US oil imports at a 2 year high; distillates exports at all time high, US oil supplies at an 18 year low, Strategic Petroleum Reserve at a 37 year low; oil rigs fall by most in 25 months, natural gas rigs at a 35 month high..
oil prices fell for the fifth time in six weeks on weak economic reports from China and Europe and lower US demand for fuel...after rising 4.1% to $98.62 a barrel last week on falling Russian oil exports and on a larger than expected drop in U.S. crude inventories, the contract price for the benchmark US light sweet crude for September delivery fell in Asian trading early on Monday as a surprise contraction in Chinese factory data added to concerns that a global slowdown might sap demand, while an increase in Libyan output eased supply concerns, and then tumbled more than 4% in New York trading to settle down $4.73 at $93.89 a barrel after European manufacturing data indicated a deeper contraction at the start of the third quarter, with Germany, France, Italy, and Spain all recording sub-50 readings in their respective PMIs...oil prices dropped again in early trading on Tuesday as traders absorbed the bleak outlook for fuel demand amid data pointing to a global manufacturing downturn, but recovered to settle 53 cents higher at $94.42 a barrel ahead of an OPEC+ producers meeting wherein a further boost in crude supply was uncertain amid concerns that a possible global recession could limit energy demand...oil prices dipped in overnight trading after the American Petroleum Institute reported a surprise build of crude inventories against analysts' predictions of a modest draw, but rallied early Wednesday despite the API data after OPEC+ ministers signaled the coalition might raise oil production in September, despite signs of decelerating demand growth in Asia and European Union, before turning lower after the EIA confirmed that US crude and gasoline stockpiles had unexpectedly surged higher last week, and after OPEC+ said it would raise its oil output target by only 100,000 barrels per day in September, and settled $3.76 or nearly 4% lower at a six month low of $90.66 a barrel, as the EIA data also showed an unseasonal drop in gasoline consumption, underscoring concerns that spiking fuel prices had undermined usually strong summer driving demand...oil prices steadied above those levels early Thursday, as traders weighed tight supply against demand fears, but then dropped to their lowest levels since the Ukrainian war began, as traders fretted over the possibility that an economic recession later this year could torpedo energy demand, settling $2.12 lower at $88.54 a barrel as traders refocused on global recession fears, rising inflation, and building crude oil inventories in the US...oil prices eroded further in overnight trading into Friday as traders awaited the release of July employment data in the United States, which was expected to show a slowing pace of new hires amid softer economic growth and tightening monetary policy, but reversed to settle 47 cents higher at $89.01 a barrel, after a surprisingly strong U.S. jobs report painted a picture of a U.S. economy that was not slowing down...nonetheless, oil prices still finished 9.7% lower on the week, the biggest weekly decline since early April, amid growing signs that a global economic slowdown was curbing demand....
meanwhile, natural gas prices also finished lower for the week, on milder forecasts and on an inventory increase that exceeded expectations....after rising 0.4% to $8.229 per mmBTU last week, but closing 0.8% lower than the prior week's July contract closing price, the contract price of natural gas for September delivery retreated in early trading Monday as weekend weather models had moderated, but bounced off the bottom to finish 5.4 cents higher at $8.283 per mmBTU, after midday weather models showed more heat on the East Coast...however, natural gas prices dropped about 7% to a two-week low on Tuesday on record output from US wells and on forecasts for less demand over the next two weeks than was previously expected, and settled 57.7 cents lower at $7.706 per mmBTU....but that drop almost was completely reversed on Wednesday, when prices rose 56.0 cents or 7% to $8.266 per mmBTU, after Freeport LNG said that its LNG export plant in Texas remained on track to return to service in early October...natural gas prices then slid on Thursday after the storage report showed a bigger-than-expected injection into storage, and on forecasts for cooler weather that could reduce air-conditioning demand but partially recovered from steeper losses to settle 14.4 cents, or 1.7% lower, at $8.122 per mmBTU...natural gas prices gave up another 5.8 cents on Friday to settle at $8.064 per mmBTU, as gas output from wells neared record highs and forecasts for hot weather were revised slightly lower and thus finished 2.0% lower on the week...
The EIA's natural gas storage report for the week ending July 29th indicated that the amount of working natural gas held in underground storage in the US rose by 41 billion cubic feet to 2,457 billion cubic feet by the end of the week, which left our gas supplies 268 billion cubic feet, or 9.8% below the 2,725 billion cubic feet that were in storage on July 29th of last year, and 337 billion cubic feet, or 12.1% below the five-year average of 2,794 billion cubic feet of natural gas that have been in storage as of the 29th of July over the most recent five years....the 41 billion cubic foot injection into US natural gas working storage for the cited week topped even the highest of estimates ahead of the report, and was quite a bit more than the 16 billion cubic feet that were added to natural gas storage during the corresponding week of 2021, and also more than the average injection of 33 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 29th indicated that after a jump in our oil imports, a drop in our oil exports, and another big withdrawal of crude from the SPR, we were able to add oil to our stored commercial crude supplies for the 3rd time in 7 weeks, and for the 15th time in the past 36 weeks. Our imports of crude oil rose by an average of 1,178,000 barrels per day to a 2 year high of 7,342,000 barrels per day, after falling by an average of 355,000 barrels per day during the prior week, while our exports of crude oil fell by 1,036,000 barrels per day to 3,512,000 barrels per day, which meant that our trade in oil worked out to a net import average of 3,830,000 barrels of oil per day during the week ending July 29th, 2,214,000 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 15,930,000 barrels per day during the July 29th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,853,000 barrels of crude per day during the week ending July 29th, an average of 174,000 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 32,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures from the EIA for the week ending July 29th appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 109,000 barrels per day more than what our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (-109,000) 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...moreover, since last week’s EIA fudge factor was at (+864,000) barrels per day, that means there was a 973,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the week over week supply and demand changes indicated by this week's report are completely worthless....however, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….
This week's modest 32,000 barrel per day decrease in our overall crude oil inventories left our oil supplies at 896,408,000 barrels at the end of the week, which was again our lowest total oil inventory level since February 6th, 2004, and therefore at a new 18 year low (see graph below)….our oil inventories decreased this week even as 638,000 barrels per day were being added to our commercially available stocks of crude oil, because 670,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time.. This week's draw on the SPR was part of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump" (sic), that was expected to supply 1,000,000 barrels of oil per day to commercial interests over a six month period 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 administration's previous 30,000,000 million barrel release from the SPR to address Russian supply related shortfalls wrapped up in June, and his earlier release of 50 million barrels from the SPR to incentivize US gasoline consumption was completed in May. Including those, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 186,292,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 24 months, and as a result the 469,855,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since May 24th, 1985, or at a new 37 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 during 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 6,675,000 barrels per day last week, which was 1.7% more than the 6,564,000 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 3,000 barrels per day higher at 438,000 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 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 91.0% of their capacity while using those 15,853,000 barrels of crude per day during the week ending July 29th, down from their 92.2% utilization rate during the prior week, and a refinery utilization rate that's below normal for mid summer. The 15,853,027,000 barrels per day of oil that were refined this week were 0.4% less than the 15,920,000 barrels of crude that were being processed daily during week ending July 30th of 2021, and 10.8% less than the 17,777,000 barrels that were being refined during the prepandemic week ending August 2nd, 2019, when our refinery utilization was at 96.4%, the highest of that summer...
With the decrease in the amount of oil being refined this week, gasoline output from our refineries was also lower, decreasing by 366,000 barrels per day to 9,292,000 barrels per day during the week ending July 29th, after our gasoline output had increased by 290,000 barrels per day during the prior week. This week’s gasoline production was also 8.5% less than the 10,151,000 barrels of gasoline that were being produced daily over the same week of last year, and 10.8% less than our gasoline production of 10,421,000 barrels per day during the week ending August 2nd, 2019, ie, a comparable week during the year before the pandemic impacted US gasoline output. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 76,000 barrels per day to 4,933,000 barrels per day, after our distillates output had decreased by 22,000 barrels per day during the prior week. But even after those decreases, our distillates output was still 1.1% more than the 4,877,000 barrels of distillates that were being produced daily during the week ending July 30th of 2021, while 6.3% less than the 5,286,000 barrels of distillates that were being produced daily during the week ending August 2nd 2019...
Even with the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the 5th time in seven weeks; but for just the 6th time out of the past twenty-six weeks, increasing by 163,000 barrels to 225,294,000 barrels during the week ending July 29th, after our gasoline inventories had decreased by 3,304,000 barrels during the prior week. Our gasoline supplies increased this week because the amount of gasoline supplied to US users decreased by 704,000 barrels per day to 8,541,000 barrels per day, while our imports of gasoline rose by 10,000 barrels per day to 609,000 barrels per day, and while our exports of gasoline rose by 72,000 barrels per day to 768,000 barrels per day. But after 20 inventory drawdowns over the past 26 weeks, our gasoline supplies were 1.6% lower than last July 30th's gasoline inventories of 228,870,000 barrels, and about 3% below the five year average of our gasoline supplies for this time of the year…
Following a series of decreases in our distillates production, our supplies of distillate fuels decreased for the 4th time in 5 weeks and for the 30th time in forty-eight weeks, falling by 2,400,000 barrels to 109,324,000 barrels during the week ending July 29th, after our distillates supplies had decreased by 784,000 barrels during the prior week. Our distillates supplies fell by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 127,000 barrels per day to 3,750,000 barrels per day, and because our exports of distillates rose by 139,000 barrels per day to 1,634,000 barrels per day, while our imports of distillates rose by 110,000 barrels per day to 234,000 barrels per day.. But after forty-six inventory withdrawals over the past sixty-eight weeks, our distillate supplies at the end of the week were 21.2% below the 138,744,000 barrels of distillates that we had in storage on July 30th of 2021, and about 25% below the five year average of distillates inventories for this time of the year…
For imports and exports, citing the four week average gives us a better picture of the trend, since it ameliorates the weekly volatility inherent in the different sizes of vessels and the timing of the ship loadings and unloadings from week to week...With this week's increase in our exports of distillates, the four week average of our distillates exports rose from last week's 47 month high of 1,485,000 barrels per day to an all time high of 1,573,000 barrels per day....with that record topping earlier highs in 2017 and 2019, we'll include a chart below to show you what it looks like...
Meanwhile, with this week's big increase in our oil imports and decrease in our exports, our commercial supplies of crude oil in storage rose for the 5th time in 12 weeks and for the 21st time in the past year, increasing by 4,467,000 barrels over the week, from 422,086,000 barrels on July 22nd to 426,553,000 barrels on July 29th, after our commercial crude supplies had decreased by 4,523,000 barrels over the prior week. After this week's increase, our commercial crude oil inventories were still about 7% below the most recent five-year average of crude oil supplies for this time of year, but roughly 26% above the average of our crude oil stocks as of the end 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 the Spring of 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 29th were still 2.9% less than the 439,225,000 barrels of oil we had in commercial storage on July 30th of 2021, and were 17.7% less than the 518,596,000 barrels of oil that we had in storage on July 31st of 2020, and 2.8% less than the 438,930,000 barrels of oil we had in commercial storage on August 2nd of 2019…
Finally, with our inventories of crude oil and our supplies of all products made from oil near multi-year lows in recent months, 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 1,164,000 barrels this week, from 1,679,939,000 barrels on July 22nd to 1,678,775,000 barrels on July 29th, after our total inventories had fallen by 8,857,000 barrels during the prior week. That left our total liquids inventories down by 109,658,000 barrels over the first 29 weeks of this year, and only one million barrels from hitting a new 13 1/2 year low...
This Week's Rig Count
The number of drilling rigs running in the US decreased for only the 8th time over the previous 97 weeks during the week ending August 5th, but were still 3.7% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US decreased by 3 to 764 rigs this past week, which was still 273 more rigs than the 491 rigs that were in use as of the August 6th report of 2021, and was 1,165 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 fell by 7 to 598 oil rigs during the past week, the biggest oil rig drop in 25 months, after the number of rigs targeting oil had increased by 6 during the prior week, but there are still 211 more oil rigs active now than were running a year ago, even as they now amount to just 37.2% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are also down 12.4% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 4 to 161 natural gas rigs, the most natural gas rig activity since August 30, 2019, which was also up by 58 natural gas rigs from the 103 natural gas rigs that were drilling during the same week a year ago, even as they were still only 10.0% 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 is still reporting five "miscellaneous" rigs active; those include a horizontal rig drilling to between 5,000 and 10,000 feet into the Permian basin in Dawson county Texas, a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, a rig drilling vertically to between 10,000 and 15,000 feet for a well or wells intended to store CO2 emissions in Mercer county North Dakota, a vertical rig drilling more than 15,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track, and another vertical rig, targeting the Marcellus shale at a depth of between 5,000 and 10,000 feet in Tompkins County, New York...that one might be a exploratory geothermal well now being drilled on the Cornell University campus....a year ago, there were was only one such "miscellaneous" rig running...
The offshore rig count in the Gulf of Mexico was down by 1 to 14 rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana's offshore waters....that now matches the number of offshore rigs that were active in the Gulf a year ago, when 13 Gulf rigs were drilling for oil offshore from Louisiana and one rig was deployed for oil offshore from Texas...in addition to rigs drilling in the Gulf, we still have two offshore directional rigs drilling for natural gas in the Cook Inlet of Alaska; one is indicated to be drilling to between 10,000 and 15,000 feet, while the other one is indicated to be drilling to between 5,000 and 10,000 feet...a year ago, there were no offshore rigs other than those deployed in the Gulf of Mexico....
in addition to rigs running offshore, there are still 2 water based rigs drilling through inland bodies of water...one is a directional rig targeting oil at at a depth greater than 15,000 feet drilling through a lake on Grand Isle, Louisiana, and the other is directional rig drilling for oil in Terrebonne Parish, Louisiana, also at a depth greater than 15,000 feet...the other inland waters rig that had been drilling in Terrebonne Parish, and the one drilling in Cameron parish, Louisiana, were shut down this week, while during the same week of a year ago, there was just one such "inland waters" rig deployed...
The count of active horizontal drilling rigs was up by one to 698 horizontal rigs this week, which was also 255 more rigs than the 442 horizontal rigs that were in use in the US on August 6th of last year, but still just over half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....on the other hand, the vertical rig count was down by 3 to 29 vertical rigs this week, but those were still up by 14 from the 15 vertical rigs that were operating during the same week a year ago…at the same time, the directional rig count was down by 1 to 37 directional rigs this week, while those were still up by 10 from the 27 directional rigs that were in use on August 6th 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 August 5th, the second column shows the change in the number of working rigs between last week’s count (July 29th) and this week’s (August 5th) count, the third column shows last week’s July 29th 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 6th of August, 2021...
checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian, we find there were 3 oil rigs added in Texas Oil District 8, which covers the core Permian Delaware, and there was another oil rig added in Texas Oil District 8A, which includes the northernmost counties over the Permian Midland, but that there were two oil rigs pulled out of Texas Oil District 8A, which includes the southern counties of the Permian Midland...since that indicates that the Texas Permian rig count increased by 2, we have to conclude that all 6 of the rigs that were pulled out of New Mexico had been drilling in the far west Permian Delaware, in order for the national Permian rig count to have fallen by four...& since there were no other changes apparent in Texas, that Texas Permian increase also accounts for the Texas increase...
elsewhere, the three rig decrease in Louisiana included the oil rig pulled out of the state's offshore waters, and the two inland waters oil rigs that were shut down in the southern tier of the state at the same time...meanwhile, the two rigs added in Colorado include one in the DJ Niobrara chalk and one in a basin that Baker Hughes doesn't track, the rig added in North Dakota was in the Williston basin, and the rig added in Wyoming was in a basin that Baker Hughes doesn't track...in Oklahoma, an oil rig was pulled out of the Cana Woodford, while oil rigs were added in the Ardmore Woodford and the Granite Wash at the same time...since the Oklahoma rig count was unchanged, that means there was at least one rig pulled out of an Oklahoma basin that Baker Hughes doesn't track..i say "at least" because most of this week's net changes occured in basins that Baker Hughes doesn't track, including the increase of 4 natural gas rigs and the decrease of six oil rigs...since i see no other changes in the state totals to account for those rigs, most of them must have occurred in states like Oklahoma that host both oil and natural gas rigs, such that the loss of one and the gain of the other wouldn't show up in the state totals...if you really need to know where those changes occured, Baker Hughes offers the North America Rotary Rig Count Pivot Table (xls) which shows the individual well drilling records by state and county since February 2011, including all those in basins that Baker Hughes doesn't track in their other summaries...
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Oil and gas production expected to increase in Guernsey County - The Daily Jeffersonian - Industry experts expect to see an increase in oil and gas production in the Utica Shale region including Guernsey County this year due to a rising demand resulting from global issues and domestic usage. Guernsey County currently has 300 Utica shale well permits and the most active producers in the county are Ascent Resources with 130 permits, Southwestern Energy with 69 and Utica Resources with 31. The Ohio Department of Natural Resources reports 24 wells — 23 productive and 1 exploratory — were drilled in Guernsey County in 2019, the latest year for which statistics are available. The average well depth was 19,918 feet with an estimated footage drilled of 478,029. The most recent horizontal shale production statistics for Guernsey County from 2019 totaled 13,556,178 barrels of oil and 91,078,704 Mcf of gas. "The industry in Guernsey County is strong, and it's active," "Some of the opportunities and challenges happening right now are allowing us to put (drilling) units together...get leases together and go out and drill to lift that commodity out of the ground. You will see increased activity here in Guernsey County this year, and beyond this year." There are 12 drilling rigs currently in operation in the Utica region across southeast Ohio. According to the Ohio Department of Natural Resources, more than 275,000 gas wells had been drilled statewide as of 2019 with 2.6 trillion cubic feet of natural gas production. The most recent statistics available also show 55,921 oil wells have produced 27 million barrels of crude oil. "Ohio has done smart things to be a welcoming state when it comes to energy, and there's good reason for that. All you need to do is look to Europe right now." "Shutting off Russia's oil supply, you are going to have to make that up somewhere and that's where you are seeing some renewed interest in the western part of the Utica shale formation because it's more rich in oil deposits," said George Brown of OOGEEP. "The great thing about Guernsey County is the entire natural gas ecosystem that goes along with it (oil)." Ohio is home to four oil refineries, which can produce nearly 600,000 barrels of crude oil daily, according to the Ohio Oil & Gas Energy Education Program. That's enough oil to produce 11.4 millions gallons of gasoline per day. The rate at which oil and gas production will increase in Guernsey County this year will depend on several variables, according to local officials. "It will probably depended producer to producer based on what their plans are...their access to capital and what their drilling units look like, but I would say we will see increased activity this year," said Chadsey. "Our people can't turn on a dime. You do have to get a permit, get your hands on a rig, a crew and all that stuff, so it will probably be a slow ramp up but I think we will continue to see more activity and excitement about that activity here in Guernsey County." The county continues to be on the western edge of the Utica shale play in what is referred to as the oil window. Brown said there are two-overlaying issues that will slow production in Guernsey and other counties nearby when it come to oil and gas. "One is the certainty in the planning that needs to go into the preparation process for exploration," he said. "It takes time. It can take up to a year, if not more, to get a rig in place and get it in the process of exploration." "And two, building out the critical energy infrastructure to get that product to meet its market. There are currently five pipeline proposals that have either been canceled or opposed that would haven taken the gas and oil coming from Ohio and other parts of the basin to end users either on the east coast of the United State or down south to meet the needs.
Ohio lawmakers want to create tax breaks for energy development - – Saying communities in Ohio have been denied economic development and job growth opportunities because of energy issues, two Ohio lawmakers announced legislation Friday that would provide taxpayer incentives to grow energy infrastructure in the state.Reps. Jon Cross, R-Kenton, and Jay Edwards, R-Nelsonville, called areas of the state “energy deserts,” and want House Bill 685 to promote the use of the state’s natural gas energy resource.“We’ve been hearing from communities that are locked out of future job growth because of the high cost of energy infrastructure in the state,” Cross said. “These ‘energy deserts’ see limited job growth because there just isn’t the infrastructure in place to deliver energy at a reasonable price. House Bill 685 is a step in the right direction to address the problem and bring jobs and affordable energy to every corner of the state.” The bill, which has yet to be assigned to a committee, would call for the creation of local “ENERGIZEOhio Zones” that would be designated as areas in need of investment. The designation would allow natural gas infrastructure projects to receive tax abatements and speed up depreciation to lower the over cost of development, the sponsors said. Also, the bill would allow the state to offer low-cost financing for projects and create a revolving loan fund that would allow local officials to facilitate pipeline easements. The bill also calls for financial incentives to gas companies developing natural gas pipelines in the zones. “I’ve heard from communities that are really suffering because they don’t have the energy they need, even though there is robust supply in the state and strong local demand,” Edwards said. “Energy infrastructure construction costs have just gone through the roof due to inflation. We can’t wait for Washington to solve our problems. The General Assembly needs to pass this legislation to help deal with these increases in costs.” There are more than 26,000 natural gas producing wells across Ohio and 24 natural gas storage sites. There is also nearly 10,000 miles of gas pipelines in the state, according to the Natural Gas Solution. “Too much of Ohio’s energy is being shipped out of state,” Cross said. “We need to keep it here in Ohio to ensure our businesses and citizens have access to affordable, abundant local energy.”
Gulfport 2Q Update – Turns Profitable $216M, No Talk of Selling | Marcellus Drilling News - Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May 2021 with a new board and new top management. By September of last year, the rumors began circulating that the company was shopping itself for sale (see Big News: OH Utica Driller Gulfport Energy Looking to Sell Itself). The two largest drillers in the Ohio Utica (Ascent Resources and Encino Energy) have been reported to be in talks to buy Gulfport. Yet, in Gulfport’s 2Q22 update issued earlier this week, there wasn’t even a whisper about a potential sale or merger.
Study: Drilling wastewater on Pa. roads dangerous to human health, environment - A long-anticipated health study commissioned by Pennsylvania environmental officials examined the practice of spreading wastewater from conventional gas – and oil drilling on thousands of miles of rural dirt roads in the state. Researchers concluded that the practice doesn’t control dust effectively and poses dangers to the environment and human health. The state Department of Environmental Protection has not yet acted based on those findings but said that the study’s impact will be “immediate, large and intense.” After a legal challenge to the practice in 2018 arising from environmental and health concerns, DEP temporarily banned most spreading of wastewater from conventional oil and gas drilling on the approximately 25,000 miles of dirt and gravel roads in the state. Spreading has never been allowed with wastewater from wells employing hydraulic fracturing, commonly known as fracking. But for more than a half-century, spreading salty wastewater from conventional oil and gas wells was a cheap way for the industry to get rid of a byproduct, while reducing municipal costs for dust control in summer and road de-icing in winter. Twenty-one of the state’s 67 counties allowed wastewater to be spread on rural roads before the temporary ban. Nationally, 12 states have permitted the practice. According to DEP records, approximately 240 million gallons of drilling wastewater were spread on Pennsylvania roads from 1991–2017. Industry officials have long maintained the spreading did not have any adverse consequences. For the independent study commissioned by DEP, Penn State researchers conducted a series of laboratory experiments to test dust generation and suppression. They also measured the chemical makeup of wastewater and explored its runoff effects. The wastewater samples came from conventional drilling operations obtained in confidence from western Pennsylvania oil service companies.The results showed that wastewater was essentially no more effective than rainwater in controlling dust because its high sodium content does not allow road dust to bond to the material. In fact, the study noted, “sodium can destabilize gravel roads and increase long-term road maintenance costs.” The investigation also revealed health and environmental concerns. Elevated levels of contaminants could pollute nearby water sources, the study concluded. In addition to increasing the salinity of fresh water, the water in some simulations contained heavy metals — such as barium, strontium, lithium, iron and manganese — at levels exceeding human health standards. Some tests also found radioactive radium, a carcinogen, though often in low concentrations.
Pipeline Co. Convicted of Criminal Charges The companies behind the construction of a controversial natural gas pipeline that crosses through the Mon-Yough area have been convicted of criminal charges related to the project. On Friday, Pennsylvania Attorney General Josh Shapiro announced that Sunoco Pipeline LP and ETC Northeast Pipeline LLC have pleaded no contest to charges related to contamination of lakes, rivers, streams and groundwater during the construction of the Mariner East 2 pipeline.The Mariner East 2 pipeline, which goes through 17 southern Pennsylvania counties, crosses Forward Twp. and passes near communities such as Sutersville, West Newton and Finleyville. It parallels an older gasoline pipeline built in the 1930s.Homeowners who live in the pipeline’s path and want to have their water tested have until Aug. 19 to file a request.Shapiro and state regulators have alleged that the companies — both subsidiaries of a larger Texas-based company known as Energy Transfer LP — failed to report environmental damage and criminal use of unapproved additives in drilling fluid.Prosecutors allege that more than 150 families have had their drinking water contaminated by construction of the Mariner East 2 pipeline, which carries liquified natural gas from Ohio and West Virginia to processing facilities elsewhere in Pennsylvania.“We have a constitutional right in Pennsylvania to clean air and pure water,” Shapiro said in a prepared statement. “It’s a right that was enshrined in our state constitution at a time when the people of Pennsylvania learned a tough lesson first-hand — the health of our children, and our economic future, depended on protecting our environment from reckless profit and unchecked corporate interests.“Today we’re upholding our oath to our constitution and holding Energy Transfer accountable for their crimes against our natural resources,” he said.Sunoco Pipeline LP pleaded no contest to 14 counts of clean streams violations for incidents related to the construction of the Mariner East 2 Pipeline, Shapiro said.The plea agreement also covers allegations leveled against ETC Northeast in connection with the construction of the Revolution Pipeline, a 42.5-mile pipeline that starts in Butler County and connects to a gas processing plant in Washington County, passing through Beaver and Allegheny counties.As part of the agreement, Shapiro’s office said, Energy Transfer will pay for independent evaluations of potential water quality impacts for homeowners from the construction of the Mariner East 2 Pipeline and offer approved mechanisms for restoring or replacing the impacted private water supplies.An independent, professional geologist will review water testing and advise homeowners on water quality and impact, Shapiro’s office said.Energy Transfer also will pay $10 million towards projects that improve the health and safety of water sources along the routes of the pipelines.In October 2021, 48 charges were filed against the two companies after a statewide grand jury investigation.According to testimony before the grand jury, Sunoco Pipeline repeatedly allowed thousands of gallons of drilling fluid to escape underground, which sometimes surfaced in fields, backyards, streams, lakes and wetlands. The company then failed to report the losses of fluid to the Pennsylvania Department of Environmental Protection numerous times, despite legal requirements to do so, the state alleged.
Pipeline developer pleads no contest in pollution cases - The developer of a major pipeline system that connects the Marcellus Shale gas field in western Pennsylvania to an export terminal near Philadelphia pleaded no contest Friday to criminal charges that it systematically polluted waterways and residential water wells across hundreds of miles. Dallas-based Energy Transfer Operating agreed to independent testing of homeowners' water and promised to remediate contamination in a settlement of two separate criminal cases brought by the Pennsylvania attorney general. Under a plea deal, the company will also pay $10 million to restore watersheds and streams along the route of its Mariner East pipeline network. "We are holding Energy Transfer accountable for their crimes against our natural resources," Attorney General Josh Shapiro said at a news conference after the hearing in Harrisburg. An Energy Transfer spokeswoman called the $10 million fund “not a fine or penalty of any kind but the product of a voluntary collaboration” with the state. “While we understand Mr. Shapiro is running for office, it remains disappointing that he would mischaracterize the facts of this voluntary agreement to his political advantage rather than acknowledge the good faith efforts of Energy Transfer to resolve this dispute,” the spokeswoman, Laura Atchley, said in an email. The company’s Mariner East 1, Mariner East 2 and Mariner East 2X pipelines carry propane, ethane and butane from the Marcellus and Utica shale gas fields to a refinery processing center and export terminal in Marcus Hook, a suburb of Philadelphia. Construction wrapped in February. Mariner East has been one of the most penalized projects in state history. The owner has racked up tens of millions of dollars in civil penalties, and state regulators repeatedly halted construction over contamination. The attorney general stepped in last October, charging Energy Transfer with releasing industrial waste at 22 sites in 11 counties and failing to report spills to regulators. The company fouled the drinking water of at least 150 families, prosecutors have said.
Energy Transfer reaches plea deal with the state in criminal case over Mariner East and Revolution pipelines -The Pennsylvania Attorney General’s office announced that it reached a plea deal with Texas-based pipeline company Energy Transfer, concluding a criminal case brought against the firm for its Mariner East and Revolution pipelines. Energy Transfer pleaded “no contest” to 23 criminal charges on Friday, without admitting guilt or wrongdoing while accepting a conviction in the case.The plea deal includes a water grievance process where qualified landowners who believe their water may have been impacted by Energy Transfer’s Mariner East pipeline construction will receive a free evaluation from an independent geologist. If it is determined that the company was indeed the cause of the water issue, Energy Transfer will have to restore or replace the landowners’ water supply.It also includes $57,500 in fines to be paid to the Department of Environmental Protection, and $10 million that will be distributed through grants towards water improvement projects. Attorney General Josh Shapiro, speaking at a press conference on Friday, said the plea deal secures what Pennsylvania citizens impacted by Energy Transfer’s pipeline construction wanted most — a voice and a remedy.The settlement caps a multi-year investigation and follows more than $32 million in penalties that Energy Transfer has already been assessed by state environmental and pipeline regulators.The attorney general first filed 48 criminal charges against Energy Transfer in October — 47 misdemeanors and 1 felony charge — alleging that the company leaked thousands of gallons of drilling fluid during underground drilling operations when building the Mariner East pipelines. Those spills showed up in people’s backyards, caused sinkholes, and polluted waterways, a grand jury convened to hear the evidence concluded. It also found that Energy Transfer kept some of this damage from environmental regulators despite requirements to report it.The twin Mariner East pipelines now carry natural gas liquids from Ohio and Western Pennsylvania to a processing plant near Philadelphia.In February, Mr. Shapiro added nine more charges to the case. These stemmed from an investigation into the company’s 2018 Revolution Pipeline explosion in Beaver County. There, an early-morning landslide cause the newly-activated natural gas pipeline to slip, rupture and ignite. The grand jury that looked into the blast found that Energy Transfer failed to secure the ground along its right of way, which led to landslides.But most of the charges in the state’s case against Energy Transfer, filed in the Daughin County Court of Common Pleas, and most of the emphasis of the investigation was about water pollution, Mr. Shapiro said during the press conference.“That is the heart of this case,” he said.As part of the deal Energy Transfer pleaded “no contest” to 23 charges with the remaining 34 dropped, including the felony charge.In a statement that implied Mr. Shapiro was grandstanding to benefit his gubernatorial campaign, Energy Transfer nevertheless said it was pleased to put this matter to bed.To those who wonder why his office accepted a plea deal instead of taking the case to trial, the attorney general said: “even if we won, Energy Transfer would have walked away paying pocket change. The residents would have been screwed.”He said the $10 million payment stipulated in this plea deal is more than six times the maximum criminal penalty that could have been assessed under state law.
CNX Increases Spending to Stay Ahead of Inflation - CNX Resources Corp. will increase this year’s capital expenditures (capex) as it battles through inflationary pressures and works to keep its operations stable heading into next year. The Appalachian pure-play is now guiding for a 2022 capex range of $550-590 million, up $70 million at the midpoint from its previous forecast. “We are planning to run a second rig for almost the entirety of the second half of the year to ensure there are no delays to our 2023 schedule, and we are pre-buying and locking in key tangible goods and services,” said CFO Alan Shepard during a recent call to discuss the company’s second quarter results. [Want today’s Henry Hub, Houston Ship Channel and Chicago Citygate prices? Check out NGI’s daily natural gas price snapshot now.] Plans to keep a second rig running and accelerate three well turn-in-lines are forecast to cost $25 million, while $15 million has been allocated for innovation and emissions reductions, and another $30 million has been earmarked for rising costs related to inflation. While other independent producers across the country have shared ambitions to gain more exposure to international markets through LNG exports, CNX management continues to stress a more local approach. “CNX is going to continue to advocate for natural gas and the Appalachian region,” said CEO Nicholas Deluliis. He noted during the Pittsburgh-based company’s first quarter earnings call in April that the basin has a limited ability to ramp up production to help meet overseas natural gas demand due to pipeline constraints. The company has been pursuing local projects for what management said have been marginal costs. CNX recently expanded a partnership with the Pittsburgh International Airport, where it operates shale gas wells. The company plans to develop more wells at the airport to produce liquefied natural gas and compressed natural gas for use in ground transportation and aviation.
Biden, Manchin back deal to advance Mountain Valley pipeline - The Biden administration has agreed to advance the controversial Mountain Valley pipeline project as part of a broader permitting reform plan in Congress, a spokesperson for Energy and Natural Resources Chair Joe Manchin (D-W.Va.) said yesterday.Senate Majority Leader Chuck Schumer (D-N.Y.), House Speaker Nancy Pelosi (D-Calif.) and President Joe Biden agreed to pursue permitting reform legislation this year so Manchin would support a budget reconciliation package on climate, taxes and health care.Legislation in the works would require federal agencies to take “all necessary actions” to permit the natural gas project slated to run through Virginia and West Virginia, according to a summary shared with E&E News. It also would grant jurisdiction to the U.S. Court of Appeals for the District of Columbia Circuit over litigation associated with the pipeline.In addition to advancing the pipeline, which is being developed as a joint venture by Equitrans Midstream Corp. and other energy companies, the permitting deal would direct the president to “designate and periodically update” 25 energy infrastructure projects considered to be of high priority. It would also establish a two-year timeline for federal environmental reviews associated with “major projects” and a one-year timeline for “lower-impact projects” (E&E Daily, Aug. 2).Unlike the reconciliation bill, the new agreement with the Mountain Valley pipeline measures would need backing from Republicans and at least 60 members of the Senate to pass (E&E Daily, July 29).Initially approved by the Federal Energy Regulatory Commission in October 2017, the 303-mile Mountain Valley pipeline has faced years of legal challenges and prolonged opposition from environmental and conservation groups, who say the project is nonviable. Manchin has repeatedly backed the $6.6 billion project, describing it as necessary for maintaining a reliable and affordable energy system (Energywire, July 21).In a research note yesterday, ClearView Energy Partners LLC described the plan to move legal challenges to the D.C. Circuit as an “unusual directive,” noting that project opponents have succeeded in vacating some of the project’s permits at the 4th U.S. Circuit Court of Appeals. In May, project developers unsuccessfully asked for new judges to hear a challenge to a state water permit (Energywire, June 23). “We view this Congressional directive (if enacted) as materially changing the prospects for MVP and its planned timeline,” Clearview wrote about the accord. The plan could affect several federal agencies if it enacted. Mountain Valley still has permits pending from the Bureau of Land Management, the Forest Service and Fish and Wildlife Service. Two state water permits from Virginia and West Virginia are also still being litigated.
Manchin Trades Climate Support for Massive WV Pipeline — From his Summers County, West Virginia, farmhouse, Mark Jarrell can see the Greenbrier River and, beyond it, the ridge that marks the Virginia border. He and many others along the path of the partially finished Mountain Valley Pipeline through West Virginia and Virginia fear that it may contaminate rural streams and cause erosion or even landslides. By filing lawsuits over the potential impacts on water, endangered species and public forests, they have exposed flaws in the project’s permit applications and pushed its completion well beyond the original target of 2018. The delays have helped balloon the pipeline’s cost from the original estimate of $3.5 billion to $6.6 billion. But now, in the name of combating climate change, the administration of President Joe Biden and the Democratic leadership in Congress are poised to vanquish Jarrell and other pipeline opponents. For months, the nation has wondered what price Democratic West Virginia Sen. Joe Manchin would extract to allow a major climate change bill. Part of that price turns out to be clearing the way for the Mountain Valley Pipeline. “It’s a hard pill to swallow,” said Jarrell, a former golf course manager who has devoted much of his retirement to writing protest letters, filing complaints with regulatory agencies and attending public hearings about the pipeline. “We’re once again a sacrifice zone.” The White House and congressional leaders have agreed to step in and ensure final approval of all permits that the Mountain Valley Pipeline needs, according to a summary released by Manchin’s office Monday evening. The agreement, which would require separate legislation, would also strip jurisdiction over any further legal challenges to those permits from a federal appeals court that has repeatedly ruled that the project violated the law. The provisions, according to the summary, will “require the relevant agencies to take all necessary actions to permit the construction and operation of the Mountain Valley Pipeline” and would shift jurisdiction “over any further litigation” to a different court, the D.C. Circuit Court of Appeals. In essence, the Democratic leadership accepted a 303-mile, two-state pipeline fostering continued use of fossil fuels in exchange for cleaner energy and reduced greenhouse emissions nationwide. Manchin has been pushing publicly for the pipeline to be completed, arguing it would move much needed energy supplies to market, promote the growth of West Virginia’s natural gas industry and create well-paid construction jobs.
Manchin agreement smooths way for Mountain Valley Pipeline - Pittsburgh Business Times -- Equitrans Midstream Corp. CEO Thomas Karam on Tuesday hailed proposed legislation that he said would smooth the way for the approval of its long-delayed pipeline for Marcellus and Utica shale natural gas.The long-delayed and over-budget $6.6 billion pipeline, caught up in legal hurdles and resubmitted permits, was one of the top of priorities for U.S. Sen.Joe Manchin, D-West Virginia when he negotiated a wider package on the Biden administration's domestic priorities on prescription drugs and climate change last week. It emerged Monday that part of the deal was an agreement to lighten the permitting process of a number of energy infrastructure projects, including MVP. MVP, a project of Canonsburg-based Equitrans (NYSE: ETRN), is a 303-mile pipeline that will take southwestern Pennsylvania natural gas from West Virginia to Virginia. But it's been mired in legal battles and permits that it has had to resubmit, some more than once. Karam called MVP "collateral damage" in the fight between energy companies and environmental advocates.Karam, citing Manchin's work and the agreement on proposed legislation on federal permitting, said the proposed legislation would allow the pipeline to complete its revised timeline of being operational in the second half of 2024.The proposed permitting legislation "includes direct treatment for MVP," Karam said. He had referred to it as the Federal Permitting Reform and Jobs Act, but Equitrans later in the day issued a correction to say that the bill by that name was not the same and had been introduced last year. The proposed energy permitting provisions discussed on the call, and part of which was released Monday, directly mentioned MVP.Manchin's office told reporters that the pipeline was one of several that would benefit from the changes in permitting processes, which would provide the certainty that oil and gas companies have craved and have not received in recent years with court action and fierce opposition. MVP, which was initially to be completed in 2018, has been a poster child for those delays. Karam had two messages Tuesday in the company's second-quarter earnings call: That the legislation was going to help MVP and other energy infrastructure projects, and that even without it, Equitrans was confident that it could clear the legal hurdles that have been brought up in recent months. Equitrans through the decision of the Fourth Circuit Court of Appeals, have lost a previously approved biological impact statement as well as approval to cross a federally owned forest.
Republican Senators, Manchin Revive Trump-Era Energy Reform - The Senate voted to reinstate rules helping expedite the construction of energy infrastructure that persisted under former President Donald Trump, eliminating a final rule that was previously imposed by the Biden administration. Senate Energy and Natural Resources Chair Joe Manchin of West Virginia joined a united Republican caucus to pass a Resolution of Disapproval in a 50-47 vote by using the Congressional Review Act (CRA) to nullify the Biden administration’s National Environmental Policy Act (NEPA) regulations, according to Senate logs. The move will accelerate federal permitting for the development of crucial future energy, mining, and infrastructure projects.The vote will return the NEPA process to the 2020 Trump-era provisions that curtailed regulations, making sure that fossil fuel projects were only studied for their individual environmental impact and not for the eventual effects of the energy that would be produced by the infrastructure, according to documents. The Biden administration, which often prioritizes climate and environmental issues, found Trump’s reforms objectionable and finalized a new rule that neutralized them in April 2022. Despite the 2020 rule’s ability to expedite oil and gas pipelines, the removal of NEPA regulation applies to all infrastructure on federal lands and can also help green energy infrastructure or rare earth mineral mines, essentially for the production of EVs to be built faster, according to CEI. Republican Sen. Dan Sullivan of Alaska originally proposed the vote that will also prevent the reissuing of a similar rule in the future unless Congress authorizes it. Republicans unanimously voted to overturn Biden’s permitting regulations, while Manchin was the only Democrat to support the move. The vote comes after President Joe Biden and Sen. Chuck Schumer of New York promised Manchin that they would help pass permitting reform on Monday. The president can still use his powers to veto the effort.
U.S. Natural Gas Production Hit An All-Time High In 2021 - This article is the fourth in a series on the BP Statistical Review of World Energy 2022. The Review provides a comprehensive picture of supply and demand for major energy sources on a country-level basis. Previous articles covered overall energy consumption, carbon dioxide emissions, and petroleum supply and demand. Today, I want to cover the production and consumption of natural gas. In 2021, global natural gas consumption reached a new all-time high, surpassing the previous record set in 2019 by 3.3%. Natural gas is the cleanest-burning of the fossil fuels. It is also the fastest-growing fossil fuel, with a global 2.2% average annual growth rate over the past decade.In comparison, oil grew at a rate of 0.7% globally over the past decade, and coal grew globally at 0.1%. Looking ahead, natural gas is projected to be the only fossil fuel that will see substantial demand growth over the next two decades.Over the past decade, the U.S. shale gas boom propelled the U.S. into the global lead among natural producers. In 2021, the U.S. set a new all-time high for natural gas production. For the year, the U.S. held a commanding 23.1% share of global natural gas production, ahead of Russia (17.4%) and even the entire Middle East (17.7%).The Top 10 producers of natural gas accounted for 72.6% of the world’s natural gas supply in 2021. U.S. production grew 2.3% last year to surpass 90 billion cubic feet (BCF) per day for the first time. U.S. production in 2021 was 91% higher than in 2005, when the shale gas boom was just getting started.The U.S. is also the world’s top consumer of natural gas. In fact, most of the leading producers are also the world’s leading consumers.The surge of natural gas production in the U.S. has also launched the U.S. into first place globally in natural gas liquids (NGL) production. The U.S. has a 44.8% global share of NGL production, with most of the NGLs destined for refineries or petrochemical production.However, because the U.S. consumes most of the natural gas it produces, it lags behind two other countries in the export of liquefied natural gas (LNG), which is different than NGL. In 2021 Australia was in first place globally with a 20.9% share of LNG exports, followed by Qatar (20.7%), the U.S. (18.4%), Russia (7.7%), and Malaysia (6.5%).But the U.S. is the world’s fastest-growing LNG exporter, with a 49.1% average annual growth rate over the past decade (and a 100% increase in LNG exports from 2019 to 2021). The U.S. is on a pace to become the world’s largest LNG exporter this year.
Fracking offers New York enormous potential — if only politicians would get out of the way - Way back in 2019, before anyone had heard of COVID, the national economy was enjoying record levels of success while New York’s was struggling. President Donald Trump was well-positioned for reelection, while Gov. Andrew Cuomo was trying to explain his state’s stagnation.The previous year, 190,000 New Yorkers had fled to other states. Once-booming upstate cities like Buffalo, Rochester and Binghamton led the state’s population loss. Cuomo blamed it on the weather, saying people departed for “climate-based” reasons. And Cuomo blamed Trump (no surprise there) for the discontinuation of state and local tax (SALT) deductions that he claimed created a $2 billion shortfall. Then-political-newcomer Rep. Alexandria Ocasio-Cortez had scuttled Cuomo’s hard-fought Amazon deal, canceling 25,000 jobs and billions in tax revenue. New York state was in a rut.And New York’s greatest economic opportunity still lies buried under its feet today.Geological formations below ground hold tens of trillions of cubic feet of natural gas. The US Geological Survey estimates the Marcellus Shale formation contains 84 trillion cubic feet and the Utica Shale another 38 trillion. Large portions of these formations are in New York, where they sit untapped — because of Cuomo’s fracking ban, which he persuaded the Legislature to pass.Cuomo couldn’t have known that the price of natural gas would more than quadruple after 2020, nor that Russia would cut liquefied-natural-gas exports to Europe, prompting rationing and fear for the winter. But he did know that natural gas — and the fracking necessary to retrieve it — would mean jobs, economic prosperity and opportunity for New Yorkers upstate. He ignored all that in the name of green science. My organization, Power The Future, compared Pennsylvania’s economy with New York’s. Natural gas generated $1.7 billion in new tax revenue for the Keystone State from 2012 to 2019. Wages for oil and gas employees had increased 36% between 2007 and 2012. In fact, from the great recession of 2008 to 2012, when Pennsylvania was losing jobs overall, natural gas and fracking jobs increased 259%.The natural-gas industry is so crucial to Pennsylvania that the Bernie Sanders-backed Senate candidate John Fetterman has magically reversed his opposition to fracking. The Democratic gubernatorial candidate, Josh Shapiro, who has been on the record as anti-fossil fuel and anti-fracking — and even sued the industry as attorney general — hides all this on his campaign website, saying he wants Pennsylvania to “remain an energy hub.” So even Pennsylvania’s liberal Democrats are pro-natural-gas. Or at least claim to be. Then there is New York, today with an even worse economic climate and greater population decline (not to mention skyrocketing crime). Cuomo is long gone. But New York’s anti-fossil fuel, anti-fracking, anti-commonsense policies remain.
DC Moves To Ban Natural Gas In Most New Buildings -By 2026, all new buildings and substantial renovations in D.C. will have to be net-zero construction, meaning they produce as much energy as they consume, under legislation passed unanimously by the D.C. Council. The legislation, which also bans most natural gas use in new buildings, has now been signed by Mayor Muriel Bowser. Separate climate legislation, also signed by Bowser, commits to making the entire city carbon neutral by 2045. “Buildings account for close to 75% of the District’s emissions,” said Councilmember Mary Cheh, who introduced the bills, during discussion of the legislation. “So making our buildings more efficient and ensuring that they use clean energy, is probably one of the most important steps we can take to achieve carbon neutrality.” Building emissions come from the electricity and natural gas used for heating, air conditioning, hot water, cooking, and everything else that requires power. Earlier this year, a study found that ample natural gas leaks around the District are a contributor to climate change. Mike Tidwell, executive director of the Chesapeake Climate Action Network, said the District had “raised the bar on climate action, not only in the nation’s capital, but for the whole country.”
Natural Gas Futures See Late Bounce as August Forecast Turns Hotter; Rain Dampens Cash -Armed with a cooling weather forecast and a new production high over the weekend, natural gas traders initially sent September futures lower as the calendar flipped to August. However, midday weather models showing more heat for the East Coast quickly reversed the course for September Nymex gas futures. The prompt month settled 5.4 cents higher at $8.283/MMBtu. October futures moved up 5.2 cents to $8.260. Spot gas prices extended their losses from late last week amid showers tracking across the Midwest and eastern United States, which kept a lid on temperatures. NGI’s Spot Gas National Avg. fell 19.0 cents to $8.140. Futures action was fast and furious Monday, with September prices down sharply out of the gate as weather forecasts cooled a bit for the first half of this month. The prompt month plunged to a $7.753 intraday low before recovering midday. Bespoke Weather Services said near-record heat is still expected this week, with every day in the 15-day outlook forecast to be hotter than normal. But, models have tended to overshoot the level of projected heat throughout the summer, and heading into the middle of August, some cooler trends are likely to emerge. “As we head into the middle part of the month, the focus of strongest anomalous heat looks set to slosh back into the middle of the nation, with some relaxation expected in the eastern part of the U.S.,” Bespoke said. Nevertheless, the midday Global Forecast System model gained back four of the nine cooling degree days (CDD) it lost over the weekend. Overall, it remained “impressively hot and bullish” most of the next 15 days, while remaining more than 15 CDDs hotter than the European model. Meanwhile, production continues to tease new highs. NatGasWeather pointed out that output hit 97 Bcf late last week and held at that level through the weekend. However, with the start of the new month, early data on Monday reflected a 1.5 Bcf day/day decline in production. Revisions are likely, though. With the recent heat and the near-term outlook reflecting more of the same, U.S. storage deficits are set to swell in the coming weeks, according to the firm. It sees overall stocks, currently 345 Bcf below the five-year average, slipping to slightly more than 360 Bcf behind those levels. On the bright side, NatGasWeather noted deficits may have ballooned to near 450 Bcf if not for the outage at the Freeport LNG terminal.
U.S. natgas futures drop 7% on record output, lower demand (Reuters) - U.S. natural gas futures dropped about 7% to a two-week low on Tuesday on record output and forecasts for less demand over the next two weeks than previously expected. That price drop came despite a 5% jump in European gas prices on concerns about Russian supplies and forecasts for temperatures across much of the Untied States to remain hotter than normal through at least mid August. So far this summer, electric companies have already burned record amounts of gas to meet soaring power use to keep air conditioners humming. Power demand in Texas was expected to break records again this week. Gas-fired plants have provided over 40% of U.S. power in recent weeks, according to federal energy data, even though gas futures soared about 52% in July. That is partially because coal prices keep hitting fresh record highs, making it uneconomical for some generators to use their coal-fired plants. Front-month gas futures fell 57.7 cents, or 7.0%, to settle at $7.706 per million British thermal units (mmBtu), its lowest close since July 19. That was the biggest one-day percentage decline since late June when the contract fell about 17%. So far this year, the front-month was up about 105% as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since the amount of gas from Russia to Europe has dropped following Moscow's invasion of Ukraine on Feb. 24. Gas was trading around $62 per mmBtu in Europe and $45 in Asia. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 97.4 bcfd so far in August from a record 96.7 bcfd in July. On a daily basis, however, output was on track to drop 1.4 bcfd to a preliminary 96.7 bcfd on Tuesday after soaring 2.4 bcfd to a daily record high of 98.4 bcfd on Friday. Preliminary data is often changed later in the day. With hotter weather expected, Refinitiv projected that average U.S. gas demand including exports would rise from 99.6 bcfd this week to 100.2 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Monday. The average amount of gas flowing to U.S. LNG export plants rose to 11.1 bcfd so far in August from 10.9 bcfd in July. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG.
USA Gas Prices Hit 14 Year Seasonal High -U.S. gas prices hit at a 14-year seasonal high as the country battles persistent high temperatures and resultant soaring cooling demand for gas. That’s what Rystad Energy Analyst Karolina Siemieniuk highlighted in a market note sent to Rigzone late Tuesday, which outlined that Henry Hub gas prices rose to $8.99 per MMBtu on July 26, before falling to $8.283 per MMBtu on August 1. At the time of writing, Henry Hub gas prices were hovering just under $8 per MMBtu. The commodity closed above $9 per MMBtu in June but dipped to under $6 per MMBtu in July. In the note, the Rystad analyst pointed out that, in the west, prolonged droughts and reduced hydro-electric generation had contributed to elevated gas use. “At the same time, the U.S. has become the largest LNG exporter, with 42 million tons of LNG exported in the first six months of 2022, about six million tons more compared with the same period last year,” Siemienik stated in the note. “The U.S. has since mid-June not been exporting at its full capacity due to the ongoing outage at the Freeport LNG facility in Texas, which has affected 15.3 million tons per annum of capacity. Despite this outage … current U.S. gas inventories are below the five-year average and last year’s number,” the analyst added. “U.S. underground storage as of week 29 (July 22) was at 2.416 trillion cubic feet, which is 260 billion cubic feet below last year’s level. In the absence of the Freeport LNG outage, gas inventories could have been even lower and prices in the U.S. even higher,” Siemieniuk continued. The analyst also warned in the note that, “with Europe still scrambling for LNG, prices are likely to stay elevated for the near future”.
U.S. natgas jump 7% with Freeport LNG seen back in October (Reuters) - U.S. natural gas futures jumped 7% on Wednesday after Freeport LNG said its liquefied natural gas (LNG) export plant in Texas remains on track to return to service in early October. Freeport said in a release that it entered into a consent agreement with the U.S. Pipeline Hazardous Materials Safety Administration (PHMSA) that should allow the plant "to resume initial operations in early October." The shutdown of Freeport on June 8 left a lot of gas in the United States for utilities to inject into what are extremely low stockpiles. Freeport is the second-biggest LNG export plant in the United States. It was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut. Freeport has long estimated the facility will return to at least partial service in October. Some analysts, however, have projected the outage would last longer. In addition to the Freeport news, prices were also up on forecasts for hotter weather and more air conditioning demand next week than previously expected. Front-month gas futures rose 56.0 cents, or 7.3%, to settle at $8.266 per million British thermal units (mmBtu). In what has already been an extremely volatile year, that increase was only the biggest one-day percentage gain since July 20 when the contract rose about 10%. On Tuesday, the front-month fell about 7%. So far this year, the front-month was up about 118% as much higher prices in Europe and Asia keep demand for U.S. LNG exports strong, especially since the amount of gas from Russia to Europe has dropped following Moscow's invasion of Ukraine on Feb. 24. Gas was trading around $59 per mmBtu in Europe and $46 in Asia. The United States became the world's top LNG exporter during the first half of 2022. But no matter how high global gas prices rise, the United States cannot export any more LNG because its plants were already operating at full capacity. Russian gas exports 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 - held at 2.5 bcfd on Tuesday, the same as Monday. That compares with an average of 2.8 bcfd in July and 10.4 bcfd in August 2021. . With hotter weather expected, Refinitiv projected that average U.S. gas demand including exports would rise from 99.5 bcfd this week to 101.3 bcfd next week. The forecast for next week was higher than Refinitiv's outlook on Tuesday. The average amount of gas flowing to U.S. LNG export plants rose to 11.0 bcfd so far in August from 10.9 bcfd in July. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG.
Natural Gas Futures Plunge, but Quickly Recover from EIA’s Plump Storage Report -The Energy Information Administration (EIA) reported a much larger-than-expected 41 Bcf injection into natural gas storage inventories for the week ending July 29. The EIA figure topped even the highest of estimates ahead of the report, and seemingly eased some concerns about supply, given the possibility of Freeport LNG’s return in October. The Nymex September gas futures contract was down about 24 cents day/day at around $8.020/MMBtu in the minutes leading up to the inventory report. They quickly plunged to $7.880 as the EIA print crossed trading desks. By 11 a.m. ET, though, the prompt month was back at $8.112, off 15.4 cents from Wednesday’s close. “After a few tight numbers, I see this one 1.5 Bcf/d loose versus last year,” said managing director Het Shah of The Desk’s online chat Enelyst. “Most of my miss was in the South Central salt. I was expecting salt to draw” but it “came in flat.” South Central salt stocks ended the period unchanged at 195 Bcf, while nonsalts added 4 Bcf to lift stocks to 671 Bcf, according to EIA. Midwest inventories rose by 18 Bcf, while East stocks increased by 17 Bcf. Mountain storage levels were up 3 Bcf, and the Pacific region stayed flat on the week. The 41 Bcf injection compares with the year-earlier injection of 16 Bcf. The five-year average for the week is a build of 35 Bcf, according to EIA. Enelyst participants questioned whether production was higher than the 97 Bcf/d levels recently observed in the market. In particular, there were questions about whether Appalachia producers were ramping up amid the bursts of heat sweeping through the region. In addition, one of the trains at the Sabine Pass liquefied natural gas terminal was out of commission most of last week, which made more gas available for injection. Total working gas in storage as of July 29 was 2,457 Bcf, which is 268 Bcf below year-ago levels and 337 Bcf below the five-year average, EIA said.
U.S. natgas futures ease 1% on record output, milder forecasts (Reuters) - U.S. natural gas futures eased about 1% on Friday as output neared record highs and forecasts for hot weather were revised slightly lower, which would mean lower demand for air conditioning. Also weighing on prices was the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in Texas, which has left more gas in the United States for utilities to inject into stockpiles for next winter. Forecasts called for weather to remain hotter than normal through at least mid August. Gas-fired generators have provided more than 40% of U.S. power in recent weeks, according to federal energy data. Even with gas futures soaring about 52% in July, gas remained an attractive option because coal prices kept hitting record highs. Freeport, the second-biggest LNG export plant in the United States, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8. Freeport expects to return the facility to at least partial service in early October. Front-month gas futures fell 5.8 cents, or 0.7%, to settle at $8.064 per million British thermal units (mmBtu). For the week, the contract slid about 2% after easing about 1% last week. So far this year, the front-month was up about 116%, as much higher prices in Europe and Asia fed strong demand for U.S. LNG exports. Gas flows to Europe from Russia dropped following Moscow's Feb. 24 invasion of Ukraine. Gas was trading around $58 per mmBtu in Europe and $45 in Asia. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 97.8 bcfd so far in August from a record 96.7 bcfd in July. With hotter weather expected, Refinitiv projected that average U.S. gas demand including exports would rise from 98.9 bcfd this week to 100.8 bcfd next week before sliding to 99.2 bcfd in two weeks as heat starts to ease. Refinitiv's forecasts for this week and next were lower than on Thursday.
EPA raises concerns over proposed Superior gas plant - Federal regulators are raising new concerns about the environmental impacts of a proposed natural gas plant in Superior they say could cause billions of dollars in damages.The Environmental Protection Agency says a preliminary review of the Nemadji Trail Energy Center fails to account for the project’s full climate impact and that the utilities seeking to build the plant should be required to reduce greenhouse gas emissions as a condition for receiving federal funding.Doing so would show “leadership in line with the federal policy priority to reduce climate risks and could also reduce regulatory risks for ratepayers,” the agency said.La Crosse-based Dairyland Power Cooperative and two Minnesota utilities are seeking a loan from the U.S. Department of Agriculture’s Rural Utilities Service to finance the $700 million plant, which they say will help them transition away from coal-fired power. A draft environmental review released earlier this year estimates the 625-megawatt plant would produce the equivalent of more than 2.7 million tons of carbon dioxide each year but would actually reduce net carbon emissions by displacing electricity from coal-fired power plants. The EPA says the review fails to quantify all the plant’s greenhouse gas emissions or quantify the potential costs to society, which the agency estimates could be more than $2 billion, nor does it consider the plant’s disproportionate impact on Native American tribes.The review doesn’t account for methane — a far more potent greenhouse gas than carbon dioxide — leaked during the production, processing and transportation of gas before it reaches the plant, which the EPA says makes it unclear whether the project would actually result in lower emissions. The agency also says net emissions projections should account for the increasing reliance on wind, solar and other carbon-free energy sources — not just the “business as usual” model.
Texas LNG Blast Starting to Eat into USA LNG Exports to Europe - An outage at Freeport LNG in Texas since a June 8 blast is starting to eat into U.S. LNG exports to Europe, a new market note from energy and environmental geo-analytics company Kayrros has stated. According to a graph included in the note, which contained data stretching back to the start of the year, Europe LNG imports from the U.S. are at their lowest level in 2022 at under one million cubic meters. Although the graph shows that the figure is still well above 2021, 2020, and 2019 levels at the same period, it outlines that highs of just under three million cubic meters were reached three times this year, with the latest occurrence coming around May. “Much of the recent relative easing of European LNG imports reflects reduced flows from the U.S., which had been the main source of incremental imports earlier on,” Kayrros stated in the note, which was sent to Rigzone. “U.S. LNG export capacity took a hit on June 8 when a blast rocked the Freeport LNG liquefaction plant on Quintana Island, Texas, causing a prolonged outage whose impact is now beginning to be felt at the receiving end,” Kayrros added. In the note, Kayrros said LNG is a key alternative to piped Russian natural gas into Europe, but added that supply availability has been somewhat constrained by a series of outages in the last few weeks. The company also highlighted in the note that Europe needs to maintain sufficiently high gas imports levels to build underground storage ahead of the peak winter heating season. On June 8, a statement posted on Freeport LNG’s official Facebook page announced that an incident had occurred at the Freeport LNG facility on Quintana Island at about 11.40 am. An update posted on the company’s Facebook page on the same day revealed that the incident had been stabilized and that the company was in the early stages of its investigation of the event. On June 14, Freeport LNG revealed that the completion of all necessary repairs and a return to full plant operations at the Freeport LNG liquefaction plant on Quintana Island was not expected until late 2022.
Freeport LNG reaches agreement with US on corrective actions following June fire - Freeport LNG has reached an agreement with US regulators on certain corrective actions that must be taken before it can resume service, the operator said Aug. 3. The three-train, 15 million mt/year facility in Texas has remained offline since an explosion and fire June 8. The terminal accounts for about 15% of US LNG supply, which has become increasingly important to serving European demand amid sharp cuts in Russian pipeline gas to the continent. The operator said in a statement that it believes it can complete the necessary corrective measures, along with applicable repair and restoration activities, in order to resume initial operations in early October, maintaining its most recent target. It had previously targeted resumption of full service by the end of the year. Officials with the US Pipeline and Hazardous Materials Safety Administration did not immediately respond to a message seeking comment. "The obligations under the consent agreement are intended to ensure that Freeport LNG can safely and confidently resume initial LNG production and thereafter ultimately return to full operation of all liquefaction facilities," the operator said. "In the near term, the consent agreement includes certain corrective measures, many of which are currently underway, that Freeport LNG is to take to obtain PHMSA approval for an initial resumption of LNG production from its liquefaction facility." NYMEX Henry Hub August spiked 56 cents higher to settle at $8.266/MMBtu Aug. 3, data from CME Group shows. The contract had weakened in recent trading sessions, after reaching a 30-day peak of $8.993/MMBtu July 26. The explosion and associated fire at Freeport LNG occurred in a pipe rack near the LNG storage tanks at the liquefaction facility. An estimated 120,000 cubic feet of LNG was reported to be released within the facility, according to PHMSA. Following the incident, PHMSA told Freeport LNG it wanted the operator to take corrective actions and seek their approval before resuming normal operations. Corrective actions it sought included the submission of an evaluation of the LNG storage tanks operating modes. The agency had said it wanted the evaluation to be performed by an approved independent third party. Inspection and testing procedures also were sought, as was a root-cause failure analysis. PHMSA also had said a final report would have to include findings, any lessons learned, and whether the findings and any lessons learned are applicable to the entirety of Freeport's operations.
EPA resumes pollution helicopter tracking in Permian Basin - In a sign of intensified regulatory scrutiny of the United States’ largest oil-producing region, EPA has launched a new round of helicopter flyovers in the Permian Basin in search of big sources of methane and smog-forming compounds. The flyovers will continue until Aug. 15, the agency announced yesterday. Any violations uncovered will be met with “significant penalties,” along with steps to prevent future infractions and follow-up monitoring to make sure that any emission fixes are working, according to a news release. The basin, which spans some 75,000 square miles in West Texas and southeastern New Mexico “accounts for 40% of our nation’s oil supply and has produced large quantities of dangerous [volatile organic compounds] and methane over the years, contributing to climate change and poor air quality,” Earthea Nance, head of EPA’s Dallas-based regional office, said in the release. “The flyovers are vital to identifying which facilities are responsible for the bulk of these emissions and therefore where reductions are most urgently needed.” Methane is a powerful heat-trapping gas; volatile organic compounds help spawn ground-level ozone, the main ingredient in smog. The aircraft pollution tracking effort has precedent. In 2020, for example, EPA conducted flyovers in the basin that found emissions “significantly higher than those reported by industry,” according to a news release at the time by the New Mexico Environment Department. As of publication time today, a spokesperson for the Dallas EPA office had not provided answers to questions posed late yesterday seeking information on the number and scope of the flyovers, when they began and whether the findings could be used in determining whether at least some parts of the basin are failing to meet the latest ground-level ozone standard of 70 parts per billion. Ozone, a lung irritant, is formed by the reaction of volatile organic compounds and nitrogen oxides in sunlight. While all of the basin is currently deemed in attainment with the 70 ppb limit, EPA regulators signaled in June that they were considering downgrades, a step that would likely mean new pollution control requirements for oil and gas producers in the region. Already, EPA has missed its self-imposed schedule of releasing a formal notice of any possible reclassifications by June. But the prospect has prompted pushback from both Texas Gov. Greg Abbott (R) and industry trade groups who contend that stricter enforcement could drive up gasoline prices. In a letter earlier this summer, for example, Abbott set a July 29 deadline for the agency to suspend its “proposed redesignation,” warning that Texas would otherwise “take the action needed to protect the production of oil — and the gasoline that comes from it” (E&E News PM, June 27). That deadline passed last Friday; a staffer in Abbott’s press office had no immediate comment today on what action, if any, is now planned. In a prepared statement today, Todd Staples, president of the Texas Oil & Gas Association, did not address the EPA flyovers but said that producers are using a variety of means — including drones, handheld optical imaging cameras and zero-emission pneumatic controllers — to identify and cut releases, adding that “these efforts are met with great success.”
U.S. oil output slips 0.5% in May to lowest since February – EIA --U.S. crude oil production slid in May by about 0.5% to its lowest since February, according to a monthly report from the U.S. Energy Information Administration on Friday. Oil production fell to nearly 11.6 million barrels per day in May from 11.65 million bpd the month prior, the report showed. Output, which has been recovering from the impact of the coronavirus pandemic, remains far below its record high of 12.3 million bpd in 2019. Production in North Dakota rose 17.1% to about 1 million barrels per day in May, highest since March, the report showed. New Mexico output fell 0.7% to 1.5 million barrels per day in May, lowest since March. Output in Texas fell 1% to 5 million barrels per day in May, lowest since February. Monthly gross natural gas production in the U.S. Lower 48 states rose 1.1 billion cubic feet per day (bcfd) to a record 108.4 bcfd in May, the EIA said in its monthly 914 production report. That topped the prior all-time high of 108.2 in November 2021. In top gas producing states, monthly output rose 0.3% to a record 30.9 bcfd in Texas and 0.5% in Pennsylvania to 20.7 bcfd. Pennsylvania output hit a record 21.9 bcfd in December 2021. Demand for U.S. crude and petroleum products rose in May to about 20 million bpd, the highest since March, according to the EIA. Demand for motor gasoline rose to 9.1 million bpd, the highest since August 2021, the EIA said.
U.S. Drilling Activity Slows As Prices Ease - The number of total active drilling rigs in the United States fell by 3 this week, according to new data from Baker Hughes published on Friday. The total rig count fell to 764 this week—273 rigs higher than the rig count this time in 2021. Oil rigs in the United States fell by 7 this week to 598. Gas rigs rose by 4, to 161. Miscellaneous rigs held steady at 5. The rig count in the Permian Basin fell by 4 to 347 this week. Rigs in the Eagle Ford stayed the same at 72. Oil and gas rigs in the Permian are 104 above where they were this time last year. Primary Vision's Frac Spread Count, an estimate of the number of crews completing unfinished wells—a more frugal use of finances than drilling new wells—rose to 295 for week ending July 29, compared to 239 a year ago. Crude oil production in the United States stayed the same at 12.1 million bpd in the week ending July 29, according to the latest EIA data. At 12:33 p.m. ET, oil prices were trending up on the day despite a positive jobs report, with the overall oil market still tight, although prices were down on the week. WTI was trading at $89.63 on the day—up $1.09 per barrel (+1.03%) on the day, but down $10 per barrel on the week. The Brent benchmark traded at $95.27 per barrel, up $1.15 (+1.22%) on the day, but down nearly $15 per barrel on the week. At 1:04 pm ET, WTI was trading at $89.72 while Brent was trading at $95.59 per barrel—both up on the day.
US Frack Growth Constrained In "Perfect Storm" - Last week, Halliburton Co.'s CEO Jeff Miller warned hydraulic fracturing equipment is in short supply and could hamper fracking growth. Another oil/gas executive echoed the same warning this week and said bottlenecks could persist through 2023. "Availability of frac fleets is one of main bottlenecks impeding oil and natural as production growth for the next 18 months," Robert Drummond, chief executive officer of fracking firm NexTier Oilfield Solutions, told Reuters. Besides supply chain snarls, Drummond warned that capital constraints would make adding equipment to fields challenging. He said this imbalance could take several years to correct, adding that NexTier has no plans to expand fracking capacity this year. This development is another setback for the Biden administration's efforts to increase US oil production to ease the worst inflation in forty years ahead of the midterm elections in November. US crude production is around 11.6 million barrels per day, below the pre-pandemic 12.3 million bpd in 2019, the latest data from the Energy Information Administration show. Matt Hagerty, a senior analyst at BTU Analytics, pointed out that "frac crew bottlenecks" are a "significant headwind for US producers headed into 2023." He said frac sand and labor shortages, elevated inflation, and limited frac fleets are a "perfect storm." Halliburton's Miller said oil companies didn't have enough fracking equipment for newly leased wells. He said diesel-powered and electric equipment are in short supply, "making it almost impossible to add incremental capacity this year." A similar message was conveyed by Exxon Mobil, whose CEO said that global oil markets might remain tight for three to five years primarily because of a lack of investment since the pandemic began.Exxon CEO Darren Woods said it'll take time for oil firms to "catch up" on the investments needed to ensure enough supply.In response to shale's dismal ramp-up in production, the Biden administration has panic sold millions and millions of barrels of oil from the Strategic Petroleum Reserve, which has been drained by 125 million barrels so far in 2022 -- all in hopes of lowering gasoline prices at the pump ahead of the midterm elections in November.
Coast Guard monitoring oil spill cleanup in Louisiana (AP) — The Coast Guard was monitoring an oil spill cleanup on Thursday, four days after it poured into a Louisiana swamp southwest of Baton Rouge. An estimated 4,000 gallons (15,141 liters) of oil spilled Sunday while WCC Energy Group LLC was piping oil from wellheads into a barge tank used for storage, Coast Guard spokesman Riley Perkofski said in emails. A call to WCC Energy Group's office was not immediately returned. The Coast Guard has not received any reports of oiled wildlife, and the spill's cause is being investigated, a news release said. The spill occurred near Bayou Sorrel in Iberville Parish, at a site about 20 miles (32 kilometers) southwest of Baton Rouge, Perkofski said. The company stopped the spill and hired a cleanup company, the news release said. It said OMI Environmental Solutions has put oil-absorbing boom around the spill, with a skimmer and absorbent materials inside it to recover oil. Federal regulations classify a 4,000-gallon spill as medium sized. Bayou Sorrel became notorious in Louisiana after fumes at a hazardous waste dump, also about 20 miles southwest of Baton Rouge, killed a 19-year-old trucker. Kirtley Jackson's death prompted the legislature to pass Louisiana's first hazardous waste law in 1978. The 265-acre (107 hectare) dump was cleaned up as a Superfund site, and was taken off the Superfund list in 1997.
Hafnia tanker spills more than 2,000 gallons of bunker oil in Mississippi River - An LR tanker, Hafnia Rhine, owned by the Oslo-listed product tanker unit of BW Group, Hafnia, spilled more than 2,000 gallons of oil into the Mississippi River in the US. According to the US Coast Guard, the Singapore-flagged vessel, built in 2008, discharged oil into the river last Thursday while bunkering a barge at Ama Anchorage near Kenner, Louisiana. The oil spill was secured by the vessel’s crew, but Coast Guard pollution responders deployed to the scene estimated up to 2,100 gallons of fuel oil entered the water and contaminated at least 50 barges in the vicinity. The National Response Corporation and Environmental Safety and Health Consulting Services were hired to help remove the oil from the water. A containment boom and a sorbent boom were placed around the affected area, including the contaminated vessels. There have been no reports of impact on wildlife and the cause of the spill is still under investigation, the Coast Guard said.
Wisconsin DNR investigating oil spill on contested Enbridge Line 5 -- The state Department of Natural Resources is investigating an oil spill near a Native American reservation in northern Wisconsin. Enbridge Energy reported Wednesday that a contractor had encountered contaminated soil along the Canadian company’s Line 5 pipeline south of Ashland and about a mile from the Bad River Band of Lake Superior Chippewa reservation, according to the DNR. Enbridge said they could not find a leak and believe the contamination was from a past spill, according to the DNR, which said agency staff have visited the site and not found evidence of an ongoing leak. Enbridge spokesperson Juli Kellner said crews found “a trace amount of product” near a valve and shut down the line as a precaution while they investigate the source. Conley cautioned utilities are risking more than $500 million in ratepayer money and he will not allow them to build in protected areas “simply because the transmission companies plowed ahead" with no guarantee of a river crossing. Enbridge has excavated and stored the contaminated soil, according to the DNR, and will be required to document all actions taken to address the suspected spill, the amount of contaminated soil and how it is disposed of.The DNR says the investigation is ongoing and the agency declined to provide additional information, which it said will be posted once available on the agency’s publicly accessible spills database.The 645-mile line runs from Superior to Ontario, Canada, moving about 540,000 barrels of petroleum products per day.As a result of a lawsuit filed by the Bad River band, Enbridge is seeking to bypass the reservation with about 41 miles of new pipe through Ashland, Bayfield and Iron counties.
Feds suspend oil leases on public land in Central California - California Atty. Gen. Rob Bonta announced Monday that the state has reached a settlement with the federal government to halt new oil and gas leases on public lands in Central California until the potential risks to public health and the environment are adequately assessed. The moratorium comes after several years of legal challenges from environmental organizations and the state of California, which accused the U.S. Bureau of Land Management under Donald Trump of opening up more than 1 million acres of federal land in Central California to drilling and hydraulic fracturing without thoroughly examining the potential effects on air quality and groundwater. Hydraulic fracturing, more commonly known as fracking, is a common practice used to extract more oil and natural gas by injecting highly pressurized water, sand and a medley of toxic chemicals into underground rock formations. Fracking chemicals have the potential to sully nearby aquifers and release harmful air pollution linked to increased risk of asthma, heart disease and certain cancers. Research also suggests fracking can induce smaller tremors. “Fracking is dangerous for our communities, damaging to our environment, and out of step with California’s climate goals,” Bonta said in a statement Monday. “The Trump administration recklessly opened Central California up to new oil and gas drilling without considering how fracking can hurt communities by causing polluted groundwater, toxic air emissions, minor earthquakes, climate impacts and more. In keeping with the Bureau of Land Management’s mission to preserve the health of our public lands, it must reassess this Trump-era mistake.” Bonta, along with his predecessor, Xavier Becerra, alleged the federal agency didn’t fully evaluate these potential impacts or sufficiently consider how to mitigate them on 1.2 million acres of land in Fresno, Kern, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare and Ventura Counties. Under the settlement announced Monday, the Bureau of Land Management, the federal agency responsible for overseeing oil and gas development on federal and Native American tribal lands, has agreed to not lease these lands until it finalizes a review that properly addresses these environmental concerns. “Protecting public lands is not only a step forward, but also a way to prevent several steps back,” said Cesar Aguirre, a senior organizer with the Central California Environmental Justice Network. “Using public lands to prop up the oil industry is dangerous to our green spaces and communities. We must protect our public lands not only for us to enjoy, but for us to protect Earth.”
California not counting methane leaks from idle wells - California claims to know how much climate-warming gas is going into the air from within its borders. It's the law: California limits climate pollution and each year the limits get stricter.The state has also been a major oil and gas producer for more than a century, and authorities are well aware some 35,000 old, inactive oil and gas wells perforate the landscape.Yet officials with the agency responsible for regulating greenhouse gas emissions say they don't include methane that leaks from these idle wells in their inventory of the state's emissions.Ira Leifer, a University of California Santa Barbara scientist said the lack of data on emissions pouring or seeping out of idle wells calls into question the state’s ability to meet its ambitious goal to achieve carbon neutrality by 2045.Residents and environmentalists from across the state have been voicing concern about the possibility of leaking idle or abandoned wells for years, but the concerns were heightened in May and June when 21 idle wells were discovered to be leaking methane in or near two Bakersfield neighborhoods. They say that the leaking wells are “an urgent public health issue,” because when a well is leaking methane, other gases often escape too.Leifer said these “ridealong” gases were his biggest concern with the wells."Those other gases have significant health impacts,” Leifer said, yet we know even less about their quantities than we do about the methane.In July, residents who live in the communities nearest the leaking wells protested at the California Geologic Management Division’s field offices, calling for better oversight.“It’s clear that they are willing to ignore this public health emergency. Our communities are done waiting. CalGEM needs to do their job,”
Diesel Shortage Deepens Global Dependency On U.S. Fuel - A deepening dependency on U.S. diesel deliveries in many parts of the world could lead to problems in the coming months as domestic demand for the fuel increases while production fails to increase at the same rate.Bloomberg reports that the United States is exporting diesel fuel at record rates, reaching 1.4 million bpd in July, which was the highest in five years, according to data from Vortexa.U.S. diesel shipments go mainly to Brazil, Mexico, Chile, and Argentina, but now they are going to Europe as well.A lot of the increase is coming from Europe, which is seeking to replace Russian volumes with U.S. ones amid the Ukraine crisis and an oil and fuels embargo that will come into effect towards the end of the year.The Bloomberg report cited Valero Energy’s chief operating officer as saying during a conference call last week that supplying Europe with enough diesel would be a challenge because of the tight supply situation.Another challenge would come from higher domestic demand as farmers begin harvesting in the Midwest. Harvest season begins soon in Brazil, too, a big buyer of U.S. diesel.Diesel inventories in the United States have been in decline for much of this year as demand for fuels continued to recover from the pandemic faster than supply. The latest data from the Energy Information Administration showed yet another inventory decline for the week to July 22, of 800,000 bpd. This compared with a 1.3-million-barrel draw for the previous week.Production of middle distillates, including diesel, in the meantime, has hovered around 5 million barrels daily. On the East Coast, a shortage is already looming, according to Bloomberg. Seasonal distillate stocks, the media reported, have been at record lows since May. Last winter, the East Coast already suffered a shortage of diesel, and if the situation continues unfolding the way it is currently unfolding, it could see a repeat.
Exxon, Chevron Post Record Revenues | Asharq AL-awsat - The two largest US oil companies, Exxon Mobil Corp and Chevron Corp, posted record revenue in Q2 2022 on Friday. With crude surging above $100 a barrel shortly after the Russian invasion on Ukraine, and refining margins climbing due to tight plant capacity, ExxonMobil reported $17.9 billion in profits and Chevron $11.6 billion in the just-finished second quarter. The results come on the heels of similarly jaw-dropping figures from European petroleum heavyweights, with Shell reporting $18 billion in profits, Total Energies $5.7 billion and Eni $3.8 billion. Crude prices traded between $95 and $120 a barrel during the quarter, as the war and the wave of sanctions on Moscow lifted the oil market back to levels last seen in 2008. On Friday, both companies reported higher oil and natural gas volumes in the United States, with ExxonMobil boosted by an increased 130,000 barrels of oil-equivalent in the Permian Basin in Texas and New Mexico, and Chevron notching a three percent rise in US volumes. ExxonMobil plans to add 250,000 barrels per day of refining capacity at its Beaumont, Texas plant in the first quarter of 2023, representing “the industry's largest single capacity addition in the US since 2012,” ExxonMobil Chief Executive Darren Woods said in a news release. Both companies reported big increases in revenues, with Exxon Mobil's jumping 71% to $115.7 billion and Chevron 83% to $69 billion. This rise is considered one of the main factors behind the global inflation that hit unprecedented levels for decades in the United States and Europe. Inflation is already changing where Americans go and what they eat. It's also changing the way they consume energy. Inflation in Europe has also been surging, including soaring costs for energy. The two companies, which suffered significant financial losses early in the COVID-19 pandemic as petroleum demand tanked, have not used the mountains of cash from higher prices to significantly lift capital spending, which remains below the level prior to the pandemic. Instead, the companies have been steering funds to shareholders. ExxonMobil paid out $7.6 billion in distributions during the quarter, while Chevron lifted the top end of its annual share repurchase range to $15 billion from $10 billion.
Top House Democrat probes oil company earnings - House Energy and Commerce Chair Frank Pallone demanded information yesterday about record profits from some of the biggest U.S. oil producers as the head of the United Nations slammed what he called the industry’s “grotesque greed,” adding to the political fallout from one of Big Oil’s best-ever financial quarters. Pallone (D-N.J.) sent letters to the chief executives of Exxon Mobil Corp., Chevron Corp., Shell PLC and BP PLC, saying his committee is investigating “what oil companies could and should be doing to bring down gas prices.” The four companies earned more than $50 billion in the second quarter of 2022, as Russia’s war in Ukraine pushed up oil prices and the average price of gasoline in the United States exceeded $5 a gallon. It was the best quarter on record for Exxon, Chevron and Shell, and the best since 2008 for BP, according to Reuters (Energywire, Aug. 1). “Your company is positioned to help alleviate Americans’ pain at the pump, but I am concerned that you are more focused on rewarding company executives and shareholders,” Pallone’s letters said. Pallone asked how much of their earnings the companies planned to spend on executive compensation, dividends and shareholder buybacks, and also how much of their capital budget will go to conventional oil and gas production versus cleaner forms of energy. The letters were sent the same day U.N. Secretary-General António Guterres called on governments to tax the oil companies’ profits and “use the funds to support the most vulnerable people through these difficult times.” “It is immoral for oil and gas companies to be making record profits from the current energy crisis on the backs of the poorest, at a massive cost to the climate,” Guterres, a former prime minister of Portugal who has led the United Nations since 2017, said during a press conference at the U.N. headquarters. The oil companies, while acknowledging that consumers are struggling with high costs, defended their record while releasing financial results over the last week. On a call with reporters yesterday, Shell CEO Ben van Beurden was asked about public anger over high energy costs. “In the end, our role is to supply the energy the world needs and that is what we are doing,” he said. In an email to E&E News, Shell added that it continues to “convey to Congress and the Administration that we will do all we can to increase production at this tumultuous time.“
NOCs, Not Big Oil, Are Responsible For Most Emissions While much of the global pressure toward decarbonization has been directed toward privately owned and operated oil supermajors like BP, ExxonMobil, and Shell, a new report from the Economist suggests that much of this pressure and blame is misguided. It’s not that Big Oil doesn’t need to change its focus, strategy, and commitments in order to cut greenhouse gas emissions quickly and significantly enough to avoid the worst impacts of climate change – it does. The thing is, the emissions of privately owned oil companies pale in comparison to the enormity of state-owned oil enterprises, which are producing most of the oil, emitting most of the greenhouse gases, raking in most of the profits, and receiving much less attention. In fact, the Economist article, titled “State-run oil giants will make or break the energy transition,” says that in comparison to Big Oil, national oil companies (NOCs) are “enormous oil.” Together, NOCs represent three-fifths of the world’s crude oil production, half of global natural gas production, and two-thirds of the world’s remaining proven oil and gas reserves. “Four—Adnoc of the United Arab Emirates (UAE), Saudi Aramco, pdvsa of Venezuela and QatarEnergy—possess enough hydrocarbons to continue producing at current rates for over four decades.”Taking into consideration the sheer scale of NOCs’ production power, it does make the global attention to these institutions’ climate actions (or rather non-actions) particularly stark and worrying. Especially when you take a look at just how bad most NOCs’ track records are when it comes to going green. To be clear, Big Oil’s track record isn’t stellar either, especially west of the Atlantic, but the greenhouse gas emissions of most supermajors have already stabilized or peaked. By contrast, just two NOCs can say the same: Brazil’s Petrobras and Colombia’s Ecopetrol. So why aren’t we going after the big fish? The answer, of course, is complicated. Decarbonization is political no matter how you slice it, but pressuring governments themselves to divest of the very industry keeping their state economies afloat and their politicians in office is tricky and divisive business. Many countries with state-run oil companies are volatile nations with monopolized economies and no contingency plan if oil was to go the way of the dodo. What’s more, all too often, petrostates make for oil autocrats with itchy trigger fingers. “No matter how you define a petrostate – whether you look at a state’s oil-derived wealth, its dependence on oil revenues, or its exports and relative importance to world markets – there is strong evidence that petrostates are more likely than other countries to start wars,” Foreign Policy reported last month.
St. Clair River oil spill from Canadian refinery contained, officials said --An oil spill on the St. Clair River from a Canadian refinery has been contained, Algonac city officials said Thursday."Canadian officials have mitigated the situation and have given an all-clear for water plants to open intakes and resume normal operations," Algonac fire department officials said in a post on the department's official Facebook page.The spill came from Suncor Energy's refinery in Sarnia, according toSarniaNewsToday.ca.It reports a sheen on the St. Clair River was discovered Wednesday. The emergency notification and response system for the Aamjiwnaang First Nation detected the spill on the river west of Indian Road and north of Lasalle Line, according to the news report.Company officials attributed the sheen to an overflow of the refinery’s internal sewer system caused by heavy rainfall, according to the website.It also said Suncor reports the overflow is no longer active and all water from the site is being safely managed. The company also contacted water users and asked them to take necessary precautions until the sheen passed. In addition, the refinery’s spill response team has deployed booms into the river. Cleanup efforts continue, the website said Wednesday.
Imperial Oil investigating 55,000 litre spill of produced water in N.W.T. - Imperial Oil Ltd. says it is investigating a spill from a produced water line at its facility in Norman Wells, N.W.T. The company says about 55,000 litres of produced water was released last Wednesday. The byproduct is produced during the extraction of oil and gas, is high in saline and can be contaminated with other substances. The company says it is investigating whether the produced water entered the Mackenzie River. It says water quality monitoring does not indicate a risk to public health or wildlife. The cause of the spill has not yet been determined.
Imperial Oil investigating if spill in Norman Wells entered Mackenzie River | CBC News - Imperial Oil is investigating to see if a spill from a produced water line at the Norman Wells, N.W.T., operation has entered into the Mackenzie River. The spill was reported to the N.W.T. Department of Environment and Natural Resources on Wednesday and according to the federal regulator occurred between Bear and Goose Island. Produced water is treated water that is pumped to the surface during oil recovery and then reused. According to Transport Canada, produced water can contain contaminants from oil extraction, but it varies with how much it contains. The company estimates the quantity of the spill is 55 cubic metres (55,000 litres). Lisa Schmidt, a spokesperson for Imperial Oil, said in an email the company is investigating the situation. "The line was quickly shut down. We currently estimate that approximately 55 cubic metres may have been released. We are still investigating whether produced water entered the Mackenzie River," she wrote. Schmidt said Imperial Oil is monitoring the water quality and there are no indications there is a risk to public health or wildlife. "We have notified regulators and have shared this information with local communities." No details have been provided on what caused the spill. Lisa LeBel, a spokesperson for Canada Energy Regulator, said in an email the agency "requested additional information from Imperial on the concentrations of chloride and hydrocarbons in the released fluid, an assessment of any potential impacts of the release as well as the actions that will be taken to repair the leak and prevent reoccurrence." Norman Wells Mayor Frank Pope said the leak was reported to him and that Imperial Oil has staff responding to the situation. Downriver in Fort Good Hope, Edwin Erutse, president of the Yamoga Land Corporation, said he has received a call from a concerned resident on the spill and plans to followup to find out more. Erutse said the spill comes during a busy fishing time in the community. "People have nets and that out on the river, so I want to make sure that these concerns don't go unaddressed," he said.
Swans treated after oil spill in Leamington Spa river - BBC News - A number of swans have been treated after being coated in oil following a spill in a river in Warwickshire. The Environment Agency (EA) responded to reports of the oil spill on the River Leam in Leamington Spa earlier.Officers were able to contain the spill using a boom and it was soaked up using absorbent pads to remove it from the water.The agency said the affected swans had been checked over by the RSPCA and Warwickshire Wildlife Trust.The cause of the spill is under investigation"The oil was inaccessible from the river bank but the team were able to access the area by boat," a spokesperson for the EA said."We are working with Severn Trent Water to investigate the source of the pollution."
UK North Sea Tax Receipts Now $27 Million Daily The UK Government is being urged to do more to support families, businesses, and the energy transition after research by the Aberdeen & Grampian Chamber of Commerce (AGCC) revealed a 662 percent increase in North Sea tax receipts. The AGCC found that offshore operators and licensees have been paying an average of $27 million in tax per day since the start of the year. That windfall is set to rise even further with the introduction of the Energy Profits Levy (EPL), which increases the effective rate of tax paid by offshore energy firms to 65 percent, which is more than three times higher than the standard rate of corporation tax. The government is now being urged to use this ‘double windfall’ to support consumers and businesses, but also to incentivize investment in the low carbon technologies which will help Scotland and the UK reach net-zero targets. The EPL comes with a tax sweetener – the Investment Allowance – which will see North Sea producers get a 91 pence tax saving for every £1 ($1.11 for every $1.22) they invest in further oil and gas extraction. AGCC stated that the allowance should be extended to include investment in the energy transition, in technologies such as offshore wind, hydrogen, CCS, and direct air capture. Between January and June this year, offshore companies paid over $4.88 billion in tax in just 181 days, according to tax receipt data from the Office for National Statistics, a 662 percent increase on the previous 12 months, when receipts for the six months of the year totaled $642 million. The Office of Budget Responsibility recently upgraded its estimates for the fiscal years ending March 2023 to 2027, now predicting North Sea revenues to hit $24.66 billion. This is more than double previous forecasts and excludes the windfall tax, which the Treasury says will raise an additional amount of over $6 billion in its first year and could run until 2025 if energy prices remain high, although there is no definition of what a high price is in the legislation. “Our research shows that with increased receipts and its new profits levy, the Treasury is receiving a double windfall from the North Sea. On the current trajectory, the tax take from the basin this financial year could be four times higher than the original forecasts done by the Office for Budget Responsibility in 2020. Clearly, there are sufficient incremental tax revenues to fund the support to consumers and businesses, but also to go further and to inject real pace into the energy transition.” “Failing to include renewables in the Investment Allowance was a missed opportunity and we want to see it expanded to include investment in technologies such as offshore wind, hydrogen, carbon capture and storage, and direct air capture – all of which are currently being developed in the North-east of Scotland. We need to deliver the reindustrialization of Scotland to make sure we capitalize on our green energy potential. These tax receipts provide an opportunity to do just that,”
Supply Chain Issues Push Back First Tyra Gas --TotalEnergies-operated Tyra Redevelopment Project in the Danish North Sea has experienced delays due to global supply chain difficulties. Energy company Noreco has announced that the TotalEnergies-operated Tyra Redevelopment Project in the Danish North Sea experienced delays due to global supply chain difficulties. Noreco said in a statement that the first gas date from the Tyra Redevelopment Project was revised by TotalEnergies and pushed back to winter 2023-2024. According to the company, the revision was driven by global supply chain challenges that have impacted the extent to which fabrication work on the processing module (TEG) has been completed in the yard in Batam. While the sail-away of the TEG will be a positive milestone that marks the end of Tyra II’s onshore fabrication phase, it will depart with additional work required to be completed offshore to achieve first gas. The operator of the project also revised its plan for the ongoing hook-up and commissioning phase. Seven out of eight modules are already installed offshore, and the TEG has been the only remaining module where onshore fabrication is still ongoing. With load-out of the processing module beginning this week, the module will leave McDermott’s yard in Batam in an incomplete state with approximately 580,000 hours of remaining work, where the operator expects approximately 165,000 hours are required to reach first gas. The carry-over work is mainly caused by the overall performance at the yard where overhang from Covid-19 has challenged the quality and progress, and the operator’s efforts in mitigating actions have proved not to be sufficiently effective.
German government drives up heating costs by imposing gas surcharge -- Last week, Federal Economics Minister Robert Habeck (Greens) announced the introduction of a heating gas surcharge, dealing another financial blow to working families, low-income households, students and pensioners. In addition to the high gas bills that many municipal utility companies will be sending out in the autumn, the government will be imposing a gas surcharge starting October 1. According to Habeck, the surcharge will amount to 1.5 to 5 cents per kilowatt hour and will be levied on all gas customers. Since about half of German households heat with gas, it will affect millions of people. The annual additional costs incurred by households as a result of the surcharge range from several hundred to well over a thousand euros, depending on its final level and the amount of gas consumed. If the surcharge is 5 cents, an average four-person household with an annual consumption of 20,000 kilowatt hours would have to pay up to €1,000 more. Even before the surcharge is imposed, experts predicted that the price of gas would triple. Now, the price will increase even further due to the gas surcharge. The surcharge will be passed on to the energy suppliers, who are thus being compensated for massively increased import prices. This affects both municipal utility companies that supply only a few tens of thousands of customers, as well as large corporations like Uniper, which do not produce gas and oil themselves but buy, distribute, and supply it to end users. They are being compensated for 90 percent of the price increase in procurement costs. In the end, the gas surcharge ends up in the coffers of the large energy companies, which profit from the high world market prices and are already reporting record profits.
Rhine River drops to record lows, restricting shipping and exacerbating the European energy crisis - (video) The water level on the Rhine River as measured by the Emmerich gauge in northern Germany is at a record low for this time of year. If it keeps going down at this rate, the all-time record that was established in 2018 might be beaten very soon – and a lot sooner than it was back then. The river at Kaub in east-central Germany – a key waypoint for the shipment of commodities – is expected to drop to 47 centimeters (18.5 inches) on August 6. That would take it to within 7 cm (2.75 inches) of being impassable.1 An impassable river could halt the flow of everything from fuel to chemicals as European governments try to prevent the continent’s worst energy-supply crisis in decades tipping the region into recession. “Coal shipments are already restricted by low water levels because fewer ships are available, and the ones that are ready to use carry less cargo,” energy supplier EnBW AG said . “Shipment costs for coal are therefore increasing, which in turn inflates the costs of operating coal plants.” Transporting petroleum to Basel, Switzerland, currently costs more than 200 euros ($204) per ton. That’s the most in at least three years, and it’s up from 25 euros a few months ago. Warm winter, lack of rainfall and excessive heat have already played a significant role in the crisis, pushing the European benchmark electricity prices to all-time highs on August 2.2 As a result, countries are relying even more on Russian gas to meet increased power demand instead of storing it for the coming winter season, as recently agreed in Brussels. “With the Rhine transport disrupted and alternatives such as rail and road looking increasingly expensive, it will be difficult for Germany and Switzerland to build gasoil/diesel stocks before temperatures cool,” said Josh Folds, a European oil analyst at consultants Facts Global Energy.
German leader says gas pipeline part is ready for Russia - (AP) — German Chancellor Olaf Scholz inspected a turbine at the center of a natural gas dispute and declared Wednesday that “there are no problems” blocking the part's return to Russia besides missing information from Russia’s state-controlled gas company. The Kremlin insisted more assurances were needed. Russian energy giant Gazprom last week halved the amount of natural gas flowing through the Nord Stream 1 pipeline to 20% of capacity, the latest reduction it blamed on delays to the turbine's delivery due to Western sanctions. German partner Siemens Energy sent the turbine to Canada for overhaul, which was a routine process before Russia invaded Ukraine and was subjected to Western sanctions. The German government says the turbine was meant to be installed in September and wasn't needed to make the pipeline function now; it says Moscow is using spurious technical explanations as cover for a political move to create uncertainty and to push up gas prices. The turbine is now stored at a Siemens Energy facility in Mulheim an der Ruhr, in western Germany. “This turbine is usable any time,” Scholz said, standing next to the 18-ton piece of machinery. “There is nothing standing in the way of its transport on to Russia — other than that the Russian recipients have to say that they want to have the turbine, and give the necessary information for the customs transport to Russia." “All other permits are there — that goes for the permit from Germany, the permit from the European Union, from the United Kingdom, from Canada,” the chancellor added. "There are no problems.” Gazprom’s repeated reductions of gas deliveries to various countries have raised fears that Russia may cut off supplies altogether to try to gain political leverage over Europe. German officials say Gazprom needs to specify where exactly the turbine needs to be sent. Scholz said he was checking out the turbine publicly to “demystify” it. The chancellor reiterated Germany's insistence that “there are no technical reasons for the reduction of gas deliveries through Nord Stream 1.” He said sanctions don't apply to the gas used to power industry, heat homes and generate electricity.Gazprom has repeatedly said it pressed Siemens Energy for documents and clarification. The company specifically wants documents from Siemens Energy proving that the turbine isn't subject to Western sanctions, Kremlin spokesman Dmitry Peskov said. “We need to be sure that it’s not under sanctions. We need to be sure that Siemens’ British subsidiary in charge of it won’t switch it off remotely in the future as part of sanctions,” Peskov told reporters during a conference call.
3 charts show Europe's unprecedented natural gas crisis -Europe is facing an unprecedented energy crisis that's pushing the economy closer to a recession and posing serious questions about the region's climate change ambitions. Russia has significantly reduced flows of natural gas to Europe since Western nations imposed tough sanctions on the Kremlin following its unprovoked invasion of Ukraine on Feb. 24. Moscow denies it is using gas as a weapon, but Europeans complain that Gazprom, Russia's state-owned energy company, is no longer a reliable provider. Reduced gas supplies from Russia are a problem for EU nations given it used to import about 40% of its gas stocks from the country. Data from Nord Stream, the operator in charge of a pipeline (Nord Stream 1) that links Russia to Germany, confirms that there's fewer gas volumes heading West. Last week alone, supplies via Nord Stream 1 were reduced to 20% from 40% with Gazprom citing maintenance issues Germany's economy minister, Robert Habeck, said Gazprom's technical excuse was a "farce." Supplies had been briefly halted before the latest reduction, with maintenance works being completed between July 11 and July 21. According to the European Commission, the EU's executive arm, 12 members states are already suffering from the reduced gas flows and a handful of others have been completely cut off. Top EU officials say Russia is "blackmailing" Europe and "weaponizing" its gas supplies. Moscow has repeatedly denied the accusations. "We have to be ready, there might be full disruption in near [the] future, and that means that we need to have a plan in place," European leaders are concerned about a complete shutdown in supplies, particularly because many industries use the commodity as a raw material in their manufacturing process. In this context, there have been efforts to seek alternative suppliers and different sources of energy. However, this transition is a difficult task that's impossible to be done in a short timeframe. The commission has asked EU nations to have a minimum storage target of 80% by November. In June, gas filling levels were just over 56%, according to the same institution. Natural gas prices have risen dramatically in the wake of Russia's invasion of Ukraine and even beforehand when Russia started to tighten flows. There's renewed price pressures every time Russia decreases its supplies to Europe given how important the commodity is for several sectors and given the lack of alternatives to Russian fossil fuels. Salomon Fiedler, an economist at Berenberg, noted that natural gas prices in Europe are "exorbitantly more expensive" now compared with the 2015-2019 price average. "In a normal year, the EU may use around 4.3 billion megawatt per hour (MWh) worth of natural gas. Thus, if prices are higher by €100 per MWh for one year and the EU had to pay these prices instead of benefitting from some long-term fixed-price contracts, costs would increase by about €430 billion ($437 billion) – equivalent to 3% of the EU's 2021 GDP," he said. Higher prices then naturally trickle down to the energy bills of companies and individuals across the bloc. "European benchmark natural gas prices at the Dutch Title Transfer Facility (TTF) shot up by 15% to almost EUR 200 per megawatt-hour as utilities bid for alternative supplies, raising concerns that consumers and industry will struggle to pay their energy bills and that there will be a winter recession," analysts at the Eurasia Group consultancy said in a research note Tuesday. Gr With supplies reduced and prices higher, the gas crisis is shaking Europe's economic prospects. The latest growth reading for the euro zone, out Friday, showed GDP at 0.7% in the second quarter — above market expectations. But more and more economists are pricing in a recession for 2023. The European Commission said earlier this month that the economy would grow 2.7% this year and 1.5% next year. However, the institution also said that a full shutdown in gas supplies from Russia could bring about a recession later in 2022. "Higher gas prices drive up firms' costs and squeeze consumers' budgets, leaving them less money to spend on other goods and services. As a result, we expect the euro zone to fall into recession this autumn at still high inflation," Fiedler said.
As Europe hunts for gas, where do the emissions go? -European leaders are assuring the world that they won’t overshoot their climate targets as they desperately search for new sources of fossil fuels.But could global emissions rise, even if Europe’s don’t?It’s a question increasingly on the mind of climate analysts and advocates as the European Union accelerates its hunt for alternatives to the Russian gas, oil and coal that keeps its economy humming.They worry that the rush to find new fuels is driving interest in new projects outside Europe that could increase global emissions while leaving those countries searching for buyers once the European Union no longer needs their gas.“If the E.U.’s policies feed an expansion of gas production globally that exceeds what it needs to replace the Russian gas for a period of time, then it creates a big problem,” said Bill Hare, founder and CEO of Climate Analytics, which provides scientific and policy analysis on climate change.“It is not only damaging to the climate but also to the countries that will start investing in new extraction,” he added.The European Union’s stated goal is to replace Russian fuel with gas from other countries as it works to reduce demand by boosting renewable energy capacity and improving energy efficiency over the coming years.But some countries in Europe are also investing in new terminals to import liquefied natural gas while also expressing support for new gas projects in countries like Senegal and Nigeria.The European commissioner for energy, Kadri Simson, said last week that the European Union had reached agreements for gas imports with Azerbaijan, the United States, Canada, Norway, Egypt and Israel and is exploring options to increase LNG imports from Nigeria.Nigeria, along with Mozambique and Tanzania, are among several countries in Africa that have LNG export terminals proposed or under construction capable of handling 60 million tons of gas a year, according to the latest data from Global Energy Monitor.In April, Italian energy giant Eni announced it would develop a liquefied natural gas field in the Republic of Congo with a capacity of 3 million tons of gas annually.And in June, German utility EnBw signed a 20-year contract with U.S. LNG producer Venture Global for 1.5 million tons starting in 2026. In Europe, there’s been a flurry of proposals to expand LNG import capacity since the European Commission announced it would cut its dependence on Russian gas. Analysts say that seems to be lowering the barrier for some LNG projects to advance their development timescales.Most of those projects are floating terminals, which have a life span of 5 to 10 years and can be moved elsewhere once Europe gets through its initial energy crunch, but there are indications that some could become permanent, said Greig Aitken, a research analyst with Global Energy Monitor. He pointed to a pre-contract agreement between the Polish company PGNiG Group and Sempra Infrastructure that aims for gas sales lasting 20 years from terminals in Louisiana and Texas starting in 2027. Those types of investments, if they’re finalized, could potentially lock in years of additional gas use and emissions.
Australia to divert gas for LNG exports to domestic use --The Australian government has moved to divert gas from the three LNG projects at Gladstone, Queensland to the domestic market to avoid a forecasted shortfall of 56PJ in 2023. The country's minister for resources Madeleine King is preparing a notice of intent to invoke the Australian domestic gas security mechanism (ADGSM) for 2023, after the Australian Competition and Consumer Commission (ACCC) found that the east coast could face a shortfall of 56PJ in 2023, compared with a shortfall of 2PJ it has forecast for this year. The three LNG projects in eastern Australia under the ADGSM are the Shell-operated 8.5mn t/yr Queensland Curtis LNG (QCLNG) venture; the 7.8mn t/yr Gladstone LNG (GLNG) venture operated by independent Australian producer Santos, and the 9mn t/yr Australia Pacific LNG (APLNG) venture operated by ConocoPhillips and independent Australian producer Origin Energy. The move is designed to force the three LNG exporters to guarantee supply to domestic manufacturers and households rather than delivering it to seaborne markets, where Russia's invasion of Ukraine has increased demand and prices. Canberra's plans will reduce the availability of spot cargoes on the seaborne LNG market, which is already tight due to Russia's invasion of Ukraine. But it will play well to a domestic audience concerned about rising inflation and a hollowing out of local manufacturing capacity. "Based on the forecast shortfall, the government needs to see firm commitments out of the east coast LNG exporters," King said. She also plans to extend the ADGSM, which was to expire on 1 January, to 2030, with a review in 2025. "The government is also talking with key trading partners to reassure them that Australia remains a trusted trading partner and a stable and reliable exporter of resources and energy," King added. The ACCC has argued that LNG exporters are not dealing with domestic users in the spirit of a Heads of Agreement signed last year, which commits them to offer uncontracted gas domestically before exporting it. "We are concerned that domestic gas users don't always have reasonable notice of these offers, and that LNG exporters do not make counter-offers to bids, which could indicate they are not seriously engaging in the domestic market," ACCC chair Gina Cass-Gottlieb said.
Australia tells exporters to keep natural gas at home to avoid an energy crunch - which could cause prices to soar even further - Australia has warned of a liquefied natural gas crunch on its eastern coast and will tell exporters to keep their supplies at home to make up any potential shortfalls.The Australian Competition and Consumer Commission said in astatement on Monday that exporters must divert gas to the domestic market to prevent a 56 petajoule shortage by 2023."Our latest gas report finds that the outlook for the east coast gas market has significantly worsened," ACCC chair Gina Cass-Gottlieb said. "To protect energy security on the east coast we are… strongly encouraging LNG exporters to immediately increase their supply into the market."News of a potential slowdown in exports comes as European gas prices soar, contributing to an energy crisis on the continent.Benchmark Dutch TTF natural gas futures rose 4% to just under 200 euros ($205) per megawatt hour on Monday - meaning they have surged 135% since the start of June.Australia is one of the world's largest liquefied natural gas exporters and ships 7.2 million tons of the super-cooled fuel abroad each year, according to Bloomberg. Supply cuts could push key gas benchmarks even higher, analysts said.Natural gas stocks rallied after the ACCC's announcement.
Russia Has Exported $1 Billion In Fossil Fuels Per Day Since The Ukraine War Despite Sanctions And Boycotts - Despite wide-ranging sanctions and import bans, Russia's vast energy sector continues to thrive, with the country managing to export nearly a billion dollars worth of fossil fuels per day in the first 100 days since its invasion of Ukraine. Indeed, higher crude oil and fuel prices have allowed Russian oil and gas revenues to climb even after the sanctions forced export volumes to dip.Ultimately, there is no shortage of willing buyers lining up for cheap Russian Urals, nor is there a dearth of middlemen connecting them with Russian energy companies.Lurking behind the scenes are Switzerland's giant trading houses Vitol, Glencore, and Gunvor as well as Singapore's Trafigura, all of which have continued lifting large volumes of Russian crude and products, including diesel, amid wide-ranging Western Sanctions on Russia.Vitol has pledged to stop buying Russian crude by the end of this year, but that's still a long way from today. Trafigura promised it would stop buying crude from Russia's state-run Rosneft by May 15th but is free to buy cargoes of Russian crude from other suppliers. Glencore has promised it wouldn't enter any "new" trading business with Russia, but appears willing to maintain previous deals.Meanwhile, India and China have been making up for much of the lost markets for Russian fuels.India has never been a big buyer of Russian crude despite having to import 80% of its needs. In a typical year, India imports just 2-5% of its crude from Russia, roughly the same proportion as the United States did before it announced a 100% ban on Russian energy commodities. Indeed, India imported only 12 million barrels of Russian crude in 2021, with the majority of its oil sourced from Iraq, Saudi Arabia, the United Arab Emirates, and Nigeria.But back in May, reports emerged of a "significant uptick" in Russian oil deliveries bound for India.According to a Bloomberg report, India spent a good $5.1 billion on Russian oil, gas, and coal in the first three months after the invasion, more than five times the value of a year ago. However, China remains the biggest buyer of Russian energy commodities, spending $18.9 billion in the three months to the end of May, almost double the amount a year earlier.And, it's all about the money.According to the International Energy Agency (IEA), Urals crude from Russia has been offered at record discounts. Ellen Wald, president of Transversal Consulting, has told CNBC that a couple of commodity trading firms--such as Glencore and Vitol--were offering discounts of $30 and $25 per barrel, respectively, for the Urals blend. Urals is the main blend exported by Russia.The experts say simple economics is the biggest reason why White House pressure to curb purchases of crude oil from Russia have fallen on deaf ears in Delhi."Today, the Government of India's motivations are economic, not political. India will always look for a deal in their oil import strategy. It's hard not to take a 20% discount on crude when you import 80-85% of your oil, particularly on the heels of the pandemic and global growth slowdown,"
Russia faces 'economic oblivion' despite claims of short-term resilience, economists say - Russia is facing "economic oblivion" in the long term because of international sanctions and the flight of businesses, several economists have said. The International Monetary Fund last week upgraded Russia's gross domestic product estimate for 2022 by 2.5 percentage points, meaning the economy is now projected to contract by 6% this year. The IMF said the economy seemed to be weathering the barrage of economic sanctions better than expected.The Central Bank of Russia surprised markets in late July by cutting its key interest rate back to 8%, below its prewar level, citing cooling inflation, a strong currency and the risk of recession.The ruble recovered from historic early losses in the aftermath of the invasion of Ukraine to become a top performer on the global foreign exchange market this year, prompting Russian President Vladimir Putin to declare that Western sanctions had failed.Meanwhile, Russia has continued to export energy and other commodities while leveraging Europe's dependency on its gas supplies.However, many economists see long-lasting costs to the Russian economy from the exit of foreign firms – which will hit production capacity and capital and result in a "brain drain" – along with the loss of its long-term oil and gas markets and diminished access to critical imports of technology and inputs.
Nigeria Loses N184.5bn to Gas Flaring in Six Months - The possibility of Nigeria boosting its earnings by N183.54 billion at a time it is witnessing a decline in revenue was lost as oil and gas companies operating in the country wasted 126 billion standard cubic feet (SCF) of gas in the first half of 2022. According to a report obtained from the National Oil Spill Detection and Response Agency (NOSDRA), the gas was burnt off in the course of the oil production process in six months. The agency lamented that gas has been flared in Nigeria since the 1950s, releasing carbon dioxide and other gases into the atmosphere, serving as a continuing source of environmental and health concerns in the Niger Delta, despite efforts to reduce it. The oil spill watchdog noted that the volume of gas flared in the six-month period was equivalent to carbon dioxide (CO2) emission of 6.7 million tonnes in the oil-producing areas, capable of generating 12,600 gigawatts hours of electricity; while the companies were expected to pay penalties of $252.1 million, about N104.87 billion, which are hardly paid. In comparison, NOSDRA reported that the gas flared in the month under review was 4.56 per cent higher than the 120.5 billion SCF of gas flared in the second half of 2021, valued at $421.8 million, about N175.47 billion. The gas flared between July and December 2021 also attracted penalties of N241 million, an equivalent of N100.26 billion; has a power generating potential of 12,100 gigawatts hour; and saw an equivalent of 6.4 million tonnes of CO2. Furthermore, NOSDRA added that the volume of gas flared in the first half, according to the agency, represented a decline of 9.87 per cent, compared with the 139.8 billion SCF of gas flared in the same period in 2021, valued at $489.4 million, about N203.59 billion. The quantity of gas flared in the first six months of 2021, was capable of generating 14,000 gigawatt-hour of electricity; was equivalent to 7.4 million tonnes of CO2; while the companies were liable for penalties of $279.7 million, about N116.36 billion.
MOSOP reports fresh oil spill in Ogoniland, fingers Shell - MOVEMENT For Survival Of Ogoni People (MOSOP) on Wednesday cried out over a fresh oil spill in Ogoniland.. The spill, the Ogoni leadership organ noted, hit Bodo community, Gokana Local Government Area impacting residential areas with community dwellers asked to evacuate to mitigate the associated risks, including probable fire outbreak. MOSOP President, Fegalo Nsuke, in preliminary appraisal of the situation narrated that, “Witness reports say the spills suddenly erupted within the residential area of the community, strongly suggesting equipment failure.” Nsuke pointed fingers at “Shell for this spill and urges the company to take responsibility to put out the spills, alleviate its impact on the community, curtail its spread and commence proper remediation and compensation as expected and in accordance with global best practices. “This massive spill is occurring 11 years after the UNEP released a damning report exposing Shell’s devastation of the Ogoni environment and on a day an unannounced stakeholders meeting with some chiefs in Port Harcourt is holding to cement a plot to reenter Ogoni oilfields despite overwhelming Ogoni objection, a divide and conquer strategy with potentials to spark off internal conflicts. “We have communicated with community leaders to cooperate with investigations and ensure that every detail about this spill is communicated to our secretariat as soon as possible.” A spokesperson for the Shell Petroleum Development Company of Nigeria Limited (SPDC), however responded to Vanguard in anonymity that, “Owing to the level of theft, the SPDC JV-owned Trans Niger Pipeline (TNP) has not been carrying crude oil since mid-June.” Vanguard further gathered that Shell, owner of the TNP had equally warned other marginal operators piping through that line to desist as a result of theft, prompting new entrant, Heirs Oil and Gas to consider trucking. Another operator’s representative confirmed that a leak had been report on the TNP in Bodo axis, but prompt intervention has been hampered by alleged refusal of the community to allow a Joint Investigation Visit to the affected to spill spot to ascertain the cause and effect on the spill
Shell warns of economic plunge if sabotage persists in oil sector --Shell Petroleum Development Company of Nigeria (SPDC) has warned that if oil theft is not tackled urgently, the country could, in the future, be spending 50 per cent of its yearly budget on clean up. The Head, Corporate Relations, Nigeria, Igo Weli, while linking the current rise in foreign exchange rates, high cost of goods and services to sabotage of oil facilities, said unchecked illegal refining would further crash the economy and retard infrastructural development. Weli stated this in Port Harcourt, yesterday, during an engagement on oil theft, pipeline vandalism and illegal refineries. He said: “Spill is going on, and if you want to clean it up, it is going to cost a lot of money. People should create a link between actions and impacts. If you break pipes and the oil spills, and government needs to clean it, then the resources needed for other infrastructural development, like building of schools and hospitals, would be channelled into cleaning up a spill that is avoidable. “So, if the issue of oil theft continues, the spills will be horrible in the future and if you want to clean them up, you will have to allocate about 50 per cent of the national budget. “Consequently, there will be no economic growth in the nation, infrastructure will be retarded, new ones will not be built, old ones will not be maintained, schools will go on longer strikes and hospitals will collapse.” This came as the company announced that its Trans Niger Pipeline, from Rivers State to Bonny export terminal, has been inoperative since March 2022 as a result of sabotage. He said it makes no economic sense to keep pumping crude, asking: “How can we pump 200 barrels while only five gets to Bonny terminal?”He said Shell would only reopen the facility when it has confidence that it is secure. Weli said Shell is doing so much to protect its facilities from oil thieves and vandals, lamenting that 91 percent of spills from its facilities were caused by third party interference and sabotage. “What we do in Nigeria to protect our facilities, we don’t do in other countries where we operate. We have daily overflight with security agents. We have detailed engagements with them and we were deploying drones to monitor facilities. The loss is higher. That is why it is affecting the economy, the exchange rate and every other aspect of the economy.”
Africa’s key oil exporters unlikely to benefit from OPEC’s higher quotas --Failing to meet their original production targets, all Africa’s key oil exporting countries-except for Algeria, are not expected to benefit from OPEC’s new policy aimed at increasing production quotas, according to Oxford Economics. The London-based economic research forecast that Brent crude oil price will reach an average of $105.4 per barrel this year; however, it ruled out that such hikes would reflect significantly well on government oil revenues in countries such as Libya, Angola and Nigeria. “The relatively high oil price is providing fiscal reprieve for most of Africa’s oil producers after they withstood a severe shock to their largest source of income in 2020, but some will miss out on the potential windfall due to diverse exogenous factors,” the briefing noted.. For long, Libya has been falling short of meetings its production quotas due to a protracted civil conflict that continues to destabilize the oil industry. In June, the country’s oil production halved to just over 600,000 bpd from 1,200,000 bpd, said the report. Against the backdrop of two rival governments, tribal leaders have blocked key oil fields and halted exportation, which forced the national oil company to declare a force majeure in June. The move resulted in a spike in global oil prices, said the briefing. Although Angola’s crude oil production increased to 1,180,000 bpd in June from 1,160,000 in May, the country’s oil output still fell behind its June target by 320,000 bpd, the report noted. “We forecast oil production to rise to an average of 1,180,000 bpd in 2022 from 1,130,000 bpd in 2021. That said, the balance of risks is skewed to the downside due to the possibility of further technical problems at oil production facilities and supply chain disruptions.” Oil production in Nigeria declined by more than ten percent in Q2 2022 to an average of 1,170,000 bpd compared 1,310,000 bpd in the previous quarter. Oil revenues have dropped from $35.4m in May to $0.4m in June 2022, the report said. Since Feb 2021, the gap between Nigeria’ oil output and Opec quota has been widening due to oil supply disruptions and other security issues, showed a graph cited in the briefing. Algeria stands out as the country with the highest potential to benefit from increased production targets. The briefing made no mention of other members states of the African contingent within OPEC including Congo, Equatorial Guinea and Gabon. Source: Zawya
Kazakhstan Temporarily Reduces Oil Exports Through Russia - Oil supply from Kazakhstan to Russia's Novorossiysk Black Sea port has significantly decreased due to repairs and a production suspension at the country's two major oilfields."Due to repairs at the Tengiz field of Kazakhstan, the head section of the CPC pipeline (Tengiz pump station) is receiving oil from the field in a reduced mode. Also, due to the stoppage of oil production at the Kashagan field, the volume of oil intake into the CPC pipeline was reduced. These factors led to a significant decrease in the total volume of oil pumped through the Tengiz-Novorossiysk pipeline system," the Kazakh-Russian Caspian Pipeline Consortium (CPC) said in a statement on August 4, which was carried by Tengrinews."A separate announcement will be made [later] on the resumption of regular volumes of [oil] transport," the report added.Meanwhile, Kazakh Energy Minister Bolat Akchulakov said that his country is holding talks with Russia to supply gas to Kazakhstan's northern and eastern regions"If we want to start this work today, then the most optimal option is to supply gas from Russia. This is the most economically optimal option and sustainable in terms of gas supply. We are conducting such negotiations with Gazprom at the level of the QazaqGaz [Kazakh Gas] company," the minister said on August 3."As for the volume, the first stage will be nearly 4 billion cubic meters of gas with the possibility of increasing it to nearly 7 billion cubic meters. Let us round it up to 10 billion cubic meters because many coal-fired stations located there will, most likely, have to be converted to gas," he added.He also said that Kazakhstan was not considering Turkmenistan as a supplier of gas to its northern and eastern regions since there was no gas pipeline there. "Therefore, it will be easier today to construct a pipeline from Russia [to Kazakhstan], and then connect it to our energy system. However, this will take time," the minister added.
Iran says ready to return oil output to pre-sanctions level-Xinhua (Xinhua) -- Iran said on Wednesday that it is ready to return its crude oil production to pre-sanctions levels at the earliest possible time. Iranian Petroleum Minister Javad Owji made the remarks on the sidelines of the 31st OPEC and non-OPEC Ministerial Meeting, which was held via a videoconference, reported the Iranian oil ministry's website. Owji expressed the hope that major Western governments would understand correctly the world's present sensitive and critical circumstances and adopt a logical approach toward ensuring global energy security. He warned that this year's winter is very important for the entire world, Europe in particular, calling on the Europeans to think of solutions in advance. The minister said Iran has frequently highlighted the necessity of de-politicizing the energy sector, stressing that the return of Iran's oil to the world market can help restore balance and calm to the market. He added that Iran has always held that undermining global energy security and intensification of market fluctuations is a zero-sum game for all players. Owji's remarks came as the delegations from the remaining signatories to a 2015 nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), as well as the U.S. delegation, are currently in the Austrian capital of Vienna for a fresh round of the talks on reviving the agreement. Former U.S. President Donald Trump pulled the U.S. out of the deal in May 2018 and reimposed sanctions on Iran, which responded by abandoning some of its nuclear commitments under the JCPOA. Eight rounds of talks on restoring the deal have been held in Vienna since April 2021, but have so far failed to reach a breakthrough.
Libya oil production back at pre-blockade levels\ --Libya's oil production has returned to the volume recorded before a months-long blockade that paralysed the economy, official sources said on Sunday. "We are happy to announce that our production rates have reached the pre-force majeure levels" of 1.2 million barrels per day, Libya's National Oil Corporation (NOC) said on Twitter. Oil and Gas Minister Mohammed Aoun told AFP that he "confirms" production has returned to that level. On 15 July, Libya's new oil chief lifted force majeure at all the country's oil fields and export terminals as groups besieging several installations ended a blockade that had begun in mid-April. Force majeure is a legal measure allowing companies to free themselves from contractual obligations in light of circumstances beyond their control. The NOC, vital to oil-rich Libya's economy, has repeatedly resorted to the mechanism amid blockades of oil installations through years of violence and political upheaval following the NATO-backed revolt that toppled and killed dictator Muammar Gaddafi in 2011. Conflict in recent years broadly pitted authorities in the capital Tripoli against a camp in the east, where parliament is based. As the country's divided authorities struggled for power, groups close to the eastern camp blockaded six oil fields and export terminals over demands for a more "equitable distribution" of hydrocarbon revenues. Oil production fell to around 400,000 barrels of crude per day during the mid-April to mid-July blockade. Western diplomatic sources said the eastern-based camp agreed to reopen the facilities in exchange for a share of oil revenues for spending in regions under their control. The deal, which has not been confirmed officially, also saw the Tripoli-based government of Prime Minister Abdulhamid Dbeibah replace veteran NOC head Mustafa Sanalla with Farhat Bengdara. Bengdara is reportedly close to the United Arab Emirates, which supports the eastern-based camp.
OPEC+ Ministers Have Near Clean Sheet for September Policy -OPEC+ ministers meet today and, for the first time in over a year, there is no pre-agreed target increase to rubberstamp, analysts at Standard Chartered have highlighted. “The early 2020 output target cuts were fully reversed with the August loading programs,” the analysts stated in a report sent to Rigzone on Wednesday. “Ministers therefore have a nearly clean sheet in considering output policy from September onwards,” the analysts added. In the report, the analysts noted that there are several “key issues” from an OPEC perspective, adding that ministers will want to keep Russia within the policy process to ensure longer-term cooperation, “but will also not want to give key consuming countries the impression that they are holding back supplies unjustifiably”. “In our view, ministers have over the past month become more concerned about the downside to prices than the upside due to increased recession concerns, poor data from China, and the sharp erosion of price gains made after Russia’s invasion of Ukraine,” the analysts said in the report. “Brent prices are currently just $3 per barrel higher than the day before the invasion, after having moved $40 per barrel higher at one point,” the analysts added. Standard Chartered analysts outlined in the report that the company’s model shows “significant” supply gaps in 2024 and beyond, which they said “should tilt price pressures sharply to the upside”. The outlook for 2023 appears more downbeat, however, according to the analysts. “We think OPEC needs to keep supply under control and target lower inventories to keep prices above $90 per barrel in 2023,” the analysts noted in the report.
Global oil demand close to pre-pandemic levels, says Russia’s Novak Global oil demand has almost recovered to pre-pandemic levels, Russian Deputy Prime Minister Alexander Novak told state TV channel Rossiya-24 after OPEC+ members agreed to slightly increase its production target next month. He added that uncertainties remained in logistic chains and possible further spread of the COVID-19 pandemic and said that Russia and Saudi Arabia, two leading players in the oil output coordination deal, plan to hold an inter-governmental meeting in October.
Oil drops at start of week as China data raises demand concerns - Oil fell as the week’s trading kicked off, after poor Chinese economic data added to concerns that a global slowdown may sap demand. West Texas Intermediate dropped toward $98 a barrel after sinking almost 7% in July in the first back-to-back monthly loss since late 2020. Weekend data indicated a surprise contraction in Chinese factory activity, highlighting the cost of Beijing’s preference for mobility curbs to tackle Covid-19. In Libya, meanwhile, crude output has rebounded after a series of disruptions that more than halved supply, according to the OPEC member’s oil minister. Production has returned to 1.2 million barrels a day, a level last seen in early April, Mohamed Oun said in a telephone interview. Oil has seen volatile trading in recent months as concerns about a slowdown hurt demand for commodities even as underlying signals pointed to still-tight physical conditions. Data last week showed the US economy shrank for a second quarter, while the Federal Rerserve hiked rates by 75 basis points.
Oil Tumbles On China PMI Weakness, Libya Output Hike; To Remain Muted On Low Liquidity - Oil started the new month on the back foot, driftng lower slowly at first and then accelerating the move to the downside, with Brent trading just south of $100, as disappointing Chinese PMI prints added to concerns that a global slowdown may sap demand while an increase in Libyan output eased supply concerns ahead of this week's OPEC+ meeting. WTI slid below $97/bbl after sinking almost 7% in July in the first back-to-back monthly loss since late 2020. Weekend data indicated a surprise contraction in Chinese factory activity, highlighting the cost of mobility curbs to tackle Covid outbreaks. Purchasing managers’ indexes also weakened in South Korea and the euro area’s four largest members.Libya’s crude output has rebounded to its early April levels, the OPEC member’s oil minister said, in an increase that could help cool a jittery global oil market. Output climbed to 1.2 million barrels per day, Oil Minister Mohamed Oun said in a Bloomberg telephone interview. The increase comes after officials reached an agreement earlier this month with protesters and tribal leaders to reopen fields and export terminals largely shut for months.Unfortunately for bulls, as Bloomberg's Nour Al Ali correctly notes, open interest in Brent crude indicates that low liquidity is driving the market at the moment. This means that prices may remain range-bound as traders assess recessionary risks against tight market dynamics.As Ali adds, even before OPEC+ meets later this week, the verdict might already be out: "Low open interest in Brent shows that traders are as invested as they can be in the oil market for the time being. When both prices and open interest fall, that could mean that long positions are being liquidated. This chart that Alex Longley showed me earlier today shows aggregate open interest adjusted for prices near historic highs."
Oil Slides 4% on Expected Demand Loss as World Growth Slows - - Oil futures settled the first trading day of August with sharp losses triggered by weaker-than-expected economic data for China that showed a derailed recovery in its manufacturing sector following a brief rebound from spring lockdowns, while the return of Libyan oil production to the global market pressured the international crude benchmark below $100 barrel (bbl). Libya's National Oil Company (NOC) on Sunday, July 31, said the country's crude production returned to its pre-pandemic level of 1.2 million barrels per day (bpd) following the lifting of force majeure on oil exports two weeks prior. NOC's new board of directors lifted all force majeure declarations at Libya's oil terminals and fields on July 15 after a three-month shutdown triggered by violent protests. Libya's oil sector has been severely impacted by ongoing political turmoil, with various groups seeking control of the oilfields and the revenues they generate. Just a month ago, Libyan crude production averaged just about 650,000 bpd amid force majeure on loadings out of the Es Sider and Ras Lanuf terminals, as well as production at the El-Feel oil field. Libya' s fragile ceasefire may indeed prove short-lived as many times before over the past two years as the country descended deeper into political chaos. For now, the return of more than 1 million bpd in Libyan oil production will weigh on the oil market and prices. The return of Libya's oil production comes against a backdrop of a deteriorating macroeconomic outlook in China, European Union, and the United States -- the world's largest demand centers. In China, business activity across the manufacturing sector unexpectedly fell to a three-month low 49 reading in July, which is also indicative of a contraction. Details of the report showed Chinese manufacturers continued to struggle with high raw material prices, ongoing flare-ups of COVID-19, and disrupted supply chains. Slower-than-expected international demand for Chinese manufactured goods also weighed on the forward outlook. In Europe, the manufacturing sector fell deeper into contraction at the start of the third quarter, with July Purchasing Manager's Index data showing the sharpest decline in production since the initial wave of strict COVID-19 lockdowns in May 2020. Germany, France, Italy, and Spain all recorded sub-50 readings in their respective headline manufacturing PMIs. "Eurozone manufacturing is sinking into an increasingly steep downturn, adding to the region's recession risks. New orders are already falling at a pace which, excluding pandemic lockdown months, is the sharpest since the debt crisis in 2012, with worse likely to come," said Chris Williamson, chief business economist at S&P Global Market Intelligence.At settlement, West Texas Intermediate futures for September delivery declined $4.73 barrel (bbl) to $93.89 bbl. Brent October futures managed to finish a session a tad above $100 bbl, still down nearly $4 on the session. NYMEX September RBOB dropped 11.51 cents to $2.9981 gallon, while NYMEX September ULSD contract slid 10.9 cents to $3.44 gallon.
Oil prices slip as weak manufacturing data stokes recession fears - Oil prices edged lower on Tuesday, extending losses from the previous session, as investors worried about global oil demand following weak manufacturing data in several countries. Brent crude futures fell 29 cents to $99.74 a barrel by 0002 GMT, with WTI crude futures down 22 cents at $93.67 a barrel. The slide came after Brent futures slumped on Monday to a session low of $99.09 a barrel, their lowest since July 15. The U.S. crude benchmark dropped to as low as $92.42 a barrel, its weakest since July 14. Prices have been volatile, as investors weigh tight global supply with fears of a potential global recession. Recessionary concerns were heightened on Monday as surveys from the United States, Europe and Asia showed that factories struggled for momentum in July. Flagging global demand and China's strict COVID-19 restrictions slowed production. The price drops also come as market participants await the outcome of a meeting on Wednesday between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+, to decide on September output. A Fox Business news reporter said Saudi Arabia will push OPEC+ to increase oil production at the meeting. Two of eight OPEC+ sources in a Reuters survey said that a modest increase for September would be discussed at the Aug. 3 meeting. The rest said output is likely to be held steady. Meanwhile the United States on Monday imposed sanctions on Chinese and other firms it said helped to sell tens of millions of dollars' in Iranian oil and petrochemical products to East Asia as it seeks to raise pressure on Tehran to curb its nuclear programme.
Oil edges up ahead of OPEC meeting despite recession worries - Oil futures edged up less than 1% on Tuesday ahead of a meeting of OPEC+ producers this week that may not lead to a further boost in crude supply amid concerns a possible global recession could limit energy demand. Brent futures rose 51 cents, or 0.5%, to settle at $100.54 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 53 cents, or 0.6%, to settle at $94.42. Also giving oil prices a slight lift were analyst expectations that U.S. crude inventories declined by around 600,000 barrels last week. The Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, meet on Wednesday. Two of eight sources said a modest output hike would be discussed. The rest said a boost was unlikely. OPEC+ trimmed its forecast for an oil market surplus this year by 200,000 barrels per day (bpd) to 800,000 bpd, three delegates told Reuters.. Russia's invasion of Ukraine in February fed worries about global oil supply and sent prices soaring to near record highs. But with central banks raising interest rates to fight inflation, worries about slowing growth have eclipsed tight supply. Surveys showed factories across the United States, Europe and Asia struggled for momentum in July as flagging global demand and China's strict COVID-19 restrictions slowed production. "These readings did nothing to mitigate the fears of recession," Also casting a cloud over the market were worries that U.S. Speaker of the House Nancy Pelosi's visit to Taiwan will escalate tensions between the United States and China. China put its military on high alert and said it will launch "targeted military operations" in response to the visit. In Venezuela, meanwhile, outages disrupting the country's power and gas supplies to state-run energy firm PDVSA hit July oil exports, contributing to a 27% fall from the previous month.
WTI Dips After Unexpectedly Large Crude Build - Oil prices eked out modest gains on Tuesday ahead of tomorrow's OPEC+ meeting. Oil-watchers are skeptical that OPEC+ will answer President Joe Biden’s call for more oil supplies when it meets on Wednesday, expecting the coalition to preserve its remaining capacity for another time. “OPEC is unable or unwilling to swing as much as consuming nations would like,” said Tamas Varga, an analyst at brokers PVM Oil Associates Ltd. in London.“While President Biden’s visit to Saudi Arabia produced no immediate oil deliverables, we believe that the kingdom will reciprocate by continuing to gradually increase output,” said Helima Croft, chief strategist at RBC Capital Markets LLC. “A failure to add any more barrels to the market would undoubtedly be viewed as a major disappointment in Washington.”The rollercoaster today seemed also driven higher by fears of WW3 and then lower as Pelosi never triggered WW3, then oil prices tumbled back as Fed speakers jawboned down any hope for a Fed Pivot anytime soon, once again raising growth fears.“A global economic slowdown might be happening, but crude prices have come down too far given how tight the physical market remains,” Edward Moya, senior market analyst at Oanda said. For now all eyes are back on inventories... API
- Crude +2.165mm (+467k exp)
- Cushing +653k
- Gasoline -204k
- Distillates -351k
Analysts expected a modest build in crude stocks after last week's unexpectedly large draw, but were off with a significant build of 2.165mm barrels last week (gasoline and distillates saw small draws)... WTI was hovering around $94.25 ahead of the API print and slipped lower after the data, back below $94... US crude futures closed below its 200-day moving average for the first time this year on Monday. The level is considered by many to provide technical support and prices have since rebounded. Finally, we note that while gas prices at the pump continue to slide, wholesale gasoline and crude prices are decoupling higher and they lead retail higher...
Crudes Rally Ahead of OPEC+ Meeting, US Inventory Data -- West Texas Intermediate futures rallied early Wednesday despite preliminary data from the American Petroleum Institute showing U.S. commercial crude oil inventories unexpectedly increased in the final week of July, while OPEC+ ministers signal the coalition might raise oil production in September despite signs of decelerating demand growth in Asia and European Union. OPEC+ might have to raise oil production next month to avoid the market overheating, according to Kazakhstan energy minister Bolat Akchulakov, who suggested Wednesday morning the coalition is targeting a price corridor of $60 to $80 for the second half of the year. The market widely expected OPEC+ to keep oil production steady or opt for a modest increase at this week's meeting as most members of the coalition are seen to have exhausted their output potential. Reuters survey on Tuesday showed OPEC producers continued to underproduce their quota in July, with output by the 13-member cartel raising output by 310,000 bpd or just 60% of the production target allotted for the month. Wednesday's OPEC+ meeting follows the end of historic production cuts introduced in April 2020 which are now fully unwound as OPEC+ members return the final 648,000 barrels per day (bpd) of the reduction this month. OPEC+ Joint Technical Committee made no recommendation on Tuesday to raise production targets for September, but it lowered its global surplus forecast by 200,000 bpd this year to 800,000 bpd. Separately, the American Petroleum Institute reported on Tuesday U.S. commercial crude oil inventories increased by 2.165 million barrels (bbl) during the week ended July 29, missing calls for 700,000 bbl downturn. Stocks at the Cushing, Oklahoma, tank farm -- the New York Mercantile Exchange delivery point for West Texas Intermediate futures -- added 653,000 bbl. Gasoline supply declined 204,000 bbl in the final week of July compared with expectations for a 1.3 million bbl draw. Data also showed distillate inventories decreased 351,000 bbl last week compared with an expected 700,000 bbl build. In financial markets, global stocks are getting whipsawed early Wednesday as U.S. House Speaker Nancy Pelosi prepared to depart Taipei's Songshan airport in Taiwan, concluding a high-stake visit to the island. Within minutes of Pelosi's landing in Taiwan Tuesday night, China said it would immediately begin "a series of joint military operations around the island," including using long-range live ammunition in the Taiwan Strait. Near 7:45 a.m. EDT, West Texas Intermediate advanced to $95.14, up $0.74, while international crude benchmark Brent contract for October delivery gained to $101.34 bbl. NYMEX September RBOB added 6 cents to $3.12 gallon, while NYMEX September ULSD contract rallied 10.26 cents to $3.4807 gallon.
Oil Surges After OPEC+ Shuns Biden With Small Output Hike, Signals "Severely Limited Excess Capacity" -- OPEC+ just released its full statement and explicitly notes its limited ability to increase production (due to capacity constraints) from here: (emphasis ours)
- The 31st OPEC and non-OPEC Ministerial Meeting was held via videoconference on 3 August 2022.
- The Meeting noted the dynamic and rapidly evolving oil market fundamentals necessitating continuous assessment of market conditions.
- The Meeting noted that the severely limited availability of excess capacity necessitates utilizing it with great caution in response to severe supply disruptions.
- The Meeting noted that chronic under-investment in the oil sector has reduced excess capacities along the value chain (upstream-midstream downstream).
- The Meeting highlighted with particular concern that insufficient investment into the upstream sector will impact the availability of adequate supply in a timely manner to meet growing demand beyond 2023 from non-participating non-OPEC of-producing countries. some OPEC Member Countries and participating non-OPEC oil-producing countries
- It noted that preliminary data for OECD commercial oil stocks level stand a: 2.712 mb in June 2022. which was 163 mb lower than the same time last year, and 236 mb below the 2015- 2019 average, and that emergency oil stocks have reached their lowest levels in more than 30 yea's.
- The Meeting also noted that Declaration of Cooperation conformity averaged 130% since May 2020. supported by voluntary contributions of some Participating Counties.
Emphasizing the value and importance of maintaining consensus as essential to the cohesion o' OPEC 3nd participating nor-OPEC oil-producing countries. in view of the latest oil market fundamentals, the Participating Countries decided to:
- Reaffirm the decision of the 10th OPEC and non-OPEC Ministerial Meeting on 12th April 2020 and further endorses in subsequent meetings including the 19th OPEC and non- OPEC Ministerial Meet ng on the 18 July 2021.
- Adjust upward the production level for OPEC and non-OPEC Participating Countries by 0.1 md/d for the month of September 2022 as pe' the attached table. This adjustment does not 3'fee: the baselines deeded on the above-mentioned Meeting on 18 July 2021.
- Reiterate the critical importance of adhering to full conformity and to the compensation mechanism. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting.
- Hold the 32nd OPEC and non-OPEC Ministerial Meeting on 5 September 2022.
WTI Reverses OPEC+ Gains After Big Surprise Crude Build - - Oil prices have roller-coastered higher and now lower this morning following OPEC+'s decision to hike output minimally, and also note they have limited capacity for further increases. WTI traded lower overnight after an unexpectedly large crude build was reported by API. “The announced increase from OPEC+ equates to a nonevent,” . “The amount is so modest that it is a rounding error for global oil markets,” she added, noting that the market remains “hypersensitive” to supply and demand dynamics and that “volatility around headlines is not going away.” The oil market has reversed those OPEC+ gains as investors once again focus on fears of a global economic slowdown as signaled by numerous PMI/ISM surveys in the last few days. DOE
- Crude +4.47mm (+467k exp)
- Cushing +926k
- Gasoline +163k
- Distillates -2.40mm
After an unexpectedly large crude draw the previous, analysts expected a modest build this week (and API signaled a much larger build). Stocks at Cushing also rose for the 5th straight week Graphics Source: Bloomberg There was a 4.7mm drain from Strategic Midterm Reserve brings total down to 470 million barrels, lowest since May 1985. Gasoline demand fell by 7.61% in weekly comparison, nearly reversing all of the gains the previous week and causing the four-week rolling average to decline by 2.5%. The drop suggests demand remains suppressed despite the sustained decline in pump prices. US crude production was unchanged on the week... Perhaps rather notably, refinery capacity sank to 91% last week...the lowest in 3 months. WTI was hovering around $93.75 (200MA $94.76) ahead of the official data and extended losses on the big build...
Oil falls 4%, pressured by surprise U.S. crude, gasoline build -- Oil prices slid about 4% on Wednesday, with losses accelerating after U.S. data showed crude and gasoline stockpiles unexpectedly surged last week and as OPEC+ said it would raise its oil output target by 100,000 barrels per day (bpd). Brent crude futures settled down $3.76, or 3.7%, at $96.78 a barrel. West Texas Intermediate (WTI) crude futures fell $3.76, or 4%, to $90.66. Both contracts had seesawed earlier in the session. The premium for front-month Brent futures over barrels loading in six months' time is at a three-month low, indicating waning concern about tight supply. The same premium for WTI futures neared a four-month low. U.S. crude oil inventories rose unexpectedly last week as exports fell and refiners lowered runs, while gasoline stocks also posted a surprise build as demand slowed, the Energy Information Administration said. Crude stocks rose 4.5 million barrels last week, compared with an analyst forecast for a draw of 600,000 barrels. Gasoline stocks gained 200,000 barrels, versus expectations for a 1.6 million-barrel drop. "The crude oil number is well above expectations. Gasoline is a disappointment. You should never see a build in gasoline during summer. It's a very bearish report," Ministers for the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, agreed to the small increase to the group's output target, equal to about 0.1% of global oil demand. While the United States has asked the group to boost output, spare capacity is limited and Saudi Arabia may be reluctant to beef up output at the expense of Russia, hit by sanctions over the Ukraine conflict. Ahead of the meeting, OPEC+ trimmed its forecast for the oil market surplus this year by 200,000 bpd to 800,000 bpd, three delegates told Reuters. Also weighing on prices, Iranian and U.S. officials said they were travelling to Vienna to resume indirect talks about Iran's nuclear program, reviving the all but vanished hopes of a removal of sanctions hampering Iranian oil exports. On the demand side, Federal Reserve officials voiced their determination again on Wednesday to rein in high inflation, although one said a half-percentage-point hike in the U.S. central bank's key interest rate next month might be enough to march on toward that goal. The U.S. dollar index, which tracks the greenback against six major peers, also rose, pressuring demand by making oil more expensive for holders of other currencies. However, oil prices were helped by Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields with the Russian Black Sea port of Novorossiisk, saying that supplies were significantly down, without providing figures.
Oil prices stabilise after drop to near 6-month low based on supply fears (Reuters) -Oil prices were broadly steady on Thursday as the market weighed tight supply against fears of a demand slowdown, after a build in U.S. crude and gasoline stocks sent prices to multi-month lows in the previous session. Brent crude futures were down 3 cents to $96.75 a barrel by 1200 GMT, while West Texas Intermediate (WTI) crude futures were up 40 cents, a 0.44% gain, at $91.06. Both benchmarks fell on Wednesday to their weakest levels since before Russia's Feb. 24 invasion of Ukraine, that Moscow calls "a special operation". The move followed an unexpected surge in U.S. crude inventories last week. Gasoline stocks, the proxy for demand, also showed a surprise build as demand slowed, the Energy Information Administration said. The demand outlook remains clouded by increasing worries about an economic slump in the United States and Europe, debt distress in emerging market economies, and a strict zero COVID-19 policy in China, the world's largest oil importer. An OPEC+ agreement on Wednesday to raise its output target by just 100,000 barrels per day (bpd) in September, equivalent to 0.1% of global demand, was viewed as bearish for the market. Also, OPEC heavyweights Saudi Arabia and the UAE stand ready to deliver a "significant increase" in oil output should the world face a severe supply crisis this winter, sources familiar with the thinking of the top Gulf exporters said. Still, analysts expect the limited spare capacity of OPEC+ - highlighted in a statement on Wednesday - to support prices longer term. Additional price support came from the Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields with the Russian Black Sea port of Novorossiisk, and which said on Wednesday that supplies were significantly down.
WTI Slides Below $90 on Growth Outlook, Building Stocks -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange plummeted Thursday, sending West Texas Intermediate futures below $90 per barrel (bbl) for the first time since the beginning of the Russian invasion of Ukraine as investors refocused on global recession fears, rising inflation, and building crude oil inventories in the United States. Despite falling gasoline prices, American motorists did not come back to the gas pumps last month, according to U.S. Energy Information Administration data released on Wednesday showing that four-week average gasoline consumption fell to its lowest since late February -- typically the weakest driving season of the year. At 8.5 million barrels per day (bpd), the weekly demand rate is nearly 12% below the same period last year and some 9% below the five-year average. On July 25, the American Automobile Association published results of a 1,000-person survey, finding that responders have sharply curtailed driving activity in the face of $4-plus gasoline. The same quarterly survey in March also identified $5 gas as a key sensitively level for some change in driving behavior. Supporting this argument, U.S. consumer sentiment fell to the lowest level on record at the start of the summer and remained at depressed levels throughout July as Americans fretted over the economy, inflation, and rising interest rates. Oil futures attempted to break higher earlier in the session, but the rally quickly sizzled despite Saudi Aramco, the world's largest oil exporter, sharply raising its flagship crude prices for Asian buyers. Saudi Aramco lifted its official selling prices for September loading to a record $12.15-per-bbl premium versus the Dubai/Oman benchmark, up from a premium of $11.35 per bbl in the prior month. Markets were mostly expecting the differential at $10.80 per bbl over the regional benchmark. The larger-than-expected price hike signals that market fundaments remain robust for now despite expected demand losses in the second half of the year. For Northwest Europe, Aramco cut its flagship crude prices to $6.50 per bbl over international benchmark Brent from an $8-per-bbl premium the prior month, while also lowering selling prices for the Mediterranean. For the U.S. cargoes, differentials over Argus Sour were raised to a premium of $7.50 per bbl from a $7-per-bbl premium in August. The Saudi price move follows a decision by OPEC+ producers to raise crude output by a minuscule 100,000 bpd for September -- less than a quarter of the 432,000-bpd monthly increase the market has been accustomed to over the past year and much less than 648,000 bpd hike announced for July and August. The decision was based on the fact that many OPEC+ members have limited capacity to meaningfully increase production, according to the document released by the group. The only two members of the coalition that have the ability to raise production are Saudi Arabia and the United Arab Emirates, but they would do so only if the supply crisis worsened, according to sources close to negotiations. At settlement, nearby-month delivery WTI traded fell $2.12 to $88.54 per bbl -- the lowest since Feb. 2, while the international crude benchmark Brent contract for October delivery declined $2.66 to $94.12 per bbl. NYMEX September RBOB dropped 11.87 cents to $2.7935 per gallon, while NYMEX September ULSD contract slumped 7.76 cents to $3.3372 per gallon.
Brent crude and West Texas Intermediate (WTI) oil prices both dropped to levels not seen in months on Thursday. Brent closed at $94.12 per barrel and WTI closed at $88.54 per barrel on August 4. Thursday’s close marked the first time Brent and WTI have finished the day’s trading under $95 per barrel and $89 per barrel, respectively, since February this year. At the time of writing, the price of Brent crude was trading at $94.66 per barrel, while the price of WTI was trading at $89.07 per barrel. After starting December at under $70 per barrel, Brent soared to $127.98 per barrel on March 8. During the same timeframe, the price of WTI rose from under $67 per barrel to $123.7 per barrel. Russian forces escalated a conflict with Ukraine near the end of February this year, which saw both Brent and WTI prices rise. According to the U.S. Energy Information Administration’s (EIA) latest short term energy outlook (STEO) which was released in July, the EIA sees Brent and WTI spot prices averaging $104.5 per barrel and $98.79 per barrel this year, respectively. Brent spot prices are expected to dip to $93.75 per barrel in and WTI spot prices are expected to drop to $89.75 per barrel in 2023, the STEO highlighted. The 2021 Brent spot average price was $70.89 per barrel and the 2021 WTI spot average price was $68.21 per barrel, the EIA pointed out in its latest STEO. The EIA highlighted that its July STEO was subject to heightened uncertainty “resulting from a variety of factors, including Russia’s full-scale invasion of Ukraine”. “The possibility of economic activity being less robust than assumed in our forecast could result in lower-than-forecast energy consumption. Factors driving uncertainty about energy supply include how sanctions affect Russia’s oil production, the production decisions of OPEC+, and the rate at which U.S. oil and natural gas production rises,” the EIA noted in its July STEO.
WTI, Brent Gain After US Job Growth Eases Recession Fears - West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange reversed off six-month lows in afternoon trade Friday after government data showed U.S. job growth unexpectedly accelerated in July, lifting the level of employment above its pre-pandemic level and easing fears the world's largest economy is teetering on the brink of recession. Further supporting the oil complex, the number of active oil rigs in the United States unexpectedly fell by seven this week to 598, according to the oilfield service provider Baker Hughes, in what could be the first sign that falling oil prices are causing producers to scale back on drilling activity. This marked the first drop in rig count since late May. The decline was spread across several key oil-producing regions including the prolific Permian Basin in west Texas and New Mexico. The Permian's oil-rig count dropped by four in the latest week to 344.The focus of Friday's trading was a blockbuster employment report in the U.S. that showed a surprise surge in new hires last month, lifting optimism that the economy can indeed dodge the recession bullet. U.S. employers added 528,000 new jobs last month -- the largest since February -- compared with an expected 250,000 increase. Data for June was also revised higher to show 398,000 jobs created instead of the previously reported 372,000. July marked the 19th straight month of payroll expansion. Further details of the report showed employers continued to raise wages at a strong clip in July and generally maintained longer hours for workers. The labor market has now recouped all the jobs lost during the COVID-19 pandemic, with overall employment now 32,000 jobs higher than in February 2020. Incoming data offset some of the pessimism tied to a steady rise in unemployment claims that showed a slow deterioration in the labor market over the past two months. Initial claims for jobless benefits fell to 260,000 last week -- near the highest level since November -- while continuing claims that run a week behind the headline number, totaled 1.42 million, up 48,000 from the prior week and 83,000 from the beginning of July. It remains to be seen whether strong jobs data will translate into higher gasoline demand in coming months. The latest U.S. Energy Information Administration data show four-week average gasoline consumption fell to its lowest level since late February -- typically the weakest driving season of the year. At 8.5 million barrels per day (bpd), the weekly demand rate is nearly 12% below the same period last year and some 9% below the five-year average. On July 25, the American Automobile Association published results of a 1,000-person survey, finding that responders have sharply curtailed driving activity in the face of $4 plus gasoline. The same quarterly survey in March also identified $5 gas as a key sensitivity level for some change in driving behavior. At settlement, nearby-month delivery WTI gained $0.47 to $89.01 barrel (bbl), while international crude benchmark Brent contract for October delivery advanced $0.80 to $94.92 bbl. NYMEX September RBOB added 6.21 cents to $2.8556 gallon, while NYMEX September ULSD contract slumped 12.13 cents to $3.2159 gallon.
Oil Has Worst Week Since Pandemic as U.S. Jobs Signal Stiffer Rate Hikes -- Oil bulls used to beam at the U.S. jobs market with pride. Now, they aren’t so sure anymore if they should. A barrel of U.S. crude was already hovering at six-month lows on Friday before the Labor Department reported that employers in the country added a stunning 528,000 jobs for July — more than double the level forecast by economists. There is a close nexus between oil prices and job numbers in the United States, with the simple logic being that x amount of fuel is needed for x number of people to commute or get around. But it gets more complicated when those same job numbers — and higher wages — lead to higher inflation, consequently, higher interest rates. “Good news is certainly bad news here,” economist Adam Button said, referring to the U.S. nonfarm payrolls data for July. For what it was worth, crude prices still rose from Friday’s lows to turn positive on the day after the release of the job numbers as dip-buying emerged after the cumulative drop of more than 6% in just two previous days of trading. But oil’s performance remained dismal for the week and August-to-date, something bulls in the market would have trouble reconciling with after ginormous gains for six months from November through May. The front-month for U.S. West Texas Intermediate, or WTI, settled below the key $90 per barrel, though in the positive. WTI’s last trade was $89.01, up 47 cents, or 0.5%, on the day. It hit a six-month low of $87.03 earlier, a bottom not seen since Feb. 1, when it went to as low as 86.55. Previously, WTI had never forayed below $90 since the Russian invasion of Ukraine that saw a litany of sanctions imposed on Russian energy exports that sent a barrel of U.S. crude to as high as $130 by March 7. But for this week and month, WTI is about 10% in the red, after back-to-back losses of more than 7% in July and June. London-traded Brent, the global benchmark for crude, settled well below the $100 level, which it had not visited since the Ukraine invasion that earlier sent it to above $140 on March 7. Brent finished the day at $94.92, up 80 cents, or 0.9%. For the week and month, it logged an eye-watering loss of 14%, after conceding almost 7% in July and more than 4% in June. Brent also posted its worst weekly loss since the week to April 17, 2020, when it tumbled 24%. Until the jobs report released on Friday, expectations had been for a 50 basis point hike in September. Now, money market traders are pricing in a 62% chance of a 75-basis point hike for next month — the same as in June and July. Be that as it may, pump prices of U.S. gasoline — one of the main components of the CPI, have fallen from June record highs of above $5 a gallon to under $4 now, taking some measurable heat off the index. The U.S. dollar and Treasury bond yields — ostensibly the biggest beneficiaries of any Fed rate — took flight after the release of the job numbers. The Dollar Index which pits the greenback against six majors led by the euro, hit a one-week high of 106.81. The benchmark 10-year Treasury note for yields hit a two-week high of 2.87%. For oil bulls, further strength in the dollar and yields and weakness in stocks could mean more losses in crude.
Iraq crisis: Sadr supporters occupy parliament - Rival street protests over the shape of Iraq’s government ended peacefully this week, but the country’s political crisis has entered a new and uncertain phase as the feuding elite offered no signs of resolution.Ten months after populist cleric Moqtada al-Sadr won the largest number of seats in the legislature, politicians from the country’s Shiite, Sunni and Kurdish blocs continue to fight bitterly over the shape of a new government. Now Sadr has withdrawn from the process as his followers camp out in the grand legislature building.No budget has been passed, and the country’s problems are piling up. Public works projects are on hold. The power grid is faltering. As summer heat smothers the daytime, few can afford enough electricity to keep cool anyway.Almost two decades after the U.S.-led invasion of Iraq, political parties here have usually operated within what have effectively become rules of the game: a consensus-based system that gives everyone a seat at the table and access to the oil-rich country’s mineral wealth, often through patronage and corruption. But after trying and failing to form a government that excluded his Shiite rival, former prime minister Nouri al-Maliki, Sadr has challenged the rule book, and the unrest it is sparking has tilted Iraq toward anxious, unknown territory.Sadr is a storied figure in Iraq, with a history of agitation against U.S. troops and fierce loyalty from tens of thousands of working-class acolytes. Now, the Shiite cleric is urging those followers to take to the streets as he casts himself as the man to bring down a kleptocratic political system forged in the wake of America’s invasion.But analysts say this is likely to be a fresh push to dominate decision-making within the country’s divided Shiite factions, and by extension, throughout the country’s entire political system.“Sadr seems intent on reconfiguring the power-sharing arrangement,” said Fanar Haddad, an assistant professor at the University of Copenhagen. “He’s shown that they can occupy parliament; he’s shown that they can occupy public space.”Iraq’s latest power struggle was made possible by popular protests against corruption and foreign interference in 2019, which caught politicians from Baghdad to Tehran to Washington by surprise and briefly seemed to threaten the entire political system.The movement was broken by security forces and militias, including forces backed by Sadr, but it forced fresh elections in October. The cleric’s candidates won more seats than any other faction.After months of deadlock over forming a new government, he pulled his parliamentarians from the discussion, and framed the walkout as an indictment of the system.Sadr retained followers across Iraq’s institutions of power, leading analysts to speculate that the move might also be aimed at shoring up a usually zealous base that was growing cynical about participation in the country’s fractious electoral politics.They believe the mercurial cleric is trying to sideline Shiite rivals to emerge as the preeminent power presiding over the government formation process.
Hezbollah Threatens Israel With War Over Disputed Gas Field - Lebanon’s armed Hezbollah group warned Israel on Sunday against drilling at an offshore gas field, renewing a threat that it could escalate the offshore border demarcation dispute to a war. Hezbollah, backed by Iran, aired a video on its Al-Manar television channel, showing drone footage of Israeli barges at the gas field and their coordinates. The video ends with footage of a rocket with the words “within range” in Arabic and Hebrew. The text on the video message opens with “Playing with time is useless,” also in both languages. Israel and Lebanon, which do not have diplomatic relations, are in a years-long dispute over the demarcation of their territorial waters in the Mediterranean.The dispute escalated this summer after UK’s Energean, which has been awarded the right to drill at the offshore Karish field, arrived on the site with a rig, prompting an immediate reaction from Beirut. The Lebanese president and the caretaker prime minister of the country accused Israel of violating Lebanon’s sovereignty.Karish is the focus of the rift. According to Israel, Karish lies in its territorial waters. According to Lebanon, it falls within a triangle of contested waters because the two cannot agree where exactly the border passes.Israel has already warned early on that any damage to the drilling rig in Karish—like attacks on any gas drilling rigs in its waters—will be construed as an attack on the state, implying there would be an immediate reaction.The latest video threat from Hezbollah came as Amos Hochstein, U.S. Special Presidential Coordinator for the Partnership for Global Infrastructure and Investment, traveled to Lebanon on Sunday.Hochstein was set to “discuss sustainable solutions to Lebanon’s energy crisis, including the Biden Administration’s commitment to facilitating negotiations between Lebanon and Israel on the maritime boundary,” the U.S. Department of the State said. “Reaching a resolution is both necessary and possible, but can only be done through negotiations and diplomacy,” the State Department added.
Israeli strikes on Gaza kill 8, including senior militant - Israel unleashed a wave of airstrikes in Gaza on Friday, killing at least eight people, including a senior militant, and wounding another 40, according to Palestinian officials. Israel said it was targeting the Islamic Jihad militant group in response to an “imminent threat” following the arrest of a senior militant in the occupied West Bank earlier this week. The strikes risk igniting yet another war in the territory, which is ruled by the Islamic militant group Hamas and is home to about 2 million Palestinians. The assassination of a senior militant would likely be met by rocket fire from Gaza, pushing the region closer to all-out war. A blast could be heard in Gaza City, where smoke poured out of the seventh floor of a tall building on Friday afternoon. “The Israeli government will not allow terrorist organizations in the Gaza Strip to set the agenda in the area adjacent to the Gaza Strip and threaten the citizens of the State of Israel,” Prime Minister Yair Lapid said in a statement. “Anyone who tries to harm Israel should know: We will find you.” The Palestinian Health Ministry said eight people were killed, including a 5-year-old girl, and at least 40 were wounded. Islamic Jihad said Taiseer al-Jabari, its commander for northern Gaza, was among those killed. He had succeeded another militant killed in an airstrike in 2019. A few hundred people gathered outside the morgue at Gaza City’s main Shifa hospital. Some entered to identify loved ones, only to emerge in tears. One shouted: “May God take revenge against spies,” referring to Palestinian informants who cooperate with Israel.
China Ramps Up Aid To Assad's Syria, Alarming Israeli Defense Officials - After being recently accused by Washington of aiding Russia during its Ukraine offensive, China has announced new aid for Assad's Syria, which has set off alarm bells in Israel.Syria will receive "advanced communications equipment" from the government of China, which was announced and confirmed during a prior July embassy ceremony in Damascus. The official announcement described the aid as aiming "to improve local network infrastructure, especially in those areas hit hard during the Syrian crisis since 2011." This comes after China has long been in talks with the Syrian government over general post-war reconstruction efforts and investment opportunities.Israeli officials worry that after years of reporting on quiet Chinese military advisory and technical support given to Assad and the Syrian Army, Beijing is poised to grow potential military aid. According to Israeli sources cited in Breaking Defense, "this could be only the tip of the iceberg of Chinese assistance for Syria’s effort to rebuild its armed forces."Israel has long sought throughout the over decade-long war in Syria to severely degrade the Syrian Arab Republic's military capabilities - seeing it as a long term threat to Israeli security - given also Damascus is a close ally of Tehran.
Drone strike on al-Zawahiri confronts Taliban with nationalist backlash - The U.S. drone strike that killed al-Qaeda leader Ayman al-Zawahiri here early Sunday morning also struck a humiliating blow to the Taliban regime, which had secretly hosted the aging extremist in the heart of the Afghan capital for months but failed to keep him safe. Just as the Taliban was preparing to celebrate its first year in power later this month, the attack has sparked a nationalistic backlash against the beleaguered regime at home and taunting comments on social media calling for revenge against the United States. “If the martyrdom of Zawahiri is confirmed, then shame on you that we could not protect the true hero of Islam,” an Afghan named Ehsanullah tweeted in response to a statement early Tuesday by the chief Taliban spokesman that the al-Qaeda leader had been killed in a U.S. drone strike. \ The assassination of al-Zawahiri, a hero to Islamist militant groups but a long-wanted terrorist in the West, has also crystallized the ongoing struggle between moderate and hard-line factions within the Taliban regime. Several leaders of the hard-line Haqqani network, long denounced by U.S. officials for directing high-profile terrorist attacks, hold powerful positions in the regime. Now, some Afghan and American analysts said, the drone strike may harden Taliban attitudes and push the regime toward an open embrace of the extremist forces it pledged to renounce in its 2020 peace deal with the United States. “The Taliban are in deep political trouble now, and they are going to face pressure to retaliate. The relationship they have with al-Qaeda and other jihadi groups remains very strong,”
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