US oil prices fell for the 3rd week out of the past four on expectations that the coming recession would impact demand...after managing to salvage an 0.8% increase to $108.43 a barrel last week as production outages in Libya, Ecuador and Norway offset recession fears, the contract price for US light sweet crude for August delivery fell 0.3% in early Asian trade on Monday as fears of global recession weighed on the market even as supplies remained tight amid lower OPEC output, unrest in Libya, and sanctions on Russia, but then edged higher as output disruptions in Libya and planned shutdowns in Norway offset concerns that an economic slowdown would dampen demand as US markets remained closed for the 4th of July...oil prices held those gains in early trading Tuesday, as traders assessed still-strong underlying market signals against concerns a recession would eventually sap demand, and moved more than 1% higher even as Brent crude turned lower, but then dropped alongside broader markets after being pressured by the growing risks of an economic slowdown and tumbled as much as 10% before settling $8.93 lower at $99.50 a barrel, as recession fears iced markets, outweighing fundamentally tight supplies....oil prices bounced back in early trading Wednesday, rising as much as 3% as traders piled back into the market as supply concerns returned to the fore, but then turned lower to trade down 2% at a twelve week low as fears of a global recession returned, before settling 97 cents lower on the day at $98.53 a barrel as fears of a global slowdown outweighed continued supply disruptions and market tightness...oil prices extended those losses in evening trading after the American Petroleum Institute reported crude stockpiles had unexpectedly rose last week, but rebounded dramatically early Thursday on demand stress from China's reopening and on fears that Texas power outages would constrict production or refinery capacity, but then moved lower after the Energy Information Administration reported a big inventory build of 8.2 million barrels for the week through July 1st, before regaining its footing to settle $4.20 or 4.26% higher at $102.73 a barrel...oil prices slipped back towards $102 in early Asian trade on Friday, as traders remained torn between worries over tight global supplies and fears a recession could dampen oil demand, but moved higher in volatile trading to settle $2.06, or 2% higher, at $104.79 a barrel, as U.S. employment data showed the economy added more jobs than had been expected in June, but still finished 3.4% lower on the week as recession fears overshadowed a fundamentally tight supply picture..
on the other hand, natural gas prices finished higher for the first time in four weeks, as this week's inventory build fell well short of expectations....after falling 8.8% to $5.730 per mmBTU last week as the damage at the Freeport LNG export terminal allowed more gas to be added to domestic supplies than had been expected, the contract price of natural gas for August delivery continued lower on Tuesday, falling 20.7 cents to $5.523 per mmBTU, as a reprieve from oppressively hot mid-July weather patterns and the potential for another stout storage report weighed on prices...natural gas prices were little changed on Wednesday as expectations that utilities had added more gas than usual to storage last week offset a big drop in daily output and forecasts for hotter weather than was previously predicted, and settled 1.3 cents lower at $5.510 per mmBTU...but natural gas prices jumped 14% on Thursday after the EIA reported a storage build that fell well short of expectations and settled 78.7 cents higher at $6.297 per mmBTU, the largest one day percentage gain since February 2nd...prices gave up some of those gains on Friday on a slow rise in output and on forecasts for less demand next week than had been previously forecast, and settled 26.3 cents lower on the day at $6.034 per mmBTU, but were still 5.3% higher on the week...
The EIA's natural gas storage report for the week ending July 1st indicated that the amount of working natural gas held in underground storage in the US rose by 60 billion cubic feet to 2,311 billion cubic feet by the end of the week, which still left our gas supplies 261 billion cubic feet, or 10.1% below the 2,572 billion cubic feet that were in storage on July 1st of last year, and 322 billion cubic feet, or 12.2% below the five-year average of 2,633 billion cubic feet of natural gas that have been in storage as of the 1st of July over the most recent five years....the 60 billion cubic foot injection into US natural gas working storage for the cited week was less than the average forecast for a 73 billion cubic foot injection from an S&P Global Platts survey of analysts, but higher than the 25 billion cubic feet that were added to natural gas storage during the corresponding week of 2021, while it matched the average injection of 60 billion cubic feet of natural gas that has typically been added to our natural gas storage during the same week over the past 5 years....
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending July 1st indicated that after a jump in our oil imports, a drop in our oil exports, and another oil withdrawal from the SPR, we had oil left to add our stored commercial crude supplies for the 3nd time in 8 weeks, and for the 13th time over the past 32 weeks…our imports of crude oil rose by an average of 841,000 barrels per day to an average of 6,839,000 barrels per day, after falling by an average of 228,000 barrels per day during the prior week, while our exports of crude oil fell by 768,000 barrels per day to 2,612,000 barrels per day, which meant that our trade in oil worked out to a net import average of 4,227,000 barrels of oil per day during the week ending July 1st, 1,609,000 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 12,100,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 16,337,000 barrels per day during the July 1st reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,438,000 barrels of crude per day during the week ending July 1st, an average of 228,000 fewer 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 average of 342,000 barrels of oil per day were being added to the supplies of oil stored in the US...so based on that reported & estimated data, the crude oil figures from the EIA for the week ending July 1st appear to indicate that our total working supply of oil from net imports and from oilfield production was 453,000 barrels per day less than what was added to storage plus 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 (+453,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed.... however, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….
This week's 342,000 barrel per day increase in our overall crude oil inventories came as 1,176,000 barrels per day were being added to our commercially available stocks of crude oil, while 834,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time....that draw on the SPR would have been part of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump", that was 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...the administation's previous 30,000,000 million barrel release from the SPR to address Russian supply related shortfalls should have wrapped up in June, and the earlier plan to release 50 million barrels from the SPR to incentivize US gasoline consumption wrapped up in May....including those, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 164,121,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 23 months, and as a result the 492,028,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since December 6th, 1986, or at a 36 1/2 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 SPR releases....now the total 180,000,000 barrel drawdown expected over the current six month release program to November will remove almost a third of what remained in the SPR when the program started, 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 rose to an average of 6,512,000 barrels per day last week, which was 0.3% more than the 6,492,000 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 12,100,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,700,000 barrels per day, while Alaska’s oil production was 23,000 barrels per day lower at 406,000 barrels per day but had no impact on the final rounded national total....US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was still 7.6% below that of our pre-pandemic production peak, but was 24.7% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021...
US oil refineries were operating at 94.5% of their capacity while using those 16,438,000 barrels of crude per day during the week ending July 1st, down from their 95.0% utilization rate during the prior week, while still in line with the historical refinery utilization rate for early summer…the 16,438,000 barrels per day of oil that were refined this week were 2.0% more than the 16,115,000 barrels of crude that were being processed daily during week ending July 2nd of 2021, but 5.7% less than the 17,438,000 barrels that were being refined during the prepandemic week ending July 5th, 2019, when our refinery utilization was also at a fairly normal 94.7% for early July...
Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries was still much higher, increasing by 849,000 barrels per day to 10,346,000 barrels per day during the week ending July 1st, after our gasoline output had increased by 134,000 barrels per day during the prior week…this week’s gasoline production was still 2.0% less than the 10,554,000 barrels of gasoline that were being produced daily over the same week of last year, and 0.7% below our gasoline production of 10,418,000 barrels per day during the week ending July 5th, 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 243,000 barrels per day to 5,379,000 barrels per day, after our distillates output had increased by 85,000 barrels per day during the week ending June 17th…with that big increase, our distillates output was 8.2% more than the 4,967,000 barrels of distillates that were being produced daily during the week ending July 2nd of 2021, and fractionally more than the 5,358,000 barrels of distillates that were being produced daily during the week ending July 5th, 2019...
Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the nineteenth time out of the past twenty-two weeks, decreasing by 2,496,000 barrels to 219,112,000 barrels during the week ending July 1st, after our gasoline inventories had increased by 2,645,000 barrels during the prior week...our gasoline supplies decreased this week because the amount of gasoline supplied to US users increased by 491,000 barrels per day to 9,413,000 barrels per day, after domestic gasoline supplied had increased by 417,000 barrels per day during the prior week, and even as our imports of gasoline rose by 121,000 barrels per day to 945,000 barrels per day, while our exports of gasoline rose by 46,000 barrels per day to 1,015,000 barrels per day ...after 19 inventory drawdowns over the past 22 weeks, our gasoline supplies were 7.0% lower than last July 2nd's gasoline inventories of 235,497,000 barrels, and about 10% below the five year average of our gasoline supplies for this time of the year…
Even after the recent increases in our distillates production, our supplies of distillate fuels decreased for the 2nd time in eight weeks and for the 28th time in forty-four weeks, falling by 1,266,000 barrels to 112,401,000 barrels during the week ending July 1st, after our distillates supplies had increased by 2,559,000 barrels during the prior week….our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, jumped by 814,000 barrels per day to 4,382,000 barrels per day, while our exports of distillates fell by 17,000 barrels per day to 1,282,000 barrels per day, and while our imports of distillates rose by 7,000 barrels per day to 104,000 barrels per day....but after forty-three inventory withdrawals over the past sixty-four weeks, our distillate supplies at the end of the week were 19.9% below the 138,692,000 barrels of distillates that we had in storage on July 2nd of 2021, and still about 20% below the five year average of distillates inventories for this time of the year…
Meanwhile, with the increase in our oil imports, the decrease in our oil exports, the decrease in oil going to refineries, and after this week's release of crude from our Strategic Petroleum Reserve, our commercial supplies of crude oil in storage rose for the 8th time in 15 weeks and for the 21st time in the past year, increasing by 8,234,000 barrels over the week, from 415,566,000 barrels on June 24th to 423,800,000 barrels on July 1st, after our commercial crude supplies had decreased by 2,762,000 barrels over the prior week…after this week’s increase, our commercial crude oil inventories were still about 10% below the most recent five-year average of crude oil supplies for this time of year, but 23.0% above the average of our crude oil stocks as of the first weekend of July 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 commercial 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 supplies as of this July 1st were still 4.9% less than the 445,476,000 barrels of oil we had in commercial storage on July 2nd of 2021, and were 21.4% less than the 539,181,000 barrels of oil that we had in storage on July 3rd of 2020, and 7.7% less than the 458,992,000 barrels of oil we had in commercial storage on July 5th 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, fell by 714,000 barrels this week, from 1,678,509,000 barrels on June 24th to 1,677,795,000 barrels on July 1st, after our total inventories had fallen by 602,000 barrels during the prior week....that left our total liquids inventories down by 110,638,000 barrels over the first 26 weeks of this year, and at the lowest since October 24th, 2008, or at a 13 1/2 year low...
This Week's Rig Count
The number of drilling rigs running in the US increased for the 78th time over the prior 93 weeks during the week ending July 8th, but still remained 5.2% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US decreased by 2 to 752 rigs this past week, which was also 273 more rigs than 479 rigs that were in use as of the July 9th report of 2021, but was still 1,177 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 2 to 597 oil rigs during the past week, after rigs targeting oil had risen by 1 during the prior week, and there are now 219 more oil rigs active now than were running a year ago, even as they still amount to just 37.1% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 12.6% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 153 natural gas rigs, which was still up by 52 natural gas rigs from the 101 natural gas rigs that were drilling during the same week a year ago, even as they were still only 9.5% 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 natural 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 unchanged at 16 rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana's offshore waters....that's now one less than the 17 offshore rigs that were active in the Gulf a year ago, when 16 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas.…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 4 water based rigs drilling through inland bodies of water....the one that was added this week is a directional rig on Grand Isle, Louisiana, itself virtually offshore, and is targeting oil at a depth greater than 15,000 feet; legacy inland waters rigs still running include a directional rig drilling for oil at a depth between 10,000 and 15,000 feet, inland in the Galveston Bay area, and two 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 unchanged at 682 horizontal rigs this week, which was still 249 more rigs than the 433 horizontal rigs that were in use in the US on July 9th of last year, but less than half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....at the same time, the directional rig count was also unchanged at 43 directional rigs this week, while those were up by 12 from the 31 directional rigs that were operating during the same week a year ago…on the other hand, the vertical rig count was up by 2 to 27 vertical rigs this week, and those were also up by 12 from the 15 vertical rigs that were in use on July 9th 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 July 8th, the second column shows the change in the number of working rigs between last week’s count (July 1st) and this week’s (July 8th) count, the third column shows last week’s July 1st active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 9th of July, 2021...
the rig that was added in Louisiana was the aforementioned inland waters rig on Grand Isle, and there were no other changes in that state...checking the Rigs by State file at Baker Hughes for the changes in Texas, we first find that two rigs were pulled out of Texas Oil District 1, but that two rigs were added in Texas Oil District 2....those were likely offsetting changes in the Eagle Ford shale, since most of the drilling in those districts targets that basin...in the Texas oil districts covering the Permian basin, we find that one rig was added in Texas Oil District 7C, which includes the southern counties of the Permian Midland, and another rig was added in Texas Oil District 8, which covers the core Permian Delaware, but that a rig was removed from Texas Oil District 8A, which includes the northern counties of the Permian Midland, together thus accounting for the one rig increase in the Permian basin...meanwhile, since there were no changes in Texas Oil District 10 of the Texas panhandle, we have to figure that the rig added in the Granite Wash was in the part of that basin that's in the adjacent area of Oklahoma...and since the Oklahoma rig count was unchanged, we have to figure that a rig was pulled out of a basin in that state that Baker Hughes doen't track...
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Votes Clear Path for $1.2B Lordstown Power Plant - Youngstown Business Journal - The Village Board of Public Affairs and Village Council on Tuesday approved a service agreement with the city of Warren that would directly supply water to the Trumbull Energy Center, a proposed $1.2 billion combined cycle energy plant. The approvals came after weeks of contention over the use of Warren water for the project. …
State reaches settlement agreement in NEXUS pipeline appeal - Pipeline company to pay $950 million statement for 2019 tax year. — Fremont City Schools and several other Sandusky County school districts, townships and public entities can expect to see additional tax revenues from the NEXUS pipeline after the state's tax commissioner reached a settlement on the pipeline owner's valuation appeal.The valuation appeal dragged on for more than three years.Jerri Miller, Sandusky County's auditor, said Wednesday the final settlement announced last month for Nexus was $950 million statewide for tax year 2019. The Sandusky County auditor said the settlement was for about two-thirds of the original assessed values.The settlement agreement is not appealable by either NEXUS or the Ohio Department of Taxation (ODT).She said county auditors in each county along the pipeline's route retain the right to appeal for up to 60 days from receipt of notice of the decision from the state."I don't think any will appeal," Miller said.In 2019, the owners of the NEXUS Gas Transmission pipeline asked ODT to reduce the taxable value of its natural gas pipeline statewide by almost half, according to the Canton Repository.The state had set the initial statewide valuation at $1.4 billion. While NEXUS’ valuation was under review, its owners paid taxes based on the value they believed the pipe was worth, not the state’s assigned taxable value, as they were permitted to do. Ohio Tax Commissioner Jeffrey A. McClain settled the three-year dispute with NEXUS officials over how much the roughly 256-mile interstate natural gas transmission pipeline is worth in Ohio.Fremont schools' Superintendent Jon Detwiler said NEXUS had been paying at 42% during the appeal.
NEXUS pipeline owes Stark County schools, governments $5 million - The owners of the NEXUS Gas Transmission pipeline owe millions of dollars to Ohio schools, libraries and governmental agencies, with roughly $5 million due to Stark County. Ohio Tax Commissioner Jeffrey A. McClain has settled a three-year dispute with NEXUS officials over how much the roughly 256-mile interstate natural gas transmission pipeline is worth in Ohio. The pipeline is a partnership between Detroit-based DT Midstream and Enbridge, a Canadian company. McClain notified county auditors last week about the settlement, and the auditors have since been running the calculations to determine how much their affected entities are owed if the settlement stands. While neither the Ohio Department of Taxation or NEXUS can appeal the agreement, the auditors of the 12 affected counties have 60 days to object.Besides Stark, the counties affected by the settlement are Columbiana, Erie, Fulton, Henry, Huron, Lorain, Lucas, Medina, Sandusky, Summit and Wayne. Initial statewide estimates projected the pipeline would boost tax revenue by $83.7 million during its first year in operation. Stark County, which saw the pipeline cross Washington, Nimishillen, Marlboro and Lake townships, was expected to see a $8.9 million tax boost the first year and $41.7 million over the first five years of operation. But then an oversupply of natural gas caused natural gas prices to drop to all-time lows and reduced the amount of gas flowing through the pipelines. In 2019, the pipeline owners asked the Ohio Department of Taxation to reduce the taxable value of its natural gas pipeline statewide by almost half. The state had set the statewide valuation at $1.4 billion. While NEXUS’ valuation was under review, its owners paid taxes based on the value they believed the pipe was worth, not the state’s assigned taxable value, as they were permitted to do. Last week’s statewide settlement resets the taxable value of the pipeline for 2019 at $950 million statewide. The subsequent years’ values take the 2019 valuation and subtract for depreciation. Separately, some Stark County schools, libraries and governmental entities still are awaiting a resolution on the taxable value for the Rover Pipeline. A hearing to review Rover’s appeal is scheduled to begin Aug. 1 before the Ohio Board of Tax Appeals. Rover’s twin 42-inch-diameter mainlines cross Pike, Bethlehem and Sugar Creek townships in Stark County and traverse Carroll, Tuscarawas, Harrison, Wayne, Ashland and Richland counties.
FERC Defeats Ohio City's Challenge to Nexus Pipeline Approval - The Federal Energy Regulatory Commission adequately explained why it granted a certificate for Enbridge Inc.'s 256-mile Nexus Gas Transmission project, and its approval was lawful, even though the project will be used to export natural gas to Canada, the D.C. Circuit said Friday. Nexus is “indisputably using its proposed pipeline to transport gas in interstate commerce,” according to the US Court of Appeals for the District of Columbia Circuit. Therefore, it’s a natural gas company and FERC could study its application under Section 7 of the Natural Gas Act, the court said. The ruling was a loss for the city ...
DC Circ. Backs FERC Redo Of $2.1B Pipeline Approval – Law360 - The DC Circuit on Friday said The Federal Energy Regulatory Commission has now adequately justified its decision granting Nexus Gas Transmission LLC eminent domain authority for its $2.1 billion pipeline, after previously direction the agency to beef up its legal arguments. The appeals court said FERC had satisfied its 2019 request to better explain why the agency could consider gas export contracts as evidence that the Nexus pipeline running through Ohio and Michigan was needed. The three-judge panel also rejected the city of Oberlin, Ohio’s arguments that FERC unlawfully relied on those contracts to justify issuing a construction certificate to the… appeals court said FERC had satisfied its 2019 request to better explain why the agency could consider gas export contracts as evidence. It supplies markets in Michigan, Ohio and Canada with gas from Ohio, West Virginia and Pennsylvania, court papers said.
City of Oberlin, Ohio v. FERC, No. 20-1492 (DC Cir. 2022) - Justia Opinion Summary: The Federal Energy Regulatory Commission (“FERC”) granted NEXUS Gas Transmission, LLC (“Nexus”) a certificate of public convenience and necessity to construct and operate a natural gas pipeline from Ohio to Michigan. After FERC granted Nexus the certificate, the City of Oberlin (“City”) petitioned for review claiming, among other things, that FERC did not adequately justify its reliance on agreements to transport gas ultimately bound for export to Canada as evidence of need for the pipeline. The DC Circuit denied the petition, explaining that the FERC’s explanation on remand from was reasonable and because its decision comported with the Natural Gas Act and the Takings Clause. The court wrote FERC’s justification for considering the agreements to transport gas bound for export is well reasoned and comports with both the Natural Gas Act and the Takings Clause. FERC’s alternative explanation that it would have granted Nexus a certificate even without considering the export agreements also passes muster.
Wayne County hazardous waste site OK'd for changes in landfill storage - State environmental regulators have approved a Wayne County hazardous waste facility's request for a modified operating license.The approval allows the facility, Wayne Disposal Inc. in Van Buren Township, to redesign its liner and incorporate geosynthetic clay liners into portions of the 120-acre landfill instead of compacted clay.The modified license "also requires extensive groundwater, soil and air monitoring, on an ongoing basis," the state said in a fact sheet about the project.Wayne Disposal Inc. is owned and operated by U.S. Ecology. It is nestled between Willow Run Airport to the north and Interstate 94 to the south in western Wayne County near Belleville. The company is not seeking to expand its overall footprint.Inspectors have not found the facility to be in violation of the Clean Air Act or Resource Conservation and Recovery Act in the last three years, according to online U.S. Environmental Protection Agency data. The Resource Conservation and Recovery Act, signed in 1976, sets standards for solid and hazardous waste disposal.Inspectors found Wayne Disposal Inc. to be out of compliance with the Clean Water Act for two quarters in the last three years — at the end of 2019 and beginning of 2020. The violations were not considered significant. The Michigan Department of Environment, Great Lakes, and Energy issued the facility a notice of violation under the Clean Water Act in 2020. The landfill has had state approval to accept hazardous waste since 1990 and federal approval to accept PCBs — polychlorinated biphenyls, man-made chemicals that were banned in 1979 and shown to cause health issues including cancer — since 1997.The EPA also is considering a request from the facility to modify its PCB approval and liner system, which "would allow WDI to continue to develop its current PCB capacity of 12 million cubic yards." The liners would be placed in portions of the landfill already approved to accept PCB waste, the EPA said. The U.S. Environmental Protection Agency tentatively plans to approve the request.The landfill found itself at the center of controversy over fracking in 2014 when it announced it would be importing hydraulic fracturing waste from Pennsylvania. At the time, it was one of only 17 facilities in the U.S. qualified to handle fracking waste, known as "technologically enhanced naturally occurring radioactive material."Opponents said the material shouldn't be shipped through and stored in a state with such vast freshwater resources. They also took issue with the process of fracking itself, which ultimately produces natural gas, a fossil fuel used to create electricity.
A Vast Refinery Site in Philadelphia Is Being Redeveloped and Called ‘The Bellwether District.’ But for Black Residents Nearby, Justice Awaits - One minute, the 3-year-old was playing tag in the grass, while the hulking remains of a 150-year-old oil refinery loomed nearby. Then, suddenly, she couldn’t breathe.Many residents here in the Grays Ferry section of Philadelphia live with asthma and other chronic health conditions that they, advocates and even some medical experts attribute to the close proximity of the former Philadelphia Energy Solutions Refinery, which was destroyed in an explosion in June 2019 and closed shortly afterward.Now, at a recent gathering of her neighbors and environmentalists in a local park to celebrate the refinery’s closure, the toddler was experiencing an asthma attack. When an inhaler offered no relief, family members rushed her to a nearby hospital where she was treated, released and made a full recovery.“Look at all the damage that’s been done,” the toddler’s grandmother, Sheryl Russell, 45, said of the health ailments that many residents trace to the refinery. “And it’s, like, where do they pay? They need to pay for that.” The closure of the 1,300-acre refinery here—once the largest on the East Coast—had been cheered as a major victory for those working at the intersection of equity, social justice and environmentalism. Yet in the three years since the refinery closed, the kind of sustained change sought by residents and environmental activists has proved elusive.Despite the refinery’s closure and demolition, the site where it once stood is still emitting harmful chemicals. Last month, the results of an analysis near the former plant were published showing that legacy pollution in the form of benzene—a chemical linked to cancer and other illnesses—was twice the federal threshold and at the second-highest levels in the country.A coalition of residents and activists and the developers who now own the refinery site have been involved in tense negotiations over a neighborhood investment and revitalization plan that helps accelerate the approval process so that development projects at the former plant can move forward. Despite assurances by the site’s new owners, Hilco Redevelopment Partners, some neighbors are concerned about the possibility of future industrial work there that could negatively impact the community.And residents—who, for nearly eight generations, have dealt with adverse health conditions—are worried about the lingering effects of the cleanup operations at the former refinery, which first opened five years after the last enslaved people were liberated by the Emancipation Proclamation.
New WVU Program Trains Next Generation of Toxicologists to Collect, Analyze Air Samples from Mining, Fracking Sites -- West Virginia University is launching a toxicology training program that offers students something no other academic program does: experience collecting air samples, identifying the toxicants they contain and determining how those toxicants might harm a community’s health.The National Institutes of Health has awarded WVU $1.7 million for the program, which bridges the disciplines of toxicology and systems-based medicine—disciplines that are traditionally distinct from one another. Over five years, the 40 doctoral students who participate will collect air samples in the local environment and then re-aerosolize and analyze them in WVU’s Inhalation Facility to assess their toxicity“With colleagues in the School of Public Health, they’re going to do what we refer to as ‘Environmental Immersions,’” said Timothy Nurkiewicz, who directs the Facility and chairs the School of Medicine’s Department of Physiology and Pharmacology. “They go out into the field downwind of mountaintop mining sites or fracking platforms, and they sample the air in real time. They can actually collect those samples, bring them back for inhalation exposures, and perform their studies like that. That’s something no other program in the country has.” The Inhalation Facility provides a tightly-controlled environment where researchers, both faculty and students alike, can replicate the inhalation exposures that people face in occupational, environmental and personal settings. These replications make it possible to carry out experiments that reveal the exposures’ dose limits, health effects and mechanisms of toxicity.The program’s participants will use the Inhalation Facility to investigate how inhaling various toxins can harm the respiratory, cardiovascular, nervous, endocrine, reproductive and other systems.“One of my big concerns with modern science is that students are largely studying cells and molecules on a very constrained scale,” Nurkiewicz said. “They don’t fully appreciate how our body systems work. They can’t tell the forest from the trees. This training program is centered around our Inhalation Facility, which is the core for all of our exposures. The students will work with those exposures to study the various systems of the body and determine how inhalation of specific toxicants impacts their function and health.” “In essence, we’ll train the next generation of toxicologists much like I was trained over the years,” Nurkiewicz said. “I was originally trained as a microvascular physiologist, and then I learned inhalation toxicology because of my colleagues at the National Institute for Occupational Safety and Health. Well, that’s not a normal combination. There’s no program in that, right? So, this training program recognizes that we’ve been very successful here. Students will have the best of both worlds. They will still learn their initially-chosen discipline, but it will ultimately be viewed through the lens of toxicology.”
Manchin: Biden could invoke Defense Production Act to complete natural gas pipeline - The HillSen. Joe Manchin (D-W.Va.) on Thursday called on President Biden to invoke the Defense Production Act (DPA) if necessary to complete a U.S. natural gas pipeline following the ban on oil imports from Russia. The West Virginia Democrat — at a Thursday hearing of the Senate Energy Committee, which he chairs — called the 303-mile Mountain Valley Pipeline “the quickest thing that we can get, it’s more energy into the market that’s going to be needed. “I’ve been preaching to the heavens for a long time on this one. It can be done with the Defense Production Act,” Manchin added. “What we do know is that Russia has weaponized energy. They have used it as a geopolitical weapon. The thing I know about an adversary or a bully is if they have a weapon, you better have one that will match it or be better than theirs. And we do, we just haven’t used it,” Manchin said, in reference to American energy stores. Manchin was a leading proponent of the U.S. barring Russian oil imports after the nation invaded Ukraine, a step the Biden administration eventually took last week. Manchin, a pivotal vote who has frequently bucked his party’s legislative agenda, called the Biden administration’s opposition at the time “so wrong.” The Mountain Valley Pipeline began construction in 2014, and once completed is set to carry natural gas between southwestern Virginia and northwestern West Virginia. Manchin said at the hearing that the pipeline could be completed in four to six months and added that he has also introduced legislation to remove regulatory hurdles. Under the DPA, which Biden has previously used for matters relating to wildfires and the COVID-19 pandemic, the president can direct private companies to prioritize developing materials crucial to national defense interests. As gas prices spike, environmentalist groups and Democrats to Manchin’s left on climate issues have also called on Biden to invoke the DPA to deploy renewable energy. Press secretary Jen Psaki was asked at the Thursday White House press briefing whether use of the law is under consideration to increase oil production domestically, and she suggested the administration was not inclined to pay oil companies for “what they probably already have the capacity to do.”
Northport Marina reopens after diesel spill — A diesel spill caused Northport Marina to shut down, then reopen. The spill came from a discharge of diesel fuel into the marina from a yacht, according to Northport Village Marina Harbormaster Bill Rosemurgy. The yacht is owned by actor Tim Allen. The spill was first reported Sunday afternoon at approximately 5 p.m. According to Rosemurgy, the spill is mostly contained within the marina, which remained closed until Monday evening. According to Leelanau Township Fire Chief Hugh Cook, the leak stemmed from a fuel filter issue on the boat that resulted in spewing diesel fuel all throughout the engine compartment. Once there was too much fuel in the engine compartment, the bilge pump dumped it out into the marina. Cook said that the owner of the boat was not made aware of the leak until they docked at the gas dock, and onlookers told them they were spewing out diesel fuel. Allen said the fuel filter gasket popped while he was rounding the corner of Omena Bay. He confirmed that he didn’t know the fuel was leaking until it was pointed out to him. Rosemurgy said 30 gallons might not sound like a lot of fuel, but that diesel fuel tends to spread faster on the water because it is more oily compared to gasoline. According to Allen, rescuers from the U.S. Coast Guard said that diesel spills tend to look a lot worse than they actually are. Northport Village Marina deployed booms and absorbent pads Sunday night, according to Rosemurgy. Mackinac Environmental deployed more pads, and they have a boat onsite helping with the clean up. The Leelanau Township Fire Department assisted as well. Rosemurgy said the U.S. Coast Guard was made aware of the spill Sunday afternoon, and they have been in touch with officers in the Sault Ste. Marie Station. A U.S. Coast Guard official from the station said that their pollution team has been made aware of the situation, and they are providing oversight to the marina. \ The boat owner, Allen, will be responsible for paying for all of the clean-up measures, Cook said. At this point, he does not believe that the spill has affected animal life in the area. Visitor Helena Marano was concerned about the wildlife, as she saw several dead ducklings, carp and pike in the marina, and tried to wash off a duckling covered in fuel. “It died in our hands,” Marano said. According to Rosemurgy, the marina reopened around 7 p.m. He also said that the beach south of the marina where the playground was closed Monday morning because of obvious amounts of diesel along the beach and in the sand. “I looked at it and said to myself ‘I wouldn’t let my kids swim here, so I’m not going to let anyone else’s kids swim here,’” Rosemurgy said. “That’s about as scientific as it was.” He said the beach will remain closed until it is all cleaned up, which they hope will be by the end of Monday.
Experts question safety of fuel export at Chatham's Elba Island, other sites - The sky-blue storage tanks, which first went operational in the 1970s, contain liquefied natural gas and tower above the Savannah River. New safety questions arose in 2019 when Elba became one of seven LNG export facilities in the nation. A June 8 explosion at a major Texas LNG exporter heightened Matthews’ worries. Now Matthews wonders what might happen if gas escaped from those storage units and drifted across Chatham County and what economic blow the city could take in the event of a significant incident such as occurred at the Texas export facility. “Most people don’t even know what those blue tanks are,” Matthews said. “If there is a leak, it could all be over in 15 minutes.” The Texas pipeline explosion remains under investigation, but it serves as a reminder that despite the LNG industry’s strong safety record, accidents do happen. Risks have shifted at Elba as the facility moves focus from imports to exports. However, experts say evolving hazards are not widely understood and the U.S. regulatory body that oversees LNG facilities has been slow to revise its standards. The company that operates Elba Island says its facility is operating safely and the company has multiple plans in place for potential mishaps or incidents.
Few states have seen more major gas leaks than Georgia, report finds - Few states see more natural gas leaks from pipelines than Georgia does, according to a new analysis of federal incident data, leading to millions of dollars in damages and at least two deaths here since 2010. Georgia had 59 reported pipeline leaks from 2010 to October of last year — the 10th most of any state — according to a recent report by Environment America, U.S. Public Interest Research Group Education Fund (U.S. PIRG) and Frontier Group. Of those, 25 caused fires and six triggered explosions. In addition to the fatalities, at least nine people were injured in those incidents, data from the report shows. The natural gas leaks included in the report were those that caused injuries, deaths or extensive property damage, which are required to be reported to the federal government. Leaks in Georgia resulted in more than $30 million in gas losses, repairs and property damage during the time frame, according to the news release. Leaks present the most visible examples of the dangers of natural gas. Last August, a fire hit a pipeline underneath a bridge along Cheshire Bridge Road in Atlanta, and the bridge was compromised. Businesses along the street still feel the weight of the bridge’s closure.The estimated related cost of the Cheshire Bridge Road incident — from property damage, the emergency response and lost gas — is more than $10.3 million, according to an incident report. The gas leaks report found there were almost 2,600 reported leaks nationally, and 368 of those caused explosions from 2010 to October 2021. Nationally, leaks cost $4 billion, the report said. Despite ranking in the top 10, the number of leaks in Georgia was modest compared to those in other states. Texas, for instance, reported 287, followed by California with 229 since 2010. Matthew Casale, U.S. PIRG’s environment campaigns director, said gas leak dangers aren’t limited to just a few states. The leaks caused 122 fatalities and 603 injuries across the nation since 2010, according to the report. Casale said investments in the gas system should prioritize the most dangerous leaks, but that ultimately, society should move away from gas.
Could Supreme Court ruling thwart FERC's clean energy plans? - The landmark Supreme Court decision last week restricting EPA’s regulation of climate-warming emissions could spill over to the Federal Energy Regulatory Commission, which is seen as critical for advancing clean energy. In a 6-3 opinion, the Supreme Court ruled that the Clean Air Act did not authorize EPA to craft a broad rule targeting emissions from power plants like the Obama-era Clean Power Plan. The court majority justified the ruling using the “major questions” doctrine, a relatively new legal theory that holds that Congress must clearly express when agencies are allowed to decide matters of “vast economic and political significance” (Greenwire, June 30). Some observers say that could stunt potential new rules from agencies such as FERC, particularly on issues that pertain to climate change.“The major questions doctrine, as they articulated it now, is so broad you could apply it to any major rulemaking,” said Harvey Reiter, a partner at Stinson LLP whose focus includes energy regulations. “[The decision] talks about cases of great ‘economic and political significance,’ but that could characterize any major rule of any agency.”Charged with overseeing wholesale power markets and interstate energy projects, FERC is weighing rules that could transform the electric power sector and help facilitate the deployment of solar, wind and other clean energy resources (Energywire, June 17). With support from its Democratic majority, the five-person commission this year also proposed changing how it reviews new natural gas projects to account for effects on the climate, nearby landowners and environmental justice communities (Energywire, March 25).Some legal experts say those actions fall clearly within FERC’s authority to ensure “just and reasonable” energy rates — as outlined in the Federal Power Act — and to approve gas pipelines that are shown to be in the public interest. But others said the Supreme Court decision may give ammunition to industry groups and others who’ve argued for a more narrow reading of what FERC can and cannot do, experts said.“Even though agencies are different and have different statutory mandates, any agency that’s thinking about being ambitious in addressing climate change now has to worry that a federal court may use the language of the major questions doctrine to attack whatever the agency is doing,” said Joel Eisen, a professor of law at the University of Richmond.In particular, a proposal issued in February to assess natural gas pipelines’ greenhouse gas emissions could be at risk of being abandoned or changed significantly due to concerns about the major questions doctrine, some analysts said.After the commission approved the proposal in February, Republican Commissioner Mark Christie invoked the major questions doctrine in opposing the policy. He criticized the measure, which attempted to outline a framework for quantifying new gas projects’ greenhouse gas emissions, in part because Congress had not authorized FERC to take such a step, he said (Energywire, Feb. 18).The proposal mostly focused on the direct emissions released by pipelines but could have also been used to address “emissions resulting from the downstream combustion” of gas in most cases. Upstream emissions — such as those released during natural gas extraction or processing — could have also been considered by the commission prior to the approval of a pipeline, according to the proposal. “The fundamental changes the majority imposes today … clearly exceed the Commission’s legal authority under the NGA and NEPA and, in so doing, violate the United States Supreme Court’s major questions doctrine,” Christie said in his dissent, using acronyms for the Natural Gas Act and the National Environmental Policy Act.
Natural Gas Futures Slip Amid Expectations for Lighter Domestic Demand -- Natural gas futures slipped lower Tuesday, extending the extensive sell-off from a week earlier. A mid-July reprieve from oppressively hot weather patterns and the potential for another stout storage print weighed on prices. -- The August Nymex gas futures contract settled at $5.523/MMBtu, down 20.7 cents day/day. September fell 22.5 cents to $5.487. With heat scorching the Lower 48 in the near term, NGI’s Spot Gas National Avg. gained 30.0 cents to $5.760. Major weather models continued to show strong heat through the first half of the month, according to NatGasWeather, though some easing in temperatures may be on the horizon. The American and European models “both remain plenty hot enough most days through July 15-16 as highs of 90s to 100s rule most of the southern two-thirds of the U.S.,” the firm said. “The pattern is neutral or closer to seasonal July 16-19 as the hot ridge weakens slightly and shifts over the west-central U.S., while at the same time weather systems with showers and comfortable temperatures are favored across the Great Lakes, Ohio Valley and Northeast for near-normal national demand.” EBW Analytics Group’s Eli Rubin, senior analyst, provided a similar assessment. “Strong near-term heat exceeding 13 cooling degree days all week may help provide physical support for cash market prices,” Rubin said. “The locus of heat shifting westward and northward, however, appears to have lessened cooling demand risks for mid-to-late July.” This could enable utilities to maintain solid levels of injections into natural gas storage in July. The U.S. Energy Information Administration (EIA) last week reported a larger-than-expected 82 Bcf injection into storage. It surpassed the highest of estimates ahead of the report by 2 Bcf. A June fire at the Freeport LNG export facility curbed U.S. export capacity by about 2.0 Bcf/d through at least the end of summer. That gas is now available for domestic use, including storage. Analysts at The Schork Report noted that the market is about 40% through the injection season, and it is averaging a steady pace. Utilities have added enough to supplies to cover about two-fifths of last winter’s deliveries. The median of early estimates for Thursday’s EIA inventory report, which covers the period ended June 24, hovers around 70 Bcf. That compares with an injection of 73 Bcf in the comparable week last year and a five-year average injection of 73 Bcf. Still, the storage to date trails historic averages. Total working gas in storage as of June 24 was 2,251 Bcf — 322 Bcf below the five-year average, according to EIA. The Schork team estimates that storage will come in at around 3.44 Tcf at the end of the injection season. That would fall short of the five-year average of nearly 3.66 Tcf.
U.S. natgas steady as expected big storage build offsets hot weather (Reuters) - U.S. natural gas futures were little changed on Wednesday as expectations that utilities added more gas than usual to storage last week offset a big drop in daily output and forecasts for hotter weather and more air conditioning demand next week than previously predicted. That lack of price movement also came as power demand in Texas hit another all-time high on Tuesday and will likely keep breaking that record all week during a lingering heatwave. Analysts forecast U.S. utilities added a bigger than usual 74 billion cubic feet (bcf) of gas to storage during the week ended June 24 as the ongoing shutdown of the Freeport liquefied natural gas (LNG) export plant in Texas leaves more gas in the United States. Front-month gas futures for August delivery on the New York Mercantile Exchange (NYMEX) fell 1.3 cents, or 0.2%, to settle at $5.510 per million British thermal units (mmBtu). With the U.S. Federal Reserve expected to keep raising interest rates, open interest in NYMEX futures fell on Tuesday to its lowest since July 2016 for a third day in a row as investors cut back on risky assets like commodities. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 96.0 billion cubic feet per day (bcfd) so far in July, from 95.1 bcfd in June. 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 1.8 bcfd on Wednesday to a preliminary 94.7 bcfd. That would be the biggest one-day drop since early February, but preliminary data is often revised later in the day. With hotter weather coming, Refinitiv projected average U.S. gas demand including exports would rise from 95.8 bcfd this week to 99.2 bcfd next week. The forecast for next week was higher than Refinitiv's outlook on Tuesday. Since the start of the year, the U.S. front-month is up 48% as much higher prices in Europe and Asia feed strong demand for U.S. LNG exports. That is especially true since Russia's Feb. 24 invasion of Ukraine stoked fears Moscow would cut gas supplies to Europe. Gas was trading around $52 per mmBtu in Europe and $39 in Asia. The average amount of gas flowing to U.S. LNG export plants dropped to 11.2 bcfd so far in July, the same as June, due to the Freeport shutdown on June 8. That compares with 12.5 bcfd in May and a monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.6 bcfd of gas into LNG. Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 bcfd of gas before it shut. So long as Freeport remains shut, that gas will remain in the United States and allow utilities to boost the country's low stockpiles ahead of next winter. Having that extra gas has already caused U.S. prices to drop more than 40% from a near 14-year high over $9 per mmBtu in early June just before the Freeport outage.
U.S. natgas futures up 4% on output decline ahead of storage report - U.S. natural gas futures rose about 4% on Thursday as daily output fell over the past couple of days and on forecasts for higher demand this week than previously expected. The price gain came ahead of a federal report expected to show utilities added more gas to storage last week than usual despite hotter than normal weather as the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in Texas leaves more gas in the United States. Analysts forecast U.S. utilities added 74 billion cubic feet (bcf) of gas to storage during the week ended July 1. That compares with an increase of 25 bcf in the same week last year and a five-year (2017-2021) average increase of 60 bcf. If correct, last week’s increase would boost stockpiles to 2.325 trillion cubic feet (tcf), or 11.7% below the five-year average of 2.633 tcf for this time of the year. Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8. Front-month gas futures NGc1 for August delivery were up 21.7 cents, or 3.9%, at $5.727 per million British thermal units (mmBtu) at 8:43 a.m. EDT (1243 GMT). That puts the U.S. front-month up about 53% 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 would cut gas supplies to Europe. Gas was trading around $55 per mmBtu in Europe and $39 in Asia. Since mid-June, Russia has exported around 3.7 bcfd of gas on the three main lines into Germany – Nord Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route. NG/EU That is down from around 6.5 bcfd in early June and an average of 9.4 bcfd in July 2021. Power demand in Texas was expected to keep breaking records this week and next as a heatwave lingers over the state. The average amount of gas flowing to U.S. LNG export plants has held at 11.2 bcfd so far in July, the same as June. That was down from 12.5 bcfd in May and a monthly record of 12.9 bcfd in March due to the Freeport outage. Having that extra gas in the United States during the Freeport outage has already caused U.S. prices to drop about 40% from a near 14-year high above $9 per mmBtu in early June, just before the LNG plant shut.
NYMEX August natural gas futures rally amid storage-driven short-squeeze | S&P Global Commodity Insights - Buyers came out following the release of a bullish weekly natural gas storage report, which sent NYMEX August natural gas futures rallying 78.7 cents to settle at $6.297/MMBtu on July 7. Roughly one month ago, NYMEX gas futures were trading in the $9.60s/MMBtu area and have since tumbled by a hefty 49% to lows in the $5.30s/MMBtu area earlier this week. Bullish gas market traders have been looking for anything remotely price-supportive as a reason to trigger a short-covering rally. Following the release of the weekly storage data by the Energy Information Administration for the week ended July 1, which showed a much smaller than projected 60 Bcf storage build, NYMEX gas futures soared. In the midst of a heavy-handed short-squeeze, gas futures prices vaulted to an intraday high of $6.381/MMBtu. The data, which brings working gas in storage to 2,311 Bcf for the reflective storage week, was viewed as notably bullish as most market estimates were looking for an injection in the upper-60s/Bcf to low-70s/Bcf. According to the EIA data, inventories were 261 Bcf less than last year at this time and 322 Bcf below the five-year average of 2,633 Bcf. The smaller storage build could be attributed to tightening underlying supply/demand fundamentals stemming from rising LNG exports and wobbling dry gas production volumes that are being affected by maintenance operations. However, the storage data may have been a bit sandbagged. Sandbagging means that some market players and analysts were purposefully setting their storage build estimates higher so that a potentially lower storage number would be construed as overly bullish relative to market expectations. It could also be that some market participants were projecting higher storage build estimates simply due to the recent chain of surprisingly larger-than-expected storage builds that have been published over the last few weeks. Early-bird market estimates for the next EIA storage report for the week ending July 8 are for a build in the neighborhood of 59 Bcf to 65 Bcf. Another component to the strength in NYMEX front-month gas futures is the 15-day outlook coming from the Global Forecast System and European weather models. The major weather forecast models suggest above-average temperatures will be on tap for most of the US for the next several days, which will include potentially record hot conditions in Texas, the largest gas-consuming state in the US. However, a trough is slated to redevelop over the East, ushering in cooler temperatures to the eastern third of the nation by early next week. While this may be a short-lived cooldown to the Great Lakes and the Northeast, the models are forecasting those below-average temperatures will remain in place in the Southeast region of the US, and there may even be a hot weather reprieve in Texas toward the end of the week 2 (six- to 10-day) timeframe. Meanwhile, it should be noted that the major weather forecast models are also showing a threat of a prolonged heat wave in Europe, similar to the devastating 2003 heatwave. This hot temperature event is forecast to kick off in the days ahead and could remain anchored in place for weeks, which will likely continue to support elevated LNG export volumes leaving the US to Europe.
Gas group sees lower-carbon LNG projects key for North America supply role | S&P Global Commodity Insights - The lower-carbon natural gas liquefaction and LNG export projects being developed in the US and Canada will play an important part in a global energy market that increasingly looks for decarbonization methods while gas use is projected to grow, the International Gas Union said in a July 6 report.The IGU referred to Venture Global's plans to capture and store up to 500,000 mt of CO2 annually at its Calcasieu Pass and Plaquemines liquefaction sites in Louisiana. The company also is planning to have carbon capture and storage facilities at its proposed CP2 project in Louisiana, which has yet to reach a final investment decision.In Canada, the under-construction LNG Canada project led by Shell in Kitimat, British Columbia, with liquefaction capacity of 18 million mt/year, and the smaller-scale Cedar LNG and Woodfibre LNG projects, also in British Columbia, intend to be powered by hydropower to reduce emissions associated with the liquefaction facilities."Low-carbon LNG is expected to play a key role in the global energy system," as "LNG offtakers will be more cautious about the environmental and emissions performance of procured cargoes as the urgency to meet decarbonization targets intensifies," IGU said in the report."Over the past year, we have seen an increased focus on decarbonization among liquefaction facilities," said IGU, which is based in Europe and advocates for increased gas use.Another US LNG company planning to include CCS facilities, not mentioned in the IGU report section on lower-carbon projects, is NextDecade's Rio Grande project that is looking to store up to 5 million mt/year of CO2 at the 27-MPTA project planned near Brownsville, Texas. Other decarbonization measures at LNG export facilities include all-electric motors to support the liquefaction compressors, which can utilize renewable resources based on the power supplies of the local utility, and gas supplies that have a reduced carbon footprint due to upstream or pipeline transportation measures, IGU said. The Hammerfest LNG project in Norway and Freeport LNG project in Texas are two projects featuring electric motors, IGU pointed out, asserting that gas use in combination with renewable resources "will be the two major pillars of decarbonization."
Michigan panel wants details on Great Lakes oil tunnel plan - (AP) — A Michigan regulatory panel said Thursday that it needs more information about safety risks before it can rule on Enbridge Energy's plan to extend an oil pipeline through a tunnel beneath a waterway linking two of the Great Lakes. The state Public Service Commission voted 3-0 to seek further details about the potential for explosions and fires involving electrical equipment during construction of the tunnel beneath the Straits of Mackinac. The commission's approval would be required for Enbridge to replace two existing Line 5 pipes in the straits, which connect Lake Huron and Lake Michigan, with a new segment that would run through the proposed underground tunnel. “This has been an extensive process,” Chairman Dan Scripps said. “We want to make sure that we get it right.” Enbridge and the state of Michigan are mired in legal battles over Line 5. The 69-year-old underground pipeline carries Canadian oil and natural gas liquids used for propane through northern Michigan and Wisconsin to refineries in Sarnia, Ontario. A 4-mile-long (6.4-kilometer-long) section divides into dual pipes that cross the bottom of the straits. Enbridge is defying Michigan Gov. Gretchen Whitmer's 2020 order to shut down the line, a move long sought by environmental groups and Native American tribes who fear a rupture would devastate the lakes. The company says the line is in good condition and contends in a federal lawsuit that the Democratic governor doesn't have the jurisdiction to shut it down. Enbridge, based in Calgary, Alberta, reached a deal with former Republican Gov. Rick Snyder in 2018 to build the $500 million tunnel. Enbridge has obtained permits from the Michigan Department of Environment, Great Lakes and Energy and awaits word from the U.S. Army Corps of Engineers as well as Michigan Public Service Commission. The commission said last year it would not pass judgment on whether the entire 645-mile (1,038-kilometer) line should continue operating, focusing instead on the underwater section. Its three members are Whitmer appointees. Scripps and Tremaine Phillips are Democrats, while Katherine Peretick is an independent. In its order Thursday, the commission said testimony, exhibits and briefings included too little about tunnel engineering and hazards. Also lacking is information about safety and maintenance of the dual pipelines, “including leak detection systems and shutdown procedures,” the order said. Interviewed by telephone after the meeting in Lansing, Scripps said Enbridge had pegged the likelihood of an oil release from the tunnel pipe as “one in a million." The commission wants to know how the figure was calculated, he said, as well as steps to eliminate even that possibility.
Biden opens door to more offshore drilling, despite earlier climate vow - President Biden’s administration opened the door Friday to moreoffshore oil and gas drilling in federal waters over the next five years, setting a potential course for future U.S. fossil fuel extraction just a day after suffering a major climate setback at the Supreme Court.The proposed program for offshore drilling between 2023 and 2028would ban exploration off the Atlantic and Pacific coasts. But by leaving the possibility for new drilling in parts of the Gulf of Mexico and off the coast of Alaska, the announcement falls short of Biden’s campaign promise to end federal fossil fuel leasing for good.The plan may move the country further from its pledge to slash the nation’s planet-warming pollution in half by 2030 compared with 2005 levels and help avert even fiercer fires, storms and drought driven by rising temperatures. Biden’s climate agenda now hinges on whether Democrats can pass a reconciliation package in the Senate that includes robust environmental policies.“The Supreme Court just put a lead ball around his ankle with regard to his executive authority,” said John Podesta, a former chief of staff to President Bill Clinton and a former senior adviser to President Barack Obama. “If you don’t get reconciliation, together with the constraints that the Supreme Court has put on, I think there’s no way you can get the 50 percent reduction by the end of the decade.” But the offshore plan, along with other events this week, underscores the political and legal limits in the United States to tackle global warming, and carries risks for Democrats as Americans experience record-breaking gasoline prices ahead of November’s midterm election and as many in Biden’s base demand stricter limits on fossil fuels.The consequences of warming 1.5 degrees Celsius (2.7 degrees Fahrenheit) compared with preindustrial levels by continuing to burn other fossil fuels are enormous for humanity: If left unchecked, global warming may stall headway on combating hunger, poverty and disease worldwide. The International Energy Agency has urged halting investment in new fossil fuel supplies to meet that goal.The Interior Department is considering 10 potential auctions in the Gulf of Mexico and one in Alaska’s Cook Inlet. Interior Secretary Deb Haaland emphasized that the plan has not been finalized and that her department is considering the option of having no lease sales at all. The plan narrows areas considered for oil and gas leasing from one proposed under President Donald Trump in 2018.
Biden offshore plan puts leasing halt on the table -The White House today advanced an offshore oil and gas plan that laid out two main alternatives: close the ocean to new oil and gas leasing or preserve the status quo by continuing to hold auctions, mostly in the Gulf of Mexico. The Biden administration published the highly anticipated draft plan without highlighting a preferred decision and is taking public comment for 90 days, with a final decision coming at an unspecified later date. “This announcement is not a decision — it’s a process step,” an Interior Department official said. “It’s meant to engage the American people, bring them into this conversation. And let it unfold from there.” He noted the “climate imperative” facing the administration as it advances this plan as well as its ongoing interest in reforming the oil and gas program in line with a report the administration released last year. The leasing option laid out in the plan envisions scheduling up to 11 oil and gas auctions between 2023 and 2028. The plan highlights the precarious path President Joe Biden faces in reshaping the federal oil and natural gas program to serve a larger climate agenda during a period of high energy prices. With the plan not finalized, offshore leasing will not restart until at least next year. The draft does propose limiting potential leasing to areas with existing oil and gas infrastructure and active activity, cutting out the Pacific, Atlantic and Arctic oceans. It weighs up to 10 lease auctions in the Gulf and one potential sale in Alaska’s Cook Inlet. But administration officials said the final plan could have fewer or none depending on public comment. The regional restriction would do little to disrupt oil and gas activities. Right now, the Gulf of Mexico is in effect the only offshore oil and gas region in the country, responsible for roughly 97 percent of offshore production. If the final proposal moves forward with leasing, it could follow the strategy the administration so far has carved out for its onshore oil and gas decisions, where it hasn’t embraced calls to end new leasing or drilling but restricted the public lands that will be made available for development and increased the royalties drillers pay for producing public minerals. The Biden administration had come under fire for not proposing a draft offshore leasing plan sooner, with GOP lawmakers and the oil industry expressing frustration at what they saw as a de facto leasing moratorium that continued even after a federal judge ordered an end to the pause on new auctions ordered by Biden when he first took office. Sen. Joe Manchin (D-W.Va.) said in a statement he was pleased the administration had released the plan but disappointed by its consideration of no new leasing.
Industry groups call for expansion of offshore lease sales as DOI plans to limit access - Industry groups reacted to the Department of Interior’s release of its five-year offshore drilling plan that seeks to block new offshore drilling in the Atlantic and Pacific oceans, saying it would be an overall disadvantage to America and its energy security. The Department of Interior on Friday released its five-year offshore leasing plan, which they are required to do by law. It contains much ambiguity and uncertainty for the industry, signaling a plan for 11 lease sales, but not guaranteeing any lease sales, Energy Workforce & Technology Council CEO Leslie Beyer said. “Also, the plan limits access to two of our bordering oceans,” Beyer said. “If the Administration's goal is truly to bring down energy costs and provide energy security for our nation, the Department should be expanding offshore drilling access to boost production to meet demand instead of limiting leases and continuing to disincentivize domestic production.” The American Petroleum Institute (API) Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola said the announcement leaves open the possibility of no new offshore lease sales, the continuation of a policy that has gone on for far too long. “Because of their failure to act, the U.S. is now in the unprecedented position of having a substantial gap between programs for the first time since this process began in the early 1980s, leaving U.S. producers at a significant disadvantage on the global stage and putting our economic and national security at risk,” Macchiarola said. National Ocean Industries Association President Erik Milito the Biden administration must act swiftly to finalize and implement the offshore oil and gas leasing program. “We are in the middle of a substantial, unnecessary, and avoidable gap in offshore leasing that is having serious impacts for both near-term and long-term investment in U.S. energy production,” Milito said. “The gap in offshore lease sales – and all of negative impacts associated with reduced domestic production – will continue for the foreseeable future until a final leasing program is in place and lease sales resume.” The proposed leasing plan is just one step in that process, he said, adding it is imperative that the Administration act without any further delays and finalize the program as proposed, without reduced acreage. At a time of historic tightness in the global oil marketplace and associated high prices for Americans, energy policies are needed that promote continued and growing supplies from U.S. producing regions. “Every administration – whether they were Republican or Democrat – have recognized the strategic advantages of the U.S. offshore and fulfilled their statutory obligation to maintain an offshore leasing program and continuously hold lease sales. This is the first year that the U.S. will not hold an offshore lease sale since 1965,” Milito said.
201K gallons of oil spill from pipeline in Tennessee (AP) — Officials are cleaning up a massive oil spill from a multistate pipeline that ruptured in rural Tennessee.According to the state Department of Environment and Conservation, approximately 201,600 gallons of crude oil spilled from the pipeline on June 29 and entered Horse Creek in Henderson, some 88 miles northeast of Memphis. The department says the spill was “secured” on June 30 and there were no reported impacts to nearby drinking water wells, no water contact advisories issued and no fish kills observed. Officials say a mowing contractor struck the Mid-Valley Pipeline Company’s pipeline. Parent company Energy Transfer said in a statement on Wednesday that the pipeline was repaired and cleanup was concluding.
Tennessee just had its second-largest crude oil spill ever, with 200,000 gallons leaking into rural town - A burst pipeline has leaked more than 200,000 gallons of crude oil in the small town of Henderson, Tenn., making it the second-largest crude oil spill in state history. The Mid-Valley Pipeline Company, a roughly 1,000-mile crude oil pipeline, is the source of the leak, about 130 miles southwest of Nashville. The pipeline dumped about 4,800 barrels of crude oil, which is equivalent to 201,600 gallons, into the surrounding area and into a local creek in Chester County last Wednesday, according to the Department of Transportation’s Pipeline and Hazardous Safety Materials Administration, also known as PHMSA. The Mid-Valley Pipeline Company transmission route starts in Texas, passes through Louisiana, Arkansas, Mississippi, Tennessee, Kentucky and Ohio, and ends in Michigan. Mid-Valley Pipeline Company is owned by Energy Transfer Partners. Crude oil spills of this magnitude are rare. The largest crude oil spill recorded in the state was an approximately 357,000-gallon spill in Clarksville in 1988, and it was also on the Mid-Valley Pipeline Company system, according to PHMSA data that dates back to 1986. Initial reports suggest that a mower hit and ruptured the pipeline.
Proposed silica mine wins state permit but faces Ste. Genevieve County roadblock --A recently formed silica sand mining company has won a key state permit for its site in Ste. Genevieve County, but a county health ordinance remains in the company’s way. On Thursday, the same day the Missouri Department of Natural Resources granted NexGen Silica a surface mining permit, the company sued the Ste. Genevieve County Commission and the health department in Ste. Genevieve County Circuit Court in an attempt to strike down the county ordinance. The actions last week were the latest developments in a monthslong fight between NexGen Silica and residents who live near the proposed mine.Opponents have raised concerns over possible effects to local wells and on air quality in and around the site, which is within miles of public lands such as Hawn State Park. The residents’ group, called Operation Sand, had pushed the County Commission to approve the health ordinance in May to stymie the mine proposal. One of the leaders of Operation Sand, Jillian Ditch, said Tuesday she wasn’t surprised the Department of Natural Resources issued a surface mining permit to NexGen.“Operation Sand and myself, we believe in the health ordinance,” Ditch said. “We know that it’s sound and valid and it will be upheld in court.” Circuit Judge Timothy Inman was assigned to the case on Friday but recused himself the same day. The company’s 46-page lawsuit argues the ordinance is “preempted by the Missouri statutes, was passed using a defective and unlawful procedure, and is unconstitutional.”Nexgen Silica intends to produce frack sand and/or industrial sands, moving the materials for transport on the Mississippi River at Ste. Genevieve, the company said in April.While frack sand is used in natural gas drilling, industrial sand has a wide range of applications, from glass to computer chips, Clark Bollinger, general manager for Nexgen Silica, said at the time.
The price of frac sand has spiked 150% for Permian oil producers— Bumping along the desolate highways of the Permian Basin, the world’s busiest oil field, there are long stretches where all you see are drilling rigs, sage brush and miles upon miles of sand. That’s why it’s so strange that Texas crude producers are facing a sand shortage of more than 1 million tons and prices that have jumped 150%. Frac sand, which gets blasted through shale rocks to unlock oil and natural gas, is averaging $55 a ton, up from $22 at the end of 2021, data from energy-research firm Lium show. Demand is climbing as oil explorers turn the taps back on after Covid-driven cutbacks. But like in so many pockets of the economy, the recovery is sparking a mismatch. Sand suppliers have seen disruptions, labor shortages and trucking bottlenecks. The chief executive officer of US Silica Holdings Inc., the largest publicly traded frac-sand miner, has dubbed the tight market “sandemonium” and said his company is sold out. That’s where Steve Brock and his upstart sand-mining operation, Nomad Proppant LLC, come in. Since the early days of the shale revolution more than a decade ago, fracing operators have relied on mined sand that’s delivered to their sites by truck — across distances as long as 100 miles. Brock, Nomad’s chief commercial officer, wants to turn that model on its head. His idea: Why not just use the sand that’s right under your feet? Nomad has developed machinery that can go directly to the frac wells (give or take 10 to 20 miles), vastly reducing the burden of freight costs and the time-consuming process of trucking. “We’re not brain surgeons here — all we’re doing is finding the best spots and washing and delivering the sand,” said Brock, 34. “Frankly, that it took us this long to get here is pretty wild.”
Oil and gas production creates record tax revenue for State of Texas – Railroad Commission of Texas Chairman Wayne Christian applauds the Texas oil and gas industry following the Texas Comptroller of Public Accounts’ announcement of record-breaking tax revenues from the industry. “Despite President Biden’s delusional desire to transition away from fossil fuels, Comptroller Hegar’s announcement reinforces the fact that oil and gas literally fuels every facet of our lives from energy to food and beyond,” said Railroad Commission Chairman Wayne Christian. “In addition to paying record-breaking tax revenue which funds our schools, roads, first responders and more, Texas’ oil and gas industry is our economy’s lifeblood supporting roughly one-third of our state’s economy and paying an average salary of $130,000. Oil and gas production is also so much more than simply fueling our energy use and funding our government, it produces about 96% of everyday consumer items including electricity, gasoline, plastics, medicine and countless others.” The Comptroller recently announced the oil and gas industry paid record-breaking taxes to the state. In June, the oil production tax generated $679 million – up 87% from June 2021 and the highest monthly collection on record. For the same month, the natural gas production tax generated $439 million – up 176% from June 2021 and the highest monthly collection on record.
Oilfield services jobs rise again for eight straight months of growth - Employment in the U.S. oilfield services and equipment sector rose by an estimated 4,999 jobs to 633,198 in June, according to preliminary data from the Bureau of Labor Statistics (BLS) and analysis by the Energy Workforce & Technology Council, and after adjustments to May numbers. May adjusted number of 628,190 is down from the preliminary of 628,793. Gains in June were made in five out of seven categories tracked, with the largest gains coming in support activities in mining (oil and gas share) and oil and gas extraction. Slight losses were seen in petroleum and coal products manufacturing, and in fabricated metal product manufacturing. The data reported is the highest since September 2021 when total jobs rebounded to 643,057, but still off the pre-pandemic mark in February 2020 of 706,528. The growth in June comes as overall U.S. employers added 372,000 jobs, and the unemployment rate remains at 3.6%. Job increases came mostly in healthcare, and leisure and hospitality in June.
US Waha hub forward gas basis discounts widen as Permian output pushes capacity --Forward gas traders are bracing for the return of steep basis discounts at the West Texas Waha Hub by early fourth quarter as anticipated gains in Permian Basin production hit the spot market before a series of recently announced brownfield pipeline expansions can enter service. Over the past six months, Waha’s October and November 2022 forwards have experimented with steep, and previously unanticipated, basis discounts. In early May and again in mid-June, the hub’s two autumn contracts briefly traded at more than $1.80/MMBtu below the Henry Hub. A recent, and sharp. devaluation in the benchmark US gas price has allowed Waha to close the gap slightly. According to Platts’ latest M2MS forwards assessments, October and November are now pricing at a discount of about $1.30-$1.40/MMBtu—still well below the 80-90 cents range seen in January. Weaker shoulder-season prices at Waha, which have hit the spring 2023 contracts as well, come as Permian Basin production shows signs of upward momentum. Since February, output there has climbed by a brow-raising 700 MMcf/d, or about 5%, to average 14.5 Bcf/d last month. In May, production averaged its highest on record at nearly 14.7 Bcf/d, S&P Global Commodity Insights data showed. Production gains this year come as operators in the basin continue to step up drilling activity.
Invisible and toxic in New Mexico - Pollution from oil and gas facilities can harm the health of those who live near them. That’s disproportionately Indigenous people in NM, a new map shows. In her 30 years working as a health care professional in the Navajo Nation, Adella Begaye witnessed the health impacts of extractive industries on Indigenous communities in the Southwest. “We know these toxins can impact the respiratory system, your heart and the lungs. All parts of the body,” she said, speaking to the harms of pollution from the uranium, coal, and oil and gas industries. . In New Mexico, the second-largest oil-producing state in the U.S., residents’ proximity to oil and gas facilities has become a growing public health concern.According to the Oil and Gas Threat Map by the nonprofits FracTracker Alliance and Earthworks, over 144,000 people in New Mexico live within a half-mile of an oil and gas facility. That number includes 20% of the state’s Indigenous residents.This “threat radius” is correlated with adverse health outcomes, including cancer, respiratory illness,fetal defects, blood disorders, and neurological problems stemming from chemicals associated with oil and gas production. “There are billowing clouds of methane and toxics like benzene from pretty much every oil and gas facility,” said Earthwork’s Information Systems Director Alan Septoff during a presentation of the updated map. Pollutants from more than 62,000 oil and gas facilities in New Mexico include the carcinogen benzene, hydrogen sulfide (similar in toxicity to carbon monoxide), and “volatile organic compounds (VOCs) that can contribute to the formation of ground-level ozone (smog),” according to the EPA. A spokesperson from the New Mexico Environment Department confirmed oil and gas activities impact the health of people living nearby. “The most widespread reported symptoms include respiratory problems like asthma and coughing, eye, nose, and throat irritation, headaches, nausea, dizziness, trouble sleeping, and fatigue,” spokesperson Mathew Maez wrote in an email.According to the American Lung Association, the four major oil- and gas-producing counties in New Mexico received failing grades for high ozone days. “That means that people are being exposed to asthma-exacerbating air pollution,”
Kinder Morgan Reports Massive Gas Release From Colorado Pipeline -An equipment malfunction resulted in 25 million cubic feet of gas being released. Kinder Morgan Inc. reported a massive release of natural gas from its TransColorado Pipeline following an equipment malfunction at a compressor station in Olathe, Colorado. About 25 million cubic feet of natural gas was released June 25, the company said in an e-mailed statement. “Following the incident, all appropriate regulatory agencies were notified,” said the company. “An investigation into the cause and quantity of the release is being conducted.”The primary component of natural gas is methane, which has 84 times the warming impact of carbon dioxide during its first two decades in the atmosphere.
Industrial Commission formally supports WBI Energy's 'Wahpeton Expansion' natural gas pipeline project -- North Dakota’s Industrial Commission is on record supporting a project to bring more natural gas to southeast North Dakota. It’s called the “Wahpeton Expansion Project,” proposed by WBI Energy. It would run from Mapleton to Wahpeton, and would also serve Kindred. The project includes approximately 60.5 miles of 12 inch diameter pipe from Mapleton to Wahpeton. "That part of North Dakota does not have reliable or adequate natural gas supply," said North Dakota Pipeline Authority director Justin Kringstad. "The supply can be intermittent. So this new pipeline would allow direct connection to an existing North Dakota gas line, with reliable, 365 day a year gas supply." The proposal is now before the Federal Energy Regulatory Commission.
MHA Nation hopes to sell waste natural gas to proposed $2B hydrogen hub -- The Fort Berthold reservation in North Dakota lights up at night like candles on a birthday cake in a darkened room, illuminated by scads of oil well rigs that are flaring off millions of dollars worth of natural gas annually. It’s Mark Fox’s wish that the burning will stop, with hopes that his Mandan, Hidatsa and Arikara Nation (MHA) may someday be able to sell the gas that today is simply wasted and use the proceeds to improve the lives of tribal members.His wish is getting a big boost from an unlikely quarter: a federal initiative to wean the nation off fossil fuels and use hydrogen as a main source of energy for transportation and energy-intensive industries such as steelmaking and fertilizer manufacturing.The tribe has signed a non-disclosure agreement and memorandum of understanding with Bakken Energy LLC and Mitsubishi Power Americas Inc. to supply natural gas to a coal gasification plant near Beulah that would be converted to produce “blue” hydrogen. If the project comes to fruition, it would be the largest producer of clean hydrogen in North America, according to a statement from Mitsubishi Power. “So now instead of burning it into the night, the tribe would be paid for their gas — rather than flaring it and no one gets paid,” Fox told Tribal Business News.The stakes are high, both in terms of revenues lost and what it could mean to improve the lives of the MHA Nation. According to the U.S. Energy Information Administration, North Dakota has been the nation’s second-largest crude oil-producing state since 2012, and it has nearly 3 percent of the nation’s total natural gas reserves. But because the state does not have enough pipeline capacity to transport all of its natural gas, large amounts of the gas production are flared at the wellhead.“State regulators prefer burning the associated gas that is extracted during oil production to having the gas vent into the air when possible because methane, the main component of natural gas, is a more potent greenhouse gas than the carbon dioxide that is the main product of flaring,” according to the agency. The Howard Center for Investigative Journalism at Arizona State University determined that “oil and gas operators on reservation land reported flaring more than 199 billion cubic feet of natural gas from 2012 to 2020, valued at more than $600 million.” The center’s independent analysis of satellite data indicated that the amount of gas flared from reservation wells may be underreported by 42 billion cubic feet of gas during that period. Fox said the MHA Nation, which has slightly more than 17,000 individual citizens, could use the revenues of flared gas to improve roads, build schools and clinics and increase law enforcement efforts. The nation encompasses about 1 million acres of land in western North Dakota bisected by the Missouri River.
Federal oil lease sale in Montana stirs little interest -As federal oil and gas leases go, the first Montana sale in nearly two years was no firecracker.Post-sale data for the June 30 event shows 865 federal acres in Montana fetching a combined $68,073. The data is presented by EnergyNet, which manages the Bureau of Land Management’s online leasing program. The sale, which included parcels in Montana and North Dakota, produced more than $7.3 million in receipts. North Dakota acres received as much as $52,001 an acre.This was the Bureau of Land Management’s first Montana-Dakota lease sale since Sept. 22, 2020. It was brought about by a court order striking down an onshore-lease suspension made by President Joe Biden days after taking office. As a candidate, Biden had campaigned on ending oil and gas drilling on federal land, a key part of the president’s plan to curb greenhouse gas emissions.The sale seemed to satisfy neither the petroleum industry nor environmentalists. The petroleum industry criticized the Biden administration for offering up 140,000 across eight states, a number the industry said was too small. There were also objections to an increase in the public’s share of the proceeds from any oil or natural gas extracted. The new royalty rate of 18.75%, up from 12.5%, is more in line with royalties collected by states for mineral leases on state land. Montana’s state rate is 16.67%.
Oil and gas, green groups both pan reduced lease sale - Oil and gas companies successfully bid for the right to develop 71,251 federal acres across the West in the U.S. Bureau of Land Management’s first onshore oil and gas lease sale since President Joe Biden took office. Most of the newly leased federal minerals are in Wyoming — 67,627 subsurface acres, according to the BLM. But the industry didn’t get nearly what it wanted.The BLM offered just 21% of the 570,000 lease acres initially nominated in Wyoming, withdrawing large tracts that fall within greater sage grouse “core habitat.” Oil and gas companies picked up just 55% of the reduced 119,565 acres offered for lease in Wyoming.“It’s just clear that this administration is doing everything it can to make it more difficult for leasing on public lands, which is detrimental to the state of Wyoming given our place as the leader of development on public lands in the U.S.,” Petroleum Association of Wyoming Director of Communications Ryan McConnaughey said.The delayed and significantly reduced lease sale was a meager step in the right direction, according to environmental groups pressuring federal regulators and the Biden administration to make good on promises to reform the oil and gas leasing program.“We obviously wish [the BLM] would have lived up to their commitment to take a timeout on leasing and acknowledge that there’s a lot that’s under lease already,” WildEarth Guardians Climate and Energy Program Director Jeremy Nichols said.Hopeful drillers had nominated nearly 570,000 acres of federal oil and gas in Wyoming at the beginning of the Biden administration — an unusually large request that nonetheless fit a trajectory of increasingly larger quarterly oil and gas lease salesestablished under the Trump administration. Amidst administrative appeals, lawsuits, a new administration and Biden’s 2021indefinite moratorium on BLM oil and gas lease sales (since struck down in the courts), both the Interior Department and the BLM withdrew parcels, citing various concerns. Some were whittled away based on potential impacts to cultural resources and other competing public interests, but most — more than 380,000 acres — were withdrawn because they were located in greater sage grouse core habitat in Wyoming.The iconic Western bird serves as a barometer for the health of the sprawling sagebrush habitat across the West and the more than 100 other species that depend on it. The birdremains imperiled, according to biologists, and its stronghold is in Wyoming.
Calif. gives 'new life' to gas plants in emergency overhaul -California Gov. Gavin Newsom (D) signed a controversial measure yesterday that would delay the closure of natural gas plants and expedite energy generation projects in an effort to avoid blackouts over the next five summers. The legislation aims to beef up supply on the state’s electrical grid, as it faces a potential shortfall in times of extreme heat. The language came as part of a raft of late bills attached to the $308 billion state budget. The move angered environmental advocates and groups representing lower-income communities, who said the legislation was rushed through without scrutiny or public input — and could harm the state’s green goals and public health. The new law shifts power for buying emergency generation projects to the state Department of Water Resources (DWR), allocating at least $2.2 billion to the task. The California Energy Commission will conduct environmental reviews and can bypass approvals from other state and local agencies that normally would review developments. DWR can use the money to pay for the construction of new plants that use “zero-emissions” fuel like solar, wind and battery storage. For the next year, the agency can buy diesel-powered generators. DWR can also buy power from coastal natural gas power plants that were slated to close between next year and 2029. The law puts no expiration date on that ability. Newsom‘s office said DWR will buy generation as part of a “Strategic Reserve” that will only be used “when we face potential shortfall during extreme climate-change driven events (e.g. heatwaves, wildfire disruptions to transmission).” “The state’s energy plan is focused on ensuring reliability in the face of climate change and affordability for Californians while we accelerate our transition to clean energy,” Erin Mellon, a Newsom spokesperson, said in an email.
California Shows Why Fossil Fuels Are So Hard to Quit - Every five years, this city of 7,000 hosts a rollicking, Old West-themed festival known as Oildorado. High schoolers decorate parade floats with derricks and pump jacks. Young women vie for the crown in a “Maids of Petroleum” beauty pageant. It’s a celebration of an industry that has sustained the local economy for the past century.This is oil country, in a state that leads the country in environmental regulation. With wildfires and drought ravaging California, Gov. Gavin Newsom, a Democrat, wants to end oil drilling in the state by 2045. That has provoked angst and fierce resistance here in Kern County, where oil and gas tax revenues help to pay for everything from elementary schools to firefighters to mosquito control.“Nowhere else in California is tied to oil and gas the way we are, and we can’t replace what that brings overnight,” said Ryan Alsop, chief administrative officer in Kern County, a region north of Los Angeles. “It’s not just tens of thousands of jobs. It’s also hundreds of millions of dollars in annual tax revenue that we rely on to fund our schools, parks, libraries, public safety, public health.”Across the United States, dozens of states and communities rely on fossil fuels to fund aspects of daily life. In Wyoming, more than half of state and local tax revenues comes from fossil fuels. In New Mexico, an oil boom has bankrolled free college for residents and expanded medical care for new mothers. Oil and gas money is so embedded in many local budgets, it’s difficult to imagine a future without it.Disentangling communities from fossil-fuel income poses a major obstacle in the fight against climate change. One study found that if nations followed the urging of scientists and cut emissions from oil, gas and coal deeply enough to avert catastrophic warming, United States tax revenues from oil and gas production, currently about $34 billion per year, could fall by two-thirds by 2050.While Kern County produces 70 percent of California’s oil, it is also the state’s largest supplier of wind and solar power. But renewable energy doesn’t generate as much tax revenue as fossil fuels, partly because California exempts solar panels from property taxes to spur construction. And jobs in the wind and solar industries generally don’t pay as much or last as long as those in the oil fields.So Kern County is feuding with the governor. Local officials, whohave unsuccessfully sued to block Governor Newsom’s restrictions on drilling, are backing a plan for up to 43,000 new wells and havethreatened to halt solar projects in response to the state’s oil crackdown.Whether Kern County can transition to cleaner energy could offer a model, or a cautionary tale, to the rest of the nation.“California is about 10 years ahead of other places on climate policy, but I expect we’ll see similar issues pop up across the United States,” said Kyle Meng, an economist at the University of California, Santa Barbara. “When you look at how deeply oil and gas is woven into the fabric of many communities, providing money for schools and hospitals and roads, the shift to clean energy can get really complicated, really fast.”
Biden administration backs Alaska LNG in new environmental study - The Biden administration has endorsed Alaska’s $38 billion natural gas project in an expanded environmental review that concludes the energy project would have little effect on greenhouse gas emissions. U.S. Sen. Dan Sullivan — a vocal opponent of the administration’s restrictions on fossil fuel development — called the Department of Energy’s environmental impact statement “a glowing report on the importance of this project.”
Administration weighs options for Alaska drilling project that would produce 629M barrels of oil -The Biden administration is weighing several options for the future of a major proposed drilling project in Alaska that could produce massive quantities of oil and significantly contribute to climate change. The administration released an environmental review that said that at its peak, the project could produce more than 180,000 barrels of oil per day and produce a total of 629 million barrels overall over the course of a 30-year duration. It found that the project could contribute between 278 million and nearly 287 million metric tons of carbon dioxide to climate change over the same time period. That’s the equivalent of the carbon dioxide contribution of between about 59.9 million and 61.8 million cars that are driven for a year. The review contains several “alternatives” for the ultimate decision that the administration may make on the project including blocking it, allowing it to proceed as sponsor ConocoPhillips proposed and shrinking the project. The document doesn’t list a “preferred” option, and a spokesperson for the department confirmed that all of them would be given equal consideration. The document’s release comes after a court tossed the Trump-era approval of the project, known as the Willow Project, last year. A judge argued that the analysis behind that approval was flawed for environmental reasons, including a lack of consideration of climate impacts. The judge ordered the Biden administration to redo it.
Oil from U.S. reserves sent overseas as gasoline prices stay high — More than 5 million barrels of oil that were part of a historic U.S. emergency reserves release to lower domestic fuel prices were exported to Europe and Asia last month, according to data and sources, even as U.S. gasoline and diesel prices hit record highs.About 1 million barrels per day is being released from the Strategic Petroleum Reserve (SPR) through October. The flow is draining the SPR, which last month fell to the lowest since 1986. U.S. crude futures are above $100 per barrel and gasoline and diesel prices above $5 a gallon in one-fifth of the nation. U.S. officials have said oil prices could be higher if the SPR had not been tapped. “The SPR remains a critical energy security tool to address global crude oil supply disruptions,” a Department of Energy spokesperson said, adding that the emergency releases helped ensure stable supply of crude oil. The fourth-largest U.S. oil refiner, Phillips 66, shipped about 470,000 barrels of sour crude from the Big Hill SPR storage site in Texas to Trieste, Italy, according to U.S. Customs data. Trieste is home to a pipeline that sends oil to refineries in central Europe. Atlantic Trading & Marketing (ATMI), an arm of French oil major TotalEnergies, exported 2 cargoes of 560,000 barrels each, the data showed. Phillips 66 declined to comment on trading activity. ATMI did not respond to a request for comment. Cargoes of SPR crude were also headed to the Netherlands and to a Reliance refinery in India, an industry source said. A third cargo headed to China, another source said. At least one cargo of crude from the West Hackberry SPR site in Louisiana was set to be exported in July, a shipping source added. “Crude and fuel prices would likely be higher if (the SPR releases) hadn’t happened, but at the same time, it isn’t really having the effect that was assumed,” The latest exports follow three vessels that carried SPR crude to Europe in April helping replace Russian crude supplies. U.S. crude inventories are the lowest since 2004 as refineries run near peak levels. Refineries in the U.S. Gulf coast were at 97.9% utilization, the most in three and a half years.
Has There Been Any Follow Up on DOE Energy Meeting? - Has there been any follow up on the energy meeting that U.S. Energy Secretary Jennifer M. Granholm held? That was one of the questions posed to White House Press Secretary Karine Jean-Pierre at a press briefing earlier this week. Answering the question, Jean-Pierre said, “as you know, that meeting went very well”. “We are … still looking to get to solution. We think that was a first step. There’s going to be more conversations … We just don’t have more to share on the next steps, specific next steps and what has been presented to the President,” the White House Press Secretary added in her response. “But clearly, we’re looking for solutions. We want to get that capacity up. We want to make sure that refineries are increasing their capacity so that we can get … gasoline out there, we can get diesel out there so that the cost[s] for the American people … come on down,” Jean-Pierre continued. “And so that’s what we’re going to continue to work on,” the press secretary went on to say. The average price of regular gasoline in the U.S. on July 7 was $4.752 per gallon, according to the AAA gas prices website. Yesterday’s average was $4.779 per gallon, the week ago average was $4.857 per gallon, the month ago average was $4.919 per gallon and the year ago average was $3.137 per gallon, the AAA site showed. The highest recorded average price for regular gasoline was seen on June 14 at $5.016 per gallon, according to the site. The U.S. Department of Energy (DOE) confirmed last month that Granholm led an in-person meeting with the CEOs and executives of seven major U.S. oil companies at the DOE headquarters in the morning of June 23. In an organization statement at the time, the DOE said the meeting took a productive focus on dissecting the current global problems of supply and refining, generating an opportunity for industry to work with government to help deliver needed relief to American consumers.
Biden's 51 years of bad blood with Big Oil - The fight started decades ago, when Biden was an up-and-coming county councilman with an eye on a U.S. Senate seat. President Joe Biden has been feuding with Big Oil since he was a 28-year-old county councilman in Delaware who went to war against a Shell refinery. “If Shell wants to build a refinery, let them build it,” Biden said during his brief stint as a local politician, the Wilmington News Journal reported at the time. “But first let them write it in blood that they won’t pollute.” He helped galvanize political opposition to the planned refinery, which was never built.Biden’s fight against the oil giant was a centerpiece of his two years on the New Castle County Council, where he served from 1971 until 1972. He leaned on his reputation for battling Big Oil to win his 1972 Senate race — catapulting a political career that ultimately landed in the White House.As president, Biden’s clash with the industry continues, but the stakes are higher. He’s hoping to prod drillers and refiners to step up production in an attempt to ease soaring fuel costs. But his public criticism of industry — and the industry’s disdain for his rhetoric and his policies — could make it harder for the administration and the industry to work together to lower gas prices.Earlier this month, Biden publicly quipped that an oil executive was “mildly sensitive” after the executive had accused Biden of vilifying the industry. E nergy Secretary Jennifer Granholm appeared to make amends on the administration’s behalf, but the relationship between Team Biden and Big Oil isn’t great (Greenwire, June 24).
Three charges laid for 2019 spill from Newfoundland's Hibernia offshore oil platform— Newfoundland and Labrador's offshore oil regulator is laying charges in connection with a 2019 oil spill in the Hibernia field, which sits about 315 kilometres off the coast of St. John's. The Canada-Newfoundland and Labrador Offshore Petroleum Board says it charged Hibernia Management and Development Company with three offences related to the spill. That company operates the Hibernia oilfield, which is owned by several oil giants including ExxonMobil Canada, Chevron and Suncor. The regulator alleges that the company failed to stop work or activity that was likely to cause pollution and that it didn't follow risk-management processes. The third charge is connected to an alleged violation of the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act, which prohibits spills in the province's offshore area. The July 17, 2019, incident resulted in an estimated 12,000 litres of oil spilling into the Atlantic Ocean.
Fossil Fuel Interests Are Behind Canada’s Blue Hydrogen Push - Talk to fossil fuel execs, government ministers, and industry reps these days and they’ll all tell a similar story: Blue hydrogen is the clean fuel of the future that will help Canada and the world get to net-zero emissions. It’ll power everything from airplanes to long-haul trucks and will even heat our homes. Canadian media has called blue hydrogen, which is produced from natural gas and has its emissions captured, “a key part” of the nation’s emissions-reduction strategy and “fairly clean” — a claim that echoes an infographic from ATCO, a major Canadian energy company, that said blue hydrogen produces “nearly zero emissions.”The Canadian government is relying heavily on this fuel source to deliver the promises in its net-zero emissions goals. In December 2020, the government released a hydrogen strategy that suggests that rapid expansion of the hydrogen industry — including “large-scale blue hydrogen production” by 2030 — could help the country “achieve our net-zero goal all while creating jobs, growing our economy and protecting the environment.”Alberta, long the heart of Canada’s oil and gas industry, is banking on hydrogen, too. “It was really starting to settle in that we had probably had the last [oil and gas] boom,” then-Mayor of Edmonton Don Iveson told the Narwhal in early 2021. Hydrogen tantalizingly represents continued jobs and investment in the region.Earlier this year, Edmonton hosted the inaugural Canadian Hydrogen Convention, which was sponsored by city and regional government, various Alberta-based business interests, and Canadian and international fossil fuel companies. The city will also be home to a hydrogen hubthat paints a rosy picture of a future in which “buses, trains, heavy trucks, home heating, and farm equipment all run on zero-emissions hydrogen” and the fuel will “ensure long-term economic competitiveness as the world shifts towards a low-carbon future.”“Our province is securing our future as a powerhouse in clean energy production,” claimedPremier Jason Kenney last summer when announcing Alberta’s $1.3 billion investment in the Edmonton hydrogen hub.The problem with this blue rhapsody? It’s not what it seems.The oil and gas industry is counting on both governments and the public buying into blue hydrogen, which has been called a $100 billion dollar opportunity and was featured at a gas industry conference earlier this year. To fuel this hype, the industry has produced inaccurate ormisleading information that claims a combination of hydrogen as a fuel source and carbon capture will make blue hydrogen the energy resource of the future. Kenney is a long-standing critic of climate science and booster of claims that foreign-funded environmental groups are undermining Canadian fossil fuel interests. Yet, as DeSmog’s new mapof hydrogen lobbying actors in Canada shows, among the biggest beneficiaries and proponents of Alberta’s blue hydrogen push are U.S. company Air Products, Shell, Toyota, and France Hydrogène.
Backing fracking? Landmark report could resurrect lost industry this week - The revival of domestic fracking could be finalised this week, as Downing Street scrambles to boost domestic energy supplies following Russia’s invasion of Ukraine. Industry sources confirmed to City A.M. the British Geological Society (BGS) will hand in its report to the Government in the coming days, providing advice on the latest scientific evidence around shale gas extraction. Fracking involves pumping water, chemicals and sand underground at high pressure to fracture shale rock and release trapped oil and gas. Prime Minister Boris Johnson first imposed a moratorium on fracking in 2019, following a devastating report from a leading industry body which concluded it was not possible to accurately predict the probability or potency of earthquakes linked to fracking operations. However, following the eruption of war in Europe, the Government greenlit a survey into whether there have been new developments in the science of hydraulic fracturing that make the process safer. Cuadrilla, the owner of the country’s two remaining horizontal shale wells in Lincolnshire, has suggested 10 per cent of its site’s 3.76tn cubic metres of gas could meet the UK’s energy needs for the next 50 years If the report from the BGS suggest the process could be made safe, it could result in further production at the site. By contrast, if the BGS’ findings concerning safety are negative, it will likely be the closing chapter for domestic fracking – with the North Sea Transition Authority previously ordering Cuadrilla The IEA’s energy analyst Andy Mayer told City A.M. the alternative to fracking was depending on overseas imports, which would be both more environmentally damaging and more expensive. He said: “The UK’s choice on fossil fuels today is drill and dig, or dither and import.”
UK Gov Energy Reps Stay on as Resignations Mount - The UK Secretary of State at the Department of Business, Energy and Industrial Strategy (DBEIS), Kwasi Kwarteng, and the UK Minister of State for Energy, Clean Growth and Climate Change at DBEIS, Greg Hands, have remained in their roles through a flurry of government resignations. Since Tuesday, more than 50 MPs have resigned, according to a tracker on Sky News. This includes the ex-Chancellor of the Exchequer Rishi Sunak and the Secretary of State for Health and Social Care Sajid Javid. UK Prime Minister Boris Johnson has now suffered more ministerial resignations in one day than any PM in history, Sky News highlighted. Rigzone has asked DBEIS if Kwarteng and Hands plan to submit their resignations. At the time of writing, Rigzone has not heard back from the government. Kwarteng was appointed Secretary of State at the DBEIS on January 8, 2021. The Secretary of State has overall responsibility for the DBEIS, which brings together responsibilities for business, industrial strategy, science, innovation and energy, the UK government website outlines. Hands was appointed Minister of State at the DBEIS on September 16, 2021. His responsibilities include, Net Zero Strategy, low carbon generation, oil and gas, security of supply, international energy, and hydrogen, the UK government site highlights. On Wednesday, the Energy Security Bill, announced as part of the Queen’s Speech, was introduced into Parliament by Kwarteng. A statement on the UK government website described the bill as “the most significant piece of energy legislation in a decade”. “To ensure we are no longer held hostage by rogue states and volatile markets, we must accelerate plans to build a truly clean, affordable, home-grown energy system in Britain,” Kwarteng said in a government statement on Wednesday. “This is the biggest reform of our energy system in a decade. We’re going to slash red tape, get investment into the UK, and grab as much global market share as possible in new technologies to make this plan a reality,” he added in the statement. “The measures in the Energy Security Bill will allow us to stand on our own two feet again, reindustrialize our economy and protect the British people from eye-watering fossil fuel prices into the future,” Kwarteng continued.
Shell Sees $1B Gain in Refining -Shell Plc said soaring margins from fuel production may have added more than $1 billion to the earnings of its refining business last quarter, when gasoline prices broke records in several countries. The trading update from the London-based energy giant is the first indicator of just how much cash was flowing into the coffers of major oil companies due to the inflationary surge in the price of gasoline, which climbed above $5 a gallon in the US for the first time. While the rising cost of energy is strengthening the oil majors after several tough years, it risks a political backlash. US President Joe Biden has directly called on fuel retailers to cut prices and companies are facing windfall taxes in some countries. Shell’s indicative refining margin jumped to $28.04 a barrel in the second quarter from $10.23 in the first three months of the year, the company said in a statement on Thursday. That’s expected to have a positive impact of $800 million to $1.2 billion on the results of its products division, compared with the prior period. Shell’s shares advanced as much as 2.5%, and traded up 1.2% at 1,997.2 pence as of 9:36 a.m. in London. Still, analysts at RBC Europe Ltd. saw the update as “neutral,” citing uncertainty around the “magnitude of working capital outflows.” In May, Shell said that it would be hit by around $7.4 billion of working capital movements. Oil prices have jumped 30% this year as the war in Ukraine stokes supply concerns. Having ramped up its long-term price assumptions, Shell now expects to reverse previous writedowns on asset values by $3.5 billion to $4.5 billion. The company took a $3.9 billion impairment in the first quarter, stemming from its planned exit from ventures in Russia. It will take an additional hit of as much as $350 million from the loss of LNG volumes from the Russian Sakhalin-2 project, it said on Thursday. Trading and optimization results from Shell’s sprawling integrated gas unit fell from the previous quarter, when the business benefited from “exceptional” trading opportunities. The renewables and energy solutions division is expected to report adjusted earnings of $400 million to $900 million for the second quarter amid an “exceptional market environment,” the statement showed. Shell didn’t give an update on the future of its buyback program, having said it completed $8.5 billion of repurchases in the first half of the year. The company has previously signaled an acceleration in returns, saying that shareholder distributions would be in excess of 30% of operating cash flow.
Shell to build Europe's 'largest' renewable hydrogen plant to help power Dutch refinery - Plans to build a major hydrogen plant in the Netherlands will go ahead following a final investment decision by subsidiaries of oil and gas giant Shell. In an announcement Wednesday, Shell said the Holland Hydrogen I facility would be "Europe's largest renewable hydrogen plant" when operations start in 2025. According to Shell, the 200 megawatt electrolyzer will be located in the Port of Rotterdam, Europe's largest seaport, generating as much as 60,000 kilograms of renewable hydrogen every day. Hydrogen has a diverse range of applications and can be deployed in a wide range of industries. It can be produced in a number of ways. One method includes using electrolysis, with an electric current splitting water into oxygen and hydrogen. If the electricity used in this process comes from a renewable source such as wind or solar then some call it "green" or "renewable" hydrogen. Shell said the electrolyzer in the Netherlands would use renewable power from the Hollandse Kust (noord) offshore wind farm, a 759 MW project set to be operational in 2023. Shell is a part-owner of the wind farm. The hydrogen generated by the plant will be funneled to the Shell Energy and Chemicals Park Rotterdam using a new hydrogen pipeline called HyTransPort. The idea is that this renewable hydrogen "will replace some of the grey hydrogen" — which is produced using fossil fuels — used at the site. "This will partially decarbonise the facility's production of energy products like petrol and diesel and jet fuel," Shell said. In a statement, Anna Mascolo, who is executive vice president for emerging energy solutions at Shell, said renewable hydrogen would, "play a pivotal role in the energy system of the future and this project is an important step in helping hydrogen fulfil that potential."
Norway approves gas production hike to continue record exports — Norway approved higher production from key natural-gas fields in an effort to maintain record exports as Europe reels from cuts in Russian supply. The energy ministry said Monday it had agreed on revisions to permits for the Troll, Gina Krog, Duva, Oseberg, Asgard and Mikkel fields. The move will allow Norway to keep output at full tilt into next year, helping to replace Russian flows that have slumped amid the war in Ukraine and sanctions on Moscow. “The most important thing Norway can do in today’s demanding energy situation for Europe and the world is to facilitate that the companies on the shelf can maintain today’s high production,” Petroleum and Energy Minister Terje Aasland said in a statement. “The companies are continuously assessing the opportunities they have for delivering more gas and oil.” Gas prices in Europe have soared to the highest level in almost four months as Russia’s shipments drop to multiyear lows and a key gas-export facility in the US suffers a prolonged outage. Norway itself contributed to price gains on Monday as planned strikes there threatened to further tighten the market. The production permits affected by the government’s decision cover volumes to be produced both in 2022 and in 2023, and the adjustments have already been accounted for in Norway’s sales forecast for this year, the ministry said.M
Norway's oil and gas output to be cut as offshore workers begin strike - Norwegian offshore workers began a strike on Tuesday in a stoppage that will cut oil and gas output in the country, said the union leading the industrial action. The strike, in which workers are demanding wage hikes to compensate for rising inflation, comes amid high oil and gas prices, with supplies of gas to Europe especially tight after Russian export cutbacks. Audun Ingvartsen, the leader of the Lederne trade union, confirmed to Reuters that the strike had begun. The union and the lobby representing oil companies said on Monday night that the negotiating parties had not made progress and that a strike was set to begin at midnight local time (0000 CET). The strike will have "a substantial impact on gas exports," the Norwegian Oil and Gas Association said on its website. "About 13 per cent of Norway’s daily gas exports will be lost". Equinor, the operator of the platforms, initiated a shutdown of three fields in the North Sea as a result of a strike, the company said on Tuesday. Tuesday's stoppage at three fields — Gudrun, Oseberg South and Oseberg East — is due to be extended to three other fields — Kristin, Heidrun and Aasta Hansteen — from midnight on Wednesday. A seventh field, Tyrihans, will have to shut because its output is processed from Kristin. Lederne said on Monday it would further escalate the industrial action from July 9, taking workers on strike at three more platforms. On Tuesday, oil and gas output will be reduced by 89,000 barrels of oil equivalent per day (boepd), of which gas output makes up 27,500 boepd, Equinor reiterated on Tuesday. As the strike deepens from Wednesday, oil output will be cut by 130,000 barrels per day, Equinor said, confirming an earlier estimate. Reuters estimates that this week's action corresponds to around 6.5% of Norway's production. It means that close to a quarter of Norway's gas output could be shut by Saturday, as well as around 15% of its oil production.
European gas rally shows no signs of easing on supply concerns - European natural gas prices rose to the highest level in almost four months on persistent supply concerns amid the worst energy crunch in decades. Benchmark futures jumped as much as 8% for a fifth consecutive advance. European energy markets are in turmoil with Russia’s supplies at multiyear lows, coupled with intense competition for liquefied natural gas with Asia, where prices soared to the highest ever seen during the summer. Traders are also closely watching exports from Norway, where strikes planned for this week threaten to cut gas and oil production. Output at three fields began shutting on Tuesday as the labour action started, with two more walkouts planned in the coming days. For now, shipment orders published by Norway’s grid operator show flows little changed for Tuesday. But the strike could escalate on Wednesday and into the weekend if no solution to an ongoing wage dispute is found, according to a local union. “Another day, another fear and liquidity driven spike in European gas and power pricing,” analysts at Alfa Energy Ltd. said in a note. Dutch front-month gas futures, the European benchmark, traded 6.4% higher at 173.29 euros per megawatt-hour by 11:07 a.m. in Amsterdam. The UK equivalent jumped as much as 13%. German 2023 power is trading at a record, near the highest-ever level for the benchmark. Another near-term risk is that the Nord Stream pipeline — Europe’s key channel for gas from Russia — won’t restart after 10 days of maintenance that begin July 11. That’s a development the region’s biggest consumer, Germany, is already considering as an option. German gas giant Uniper SE is in talks with the government over a potential bailout package of as much as 9 billion euros, ($9.3 billion) according to a person familiar with the situation. German Economy Minister Robert Habeck has warned the gas crunch risks triggering a collapse in the market, similar to the role of Lehman Brothers in the financial crisis. “News out of Germany only fanned the flames,” Alfa Energy said.
European gas prices fall after Norway’s government steps in to end oil and gas strike - European gas prices on Wednesday fell away from four-month highs after Norway's government intervened to bring an end to an oil and gas strike that threatened to exacerbate the region's deepening energy crisis. The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was last seen trading 2.5% lower at 161 euros ($164.6) per megawatt-hour. The contract briefly climbed above 178 euros per megawatt-hour amid intensifying supply fears in the previous session, reaching its highest level since early March. Norway's government late on Tuesday proposed "compulsory wage arbitration" to effectively bring an end to the industrial action by offshore workers. "The announced escalation has critical implications in the current situation, both in relation to the energy crisis and the geopolitical situation we're facing with war in Europe," Labor Minister Marte Mjos Persen said in a statement. Under Norwegian legislation, the government can intervene in certain conditions to force parties in a labor dispute to a wage board that will decide on the matter. "The parties themselves are generally responsible for finding a solution in such instances. But when the conflict could result in such far-reaching societal impacts for all of Europe, I have no other choice than to intervene in the conflict," Persen said. Offshore oil and gas workers walked out of their jobs on Tuesday. The Lederne trade union, which has more than 1,300 members, called the strike as the cost of inflation outpaced proposed revised salaries.
Norway's government halted an oil and gas worker strike that could have cut natural-gas exports by 60% and worsened Europe's energy crisis -Norway's government has stepped in to halt a strike by oil and gas workers that would have slashed natural-gas exports by up to about 60%, exacerbating the energy crisis in Europe.The strike by the Lederne union that started Tuesday could have been disastrous for Europe. Norway is the continent's second-largest energy supplier after Russia — which is already slowing natural-gas supplies via a key pipeline to Germany.Planned escalation would have cut about 56% of the country's gas exports by Saturday, said the Norwegian Oil and Gas Association, an employers' group. In the worst-case scenario, Belgium and the UK would not have been able to receive piped gas from Norway starting Saturday, Norwegian pipeline operator Gassco told Reuters.The escalation in industrial action would also have cut oi production by 341,000 barrels a day, the employers' group said. That has been averted by the government's intervention on Tuesday."The Ministry of Petroleum and Energy believes that it would be indefensible to cease gas production in the scope entailed by this strike over the next few days," Norway's labor minister, Marte Mjøs Persen, said in a statement."Production is falling dramatically, and this is highly critical in a situation where the EU and the UK are entirely dependent on their energy partnership with Norway."The Norwegian government has the power to intervene in labor disputes under certain conditions, per Reuters. It has proposed compulsory wage arbitration between the Lederne union and employers.Mjøs Persen said the Norwegian government typically exercises "significant restraint" before intervening in industrial action, but "the serious consequences of the announced escalations have forced my hand."About 15% of Norway's offshore oil and gas workers are members of the Lederne labor union that was on strike, according to Reuters.They were demanding wage increases to deal with rising inflation, which hit 5.7% in May — the highest since 1988, according toNorway's statistics agency. Lederne union members voted down a proposed wage agreement last week, according to Reuters. Other oil and gas labor unions in the country accepted the deal.Lederne union leader Audun Ingvartse said in a Tuesday statement he was "surprised" the Norwegian government has intervened in the industrial action in less than a day, but the union respects the authorities' reasons for the response. He added union members would be returning to work "as soon as possible."
Fire at Mongstad Extinguished -Equinor revealed on Sunday that a fire had been extinguished at the Mongstad site. “The situation is being handled by the emergency response organization,” the company noted on July 3. “A controlled combustion has been conducted from the leakage point. The fire is now extinguished,” Equinor added. The company noted on July 3 that the work to maintain and secure the affected system continued and said further examinations and any repairs will be conducted before the affected part of the processing plant can be restarted. In an earlier release on the same day, Equinor revealed that a fire had been reported at Mongstad. The incident was reported at 5:46 CET to Equinor’s emergency response organization and the plant was evacuated, apart from critical personnel handling operations and emergency response, Equinor highlighted, adding that no personnel injuries were reported. “Public rescue services and authorities have been notified and Equinor's emergency response organization has been mobilized,” Equinor noted in the earlier release. “A controlled burning of trapped volumes through pressure relief is being conducted, with continuous cooling of the surrounding equipment. The main plant is still in operation, but parts of the plant involved in production of some refined products are affected,” Equinor added in the release. “The cause of the fire is not yet clear. Equinor will cooperate with the authorities in uncovering the cause of the incident,” Equinor continued.
Russia is set to switch off the gas for work on a key pipeline — and Germany fears the worst - Russia is poised to temporarily shut down the Nord Stream 1 pipeline — the European Union's biggest piece of gas import infrastructure — for annual maintenance. The works have stoked fears of further disruption to gas supplies that would undermine the bloc's efforts to prepare for winter. Some fear the Kremlin could use planned maintenance works to turn off the taps for good. The summer maintenance activities on the pipeline, which runs under the Baltic Sea from Russia to Germany, are scheduled to take place from July 11 through to July 21. It comes as European governments scramble to fill underground storage with natural gas supplies in an effort to provide households with enough fuel to keep the lights on and homes warm during winter. The EU, which receives roughly 40% of its gas via Russian pipelines, is trying to rapidly reduce its reliance on Russian hydrocarbons in response to President Vladimir Putin's months-long onslaught in Ukraine. Klaus Mueller, the head of Germany's energy regulator, told CNBC that Russia may continue to squeeze Europe's gas supplies beyond the scheduled end of the maintenance works. No gas is expected to be transported via the pipeline once the annual inspection gets underway, Bundesnetzagentur's Mueller said, adding: "We cannot rule out the possibility that gas transport will not be resumed afterwards for political reasons." Analysts at political risk consultancy Eurasia Group agree. If supply "doesn't come back after maintenance because President Putin plays games or wants to hit Europe while it hurts, then the plan to fill up gas storage by the end of summer will probably not work," Henning Gloystein, director of energy, climate and resources at Eurasia Group, told CNBC via telephone. The Nord Stream 1 pipeline is majority-owned by Russian gas company Gazprom. One key concern for EU policymakers and the energy sector more broadly is that they have "virtually no idea as to what will happen" because most communications with Gazprom have now broken down, Gloystein said. They had been previously been relatively open and frequent until May.
Russia may keep Nord Stream gas curbed after works, Goldman says - A key Russian pipeline to Europe may not return to full capacity after planned maintenance this month, Goldman Sachs Group Inc. said, echoing the concerns of German officials. Nord Stream 1 will shut for works on July 11-21, tightening a market that’s seen prices soar in recent weeks. With Russia having already slashed flows through the pipe to just 40% of normal levels, any move to withhold supplies for longer would severely hurt Europe’s efforts to refill stockpiles for winter. “While we initially assumed a full restoration of NS1 flows following its upcoming maintenance event, we no longer see this as the most probable scenario,” Goldman analysts said in a note. The bank raised its gas-price forecasts for Europe into next year, citing increased risks to supply. European gas is trading at the highest level in almost four months as consumers endure the worst energy crunch in decades, while once rock-solid utilities are struggling to stay afloat. Germany, which relies on Russia for more than a third of its gas imports, said last month that the drop in flows through Nord Stream made it difficult to meet stockpiling targets, and expressed fears that the pipeline may not return to normal capacity following the scheduled works. The International Energy Agency even warned Tuesday that a complete cutoff in flows “cannot be excluded” given Russia’s “unpredictable behaviour.” While Goldman sees a total halt in deliveries as unlikely — since it would slash vital revenues for Moscow — the bank raised its third-quarter forecast for benchmark gas futures to 153 euros a megawatt-hour. Prices could rise above 200 euros in a “worst-case scenario” for Nord Stream shipments, it said. Front-month gas extended gains to trade above 170 euros on Tuesday as supply concerns were compounded by a shutdown of fields in Norway for strike action, and surging prices in Asia.
Germany’s Union Head Warns of Collapse of Entire Industries -Top German industries could face collapse because of cuts in the supplies of Russian natural gas, the country’s top union official warned before crisis talks with Chancellor Olaf Scholz starting Monday. “Because of the gas bottlenecks, entire industries are in danger of permanently collapsing: aluminum, glass, the chemical industry,” said Yasmin Fahimi, the head of the German Federation of Trade Unions (DGB), in an interview with the newspaper Bild am Sonntag. “Such a collapse would have massive consequences for the entire economy and jobs in Germany.” The energy crisis is already driving inflation to record highs, she said. Fahimi is calling for a price cap on energy for households. The rising costs for Co2 emissions mean further burdens for households and companies, Fahimi added. The crisis could lead to social and labour unrest, she said. Economics Minister Robert Habeck said on Saturday that the government is working on ways to address the surging costs both utilities and their customers face, without giving details. Earlier he had warned that the squeeze on Russian gas supplies risks creating deeper turmoil, likening the situation to the role of Lehman Brothers in triggering the financial crisis in 2008. Russia has reduced shipments through Nord Stream pipeline by 60% and the pipeline is scheduled for a full shutdown this month for maintenance. Germany has raised doubts that Nord Stream will resume supply after that.
Uniper kicks off German LNG terminal construction - German utility Uniper has started construction work on the site of the country’s first liquefied natural gas import terminal in an effort to fast-track the development ahead of the winter spike in gas demand. The terminal will involve the installation of a floating gas storage and regasification vessel, chartered from Greece’s Dynagas, in the North Sea port of Wilhelmshaven, which is the only German deep-water port than can be accessed without tidal constraints. The German Federal Ministry for Economic Affairs & Climate Protection and Uniper are aiming to commission the LNG import terminal during the upcoming winter season. The facility will provide annual import capacity of 7.5 billion cubic metres of natural gas, or about 8.5% of the country’s annual gas consumption, Uniper said. The company said the state Trade Supervisory Authority in the city of Oldenburg approved the early start of work on the terminal, along with onshore and seaward port infrastructure. Uniper submitted the application for the required permit and early start of construction to the Oldenburg authorities at the beginning of June.
Gazprom proposes extending gas sales for rubles to LNG -- Gazprom proposes extending gas sales for rubles to liquefied natural gas, Kiril Polous, who is in charge of Gazprom's long-term development programs, said during a State Duma Energy Committee round table at which Russia's Energy Strategy for until 2050 was discussed.
Austria starts to eject Gazprom from gas storage facility - (Reuters) Austria is following through on a “use it or lose it” threat to eject Russia’s Gazprom from its large Haidach gas storage facility for systematically failing to fill its portion of the capacity there, the government said on Wednesday. Austria obtains around 80% of its gas from Russia but since the war in Ukraine it has accused Moscow of weaponising that supply and has been seeking alternatives. Fearing that Russia will cut it off, it is racing to fill its gas storage facilities, which are at just under half their capacity. Since Gazprom has not been filling its portion of the Haidach facility near Salzburg, the conservative-led government told the Russian firm in May that if it did not use its storage there the capacity would be handed over to others. Legislation making that possible came into force on July 1. “If customers do not store (gas) then the capacity must be handed over to others. It is critical infrastructure. We need it now in such a crisis. That is exactly what is happening now in the case of Gazprom and its storage at Haidach,” energy minister Leonore Gewessler told a news conference, adding that gas regulator E-Control had started the process of ejecting Gazprom.
Germany and Ukraine in disagreement over Russian gas -Germany is seeking to bolster waning energy supplies, but Ukraine has accused Berlin of giving in to Russian "blackmail" after Moscow blamed reduced supplies on the need for repairs, not market conditions amid the Ukraine crisis.Germany has said it hopes to convince Canada to deliver a turbine needed to maintain the Nord Stream 1 gas pipeline, with Russia waiting on the machine's arrival before increasing supplies.Germany is seeking to bolster waning energy supplies, but Ukraine has accused Berlin of giving in to Russian "blackmail" after Moscow blamed reduced supplies on the need for repairs, not market conditions amid the Ukraine crisis.The turbine is currently undergoing maintenance at a Canadian site owned by German industrial giant Siemens.Russian energy behemoth Gazprom last month blamed the issue for a reduction in supplies to Germany via the controversial pipeline, with Berlin facing a serious energy crisis.Berlin says it has been in regular contact with Ottawa in recent weeks in order to ensure the turbine's swift transfer back to Europe without Canada falling foul of Ukraine-related sanctions against Russia. German government spokesman Steffen Hebestreit said on Friday that Berlin — already concerned by a wider pipeline maintenance session set to start on Monday and for around ten days — had received "positive signals" from Canada.
Natural Gas Soars 700%, Becoming Driving Force in the New Cold War -- One morning in early June, a fire broke out at an obscure facility in Texas that takes natural gas from US shale basins, chills it into a liquid and ships it overseas. It was extinguished in 40 minutes or so. No one was injured. It sounds like a story for the local press, at most — except that more than three weeks later, financial and political shockwaves are still reverberating across Europe, Asia and beyond. That’s because natural gas is the hottest commodity in the world right now. It’s a key driver of global inflation, posting price jumps that are extreme even by the standards of today’s turbulent markets — some 700% in Europe since the start of last year, pushing the continent to the brink of recession. It’s at the heart of a dawning era of confrontation between the great powers, one so intense that in capitals across the West, plans to fight climate change are getting relegated to the back-burner. In short, natural gas now rivals oil as the fuel that shapes geopolitics. And there isn’t enough of it to go around. It’s the war in Ukraine that catalyzed the gas crisis to a new level, by taking out a crucial chunk of supply. Russia is cutting back on pipeline deliveries to Europe — which says it wants to stop buying from Moscow anyway, if not quite yet. The scramble to fill that gap is turning into a worldwide stampede, as countries race to secure scarce cargoes of liquefied natural gas ahead of the northern-hemisphere winter. Germany says gas shortfalls could trigger a Lehman Brothers-like collapse, as Europe’s economic powerhouse faces the unprecedented prospect of businesses and consumers running out of power. The main Nord Stream pipeline that carries Russian gas to Germany is due to shut down on July 11 for ten days of maintenance, and there’s growing fear that Moscow may not reopen it. Group of Seven leaders are seeking ways to curb Russia’s gas earnings, which help finance the invasion of Ukraine — and backing new LNG investments. And poorer countries that built energy systems around cheap gas are now struggling to afford it. “The world is now thinking about gas as it once thought about oil, and the essential role that gas plays in modern economies and the need for secure and diverse supply have become very visible.” Many countries have turned to natural gas as part of a transition to cleaner energy, as they seek to phase out use of dirtier fossil fuels like coal and in some cases nuclear power too. Major producers — like the US, which has quickly risen up the ranks of LNG exporters to rival Qatar as the world’s biggest — are seeing surging demand for their output. Forty-four countries imported LNG last year, almost twice as many as a decade ago. But the fuel is much harder to shift around the planet than oil, because it has to be liquefied at places like the Freeport plant in Texas. And that’s why a minor explosion at a facility seen as nothing special by industry insiders — it’s not the biggest or most sophisticated of the seven terminals that send LNG from American shores – had such an outsized impact. Gas prices in Europe and Asia surged more than 60% in the weeks since Freeport was forced to temporarily shut down, a period that’s also seen further supply cuts by Russia. In the US, by contrast, prices for the fuel plunged almost 40% — because the outage means more of the gas will remain available for domestic use. There were already plenty of signs of extreme tightness in the market. War and Covid may be roiling every commodity from wheat to aluminum and zinc, but little compares to the stomach-churning volatility of global gas prices. In Asia, the fuel is now about three times as expensive as a year ago. In Europe, it’s one of the main reasons why inflation just hit a fresh record.
Russian lawmakers back windfall tax on Gazprom amid gas rally - Russian lawmakers approved a temporary windfall tax on energy giant Gazprom PJSC, a move that will channel billions of dollars into state coffers as natural-gas prices soar. The producer is set to pay an additional 1.25 trillion roubles ($22.2 billion) in mineral extraction tax from September to November, or 416 billion roubles each month, according to a bill adopted by the lower house of parliament on Tuesday. It still requires approval from the upper chamber and the president. European gas prices have more than doubled this year as Russia’s war in Ukraine — and resulting international sanctions — drive up risks to supply. Gazprom’s exports to its key markets have shrunk since March as some nations were cut off entirely while others saw flows through major pipelines curtailed. Despite lower shipments, the Russian exporter has gained from surging prices. The windfall tax, once approved, will direct more of those proceeds to the government — Gazprom’s largest shareholder — rather than to all investors. Last week, shareholders at the company’s annual meeting voted against a record dividend payout of 1.24 trillion roubles, deciding such a move would be “unreasonable” in the current environment, Deputy Chief Executive Officer Famil Sadygov said. Since the state owns just over 50% of Gazprom, the new tax would be twice as lucrative for the budget than the proposed dividend. “Of course, we must be ready to fulfill our obligations to pay taxes in an increased amount,” Sadygov said last week, adding that Gazprom’s priorities include expanding its domestic network and preparing for the winter season.
IEA: High prices, uncertainty will slow growth in gas demand - The International Energy Agency says high prices for natural gas and supply fears due to the war in Ukraine will slow the growth in demand for the fossil fuel in the coming years. In a report published Tuesday, the Paris-based agency forecast global demand for natural gas will rise by 140 billion cubic meters between 2021 and 2025. That’s less than half the increase of 370 bcm seen in the previous five-year period, which included the pandemic downturn. The revised forecast is mostly due to expectations of slower economic growth rather than buyers switching from gas to coal, oil or renewable energy. While the burning of gas emits less planet-warming carbon dioxide than other fossil fuels, methane released during the extraction process is a significant driver of climate change. “Russia’s unprovoked war in Ukraine is seriously disrupting gas markets that were already showing signs of tightness,” said Keisuke Sadamori, the agency’s director of energy markets and security. Efforts by European Union countries to wean themselves off Russian gas will lead to a fall in pipeline exports from Russia to the 27-nation bloc of 55-75%, the IEA said. At the same time the EU’s purchases of liquefied natural gas have diverted deliveries intended for other regions, such as Asia, which is predicted to account for half the demand growth by 2025. “We are now seeing inevitable price spikes as countries around the world compete for LNG shipments, but the most sustainable response to today’s global energy crisis is stronger efforts and policies to use energy more efficiently and to accelerate clean energy transitions,” said Sadamori. The agency’s quarterly report said capacity is partly constrained by a slump in gas infrastructure investments in the mid-2010s and pandemic-related construction delays. Recent new investments are not likely to affect gas supplies until after 2025, it said.
Shell buys stake in Qatari gas field expansion project -Oil and gas company Shell has joined QatarEnergy’s $29bn project to expand production at the world’s biggest natural gas field, becoming the fifth and final international partner.The United Kingdom-based company took a 6.25 percent stake for an undisclosed sum, joining TotalEnergies, Eni, ConocoPhillips and ExxonMobil in the North Field East project.The North Field expansion is the biggest liquefied natural gas (LNG) project ever seen, QatarEnergy said. It comes at a time of intense geopolitical tensions over energy supplies as the ongoing war in Ukraine pushed European countries to stop using Russian resources.The expansion is predicted to increase Qatar’s LNG production from the current 77 million tonnes a year to 110 million tonnes by 2027.“As one of the largest players in the LNG business, [Shell] have a lot to bring to help meet global energy demand and security,” said Qatar’s Energy Minister Saad Sherida al-Kaabi, who is also the QatarEnergy president and CEO. QatarEnergy estimates that the North Field, which extends under the Gulf into Iranian territory, holds about 10 percent of the world’s known gas reserves.
Turkey looking to transit Turkmen gas via Azerbaijan - As Europe seeks alternatives to Russian gas, Turkey has – for the first time in two decades – said that it is examining the possibility of transiting gas from Turkmenistan to Turkey via Azerbaijan.Fuat Oktay, Turkey’s vice president, said on June 2 that Turkey was examining three options for getting gas from Turkmenistan to Turkey and that it was conducting studies on all three.All three would use Turkey’s TANAP gas pipeline, which now carries only Azerbaijani gas and runs from northeastern Turkey to the border with Greece.Ankara's move appears to have been prompted by efforts by the European Union to secure new supplies of gas following Russia’s invasion of Ukraine. In response to European sanctions against Russia, Russia has retaliated by cutting energy supplies to Europe, raising fears of serious gas shortages on the continent.Although Oktay didn't specifically mention transiting the gas on to Europe, the TANAP pipeline is the sole pipeline carrying Azerbaijani gas through Turkey to Greece. There it connects to the TAP pipeline carrying gas to Albania, Bulgaria, and Italy and onward to central European markets. The TANAP pipeline has nearly 15 billion cubic meters a year of spare capacity, while the TAP pipeline has around 10 billion cubic meters a year. Brussels would like to see that capacity used to transit more gas to Europe.Although short on detail, Oktay's announcement was significant, as it was the first time in over 20 years that Ankara has become directly involved in proposals to transit gas from Turkmenistan to Turkey.
Sinopec Acquires Trillion Cubic Meters of Shale Gas Resources in Southwestern Sichuan, China -- China Petroleum & Chemical Corporation (HKG: 0386, "Sinopec") has reported that it has achieved a daily production capacity of 530,000 cubic meters of shale gas on June 30 in its Xinye Well-1 in Qijiang, Chongqing, confirming the 100 billion cubic meters of shale gas reserves in its Xinchang shale gas structure. As of now, Sinopec has established the shale gas resource belt of "Xinchang South – Dongxi – Dingshan – Lintanchang" (the "Belt") in the southeastern Sichuan Basin, with overall shale gas resource volume reaching 1.19305 trillion cubic meters, the second trillion-level shale gas reserve of Sinopec following its Fuling shale gas field that will contribute to ensure China's energy security. The Xinye Well-1 has a depth of 5,756 meters, and the structure belt has a large favorable area and resources of shale gas, making it a key area for Sinopec's strategic exploration and production of shale gas. The average well depth of the Belt is over 3,500 meters, among which the deepest drilled Dingye Well-8's shale gas layer has a depth of 4,614 meters. The challenges of developing deep deposits include complex ground stress and deep burial depth. Sinopec attaches great importance to exploring deep shale gas and innovated theories and technologies including fracturing for deep shale gas wells as well as achieving domestic production of fracturing equipment, tools and materials. Sinopec has realized 100 percent drilling ration of high-quality shale.
Russia moves to take control of Sakhalin-2 oil and gas project - Shell owns a 27.5 percent share in a significant oil and gas project that Russia has tried to take over. Vladimir Putin, the president of Russia, issued an executive order on Thursday to take control of the Sakhalin-2 project. As the economic repercussions of the Ukraine war extend, the decision may push Shell and Japan’s Mitsui and Mitsubishi to sell off their investments. “We are aware of the decree and are examining its consequences,” the oil colossus Shell said. According to the decree, Sakhalin Energy Investment’s rights and liabilities will be transferred to a new company. Due to the war in Ukraine, Shell said in February that it will sell its holdings in Russia, including the iconic Sakhalin 2 complex in the country’s far east. It declared in April that leaving Russia will cost it £3.8 billion. Gazprom owns and operates half of the project, which supplies 4% of the current global liquefied natural gas (LNG) market. The regulation states that while Gazprom will preserve its stake, other investors must submit requests for stakes in the new company to the Russian government within a month. Then, the government will decide if they may keep a stake. According to prior reports by The Daily Telegraph and Reuters, Shell has been in discussions with prospective bidders for its stake in the project, including some from China and India. Ben van Beurden, the company’s chief executive, stated on Wednesday that Shell was “making good progress” in its decision to leave the joint venture.
JPMorgan warns oil may hit $380 a barrel if Russia begins retaliatory production cuts -Amid ongoing geopolitical tensions and skyrocketing energy rates, global oil prices may hit $380 a barrel if the US and European curbs compel Russia to inflict retaliatory crude output cuts, Bloomberg reported citing analysts at JPMorgan Chase & Co. It was after Russia’s invasion of Ukraine that the Western allies led by the US imposed several sanctions, and worked out a complicated mechanism to cap the price fetched by Russian oil. According to JPMorgan analysts including Natasha Kaneva, currently Russia enjoys a strong financial position and it can afford to slash daily crude production by 5 million barrels. The analysts noted that Russia’s crude production cuts could be disastrous for the world, as a cut of 3 million barrels will elevate London crude prices to $190. In the worst-case scenario, if the output is cut by 5 million barrels, the price could reach as high as $380 a barrel. “The most obvious and likely risk with a price cap is that Russia might choose retaliate by reducing exports as a way to inflict pain on the West,” wrote the analysts.
The G7 Is Still Pushing Its Nutty Russia Oil Price Cap Idea - by Yves Smith - Even observers who are generally very well informed but not strongly interested in finance are ridiculing the barmy idea of imposing a price cap on Russian oil sales. This move is perceived to be necessary because the other Western-devised sanctions against Russian energy sales, of first trying to embargo them, then realizing that that would amount to shooting too many economies in the head, then having what amounted to a partial embargo drive oil prices way up, made Russia fat and happy on lower petroleum sales.This brilliant bunch, not having worked out that they are unable to anticipate obvious effects of their moves to pummel Russia, are doggedly trying to get a bad idea first floated by Mario Draghi, then touted by Janet Yellen, then taken up at the last G7 meeting, of imposing an oil price cap on Russia off the ground.Mind you, the scheme should have been relegated to the dustbin by now. The only way something like this might have a dim possibility of success is if you got a very substantial majority of buyers to hang together. China already rejected the idea in particularly tart terms, expressing its hostility to the nerve of the G7 trying to insert itself in trade relations between Russia and China. Whoever wrote the Global Times editorial was having quite the go at the G7:Yet, the problem is that G7 nations are no longer major buyers of Russian oil, and as an unrelated third party, the G7 has neither the qualification nor the market power to dictate energy trade among China, India and Russia.Western media reports so far suggested that the West may impose such a price cap through insurance. About 95 percent of the world’s tanker fleet is insured through the International Group of Protection & Indemnity Clubs in London and some companies in other European countries. G7 could tell crude buyers that if they want to continue using the insurance service for Russian oil shipment, they need to agree to a “capped price.”But even that could also fail to pressure Russia, as Russia has already prepared an alternative by offering insurance through the Russian National Reinsurance Company, according to media reports.Even though tankers make a point of carrying insurance, as an insider pointed out, “All that does is give you the right to sue the insurer.”Needless to say, China having taken such a forceful stand makes it easier for India and the Global South to say no, aside from the fact that they have other reasons to play nice with Russia (like fertilizer sales).Oh, and another wee problem is in the highly unlikely event that the G7 were to get somewhere with this idea, Russia has made clear it’s not going along with the price cap. Goldman warned that prices could jump to over $200 a barrel and JP Morgan, as high as $380, if Russia decided to stare the West down and withhold supply. Deputy chariman of Russia’s security council, Dimitry Medvedvev, apparently follows Western analysts. From Reuters:Russia’s former president Dmitry Medvedev said on Tuesday a reported proposal from Japan to cap the price of Russian oil at around half its current level would lead to significantly less oil on the market and could push prices above $300-$400 a barrel.Commenting on the proposal, which was reportedly put forward by Prime Minister Fumio Kishida, Medvedev said Japan “would have neither oil nor gas from Russia, as well as no participation in the Sakhalin-2 LNG project” as a result.Russia is restructuring the Sakhalin-2 LNG joint venture. Russia is the majority owner. Minority owner Shell has said it wants to sell its stake…and Russia cleared its throat, since Russia is not going to allow Shell to freely transfer a strategically important asset, particularly since the world has too many unfriendlies now. So Russia is requiring the minority owners Shell, plus Mitsubishi and Mistui, to reapply. The Japanese companies together own 22%.
India isn’t likely to stop buying Russian oil any time soon. Here’s why - Despite criticism from the West, India is not backing down on its commitment to buying Russian oil. As Brent crude retreats back to near $100 a barrel, foreign policy experts say India's drive to buy oil will only escalate as inflation concerns take center stage. "India is getting negative attention for the acquisition of oil by the U.S. and Europe… but India has made a judgement that its national interests dictate — keeping oil prices in the best position that it can is vital for domestic stability and economic interests," said Frank Wisner, former U.S. ambassador to India and an international affairs advisor at Squire Patton Boggs. As the world's third largest oil importer, India is vulnerable to rising oil prices. Further, pressure is growing on Prime Minister Narendra Modi to tame rampant inflation for his 1.3 billion citizens. "The availability and price of Russian oil is too attractive," added Wisner. Analysts at Nomura say for every $1 increase in the price of oil, India's import bill increases by $2.1 billion. Since Russia invaded Ukraine in late February, India's imports of Russian oil have surged. Early data from June shows India's supply of Russian crude reached nearly 1 million barrels per day, up from 800,000 barrels per day in May, according to Again Capital. Currently, Russian oil makes up 25% of India's energy imports, due in part to the sanctions placed on Iran. Still, critics blame India for financing Russia's wartime efforts in Ukraine. However, Americans frustrated with higher prices should take note of this observation: "Oil prices would likely be $8 to $10 higher if India was not buying the volumes of Russian crude that it is," said John Kilduff, founding partner of Again Capital. Experts say recession concerns could reduce the amount of oil India buys, but they are making no major changes in estimates at this point. Last week, G7 leaders floated the idea of implementing a price cap on Russian oil. However, strategists — including RBC Capital's Helima Croft — say this could backfire, especially now that the price of oil is trading off its highs. "I don't think the Russians are ever going to accept a price cap… discounts become more challenging in a lower priced environment," said Croft. It's less likely that the U.S. would punish India for its oil purchases, given the important role the country plays in the U.S.'s efforts to challenge China's rise in the East, foreign policy experts said. "The United States prioritizes its Indo-Pacific strategy: Without India, there is no 'Indo' in Indo-Pacific," said Manjari Chatterjee Miller, senior fellow for India, Pakistan and South Asia at the Council on Foreign Relations. "The rest of the Quad countries are all Pacific powers," she added, referring to the Quadrilateral Security Dialogue, which includes the U.S., Japan, India and Australia. Rolling out sanctions or other measures to reprimand India could also cause a blowback. "India is also a very touchy power as the U.S. has realized in its long dealings with the country: Penalizing India would be a very serious setback to the bilateral partnership, and even the Quad," added Miller.
Russia's Medvedev Warns US Trying To Punish A Nuclear Power 'Risks Existence Of Humanity' -- Former Russian President Dmitry Medvedev on Wednesday warned the US against trying to punish Russia for its war in Ukraine, saying that doing so would risk humanity since Moscow has the world’s largest nuclear arsenal. "The idea of punishing a country that has one of the largest nuclear potentials is absurd. And potentially poses a threat to the existence of humanity," Medvedev wrote on Telegram. Medvedev, who currently serves as the deputy of Russia’s Security Council, had warned earlier in the war that if the US destabilizes Russia like it did Iraq and other countries, it could lead to a nuclear "dystopia." As of 2020, Russia was estimated to have 6,375 nuclear warheads, and the US said it possessed 5,750 warheads.Even though it’s widely believed that a direct conflict between the US and Russia could quickly turn nuclear, it doesn’t appear to be a factor in the Biden administration’s response to the war in Ukraine. Instead, the US is pouring billions of dollars in weapons into the country and continues to escalate its involvement in the war.In his Telegram post, Medvedev also called out the US for hypocrisy for trying to put Russia on trial for war crimes, citing the millions killed by the US since World War II in countries like Korea, Vietnam, Iraq, Afghanistan, and many others."So who’s going to give us a show trial? Those who kill people and commit war crimes with impunity, but do not meet real condemnation in the international structures financed by them?" Medvedev said, according to a Google translation of his Telegram post.US Attorney General Merrick Garland recently visited Ukraine and pledged support for international efforts to investigate alleged Russian war crimes. The International Criminal Court (ICC) has opened an investigation in Ukraine, but the US is not a party to the court and has impeded its effort to investigate alleged war crimes committed by the US and Israel.
Pipeline Critical to Kazakh Oil Exports Ordered to Halt Operations by Russian Court – On July 6, a Russian court ordered the Caspian Pipeline Consortium (CPC) to suspend operations for 30 days. CPC carries oil from Kazakhstan into Russia and to the edge of the Black Sea. Although it handles just over 1 percent of global oil, CPC is critical for Kazakhstan; around 80 percent of Kazakhstan’s oil exports move through the Novorossiysk oil terminal.The timing of the decision has naturally raised some eyebrows, coming just two days after Kazakh President Kassym-Jomart Tokayev told European Council President Charles Michel via phone that Nur-Sultan was “ready to use its hydrocarbon potential for the sake of stabilization of the global and European markets.” Early last month, the European Union imposed a partial ban on Russian oil imports as part of a sixth package of sanctions in response to the Russian invasion of Ukraine. But the ban on seaborne Russian crude oil does not take effect until December. As a Bloomberg article pointed out in late June Russian exports of oil to Europe had already begun to creep back up, largely due to shipments to Russian-owned refineries in Italy and increased purchases by Turkey. In any case, Europe’s aim is to decrease its imports of Russian oil and Kazakhstan stands as an option — but Kazakh exports to Europe depend on Russian pipelines. The chain of events doesn’t necessarily suggest Kazakhstan-Russian tensions, though some with surely draw that conclusion. Rather, the dirty work of transporting oil and the constraints Kazakhstan faces due to a lack of d iversification of export routes are at the heart of the issue. On the latter, Kazakhstan faces a geographic conundrum: With Russia or China the main avenues available for oil exports, diversification is not so simple. A CPC press release about the stoppage explains that in late April, Rostransnadzor, the Russian federal agency which supervises transport, including pipelines, ordered an audit of the company that operates the Russian portion of the pipeline, CPC-R. After the audit concluded in May, it “revealed a number of documentary violations under the Oil Spill Response (OSR) Plan.” On June 6, CPC was issued a citation, which mandated that the violations be addressed by the end of November 2022. But Rostransnadzor appealed to the court on July 5 for an immediate 90-day halt to operations at Novorossiysk. The court ruled for a 30-day suspension, which CPC said it would appeal.
Oil Traders in Panic After Russia CPC Terminal Order - A Russian court order to halt oil loadings from a port in the Black Sea has unnerved European crude traders already reeling from the tightest regional market in years, sending prices for competing barrels spiraling. On Tuesday, a Russian court ordered a 30-day stoppage of the CPC Terminal, through which more than 30 million barrels of mostly Kazakh crude gets exported each month. It said the halt is because the facility violated its oil-spill prevention plan. If it comes to pass, the stoppage would be another blow to a European oil market that’s lost large amounts of supply to unrest in Libya, and seen sharply reduced shipments from elsewhere. For now the terminal is running as normal. Azeri Light oil, popular among European refiners because of its low sulfur levels, jumped to a premium of more than $10 a barrel to benchmark Dated Brent, the highest level several traders were able to remember. Further afield, Nigeria’s Forcados crude was offered at a premium of $14 a barrel. The CPC stoppage is meant to begin after a bailiff arrives. That hasn’t happened yet, and the terminal operator, Caspian Pipeline Consortium, has asked the higher regional court to delay the order suspending operations, arguing a sudden stop could cause permanent damage. European refiners are now mostly keeping away from Russia’s Urals crude following the invasion into Ukraine, putting a greater emphasis on other sources of supply. But Azerbaijan, Kazakhstan, Libya, the North Sea and West Africa -- all major suppliers to Europe -- already saw their combined monthly exports decline by a combined 1.04 million barrels a day in June, tanker tracking compiled by Bloomberg show. Exports from Libya have fallen to about a third of last year’s level amid the worsening political crisis. Should the court order go ahead, it would strip Europe of at least another 1 million barrels a day. Several oil traders in the region expressed concerns over the possible shutdown, saying spot prices could go up even further because of an urgent need for alternative grades. Some refineries that already bought CPC cargoes for August loading said they were worried whether their shipments will now be delayed. CPC loadings are planned at about 1.24 million barrels a day in July, slightly less than 1.4 million to 1.5 million barrels a day in the first quarter, mainly due to planned maintenance at Kazakhstan’s giant Kashagan field. The US and its allies are trying to punish Moscow in the oil market for the country’s invasion of Ukraine, prompting speculation the court order is a politically motivated response that may have less of an impact on supply in practice.
SL President dials Putin; explores options for buying oil, bolstering ties - Sri Lankan President Gotabaya Rajapaksa on Wednesday said he had a "very productive" conversation with his Russian counterpart Vladimir Putin to negotiate a credit line for purchasing discounted oil from Moscow to "defeat" the worst economic challenges faced by the island nation. During their conversation, Rajapaksa also urged Putin to restart the services of the Russian flag carrier Aeroflot to the country. Sri Lanka is going through the worst economic crisis since its independence from Britain in 1948, and needs to obtain at least USD 4 billion to tide over the acute shortage in foreign exchange reserves. Had a very productive telecon with the Russian President Vladimir Putin. While thanking him for all the support extended by his government to overcome the challenges of the past, I requested an offer of credit support to import fuel to Lanka in defeating the current economic challenges, President Rajapaksa said in a tweet. The two presidents discussed issues of bilateral economic cooperation, in particular in energy, agriculture and transport, according to a press statement released by the Kremlin in Moscow. In May, Sri Lanka had purchased 90,000 tonnes of oil from Russia. Western countries have largely halted energy imports from Russia as part of the punitive sanctions on Moscow over its invasion of Ukraine in February. A spike in global oil prices has forced a number of developing countries to buy Russian crude, which is being offered at steep discounts. A Sri Lankan delegation is also scheduled to leave for Russia on July 9 to hold several rounds of preliminary discussions with high-ranking representatives in Moscow on obtaining fuel, fertilisers, gas, loans and humanitarian aid, according to web portal Colombo Page. The Sri Lankan President said that during his telephonic conversation with Putin, they agreed to bolster bilateral ties in sectors like tourism, trade and culture. Rajapaksa also urged Putin to restart the services of Aeroflot in the country, which was suspended last month. Further, I humbly made a request to restart @Aeroflot_World operations in Lanka. We unanimously agreed that strengthening bilateral relations in sectors such as tourism, trade and culture was paramount in reinforcing the friendship our two nations share, he said in another tweet.
India's export curbs, tax hike to exacerbate global diesel, petrol shortage --India's latest measures aimed at boosting domestic oil supplies could reduce its diesel and gasoline exports in the second half of the year, keeping global supplies tight and underpinning prices, traders and analysts said. The world is grappling with tight gasoline and diesel supplies as Western sanctions have reduced exports from Russia while demand has surged in a post-pandemic recovery. India's curbs follow similar measures taken by China that have reduced oil product exports from the world's No. 2 refiner. In order to reap record margins, India, the world's No. 3 oil importer, has ramped up imports of cheap Russian oil and increased oil product exports. However, the country announced on July 1 a windfall tax on local oil producers and refiners and imposed new restrictions on export volumes in a bid to increase local supplies to meet rising demand and raise federal revenues. "The export tax hike could see third-quarter diesel exports come in 100,000 barrels per day (bpd) lower to 640,000 bpd on average than our original estimate before the policy changes," consultancy Energy Aspects said in a note. "Indian exports will not drop to zero as the new rules just make it relatively less economic to export while also putting a maximum threshold on private refiners' export volumes." Consultancy FGE has revised down its forecasts for the country's gasoline exports by 50,000 bpd and diesel exports by 90,000 bpd for the remainder of 2022. In the first five months this year, India's gasoline and diesel exports jumped more than 16% on year to 150.75 million barrels, government data showed. Cargoes were mainly headed to the Asia Pacific, Africa and Europe, according to Kpler. Indian refiners are required to sell domestic buyers the equivalent of at least 30% of their diesel export volumes. For gasoline, it's 50%.
India Will Not Lift Windfall Tax On Oil Firms Until Crude Drops By $40 - India’s windfall tax on oil companies and refiners, introduced last week, could stay for a very long time, as the government plans to withdraw it only when oil prices drop by $40 per barrel from current levels, Indian Revenue Secretary Tarun Bajaj told Reuters on Monday.India last week introduced a windfall tax on oil producers and refiners who are exporting more due to the high international price of crude oil and refined products. What’s more, fuel exporters will be required to sell at least some of their product domestically. The new taxes will serve as an incentive to keep more product at home and export less—a reality that will further tighten international markets for oil and oil products.“As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market,” a government-issued statement read.The windfall tax took effect on July 1 and could be in effect for a very long time, considering that India says it will terminate the windfall tax only when international crude oil prices fall by $40 per barrel from current levels.Early on Monday, Brent Crude was trading at over $113 per barrel, up by 1.32% on the day.Speaking to Reuters, the Revenue Secretary Bajaj said today that “The taxation would be reviewed every 15 days.”“If crude prices fall, then windfall gains will cease and windfall taxes would also be removed,” Bajaj added, noting that the government expects windfall gains for oil firms would evaporate once the price of oil slumps by $40 a barrel from current levels.India’s imports of Russian crude have soared in recent weeks as its refiners take advantage of the steep discounts at which Russian grades sell relative to Brent. Many refiners have also boosted their fuel exports to take advantage of the high refining margins globally amid a fuel crunch in many regions.
Iran ready to raise output as market may face shortage in next few months -Iran, whose energy trade is pressed by US sanctions, is ready to pump more oil as the world needs the crude to balance supply and demand and calm prices before travel seasons in the US and Europe, the oil minister Javad Owji said, according to economic daily Donyay-e Eqtesad on July 2. Iran could increase production to levels before the sanctions, he said, without giving an estimate of current output. "There are some worries about oil supply shortage in the coming months," he said, despite some concerns about economic slowdown and possible curbs to demand because of geopolitical tensions. Iran's oil production was 3.8 million b/d before the Trump administration imposed sanctions in 2018. The OPEC member recently said its oil production capacity has topped that figure. In May, according to the Platts survey by S&P Global Commodity Insights, output was 2.58 million b/d, holding at the highest level since March 2019. "The oil market is in such situation that return of Iran's oil to the market can partially respond to customers and help the global markets reach balance and tranquility," Owji said. "Particularly, we will be watching global demand increase for oil and oil products as the summer and travel seasons in the Unites States and Europe are approaching," he said.
Iran’s daily refining capacity exceeds 2.2m barrels: OPEC - Tehran Times -- Iran's refining capacity has increased by more than 480,000 bpd from 2011 to 2021, according to OPEC's Annual Statistical Bulletin. Iran's refining capacity in 2011 was reported to be 1.715 million bpd. Despite all the external challenges like the coronavirus pandemic and the U.S. sanctions, the Iranian oil and gas sector has been developing at a fast pace and the country is passing new milestones in this industry every day. Various sectors of Iran’s oil and gas industry including exploration, production, processing, and distribution are all among the world’s top charts and the country is taking new steps to develop the industry even further. Among different sectors of this industry, refining is a major one being seriously paid attention for development. Back in September 2021, Oil Minister Javad Oji had said that the country’s oil refining capacity will be increased by 1.5 folds by the end of the current government’s incumbency (in four years). He mentioned promoting the quantity and quality of the current refineries’ products and the construction of new refineries as some major plans of the Oil Ministry in the new government. According to the defined schedule for the quantitative and qualitative development of existing refineries and planning for the construction of new refineries in the next four to five years, the country's daily oil refining capacity will increase by one and a half times to 3.5 million barrels, the minister stated. “Following the improvement of the quality of petroleum products and the increase of the quality of gasoline and gas oil, which is very important for us in the field of environment, the discussion of quantitative and qualitative development plans of refineries is seriously on the agenda of the current government”, he added.
Iran’s oil revenues exceed $25bn last year: OPEC - A report released by the Organization of Petroleum Exporting Countries (OPEC) indicates that Iran earned more than $25 billion in revenue from oil exports in 2021. OPEC reported $560 billion in revenue from oil sales in 2021 in its annual report, which shows a 77 percent increase in comparison with a year earlier. The revenues of 13 members of OPEC from oil exports stood at $317 billion in 2020. Iran also earned more than $25.313 billion from oil sales in 2021. Iran’s revenue from oil sales tripled in that period as compared to the last year’s corresponding period. Iran had earned over $7.914 billion worth of income as a result of oil exports in 2020.
Saudi Arabia, Kuwait discuss boosting Neutral Zone oil production - Saudi Arabian and Kuwaiti officials for the Neutral Zone -- the oil-producing area that straddles the border between the two countries -- met on July 3 to discuss ways to "develop and exploit the natural resources in the divided region," Kuwait's state-run news agency Kuna reported, citing a statement from the Kuwait oil ministry. Discussions included boosting production from the current 170,000-175,000 b/d to 500,000 b/d, though 250,000-300,000 b/d is more likely in the next five years, a source with knowledge of the operations told S&P Global Commodity Insights. "There are operational challenges" likely to keep production from going any higher, the person said. The fields located in the Neutral Zone lie in onshore and offshore territory shared by the two nations. The offshore Al-Khajfi is operated by Saudi Arabia's Aramco Gulf Operations Co. and Kuwait Gulf Oil Co., a unit of Kuwait Petroleum Corp., while the onshore Wafra is operated by KGOC and Saudi Arabian Chevron. New sources of oil and natural gas are being sought as a ratcheting of western sanctions on Russian oil flows, including the EU's ban on most imports by the end of the year, is expected to tighten global supplies, as demand has picked up with the summer driving season in the northern hemisphere. But widening concerns over a global recession and rampant inflation have weighed on the market, contributing to volatile prices in recent weeks. Dated Brent has climbed 58% this year to $121.54/b as of July 1, according to Platts assessments by S&P Global Commodity Insights. The July 3 Neutral Zone meeting was held at the headquarters of the joint Wafra operations in Kuwait, according to Kuna. Kuwait's undersecretary of the oil ministry, Nimr Fahd al-Malik al-Sabah, who is head of the Kuwait side, attended the meeting along with the head of the Saudi side, Muhammad al-Brahim, assistant Saudi energy minister, Kuna said. The countries agreed in 1970 to co-manage and share crude production from the zone equally. However, they were offline for more than four years until 2020, due to a political dispute that was resolved with the signing of an agreement in December 2019.
Nigeria’s crude output falling below expectation – A financial service company, Vetiva, says despite the efforts by the Organisation of Petroleum Exporting Countries to unwind production caps, Nigeria’s crude output has fallen below expectation. The company in its half-year economic outlook titled “A strange labyrinth”, cited operational and security challenges as the reason for the development. An oil & gas analyst at Vetiva, Victoria Ejugwu, expressed worries that while oil prices have soared higher, the industry continues to contract due to underproduction. “Despite the fact that OPEC has been unwinding production caps, Nigeria’s crude output has fallen below expectation. This has been due to some operational problems, as well as issues stemming from insecurity. Given this, our outlook for the country’s production is somewhat cautious, and do not expect a significant deviation from current production levels. While oil prices have soared higher, the industry continues to contract, due to underproduction. Given this, we anticipate further contraction in Q3’22 that is, -7.00perctn and a marginal 0.1percent growth in Q4’22” The oil and gas analyst predicted that the downstream players would continue to see low margins in the coming months. “With the oil price rally we have seen this year, the Nigerian government continues to maintain subsidy payments, keeping PMS retail pump price at N165/litre. As such, gross margins of about five per cent from PMS sales have remained thin. Although the enactment of the Petroleum Industry Bill is supposed to bring about market deregulation, however, given that the general elections are around the corner, full deregulation is not expected in the near term. On this note, downstream players would continue to see low margins in the coming months”
Oil Firms Waste N169.4bn Gas in Five Months - Gas that would have fetched the nation about N169.4 billion amid a strain in earnings has been wasted by oil and gas companies operating in Nigeria through gas flaring. Data released by the National Oil Spill Detection and Response Agency (NOSDRA) disclosed that the gas wasted by these energy firms was between January and May 2022. In measurement, the culprits flared 116.4 billion Standard Cubic Feet (SCF) of gas in the period under review and would have generated 11,600 gigawatts hour of electricity. The flared gas led to 6.2 million tonnes of carbon dioxide emissions. The companies are also liable for fines totalling $232.7 million, about N96.8 billion; which according to NOSDRA, are hardly ever collected. NOSDRA’s analysis of the gas flared in the period revealed that in January 2022, a total of 29.97 billion SCF of gas was flared by the companies; in February, 27.12 billion SCF was flared; while in March, April and May, 16.49 billion SCF, 21.48 billion SCF and 21.3 billion SCF were flared respectively. Furthermore, NOSDRA stated that most of the defaulting firms in the months under review operated in onshore oil fields, flaring 59 billion SCF of gas, valued at $206.5 million, about N85.9 billion. NOSDRA noted that the gas flared by companies operating onshore was capable of generating 5,900 gigawatts hour of electricity, equivalent to 3.1 million tonnes of carbon dioxide emissions; while the firms were liable for penalties of $118 million, about N49.09 billion. Giving a breakdown of gas flared onshore in the five months period of 2022, the oil spill and gas flare watchdog disclosed that in January, February and March, 19.14 billion SCF; 14.03 billion SCF and 10.49 billion SCF of gas was flared, respectively; while 6.63 billion SCF and 8.72 billion SCF of gas was flared in April and May 2022, respectively.On the other hand, NOSDRA reported that oil and gas companies operating offshore flared 57.4 billion SCF of gas, valued at $200.7 million, about N83.49 billion; capable of generating 5,700-gigawatt hours of electricity; engendered 3.0 million tonnes of carbon dioxide emissions; and attracted fines of $114.7 million, about N47.72 billion. Giving a breakdown of the gas flared offshore in the five-month period, NOSDRA stated that 10.83 billion SCF of gas; 13.09 billion SCF of gas; 6.0 billion SCF of gas; 14.85 billion SCF and 12.58 billion SCF of gas was flared in January, February, March, April and May 2022, respectively.
Nigeria lost $1 billion in revenue to crude oil theft in Q1 2022 -Due to crude oil theft, Nigeria lost a staggering $1 billion in revenue in the first quarter of 2022, endangering the economy of Africa’s top producer.This was disclosed by Gbenga Komolafe, the head of the Nigerian Upstream Petroleum Regulatory Commission in a statement seen by Reuters. Nigeria loses millions of barrels of crude oil each year to theft and vandalism, including the theft of crude from a network of pipelines run by large oil companies. This illustrates how lax security results in significant financial losses for the nation.Only about 132 million barrels of the 141 million barrels of oil produced in the first quarter of 2022 were received at export terminals, according to Gbenga Komolafe, the chairman of NUPRC.Komolafe said, “This indicates that over nine million barrels of oil have been lost to crude theft…this equates to a loss of government revenue of approximately $1 billion…in just one quarter,”He added, “This trend poses an existential threat to the oil and gas sector and, by extension, to the Nigerian economy if left unchecked.”Theft of crude oil grew from 103,000 barrels per day in 2021 to 108,000 barrels per day on average in the first quarter of 2022, according to Komolafe. Nairametrics reported that Inspector-General of Police, Usman Alkali Baba has ordered tactical and intelligence commanders of the Force to deploy assets towards tackling perpetrators of economic crimes aimed at sabotaging Nigeria’s revenue-generating value chains, including crude oil vandalism. Nairametrics also reported earlier this year that Austin Avuru, founding MD/CEO of Seplat Energy and Executive Chairman AA Holdings warned that Nigeria’s oil production has reached an emergency critical status. He stated that some oil production wells don’t get to see 80% of production making it to the terminals due to oil theft. The theft resulted in the Bonny Oil & Gas Terminal, a pipeline that transports crude from the oil-rich Niger Delta to export vessels among other places, declaring a state of force majeure, which made the atmosphere unfriendly and discouraging for investors.
Nigeria faces uphill battle to tackle its oil spill issues - Nigeria has long had issues with safety, not least in keeping workers safe from militants. The government has shown little sign of tackling the problem among legal operations, let alone the safety challenges of widespread illicit bunkering and refining. Over the last 10 years, local companies have seized the advantage of IOCs exiting Nigeria to acquire mature assets. These assets pose challenges, though, in their ageing infrastructure and historic difficulties with local communities. A number of recent incidents have highlighted the safety challenge in Nigeria. In November 2021, a wellhead owned by Aiteo Group began spraying crude into the Santa Barbara River, taking around one month to stop the spill. An explosion in February 2022 destroyed the 50-year old Trinity Spirit FPSO, leaving a number of workers dead and widespread pollution. Furthermore, with rampant theft and illicit refining in the Niger Delta, accidents are never too far away. Most commonly these involve spills and deficient environmental processes but, on occasion, there are major incidents. A fire at an illegal refinery in Imo State, in April this year, killed more than 100 people. Oil theft has increased in recent months, according to a number of reports. Nigeria’s official production has dropped over the last few months, with Nigerian Upstream Petroleum Regulatory Commission (NUPRC) estimating the country lost $1 billion to theft in the first quarter. Nigeria’s government has limited leeway to tackle the insurgency in the Niger Delta. High costs on servicing its debt, combined with subsidy payments, leave it struggling for cash, making a newly energised amnesty programme unlikely.
China Allows Refiners to Export 40 Percent Less Fuel -China issued its latest batch of fuel export quota for the year, but total allowances are still around 40% less than the same point in 2021. Some 5 million tons of diesel, gasoline and jet fuel quotas were awarded, according to refinery executives who received preliminary notices from the Ministry of Commerce and a note from local consultant OilChem. The executives asked not to be identified because they aren’t authorized to speak to media. The commerce ministry didn’t immediately reply to a fax seeking comment. That takes issuance in 2022 to 22.5 million tons, compared with 37 million tons for the same period last year. Beijing controls how much fuel both state-owned and private refiners can export, and has been seeking to limit shipments as part of efforts to reduce pollution and consolidate the sector. A large chunk of China’s refining capacity is currently not being used as the economy recovers from virus lockdowns. The latest issuance shows Beijing isn’t interested in ramping up exports to meet surging demand from fuel-starved global markets. That’s in stark contrast to the US, where there’s a relative lack of capacity and refineries are running near their limits. Based on the preliminary notices, PetroChina Co. received 1.47 million tons of quota and China Petroleum & Chemical Corp. got 1.27 million tons. Sinochem Group and Zhejiang Petrochemical Co. were assigned 840,000 tons each, while CNOOC Ltd. got 460,000 tons. NPI, an unit affiliated with Zhenhua Oil Co. obtained 100,000 tons and China Aviation Oil Corp. received 20,000 tons.
Black Mountain Energy & Highwire plan flared gas cryptomine at Australian fracking site - Oil & gas company Black Mountain Energy is partnering with cryptomining firm Highwire to deploy flare-gas mining facilities at a fracking project in Australia.In a notice posted to the ASX, Black Mountain said it had received a non-binding Letter of Intent from Highwire Energy Partners LLC to use well-testing gas that would otherwise be flared at the Valhalla fracking project in the Canning Basin of Western Australia, to power mobile cryptocurrency servers. US-based Highwire reportedly intends to negotiate the purchase of up to 5 terajoules per day of gas and the installation of up to 25MW of generation to support its operations.Speaking to the Market Herald, Black Mountain Energy CEO Rhett Bennett said: "Flaring natural gas certainly is not ESG [environment, social, and governance]-friendly. So the ability to utilize that gas for power and ultimately create a product, in this form crypto, is a much better solution." Black Mountain is focused on drilling for gas in Western Australia’s Canning Basin. Located in the Fitzroy Trough, west of Fitzroy River and about 2,500km from Perth, Project Valhalla has a permit area covering 3,662 square km. The company says the site contains 11.8 trillion cubic feet (TCF) of prospective gas resources and 1.5TCF of contingent gas resources.Anti-fracking organization, Lock the Gate Alliance, said the idea was "the height of arrogance," “madness,” and labeled the proposal a "parasitic project.""The Kimberley is home to the largest area of intact tropical savanna in the world. It can't be put at risk for fracking, let alone Bitcoin mining," a spokesperson said. “If Bitcoin miners want to mine Bitcoin in Australia, they should be forced to use renewable energy — not climate crisis-inducing fracked gas."Oil & gas extraction sites routinely waste natural gas, burning it off in "flares." These burn methane and release CO2, but they do it inefficiently, releasing a significant amount of methane, which is a greenhouse gas that is more potent than CO2 - albeit with a much shorter lifetime in the atmosphere. As with the likes of Crusoe Energy, Earth Wind & Power (EWP), Bit River, EZ Blockchain, NGON, Giga Energy, and Validus Power, Highwire Energy aims to utilize stranded and oversupplied natural gas to mine cryptocurrency. These companies claim burning the gas for mining operations is more environmentally friendly – burning more efficiently to create more CO2, and preventing more methane from being released into the atmosphere. Highwire uses proprietary containerized mining servers about 4m x 4m in size on well sites and powers them using a field generator run off the natural gas from that well. The company is already running similar operations in the state of Wyoming in partnership with Moser Energy Systems. Elsewhere in Australia, Tasmania Data Infrastructure has recently announced plans to develop a cryptomine data at the Que River Mine Site in Tasmania. Operations are anticipated to commence in Q4 2022; launching with 5MW, the site has a potential expansion capacity 'in excess of 100MW.' The company is working with Mawson to procure and roll out the hardware and equipment housing.
OPEC+ Is Still 2.5 Million Bpd Below Its Production Target -- OPEC+ pumped more than 2.5 million barrels per day (bpd) below its target in June, despite a rebound in Russia’s oil production that helped the group’s output rise by 730,000 bpd from May, according to the Argus survey published on Friday.Saudi Arabia and Iraq, OPEC’s largest and second-largest producers, raised their output as domestic demand from power plants that burn oil increased seasonally. Russia, the largest non-OPEC producer part of the OPEC+ pact, saw its production rebound last month and rise by 550,000 bpd compared to May.Russia’s oil production rose in June and was approaching the levels last seen in February, just before the Russian invasion of Ukraine. Most of the rebound was due to higher intake from domestic refiners. Elsewhere in the OPEC+ group, non-OPEC Kazakhstan and Azerbaijan saw production declines in June due to maintenance at key oilfields, the Argus survey showed.Kazakhstan’s crude oil supply to the global markets has just become more uncertain in the coming weeks after a Russian court this week ordered the Caspian Pipeline Consortium (CPC), which operates a key export route for crude oil from the huge oilfield Tengiz, to suspend activities for 30 days, citing environmental violations. OPEC’s Nigeria continued to experience severe production problems. Its output slumped to a 17-month low in June as shipments of the Forcados and Qua Iboe crudes fell, per the Argus survey.Nigeria was also the main driver of lower production at all 13 OPEC members in June, the monthly Reuters survey showed last week. OPEC’s crude oil production fell in June compared to May due to outages in Libya and Nigeria, and the 10 cartel producers bound by the OPEC+ pact lifted their combined production by just 20,000 bpd last month, according to the survey. Last week, OPEC+ confirmed a 648,000 bpd production hike for August, with which it will have effectively rolled back all the cuts it started in May 2020 in response to the crash in demand. The group, however, continues to significantly undershoot its targets.OPEC Secretary General: The Oil And Gas Industry Is Under Siege - The oil and gas industry is "under siege" OPEC Secretary General Mohammad Barkindo said on Tuesday. After years of underinvestment on a global scale, the oil and gas industry is now "facing huge challenges along multiple fronts," the Secretary General told delegates at an industry conference in Lagos. "These threaten our investment potential now and in the long term, to put it bluntly, my dear friends, the oil and gas industry is under siege," Barkindo said, citing geopolitical developments in Europe. Barkindo also suggested that the supply shortage that would eventually come for the industry as a result of that underinvestment—and as a result of some country's attempted shift away from fossil fuels—could be mitigated if more oil were allowed to be exported from OPEC members Iran and Venezuela. While nations look to ditch fossil fuels and capacity falls, oil demand continues to grow, sending crude oil prices ever higher, Barkindo said, adding that "For us in Nigeria, fossil fuel will always have a share in our energy mix, for the foreseeable future. We will not at this time abandon fossil fuels. We have adopted gas as a transition fuel." OPEC's Secretary General sees global oil demand increasing through 2045. Meanwhile, refining capacity in OECD countries fell by 3.3 percent last year. "The ongoing war in Ukraine, a COVID-19 pandemic which is still with us, and the inflationary pressures across the globe have come together in a perfect storm that is causing significant volatility and uncertainty in the commodity markets in general. More importantly, in the world of energy," Barkindo explained. Crude oil prices fell by more than 8% on Tuesday afternoon on the fear that the world could soon see a recession, denting oil demand.
OPEC Secretary General Mohammad Barkindo dies at age 63 -Mohammad Barkindo, a Nigerian politician and secretary-general of oil producer group OPEC, died at the age of 63, just days before he was set to finish his term at the organization. The head of Nigeria's National Petroleum Corp., Mele Kyari, announced the news in a tweet Wednesday, which was later confirmed by OPEC. "We lost our esteemed Dr Muhammad Sanusi Barkindo," a tweet early Wednesday morning from his verified Twitter handle read. "He died at about 11pm yesterday 5th July 2022. Certainly a great loss to his immediate family, the NNPC, our country Nigeria, the OPEC and the global energy community. Burial arrangements will be announced shortly." The cause of death has not been announced. Barkindo's unexpected death came as a shock to members of the oil and gas world, many of whom describe him as a giant in the industry. His career spanned over four decades and included work at Nigeria's National Petroleum Corp., Duke Oil, Nigeria's Foreign Ministry and Energy Ministry, as well as OPEC. Since taking the helm as secretary-general of OPEC in 2016, Barkindo oversaw tumultuous times for the oil producer group, which witnessed volatile markets rocked by historic events including the Covid-19 pandemic, the creation of the OPEC+ alliance with Russia and other non-OPEC states, and Russia's invasion of Ukraine. While the organization lost two members, Qatar and Ecuador, during that time, Barkindo is nonetheless credited with guiding unity among the group's members in an effort to stabilize global oil markets.
Oil prices slip as recession fears rumble on, tight supply stems losses - Oil prices fell in early Asian trade on Monday, paring gains from the previous session as fears of global recession weighed on the market even as supply remains tight amid lower OPEC output, unrest in Libya and sanctions on Russia. Brent crude futures slipped 35 cents, or 0.3 per cent, to $111.28 a barrel at 0016 GMT, having jumped 2.4 per cent on Friday. US West Texas Intermediate (WTI) crude futures similarly dropped 32 cents, or 0.3 per cent, to $108.11 a barrel, after climbing 2.5 per cent on Friday. While recession fears have weighed on the market over the past two weeks, supply concerns linger, preventing steeper price falls. "Energy markets remain laden with specific supply risks that makes being short a nervy experience," Commonwealth Bank commodities analyst Tobin Gorey said. Output from the 10 members of Organization of the Petroleum Exporting Countries (OPEC) in June fell 100,000 barrels per day (bpd) to 28.52 million bpd - a long way off their pledged increase of about 275,000 bpd, a Reuters survey showed. Declines in Nigeria and Libya offset increases by Saudi Arabia and other large producers, and Libya faces further supply disruption due to escalating political unrest. "This makes the likelihood of the group (OPEC) meeting its newly increased production quotas even more unlikely," ANZ Research analysts said in a note. Libya's exports have dropped to between 365,000 bpd and 409,000 bpd, down about 865,000 bpd compared to normal levels, the National Oil Corp said last week. In a further hit to supply, a planned strike by Norwegian oil and gas workers this week could cut the country's oil and condensate output by 130,000 bpd. Traders will be watching out for official prices for August from top oil exporter Saudi Arabia for signs of how tight the market is, with refiners bracing for another sharp increase close to the record level set in May. Nine refining sources surveyed by Reuters expected Saudi's flagship Arab Light crude official selling price could rise by about $2.40 a barrel from the previous month.
Oil up as supply outages outweigh demand fears - Oil prices edged higher on Monday as output disruptions in Libya and planned shutdowns in Norway offset concerns that an economic slowdown would dampen demand. International benchmark Brent crude was trading at $111.92 per barrel at 0705 GMT for a 0.26% increase after the previous session closed at $111.63 a barrel. American benchmark West Texas Intermediate (WTI) was at $108.62 per barrel at the same time for a 0.17% gain after the previous session closed at $108.43 a barrel. Prices fell in early trading in Asian markets as data last week showed that manufacturing activity in the US dropped by more than expected last month, adding to fears of an economic recession and consequent weak demand. However, prices soon rebounded on Monday over prevailing supply fears in Norway and Libya. A planned strike by Norwegian energy sector workers is due to have a substantial impact on gas exports, with 13% losses expected in daily gas exports, according to the employers' group, the Norwegian Oil and Gas Association (NOG). The country will also incur a daily oil output loss of 130,000 barrels, NOG added. On Thursday, the Libyan National Oil Corporation (NOC) declared a force majeure at the Es Sider and Ras Lanuf ports and the El Feel oilfield, while a force majeure at the ports of Brega and Zueitina is still in effect. Daily exports ranged between 365,000 and 409,000 barrels per day (bpd), a drop of 865,000 bpd compared to production under "normal circumstances," according to NOC.
Oil holds above $110 as tight supply balanced by recession risk - Oil held gains as investors assessed still-strong underlying market signals against concerns a recession will eventually sap demand. West Texas Intermediate traded above $110 a barrel in Asia after a long holiday weekend in the US. The benchmark is about 2% higher than Friday’s close as there was no settlement on Monday. Key market timespreads remain robust, indicating that there’s solid demand for near-term crude supplies. Oil has started the third quarter in strong form after dropping in June, when concerns about an economic slowdown spurred the commodity’s the first monthly loss this year. While Russia’s invasion of Ukraine has roiled crude flows and lifted prices, the jump in energy costs has fanned inflation. That’s pushed central banks to raise rates, triggering risks growth will stall. “I don’t think sentiment has fundamentally shifted to a positive tone yet,” said Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group Ltd. “Further signs of tightness in the physical market will be required.” Still, the crude market remains in backwardation, a bullish structure marked by near-term prices trading above longer-dated ones. Brent’s prompt spread — the difference between its two nearest contracts — was above $4 a barrel in backwardation on Tuesday, up from about $2.50 a barrel a month ago. Prices: WTI for August delivery traded at $110.66 a barrel on the New York Mercantile Exchange at 10:37 a.m. in Singapore, up 2.1% from Friday’s close. Brent for September settlement added 0.4% to $113.89 a barrel on the ICE Futures Europe exchange. Traders are also tracking China’s efforts to contain renewed Covid-19 outbreaks and enable Asia’s largest economy to reopen fully. That would bolster consumption and offset the drag from slowdowns in the US and Europe. “China is the real wildcard here: it’s going to be two steps forward, one step back,” said ANZ’s Hynes. “A demand recovery in China could potentially offset weakness in developed economies as central banks tighten monetary policy.”
Oil prices plummet as recession risks come to forefront - Oil dropped alongside broader markets after being pressured by the growing risks of an economic slowdown. West Texas Intermediate dropped as much as 3.8% to trade below $105 a barrel. Prices were pressured lower on Tuesday as equities fell and the dollar surged, making commodities priced in the currency less attractive. Citigroup Inc. said that crude could fall to $65 this year in the event of a recession, a call in stark contrast to JPMorgan Chase & Co.’s most bullish $380 a barrel scenario. “In the very near term the Dow & S&P will have a major factor on crude direction as recession fears remain,” said Dennis Kissler, senior vice president of trading at BOK Financial. Fundamentally, there are concerns that fuel demand could “drop significantly now that the 4th of July holiday is behind us.” While futures have been pressured by the threat of a global economic slowdown, key market timespreads remain robust, indicating that there’s solid demand for near-term supplies. A strike in Norway and supply disruption in Libya have exacerbated that strength of late. Prices: WTI for August delivery fell $3.90 to $104.53 a barrel at 9:27 a.m. in New York There was no settle on Monday due to the July 4 holiday Brent for September settlement dropped $5.02 to $108.48 a barrel. Oil’s rally has prompted western leaders to demand the Organization of Petroleum Exporting Countries, including Saudi Arabia and its allies pump more. The kingdom hiked its official selling prices to Asia on Tuesday. Its flagship Arab Light crude price will be $9.30 above its regional benchmark in August, an increase of $2.80.
Citi warns oil may collapse to $65 by the year-end on recession - Crude oil could collapse to $65 a barrel by the end of this year and slump to $45 by end-2023 if a demand-crippling recession hits, Citigroup Inc. has warned. That outlook is based on an absence of any intervention by OPEC+ producers and a decline in oil investments, analysts including Francesco Martoccia and Ed Morse said in a report. Brent, the global crude benchmark, last traded near $113 a barrel. Oil has soared this year following the invasion of Ukraine, and banks are now trying to chart its course into 2023 as central banks raise interest rates and recessionary risks mount. Citi’s outlook compared the current energy market with crises of the 1970s. At present, the bank’s economists do not expect the US to dip into recession. “For oil, the historical evidence suggests that oil demand goes negative only in the worst global recessions,” the Citi analysts said in the July 5 note. “But oil prices fall in all recessions to roughly the marginal cost.”
Oil tumbles more than 9%, breaks below $100 as recession fears mount - Oil prices tumbled Tuesday with the U.S. benchmark falling below $100 as recession fears grow, sparking fears that an economic slowdown will cut demand for petroleum products. West Texas Intermediate crude, the U.S. oil benchmark, settled 8.24%, or $8.93, lower at $99.50 per barrel. At one point WTI slid more than 10%, trading as low as $97.43 per barrel. The contract last traded under $100 on May 11. International benchmark Brent crude settled 9.45%, or $10.73, lower at $102.77 per barrel. Ritterbusch and Associates attributed the move to "tightness in global oil balances increasingly being countered by strong likelihood of recession that has begun to curtail oil demand." "[T]he oil market appears to be homing in on some recent weakening in apparent demand for gasoline and diesel," the firm wrote in a note to clients. Both contracts posted losses in June, snapping six straight months of gains as recession fears cause Wall Street to reconsider the demand outlook. "In a recession scenario with rising unemployment, household and corporate bankruptcies, commodities would chase a falling cost curve as costs deflate and margins turn negative to drive supply curtailments," the firm wrote in a note to clients. Citi has been one of the few oil bears at a time when other firms, such as Goldman Sachs, have called for oil to hit $140 or more.
Oil plummets below $100 as recession risks come to forefront - Oil prices tumbled Tuesday with the U.S. benchmark falling below $100 as recession fears grow, sparking fears that an economic slowdown will cut demand for petroleum products. West Texas Intermediate crude, the U.S. oil benchmark, slid 8.4%, or $9.14, to trade at $99.29 per barrel. The contract last traded under $100 on May 11. International benchmark Brent crude shed 9.1%, or $10.34, to trade at $103.16 per barrel Tuesday. Oil was pressured in a low liquidity session on Tuesday as equities fell and the dollar surged, making commodities priced in the currency less attractive. Citigroup Inc. said that crude could fall to $65 this year in the event of a recession, a call in stark contrast to JPMorgan Chase & Co.’s most bullish $380 a barrel scenario.
Crude oil price tumbles $10/bbl, WTI falls below $100/bbl as recession fears mount -Oil plummeted by about $10 a barrel on Tuesday as concerns of a global recession curtailing demand overshadowed a strike by Norwegian oil and gas workers that could cut exports and exacerbate supply shortages.Global benchmark Brent crude was down $10.65, or 9.4%, at $102.85 a barrel by 12:46 p.m. EDT (1645 GMT). U.S. West Texas Intermediate (WTI) crude fell $9.36, or 8.6%, to $99.07 a barrel from Friday’s close. There was no WTI settlement on Monday because of a U.S. holiday. “The market is getting tight, but still we’re getting creamed and the only way you can explain that away is fear of recession in every risk asset,” said Robert Yawger, director, energy futures at Mizuho in New York. “You’re feeling the pressure.”
Oil tumbles as much as 10%, breaks below $100 as recession fears mount - Oil prices tumbled Tuesday with the U.S. benchmark falling below $100 as recession fears grow, sparking fears that an economic slowdown will cut demand for petroleum products. West Texas Intermediate crude, the U.S. oil benchmark, settled 8.24%, or $8.93, lower at $99.50 per barrel. At one point WTI slid more than 10%, trading as low as $97.43 per barrel. The contract last traded under $100 on May 11. International benchmark Brent crude settled 9.45%, or $10.73, lower at $102.77 per barrel. Ritterbusch and Associates attributed the move to "tightness in global oil balances increasingly being countered by strong likelihood of recession that has begun to curtail oil demand." "[T]he oil market appears to be homing in on some recent weakening in apparent demand for gasoline and diesel," the firm wrote in a note to clients. Both contracts posted losses in June, snapping six straight months of gains as recession fears cause Wall Street to reconsider the demand outlook. "In a recession scenario with rising unemployment, household and corporate bankruptcies, commodities would chase a falling cost curve as costs deflate and margins turn negative to drive supply curtailments," the firm wrote in a note to clients. Citi has been one of the few oil bears at a time when other firms, such as Goldman Sachs, have called for oil to hit $140 or more. Prices have been elevated since Russia invaded Ukraine, raising concerns about global shortages given the nation's role as a key commodities supplier, especially to Europe. WTI spiked to a high of $130.50 per barrel in March, while Brent came within striking distance of $140. It was each contract's highest level since 2008. But oil was on the move even ahead of Russia's invasion thanks to tight supply and rebounding demand. High commodity prices have been a major contributor to surging inflation, which is at the highest in 40 years. Prices at the pump topped $5 per gallon earlier this summer, with the national average hitting a high of $5.016 on June 14. The national average has since pulled back amid oil's decline, and sat at $4.80 on Tuesday. Despite the recent decline some experts say oil prices are likely to remain elevated. "Recessions don't have a great track record of killing demand. Product inventories are at critically low levels, which also suggests restocking will keep crude oil demand strong," Bart Melek, head of commodity strategy at TD Securities, said Tuesday in a note. The firm added that minimal progress has been made on solving structural supply issues in the oil market, meaning that even if demand growth slows prices will remain supported. "Financial markets are trying to price in a recession. Physical markets are telling you something really different," Jeffrey Currie, global head of commodities research at Goldman Sachs, told CNBC Tuesday. When it comes to oil, Currie said it's the tightest physical market on record. "We're at critically low inventories across the space," he said. Goldman has a $140 target on Brent.
WTF happened to WTI? - FT Alphaville - Commodities had a rough Tuesday, having been led downwards by oil. The front-end US benchmark West Texas Intermediate contract settled at $99.50 a barrel, down 8.2 per cent, having lost more than 10 per cent earlier. Brent was 9.5 per cent lower at $102.77 per barrel, its second biggest one-day absolute fall on record in dollar terms. Both markets are struggling to rally much this morning. Why? The commentariat was quick to claim that recession fears were curtailing oil demand and knocking the price floor out (an argument set out in easily quotable form by Citigroup that morning, coincidentally). That there was no reason for recession fears to have redoubled seemed not to matter. No new data had arrived to move the demand side, whereas stories such as Saudi Arabia raising crude export prices and US-Iran negotiations faltering were supportive of the expectation that supply would remain tight. Strike-breaking in Norway, potentially restoring about 130,000 barrels to the market, was positive but not unexpected and not overly significant. That’s why, beyond the front end, all remained calm. Time-spreads — the price differential between two consecutive futures contracts — were showing no sign of distress, as Goldman Sachs notes: Front-month Brent timespreads, diesel and gasoline cracks all weathered the fall in flat price, only down slightly on the day. In fact, the most notable move in oil prices in the past few days was the strength in crude timespreads and physical prices, reflective of a market still in deficit. This is consistent with our tracking of oil fundamentals, with an estimated global c.1 mb/d deficit in June, with China back to drawing inventories as well. [ . . . ] While the odds of a recession are indeed rising, it is premature for the oil market to be succumbing to such concerns. The global economy is still growing with the rise in oil demand this year set to significantly outperform GDP growth, buttressed by the post-COVID re-opening in Asia-Pacific as well as the resumption in international travel. For most of the year Goldman’s been championing a commodities supercycle argument, which has probably contributed to some crowded positions across the complex. Meanwhile, deteriorating market conditions resulted in sharply increased margin requirements on energy, agricultural and metals derivatives, as per the Bank of England’s Financial Stability report for July: In that context, Tuesday’s commodities market ripple is as likely to be explained by a risk-off trade that just happened to have oil at the sharp end. Back to Goldman: As is repeatedly the case with oil, the move lower was then exacerbated by technical factors and trend-following [Commodity Trading Advisor] flows, such as Brent trading through its 100-day moving average, as well as through the strikes of puts with large open interest (where negative gamma effects invariably accelerate large price sell-off). It is important to finally note that this sell-off occurred amidst seasonally low post-July 4 trading liquidity. From this perspective, this sell-off in oil prices is not all that surprising, similar in set-up and magnitude as the one after Thanksgiving 2021, most recently.
Oil prices bounce back from Tuesday tumble as supply concerns return - Oil prices rose as much as nearly 3% on Wednesday before paring some gains as investors piled back into the market after a heavy rout in the previous session, with supply concerns returning to the fore even as worries about a global recession linger. Brent crude futures rose as much as $3.08, or 2.9%, to $105.85 a barrel in early trade after plunging 9.5% on Tuesday, the biggest daily drop since March. It was last up 92 cents, or 0.9%, at $103.69 a barrel at 0243 GMT. U.S. West Texas Intermediate crude climbed to a session high of $102.14 a barrel, up $2.64, or 2.7%, after closing below $100 for the first time since late April. It was last up 46 cents, or 0.5%, at $99.96 a barrel. "The fundamental story regarding global tightness is still there ... The sell-off was definitely overdone," OPEC Secretary General Mohammad Barkindo said on Tuesday that the industry was "under siege" due to years of under-investment, adding shortages could be eased if extra supplies from Iran and Venezuela were allowed. Russia's former president Dmitry Medvedev also warned that a reported proposal from Japan to cap the price of Russian oil at around half its current level would lead to significantly less oil in the market and push prices above $300-$400 a barrel. On the other hand, the Norwegian government on Tuesday intervened to end a strike in the petroleum sector that had cut oil and gas output, a union leader and the labour ministry said, ending a stalemate that could have worsened Europe's energy crunch. By Saturday, the strike would have cut daily gas exports by 1,117,000 barrels of oil equivalent (boe), or 56% of daily gas exports, while 341,000 of barrels of oil would have been lost, the Norwegian Oil and Gas (NOG) employers' lobby said. Worries about a recession, however, have continued to weigh on markets. By some early estimates, the world's largest economy may have shrunk in the three months from April through June. That would be the second straight quarter of contraction, considered the definition of a technical recession. More G10 central banks raised interest rates in June than in any month for at least two decades, Reuters calculations showed. With inflation at multi-decade highs, the pace of policy-tightening is not expected to let up in the second half of 2022. "Although crude oil still faces the problem of a supply shortage, key factors that led to the sharp selloff in oil yesterday remain," He cited policy tightening by global central banks and a likely interest rate hike by the U.S. Federal Reserve as pressuring commodities prices. "Thus, today's rebound could be a short-term correction for bears and oil prices are likely to remain under pressure in the near future."
Oil Continues to Fall on Recession Fears | Rigzone - Oil extended its drop for a second day as fears of a global slowdown outweighed continued supply disruptions and market tightness. West Texas Intermediate settled below $100 after trading in a $7 range on Wednesday. The two-day decline comes as concerns over an economic recession, as well as months of dwindling liquidity, undermine the idea of oil being used as a hedge against inflation. Meanwhile, Citigroup Inc.’s Ed Morse said the outlook for oil demand will likely see further downward revisions amid higher fuel prices. “Almost everybody has reduced their expectations of demand for the year,” Morse said in a Bloomberg Television interview Wednesday. Oil has opened the third quarter on volatile footing. With central banks, including the Federal Reserve, hiking interest rates to tame inflation, investors have been pricing in the consequences of a slowdown, even as physical crude markets continue to show signs of vigor and Russia’s war in Ukraine drags on. While this week’s price weakness has been borne out of concern of a global recession and technical selling, there’s been little change to fundamentals. Nearby Brent futures are trading at a giant premium to later months -- indicating market strength -- while disruption to global oil production has been mounting amid a risk to Kazkahstan’s crude exports. WTI for August delivery fell 97 cents to settle at $98.53 a barrel in New York. Brent for September settlement dropped $2.08 to settle at $100.69 a barrel. “While the odds of a recession are indeed rising, it’s premature for the oil market to be succumbing to such concerns,” Goldman Sachs & Co. analysts including Damien Courvalin said in a note. “The global economy is still growing, with the rise in oil demand this year set to significantly outperform GDP growth.” In China, there are signs of rising demand as the world’s biggest importer emerges from virus lockdowns. Overall consumption of gasoline and diesel last month was at almost 90% of June 2019 levels, according to people with knowledge of the energy industry.
WTI Extends Losses After Unexpected Crude Build - Oil prices continued to slide on apparent recession fears today with Brent joining WTI below $100, with low liquidity exacerbating the moves."We view this move as driven by growing recession fears in the face of low trading liquidity, with technicals exacerbating the selloff," the bank's analysts, including Damien Courvalin, the head of energy research, wrote in a note on Wednesday. "The declines in prices and refining margins since mid-June are now equivalent to the oil market pricing in an 1.1% downward revision to 2H22-2023 global GDP (gross domestic product) growth expectations."Citi's Ed Morse said “Almost everybody has reduced their expectations of demand for the year."Talk of demand destruction continues but the rubber meets the road when inventory and supply data hits.API
- Crude +3.825mm (-1.1mm exp)
- Cushing +459k
- Gasoline -1.814mm
- Distillates -635k
US Crude stockpiles unexpectedly rose last week, according to API... WTI was hovering around $98.60 ahead of the API data and dipped modestly on the printCircling back to the start, the Goldman analysts said the selloff had overshot as "demand destruction through high prices is the only solver left as still declining inventories approach critically low levels."“While the odds of a recession are indeed rising, it’s premature for the oil market to be succumbing to such concerns,” Goldman Sachs & Co. analysts including Damien Courvalin said in a note. “The global economy is still growing, with the rise in oil demand this year set to significantly outperform GDP growth.”
Oil prices rise by over $5 as tight supply outweighs recession fears -Oil prices surged on Thursday, rebounding from steep losses the previous two sessions, as investors returned their focus to tight supply despite nagging fears of a potential global recession. Brent crude futures were up $5.39, or 5.4%, at $106.08 a barrel by 12:23 p.m. EDT (1623 GMT). U.S. WTI crude futures climbed $5.61, or 5.7%, to $104.14 a barrel. Trade was volatile. At session lows, prices were down about $2. Wall Street's main indexes opened higher, making up for some losses last week tied to recession fears as central banks aggressively hike interest rates to fight inflation. "With Russian oil supplies set to drop as the year progresses and it runs out of Western parts to maintain fields, and with the rest of OPEC hopelessly uninvested in maintaining production capacity, I fear the days of $100 oil will be with us for some time yet," On the supply side, traders are bracing for oil supply disruptions at the Caspian Pipeline Consortium (CPC), which has been told by a Russian court to suspend activity for 30 days. Exports via the CPC, which handles about 1% of global oil supplies, were still flowing as of Wednesday morning. Further squeezing global supplies, Washington tightened sanctions on OPEC member Iran on Wednesday, pressuring Tehran as it seeks to revive a 2015 Iran nuclear deal and unleash its exports. Oil prices have dropped in the past few weeks as investors worried that a sharp economic slowdown could slam demand for commodities. U.S. crude oil stockpiles rose by 8.2 million barrels last week, driven by an increase in inventories and as refiners cut output, the Energy Information Administration said. However, product supplied, the best proxy for U.S. consumer demand, was up in the latest week to 20.5 million bpd. = On Wednesday, Brent and WTI settled at their lowest since April 11. On Tuesday, WTI slid 8% while Brent tumbled 9% - a $10.73 drop that was the third biggest for the contract since it started trading in 1988. "Recession fears continue to grow and that obviously does raise some concerns for the demand outlook," s\ "However, supportive fundamentals should mean that further downside is relatively limited."
WTI Drops After Huge Surprise Crude Build, Crack Spread Soars On Product Draws - Oil prices were soaring this morning, with WTI rebounding dramatically back above $100 on the heels of demand stress (China reopening) and supply fears (Texas power outage rumors constricting production/refinery capacity and a possible blockage of Kazakhstan's exports).WTI is back at $104 after dipping to $96.50 last night after API reported a surprise crude build and follows comments from Goldman that the sell-off was overdone..."We view this move as driven by growing recession fears in the face of low trading liquidity, with technicals exacerbating the selloff," the bank's analysts, including Damien Courvalin, the head of energy research, wrote in a note on Wednesday. "The declines in prices and refining margins since mid-June are now equivalent to the oil market pricing in an 1.1% downward revision to 2H22-2023 global GDP (gross domestic product) growth expectations." So will the official data confirm the API build... and/or any signs of demand destruction? DOE:
- Crude +8.23mm (-1.1mm exp)
- Cushing +69k
- Gasoline -2.49mm
- Distillates -1.266mm
The official DOE data confirmed and exceeded API's surprise crude build data, but also showed draws on the product side...Notably there was another major SPR draw last week (-5.8mm) which likely offsets some of the anxiety over the huge crude build...US Crude production remained flat at 12.1mm b/d - the highest since April 2020...Refinery Capacity is still running near record high levels, although it did drop modestly last week after a string of problems on the West Coast weighed on runs.
Oil Spreads Rocket as Traders Scour for US Crude Supplies - -- The heart of the US physical oil markets is screaming for supplies even as headline prices swing due to worries about a global recession. The US crude prompt timespread, which closely reflects the supply and demand balances at the country’s biggest storage hub in Cushing, Oklahoma, has surged to the highest level since March at nearly $4 a barrel. Stockpiles at the delivery point for benchmark US crude futures are hovering at levels that are considered a minimum requirement to maintain operations. In the Permian Basin’s hub in Midland, Texas, it’s a similar story. Barrels available in July are trading at around $3.50 a barrel above those in August, dealers said. Last week, the spread was narrower by $1 a barrel, they added. Inventories at Midland have drawn over 400,000 barrels since last month, said Geoffrey Craig, global energy analyst at Ursa Space, which uses satellite data to track storage levels. Compared with last year, stockpiles in this area are about 600,000 barrels lower. The shortages are somewhat at odds with the larger narrative in oil markets this week. Headline prices have whipsawed as fears of a global recession have gripped the market, prompting worries about whether demand can withstand a weak economy. “A lot of old school analysts, including me, are pointing at the spreads as a good reason not to believe in a big liquidation fire sale,” said Robert Yawger, director of the futures division at Mizuho Securities USA. “The super backwardation implies shortage,” he said. Backwardation is a market pattern where the supplies for immediate delivery are trading at a premium to those in the future. Beyond the spreads, there are other bullish signs. Demand for US crude in overseas markets remains robust. Despite weekly fluctuations, on a four-week basis, outflows are keeping above the 3 million barrel a day mark, a sweet spot among traders in the industry when determining the health of the market. In addition, offshore Louisiana crudes this week are trading at the strongest levels against Nymex oil futures in roughly two months.
EIA Inventory Report Arrests The Oil Price Bounce - Crude oil prices moved lower after the Energy Information Administration reportedan inventory build of 8.2 million barrels for the week to July 1.This compared with a draw of 2.8 million barrels for the previous week.A day earlier, the API had estimated a crude oil inventory build of close to 4 million barrels, which contributed to a decline in oil prices, which had, however, started to reverse at the time of writing.Brent had rebounded above $100 per barrel in pre-noon Asian trade on Thursday after dipping below the three-digit threshold for the first time in months earlier this week.Later in the day, West Texas Intermediate also rebounded above $100, with both benchmarks gaining more than 4 percent as of the time of writing.According to analysts, the price decline was a sign that traders were beginning to worry about demand destruction as the world moves into a recession. However, it appears that supply worry has prevailed.In fuels, the EIA reported inventory declines for last week.Gasoline inventories shed 2.5 million barrels, with production averaging 10.3 million barrels daily.This compared with an inventory build of 2.6 million barrels for the previous week, with production averaging 9.5 million barrels daily.In middle distillates, the authority estimated an inventory decline of 1.3 million barrels for the week to July first, with production averaging 5.4 million barrels daily.This compared with an inventory increase of 2.6 million barrels for the previous reporting period, and production averaging 5.1 million barrels daily.Brent crude has shed close to $20 over the past week, with WTI down by over $13 per barrel. The decline is being entirely attributed to worries about a recession rather than actual demand destruction resulting from excessively high prices.“If a recession m aterializes and inflation continues to push prices for almost everything higher, oil demand is almost certain to fall, bringing prices with it,” Louise Dickson from Rystad Energy told the New York Times this week.
Oil Prices Regained Footing on Thursday from Steep Falls in the Previous Two Sessions - Oil prices regained footing on Thursday from steep falls in the previous two sessions, as investors returned their focus to tight supplies even as fears persisted over the demand outlook amid risks of a global recession. Not even the unexpected 8.2 million barrel rise in U.S. crude oil inventories could keep prices down, as stockpiles for both gasoline and distillates fell more than expected. Gasoline inventories declined by 2.5 million barrels. At current levels, gasoline inventories are about 8% below the five-year average for this time of the year. Meanwhile, domestic oil production remained unchanged at 12.1 million bpd. This is a bullish development for oil markets as it shows that domestic oil producers are not ready to increase production at a fast pace despite high oil prices. August WTI gained $4.20 per barrel, or 4.26% to $102.73. Brent for September delivery added $3.96, or 3.93%, to settle at $104.65 a barrel. As far as gasoline goes, prices at the pump have retreated from June’s never-before-seen levels but remain stubbornly high. Some relief could be in sight. U.S. gasoline futures have dropped more than 11% this week, following a decline in oil prices as recession fears spark concerns around a drop-off in demand. Other factors that could send gas prices higher again include a hurricane or any refining-related issues, with refineries already running near peak capacity. RBOB Gasoline for August delivery gained 18.38 cents per gallon, or 5.68% to $3.4204, while August heating oil gained 26.33 cents per gallon, or 7.72% to $3.6739. WTI’s failure to hold below the key psychological level of $100 reignited the bull run. Thursday’s trading shows that WTI oil remains stuck in the $100 – $120 range. The recent attempt to settle below the $100 level was unsuccessful, and WTI oil quickly moved back into the previous trading range. Looking forward, some Wall Street firms believe oil prices will regain prior highs, which would mean only temporary relief at the pump. Goldman Sachs is calling for Brent crude, the international oil benchmark, to hit $140 this summer. It traded at $106.35 on Thursday. Meanwhile Citi has been an oil bear for some time and on Tuesday said Brent could hit $65 by the end of the year should the economy tip into recession. Traders will remain focused on global economic outlook in the upcoming trading sessions as a potential recession remains the key threat to oil markets. Japan has recently announced that it is dealing with the seventh wave of coronavirus, so healthcare news will also need monitoring. The EIA reported that U.S. SPR crude stocks fell by 5.8 million barrels in the week ending July 1st to 492.03 million barrels, the lowest level since December 1985. U.S. crude oil stocks increased by 8.2 million barrels to 4123.8 million barrels. The EIA also reported that U.S. exports of total petroleum products increased last week to a record high. Product exports increased to nearly 7 million bpd. Meanwhile, product supplied of jet fuel increased to 1.8 million bpd, the highest since December 2019. Russian Deputy Foreign Minister, Sergei Ryabkov, said that plans to introduce price caps on Russian oil will "collapse" and Russia will find ways to ensure revenues for its budget. ‘
Oil dips as investors torn by tight supply worries and recession fears -Oil prices slipped in early Asian trade on Friday, following a rebound in the previous session, as investors remained torn between worries over tight global supplies and fears a recession could dampen oil demand. Brent crude futures fell 39 cents, or 0.4%, to $104.26 a barrel by 0013 GMT, dropping away from a near 4% rebound on Thursday. U.S. West Texas Intermediate crude slipped 35 cents, or 0.3%, to $102.38 a barrel, having settled 4.2% higher a day earlier. Both contracts are set to decline for a second week. Trade this week was marked by a sharp sell-off on Tuesday, where WTI slid 8% and Brent tumbled 9%. Brent's $10.73 drop was the third biggest for the contract since it started trading in 1988. "The sell-off in the commodity markets got a reprieve as traders shrugged off recession fears and turned their focus back to the undersupply issues," CMC Markets analyst Tina Teng said in a note. "However, the economic uncertainties remain with the inverted benchmark bond yields pointing to an unavoidable recession, which may continue to weigh on commodity prices." Central banks across the world are raising interest rates to tame inflation, spurring fears that rising borrowing costs could push countries into recession and reduce oil demand. Data from U.S. Energy Information Administration (EIA) showed on Thursday that product supplied, the best proxy for U.S. consumer demand, rose to 20.5 million barrels per day in the most recent week. Overall gasoline and distillate demand over the past four weeks, however, was down a little more than 5% from the year-ago period.
Oil Heads for Weekly Loss as Growth Fears Trump Supply Tightness - -- Oil is set for a weekly loss after choppy trading in which concerns over a demand-sapping global slowdown clashed against signals that supplies remain tight. West Texas Intermediate slipped toward $102 a barrel in early Asian trading, putting the US benchmark on course for a weekly fall of more than 5%. Prices have swung in a range of more than $16 this week, which saw both WTI and Brent briefly drop below $100. Investors remain concerned that restrictive US monetary policy could herald a recession, and oil has been dragged lower alongside other commodities. Two of the Federal Reserve’s most hawkish policy makers, Christopher Waller and James Bullard, backed raising interest rates by another 75 basis points this month to curb red-hot inflation, while also playing down concerns of a slump. Still, physical market signals remain robust, especially in the US. In addition, there may be interruptions to supplies. A crucial export route for Kazakh oil risks being suspended as it appeals a Russian court order for it to temporarily shut down. Crude’s volatile trading means it’s down about 15% from last month’s high but still up more than 35% this year following Russia’s invasion of Ukraine. The complex market outlook has spurred banks to offer starkly different scenarios for prices, with Goldman Sachs Group Inc. remaining broadly bullish while Citigroup Inc. has said the commodity is at risk of a tumble.
Oil rises 2% but posts weekly loss on recession fears -- Oil prices rose about 2% in volatile trade on Friday but were still heading for a weekly decline as investors worried about a potential recession-driven demand downturn even as global fuel supplies remained tight. Central banks around the world are raising interest rates to tame inflation, spurring fears that rising borrowing costs could stifle growth, while mass COVID-19 testing in Shanghai this week caused worries about potential lockdowns that could also hit oil demand. Brent crude futures rose $2.37, or 2.3%, to settle at $107.02 a barrel. U.S. West Texas Intermediate crude rose $2.06, or 2%, to settle at $104.79 a barrel. Both benchmarks traded in negative territory and then rebounded from session lows. Brent posted a weekly decline of about 4.1% and WTI a loss of 3.4%, following on from the first monthly decline since November. Prices tumbled on Tuesday, when Brent's $10.73 drop was the contract's third-biggest daily fall since it started trading in 1988. U.S. non-farm payrolls data showed the economy added more jobs than expected in June, a sign of persistent labor market strength that gives the Federal Reserve ammunition to deliver another 75-basis-point rate hike this month. "The oil market is looking at the jobs report as a double-edged sword," said Phil Flynn, analyst at Price Futures Group. "The jobs number was positive from a demand perspective. On the bearish side, the market is concerned that if the jobs market is strong, the Fed can be more aggressive with raising rates." U.S. energy firms this week added two oil rigs, bringing the total to 597, highest since March 2020, energy services firm Baker Hughes Co said. Oil prices soared during the first half of 2022. Brent neared the record high of $147 after Russia launched its invasion of Ukraine in February, adding to supply concerns. "Economic worries may have roiled oil prices this week, but the market is still flashing bullish signals. This is because supply tightness is more likely to intensify from this point than to ease," said Stephen Brennock of oil broker PVM. Western bans on Russian oil exports have supported prices and sparked a re-routing of flows while the Organization of the Petroleum Exporting Countries (OPEC) and allied producers struggle to deliver on pledged production increases. Russian President Vladimir Putin warned the West that continued sanctions against Moscow risked triggering "catastrophic" energy price rises for consumers around the world.
Oil Posts Weekly Loss after Choppy Trading | Rigzone - Oil posted a weekly decline as volatile trading and recession fears overshadowed a fundamentally tight supply picture. West Texas Intermediate crude futures rose to settle over $104 a barrel on Friday but it wasn’t enough to stave off a weekly decline of 3.6%. Investors remain concerned that restrictive US monetary policy could herald a recession. Still, physical signals remain robust, especially in the US, where the prompt timespread, which closely reflects the supply and demand balances at the country’s biggest storage hub in Cushing, Oklahoma, surged to the highest level since March earlier in the week. “We believe it is premature for commodities to succumb to recession concerns when the global economy is still growing and markets remain in deficit on strong demand,” said Goldman Sachs Group Inc. analysts, including Jeffrey Currie, in note to clients. Crude’s volatile trading means that it’s well down from last month’s high but still up more than 35% this year following Russia’s invasion of Ukraine. The complex market outlook has spurred banks to offer starkly different scenarios for prices, with Goldman Sachs Group Inc. remaining broadly bullish while Citigroup Inc. has said the commodity is at risk of a significant tumble. Meanwhile, in the Permian Basin’s hub in Midland, Texas, inventories are about 600,000 barrels lower than last year, according to Geoffrey Craig, global energy analyst at Ursa Space. Outside of the US, a key export route for Kazakh oil risks being suspended as it appeals a Russian court order for it to temporarily shut down. Prices: WTI for August delivery added $2.06 to settle at $104.79 a barrel. The contract is down 3.4% this week. Brent for September settlement gained $2.37 to settle at $107.02 a barrel. In China, meanwhile, investors are tracking efforts by Beijing to buttress growth after anti-virus lockdowns hurt the economy and energy consumption in the first half. The Ministry of Finance may allow local governments to sell 1.5 trillion yuan ($220 billion) of special bonds for infrastructure funding.
US Imposes Sanctions On Iran Oil Producers After Failure To Revive Nuclear Deal --So much for Iranian oil flooding the market.After days, and weeks and months and years of failed attempts to revive the JCPOA, aka the Iranian nuclear deal, on Wednesday the Biden administration announced it was putting sanctions on 15 individuals and entities who have been involved in illicit sales and shipments of millions of dollars' worth of Iranian oil.The newest sanctions, unveiled by Secretary of State Antony Blinken, come as the latest efforts to revive the Iran nuclear deal failed just last week."The United States is designating 15 individuals and entities that engaged in the illicit sales and shipment of Iranian petroleum, petroleum products, and petrochemical products. These entities, located in Iran, Vietnam, Singapore, the United Arab Emirates (UAE), and Hong Kong, have supported Iranian energy trade generating millions of dollars' worth of illicit revenue," Blinken said in a statement. We are imposing sanctions on Iranian petroleum and petrochemical producers, transporters, and front companies. Absent a commitment from Iran to return to the JCPOA, an outcome we continue to pursue, we will keep using our authorities to target Iran's exports of energy products. — Secretary Antony Blinken (@SecBlinken) July 6, 2022"While the United States is committed to achieving an agreement with Iran that seeks a mutual return to compliance with the Joint Comprehensive Plan of Action, we will continue to use all our authorities to enforce sanctions on the sale of Iranian petroleum and petrochemicals," added Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson.Blinken said that the three Iran-based entities sanctioned by the State Department include: Zagros Tarabaran-E Arya, which is a shipper of Iranian petroleum products; Persian Gulf Star Oil Company is the largest producer of gas condensate in Iran; and East Ocean Rashin Shipping Co. Ltd., which is a port agent and freight forwarder of Iranian petroleum and petrochemical products."The United States has been sincere and steadfast in pursuing a path of meaningful diplomacy to achieve a mutual return to full implementation of the Joint Comprehensive Plan of Action (JCPOA). It is Iran that has, to-date, failed to demonstrate a similar commitment to that path. Absent a change in course from Iran, we will continue to use our sanctions authorities to target exports of petroleum, petroleum products, and petrochemical products from Iran," Blinken said.Bottom line: the Biden admin has lost patience with Iran, having realized Tehran never intended to bring the JCPOA deal to closure on mutually acceptable terms. Expect creeping sanctions to accelerate and to envelop more and more official Iranian entities as long as Tehran continues toying with Biden. And since there is no reason why Iran should change its behavior - after all the middle east oil producer sells as much as oil as it wants to China who ignores US sanctions and buys both Iranian and Russian oil at significant discounts (in fact, Iran is now competing to undercut Russia on oil price) - the only loser here are US consumers and motorists who will not benefit from the potential pool 1-2 mmb/d of legitimate Iranian exports which would sharply lower US gas prices. Instead the only winner here will be China.
Iraqi Kurdistan 'defies' Baghdad with oil and gas law change - The parliament of the northern Iraqi Kurdistan region last week amended the region’s oil and gas law, further complicating tensions with the Iraqi federal government that sees the region’s oil sector as illegal.Iraq's Supreme Federal Court ruled in February that Kurdistan's Oil and Gas Law No. 22 passed by the Kurdistan parliament in 2007 to regulate its oil and gas industry is unconstitutional. The court then ordered the Iraqi government to take measures and force the Kurdish authorities to hand over their crude supplies to the Iraqi federal government. Kurdish authorities rejected the decision and described it as "politically motivated", saying the court's ruling was not aligned with the Iraqi constitution.The parliament on Wednesday and with the vote of 71 MPs passed the first amendment of the Kurdistan region’s oil and gas law No. (22) for the year 2007. The amendment draft was sent by the KRG to the parliament.“Only article four of the law, which is related to the structure of the Kurdistan region’s supreme council for oil and gas, was amended, accordingly the chief of staff of the Kurdistan Regional Government (KRG) council of ministers added to council,” Ali Hama-Salih, head of the energy and natural resources parliamentary committee told The New Arab.“The amendment lacks defining the region’s oil policy and the establishment of key institutions in the oil and gas sector.”With the new amendment, the council will become a six-member assembly, and the new member is from the ruling Kurdistan Democratic Party (KDP). Accordingly, the KDP will have three members, the Patriotic Union of Kurdistan (PUK) two members, and the Movement for Change (Gorran) will have one member.“We did not vote for the amendment, since first we did not deem it necessary. During the past four years the region’s supreme council for oil and gas did not convene, it was supposed to convene and send its report to the Kurdistan parliament,” Gulstan Saeed, chairwoman of Gorran’s parliamentary bloc told TNA in a phone call.“Secondly, the amendment makes the KDP the absolute decision maker in the council as the head of the council, whose vote will be decisive in case of equal votes, is from the KDP. Thus, the KDP can make any decision in the council even if members from PUK and Gorran did not vote or attend.” Saeed said that amending the law is “a kind of challenge” to the decision by the ISFC, and it would increase risks to the region’s oil and gas sector.
Gunfire that killed Palestinian-American journalist likely came from Israeli military positions, U.S. says - The bullet that killed an American journalist in the Palestinian city of Jenin in May likely came from Israeli military positions, but its exact origin could not be determined and the shooting was most likely unintentional, according to a third-party analysis overseen by U.S. officials. The “extremely detailed forensic analysis” could not reach a “definitive conclusion” regarding who shot the Palestinian-American journalist, Shireen Abu Akleh, State Department spokesperson Ned Price said in a statement on Monday. Experts said the bullet was badly damaged, preventing a clear conclusion. Since Abu Akleh’s death on May 11, tension has mounted over who should be held accountable. Multiple independent investigations have found support for witnesses’ accounts that Israeli military forces killed the journalist, who was wearing identifiable press gear and a helmet while covering an Israeli raid in the West Bank city for the news outlet Al Jazeera. Israeli officials have repeatedly denied the military’s involvement in the shooting. Though the bullet’s origin could not be determined, the U.S. security coordinator, who oversaw the analysis, “concluded that gunfire from IDF positions was likely responsible for the death of Shireen Abu Akleh,” Price said, referring to the Israel Defense Forces. The coordinator was granted access to both Israeli and Palestinian investigations.
Russian Gazprom-Linked Executive Found Dead in His Swimming Pool -- A Russian executive with connections to the energy industry was found dead in his swimming pool on Monday with a gunshot wound to the head, according to local media. Yuri Baranov, 61, had a point-blank gunshot wound to the head, and a Grand Power pistol was found nearby in his villa outside St Petersburg, local outlet 47news reported. Two spent shell casings were found at the bottom of the pool, per the outlet.It is the fifth death of a Gazprom-linked executive in recent months and one of numerous deaths of high-level executives linked to the Russian energy industry.The company Voronov founded, Astra Shipping, specialized in contracts in the Arctic from the state-controlled gas corporation, according to 47news. Security footage reviewed by police showed that nobody had entered or left the villa since July 1, the outlet reported. That day, Voronov left his St Petersburg home to head to the villa and had been drinking heavily for two weeks prior, his wife told the outlet. She alleged that he had run into trouble with dishonest contractors, 47news reported, without naming any specific company. Records reviewed by the outlet showed the company had high debt levels in 2020 and 2021. There has been a grim catalogue of Gazprom-linked deaths in recent months, some of which have been cast as suspicious by family members and colleagues. In April, Sergey Protosenya was found hanged in his Spanish villa with a gun next to him, with the bodies of his wife and daughter, who were shot, nearby.Protosenya was the former vice-president of Novatek, a gas company with close connections to Gazprombank, Gazprom's financial arm. The day before Protosenya's body was discovered, police found Gazprombank's former vice-president, Vladislav Avayev, dead in Moscow along with the bodies of his wife and two daughters. State media reported that investigators believed he killed his family before turning the gun on himself. In February, 61-year-old Gazprom executive Alexander Tyulyakov was found hanged in his St Petersburg garage, Novaya Gazeta reported. Police told the outlet a suicide note was found near his body, but that they questioned its authenticity.
Canada's trade surplus jumps to highest since 2008 on oil surge - Canada’s merchandise trade surplus widened to the largest in 14 years as the nation benefits from surging global prices for its crude oil. Exports exceeded imports by $5.3 billion in May, the highest since August 2008. The surplus was more than double economists’ forecasts and the $2.2 billion surplus reported for April. Total exports rose 4.1 per cent, led by a 9.2 per cent jump in crude oil shipments. Rising prices for energy and other commodities over the past year have helped the nation swing into recurring surpluses for the first time since 2014, acting as a buffer to global economic headwinds and shoring up the nation’s currency. Embedded Image In the first five months of 2022, the nation recorded a cumulative $15.9 billion of surpluses. Canada had a trade deficit of $1.5 billion in the same period last year. But the surge in oil is also making the country increasingly reliant on fossil fuels. Energy exports rose 5.7 per cent to $20.4 billion in May, representing 30 per cent of total shipments -- an all-time high share. The bulk of that is fossil fuels like crude oil and natural gas, which made up 29 per cent of exports in May. Canada’s trade surplus with US, its largest trading partner and biggest market for oil, hit a record $14 billion in May. Economists were anticipating the surplus would widen to $2.4 billion in May, from $1.5 billion initially reported for April. Statistics Canada revised data going back to January that showed the nation’s exports were stronger than initially estimated. The export gain in May wasn’t just a price phenomenon, with volumes up 1.7 per cent. Imports fell in May -- both in nominal and volume terms -- pulling back gains from earlier this year. Exports also increased for non-energy products, which rose 3.5 per cent on aircraft shipments. Service exports rose 1.7 per cent, while import services were up 0.5 per cent in May.
The Coming Sanctions-Induced Economic Tsunami? by Yves Smith - It’s not hard to see that as rough as economic conditions are now, they are set to get worse. And it’s not hard to see that despite the considerable blowback from the sanctions against Russia, the West is not going to relent.Here’s a simple baseline forecast. Russia wins in Ukraine. The West may try to define it somehow as not a victory, but it’s hard to see how Russia does not take the entire Black Sea coast plus Ukraine east of the Dneiper by the end of the year, and I hazard to guess sooner, say October-November. What Russia decides to do with the western part is path dependent and so in play (consider how possible military coup/Zelensky flight, Democratic November wipeout, rising political strife in Europe, Poland deciding to get expansionist could all factor into Russian decisions). Some Russians are already getting cocky:The West will remain fixated on making Russia pay for taking Ukraine. But the West lacks the ability to do so via conventional warfare (see this devastating analysis, The Return of Industrial Warfare, which shows that the West lacks the manufacturing capacity to match, let alone beat, Russia). So the only means left is economic war. Despite the fact that the West is losing decisively there too, it is determined to escalate, no matter how much harm it does to itself.Russia has been measured in its responses. Perhaps the Russian leadership hoped that the West would recognize the balance of power and cool off after Russia force a Minsk-Accords-type solution plus a guarantee of neutrality upon Ukraine, which seemed a possible outcome as of the end-of-March negotiations in Istanbul, which the UK and US got Zelensky to undo. Russia knows there’s no point in negotiating with the West, or at least not the current actors.Russia is nevertheless far from tit-for-tat-level retaliation; one assumes if nothing else Russia is now playing to China and India and the Global South to show that it is being pretty reasonable given the givens and trying to balance respecting contracts with not being ripped off. Merely requiring gas for roubles, and now “other commodities for roubles” as a way to prevent another $300 billion in foreign exchange reserves from being stolen was hardly a big ask, yet some buyers went ballistic. Poland and Bulgaria refused to comply with the new payment procedure and so Russia stopped shipping their contracted amounts.Now the Western press is regularly complaining that Russia is not sending all the gas that is is “supposed” to. Austria complained in June (on the fourth day this happened) that was only getting 50% of the gas it expected. The article made no mention of the fact that this was in the period when Gazprom pointed, and it was confirmed, that Siemens had sent turbine used in St. Petersburg to Montreal and Canada would not send it back, and Gazprom had to cut deliveries on Nord Stream 1 by 40%. The other nation-level shortfalls could be due to Germany backfilling Poland and Bulgaria.Recall also that Russia sanctioned 31 Gazprom European entities connected to Gazprom Germania because Germany stole Gazprom assets there, including storage facilities. At least one of those entities was Austrian.In other words, it’s hard to unpack how much of the alleged shortfalls are the direct result of sanctions-related measures and specific counter-sanctions by Russia, as opposed to the Russia jerking the EU around because it can. So far, it looks to be mainly or entirely the former, but with more and more provocations like the Kaliningrad partial blockade, there’s a lot of room for Russia to get nasty.
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