back yet,” Energy Minister Suhail Al-Mazrouei said at a conference on Wednesday in Jordan. “China will come with more consumption.” Al-Mazrouei warned that without more investment across the globe, OPEC+ can’t guarantee sufficient oil supplies as demand fully recovers from the coronavirus pandemic. Prices can reach “unseen” levels if Russian oil and gas is completely taken off the market, he said. OPEC+ agreed last week to open its oil taps a little faster in the summer months. That modest supply boost amounts to just 0.4% of global demand over July and August and comes after several months in which the group has struggled to hit its production targets. “We’re lagging by almost 2.6 million barrels a day, and that’s a lot,” Al Mazrouei said. Only Saudi Arabia and the UAE have significant volumes of idle production capacity, but even that is only enough to offset a portion of the supply gap created by sanctions on Russia. “The situation is not very encouraging when it comes to the quantities that we can bring,” Al Mazrouei said. OPEC Secretary-General Mohammad Barkindo echoed the UAE’s comments, stressing the lack of spare capacity in the group. “With the exception of two-three members, all are maxed out,” he told Bloomberg
OPEC+ Is Struggling With Oil Production Hikes, UAE Admits - The OPEC+ group is currently pumping 2.6 million barrels per day (bpd) of oil below its target, and efforts to boost output per the monthly plans are "not encouraging," the energy minister of one of OPEC's top producers, the United Arab Emirates, said on Wednesday. "According to last month's report, we have seen the conformity (to output cuts) of the OPEC+ group and the conformity was more than 200%," the UAE's Energy Minister Suhail al-Mazrouei said at an energy conference in Jordan as carried by Reuters. Since OPEC+ started reversing last year the record cuts from April 2020, the group has been consistently struggling to meet its production quota as many members lack spare capacity or investment to increase production. The UAE is actually one of the very few with some spare capacity, as is OPEC's top producer Saudi Arabia. The Saudis, OPEC's second-largest producer, Iraq, and the third-largest, the UAE, are believed to be the only producers with enough spare capacity. OPEC's African members Nigeria and Angola are struggling with their targets, while the leader of the non-OPEC producers in the pact, Russia, is trying to stop a production decline as its oil is now under sanctions, bans, and embargoes in the West. OPEC+ decided last week to accelerate its monthly oil production increase to nearly 650,000 bpd for July and August as the group looks to compensate for falling production in Russia amid expectations of strong fuel demand this summer. The higher monthly production hike was seen by the market as not enough to offset supply losses from Russia or to meet what is expected to be a strong summer fuel demand despite record fuel prices in many countries. China is gradually returning from lockdowns in some major cities, also supporting the outlook that demand will strengthen. At today's conference in Jordan, the UAE's al-Mazrouei said, "The risk is when China is back," referring to Chinese demand and OPEC+'s ability to supply as much crude to the world as its pact says.
OPEC+ output up after two months of declines, but quota shortfall grows: Platts survey - Crude oil production from OPEC and its Russia-led allies rebounded modestly in May from a steep drop in April but remains well short of its collective quotas, according to the latest Platts survey by S&P Global Commodity insights, highlighting the group’s continuing struggles with sanctions and unplanned outages. OPEC’s 13 members pumped 28.62 million b/d in May, down 180,000 b/d from April, including major losses in Nigeria and Libya, while nine other countries partnering with the producer group added 13.08 million b/d, a rise of 300,000 b/d, led by gains in Russia and Kazakhstan, the survey found. That is a net 120,000 b/d gain in the month by the entire OPEC+ alliance. But with production quotas rising monthly under the OPEC+ agreement, the group underproduced its target by 2.616 million b/d, with compliance at a lofty 182.5%, according to S&P Global calculations. Bar chart that illustrates modest output gains in may for for OPEC+ countries Russia, targeted by western sanctions since its invasion of Ukraine in late February, has been the biggest contributor to the alliance’s shortfalls, as its production has fallen significantly from pre-war levels. However it was able to regain some footing in May, boosting output by 150,000 b/d to 9.29 million b/d, compared to its quota of 10.549 million b/d, the survey found. Bar chart that illustrates modest output gains in may for for OPEC+ countries Exports of Russian crude have remained resilient in the face of the sanctions, with some buyers eager to snap up discounted cargoes. But analysts expect production to contract sharply in the months ahead, as the EU implements a ban on almost all seaborne Russian oil imports by year-end. Fellow non-OPEC producer Kazakhstan also saw a healthy bounce in May to 1.52 million b/d, thanks to repairs to its damaged CPC pipeline from storm damage in April, according to the survey. Kazakhstan exports some two-thirds of its crude via the pipeline. Volatile output With Russia impaired, OPEC kingpin Saudi Arabia has over the past few months reclaimed its mantle as the group’s leading producer, pumping 10.45 million b/d in April, though that is below its quota of 10.549 million b/d. The world’s largest crude exporter saw its shipments down in the month, though some volumes were shunted into inventories and refinery runs were strong, market sources said.
Iran Might Get US OK To Flow More Oil Even Without Nuclear Deal The US may allow more sanctioned Iranian oil onto global markets even without a revival of the 2015 nuclear accord, according to the biggest independent crude trader. While a new agreement would limit Iran’s atomic activities and ease US sanctions on its energy exports, talks between Tehran and world powers have stalled since March. Oil traders are increasingly pessimistic that negotiators will strike a deal. Still, US President Joe Biden could decide that the need to bring down record-high pump prices ahead of November’s midterm elections outweighs the benefit of strictly enforcing sanctions, including by seizing more Iranian oil tankers. “Uncle Sam might just allow a little bit more of that oil to flow,” Mike Muller, head of Asia at Vitol Group, said Sunday on a podcast produced by Dubai-based Gulf Intelligence. “If the midterms are dominated by the need to get gas prices lower in America, turning a somewhat greater blind eye to the sanctioned barrels flowing out is probably something you might expect to see. US intervention in these flows has always been pretty sparse.” The US confiscated oil from an Iranian-flagged vessel off Greece last month, which was followed days later by Tehran detaining two Greek tankers in the Persian Gulf. But Washington’s move is unlikely to signal the start of more tanker seizures by the US, according to Muller. Iran has raised oil exports this year, most of them ending up in China. A new nuclear deal would lead to an additional 500,000 to 1 million barrels per day coming on to international markets, enough to weigh on prices, according to energy analysts. The Islamic Republic also has around 100 million barrels of oil in storage that could be sold down quickly. Crude prices have soared more than 50% this year to almost $120 a barrel, mostly because of the fallout of Russia’s invasion of Ukraine. While many Republicans and some Democrats oppose any lifting of Iranian sanctions, Biden is under plenty of pressure to lower gasoline prices, which have shot up to an average of more than $4.80 per gallon in the US. There’s little consensus about the direction of oil prices, according to Vitol, which traded 7.6 million barrels of crude and refined products a day in 2021. While supplies are tight, Washington’s release of strategic reserves is helping balance the market. Thursday’s decision by OPEC+ -- a 23-nation group of producers led by Saudi Arabia and Russia -- to accelerate output increases is unlikely to have much impact, Muller said. That’s because many members will struggle to pump more, and Moscow’s exports could drop due to sanctions over the war in Ukraine. “The range of expert opinion out there has never been wider,” said Muller, who’s based in Singapore. “There are people who think the market’s going to $135-$140 a barrel. And there are people who think we’re going below $100 again.” There’s also a dichotomy emerging between richer and poorer countries, he said. Some in Asia such as Malaysia and Singapore are experiencing a demand rebound as coronavirus lockdowns ease. Others including Pakistan and Sri Lanka, which has defaulted on international bonds and is struggling to pay for fuel imports, are experiencing demand destruction.
Saudi Arabia cuts oil flows to China while meeting other requests - Saudi Arabia will provide some Chinese buyers with less crude than they asked for next month, while fulfilling requests from many other customers in Asia after OPEC+ pledged to speed up production hikes. Japan, South Korea, Thailand and India will get the oil volumes they had sought, with some even getting extra supplies, according to refinery officials who asked not to be identified as the information is private. State-run marketer Saudi Aramco typically doesn’t provide buyers with a reason why volumes are cut. Aramco didn’t immediately reply to an email seeking comment on the matter. Many Asian buyers asked Aramco for more oil during the so-called nomination process held this week as they sought alternatives to Russian varieties. China and India continue to be big buyers of Russian crudes after Moscow’s invasion of Ukraine, enjoying deep discounts for their willingness to keep importing grades such as flagship Urals and ESPO from the Far East. July supplies of Saudi oil were especially sought-after by many in Asia due to strong refining margins. Despite a higher-than-expected increase in prices from the kingdom, buyers are still finding its cargoes more affordable than arbitrage supplies from the North Sea and the US following a slump in benchmark prices in the Middle East versus London and US markers. At least three European refiners have received full contractual volumes for July delivery from Aramco, said refinery officials with knowledge of matter.
Why Saudi Arabia Isn’t Giving Up On Its Russian Oil Alliance -Russian Foreign Minister, Sergei Lavrov, and his Saudi counterpart, Prince Faisal bin Farhan, met at length last week in Riyadh after which they released statements highlighting: “The level of cooperation in the OPEC+ format.” The two ministers underlined the: “Stabilising effect that tight coordination between Russia and Saudi Arabia in this strategically-important area has on the global hydrocarbon market.” Shortly afterward, the OPEC+ alliance, comprising all the OPEC member states plus most notably Russia, announced a theoretical increase in crude oil production – of 648,000 barrels per day (bpd) in July and August, instead of by 432,000 bpd as previously agreed. In practice, as it also includes Russian exports that are already banned by the U.S. and are being banned in the E.U., the increase is meaningless. Subsequent Saudi assurances that any deficit in Russia’s output caused by the ban will be met by other OPEC states is similarly meaningless in practical terms, given enduring question marks over genuine output capabilities. Any residual notion that Saudi Arabia might be trying to alleviate the economic problems of many countries resulting from high oil prices was dispelled over the weekend, as the Kingdom raised its official selling price for its flagship Arab Light crude to Asia to a US$6.50 per barrel (pb) premium for July to the average of the Oman and Dubai benchmarks, up from a premium of US$4.40 pb in June. The net effect of OPEC+’s production increase, therefore, will be zero, which Saudi Arabia, Russia, and all other OPEC members, know perfectly well. So, why is Saudi, for so long a staunch ally of the U.S. after the landmark relationship deal made in 1945, now so resolutely sticking with Washington’s long-time nemesis, Russia, even with the invasion of Ukraine still in full swing?The core of the answer lies in the immediate aftermath of the 2014-2016 Oil Price War launched by Saudi Arabia with the specific intention of destroying – or at least disabling for as long a period as possible – the then-nascent U.S. shale oil sector. In 2014, the Saudis had correctly identified this sector as the biggest threat to its finances and political power – both of which were, and still are – founded exclusively on its oil resources. In addition, but incorrectly at that point, the Saudis believed that the U.S. intended to cease, or at least significantly scale back, its on-the-ground support for Saudi Arabia in the region as Washington’s principal bulwark there against the increasing influence of Iran, Russia, and China. These fears in Riyadh were being stoked at that time by the ongoing talks of a ‘nuclear deal’ between the major powers, led by the U.S. itself, and Iran – Saudi Arabia’s longstanding nemesis. These talks did indeed result less than a year later in the Joint Comprehensive Plan of Action (JCPOA) deal that effectively brought Iran back into the mainstream of global political interplay. Due mainly to the remarkable, and unexpected, ability of much of the U.S.’s shale oil companies to survive with oil prices that had been pushed extremely low through OPEC overproduction, the 2014-2016 Oil Price War resulted in devastation for the economy of Saudi Arabia and for its brother states in OPEC. An additional negative result for Saudi Arabia was that it had lost its credibility as the de facto leader of OPEC and that OPEC had lost its credibility as the indomitable force in global oil markets. This meant that OPEC’s pronouncements on future oil supply and demand levels – and therefore, on pricing – had lost much of their potency to move markets in and of themselves and that their joint production deals were diminished in effectiveness.In the interim, many of the positive rationales on both sides of the core 1945 agreement between the U.S. and Saudi Arabia had disappeared. The U.S. did not trust Saudi Arabia anymore not to go after its shale oil sector. It also did not trust Saudi Arabia to try to keep oil prices within the US$35-75 per barrel (pb) of Brent price band that was ideal for Washington: the first number being the floor at which many U.S. shale producers could at least breakeven, if not make a slight profit, and the second number being the cap after which extremely serious negative economic and political threats begin to emerge.
IEA says high oil prices already damaging demand - Oil demand is already being hit by elevated crude prices but there are positive signals that consumption will hold up for now, the head of the International Energy Agency’s oil market division Toril Bosoni told S&P Global Commodity Insights in an interview. We believe that current prices are already impacting economic growth and oil demand,” Bosoni said on the sidelines of the S&P Global Executive Petroleum and Energy Conference held June 7 and 8. She acknowledged demand destruction was already a feature of the oil market, but noted consumers are constantly adjusting their demand to energy prices, incomes, consumer confidence and the value of competing energies. The IEA has been ratcheting down its 2022 oil demand forecast since the start of the year from 3.2 million b/d to 1.8 million b/d currently amid rising oil prices. The Dated Brent benchmark started the year below $80/b before climbing to a peak of close to $140/b in March on fears of reduced supply due to lost Russian barrels and tight oil product markets. But despite the downgrades, which were also related to China lockdowns and the Russia-Ukraine war, Bosoni believes there are good reasons for demand to be resistant to triple digit oil. Resistant demand “Demand in the US and Europe has been holding up better than expected… High savings rates and strong pent-up demand for travel is providing an offset to the impact of surging fuel prices for now,” Bosoni said. Key jet, gasoline and diesel prices as assessed by S&P Global’s Platts have risen by more than 50% since the start of 2022. With demand for summer travel likely to boost jet fuel demand, the US driving season set to guzzle gasoline and the summer use of air conditioners in the Middle East, pressure on oil products is going to get greater before it eases. Across the barrel, the demand sensitivity to higher crude prices could shrink consumption by 680,000 b/d this year if Brent averages $110/b, a 7% increase on the baseline Dated Brent assumption of $102.7/b, according to S&P Global. A further rise to average $120/b in 2022 would sideline more than 1.3 million b/d of demand, according to S&P Global. Transport fuels are set to feel the most pain from higher prices, with gasoline, jet and middle distillates making up 80% of the total oil demand impact, S&P Global estimates showed. Bosoni admitted the pandemic-related lockdowns in China “have had an even greater impact on demand than first thought,” with the world’s second-largest consumer having been a significant drag on the global demand outlook. However, she sees Chinese demand recovering in the second half of the year, “accelerating manufacturing and exports, boosting bunker requirements and diesel demand.”
Oil Bulls Emboldened By EU Sanctions And China Easing Lockdowns - By John Kemp, senior market analyst at Reuters - Portfolio investors have begun to turn bullish again towards petroleum as impending EU sanctions on Russia’s exports and easing lockdowns in China outweigh fears of a possible recession in Europe and North America.Hedge funds and other money managers purchased the equivalent of 32 million barrels in the six most important futures and options contracts in the week to May 31, according to exchange and regulatory data. Funds have been net buyers in two of the last three weeks, increasing their position by a total of 83 million barrels (15%) since May 10, the fastest comparable increase for four months.The latest week saw purchases across the board in Brent (+13 million barrels), NYMEX and ICE WTI (+7 million), European gas oil (+5 million), U.S. diesel (+3 million) and U.S. gasoline (+3 million).The combined position of 631 million barrels remains moderate, in only the 53rd percentile for all weeks since 2013..... but the ratio of long to short positions, at 6.54:1, displays a strongly bullish bias, in the 83rd percentile.On the supply side, the EU has approved a sixth sanctions package, phasing out most purchases of Russian crude and products, including distillates, by the end of 2022 or early 2023, which is likely to intensify shortages of both.On the demand side, China has eased the lockdown imposed on Shanghai, and the government’s zero-COVID strategy is being tempered by the need to support the economy, likely boosting consumption of crude and distillates.Those bullish signals more than offset continued fears of a business cycle slowdown or an outright recession in Europe and North America.In the United States, the most recent economic data shows growth has decelerated after last year’s exceptional post-epidemic rebound but still has considerable momentum, which will keep oil consumption high in the short term.Fund managers increased their position in middle distillates such as diesel and gas oil by 8 million barrels, the fastest increase for 17 weeks. Distillate inventories have continued to fall on the U.S. East Coast, reflecting the acute shortage throughout the North Atlantic basin caused by sanctions and cyclically high levels of manufacturing and freight activity.With China’s distillate consumption likely to increase as the government boosts domestic growth, while EU sanctions hit Russia’s distillate exports especially hard, this part of the market is set to tighten even further.
Citi And Barclays Capitulate On Bearish Crude Views, Raise Oil Price Forecasts -Two banks and big oil bears - Citi and Barclays - raised their oil price forecasts over the weekend, citing the effects of Russian crude oil sanctions and delays in the renewal of the Iran nuclear deal - without which there will be no meaningful increase in crude oil exported from Iran. Citi Research, which was one of the biggest bears on oil with bank strategist predicting $70 oil as recently as last week, raised its oil price forecast due to heavy delays in securing another Iranian nuclear deal, which will contribute to the tight market conditions for crude oil.Citi now sees sanction relief for Iran coming in the first quarter of 2023, adding 500,000 bpd in the first half and 1.3 million bpd over the second half. This is in contrast to its previous forecast, which assumed Iranian sanctions relief—and therefore additional crude oil—would come sometime mid-2022. Now that we are already in mid-June and the talks appear to have stalled, Citi’s previous scenario looks highly unlikely.Citi’s second-quarter 2022 Brent forecast is now seen at $113 per barrel—up from $99 per barrel in its previous forecast. Citi also raised its Q3 and Q4 forecast to $99 and $85 per barrel, respectively. For 2023, Citi lifted its Brent price forecast to $75—up $16 per barrel.Barclay’s also lifted its price forecast citing crude oil sanctions on Russia by the EU. Barclays now sees Brent prices averaging $111 this year and next—an increase of $11 for this year and $23 for next year. Barclay sees WTI at $108 for both years.Barclay’s estimate assumes Russia’s crude oil production will decrease by 1.5 million bpd by the end of the year, after European Union ambassadors approved last Thursday the plan to ban Russian seaborne imports of crude in six months and refined products in eight months. The sanctions package also includes a ban on tanker insurance for Russian shipments to third countries, to take effect six months after the package is formally adopted.
Brent climbs over $120 per barrel after Saudi Arabia raises crude prices - Oil futures gained on Monday, with Brent rising above $120 a barrel after Saudi Arabia raised prices for its crude sales in July, signalling tight supply even after OPEC+ producers agreed to accelerate output increases over the next two months. Brent crude firmed 68 cents, or 0.6%, to $120.40 a barrel at 0640 GMT after touching an intraday high of $121.95, extending a 1.8% gain from Friday. U.S. West Texas Intermediate (WTI) crude futures were up 61 cents, or 0.5%, at $119.48 a barrel after earlier hitting a three-month high of $120.99. It gained 1.7% on Friday. Saudi Arabia raised the July official selling price (OSP) for its flagship Arab light crude to Asia by $2.10 from June to $6.50 premium versus the average of the Oman and Dubai benchmarks, state oil producer Aramco said on Sunday. The July OSP is the highest since May, when prices hit all-time highs due to worries of disruption in supplies from Russia because of sanctions over its invasion of Ukraine. The price increase came despite a decision last week by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, to increase output in July and August by 648,000 barrels per day, or 50% more than planned. Iraq said on Friday it aimed to raise output to 4.58 million bpd in July. Oil producers are "making hay while the sun shines", Avtar Sandu, manager of commodities at Phillip Futures in Singapore said, adding that U.S. summer driving demand and easing of COVID-19 lockdowns in China were expected to keep prices high. The OPEC+ decision to bring forward output increases is widely seen as unlikely to meet demand as the increased allocation is spread across all members, including Russia, which is facing sanctions. "While that increase is sorely needed, it falls short of demand growth expectations, especially with the EU's partial ban on Russian oil imports also factored in," On Monday, Citibank and Barclays raised their price forecasts for 2022 and 2023 on tighter Russian supplies and the delayed return of Iranian oil. Citi analysts said reconfigured flows to Asia could mean Russian production and exports would not ultimately fall so much, but more in the range of 1 million to 1.5 million bpd. "Of 1.9 million bpd of European seaborne exports of crude oil, around 900,000 bpd could divert to other markets such as China/India or could stay in some European markets with limited access to non-Russian oil." Barclays expect Russian oil output to fall by 1.5 million bpd by end-2022. Separately, Italy's Eni and Spain's Repsol could begin shipping Venezuelan oil to Europe as soon as next month to make up for Russian crude, five people familiar with the matter told Reuters, resuming oil-for-debt swaps halted two years ago when Washington stepped up sanctions on Venezuela.
Crudes Soften With US Recession, Libya Supply in Focus -- Paring early morning advances, oil futures slipped in afternoon trade Monday as investors assessed risks of a potential recession in the United States ahead of the release of the consumer price index for May against supply disruption in Russia and Libya that could tip global oil markets further into deficit. Some 250,000 barrels per day (bpd) in Libya's oil production remain shut-in following last week's protests that disrupted operations at the country's largest oi field -- El Sharara with daily capacity of 300,000 barrels (bbl). Libya's National Oil Company said on Monday the oilfield has been partially restarted despite the ongoing threats of violence against its employees. El Sharara was closed in the middle of April after a blockade from protesters demanded a transfer of powers from Prime Minister Abdul Hamid Dbeibah, who has been refusing to step down, for newly sworn-in eastern Prime Minister Fathi Bashaga. Disputes over the distribution of oil revenues have also led to blockades at several Libyan oilfields, including Sharara. In April, Libya loaded just 819,000 bpd of crude from its ports, down from nearly 1 million in March and the lowest volume since October 2020, according to the tanker-tracking data analyzed by Bloomberg. The disruption in Libya coincides with re-opening of China's economy after months-long lockdown wiped off a large chunk of Asia's oil demand over March-May period. Asian oil demand is now forecast to strengthen as China cautiously emerges from the virus restrictions, with most long-term customers in Asia are expected to take their full contracted supply this summer. According to the wire services, some Asian buyers are planning to seek more crude from Saudi Arabia, even after the world's biggest exporter raised prices by more than expected for the region. Saudi state-owned oil producer Saudi Aramco raised its official selling prices of Arab light crude for Asian customers by $2.10 bbl in July compared with market expectations for a $1.50 bbl increase. These changes mean that Asian consumers will pay a $6.50 bbl premium for Aramco's crude oil over the average of the Oman and Dubai benchmarks. Saudi Aramco also hiked its prices for European and Mediterranean buyers, raising OSPs by $2.20 bbl and $2 bbl, respectively. In northern Europe and the Mediterranean, refiners will now pay a $4.30 and $3.90 premium bbl compared with the ICE Brent oil benchmark. Interestingly, Aramco left OSPs for U.S. refiners unchanged at premiums in the range of $7 bbl and $4.50 bbl. At settlement, NYMEX West Texas Intermediate for July delivery slipped $0.37 to $118.11 bbl, with losses accelerating post-settlement, while international crude benchmark Brent contract for August fell to $119.51 bbl. NYMEX RBOB July contract declined 5.92 cents to $4.1930 gallon and ULSD July futures gained 7.98 cents to $4.3601 a gallon.
Oil Prices Rise On Relaxed China COVID Curbs, Tight Supplies - Oil prices rose on Tuesday on an expected demand recovery in China as the world's second-biggest economy relaxes tough COVID-19 curbs, and on doubts that a higher output target by OPEC+ producers would ease tight supply, Trend reports with reference to Reuters . Brent crude futures were up 76 cents, or 0.6%, at $120.27 barrel at 0413 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 83 cents, or 0.7%, at $119.33 a barrel. The benchmark hit a three-month high of $120.99 on Monday. Beijing and commercial hub Shanghai have been returning to normal in recent days after two months of painful lockdowns to stem outbreaks of the Omicron variant. Traffic bans were lifted and restaurants were opened for dine-in service on Monday in most parts of Beijing. 'We could see a surge in fuel demand with cars back on roads in the major cities, and ports gradually returning to normal operation in China,' said Tina Teng, an analyst at CMC Markets. Top oil exporter Saudi Arabia raised the July official selling price (OSP) for its flagship Arab light crude to Asia by $2.10 from June to a $6.50 premium over Oman/Dubai quotes, just off an all-time peak recorded in May when prices hit highs due to worries of disruptions in Russian supplies. Last week, the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, decided to boost output for July and August by 648,000 barrels per day, or 50% more than previously planned. The increased target was spread across all OPEC+ members. However, many members have little room to ramp up output, including Russia, which faces Western sanctions. 'While the new increased monthly targets continue to be driven by proportional contributions from all participants (including Russia), it is unrealistic to expect an increase close to the headline figure,' said Stephen Innes, managing partner at SPI Asset Management, in a note. Elsewhere, U.S. crude inventories likely fell last week, while gasoline and distillate stockpiles were seen up, a preliminary Reuters poll showed on Monday.
WTI Oil Futures End at 3-Month High Ahead of Stock Data-- After choppy trading for most of the session, oil futures settled mixed Tuesday. Traders are waiting for the release of weekly inventory data in the United States, with market consensus calling for commercial crude oil inventories to have declined again during the first week of June as global inventories continued a destocking pattern heading into summer. U.S. Energy Information Administration estimates global oil inventories declined for each of the seven consecutive quarters from the third-quarter 2020 to the first quarter, leaving stockpiles well below the five-year average. In the United States, commercial oil inventories stand 15% below the five-year average after plunging more than 9 million barrels (bbl) over the past three weeks alone. Analysts expect domestic stockpiles to likely decline again, seen down 1.9 million bbl during the first week of June. Earlier in the session, oil complex came under selling pressure after The World Bank sharply downgraded its outlook for the global economy this year, pointing to the devastating impact of Russia's war in Ukraine, the prospect of widespread food shortages and concern over the potential return of "stagflation" -- a mix of high inflation and sluggish growth unseen for more than four decades. The World Bank slashed its global economic growth forecast to 2.9% this year, down from 4.1% seen in early January. The bank doesn't expect a much brighter outlook in 2023 and 2024 either, with annualized growth of just 3% for both years. For the United States alone, The World Bank has slashed its growth forecast to 2.5% this year from 5.7% in 2021 and from the 3.7% it had forecast in January. For the 19 European countries that share the euro currency, it downgraded the growth outlook to 2.5% this year from 5.4% last year and from the 4.2% it had expected in January. Separately, Bloomberg News reported on Tuesday that India's largest refiners are collectively working on finalizing and securing new six-month supply contracts with Russia's state-oil giant Rosneft. These supply agreements, if concluded, will be separate and on top of shipments that India already buys from Russia. People familiar with the negotiations suggest the new contracts would replace purchases of oil cargoes India procures on the spot market. Details on volume and pricing are still being negotiated with Indian banks that are set to fully finance all cargoes, while Rosneft would be responsible for shipping and insurance. The news comes atop reports suggesting China is actively engaging Moscow to replenish its crude stockpiles with heavily discounted Russian barrels that have been shunned by Western traders. At settlement, NYMEX West Texas Intermediate for July delivery advanced $0.91 to $119.41 per bbl, while international crude benchmark Brent contract for August settled the session above $120 per bbl at $120.57. NYMEX RBOB July contract declined 3.53 cents to $4.1577 per gallon and ULSD July futures dropped 3.95 cents to $4.3206 per gallon.
WTI Dips After Unexpected Crude Build, Gasoline Stocks Up Most Since Jan - Oil prices rebounded from midday weakness to close at 2-month highs with WTI at $120 after Goldman hiked its crude price forecasts and rebounding demand hopes from China“The true fundamentals in crude, gasoline and diesel remain bullish, although prices have risen a bit too far too fast,” said Dennis Kissler, senior vice president of trading at BOK Financial.The Energy Information Administration revised down their forecasts for gasoline consumption in its latest monthly report, but as long as inventories remain so far below the 5-year average it’s extremely bullish, he said.For now, the next leg will depend on inventory data tonight and tomorrow's demand signals. API
- Crude +1.845mm (-2.2mm exp)
- Cushing -1.839mm
- Gasoline +1.821mm
- Distillates +3.376mm
A more worrisome set of data from API with crude stocks building unexpectedly along with products seeing inventories rise (gasoline stocks up by the most since January)Does this suggest demand destruction is beginning? WTI was trading just below $120 ahead of the API data and dipped after. Rebecca Babin, senior energy trader at CIBC Private Wealth Management warns, “I am concerned US demand will not live up to expectations and we will see demand destruction here.” But for now, demand destruction in gasoline at the pump , for instance, remains modest at its worst.
WTI Tops $121 as Traders Brace for Summer Fuel Shortages - West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange roared higher Wednesday after major banks and trading houses forecasted oil prices will need to go higher this summer to normalize unsustainably low levels of global oil inventories and to incentivize production from OPEC+ nations and producers outside the bloc with the decline in Russian supplies adding pressure on an already tight global oil market. Goldman Sachs economists forecasted Tuesday oil prices will surge above $140 barrel (bbl) this summer, with a gradual recovery in Chinese demand and precipitous drop in Russian oil production adding to the pressure on already low global supplies. Analysts with the investment bank said summer retail gasoline prices will need to spike to levels normally associated with $160 bbl crude oil to curtail demand. U.S. average retail gasoline prices jumped another 5 cents on Tuesday to a fresh record $4.92 gallon, according to AAA. That's up by 30 cents over the past week and 62 cents in the past month. U.S. Energy Information Administration on Tuesday also boosted its projections for oil, gasoline, and natural gas prices, saying it no longer expects gasoline prices to tumble back below $4 gallon by September. The American Petroleum Institute reported Tuesday afternoon commercial crude oil stocks rose 1.845 million bbl last week versus calls for inventories to have dropped 1.9 million bbl. Stocks at the Cushing, Oklahoma, hub -- the New York Mercantile Exchange delivery point for the West Texas Intermediate futures contract -- dropped 1.839 million bbl. The data also showed gasoline stockpiles rose 1.821 million bbl in the reviewed week, more than six times estimates for a 300,000 bbl build. Distillate inventories posted a 3.376 million bbl build, more than four times calls for an increase of 800,000 bbl. Against these headwinds, World Bank downgraded its outlook for global economic growth this year, pointing to the devastating impact of Russia's war in Ukraine, the prospect of widespread food shortages and concern over the potential return of "stagflation" -- a mix of high inflation and sluggish growth unseen for more than four decades. The World Bank slashed its global economic growth forecast to 2.9% this year, down from 4.1% seen in early January. The bank doesn't expect a much brighter outlook in 2023 and 2024 either, with annualized growth of just 3% for both years. For the United States, The World Bank slashed its growth forecast to 2.5% this year from 5.7% in 2021 and from the 3.7% it had forecast in January. For the 19 European countries that share the euro currency, it downgraded the growth outlook to 2.5% this year from 5.4% last year and from the 4.2% it had expected in January. Near 7:30 a.m. EDT, NYMEX WTI for July delivery rallied $1.12 to $120.53 bbl, while international crude benchmark Brent contract for August surged above $121 bbl, up $1.01. NYMEX RBOB July contract declined 3.53 cents to $4.1577 gallon and ULSD July futures dropped 3.95 cents to $4.3206 gallon.
WTI Rebounds After Inventory Data, UAE Warns Prices "Nowhere Near" Their Peak -- Oil prices are higher this morning but trending lower ahead of the official DOE data, erasing any gains following last night's API report that showed notable builds for crude and gasoline inventories. The overnight jump was triggered by UAE warnings that oil prices are “nowhere near” their peak as an impending rebound in Chinese demand threatens to strain a global market already pinched by tight supplies.“With the pace of consumption we have, we are nowhere near the peak because China is not back yet,” UAE Energy Minister Suhail Al-Mazrouei said at a conference on Wednesday in Jordan. “China will come with more consumption.”The comments came after banks including Goldman Sachs and Morgan Stanley underlined calls for higher prices in the coming months.For now, all eyes are on inventories and any signs of demand destruction. DOE
- Crude +2.03mm (-2.2mm exp)
- Cushing -1.593mm
- Gasoline -812k - 10th weekly draw in a row
- Distillates +2.592mm - biggest build since Dec 2021
The official data confirmed API's unexpected crude build as inventories rose over 2mm barrels (against expectations of a 2.2mm barrel draw). Additionally, Distillates stocks saw their biggest build since Dec 2021.The headline build in crude stockpiles was more than offset by the withdrawal of nearly 7.3 million barrels of crude from the Strategic Petroleum Reserve last week. Total nationwide crude inventories (including commercial stockpiles and oil held in the SPR) fell by more than 5.2 million barrels in the week to June 3.
Oil jumps to 13-week high on rising US gasoline demand, supply concerns (Reuters) -Oil prices rose about 2% to a 13-week high on Wednesday as U.S. demand for gasoline has kept rising despite record pump prices, on expectations China's oil demand will rise and on supply concerns in several countries. Brent futures rose $2.19, or 1.8%, to $122.76 a barrel by 11:47 a.m. EDT (1547 GMT). U.S. West Texas Intermediate (WTI) crude rose $2.00, or 1.7%, to $121.41. Brent and WTI were on track for their highest settlements since March 8, which were their highest since 2008. U.S. commercial crude oil inventories rose unexpectedly last week, while crude in the Strategic Petroleum Reserve fell by a record amount as refiners' inputs rose to their highest since January 2020, the Energy Information Administration said. U.S. gasoline stocks fell by a surprise 0.8 million barrels as demand for the fuel rose despite sky-high pump prices. Analysts polled by Reuters had expected gasoline stocks to rise 1.1 million barrels. [EIA/S] [API/S] "The gasoline draw is a highlight of the report with a tight market place across the U.S.," said Tony Headrick, energy market analyst at CHS Hedging, noting demand remained strong even with pump prices above $5 per gallon in many parts of the country. Auto club AAA said national average retail regular unleaded gasoline prices hit a record $4.955 per gallon on Wednesday. "Oil prices are higher, supported by expectation of China easing the COVID restrictions, translating in higher demand and imports this summer,". China's major A-share indexes and Hong Kong's Hang Seng finished trade at two-month closing highs on hopes for a demand recovery on easing of lockdowns to fight the spread of COVID-19. On the supply side, traders noted several countries could face problems boosting output. In Norway, a number of oil workers plan to strike from June 12 over pay, putting some crude output at risk of shutdown. Efforts by OPEC+ oil producers to boost output are "not encouraging", United Arab Emirates' energy minister Suhail al-Mazrouei said, noting the group was currently 2.6 million barrels per day (bpd) short of its target. Further pressuring the supply outlook, Iran removed two surveillance cameras of the International Atomic Energy Agency from one of its nuclear facilities, state television reported. That move will probably raise tensions with the United Nations nuclear watchdog, the United States and other countries negotiating with Iran over its nuclear program, hoping for a deal analysts have said could lift sanctions and add 1 million bpd of crude to world supply. The International Energy Agency, meanwhile, warned that Europe, which has sanctioned Russia following its invasion of Ukraine, could face energy shortages next winter.
Oil, gasoline prices to pare gains but remain high through 2022, 2023: EIA - Geopolitical uncertainty and the ongoing impact of the pandemic led to increased oil price volatility and contributed to a more than $4/b rise in the US Energy Information Administration's 2022 oil price expectations, the agency said June 7. The EIA in its June Short-Term Energy Outlook now sees WTI averaging $102.47/b in 2022, up $4.27/b from its prior estimate in May and expects Brent to average $107.37/b in 2022, up $4.02/b from the prior month. The EIA expects WTI at $93.24/b in 2023 and sees Brent at $97.24/b, both unchanged from the prior month. "We continue to see historically high energy prices as a result of the economic recovery and the repercussions of Russia's full-scale invasion of Ukraine," EIA Administrator Joe DeCarolis said in a statement. "Although we expect the current upward pressure on energy prices to lessen, high energy prices will likely remain prevalent in the US this year and next." Already-high crude oil prices rose further as Shanghai and Beijing began easing COVID-19 restrictions end-May and the EU announced plans to cut its Russian oil imports by 90% by the year's end. "Actual price outcomes will largely depend on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia's oil production or the sale of Russia's oil in the global market," the agency said in its report. The EIA forecast Russia's total liquid fuels production to fall to 9.3 million b/d by end-2023, from 11.3 million b/d at the start of 2022. Those estimates assume the EU's ban on seaborne crude oil from Russia will be imposed in six months and the region's import ban on petroleum products will go into effect in eight months. The agency said that its forecast, finalized June 2, did not incorporate restrictions on shipping insurance as those details were not available at the time. "The possibility that these sanctions or other potential future sanctions reduce Russia's oil production by more than expected creates upward risks for crude oil prices during the forecast period," the agency said. The EIA forecast retail gasoline prices in 2022 to average $4.07/gal, up 25 cents from its prior estimate in May. The agency put retail diesel prices at an average $4.69/gal over the same period, down 3 cents from May. The EIA attributed rising gasoline and diesel prices to refining margins at or near record highs amid low inventory levels. But it forecast gasoline wholesale margins -- the price difference between wholesale gasoline and Brent crude -- to fall 36 cents to an average 81 cents/gal over May and the third quarter, and diesel wholesale margins to decline 46 cents to $1.07/gal during the same period. High wholesale products margins are seen putting US refinery utilization at or near its highest levels in the past five years, the EIA said. The agency does not see total refinery output of oil products reaching a five-year high, because operable refining capacity in the US is about 900,000 b/d lower than at the end of 2019. The EIA forecast third quarter refinery utilization to average 94% and asserted that such high utilization would "help bring wholesale margins down from record levels."
WTI Eases From 13-Week High as China Renews COVID Shutdowns - After a three-session rally, oil futures moved shallowly mixed in early trade Thursday as renewed COVID-19 controls in parts of Shanghai, China's financial capital of 25 million people, countered robust demand for refined fuels in the United States, where gasoline demand is rising despite record high retail prices for the transportation fuel that are approaching $5 gallon. Gasoline inventories in the United States fell to the lowest seasonal level in eight years last week, according to data from the U.S. Energy Information Administration, as demand for gasoline spiked above 9.1 million barrels per day (bpd) -- the highest weekly rate this year. Despite sky-high prices at the pump, there are no signs of visible change in U.S. driving patterns, with the seasonal uptick in summer fuel demand as seen in previous years on track. Goldman Sachs economists forecasted this week gasoline prices will need to go much higher from where they are now to have a meaningful impact on demand. The bank warned of likely price spikes and fuel shortages this summer as China hums towards reopening its economy and the European Union turns down imports of Russian oil and refined fuels. Potentially weighing on prices Thursday morning are fresh COVID-19 curbs in Shanghai, where a reopening from a three-month lockdown had only recently occurred. Shanghai will lockdown seven districts this weekend, restricting movement for millions of people to conduct mass COVID-19 testing after discovering nine cases. The moves are raising concern that the city's reopening is backsliding as officials fear a resurgence of infection after social and economic activity resumed. Residents face the risk of being confined to their homes for another two weeks if any infections are discovered during mass testing, in line with China's zero-COVID policy. In the capital Beijing, which has been struggling with a long but low-level COVID flareups, authorities ordered the tightening of rules again after a bar cluster ended a five-day streak of zero community spread. Analysts predict China will be stuck in a slowly evolving loop as it sticks to its zero-COVID policy, making a strong rebound in its economy virtually impossible. Overnight trade data out of China showed crude oil imports fell 1.7% from a year ago over the January to May period, highlighting a drop in oil demand as Beijing restricts mobility for its people. Despite the lockdowns, exports grew by 16.9% last month from a year earlier to US$308.25 billion compared to 3.9% growth in April. China's imports, meanwhile, grew by 4.1% in May to US$229.49 billion, up from an unchanged reading in April, and above expectations for a 0.6% rise. Near 7:30 a.m. EDT, NYMEX West Texas Intermediate for July delivery slipped $0.34 to $121.75 barrel (bbl), while international crude benchmark Brent contract for August softened to $123.30 bbl. NYMEX RBOB July contract increased 1.1 cents to $4.2329 gallon and ULSD July futures gained 0.97 cents to $4.3240 gallon.
Oil slips on China lockdowns, but bullish trends intact | Euronews -Oil prices dipped on Thursday but still hovered near three-month highs after parts of Shanghai imposed new COVID-19 lockdown measures, as strong gains in refined products contributed to an ongoing bullish backdrop for crude oil. Brent crude futures for August settled down 51 cents at $123.07 a barrel, a 0.4% decline, while U.S. West Texas Intermediate crude for July lost 60 cents, or 0.5%, to $121.51 a barrel. Oil prices have been rallying steadily over the last two months, led by big increases in prices of refined products due to tight refining supply and surging demand. Worldwide, refiners have shut facilities, and capacity is tight as well because of reduced activity in Russia, the world’s largest exporter of crude and fuel, following its invasion of Ukraine. Peak summer gasoline demand in the United States continues to boost crude prices. The U.S. and other nations have engaged in a series of releases of strategic reserves, but it has had limited effect as of yet with global crude production rising very slowly. “I think higher energy prices are here for the balance of the year unless we see some breakthrough that allows a significant amount of crude oil to return to the market,” said Andrew Lipow, president of Lipow Oil Associates in Houston. U.S. gasoline stocks unexpectedly dropped last week, government data showed on Wednesday, indicating resilience in demand for the motor fuel during the peak driving period despite sky-high pump prices. U.S. four-week demand was around 9 million barrels per day, just 1% off of 2021’s level. “Even though prices are higher, we haven’t seen any sizable drop in demand yet,” said Thomas Saal, senior vice president at StoneX Financial. “That may happen any day now, but people are still driving.” Refiners have been unable to keep pace with demand. The United States is at near-peak processing capacity while China has kept refiners offline due to COVID-related curbs. China’s May exports jumped 16.9% from a year earlier as easing COVID curbs allowed some factories to restart, the fastest growth since January this year and more than double analysts’ expectations. That could suggest more refining capacity will eventually come online, but major Chinese metropolitan areas still have some COVID-related travel restrictions in place, dampening demand. Parts of Shanghai began imposing new lockdown restrictions on Thursday, with residents of Minhang district ordered to stay home for two days to control transmission risks.
Oil falls on demand worries over Shanghai's new partial lockdowns (Reuters) - Oil prices fell on Friday but still hovered near three-month highs, with fears over new COVID-19 lockdown measures in Shanghai outweighing solid demand for fuels in the world's top consumer United States.Brent crude futures for August was down $1.01, or 0.8%, at $122.06 a barrel as of 0141 GMT after a 0.4% decline the previous day. U.S. West Texas Intermediate crude for July fell 98 cents, or 0.8%, to $120.53 a barrel, having dropped 0.5% on Thursday.Still, with prices rallying over the last two months, Brent was on track for a fourth consecutive weekly gain and WTI was set for a seventh straight weekly increase. Both benchmarks on Wednesday marked their highest closes since March 8, when they hit their highest settlements since 2008."Shanghai's new pandemic restrictions raised concerns over demand in China," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd."But losses were capped by expectations that tight global supply will continue with solid U.S. demand for fuels and slow increase in crude output by OPEC+," he said.Shanghai and Beijing went back on a fresh COVID-19 alert on Thursday after parts of China's largest economic hub imposed new lockdown restriction and the city announced a round of mass testing for millions of residents.China's crude oil imports rose nearly 12% in May from a low base in a year earlier, although refiners were still battling high inventories with COVID-19 lockdowns and a slowing economy weighing on fuel demand last month.Meanwhile, peak summer gasoline demand in the United States continues to boost crude prices. The United States and other nations have engaged in a series of releases of strategic reserves, but these have had limited effect, with global crude production rising very slowly. Last week, OPEC+ - a group comprising OPEC and producers including Russia - agreed to accelerate output increases to tame runaway fuel prices and slow inflation. But the move will leave the group with very little spare capacity and almost no room to compensate for a major supply outage.
‘Oil Futures, USD Advance Ahead of Highly Anticipated CPI - Oil futures advanced in early trade Friday ahead of the release of the highly anticipated U.S. consumer price index that is expected to show persistently high inflation continued in May amid an ongoing surge in prices for retail gasoline that are quickly approaching a record-high $5 gallon nationally. Some economists suggest gasoline prices will need to go much higher from where they are now to have a meaningful impact in slowing demand. Energy Information Administration reported gasoline demand in the United States topped 9.1 million barrels per day (bpd) for the first week of June -- the highest weekly rate this year, and some 700,000 bpd above the comparable week in 2021. May's CPI also comes ahead of next week's Federal Open Market Committee meeting when central bank officials are poised to again lift the federal funds rate. Investors expect the Federal Reserve will raise the benchmark interest rate by 50 basis points on June 15, and to again hike the rate by another 50 when they again meet in July. Should inflation go higher than expected, this would almost certainly set the table for a more aggressive interest rate hike in the fall, according to economists. In financial markets, U.S. equity futures traded mixed early Friday following Thursday's late-hour selloff on Wall Street that shed more than 600 points from Dow Jones Industrials. DJI futures indicate a 50-point opening bell dip while those linked the S&P 500 are priced for a 1.5% fall. Futures linked to the Nasdaq are looking at a 20-point opening bell gain. Ten-year Treasury bond yields dipped to 3.03% and the U.S. Dollar Index rose 0.28% against a basket of six global currencies to 103.4 in overnight trading. On Wednesday, U.S. Energy Information Administration reported domestic distillate inventories started to climb seasonally last week, rising 2 million barrels (bbl) to 109 million bbl, which should ease some concerns about low inventory levels. But even with the recent increase, stocks are still at the lowest level since 2005, and they are not rising especially rapidly, which is likely to keep prices on an upward trend. Distillate stocks usually increase this time of year as refineries ramp up crude processing to produce more gasoline for the summer driving season. There are also signs that the business cycle in the United States has started to slow, weighing on demand for middle distillates that are typically used in construction, manufacturing, and freight shipments. EIA on Wednesday reported implied demand for middle distillates fell to the second lowest weekly rate this year at 3.65 million bpd after remaining below 4 million bpd since late March. Near 6:30 a.m. CDT, NYMEX West Texas Intermediate for July delivery advanced $0.82 to $122.37 bbl, while international crude benchmark Brent contract for August rallied to $124.13 bbl. NYMEX RBOB July contract gained 2.67 cents to $4.3029 gallon and ULSD July futures increased 8.25 cents to $4.4862 gallon.
Oil Skids on Soaring U.S. Inflation, Dollar; A Barrel Still Above $120 -- Oil prices skidded on Friday as U.S. inflation at more than 40-year highs suggested even more aggressive rate hikes that sent the dollar flying, making commodities priced in the greenback, including crude, costlier for non-holders of the currency. But a barrel still held well above $120, ensuring a seventh straight weekly gain for U.S. crude and a fourth weekly win in a row for global benchmark Brent. London-traded Brent settled down $1.06, or 0.9%, to $122.01 a barrel. For the week though, it showed a gain of 1.8% and was up 9% over a four-week period. On Wednesday, Brent hit $124.38, its highest since 14-year peaks of above $130 reached on March 9 after the invasion of Ukraine that triggered Western sanctions on Russian oil that upended the global energy market. The global crude benchmark is up 57% so far for this year. West Texas Intermediate settled down 84 cents, or 0.7%, at $120.67 per barrel, after a three-month high of $123.15 on Wednesday. For the week, the US crude benchmark rose 1.8% and was up 18% over a seven-week period. Year-to-date, WTI is up more than 60%. Friday’s slide in crude came as the Dollar Index, which pits the greenback against six other major currencies, hit a three-week high of 104.23. The dollar jumped after the Labor Department reported that the US Consumer Price Index grew 8.6% during the year to May, expanding by its fastest rate since 1981, as the cost of virtually everything — from food to fuel, shelter and clothing — rose again last month. The average pump price of gasoline, particularly, hit more than $5 a gallon on Thursday for the first time ever in the United States, according to data from fuel price tracking service GasBuddy. Separately, the University of Michigan said its closely-followed US Consumer Sentiment Index hit a record low in its latest survey for June as Americans become increasingly disillusioned with inflation taking a bigger bite of their paycheck each month. U.S. bond yields, led by returns on the 10-year Treasury note hit a one month high of 3.17%, suggesting the Federal Reserve could be aggressive with rate hikes for the rest of the year in a bid to get inflation as close as possible to its annual 2% target. The central bank has previously said that it was ready to slow the economy, if necessary, to achieve its aim. Analysts say the Fed might have a tough task ahead as oil and gasoline prices don’t seem to be coming down enough to stop inflation in its tracks. “The oil market is still very tight and the eventual weaker U.S. consumer won’t really take effect until closer to the end of the year,” “Some traders are entering de-risking mode as prospects for the economy continue to dim, but no one really wants to abandon the best trade of the year, which is oil and energy stocks.”
US crude falls 84-cents on Friday but wraps up a seventh-straight week of gains - It's been seven terrible weeks for most global financial markets but seven straight weeks of gains in crude oil. WTI finished down by 84-cents on Friday but climbed $1.80 on the week. It's the highest finish to a Friday since 2008. Earlier this year oil spiked as high as $130.50 when the Ukraine war broke out but it was a short-lived spike and finished that week at $109.33. The latest rally has come on signs of persistent shortages despite Chinese lockdowns, more OPEC supply and the SPR release. The next challenge is the risk of rapidly-slowing global growth amidst higher rates. So far though, crude has passed all the tests and technically, not much stands in the way of a return to $130. Even today with all the bearishness in stocks and bonds, the 0.7% decline is hardly material. WTI fell as low as $118.33 but rebounded more than $2 from the lows. For the weekend, two spots to watch are Libya and Norway. In Libya, rebels are threatening to block another port while in Norway workers could announce a strike. Demand destruction is likely creeping in; in part because gasoline and diesel prices are even-higher than they should be, because of refinery problems. Yesterday, US retail gasoline prices hit $5/gallon on average nationally for the first time.
The Biggest Reshuffle Of Oil Flows Since The 1970s - The biggest reshuffle of oil trade flows since the Arab oil embargo of the 1970s is underway—and things may never return to normal. The Russian invasion of Ukraine and the sanctions on Russian oil exports are changing global oil trade routes. Over the past nearly five decades, oil flowed more or less freely from any supplier to any customer in the world, except for sanctions on Iran and Venezuela in recent years. This free energy trade is now over, after the Russian aggression and the Western sanctions that followed, plus Europe’s irreversible decision to cut off its dependence on Russian energy at any cost. A new Iron Curtain is now upending oil flows as Europe turns to the U.S., the Middle East, and Africa (and basically everyone that’s not Russia) for oil supply. The EU adopted last week a sanctions package to stop importing Russian seaborne crude oil within six months and Russian oil products within eight months. In a much farther-reaching measure in the sanctions package, the EU also bans EU operators from insuring and financing the shipment of Russian oil to third countries after a six-month wind-down period.The UK is also set to join the insurance ban after the UK and the European Union have reportedly agreed to jointly shut off Russia’s access to oil cargo insurance. The UK is home to an insurers’ club that covers 95% of the global oil shipment insurance market. This move is expected to make Russian oil shipments to countries willing to take its oil, mostly in Asia, more difficult to arrange in terms of liability coverage, and could prompt buyers in India and China to ask for even steeper discounts of the Russian crude to Dated Brent. The flagship Urals grade from Russia is selling at a more than $30 discount to Brent these days. By the end of this year, Europe expects to have effectively banned 90% of all its imports of Russian oil before the war. The embargo and the self-sanctioning are already upending global oil tanker traffic. Instead of traveling two or three weeks from Russia’s Baltic ports to Hamburg or Rotterdam, tankers carrying Russian oil now travel two or three months to reach India and China. For oil going to Europe, crude from the Middle East will now travel longer distances to European ports compared to the shorter routes to India and China. These changes in oil flows will result in higher insurance, shipping, and financing costs for cargoes, Zoltan Pozsar, Global Head of Short-Term Interest Rate Strategy at Credit Suisse and a former U.S. Treasury Department official, told The Wall Street Journal. More expensive energy trade—due to the end of the free trade that was based solely on market signals of supply, demand, and prices—could put commodities at the center of the next global economic crisis, Pozsar told the Journal. Sure, Russia is increasingly using ship-to-ship transfers to load crude from smaller tankers onto supertankers. It is also expected to backchannel part of its crude shipments the way Iran has been doing since the U.S. sanctions on its oil exports were re-imposed in 2018. Still, Asia will not be able to absorb all the Russian oil that was previously going to Europe, which was Russia’s number-one oil customer before the war. India, which has traditionally bought oil mostly from the Middle East, is boosting Russian oil purchases, taking advantage of the cheap Russian crude. Middle Eastern producers, for their part, are expected to supply more oil to Europe, as will African producers and the United States. India and China are Russia’s chance to continue selling its oil. Although Russia publicly expresses confidence that it will have “new markets” for its energy, analysts doubt all the oil that would have gone to Europe could end up with buyers in Asia, also because of liability coverage issues and the changing oil trade routes which extend the period of crude traveling from seller to refiner. For Europe, the choice of oil supply is now political, and it will be willing to pay a premium to procure non-Russian oil. This will tighten supply options and continue to support elevated oil prices for months to come.
Iran says it expects confiscated oil cargo to be returned in full --Iran said it expects oil cargo confiscated by the United States off the coast of Greece to be returned in full following a Greek court decision overturning an original ruling to allow its seizure. The case arose when Greece in April impounded the Iranian-flagged Lana with 19 Russian crew members on board near the island of Evia because of European Union sanctions. The US in May confiscated part of the Iranian oil onboard, transferring it to another ship, following the initial Greek court ruling. The Greek court’s decision to overturn that ruling has not yet been made public. “Following intensive follow-up, the Greek Court of Appeals will overturn the initial court ruling on the confiscation of Iranian oil and … the entire oil shipment will be returned,” Iranian Ambassador Ahmad Naderi said. “The issue remains the subject of intense consultations between the two countries to ensure full implementation of the ruling,” he added on the embassy’s Twitter account. Greek media reported that the Lana was believed to be carrying more than 100,000 tonnes of Iranian crude, in breach of US and European Union sanctions on Iran.The confiscation of the cargo prompted an angry response from Iran, with Iranian forces last month seizing two Greek tankers in the Gulf after Tehran warned it would take “punitive action” against Athens.President Ebrahim Raisi said on Thursday that Iran had shown it would stand up to “bullies”.“Like bullies, they stole our ship. Iran proved that the era of ‘hit and runs’ is over, and we seized two of their ships. How many times do you want to test the Iranian nation?” Raisi said in remarks carried by state television.
US-Backed Kurds Offer To Work With Assad Government To Resist Turkish Invasion --The most enduring US ally in the Syrian War, the Kurdish Syrian Democratic Forces (SDF) are very publicly interested in resisting the latest round of planned Turkish invasions of northern Syria, saying they are open to coordination with the Syrian government’s troops to do so.Turkey has repeatedly invaded northern Syria and northern Iraq to have a run at Kurdish factions, declaring them "terrorists" in both. The operations in Syria aim at the SDF’s parent organization, the YPGThe most recent threatened Turkish operation seeks to establish a 30 km "security zone" within Syria. This is roughly in line with past plans threatened, mostly with an eye toward propping up Turkish-backed rebels in the area.Syria opposes such raids because that "zone" becomes rebel territory, and the SDF oppose it because it’s carved out of their territory. SDF leaders suggest the Syrians would particularly help if they used air defenses against the Turkish warplanes. According to Middle East Eye:The Syrian Democratic Forces (SDF) would be "open" to coordinating with Syrian government troops to fend off any Turkish invasion of the north, the head of the US-backed militia has said. Mazloum Abdi also told Reuters on Sunday that Damascus should use its air defense systems against Turkish planes. The US-armed SDF are a formidable on the ground force, but were an auxiliary of the US in fighting ISIS, and envision the same role with Syria in resisting Turkey.Turkey backed the rebels in Syria almost immediately at the beginning, envisioning the Sunni Arab-dominated rebels being more hostile to Kurdish autonomy, and leaving the YPG in a weakened position.Ironically, Turkey’s pro-rebel position set Islamists up in north Syria, and when the US got involved, they backed the YPG in resisting those groups, leaving the YPG and the SDF as a stronger group than they likely were before the war began. Now, they may find themselves natural allies to Syria, and even further entrenched as an autonomous faction in northeast Syria.
Blast at U.S. base in Syria in April being investigated as insider attack - The attack last April on the American base in Syria known as Green Village is now being investigated as an insider attack carried out by a U.S. service member, a U.S. official confirmed. The attack was first described by the Pentagon as "indirect fire" — a rocket or mortar attack of the kind occasionally launched at U.S. bases in Syria and Iraq. But then, within days, the Pentagon said the blast, which resulted in traumatic brain injury for a small number of soldiers, was caused by an explosion that had been "placed" inside the camp. Joint Task Force and Operation Inherent Resolve officials released a statement on April 15 stating that the explosions at Green Village were the result of the "deliberate placement of explosive charges by an unidentified individual(s) at an ammunition holding area and shower facility."
American Mother Pleads Guilty To Leading Battalion For ISIS -- An American mother from Kansas pleaded guilty in a U.S. federal district court on Tuesday to organizing and leading an all-female military battalion for the ISIS terrorist group in Syria. Allison Fluke-Ekren, a mother of five and former school teacher, admitted to training around 100 women and girls to support ISIS activities. She also plotted to carry out a terrorist attack on U.S. soil, the U.S. Department of Justice (DOJ) announced, citing court documents. After spending years abroad supporting the ISIS terrorist group, Fluke-Ekren was transported in custody to the United States after being arrested in Syria on Jan. 28. U.S. District Judge Leonie Brinkema accepted Fluke-Ekren’s guilty plea in the Eastern District of Virginia on Tuesday. Fluke-Ekren first fronted a U.S. court on Jan. 31, where she entered no plea and was ordered held without bail until a detention hearing in February. According to the DOJ, the Kansas mom, whose parents and adult children want nothing to do with her, left America for Egypt in 2008 to live with her second husband, a now-deceased former member of the Ansar al-Sharia terrorist group. For the eight years starting from approximately September 2011, she spent time in Syria, Libya, and Iraq engaging in “terrorism-related activities,” ultimately becoming the leader of Khatiba Nusaybah, the all-female ISIS battalion. As its leader and organizer, she trained women and young girls—some as young as 10 or 11—in the use of automatic firing AK-47 assault rifles, grenades, and suicide belts packed with explosives. She also taught religious classes, martial arts, medical training, and courses in driving vehicles used as explosives. In its release, the DOJ announced that Fluke-Akren assisted her husband in reviewing and summarizing the contents of U.S. government documents stolen in the aftermath of the Sept. 11, 2012, terrorist attack on the U.S. Special Mission and CIA Annex in Benghazi, Libya. Around mid-2014, Fluke-Ekren told a witness in Syria that she desired to carry out an attack in the United States. The eyewitness said the former U.S. school teacher discussed ideas about using explosives to attack a Midwest college. She also plotted to carry out a bombing at a U.S. shopping mall. “To conduct the attack, Fluke-Ekren explained that she could go to a shopping mall in the United States, park a vehicle full of explosives in the basement or parking garage level of the structure, and detonate the explosives in the vehicle with a cell phone triggering device,” according to the DOJ’s release. According to the witness, Fluke-Ekren considered any attack that did not kill a large number of individuals to be a waste of resources and that she wished attacks taking place outside the United States had occurred on U.S. soil instead.
High Gas Prices Force UK Fertilizer Plant to Shut -CF Industries Holdings Inc. will close one of its UK fertilizer plants permanently as it struggles with high energy costs. The company is proposing to shutdown the Ince facility as it restructures operations in Britain, it said Wednesday. The site, which hasn’t produced ammonia since September, was one of CF’s plants halted last year as soaring gas costs squeezed profitability. That prompted the government to step in to help keep some operations going. The move to close the factory highlights the challenge that expensive gas poses to European industries. The threat to fertilizer output has also been bad news for the food and drink sector, because the factories produce carbon dioxide as a byproduct. That gas is used to stun pigs and chickens for slaughter, extend the shelf life of fresh food and give beer and soda their fizz. Fertilizer output at CF’s Billingham and Ince sites has provided as much as 60% of Britain’s CO2 production. The UK government has called the gas an “essential component of the national economy.” Gas prices have eased from a record, but are still 50% above usual for this time of year. High prices are expected to continue into winter and the risk still remains of further supply cutoffs from Russia. Prices will stay high for the next two years, according to ING Bank NV. CF said it would focus its UK manufacturing operations at its Billingham plant, which is the UK’s largest ammonia, ammonium nitrate and CO2 site. That facility is better positioned for long-term sustainability as it has sufficient capacity to meet all domestic demand, it said. Even before the energy price crisis, the company’s fertilizer sales were lagging behind due to competition from lower-cost international supplies. Muted demand in the UK has meant that CF has been forced to export at “unsustainably low margins” in order to continue to operate both facilities, the company said.
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