US oil supplies at a new 19 year low; Strategic Petroleum Reserve at new 37½ year low; total oil + oil products supplies at a new 13½ year low; oil rigs drop most since Hurricane Ida; natural gas rigs at a 3 year high
oil prices ended lower this week following reports that the US and Iran had reached an accord, and after China had again locked down a major city on Covid concerns....after rising 2.9% to $93.06 a barrel last week after the Saudis warned that OPEC would cut their output if the US reached a deal with Iran, the contract price for the benchmark US light sweet crude for October delivery was little changed in early Asian trading Monday, as traders balanced expectations that OPEC would cut output to support prices against concerns sparked by Fed Chairman Powell's saying the US would face slow growth "for some time", but moved higher in New York trading as potential OPEC+ output cuts and clashes between militias in Libya helped to offset a strong U.S. dollar and a dire outlook for U.S. growth, and then rallied to finish $3.95 higher at a one month high of $97.01 a barrel amid rising risks of a potential Libyan civil war that could put their output at risk, and growing expectations that OPEC+ was positioning themselves to cut production...but oil prices slipped early Tuesday as global inflation worries overshadowed the prospect of possible OPEC+ output cuts, and then tumbled in reaction to unconfirmed reports that the US, the European Union and Iran had reached an agreement to limit Iran's nuclear program in exchange for the lifting of Western sanctions on its crude oil exports, and settled $5.37 lower at $91.64 a barrel amid indications that Iraqi oil production would not be impacted by the recent turmoil in that country...prices slipped further in Tuesday evening trading after the American Petroleum Institute reported an unexpected build of crude inventories, and then fell early Wednesday amid growing optimism over the return of Iranian oil exports to the global market, and later extended the day's losses despite a larger than expected crude inventory build as recession fears combined with lower anxiety over the Iraqi disruptions were exacerbated by a collapse of liquidity in the futures market, as oil settled $2.09 lower at $89.55 a barrel, thus extending the longest monthly losing streak in more than 2 years amid worries that the global economy would slow further with renewed restrictions to curb Covid-19 in China....oil prices extended losses into the first trading session of September on Thursday after China announced a COVID lockdown for a megacity of 21 million people in Sichuan province, a key manufacturing hub for Western technology and automaker brands, in a move that would weaken oil demand and further disrupt global supply chains, and settled $2.94 or 3.3% lower at $86.61 a barrel as traders focused on tightening monetary policy around the world that could crimp economic growth and hit oil demand...oil prices finally inched higher early Friday, boosted by a sharp drop in the dollar index, as traders positioned themselves ahead of the August employment report, and further rallied on expectations that OPEC+ would discuss output cuts at their meeting on Sept. 5th, and settled 26 cents higher on the day at $86.87 a barrel, but still ended 6.7% lower on the week, after the lockdown of nearly 18 million people in Shenzhen pulled prices down from Friday’s highs that initially drove crude prices up more than 3% on the day...
natural gas prices also finished the week lower, following a drop in European gas prices and a big injection of gas into US storage.. after ending 0.7% lower at $9.296 per mmBTU last week following a postponement of the expected restart date for Freeport LNG exports, the contract price of US natural gas for September delivery edged higher ahead of the expiration of that September contract on Monday, and settled up 5.7 cents, or 0.6% at $9.353 per mmBTU on forecasts for hotter weather and higher cooling demand, while the contract price of US natural gas for October delivery, which was to be the quoted price the rest of the week, settled 6.7 cents higher at $9.336 per MMBTU....however, the price of that October contract fell 29.4 cents or 3.1% to $9.042 per mmBTU on Tuesday, after European prices tumbled nearly 20% from an all time high over $100, but recovered 8.5 cents to $9.127 per mmBTU on Wednesday, supported by above-normal temperatures, which boosted cooling demand, and overall higher European gas prices...despite a bearish storage report, natural gas prices moved up 13.5 cents to $9.262 per mmBTU on Thursday as overnight weather revisions pushed the demand forecast in a bullish direction that would require more of the fuel to cool homes and businesses....but natural gas prices collapsed on Friday, plunging 47.6 cents to settle at $8.786 per mmBTU, on stronger field production and on optimism about storage levels, and thus finished 5.5% lower on week, the biggest drop since the week ending July 1st, while the October contract price, which had settled the prior week at $9.269 per mmBTU, ended 5.2% lower...
The EIA's natural gas storage report for the week ending August 26th indicated that the amount of working natural gas held in underground storage in the US rose by 61 billion cubic feet to 2,640 billion cubic feet by the end of the week, which left our gas supplies 228 billion cubic feet, or 7.9% below the 2,868 billion cubic feet that were in storage on August 26th of last year, and 338 billion cubic feet, or 11.3% below the five-year average of 2,978 billion cubic feet of natural gas that were in storage as of the 26th of August over the most recent five years....the 61 billion cubic foot injection into US natural gas working storage for the cited week was generally in line with major major surveys that projected gas supplies would rise anywhere from 53 to 64 billion cubic feet, but was nearly triple the 21 billion cubic feet that were added to natural gas storage during the corresponding week of 2021, and was also much more than the average injection of 46 billion cubic feet of natural gas that had typically been added to our natural gas storage during the same week over the past 5 years....
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending August 26th showed that after a decrease in our exports was offset by a decrease in our imports and after a drop in the amount of oil pulled from the SPR was offset by a jump in oil supplies that could not be accounted for, we had to pull oil out of our stored commercial crude supplies for the 5th time in 7 weeks, and for the 24th time in the past 40 weeks....Our imports of crude oil fell by an average of 216,000 barrels per day to average 5,956,000 barrels per day, after rising by 40,000 barrels per day during the prior week, while our exports of crude oil fell by 210,000 barrels per day to average 3,967,000 barrels per day, which meant that our trade in oil worked out to a net import average of 1.989,000 barrels of oil per day during the week ending August 26th, 6,000 fewer barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly 100,000 barrels per day higher 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 14,089,000 barrels per day during the August 26th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,238,000 barrels of crude per day during the week ending August 26th, an average of 17,000 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 913,000 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 August 19th appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 1,237,000 barrels per day less than what our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+1,237,000) 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 (+636,000) barrels per day, that means there was a 601,000 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 changes in supply and demand from that week to this that are indicated by this week's report are pretty useless... however, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….
This week's 913,000 barrel per day decrease in our overall crude oil inventories left our oil supplies at 868,344,000 barrels at the end of the week, which is our lowest total oil inventory level since April 11th, 2003, and therefore at a new 19 year low.….Our oil inventories decreased this week as 475,000 barrels per day were being pulled out of our commercially available stocks of crude oil and 438,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve. That draw on the SPR was another installment of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump" (sic), that was intended 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, at least up until then, and was apparently down by 718,000 barrels per day from last week because the administration is now attempting to use the Strategic Petroleum Reserve to manipulate prices on a weekly basis....Including the administration's initial 50,000,000 million barrel SPR release earlier this year, their subsequent 30,000,000 barrel release, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 206,149,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 25 months, and as a result the 449,998,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since December 28, 1984, or at a 37 1/2 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's SPR releases. Now the total 180,000,000 barrel drawdown expected 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 fell to an average of 6,107,000 barrels per day last week, which was 3.2% less than the 6,311,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day higher at 12,100,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,700,000 barrels per day, while Alaska’s oil production was 9,000 barrels per day higher at 418,000 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 92.7% of their capacity while using those 16,238,000 barrels of crude per day during the week ending August 26th, down from their 93.8% utilization rate during the prior week, and a refinery utilization rate that's a bit below the normal range for late summer. The 16,238,000 barrels per day of oil that were refined this week were 1.9% more than the 15,938,000 barrels of crude that were being processed daily during week ending August 27th of 2021, but 6.6% less than the 17,381,000 barrels that were being refined during the prepandemic week ending August 30th, 2019, when our refinery utilization was at 94.8%, within the normal range for mid summer utilization...
Despite the modest decrease in the amount of oil being refined this week, the gasoline output from our refineries was higher, increasing by 349,000 barrels per day to 9,778,000 barrels per day during the week ending August 26th, after our gasoline output had decreased by 536,000 barrels per day during the prior week. This week’s gasoline production was still 1.1% less than the 9,778,000 barrels of gasoline that were being produced daily over the same week of last year, and 4.8% less than our gasoline production of 10,272,000 barrels per day during the week ending August 30th, 2019, ie, during the year before the pandemic impacted US gasoline output. On the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 281,000 barrels per day to 4,919,000 barrels per day, after our distillates output had increased by 22,000 barrels per day during the prior week. With that decrease, our distillates output was still 2.3% more than the 4,810,000 barrels of distillates that were being produced daily during the week ending August 27th of 2021, but 4.6% less than the 5,154,000 barrels of distillates that were being produced daily during the week ending August 30th 2019...
Even with the big rebound in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the 5th time in 6 weeks; and for the 24th time out of the past thirty weeks, decreasing by 1,172,000 barrels to 214,475,000 barrels during the week ending August 26th, after our gasoline inventories had decreased by 28,000 barrels during the prior week. Our gasoline supplies fell by more this week because the amount of gasoline supplied to US users rose by 157,000 barrels per day to 8,591,000 barrels per day, and because our exports of gasoline rose by 120,000 barrels per day to 1,040,000 barrels per day, and because our imports of gasoline fell by 31,000 barrels per day to 584,000 barrels per day. After 24 gasoline inventory drawdowns over the past 30 weeks, our gasoline supplies were 5.6% lower than last August 27th's gasoline inventories of 227,214,000 barrels, and about 7% below the five year average of our gasoline supplies for this time of the year…
Even after the decrease in our distillates production, our supplies of distillate fuels increased for the 10th time in 16 weeks and for the 20th time in the past year, rising by 112,000 barrels to 111,490,000 barrels during the week ending August 26th, after our distillates supplies had decreased by 662,000 barrels during the prior week. Our distillates supplies rose this week even with the production decrease because the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 322,000 barrels per day to 3,566,000 barrels per day, and because our exports of distillates fell by 35,000 barrels per day to 1,544,000 barrels per day, while our imports of distillates rose by 35,000 barrels per day to 208,000 barrels per day.. But after forty-eight inventory withdrawals over the past seventy-two weeks, our distillate supplies at the end of the week were 18.3% below the 136,727,000 barrels of distillates that we had in storage on August 27th of 2021, and about 23% below the five year average of distillates inventories for this time of the year...
Meanwhile, with offsetting changes to most of this week's oil supply and demand metrics, our commercial supplies of crude oil in storage fell for the 10th time in 16 weeks and for the 30th time in the past year, decreasing by 3,326,000 barrels over the week, from 421,672,000 barrels on August 19th to 418,346,000 barrels on August 26th, after our commercial crude supplies had decreased by 3,282,000 barrels over the prior week. After those & prior decreases, our commercial crude oil inventories were about 6% below the most recent five-year average of crude oil supplies for this time of year, but still 25.5% above the average of our crude oil stocks as of the last weekend of August 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 August 26th were still 1.7% less than the 425,395,000 barrels of oil we had in commercial storage on August 27th of 2021, and were 16.1% less than the 498,401,000 barrels of oil that we had in storage on August 28th of 2020, and 1.1% less than the 422,980,000 barrels of oil we had in commercial storage on August 30th of 2019…
Lastly, with our inventories of crude oil and our supplies of all products made from oil near multi-year lows over the most recent months, we are continuing to watch 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 3,257,000 barrels this week, from 1,667,196,000 barrels on August 19th to 1,663,939,000 barrels on August 26th, after our total inventories had fallen by 6,727,000 barrels during the prior week. That left our total liquids inventories down by 124,494,000 barrels over the first 33 weeks of this year, and at the lowest level since October 10th, 2008, and thus at another 13 1/2 year low...
This Week's Rig Count
The number of drilling rigs running in the US fell for the fourth time in five weeks, but for only the 11th time over the past 101 weeks during the week ending September 2nd, while they're still 4.2% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US decreased by 5 to 760 rigs this past week, which was still 263 more rigs than the 497 rigs that were in use as of the September 3rd report of 2021, and was 1,169 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 decreased by 9 to 596 oil rigs during the past week, the biggest oil rig drop since Hurricane Ida shut down the Gulf a year ago, after the number of rigs targeting oil had increased by 3 during the prior week, while there are still 202 more oil rigs active now than were running a year ago, even as they amount to just 37.0% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are down 12.7% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 4 to 162 natural gas rigs, which was the most gas rig activity in 3 years, and up by 60 natural gas rigs from the 102 natural gas rigs that were drilling during the same week a year ago, even as they were still only 10.1% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….other than those rigs targeting oil and natural gas, Baker Hughes reports that two "miscellaneous" rigs continued drilling this week, including a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, and a vertical rig drilling more than 15,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track....a year ago, there were was only one such "miscellaneous" rig running...
The offshore rig count in the Gulf of Mexico was down by 2 to 14 rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana's offshore waters....that's in contrast to a year ago, when 14 Gulf rigs had been shut down as Hurricane Ida approached...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 also two rigs drilling offshore from Alaska...
In addition to rigs running offshore, there are 3 water based rigs drilling through inland bodies of water this week...the new one is a directional rig drilling for oil to between 5,000 and 10,000 feet in Cameron Parish, Louisiana; there is also a directional rig targeting oil at a depth greater than 15,000 feet drilling through a lake on Grand Isle, Louisiana, and a directional rig drilling for oil in Terrebonne Parish, Louisiana, also at a depth greater than 15,000 feet...the inland waters rig that had been drilling in Galveston Bay, Texas was concurrently shut down, while a year ago, there were no rigs drilling on inland waters
The count of active horizontal drilling rigs was up by 1 to 695 horizontal rigs this week, which was 232 more rigs than the 463 horizontal rigs that were in use in the US on September 3rd of last year, but 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 5 to 26 vertical rigs this week, which was still up by 3 from the 23 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 39 directional rigs this week, while those were still up by 28 from the 11 directional rigs that were in use on September 3rd 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 September 2nd, the second column shows the change in the number of working rigs between last week’s count (August 26th) and this week’s (September 2nd) count, the third column shows last week’s August 26th 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 3rd of September, 2021...
checking first the Rigs by State file at Baker Hughes for the changes in Texas Permian, we find that there were two rigs pulled out of Texas Oil District 8, which covers the core Permian Delaware, that there were five rigs pulled out of Texas Oil District 8A, which covers the northernmost counties of the Permian Midland, and that there was an oil rig pulled out of Texas Oil District 7C, which includes the southern counties of the Permian Midland, which combined indicates an 8 rig decrease in the Texas Permian...since the national Permian basin count was just down by 6 rigs, we can conclude that the two rigs added in New Mexico were in the far west Permian Delaware, which most likely would also account for the natural gas rig added in the Permian this week...elsewhere in Texas, there were two rigs added Texas Oil District 1, which accounts for the oil rig increase in the Eagle Ford shale, but there were two rigs pulled out of Texas Oil District 2, which could have included an offsetting removal from the Eagle Ford...in addition, the inland waters rig that had been drilling in Galveston Bay was also removed, leaving Texas down 9 rigs...
in other states, North Dakota's count was up by two with the 2 rig addition in the Williston basin, where all rigs are deployed for oil....meanwhile, Oklahoma saw the addition of an oil rig in the Ardmore Woodford, the removal of an oil rig and the addition of two natural gas rigs in the Arkoma Woodford, the removal of an oil rig from the Cana Woodford, and the removal of an oil rig from a basin elsewhere in the state that Baker Hughes doesn't track, which together left the Oklahoma count unchanged...similarly, the addition of a natural gas rig in the Haynesville shale of northwestern Louisiana and the addition of the inland waters oil rig in the southern tier of the state were offset by the removal of two oil rigs from the state's offshore waters, leaving the Louisiana rig count unchanged...
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Lorain County throws wrench in multi-million dollar tax settlement on NEXUS pipeline - Lorain County commissioners followed the advice of County Auditor Craig Snodgrass and voted to approve legislation that essentially blew up a tentative state tax property settlement with a natural gas company that affects 13 Ohio counties and could cost taxpayers tens of millions of dollars. On the flip side, though, if Snodgrass is right, those counties could see tens of millions of dollars more flow into their coffers via property tax. Snodgrass will file an appeal of a July 6 agreement reached by the state’s tax commissioner and the owner of the NEXUS pipeline on the value of the Crapipeline. Appealing is a risk, but one that Snodgrass said he thinks is needed. The issue centers on the valuation of NEXUS pipeline, a natural gas line that runs through 256 miles of Ohio, and 13 counties, and has been the center of debate for three years. The state originally valued it at $1.6 billion before adjusting that figure to $1.2 billion after NEXUS filed what’s known as a valuation appeal. The higher the value of the gas line, the more money schools and other government agencies receive in funding from tax money collected in those areas where the gas line operates. The two sides worked out a settlement agreement valuing the pipeline at $950 million for tax year 2019, $946 million in tax year 2020; $934 million in tax year 2021 and the estimated value of $901 million for 2022. The county was expected to rake in $34 million in tax revenue from the gas line in its first five years of operation. But at the $950 million value, it would take in $7 million less in the same timeframe. Snodgrass said he was not comfortable with the deal. He said he wanted to know how the state and NEXUS determined the value of the pipeline. “We just aren’t getting enough information to find out if this is the right number,” Snodgrass said. To get those answers, he urged the commissioners to pass a resolution at a special Aug. 24 meeting allowing him to hire retain Sansoucy Associates, of Lancaster, N.H., “to provide valuation, valuation analysis, rebuttal, research and general consulting services with regards to the Nexus Gas Transmission Pipeline owned by DT Midstream and Enbridge.” The commissioners passed the resolution 2-1 with Commissioners Michelle Hung and Matt Lundy voting to hire Sansoucy and Dave Moore voting against it. By approving the hiring of Sansoucy, the terms and conditions of the settlement are voided, according to documents provided by NEXUS. Going forward, NEXUS will pursue market true value for the pipeline at a value of $615,695,340.
19 New Shale Well Permits Issued for PA-OH-WV Aug 22-28 | Marcellus Drilling News - Last week the three states with active Marcellus/Utica drilling, Pennsylvania, Ohio, and West Virginia, issued a collective 19 new drilling permits, down from 30 the week before. The top receiver of permits in PA was EQT (i.e. Rice Drilling), with five permits issued for the same well pad in Greene County. Range Resources and Inflection Energy each received two new permits. also: Allegheny County, Ascent Resources, Beaver County, Elk County, Encino Energy, EQT Corp, Greene County (PA), Guernsey County, Harrison County,Inflection Energy, Lycoming County, Marshall County, Range Resources Corp,Seneca Resources, Tug Hill Operating, Utica Resource Operating
Proposed Pennsylvania LNG Export Terminal in Talks to Commercialize Project - An East Coast LNG export terminal that would tap into vast amounts of feed gas from the Appalachian Basin is aiming to pre-file with federal regulators by the end of the year and reach a final investment decision by 2024. The 7.2 million metric tons/year (mmty) facility would be located at a yet-to-be-determined site along the Delaware River near Philadelphia. It could produce the first liquefied natural gas by 2028, said Franc James, founder and CEO of Penn America Energy Holdings LLC. James acknowledged, however, that the $6 billion-plus Penn LNG project faces an uphill battle in the Northeast, where environmental opposition has stymied energy infrastructure. “I’m from Pennsylvania, so that’s probably why I gravitated toward developing this project,” he told NGI. “We’re in a state, regardless of political party, that’s enjoyed a history of energy…We think if you build it in the Northeast, Pennsylvania is likely the only place to build a terminal.” The Philadelphia native, a former iron ore and copper mining executive, has been working on the project since 2015. James said his New York City-based company, which includes industry veterans, has moved beyond the proof of concept stage and is currently working on commercialization, permitting and engineering. Reached by phone last week just ahead of a trip to Europe to continue commercial discussions, James told NGI the company is in talks to supply up to 5 mmty of LNG. He said discussions are ongoing with two majors, an international trader and utilities. “We are a project size that is easily absorbed into demand,” James said. Russia’s invasion of Ukraine has created a need for new natural gas supply and made the Penn LNG project competitive on its current timeline, he added. The company is currently working with Bechtel Corp. on engineering. James also said the 1.2 Bcf/d of feed gas the terminal would need can be easily supplied by the Texas Eastern Transmission Co. and Transcontinental Gas Pipe Line Co. interstate systems. The facility would only need to build a connector to those pipelines, James said. That would help Penn America avoid the kind of lengthy battles over larger systems in the region that have stopped pipeline projects altogether. Marcellus Shale Coalition President David Callahan said Penn LNG could complement the nation’s other two East Coast export facilities, Cove Point LNG in Maryland and the Elba Island terminal in Georgia. Penn LNG would be the largest of those facilities. The “location-advantaged” facility could also better connect European allies with abundant Appalachian shale gas, he said. The facility would also help to alleviate pipeline constraints in the basin, where natural gas production in the Marcellus and Utica shales is above 35 Bcf/d. EQT Corp. CEO Toby Rice said recently that Appalachian pipeline capacity has “hit the wall.” EQT is the largest gas producer in the United States. The company launched an initiative earlier this year to promote U.S. LNG exports. It comes at a time when global buyers are looking to diversify supplies in a shift away from Russia after the invasion of Ukraine. EQT wants to quadruple current U.S. LNG export capacity to 55 Bcf/d by 2030 to replace international coal and cut global emissions. While there are 20 LNG projects in various stages of development along the Gulf Coast, Appalachian pipeline constraints could make it difficult for some to be completed. As a result, Rice said EQT is working to “catalyze” East Coast LNG projects.
U.S. Ethane Production Seen Climbing 16% in 2022, Says EIA - Production of ethane, a natural gas liquid (NGL), should grow by about 9% in the United States during the second half of 2022 compared to first-half levels, according to an Energy Information Administration (EIA) forecast. “Ethane is consumed almost exclusively as a feedstock in petrochemical plants known as steam crackers to produce ethylene, a precursor chemical for manufacturing many plastics and resins,” said authors of EIA’s most recent Short-Term Energy Outlook (STEO). New cracker plants to take in additional ethane volumes are in Pennsylvania and Texas. The analysis found that domestic ethane production has risen for the past five years and reached a monthly record of 2.5 million b/d in March. Since then, monthly ethane output has topped 2.4 million b/d, said researchers. Earlier this year, EIA said domestic ethane consumption has steadily increased for more than a decade. The latest STEO projected that average second-half U.S. ethane production would surpass 2.6 million b/d. “We expect that production in 2022 will exceed production in 2021 by 16%, or 340,000 b/d,” said analysts. EIA also reported that U.S. ethane prices since 2017 typically have “traded at a premium relative to natural gas prices, spurring natural gas plant operators to recover more ethane from raw natural gas streams.” The ethane premium held steady at $1.35/MMBtu during the first half of 2022, compared to 80 cents/MMBtu for full-year 2021, researchers said. That equated to “25% above the Henry Hub natural gas wholesale price, despite higher average natural gas prices,” they said. For 2023, EIA projected a nearly 7% increase in ethane production to about 2.7 million b/d “to support continued growth in U.S. consumption and exports. “Demand for ethane overseas as a petrochemical feedstock has been growing since 2015,” said analysts. “We forecast U.S. exports of ethane to continue to grow from about 350,000 b/d in the second quarter of 2022 to about 440,000 b/d in the fourth quarter. We expect ethane exports to rise to 460,000 b/d in 2023.”
Antero Prevails Against Corrupt Employee, Wins $12.9M at Trial | Marcellus Drilling News - Antero Resources is one of the largest drillers in the Marcellus/Utica (with major assets in West Virginia). The company is the fifth largest natgas producer in the country and the second largest LNG exporter. It’s also one of our favorite Marcellus/Utica drillers. As good and careful as companies like Antero are when hiring, sometimes there’s a rotten apple found in the barrel. Such was the case with a former employee who headed up the company’s operations in WV–where most of its drilling happens. The former employee took bribes and kickbacks from a vendor over a period of years (2012-2015), steering contracts to that vendor. The vendor’s performance was not as good as other competitors. At the end of years of litigation, Antero has finally been awarded compensation from a jury, and a bit extra from a judge, to make up for the actions of their rogue employee.
It’s a deal with the devil’: outrage in Appalachia over Manchin’s ‘vile’ pipeline plan -- Taking on the fossil fuel industry in West Virginia was always going to be a David v Goliath type battle, but after years of protests, lobbying and lawsuits, 68-year-old Becky Crabtree thought the community-led resistance had beaten the Mountain Valley pipeline (MVP) in a fair fight.So when news broke earlier in August that the state’s fossil-fuel friendly senator Joe Manchin had resurrected the beleaguered pipeline, Crabtree, a high school science teacher who teaches students about the climate crisis, felt “numb”.Manchin, a conservative Democrat who receives more campaign financing from the fossil fuel industry – including pipeline companies – than any other lawmaker in Congress, had agreed to back his party’s historic climate legislation before the crucial midterm elections. But only after he negotiated a side-deal to fast-track the MVP. “It’s the unfairness that makes me so angry. It’s a deal with the devil,” said Crabtree, 68, who owns a 30-acre sheep farm in Lindside, Monroe county.The deal is a sweet one for the pipeline’s supporters. Democratic leaders agreed to advance separate legislation in September that would “require the relevant agencies to take all necessary actions to permit the construction and operation of the MVP and give the DC circuit jurisdiction over any further litigation”.This could help the pipeline company circumvent judges who have suspended construction and overturned permits over environmental concerns, and have future legal cases heard in an appeals court in Washington, which is considered more favourable to developers.It’s part of a broader set of concessions negotiated by Manchin to diminish environmental protections and expedite permits and construction of pipelines and other energy infrastructure, limiting legal challenges by concerned communities and environmental groups.It also mandates new oil and gas drilling deals in Alaska and the Gulf of Mexico – places that environmentalists have also fought in court to preserve. Any public lands given over to solar and wind developments must be accompanied by millions of acres handed to oil and gas – tying the US to planet-heating energy projects for decades. Brett Hartl, a campaigner at the Center for Biological Diversity, said the side-deal was a “vile tribute” to the fossil fuel industry. “These companies are wrecking our climate and raking in record profits, and more federal help is the last thing they deserve.”
BP Whiting shutdown: EPA waives fuel rule in Illinois, Michigan, Wisconsin and IN after Indiana refinery fire - -- The Environmental Protection Agency temporarily lifted a federal rule for fuel sales in four states in response to a fire last week at an Indiana oil refinery that could affect prices and supply.The emergency waiver was granted Saturday for Indiana, Illinois, Michigan and Wisconsin, EPA Administrator Michael Regan said. In a letter to state officials, Regan said the agency determined the waiver is necessary "to minimize or prevent disruption of an adequate supply of gasoline to consumers."The waiver lifts a Clear Air Act requirement that lower-volatility gasoline be sold in the states during summer months to limit ozone pollution. It is in effect until Sept. 15, the EPA said.BP said its refinery in Whiting, Indiana, experienced an electrical fire Wednesday. No one was hurt, and the fire was put out, but it caused a loss of utilities in other parts of the refinery, forcing at least a partial shutdown. The refinery is located along Lake Michigan's shoreline about 15 miles southeast of Chicago, according to the company.The company said Sunday it is working toward a "phased restart of the refinery," but no date was given.Governors in all four states requested the EPA waivers, according to the EPA's letter. Michigan Gov. Gretchen Whitmer's office said the refinery provides about 20% to 25% of the gasoline, jet fuel and diesel used by Michigan, Wisconsin, Indiana and Illinois. BP spokeswoman Christina Audisho said the company was working with local and state agencies and was still assessing when affected units can restart.
Holcomb signs executive order to avoid rising gas prices — Gov. Eric Holcomb signed an executive order Monday that suspends some regulations in an effort to minimize any disruptions at the pump after an Indiana oil refinery caught fire last week. There was an electrical fire at the BP refinery in Whiting, Indiana, on Aug. 24, which caused apartial shutdown at the plant. The refinery provides about 20% to 25% of the gasoline, jet fuel and diesel used by Indiana, Michigan, Wisconsin, and Illinois. Leaders fear the fire could affect gas prices and supply. That's why Holcomb signed an executive order to temporarily suspend regulations regarding vapor pressure requirements on fuel standards. The order also lifts restrictions on hours of service relating to motor carriers and drivers transporting fuels.Holcomb's office said the temporary suspensions are meant to expedite the refining and transporting of fuel through Indiana.Similarly, Michigan Gov. Gretchen Whitmer took action over the weekend by declaring an energy emergency in Michigan and lifting laws and regulations to increase the state's fuel supply. Also, the Environmental Protection Agency on Saturday temporarily lifted a federal rule for fuel sales in the four affected states. All these efforts are to avoid sky-high gas prices or a lack of fuel at the pump. Patrick De Haan, the head of petroleum analysis at Gas Buddy, said Hoosiers are already seeing prices increase."We did, within the last hour, see some stations reset to the same price they went up to two weeks ago," said De Haan. "Looks like a lot of stations in Indiana are going up to $3.99."
BP’s Indiana Refinery Restarts After Fire -BP Plc’s Whiting, Indiana refinery has restarted production after being idled last week due to an electrical fire, Reuters reports, citing unnamed sources close to operations.The 435,000 barrel-per-day refinery, the largest in the Midwest, caught fire last week, leading to the shutdown of several units and a declaration of emergency across four states.The fire impacted supplies of gasoline, diesel and jet fuel in the Midwest, with Indiana, Illinois, Michigan and Wisconsin obtaining some 25% of their fuel supply from this facility.The outage led to a temporary lifting of a summer restriction on fuel sales–intended to head off larger shortages–by the Environmental Protection Agency. The Whiting refinery can produce 10 million gallons (~277,000 barrels) of gasoline, 4 million gallons of diesel, and 2 million gallons of jet fuel each day; it is capable of producing enough gasoline every day to support the daily travel of 7 million cars, the refinery factsheet claims.Markets were concerned that an outage at a key refinery such as Whiting could put upward pressure on gasoline prices that have been trending downward for weeks. Michigan, one of the four states affected, is already set to experience the highest Labor Day gas prices since 2012, the Detroit Free Press reports. This is despite the fact that average gas prices in the state have fallen by 49 cents per gallon over the past 30 days, with decreases recorded for 10 consecutive weeks.The national average per gallon of gasoline in the United States was down to $3.481 on Wednesday, according to AAA, compared with the year-ago average of $3.159. Concerns remain that gasoline prices will rise again, with Secretary of Energy Jennifer Granholm saying that fuel exports are affecting domestic supplies, with gasoline supplies on the East Coast at their lowest level in almost 10 years.
U.S. energy secretary urges refiners not to increase fuel exports (Reuters) - The U.S. Energy Secretary urged domestic oil refiners this month to not further increase exports of fuels like gasoline and diesel, adding that the Biden administration may need to consider taking action if the plants do not build inventories. U.S. refiners have boosted oil product exports this month as domestic crude oil production rose and global fuel demand continued to recover. Energy Secretary Jennifer Granholm, in a letter sent Aug. 18, urged seven refiners including Valero, ExxonMobil and Chevron to build supplies of fuels as the United States enters peak hurricane season. "Given the historic level of U.S. refined product exports, I again urge you to focus in the near term on building inventories in the United States, rather than selling down current stocks and further increasing exports," Granholm said in the letter sent to refiners, a copy of which was seen by Reuters. High U.S. oil product exports have been a concern for the administration of President Joe Biden this summer as gasoline prices briefly hit a record of $5 a gallon, helping drive inflation to 40-year highs. Gasoline prices have since fallen to about $3.86 per gallon. Federal weather forecasters have projected an above-average Atlantic hurricane season, which can be a perilous time for refineries. Still-high gasoline prices remain a threat to Biden's fellow Democrats ahead of the Nov. 8 midterm elections, when they hope to retain control of both chambers of Congress. Granholm said the administration is talking with state officials along the East Coast, where gasoline levels are at their lowest in nearly a decade. It is putting the gasoline and heating oil reserves in the U.S. Northeast, which hold 2 million barrels of fuel, on "active standby" for potential release, and preparing other emergency contingency actions, she said. The administration hopes that companies will "proactively address this need" of building inventories, she said. If that does not happen, the administration "will need to consider additional federal requirements or other emergency measures," Granholm added, without providing details.
Energy secretary calls on US refiners to limit exports ahead of hurricane season - Energy Secretary Jennifer Granholm called on major U.S. oil refiners to build up capacity and reduce exports of refined products ahead of the winter in a letter shared with The Hill. In the letter, written last week, Granholm noted the reduced availability of diesel inventories along the East Coast, which are nearly 50 percent below the five-year average. Refined product exports are at a record high. A likely above-average hurricane season, followed shortly by the winter heating season, is likely to compound demand in the northeast. “Given the historic level of U.S. refined product exports, I again urge you to focus in the near term on building inventories in the United States, rather than selling down current stocks and further increasing exports,” Granholm wrote, saying that such a buildup would be an alternative to emergency measures such as releases from the Northeast Gasoline Supply Reserve. The letter was reported first by The Wall Street Journal. The paper accused Granholm in a Wednesday editorial of attempting to strong-arm the energy industry and abandoning European nations weaning themselves off Russian imports. An Energy Department official sharply disputed this characterization, saying “as we get closer and closer to peak hurricane season right now, and we’re running our internal models, we are calling on [the industry] to be more proactive.” “We understand that they do have plans in place for their refineries and getting them back up and running,” the official added, “but we also want them as they’re increasing their exports to also look at the bigger picture … and making sure they’re making the right decisions to ensure there’s physical supply for American consumers and our allies.”
Appeals court rules two Trump administration Gulf lease sales unlawful -A federal appeals court on Tuesday ruled two Trump-era Interior Department oil leases in the Gulf of Mexico were unlawful. In the ruling, Judge Gregory C. Katsas of the Washington, D.C., Court of Appeals found the department in 2018 leased more than 150 million acres for oil exploration without properly analyzing the risk under the National Environmental Policy Act. The lease sales, 250 and 251, were among 11 proposed by the department in its 2017 five-year plan. In a lawsuit following the sales, a coalition of environmental groups argued the Trump administration’s evaluation had erroneously presumed adequate endorsement of safety and environmental procedures in the Gulf. A D.C. court sided with the Interior Department on April 20, prompting an appeal by the plaintiffs.Plaintiffs in the case include Earthjustice, the Sierra Club and the Center for Biological Diversity. In his ruling, Katsas sided with the plaintiffs, stating that the Bureau of Ocean Energy Management (BOEM) failed to consider whether the federal Bureau of Safety and Environmental Enforcement’s (BSEE) “work was in fact rigorous, despite some evidence that it was not” when it came to inspection and enforcement. He noted a Government Accountability Office report that said BSEE procedures are outdated and inconsistent. “We agree with the environmental groups that BOEM’s failure to address the report was arbitrary. To engage in reasoned decision-making, an agency must respond to ‘objections that on their face seem legitimate,’” he wrote. Katsas agreed with the Interior Department on other arguments, rejecting the plaintiffs’ claims that the BOEM failed to consider possible rule changes.
Illinois plans to plug hundreds of abandoned wells - The U.S. Department of Interior awarded an $560 million to 24 states to begin plugging and remediating more than 10,000 high-priority well sites across the country, including $25 million to help support Illinois’ remediation efforts. “Orphaned oil and gas wells are environmental and safety hazards that threaten the wellbeing of our rural communities,” said Governor J.B. Pritzker. “We appreciate that the Biden Administration approved our efforts to award Illinois significant funding to cap and reclaim these wells — safeguarding Illinois families, generating good-paying union jobs, and protecting our environment from disastrous methane leaks in the process. These are the kind of investments that create a healthier, more sustainable state and nation.”“As chair of the Governor’s Rural Affairs Council, I know our rural communities deserve effective solutions that address the unique issues impacting these vibrant regions of Illinois. The federal Orphaned Well Program provides a step forward by taking action on abandoned oil and gas wells that can be hazardous to health and safety,” said Lieutenant Governor Juliana Stratton. “From creating economic opportunities to combat pollution to safeguarding the health of communities, this $25 million in grant funding will take us far in protecting the environment and the people that make southern Illinois and other impacted areas so great.IDNR’s Office of Oil and Gas Resource Management will oversee the work in Illinois. State officials are hopeful the efforts will free up state funds for other needs.
US LNG export terminals stage production push as European gas prices top $100/MMBtu - Record global gas prices, now trading as high as $100/MMBtu in onshore European markets, are putting pressure on US LNG export terminals to step up production, pushing feedgas demand this week to its highest since early July. On Aug. 25, total gas demand from US export terminals edged up to over 11.5 Bcf/d, marking its highest level since July 1. The single-day demand high is no fluke — over the past week, feedgas demand has trended just shy of that level, averaging nearly 11.2 Bcf/d, data from Platts Analytics shows. The continued ramp up of production at Venture Global’s Calcasieu Pass terminal has been a key driver behind recent gains in US liquefaction activity, with flows to the still-commissioning 10 million mt/year terminal estimated at a record-high 1.6 Bcf/d on Aug. 26. While the June 8 shut-in of production at Freeport LNG cut US export capacity by some 2 Bcf/d, or about 15%, this summer, the US’ other six operational terminals are making a push to maximize output — and for good reason. On Aug. 26, spot LNG import prices in Northwest Europe surged to their highest on record for the third consecutive day, this time hitting $74.49/MMBtu. In East Asia, Platts benchmark JKM import price climbed to over $71/MMBtu on Aug. 25, before easing back to the mid-$66 range on Aug. 26. At current levels, JKM prices are at their highest since the single-day price of $84.76 was recorded in early March, data from S&P Global Commodity Insights shows. In the US market, the Platts Gulf Coast Marker for FOB cargoes loading 30-60 days forward was assessed at $73.35/MMBtu Aug. 26, up $6.10/MMBtu on the day to a new high. The run up in global prices, which have surged this week, comes as the European gas market grapples with growing supply uncertainty. Most recently, Norwegian transmission system operator, Gassco, advised European end-users of a planned maintenance on the Karsto, Oseberg and Kristin gas assets, from Aug. 26- Sept. 7, Platts reported previously. The maintenance cuts Norwegian pipeline supply to Europe by some 23.5 million cu m/d, or about 800 MMcf/d.
Cheniere Energy Expanding Corpus Christi Complex - The biggest U.S. exporter of liquefied natural gas Cheniere Energy has revealed its plans to expand its complex on the Texas coast. Cheniere said submitted a letter to the Federal Energy Regulatory Commission (FERC) requesting a pre-filing review for the proposed Corpus Christi Liquefaction Midscale Trains 8 & 9 Project. According to the company, the proposed project would expand the previously approved liquefaction project and Stage 3 project facilities. Namely, the company is seeking to add two midscale production lines – otherwise known as trains – as well as a 220,000-cubic-meter storage tank at its Corpus Christi plant. It also wants to add a refrigerant storage facility, appurtenant connecting facilities and piping, and an increase in Corpus Christi’s previously approved ship loading rates. Cheniere plans to file a formal application with the agency in February 2023 upon completion and approval of the commission’s mandatory 6-month pre-filing process. Construction would begin in October 2024 with a projected in-service date during the second half of 2031. This request to the FERC comes some two months after the company reached a final investment decision for the Stage 3 expansion of Corpus Christi LNG. Stage 3 is supposed to be a 10+ million ton per annum project that consists of up to seven midscale trains bringing Corpus Christi’s total nominal capacity to approximately 25 mtpa. Cheniere’s 1,000+ acre Corpus Christi Liquefaction facility is in the Corpus Christi Bay in San Patricio County, Texas, where energy infrastructure and estuaries coexist. It currently has three fully operational liquefaction units, all of which were completed ahead of schedule and within budget, and each train is designed to produce around 5 million tons per annum of LNG. The first two LNG trains, along with the first two LNG tanks and wharf facilities, were completed in August 2019, while the third train and tank and a second berth were finished in March 2021. It is worth noting that Cheniere signed six LNG supply deals since May as Europe and Asia continue to compete for tight global supplies.
U.S. natgas futures fall over 3% as European prices slip (Reuters) - U.S. natural gas futures slipped more than 3% on Tuesday, tracking a retreat in European rates, with prices hitting a two-week low as supplies in the United States were seen rising. On its first day as the front-month, gas futures for October delivery fell 29.4 cents, or 3.1%, to settle at $9.042 per million British thermal units (mmBtu), having dropped to their lowest level since Aug. 16 earlier in the session. Data provider Refinitiv said gas output in the U.S. Lower 48 states rose to 98.1 billion cubic feet per day (bcfd) on Monday, its highest since Aug. 8. "The production and overall supply increased not only from natural gas production, but also from slightly higher Canadian imports," "When you couple the current weather forecast, which did get a little warmer over the weekend, with the supply gains and then the European gas price sell-off, I think it's just resulted in a little bit of profit taking." British and Dutch wholesale gas prices eased as Europe almost reached its target of gas inventories being 80% full. Gas was trading around $81 per mmBtu in Europe and $69 in Asia. Europe was also gearing for a scheduled outage on the Nord Stream 1 pipeline, which runs under the Baltic Sea to Germany, for three days from Aug. 31 to Sep. 2, with market players concerned flows might not resume. Meanwhile, the restart delay at the fire-hit Freeport liquefied natural gas (LNG) export plant in Texas, leaves more fuel in the United States for utilities to refill storage.
Natural Gas Futures Rally Continues as Traders Brush Off Bearish Storage Data - After falling within pennies of the $9 mark early Thursday, bulls paraded in and delivered a swift kick to natural gas futures prices. Storage data confirming looser balances sapped momentum only briefly, with the October Nymex gas futures contract settling at $9.262/MMBtu, up 13.5 cents on the day. November futures picked up 14.1 cents to $9.330. Spot gas was mostly higher, with continued heat and a stressed electric grid in California driving up prices. NGI’s Spot Gas National Avg. climbed 25.5 cents to $9.135. “The market has certainly been very resilient, with any bearish data being shrugged off rather easily,” NatGasWeather said of Thursday’s Nymex futures price action. The price hike occurred despite government storage data that showed continued tightening of the inventory gap to historical levels. The Energy Information Administration said 61 Bcf was injected into natural gas storage inventories for the week ending Aug. 26, on the higher side of expectations ahead of the report. Respondents to major surveys projected stocks to rise anywhere from 53 Bcf to 64 Bcf. By comparison, EIA recorded a 21 Bcf injection for the year-earlier period, and the five-year average injection is 46 Bcf. “A tad looser, especially with low wind,” said a participant on Enelyst of the EIA’s 61 Bcf build. Enelyst managing director Het Shah said wind generation averaged a paltry 23,568 MWh for the week ending Aug. 26. Strong production also likely aided in the above-average injection, with estimates near 99 Bcf/d of output for the reference period. Broken down by region, the Midwest led with a plump 33 Bcf increase in stocks, according to EIA. The East added 16 Bcf to inventories, while the South Central added 10 Bcf. This included a 9 Bcf increase in nonsalt facilities and a 1 Bcf rise in salts. Mountain inventories were up by 4 Bcf, while Pacific stocks slipped by 2 Bcf. Total working gas in storage as of Aug. 26 stood at 2,640 Bcf, which is 228 Bcf below last year at this time and 338 Bcf below the five-year average, EIA said. Looking ahead to the agency’s next inventory report, Enelyst participants were looking for an injection in the 50s Bcf to low 60s Bcf. Shah noted that wind generation was poised to average 35,937 MWh for the current week, which should help keep power burns in check and allow more gas to flow into storage. An injection of 60 Bcf in the next EIA report would compare with a 48 Bcf injection for the same week last year and a 65 Bcf five-year average build.
Natural Gas Futures Collapse on Stronger Production, Storage Optimism; Cash Slides - It was a bloodbath in the natural gas market at the close of the week, with production figures showing only a modest dip day/day and holding near highs. With the most intense heat throughout the first half of the month relegated out West, the October Nymex gas futures contract plunged 47.6 cents Friday to settle at $8.786/MMBtu. November futures fell 48.0 cents to $8.850. Spot gas prices also tumbled ahead of the extended Labor Day holiday weekend. NGI’s Spot Gas National Avg. slid 53.0 cents to $8.605. Notwithstanding Friday’s nosedive throughout the Nymex futures curve – particularly for the winter months – market observers didn’t appear to be convinced the price move indicates a change in behavior among traders. Prices have been erratic throughout the summer, and there is still plenty for bulls to pounce on when it comes to supply/demand balances. However, traders may be looking at the latest storage inventory data as verification that as the shoulder season gets underway, loosening already is taking place and further easing is likely. The Energy Information Administration (EIA) said inventories for the week ending Aug. 26 rose by a larger-than-normal 61 Bcf, lifting stocks to 2,640 Bcf. Notably, this is still 228 Bcf below year-earlier levels and 338 Bcf below the five-year average. Though double-digit percentage deficits exist in all regions but the Midwest, South Central stocks are precariously low. Salt inventories sit nearly 23% below the five-year average. However, the Schork Group said as the likelihood of extreme cooling in the northern states fades, salt stocks should climb on a consistent basis in the coming weeks. Overall injections, according to Schork analysts, have been rather strong. They said at this point in the summer, the market generally wants to see a refill of at least 1.134 Tcf. Season-to-date, the market has added 1.258 Tcf. “However, as we’ve been saying all summer long, the strong pace of injections is not strong enough,” the Schork team said. “These injections notwithstanding, time is running out for the market to get molecules into the ground.” For example, the EIA is projecting inventories at the end of October to reach 3.433 Tcf. This means that from now until the start of the heating season, which typically begins in the second week of November, the market needs to inject 793 Bcf. The three largest injections from this point are 920 Bcf in 2014, 854 Bcf in 2011 and 797 Bcf in 2015. “So, a 793 Bcf injection is not unheard of,” the Schork analysts said. “However, because of time decay, the odds are long.” Meanwhile, NatGasWeather said heat is expected to continue a bit longer.
Texas adopts new natural gas weatherization rules 18 months after grid crash -A year and a half after a severe winter storm nearly collapsed the state’s power grid, Texas oil and gas regulators approved new rules Tuesday that would require natural gas companies to properly prepare their equipment for extreme weather. The rules will require oil and gas companies to be able to continue operating during a weather emergency, but they do not specify the standards the agency’s inspectors will use to measure readiness. They also require companies to submit annual reports to the Texas Railroad Commission, which regulates the state’s massive oil and gas sector, outlining what they have done to ensure their facilities won’t fail during weather emergencies. If companies do not comply with the new rules, they would be subject to a minimum $5,000 fine and a maximum fine of $1 million. Critics are skeptical about whether the Railroad Commission can prevent another catastrophe like the one that struck Texas in February 2021, when extended freezing temperatures shut down natural gas facilities and power plants, which rely on each other to keep electricity flowing. The resulting blackouts left millions of Texans without power for days, and hundreds of people died in the winter storm.A Federal Energy Regulatory Commission report on the Texas freeze released in late 2021 found that 31.4% of unplanned generation outages were due to fuel issues — and 87% of those fuel issues were related to natural gas.The Texas Competitive Power Advocates, which represents electricity generators, said the fine was not a strong punishment. “Penalties should serve as an incentive to avoid violations, not as a minor inconvenience,” the group said in comments submitted to the Railroad Commission.
DOI Awards Initial $560MM to Begin Plugging Orphaned Wells -- The U.S. Department of the Interior (DOI) has announced that it has awarded an initial $560 million from President Biden’s Bipartisan Infrastructure Law to 24 states to begin work to plug, cap and reclaim orphaned oil and gas wells. Of the states eligible for funding, 22 have been allocated $25 million each in initial state grants, while Arkansas and Mississippi will receive $5 million each to support methane measurement and begin plugging wells, the DOI highlighted. According to a DOI list reflecting the number of wells identified for plugging and remediation with initial grant funding by each eligible state, Kansas has the most at 2,352, followed by Kentucky (1,000 – 2,000), and Oklahoma (1,196). The number of wells varies based on the remoteness, well depth, site conditions and previous activity at the well site as well as other state considerations, such as the number of existing staff and whether the state has preexisting well plugging contracts, the DOI noted. The investment is part of an overall $1.15 billion in phase one funding announced in January by the DOI for states to plug and remediate orphaned wells. States will receive additional formula funding dollars in the coming months, the DOI stated, adding that, in addition, an initial $33 million was recently allocated to plug 277 wells on federal public lands. According to the DOI, the Bipartisan Infrastructure Law delivers the largest investment in tackling legacy pollution in American history, “including through a $4.7 billion investment to plug orphaned wells”.
Exxon agrees to divest Arkansas shale gas assets to Flywheel Energy - Exxon Mobil has agreed to sell its oil and gas producer natural gas properties in Arkansas to Flywheel Energy, an Exxon spokesperson told Reuters. The agreement has been signed by XTO Energy, a subsidiary of Exxon, with Kayne Anderson Private Energy Income Funds-backed Flywheel. The transaction includes around 5,000 natural gas wells including around 4,100 non-operated and 850 operated, as well as related pipeline and processing properties that cover an area of around 381,000 acres. The sale of Fayetteville Shale assets forms part of the US energy company’s efforts to focus on more lucrative prospects.
Exxon sells Fayetteville Shale assets; Arkansas severance tax revenue rising - Texas-based ExxonMobil Corp. recently sold its natural gas properties in the Fayetteville Shale play in north-central Arkansas to Oklahoma City-based Flywheel Energy LLC, according to Reuters. Financial terms of the deal were not disclosed. Late Friday (Aug. 26), Reuters reported the transaction included about 5,000 natural gas wells and pipeline and processing properties, comprising about 381,000 acres. Among the wells, 850 operated. Exxon subsidiary XTO Energy signed the agreement with Flywheel Energy, which is backed by Kayne Anderson Private Energy Income Funds.According to Reuters, the sale of Exxon’s assets in the Fayetteville Shale “brings the largest U.S. producer closer to a goal of selling $15 billion in non-core properties to focus on more lucrative prospects.” The deal is expected to close by the end of October. XTO Energy had acquired the Fayetteville Shale assets for $650 million amid a shale boom in 2010.According to Flywheel Energy’s website, it operates “the largest position” in the Fayetteville Shale. In 2018, Flywheel Energy entered the Arkansas market when it acquired the Fayetteville Shale assets of Houston-based Southwestern Energy Co. in a cash-and-debt deal worth nearly $2.4 billion. That deal was expected to help Southwestern Energy capture greater returns in its higher-margin Appalachia assets. The company was the top leaseholder in the Fayetteville Shale with more than 4,000 producing wells on over 915,000 acres.Flywheel’s move comes as natural gas prices have significantly recovered from several years of low prices that stymied production and pushed industry consolidation. Wednesday’s (Aug. 31) price hovered around $9.18 per MMBtu, well above the $3.73 to begin the year. The price hit a recent low around $1.50 per MMBtu in June 2020.Arkansas severance tax revenue is showing gains along with the higher market prices, according to figures from the Arkansas Department of Finance and Administration (DFA). The tax revenue peaked at $78.634 million in fiscal year (July-June) 2015, but declined to a low of $14.067 million in fiscal year 2020. The revenue partially rebounded to $61.556 million in fiscal year 2022, which ended in June.The July 2022 revenue, the most recent month reported by the DFA, was $8.784 million, which was ahead of the $8.444 million in the July of record-setting fiscal 2015.
60 gallons of oil, fuel spill into Cumberland County river after Naples boat fire — Dozens of gallons of oil and fuel leaked into the Songo River in Naples Tuesday night after a large boat caught fire. A 35-foot cabin cruiser motor boat caught fire, spreading to jet skis and a nearby dock, which were completely destroyed, according to officials with the Naples Fire Department. The owner was reportedly onboard with a bilge pump getting water out of the boat when the fire started. “On arrival the boat was fully involved,” Naples Fire Chief Justin Cox said. “And we just started fire suppression until the boat sank.” “[The owner] was trying to operate the boat,” Cox said. “Started the bilge pump and smelled smoke, saw fire and he evacuated.” After the fire was extinguished, officials determined that about 60 gallons of oil and gas had spilled into the river. One neighbor said that the fire was so big, he thought it might have been the woods outside his house. Chris Garcia said that he heard a pop and then saw a bright glow through his window shades late Tuesday afternoon. No one was seriously injured in the fire, which is believed to have started due to an electrical issue.
Eagle Ford Crude Oil Production Still Not On Pre-Pandemic Levels - Constant increases in the past six months have not yet put Eagle Ford crude oil production on par with pre-pandemic levels, the U.S. Energy Information Administration said. According to the EIA’s latest Drilling Productivity Report, crude oil production in the Eagle Ford region in southern Texas is estimated to average at around 1.2 million barrels per day (bpd) during September 2022. Despite recent increases, less crude oil is being produced in the Eagle Ford region than before the pandemic – 1.4 million bpd in April 2020 – and much less than the all-time high of 1.7 million bpd in March 2015. Because prices increased, we estimate that economically recoverable oil resources – the amount of recoverable oil that producers believe can be profitably produced – in the Eagle Ford formation, increased to 8.4 billion barrels in the first half of 2022, an increase from 0.5 billion barrels in 2020. The EIA said that, between 2020 and the first half of 2022, crude oil prices more than doubled, incentivizing future development in previously marginal areas. This analysis of the Eagle Ford formation focuses on proven reserves and economically recoverable resources. Proved reserves are volumes of crude oil and natural gas that data demonstrate with reasonable certainty can be recoverable in future years from known reservoirs, considering existing economic and operating conditions. In contrast, economically recoverable resources vary considerably depending on price and cost assumptions. Economically recoverable resources represent a less certain estimate of future crude oil and natural gas volumes and production. If prices are too low to provide a return on the investment of developing the well, producers will not invest in drilling the well. The Eagle Ford formation produces both crude oil and natural gas, so profitability is not only based on past crude oil or natural gas production rates but also on producers’ forecasts of future prices for natural gas and crude oil.
Surrounded by fossil fuels, they fear climate bill leaves them behind — On any given day at the Prince Hall apartment complex, the breeze might carry soot and stink of burning tar. Black smoke might billow overhead as excess gas is burned at one of the refineries directly across the road. The fumes make Ariel Watson’s head ache until she can barely think. Jeremy Roy, 9, closes his windows against air that “stinks like farts.” For the mostly Black and Latino residents of Port Arthur — home to three oil refineries, two liquid natural gas terminals and at least 40 other facilities that release toxins into the air — the burning of fossil fuels is a local health hazard as well as a planetary threat. But as Democrats celebrate the passage of a hard-fought climate deal, with historic investments in clean energy as well as concessions to the fossil fuel industry, locals fear that the legislation may leave their community behind. To secure the vote of Sen. Joe Manchin III (D-W.Va.), party leaders committed to auction off more drilling leases and relax permitting requirements for new projects. Experts say the measures may prolong the environmental damage many Americans now face — especially in areas where petroleum products are produced for export. Now, people in Port Arthur and other industrial communities say they must fight to maintain what power they have left: the ability to comment on — and push back against — polluting infrastructure. Positioned in the far eastern corner of Texas, close to the Gulf of Mexico and just 13 miles from where the state’s oil was first discovered, Port Arthur has been a hot spot for refining and manufacturing petroleum products for more than a century. And for just as long, says activist John Beard Jr., the city has been a “sacrifice zone” — one of many low-income communities of color that have borne the cost of the country’s economic growth.“We’re battling for a clean environment, not just for the sake of climate change, but for the sake of the air that we breathe and the water that we drink,” said Hilton Kelley, a Port Arthur native and founder of the Community in Power and Development Association, a local environmental justice group. “We’re battling for our life.”
Magellan to increase scope of El Paso refined products pipeline expansion - Magellan Midstream Partners said Aug. 29 it would increase the scope of its planned refined products pipeline network expansion in Texas from the Houston area to El Paso, adding an additional pipeline and capacity from the initial project. The expansion would increase capacity by 30,000 b/d to 100,000 b/d in part by building a new 16-inch, 30-mile pipeline between Odessa and Crane, Texas in the Permian Basin, as well as additional storage facilities. The original plan was to hike capacity up to 85,000 b/d, but Magellan said extra customer interest sparked the increased scope of the project. The overall project increases pipeline capacity along 265 miles from Odessa to El Paso. The project also would take advantage of underutilized pipeline capacity from the Houston oil-refining network to the Odessa hub. The pipeline system primarily moves gasoline and diesel fuel from US Gulf Coast refineries to El Paso, with further pipeline access into New Mexico, and connections to third-party pipelines to Arizona and Mexico. "To meet strong market demand, we have increased the scope of this expansion to deliver essential fuels supported by take-or-pay commitments from quality customers, providing an attractive return for our investors." Magellan said the project, which costs about $125 million, could be completed by early 2024 -- pushed back from a previous mid-2023 estimate -- following the addition of incremental pumping capabilities and the construction of additional storage in El Paso.
Judge Upholds $14 Million Fine in Long-running Citizen Suit Against Exxon in Texas - A federal judge this week rejected a third appeal by ExxonMobil in the 12-year legal battle over toxic emissions from one of the Texas-based energy giant’s Gulf Coast facilities. The Fifth Circuit Court of Appeals in New Orleans upheld a $14.25 million fine—thought to be the largest-ever fine resulting from citizen enforcement of environmental law—in a lawsuit brought by environmental organizations against Exxon’s massive complex in Baytown, some 25 miles outside Houston. The decision still doesn’t guarantee a conclusion to the long-running case, which Exxon may be able to appeal further. “It’s frequently in the interest of a company to drag out cases for as long as possible to try and get the other side to give up, but we are not giving up,” said Josh Kratka, senior attorney at the National Environmental Law Center, which represented the plaintiffs in the trial. “We hope this is the end of it.”The suit was first filed in 2010 by Environment Texas and the Sierra Club under the citizen suit provision of the Clean Air Act, which empowers civilians to sue polluters for violations of federal environmental law. The plaintiffs originally alleged that 16,386 illegal air emissions events, which Exxon disclosed in its own reports, affected the health of communities around the Baytown refinery. A district court in 2017 ordered the Texas-based energy giant to pay almost $20 million. Exxon appealed, arguing that not all of those violations could be directly traced to specific health problems. Upon review, the court reduced the number of actionable violations to 3,651 and reduced the fine to $14.25 million. Exxon appealed again, contesting the court’s legal standing and the size of the fine. “This is a standard tactic. It just goes to show the lengths that polluters will go to to prevent true justice from coming forward,” said Stefania Tomaskovic, director of the Coalition for Environment, Equity and Resilience in Houston. “It’s always a struggle to protect our air when companies have so much money to hire lawyers and citizens are not as well resourced.” On Tuesday, a federal judge rejected Exxon’s latest appeals. The judge upheld the high fine in part due to elements of the Clean Air Act designed to ensure that paying emissions fines isn’t a cheaper alternative for polluters than building adequate facilities. “The company delayed implementation of four emission-reducing projects mandated by a 2012 agreement between Exxon and state regulators,” said the court opinion issued this week. “Exxon needed to invest $11.75 million dollars in improvements to comply with its Clean Air Act obligations.”
Texas will plug 800 abandoned oil and gas wells, funded by $25 million federal infrastructure grant - Texas will begin plugging about 800 abandoned oil and gas wells this fall, the state’s oil and gas agency said, after receiving an initial $25 million grant from a program included in President Joe Biden’s infrastructure plan. It’s a fraction of the approximately 7,400 documented abandoned oil and gas wells that need to be plugged in the state — and industry observers believe the figure to be an undercount. Several more millions of dollars are expected to be disbursed to Texas through the newly created federal program. Abandoned oil and gas wells leak methane, a potent greenhouse gas that is the second-largest contributor to climate change after carbon dioxide. The wells, if not properly plugged, also can leak toxic water and chemicals in the surrounding areas. One orphan well, leaking extremely saline groundwater and hydrogen sulfide gas, has created a massive artificial lake in West Texas, known as Lake Boehmer. Methane lasts in the atmosphere for less time. Cutting methane emissions is one of the most effective short-term tools to reduce the effects of climate change, scientists say. The projected cost to plug and clean up the pollution from all 7,400 documented wells is approximately $482 million, according to the commission’s notice of intent to apply for federal funding obtained by The Texas Tribune. But an estimate from the Department of the Interior shows that Texas likely will be eligible for less than that — about $344 million in federal funds. The bipartisan infrastructure law passed last year by Congress dedicated $4.7 billion to create a new federal orphan oil and gas well remediation and plugging program. Both Republican U.S. Sens. John Cornyn and Ted Cruz voted against the law — as did every Republican House member from Texas. The first grant of $25 million to Texas is part of an initial award of $560 million in 24 states. There are more than 10,000 high-priority well sites ready for remediation, according to the department’s estimates based on state applications.
Will Joe Biden’s gamble on big oil pay off in leveling gas prices? --Can Joe Biden push big oil to drill for more oil, lower gas prices andspeed up the switch to electric vehicles? That’s the ambitious aim of a plan the Biden administration is implementing as drivers continue to wrestle with soaring gas prices. Unusually, the plan has support not just from the oil industry but some economists and environmentalists.As 2022’s gas prices set off inflation and oil companies celebrated record profits, Biden practically begged industry executives to take a basic step that could have brought down costs: pump more oil to increase supply. His pleas fell on deaf ears.While critics charge the industry with acting out of greed, oil companies see real risk in pumping more oil. Since 2008, oil oversupplies have repeatedly caused prices to collapse, leaving companies with dwindling profit.In late July, the Biden administration changed tack, moving forward with a risky if innovative plan designed to protect consumers from high gas prices, reduce oil companies’ risk and push the nation toward electric vehicles. The proposal would work by wielding the Strategic Petroleum Reserve, the federal government’s store of oil, in a way that sets a partial floor and ceiling on oil prices.In short, when demand is weak and prices fall so low that pumping more oil becomes unprofitable, the government would buy at a price that’s high enough to buoy industry’s profits and store barrels in the reserve. When demand is strong and prices climb, the government can intervene by flooding the market with reserve oil, which could help bring down prices.If it works, the plan could be managed to keep gas prices high enough that consumers continue switching to EVs, but not so high that they harm the economy. While many will question the wisdom of a plan to reduce greenhouse gasses by pumping more oil, the idea still has support from a “strange-bedfellows coalition”, said Skanda Amarnath, executive director of Employ America, a progressive thinktank that has pushed a similar plan.“If you’re using these tools intelligently, it does provide oil producers with some certainty and confidence,” he said. “But it also needs to be thought about holistically … and it should steward the strategic reserve in a climate-conscious way.”
Canada invokes pipeline treaty with U.S. over Wisconsin Line 5 dispute -Canada has invoked a 1977 pipeline treaty with the U.S. for the second time in less than a year, in this case to prevent a shutdown of Enbridge Inc.’s Line 5 pipeline in Wisconsin, Foreign Minister Melanie Joly said on Aug. 29. The Bad River Band, a Native American tribe in northern Wisconsin, wants the 1953 pipeline shut down and removed from its reservation because of the risk of a leak and expired easements, which are land use agreements between Enbridge and the tribe.In May, Enbridge filed a motion in a U.S. district court saying federal law prohibits attempts to stop the pipeline’s operations. The motion sought to dismiss some of Bad River Band’s claims. The treaty, which was invoked last October in the Michigan case, is expressly designed to ensure the uninterrupted operation of hydrocarbons through the U.S."The economic and energy disruption and damage to Canada and the U.S. from a Line 5 shutdown would be widespread and significant," Joly said in a statement."This would impact energy prices, such as propane for heating homes and the price of gas at the pump. At a time when global inflation is making it hard on families to make ends meet, these are unacceptable outcomes."The statement says Canada "strongly" supports a proposal by Enbridge to reroute the pipeline around the Bad River Band reservation in northern Wisconsin.
Courts Lawsuit in ’21 oil spill has been settled, pipeline operator says – A settlement has been reached in a class-action lawsuit brought by fishing companies, coastal businesses and property owners looking to recoup losses after last fall’s pipeline break that spilled thousands of gallons of oil into the ocean off Orange County, operator Amplify Energy Corp. announced Aug. 25. Details of the agreement that will settle the civil claims against Amplify and its subsidiary companies were not provided. A statement from Amplify’s president and CEO, Martyn Wilsher, said, “Though we are unable to provide additional detail at this time, we negotiated in good faith and believe we have come to a reasonable and fair resolution.” Wylie Aitken, one of three attorneys tapped to represent more than a dozen business owners and individuals named as plaintiffs in the suit, said the agreement includes “both monetary and injunctive relief,” though he declined to provide the amount of money the parties settled on until the agreement is submitted to the court for approval. Still being finalized are details such as how the money will be allocated fairly to all plaintiffs and the steps for injunctive relief that Amplify will take to ensure “this never happens again,” he said. Aitken said, though, that attorneys are “very satisfied” with the terms of the agreement “and feel our clients will be equally satisfied, and that’s the most important thing.” Amplify said the company’s insurance policies will fund the settlement, which still needs to be approved by the court. Orange County officials recently agreed to accept a $956,352 settlement from the company, which will cover costs incurred by county agencies during the cleanup.
Texas firm to pay $13 mln to settle charges over California oil spill -A TEXAS oil company agreed to plead guilty to criminal negligence charges and pay nearly $13 million for a crude oil spill that killed wildlife and fouled southern California beaches, federal prosecutors said on Friday. Amplify Energy Corp repeatedly turned off and on a 17-mile-long subsea pipeline when it could not determine the location of the leak, according to plea agreements filed in U.S. District Court, Central District of California. The Houston-based company and two subsidiaries each agreed to plead guilty to one count of negligently discharging oil during the October 2021 incident. The pipeline was struck by a ship’s anchor. The three firms “are required to make significant improvements that will help prevent future oil spills,“ Acting United States Attorney Stephanie S. Christensen said in a statement. The plea “reflects the commitments we made immediately following the incident to impacted parties and is in the best interest of Amplify and its stakeholders,“ said Chief Executive Martyn Willsher. The spill released some 558 barrels (25,000 gallons) of crude oil into the Pacific Ocean, killing wildlife, blackening the coastline and forcing the closure of beaches south of Los Angeles. A judge must still accept the plea agreement. The companies will serve probation for four years, be required to conduct semiannual pipeline inspections, and revise and submit an oil spill plan to state wildlife officials, the court filing showed. Amplify has said it incurred $17.3 million in cleanup costs in the immediate aftermath of the spill. The company this week said it reached an agreement in principle with plaintiffs to resolve civil claims.
When an Oil Well Is Your Neighbor - .—On a blistering July afternoon, a rusty pumpjack bobs noisily as it sucks up tarry oil in the middle of a residential neighborhood in Arvin, a close-knit farmworker community in the heart of California oil country. To an outsider, it’s a shock to see a pumpjack barely 25 feet from someone’s home. But for Yesinia Martinez, the dilapidated rig beyond her bedroom window is just something that’s always been there. Her health problems, too, have always been there. Every day is a struggle. “I wake up and I have, like, no energy to get up,” she said. “I get headaches often. My memory is horrible.” Martinez personifies California’s failure to protect its residents from the harsh realities of living near fossil fuel extraction. Oil and gas operations have been linked to a growing list of serious health consequences, from birth defects to cancer, while the industry’s wastewater pollutes the state’s dwindling groundwater reserves. Meanwhile, environmental watchdogs armed with state-of-the-art imaging cameras routinely detect toxic emissions from neighborhood oil and gas wells and storage tanks, demonstrating the failure of state and regional regulators to keep communities safe. People like Martinez have paid for that failure with their health. Martinez lost count of how many times she woke up as a kid feeling something wet on her face, only to realize her nose was bleeding. She’s long had stomach trouble and bouts of anemia. Now 21, she no longer has nosebleeds, but suffers from dry eyes and headaches, fatigue and memory problems that made it even harder to study when her local university went virtual during the pandemic. She’s been seeing specialists since last fall, when her stomach problems and dizzy spells got worse. Her doctors suspect she may have an autoimmune disorder but won’t prescribe any medications until they settle on a diagnosis. “It’s overwhelming because I keep going to all these doctor’s appointments since I was younger and they can’t tell me what’s wrong,” said Martinez. “But I know there’s something wrong with me because, if not, I wouldn’t be feeling like this on a daily basis.”
California lawmakers OK buffer zones for new oil wells - After years of failed attempts to impose health and safety buffer zones around new oil and gas wells in California, state lawmakers on Wednesday sent a bill to the governor that would require setbacks between those production sites and residential neighborhoods and other sensitive areas.Senate Bill 1137 is a major part of a package of climate legislation that Gov. Gavin Newsom pledged to bolster the state’s environmental policies.“It’s a long-standing and glaring example of environmental racism,” said state Sen. Lena Gonzalez (D-Long Beach), who introduced the bill. “Research shows, of course, that people of color, Black, brown and Indigenous people suffer the greatest consequences of this toxic proximity and these are the same communities that have oil production in their backyards.”The legislation prohibits the California Geologic Energy Management Division from approving a new oil well within 3,200 feet of a “sensitive receptor,” defined as a residence, education resource, community resource, healthcare facility, dormitory or any building open to the public.Similar efforts have failed to gain traction in the state Legislature in the past, succumbing to tough lobbying opposition from the petroleum industry and trade unions. Newsom largely remained on the sidelines during those earlier legislative battles while he pushed his administration to adopt setbacks through state regulations.The governor waded into the fight this year, however, after the Western States Petroleum Assn. ran ads in Florida criticizing Newsom’s climate policies. The ads were aired after Newsom ran his own television spots in Florida calling out the state’s restrictive policies on abortion and LGBTQ rights.Opponents argued that the bill would raise already sky-high gas prices and criticized the rushed nature in which the legislation was approved during floor debates in the Legislature. “This bill is a setback for desperately needed energy production in California,” Assemblymember Vince Fong (R-Bakersfield) said on the Assembly floor. “This bill is a setback for Californians struggling to afford to live and work in California. This bill is a setback to the entire California economy.” Democratic lawmakers said SB 1137 will only block oil companies from building new wells, or wells that are reworked, near the restricted areas and that existing wells can continue to operate. Companies with existing oil and gas wells within the health and safety buffers would be required to monitor emissions, control dust and limit nighttime noise and light.
Feds implore court to review California fracking injunction - · A federal appeals court panel jumped the gun when it blocked the U.S. government from issuing fracking permits off the coast of California, according to a request by the Biden administration for a new, full court hearing.
Salvage to commence on sunken fishing vessel off San Juan Island, Washington - A multi-agency operation will soon commence to raise the wreck of a commercial fishing vessel that sank off San Juan Island in Washington State earlier this month. The fishing vessel is the 49-foot (14.9-metre) Aleutian Isle, which sank to a depth of 200 feet (60.8 metres) west of San Juan Island in the afternoon (local time) of August 13. All of the boat’s occupants were safely rescued. However, the incident also resulted in an oil spill as the vessel’s fuel tanks still contained 2,500 gallons (9,463 litres) of diesel at the time of the sinking. The pollution response phase was then undertaken, and the decision was made to proceed with the raising of the wreck after responders noticed a reduction in the visible oil pollution in the area within the week following the incident. Dive operations are ongoing in preparation for the eventual lifting of the sunken vessel with the aid of a crane and barge. The present dive effort has an estimated duration of 10 days under optimal weather conditions. A unified command consisting of the US Coast Guard, the Washington Department of Ecology, the San Juan County Office of Emergency Management, and the Swinomish Tribe has been formed in response to the incident. Support agencies include the NOAA, the Washington Department of Fish and Wildlife, Islands’ Oil Spill Association, the National Marine Fisheries Service, and the US Fish and Wildlife Service.
Imperial Oil reporting spill in Norman Wells occurred under Mackenzie River - Nearly a month after the incident was first reported, Imperial Oil has confirmed that the produced water line that spilled in Norman Wells, N.W.T. is underneath the Mackenzie River. Cabin Radio first reported the leak's location. Imperial Oil said the cause of the leak is still being determined and that results from water sampling indicate there is no risk to public health or freshwater aquatic life downstream. In early August, residents in Fort Good Hope reported a fuel-like sheen and other surface contaminants spotted on the surface of the Mackenzie River. Residents report unusual conditions on Mackenzie River following Imperial Oil spill in Norman Wells, N.W.T. In an interview with CBC News in late July, Edwin Erutse, president of the Yamoga Land Corporation, said news of the spill came 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. Tommy Kakfwi, who was elected chief of Fort Good Hope in 2021, said the Guardian representatives with the K'ahsho Got'ine Foundation are doing their own tests alongside Imperial Oil. "There is concern," he said. "We're doing our own water sampling right beside them to make sure they don't water down their results." The spill was reported to the N.W.T. Department of Environment and Natural Resources on July 27 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 varies with how much it contains. The company estimates the quantity of the spill is 55 cubic metres (55,000 litres).
Canada to import a record volume of US ethanol in 2022 -Fuel ethanol consumption in Canada is expected to grow by approximately 8.6 percent this year, according to a report filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network. Imports of U.S. fuel ethanol are expected to reach a record 1.5 billion liters (396.26 million gallons). According to the report, Canada is expected to consume approximately 3.18 billion liters of fuel ethanol this year, up from 2.928 billion liters in 2021, 2.783 billion liters in 2020 and 3.064 billion liters in 2019. Ethanol is expected to account for 6.7 percent of gasoline use in 2022, compared to 6.3 percent last year and 6.2 percent in 2020. There are currently 12 ethanol plants located in Canada with a combined 1.881 billion liters of production capacity. The number of plants has held steady since 2018, with capacity maintained at its current level since 2020. Capacity use is expected to reach 95.7 percent this year, up from 93 percent in 2021 and 90.3 percent in 2020. Canadian ethanol plants are expected to produce 1.8 billion liters of fuel ethanol this year, up from 1.75 billion liters in 2021 and 1.698 billion liters in 2020. Production, however, is expected to remain slightly below the 1.891 billion liters produced in 2019. Corn is the primary feedstock used to produce fuel ethanol in Canada, with 3.7 million metric tons expected to be consumed this year, up from 3.55 million metric tons in 2021 and 3.352 million metric tons in 2020. An additional 560,000 metric tons of wheat and other grains is expected to go to fuel ethanol production this year, up from 540,000 metric tons in 2021 and 552,000 metric tons in 2020. Canada is expected to export 180 million liters of ethanol this year, including 100 million liters of fuel ethanol. The country exported 178 million liters of ethanol last year, including 108 million liters of fuel ethanol, and 143 million liters in 2020, including 75 million liters of fuel ethanol. Ethanol imports are expected to reach 1.6 billion liters this year, including 1.48 billion liters of fuel ethanol. Canada imported 1.373 billion liters of ethanol last year, including 1.254 billion liters of fuel ethanol, and 1.256 billion liters in 2020, including 1.164 billion liters of fuel ethanol. Canadian imports of U.S. fuel ethanol reached a record 1.3 billion liters in 2021, up 8 percent when compared to 2020. Imports of U.S. fuel ethanol are expected to increase to 1.5 billion liters in 2022.
Crude oil from Mizton Field offshore Mexico reaches US markets – Exports of Mexico’s newest crude are ramping up from Eni’s Mizton field as US refiners find it an apt replacement for banned Russian oil and one that complements domestic grades. As reported by Reuters, the shipments represent the first crude exports made by an oil company other than state firm Pemex in Mexico’s history. The Mizton field is part of the Mizton-Amoca-Tecoalli cluster in the southern Gulf of Mexico. Eni estimates that the fields hold about 2.1 billion barrels of oil and gas. The Miamte FPSO, which can handle up to 90,000 barrels per day of output, began pumping the oil in February. Four vessels chartered by Eni Trading & Shipping have discharged at US ports since April, according to the Reuters report. They have carried a total of about 2.2 million barrels of the crude to US refiners including Marathon Petroleum and PBF Energy. A fifth Eni cargo of 525,000 barrels of Mizton on Aframax tanker Nippon Princess is scheduled to reach the US East coast soon, reportedly purchased by PBF Energy. Mizton crude is similar in quality to other US Gulf grades used by coastal refiners, and a good replacement of Russia’s flagship Urals crude, according to analysis in the Reuters report. Russian oil, which accounted for about 3% of total US crude imports last year, was banned in April as part of American sanctions on Russia in the wake of its invasion of Ukraine.
Value of Jamaica's crude oil imports grew by 50 per cent in 2021 - ESSJ - The value of crude oil imports by Jamaica last year grew by 50.0 per cent to US$580.9 million compared with 2020 according to the Planning Institute of Jamaica’s Economic and Social Survey Jamaica (ESSJ), 2021 edition. According to the survey, the growth was driven by an increase of 49.6 per cent to US$71.0 in the average cost per barrel of crude oil, reflecting the rise in international crude oil prices. “The volume of crude oil imported remained relatively flat at 8.2 million barrels. Brazil continued to be Jamaica’s largest supplier of crude oil, with imports increasing to 5.9 million barrels from 4.8 million barrels, followed by Colombia, which decreased from 2.9 million barrels to 1.9 million barrels,” said the ESSJ. It noted that the value of refined products imported by Petrojam grew to US$425.2 million from US$190.8 million For imports of petroleum products by bauxite companies, the value increased to US$95.7 million from US$86.3 million, and for petroleum products imported by the marketing companies the value rose to US$286.8 million from US$224.0 million. “The country’s oil bill (total value of crude oil, refined product imports and LNG imports) increased to US$1.69 billion from US$1.08 billion, mainly reflecting the rise in international oil prices,” the survey said.
US LNG export terminals stage production push as European gas prices top $100/MMBtu - Record global gas prices, now trading as high as $100/MMBtu in onshore European markets, are putting pressure on US LNG export terminals to step up production, pushing feedgas demand this week to its highest since early July. On Aug. 25, total gas demand from US export terminals edged up to over 11.5 Bcf/d, marking its highest level since July 1. The single-day demand high is no fluke — over the past week, feedgas demand has trended just shy of that level, averaging nearly 11.2 Bcf/d, data from Platts Analytics shows. The continued ramp up of production at Venture Global’s Calcasieu Pass terminal has been a key driver behind recent gains in US liquefaction activity, with flows to the still-commissioning 10 million mt/year terminal estimated at a record-high 1.6 Bcf/d on Aug. 26. While the June 8 shut-in of production at Freeport LNG cut US export capacity by some 2 Bcf/d, or about 15%, this summer, the US’ other six operational terminals are making a push to maximize output — and for good reason. On Aug. 26, spot LNG import prices in Northwest Europe surged to their highest on record for the third consecutive day, this time hitting $74.49/MMBtu. In East Asia, Platts benchmark JKM import price climbed to over $71/MMBtu on Aug. 25, before easing back to the mid-$66 range on Aug. 26. At current levels, JKM prices are at their highest since the single-day price of $84.76 was recorded in early March, data from S&P Global Commodity Insights shows. In the US market, the Platts Gulf Coast Marker for FOB cargoes loading 30-60 days forward was assessed at $73.35/MMBtu Aug. 26, up $6.10/MMBtu on the day to a new high. The run up in global prices, which have surged this week, comes as the European gas market grapples with growing supply uncertainty. Most recently, Norwegian transmission system operator, Gassco, advised European end-users of a planned maintenance on the Karsto, Oseberg and Kristin gas assets, from Aug. 26- Sept. 7, Platts reported previously. The maintenance cuts Norwegian pipeline supply to Europe by some 23.5 million cu m/d, or about 800 MMcf/d.
The Global Gas Crisis Is Spilling Into The United States - Both experts and everyday consumers remain at odds about the current state of the global natural gas market. The main point of contention is whether U.S. prices will drop significantly or rise further. With inflation hitting record highs this past year, nobody can blame consumers for being wary. Most experts agree that gas prices and demand will keep up their pace. The ongoing European energy crisis weighed into this heavily. EU countries continue to search for alternatives to Russian fuel. However, Europe’s energy problems will likely ripple into the entirety of the international energy market. In fact, it might be happening already. The Nord Stream 1 pipeline running at low capacities could hit the U.S. harder than expected. With sky-high gas prices across Europe and dwindling reserves, the EU has been scouring the world for alternatives to Russian energy. Because of this, global gas competition recently experienced a sharp – and ongoing – rise.Along with this, the winter months will prove the most strenuous on the average consumer’s wallet. After all, millions of American and European homes rely on natural gas for heat. With winter quickly approaching, the situation looks grim. While bills like the Inflation Reduction Act will likely take some of the pressure off of natural gas demand in the US, those initiatives will take time to implement and build. The real question remains; will they be ready in 3-4 months' time?On the positive side, Europe’s frantic search for solutions could pay off in the near future. Already, countries like Norway, the US, and the UK have stepped up to aid Germany and other central EU nations in getting alternative gas imports. However, whether or not these sources are enough to tide the EU over through winter remains up for debate.With competition for natural gas hitting a fever pitch, many speculate gas prices will continue rising worldwide. Not only are natural gas supplies in the US being shipped to Europe to aid with the energy crisis, but record-setting heat waves mean more power consumption as American, and European homes are relying more and more on air conditioning. Even Asia has started feeling the strain of the Western energy crisis these past few weeks. For instance, Japan has begun looking for alternative sources of natural gas in light of the war in Ukraine and gas shortages in Europe. As with the West, Northern Asia is firmly focused on making it through the coming winter. In the past couple of weeks, Russia started hinting that it might also limit gas supplies to Northern Asia. Russia halted a large shipment of natural gas bound for its southern neighbors.Countries like South Korea and Japan, which have minimal natural gas reserves of their own, are heavily reliant on natural gas imports. This puts them in direct competition with European, which has its eye on LNG supplies shipped by sea. Though the battle to secure supplies just started, many experts expect it to intensify in the coming years.
Analysis: Forget showering, it's eat or heat for shocked Europeans hit by energy crisis - (Reuters) – No more ironing, limited oven use and showering at work – Europeans are trying to keep their energy use down but the bills keep climbing.As wholesale gas and electricity prices surge, millions of people in Europe are now spending a record amount of their income on energy, data show.In the east England town of Grimsby, Philip Keetley didn’t turn on his cooling fan at home as Britain sweltered under a record heat-wave this summer.A look at his bank account showed he couldn’t afford to. “The cost of living has increased and yet you’re still expected to live on the money provided for when there wasn’t a crisis … I either can have my heating on or eat,” Keetley said. Citizens in other European countries too are voluntarily taking action to cut consumption as gas, electricity and fuel prices sky-rocket due to war in Ukraine, sanctions on Russia and the aftermath of the coronavirus pandemic.The benchmark European gas price has soared 550% in the past 12 months. The cost of energy for British consumers will rise by 80% from October, regulator Ofgem said on Friday, taking average annual household bills to 3,549 pounds ($4,188).European governments have rushed to offer aid, but data shows the assistance hasn’t made a significant difference to households.This winter, Britons will spend an average 10% of their household income on gas, electricity and other heating fuels as well as domestic vehicle fuels, mainly petrol and diesel, twice the amount in 2021, according to Carbon Brief’s calculations of official data.This makes the current energy crisis more severe than those of the 1970s and 1980s. An oil producer’s oil embargo and the Iranian revolution in 1979 caused blackouts and long queues in petrol stations in the West. At the peak of that crisis in 1982, people in the UK paid 9.3% of their income on energy.UK charity National Energy Action (NEA) estimates 8.5 million UK households could be in fuel poverty after October when Britain’s cap increases, up from 4.5 million last October.
"How In The Name Of God": Shocked Europeans Post Astronomical Energy Bills As 'Terrifying Winter' Approaches - Over the past week, shocked Europeans - mostly in the UK and Ireland - have been posting viral photos of shockingly high energy bills amid the ongoing (and worsening) energy crisis. Several of the posts were from small business owners who getting absolutely crushed right now, and won't be able to remain operational much longer. One such owner is Geraldine Dolan, who owns the Poppyfields cafe in Athlone, Ireland - and was charged nearly €10,000 (US$10,021) for just over two months of energy usage. As the Irish Times reports, "The cost of electricity to the Poppyfields cafe for 73 days from early June until the end of August came in at €9,024.70 an increase of 250 per cent in just 12 months. There doesn’t include the €812.22 in VAT, which brought her total bill to €9,836.92." "How in the name of God is this possible," tweeted Dolan.UK pensioners are also facing a "terrifying" winter, as elderly Britons are about to get hit with an 80% rise in energy bills in October.Elderly Britons are set to welcome a boost of around £1,000 to their state pension payments next year thanks to the return of the triple lock, however the cost of living crisis will still leave them significantly poorer.However, the price cap for energy bills will rise by 80 per cent to £3,549 in October, and it is predicted to rise over £6,600 next year according to Cornwall Insight.Higher energy bills often hurt pensioners significantly more than the rest of the population because they spend a greater amount of their income on heating their home. -Daily Mail
"A Structural Rupture" - German Companies Shutting Down In Response To Record Energy Prices --It's not just European smelters shutting down due to soaring energy prices: the entire German economy is about to get its plug pulled. While a handful of macro tourists rejoice that record European year-ahead electricity prices plunged by 50% to levels not seen since... last week... As the FT reports, German manufacturers are halting production in response to the surge in energy prices, a trend the government has described as “alarming”. German economy minister Robert Habeck said industry had worked hard to reduce its gas consumption in recent months, partly by switching to alternative fuels like oil, making its processes more efficient and reducing output. But he amusingly clarified, some companies had also “stopped production altogether” — a development he said was “alarming”.“It’s not good news," he said, “because it can mean that the industries in question aren’t just being restructured but are experiencing a rupture — a structural rupture, one that is happening under enormous pressure.”Habeck said rising gas prices were affecting everyone from big industrial companies to small trading firms and the medium-sized enterprises that make up the “Mittelstand”. “Wherever energy is an important part of the business model, companies are experiencing sheer angst,” he said. And since energy is a crucial part of every business model, one can only imagine the chaos, fear and loathing hammering the largest European economy right now.Confirming that Trump was right all along, the German minister said the business model of large parts of German manufacturing was based on the abundance of gas from Russia that was cheaper than gas from other regions. That competitive advantage “won’t come back any time soon, if it ever comes back at all”, Habeck said.Whether he was aware of it or not, Habeck effectively echoed what Zoltan Pozsar said over the weekend, that Europe is facing a Minsky moment triggered by excessive financial leverage "and in the context of supply chains, leverage means excessive operating leverage: in Germany, $2 trillion of value added depends on $20 billion of gas from Russia… …that’s 100-times leverage – much more than Lehman’s."
Climate change: Russia burns off gas as Europe’s energy bills rocket - BBC - As Europe's energy costs skyrocket, Russia is burning off large amounts of natural gas, according to analysis shared with BBC News. They say the plant, near the border with Finland, is burning an estimated $10m (£8.4m) worth of gas every day.Experts say the gas would previously have been exported to Germany.Germany's ambassador to the UK told BBC News that Russia was burning the gas because "they couldn't sell it elsewhere".Scientists are concerned about the large volumes of carbon dioxide and soot it is creating, which could exacerbate the melting of Arctic ice.The analysis by Rystad Energy indicates that around 4.34 million cubic metres of gas are being burned by the flare every day.It is coming from a new liquefied natural gas (LNG) plant at Portovaya, north-west of St Petersburg. The first signs that something was awry came from Finnish citizens over the nearby border who spotted a large flame on the horizon earlier this summer. Portovaya is located close to a compressor station at the start of the Nord Stream 1 pipeline which carries gas under the sea to Germany. Supplies through the pipeline have been curtailed since mid-July, with the Russians blaming technical issues for the restriction. Germany says it was purely a political move following Russia's invasion of Ukraine. But since June, researchers have noted a significant increase in heat emanating from the facility - thought to be from gas flaring, the burning of natural gas. While burning off gas is common at processing plants - normally done for technical or safety reasons - the scale of this burn has confounded experts. "I've never seen an LNG plant flare so much," said Dr Jessica McCarty, an expert on satellite data from Miami University in Ohio. Miguel Berger, the German ambassador to the UK, told BBC News that European efforts to reduce reliance on Russian gas were "having a strong effect on the Russian economy". "They don't have other places where they can sell their gas, so they have to burn it," he suggested. Mark Davis is the CEO of Capterio, a company that is involved in finding solutions to gas flaring.He says the flaring is not accidental and is more likely a deliberate decision made for operational reasons."Operators often are very hesitant to actually shut down facilities for fear that they may be technically difficult or costly to start up again, and it's probably the case here," he told BBC News. Others believe that there could be technical challenges in dealing with the large volumes of gas that were being supplied to the Nord Stream 1 pipeline.It could also be the result of Europe's trade embargo with Russia in response to the invasion of Ukraine."This kind of long-term flaring may mean that they are missing some equipment," said Esa Vakkilainen, an energy engineering professor from Finland's LUT University."So, because of the trade embargo with Russia, they are not able to make the high-quality valves needed in oil and gas processing. So maybe there are some valves broken and they can't get them replaced." The financial and environmental costs mount each day the flare continues to burn, say scientists. "While the exact reasons for the flaring are unknown, the volumes, emissions and location of the flare are a visible reminder of Russia's dominance in Europe's energy markets," said Sindre Knutsson from Rystad Energy. "There could not be a clearer signal - Russia can bring energy prices down tomorrow. This is gas that would otherwise have been exported via Nord Stream 1 or alternatives."
Russia Gives Power Burn a Whole New Meaning - Russia is giving the term ‘power burn’ a whole new meaning by flaring its gas instead of exporting it to Europe via the Nord Stream pipeline. That’s what energy and environmental geo-analytics company Kayrros stated in a new market note sent to Rigzone, adding that the term is usually used to evoke the burning of natural gas in power plants. Since June, satellite data from VIIRS and Sentinel-2 processed by Kayrros has shown “abnormally high” flaring from the Portovaya compressor station on the Russian-Finnish border, the entry point for Gazprom’s Nord Stream gas pipeline to Germany, Kayrros outlined. S-2 images suggest flaring likely began when Russia started rationing gas exports in June, “ostensibly for maintenance reasons”, Kayrros noted. “Many see the move as a power play to ratchet up political pressure on European supporters of Ukraine that depend on Russian gas for their winter needs,” Kayrros said in the note. “High flaring also suggests Gazprom might prefer to burn gas than to shut-in production, perhaps in the hope that the export cuts will remain temporary,” Kayrros added. In the note, Kayrros outlined that, faced with reduced Russian gas supplies, Europe continues to import “much more LNG than normal, with the U.S. accounting for most of the increase”. “Europe has continued to import LNG at unprecedented rates this summer in a bid to make up for reduced exports of Russian piped gas,” Kayrros stated. “European LNG imports significantly exceeded the level of previous years in the first half of 2022. They have since remained elevated and have not shown much of the seasonal decline normally seen in the summer,” the company added. If Nord Stream 1 flows are cut to nil, absent demand destruction, European gas inventories would be exhausted by year-end, BofA Global Research stated in a report sent to Rigzone recently. “More worryingly, even at 20 percent NS1 capacity utilization (equal to current flows), we project the same outcome just one winter later in 2023/2024,” BofA Global Research added in the report. “While NS1 used to deliver ~10 percent of Europe’s gas demand and carried ~35 percent of Russian piped exports as of 2021, we believe minimum 2022 levels implied by Europe’s take-or-pay contracts with Gazprom could be serviced without any flows from NS1,” the company continued. BofA Global Research highlighted in the report that a 10 percent gas demand reduction year on year across the first half of 2022 has contributed to restoring current European gas inventory levels to five-year averages from record lows in January. “We believe further demand destruction in Europe will be necessary to fill storage to targeted levels (90 percent) and avoid inventory depletion into next winter,” BofA Global Research stated in the report.
Ursula von der Leyen Calls for 'Emergency Intervention' in Electricity Market."The skyrocketing electricity prices are now exposing, for different reasons, the limitations of our current electricity market design," the European Commission president said on Monday while addressing the Bled Strategic Forum in Slovenia. "[The market] was developed under completely different circumstances and for completely different purposes. It is no longer fit for purpose."That is why we, the Commission, are now working on an emergency intervention and a structural reform of the electricity market. We need a new market model for electricity that really functions and brings us back into balance."Under this system, all electricity producers – from fossil fuels to wind and solar – bid into the market and offer power according to their production costs. The bidding starts from the cheapest resources – the renewables – and finishes with the most expensive ones, usually gas.Since most EU countries still rely on fossil fuels to meet all their energy demands, the final price of electricity is often set by the price of gas. If gas becomes more expensive, electricity bills inevitably go up, even if clean, cheaper sources also contribute to the total energy supply.
Europe Plans "Emergency Intervention" In Power Market As All Hell Breaks Loose - With even Zoltan Pozsar warning that Europe faces an apocalypse of sorts now that the Eurussia divorce is complete and energy prices in Europe are hitting fresh daily record highs every single day - just today, German 1Year forward baseload electricity rose above €1000, or 10x where they were a year ago, before easing after European nat gas prices plunged the most since March after Germany said its gas stores are filling up faster than planned ahead of winter... ... moments ago the European Union appears to have finally realized that it faces an armed revolt this winter, or worse, when millions face freezing cold without power and heat (see "This Is Beyond Imagination": Polish Homeowners Line Up For Days To Buy Coal Ahead Of Winter"), and announced that it was planning "urgent steps" to push down soaring power prices, Commission President Ursula von der Leyen said on Monday."The skyrocketing electricity prices are now exposing, for different reasons, the limitations of our current electricity market design,” von der Leyen said in a speech at the Bled Strategic Summit in Slovenia, pointing out what has been obvious for years to those who warned repeatedly that Europe should probably not take make its energy policy based on the idiotic ravings of a self-absorbed, petulant, Scandinavian teenager. “It was developed under completely different circumstances and completely different purposes.”Ah yes, it's the "circumstances and purposes" that are at fault, not Europe's catastrophic "green" push over the past decade that left the continent at the mercy of Putin, very much as one Donald J Trump warned would happen... and speaking of Putin, maybe Europe can impose a few more self-destructive sanctions on Russian energy exports. But we digress...Ursula then added “that’s why we are now working on an emergency intervention and a structural reform of the electricity market", one which would look roughly like this. The unprecedented spike in power prices, which have soared almost 10-fold in the past year, has fueled inflation, increased the economic burden on businesses and households recovering from the pandemic, and forced the ECB to aggressively hike rate in hopes of crushing demand into what is now a definite recession if not a depression. One could say that Putin couldn't have planned his revenge on Europe better.According to Bloomberg, more and more member states are calling for a price cap and the Czech Republic, which holds the rotating presidency of the EU, plans to convene an extraordinary meeting of energy ministers on Sept. 9.In other words, while the ECB plans to crush demand with tighter monetary conditions, European governments will ease demand and inject fiscal stimulus to avoid an angry mob descending on various local parliaments.
Average Filling Level Of EU Gas Storage Facilities Reached 80% - Von Der Leyen - The average filling level of the European Union gas storage facilities has reached 80%, European Commission President Ursula von der Leyen said on Tuesday. "We have reached now an average in the European Union of storage filling of 80% so we are basically have reached already the amount that we have agreed on for this year but we know that we will increase this storage filling," von der Leyen said at the Baltic Sea Energy Summit in Denmark.
European Natural Gas Prices Plummet - It was a volatile start to the week for energy markets. European natural gas prices sunk, whilst oil moved higher. The next week will be key for markets. For natural gas, we will need to see whether flows along Nord Stream restart later in the week following maintenance. For oil, OPEC+ will hold its monthly meeting on 5 September to discuss supply policy. European natural gas prices came under significant pressure yesterday. TTF settled almost 20% lower, although prices are still trading at more than EUR270/MWh. Following the higher prices run, it seems there has been some profit-taking. From a fundamental point of view, little has changed to justify the scale of the move. Although given the uncertainty and limited liquidity in the market, prices are likely to remain trading at elevated levels with a large amount of volatility. Possibly contributing to the weakness were reports that the European Commission will come up with a proposal to address the significant strength that we have seen in European power prices. Any action which caps power prices will limit the profitability of burning gas for power generation, which could possibly feed through to lower gas demand. At the moment, spark spreads provide little incentive for gas demand destruction from the power generation sector. Finally, Russian gas flows along Nord Stream are set to stop tomorrow (31 August) for three days of maintenance at a compressor station. The market will be eagerly watching to see if flows restart once maintenance comes to an end. Currently, Nord Stream is only operating at about 20% of capacity, and Gazprom (MCX:GAZP) has said that flows will return to these levels once the work is complete. If flows do restart when stated, it could provide a bit further downside to European prices in the immediate term
Russia halts gas through major pipeline, citing maintenance (AP) — Russia’s Gazprom halted the flow of natural gas through a major pipeline from Russia to Europe early Wednesday, a stoppage that it announced in advance and has said will last three days. The Russian state-owned energy company announced the closure of Nord Stream 1 in mid-August, citing maintenance at a compressor station — an explanation that German officials have cast doubt on. Gazprom says that work is necessary on the only remaining functioning turbine at the Portovaya station, at the Russian end of the pipeline. Gazprom started cutting supplies through Nord Stream 1 in mid-June. It cited technical problems that German authorities have dismissed as cover for a political power play. In recent weeks, Nord Stream 1 has been running at only 20% of capacity. Russia, which before the reductions started accounted for a bit more than a third of Germany’s gas supplies, has also reduced the flow of gas to other European countries which have sided with Ukraine in the war. Natural gas is used to power industry, heat homes and offices, and generate electricity. Increasing the amount in reserve has been a key focus of the German government since Russia invaded Ukraine, to avoid rationing for industry as demand rises in the winter. In July, the government moved to tighten storage requirements. It introduced a requirement for storage to be 75% full by Sept. 1 — a target that already has been surpassed — and raised the targets for October and November to 85% and 95%, respectively, from 80% and 90%. As of Wednesday, Germany’s storage facilities were over 83% full. Chancellor Olaf Scholz said his government had done well to act early, when “not everyone was sure we might have a problem.” While Germany looks to store gas and diversify its supplies, it also is among countries pushing for an urgent redesign of the European electricity market to decrease the influence of soaring gas prices on the cost of energy. “The pressure is so great that I am really very confident that it will be done quickly,” he said Wednesday, without specifying whether changes will be in place this winter. European Commission President Ursula von der Leyen pledged reform on Monday.
Gazprom To Slash NatGas Deliveries To France's Top Utility As Squeeze Worsens - On Tuesday, Europe faced a worsening supply crunch after Russian energy giant Gazprom PSJC informed French utility Engie SA that natural gas supplies would immediately be reduced because of contract disagreements, reported Financial Times.Engie said Gazprom notified it of "a reduction in gas deliveries, starting today, due to a disagreement between the parties on the application of some contracts."Gazprom's reductions in NatGas over retaliation for sanctions related to its invasion of Ukraine have primarily targeted Germany and eastern Europe but now appear to extend to France. The continent is facing the worst energy crisis in half a century, sending prices of NatGas to record highs on supply shortage concerns ahead of the winter season. French Energy Transition Minister Agnes Pannier-Runacher spoke with France Inter radio about the NatGas curbs to Engie, who warned: "We're getting ready for the worst-case scenario, which is a complete cut-off." She said Moscow is using NatGas as a weapon of war.Engie's deliveries of Russian NatGas averaged in the 17% range but have since slumped to only 4% in recent months. The good news is the utility announced it "had already secured the volumes necessary to meet its commitments towards its customers and its own requirements, and put in place several measures to significantly reduce any direct financial and physical impacts that could result from an interruption to gas supplies by Gazprom." The announcement follows the EU's announcement on Monday to prepare emergency measures to reduce the price of electricity by separating it from soaring NatGas prices.
Russia's Gazprom to halt gas to Europe via key pipeline - (AP) — Europe’s energy crisis loomed larger Friday after Russian energy giant Gazprom said it couldn't resume the supply of natural gas through a major pipeline to Germany for now. The company cited what it said was a need for urgent maintenance work to repair key components — in an announcement made just hours before it had been due to restart deliveries. The Russian state-run energy company had shut down the Nord Stream 1 pipeline on Wednesday for what it said would be three days of maintenance. It said in a social media post Friday evening that it had identified “malfunctions” of a turbine and added that the pipeline would not work unless those were eliminated. The move was the latest development in a saga in which Gazprom has advanced technical problems as the reason for reducing gas flows through Nord Stream 1 — explanations that German officials have rejected as a cover for a political power play following Russia's invasion of Ukraine. European utilities have scrambled to find additional supply during the summer months to get ready for the winter’s heating demands, buying expensive liquefied gas that comes by ship, while additional supplies have come by pipeline from Norway and Azerbaijan. Fears of a winter shortage have eased somewhat as storage has progressed, but a complete cutoff could present Europe with serious difficulties, analysts say. The European Union needs to step up efforts to reduce gas consumption, said energy policy expert Simone Tagliapietra at the Bruegel think tank in Brussels. The continuing interruptions from Gazprom mean that “a winter with zero Russian gas is the central scenario for Europe.” he said. “There is only one way to prepare for that: reducing gas and electricity demand.” Gazprom said it had identified oil leaks from four turbines at the Portovaya compressor station at the Russian end of the pipeline, including the sole operational one. It claimed to have received warnings from Russia’s industrial safety watchdog that the leaks “do not allow for safe, trouble-free operation of the gas turbine engine.” “In connection with this, it is necessary to take appropriate measures and suspend further operation of the … gas compressor unit in connection with the identified gross (safety) violations,” the company said.
Russia keeps pipeline shut as Gazprom, Siemens Energy wrangle - (Reuters) -Russia kept one of its main gas supply routes to Europe shut on Saturday, stoking fears of winter fuel shortages and spotlighting differences between Gazprom (MCX:GAZP) and Germany's Siemens Energy over repair work on the pipeline. Already struggling to tame soaring gas prices, European governments had expected the Nord Stream 1 pipeline to resume flows after a short maintenance this week but Russia abruptly cancelled the restart, citing an oil leak in a turbine. Europe has accused Russia of weaponising energy supplies in what Moscow has called an "economic war" with the West over the fallout from Russia's invasion of Ukraine. Moscow blames Western sanctions and technical issues for supply disruptions. The latest Nord Stream shutdown, which Russia says will last for as long as it takes to carry out repairs, added to fears of winter gas shortages that could help tip major economies into recession and energy rationing. The discovery of the oil leak on Friday coincided with the Group of Seven (G7) wealthy democracies proceeding with plans to impose a price gap on Russian oil, intending to shrink President Vladimir Putin's resources to fight the war in Ukraine. Gas shortages also prompted European Union member Sweden on Saturday to unveil a financial support package for energy firms. "If we do not act, there is a serious risk of disruptions in the financial system, which in the worst case could lead to a financial crisis," said Prime Minister Magdalena Andersson. "Putin wants to create division, but our message is clear: you will not succeed," she said. Gazprom said Siemens Energy was ready to carry out repairs on the pipeline but that there was nowhere available to carry out the work, a suggestion Siemens Energy denied, saying it had not been asked to do the job. Siemens Energy has also said that sanctions do not prohibit maintenance. Before the latest round of maintenance, Gazprom had already cut flows to just 20% of the pipeline's capacity. "Siemens is taking part in repair work in accordance with the current contract, is detecting malfunctions ... and is ready to fix the oil leaks. Only there is nowhere to do the repair," Gazprom said in a statement on its Telegram channel on Saturday. Siemens Energy said it had not been commissioned to carry out the work but was available, adding that the Gazprom-reported leak would not usually affect the operation of a turbine and could be sealed on site. "Irrespective of this, we have already pointed out several times that there are enough additional turbines available in the Portovaya compressor station for Nord Stream 1 to operate," a spokesperson for the company said. Flows through Nord Stream 1 were due to resume early on Saturday morning. But hours before it was set to start pumping gas, Gazprom published a photo on Friday of what it said was an oil leak on a piece of equipment. Siemens Energy, which supplies and maintains equipment at Nord Stream 1's Portovaya compressor station said on Friday the leak did not constitute a technical reason to stop gas flows.
Norway Displaces Russia As Europe's Biggest NatGas Supplier - The European Union is reducing its dependence on Russian natural gas and has made some progress. Norway has displaced Russia as the top supplier of NatGas to the EU as energy supply chains are rejiggered, reported Reuters, as Moscow reduces flows to EU countries via the Nord Stream 1 pipeline. According to government data in May, Norway ramped up NatGas production by at least 8% versus last year. This means the Scandinavian country could produce upwards of 122 billion cubic meters (bcm) of NatGas this year. Refinitiv Eikon data show Norway is now the largest supplier of NatGas to Europe, surpassing Russia, which has slashed Nord Stream capacity to just 20%. By Wednesday, the pipeline will undergo a surprise three-day shutdown for 'maintenance' work. Norwegian petroleum & energy minister Terje Aasland expects production levels can be sustained through the decade as new projects are coming online. This is undoubtedly a relief for the energy-stricken continent. "I expect that we can maintain the production levels we are at now until 2030. "We see that there are projects and also plans for development and operation coming now that can help maintain the high gas volumes going forward," Terje Aasland told Reuters in an interview.The energy minister said diversification of EU's Natgas supplies away from Russia is critical. He said, "this is an important message to get from the EU."
Exxon Takes Legal Action After Putin Blocks Final Russian Exit - Exxon Mobil Corp. took the first step toward filing a lawsuit against Russia after Vladimir Putin blocked the oil major from exiting its only remaining operation in the country. Exxon has been trying to exit the Sakhalin-1 project in the country’s Far East since March but was stalled by a presidential decree earlier this month. Russia’s state-owned Rosneft PJSC said the dispute could be resolved if Exxon resumes normal operations at the project. “We have provided a notice of difference to the Russian Federal Government regarding the decree, which inhibits our rights and impedes our ability to exit operations safely,” the Irving, Texas-based company said Tuesday in a statement. Putin tightened his control over Russia’s finance and energy sectors earlier this month by halting foreign companies from disposing of their assets as part of measures “to protect national interests.” The decree came just days after Exxon said it was in talks to move its 30% stake of Sakhalin-1 to a third party entity it didn’t identify. Sakhalin-1 is a hugely complex operation that produced about 227,000 barrels a day last year. It has multiple records for the longest wells ever drilled, uses ice breakers to maintain exports when the sea freezes over in winter and was regarded as an engineering marvel when it first started pumping in 2005. Exxon has been winding down output since May and it’s likely to be a steep technical challenge for the eventual new owner to safely ramp up production to prior levels. If production at Sakhalin-1 returns to normal, this could create conditions for resolving all disputes around the project, Russia’s state news agency Tass reported on Tuesday, citing a representative of Rosneft PJSC, another shareholder in the Far Eastern project with a 20% stake. Oil production at Sakhalin-1 has been practically halted since May 15 due to Exxon’s decision to withdraw from the project, Rosneft said earlier. There have been no crude exports from the De Kastri terminal, which serves Sakhalin-1, since the start of June, according to tanker-tracking data monitored by Bloomberg. Earlier this month Russia ordered a new entity be created for Sakhalin-2, a separate gas project nearby in which Shell Plc was a major shareholder as well as Japanese trading houses Mitsubishi Corp. and Mitsui & Co.
The Big Bet on Natural Gas Is Blowing Up in the World’s Face - It’s not clean, it’s not cheap, and it’s not a bridge fuel to anyplace good. Throughout the 2010s, natural gas was portrayed as a near-miraculous energy source that could fight climate change, lower energy costs, and clean up the environment. It would be a “bridge fuel” that would help eradicate coal and provide the on-demand power that renewable sources like solar and wind could not. “The natural gas boom has led to cleaner power, and greater energy independence,” President Obama boasted in a 2012 debate with Mitt Romney. “We’re encouraging it and working with the industry.” Much of the rest of the world took the same approach. Europe bet heavily on natural gas—especially Germany, which regeared its whole energy system around gas from Russia, thanks in part to years of effort from former German Chancellor Gerhard Schröder. A decade later, the supposed dream of natural gas has become a nightmare. Making energy cheaper? Utility and heating bills are skyrocketing. Providing abundant clean fuel? Shortages are causing a stampede back to coal. It’s a disaster.Energy costs are soaring across the world, led by the gas shortage caused by Vladimir Putin’s invasion of Ukraine. Dutch gas futures contracts, which are widely used as a benchmark for Europe, have soared from about 20 euros per megawatt-hour’s worth of gas in mid-2021 to about280 euros today, with the most recent spike caused by Russia’s announcement that it would shut down its main gas pipeline for a few days.That in turn is fueling inflation: In July, the eurozone posted an 8.9 percent annual figure, the highest in its history, fueled mainly by gas prices. It might even get worse—Citigroup analysts predict that the U.K. might hit 18.6 percent inflation next year, again thanks mostly to gas. Meanwhile, these soaring European prices are placing gas supply beyond the reach of the rest of the world. Pakistan, Bangladesh, and Sri Lanka have seen rolling blackouts thanks to expensive gas. Even in North America, where gas has traditionally been very cheap because it’s hard to transport to other continents, prices are surging thanks to the high price our exports now demand as they move through our recently constructed liquefied natural gas terminals to the EU market. The price of gas has compelled a turn back to coal power in countries like India, China, and Germany—and in Germany, the government is frantically restarting dirty, old plants that had been mothballed.
Shell CEO: Europe's Gas Crisis Could Continue For Multiple Winters - Europe could continue scrambling for gas supply for a number of winters due to low gas flows from Russia, according to the chief executive officer of supermajor Shell. “It may well be that we will have a number of winters where we have to somehow find solutions,” Shell’s top executive Ben van Beurden said at a conference in Norway on Monday, as carried by Reuters. Gas and power prices in Europe were setting fresh records every day of the past week, as natural gas supply from Russia continues to be limited ahead of the winter. Energy prices in Europe have been smashing records after Russia’s Gazprom said on August 19 that it would halt all deliveries via Nord Stream to Germany for three days between August 31 and September 2. This announcement raised renewed concerns that supply via the pipeline could be further cut or halted altogether after the three-day unplanned maintenance at the end of August. Soaring energy prices are fueling inflation and adding to the burden on households and industries across Europe. In France, year-ahead power prices surged as much as 13% on Friday alone, to $1,003 (1,000 euro) per megawatt-hour for the first time ever, per Bloomberg’s estimates. French power prices have now soared tenfold over the past year. Apart from rallying gas and power prices in the rest of Europe, France’s electricity supply is constrained by outages at some of its nuclear power plants. In Germany, year-ahead electricity prices also hit a record of $843 (840 euro) per MWh on Friday, surging by 50% last week alone.Last week, Europe’s benchmark gas prices at the Dutch TTF hub surged by 40% amid fears of a winter crunch in supplies. This week, early on Monday the benchmark gas price slumped by 16% in early trade in Amsterdam, after Germany said its gas storage sites were filling at a faster pace than previously thought. According to data from Gas Infrastructure Europe, the EU gas storage was over 79% full as of August 28, with Germany’s storage at nearly 83% full.
Elon Musk Warns The World Needs Oil & Gas Or "Civilization Will Crumble" - Tech entrepreneur Elon Musk told reporters in Norway on Aug. 29 that, while sustainable energy sources should be developed, the world must continue to extract oil and gas in order to sustain civilization. Musk made the remarks to reporters ahead of the Offshore Northern Shore (ONS) conference in Stavanger, Norway, where Musk is scheduled to speak.After Musk arrived at the conference venue, he told reporters he had come “in appreciation for the support of the Norwegian people for electric vehicles” and thanked them for their “tremendous support.”The Tesla chief added that, at the conference, he was planning to provide “ideas for a transition to a sustainable energy world,” including the possibility of expanding wind power generation in the North Sea, the body of water between the UK and Norway.“Places where it’s very windy, there might be potential for tremendous amount of wind power and when combined with stationary battery packs; this could be a very strong sustainable energy source in the winter,” Musk said. Asked if he believes oil and gas should continue to be used, Musk replied in the affirmative. “Realistically, we do need to use oil and gas in the short term because otherwise civilization will crumble,” he said. “In order for civilization to continue to function, we do need oil and gas,” he continued, adding that “any reasonable person would conclude that.”
TotalEnergies to divest 49% stake Russia’s Termokarstovoye gas field - French energy giant TotalEnergies has agreed to divest its 49% stake in Termokarstovoye gas and condensates field in Serbia, Russia to its local joint venture partner Novatek. The transaction includes the sale of Terneftegas, which operates the Termokarstovoye oil and gas field. Upon the completion of the transaction, Novatek will hold a 100% stake in the Terneftegas field, which includes a gas treatment unit, a gas gathering network, and a gas condensate de-ethanization facility.
Norway's Equinor Eyes Sale of Stake in Statfjord Offshore Field - Norway's Equinor is considering selling a 28% stake in the Statfjord field, which straddles the Norwegian and British continental shelves, alongside minority stakes in several satellite fields, a presentation seen by Reuters showed. The company has hired U.S. investment bank Houlihan Lokey to advise on the sale, which could fetch up to $500 million, a source familiar with the sale told Reuters. Equinor also plans to sell minority stakes in the connected fields Statfjord North, Statfjord East and Sygna, the presentation showed. Statfjord has been producing oil and gas for more than 40 years and, by the end of 2021, still had 107 million barrels of oil equivalent left, about half of which are gas reserves. In 2020, Equinor decided to extend the field's lifetime towards 2040, with a planned decommissioning of the Statfjord A platform postponed until 2027. Platforms Statfjord B and C are expected to operate beyond 2035. Statfjord produced 38,000 barrels of oil equivalent per day (boepd) in 2021, with gas accounting for more than a third, according to data from the Norwegian Petroleum Directorate. Stafjord North, Stafjord East, and Sygna produced a total of nearly 16,000 boepd of mainly oil the same year. Oil from Statfjord is exported via shuttle tankers, while gas is piped to the St Fergus terminal in Britain. Equinor, which is expected to remain a stakeholder in the fields after any sales, now holds 78.6% of Statfjord, 45% of Statfjord North, 43.3% of Statfjord East, and 43.4% of Sygna.
Eni, TotalEnergies Strike Gas Offshore Cyprus at Cronos Wildcat - Partners Eni and TotalEnergies have confirmed a major gas discovery in the Cronos-1 wildcat exploration well in Cyprus’ deepwater Block 6, 160 km off the island’s coast in the Eastern Mediterranean. Preliminary estimates suggest the presence of nearly 2.5 Tcf of gas (70 Bcm) in place with significant additional upside to be evaluated with a new exploration well (Zeus-1) to be drilled next on Block 6, according to separate news releases issued by the companies. Vantage Drilling’s Tungsten Explorer conducted drilling operations at Cronos-1. The well encountered several good-quality carbonate reservoir intervals and confirmed earlier data acquisition campaigns that had suggested an overall net gas pay of more than 260 m with excellent permeability. Cronos-1 is the fourth exploration well drilled by Eni Cyprus and its second well in Block 6. Eni, together with TotalEnergies, drilled its first well in Block 6, Calypso-1, which was hailed as a success in February 2018 after it encountered an extended gas column of rocks of Miocene and Cretaceous age, with the Cretaceous sequence possessing excellent reservoir characteristics. Calypso-1 is significant because it confirms the extension of the Zohr field’s carbonate play into Cyprus’ exclusive economic zone, Eni reported at the time, referencing the massive Zohr gas field found in Egypt’s Shorouk block in 2015—the largest gas find to date in the Mediterranean. Eni and state-owned Egyptian General Petroleum Corporation operate Zohr through a 50/50 joint venture; participating partners include BP, the UAE’s Mubadala Petroleum, Russia’s Rosneft, and Egyptian Natural Gas Holding. The results from Cronos-1 further confirm that the petroleum-rich characteristics of Zohr’s geology extend along the seabed into Cypriot waters.
IEA: Russian Oil Output Still Exceeding Expectations -Six months into Russia’s war on Ukraine, Russia's oil output has continued to exceed expectations although experts are warning that Moscow will find it increasingly difficult to uphold production as Western sanctions begin to bite.According to the latest report by the International Energy Agency (IEA), Russian oil exports fell by 115 kb/d in July to 7.4 mb/d, from about 8 mb/d at the start of the year. That decline is nowhere near the 2-3 million b/d slump predicted by some experts. The country’s crude and oil product flows to the US, UK, EU, Japan and Korea have slumped by nearly 2.2 mb/d since the outbreak of the war, two-thirds of which have been rerouted to other markets. Export revenues fell from 21 bn in June to $19 bn in July, on both reduced volumes and lower oil prices.Exports to India have been able to make up for much of the reduced flows to western nations. New reports have emerged that during the second quarter, Indiaslashed its crude imports from the United States by one million metric tonnes while sharply ramping up imports of discounted Russian oil.India’s energy mix now looks dramatically different from a year ago. Last year, Russian oil in India’s crude basket amounted to a paltry 2.2%, while the U.S. was 9.2%; right now, Russia accounts for nearly 12.9% of India’s crude imports, while the U.S. share has tumbled to just 5.4%.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.However, the IEA says Russia will find it increasingly difficult to maintain that level of production."In the absence of (western) companies, in the absence of the technology providers, in the absence of service companies, it will be much harder for Russia to maintain the production," IEA chief Fatih Birol told Reuters.
G-7 leaders agree to set price cap on Russian oil — Financial officials representing the world's wealthiest democracies agreed to set a cap on the price of Russian oil on Friday, a key development in the West's economic campaign against the country amid its war with Ukraine. Top financial ministers representing the Group of Seven — the United States, Canada, France, Germany, Japan, Italy and the United Kingdom —— announced a deal had been made but that precise details would need to be ironed out in the coming weeks. The proposal is designed to stabilize global energy prices, which have swung wildly and helped fuel global inflation in the more than six months since the Russian Federation invaded Ukraine. In a joint statement, the G-7 financial officials said the eventual price would be "set at a level based on a range of technical inputs and will be decided by the full coalition in advance of implementation in each jurisdiction." In a separate statement published Friday morning, U.S. Treasury Secretary Janet Yellen called the initial agreement a "critical step forward in achieving our dual goals of putting downward pressure on global energy prices while denying Putin revenue to fund his brutal war in Ukraine." "This price cap is one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States and globally from future price spikes caused by global disruptions," Yellen said. "Today's action will help deliver a major blow for Russian finances and will both hinder Russia's ability to fight its unprovoked war in Ukraine and hasten the deterioration of the Russian economy."
G-7 announces price cap deal on Russian oil in win for Yellen - Finance ministers from the Group of Seven major economies announced an agreement Friday a plan to impose a cap on the price importers pay for Russian oil, in a bid to shrink a key source of revenue the Kremlin uses to finance its war in Ukraine. “We seek to establish a broad coalition in order to maximize effectiveness and urge all countries that still seek to import Russian oil and petroleum products to commit to doing so only at prices at or below the price cap,” the group said in a statement. The agreement, which still faces hurdles before it can be implemented, marks a win for U.S. Treasury Secretary Janet Yellen, a key advocate of the proposal who has helped build global support for the idea. Yellen said the price cap would prove a powerful tool to fight inflation and deliver “a major blow for Russia’s finances.” “By committing to finalize and implement a price cap on Russian oil, today the G-7 took a critical step forward in achieving our dual goals of putting downward pressure on global energy prices while denying [President Vladimir] Putin revenue to fund his brutal war in Ukraine,” she said in a statement. Several elements of the plan remain unclear, however, including how many countries will ultimately sign on, the price at which the cap will be set and how Putin will respond. The goal is to align the price cap’s effective date with new European sanctions set to take effect on Dec. 5 on shipping services for Russian oil exports. Under the agreement, importers that purchase Russian oil below the cap will be exempt from the new restrictions on financing and shipping services, which are largely provided by G-7 countries. That will allow oil to continue flowing while limiting Russia’s revenues, which have climbed in the wake of the Ukraine invasion. Treasury officials are working with their international counterparts to complete legal frameworks for the cap in each jurisdiction, which are expected to be unveiled in mid-October. Russian Central Bank Governor Elvira Nabiullina has said Russia will refuse to sell to countries that impose a cap, raising doubts about whether the plan The G-7 in its statement committed to working urgently to finalize the measure in each of its jurisdictions and acknowledged that implementation in the European Union will require unanimous agreement among all 27 member states. “The price cap is specifically designed to reduce Russian revenues and Russia´s ability to fund its war of aggression whilst limiting the impact of Russia´s war on global energy prices, particularly for low and middle-income countries, by only permitting service providers to continue to do business related to Russian seaborne oil and petroleum products sold at or below the price cap,” the statement read. Senior Treasury officials confirmed Friday the agreement would include three prices caps — one for crude oil, and two for refined products — that would be set at a particular dollar amount, not as a discount or percent of a benchmark price. Those prices, which are still being determined by the G-7 members, could be revised as needed, one of the senior officials said on a call with reporters. Some in the oil industry have warned the plan is overly complicated and will be difficult to implement, while economic and energy policy experts say it could have unintended consequences and push up the price of oil. Yellen has said the alternative would be worse — if the European sanctions take effect without a price cap exemption, it could lead to a catastrophic supply shock that sends energy prices soaring and triggers a global recession, she has said. U.S. oil prices, which had shot up in the morning to near $90 a barrel after the release of positive economic data, gave back some of the gains after Treasury’s announcement “Russia has aggressively pushed back at G7 proposals to cap oil prices, by saying they will cut off any price cap participants,” That threat could be more salient if OPEC decides to cut its own production at a meeting of the oil producing countries scheduled for Monday,
Russia Vows To Halt All Oil Exports To Countries That Impose "Completely Absurd" Price-Cap - It did not take long for the Kremlin to respond to the G-7 plan to impose price-caps on Russian oil, with Deputy Prime Minister Alexander Novak warning that Moscow will ban exports of oil and other petroleum products to countries that impose a cap on the price of Russian crude. Novak made the remarks to reporters in Moscow on Sept. 1, according to Russian state media Tass, which came as Western powers were preparing to meet on Sept. 2 to agree on a Russian oil price cap. “We will simply not supply oil and petroleum products to such companies or states that impose restrictions, as we will not work non-competitively,” Novak said, while denouncing the price cap as “completely absurd.” “It will completely destroy the market,” Novak continued, arguing that interference in market mechanisms in a key commodity like oil would have a destabilizing impact on energy security in countries across the world. US Treasury Secretary Janet Yellen took the opportunity of G-7 agreement to a nothingburger plan to take a victory lap: "The price cap will advance our two key objectives; The first, of course, is reducing revenues that Putin needs to continue waging his war of aggression. And the second is maintaining a reliable supply of oil to the global market and putting downward pressure on the price of energy for people in the U.S., in the UK, and around the world." But, echoing Novak’s remarks about a Russian oil export ban targeting countries that sign onto the cap, Kremlin spokesman Dmitry Peskov told reporters during a conference call on Sept. 2 that “companies that impose a price cap will not be among the recipients of Russian oil.”
Moscow Says Western Sanctions Wont Hamper Russia-Iran Economic Cooperation - Hostile acts of the West and its sanctions against Iran and Russia will not stop the two countries from developing mutually beneficial cooperation in all areas, the Russian Foreign Ministry said on Tuesday. "In January-July 2022 the bilateral trade (between Russia and Iran) accounted for $2.7 billion, which is 42.7% more than in the same period last year," the ministry said. There has also been progress in negotiations on a comprehensive free-trade agreement between Iran and the Eurasian Economic Union, the ministry added. On Wednesday, Iranian Foreign Minister Hossein Amirabdollahian will pay a working visit to Moscow and meet with Russian Foreign Minister Sergey Lavrov. The ministers are expected to discuss the situation around the Iranian nuclear deal, joint Russian-Iranian energy and transport projects, as well as some regional topics such as Ukraine, Syria and Afghanistan.
Iran Is Ready To Release Millions Of Barrels Of Oil Into The Market --Iran has considerable volumes of oil in floating storage that it could quickly release should a deal with the United States be finalized.In an update earlier this month, OilX claimed that Iran has some 40 million barrels, the bulk of which is probably condensate.Vortexa estimates Iranian crude in floating storage at 60 to 70 million barrels while Kpler has estimated them at 93 million barrels, Bloomberg reported on Sunday.The volumes would not be released immediately, however, as issues such as insurance and shipping would need to be dealt with first.“Iran has built up a sizable flotilla of cargoes that could hit the market fairly soon,” John Driscoll from JTD Energy Services told Bloomberg.Currently, Iran and the United States are both considering the final version of an agreement proposed by the European Union, which is acting as an intermediary in the negotiations.According to recent reports, some of the problems have been straightened out but others still remain and need to get resolved before a deal is finalized.Israel’s Haaretz reported yesterday that it had seen a copy of the draft proposal, which involves the release of prisoners from Iran and, in exchange, the release of Iranian funds from international bank accounts.Iran will be free to keep the uranium it had enriched so far but banned from violating the nuclear deal, the Israeli daily wrote.A nuclear deal would mean the return of Iranian crude to international markets, at a rate of some 1.3 million bpd, according to a recent Financial Times report. This would substantially lower oil prices, at least for a while.Iran is eager to boost its exports of crude but it has signaled it would not rush into a deal until its last remaining demands are made. Chief among them is a guarantee that the deal would survive during future U.S. administrations.
Iran may drain offshore crude oil cache if nuclear agreement reached - Progress toward an Iranian nuclear deal has thrown the spotlight onto a sizeable cache of crude held by Tehran that could be swiftly dispatched to buyers in the event an agreement gets hammered out. About 93 million barrels of Iranian crude and condensate are currently stored on vessels in the Persian Gulf, off Singapore and near China, according to ship-tracking firm Kpler, while Vortexa Ltd. estimates the holdings at 60 to 70 million barrels. In addition, there are smaller volumes in onshore tanks. “Iran has built up a sizable flotilla of cargoes that could hit the market fairly soon,” said John Driscoll, chief strategist at JTD Energy Services Pte. Still, it may take “a bit of time” to iron out insurance and shipping issues, as well as spot and term sales post-sanctions, he said. The possible full readmittance of Iran to the global crude market, with the potential lifting of US sanctions, comes at complex moment for oil traders. Investors are juggling the countdown toward far tighter European Union curbs on Russian crude flows from December as part of the the bloc’s pushback against the war in Ukraine. In addition, the Biden administration’s mammoth sale from the Strategic Petroleum Reserve will end in October. The potential return of Iranian barrels into global oil markets -- both from the volumes in floating storage and over the longer term -- has weighed on futures prices in recent weeks, offsetting signs of tightness elsewhere. The focus for diplomats is the revival of a multinational accord that limited Iran’s nuclear program in exchange for the lifting of related sanctions, including on oil flows. The original deal collapsed after then-President Donald Trump abandoned it. Last week, the US sent its response to the latest proposal, boosting speculation an agreement may soon be struck, although Tehran said Sunday that exchanges will now drag on into September. Iran’s offshore crude hoard compares with average daily global supply this year of about 100 million barrels a day, according to an estimate from the International Energy Agency. In the US, President Joe Biden has been releasing about 180 million barrels from the SPR over a six-month period. Since former President Trump stopped granting waivers to import Iranian oil following American sanctions, Iran’s daily shipments have held at about 1 million barrels, according to Emma Li, an analyst at Vortexa. China has remained among the top buyers, as other nations backed away. Longer term after any deal is struck and the offshore cache is drained, Iran would seek to rebuild production and step up overseas sales. Goldman Sachs Group Inc., which is skeptical about a breakthrough in the near term, said even if a deal is reached, these wouldn’t begin until 2023, according to a note. While Iran may aim to fill the void left by Russia in Europe, namely in Spain, Italy, Greece and even Turkey, Tehran would also attempt to reclaim share in the prized Asian market, even if it takes a sweetening of terms, Driscoll said.
ONGC to add 100,000 sq km of new exploration area annually - India’s top oil & gas producer ONGC plans to add around 100,000 sq km of new exploration area annually to take the total exploratory acreage to 500,000 sq km by 2024-25. Addressing the shareholders in the company’s annual general meeting (AGM) on Monday, ONGC’s acting chairman and managing director Alka Mittal said, “Your company has launched a very ambitious exploration programme under which it plans to increase the exploratory acreage to 5 lakh sq km by 2024-25 with an addition of around one lakh sq km of new exploration area annually.”
Egypt's Zohr gas field production jumps to 2.7bln cubic meters daily - The Ministry of Petroleum and Mineral Resources announced that Zohr gas field achieved a record during Fiscal Year 2021-2022 since the start of production in 2017-2018. Current production from Zohr gas field jumped to 2.7 billion cubic meters per day, the ministry said on Monday. The ministry clarified in a statement that the volume of investments in the gas field hit 741 million dollars during the relevant year. Investments have exceeded US$12 billion since the beginning of work in the field, it added. Tarek El Molla, Egyptian Minister of Petroleum and Mineral Resources, said that there are good opportunities in search and explorations in land and sea sites in order to up petroleum and oil reserves and production.
Libya’s oil production rises to 1.22 million bpd – NOC – The National Oil Corporation (NOC) announced Monday that Libya’s production of crude oil amounted to one 1.22 million barrels on Sunday, with an increase of 1,000 barrels compared to the production of the day before. The corporation reported that condensate production was 53,000 barrels on Sunday. This comes while global crude oil prices increased, as Brent crude rose 55 cents, or 0.5 percent, to $ 101.54 a barrel. The rise was affected by expectations that OPEC would cut production if necessary to support prices, in addition to the events in Tripoli the past two days, as well as increased demand amid high natural gas prices in Europe, to compensate for the poor outlook for growth in the United States.
Oil tanker runs aground in Suez Canal sparking major recovery effort on key trade route - A 64,000-tonne oil tanker ran aground in the Suez Canal sparking a massive recovery operation on the major international trade route. Tug boats were sent to help free the Affinity V with immediate fears that there could be a repeat of the Ever Given ship that was stuck for three months in Egypt.World trade ground to a halt with the Ever Given, that had 18,300 containers on board, completely blocking the Suez Canal last year.Now the Singapore-flagged Affinity V ran aground with GPS imaging showing the ship blocking the entire width of the canal in a similar way to the Ever Given.Five tug boats were seen working on releasing the ship on Wednesday night which was blocking the canal at the 143 kilometre channel and preventing traffic to pass. Now the Suez Canal Authority has said that the ship has been freed and refloated.It took around five hours to free the stranded ship and that traffic on the Suez Canal has already returned to normal.The cause of the accident has been put down to a problem with the rudder and the steering system.The Suez Canal Authority tweeted: "Lieutenant-General Osama Rabie, head of the Suez Canal Authority, announced today, Thursday, the success of the rescue units and the authority’s tugs in saving and floating the 64 thousand-ton fuel tanker AFFINITY."It ran aground at the 143 kilometre channel due to a technical malfunction with the ship’s rudder, which caused the loss of the ability to steer and left the ship stranded." The canal authority explained that five tugs were used in the rescue mission to quickly return shipping to normal.
Oil leaking from stricken cargo ship off Gibraltar - A bulk carrier that collided with a liquefied natural gas tanker off Gibraltar is leaking fuel oil, the government of the tiny British territory said Thursday. The carrier — the OS 35 — has been beached in the Bay of Gibraltar since the two vessels collided late on Monday off the territory located on the southern tip of the Iberian peninsula. No one was injured in the accident. The 24 crew members of the carrier were evacuated. A boom — a temporary floating barrier used to contain an oil spill — had been placed in the area of the collision. “The Gibraltar Port Authority has confirmed a leak of heavy fuel oil a small amount of which has escaped the perimeter of the boom,” the government of Gibraltar said in a statement. In a separate statement, it added the leak “is fully under control”. “The priority is to corral and collect the free floating oil that has escaped the boom, as well as to remove the oil that has remained contained inside the boom,” it added. The Port Authority said later Thursday it had begun to pump the oil out of OS 35’s fuel tanks and a skimmer was removing oil from the surface of the water inside the boom./p>
Jordan may need specialist help to clean up Aqaba oil spill - Jordanian authorities are still working to clean up oil that leaked from ship two weeks ago and washed up in a marine reserve along its Aqaba coast on the Red Sea, officials and residents said. After announcing that the August 14 spill in Jordanian territorial waters was minor and would be contained within hours, state television said on Sunday that 11 tonnes of spilled fuel oil caused "damage to a number of piers at the container terminal and the passenger port and to a number of Aqaba's southern beaches". State television said the leak "spread to large areas over three days because of the wind and waves, and a large proportion reached the beaches". "Some divers were exposed to oil spots when entering and exiting the water," the report said. The coastline of the Aqaba Marine Reserve, which contains the kingdom's only surviving coral reef, is 12 kilometres long. The environment in the Gulf of Aqaba, shared by Jordan, Israel, Saudi Arabia and Egypt, has been severely degraded by decades of overfishing, waste disposal, heavy coastal construction and industrial contamination. A Jordanian official told The National that government teams would require more equipment and knowhow to deal with the spill in hard-to-reach places at the port and in other areas of Aqaba. “Our cadets picked up a significant amount of oil already but in certain areas it will require more specialist knowhow to clean it up,” the official, who did not want to be named, said. Residents of Aqaba say oil spots have appeared on the coastline and that diving has been halted in several locations. Video footage taken by one resident showed crabs covered with oil on the coastline. "The spill is obvious in several parts of the coast and we can can feel and smell it when we go in the water," said one Aqaba resident, who did not want to be identified. "You can see it in shallow water covering the top of the corals."
Oil Spill Incidents in Nigeria Decline by 13.5% - The National Oil Spill Detection and Response Agency (NOSDRA) has disclosed that a minimum of 383 oil spill incidents were recorded in 2021, lower than the 443 spills recorded in 2020 by 13.5 per cent. In its latest oil spill report, NOSDRA stated that 33 of the 383 publicly available oil spill records for 2021 were not visited by a joint investigative team, while 122 of these spills had no estimated quantity provided by the company operating the assets from which the spills occur. The oil spill remediation agency disclosed that based on available 23,897.271 barrels of crude oil, about 3.776 million litres were spilled, an equivalent of 119 tanker trucks full. It further noted that the total spills in 2021 comprised two major oil spills, a situation where over 250 barrels of crude oil were spilled into inland waters, or over 2,500 barrels spilled on land, swamp, shoreline, and the open sea. In addition, it stated that seven medium oil spills were recorded, a situation whereby 25-250 barrels of oil were spilled into inland waters, or 250-2,500 barrels spilled on land, swamp, shoreline, and the open sea. Also, 240 minor oil spills were recorded, whereby up to 25 barrels were spilled into inland waters, or 250 barrels spilled on land, swamp, shoreline, and the open sea. It added that 175 of these oil spills were under 10 barrels in size, while 128 oil spills could not be categorised. NOSDRA stated that currently, there are no legally binding regulatory penalties or fines for oil spills in Nigeria, noting, however, that companies whose assets are responsible for the spill are required to fund the clean-up of each spill and usually pay compensation to local communities affected, especially if the spill was a fault of the company’s. “A recent court case related to repeated oil spills in the Bodo area of Ogoniland argues that a failure by companies to adequately protect pipelines from vandalism or theft or continuing to operate when vandalism or theft is rife, constitutes culpability on behalf of the pipeline operator. The government agency further stated that all operators are required by law to close off or stop all oil spills emanating from their assets within 24 hours of being notified of an oil spill in their jurisdiction, while a Joint Investigative Visit (JIV) must be carried out as soon as possible after a spill has been identified and containment measures are taken.
UN raises alarm on Red Sea oil tanker 'time-bomb' - – The UN appealed Tuesday for the last $14 million needed to try and prevent a stricken oil tanker from triggering a disaster off Yemen that could cost $20 billion to clean up. The decaying 45-year-old FSO Safer, long used as a floating storage platform and now abandoned off the rebel-held Yemeni port of Hodeida, has not been serviced since Yemen was plunged into civil war more than seven years ago. If it breaks up, it could unleash a potentially catastrophic spill in the Red Sea. David Gressly, the United Nations’ resident and humanitarian coordinator in Yemen, leads UN efforts on the Safer. “Less then $14 million is now needed to reach the $80 million target to start the emergency operation to transfer oil from the Safer to a safe vessel,” said Gressly’s communications advisor Russell Geekie. “We’re deeply concerned. If the FSO Safer continues to decay, it could break up or explode at any time,” he told reporters in Geneva, via video-link from Sanaa. “The volatile currents and strong winds from October to December will only increase the risk of disaster. If we don’t act, the ship will eventually break apart and a catastrophe will happen. It’s not a question of if, but when.” He said the result would potentially be the fifth largest oil spill from a tanker in history, with the clean-up costs alone reaching $20 billion. The Safer contains four times the amount of oil that was spilled by the 1989 Exxon Valdez disaster, one of the world’s worst ecological catastrophes, according to the UN. “It would unleash an environmental, economic and humanitarian catastrophe,” said Geekie. The ship contains 1.1 million barrels of oil. The UN has said a spill could destroy ecosystems, shut down the fishing industry and close the lifeline Hodeida port for six months. The Safer is unusable, is fit only for scrappage and nothing on it works, said Geekie. “This is a ticking time bomb,” he warned. “You don’t want to go and smoke a cigarette on the deck, I can tell you that much.”
Decaying Ship Could Produce Massive Oil Spill off Yemen Coast — The United Nations warns of a catastrophic oil spill off the Red Sea coast of Yemen if oil from a decaying tanker ship is not loaded onto a safer vessel. U.N. officials say an emergency operation cannot be implemented until they have the necessary $80 million in hand. They say donors have pledged $66 million, leaving $14 million to reach the amount needed to start transferring oil from the FSO Safer to a more stable vessel. The problem, they say, is that very few of the donors have yet to honor their pledges and put the money in the bank. Russell Geekie, senior communications adviser to the U.N. resident and humanitarian coordinator for Yemen, says less than $10 million of the pledged funding has been received. "The FSO Safer continues to decay and could break up or explode at any time," Geekie said from the capital, Sanaa. "The volatile currents and strong winds from October to December will only increase the risk of disaster. If we do not act, the ship will eventually break apart, and the catastrophe will happen. It is not a question of if, but when." The FSO Safer contains more than a million barrels of oil. It has been anchored just a few kilometers off the coast of Yemen for more than 30 years. Oil from the vessel stopped being offloaded and maintenance ground to a halt when civil war between the government and Houthi rebels broke out in 2015. Geekie calls the current situation a ticking time bomb. Were the ship to break apart, he warns the oil spill would unleash an environmental, humanitarian and economic calamity. "We need a relatively small amount of money to prevent something that would cost $20 billion just for the cleanup alone," he said. "That would decimate the Red Sea coast of Yemen, put 200,000 people in the fishing industry out of work overnight — not to mention all the toxic fumes and other toxins that would be on the shoreline." He says the oil spill also would close the ports of Hodeida and Saleef, where humanitarian aid — food, fuel and other lifesaving supplies — come into Yemen. The United Nations calls Yemen one of the largest humanitarian crises in the world. It says nearly 24 million people need international assistance, more than half of them children. An estimated 377,000 people have been killed through direct and indirect causes over more than seven years of warfare.
Saudi Arabia New Output Cuts Threat Is Another Blow To Washington - Saudi Arabia’s threat last week to lead the Organization of the Petroleum Exporting Countries (OPEC) into a concerted cutting of its collective crude oil production – which would lead to even higher prices over a longer period – marks the end of the U.S.’s and the West’s Middle East dream.This dream, as analysed in my new book on the global oil markets, began in earnest on 26 May 1908 when an oil drilling team led by British geologist, George Reynolds, struck oil at Well No. 1 at the Masjid Sulaiman field in Persia (partly now modern-day Iran). The 28 May 1901 concession for Reynolds’ employer – William Knox D’Arcy – to explore, drill, produce, and export petroleum in Iran (excluding five northern provinces close to Russia) for a period of 60 years, included the provision that Persia was to be given £20,000 in cash, £20,000 in shares from the company that operated the concession, and 16 percent of the profits made by the first or any other company formed by this concessionaire.Shortly after the Masjid Sulaiman discovery, the Anglo-Persian Oil Company was founded, and in 1914, a 51 percent stake in the company was bought by the UK government, and in 1954 it changed its name to the British Petroleum Company.At around the same time, Mohammad Mosaddegh, the highly popular prime minister of Iran, nationalised the UK company’s Iranian infrastructure assets, and renamed the new entity the National Iranian Oil Company (NIOC). Shortly after this, a military coup organised jointly between the UK’s Secret Intelligence Service (SIS) and the U.S.’s Central Intelligence Agency (CIA) codenamed, respectively, ‘Operation Boot’ and ‘Operation Ajax’, removed Mossadegh from power, which enabled Shah Mohammad Reza Pahlavi to increase his hold over the country, backed particularly by the U.S. and the UK.A similar tale unravelled in Saudi Arabia, the concession deal for which made Iran’s pre-1951 oil profit share of 16 percent look positively generous. To secure the exclusive rights to explore, drill, produce, and export petroleum across the entirety of Saudi Arabia, the U.S.’s Standard Oil made a single payment of US$275,000 in April 1933 (equivalent to just over US$6 million now) to the Kingdom.For Middle Eastern countries, these facts – to this day – are still well known and inform their view on dealing with the West, which has long been regarded by them as being an occupier of the region simply to exploit its oil and gas resources for as little outlay as possible.The first few signs of widespread and concerted action by Middle East states to counter what they regarded as the West’s stranglehold over their natural resources came with the formation of the United Arab Republic union between Egypt and Syria from 1958 to 1961, the formation of OPEC in 1960, the series of conflicts with neighbouring Israel over the period, and then the 1973/74 Oil Embargo.During this embargo, effectively the first ‘Oil Price War’, as also analysed in depth in my new book on the global oil markets, OPEC members plus Egypt, Syria and Tunisia began to block oil exports to the U.S., the UK, Japan, Canada and the Netherlands. This was in response to the U.S. supplying arms to Israel in the Yom Kippur War that it was fighting against a coalition of Arab states led by Egypt and Syria. The spiking effect in oil prices was exacerbated by incremental cuts to oil production by OPEC members over the period and by the end of the embargo in March 1974 the price of oil had risen from around US$3 per barrel (pb) to nearly US$11 pb and then it trended higher again.Saudi Arabia’s then-Minister of Oil and Mineral Reserves, Sheikh Ahmed Zaki Yamani – widely credited with formulating the Embargo strategy – highlighted that it marked: “A fundamental shift in the world balance of power between the developing nations that produced oil and the developed industrial nations that consumed it.”This history and these ideas are precisely where the global oil and gas market is now, and exactly the reason why Saudi Arabia’s current Energy Minister, Prince Abdulaziz bin Salman, said what he did about OPEC being ready to cut crude oil production and, by extension, see oil prices rise higher for longer.
Oil Surges As Supply Takes Center Stage - Oil’s recent rebound has the potential to run further as traders will turn their focus to the upcoming OPEC+ meeting now Jackson Hole is out of the way, Bloomberg's Sungwoo Park writes. Crude is sharply extending gains on Monday, suggesting oil is now focused more on supply dynamics following the recent Saudi pivot than on a hawkish Powell. Indeed, the medium-term outlook for crude has improved since the Saudi energy minister’s comments on potential supply curbs last week, with more OPEC+ members aligning themselves with the kingpin. These add key support to the positive backdrop on the supply side amid a prolonged energy crisis in Europe, along with the prospect of renewed exports from Iran getting undermined lately (just as we have been warning all along for the past year).That should help overshadow bearish factors, especially fears about demand destruction amid recession risks. Oil’s timespreads remain in backwardation (which is of coursebullish).With OPEC+ taking the driver’s seat again, crude can get a fresh impetus if the alliance delivers what the oil bulls want to hear - or a surprise beyond expectations - at the Sept. 5 meeting.Finally, a reminder that perhaps the main reason why oil prices haven't exploded even higher is the weekly drain of ~5 million in oil from the SPR. However, all that is ending in two months at which point the SPR will shift from a tailwind to a headwind for lower energy prices. It's also why, in what appears a sheer act of desperation, the IEA's head Fatih Birol just blurted out confirmation to what Zoltan Pozsar said, namely that a commodity supply panic is imminent, saying that a further SPR releases is "not off the table." Not off the table? Does he plan on taking it negative?
NYMEX WTI Futures Spike 4 Percent amid Low Liquidity on TS Watch -Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled the session mixed, with crude futures moving sharply higher, as traders monitor the development of a potential Tropical Storm, Invest 91L, over the central Atlantic as well as a system that is expected to emerge off the coast of Africa later this week. DTN WeatherOps on Monday said Invest 91L has significantly picked up strength and is now forecast to possibly become a tropical depression in about 36 to 40 hours with a gradual strengthening through the end of the forecast period. 91L could become a tropical storm in about 48 hours, with DTN forecasting a 40% chance of intensifying into a category one hurricane over the next several days. Among other disturbances being monitored this week is Feature 18L, a small but well-defined formation of low-level clouds spinning over the open waters off the coast of Africa. Oil traders will closely monitor the two systems as we move into the peak season for hurricanes in the Atlantic Basin, with the hurricane season which began June 1 so far a nonevent for the U.S. oil and gas industry this year. Further supporting the oil complex, Saudi Arabia, the de-facto leader of OPEC+, expressed its support last week for agreeing to cut crude oil production when they meet Sept. 5, which would likely tighten the global market heading into colder months. In August, OPEC+ agreed on a token 100,000 bpd increase in collective output that takes effect Sept. 1, citing "limited spare capacity in a number of members." Analysts believe Saudi Arabia wants to see higher oil prices to incentivize new production and does not want the return of Iranian barrels after talks over ending sanctions on Tehran moved into the final stages. EU, U.S., and Iranian negotiators appear to have reached some sort of breakthrough in their 14-month effort to bring Tehran back into compliance with the 2015 Joint Comprehensive Plan of Action which the United States withdrew from in 2018. Volatility in equity markets follows a hawkish speech by U.S. Federal Reserve Chairman Jerome Powell late last week who reiterated that interest rates are going higher for longer even if higher rates tip the U.S. economy into recession. The hawkish address appeared to quash a market narrative that the central bank would change course from an aggressive path of increasing the federal funds rate. On the session, West Texas Intermediate futures for October delivery settled a tad above $97 bbl, up $3.95 bbl, with open interest for WTI futures at their lowest point since December 2014. The international crude benchmark Brent contract advanced $4.10 to $105.09 bbl. NYMEX September RBOB futures gained 2.63 cents to $2.8776 gallon, while the September ULSD contract declined 9.77 cents to $3.9099 gallon.
Crude oil prices slip as inflation outweighs possible OPEC+ output cuts; Brent hits $104.70/bbl - Oil prices fell on Tuesday after notching their highest gains in more than a month in the previous session, as global inflation worries overshadowed the prospect of possible OPEC+ output cuts. Brent crude futures fell 39 cents, or 0.3%, to $104.70 a barrel by 0012 GMT after climbing 4.1% on Monday. US West Texas Intermediate crude was at $96.79 a barrel, down 21 cents, or 0.2%, following a 4.2% rise in the previous session. Inflation is near double-digit territory in many of the world's biggest economies, a level not seen in close to a half century, and investors are concerned that more aggressive interest rate hikes will follow from the United States and Europe. Also weighing on prices, Russia's oil output has exceeded expectations in the wake of the war in Ukraine, the head of the International Energy Agency (IEA) said on Monday. But he said that Moscow - which calls its actions in Ukraine "a special operation" - will find it increasingly difficult to uphold production as Western sanctions begin to bite. IEA members nations could release more oil from strategic petroleum reserves (SPR) if they find it necessary when the current scheme expires, the head of the agency also said.
Oil down as interest rate hike cues fuel demand fears - Oil prices decreased on Tuesday as signs of more aggressive interest rate hikes by central banks fuel recession and demand fears. International benchmark Brent crude traded at $102.59 per barrel at 09.26 a.m. local time (0626 GMT) for a 0.33% decline from the closing price of $102.93 a barrel in the previous trading session. American benchmark West Texas Intermediate (WTI) was at $96.91 per barrel at the same time for a 0.10% fall after the previous session closed at $97.01 a barrel. Oil prices came under pressure due to concerns over an economic slowdown as central banks are expected to make more aggressive interest rate hikes. The head of the US Federal Reserve, Jerome Powell, said Friday that the Fed deliberately moved its policy stance to a level that would be restrictive enough to reduce inflation to 2%. He also acknowledged the rate hike at the July meeting was the second 75 basis points increase and an unusually large increase might be more appropriate at the next meeting. "Our decision at the September meeting will depend on the aggregate of incoming data and the evolving outlook," said Powell. Meanwhile, the recent unrest in OPEC's second-largest oil producer, Iraq, fueled supply fears and limited the downward pressure on prices. At least 13 protesters were killed Monday after supporters of Iraqi Shia cleric Muqtada al-Sadr stormed the Republican Palace, the seat of the Iraqi government in Baghdad, according to local media. More than 350 protesters were also injured in the unrest. Authorities urged Iraqis to abide by a nationwide curfew and instructions from the security apparatus. The situation deteriorated in Baghdad earlier Monday after al-Sadr said he was quitting politics for good. The Republican Palace is in the heavily fortified Green Zone, which houses government agencies and several foreign diplomatic missions. Iraqi parties have been unable to form a new government since the last elections on Oct. 10, 2021.
Crude Oil Plummets 5% on Reports of US-Iran Nuclear Deal -- Oil futures nearest delivery accelerated losses in afternoon trade Tuesday, sending the international crude benchmark below $100 per barrel (bbl). The move was in reaction to unconfirmed reports that the United States, European Union and Iran have reached an agreement to limit Iran's nuclear program in exchange for the lifting of Western sanctions on its crude oil exports, leading to a full readmittance of Iran into the global oil market. Media airwaves were hit with reports on Tuesday suggesting Western allies have reached an agreement with Tehran to revive the 2015 Joint Comprehensive Pact of Action, to be announced in the next two or three weeks, according to the former International Atomic Energy Agency official. It must be noted that the news did not come from an official source either in Iran, EU or the U.S. and must be taken with a grain of salt. Still, oil prices tumbled more than 5% in reaction to the breaking news that could bring Iran back into the global oil market. Tehran holds a sizable cache of crude in its offshore storage that could be immediately dispatched to buyers even if an agreement doesn't come into full force until later this year. According to ship tracking firm Kpler, around 93 million bbl of Iranian crude and condensate are currently stored on vessels in the Persian Gulf, off Singapore and near China, while Vortexa Ltd. estimates the holdings at 60 million to 70 million bbl. In addition, there are smaller volumes in onshore tanks. This could offer immediate relief to European buyers, for instance, bracing for the embargo on Russian oil embargo that comes into full effect in January 2023. In the EU, gas futures traded at Dutch Title Transfer Facility continued lower for the second straight session on Tuesday amid the reports the European Commission is planning to step into energy markets by capping the price of natural gas. Commission President Ursula von der Leyen remarked on Monday that the commission is currently working on the mechanism to de-link natural gas prices from electricity costs. Power prices across the EU spiked nearly ten-fold over the past few months, prompting widespread shutdowns of industrial operations and inflicting pain on struggling consumers. This month, consumer sentiment in the EU plunged to a negative 24.9, the second-lowest reading on record after a negative 25 recorded in April 2020. At settlement, NYMEX October West Texas Intermediate futures plummeted $5.37 or more than 5% to $91.64 per bbl while international crude benchmark Brent for October delivery settled below $100 per bbl ahead of contract expiration Wednesday afternoon and the next-month November contract settled at a $1.47 discount to the front month. NYMEX September RBOB futures fell more than 18 cents to $2.6944 per gallon, and the October contract expanded its discount to 16.41 cents. NYMEX September ULSD futures retreated 9.28 cents to $3.8171 per gallon, and the October ULSD contract settling the session at $3.7778 a gallon. Both September RBOB and ULSD contracts expire Wednesday afternoon.
Oil slides more than 6% on inflation and Iraq exports - Oil prices fell more than $7 a barrel on Tuesday, the steepest decline in about a month, on fears that an inflation-induced weakening of global economies would soften fuel demand and as unrest in Iraq has failed to put a dent in the OPEC nation's crude exports. Brent crude futures for October settlement declined 5.5% to end the day at $99.31 per barrel. U.S. West Texas Intermediate crude declined $5.37, or 5.5%, to settle at $91.64 per barrel. Inflation is near double-digit territory in many of the world's biggest economies. This could prompt central banks in the United States and Europe to resort to more aggressive interest rate increases, which could slow economic growth and weigh on fuel demand. The European Central Bank should include a 75 basis-point interest rate hike among its options for the September policy meeting given exceptionally high inflation, Estonian policymaker Madis Muller said on Tuesday. German inflation rose to its highest level in almost 50 years in August, beating a high set only three months earlier, data showed. Hungary's central bank raised its base rate by 100 basis points to 11.75%. Bets on another oversized Fed rate hike also pushed up the dollar. A stronger greenback is generally bearish as it makes it more expensive for buyers with other currencies in the dollar-denominated oil market. Prices tumbled after comments from Iraq's state-owned marketer SOMO that the country's oil exports are unaffected by unrest, said UBS analyst Giovanni Staunovo. Baghdad's worst fighting in years between Shi'ite Muslim groups continued for a second day. Still, SOMO said it can redirect more oil to Europe if required. Prices felt more pressure when Russia's fastest-growing oil producer, Gazprom Neft, said it plans to double oil production at its Zhagrin field in Western Siberia to more than 110,000 barrels per day. Investors will watch the meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known collectively as OPEC+, on Sept. 5. Saudi Arabia last week raised the possibility of production cuts from OPEC+, which sources said could coincide with a boost in supply from Iran should it clinch a nuclear deal with the West. .
WTI Slips Lower After API Reports Unexpected Crude Build - Oil prices tumbled hard today after reports confirmed that Iraqi crude exports were so far unaffected by the turmoil in the country. “Demonstrations and acts of violence in Iraq did not affect the operations of Iraqi oil exports through the southern ports,” Additionally, a source in one of the OPEC+ delegations told Russian news agency TASS that OPEC+ are not currently discussing the possibility of oil production cuts. “The market is hoping for a solution in Iraq, but, until such time, a notoriously volatile country will keep the market nervous,” All of this was exaggerated by an abysmal lack of liquidity in markets. API
- Crude +593k (-1.9mm exp)
- Cushing -599k
- Gasoline -3.414mm (-1.3mm exp)
- Distillates -1.726mm (-1.2mm exp)
Analysts expected a 3rd week of crude draws last week (and 4th week of Gasoline stock declines). but they were disappointed as API reported a surprise crude build... Decent product draws however suggest demand remains. Also of note is that API reported a drawdown in Cushing stocks, the first in 9 weeks...
WTI Extends Losses Despite Bigger Than Expected Crude Draw - Crude prices extended yesterday's losses this morning with WTI trading back below $90 briefly as recession fears combined with lower anxiety over Iraq disruptions were exacerbated by a collapse in liquidity in the futures market."Crude oil's bounce from a six-month low has faded fast following Friday's hawkish message from Jerome Powell, the Federal Reserve Chairman, which once again raised concerns that the central banks aggressive stance towards combatting runaway inflation would mean lower growth and with that lower demand for crude oil and fuel products," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.Slowing demand in China, the world's largest importer, is also adding to expectations for weaker demand, as the country imposed fresh Covid-19 lockdowns in the cities of Dalian and Shenzhen, while factory orders fell in August. Also adding to the drop, OPEC's technical committee, reporting ahead of the OPEC+ monthly meeting on Sept.5, raised its estimate for the surplus of supply in the global market to 0.9-million barrels day, up from its July report estimating a surplus of 0.8-million bpd, according to reports.The API-reported crude build also piled on some additional selling pressure at the margin.All algo's eyes will be on the official data to confirm that build.DOE
- Crude -3.326mm (-1.9mm exp)
- Cushing -523k
- Gasoline -1.172mm (-1.3mm exp)
- Distillates +112k (-1.2mm exp)
Shunning API's reported build, the official data showed US crude stocks drew-down for the 3rd straight week. Cushing stocks drew down for the firs time in 9 weeks. Distillates inventories rose while gasoline stocks fell once again...US gasoline demand remained below 2020 levels last week...Drilling activity is stalling out for the first time since it began to recover in September 2020. Over the past two years, the rig count has marched forward at a consistent clip of about five new rigs a week -- until this month, that is.WTI was hovering around $90.50 ahead of the official data and slipped a little lower after...
Oil Prices Slump Again, Hit by Demand Concerns - -Oil prices extended their slide on Wednesday, led lower by worries that the global economy would slow further with renewed restrictions to curb COVID-19 in China. Brent crude futures for October due to expire on Wednesday, settled at $96.49, down $2.82 a barrel, or 2.8%. The more active November contract lost $2.20 to $95.64 a barrel. U.S. West Texas Intermediate (WTI) crude futures ended down $2.09, or 2.3%, at $89.55 a barrel. "The weakness coming out of China has played a significant role" in lowering prices,. "There are fears of demand destruction across the West as interest rates rise and inflation concerns grip Western economies." The market has been primarily concerned with inadequate supply in the months following Russia's invasion of Ukraine and as OPEC struggled to increase output. That drove near-term contracts to a sharp premium over later-dated futures earlier this year, but that pattern has reversed somewhat as output has increased. Both OPEC and the United States saw production hit its highest levels since the early days of the coronavirus pandemic, with OPEC's output hitting 29.6 million barrels per day (bpd) in the most recent month, according to a Reuters survey, while U.S. output rose to 11.82 million bpd in June. Both are at their highest levels since April 2020. "The fear that there’s a slowdown here and then also the potential here for some additional supply increases coming down the pike is having some pressure on the market," The Joint Technical Committee of the Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, said it now sees an oil surplus this year of 400,000 bpd, up 100,000 bpd from its forecast a month earlier. Some OPEC+ members have called for cuts. The group is next due to meet on Sept. 5 amid weakening demand in Asia that spurred Saudi Arabia to lower its official selling prices to that region. U.S. crude stocks fell by 3.3 million barrels, the U.S. Energy Information Administration said Wednesday, while gasoline stocks were down 1.2 million barrels. [EIA/S] China's factory activity extended declines in August due to new COVID infections, the worst heat wave in decades and an embattled property sector that weighed on production, suggesting the economy will struggle to sustain momentum. Parts of China's southern city of Guangzhou imposed COVID curbs on Wednesday, joining the tech hub of Shenzhen in battling flare-ups.
Oil Futures Deepen Losses After China Locks Down Tech Hub -- Oil futures extended losses into the first trading session of September after China announced a COVID lockdown for a megacity of 21 million people in Sichuan province, a key manufacturing hub for Western technology and automaker brands, in a move that weakens oil demand and further disrupts global supply chains. All of China's 31 provinces have reported COVID-19 infections in the past ten days, according to Chinese health authorities, a troubling sign for the world's second largest economy as it battles yet another resurgence of the Omicron variant. Chinese metropolis of Chengdu with a population larger than some European countries will go into full lockdown Thursday after the discovery of a cluster of COVID-19 cases that triggered Beijing's "zero-COVID" policy of mass-testing and limited personal movement. The city accounts for about 1.7% of China's gross domestic product and is home to major technology and automakers companies, including Toyota Motor Corp. and Foxconn Technology Group, the world's largest assembler of Apple Inc.'s iPhones, and Intel Corp. among others. Compounding the pain for global supply chains, authorities in the southern technology hub of Shenzhen this week tightened restrictions on movement and deployed mass-testing after a sudden outbreak at a factory. In total, 41 cities that are responsible for 32% of China's GDP are currently in the midst of a COVID outbreak, according to Capital Economics. The China lockdowns are troubling news for a global oil market plagued by growing signs of demand destruction in the United States and the European Union. U.S. gasoline consumption fell to 8.9 million barrels per day (bpd) in the four weeks of August -- well below the 2021 consumption rate and on par with 2020 when travel restrictions due to the COVID-19 pandemic were still in place limiting personal movement. Nationally, prices at the gas pump fell every day in August but did little to lure Americans back to the roads. With summer driving season officially ending with the Labor Day holiday (9/5), there is little hope that gasoline demand would improve above its historic norms heading into the colder months. Prospects for distillate demand don't look much brighter. EIA data show distillate consumption in the United States eroded for the third consecutive week through Aug. 26 to 3.566 million bpd -- the lowest level since the week leading up to July 4th holiday. Against last year's level, distillate fuel supplied to the U.S. market fell 824,000 bpd or over 18%. Demand for middle distillate fuel typically correlates closely with economic activity that is expected to weaken further as the Federal Reserve moves to fight historically high inflation. Near 7:30 a.m. EDT, NYMEX October West Texas Intermediate futures fell $1.79 to $87.77 barrel (bbl), while international crude benchmark Brent for November delivery traded at $93.67 bbl, down $1.97. NYMEX October RBOB futures fell nearly 6 cents to trade at $2.3718 gallon, with NYMEX October ULSD futures retreated 18.76 cents to $3.4798 gallon.
Oil Sinks Further in Test of OPEC's Resolve Amid Demand Concerns - Oil fell to a two-week low amid escalating concerns about worldwide demand while a broader risk-off sentiment weighed on assets from metals to equities. West Texas Intermediate futures dropped 3.3% to settle at $86.61 a barrel on Thursday. Investors are focusing on tightening monetary policy around the world that could crimp economic growth and hit oil demand. The lockdown of the Chinese megacity of Chengdu to contain a Covid-19 outbreak added to the negative sentiment. “The oil benchmarks have started September lower as signs that the global economy is heading towards murky waters grow ever-more apparent,” . “There has been a wider shift away from risk assets in recent days and this has accelerated as bets are on” for a 75-basis-point rise in US interest rates next month. Oil declined by more than 20% in the three months through August, overturning all of the gains since Russia’s invasion of Ukraine at the end of February. The slump prompted Saudi Arabia to signal that the Organization of Petroleum Exporting Countries and its allies could cut supplies. The group is scheduled to gather on Monday to discuss output policy. “What it could translate into is OPEC potentially once again cutting production if prices get too low,” said Ole Hansen, Saxo Bank’s head of commodity strategy. “That makes me believe that the downside is limited ahead of Monday’s meeting.” . WTI for October delivery dropped $2.94 to settle at $86.61, lowest closing price since Aug. 16 Brent for November shed $3.28 to settle at $92.36. Among the items that OPEC+ ministers may weigh up is a US-led plan to cap the price of Russian crude in a bid to deprive Moscow of funds amid the war in Ukraine. The proposal has been gathering support, with the UK government signaling its approval. Group of Seven finance ministers including US Treasury Secretary Janet Yellen are due to discuss the proposal on Friday. Strength in the greenback has added to headwinds for dollar-denominated commodities as the pricier currency makes them more expensive for overseas buyers. The Bloomberg Dollar Index rose toward the highest level on record following a run of three monthly gains.
Oil firms on bets OPEC+ to talk up output cuts to stem sinking prices -Oil prices rose on Friday on expectations that OPEC+ will discuss output cuts at a meeting on Sept. 5, though concern over China's COVID-19 curbs and weakness in the global economy loomed over the market. Brent crude futures rose 66 cents to settle at $93.02 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 26 cents to settle at $86.87 a barrel. Both benchmarks slid 3% to two-week lows in the previous session. Brent posted a weekly drop of 7.9%, and WTI of 6.7%. The Organization of the Petroleum Exporting Countries and allies led by Russia - a group known as OPEC+ - are due to meet on Sept. 5 against a backdrop of expected demand declines, though top producer Saudi Arabia says supply remains tight. OPEC+ is likely to keep oil output quotas unchanged for October at Monday's meeting, three OPEC+ sources said, although some sources would not rule out a production cut to bolster prices that have slid from sky-high levels hit earlier this year. OPEC+ this week revised market balances for this year and now sees demand lagging supply by 400,000 barrels per day (bpd), against 900,000 bpd forecast previously. The producer group expects a market deficit of 300,000 bpd in its base case for 2023. Meanwhile, Iran said it had sent a "constructive" response to U.S. proposals aimed at reviving Tehran's 2015 nuclear deal with world powers. The United States gave a less positive assessment. G7 finance ministers agreed on Friday to impose a price cap on Russian oil, but provided few new details to the plan aimed at curbing revenue for Moscow's war in Ukraine while keeping crude flowing to avoid price spikes. In the United States, employers hired more workers than expected in August, but moderate wage growth and a rise in the unemployment rate to 3.7% could ease pressure on the Federal Reserve to deliver a third 75 basis-point interest rate hike this month. U.S. energy firms this week cut the number of oil and natural gas rigs operating for the fourth time in five weeks. The U.S. oil and gas rig count, an early indicator of future output, fell by 5 to 760 in the week to Sept. 2, Baker Hughes Co said on Friday. Russia's Gazprom said on Friday that natural gas supplies via the Nord Stream 1 pipeline would remain shut off after the main gas turbine at Portovaya compressor station near St Petersburg was found to have an oil leak. Investors remain worried about the impact of the latest COVID-19 restrictions in China. The city of Chengdu on Thursday ordered a lockdown that has hit manufacturers such as Volvo . Data showed Chinese factory activity in August contracted for the first time in three months in the face of weakening demand, while power shortages and COVID-19 outbreaks also disrupted output.
Oil Sees Worst Week in Five From China COVID, Iran Deal Threat - It’s hard to imagine oil having its worst week in five just before the start of an OPEC meeting. Yet, as the saying goes, “it is what it is.” The lockdown of nearly 18 million people in China’s tech hub Shenzhen over a new Covid fright pulled crude futures down from Friday’s highs that initially drove both West Texas Intermediate and Brent crude up more than 3% on the day. That left both crude benchmarks down more than 6% for the week, their most dismal showing since the week ended July 29. New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled up 26 cents, or 0.3%, at $86.87 per barrel, after a session peak at $89.61. WTI was down in three prior sessions, losing 3.3% on Thursday, 2.3% on Wednesday and 5.5% on Tuesday. That left the U.S. crude benchmark down 6.7% for the week. Brent, the London-traded global benchmark for oil, settled Friday’s trade up 66 cents, or 0.7%, at $93.02 per barrel, after a session high at $95.28. Like WTI, Brent was down in three prior sessions, losing 4.5% on Thursday, 2.8% on Wednesday and 5% on Tuesday. For the week, it fell 6.4% Key districts in Shenzhen shut down public transport and extended curbs on public activities on Friday as cities across China battled fresh coronavirus outbreaks that have dampened the outlook for economic recovery, Reuters said in a report. China is the world's top importer and any curbs on the movement of its people can usually have detrimental effects on its crude consumption. Six districts comprising the majority of Shenzhen's population of almost 18 million announced that all residents would be tested twice for Covid-19 over the weekend as subway and bus services were suspended, the Reuters report added. Also pulling oil down from Friday’s highs was the Biden administration’s latest take on efforts to revive the Iran nuclear deal that could pave the way for the removal of U.S. sanctions that — if abolished — could add up to a million barrels per day of the Islamic Republic’s crude on the global export market. The White House said there should be no link between the reimplementation of the Iran nuclear deal and Tehran's obligations under the Non-Proliferation Treaty. That was the strongest signal yet that Washington really wanted a revival of the deal, agreed between Iran and six global powers in 2015 under the aegis of the Obama administration. The Trump administration that came on later canceled the deal in 2018 and placed sanctions on Tehran. President Joe Biden, on entering office in January last year, allowed negotiations to begin with the aim of reviving the deal. The White House made clear on Friday that there was no deal as yet. “Iran’s response didn’t put us in a position to close a deal, as we won’t close a deal unless Iran meets the terms we have set forth. We are not there yet,” a White House National Security Council spokesperson was quoted saying in a tweet by Iran International, a London-based TV station that reports on Iranian affairs.
Iran Gives West Ultimatum On Nuclear Deal As It Starts Enriching Uranium At Natanz -Iran has issued an ultimatum which further suggests that at a moment a restored nuclear deal is reportedly at the 'finish line' (or hanging by a thread, depending on the source) - it could be on the brink of unraveling in this final crucial stage. "Iran’s president warned Monday that any roadmap to restore Tehran’s tattered nuclear deal with world powers must see international inspectors end their probe on man-made uranium particles found at undeclared sites in the country," the AP reports.This has been a key demand of the Iranian side particularly over the past months, but the US and its ally Israel in the background have claimed the withdraw of inspectors will only more easily allow the Islamic Republic to pursue a covert nuclear weapons program under cover of a restored JCPOA.The IAEA has long demanded answers after man-made uranium particles were found at undeclared sites inside Iran. President Ebrahim Raisi addressed this in his Monday speech:As a member of the Nuclear Nonproliferation Treaty, Iran is obligated to explain the radioactive traces and to provide assurances that they are not being used as part of a nuclear weapons program. Iran found itself criticized by the IAEA’s Board of Governors in June over its failure to answer questions about the sites to the inspectors’ satisfaction.Raisi mentioned the traces — referring to its as a "safeguards" issue using the IAEA’s language."Without settlement of safeguard issues, speaking about an agreement has no meaning," Raisi said.Thus his words point to an agreement on the "final text" being anything but a done deal.Complicating things further, Reuters in a Monday afternoon report, citing the IAEA, says:Iran has started enriching uranium with one of three cascades, or clusters, of advanced IR-6 centrifuges recently installed at its underground enrichment plant at Natanz, a report by the U.N. atomic watchdog to member states seen by Reuters said on Monday.Iran is using the cascade of up to 174 machines to enrich uranium to up to 5% purity, the confidential report said.
Iran Closes Border With Iraq, Flights Paused From Gulf Carriers, On Fears Of New Civil War - Influential Shia leader Muqtada al-Sadr, whose followers largely drove the past 48 hours of protests and violence that rocked the central Green Zone area of Baghdad - resulting in at least 30 deaths and injuries to hundreds more - has called for his supporters to disperse while further apologizing to the Iraqi people for the overnight deadly mayhem. Al Jazeera observed Tuesday that "Supporters of Muqtada al-Sadr have started to leave the Green Zone area after their leader told them to end the protests." Further suggesting greatly calmed streets which were hours ago scenes of running armed street battles with security forces, the report noted that "The military also announced that a nationwide curfew, which went into effect on Monday at 7pm local time (20:00 GMT), has been lifted, further raising hopes that there might be an end to the street violence." Acting prime minister Mustafa Al-Kadhimi welcomed Sadr's speech. The Sadrist movement head issued the following warning to those still occupying government buildings: "The party is disciplined and obedient, and I wash my hands of those who do not withdraw from parliament building within an hour." The ultimatum to his supporters appears to have worked for now. A United Nations statement said the following: "UNAMI welcomes the most recent moderate declaration by Sayed Muqtada al-Sadr. As stated yesterday: restraint and calm are necessary for reason to prevail," according to a UN Mission tweet. Yet fears that the ongoing political gridlock in parliament - and inability to form a government going all the way back to a parliamentary election in October 2021 - could slide the country into civil war remain. It remains to be seen whether significant unrest will spread to other provinces, but Iraq's southern city of Basra - a hotbed of pro-Sadr support, whose withdrawal from politics sparked these latest clashes (or as his supporters say... being forced out) - has this week seen angry protests and confrontations with security forces.
Full Implosion Overnight In 'Green Zone' As Baghdad Threatens To Become Next Kabul - The American embassy in Baghdad has reportedly engaged inbound rocket attacks with its air defense system, the C-RAM which protects aerial threats against the Green Zone.Some reports suggest the streets have finally grown calmer in the early morning hours (local time), but this is after an evening and overnight death toll of at least 15, including unconfirmed reports of police casualties. AFP citing local medical sources also says some 350 protesters were injured. Currently the Kuwaiti embassy in Iraq is urging all of its citizens to leave the country, and its likely that more regional and gulf states will follow, especially if violence spreads to other provinces. Media outlets close to the Sadr Movement are using the word “terrorist” when referring to Iran-backed armed groups. Earlier the Sadr supporters torched the Iran-backed group Asaib Ahl al-Haq’s headquarters in Baghdad. pic.twitter.com/2KzUjnX8ZM Below: a brief collection of videos from some of the night's chaotic scenes of clashes between pro-Sadr protesters, rival militant factions, and security forces...
Moqtada al-Sadr: At least 15 dead amid fighting in Iraqi capital - At least 15 people have been killed in clashes between Iraqi security forces and supporters of a powerful Shia cleric in the capital, Baghdad. Officials say dozens more were injured after protesters loyal to Moqtada al-Sadr stormed the presidential palace. The violence began after Mr Sadr announced his retirement from politics. His bloc won most seats seats in parliament last October, but he has refused to negotiate with Iran-backed Shia groups to form a government. There has been a year of political instability as a result. Street fighting erupted overnight, as fighters exchanged gunfire and tracer rounds illuminated the night sky in some of the worst violence to hit the Iraqi capital in recent years. Much of the fighting has been concentrated around the city's Green Zone, an area that houses government buildings and foreign embassies. Dutch embassy staff were forced to move to the German mission due to the clashes. Security officials said some of the violence was between the Peace Brigades, a militia loyal to Mr Sadr, and members of the Iraqi military. Videos shared on social media appeared to show some fighters using heavy weaponry, including rocket-propelled grenades (RPGs). Iran has closed its borders with Iraq amidst the fighting, and Kuwait has urged its citizens to leave the country immediately. Medics said 15 supporters of Mr Sadr had been shot dead and about 350 other protesters injured, according to AFP news agency. A spokesperson for UN Secretary General Antonio Guterres said he was alarmed by events and called for "immediate steps to de-escalate the situation". And Mustafa al-Kadhimi, Iraq's caretaker prime minister - and Sadr ally - has declared a nationwide curfew after unrest in several other cities. He has suspended cabinet meetings and has pleaded with the influential cleric to intervene and stop the violence. For now, Mr Sadr has announced a hunger strike until the violence and use of weapons by all sides stopped. In his statement on Monday, Mr Sadr said: "I had decided not to interfere in political affairs, but I now announce my final retirement and the closure of all [Sadrist] institutions." Some religious sites linked to his movement will remain open. Mr Sadr, 48, has been a dominant figure in Iraqi public and political life for the past two decades. His Mehdi Army emerged as one of the most powerful militias which fought US and allied Iraqi government forces in the aftermath of the invasion which toppled former ruler Saddam Hussein. He later rebranded it as the Peace Brigades, and it remains one of the biggest militias which now form part of the Iraqi armed forces. Mr Sadr, one of Iraq's most recognisable figures with his black turban, dark eyes and heavy set build, had championed ordinary Iraqis hit by high unemployment, continual power cuts and corruption. He is one of a few figures who could quickly mobilise hundreds of thousands of supporters on to the streets, and draw them down again. Hundreds have been camped outside parliament since storming it twice in July and August in protest at the deadlock. Once an Iranian ally, Mr Sadr has distanced himself from Iraq's Shia neighbour and repositioned himself as a nationalist wanting to end US and Iranian influence over Iraq's internal affairs.
First of ‘hundreds’ of Iranian drones arrives in Russia - The first shipment of what U.S. officials assess will be hundreds of Iranian unmanned aerial vehicles has arrived in Russia, according to a Pentagon spokesperson. The U.S. confirms that Russia has received two types of drones from Iran, the Mohajer-6 and Shahed-series, Defense Department spokesperson Todd Breasseale told POLITICO, corroborating earlier reports. The drones can be used to conduct strikes, electronic warfare and targeting, he noted. This initial tranche is likely part of Moscow’s plans to import “hundreds” of Iranian drones of various types, which Russia intends to use on the battlefield in Ukraine, Breasseale said. However, Breasseale noted that information indicates the drones in the initial transfer have already experienced a number of failures. He also noted that Russian forces in Ukraine are suffering from supply shortages, in part because of sanctions and export controls. This is forcing Russia to depend on “unreliable nations like Iran” to fill their needs. “Russia deepening their alliance with Iran is something that the whole world — and especially those in the region — should watch and see as a profound threat,” Breasseale said. “We will vigorously enforce all U.S. sanctions on both the Russian and Iranian arms trade and we will stand with our allies and partners throughout the region against the Iranian threat.” Top U.S. officials have warned for weeks about Russian cooperation with Iran. National security adviser Jake Sullivan told CNN in July that the U.S. had information indicating Iran was “preparing to provide Russia with several hundred UAVs, including weapons capable UAVs” for use on the battlefield in Ukraine. Russian operators have been undergoing training in Iran for weeks as part of the agreement for UAV transfers, according to a spokesperson for the National Security Council, who asked to remain anonymous to discuss a sensitive matter. Beyond the drone transfers, the U.S. has seen recent reports that Russia launched a satellite with “significant spying capabilities” on Iran’s behalf, the spokesperson said.
US Signs Deal To Give Israel 4 Refueling Planes Needed To Bomb Iran - The Pentagon signed a contract with Boeing on Thursday to supply Israel with four KC-46 refueling planes that are needed for potential Israeli strikes on Iran, although the aircraft won’t be delivered until at least 2025. The deal is worth $927 million, and Israel is purchasing the planes from Boeing with money from the $3.8 billion in military aid it receives from the US each year. Of that amount, Israel receives $3.3 billion in Foreign Military Financing, a State Department program that gives foreign governments money to purchase US-made military equipment. Israel has the option to order four more KC-46s in the future. The deal has been in the works for a long time, and Israel has previously asked the US if it could accelerate the delivery of the planes, but the US has denied the request. The US military would need to give up its spot in line to receive KC-46s in order for Israel to receive the planes earlier. Israel currently relies on aging tankers for mid-air refueling, which aren’t expected to be capable of supporting attacks on Iran. According to the Times of Israel, Israeli jets would need to travel about 1,200 miles to strike targets in Iran, which would require either the KC-46s or stopping in a Gulf country to refuel. Over the past year, Israel’s military has been focused on making preparations to bomb Iran. Israeli warplanes recently simulated launching large-scale attacks on Iran over the Mediterranean Sea. In the meantime, Israel has stepped up its brazen attacks on Syria, ostensibly to 'counter Iran'...
Russia Destroys Oil Storage Supplying Fuel To Ukrainian Troops - Ministry - The Russian Aerospace Forces destroyed with high-precision weapons an oil storage facility in the Dnipropetrovsk Region, from which Ukrainian troops received fuel, the Russian Defense Ministry said on Sunday. "In the area of the city of Nikopol, Dnipropetrovsk Region, an oil storage facility was destroyed, from which fuel was supplied to the AFU (Armed Forces of Ukraine) units in Donbas," the ministry said. Russia launched a military operation in Ukraine on February 24, after the breakaway republics of Donetsk and Luhansk appealed for help in defending themselves against Ukrainian forces. In response to Russia's operation, Western countries have rolled out a comprehensive sanctions campaign against Moscow and have been supplying weapons to Ukraine.
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