natural gas prices are at a 25 month low after the largest one month drop in 22 years; commercial crude oil inventories are at a 19 month high; rig count falls by the most in 31 months
US oil prices fell for a second straight week after fears of higher interest rates were exacerbated by a much stronger than expected jobs report.. after falling 2.4% to $79.68 a barrel last week on rising inventories and disappointment in Europe's proposals to restrict Russian fuel exports, the contract price for the benchmark US light sweet crude for March delivery initially jumped in Asian trading on early Monday, after a drone attack had targeted Iran and as China pledged to promote a consumption recovery, but then turned lower over uncertainty ahead of the coming meetings of the OPEC+ group and the US Fed, and settled down $1.78 at $77.90, the lowest in three weeks, pressured by a firmer U.S. dollar and risk-off sentiment in financial markets, as traders turned cautious ahead of this week's two day Fed meeting beginning the next day...oil prices followed stocks lower early Tuesday, as the U.S. Dollar Index advanced for a third straight session and as traders positioned ahead of policy meetings by the Fed and European Central Bank, where officials were expected to signal more rate hikes for 2023, but then rebounded from their earlier lows and moved higher, drawing support from a weakening dollar, and from data showing that demand for U.S. crude and petroleum products had risen in November, and settled 97 cents higher at $78.87 a barrel...oil prices held their gains in overnight trading even after the American Petroleum Institute reported across the board inventory increases and opened higher on Wednesday, then flipped between modest gains and losses in pre-inventory report trading, first rallying to a high of $79.73, and then trading back to within Tuesday’s trading range following the news that OPEC+’s Joint Ministerial Monitoring Committee recommended making no changes to the group's output policy, but turned decidedly south after EIA data showed big builds in crude oil, gasoline and distillate inventories, and settled $2.46 lower at $76.41 a barrel after the Fed signaled further rate increases were needed to lower inflation to its 2% target....oil prices rose in early Asian trading on Thursday after the Fed's modest rate hike sent the US dollar lower, but then eased in US afternoon trading after the dollar bounced off a seven-month low on the back of expectations that global central banks would soften the path of interest rate increases this year after the European Central Bank, the Bank of England, and the Bank of Canada all lifted their lending rates to the highest level in almost two decades and settled 53 cents lower at $75.88 a barrel...oil prices were little changed early Friday ahead of the release of the U.S. employment report, which was expected to show job growth slowed further at the start of the year amid rising interest rates, but then tumbled after reported job increases came in three times expectations, raising fears of higher interest rates in response and settled $2.49 or 3.3% lower at $73.39 a barrel as the dollar rocketed higher, making commodities priced in the U.S. currency costlier for non-dollar holders....oil prices thus finished nearly 7.9% lower for the week, amid uncertainties over how well demand from China would fare in February, after their crude imports were assessed at 10.98 mbpd in January, down from December's 11.37 mbpd and November's 11.42 mbpd...
US natural gas prices also finished lower for the eighth consecutive week as traders looked past a polar outbreak to warmer weather through mid-February... after falling 6.2% to a 21 month low of $2.849 per mmBTU last week as winter gas supplies held above normal and traders bet against a prospective Freeport export restart, the contract price of US natural gas for March delivery opened 17 cents lower on Monday, as updated forecasts over the weekend reduced the duration of the polar conditions expected to arrive later in the week, and settled 17.2 cents lower at a 21 month low of $2.677 per mmBTU after trading in a narrow range on strong gas production and expectations for mild mid-February weather...after opening lower with wintry conditions moving across the Midwest, natural gas again traded in a narrow range Tuesday and settled seven-tenths of a cent higher at $2.684 per mmBTU, but still ended January with the largest monthly decline in 22 years...after opening higher Wednesday as output was on track to drop about 4.0 billion cubic feet per day as winter storms froze off oil and gas wells in Texas, Oklahoma, New Mexico and Pennsylvania, prices again moved lower to settle down 21.6 cents at $2.468 per mmBTU as traders brushed off the temporary declines in production related to the freeze-offs and instead focused on a quick warm-up expected for the weekend...after moving gradually higher following a storage report that was in line with estimates, gas prices again back off their gains on Thursday to settle 1.2 cents lower at $2.456 per mmBTU on the prospect of warmer weather coming next week...March gas prices slipped another 4.6 cents to settle at a 25 month low of $2.410 per mmBTU on Friday as forecasts showed February was poised to ccontinue the same warm-weather themes that had collapsed prices winter-to-date, and thus finished 15.4% lower on the week...
with natural gas prices finishing at a 25 month low after falling in January by the most in any month in 22 years, we'll include a graph of how those prices have moved over the past three years...
the above is a screenshot of the interactive natural gas price chart from barchart.com, which i have set to show front month natural gas prices weekly over the past three years, which means you're seeing the range of natural gas prices over that time as they were quoted by the media...this same chart can be reset to show prices of front month or individual monthly natural gas futures contracts over time periods ranging from 1 day to 30 years, as the menu bar on the top indicates, and also to show natural gas prices by the minute, hour, day, week or month for each...each bar in the graph above represents the range of natural gas prices for a single week, with weeks when prices rose indicated in green, and weeks when prices fell indicated in red, with the small sticks above or below each weekly bar representing the extent of the price change above or below the opening and closing price for the week in question...notice that we've highlighted prices for the week of December 28, 2020, which was the last time natural gas prices were this low....also note that natural gas prices had briefly spiked above $10/mmBTU on August 22nd, so they've fallen by more than three-quarters to $2.41/mmBTU in less than 6 months...moreover, they had been as high as $7/mmBTU as recently as 8 weeks ago, so they've fallen more than 65% in that short time... the steepness of the recent drop in prices is quite visually evident...
The EIA's natural gas storage report for the week ending January 27th indicated that the amount of working natural gas held in underground storage in the US fell by 151 billion cubic feet to 2,583 billion cubic feet by the end of the week, after the decrease for the week ending January 20th was revised from -91 billion cubic feet to -86 billion cubic feet ...that left our natural gas supplies 222 billion cubic feet, or 9.4% above the 2,361 billion cubic feet that were in storage on January 27th of last year, and 163 billion cubic feet, or 6.7% more than the five-year average of 2,420 billion cubic feet of natural gas that were in storage as of the 27th of January over the most recent five years….the 151 billion cubic foot withdrawal from US natural gas working storage for the cited week was more than was expected by a Reuters survey of analysts, whose average forecast called for a 142 billion cubic feet withdrawal of gas, but it was much less than the 261 billion cubic feet that were pulled out of natural gas storage during the corresponding week of 2022, and also less than the average 181 billion cubic feet of natural gas that have typically been withdrawn from our natural gas storage during the same winter 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 January 27th indicated that after a big increase in our oil imports and a big decrease in our oil exports, we had surplus oil left to add to our stored commercial crude supplies for the 6th consecutive weekly increase, and for the 25th time in the past 41 weeks, despite an unusual increase in oil demand that could not be accounted for... Our imports of crude oil rose by an average of 1,378,000 barrels per day to average 7,283,000 barrels per day, after falling by an average of 956,000 barrels per day during the prior week, while our exports of crude oil fell by 1,215,000 barrels per day to average 3,492,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 3,791,000 barrels of oil per day during the week ending January 27th, 2,593,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly unchanged at 12,200,000 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 averaged a total of 15,991,000 barrels per day during the January 27th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 14,961,000 barrels of crude per day during the week ending January 27th, an average of 19,000 fewer barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that an average of 591,000 barrels of oil per day were being added to the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending January 27th appear to indicate that our total working supply of oil from net imports and from oilfield production was 438,000 barrels per day more than what was added to storage plus 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 [-438,000] 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 an omission or error of that size in this week’s oil supply & demand figures that we have just transcribed.... Furthermore, since last week’s “unaccounted for crude oil” was at [+1,659,000] barrels per day, that means there was a 2,097,000 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 to supply and demand from that week to this one that are indicated by this week's report are off by that much, thus rendering those comparisons meaningless.... However, since most everyone treats these weekly EIA reports as gospel, and since these weekly 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)….
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,599,000 barrels per day last week, which was 1.0% more than the 6,534,000 barrel per day average that we were importing over the same four-week period last year. This week's 591,000 barrel per day increase in our overall crude oil inventories was all added to our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve remained unchanged.. This week’s crude oil production was reported to be unchanged at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,700,000 barrels per day, while Alaska’s oil production was 1,000 barrels per day higher at 451,000 barrels per day and had no impact on the 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 6.8% below that of our pre-pandemic production peak, but was 25.8% 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 85.7% of their capacity while using those 14,961,000 barrels of crude per day during the week ending January 27th, down from their 86.1% utilization rate during the prior week, and below normal utilization for late January. The 14,961.000 barrels per day of oil that were refined this week were 1.9% less than the 15,497,000 barrels of crude that were being processed daily during week ending January 28th of 2022, and 6.3% less than the 15,972,000 barrels that were being refined during the prepandemic week ending January 31st, 2020, when our refinery utilization was also at a below normal 87.4% for late January ...
Even with a modest decrease in the amount of oil being refined this week, the gasoline output from our refineries was quite a bit higher, increasing by 612,000 barrels per day to 9,443,000 barrels per day during the week ending January 27th, after our gasoline output had decreased by 34,000 barrels per day during the prior week. This week’s gasoline production was also 9.2% more than the 8,650,000 barrels of gasoline that were being produced daily over the same week of last year, while 4.6% less than the gasoline production of 9,903,000 barrels per day during the prepandemic week ending January 31st, 2020. Similarly, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 100,000 barrels per day to 4,692,000 barrels per day, after our distillates output had decreased by 9,000 barrels per day during the prior week. With that, our distillates output was 2.0% more than the 4,602,000 barrels of distillates that were being produced daily during the week ending January 28th of 2022, but still 5.7% less than the 4,976,000 barrels of distillates that were being produced daily during the week ending January 31st 2020...
With the big increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the tenth time in twelve weeks and for the 13th time in 25 weeks, increasing by 2,576,000 barrels to 234,598,000 barrels during the week ending January 27th, after our gasoline inventories had increased by 1,763,000 barrels during the prior week. Our gasoline supplies rose again this week even though the amount of gasoline supplied to US users rose by 348,000 barrels per day to 8,491,000 barrels per day, while our imports of gasoline rose by 48,000 barrels per day to 501,000 barrels per day, and while our exports of gasoline rose by 33,000 barrels per day to 893,000 barrels per day.. But even after 10 recent gasoline inventory increases, our gasoline supplies were still 6.2% below last January 28th's gasoline inventories of 250,037,000 barrels, and about 7% below the five year average of our gasoline supplies for this time of the year…
With the increase in our distillates production, our supplies of distillate fuels increased for the 1st time in 5 weeks, and for the 25th time over the past year, rising by 2,320,000 barrels to 117,590,000 barrels during the week ending January 27th, after our distillates supplies had decreased by 507,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 186,000 barrels per day to 3,692,000 barrels per day, and because our exports of distillates fell by 225,000 barrels per day to 981,000 barrels per day, while our imports of distillates fell by 7,000 barrels per day to 313,000 barrels per day... After a run of fifty-six inventory withdrawals over the past ninetyone weeks, our distillate supplies at the end of the week were were 4.2% below the 122,744,000 barrels of distillates that we had in storage on January 28th of 2022, while about 17% below the five year average of distillates inventories for this time of the year...
Meanwhile, with a big increase in our oil imports and a big decrease in our oil exports, our commercial supplies of crude oil in storage rose for the 13th time in 25 weeks and for the 23rd time in the past year, increasing by 4,140,000 barrels over the week, from 448,548,000 barrels on January 20th to 452,688,000 barrels on January 27th, after our commercial crude supplies had increased by 533,000 barrels over the prior week. After recent big oil supply increases following the Christmas refinery freeze offs, our commercial crude oil inventories were at a 19 month high, about 4% above the most recent five-year average of commercial oil supplies for this time of year, and also about 42% above the average of our available crude oil stocks as of the last weekend of January 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. And even after our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, and then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, our commercial crude supplies as of this January 27th were 9.0% more than the 415,143,000 barrels of oil we had in commercial storage on January 28th of 2022, but 4.8% less than the 475,659,000 barrels of oil that we had in storage during the 2nd Covid surge on January 22nd of 2021, while 4.1% more than the 435,009,000 barrels of oil we had in commercial storage on January 31st of 2020…
Finally, with the SPR at a 39 year low and our supplies of all products made from oil trending near multi-year lows over the recent months, we are also continuing to watch the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR for a sense of the big picture.. After the commercial crude, gasoline, and distillate inventory increases we've already noted for this week, the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, rose by 1,597,000 barrels this week barrels this week, from 1,605,596,000 barrels on January 20th to 1,607,193,000 barrels on January 27th, after our total inventories had increased by 3,989,000 barrels during the prior week. Even after four straight increases, our total petroleum liquids inventories were still down by 510,450,000 barrels, or by 24.1% from their early pandemic high, and are just 1.8% off their recent 18 1/2 year low...
This Week's Rig Count
The number of drilling rigs active in the US decreased for the 12th time over the prior 27 weeks during the week ending February 3rd, and by the most since June 19th 2020, and is now 4.3% below the prepandemic level, despite increasing in 94 of the past 123 weeks...Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 12 to 759 rigs over the past week, which was still 146 more rigs than the 613 rigs that were in use as of the February 4th report of 2022, but was 1,170 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 10 to 599 oil rigs during the past week, after the number of rigs targeting oil had decreased by 4 during the prior week, but there are still 102 more oil rigs active now than were running a year ago, even as they amount to just 37.2% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, while they are now down 12.3% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 2 to 158 natural gas rigs, which was still up by 42 natural gas rigs from the 116 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.8% 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: one of those was a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, while the other was a directional rig drilling to between 5,000 and 10,000 feet into a formation in Lake county California that Baker Hughes doesn't track....While we haven't seen any details on either of those wells, in the past we've identified various "miscellaneous" rig activity as being for exploration, for carbon dioxide storage, and for utility scale geothermal projects....a year ago, there were were no such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico decreased by one to twelve rigs this week, with all of those drilling in Louisiana's offshore waters....that Gulf rig count is now down by 4 from the 16 Gulf rigs running a year ago, when 15 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas....since there aren't any rigs drilling off our other coasts at this time, the Gulf rig count is equal to the national offshore count..
In addition to rigs running offshore, there are still two water based rigs drilling through inland bodies of water this week; those include a directional rig drilling for oil at a depth greater than 15,000 feet in Terrebonne Parish, Louisiana; and a directional rig drilling for oil to between 5,000 and 10,000 feet, inland in Lafourche Parish, Louisiana ...a year ago, there were also two rigs drilling on inland waters...
The count of active horizontal drilling rigs was down by 5 to 700 horizontal rigs this week, which was still 145 more rigs than the 555 horizontal rigs that were in use in the US on February 4th of last year, but just 50.9% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....in addition, the directional rig count was down by 7 to 38 directional rigs this week, while those still were up by 4 from the 34 directional rigs that were operating during the same week a year ago…meanwhile, the vertical rig count was unchanged at 21 vertical rigs this week, which was down by 3 from the 24 vertical rigs that were in use on February 4th of 2022…
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 February 3rd, the second column shows the change in the number of working rigs between last week’s count (January 27th) and this week’s (February 3rd) count, the third column shows last week’s January 27th 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 4th of February, 2022...
as you might guess from the dearth of changes shown in the basin count table, most of this week's rig drop was in basins not tracked by Baker Hughes; that includes the three rigs pulled out of Wyoming, possibly from the Powder River or Green River basins, the two rigs pulled out of California, and the rigs pulled out of Alaska (which had been drilling on the North Slope), Utah (which had been drilling in the Uintah basin), Louisiana, (which had been drilling offshore), and Colorado, where most rigs are drilling in the DJ Niobrara chalk...meanwhile, checking the Rigs by State file at Baker Hughes for changes in the Texas Permian basin, we find that there was a rig added in Texas Oil District 8, which overlies the core Permian Delaware, but that there was a rig pulled out of Texas Oil District 7C, which includes the southernmost counties in the Permian Midland, and that three more rigs were pulled out of Texas Oil District 8A, which overlies the northernmost counties in the Permian Midland...since the Permian basin count shows an increase of two natural gas rigs and a decrease of five oil rigs, that means there was a natural gas rig added and an oil rig pulled out of one of those district that offset each other and didn't show up in the totals...meanwhile, since the rig counts in other Texas districts were unchanged, that means the rig pulled out of the Granite Wash basin had been drilling in Oklahoma, adjacent to the Texas panhandle, and since the Oklahoma rig count is unchanged, that means an offsetting rig had to have been added in Oklahoma, in a basin not tracked by Baker Hughes...lastly, since the Permian saw an increase of two natural gas rigs, four natural gas rigs had to have been removed from elsewhere, and in this week's case, all came out of basins not tracked by Baker Hughes, most likely those in Wyoming and Utah, since the other removals we've noted were most likely all oil rigs...
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Train Derailment in Eastern Ohio Causes Massive Fire, Prompts Evacuations – A train derailment in eastern Ohio caused a massive fire that lit up the skies for miles and forced several residents to be evacuated, officials said Friday night.According to NBC affiliate WFMJ-TV, the train derailed and caught fire shortly after 9 p.m. in East Palestine, a town in Ohio not far from the Pennsylvania border.Following the massive fire, residents within a mile of the accident were told to evacuate immediately. People in other areas were also told to stay indoors, according to a Facebook message posted by the city.“Everybody is working together to try and solve this situation as best we can,” Mayor Trent Conaway said in press conference streamed through Facebook.Video obtained by WFMJ showed a large fire and massive cloud of smoke that could allegedly be seen for miles.Fire departments from Ohio, Pennsylvania, and West Virginia have been called to assist. East Palestine is a community of around 4,700 around 20 miles southeast of Youngstown.
Ohio Valley Connector Expansion Project Clears FERC Hurdle - Gas Compression Magazine - The purpose of this project is to provide additional pipeline delivery capabilities to existing interconnects with Rockies Express Pipeline and Rover ... The US Federal Energy Regulatory Commission (FERC) has issued a favorable environmental impact statement (EIS) for Equitrans LP’s (Equitrans) Ohio Valley Connector Expansion Project, allowing it to move forward. Equitrans is seeking FERC approval for its Ohio Valley Connector Expansion project, which will provide up to 350,000 Dth/d of incremental firm deliverability on its Mainline System and new transportation paths. The purpose of this project is to provide additional pipeline delivery capabilities to existing interconnects with Rockies Express Pipeline and Rover Pipeline LLC. Specifically, Equitrans proposes to acquire the existing non-jurisdictional Cygrymus Compressor Station in Greene County, Pennsylvania, and operate two Solar Taurus 70 turbines for a combined 22,032 hp (16,436 kW) at the compressor station. The existing Corona Compressor Station in Wetzel County, West Virginia, currently houses one 16,399-hp (12,234-kW) Solar Mars 100 turbine. Equitrans plans to add one additional 16,399-hp Solar Mars 100 compressor unit at the compressor station, doubling the station capacity from 250 to 500 MMscf/d (7 × 106 to 14 × 106 m3/d). The existing Plasma Compressor Station in Monroe County, Ohio, consists of two Solar Taurus 70 gas turbine-driven centrifugal compressors with 22,500 hp (16,785 kW) total. Equitrans proposes to increase capacity and install one 23,497-hp (17,529-kW) Solar Titan 130 gas turbine-driven centrifugal compressor to the station. Equitrans proposes to acquire and operate the existing non-jurisdictional Cygrymus Compressor Station and install two new turbines in Greene County, Pennsylvania. In addition, Equitrans will install one additional compressor unit Equitrans will also construct approximately 5.5 miles (8.8 km) of pipeline in various segments and ancillary facilities in Greene County and Wetzel County.
Johnson sponsors natural gas bill - The first bill of the new congressional session introduced by U.S. Rep. Bill Johnson is a familiar one as he’s sponsored it three previous times without success.Johnson’s bill, called the Unlocking Our Domestic LNG Potential Act, would allow domestic suppliers of natural gas, including liquified natural gas, to export it to allies in Europe and Asia after completing the Federal Energy Regulatory Commission’s review process rather than additional approval by the U.S. Department of Energy, which takes much longer.The bill, with Johnson as the lone sponsor, would help spur the construction or expansion of natural gas facilities.“We have abundant energy resources right here in the Marcellus and Utica shale plays here in Ohio and across the country,” said Johnson, R-Marietta. “We have the opportunity to lead on the world stage as a global provider of clean and abundant U.S. natural gas. If other countries can rely on America for their energy, they can rely less on cruel, energy-rich dictators like Vladimir Putin” of Russia.Johnson’s 11-county district includes Mahoning and Columbiana.He is chairman of the House Energy and Commerce Committee’s Subcommittee on Environment, Manufacturing and Critical Materials.Johnson had introduced this bill in 2017, 2020 and 2021 without a vote taken any time on the proposals.Johnson said his bill would help preserve the future of American energy, protect American energy jobs and strengthen national security.The President Joe “Biden administration continues to send mixed messaging on whether it supports reliable, sustainable and affordable energy resources like natural gas,” Johnson said. “At a time of great global uncertainty, for America to not be sitting at the head of the global energy table is dangerous. My legislation would change that.”Johnson said his proposal is “good climate policy. Expanding American liquified natural gas exports results in massive global carbon emissions reductions. It is past time that we cut the red tape surrounding the natural gas export permitting process and unleash homegrown American energy.”
Ohio Rep. Johnson's Bill Would Drop DOE from LNG Export Approvals - Marcellus Drilling News -U.S. Rep. Bill Johnson, Republican Congressman from Ohio’s 6th congressional district (in the Utica Shale part of the state), has introduced his first bill of the new session of Congress. The bill is called theUnlocking Our Domestic LNG Potential Act. It will allow domestic suppliers of natural gas, including LNG, to export our gas to allies in Europe and Asia after completing the Federal Energy Regulatory Commission’s (FERC) review process only–cutting out a requirement to have the U.S. Department of Energy (DOE) also approve it. The DOE approval takes much longer (years) and has been a choke point. It’s time to end the delays. It’s time to get rid of the weakest link.
Capito working on bipartisan federal permit reform bill - Sen. Shelley Moore Capito, R-W.Va., is going full steam ahead on pursuing federal perming reform, which would help speed up the process of completing the Mountain Valley Pipeline (MVP). Capito said last week during a virtual press briefing two different committees are being urged to work on a compromise bill that would shorten the time it takes for permitting, especially in the energy sector. The MVP, a 300-mile, 42-inch-diameter natural gas pipeline from north-central West Virginia running to Chatham, Va., is more than 90 percent complete but continues to be delayed by lawsuits over federal permits. Both Capito and Sen. Joe Manchin, D-W.Va., have been trying to provide a way to fast track the process of obtaining a federal permit as well as speed up court cases to get the MVP open and to help other energy-related projects move ahead faster. The process now often takes seven to 10 years. “Canada can do it in 18 months,” Capito said. “We should be able to do that.” But there is “too much litigation, too many loopholes and not enough serious reform,” she said. “I think we can get there, but I don’t think it will be easy.” Manchin has made several attempts to attach the permitting reform to other legislation but has been unsuccessful. In September 2022, Capito introduced her own bill, the Simplify Timelines and Assure Regulatory Transparency (START) Act, a comprehensive federal regulatory permitting and project review reform legislation similar to what Manchin wants. Both are committed to seeing the MVP finished as soon as possible. The MVP project started out with a $3.5 billion price tag and was projected to be transporting natural gas by late 2018. But with protests and court cases based on the federal permitting, the Federal Energy Regulatory Commission recently extended the current permits until 2026 and the cost of the MVP is now estimated to be well over $6 billion. Capito is ranking member of the Senate Committee on Environment and Public Works, and Manchin is chair of the Energy and Natural Resources Committee.
Manchin, Westerman plot new push for permitting reform - Capitol Hill’s permitting reform effort got new life Wednesday as two top Senate and House lawmakers held an initial summit on reviving the overhaul bid. This time, the House could take the lead. Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) and House Natural Resources Chair Bruce Westerman (R-Ark.) are discussing the path forward for the stalled permitting reform effort. “They’re going to work on something,” Manchin said of the House. “I think it’s a high priority, which both sides know that we need it. Everyone has come to agreement that you got to have permitting. Let’s take the politics out of it, and do what’s doable.” Advertisement The talks are part of a broader Capitol Hill trend. Lawmakers from both parties are seeking to relaunch the permitting overhaul push after it ran into a blockade last year from conservative Republicans and progressive Democrats. Lawmakers hope to build off permitting efforts from Manchin last year, which combined Republicans’ long-sought desire to streamline permitting approval with Democratic interest in unleashing more transmission and renewable energy infrastructure to combat climate change. In exchange for supporting the reconciliation deal that enabled Democrats to pass $369 billion in climate spending last summer, Manchin secured a promise from Democratic leaders to attach his permitting proposal to a piece of must-pass legislation. The deal included completion of a major priority for Manchin, the Mountain Valley pipeline. The effort failed multiple times last fall. Republicans were hesitant to back a Democratic deal on permitting that enabled the broader reconciliation package to pass. They also complained that Manchin’s proposal did not go far enough to help streamline project approval timelines. At the same time, progressive Democrats attacked the proposal from the left, saying it would exacerbate climate change by approving more fossil fuel infrastructure. This go-around, Manchin told reporters that he would defer at first to House negotiations. “We’ve been down that road twice; we’ll see what they do,” Manchin said about the House talks. “They are going to do their thing.” House Republicans, for their part, maintained that they have interest in finding a permitting compromise that can advance as they take control of the chamber this year.
By The Numbers: Mountain Valley Pipeline Statistics Don’t Lie | Sierra Club - We all have seen it – Mountain Valley Pipeline (MVP) has touted their “accomplishments,” spread misinformation that the project is nearly complete, and pushed the messaging that in order to achieve “energy security” the pipeline must be completed. But if you pull back the curtain you’ll find the project for what it truly is – a polluting boondoggle. The Mountain Valley Pipeline is a 303 mile-long proposed fracked-gas pipeline routed to go over steep slopes and through pristine water resources in Virginia and West Virginia . Construction on the project began in 2018, but the project has had multiple authorizations vacated, resulting in significant delays. To this day major portions of the route have not been completed to full restoration, federal land in the Jefferson National Forest has seen minimal activity fromthe project, the scope of its Southgate extension project continues to be evaluated, leaving its completion highly uncertain and Mountain Valley Pipeline still has more than 400 water crossings left to complete and miles of pipe to lay. MVP claims the pipeline will be ready in 2023, and the Federal Energy Regulatory Commission (FERC) just gave them four more years to complete it, but here’s a quick snapshot of the reality that faces the pipeline.
- 8+ years of conflict
- 4+ years since construction began
- 36 months where construction was actually permitted
- 26 months of delay due to their own mess and hasty permitting
- 3 federal authorizations missing
- 2 state permits in litigation
- 429 stream and wetland crossings left to construct
- 450+ water quality-related violations
- 56 percent complete to full restoration
Clearly, MVP should not be confident of the pipeline’s completion. Let’s break this down: The project was announced more than eight years ago in Summer 2014, and construction began almost five years ago – and they still aren’t even close to finishing. MVP may claim that the project is 90% complete, but this percentage does not consider the most difficult or complex construction work, nor does it incorporate the final stage of construction — “complete to full restoration.” Indeed, there are still approximately 427 interruptions in the mainline. MVP is now reporting in their latest compliance reports that the pipeline is 55.8% complete to full restoration. This may sound like a high percentage, but it leaves out how they have hundreds of difficult water crossings and some of the most challenging construction work ahead, which includes steep terrain. Additionally, FERC has granted the project four more years to move forward with completion but MVP was originally predicted to be in service by 2018. The expected completion date has been pushed back more than half a dozen times, with Equitrans now claiming the pipeline will be in full service in late 2023. Recently, RBN Energy LLC predicted the pipeline will still be unable to operate by the end of 2024.Since construction began in February of 2018, there have only been 36 months where construction was actually allowed and 26 months of delay due to rushed and incomplete efforts to obtain the necessary permits. During this time, MVP only had the full suite of required permits from February 2018 through July 2018 – meaning that they have been without at least one permit since then. Not only have the rushed and shoddy permitting processes put the entire project in question, but the blueprint to construct over steep Appalachian slopes further signals that this project has never been compatible with a healthy planet and livable communities.
WVU Researcher Looks for Way to Convert Shale Ethane to Olefins - Marcellus Drilling News - Natural gas is a booming industry in West Virginia and the United States, accounting for more than 38% of the nation’s total energy consumption. One West Virginia University researcher is hoping to capitalize on valuable untapped chemicals that come from shale gas, commonly found throughout the Marcellus/Utica region. Madelyn Ball, an assistant professor of chemical and biomedical engineering at WVU’s Statler College of Engineering and Mineral Resources, received $110,000 in funding from the American Chemical Society to conduct research that will convert ethane and propane from shale gas into olefins, a class of chemicals made up of hydrogen and carbon such as ethylene and propylene, that can be used in the production of plastics and other complex chemicals.
In Pennsylvania, a New Administration Fuels Hopes for Tougher Rules on Energy, Environment - On Christmas Day 2022, part of a natural gas processing plant in Washington County, Pennsylvania caught fire, igniting a vapor cloud and prompting a response by the local fire department, a shutdown by the owner and notification of the incident to the state’s Department of Environmental Protection. The fire burned itself out by about 5 p.m. The DEP said its officials went to the Revolution Cryo plant in Smith Township on Dec. 25, and returned on Jan. 3 as part of an ongoing investigation into what caused the incident at the plant owned by Energy Transfer, a leading natural gas pipeline operator. The agency denied claims by some environmental groups that anyone calling its emergency line to report the incident got only a voicemail, and said that no residents evacuated. As to the causes of the fire, the agency said it “does not comment on ongoing investigations or speculate on possible enforcement actions.” To the DEP’s critics, its response to the fire, and the fire itself, are the latest signs that the agency is ineffective in dealing with industry and communicating with the public. “They could have provided a much more detailed and transparent account about what happened, what the risks were, how people should be protecting themselves,” said Matt Mehalik, executive director of the Breathe Project, a nonprofit that advocates for improved air quality in southwest Pennsylvania. “The DEP did not broadcast that very widely, and there was a much more minimized sharing of information that largely is perceived as keeping those people in the dark during that period of time.” Since the state’s hydraulic fracturing boom for natural gas began in the mid-2000s, critics say the DEP has been hobbled by staff cuts and a cultural reluctance to crack down on the industry in a state with a long history of fossil fuel extraction. The result has been explosions, spills, leaks and contaminated private water wells as well as growing evidence that fracking for natural gas harms public health. But with the inauguration of Josh Shapiro as the new Democratic governor, and new leadership at the DEP, advocates for tougher regulation of the oil and gas industry, and for an activist approach to countering climate change, hope that the state is poised to begin a new chapter.
Difficulty measuring methane slows plan to slash emissions (AP) — The doors of a metal box slide open, and a drone rises over a gas well in Pennsylvania. Its mission: To find leaks of methane, a potent greenhouse gas, so that energy companies can plug the leaks and reduce the emissions that pollute the air. The drone is among an array of instruments whose purpose is to detect leaks of methane, which scientists say causes roughly 30% of manmade global warming. Along with satellites, ground sensors and planes armed with infrared cameras, drones are part of the backbone of a new federal policy to compel energy companies to record and slash their methane emissions. The problem is, no one knows when — or even whether — that will be possible. Technology that might allow for precise methane measurements is still being developed. Under the Biden administration’s Inflation Reduction Act, enacted into law last year, companies must start producing precise measurements of their methane emissions next year and face fines if they exceed permissible levels. Yet if no one knows how much methane an energy company has emitted, it’s unclear that any fines could be justified. “They don’t measure the methane because the capability hasn’t been there,” Drew Shindell, a professor of earth science at Duke University, said of regulators. “It’s challenging to really go measure all these methane sources.” Even energy companies that have begun developing systems to reduce their methane emissions are likely years away from being able to make comprehensive calculations Most of them are measuring leaks for only a fraction of their operations. Satellites, which help connect emissions to a single source, aren’t widely enough available. Ground-based sensors and drones require vast amounts of money and time to widely distribute. On top of all that, any agreement on what equipment would be acceptable to measure methane and how it should be used requires a rigorous process involving industry, government and environmental scientists. “We need to develop these standards, and this can take years, so the process is slow,” Despite the obstacles, climate scientists and environmentalists say they still welcome the administration’s effort, under the Inflation Reduction Act, to slash methane emissions. Even if the timeline outlined in the law’s methane reduction program is unrealistic, they say, it’s likely to prod companies to accelerate their efforts to reduce leaks.
Gas industry hires Democrats to win support of liberal voters - At a time when many other Democrats fault natural gas for fueling climate change, former senator Mary Landrieu (D-La.) frames it as a solution. “Yes, this country needs to move forward on wind and solar,” Landrieu said in a recent Bloomberg News interview, speaking on behalf of a nonprofit group that advocates for natural gas. “But we need to back it up with a fuel that we can count on, a power source, and that’s natural gas. It’s abundant, it’s cheap, and it can be cleaner.”What she didn’t mention, however, is that the nonprofit group was created by a half-dozen gas companies, with the explicit goal of convincing Democratic voters that gas is a “clean” energy source.The group, dubbed Natural Allies for a Clean Energy Future, comes as Democratic leaders across the country restrict gas use to fight climate change. The bans threaten customer losses for gas utilities, which dominate the liberal strongholds in cities and on coasts. To resist these efforts, the nonprofit group has enlisted prominent Democratic politicians and pollsters to help enhance gas’s reputation among liberal voters.“The gas utilities are acutely aware that their constituency is blue voters,” said Charlie Spatz, a research manager at the Energy and Policy Institute, which advocates for renewable energy. “The gas industry is not, at the end of the day, worried about right-wing voters. They have them.”More than 90 counties and cities — almost all of them led by Democrats — have prohibited or discouraged gas use in new buildings. In 2021, New York City became the largest city in the United States to ban gas connections for newly constructed buildings under seven stories. Natural Allies is backed by TC Energy, the Canadian pipeline giant behind the controversial Keystone XL project, and Southern Company, one of the biggest U.S. utilities. Launched shortly before the 2020 election, the group is led by Susan Waller, a former executive at the pipeline firm Enbridge.Last spring, Waller enlisted Impact Research — a leading Democratic polling firm used by Joe Biden’s presidential campaign — to survey Americans’ sentiments about natural gas. According to emails obtained by the Energy and Policy Institute, Waller told the organizers of a conference for state utility commissioners that the pollsters would share the results with the White House.More recently, Natural Allies has run ads featuring Landrieu and former senator Heidi Heitkamp, a moderate Democrat from North Dakota. Gas is “essential to accelerating our clean energy future,” Heitkamp said in an ad that was seen more than a million times on Facebook and Instagram. The group got another influential messenger this month, when former congressman Tim Ryan (D-Ohio) said he would join its leadership council after losing a tough Senate race to Republican J.D. Vance. Ryan will replace Heitkamp, who is leaving to lead the University of Chicago’s Institute of Politics.
Proved reserves of natural gas increased 32% in the United States during 2021 - EIA - Proved reserves of natural gas in the United States grew to a new record of 625.4 trillion cubic feet (Tcf) in 2021, a 32% increase from 2020, according to our recently released Proved Reserves of Crude Oil and Natural Gas in the United States, Year-End 2021 report. U.S. proved reserves had previously decreased 4% in 2020 as a response to prices that fell with decreased consumption during the first year of the COVID-19 pandemic. At year-end 2021, however, five of the eight states with the most proved reserves of natural gas each reported new record volumes, driving the growth nationally.Proved reserves are operator estimates of the volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Prices heavily affect estimates of proved reserves. The wholesale spot price for natural gas at the U.S. benchmark Henry Hub in Louisiana averaged $3.89 per million British thermal units in 2021, almost doubling from 2020, according to data from Refinitiv.Proved reserves in Alaska increased the most in 2021, up 63 Tcf, or nearly triple the state’s total in 2020. The proved reserves located in Alaska had already quadrupled in 2020 from 9.4 Tcf to 36.5 Tcf due to development of the Alaska LNG Project and its Mainline Pipeline connecting the North Slope to LNG facilities in the southern Alaska Cook Inlet Region. Large volumes of previously stranded Alaskan natural gas resources are now considered proved reserves.
U.S. LNG Exports Drop As Domestic Demand Climbs -Exports of liquefied natural gas (LNG) out of the United States dropped by 5% in January compared to December amid higher U.S. demand in colder weather, according to data from Refinitiv Eikon cited by Reuters. U.S. exporters sent out 95 cargoes with 6.84 million tons of LNG on board in January, with Europe getting 68% of those and Asia receiving 23% of all U.S. LNG exports, Refinitiv Eikon data showed. To compare, LNG exports from the United States were 7.22 million tons in December, and Europe was the destination of 79% of those. Europe continues to attract most of the U.S. exports of LNG as demand in Asia is still weak. Both the European benchmark prices and spot Asian LNG prices have dropped in recent weeks amid a comfortable level of inventories and tepid demand in Asia at the start of the Chinese reopening and around the Lunar New Year holiday. In the U.S., lower LNG exports mean higher volumes of gas available domestically. During the current cold snap, gas demand in the United States is projected to be high to very high by the end of the week at least, according to NatGasWeather.com. “While this week will bring strong to very strong national demand as frigid air sweeps across the northern and central US , the weather data keeps trending warmer for Feb 5-13 and where light to very light national demand is expected as the southern and eastern US warm well above normal,” NatGasWeather.com said on Wednesday. Lower LNG exports and thus higher availability of gas for domestic use, coupled with strong domestic production, have sent the U.S. benchmark natural gas prices to a 20-month low in recent days.
Inside the high-dollar race to sell natural gas as low-carbon - By night, the industrial operation sprawling across the marshland of Louisiana’s southwest tip seems otherworldly. The 1.6-square-mile complex of tubes, tanks and machinery emits a dull hiss, and its thousands of yellowish lights and three flame-topped flare towers cast an eerie glow. By day, when the facility is easier to discern, so is its earthly purpose. Natural gas piped from fields across the United States whooshes into the plant, where six 1,200-foot-long lines of engines, fans and compressors cool the gas into “liquefied natural gas,” or LNG. The frigid fossil fuel then shoots out of the complex and into gargantuan oceangoing tankers, each roughly as long as three football fields, waiting at the facility’s dock on a channel that feeds the Gulf of Mexico. Once loaded, the ships lumber into the Gulf and set a course based on the location of their cargo’s buyers. Some turn east and cross the Atlantic to Europe; others head south, then sail west through the Panama Canal and across the Pacific to Asia. When they reach their destinations — maybe France, or Spain, or China, or South Korea — their LNG is warmed back into a gas. Then it’s burned, producing everything from plastics to power.Dominating a coastal flank of Cameron Parish, Louisiana, and squatting along Sabine Pass, a waterway that defines the Texas state line, this is the biggest LNG-export terminal in the U.S., the nation that this year is likely to become the world’s largest LNG exporter. In 2021, this complex chilled about 35% of all the LNG the U.S. exported, and about 3% of all the natural gas the U.S. drilled up. In the process, it sent skyward the equivalent of 5.6 million metric tons of carbon dioxide, roughly the annual output of Vermont. Yet even that, according to various estimates, likely represented less than one-tenth of the climate impact of the LNG this facility sold. The gas liquefied here is burned the world over, notably in fast-growing Asian economies and in a Europe newly thirsty for U.S. LNG to replace gas it previously had piped in from Vladimir Putin’s Russia but has been unable to get in the wake of that country’s invasion of Ukraine. Overseas combustion is where natural gas produced and liquefied in the U.S. does its greatest damage to the climate. The Sabine Pass LNGcolossus is both a pivotal point in a wildly gyrating international energy business and a hot spot in the fight over how to fix the damage LNG is wreaking on a warming world.Natural gas is humanity’s looming energy and climate dilemma. Coal, the dirtiest fossil fuel, provides a declining share of total energy. The share of solar, wind and other renewable energy sources is soaring, but from a comparatively small global base. In between coal and renewables on the spectrum of carbon intensity sits natural gas, a fossil fuel that, studies project, will be burned in massive quantities for decades to come.
U.S. natgas drops 6% to 21-month low on milder weather forecasts (Reuters) - U.S. natural gas futures dropped about 6% to a 21-month low on Monday on milder weather forecasts that should cut expected heating demand through the middle of February. Gas prices have also been pressured by the growing belief that more than enough gas was in storage for the rest of the winter and that Freeport LNG's liquefied natural gas (LNG) export plant in Texas would not start pulling in big amounts of gas until at least March. On its first day as the front-month, gas futures for March delivery fell 17.2 cents, or 6.0%, from where the March NGH23 contract closed on Friday to settle at $2.677 per million British thermal units (mmBtu), their lowest close since April 2021. The front-month NGc1was down about 14% from where the February contract closed when it was the front-month on Friday. That would be its biggest daily percentage loss since dropping about 17% in June 2022, pushing the contract back into oversold territory with a relative strength index (RSI) below 30 for the 14th time this year. Meteorologists forecast temperatures across much of the lower 48 U.S. states would remain mostly colder than normal through Feb. 5, then turn warmer than normal through at least Feb. 14. With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 133.3 billion cubic feet per day (bcfd) this week to 129.9 bcfd next week, sharply down from Refinitiv's outlook on Friday. That should allow utilities to continue pulling less gas from storage for a fourth or fifth week in a row. The biggest wild card in the gas market remains when Freeport's export plant will exit a seven-month outage caused by a fire in June 2022. Freeport is the second-biggest U.S. LNG export plant, and traders expect prices to rise once it starts pulling in big amounts of gas, boosting demand for the fuel. The plant can pull in about 2.1 bcfd of gas daily, about 2% of what U.S. gas producers pull from the ground. Several analysts have said they do not expect much LNG production at Freeport until March or later. JERA, one of Freeport's five customers, said it was not counting on getting LNG from the plant by the end of March. Even though vessels have turned away from Freeport in recent weeks, several tankers were still waiting in the Gulf of Mexico to pick up LNG from the plant, including Prism Courage (since around Nov. 4), Prism Agility (Jan. 2), Corcovado LNG (Jan. 22), Prism Brilliance (Jan. 26) and Kmarin Diamond (Jan. 26). There are also a couple of vessels on their way to Freeport, including LNG Rosenrot (expected to arrive around Feb. 14) and Seapeak Bahrain (Feb. 20).
Natural-gas futures mark their biggest monthly decline in 22 years –Natural-gas futures saw a hefty decline in January, posting their worst monthly performance in more than two decades, as warmer-than-expected winter weather kept demand at bay, easing concerns about tight supplies.“Weather forecasts on both sides of the Atlantic were so warm that the supply-demand gas balances both flipped to oversupplied in the short term, pushing down prices heavily,” Joe DeLaura, energy strategist at Rabobank, told MarketWatch. On Tuesday, front-month March natural-gas futures settled at $2.684 per million British thermal units on the New York Mercantile Exchange, up 0.3%, for the session. Based on the front month, however, prices fell 40% in January — the largest monthly percentage drop since January 2001, according to Dow Jones Market Data. Jay Hatfield, chief executive officer at Infrastructure Capital Advisors, said the U.S. is “having one of the warmest winters in the last 100 years with temperatures 4.5 degrees higher than average.” In addition, a fire at Freeport’s LNG facility in June of last year knocked out 20% of the U.S. export capacity of liquefied natural gas, which significantly lowers the demand for U.S. natural gas, he said. Freeport has been taking steps to restart the facility. Hatfield also pointed out that natural gas is “almost always produced as a by-product of drilling for oil, and oil prices have held up well during the warm winter — causing production of natural gas to remain high as oil prices drive the economics of incremental drilling.” In the U.S., natural-gas inventories in storage stood at 2.729 trillion cubic feet as of the week ended Jan. 20, according to the Energy Information Administration. That’s 107 billion cubic feet higher than a year ago, and 128 billion cubic feet above the five-year average. The market is looking ahead to the end of winter, said Peter McNally, global sector lead for industrials materials and energy at Third Bridge. The U.S. winter heating season runs to the end of March. Natural-gas inventories have moved to a “very comfortable position, so we ended up with a big price drop after surging prices in 2022,” he said.
U.S. natgas drops 8% to 21-month low as mild weather depresses demand -(Reuters) - U.S. natural gas futures dropped about 8% on Wednesday to a 21-month low on forecasts for less cold weather and lower heating demand over the next two weeks than previously expected. That price decline came even though output over the past week was on track to drop about 4.0 billion cubic feet per day (bcfd) to a preliminary one-month low of 93.7 bcfd as winter storms freeze oil and gas wells - known as freeze-offs in the energy industry - in several states, including Texas, Oklahoma, New Mexico and Pennsylvania. Gas prices have been depressed for weeks due in part to expectations Freeport LNG's liquefied natural gas (LNG) export plant in Texas was still at least a month away from pulling in big amounts of gas to produce LNG. On Tuesday, Freeport asked federal regulators for permission to restart one of the plant's three liquefaction trains, which turn gas into LNG. Gas prices were also depressed due to warm weather seen so far this year. Despite extreme cold this week, temperatures in the U.S. Lower 48 states averaged about 41.8 degrees Fahrenheit (5.7 Celsius) in January, the warmest for the month since January 2006 when the mercury averaged a record 42.8 F, according to data from Refinitiv and the federal government. Front-month gas futures for March delivery fell 21.6 cents, or 8.0%, to settle at $2.468 per million British thermal units (mmBtu), their lowest close since April 2021. That kept the contract in oversold territory with a relative strength index (RSI) below 30 for a third day in a row and the 16th time so far this year. It also continues the record volatility seen last year, with the contract now closing up or down over 5% on 12 of the 21 trading days so far in 2023. In the spot market, gas prices for Wednesday at the Henry Hub NG-W-HH-SNL benchmark in Louisiana fell about 6% to $2.65 per mmBtu, their lowest since April 2021. Meteorologists forecast temperatures across much of the U.S. Lower 48 states would remain mostly lower than normal through Feb. 4 before turning higher than normal from Feb. 5 through at least Feb. 16. With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 136.4 bcfd this week to 126.5 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Tuesday, while its forecast for next week was lower. That should allow utilities to continue pulling less gas from storage for a fourth or fifth week in a row. Gas stockpiles were currently about 5% above the five-year (2018-2022) average and are on track to rise to 7% above normal in the federal storage report for the week ended Jan. 27.
New England Natural Gas Surges as Wind Chill Could Plunge 100 Degrees Below Zero; Futures Lose a Penny - Natural gas futures slipped further into the red on Thursday despite the potential for cold weather to return to the Lower 48 within the next couple of weeks. With mixed messages in the latest storage data, and Freeport LNG not yet back online, the March Nymex gas futures contract settled at $2.456/MMBtu, down 1.2 cents on the day. The real price action of the day was in the cash markets. After a harsh winter in which the West Coast has dominated headlines and seen gas prices reach record levels, the king of volatility – New England – essentially told the Golden State to hold its Samuel Adams. Bracing for a polar vortex that could result in “otherworldly” real-feel temperatures, according to forecasters, parts of the region traded as high as $225 for Friday’s gas day. NGI’s Spot Gas National Avg. rose $5.190 to $10.920.The heart of the cold weather is forecast to unfold across New England from Friday afternoon through Saturday morning as subzero temperatures envelop a widespread area, according to AccuWeather. Boston is forecast to experience one of its top-five lowest temperatures in recorded history on Saturday morning with the mercury predicted to reach 10 degrees below zero. But AccuWeather said the extreme nature of the upcoming Arctic blast would be unparalleled at the summit of Mount Washington, the tallest mountain in the northeastern United States. There, the AccuWeather RealFeel temperature is forecast to drop to 100 degrees below zero at the mountain’s summit in northern New Hampshire on Friday night into Saturday morning. The actual temperature may bottom at 45 degrees below zero.The extreme weather is not expected to be long lasting across the Northeast, AccuWeather said. A milder, tranquil weather pattern is forecast for the first full week of February. However, that didn’t stop a buying spree in the cash market across pipeline-constrained New England.Bulls looking to the latest government inventory data for signs of support were ultimately disappointed on that front as well.The U.S. Energy Information Administration (EIA) said 151 Bcf was withdrawn from natural gas inventories for the week ending Jan. 27, coming in on the high side of estimates ahead of the weekly report. Taken alone, this bullish withdrawal may have given bulls the ammunition needed to sustain momentum. However, the EIA data included a revision from the previous week’s report, which reflected slightly higher levels of storage. As for this week’s report, the EIA’s 151 Bcf was on the higher end of a Reuters survey of 14 analysts, which ranged from 133 Bcf to 155 Bcf. That survey produced a median decline in stocks of 142 Bcf. Bloomberg’s survey of eight analysts had a tighter range that produced a median draw of 145 Bcf. A Wall Street Journal poll averaged a 144 Bcf pull. NGI modeled a 141 Bcf draw.For comparison, the EIA recorded a 261 Bcf withdrawal for the similar week last year, and the five-year average draw stands at 181 Bcf.Enelyst managing director Het Shah viewed the latest storage report as being 2.6 Bcf/d loose when adjusted for weather. Looking ahead, he expects additional tightness in the next EIA report given the production losses this week.
Bloodshed in Natural Gas Futures, Cash Markets as Temperatures Quickly Thaw -- Natural gas futures continued to sell off on Friday as an expected warmup and likely rebound in production over the weekend pressured prices. The March Nymex gas futures contract closed out the week at $2.410/MMBtu, off 4.6 cents on the day. April futures slid 4.2 cents to $2.480.In a blink-and-you-missed-it moment, spot gas prices in the Northeast, which topped $200 on Thursday, came crashing back down to earth on Friday. With the highest price in the region reaching only $15.000, the steep price discounts sent NGI’s Spot Gas National Avg. down $7.855 to $3.065.Some of the most frigid weather in history is expected to continue through the weekend on the East Coast, but a swift rise in temperatures should quickly follow across most of the Lower 48. It’s this projected warmup that has prevented bulls from capitalizing not only on the widespread bitter conditions that hit the country in recent days, but also the steep decline in production that occurred as a result of freeze-offs.On Friday, U.S. dry gas production was reported by Bloomberg at around 97.6 Bcf/d. Already, this is an increase from the 96 Bcf/d lows seen in recent days. Furthermore, if the ongoing rebound in production is anything like the recovery in December, it should be quick given the expected rise in temperatures.NatGasWeather said the overnight and midday Global Forecast System (GFS) model lowered the amount of projected heating demand from the 15-day outlook. This closed the gap a bit on the much-warmer European model, which showed the period from Sunday (Feb. 5) to Feb. 17 tracking 80 heating degree days (HDD) warmer than normal.Of course, the risk is that the European model has trended too warm and is susceptible to gaining back several HDDs, according to NatGasWeather. “But what will likely matter more is if the weather data is able to show a colder pattern at Feb. 18-22.”
Texas Breaks Natural Gas Production Record - In a new record for the Lone Star State, Texas produced 11.2 trillion cubic feet of natural gas in 2022, with growth expected to trend even higher going forward, according to the latest report from the Texas Independent Producers and Royalty Owners Association (TIPRO). TIPRO also noted that Texas supplied the country with 1.83 billion barrels of oil last year. In its State of Energy Report, TIPRO chairman Jud Walker noted that “Despite facing a number of unique challenges, including supply chain bottlenecks, inflationary pressures, workforce shortages and an adversarial federal policy environment, the U.S. oil and gas industry continued to offer significant economic support in 2022.” “Oil and natural gas development, led by Texas operators, will play an important role in meeting growing global energy demand for decades to come under any realistic scenario,” Walker added. According to the report, the Texas oil and gas industry led the nation in industry employment in 2022, accounting for 37% of nationwide oil and gas jobs and indirectly employing 2.6 million people. Texas’ direct oil and gas payroll hit $48 billion in 2022, compared to $11 billion for California and $7.6 billion for Louisiana, the second and third biggest payroll contributors. In terms of oil production, Texas’ 1.83 billion barrels in 2022 compared to New Mexico, with the second highest at 534 million barrels, and North Dakota, with 393 million barrels. In the field of natural gas, where Texas broke a new record, the second biggest producer for 2022 was Pennsylvania, which produced 7.6 Tcf. The Lone Star State also boasted the highest rig count in the U.S. last year, with an average of 380 active rigs. From January 2022 to December 2022, Texas saw active rigs increase from 332 to 410. Gross Regional Product (GRP) for the Texas oil and gas industry came in at $322 billion for 2022, a figure that represents 16% of the state’s economy. TIPRO, however, notes that the actual contribution to the state's economy is much higher, stating, “Once the typical multiplier for Gross Regional Product is incorporated, the Texas oil and natural gas industry supported 40% of the Texas economy.” That all earned the state of Texas $24.7 billion in taxes and royalty payments from the oil and gas industry last year.
Fracking Fleets Powered By Associated Gas – Results And Significant Savings In The Permian Basin. - The world can address greenhouse gas (GHG) emissions in different ways. The direct way is by reducing fossil fuel production, which generates 73% of global GHG. This is the approach in Europe, perhaps because its energy companies do not have the success of a shale revolution to maintain. Europe has several examples of integrating renewables into its future. In the US, companies have adopted less-direct approaches, including greening of operations, cleaning up of gas flaring and methane leaks, and carbon capture and storage. One indirect way for reducing GHG is by companies greening their own operations by using wind or solar electricity to pump frac jobs. A frac pump has to inject frac fluid, mostly water and sand, under huge pressure, up to 10,000 pounds per square inch (psi), to crack up the rock deep underground to allow oil or gas easier inflow to the well. Typically, 250,000 – 350,000 gallons of diesel are used for each frac pumping treatment. But diesel is more expensive than natural gas and burns dirtier (twice as much GHG emissions). High-pressure, high-volume conventional diesel-fueled combustion engines are being replaced in some cases by e-frac systems where electric pumps are driven by gas turbine generators that use CNG or LNG. E-fracs are only 10% of the market now, but this stands to increase because of worldwide demand to lower GHG emissions. GHG reductions are typically 50% by using e-fracs. Cost savings exist in fuel and pump engine repairs, but upfront costs are higher than a new diesel system. A diesel fleet typically needs 20 pump-trailers at the wellsite while an e-frac system requires eight. A 95% reduction in frac pumping noise is an advantage too.An alternative to e-frac pumps that use CNG or LNG is to capture and use associated gas, which is the name for gas that is produced along with crude oil. Normally, if this gas has its own pipeline it can be taken to processing facilities and sold on the market. Since the state’s hydraulic fracturing boom for natural gas began in the mid-2000s, critics say the DEP has been hobbled by staff cuts and a cultural reluctance to crack down on the industry in a state with a long history of fossil fuel extraction. The result has been explosions, spills, leaks and contaminated private water wells as well as growing evidence that fracking for natural gas harms public health. But with the inauguration of Josh Shapiro as the new Democratic governor, and new leadership at the DEP, advocates for tougher regulation of the oil and gas industry, and for an activist approach to countering climate change, hope that the state is poised to begin a new chapter. If not, such gas can be flared which is a wasted profit and contributes directly to GHG emissions. Now a company called GTUIT, LLc, founded in 2011, has a mobile unit that transports gas processing equipment to a wellsite and converts associated gas into Tier-4 dual-fuel frac fleets, or into e-frac fleets powered by a gas turbine generator. The process, called direct fuel conversion (DFC) has been used on over 125 frac jobs with frac fleets that use Tier-2 and Tier-4 dual-fuel pumping engines or all-gas engines.Natural gas with liquids (NGLs) cannot be used with these frac fleets because it’s too rich in heavier hydrocarbons (C3+) which causes engine knocking, degradation, and too frequent maintenance — and too much downtime. Compressed natural gas (CNG) can be used in dual-fuel engines but entails multiple steps and each step adds to overall costs and GHG emissions. Typical frac fleets in the Permian basin have 15-20 frac pumps that require 3 MMcfd (million cubic feet per day) of fuel gas. The raw gas can be sourced efficiently from up to a mile away. NGLs that are separated in the processing truck can be sold on the market. Water removed from the raw gas is disposed at the well site. Results were compared from three well pads in the Midland basin, part of the Permian. Each pad had 3 or 5 wells. The frac fleet consisted of 15 dual-fuel powered pumps. The diesel volume that the associated gas replaced varied between 244,000 and 392,000 gallons. Hence big reductions in GHG emissions. For the three pads, the fuel costs varied $3.37 - $3.73 / gallon for diesel versus $1.43 - $1.51 / gallon-equivalent for the DFC frac ops. The DFC process costs only about 42% of the diesel, because natural gas produced close to the wellsite is much cheaper than trucking in diesel.
Texas Oil And Gas Industry Braces For Severe Winter Weather -Oil and gas operators in Texas should be prepared for severe winter weather this week, the Railroad Commission of Texas (RRC) said on Sunday, as snow and ice conditions are expected in parts of the biggest U.S. oil-producing state, including in parts of the Permian basin.The RRC advised all operators under its jurisdiction in areas of potential impact to heed all watches, warnings, and orders issued by local emergency officials, and secure all personnel, equipment, and facilities to prevent injury or damage. Operators were also advised to monitor and prepare operations for potential impacts, as safety permits. Severe winter weather with low temperatures could lead to freeze-offs of oil- and gas-producing equipment and frozen pipeline valves and other infrastructure.Winter Weather Advisories and Winter Storm Watches are in effect across parts of Texas, Oklahoma, and Arkansas for winter weather and hazardous travel starting Monday, the National Weather Service said on Sunday.The Midland chapter of the NWS said that a Winter Weather Advisory is in effect on Monday morning for the eastern Permian Basin, where a light glaze of ice is expected. On Tuesday and Wednesday, A Winter Storm Watch is in effect for the eastern Permian Basin for potential ice accumulations up to 0.25".Early on Monday, freezing drizzle continued to spread across the Permian Basin, with visibility lowered in Hobbs and Midland/Odessa. The previous severe winter event occurred just before Christmas when Winter Storm Elliott exposed the vulnerability of the energy system as natural gas and power supplies were strained, wells froze off, and utilities vastly underestimated the power demand during the huge storm.
Earthquakes an unfamiliar threat in Texas oil country -– The West Texas earth shook one day in November, shuddering through the two-story City Hall in downtown Pecos, swaying the ceiling fans at an old railroad station, rattling the walls at a popular taqueria.The tremor registered as a 5.4 magnitude earthquake, among the largest recorded in the state. Then, a month later, another of similar magnitude struck not far away, near Odessa and Midland, twin oil country cities with relatively tall office buildings, some of them visible for miles around.The earthquakes, arriving in close succession, were the latest in what has been several years of surging seismic activity in Texas, a state known for many types of natural disasters but not typically, until now, for major earth movements. In 2022, the state recorded more than 220 earthquakes of 3.0 magnitude or higher, up from 26 recorded in 2017, when the Bureau of Economic Geology at the University of Texas began close monitoring.The vast majority of the temblors have been concentrated in the highly productive oil fields of the Permian Basin, particularly those in Reeves County, north and west of the city of Pecos. The county’s population of 14,000 does not account for thousands of male transient workers staying in austere “man camps” and RV parks, brought there by the promise of good pay in exchange for long hours, stark terrain and dangerous work.Now earthquakes have become part of the same calculation.“In West Texas, you love the smell of the oil and gas patch because it’s the smell of money,” said Rod Ponton, a former Pecos city attorney who once unintentionally attained international fame by appearing as a worried cat during a court hearing on Zoom. “If you have to have the ground shaking every two or three months to make sure you have a good paycheck coming in every month, you’re not going to think twice about it.”
Texas Oilfield Waste Company Contributed $53,750 to Regulators Overseeing a Controversial Permit Application - A company seeking to build an oilfield waste dump near wells and waterways in East Texas has showered regulators with upwards of $50,000 in political contributions since 2019.Texas Ethics Commission filings reviewed by Inside Climate News show that McBride Operating LLC contributed $10,000 to Texas Railroad Commission (RRC) Chairman Christi Craddick on Nov. 28, 2022. Fifteen days later, Craddick joined fellow commissioners Jim Wright and Wayne Christian in giving the company another opportunity to address concerns about its controversial application to build an oilfield waste site in Paxton, Texas. While commissioners must recuse themselves from cases where they have a “personal or private interest,” these rules do not apply to cases related to political donors. The protracted debate over the Paxton waste dump permit raises questions about whether campaign finance and ethics rules in Texas allow oil and gas companies to sway regulators, environmental and corporate accountability advocates say. Those advocates have long called for reforms to reign in the influence of oil and gas companies over the Railroad Commission.“The Railroad commissioners are personally responsible for cheapening and tarnishing their office by continuing to take significant amounts of money from parties who have cases on their docket,” said Andrew Wheat, research director of Texans for Public Justice and co-author of the Captive Industry report with Virginia Palacios of the non-profit Commission Shift. McBride’s lawyer, John Hicks, defended his client’s engagement in the “constitutionally protected democratic process.”“Mr. McBride believes it is important that experienced and reasonable people be elected, and then reelected, to lead the Railroad Commission of Texas and he will proudly continue to support candidates who he believes will do what is best for Texas,” Hicks said.
ONEOK Proposes New US/Mexico Natural Gas Border Crossing Facility - ONEOK Inc. subsidiary Saguaro Connector Pipeline LLC (Saguaro) has filed a Presidential Permit application with the Federal Energy Regulatory Commission (FERC) to construct and operate facilities to export natural gas at a new international border crossing at the US/Mexico in Hudspeth County, Texas. The proposed border facilities would connect upstream with a potential intrastate natural gas pipeline, the Saguaro Connector Pipeline, which would be designed to transport natural gas from ONEOK’s existing WesTex intrastate natural gas pipeline system in the Permian Basin in West Texas to Mexico. Additionally, the proposed border facilities would connect at the International Boundary with a new pipeline under development in Mexico for delivery to an export facility on the West Coast of Mexico. The potential Saguaro Connector Pipeline would consist of approximately 155 miles (249 km) of natural gas pipeline originating at the Waha Hub in Pecos County, Texas. The Border Facilities will have an ultimate design capacity of approximately 2.834 b/cfd (80.2 x 106 m3/d) and up to a maximum allowable operating pressure of approximately 1480 psi (102 bar). If approved by FERC, Saguaro will construct and operate two new compressor stations. The first compressor station will be located at the beginning of the pipeline near Coyanosa, Texas. The second compressor station will be located on private land that will be acquired by Saguaro at an intermediate point on the pipeline (currently planned for approximately MP 113). The horsepower for each compressor station will be between 55,000 and 100,000 hp (41 and 74.6 MW).
New Mexico Investigates Permian Basin Methane Cloud Spotted by Satellite - -- New Mexico is investigating a methane cloud observed by high-resolution satellite that appears to show the powerful greenhouse gas spewing from an APA Corp. oil and gas facility late last month. The probe is at least the fourth state or federal investigation launched in the US in the last several years by regulators alerted to methane releases by Bloomberg News, which tracks emissions of the gas through satellites. The New Mexico cloud is the latest incident to suggest releases of the greenhouse gas from fossil-fuels operations may be more common and intense than is often reported by operators. New Mexico authorities said they weren’t aware of the methane plume before being contacted by Bloomberg. APA, formerly known as Apache, wasn’t aware of the methane emissions prior to being informed of them by Bloomberg either. The company sent an initial statement Jan. 13 that an operational upset at a third-party facility triggered emergency flaring at a group of connected storage tanks, without acknowledging a methane release. APA said in an excess emissions report filed in late January that it discovered the Dec. 24 release on Jan. 23, during a “later investigation'' and “determined the flare pilot failed to light when gas was sent to the flare resulting in venting of the gas to atmosphere.” The operator said it has created a working group to address the malfunction and that corrective actions will be taken once an investigation is complete. Flares are safety devices designed to combust gas when it’s released to avoid a build-up of pressure that can lead to explosions or fire. Methane, which is the primary component of natural gas, has more than 80 times the warming power of carbon dioxide during its first 20 years if released directly into the atmosphere. Halting intentional and accidental releases of methane could do more to slow climate change than almost any other single measure. Oil and gas companies that can’t halt accidental leaks or intentional releases of methane risk playing a diminished role in the energy transition because natural gas buyers will opt for producers with the cleanest gas as determined through independently verified emissions data driven by observations from satellites and other sensors. The plume was observed by the Sentinel-2 satellite on Dec. 24 and had an emissions rate of 5 metric tons of methane an hour, according to an analysis of the data by geoanalytics firm Kayrros SAS. Because the satellite orbits the Earth there was no estimated duration. However, if the release lasted an hour at that rate, it would have the same short-term climate impact as the annual emissions from 91 gasoline powered cars in the US. Non-emergency flaring and venting of methane should be significantly mitigated or eliminated to avoid the worst of climate change and maintain a pathway toward a net-zero energy system by 2050, according to the International Energy Agency.
Report: Burning gas in oil fields cost tribes $22 million --In 2019, oil and gas companies operating on tribal and federal lands lost $63 million in revenue from venting, flaring, and leaking infrastructure. That loss, according to a report from theEnvironmental Defense Fund and Taxpayers for Common Sense, shows that Indigenous nations lost the most potential royalty revenue: approximately $21.8 million. Researchers say that total loss across all lands represents enough natural gas to power 2.2 million households for a year — almost every home in New Mexico, North Dakota, Utah, and Wyoming combined. However, those numbers are likely much higher: researchers did not include emissions from Alaska, Michigan, Nebraska, Illinois, or Indiana. Gas is wasted when it is released directly into the atmosphere through venting, or burned at the site of extraction by flaring, or when it leaks from aging or ill-fitting infrastructure. As a potent greenhouse gas with warming power 80-times that of carbon dioxide, methane is often released with additional air pollutants. Those emissions contribute heavily to climate change and poor healthcare outcomes for local communities. Synapse Energy Economics, the consulting firm that conducted the analysis, found that 54 percent of the gas lost in 2019 was due to flaring, 46 percent to leaks, and less than 1 percent to venting. Researchers found that on federal lands, a majority of natural gas is lost to leaks while on tribal land, most loss is attributed to flaring. Overall, roughly $275 million worth of gas is lost through flaring. Wasted methane shortchanges the royalties that tribal, state and federal governments collect for oil and gas production that often fund priorities like education, infrastructure and public services. According to the report, while tribal governments lost the most potential revenue, states lost $20.5 million and the federal government lost $21.3 million. Additional research showed that flaring rates on Mandan, Hidatsa, and Arikara Nation lands atop the oil-rich Bakken formation were extremely high compared to public and tribal lands outside of North Dakota. Lost royalties from the MHA Nation totaled an estimated $19 million. “We can’t continue to allow half a billion dollars’ worth of taxpayer-owned resources to go to waste every year,” Jon Goldstein, a senior director at the Environmental Defense Fund, said in a press release. “The Biden administration has a clear opportunity to step up with strong rules that stop waste and pollution from practices like routine flaring to protect the public interest. These resources should benefit priorities like education and infrastructure, not be released into the atmosphere to undermine our climate and health.” The report comes in the wake of two proposed rulings from the EPA and the Bureau of Land Management aimed at reducingmethane waste. Both proposals were issued last November and the EPA is accepting public comment on their proposal until February 13.
Interior Department Releases Draft Guidance for $500 Million in Formula Grants for States to Address Orphaned Oil and Gas Wells | U.S. Department of the Interior— The Department of the Interior today released draft guidance to states on how to apply for $500 million in formula grant funding available under President Biden’s Bipartisan Infrastructure Law to create jobs cleaning up polluted and unsafe orphaned oil and gas wells across the country. The Bipartisan Infrastructure Law provides $2 billion for state formula grants, part of a total $4.7 billion to address orphaned wells across the country. An initial $560 million in grant funding was allocated to states in August 2022.“The Department of the Interior is moving quickly to implement this historic investment in tackling legacy pollution, provided through President Biden’s Bipartisan Infrastructure Law. These investments are good for our climate, for the health of our communities, and for American workers,” said Secretary Deb Haaland. “As we prepare to issue another round of grants to help states accomplish this vital work, we are eager to hear from diverse voices on this draft guidance.”Orphaned oil and gas wells pollute backyards, recreation areas, and community spaces across the country. Methane leaking from many of these unplugged wells is a serious safety hazard and is a significant cause of climate change, being more than 25 times as potent as carbon dioxide at trapping heat in the atmosphere. The historic investments to clean up these hazardous sites will create good-paying union jobs, catalyze economic growth and revitalization, and reduce harmful methane leaks.Plugging orphaned wells will help advance the goals of the U.S. Methane Emissions Reduction Action Plan, as well as the Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization, which focuses on spurring economic revitalization in hard-hit energy communities.The draft released today invites public comment on instructions to states on how to apply for formula orphaned well grants, as well as guidance on how applicants can ensure that activities funded under the program are putting people to work, protecting the environment, investing in disadvantaged communities consistent with the President’s Justice 40 Initiative, and safeguarding taxpayer money in a transparent and responsible manner.Grant funding may be used to measure and track methane emissions; to plug, remediate and reclaim orphaned oil and gas wells; and to remediate soil and restore native species habitat that has been degraded due to the presence of orphaned wells. States may apply for grants up to their eligible amount. In addition to providing historic funding to states, the Bipartisan Infrastructure Law allocated $250 million to clean up well sites in national parks, national forests, wildlife refuges and other public lands, $33 million of which was allocated last year. Guidance, informed by Tribal consultations and listening sessions, has also been shared with Tribes on how to apply for the first $50 million in funding to address orphaned wells on Tribal lands.
Exxon Beats Estimates, Posts Record $56 Billion 2022 Profit - -- Exxon Mobil Corp. reaped a record $59 billion profit but disappointed some investors by holding the line on share buybacks. Full-year profit, excluding one-time items, jumped 157% from 2021, far exceeding the driller’s prior record of $45.2 billion in 2008, which at the time marked the biggest in US corporate history. Chief Executive Officer Darren Woods said Exxon is harvesting the rewards from fossil-fuel investments in recent years that were panned as ill-timed. “Our work began years ago, well before the pandemic, when we chose to invest counter-cyclically,” he said during a conference call with analysts on Tuesday. “We leaned in when others leaned out, bucking conventional wisdom.” The stock was up more than 1.8% at 3:14 p.m. New York time after dropping earlier in the session. Exxon’s results followed those of US rival Chevron Corp., which posted a surprise earnings miss last week just days after announcing a mammoth $75 billion share-buyback program. The five so-called supermajors are swimming in cash after a record 2022 but pressure is mounting on executive teams to satisfy competing demands: investor appetite for bigger payouts and buybacks versus political outrage over windfall profits during a time of war and economic dislocation. Chevron was excoriated by the White House and Democratic members of Congress when it disclosed plans last week to funnel $75 billion to investors in the form of stock repurchases. Exxon expanded buybacks multiple times last year and pledged to repurchase $35 billion of stock through 2024, unchanged from previous guidance The company is pursuing a “balanced” approach to buybacks and dividends while reducing debt and investing in new projects, Chief Financial Officer Kathy Mikells told analysts during the call.
Oil companies post record-smashing profits as gas prices creep up - The country’s largest oil companies made more money in 2022 than ever before, eclipsing windfalls of earlier years and making themselves a potential target for driver frustration as prices at the pump rise. ExxonMobil on Tuesday reported a record-smashing annual profit of $55.7 billion for 2022, soaring past its earlier record of $45 billion in 2008. The news comes just days after another American oil behemoth, Chevron, drew the ire of the White House when the company announced its biggest windfall ever, with $36.5 billion in profits for the year. The eye-popping numbers, industry analysts say, are fueled by a variety of factors that drove up demand last year, largely connected to the war in Ukraine. The sanctions levied on Russian fuel because of the invasion threw the global market out of balance, leaving the supply of energy so tight that prices for crude oil, refined products such as gasoline and diesel, and natural gas all shot up at once. “All three dials on the slot machine lined up in a way they rarely do,” The national average price for a gallon of regular gasoline exceeded $5 at its height in 2022, as available shipments of fuel dropped and refiners struggled to replace Russian products, while the U.S. government tried to blunt the cost surge by releasing millions of barrels of oil from its Strategic Petroleum Reserve. The profits being posted now are not linked to the current upward swing in gasoline prices, with the average cost of a gallon of regular back up to $3.51, according to AAA, and likely to continue rising in the coming months. But they are giving drivers and politicians plenty to vent about. “These profits are coming right out of your pockets,” California Gov. Gavin Newsom (D) wrote on Twitter. “It’s time for a gas price gouging penalty to keep greedy oil companies in check.”
Murphy Oil Posts $965 Million Income for 2022 -After increasing net income, reducing debt and completing a significant development project in the Gulf of Mexico (GoM), Murphy Oil said it’s entering a new phase — “Murphy 2.0” — that will return more free cash flow (FCF) to shareholders. The company reported fourth-quarter net income of $199 million ($173 million adjusted), and $965 million ($881 million adjusted) for the year, according to results Murphy announced on Jan. 26. Murphy, which operates in the GoM, Canada and South Texas, also reported its preliminary year-end results and touted its execution on multiple fronts. In 2022, the company completed its Khaleesi, Mormont and Samurai field development project in the GoM, bringing seven wells online. In Canada and the Eagle Ford Shale, the company brought 50 operated wells online. Murphy’s 2023 capital guidance calls for spending $455 million onshore and $365 million offshore.
Liberty Energy expects profits, healthy fracking market are here to stay - Denver Business Journal - Fracking company Liberty Energy doesn’t expect a possible recession this year to derail demand for the oil drilling that pushed the Denver-based business to record revenue and more than doubled its profits last year. The company, which oil and natural gas companies hire to hydraulically fracture and complete newly drilled wells, sees fossil fuel demand sustaining domestic fracking activity for the foreseeable future. “The fundamental outlook for North American hydrocarbons is the healthiest Liberty has seen in our 12-year history,” said CEO Chris Wright after the company’s earnings release. Liberty Energy revenue rose 68% for the full year of 2022, the company reported, and the demand by oil companies for fracking and well completions look likely to keep activity high at current prices, he said. Global demand for oil is unlikely to decline, and Russian oil production could begin to wane due to a new embargo kicking in over that nation’s invasion of Ukraine, Wright said. Both those factors, coupled with disciplined production by oil and gas companies, are expected to keep crude oil prices high enough to maintain the current amount of fracking activity in North America as the pace of new drilling offsets the natural decline of well production and leads to only modest production growth, he said. The 5,000-employee company reported earning $400 million in full-year profits on a record $4.1 billion in revenue in 2022. That compares to the $178 million in profits on $2.5 billion in 2021 revenue Liberty Energy reported the year earlier. Liberty Energy in 2021 acquired the OneStim well-completion business from oilfield services giant Schlumberger, expanding Liberty Energy to have just over 40 fracking crews operating in oil and natural gas basins across the U.S. and Canada. The large scale has allowed Liberty Energy to negotiate good contracts with oil producers and thrive despite tight labor conditions and supply chain challenges that make it harder for smaller fracking companies to stay in business. Wright sees little worry of oil production growth crashing crude prices below what’s profitable for oil companies. The business model of U.S. oil and gas producers has changed since the last uptick in production five years ago. Companies today are aiming to drill enough wells to maintain their current levels of production, not grow wildly. In 2018 and 2019, oversupply from U.S. oil producers helped push crude prices down and started making the domestic industry vulnerable prior to the price crash early in the Covid-19 pandemic. The sudden evaporation of global demand for fuel during the pandemic triggered a wave of oil company bankruptcies and prompted the surviving businesses in the industry to focus on generating free cash flow, returning profits to shareholders and planning for modest growth. The last five years have also seen the retirement of large numbers of fracking engines and pumps that had been operating in the U.S. For the first time, the number of physical fracking fleets in North America roughly matches the volume of fracking jobs in the industry, Wright said.
Driller Helmerich & Payne sees moderate growth in customer spending for 2023 (Reuters) - Oil and gas producer budgets are slated to be "moderately higher" in 2023, drilling contractor Helmerich & Payne (HP.N) said on Tuesday during an earnings call, with activity also anticipated to grow modestly in the coming months. The company warned that natural gas prices, which have plunged below $3 per million British thermal units (mmBtu), could prompt a shift in drilling work, with some equipment moving to shale regions more heavily focused on oil production. On Tuesday, U.S. benchmark natural gas prices were trading around $2.7 per mmBtu, their lowest since early 2021. Hydraulic fracturing firm Liberty Energy last week said it would reallocate equipment to more oily areas if there is a pullback on natural gas drilling due to low prices. Roughly 28 of Helmerich and Payne's 185 active drilling rigs, or 15%, are focused on gas plays and most of those are on term contracts, the company said on Tuesday. In North America, the company anticipates activating some 16 rigs this year, bringing its total to around 191. It said it lost one rig due to a fire. The company said it experienced higher costs associated with labor and supplies last year, but anticipates those to stabilize in 2023. Shares were down about 1% in midmorning trading to $48.12 each. Helmerich & Payne reported net income of $97.1 million for the quarter ended Dec. 31, 2022, up from a loss of $51.4 million in the same period last year.
Letters: Let’s protect Loveland from fracking – Loveland Reporter-Herald - Please urge our city councilors and Mayor Marsh to deny any future fracking permits being set forth by Troy McWhinney, et al. As residents of this city, we need to hold City Councilmembers Foley, Overcash, Fogle, McFall, Mallo and Olson accountable for their votes in support of fracking in our protected natural areas. The councilors listed voted in support of fracking on Jan. 18, 2022; I applaud Councilor Samson for voting in favor of protecting Loveland residents and the natural beauty that called us to live here. Thank you also to Mayor Marsh, who advocated for a moratorium so that more information may be made available to City Council and residents.Big oil does not care about the negative effects fracking will bring to our climate and citizens. Clearly six sitting council members do not care about the health of its citizens. They might be worried about being sued by McWhinney and creating a bottleneck to his project. We as citizens must continue to urge our City Council and mayor to stop any future permitting for oil and gas fracking projects in our state.We know money speaks, but we the people must speak louder. Call and email the City Council, Mayor Marsh, Sen. Marchman, Gov. Polis. Make noise; get loud. Write letters to every editor to every newspaper in this state, because we all will suffer if fracking continues to be allowed to occur in Colorado. Get involved with organizations like Colorado Rising (https://corising.org/community-misled/), contact KUNC, be the squeaky wheel that ensures our community and future generations can remain healthy and protected from big oil and people like McWhinney.
U.S. crude oil, fuel stocks rise on weak demand -U.S. crude oil and fuel inventories rose last week to their highest levels since June 2021, the Energy Information Administration said on Wednesday, as demand remained weak. Crude inventories climbed 4.1 million barrels in the week ended Jan. 27 to 452.7 million barrels, compared with analysts’ expectations in a Reuters poll for a rise of 0.4 million barrels. That marked the sixth consecutive week of increases as refining utilization declined and net imports climbed. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.3 million barrels in the last week, EIA said. Refinery crude runs fell by 20,000 barrels per day in the last week, EIA said, while utilization rates fell by 0.4 percentage points to 85.7% in the week. Refineries activity remained subdued due to lingering outages from a late December winter storm and the onset of seasonal maintenance, Kpler analyst Matt Smith said. U.S. crude oil prices extended losses after the data and were last trading down 51 cents at $78.37 per barrel. Gasoline and heating oil futures also extended losses after EIA data showed builds. U.S. gasoline stocks rose by 2.6 million barrels in the week to 234.6 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for a rise of 1.4 million barrels. Distillate stockpiles, which include diesel and heating oil, rose by 2.3 million barrels in the week to 117.6 million barrels, versus expectations for a drop of 1.3 million barrels, the EIA data showed. Net U.S. crude imports rose by 2.59 million barrels per day, EIA said. Imports were helped by a rebound of Canadian oil volumes on the Keystone pipeline, which was temporarily shut after a leak in December, and on strong West Coast imports.
Author Dave Hanrahan's New Book, "Fracking – Oil and Murder Don't Mix," Delves Readers Into The Dangerous World Of Climate Activists And The Hydraulic Fracturing Industry - Dave Hanrahan, prominent Boston trial attorney and author, has released his fourth novel in his mystery/legal thriller series, "Fracking – Oil and Murder Don’t Mix," featuring the return of Bill Coine, Boston’s premier P.I. Set in Boston and San Antonio, the book takes a deep dive into the world of climate activists and their relentless war on gas and oil and the hydraulic fracturing industry.The story begins with the discovery of a man's body, head crushed and partly submerged in a sunken garden pond at the Japanese Tea Garden in San Antonio, Texas. The man has no identification; the only evidence at the scene is the imprint of a pair of heels from a cowboy boot. In his final report, Lt. Charles Hannify, S.A.P.D., concludes that this case will be difficult. And that’s how it stays until Bill Coine arrives in the middle of a red-hot fracking war to work for the country’s largest fracking operator, Bedrock Ventures, Inc.Murder, mayhem, and environmental sabotage are front and center as climate activists plot to destroy Bedrock Ventures’ environmentally damaging fracking operations. As the story unfolds, Coine and his wife, Jeanie, become the targets of a vicious assassin known only as Crazy Cowboy.The novel also gives readers a rare look into the innermost secrets of one of the largest law firms in the country as it struggles to control the devastating fallout when one of its powerful and corrupt senior partners goes rogue. “Fracking – Oil and Murder Don’t Mix” delivers two things mystery readers demand: interesting plot twists that keep the pages turning and the obligatory surprise ending. The book creates a complex world of danger and intrigue. Although it is fiction, the characters appear to be real, satisfying a reader’s need to be absorbed in events beyond their own lives. It also satisfies readers' curiosity about the fracking industry, including how it improves the extraction of oil and gas, whether it is harmful to the environment, and how far climate zealots will go to end it.
What Laws Empower Biden and AOC to Ban Fracking? - The American Spectator - As you kind people know, I have been writing about the moronic ban on fracking that Mr. Biden promised to impose on our nation almost the moment he was inaugurated. This measure would have cut domestic oil and gas production by more than 35 percent since early 2021. It has caused oil and gas prices to skyrocket as oil and gas became in short supply. We would have to beg countries that hate us for oil. We are already draining our strategic petroleum reserve — a life/or/death military asset — at an alarming rate. As it happened, Mr. Biden “walked back” this deadly promise. He did ban fracking and even drilling on large swaths of federally owned land. But it was not even remotely on the scale that Mr. Biden promised. It did lessen hydrocarbon production from those areas and as we all know, prices at the pump and in the furnace have risen dramatically. They would have risen far more had Mr. Biden not eaten into our vital strategic petroleum reserve. I hate to think what will happen if we and our allies need that oil in wartime. Again, Mr. Biden did not go anywhere near as far as he promised, thank God. But I keep asking myself, “Where did Mr. Biden think he got the authority to stop fracking? What law authorizes the President to control hydrocarbon production in the U.S.?” So, I looked and researched and found some answers. First, there is no clear answer. There is no law — or none that I could find — that authorizes the White House to ban fracking. Second, that being so, as I believe it is, is there a law in the works that will authorize the President thus? It happens that online, there is something akin to a “legislative tracker.” It tells us who introduced such a law, what his or her stated motivation for the law is, and what concrete data backs up that motivation. Third, the results were startling. In the House of Representatives, the law was introduced by the famous Alexandria Ocasio-Cortez, or “AOC” as we have come to call her. Ms. Cortez gives a long list of motivations for her felt need for the ban. It’s a long list, but boiled down to the essentials, it goes something like this: When a corporation drills for oil and/or gas, it releases some amount of methane gas. That gas is deadly. Fracking, like any other form of exploration or production, releases that deadly methane gas. Thus, there is believed by certain “experts” to be a need to stop fracking. This need (so says Ms. AOC) is especially acute because over one million children of African-American heritage live near sites where oil and gas is extracted by fracking and/or processed. This, states Ms. AOC, harms their health. Thus, it can be banned. With this particular reason, Rep. AOC hits the Trifecta of Progressive “Thought.” She represents that fracking is harmful to the environment, is poisonous, and is racist in that it is anti-black.
Report details toll of agriculture, oil and gas sectors on California water crisis – .A new report from the nongovernmental organization Food and Water Watch details the extent to which both the agriculture and oil and gas industries impact water stability in California. Combined, the sectors use hundreds of millions of gallons of freshwater each year.Despite the deluge of rain and snow that fell on California earlier this winter, the vast majority of the state still suffers from at least a moderate drought. The past two decades marked the region’s driest period in more than 1,200 years. Although climate change is in part to blame for the water crisis in the West, growing demand also plays a role in water shortages.“Many of our headlines speak to the drought as the sole reason for our water crisis, but this report clearly shows how big oil and big agriculture are abusing and using billions of gallons of our water for their benefit — enough to meet the water needs of every Californian,” Although agriculture accounts for less than 2 percent of the state’s economy, the sector is the largest in the nation and generates more than $50 billion in revenue each year. Meanwhile, the oil and gas industry accounts for around 2.1 percent of the California’s overall gross state product.In California, agriculture accounts for 80 percent of the water diverted from the Colorado River, with tree nut, alfalfa and dairy farming making up a large portion of this total. In 2021, almond- and pistachio-bearing acres throughout the state required an estimated 520 billion more gallons of water for irrigation compared with 2017, according to data compiled by Food and Water Watch. This increase in water usage from the nut crop expansion could have supplied around 87 percent of the state’s population with enough water for indoor daily use for an entire year, researchers said.Because almond and nut orchards are permanent, they need to be watered year-round. In addition, around 58 percent of the state’s almonds were exported overseas in 2020, which amounts to shipping 880 billion gallons of the state’s water supply abroad, researchers said.
Biden Faces Climate Litmus Test on ConocoPhillips’s Willow Oil Drilling Project - -- US President Joe Biden is nearing a critical decision on a massive proposed oil project in northwest Alaska that could unlock 600 million barrels of crude and has drawn the ire of environmentalists who have dubbed it a “carbon bomb.” Biden’s verdict on ConocoPhillips’ $8 billion Willow venture in the National Petroleum Reserve-Alaska is being seen as a litmus test of his commitment to combat climate change. “The decision on this project is a bellwether of whether we’re actually going to do something serious about climate in time or whether we are just pretending,” said Earthjustice President Abigail Dillen. “Standing alone, this would be the biggest oil and gas project in a country which has become the largest oil and gas producer in the world.” The project poses political risk for the president, who has implored oil companies to boost production even as he tries to speed the US transition to emission-free energy. It also presents a new test of Biden’s ability to balance the desires of two oft-competing constituencies: environmentalists and organized labor. The Interior Department is expected in coming days to release a final environmental impact statement on Willow, ordered up after a federal court tossed out the previous analysis and project approval from the Trump administration. That may telegraph support for a plan allowing the company to drill three wells at the site, helping deliver up to 180,000 barrels per day in estimated peak production. But it’s Interior Secretary Deb Haaland’s final decision, expected no sooner than 30 days later, that will dictate whether the project goes forward. The head of ConocoPhillips’s Alaska operations has warned further restrictions that scale down drilling to just two locations would not be economically viable. The Willow analysis is expected to be released as the Biden administration takes other moves to protect Alaska from some development. On Wednesday, the US Forest Service banned logging and new road construction across the Tongass National Forest. And next week, the Environmental Protection Agency is expected to issue a final determination barring the disposal of mining waste in Bristol Bay, thwarting the long-planned Pebble gold and copper mine. Willow’s supporters, including members of Alaska’s congressional delegation, labor unions and some residents of the North Slope, argue the project would bring much-needed crude to a market eager for alternatives to Russian oil while enhancing US energy security, sustaining jobs and generating revenue for the government. It also would extend an economic lifeline across the region, said Nagruk Harcharek, president of Voice of the Arctic Inupiat, a not-for-profit group representing eight communities of Alaska’s North Slope Borough. Oil development on the North Slope provides critical revenue to the borough, supporting local schools, emergency responders and search-and-rescue operations. The project would be located in the northeast portion of the 23-million-acre NPR-A, with some activities occurring near Teshekpuk Lake, which provides critical habitat for waterfowl, caribou and other wildlife. Environmentalists and some Alaska Natives have implored the government to block the project, through rallies outside the White House and via direct appeals to Biden administration officials. Climate activists argue it would provide a hub for future oil development and, even on its own, would unleash more crude and carbon dioxide emissions than an ever-warming planet can afford. Others have warned it could imperil caribou populations and harm the subsistence lifestyle of nearby villages.
Biden Clears the Way for Alaska Oil Project - — The Biden administration on Wednesday took a crucial step toward approving a $8 billion ConocoPhillips oil drilling project on the National Petroleum Reserve in Alaska, drawing the anger of environmentalists who say the vast new fossil fuel development poses a dire threat to the climate.The Bureau of Land Management issued an environmental analysis that says the government prefers a scaled-back version of the project, which is known as Willow. The assessment calls for curtailing the project to three drill sites from five, as well as reducing the proposed length of both gravel and ice roads, pipelines and the length of airstrips to support the drilling.The analysis is the last regulatory hurdle before the federal government makes a final ruling on whether to approve the Willow project. If approved, it project would produce about 600 million barrels of oil over 30 years, with a peak of 180,000 barrels of crude oil a day.Separately, Bureau of Land Management and White House officials are considering additional measures to reduce carbon dioxide emissions and environmental harm, such as delaying decisions on permits for one of the drill sites and planting trees, according to two people familiar with the discussions.The final decision could come within the next month. But, in concluding that limited drilling could occur on the land in Alaska’s North Slope, the Biden administration has already sent a strong signal that it is likely to give the project a green light, both supporters and opponents said.The Department of the Interior issued a statement saying the agency still had “substantial concerns” about the Willow project, “including direct and indirect greenhouse gas emissions and impacts to wildlife and Alaska Native subsistence.” The analysis notes that the agency might make final changes “that would be more environmentally protective” like delaying a ruling about permits to more than one drill site.The report was greeted with relief by Alaskan lawmakers and ConocoPhillips executives, who wanted a more expansive area for drilling but were worried that President Biden, who has made tackling climate change a centerpiece of his agenda, would work to block the project entirely.ConocoPhillips said in a statement that it welcomed the environmental analysis and said the alternative selected by the Bureau of Land Management provided “a viable path forward” for the Willow project.“We believe Willow will benefit local communities and enhance American energy security while producing oil in an environmentally and socially responsible manner,” Erec S. Isaacson, president of ConocoPhillips Alaska, said in a statement. He said the project had undergone five years of regulatory review and called on the administration to approve the plan “without delay.”
Biden Administration Allows Controversial Arctic Oil Project to Proceed - The Biden administration cleared the way on Wednesday for a controversial Arctic oil project, recommending that drilling proceed in an undeveloped section of the Alaskan tundra. While the Bureau of Land Management, or BLM, suggested that the project move forward with a more limited footprint, the changes would still allow ConocoPhillips, the company behind the development, to extract the full volume of oil it is targeting. The recommendation came in a final environmental impact statement and does not represent the final approval of the project, a decision that environmental advocates say ultimately rests with President Joe Biden. “We are calling on President Biden to reverse course on this massive climate disaster,” said Kristen Miller, executive director of Alaska Wilderness League, in a statement. “Our window to act is rapidly closing to avert catastrophic climate change, and this plan only takes us one giant step closer to the edge.” The Willow Project would represent a major expansion of Alaska’s Arctic oil development and has sparked years of fierce debate as it has churned through the regulatory process and court battles. The project would lie within the National Petroleum Reserve in Alaska, a 23-million acre area managed by the BLM that was set aside in 1923 as an emergency oil supply for the Navy. Environmental advocates and some Indigenous groups have said that new development in the fragile and rapidly-warming Arctic blatantly contradicts the Biden administration’s broader climate goals. Alaska’s Congressional delegation, including Sen. Lisa Murkowski, a moderate Republican whom Biden has tried to maintain as an ally in the Senate, has pressed for the administration to approve the project. Sen. Joe Manchin, the West Virginia Democrat and a critical swing vote on Biden’s climate agenda in Congress, has also pushed for Willow’s approval. The final environmental impact statement, published Wednesday by the BLM, recommended limiting the scope of the project to three well pads initially containing more than 200 wells, with the possibility for adding a fourth pad later. ConocoPhillips had proposed drilling from five well pads. The bureau said the changes would reduce surface impacts within the Teshekpuk Lake Special Area, critical habitat for thousands of migratory birds and a calving area of the Teshekpuk caribou herd, on which local Indigenous people depend for food. It would also limit the length of roads and pipelines needed, the BLM said. But the changes would not meaningfully alter how much oil ConocoPhillips would ultimately pump, a peak of more than 180,000 million barrels per day, or more than 600 million barrels over the project’s 30 years of operation. Over that period, the Willow Project would release about 280 million metric tons of climate pollution, equal to running 2.5 average-sized coal power plants for that entire three decades.
3 things to know about Biden's Alaska oil decision - A massive oil and gas project in the Arctic sits on a knife’s edge — and along with it perhaps President Joe Biden’s climate legacy — as administration officials weigh whether to approve an $8 billion drilling project on federal lands that’s fiercely opposed by environmentalists.The Biden administration advanced ConocoPhillips’ Willow project Wednesday, releasing a final environmental review that embraced a constricted version of the project that would still allow drilling of more than 200 wells in the approximately 24-million-acre National Petroleum Reserve-Alaska. Still, officials were quick to stress that Willow could be further restricted or even denied in a final record of decision that’s required within the next 30 days.“Let me just be clear: No decision has been made on this,” White House press secretary Karine Jean-Pierre said in a press conference Wednesday while defending the president’s commitment to climate action.“He continues to deliver on historic climate change action while carrying out the law and meeting our energy needs. Again, no decision has been made yet.”Observers say the Biden administration insistence that the project is still in limbo in this final stretch shows that the White House is considering multiple factors, including the politics of energy prices and the unique vulnerability of the Arctic region to climate change before it makes a consequential decision.“I am optimistic that the door is still open,” said Karlin Itchoak, the Alaska senior regional director for the Wilderness Society, which opposes the project. “The administration appears to still be considering further reductions to the size of the project, and still has the opportunity to do the right thing.”Should the administration block Willow, it would be the first time in history a president has barred drilling for oil and gas on public lands due to climate change. But despite the Biden administration’s focus on climate, the president is still aware of the country’s need for oil and gas and hesitant to be seen as restricting supply, a conundrum that the White House has needed to maneuver around during the last two years, said Paul Bledsoe, a former climate official for then-President Bill Clinton.“They’re in a difficult position politically,” said Bledsoe, who was director of communications for Clinton’s Climate Change Task Force. “It can be seen by some on the left-hand side that it should be a no-brainer, very easy, but that’s not true. Global oil prices are still high.”While Willow alone isn’t going to shift global energy prices or significantly impact demand for crude oil, the project is the latest example of how thorny oil and gas politics have proved for Biden.
Venezuela Demands Prepayment For Its Oil –Venezuela’s state-owned oil firm PDVSA has tightened the prepayment rules for its oil after a review of contracts, demanding now cargoes be paid in cash or in goods and services that should be received before loadings can take place, Reutersreported on Monday, quoting PDVSA documents it had seen.Earlier this month, Venezuela’s PDVSA suspended most of its crude oil exports and some fuel exports for a review of the contractual terms, a review that was to be conducted under the new head of the company, Pedro Rafael Tellechea.The review of the contracts under Tellechea – appointed by Venezuelan President Nicolas Maduro in early January – was aimed at making sure there would be no payment defaults. Since the imposition of U.S. sanctions on trade in Venezuela, PDVSA has had to resort to middlemen to market its oil, which has created complications with payments, Reuters noted earlier this month. Now, under the tougher rules, even long-term buyers of Venezuela’s oil should follow the new rules of prepayment, which say that PDVSA will have to receive the payment in full by cash before releasing oil for loading on tankers.The new prepayment rules come shortly after the Biden Administration eased part of the sanctions imposed on Venezuela – initially slapped by former President Donald Trump – including granting U.S. supermajor Chevron, the only American company still operating in Venezuela, a six-month license that allows Chevron to import some Venezuelan crude oil to the United States for sale to U.S. refiners.Earlier this month, reports had it that Chevron had recently sold 500,000 barrels of heavy Hamaca grade to U.S. refiner Phillips 66 to be used in its Sweeny, Texas, refinery, anonymous sources told Bloomberg. Venezuela’s heavy crude oil is prized by U.S. refiners, who, until recently, looked to Russia’s heavy crude to replace it. In December, it was reported that several refiners were hitting up Chevron to get their hands on the rare Venezuelan crude oil.
Greenpeace Activists Board Ship Headed to Shell Oil Field in UK - -- Climate activists from Greenpeace boarded a ship in the Atlantic Ocean that was heading to a Shell Plc oil and gas field near the UK’s Shetland Islands. Four of the Greenpeace activists used small motorized boats, launched from the organization’s Arctic Sunrise ship, to approach the 51,000 metric ton vessel called the White Marlin near the Canary Islands, according to a statement from the group. They then used used ropes to climb aboard and display a banner with the message, “Stop Drilling. Start Paying.” “Shell and the wider fossil fuel industry are bringing the climate crisis into our homes, our families, our landscapes and oceans,” said Yeb Sano, executive director of Greenpeace Southeast Asia, who tried to board the ship, but was unable to. The White Marlin is transporting a floating production, storage and offloading facility that will be used to develop the Penguins field. “These actions are causing real safety concerns, with a number of people boarding a moving vessel in rough conditions,” a Shell spokesperson said by email. “We respect the right of everyone to express their point of view. It’s essential they do that with their safety and that of others in mind.”
Reliable European demand fuels US natural gas boom -- Rising demand from Europe has added to a US natural gas investment boom even as the industry struggles to overcome opposition to pipeline construction. Production of the fuel reached 3.1 trillion cubic feet for the month of October, according to the most recently available US data, an all-time high and up almost 50 percent from the level a decade ago. The industry has been in growth mode since the summer of 2021 when Russia began trimming shipments to Europe, according to Steven Miles, a fellow at Rice University's Banker Institute in Houston. That comes on the heels of the US shale revolution in the first decade of the 21st century that ultimately led to the United States becoming a net exporter of the fuel in 2017. The progression has not been continuous, with plummeting natural gas prices crimping investment and leading to the bankruptcy of one of industry's biggest players, Chesapeake Energy, in June 2020. But energy companies have become more confident in the long-term demand outlook for the fuel in light of shifting geopolitical dynamics. Five years ago, the long-term demand "was not nearly as clear as it is today," said Eli Rubin of EBW AnalyticsGroup, a consultancy. "Especially after Russia invaded Ukraine, we have a healthy new respect for natural gas' role in providing energy security, for its role in helping to tame consumer pricing." Even before the invasion, there was heavy investment in facilities to transform gas into liquefied natural gas (LNG). In recent years, some 14 new liquefaction terminals have been approved, with the first set to begin operating in 2024. "Over the next five years, we could potentially double US LNG exports," Rubin said.
German industry to pay 40% more for energy than pre-crisis - study says (Reuters) - German industry is set to pay about 40% more for energy in 2023 than in 2021, before the energy crisis triggered by Russia's invasion of Ukraine, a study by Allianz Trade said on Monday, citing contract expiries and delayed wholesale pricing effects. "The large energy-price shock still lies ahead for European corporates," said Allianz Trade, the credit insurer that changed its name from Euler Hermes last year. In 2022, higher corporate utility bills were contained as long pass-through times from wholesale markets and government interventions mitigated the immediate hit from surging prices as Russia curbed fuel exports to the West. The price increases will hit corporate profits across Europe by 1-1.5% and lead to lower investment, which in Germany's case would amount to 25 billion euros ($27 billion), Allianz Trade estimated. German companies' finances are robust, however, and a state-imposed gas price cap would help, it added. Fears the crisis could lead to de-industrialisation and a loss of competitiveness against the United States were overdone, because labour costs and exchange rates have a bigger impact on manufacturing than energy prices, the study said. Also, while exporters were losing market shares in areas such as agrifood, machinery, electrical equipment, metals and transport, the relative beneficiaries tended to be Asian, Middle Eastern and African, not American, it added. The German government's one-off payment to help private households and small businesses with gas prices - the first stage of a package that will be complemented with retroactive price caps kicking in in March - has cost 4.3 billion euros so far, the economy ministry said on Saturday. Berlin has earmarked 12 billion euros for the payment, but the ministry said 4.3 billion euros was not the final cost as many eligible firms had not yet applied for the aid. They have until the end of February..
Russia's Pipeline Gas Exports To Europe Slump To Record Low - Russia’s pipeline gas exports to Europe slumped to a new monthly record-low in January, falling by nearly 30% from December due to lower prices on the spot market, according to Reuters calculations.Russia’s gas giant Gazprom has seen exports to Europe decline since the Russian invasion of Ukraine last year as Russia cut off gas supplies to a number of countries in Europe. Russia cut off supply to Poland, Bulgaria, and Finland in April and May, slashed gas deliveries via Nord Stream to Germany in June, then off Nord Stream supply in early September. Russia still sends some gas via pipelines to Europe via one transit route through Ukraine, and via TurkStream.This month, Gazprom has reduced pipeline gas transit flows to Europe via Ukraine on some days. Analysts have said that the lower pipeline flows were the result of lower demand for gas under long-term contracts, considering the milder weather in parts of Europe earlier in January and the fact that spot supply is currently cheaper. Per Reuters calculations, which are based on daily data of flows from Russia via the transit route through Ukraine and via TurkStream, pipeline gas exports from Russia to Europe dropped to around some 1.8 billion cubic meters (bcm) in January, down from 2.5 bcm in December.Gazprom hasn’t released January export data yet, but its exports to Europe via pipelines plunged to a post-Soviet low in 2022, according to data from the Russian firm calculated by Reuters. Last year’s Russian gas exports slumped by 45% year on year to reach 100.9 bcm in 2022. Germany, Russia’s biggest customer of gas before the Russian invasion of Ukraine, doesn’t import any Russian gas via pipeline now. Norway became Germany’s single-largest natural gas supplier in 2022, overtaking Russia, as total German gas imports dropped by 12.3% compared to 2021.
European Natural Gas Prices Surge Ahead Of Cold Spell --Europe’s benchmark gas prices have rebounded this week as traders closed short positions at the expiry of the front-month contract and some weather forecasts suggested colder weather in northern and central Europe next week than previously expected. The Dutch TTF benchmark price jumped by 11% at over $65 (60 euros) per megawatt-hour (MWh) at the opening of trade in Amsterdam on Tuesday, extending small gains from Monday and recovering some of the losses from last week, when prices slumped by 17%. On Monday, the prices were supported by short covering and an unplanned outage at a Norwegian gas processing plant. However, wind power generation is still expected to be strong, which could curb some demand for gas-fired power generation.But next week, temperatures could be lower than initially expected, which would boost demand for household heating. Colder spells are set to return to northern and central Europe next week, according to weather models by Maxar Technologies Inc, cited by Bloomberg.Still, the record gas prices in Europe could be behind us, according to ING’s revised outlook on natural gas for this year.“Mild weather and weak industrial demand have ensured that gas storage has remained strong. The region should get through this winter comfortably and prospects also look better for the 23/24 winter,” Warren Patterson, Head of Commodities Strategy at ING, said on Monday.The bank expects the TTF price to average around $65-70 (60-65 euros) per MWh over the first half of 2023—around current levels, before increasing to $81-87 (75-80 euros) per MWh over the second half of the year.
Eni signs major gas project deal in Libya -Italy's Eni and Libya's state-owned NOC have signed a long-delayed deal on the development of a major offshore gas project which will supply the domestic market and boost exports to Italy.The $8bn Structures A&E project is the largest single investment in Libya's upstream sector since the 2011 civil war and, according to Eni, the first major project in the north African country since 2000. The deal, previewed last week in a local TV interview with NOC chairman Farhat ben Gudara, was officially signed on 28 January during a visit to Tripoli by Italy's prime minister Giorgia Meloni.The project involves developing two offshore gas fields, with the platforms tied back to existing treatment facilities at the onshore Mellitah Complex, which is operated by Eni and NOC's Mellitah Oil and Gas joint venture. Eni said previously that the project will have the capacity to produce 760mn ft³/d of gas and 47,000 b/d of liquids, primarily condensate. It said in October that production could be online in 2024, but its latest statement says output from the fields will start in 2026 and reach a plateau of 750mn ft³/d. The project also includes the construction of a carbon capture and storage facility at Mellitah, in line with Eni's decarbonisation strategy and Libya's nascent decarbonisation ambitions.NOC's Ben Gudara said the deal is a "clear indication that the oil sector in Libya is free of risks" and that his country is on its way back to being considered a reliable oil and gas producer. Libya's decade-long political quagmire has not only hampered new oil and gas projects from getting off the ground but has also frequently led to existing output being shut down for political purposes. The relatively safe location of Structures A&E offshore Tripoli makes the project less vulnerable to disruption than Libya's onshore fields.
Turkey signs multi-year LNG import deal with leading Middle East gas producer -Turkey has signed a key liquefied natural gas purchase agreement with Oman for 1.4 billion cubic metres of annual gas imports for 10 years. The long-term deal is between state-owned Oman LNG and Turkey’s Botas Petroleum Pipeline Corporation, with gas supplies expected to start in 2025, local media reports in Oman have claimed. Oman LNG chief executive Hamed Al Naamany noted that its term-sheet agreement with Botas supports the company’s efforts to further develop its position in the global energy and LNG industry and explore new markets with key industry partners. Turkey’s Energy and Natural Resources Minister Fatih Donmez said the agreement also includes an opportunity to be extended. Oman LNG has signed multiple gas supply agreements with international players in recent months. Earlier in January, Oman signed binding term-sheet agreements with Thailand’s PTT Global LNG and with French giant TotalEnergies to supply a total of 1.6 million tonnes per annum of LNG starting in 2025. In December, a group of three Japanese companies signed long-term LNG import deals with Oman LNG for 2.35 million tpa of gas supplies. Oman LNG is a joint venture company with the government of Oman holding a majority stake of 51% and UK supermajor Shell holding a 30% interest. Other key stakeholders include TotalEnergies, Korea LNG, Mitsubishi Corporation, Mitsui & Co, PTTEP and Itochu. The Sultanate of Oman has significantly boosted its gas production over the years, led by BP’s Khazzan and Ghazeer tight gas projects, with output averaging more than 120,000 million cubic metres per day last year.
Türkiye to receive 1.4B cubic meters of gas from Oman per year - The new gas purchase agreement with Oman also includes an opportunity to be extended further if needed, Fatih Donmez said in his opening speech at the Summit of Century of Türkiye in Energy organized for the first time in Istanbul. 'At a time when the world, especially Europe, is suffering from gas supply problems, Türkiye is taking all steps to become a gas trade center,' he said. Donmez also declared that Türkiye's third floating liquefied natural gas storage and regasification unit (FSRU) is projected to arrive in Türkiye within a week and that the ship has taken its first cargo and started sailing. The ship will serve at the Saros FSRU terminal, which will also give the country the flexibility to carry out LNG transport, especially during the summer season when the demand to pump gas into the system is low. 'With the Saros FSRU, we will be adding a new entry point to the Thrace region, where consumption is high. More importantly, we will become a more active player in the regional gas trade, especially in the Balkans, in line with our gas hub target,' he suggested. The first step, he said, was taken with Bulgaria in this context, as the agreement includes an annual gas supply of approximately 1.5 billion cubic meters to Bulgaria until 2035, corresponding to 30% of the country's annual gas consumption. 'In addition to Bulgaria, we are carrying out similar processes with North Macedonia, Romania, and Moldova,' Donmez said.
Qatar to record 'fastest' annual growth in gas production in Middle East until 2050: GECF - Gulf Times --Qatar will record the fastest annual growth in gas production in the Middle East until 2050, delivering 2.6% annual growth, the Gas Exporting Countries Forum (GECF) said in a report. Qatar and Iran and Saudi Arabia, will remain “production hotspots” through 2050 and supply slightly less than 78% of the total output in the region, Doha-headquartered GECF said in its ‘Annual Global Gas Outlook 2050’ released on Sunday. Gas production in Iran and Saudi Arabia will grow by 2.1% and 1.5%, respectively, on an annual basis over the long term. Their share of regional production will reach almost 82%, while accounting for 18% of the world’s gas output. The GECF outlook expects regional production to grow by 140 bcm by 2030. This, it said, will represent around 24% of global growth, driven by Qatar’s North Field expansion projects, along with Iran, UAE and Saudi Arabia increases as well. But longer-term growth will be even more substantial. Output will jump by 520 bcm to 1,190 bcm by 2050. The share of global output will reach 22%, while the region will account for more than 33% of global growth. The Middle East is the world’s third-largest gas-producing region, accounting for almost 17% of global output. Annual production has been growing at a rapid 6% umping from 190 bcm in 2000 to 670 bcm in 2021. By comparison, Asia Pacific and African production grew by only 4.1% and 3.7%, respectively over that period.
AG&P speeding Philippines, India LNG terminals development --Global LNG logistics company Atlantic Gulf & Pacific International Holdings hopes to start operations at its first Philippines LNG import terminal between March and May while aiming to expand its presence globally, President AG&P LNG Terminals and Logistics, Karthik Sathyamoorthy, said. “We are going through a very interesting time within the LNG space … we are a demand creator [developing and building LNG terminals] to unlock demand in emerging economies,” Sathyamoorthy told S&P Global Commodity Insights in an interview, adding that within Asia, the company was advancing projects in India, Indonesia, and Vietnam. Singapore-headquartered AG&P’s LNG import terminal in Philippines — PHLNG — is being commissioned in two phases and comes at a time when production at Malampaya, the country’s primary gas field, has been declining, making the development of the country’s LNG infrastructure more critical. PHLNG, located at Batangas Bay, comes with a capacity of up to 5 million mt/year and is based on a floating storage unit — Ish — to be leased on a long-term basis with onshore storage and regasification facilities, Sathyamoorthy said. In February 2022, AG&P said it had inked a long-term charter agreement with ADNOC Logistics and Services for the supply, operations, and maintenance of Ish — a 137,512 cu m FSU — to be chartered for 11 years with an option to extend by another four years. The second phase of the PHLNG project comprises two onshore tanks of 60,000 cu m which are already under construction. Their integration with the main terminal was planned by mid-2025, Sathyamoorthy said. The primary customer for PHLNG is the power sector and because the terminal sits adjacent to the Illijan power plant it will secure base load supplies for Illijan and likely beyond, Sathyamoorthy said.
Russia bans oil exporters from adhering to Western price caps --The Russian government on Monday banned domestic oil exporters and customs bodies from adhering to Western-imposed price caps on Russian crude. The measure was issued to help enforce President Vladimir Putin's decree of Dec. 27 that prohibited the supply of crude oil and oil products from Feb. 1, for five months, to nations that abide by the caps. The G7 economies, the European Union and Australia agreed on Dec. 5 to ban the use of Western-supplied maritime insurance, finance and brokering for seaborne Russian oil priced above $60 per barrel as part of Western sanctions on Moscow over its actions in Ukraine. The new Russian act bans corporates and individuals from including oil price cap mechanisms in their contracts. They also have to report to customs officials and the energy ministry any attempts to impose oil price caps. In addition, customs bodies have to prevent goods from leaving Russia if they find such mechanisms have been applied. The Western allies plan from Feb. 5 to set two caps on Russian oil products, one on products that trade at a premium to crude, such as diesel or gas oil, and one for products that trade at a discount to crude, such as fuel oil. The Russian government's act also calls on the energy ministry, with the approval of finance ministry, to work out an approach for monitoring prices of Russian oil exports by March 1.
Russia says pipeline leak in Siberia caused 200 sq m oil spill -- Russia's emergencies ministry said on Monday that a pipeline leak near the Siberian city of Omsk caused an oil spill spanning 200 square metres last week. It said the leak was discovered on Friday and has since been contained. The pipeline is owned by operator Transneft , the RIA news agency reported, citing a source.
East Siberia oil spill clean-up complete --An oil spill from a trunkline near the city of Omsk in East Siberia has been contained and cleaned-up successfully, three days after the leak was discovered on 27 January, according to Russian state run oil pipeline operator Transneft’s regional subsidiary. The subsidiary, Transneft West Siberia, said an estimated 380 barrels of oil was lost in the spill, but had “accumulated in a pothole next to the pipeline” and had not passed into nearby rivers. Around 200 square metres of soil had been polluted with the oil, according to the Russian Emergency Situations Ministry’s Omsk regional unit. The leak occurred near the village of Lugovaya, about 17 kilometres from a large refinery operated by state controlled oil producer Gazprom Neft. The Omsk refinery is a monopoly supplier of motor fuels to the Omsk region and surrounding areas, with the closest alternative refinery located about 350 kilometres across the Kazakh-Russian border in Kazakhstan. Lugovaya is also located less than three kilometres from the shore of the Irtysh river, a key regional water artery and a chief tributary of the Ob river, flowing through West Siberia, country’s largest oil and gas province. According to Transneft West Siberia, the incident happened following the completion of planned maintenance work on the Ust-Balyk–Omsk pipeline, which was built at the end of the 1960s to carry West Siberian crude for processing at the Omsk refinery. Transneft and its regional subsidiaries had earlier issued several statements claiming that the pipeline had been upgraded at most of critical locations and regulary inspected. Transneft West Siberia said its spill response units have completed the clean-up of the incident site, collecting and removing oil-contaminated soil. “The possibility of oil getting into water arteries is excluded”, the operator said. “Oil transportation is carried out in the normal mode.
BP Believes Oil Demand Will Peak Near 2030 As Shift To Renewables Accelerates - Global oil demand is expected to peak between the late 2020s and early 2030s as the Russian invasion of Ukraine is accelerating investment in clean energy and governments are looking to bolster energy security with higher shares of renewables in the energy mix, BP said on Monday.In one of the most closely-watched industry reports, the BP Energy Outlook 2023with projections through 2050 says that oil demand falls over the outlook in all three scenarios as use in road transportation declines.“Global oil demand plateaus over the next 10 years or so before declining over the rest of the outlook, driven in part by the falling use of oil in road transport as vehicles become more efficient and are increasingly fuelled by alternative energy sources,” BP said.In the “New Momentum” scenario, BP’s one of three scenarios in the outlook reflecting “the current broad trajectory” of energy systems, global oil demand remains close to the current 100 million bpd by the end of this decade and drops to around 93 million bpd in 2035. The “Accelerated” scenario projects oil demand at 91 million bpd in 2030 and 80 million bpd in 2035, while the “Net Zero” scenario sees demand dropping to 85 million bpd in 2030, and further down to 70 million bpd by 2035.The prospects for natural gas depend on the speed of the energy transition, according to BP’s outlook, which sees LNG trade growing in the near term, but the outlook becoming more uncertain after 2030.The scenarios in Outlook 2023 have been updated to take account of the war, as well as of the passing of the Inflation Reduction Act in the United States, BP’s chief economist Spencer Dale said.“Most importantly, the desire of countries to bolster their energy security by reducing their dependency on imported energy – dominated by fossil fuels – and instead have access to more domestically produced energy – much of which is likely to come from renewables and other non-fossil energy sources – suggests that the war is likely to accelerate the pace of the energy transition,” Dale said.
Here's Why Qatar Is About To Make A Big Move On Iraqi Oil & Gas - Prior to the unwitting boost that Russia’s ongoing failure in Ukraine has given the U.S., NATO, and Europe, Washington’s intentions regarding Iraq were mixed. On the one hand, the reasons why the U.S. invaded Iraq – to secure oil supplies that would lessen its reliance on Saudi Arabia, to control the centre ground in the Middle East, and to counteract Iran’s growing influence in Iraq and in the region – still stood. On the other, though, it had long been clear in Iraq, Afghanistan and indeed Saudi Arabia, among many others, that Islamic countries did not want an ongoing Western Christian presence in their countries. It may be that Qatar’s move to buy a 30 percent stake in four US$27 billion projects in Iraq that were set to be managed entirely by France’s TotalEnergies are in line with the U.S.’s new strategy for Baghdad.The four projects are essential to Iraq’s future as a truly independent country. The first of them is the completion of the Common Seawater Supply Project (CSSP), which remains crucial in enabling Iraq to reach crude oil production targets of 7 million barrels per day (bpd), then 9 million bpd and perhaps even 12 million bpd, as analysed in depth in my last book on the global oil markets. The CSSP in its most basic iteration involves taking and treating seawater from the Persian Gulf and then transporting it via pipelines to oil production facilities to maintain pressure in oil reservoirs to optimise the longevity and output of fields. The long-delayed plan for the CSSP is that it will be used initially to supply around 6 million bpd of water to at least five southern Basra fields and one in Maysan Province, and then built out for use in other fields.The second of the projects is to collect and refine at a major processing plant the associated (with oil drilling) gas that is currently burned off at the five southern Iraq oilfields of West Qurna 2, Majnoon, Tuba, Luhais, and Artawi. Initial comments from Iraq’s Ministry of Oil highlighted that the plant is expected to produce 300 million cubic feet of gas per day (mcf/d) and double that after a second phase of development. Then-Iraqi Oil Minister, Ihsan Abdul Jabbar, also stated at the time the TotalEnergies deal was announced that the gas produced from this second project would also help Iraq to cut its gas imports from Iran, with the domestically produced gas being cheaper than the Iranian gas. Successfully capturing associated gas rather than flaring it would also allow Iraq to revive the also long-stalled US$11-billion Nebras petrochemicals project with Royal Dutch Shell. If Nebras went ahead it could be completed within five years and would generate estimated profits of up to US$100 billion for Iraq within its 35-year initial contract period.The third part of TotalEnergies’ four-pronged US$27 billion deal is aimed at boosting crude oil output from Iraq’s Artawi oil field to 210,000 barrels per day (bpd) of crude oil, up from the current circa-85,000 bpd. This project could lead TotalEnergies (and eventually) others to engage in similar crude oil production boosting projects across the country. The French oil and gas giant already has a 22.5 percent stake in the Halfaya oil field in Missan province in the south and an 18 percent stake in the Sarsang exploration block in the semi-autonomous region of Kurdistan in the north. The last of the four projects to be undertaken by the French company will be the construction and operation of a 1,000-megawatt solar energy plant.The most obvious fit for Qatar into this array of projects would be in the gas project, given its expertise in the field and its role as the world’s top liquefied natural gas (LNG) exporter. This is also the role that since Russia’s invasion of Ukraine in February 2022 has put it in the spotlight of the major Western powers as a substitute for lost Russian gas supplies. Qatar does not just have abundant volumes of gas, but it also has the ability in its LNG capabilities to move that gas more quickly and to more places than is possible for gas that is transported via pipelines. Currently Qatar has liquefaction capacity of around 77 million tonnes per year (mtpy), although it can and has produced more if required, and has plans to increase that to 126 mtpy by 2027. When the de facto leader of the European Union (EU) bloc, Germany, was wavering over whether to back the intended sanctions on Russian gas – gas constitutes around 27 percent of Germany’s energy mix and 55 percent of this came from Russia before the invasion of Ukraine – Qatar LNG supplies were used to plug a significant part of the short-term gap in supplies.
Oil activity boosted Oman’s economy by 30.4% in September 2022 | Arab News - Oman’s economy grew by 30.4 percent in September 2022 year-on-year, thanks to increased oil production, local media reported, citing figures issued by National Centre for Statistics and Information. The growth indicator — gross domestic product at current prices — increased to hit 32 billion Omani rial by the end of September 2022, compared to the same period a year before. The NCSI data reported that the increase was largely due to the high growth rate in Oman's oil activities which surged 72.5 percent year-on-year up until the end of September 2022. The data was derived from the first edition of the Quarterly National Accounts Indicators report issued by NCSI on Sunday. Manufacturing activities also added to GDP growth, having increased 65.6 percent by the end of the third quarter of last year compared to a year prior. Additionally, the NCSI report evaluated key indicators at current and constant prices, economic activities’ rates of growth, and other significant indicators lifting GDP within the period ending in September 2022. The west Asia sultanate, however, witnessed a contraction in construction activity which slowed by 2.2 percent at current prices during that period. Oman’s GDP at constant prices, on the other hand, recorded a rise of 4.5 percent to reach 26 billion Omani riyal in September, which was largely attributed to the 12 percent growth in oil activities. Service activities also contributed, increasing by 5 percent during that period. Oman's GDP had the second highest growth rate among the Gulf Cooperation Council countries, according to the World Bank report Global Economic Prospects.
China Data: Fuel Oil Exports Fall 6% On Year To 18 Mil Mt In 2022 - China’s exports of both low and high sulfur fuel oil fell 6% year on year to total 18.04 million mt in 2022, according to data from the General Administration of Customs Jan. 28, as bunker demand in the downstream market declined. Exports rose 5% month on month but fell 5.6% on the year to 1.23 million mt in December 2022, the GAC data showed. All of the barrels exported in 2022 were classified under the customs warehouse trade route, suggesting that the volumes were sold as bonded bunker fuels at Chinese ports. The rise in fuel oil exports in December coincided with relatively firm bunker demand as some shipping companies still saw the northern Chinese ports as viable refueling alternatives when adverse weather conditions around the southern ports intermittently disrupted bunkering operations, traders said. A bearish economic outlook had also subdued freight activity, resulting in fewer container liners plying the US-China routes, according to local bunker suppliers. Total fuel oil imports fell 10.3% year on year to 12.23 million mt in 2022 while volumes used for bonded bunkering fell 15.5% on the year to total only 7.9 million mt, according to GAC data. Of the total imports recorded across 2022, volumes classified under the general trade route, which sources said were likely straight-run fuel oil feedstocks for China’s domestic refineries, rose 1.34% on the year to 4.33 million mt. Supplies from the UAE and Russia accounted for 25.6% and 25.4% of China’s total fuel oil import in 2022, up from 11.7% and 10.4%, respectively, in 2021. Total fuel oil imports in December rose to a 16-month high of 1.76 million mt, up 19.8% from November, the GAC data showed.
Why Middle East Producers Cut Prices In The Face Of Soaring Chinese Oil Demand - China is back, and even the most ardent skeptics of Beijing’s policy easing will be compelled to admit that there is great upside in global oil demand in 2023. China has been allocating huge export and import quotas, nudging its oil refiners as hard as possible. Against the background of US economic readings rising quicker than expected and increasing the likelihood of a soft landing, as well as of Europe soon implementing its import ban on Russian products, there are several bullish factors that should push oil prices higher, in fact much higher than they are right now. Add to this the biggest position-taking spree into oil since November 2020, with investors swinging enthusiastically into net long positions (in Brent the long-short ratio is already up at almost 6:1), one would ask themselves why are we not seeing a much more pronounced market reaction. The Middle East, arguably the largest benefactor of oil volatility in 2022, has been wondering exactly that. With there being no real upside to global supply and plentiful upside to global demand, why do we keep on cutting prices for several consecutive months already? Chart 1. Saudi Aramco’s Official Selling Prices for Asian Cargoes (vs Oman/Dubai average). Saudi Aramco found itself between a rock and a hard place when setting the February 2023 official selling prices. On the one hand, ever since the Russian oil price cap kicked in, Saudi Arabia was believed to be the main go-to nation to alleviate Europe’s need to find new sources of supply. Combined with the prospect of a returning China, this should have normally translated into more demand for Saudi crude. On the other hand, the market dynamics were once again shifting to the disadvantage of Riyadh as the Middle East’s key oil marker, the Dubai futures contract, saw a steep decrease in December with the cash-to-futures spread falling by $1.60 per barrel month-on-month. As a consequence, Saudi Aramco cut its formula prices for the third consecutive month, with Arab Light down by $1.45 per barrel compared to January, falling to the lowest level since November 2021, a mere $1.80 per barrel to the Oman/Dubai benchmark. Chart 2. Saudi Aramco’s Official Selling Prices for Northwest Europe-bound cargoes (vs ICE Brent). When pricing its grades into Asia, Aramco cut the lighter ones much more than the heavies, a trend that it also followed with its European prices where Arab Light was lowered by $1.40 per barrel, coming in at a -$1.50 per barrel discount to ICE Brent. In just six months since September 2022, the average formula price in Asia plummeted by $8 per barrel, whilst in Europe the decline was milder, only $5-6 per barrel. Just as Saudi Aramco finalized the merger of Aramco Trading and Motiva Trading, moving all of its trading activity under one umbrella, prices of US-bound cargoes continue to boggle the mind as the Saudi NOC rolled over the same prices for the fourth straight month. Hardly a surprise than exports to the United States are a mere quarter of what they were in early autumn, competing with late 2020 readings for the title of weakest flows on record with only three tankers departing towards the US this month.
OPEC oil production decline in January led by Iraq – PiPa News - OPEC oil production fell in January, a reuters The survey found on Tuesday, as Iraqi exports declined and Nigerian output did not improve further, while Gulf members maintained strong adherence to the OPEC+ production cut deal to support the market. The Organization of the Petroleum Exporting Countries pumped 28.87 million barrels per day (bpd), the survey found, down 50,000 bpd from December. OPEC output in September was the highest since 2020. OPEC+ producers raised output for most of 2022 due to improving demand. For November, the group cut production targets in 2020 by the biggest since the early days of the COVID-19 pandemic, with oil prices plunging. Its decision from November calls for a 2 million bpd cut in the OPEC+ output target, of which about 1.27 million bpd was to come from the 10 participating OPEC countries. The same goal currently applies. reuters The objective of the survey is to track the supply in the market. It is based on shipping data provided by external sources, Refinitiv Eikon flow data, information from flow tracking companies such as Petro-Logistics and Kpler, and information provided by sources such as oil companies, OPEC and consultants.
Despite sanctions, Iran’s oil output rises 140,000 bpd in 2022: EIA - Tehran Times --The U.S. Energy Information Administration (EIA) in a recent report has put Iran’s average oil production in 2022 at 2.54 million barrels per day (bpd), 140,000 bpd more than the previous year. Iran's oil production in 2021 was about 2.4 million bpd. Based on the EIA report, dubbed “Short-term Energy Outlook”, the Islamic republic managed to produce 2.56 million bpd of crude oil on average in the last quarter of 2022. Iran's oil output stood at 2.58 million bpd in the last month of 2022, according to EIA data. Accordingly, Iran's oil production in December 2022 increased by 20,000 barrels compared to the previous month and by 130,000 barrels compared to the same period in 2021. In November 2022, Iran produced more than 2.56 million bpd of oil, and in December 2021 more than 2.45 million bpd. According to this report, OPEC oil production in December 2022 was about 28.93 million bpd, which has increased by 190,000 barrels per day compared to the previous month. In a previous report, EIA had put Iran’s oil revenues at about $34 billion in seven months to July 2022. The EIA figures showed that Iran's oil revenue in January-July was just $5 billion lower than the country's total crude sales in 2021. Based on the EIA report, Iran's average monthly income from oil sales in January-July has been $4.85 billion, 49 percent more than the average monthly income in the previous year which was $3.25 billion. Iran's oil revenue in the said seven months is twice the whole income in 2020, indicating that the impacts of the U.S. sanctions against Iran are weakening. Iran earned $17 billion in oil revenue in 2020 and $39 billion in 2021, and according to EIA, the Islamic Republic’s oil revenue will reach $58 billion in 2022. EIA put the total oil income of 13 OPEC members in the mentioned months at $500 billion.
Iranian Explosions- Implications And Impact On Oil - Overnight, the sky over Iran was lit up by at least two explosions targeting military production facilities: one in Isfahan and one in Tabriz. Whether the two explosions are connected remains unclear as the Isfahan target appears to have been an “ammunitions” factory and the explosion in Tabriz occurred at a motor oil factory. Some sources (here) suggest the list of targets hit might be larger and include the Headquarters of the IRGC and some other military targets. While no party has claimed direct responsibility for the explosions, Senior Ukrainian spokesperson Mykhailo Podolyak tweeted "War logic is inexorable & murderous. It bills the authors & accomplices strictly. Explosive night in Iran - drone & missile production, oil refineries. Did warn you."While drones can be launched from any platform without much infrastructure, it is worth noting that the most common Iranian suicide drones have a range of roughly 2500km and the distance between Kherson, Ukraine, and Isfahan, Iran, is approximately 2600km — so barely in tentative range.The regime in Teheran is, somewhat predictably, down-playing the impact of the explosions, noting of the Isfahan attack that one drone was shot down "and the other two were caught in defense traps and blew up. [The attack] caused only minor damage to the roof of a workshop building. There were no casualties."At the start of the Asian open, oil markets might be primed to price higher risks to oil supplies out of concern that: (i) Ukraine war might be spilling over into Middle East, (ii) Iran might seek retaliation in the region, or (iii) general unrest in oil producing countries is bad news for supply. As Iran seems to be downplaying the attacks and no clear culprit has been identified (despite Ukraine’s early response), any spike in oil prices could be driven initially by algorithmic trades immediately at the open and thus likely to fade as more information becomes available. Previous episodes of violence and explosions involving oil producing countries has led markets to price supply concerns. In somewhat comparable situations, such as Yemen’s missile strikes against Saudi Arabia for instance in March 2022, the oil price reaction function seemed driven in large part out of concern for escalation. In the current circumstances, three risk avenues could drive market concern:
- (i) Ukraine War Spill Over to Middle East - Spill-over risks from the war in Ukraine are real, with the risk-vector Iran stepping up its overt support for Russia, adding its military and industrial capabilities (such as they are) to that of Russia in the production of drones and missiles.
- (ii) Iranian Retaliation in the Region - Of concern to markets could be the increased risk of Iranian attempts to sabotage or derail the energy supply to Europe. Considering Saudi Arabia’s non-confrontational attitude toward Russia lately, an Iranian threat in retaliation against the Kingdom is not likely at this time. Energy transits however could be targeted if the regime feels particularly vulnerable due to this morning’s explosions.
- (iii) Elevated General Unrest in Oil Producing Countries - Markets generally respond poorly to upheaval in oil producing countries, especially when global demand is expected to respond to China’s reopening post Zero-Covid. These nebulous concerns are often short-lived though and price reactions fade.
OPEC+ committee recommends no change in oil output policy at virtual meeting --A technical committee of the influential OPEC+ oil producers' coalition has made no recommendation to change the group's existing production policy in its latest meeting, according to three delegates. The OPEC+ Joint Ministerial Monitoring Committee, which tracks the alliance's compliance with its output quota, convened digitally on Wednesday. The second OPEC+ technical group, the Joint Technical Committee that studies market fundamentals, canceled a virtual meeting originally scheduled for Jan. 31, according to a delegate. Neither committee can outright decide OPEC+ production policy, but the JMMC can recommend plans for the review of coalition ministers. The JMMC will next meet on April 3, one delegate said. The three delegates preferred to remain anonymous because they are not authorized to speak publicly on the matter. "The JMMC reaffirmed their commitment to the DoC which extends to the end of 2023 as agreed in the 33rd OPEC and Non-OPEC Ministerial Meeting (ONOMM) on 5th of October 2022, and urged all participating countries to achieve full conformity," an OPEC+ communique said. The DoC refers to the Declaration of Cooperation, or the OPEC+ accord. Three OPEC delegates had signaled to CNBC that the group would likely echo a ministerial December decision to roll over the production policy agreed in October. Under that provision, the group would nominally lower their production output quotas by 2 million barrels per day. Delivered cuts would sit below this figure, as actual production has long lagged output targets because of dwindling capacity, underinvestment and Western sanctions. Questions had risen whether prospective increases in Chinese demand — the world's largest crude oil importer, which is now softening the strict Covid-19 restrictions that lidded its purchases throughout most of last year — could push the producers' alliance to raise their output. "Global oil demand is set to rise by 1.9 mb/d in 2023, to a record 101.7 mb/d, with nearly half the gain from China following the lifting of its Covid restrictions," Paris-based energy watchdog the International Energy Agency said in its latest monthly Oil Market Report, released on Jan. 18. OPEC+ countries must closely watch the development of Beijing's demand, two delegates confirmed. OPEC+ producers are also following the demand impact of firm inflation rates — with the European Central Bank, Bank of England and the U.S. Federal Reserve set to decide their monetary policy this week — as well as access to sanctions-constricted Russian oil supplies. The IEA estimates that Russia's crude oil production eased from 9.8 million barrels per day in November to 9.77 million barrels per day in December, after EU sanctions implemented on Dec. 5 interdicted seaborne imports of Moscow's crude oil supplies. A second set of measures will replicate the ban on oil products imports and take effect on Feb. 5. Non-G7 countries may continue to benefit from Western financial and shipping services to take delivery of Russian crude oil, provided they make their purchases under a specified price level, now set at $60 per barrel. The plan was designed by the G-7 to retain supply into the global markets, while simultaneously diminishing Russian President Vladimir Putin's war coffers to sponsor Moscow's full-scale invasion of Ukraine. Russia has so far not signaled any intention to request an exemption from its production quota and continues as OPEC+ co-chair alongside Saudi Arabia, two delegates said. OPEC+ has long taken a cautious approach in its decision-making, as it contends with market supply-demand fundamentals, pressure from international consumers to help ease the burden on households, and the need to incentivize further investment into spare capacity.
Investors have become super-bullish about oil: Kemp - Portfolio investors have piled into petroleum futures and options at the fastest rate since the first successful coronavirus vaccines were announced in late 2020. China’s exit from a zero-COVID strategy, along with hopes the global economy can avoid a recession and low oil inventories, have contributed to an extraordinary wave of buying across the petroleum complex. Hedge funds and other money managers purchased the equivalent of 232 million barrels in the six most important futures and options contracts over the six weeks ended Jan. 24. Purchases were the fastest for any six-week period since December 2020, according to an analysis of position records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission. In the most recent week, fund managers purchased the equivalent of 70 million barrels, mostly in Brent (+40 million) and to a much lesser extent NYMEX and ICE WTI (+4 million). But the wave of buying spread beyond crude to encompass U.S. gasoline (+11 million barrels), U.S. diesel (+8 million) and European gas oil (+7 million). Refinery shutdowns linked to seasonal maintenance as well as sanctions on Russia’s diesel exports are expected to deplete fuel inventories further. The net position across all six contracts climbed to 575 million barrels (47th percentile for all weeks since 2013), up from 343 million barrels (11th percentile) on Dec. 13. The net position is at highest since Nov. 8 and before that June 14. There was a strongly bullish orientation, with long positions outnumbering short ones by a ratio of 5.93:1 (80th percentile) up from 2.58:1 (23rd percentile) five weeks earlier. The most bullish ratios are concentrated in Brent (86th percentile), U.S. gasoline (85th percentile) and U.S. diesel (86th percentile), with less optimism about European gas oil (65th percentile) and WTI (41st percentile). Refinery maintenance in the United States is expected to deplete fuel inventories there but leave WTI prices trailing Brent, which probably explains the differential performance. Hedge funds became more bullish about Brent than at any time since May 2019, before the pandemic erupted and upended the oil industry. In the bond market, investors are increasingly confident inflation will moderate, allowing central banks to bring an early end to interest rate rises. In the oil market, investors are increasingly sure continued growth will cause supplies to tighten and send prices higher. But that would be inflationary – and contradicts to the benign outlook assumed by the bond market. Oil traders and bond traders cannot both be right.
Oil Flat Ahead of OPEC+ Meeting, Fed Rate Decision -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange swung between modest gains and losses early Monday as investors awaited key rate decisions from global central banks later this week, as well as the meeting among OPEC+ producers ahead of the EU embargo on Russian fuel exports. Russia plans to increase its diesel exports next month despite the EU ban on its fuel shipments and G-7 price cap that goes into full force on Feb. 5. Shipments of diesel fuel from Russia's key Baltic and Black Sea ports surged above 2.5 million tons in January, according to industry data, some 8% above December's flows as buyers scooped up volumes on fears over potential shortages later this year. Europe, in particular, is vulnerable to such disruptions as its energy market is structurally short on middle distillates and relies heavily on imports. As of early 2023, Europe still sourced 1/4 of its middle distillate supplies from Russia. Faced with this dilemma, the EU ministers, together with G-7 partners, are reportedly set to approve a higher price cap to import Russian diesel for third countries in an attempt to keep Russian diesel flowing to the market. The discussed price ceiling is somewhere in the range of $100 - $110 barrel (bbl). For context, diesel futures in northwest Europe are currently trading at about $130/bbl, according to ICE Futures Europe data. With Russian supplies already trading at a large discount from elsewhere, the impact of a $100/bbl price cap would not be as disruptive as previously feared. The blueprint for the price cap appears to follow similar measures already applied to Russian crude exports that have so far resulted in little interruption of Russian crude shipments. Some analysts, however, believe the price cap could still result in dislocations within the Russian refining sector that will lead to a large drop in its oil output later this year. The U.S. Energy Information Administration in its latest forecast estimated Russian oil production could fall as much as 1.5 million barrels per day (bpd) because of the cumulative impact of the sanctions. Against this backdrop, OPEC+ ministers are set to meet on Wednesday for the Joint Ministerial Monitoring Committee to evaluate supply-demand balances on the global market. The group, which consists of 23 oil-producing countries, stuck to a production cut of 2 million bpd in December and has given little indication that the accord could be changed anytime soon. Near 7.30 a.m. EST, West Texas Intermediate futures for March delivery traded little changed near $79.70/bbl, and Brent March futures on ICE were near $86.70/bbl. NYMEX RBOB February contract dropped back $0.0149 to $2.5737 gallon, and front-month ULSD futures were unchanged near $3.2658 gallon.
Oil tumbles 2% as Putin lets Russian energy companies decide pricing, exports -- The official stance of the Kremlin is that it will not adhere to the West’s price caps on Russian oil. In reality though, President Vladimir Putin’s administration is allowing Russian oil companies to sell however many barrels at whatever price they can get. This effectively means the companies can apply any discounts necessary to transact oil in their hold, with the G7’s price cap already setting a barrel of Russian Urals at between $25 or $35 below the global crude benchmark Brent. Media headlines on Monday suggested disparities between Russian government policy and actual activity in the physical oil market. That drove crude prices lower again, after a dip on Friday that came on the back of a rally over two previous weeks. New York-traded West Texas Intermediate, or WTI, crude for March settled down $1.78, or 2.2%, at $77.90 per barrel after a session low at $77.75. London-traded Brent crude for March delivery settled down $1.76, or 2%, at $84.90 per barrel. The session bottom was $84.33. The slide came after the Russian government maintained that it “forbids oil exports that adhere to Western price caps,” according to a headline from Reuters. That was, however, followed by two other news bulletins that said that “the Russian government has charged oil companies with overseeing contract wording” and that “the Russian government has not set a floor price for oil exports.” “Decoded, the three messages mean the Russian government’s grandstanding against the West’s price caps remains, while it has opened the backdoor for its oil companies to do whatever is necessary to get their oil moving on the market,” Since the G-7 price cap of $60 on a barrel of Russian oil came into force on Dec. 5, it has added to the woes of OPEC+ in trying to rally a market already depressed by mixed signals over demand from top importer China and fears of an impending recession in the United States and Europe. While the Putin administration has publicly balked at the G7 price cap, it hasn’t really been able to fight it. And because they’re getting less money for their oil now, the Russians are also shipping out more barrels these days than the Saudis wish them to. And those barrels are primarily going to two destinations — India and China, which are the only two nations the United States allows to buy sanctioned Russian oil without questions. The increased exports from Russia are not only messing up OPEC+’s aim of keeping production tight but also hurting the Saudis as India and China were also the largest markets in Asia for Riyadh’s state oil company Saudi Aramco. India bought an average of 1.2 million barrels of Russian Urals a day in December, which was 33 times more than a year earlier and 29% more than in November. Discounts for Urals at Russia's western ports for sale to India under some deals widened to $32-$35 per barrel when freight wasn’t included, according to a Reuters report from Dec. 14. Another Reuters report said China paid the deepest discounts in months for Russian ESPO crude oil in December, amid weak demand and poor refining margins. ESPO is a grade exported from the Russian Far East port of Kozmino and Chinese refiners are dominant clients for this. If that wasn’t enough, a Reuters report from last Friday said Russia’s oil loadings from its Baltic ports were set to rise by 50% in January from December levels. Russia loaded 4.7M tonnes of Urals and KEBCO from Baltic ports in December. The January surge comes as sellers try to meet strong demand in Asia and benefit from rising global energy prices, the report said. The Saudis, on their part, have slashed pricing on their own Arab Light crude to Asia to try and stay competitive amid the ruthless undercutting by the Russians — who are supposed to be their closest ally within OPEC+. Separately, the Kremlin said in a statement on Monday that Putin held a phone call with Saudi Crown Prince Mohammed Bin Salman earlier in the day "to discuss cooperation within the OPEC+ group of oil producing countries in order to maintain oil price stability", Reuters reported. No details were given. The G7 will have two more price caps coming into force on Feb. 5 on refined oil products out of Russia. No one knows what effect those will have on the Kremlin.
Oil, Equities Slide as Markets Eye Hawkish Central Banks -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange continued lower early Tuesday as the U.S. Dollar Index advanced for the third straight session with investors positioning ahead of policy meetings by the U.S. Federal Open Market Committee and European Central Bank where officials are expected to signal more rate hikes for 2023 amid signs of reacceleration in fuel costs and a tight labor market in the United States. The Federal Reserve is widely expected to dial back the size of rate increases to 0.25% on Wednesday, bringing the federal funds rates to a target range between 4.5% and 4.75%. Despite the downshift, the Fed is unlikely to depart from its hawkish message of "higher interest rates for longer," defying expectations for an imminent pivot. Officials at the central bank have repeatedly pounded the message that they see interest rates rising above 5% this year and staying there until 2024, stressing the need to do more work to tame prices. Recent economic data supports this view. The U.S. labor market barely budged last year under pressure from rising interest rates, with the national unemployment rate remaining near its historic low of 3.5% and high-frequency jobless claims continuing to fall. Even as headline inflation eased from its midsummer peak of 9.1% to the current 6.5%, it is still way above the Fed's 2% target. The reopening of the Chinese economy, a potential spike in oil prices and the ongoing war in the Ukraine all could lead to a re-acceleration of inflationary pressures. The double-edged risk of a tight labor market and potential for higher oil prices is the reason why the Fed will continue delivering a hawkish message until there is clear evidence inflation is indeed on track toward the 2% target. A growing number of investment banks are now reassessing their outlook on how aggressive the Federal Reserve would be this year. "We expect that a hike this week will be followed by two additional 25 basis points hikes in March and May, which would raise the target range for the funds rate to a peak of 5-5.25%," said David Mericle, chief U.S. economist at Goldman Sachs. A stronger U.S. dollar this morning follows the slow shift in these expectations, with the greenback gaining 0.14% to 102.230 in index trading against foreign currencies, while weighing on the front-month West Texas Intermediate contract. WTI for March delivery declined $0.81 to $77.10 barrel (bbl) -- the lowest since Jan. 11, and the international crude benchmark Brent dropped $0.61 to $84.29/bbl. NYMEX RBOB February contract declined $0.0246 to $2.4743 gallon, and front-month ULSD futures plummeted $0.0329 to $3.0779 gallon.
Oil prices settle steady on higher U.S. demand, weaker dollar -Oil prices closed steady on Tuesday after recovering from a near three-week low, drawing support from a weakening dollar and on data showing that demand for U.S. crude and petroleum products rose in November. The more active second-month Brent contract settled at $85.46 a barrel, up 96 cents or 1%, while the U.S. West Texas Intermediate crude futures settled at $78.87 a barrel, up 97 cents or 1.3%. More volatility on the day of expiration kept the front-month contract under pressure as traders closed positions. The front-month contract settled at $84.49 a barrel, down 41 cents. During the session, front-month Brent and WTI futures touched their lowest in almost three weeks as traders worried about prospects for further interest rate increases and abundant flows of Russian crude. The Brent April futures and U.S. front-month WTI gained after the U.S. Energy Information Administration reported that demand for U.S. crude and petroleum products rose 178,000 barrels per day (bpd) in November to 20.59 million bpd, the highest since August. Crude benchmarks were also supported by a weaker U.S. dollar, This makes dollar-denominated crude cheaper for foreign buyers. The dollar index turned negative after U.S. data showed labour costs increased at their slowest pace in a year in the fourth quarter as wage growth slowed, bolstering expectations of the Fed slowing its interest rate increases. Investors expect the Fed to raise rates by 25 basis points on Wednesday, with increases of half a percentage point by the Bank of England and European Central Bank the following day. An OPEC panel is likely to recommend keeping the group's output policy unchanged when it meets on Wednesday, delegates told Reuters on Monday. However, Tuesday's weakness in front-month Brent prices may cause concern in the group. This widened the contango in the market, which occurs when futures prices show a commodity's price is expected to be much higher in the future. A Reuters survey shows 49 economists and analysts expect Brent crude to average more than $90 a barrel this year, the first upward revision since a poll in October, with gains likely driven by demand from top consumer China. Separately, U.S. crude oil stockpiles are likely to have risen last week, a Reuters poll showed ahead of an American Petroleum Institute report due at 4:30 p.m. ET on Tuesday.
Oil Prices Set To Climb On Rumors That The Fed Will Stop Hiking Interest Rates - Traders expect the Federal Reserve to end its rate hikes in two months, which could push oil prices higher due to the generally inverse relationship between rates and oil prices.According to a Reuters report, the Fed might end its rate-hike policy as soon as March, as economic indicators suggest inflation is slowing down and getting under control. What’s more, the Fed is set to announce another hike in benchmark rates this week but it may be lower than previous ones, at 25 basis points.Oil prices climbed last week on the positive economic data coming out of the United States, although Treasury Secretary Janet Yellen has warned that a soft landing was far from certain and there was still a danger of recession.Coupled with expectations for a rebound in oil demand in China, a lower rate hike and any other indication that the Fed may be preparing for a wind-down of its aggressive inflation control measures could lend additional upward potential to oil prices.There has also been added support for prices from the reported drone attacks on targets in Iran, suggesting a possible escalation in Middle Eastern tensions. The reports pushed oil prices higher in morning trade in Asia today, although prices have since fallen back.Some stability could come from the OPEC+ meeting this week as there are no expectations of any tweaks to the current policy of the extended cartel, with many members still unable to fulfill their production quotas even with their reduction last year.China remains the biggest bullish factor for oil prices, however, especially after the government in Beijing said over the weekend it would aim to stimulate consumption as a means of boosting economic growth after the lockdowns.Uncertainty remains, however. “We have Russia on the supply side and China on the demand side. Both can swing by more than 1 million barrels per day above or below expectation,” one investment manager told CNBC.“China seems to have surprised the market in terms of how fast they are coming out of zero Covid while Russia has surprised in terms of resilience of export volume despite the sanctions,” Stefano Grasso said.
WTI Holds Gains After API Reports Across-The-Board Inventory Builds - Oil prices rallied on the day, with WTI rebounding back above $79 as factors ranging from the end of the Fed’s (dovish) rate increases to swelling demand in China give bulls more ammunition."The main driver for oil lately has been the potential for a resurgence of oil demand out of China, which may continue into February considering how Chinese economic momentum picked up in the overnight PMI reports," said Colin Cieszynski, chief market strategist at SIA Wealth Management. The nationwide 'deep freeze' has clearly been impacting the inventory data over the last few weeks. We suspect today could be the first 'clean' indication... API
- Crude +6.33mm (-1mm exp)
- Cushing +2.72mm
- Gasoline +2.73mm
- Distillates +1.53mm
Crude inventories built for a 5th straight week (despite expectations for a small draw) with Cushing stocks soaring once again. On the product side, we also saw notable builds (with Distillates biggest rise since the first week of December)...
WTI Extends Losses After Across-The-Board Inventory Builds - Graphs: Bloomberg - Oil prices were weaker this morning following weak Manufacturing data and a poor ADP jobs report, and following last night's across-the-board builds reported by API. Additionally, OPEC+ committee recommended keeping crude production steady as the oil market awaits clarity on demand in China and supplies from Russia. “Everyone agrees that the situation is quite stable on the market,” Russian Deputy Prime Minister Alexander Novak, who represents the country at OPEC+ meetings, told the Rossiya 24 TV channel.“Of course, we see a large number of uncertainties” ranging from inflation and interest rates to Chinese demand. The nationwide 'deep freeze' has clearly been impacting the inventory data over the last few weeks. We suspect today could be the first 'clean' indication, but last night's API data suggests it may not be over (or we have a serious demand dry up)... DOE
- Crude +4.14mm (-1mm exp)
- Cushing +2.315mm
- Gasoline +2.576mm
- Distillates +2.32mm
The official EIA data confirmed API's report of a major crude inventory build last week (the sixth straight weekly build). Cushing stocks rose for the 5th straight week and Distillates saw the largest build since early December... With no crude withdrawn from, or put into, the Strategic Petroleum Reserve for a second week, the overall nationwide crude build was all in commercial inventories...
Oil Dives $3 After U.S. EIA Reports Big Builds in U.S. Crude, Fuel Stocks (Reuters) -Oil prices settled lower on Wednesday after sliding more than $3 a barrel in the session after U.S. government data showed big builds in crude oil, gasoline and distillate inventories and OPEC and its allies stuck to their output policy. Brent crude futures settled down $2.62, or 3.1%, at $82.84 a barrel while West Texas Intermediate (WTI) U.S. crude futures fell $2.46, or 3.1% to settle at $76.41. U.S. crude oil and fuel inventories rose last week to their highest levels since June 2021, the Energy Information Administration said, as demand remained weak. Crude inventories climbed 4.1 million barrels in the week ended Jan. 27 to 452.7 million barrels, much steeper than the 0.4 million barrel rise that analysts had forecast in a Reuters poll. It was the sixth straight weekly build, as refining utilization declined and net imports climbed. "The market is reacting to the report that indicates there isn't demand for crude oil or fuels," The Federal Reserve raised its target interest rate by a quarter of a percentage point on Wednesday, yet continued to promise "ongoing increases" in borrowing costs as part of its still unresolved battle against inflation. "Inflation has eased somewhat but remains elevated," the U.S. central bank said in a statement that marked an explicit acknowledgement of the progress made in lowering the pace of price increases from the 40-year highs hit last year. The U.S. dollar last fell 0.9% on the day against a basket of currencies at 101.19. Ministers from the OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia kept their output policy unchanged on Wednesday. OPEC's oil output fell in January, as Iraqi exports dropped and Nigerian output did not recover, with the 10 OPEC members pumping 920,000 barrels per day (bpd) below OPEC+ targeted volumes, a Reuters survey found. The shortfall was bigger than the 780,000 bpd deficit in December. Elsewhere, Russia's Deputy Prime Minister said he expected oil demand to rise on the back of Chinese economic activity.
OPEC+'s Joint Ministerial Monitoring Committee Recommended Making No Changes to its Output Policy - The oil market posted an outside trading day on Wednesday, trading to its high in overnight trading ahead of the OPEC+ meeting and EIA inventory report before it gave up all of its gains in afternoon trading. The market breached its previous high and rallied to a high of $79.73 and traded back within Tuesday’s trading range following the news that OPEC+’s Joint Ministerial Monitoring Committee recommended making no changes to its output policy during its meeting. The market however later continued to trend lower after the EIA reported across the board builds in U.S. inventories of crude oil and oil products and an unexpected decline in refinery capacity utilization. U.S. crude oil stocks increased for a sixth consecutive week, increasing over 450 million barrels for the first time since June 2021, amid subdued refining capacity and increased imports. The crude market, breached its support at its previous low and 62% retracement level of $76.53 as it sold off to a low of $76.05 in afternoon trading ahead of the Fed’s interest rate decision. The market later settled in a sideways trading range, remaining in negative territory after the Federal Reserve announced a quarter percentage point interest rate increase as expected. The March WTI settled at a three-week low, down $2.46 or 3.12% at $76.41. Meanwhile, the April Brent contract settled down $2.62 or 3.1% at $82.84. The product markets ended sharply lower, with the heating oil market settling down 19.37 at $2.9511 and the RB market settling down 11.3 cents at $2.4538. An OPEC+ panel endorsed the oil producer group's current output policy at a meeting on Wednesday, leaving production cuts agreed last year in place amid hopes of higher Chinese demand and uncertain prospects for Russian supply. Ministers from OPEC+ countries on the panel, called the Joint Ministerial Monitoring Committee, reviewed production figures and "reaffirmed their commitment" to the OPEC+ accord that runs to the end of 2023. A source said the message was OPEC+ is staying the course until the end of the agreement and the group was on "mute mode". Other OPEC+ sources said the ministers did not discuss the prospects for Chinese demand and supply from Russia. OPEC+ agreed to cut its production target by 2 million bpd or about 2% of world demand, from November last year until the end of 2023 to support the market. The committee will meet again in April. U.S. exports of light sweet crude to China increased to a five-month high, as the world's largest crude importer increased refining and as Europe's demand eased. Matt Smith, lead oil analyst for the Americas at data and analytics firm Kpler, said cargoes of U.S. light sweet crude bound for China increased last month to about 187,000 bpd, the highest since August. Those exports are expected to tighten global supply of light sweet crude, while prices for WTI Midland have strengthened. IIR Energy said U.S. oil refiners are expected to shut in about 1,787,000 bpd of capacity in the week ending February 3rd, decreasing available refining capacity by 63,000 bpd. Offline capacity is expected to fall to 1,570,000 bpd in the week ending February 10th.
Oil prices increase with weaker US dollar - Oil prices rose on Thursday as the US dollar fell and OPEC+ decided to maintain its current production policy. International benchmark Brent crude traded at $83.38 per barrel at 9.08 a.m. local time (0608 GMT), a 0.65% increase from the closing price of $82.84 a barrel in the previous trading session. The American benchmark West Texas Intermediate (WTI) traded at $76.97 per barrel at the same time, a 0.73% gain after the previous session closed at $76.41 a barrel. In an effort to combat inflation, the US Federal Reserve raised its benchmark interest rate by 25 basis points on Wednesday. Oil prices, which had been falling ahead of the Fed's interest rate decision, began to rise following the decision and the speech of Fed Chairman Jerome Powell. Powell stated that cutting interest rates this year would be inappropriate if the economy generally performed in line with expectations, and he expects economic growth to continue, albeit at a slower pace. On expectations of softer rate hikes in the US, the US dollar index fell to nine-month lows. The decline in the value of the US dollar aided higher oil prices by encouraging traders to use other currencies. A weaker dollar further fuels strong demand in the global oil market. The Organization of Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, agreed to adhere to cutting oil output by 2 million barrels per day until the end of 2023. The decision came at the group's 47th Joint Ministerial Monitoring Committee (JMMC) videoconference meeting. The group’s next ministerial meeting is scheduled for April 3. Meanwhile, US commercial crude oil inventories increased by 4.1 million barrels during the week ending Jan. 27, according to data released by the Energy Information Administration (EIA) late Wednesday. Inventories rose to 452.7 million barrels, against the market expectation of a decrease of around 1 million barrels.
Oil Eases as USD regains Momentum as ECB, BOE Signal Pause -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange declined for the second session on Thursday, dragged lower by building crude inventories domestically amid signs of recession in manufacturing, and a firmer U.S. dollar index that bounced off a seven-month low in afternoon trading. Greenback's move higher came on the back of expectations for global central banks to soften the path of interest rate increases this year as they assess incoming data on inflation and the labor market. Aside from the Federal Reserve raising interest rates for the eighth consecutive meeting this week, European Central Bank, Bank of England, and Bank of Canada lifted their lending rates to the highest level in almost two decades. However, it was their forward guidance that caught the attention of markets. The Bank of Canada became the first G10 central bank to signal a pause in monetary tightening amid signs of a sharp slowdown in economic activity. "There is growing evidence that restrictive monetary policy is slowing activity, especially household spending," the BoC, led by Governor Tiff Macklem, said in a statement on Wednesday. The BOE, led by Governor Andrew Bailey, announced on Thursday a larger 50-point increase in its lending rate but said further rises would only be needed if there were new signs that inflation is reaccelerating. Finally, the ECB confirmed expectations for a 50-basis point increase on Thursday, adding that "there are signs that inflation is abating." Eurozone inflation fell for the third straight month in January, flash figures published Wednesday showed, but headline inflation remained high at 8.5%. Core inflation, which excludes energy and food, was flat at 5.2%. In the United States, inflation eased from an early summer peak of 9.1% annual rise to 6.5% currently, but much of that decrease came from the energy and goods sectors, leaving a large chunk of the service-oriented economy still mired in high prices. "Disinflationary process is really in its early stage. You have a credible story in goods and housing. The issue is that we have a large core service sector where we don't have a disinflation yet," noted Fed Chairman Jerome Powell in a news conference Wednesday afternoon. U.S. manufacturing is already in recession based on the latest monthly report from the Institute for Supply Management released Wednesday, with the headline index slipping to its lowest level since the first wave of the pandemic in March and April 2020 and before that the recession in June 2009. In contrast, services PMIs fell into contraction for the first time in 2-1/2 years last month, meaning recession that is well under way in manufacturing has only begun to affect services. . At settlement, West Texas Intermediate futures for March delivery declined $0.53 bbl to $75.88 bbl. International crude benchmark Brent contract fell $0.67 to $82.17 bbl. NYMEX RBOB March contract slipped to $2.4523 gallon and March ULSD futures dropped back $0.0544 to $2.8967 gallon
Oil falls as strong U.S. jobs data prompt interest rate concerns - Oil prices fell on Friday in a volatile session, after strong U.S. jobs data raised concerns about higher interest rates and as investors sought more clarity on the imminent EU embargo on Russian refined products. Brent crude futures fell $2.43, or 3%, to $79.74 a barrel, after rising to a session high of $84.20. U.S. West Texas Intermediate (WTI) crude futures were down $2.66, or 3.4%, at $73.22, having earlier risen to $78.00 per barrel. U.S. job growth accelerated sharply in January amid a persistently resilient labor market, but a further moderation in wage gains should give the Federal Reserve some comfort in its fight against inflation. "The market can't decide whether it should be nervous about a recession or more worried about the Federal Reserve being aggressive with interest rates," The U.S. central bank on Wednesday scaled back to a milder rate increase than those over the past year, but policymakers also projected that "ongoing increases" in borrowing costs would be needed. Increases in interest rates in 2023 are likely to weigh on the U.S. and European economies, boosting fears of an economic slowdown that is highly likely to dent global crude oil demand. Investors are eyeing developments on the Feb. 5 European Union ban on Russian refined products, with member countries seeking a deal on Friday to set price caps for Russian oil products. The Kremlin said on Friday that the EU embargo on Russia's refined oil products would lead to further imbalance in global energy markets. "The exact details around what the cap will be and how they will implement it are still unclear," "There hasn't been any data out of China to indicate the extent of the recovery in China's crude demand." ANZ analysts noted a sharp jump in traffic in China's 15 largest cities after the Lunar New Year holiday but said that Chinese traders had been "relatively absent".
Oil down 7% on week as dollar rockets on U.S. jobs report - Crude prices tumbled 7% on the week, taking global benchmark Brent to below $80 per barrel while bringing WTI, or the U.S. West Texas Intermediate, to the low $70s after a sterling U.S. jobs report for January bumped up the dollar, weighing on commodities. Some 517,000 jobs were added last month, the Labor Department’s NFP, or nonfarm payrolls, report said. That was almost three times above the forecast growth of 188,000 and against December’s revised NFP number of 260,000. The outperformance threw a fresh challenge to the Federal Reserve, which had been hoping its aggressive rate hikes over the past year would have sufficiently cooled the labor market and wages to get inflation back to its target. New York-traded West Texas Intermediate, or WTI, crude for March settled down $2.49, or 3.2%, at $73.39 a barrel as the dollar’s resurgence on the same jobs report put paid to crude’s initial advance on the data. By midmorning, oil capsized in a sea of red with gold and other raw materials as the dollar’s rebound from 10-month lows made commodities priced in the U.S. currency costlier for non-dollar holders. For the week, the U.S. crude benchmark was down by just over 7.5%, opening a fresh gash on oil market sentiment for February, after the drop of nearly 3% in the final week of January. Month-to-date, WTI was down about 7%, extending its near 9% slide over three previous months. London-traded Brent crude for March delivery settled down $2.23, or 2.7%, at $79.94 a barrel, after a three-week low at $79.89. For the week, the global crude benchmark was down about 7.5%, after last week’s near 3% loss. For February thus far, Brent has lost 5.4%, extending its compounded 6.5% slide for January and December. The Dollar Index and yields on the U.S. 10-year Treasury note, which act as contra trades against risk assets that include stocks and commodities, surged and could continue rising if the Fed rethinks its plan about further consolidating rate hikes this year. The central bank went from a 50-basis point rate hike in December to 25-basis points in February. As though sensing a tougher challenge for this year, Fed Chair Jerome Powell told a news conference on Wednesday that while the pace of job gains had slowed late last year, “the labor market continues to be out of balance”. The Fed has increased rates by 450 basis points in a monetary tightening cycle that began in March 2022, two years after the coronavirus outbreak, which led to trillions of dollars in relief spending that pumped up the economy and triggered runaway inflation. Oil prices have been on the back foot since a sixth straight weekly build in U.S. crude, along with surpluses in fuel, reported by the EIA, or Energy Information Administration, this week. U.S. crude inventories, meanwhile, rose by 4.14 million barrels during the week ended Jan. 27, the EIA said in its Weekly Petroleum Status Report. The build was above the 0.376M forecast by industry analysts and compared with the rise of 0.533M reported by the EIA during the previous week to Jan 20. For context, the EIA has reported a total crude build of 34.5M barrels over the past six weeks. At current standing, crude stockpiles are at the highest since June 2021, said the EIA, the statistical arm of the U.S. Energy Department. On the gasoline inventory front, the EIA cited a build of 2.576M barrels, versus the forecast of 1.442M and the previous week’s rise of 1.763M. Gasoline inventories have gone up by almost 13M barrels since 2023 began. Distillates stockpiles also rose, for the first time in five weeks. Here, there was a build of 2.32M barrels versus the expected deficit of 1.3M. In the previous week, distillate draws stood at 507,000 barrels. Until last week, distillates, which are refined into heating oil, diesel for trucks, buses, trains, and ships, and fuel for jets, were the strongest component of the U.S. petroleum complex in terms of demand. Prior to the build in the latest week, distillate stockpiles had fallen by around 5M barrels over four weeks. Also weighing on the market were uncertainties over how well demand from China would fare in February, more than a month after the top crude importer abandoned all COVID restrictions. On China’s side, crude imports were assessed at 10.98M bpd, or barrels per day, in January, down from December's 11.37M bpd and November's 11.42M bpd, a Reuters report said Thursday.
Attack on Kherson port causes oil products leakage into Dnipro river -A recent Russian attack on Kherson seaport has resulted in leakage of oil products into the Dnipro river. Quote: “Recently, the Russian army attacked the port of Kherson. Two ships belonging to foreign companies were damaged due to enemy shelling. A Russian projectile pierced the hull and fuel storage area of one of the ships. Because of this, oil products leaked into the Dnipro.” Details: At the moment, the ship’s crew managed to localise the spill of oil products, the Kherson Oblast Military Administration added.
Iran, Russia Integrate Banking Systems To Bypass Sanctions - A top Iranian official announced this week that Iran and Russia had integrated their interbank communication and transfer systems to help enhance trade and financial operations in an effort to bypass strict economic sanctions on their financial infrastructure.With the signing of the agreement, 52 Iranian and 106 Russian banks are connected through the Russian Financial Message Transfer System, which will facilitate economic relations between the two countries, said Deputy Governor of the Central Bank of Iran Mohsen Karimi. "This system is immune to sanctions as it is based on the infrastructures of both countries," Karimi said, according to Iran’s Mehr news agency.The global consortium SWIFT, the world leader in secure financial messaging services, excluded Iranian banks from its system following the reimposition of economic sanctions by the United States on Iran in 2018.As a result of that suspension of services, the Iranian banking system is disconnected from the international one, making banking transactions with other countries difficult. Russia was partially excluded from SWIFT last year due to its invasion of UkraineWhile economic relations between the two countries have grown to 4 billion in recent years, Tehran has sold drones to Russia, which it has used in its invasion of Ukraine.Official trips between the two countries have also multiplied in recent months, with Iranian President Ebrahim Raisi visiting Russia in January 2022 and Iranian Foreign Minister Hosein Amir Abdolahian making two trips to the Russian capital in less than a year.
Video evidence shows of escalating crackdown on Iranian protests - Four months into Iran’s uprising, protesters are still in the streets. Authorities are still answering with violence and intimidation.Nowhere is this bloody stalemate more evident than in the southeastern province of Sistan-Baluchestan, which endured the single deadliest government crackdown on protesters in late September and is now the site of weekly demonstrations after Friday prayers.Video posted to social media on Jan. 20 shows a large group of protesters in Zahedan, Iran, who continue to protest every Friday after prayers. (Video: Haalvsh/Telegram)The Washington Post analyzed more than 100 videos and photographs, interviewed eyewitnesses and human rights observers, and reviewed data collected by conflict monitoring groups over 17 weeks of protests — to better understand the intensity and sophistication of the government crackdown, and the persistence of the protesters.Visual evidence shows with new clarity how security forces are operating in the region, as Iran’s feared Revolutionary Guard Corps (IRGC) works in tandem with riot police and plainclothes agents to violently suppress demonstrations — carrying out arbitrary arrests, indiscriminate beatings and, in some cases, opening fire on civilians.Ayatollah Ali Khamenei, Iran’s supreme leader, has called protesters “traitors,” accused them of “rioting,” and blamed the United States and Israel for instigating the unrest. A spokesman for Iran’s United Nations mission in New York did not respond to a request for comment on this story.The majority of the population in the province is ethnic Baluch, a predominantly Sunni minority that has faced neglect and discrimination for decades at the hands of Tehran’s theocratic Shiite government. But the resilience and desperation here speak to the enduring power of the nationwide protest movement, which began in mid-September after the death of 22-year-old Mahsa Amini in the custody of Iran’s “morality police.”“We have no future, no hope,” one protester told The Post. “Life has become so difficult, we think to ourselves even if we get killed here maybe there will be a better future for our children tomorrow.”
Iran-Azerbaijan Relations Under Stress Following Embassy Attack -A gunman stormed the Azerbaijani Embassy in Tehran on January 27, killing one guard and wounding two others. Iran said the attack was motivated by personal reasons, but Baku described it as a “terrorist attack.”The incident led Azerbaijan to temporarily suspend its operations at its embassy in Tehran and evacuate its staff from the country. Iranian media said the attacker, who was arrested, was an Iranian man married to an Azerbaijani woman. The attacker was quoted as saying that his wife disappeared after entering the Azerbaijani Embassy. The incident has further strained relations between the neighbors, who have a history of tensions. Azerbaijan has long been suspicious of Iran’s ties with Armenia, Baku’s archenemy. Meanwhile, Tehran has increasingly expressed concern about Azerbaijan’s deepening relations with Israel, Tehran’s regional foe. Earlier this month, Baku appointed its first-ever ambassador to Israel, which is a major arms supplier to Azerbaijan.Azerbaijan has also long complained of Iran’s alleged mistreatment of its sizable ethnic Azeri minority. Tehran has accused Baku of fomenting separatist sentiment in the Islamic republic.Analyst Habib Hosseinifard told RFE/RL’s Radio Farda that the embassy attack has led to an “overflow” of tensions. “Iran claims some of Israel’s actions against the country are organized from inside Azerbaijan. In addition, Iran also accuses Azerbaijan of inciting the country’s Azeri minority, while Baku accuses Tehran of strengthening extremist Shi’ite groups inside Azerbaijan. All of these have increased tensions, particularly in the past two years,” he said. Since the embassy attack, Iran has attempted to ease tensions with Azerbaijan. But Baku appears to have upped the ante by announcing on January 31 the arrests of what it said were seven members of an Iranian spy network in Azerbaijan. Meanwhile, Azerbaijan’s Deputy Foreign Minister Khalaf Khalafov said in a January 31 statement that “suspension of a diplomatic mission’s operations in any country is a serious matter" and that Baku has let Tehran know that "we do not trust Iran with respect to ensuring the security of our embassy’s employees.”The statement came days after Iranian President Ebrahim Raisi told Azerbaijan’s President Ilham Aliyev in a phone call that “the governments of Iran and Azerbaijan will not allow bilateral relations to be affected by the suggestions of those who wish ill on the two nations,” according to the Iranian government’s website.
Russia's "Sanction-Proof" Trade Corridor To India Frustrates The Neocons - Russia, Iran, and India are speeding up efforts to complete a new transport corridor that would largely cut Europe, its sanctions, and any other threats out of the picture. The International North-South Transport Corridor (NSTC) is a land-and sea-based 7,200-km long network comprising rail, road and water routes that are aimed at reducing costs and travel time for freight transport in a bid to boost trade between Russia, Iran, Central Asia, India. For Russia, the “sanction-proof” corridor provides a major export channel to South Asia without needing to go through Europe. But Brussels and Washington, frustrated by their losing in Ukraine and inability to put much of a dent in the Russian economy, could lead them to take more desperate measures. Lately, Estonia, which has a population smaller than Russia’s armed forces, has been making noise about causing problems in the Gulf of Finland, Estonian Minister of Defense Hanno Pevkur is talking about how Helsinki and Tallinn will integrate their coastal missile defense, which he says would allow the countries to close the Gulf of Finland to Russian warships if necessary. Estonia is also floating the possibility of trying to inspect Russian ships. From Asia Times:It is unlikely Estonia can carry out any inspections given that it only has two patrol vessels (EML-Roland and EML-Risto) and no other warships except some mine layers. But if Estonia even tried, it would create another friction point that Russia could exploit if it chose. It’s hard to take Estonia’s bluster seriously but equally difficult to put anything past the neocons in Washington and their adherents in the Baltics. Regardless, Russia would prefer a trade route with India that saves time and money and avoids Europe.While NATO’s war against Russia has sped up the cooperation between Moscow, Tehran, and New Delhi, India and Iran are coming under various types of pressure that could delay full implementation of the corridor. And Azerbaijan, a key nexus in the INSTC, is a wildcard as it grows increasingly confrontational with both Iran and Armenia.First the recent developments on the INSTC:
- India is helping to develop the Shahid Beheshti Terminal at Iran’s Chabahar Port in cooperation with the Iranian government.
- Iran and Russia recently signed a contract for Russia to build a cargo vessel for Iran to be used at the Caspian port of Solyanka, which is being developed jointly by the two nations as part of efforts to strengthen the Caspian Sea transportation network.
- RZD Logistics, a subsidiary of Russian railway monopoly RZD, has begun regular container train services from Moscow to Iran to serve growing trade with India by transloading.
- Rezaul Hasan Laskar, the foreign affairs editor at Hindustan Times, says the strategic Chabahar Port in southeastern Iran has “become more important following its growing use” but that “it needs to be connected to Iran’s railway network.” Iran has accelerated that project, and with an investment boost from Russia, is speeding up the completion of the Astara-Rasht-Qazvin railway, another transport corridor that will connect existing railways of Russia, Azerbaijan and Iran to the INSTC.
China Plans To Sell Lethal Blowfish Drones To Taliban: Report -Following two major recent terrorist attacks which targeted Chinese nationals in Kabul, the Chinese government is desperately appealing to the Taliban to provide better security protection for its citizens in Afghanistan. The past week has seen multiple reports emerge saying that Beijing is even offering the Taliban advanced weaponry in order to bolster counter-terror efforts in the capital. The US national security website 19fortyfive writes that "Rather than subsidize education or develop the country, it now appears that the Taliban will use its limited cash to purchase or otherwise acquire Blowfish drones from China."The source describes the China-produced drones as follows: The Blowfish is a potentially devastating platform. The mini-helicopter can fire machine guns, launch mortars, and throw grenades. Artificial Intelligence imbues them with the ability to determine who lives and who dies on the battlefield with minimal human input. The Pentagon has already expressed fears that Blowfish exported to the Middle East could end up in the wrong hands.
Israeli settlers attack Palestinians across West Bank as escalation looms — A Palestinian man was killed near a settlement in the West Bank overnight Saturday, and Israeli settlers carried out dozens of attacks targeting Palestinians across the occupied territory, according to Palestinian media and officials, as violence showed no sign of abating on the eve of a trip to the region by America’s top diplomat.The Israeli army said that the Palestinian man killed late Saturday was seen outside Kdumim, a settlement in the northern West Bank, “armed with a handgun … and was neutralized by the community’s civilian security team.” Wafa, the official Palestinian news agency, identified the man as Karam Ali Salman, 18, a resident of Qusin village, near the northern West Bank city of Nablus. The report said he was fatally shot by an armed Israeli settler in circumstances that remained “unclear.” Wafa said at least 144 Israeli settler attacks — some minor rock-throwing incidents, others much more violent — were reported on Saturday across the West Bank, the occupied territory that Palestinians envision as part of their future state. Meanwhile, Israeli authorities on Sunday began demolishing Palestinian homes in retaliation for Friday’s synagogue shooting and pledged an expansion of West Bank settlements, which could further inflame an already volatile situation. In Masafer Yatta, in the south, settlers assaulted a Palestinian man; in two villages near Ramallah, masked attackers torched a house and a car and threw stones; in Nablus, settlers uprooted nearly 200 trees.Outside the northern village of Akraba, dozens of settlers established a new, unauthorized outpost. They attacked the Palestinian landowners who arrived at the scene, then injured a medic who came to assist, according to Yesh Din, an Israeli human rights group. The Israeli military did not intervene, the report added.There has been an “unprecedented increase in the frequency of terror attacks against Palestinian citizens and their property,” said Ghassan Daghlas, a Palestinian official.Early Sunday, Israeli security forces blocked access to the family home of the Palestinian gunman who killed seven people outside a synagogue in East Jerusalem on Friday night, sealing doors and windows. Authorities promised that the house would soon be demolished.The shooter, who was killed at the scene, has been identified as 21-year-old Khairi Alqam. Alqam was named after his grandfather, who was fatally stabbed in 1998, allegedly by a Jewish attacker who was arrested but never charged with the crime, the Israeli news site Ynet reported.
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