oil production at a 33 week high; commercial oil inventories at a 19 month high; distillates imports at a 17 year high

natural gas prices hit a new 25 month low; oil production was at a 33 week high; commercial crude oil inventories are at a 19 month high after 7 straight increases; imports of distillates were at a 17 year high..

Oil prices rose for the first week in three after a key Turkish pipeline was shut following an earthquake, the Saudis hiked their prices on crude to Asia, and Russia unilaterally cut their oil output ...after falling 7.9% to $73.39 a barrel last week as fears of higher interest rates were exacerbated by a much stronger than expected jobs report, the contract price for the benchmark US light sweet crude for March delivery edged up in early Asian trading on Monday after International Energy Agency Executive Director Fatih Birol on Sunday had highlighted that China’s demand recovery was a key driver for oil prices, then continued to rally in New York trading as a major pipeline carrying around 1.2 million barrels per day to European refiners was shut down by an earthquake in Turkey, and settled 72 cents higher at $74.11 a barrel, buoyed by signs of stronger demand from China and concerns over supplies from the Middle East...oil prices gapped higher on the opening on Tuesday, driven by optimism over recovering demand in China and concerns over supply shortages following the shutdown of the Ceyhan terminal in Turkey, then spiked again after Fed Chairman Powell commented that he still expects inflation to come down significantly this year without a recession. and settled $3.03 or 4% higher at $77.14 a barrel after Saudi Arabia signaled confidence in the demand outlook with a surprise boost​ of their crude price to Asia...oil prices extended those gains overnight after the American Petroleum Institute reported domestic crude oil inventories had declined for the first time in seven weeks, and opened higher on Wednesday, then slid back in morning trading after the EIA reported across-the-board inventory increases and a crude production hike, but again spiked after Turkish officials acknowledged quake damage to the pipeline carrying oil from Iraq to Mediterranean ports, as the key export facility in Ceyhan remained shut down a third straight day. and settled $1.33 higher at $78.47 a barrel as the Fed was seen as less hawkish than feared, boosting risk appetite and weighing on the dollar…oil prices moved higher early Thursday, buoyed by hopes of increased Chinese demand, even as the higher inventories reported by the EIA on Wednesday limited the market’s gains, but then pulled back on profit taking following the big gains ​of ​early in the week to settle 41 cents lower at $78.06 a barrel, as traders reassessed the earthquake​'s​ impact on supply and fears that the Fed would continue to aggressively hike rates to cool inflation were rekindled...oil prices fell in early trade on Friday after a report on Thursday had showed the number of Americans claiming unemployment benefits increased more than expected last week, reigniting recession fears, then seesawed between fears of a US recession and hopes for strong fuel demand recovery in China​​, before rallying to settle $1.66 or more than 2% higher at $79.72  a barrel after Russia announced plans to reduce their oil production next month in response to Western price caps on the country's crude and fuel, and thus ended up 8.6% for the week, the biggest weekly jump since October...

meanwhile, US natural gas prices finished higher for the first time in nine weeks on weather induced short covering and ​expectations of higher LNG exports...after falling 15.4% to a 25 month low of $2.410 per mmBTU last week as traders looked past a polar outbreak to warmer weather through mid-February, the contract price of US natural gas for March delivery opened lower on Monday and traded near 25 month lows for most of the session, but inched higher near the close to settle 4.7 cents higher at $2457 per mmBTU as bargain hunters emerged at the lower price level....the March contract price then opened 5 cents higher on Tuesday, as the latest forecasts showed a possible return for frigid temperatures by month-end and rose throughout the session to settle 12.7 cents higher at $2.584 per mmBTU as short sellers booked their profits for a second day.​.​..however, natural gas prices opened lower on Wednesday and fell 18.8 cents, or 7.3% to a new 25 month low of $2.396 per mmBTU on a slow rise in output as warmer weather thawed frozen wells, a decline in LNG exports, and forecasts for mostly mild weather through late February...after opening higher on Thursday, natural gas prices fell to a 28 month low at $2.351 after the storage report, but recovered to close 3.4 cents higher at $2.430 per mmBTU on rising LNG exports, forecasts for slightly colder weather over the next two weeks than previously expected and a bigger-than-expected weekly storage draw...natural gas prices moved higher Friday, boosted by a brief blast of cold air sweeping across the central and eastern United States, then rallied to close up 8.4 cents, or 3.5% higher at $2.514 per mmBTU after the first vessel arrived at Freeport LNG's export plant in Texas since the facility was shut in a fire in June of last year and hence managed a 4.3% gain on the week..

The EIA's natural gas storage report for the week ending February 3rd indicated that the amount of working natural gas held in underground storage in the US fell by 217 billion cubic feet to 2,366 billion cubic feet by the end of the week, which left our natural gas supplies 233 billion cubic feet, or 10.9% above the 2,133 billion cubic feet that were in storage on February 3rd of last year, and 117 billion cubic feet, or 5.2% more than the five-year average of 2,249 billion cubic feet of natural gas that were in storage as of the 3rd of February over the most recent five years….the 217 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 195 billion cubic feet withdrawal of gas, but it was less than the 228 billion cubic feet that were pulled out of natural gas storage during the corresponding week of 2022, while more than the average 171 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 February 3rd indicated that after another substantial decrease in our oil exports, we had surplus oil left to add to our stored commercial crude supplies for the ​7th consecutive weekly increase, and for the 26th time in the past 42 weeks, despite a big increase in refinery throughput and another unusual increase in oil demand that could not be accounted for... Our imports of crude oil fell by an average of 225,000 barrels per day to average 7,058,000 barrels per day, after rising by an average of 1,378,000 barrels per day during the prior week, while our exports of crude oil fell by 592,000 barrels per day to average 2,900,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 4,158,000 barrels of oil per day during the week ending February 3rd, 367,000 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 100,000 barrels per day higher at ​a 33 week high of ​12,300,000 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 16,458,000 barrels per day during the February 3rd reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,410,000 barrels of crude per day during the week ending February 3rd, an average of 448,000 more 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 346,000 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 February 3rd appear to indicate that our total working supply of oil from net imports and from oilfield production was 702,000 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 [-702,000] 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 magnitude in this week’s oil supply & demand figures that we have just transcribed.... However, since most everyone treats these weekly EIA reports as precise, 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 6,776,000 barrels per day last week, which was 2.5% more than the 6,614,000 barrel per day average that we were importing over the same four-week period last year. This week's 346,000 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 100,000 barrels per day higher at​ a thirty-three week high of​ 12,300,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,800,000 barrels per day, while Alaska’s oil production was 1,000 barrels per day higher at 452,000 barrels per day and ​added 5​00,000 barrels per day ​to the​ 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 ​still ​6.1% below that of our pre-pandemic production peak, but was 26.8% 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 87.9% of their capacity while using those 15,410,000 barrels of crude per day during the week ending February 3rd, up from their 85.7% utilization rate during the prior week, and close to normal utilization for early February, when seasonal maintenance tends to ​start impacting throughput.  The 15,410.000 barrels per day of oil that were refined this week were still 1.1% less than the 15,577,000 barrels of crude that were being processed daily during week ending February 4th of 2022, and 3.8% less than the 16,020,000 barrels that were being refined during the prepandemic week ending February 7th, 2020, when our refinery utilization was at a fairly normal 88.0% for early February ...

Even with the increase in the amount of oil being refined this week, the gasoline output from our refineries was quite a bit lower, decreasing by 350,000 barrels per day to 9,093,000 barrels per day during the week ending February 3rd, after our gasoline output had increased by 612,000 barrels per day during the prior week. This week’s gasoline production was still 3.2% less than the 9,390,000 barrels of gasoline that were being produced daily over the same week of last year, while 1.6% less than the gasoline production of 9,241,000 barrels per day during the prepandemic week ending February 7th, 2020. Similarly, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 28,000 barrels per day to 4,692,000 barrels per day, after our distillates output had increased by 100,000 barrels per day during the prior week. And with that, our distillates output was 0.7% less than the 4,699,000 barrels of distillates that were being produced daily during the week ending February 4th of 2022, and 3.6% less than the 4,837,000 barrels of distillates that were being produced daily during the week ending February 7th 2020...

Even with the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the eleventh time in thirteen weeks and for the 14th time in 26 weeks, increasing by 5,008,000 barrels to 239,606,000 barrels during the week ending February 3rd, after our gasoline inventories had increased by 2,576,000 barrels during the prior week. Our gasoline supplies rose by more this week because the amount of gasoline supplied to US users fell by 63,000 barrels per day to 8,428,000 barrels per day, and because our imports of gasoline rose by 488,000 barrels per day to​ a 21 week high of​ 989,000 barrels per day, while our exports of gasoline rose by 17,000 barrels per day to 943,000 barrels per day.. But even after 11 recent gasoline inventory increases, our gasoline supplies were still 3.5% below last February 4th's gasoline inventories of 248,393,000 barrels, and still about 6% below the five year average of our gasoline supplies for this time of the year…

Even with the decrease in our distillates production, our supplies of distillate fuels increased for the 2nd time in 6 weeks, and for the 26th time over the past year, rising by 2,932,000 barrels to 117,590,000 barrels during the week ending February 3rd, after our distillates supplies had increased by 2,320,000 barrels during the prior week. Our distillates supplies rose again this week even ​though the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 70,000 barrels per day to 3,762,000 barrels per day, because our imports of distillates rose by 279,000 barrels per day to a 17 year high of 692,000 barrels per day, while our exports of distillates rose by 195,000 barrels per day to 1,176,000 barrels per day... After a run of fifty-six inventory withdrawals over the past ninety-two weeks, our distillate supplies at the end of the week were were 1.1% below the 121,814,000 barrels of distillates that we had in storage on February 4th of 2022, while about 15% below the five year average of ​our ​distillates inventories for this time of the year...

Meanwhile, with a big decrease in our oil exports, our commercial supplies of crude oil in storage rose for the 14th time in 26 weeks and for the 24th time in the past year, increasing by 2,423,000 barrels over the week, from 452,688,000 barrels on January 27th to 455,111,000 barrels on February 3rd, after our commercial crude supplies had increased by 4,140,000 barrels over the prior week. With big oil supply increases in recent weeks following the Christmas refinery freeze offs, our commercial crude oil inventories were at a new 19 month high, about 4% above the most recent five-year average of commercial oil supplies for this time of year, and also 40.4% above the average of our available crude oil stocks as of the first weekend of February 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 February 3rd were 10.9% more than the 410,387,000 barrels of oil we had in commercial storage on February 4th of 2022, but 3.0% less than the 469,014,000 barrels of oil that we had in storage during the 2nd Covid surge on February 5th of 2021, while 2.9% more than the 442,468,000 barrels of oil we had in commercial storage on February 7th 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 3,354,000 barrels this week barrels this week, from 1,607,193,000 barrels on January 27th to 1,610,547,000 barrels on February 3rd after our total inventories had increased 1,597,000 barrels during the prior week. Even after five straight increases, our total petroleum liquids inventories were still down by 507,096,000 barrels, or by 23.9% from their early pandemic high, and are just 2.0% off their recent 18 1/2 year low...

This Week's Rig Count

The number of drilling rigs active in the US increased for the 14th time over the prior 28 weeks during the week ending February 10th, and for the 95th time in 124 weeks, but still remain 4.0% below the prepandemic level...Baker Hughes reported that the total count of rotary rigs drilling in the US rose by 2 rigs to 761 rigs over the past week, which was also 126 more rigs than the 635 rigs that were in use as of the February 11th report of 2022, but was 1,168 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business. .

The number of rigs drilling for oil increased by 10 to 609 oil rigs during the past week, after the number of rigs targeting oil had decreased by 10 during the prior week, but there are still 93 more oil rigs active now than were running a year ago, even as they amount to just 37.8% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are still down 10.8% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 8 to 150 natural gas rigs, which was still up by 32 natural gas rigs from the 118 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.3% 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 was just one such "miscellaneous" rigs running...

The offshore rig count in the Gulf of Mexico increased by six to eighteen rigs this week, with 17 of those drilling for oil in Louisiana's offshore waters and a new one also added for oil in Texas waters....that Gulf rig count is now up  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 unchanged at 700 horizontal rigs this week, which was still 126 more rigs than the 574 horizontal rigs that were in use in the US on February 11th of last year, but just 50.9% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....however, the directional rig count was up by 5 to 43 directional rigs this week, and those were also up by 10 from the 33 directional rigs that were operating during the same week a year ago…on the other hand, the vertical rig count was down by 3 to 18 vertical rigs this week, which was down by 19 from the 28 vertical rigs that were in use on February 11th 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 10th, the second column shows the change in the number of working rigs between last week’s count (February 3rd) and this week’s (February 10th) count, the third column shows last week’s February 3rd active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the11th of February, 2022...

some of this week's rig changes can be characterized as reversing the changes of recent weeks; for instance, four weeks ago there were 19 rigs drilling in the Gulf of Mexico; with one of those offshore from Texas; over three weeks that Gulf count was reduced to 12 rigs, all offshore from Louisiana; this week we've had the restoration of all but one of those rigs, with 5 rigs additions in Louisiana waters and another one offshore from Texas; that's typical of the type of change one might see with a Gulf hurricane approaching, but in this case appears to have been due to several rigs moving between jobsites during the same period...ie, in Louisiana's waters, rigs were pulled out of Green Canyon and Mississippi Canyon, while a Gulf rig was set up to target ​the ​South Timbalier​ field, and the Texas Gulf rig that had been drilling in East Breaks was moved to Alaminos Canyon...meanwhile, three weeks ago, the E&Ps started adding natural gas rigs in the Permian basin, first adding four natural gas rigs while shutting down an oil rig, then adding two more natural gas rigs last week while shutting down five oil rigs at the same time...however, this week, 7 natural gas rigs were removed from the Permian, leaving just two, while four oil rigs were added....

so, checking the Rigs by State file at Baker Hughes to see what the changes were in the Texas Permian basin, we find that there were six rigs pulled out of Texas Oil District 8, which overlies the core Permian Delaware, and there was another rig pulled out of Texas Oil District 7B, which has a few counties over the easternmost Permian Midland, but that there was a rig added in Texas Oil District 8A, which overlies the northernmost counties in the Permian Midland...since the Texas Permian is thus down by six rigs while the national Permian rig count is only down by two, we can conclude that all the rigs added in New Mexico were set up in the far west reaches of the Permian Delaware, in the southwest corner of that state...

elsewhere in Texas, there were two rigs added in Texas Oil District 1, but there were two pulled out of Texas Oil District 2, and there was also another rig pulled out of Texas Oil District 4; at least one of the removals was a natural gas rig pulled out of the Eagle Ford; the other changes in those 3 districts likely also involved the Eagle Ford, assuming there were concurrently offsetting changes of the same type of rig that wouldn't have showed up in the totals, which now show the Eagle Ford with 68 oil rigs and 3 natural gas rigs active....in addition, there was also a rig pulled out of Texas Oil District 9, which would account for the oil rig removed from the Barnett shale, and as we've already mentioned, a rig was added in the state's offshore waters..

in other states, Louisiana saw the five oil rigs added in the state's offshore waters, and a natural gas rig added in the Haynesville shale in the northwest quadrant of that state, while Oklahoma had four oil rigs pulled out of the Ardmore Woodford while two oil rig were added in the Cana Woodford...however, since the Oklahoma count was only down one, that means an oil rig was added elsewhere in the state targeting a basin not tracked by Baker Hughes...likewise, the rig pulled out of California was also from a basin not tracked by Baker Hughes...lastly, there was a natural gas rig pulled out of West Virginia's Marcellus, offsetting the natural gas rig added in Louisiana's Haynesville shale; as we've already noted, the eight rig natural gas decrease nationally all came out of ​the big ​Texas oil basins...

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TC Energy halts gas flow on Ohio pipeline after train derailment - (Reuters) - TC Energy Corp discontinued gas delivery on its Line 1982, an underground part of Columbia Gas Transmission, in and around East Palestine, Ohio, after a train derailed near the pipeline last week, the company said on Tuesday. TC Energy's Columbia Gas Transmission on Monday declared a force majeure event on Line 1982 near East Palestine, citing an immediate pressure reduction with a total impact to physical flow of 170 Dekatherms per day. A train operated by Norfolk Southern Railroad derailed in a fiery wreck last week near the border of Ohio and Pennsylvania, leaving nearly 2,000 residents of eastern Ohio under evacuation orders as of Monday. The force majeure was declared to "maintain the safety and reliability of the system due to a third-party train derailment near Line 1982," the company said in a statement. TC Energy isolated and purged a segment of the 4-inch Line 1982 as a precaution due to an explosion risk from one of the tank cars of vinyl chloride, a source familiar with operations told Reuters. "This segment has not experienced any damage and remains isolated," the source added. The Columbia Gas Transmission system connects major natural gas basins with major markets in the U.S. Midwest and on the East Coast, according to its website.

Hilcorp Seeks New Well Permits in Columbiana County - – Houston-based Hilcorp Energy Co. is seeking permits to drill new horizontal oil and gas wells in Columbiana County, the most productive region of the northern Utica/Point Pleasant shale formation. According to data from the Ohio Department of Natural Resources, Hilcorp has placed requests for permits to drill nine new wells at the Fairfield Unkefer pad in Fairfield Township. The permits had not been awarded as of Feb. 8, records show. The permit requests were filed Jan. 27.

Ohio Board Stops County Appeal Of Pipeline Value Settlement - Law360- An Ohio county auditor cannot appeal a settlement agreement between the state tax agency and an energy company over the value of a gas pipeline transmission system, the state Board said.

TC Energy lifts force majeure on gas line near Ohio train derailment -(Reuters) -TC Energy Corp's TRP.TO Columbia Gas Transmission on Friday lifted a force majeure on Line 1982 after halting gas delivery on Feb. 7 following a train derailment near the pipeline last week.The company declared a force majeure event near East Palestine, Ohio, citing immediate pressure reduction with a total impact to physical flow of 170 dekatherms per day.TC Energy isolated and purged a segment of the 4-inch Line 1982 as a precaution against the risk of explosion in one of the tank cars containing vinyl chloride, a source familiar with operations told Reuters. The Columbia Gas Transmission system connects large natural gas basins with major markets in the U.S. Midwest and on the East Coast, its website says.

Ohio train derailment underscores the dangers of the plastics boom -Last week a train derailed in East Palestine, Ohio, sending 50 cars carrying toxic chemicals careening off their tracks. The resulting fire burned for days, forcing hundreds of evacuations and blanketing the small village on the Ohio-Pennsylvania border in smoke. Runoff from the site contaminated two streams nearby. Over the next week, as officials worked to avoid a deadly explosion that could launch “deadly shrapnel as far as a mile,” they slowly released vinyl chloride, a colorless gas linked to various cancers, from five of the railcars that were transporting it to its destination.The blaze is now under control, and residents were allowed to return to their homes late Wednesday, five days after the train derailed. Local authorities say the air and water are safe. The Environmental Protection Agency, or EPA, has been conducting air monitoring in the area. On Wednesday, the agency reported that its monitors detected volatile organic compounds, a class of toxic chemicals, but that their levels were below thresholds that trigger public health concerns. It also reported detecting particulate matter, the fine soot that makes up smoke and causes respiratory issues, above public health thresholds. The disaster is a reminder of the health and safety risks that accompany reliance on fossil fuels. Vinyl chloride, the chemical released from the railcars, is a petrochemical produced from the hydrocarbon ethylene. Its primary use is in making polyvinyl chloride, or PVC, a type of plastic that is widely used to make pipes, flooring, wire insulation, and a slew of single-use medical devices. Over the last decade, with the rise of fracking and the subsequent boom in U.S. oil and gas production, fossil fuel companies have turned to plastic production as a way to capitalize on cheap (until recently) oil and gas. Researchers at the Organisation for Economic Co-operation and Development projected that global plastics production would roughly quadruple from 407 million tonnes a year to 1,600 million tonnes in 2050.The consequences of the growth are felt most acutely by communities on the front lines of fossil fuel production and refining — such as the Gulf Coast, which has seen a massive buildout of petrochemical facilities — and in towns like East Palestine that reside along pipeline and railroad routes. Plastics are “so pervasive in our economy,” said Judith Enck, a former EPA regional administrator and current president of the environmental group Beyond Plastics. “Wherever a range of plastic products are being made, you will often have to transport vinyl chloride to the facility, and it’s not without its risks, as we’ve seen this past week.” More than 250 trains have derailed in the last decade, according to the Pipeline and Hazardous Materials Safety Administration, a branch of the federal Department of Transportation. Of them, roughly half involved hazardous waste. Trains that carry hazardous waste face additional federal regulations, but the Norfolk Southern train that derailed in East Palestine was not considered a “high-hazard flammable train,” federal officials told The Lever, an investigative news outlet. Despite the combustibility of vinyl chloride, industry lobbyists have successfully limited many trains carrying the chemical from the most stringent federal regulations.

26 New Shale Well Permits Issued for PA-OH-WV Jan 30-Feb 5 | Marcellus Drilling News - New shale permits issued for Jan. 30 through Feb. 5 in the Marcellus/Utica were about half the number of the week before, but the week before was a recent record high. There were 26 new permits issued in total last week, including five new permits for Pennsylvania, six new permits for Ohio, and 15 permits issued in West Virginia. Which is a turnaround from previous months. Lately, WV has puttered along with just a few (if any) each week. Last week WV issued eight new permits to Antero Resources and seven new permits to Tug Hill Operating. Antero Resources, Ascent Resources, Belmont County, Bradford County, Doddridge County, Gulfport Energy, Marshall County, Olympus/Huntley & Huntley, Repsol, Tug Hill Operating,Westmoreland County

Orphan Well Cleanup in Pennsylvania Underscores Enormity of Task -Interior Secretary Deb Haaland visited the Pittsburgh area Thursday to announce the plugging of the first 10 abandoned oil and gas wells in the area paid for with funds from the 2021 infrastructure law.But with 27,000 known abandoned oil wells to plug across Pennsylvania and possibly hundreds of thousands more left to discover, the announcement underscored the daunting task ahead for Congress and the federal and state agencies in charge of finding and capping oil and gas wells.Haaland, standing in front of a derelict oil well in Ed and Mary Vojtas’ front yard in Ohio Township, Pa., said the well is leaking gas and will be one of the state’s first to be plugged with federal infrastructure money.“These wells emit methane, they litter the landscape with rusted dangerous equipment posing safety hazards and threats to wildlife,” Haaland said. “Many of these wells have been left behind in backyards.” Pennsylvania, the birthplace of America’s oil industry, has more documented orphaned wells than any other state. Its effort to plug the state’s orphaned wells using federal infrastructure funding starts soon, with 10 wells in the Pittsburgh area, Richard Negrin, acting director of the Pennsylvania Department of Environmental Protection, said, speaking alongside Haaland.Until now, Pennsylvania was able to plug “only a handful” of abandoned wells annually, but federal funding will allow the state to plug 235 wells in 2023, Negrin said.The Infrastructure Investment and Jobs Act (Pubic Law 117-58) earmarked $4.7 billion for cleaning up derelict oil and gas wells left behind by drillers decades ago before states regulated them.The money will only just begin the decadeslong process of finding and plugging all the nation’s abandoned and orphaned oil and gas wells. There are roughly 131,000 documented orphaned and abandoned oil and gas wells nationwide, with the Interior Department estimating an overall total of about 3.5 million. The infrastructure money for orphaned wells is being distributed to the states by the Interior Department, but it’s up to the states to take the lead on cleaning up the wells to “get the best bang for the buck,” Haaland said.

CNX Announces Proved Reserves of 9.81 Tcfe - CNX Resources Corporation announced today its year-end reserves update as of December 31, 2022.

• Increased proved developed reserves by 5%, or 315 Bcfe, to 6,221 Bcfe
• During 2022, initiated production on 32 wells with estimated ultimate recovery (EURs) averaging 2.65 Bcfe per thousand feet of completed lateral
• Proved developed finding and development costs of $0.36 per Mcfe in 2022
• Increased total proved reserves by 181 Bcfe to 9,807 Bcfe
• Proved undeveloped location EURs estimated to average 2.69 Bcfe per thousand feet of completed lateral
• Future finding and development costs for proved undeveloped reserves of $0.42 per Mcfe
• Total proved, probable and possible reserves (3P reserves) of 11,687 Bcfe from the five-year development plan activity
• 110 Tcfe of recoverable resources beyond the five-year development plan that are economic at strip pricing as of12/30/2022

Tennessee Gas Pipeline gets draft EIS for Cumberland powerplant spur - Tennessee Gas Pipeline Co., a subsidiary of Kinder Morgan Inc., has received a draft environmental impact statement (EIS) from the US Federal Energy Regulatory Commission (FERC) for its 245-MMcfd Cumberland project. The 32-mile pipeline would run through Dickson, Houston, and Stewart Counties, Tenn., supplying the Tennessee Valley Authority’s (TVA) 1,450-Mw Cumberland natural gas combined-cycle powerplant, currently under development. FERC concluded that—with implementation of Tennessee’s proposed impact avoidance, minimization, and mitigation measures, as well as adherence to Commission staff’s recommendations—project effects would be reduced to less than significant levels, except for climate change impacts that were not characterized in the EIS as significant or insignificant. The draft EIS comment period closes Mar. 27, 2023. TVA earlier this year decided to retire its Cumberland fossil plant and build the combined-cycle plant by 2026. The two-unit Cumberland fossil plant will retire in two stages, one unit by end-2026 and the second by end-2028. TVA says that construction of the combined-cycle natural gas plant—for replacement of one of the retiring Cumberland units—will reduce carbon emissions by as much as 60%.

Weaker Natural Gas, Oil Prices Could Spur Production Cuts - Strong and steady U.S. oil and natural gas production has in 2023 outpaced demand and weighed down prices. Analysts are increasingly joining a chorus of calls for a pullback on output – or even sharper price pressure moving into the spring. West Texas Intermediate crude traded around $75/bbl early this week, far from the highs above $120 last year. New York Mercantile Exchange gas futures recently hovered around $2.500/MMBtu, down from the $6 level late in 2022 and the nearly $10 highs of last summer.The price strength in 2022 spurred production increases, but demand has since tapered substantially. Crude consumption declined in recent months amid weakening economic activity in the United States as well as Europe and parts of Asia. Natural gas demand eased dramatically in January, largely because of seasonally mild weather. Forecasts point to only an average February in terms of heating needs.“Global oil prices have been in a turbulent downtrend since the middle of 2022,” said Bank of America (BofA) strategist Francisco Blanch. “Furthermore, warmer weather has limited heating demand for oil and caused global gas prices to collapse, which may facilitate an unwind of some gas-to-oil switching from 2022. These factors have contributed to oil price weakness.”Demand for U.S. exports of gas also has leveled off – albeit at solid levels — amid benign weather in Europe and following an aggressive push to fill up storage on the continent last year. The Freeport LNG facility in Texas, sidelined because of a fire last June, also has curbed demand for gas. The facility expects to relaunch in coming weeks.The late summer and early fall of 2022 was “a very precarious time” as the European Union (EU), “raced to fill storage to comfortable levels for the winter,” Rystad Energy analyst Ade Allen said. “That phenomenon has since tempered, and fewer cargoes have been heading to Europe in the past few months since EU storage reached 94% capacity in mid-November.”Both Rystad and BofA analysts have cautioned that oil and gas producers could this year respond to loweOn the crude front, the U.S. Energy Information Administration’s (EIA) latest Weekly Petroleum Status Report showed production for the period ended Jan. 27 at 12.2 million b/d – even with the average for the past month. That also matched the high mark reported by EIA since the onset of coronavirus outbreaks in the spring of 2020.The latest print also topped the year-earlier level of 11.5 million b/d, though production continued to trail the pre-pandemic record of 13.1 million b/d set in early 2020.Globally, OPEC-plus in November launched a program to cut production by up to 2.0 million b/d. It has since signaled it plans to continue generating lighter output.In OPEC’s January oil market r eport, researchers forecast global crude demand would expand by 2.2 million b/d this year. But they also emphasized this was based largely on expectations for increased oil consumption in China, following that country’s recent easing of pandemic-related restrictions.However, researchers at the Saudi Arabia-led cartel also noted the Chinese government’s propensity to halt economic activity during coronavirus outbreaks. With spread of the virus still a threat, OPEC researchers cautioned their outlook is subject to a downgrade.

U.S. natgas futures jump 5% with output slow to return, profit taking (Reuters) - U.S. natural gas futures jumped about 5% to a one-week high on Tuesday as short sellers took profits for a second day after prices last week fell to a 25-month low and as output remains lower than last month following recent extreme cold that froze oil and gas wells in several producing basins. Also supporting prices was a growing belief that Freeport LNG's export plant in Texas would soon start pulling in a lot more gas in coming weeks once it starts producing liquefied natural gas (LNG) for export. Freeport, however, was on track to receive no gas from pipelines on Tuesday after taking in small amounts over the past 12 days, according to Refinitiv data. Gas prices jumped higher despite forecasts for milder weather and lower heating demand over the next two weeks than previously expected. Meteorologists forecast the weather would remain mostly warmer than normal through Feb. 22 except for a few cold days around the Feb. 18-19 weekend. Traders noted that cold on the weekend does not boost gas use as much as during the workweek because usage is lower on weekends when many businesses are shut. Freeport told Texas state regulators last week that it would start sending gas to one of three liquefaction trains at its long-closed export plant. The plant is waiting for permission from federal regulators to start loading LNG to free up space in its storage tanks. The liquefaction trains turn gas into LNG for export. Many analysts have said they do not expect the plant to return to full power until mid March or later. A couple of Freeport's customers - Japan's JERA and Osaka Gas - have said they do not expect to get LNG from the plant until after March. Freeport, the second biggest U.S. LNG export plant, shut after a fire in June 2022. The energy market expects gas prices to rise once the plant starts producing LNG again. When operating at full power, Freeport can turn about 2.1 billion cubic feet of gas into LNG each day. That is about 2% of total U.S. daily gas production. Federal regulators will hold a public meeting on Freeport on Feb. 11 to provide members of the community and other interested parties an opportunity to voice their concerns about Freeport's restart plans and get an update on what's happening at the plant. Front-month gas futures for March delivery rose 12.7 cents, or 5.2%, to settle at $2.584 per million British thermal units, their highest close since Jan. 31. Last week, the contract fell to its lowest close since December 2020. Refinitiv said average gas output in the U.S. Lower 48 states fell to 95.7 billion cubic feet per day (bcfd) so far in February, down from 98.3 bcfd in January. That compares with a monthly record of 99.8 bcfd in November 2022. With milder weather coming, Refinitiv forecast U.S. gas demand, including exports, would drop from 124.9 bcfd this week to 119.8 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Monday.

U.S. natgas up 1% on rising LNG exports, big storage withdrawal (Reuters) - U.S. natural gas futures edged up about 1% on Thursday after dropping to a 25-month low in the prior session on rising LNG exports, forecasts for slightly colder weather over the next two weeks than previously expected and a bigger-than-expected weekly storage draw. The U.S. Energy Information Administration (EIA) said utilities pulled 217 billion cubic feet (bcf) of gas from storage during the week ended Feb. 3. That was more than the 195-bcf decrease analysts forecast in a Reuters poll and compares with a decrease of 228 bcf in the same week last year and a five-year (2018-2022) average decline of 171 bcf. Analysts said it was the first time in 2023 that the weekly withdrawal was bigger than the five-year average because colder-than-normal weather last week boosted demand for gas to heat homes and businesses. The price increase also came with a growing belief that Freeport LNG's export plant in Texas would start pulling in more gas to produce LNG for export in coming weeks. Freeport was on track to receive about 69 million cubic feet per day (mmcfd) of pipeline gas on Thursday, according to Refinitiv data. Freeport has received an average of 34 mmcfd of feedgas since Jan. 26 when federal regulators approved the company's plan to start cooling parts of the plant. The plant received no gas on Tuesday. Freeport has said it would start sending gas to one of the plant's three liquefaction trains, which turn gas into LNG for export. The plant is waiting for permission from federal regulators to start loading LNG to free up space in its storage tanks. In other LNG news, the amount of gas flowing to U.S. LNG export plants was on track to rise by about 1.0 billion cubic feet per day (bcfd) to a preliminary eight-week high of 13.0 bcfd on Thursday, due mostly to an increase in flows to Cheniere Energy Inc's Sabine Pass export plant in Louisiana. Front-month gas futures rose 3.4 cents, or 1.4%, to settle at $2.430 per million British thermal units. On Wednesday, the contract closed at its lowest since December 2020. After dropping by a record 64% over the prior seven weeks through Feb. 3, the front-month was on track to drop by about 63% over the last eight weeks, which would also be a record loss for that period. The drop in gas prices coupled with a 6% increase in crude futures so far this week boosted oil's premium over gas to its highest since January 2020. In recent years that premium has prompted U.S. energy firms to focus drilling activity on finding more oil instead of gas. The oil-to-gas ratio, or level at which oil trades compared with gas, jumped to 33-to-1 on Thursday, its highest since August 2013. Crude's average premium has averaged 25 times over gas so far in 2023, 15 times over in 2022 and 20 times over during the past five years (2018-2022). On an energy equivalent basis, oil should trade only six times over gas.

Natural Gas Futures Firm as Late-February Cold Seen Possible; Northeast Cash Rallies -Natural gas futures ended the week on a high note, boosted by a brief blast of cold air sweeping across the central and eastern United States. The March Nymex contract settled Friday at $2.514/MMBtu, up 8.4 cents from Thursday’s close. April futures climbed 11.5 cents to $2.607.Spot gas prices were mixed, with the only meaningful changes taking place on the East Coast, in the Rockies and on the West Coast. NGI’s Spot GasNational Avg. ultimately finished 5.0 cents lower at $2.720.Despite the temporary bump in demand stemming from the wintry weather systems over parts of the country the next few days, a warmer turn in the pattern ahead may quickly knock prices back down a few notches.NatGasWeather said the Global Forecast System and European models generally aligned in showing “light to very light” demand over the next week or so before strong heating loads arrive Feb. 17-19. However, a quick warmup is expected.There are signs that colder weather may return in the final week of February as frigid air over Western Canada tries to advance into the Lower 48. The primary risk over the weekend break, according to NatGasWeather, is if the weather data trends colder with the setup Feb. 24-28 for a pattern frosty enough to satisfy.The forecaster said so far this winter, a warm ridge over the eastern United States has consistently proven to hold stronger and longer than weather models have expected. That could prove to be the case with the late-February pattern as well, but it’s too early to say with certainty.On the surface, the Energy Information Administration’s (EIA) weekly report missed to the bullish side for the third week in a row and suggested some tightening. However, it’s unclear if the tightening reflects some structural changes taking place in the market, or whether it reflects an increase in gas demand during the reference week because of lower wind and solar generation, particularly in Texas. Freeze-offs also took a significant chunk of production offline.The agency said total working gas in storage as of Feb. 3 stood at 2,366 Bcf, which is 233 Bcf higher than a year earlier and 117 Bcf above the five-year average.“Clearly, the balance needs to tighten to prevent ballooning surpluses without sustained cold, which has been elusive much of this winter,” NatGasWeather said.Some of that balancing could come from added feed gas demand to serve Freeport LNG. The liquefied natural gas terminal has taken steps toward a restart, with federal approval granted Thursday to load ships at one of the three docks at the site on Quintana Island, on the upper Texas coast.The plant has not been cleared to restart operations. The approval is one in a series that must occur before LNG production and shipments may resume after an explosion and fire shuttered the facility last June.On Friday, the Kmarin Diamond LNG Tanker was the first vessel to dock at Freeport since the facility went offline. Four additional vessels have declared anticipated arrivals at the Freeport facility through Feb. 12.The vessels could be loaded with volumes still inside the facility’s tanks since before the fire, according to anonymous sources cited by Bloomberg. Freeport LNG didn’t comment about possible loading activities.

Natural gas has first positive week in eight as selling pauses -- The selloff in natural gas paused Friday, with the market posting its first weekly gain in eight, as bears in the market reassessed their positions after taking the heating fuel to 2-½ year lows in the previous session. The front-month March gas contract on the New York Mercantile Exchange’s Henry Hub settled up 6.9 cents, or 2.8%, at $2.5140 per mmBtu, or metric million British thermal units. For the week, however, the benchmark U.S. gas contract rose 4.3%, posting its first weekly gain since the week ended Dec. 9. Gas futures lost a cumulative 63% in seven weeks prior to that. On Thursday, March gas fell to $2.351, plumbing the lowest level for a front-month gas contract on the Henry Hub since Sept. 28, 2020, when the benchmark contract then went down to $2.02. An unusually warm start to the 2022/23 winter season has led to considerably less heating demand in the United States versus the norm, leaving more gas in storage than initially thought. At the close of last week, U.S. gas-in-storage stood at 2.366 tcf, or trillion cubic feet, up 10.9% from the year-ago level of 2.249 tcf, data from the EIA, or Energy Information Administration, showed. Utilities drew a higher-than-forecast 217 bcf, or billion cubic feet, from storage for heating and electricity generation last week, the EIA said. Analysts tracked by Investing.com had expected a draw of 195 bcf for the week ended Feb. 3, above the consumption of 151 bcf seen in the prior week to Jan. 27. “The bullishness of the withdrawal was driven by colder-than-than-normal temperatures, especially at the end of the reflective storage week,” analysts at Houston-based energy markets consultancy Gelber & Associates said. “However, improving imbalances such as this aren’t significantly meaningful when they’re not accompanied by a supportive temperature outlook.” Responding to the warmth and lackluster storage draws, gas prices plunged from a 14-year high of $10 per mmBtu in August, reaching $7 in December and mid-$2 levels this week amid forecasts for bitter cold here and there.

Three Chicago area oil refineries that dumped toxic chemicals into Lake Michigan and other waterways are among worst polluters in US, study shows — Chicago Tribune - Three Chicago-area oil refineries are among U.S. facilities dumping large amounts of toxic chemicals and heavy metals into waterways, according to a new report. Oil refineries are dumping massive amounts of toxic chemicals and heavy metals into the Great Lakes and the nation’s rivers with little, if any, oversight from government regulators, according to a new analysis that found some of the worst polluters are in the Chicago area. During 2021 alone, 81 refineries in the United States that treat waste on-site released 1.6 billion pounds of chlorides, sulfates and other dissolved solids harmful to fish and other aquatic life, the nonprofit Environmental Integrity Project determined in its review of federal data. The refineries also collectively discharged 60,000 pounds of selenium, an element that can mutate fish, and 15.7 million pounds of nitrogen, which contributes to water-fouling algae blooms and dead zones in important fisheries such as the Great Lakes, Chesapeake Bay and the Gulf of Mexico. Most of the refineries are in low-income, predominantly Black and Latino communities that face disproportionate health risks from industrial pollution. Some refinery pollution is legal because federal and state officials have failed to limit it, despite requirements in the 1972 Clean Water Act mandating a review of standards for various chemicals and metals at least every five years based on the latest science and improvements in water treatment technology. “You have refineries that may look like they are complying with the law, but the standards are decades old and really don’t require very much,” Three Chicago-area refineries — BP Whiting in Indiana, ExxonMobil Joliet and Citgo in Lemont — highlight the consequences of lax regulations and weak enforcement, Schaeffer said Thursday during an online news conference. Even when limits are in place, oil companies often pay minimal fines for violating the law. Some aren’t penalized at all. The Joliet refinery, on the Des Plaines River southwest of the city, exceeded its permitted levels of pollution 40 times between 2019 and 2021, federal records show. Neither federal nor state officials have sued ExxonMobil or fined the company for its repeated infractions. Only three other refineries discharged more selenium than BP Whiting, located on the southwest shore of Lake Michigan about 8 miles from one of Chicago’s water intake cribs. Small doses of the element are healthy, but higher levels can cause hair and nail loss, gastrointestinal distress, dizziness and tremors. Citgo Lemont and ExxonMobil Joliet ranked fifth and ninth for selenium pollution, respectively, the analysis showed.

New law forces wind energy behind oil drilling in the Gulf -President Joe Biden’s administration is tapping the brakes on offshore wind energy development in the Gulf of Mexicoto make way for a new fast-tracked effort to open more federal waters to oil and gas drilling. The move, which runs counter to Biden’s ambitious goals for cutting greenhouse gas emissions and speeding the growth of renewable energy, will delay the first-ever auction of wind energy lease areas in the Gulf by at least six months.Wind energy companies had been lining up to bid on a 174,000-acre area south of Lake Charles and a 508,000-acre area near Galveston, Texas in late December. The two lease areas have the potential to generate enough power for almost 3 million homes, according to the U.S. Bureau of Ocean Energy Management. But Biden’s signing of theInflation Reduction Act put those plans on hold, likely until sometime this summer, federal regulators confirmed this week. The nearly $370 billion spending package has what some critics say are conflicting aims. On one hand, it offers a historic investment in clean energy, mostly through tax credits for solar and wind energy projects. But buried at the end of the 725-page law are special provisions for fossil fuel extraction in the Gulf.The act requires that the government offer new drilling opportunities across a vast area of the Gulf and mandates that wind energy projects take a back seat to oil and gas projects on public lands and waters.The provision was included to secure the support of Sen. Joe Manchin, a West Virginia Democrat who often sides with Republicans and receives strong financial backing from the oil and gas industry. Manchin praised the provision, saying increased drilling is “critical to American energy security” and will help “ease the pain Americans are feeling from record inflation and high energy prices.”Environmental groups blasted the Biden administration for hindering progress on its own climate and renewable energy goals.“It’s self-defeating to handcuff renewable energy development to massive new oil and gas extraction,” said Brett Hartl, government affairs director at the Center for Biological Diversity. “It’s a slap in the face to the communities fighting to protect themselves from filthy fossil fuels.” Last year, the Biden administration canceled a pair of oil and gas lease sales, citing conflicting court rulings on proposed lease sales. The Inflation Reduction Act revived both sales as well as a previously nullified lease sale from 2021. BOEM has had to take staff off other projects to meet upcoming leasing deadlines set by the act, a bureau spokesman said. The Biden administration’s goal of generating 30 gigawatts of offshore wind energy by 2030 will require pushing more than a dozen large wind farms through a new and convoluted regulatory process for offshore wind energy. So far, only two offshore wind farms are operating in U.S. waters. Two projects are under construction near Massachusetts and New York, and several more are planned along the East Coast.

Growing Body of Research Suggests Offshore Oil’s Methane Pollution Is Underestimated – DeSmog - Flying 10,000 feet above the Gulf of Mexico, in a plane outfitted with infrared imaging equipment, researchers could see methane gas bubbling under water, likely from an undetected pipeline leak. Over the course of several flights in 2021, they spotted frequent gas plumes from platforms, storage tanks, and pipelines offshore, leading the team to believe that the 151 platforms near the Louisiana coast had a much higher methane leak rate than what’s been measured for onshore oil and gas production.“I think the bottom line message in this study is there’s a lot of emissions in the shallow waters that are currently unmeasured,” said Riley Duren, the CEO of Carbon Mapper and coauthor of the nonprofit’s 2022 study of offshore methane emissions. New technologies are allowing for actual measurements of oil and gas methane emissions like never before, whether from leaks or intentional flaring and venting. So far, much of that attention and push for accountability has been focused onshore, while operators claim that drilling offshore has much lower emissions. But researchers arestarting to uncover a body of evidence showing why that may not be true.About 15 percent of U.S. oil production and 1 percent of U.S. natural gas production comes from federal leases in the Gulf of Mexico, according to the Bureau of Ocean Energy Management. Far from land and oversight, it’s a wild west that makes it easy for companies to fudge numbers and avoid accountability from regulators who acknowledge they’ve fallen short, even as questions emerge about how methane emissions may be contributing to helicopter crashes around oil and gas platforms. The rise in natural gas prices has incentivized some onshore companies to try to quantify how much money they’re losing to leaky systems by using infrared cameras capable of detecting methane, the primary ingredient in natural gas and a potent contributor to climate change. Operators in the Permian Basin in Texas and New Mexico, where 40 percent of U.S. oil and 15 percent of U.S. gas is produced, have been surprised to find that about 4 percent of the natural gas they pulled from the ground was leaking into the atmosphere. By comparison, Duren and his colleagues have detected natural gas loss rates above 23 percent in the shallow waters of the Gulf, though because offshore production is so much lower, the total volume of lost gas is likely much higher onshore. Still, researchers emphasize that the high rate of methane leakage underscores the major climate impact that reducing those leaks could have.

Carbon Capture Project Is ‘Band-Aid’ to Greenwash $10 Billion LNG Plant, Locals Say via DeSmog - Dina Nuñez called to order a meeting of women grassroots activists in a modest home in the heart of Port Isabel, Texas. Top of her agenda: how to stop a Houston-based oil and gas company from building a $10 billion project to export liquefied natural gas on a nearby stretch of coast.The claim by developer NextDecade to be building the “greenest LNG project in the world” has thrust the women to the forefront of a global struggle. At a time when scientists warn there can be no new fossil fuel developments if the world is going to avoid the worst impacts of the climate crisis, oil and gas executives are turning to a technology known as carbon capture and storage, or CCS, to convince investors, politicians, and the public their expansion plans are climate-safe. “This is a poor community, yes. We’re not saying we don’t need jobs,” Nuñez said, shortly before the meeting of volunteers with the Neighbors for the Wellness of the Coastal Community group. “But we don’t need work that affects the environment, and ultimately, the health of the community.”A prime example of the ups and downs of the American liquefied natural gas industry, plans to build Rio Grande LNG faltered in 2020 as demand for energy cratered during the Covid-19 pandemic, and concern over its climate impact grew. But the scheme has been resurrected thanks to a European scramble for LNG triggered by Russia’s invasion of Ukraine, and a new twist on the original design — the use of CCS to portray the facility as a source of “clean” energy.These claims hinge on a proposal by NextDecade to use CCS to capture more than 5 million tons a year of the carbon dioxide (CO2) produced during the process of supercooling the gas for loading on to specialized tankers for export. The company says it will be one of the biggest CCS systems in North America — and the first LNG terminal to reduce its CO2 emissions by more than 90 percent.“NextDecade is a clean energy company accelerating the path to a net-zero future,” NextDecade chief executive Matthew Schatzman told a conference call to present the CCS plan to financial analysts in March 2021. “Efforts to reduce global greenhouse gas emissions are at the very foundation of our company.”Opponents point out there’s a big catch, however. Only 6-7 percent of the overall emissions associated with such projects are generated during the process of cooling the gas, according to a 2019 study by the Department of Energy. That means that the proposed CCS plant could only ever mitigate a small fraction of Rio Grande LNG’s total climate impact.And that impact could be considerable. The Sierra Club estimates that building Rio Grande LNG could generate up to 163 million tons of CO2 equivalent emissions a year — comparable to 44 coal plants, or more than 35 million cars. That analysis factors in the potential emissions of CO2 and methane, a powerful climate pollutant, associated with the production, transport, and end-use of the natural gas. NextDecade did not respond to multiple requests for comment.

U.S. Oil Production Reaches New Pandemic-Era High, Contributes to Natural Gas Gains - Domestic crude production climbed to the highest level since 2020 as demand for petroleum products pushed ahead last week, the U.S. Energy Information Administration (EIA) said Wednesday. American producers generated 12.3 million b/d for the week ended Feb. 3, up by 100,000 b/d from the prior week, data from EIA’s latest Weekly Petroleum Status Report showed. The latest print also marked a 100,000 b/d increase from January’s average and from the pandemic-era peak. Additionally, production for the latest EIA period far exceeded the year-earlier level of 11.6 million b/d, and it climbed further toward the record of 13.1 million b/d set in early 2020, prior to coronavirus outbreaks. Total petroleum demand for the Feb. 3 period, meanwhile, advanced 2% week/week. The rising oil output, led by activity in the prolific Permian Basin, also has helped fuel robust increases in associated natural gas production and, by extension, total gas supplies. Natural gas output early this year touched record highs above 102 Bcf/d. Analysts at East Daley Analytics said in a forecast it could approach 105 Bcf/d this year. The upward trend comes amid uneven demand in recent months for both oil and gas. Natural gas consumption proved strong early in the winter amid blasts of frigid cold last December. But January and February to date, on the whole, featured benign weather and light heating demand. This weighed down prices in 2023 – from about $6.00/MMBtu late last year to around $2.50 this week – and galvanized analyst calls for production pullbacks. On the petroleum front, demand proved robust through much of 2022, but it has since leveled off. This developed as economic activity in the United States and Europe slowed, dampening consumption of travel fuels, and as mild weather and weak natural gas prices minimized demand for heating oil. Total products supplied over the last four-week period averaged 20.1 million b/d, down 8% from the comparable stretch last year, EIA said. Over the past four weeks, motor gasoline demand averaged 8.3 million b/d, down 3%, while distillate fuel consumption averaged 3.8 million b/d, down 16%. Jet fuel product supplied proved the exception, rising 7% to 1.5 million b/d.

Baker Hughes: US rig count up 2 units to 761 - The US drilling rig count increased 2 units to reach 761 rigs working for the week ended Feb. 10, according to Baker Hughes data. The count is up 126 units from the 635 rigs working this time a year ago. The number of rigs drilling on land fell 4 units week-over-week to a total of 741 rigs running. The number of rigs drilling in inland waters remained unchanged at 2 units. The number of rigs drilling offshore remained unchanged at 18 units. US oil-directed rigs increased by 10 from last week to 609 units. A year ago, 516 units were drilling for oil. Gas-directed rigs fell by 8 to reach 150 working, 32 more than were drilling for gas a year ago. Of the major oil and gas-producing states, Louisiana, New Mexico, and California saw increases in rigs week-over-week. With 6 additional rigs, Louisiana’s count stands at 66 for the week. A 4-rig increase brings New Mexico’s rig count to 109. California added a single rig to reach 4 for the week. Seven states remained unchanged this week, North Dakota, 41; Pennsylvania, 22; Colorado, 19; Wyoming, 17; Ohio, 14; Utah, 11; and Alaska, 7. A 7-unit drop left Texas with 370 rigs running for the week. Oklahoma and West Virginia dropped 1 unit each, leaving 63 and 15 rigs running, respectively. Canada’s rig count increased by 1 unit for the week. At 250 rigs, the count is 31 more than the 219 units drilling this week a year ago. A 2-rig gain brought the oil-directed rig count to 161 for the week. Gas-directed rigs in Canada decreased by 1 unit to 89.

‘A Colossal Giveaway’: A Tax Break for Big Polluters Is Also Starving Public Schools in Texas - Gliding through the shallow channel on the north side of Corpus Christi Bay, you will see stubborn remnants of a barrier island estuary that was once home to vast oyster beds, seagrass meadows, teeming fish nurseries and abundant alligators. You will see dolphins, terns, maybe even a roseate spoonbill. In less than a decade, the northern coastline of Corpus Christi Bay, in San Patricio County, Texas, has been developed from a greenspace of wetlands and dunes into a miles-long corridor of petrochemical and industrial facilities, their cracking towers rising hundreds of feet into the air. Dominating that cyborg skyline is the tower flare at the Corpus Christi Liquefaction facility, owned by gas giant Cheniere. The plant’s three operational “trains,” which came online in 2019, produce 16.5 million tons of liquefied natural gas (LNG) per year for export to hungry markets in Europe, Asia, and other international destinations. There are plans to add seven smaller trains at the facility, equivalent to another 11 million tons of capacity. Within sight of Cheniere, there is a hot briquetted iron plant now majority owned by Luxembourg-based ArcelorMittal that began operations in 2016; there is the Enbridge Ingleside Energy Center, built in 2018, the largest crude oil export terminal in North America; there are growing chemical plants owned by Chemours, Air Liquide and Occidental; a few miles inland is the world’s largest ethane cracker, a joint project of Exxon and Saudi Basic Industries Corporation (SABIC), switched on for the first time in 2022.With the exception of the Enbridge terminal, all of these projects — and hundreds more across Texas — have benefitted from Chapter 313, a two-decade-old tax abatement program that critics have described as “free money for big business.” The enabling legislation expired on Dec. 31, but a flurry of last minute proposals approved before the deadline may have irreversible effects for decades into the future. Crafted to lure businesses to Texas, Chapter 313 allowed companies to lock in a minimal property valuation for a proposed industrial project for 10 years in exchange for economic growth commitments and kickbacks to local school districts. Advocates for retaining the tax break liked to point out that renewable energy companies have comprised the majority of Chapter 313 applicants in recent years. In simple dollar terms, however, the petrochemical industry has been the program’s largest beneficiary — receiving abatements worth $7.6 billion in 2020 alone, compared to $2.1 billion for wind farm companies. A study by the nonprofit Central Texas Interfaith reveals that the top 10 beneficiaries of existing Chapter 313 agreements are all linked to the petrochemical industry like the companies expanding along the shore in San Patricio County, receiving annualized tax breaks from school districts worth more than $250 million.

RRC adds requirements for new disposal wells in the Permian Basin - The Railroad Commission has issued a notice to oil and gas operators that it is adding requirements for new disposal well permits in the Permian Basin. The requirements are designed to assist the agency and industry in monitoring and responding to injection and reservoir conditions that may be conducive to induced seismicity.The new permit conditions for monitoring and reporting will require certain new disposal wells to be equipped and operated with a bottomhole pressure monitoring gauge. These permit conditions will apply to:

1. All new “deep” disposal wells that inject fluids into strata below the primary producing formations – below the top of the Strawn in the Midland Basin and below the base of the Wolfcamp in the Delaware Basin and
2. All new “shallow” disposal wells that generally inject fluids into strata above the base of the primary producing formations – above the top of the Strawn in the Midland Basin and below the base of the Wolfcamp in the Delaware within an area designated as a Seismic Response Area by the commission.

The permit language will require the operator of the well to report daily injection data monthly. This will include:

• • Maximum surface injection pressure
• • Average surface injection pressure
• • Maximum bottomhole injection pressure
• • Average bottomhole injection pressure
• • Injection volume
• • Maximum injection rate
• • Average fluid density

Operators also would be required to measure the initial reservoir pressure prior to beginning injection, to conduct periodic fall-off tests to evaluate the average reservoir pressure, and to report this information to the RRC. On a case-by-case basis RRC staff may determine that these permit conditions are not required for a particular new disposal well application if the reservoir is already adequately monitored in a nearby disposal well.In addition, all other new disposal well permits in the Permian Basin with a permitted maximum daily injection volume of 5,000 barrels per day or more will include a permit condition requiring the operator to report daily injection volume, surface injection pressure and fluid density data.Operators of existing disposal wells with maximum daily injection volumes of 5,000 barrels per day or more are also encouraged and requested to file this information from November 2019 onward.

Activists say US should adopt New Mexico’s natural gas rules - — Activists are pushing for federal rules on curbing wasted natural gas to look more like New Mexico’s recently passed rules, as they wait for data to reflect that they work. The Environmental Defense Fund, an environmental advocacy group, and Taxpayers for Common Sense, a budget watchdog organization, released a study last week showing that oil and gas companies that operate on U.S. public and tribal lands wasted over $500 million worth of gas in 2019, which was the most recent year with data available. New Mexico topped the list of states in wasted gas, but EDF Senior Director of Regulatory and Legislative Affairs Jon Goldstein also called it a leader in cutting back. “What we’d like to see (the Bureau of Land Management) do is build from the example that New Mexico has set in terms of putting an end, essentially, to routine venting and flaring,” he said. Pipeline leaks are the most common cause of wasted natural gas, but some is also lost through flaring and venting, which are both methods for getting rid of natural gas that comes as a byproduct of oil drilling. Methane emissions, including those from wasted natural gas, drive at least a quarter of human-caused global warming, according to the EDF. Goldstein said it also puts company profits before taxpayers who would benefit from the sale of the natural gas. “Rather than invest in infrastructure to get that associated gas to market, the company will just flare it. They’ll burn it off at the well site and treat it like a nuisance,” Goldstein said. But he pointed to new rules in New Mexico that were passed after the data was collected as an example of what he’d like to see the federal and state government do to change that. New Mexico’s Energy, Minerals and Natural Resources Department, or EMNRD, is pushing oil and gas operators to capture 98% of their natural gas waste by the end of 2026. The rules went into effect in 2021 and require operators to report natural gas loss extensively, while prohibiting routine venting and flaring. It also allows the Oil Conservation Division to deny drilling permits if capture targets aren’t met. A spokesperson for EMNRD said via email that it is on track to meet its target by the end of 2026 and is already seeing a difference in its reporting. In the first 11 months of the new rules, there was a 36% reduction in gas lost.

$84 million more a year from oil and gas? Learn more about SB 164 - Oil and gas extraction provides large portions of the state’s budget every year, largely credited with a $3.5 billion in surplus funds in 2023, and some lawmakers are hoping to maximize the returns to taxpayers for drilling on public land.Targeting the State Land Office, Senate Bill 164 would raise the maximum royalty rate, a percentage paid by operators to the state on the value of oil and gas produced on State Trust land.Present rules require producers pay a 20 percent royalty fee to the State Land Office on the value of the fossil fuel produced on State land, and SB 164 would raise that to 25 percent.That would mean a fee equal to a quarter of the value would be paid to the government, compared to the present rate of one-fifth.The bill would also add a section to a new lease form to require royalty payments on natural gas that is released via venting, flaring or spills.These rules would go into effect July 1 if the bill is passed.SB 164 was introduced by Sen. Bill Tallman (D-18) and cosponsored by Rep. Debra Sarinana (D-21) and Sen. Harold Pope (D-23).It was granted a “do pass” recommendation Feb. 7 by the Senate Conservation Committee on a 6-2 vote and advanced to the Senate Tax, Business and Transportation Committee where it was awaiting a hearing.The higher rates would mean higher revenue for the State Land Office which provides funding to New Mexico public schools, hospitals and universities. That would mean up to $84 million a year in added revenue to the Office's beneficiaries in Fiscal Years 2025 and 2026, according to an analysis by the Legislative Finance Committee, based on the number of wells completed in the last 10 years and the average price of oil and gas. Because of recent state regulations looking to increase gas capture, the report said it was difficult to estimate how much revenue gas releases would generate if the bill was passed.

Bill to shift New Mexico away from oil and gas passes first committee - A new state agency to shift New Mexico away from its dependence on oil and gas would be created should a bill advancing through the legislature pass into law. House Bill 188 would create an Economic Transition Division within the State’s Economic Development Department (EDD) and appropriate a total of about $13.4 million to fund the division and provide support for local communities during economic transition. A transition away from economic dependence on fossil fuels could directly impact communities like Carlsbad and Hobbs in the southeast Permian Basin region where most of New Mexico’s oil and gas is produced. More:Bill that could block nuclear waste storage in southeast New Mexico headed to Senate Floor That industry was credited with typically providing a third of the state’s budget, and a recent $3.5 billion revenue surplus at the State was attributed to recent growth in oil production. New Mexico is second in the nation in oil, following only Texas with which it shares the Permian, and usually in the top 10 states for natural gas. When the market for oil and gas is strong, New Mexico reaps windfalls of revenue that can fund public services like schools and roads, but when the market trends downward some lawmakers worried it exposes the state to economic depression.

Court: US needs to consider effects of drilling near Chaco (AP) — A federal appeals court has sided with environmentalists, ruling that the U.S. government failed to consider the cumulative effects of greenhouse gas emissions that would result from the approval of nearly 200 drilling permits in an area surrounding Chaco Culture National Historical Park. Home to numerous sites significant to Native American tribes, the region has been a focal point of conflict over energy development that has spanned multiple presidential administrations. Now, environmentalists and some tribal leaders have accused the Biden administration of “rubber-stamping” more drilling. In a ruling issued Wednesday, a three-judge panel for the 10th U.S. Circuit Court of Appeals found that federal land managers violated the law by not accounting for the direct, indirect and cumulative effects of air pollution from oil and gas drilling. The court also put on hold the approval of additional drilling permits pending a decision from a lower court. Kyle Tisdel, a senior attorney with the Western Environmental Law Center, accused the Bureau of Land Management of prioritizing oil and gas extraction at the expense of those who live in northwestern New Mexico, including many Navajo communities. “Frontline Diné communities and their allies were vindicated today in a step toward environmental justice. We will continue to demand justice, and that their water, health and the climate stop being sacrificed to big oil profits,” Tisdel said in a statement. Environmentalists have long complained about pollution from increased drilling, but the fight took on new urgency when Native American tribes began raising concerns that a spider web of drill pads, roads, processing stations and other infrastructure was compromising culturally significant sites beyond Chaco park’s boundaries. The Bureau of Land Management had an informal process of not leasing land within 10 miles (16 kilometers) of Chaco park to address those concerns.

Lower 48 Hits ‘Near-Term Ceiling’ as International, Offshore E&P Ramping Up, Says NOV CEO --Onshore exploration and production (E&P) in the Lower 48 has plateaued for the moment amid multiple constraints, while the international and offshore segments are gathering steam, according to NOV Inc. CEO Clay Williams. Williams hosted a conference call on Tuesday (Feb. 7) to discuss the Houston-based oilfield services company’s fourth-quarter and full-year 2022 earnings. “After rising sharply in the first part of the year, the U.S. rig count [has] now found a near-term ceiling, a touch below 800 rigs, constrained by – among other things – the availability of labor,” Williams said. “North American E&Ps are citing service availability as the biggest risk to achievement of their production targets, but our oilfield service customers tell us that crew availability is the real cause.” [2023 Natural Gas Price Outlook: How will the energy industry continue to evolve in 2023? NGI’s special report “Reshuffling the Deck: High Stakes for Natural Gas & The World is All-In” offers trusted insight and data-backed forecasts on U.S. natural gas and the global LNG markets. Download now.] Williams cited that “U.S. oilfield wages in West Texas and North Dakota are up 20% to 50%,” along with higher per diems, bonuses and overtime. “Chronically shorthanded” crews are working extra hours to cover unfilled positions, he said. “The new hires are hard to find and the crews that are successful in hiring new green hands are less safe and demonstrably less efficient.” The surging cost of casing represents “another constraint and it’s contributing to 40% higher cost per foot for E&Ps,” Williams said. In addition, “Dwindling Tier 1 drilling location inventory and reversal of double-digit well productivity gains…that fueled the rapid run-up in U.S. shale production several years ago are also emerging as constraints to production growth,” Williams said. He added that, “Like in the international markets, capital is scarce and expensive, even though rising equipment utilization across North America in 2022 brought mercifully higher pricing, enabling land drilling contractors and pressure pumpers to begin earning much improved returns on capital.” Williams also highlighted “the emerging North American gas oversupply caused by constrained LNG export capacity out of the U.S. and rising gas-oil ratios in shale basins as they mature and we foresee additional pressure on E&P economics and diminishing urgency to drill in North America.” Despite these constraints, “Higher pricing across the board will likely still lead to an overall increase in year-over-year E&P spending,” Williams said. “But our outlook for 2023 North American land remains a little cautious in contrast to offshore and international land markets, where investment, urgency, utilization and pricing are rising.”

U.S. Natural Gas Activity Steady and Completions Market Tight, Says Liberty CEO - A softening outlook for natural gas activity and an elevated recession risk may lead to some hiccups this year, but the overall forecast for North American hydrocarbons is the healthiest in years, according to Liberty Energy Inc. CEO Chris Wright. The Denver-based hydraulic fracturing (fracking) and completions expert recently issued its fourth quarter and year-end results. Wright led a conference call with investors. Natural gas prices may be down, he said, but “to date, there has not been any significant reduction in activity in the natural gas regions. “We do expect to see some industry pullback in response to gas prices…If necessary, Liberty would move any spare capacity to oilier areas, where demand for our services significantly outstrips our current supply.” The markets, Wright said, “are preparing for the most widely anticipated recession in nearly 50 years.” However, “tumult in global oil supply, coupled with today’s rather low spare global production capacity, imply a strong need for North American barrels in the coming years.” The reopening of China and more global travel should drive incremental oil demand, “even if balanced against slowing economic activity,” he said. In addition, the “fundamental outlook for North American hydrocarbons is the healthiest Liberty has seen in our 12-year history. Against this strong backdrop, we expect many possible bumps in the road, like softening natural gas activity and an elevated recession risk.” Still, the outlook for North American activity for the next few years “is robust. Currently our customers and competitors are investing with discipline, keeping capacity flat to only very modest growth.” Liberty’s exploration and production (E&P) customers are receiving “attractive drilling returns, particularly in oil, even as breakeven prices have increased from the pandemic lows. The majors are redirecting capital spending to North America.” The U.S. E&Ps are looking for returns, which “infer a continuation of resource development to at least offset natural production declines,” Wright said. “As North American oil and gas production reaches new heights, there is a rising level of frac activity required to simply keep our customers’ production flat.” Today’s existing frack market is fully utilized, the CEO said. There also is “strong demand for gas-powered fleets that significantly reduce fuel costs. Natural gas is much cheaper than diesel, while driving down frack fleet emissions.” Still, the transition to gas-powered fleets is coming at a “measured pace,” Wright said, “roughly aligned with the attrition of the industry’s older generation diesel frack capacity.”

How a pipeline company paid Minnesota millions to police protests - The morning of June 7, 2021, Sheriff’s Deputy Chuck Nelson of Beltrami County, Minnesota, drove 30 minutes to Hubbard County, where he and officers from 14 different police and sheriff’s departments confronted around 500 protesters, known as water protectors, occupying a pipeline pump station. The deputy spent his day detaching people who had locked themselves to equipment as fire departments and ambulances stood by. A U.S. Customs and Border Protection helicopter swooped low, kicking dust over the demonstrators, and officers deployed a sound cannon known as a Long Range Acoustic Device in attempts to disperse the crowd.By the end of the day, 186 people had been detained in the largest mass-arrest of the opposition movement. Some officers stuck around to process arrests, while others stopped for snacks at a gas station or ordered Chinese takeout before crashing at a nearby motel.These latter details might be considered irrelevant, except for the fact that the police and emergency workers’ takeout, motel rooms, riot gear, gas, wages, and trainings were paid for by one side of the dispute — the fossil fuel company building the pipeline, which spent more than $79,000 on policing that day alone. When the Minnesota Public Utilities Commission gave Enbridge permission in 2020 to replace its corroded Line 3 pipeline and double its capacity, it included an unusual condition in the permit: Enbridge would pay the police as they responded to the acts of civil disobedience that the project would surely spark. The pipeline company’s money would be funneled to law enforcementand other government agencies via a Public Safety Escrow Account managed by the state.By the time construction finished in fall 2021, prosecutors had filed 967 criminal cases related to pipeline protests, and police had submitted hundreds of receipts and invoices to the Enbridge-funded escrow account, seeking reimbursement. Through a public records request, Grist and the Center for Media and Democracy have obtained and reviewed every one of those invoices, providing the most complete picture yet of the ways the pipeline company paid for the arrests of its opponents — and much more.

Newsom calls for federal probe into soaring natural gas prices - California Gov. Gavin Newsom (D) called for an investigation into his state’s soaring natural gas prices in a letter sent on Monday to the Federal Energy Regulatory Commission (FERC). “Wholesale natural gas prices throughout the West have risen to alarming levels that greatly exceed prices in the rest of the country,” Newsom wrote in the letter. The governor requested that the agency “immediately focus its investigatory resources on assessing whether market manipulation, anticompetitive behavior, or other anomalous activities are driving these ongoing elevated prices in the western gas markets.” While natural gas prices have been falling around the world, spot prices in Southern California early last month averaged about $19.40 per million British thermal units, The Wall Street Journal reported. This was about five times greater than the U.S. benchmark, which had been trading at about $3.75 at the time, according to the Journal. While Newsom acknowledged that cold weather events initially raised prices, he stressed that “those known factors cannot explain the extent and longevity of the price spike.” To provide Californians with some relief, Newsom said that millions of residents will receive credits of $90 to $120 in their utility bills next month. Last week, the California Public Utilities Commission (CPUC) voted to accelerate the California Climate Credit program — a measure aimed at helping families cope with high gas bills, the governor’s office explained.

Kinder Morgan shuts piping lines at Watson Station after spill - (Reuters) - Kinder Morgan Energy Partners on Thursday disclosed a gasoline spill from a piping station in Long Beach, California, and has shut down all lines pumping in and out of the area. The company has secured the spill and isolated all the lines in the area, it said in a filing. The incident took place at the unit of U.S. pipeline operator Kinder Morgan's Watson Station, a gathering system for oil and refined petroleum product pipelines.

Fuel lines from Los Angeles to Vegas, Phoenix shut by leak - (AP) — A leak in a fuel pipeline facility in California forced a shutdown of deliveries of gasoline and diesel from the Los Angeles area east to areas including Las Vegas and Phoenix, but officials said Friday they believed supplies would not immediately be affected. Pipeline operator Kinder Morgan told The Associated Press the leak was discovered Thursday afternoon at a company station near Los Angeles and that its CALNEV and SFPP West pipelines were shut down while the Houston-based pipeline operator worked to resolve the issue. “There are no injuries or fire reported as a result of this incident,” said a company statement, provided by Katherine Hill, communications manager for the publicly traded company. It did not say how much fuel leaked or when service would be restored. “The appropriate regulatory agencies have been notified, and an investigation into the cause and quantity of the release will be conducted,” the statement said. “We are working closely with our customers on potential impacts.” In Las Vegas, officials were “monitoring the situation, believe we have adequate supply, and do not anticipate an immediate impact on gas availability,” according to a statement from Clark County spokesperson Erik Pappa. The county said the pipeline provides fuel storage facilities in Southern Nevada with unleaded and diesel fuel. Another pipeline operated by UNEV Pipeline LLC serves the Las Vegas area from northern Utah. The Kinder Morgan website says its 566-mile (911-kilometer) CALNEV pipeline transports gasoline, diesel and jet fuel from Los Angeles refineries and marine terminals through parallel 14-inch (35.5-centimeter) and 8-inch (20-centimeter) diameter pipelines to Barstow, California, and the Las Vegas area. Hill said later that only the larger, 14-inch (35.5-centimeter) pipeline to Las Vegas had been shut down. Airports it serves include Nellis Air Force Base and Harry Reid International in Las Vegas and Edwards Air Force Base in California's Mojave Desert, the company said. Kinder Morgan's SFPP West pipeline runs approximately 515 miles (829 kilometers) to transport petroleum products from the Los Angeles area to Colton and Imperial, California, and east to Phoenix.

Shipping companies agree to pay $45 million in O.C. oil spill lawsuits - Companies linked to two cargo ships accused of damaging a pipeline months before it ruptured, sending crude oil gushing into the waters off Orange County, have agreed to pay $45 million to settle lawsuits brought by business owners and residents, attorneys said Thursday. If approved by a judge, the settlement would end the legal wrangling by those whose livelihoods were affected after 25,000 gallons of crude oil gushed into the waters off Orange County in October 2021. Attorneys representing the plaintiffs in the class action lawsuits said Thursday that they are also finalizing non-financial terms with the companies that owned and operated the MSC Danit and Cosco Beijing container ships to prevent “similar events from occurring in the future.” The full settlement details have not been disclosed. Capetanissa Maritime Corp., Dordellas Finance Corp. and their subsidiaries have been accused of allowing their ships to drag their anchors across the sea floor during a storm in January 2021, about nine months before the oil spill. The shipping companies have denied any wrongdoing. Attorneys representing the shipping companies could not immediately be reached for comment.

‘Monster profits’ for energy giants reveal a self-destructive fossil fuel resurgence -While 2022 inflicted hardship upon many people around the world due to soaring inflation, climate-driven disasters and war, the year was lucrative on an unprecedented scale for the fossil fuel industry, with the five largest western oil and gas companies alone making a combined $200bn in profits.In a parade of annual results released over the past week the “big five” – Exxon,Chevron, Shell, BP and TotalEnergies – all revealed that last year was the most profitable in their respective histories, as the rising cost of oil and gas, driven in part by Russia’s invasion of Ukraine, helped turbocharge revenues.Exxon, the Texas-based oil giant, led the way with a record $55.7bn in annual profit, taking home about $6.3m every hour last year. California’s Chevron had a record $36.5bn profit, while Shell announced the best results of its 115-year history, a $39.9bn surplus, and BP, another London-based firm, notched a $27.7bn profit. The French company TotalEnergies also had a record, at $36.2bn.When the 2022 results for all publicly traded oil and gas companies are tallied the total profits are expected to exceed $400bn, “a number we’ve never seen before, and one that was built off the backs of working families who were victimized by oil and gas executives’ greed”, according to Claire Moser, deputy executive director of the US activist group Climate Power.The stratospheric profits were criticized as “outrageous” by Joe Biden during his State of the Union address on Tuesday. Biden said that “we’re still going to need oil and gas for a while” but the US president attacked companies for enriching shareholders through share buybacks rather than helping alleviate rising gasoline costs for drivers.The big five oil and gas companies have already confirmed that most of the bumper profits will be going to stock buybacks and dividends. The $200bn in combined profits equates to about five times the US’s annual foreign aid budget, or about double what the world gave to Ukraine last year in military and humanitarian assistance. If the oil executives had decided to use this money to go to space, they could have left the Earth’s atmosphere 3,225 times on Elon Musk’s SpaceX rocket, at $62m a trip.António Guterres, the secretary-general of the UN, was scornful of the industry in a speech on Monday, in which he expressed incredulity at the “monster profits” of fossil fuel companies at a time when the world needs to be rapidly slashing its planet-heating emissions to avoid climate breakdown. “If you cannot set a credible course for net-zero [emissions], with 2025 and 2030 targets covering all your operations, you should not be in business,” Guterres said. “Your core product is our core problem. We need a renewables revolution, not a self-destructive fossil fuel resurgence.”

Insurance giant Marsh in firing line over controversial East Africa pipeline - Non-governmental groups submitted a complaint to the US government today, alleging that New York-based insurer Marsh, a member of the Marsh McLennan group, has violated international guidelines for responsible business conduct by acting as insurance broker for the controversial East African Crude Oil Pipeline (EACOP). EACOP will transport 200,000 barrels per day of oil from TotalEnergies’ Tilenga field in Uganda to Tanga port in Tanzania, more than 1440 kilometres to the east.For years, the pipeline has been a target for anti-fossil fuel campaigners due to a litany of concerns including carbon emissions, the displacement of people from land, and the risks posed to environmentally sensitive areas and critical freshwater resources.

88 Energy to drill North Slope well - 88 Energy Ltd. has been granted a drilling permit by the Alaska Oil and Gas Conservation Commission (AOGCC) to drill (PTD) in Project Phoenix (formerly Icewine East) on the North Slope of Alaska. The Hickory-1 well is designed to appraise up to six conventional reservoir targets within the SMD, SFS, BFF, and KUP reservoirs and 647 million bbl oil. The well is permitted to a total depth of 12,500 ft. A drilling location has been selected adjacent to the Dalton Highway directly adjacent to the Trans-Alaska Pipeline System (TAPS) utilizing data including interpretation of the Icewine-1 well logs, mapping and AVO analysis of the modern Franklin Bluffs 3D seismic data (FB3D), and publicly available information from recent drilling and flow tests carried out on adjacent acreage by Pantheon Resources PLC. Construction of the Hickory-1 ice-pad is set to begin soon. Mobilization of the Nordic Calista Rig-2 is scheduled to begin mid-February from the Pantheon Resources Co. Alkaid-2 well location. Planning and permitting is largely complete, and the company expects to spud the well early March. Hickory-1 project manager Fairweather LLC has completed the tendering and contracting program for drilling operations. Well cost is estimated at about $13.5 million gross (about $10 million net to 88 Energy). Flow testing is planned for the 2023-2024 winter season. Project Phoenix encompasses about 82,846 gross acres. It lies on-trend to recent discoveries by Pantheon Resources in multiple play types across top, slope, and bottom-set sands of the Mid Schrader Bluff, Canning, and Seabee formations. It holds an estimated unrisked conventional prospective oil resource of 647 million bbl.

U.S. Space Force official discuss plans to clean 700 gallon oil spill - The United Space Force on Maui held a conference on a chilly Monday morning to discuss the Air Force's plan to clean up an oil leak late last month. Brigadier General Anthony Mastalir told KITV4 they suspect a power surge from severe weather likely damaged a part of a back up generator. The damaged piece is called a floater; t monitors fuel levels and notifies a transfer pump when to fill the generator up with more fuel. Because the floater was damaged, the fuel overflowed. No more than 700 gallons leaked. Facility commander Brigadier General Anthony Mastalir adds this floater is designed to fail safely — but in this instance the device failed “catastrophically.” That is still being investigated. It is also unclear how deep the fuel seeped into the soil. Mastalir said experts have been working tirelessly over the past week looking into this incident and they are considering vendors to help with the remediation effort. Dozens of activists who are critical of the military’s presence on Haleakala- visited the site Sunday and met with Mastalir. Those demonstrators consider Haleakala sacred and Mastalir says he plans to include them in the clean up process and promised to communicate with them regularly. Moving forward Mastalir also pledged to be transparent with the public about this spill. Officials with the Environmental Protection Agency and the Department of Health told KITV4 they will come to inspect the affected area.

Preliminary investigation underway on oil spill - The Maritime Safety Authority of Fiji with Fiji Ports Corporation Limited has confirmed that they have received reports of an oil spill within the parameters of the Suva Harbor, particularly at Narain Jetty. The pollution officers from the two organizations were able to contain the Tier one spill. According to a statement as of yesterday afternoon, oil spill booms were deployed and has been effective in containing the spill from spreading to other areas of the jetty. Preliminary investigations are currently underway to determine the cause of the spill, and necessary actions will be taken against the responsible individual or company. The Department of Environment and Water Police have been informed in regards to the incident and are assisting MSAF and FPCL with the investigation.

Equinor gets Canada regulator’s licence for offshore oil discovery A Canadian offshore oil regulator has issued a licence to Equinor’s Cappahayden K-67 discovery in the Flemish Pass Basin offshore Newfoundland, Canada.The Significant Discovery Licence 1059 has been issued by the Canada-Newfoundland and Labrador Offshore Petroleum Board.Based on the interpretation of well and seismic data associated with the discovery, C-NLOPB estimates that the Cappahayden K-67 discovery holds approximately 385 million barrels of recoverable oil.The nearby Bay du Nord field is estimated to hold 500 million barrels of recoverable oil,reported Reuters.In a press statement, C-NLOPB said: “The Petroleum Resources Management System adopted by the C-NLOPB defines Contingent Resources as ‘volumes of hydrocarbons, expressed at 50% probability, assessed to be technically recoverable, that have not been delineated and have unknown economic viability’.“This includes oil in fields/pools that are not approved for development.”Equinor holds a 60% stake in the discovery, which was made in 2020. The remaining 40% stake is held by BP.

Offshore Exploration Heats Up in Mexico - Shell is pushing forward with a four-well deepwater drilling program off Mexico's coast, headlining what looks to be a busy year for exploration by international oil companies. Drilling is set to kick off in the coming months for about a dozen offshore wells, largely deepwater, data from Mexican upstream regulator CNH shows. Shell has already finished drilling at one new well, Aluk, for which results are not available yet, and kicked off work at another, Jokol, in the Salina Basin in the southeastern part of the country, a spokeswoman said. Next up are the Itzcali and Luwa wells in the northern Perdido area. Shell has the Noble Voyager drillship under contract through October 2023. It is partnered with QatarEnergy in the Perdido blocks and with Chevron on the Aluk well. Shell will be hoping for better results than it realized with its initial five-well push in the region, which kicked off in 2020 but failed to yield a commercial discovery. The supermajor moved aggressively to capture large swathes of acreage in Mexico’s second deepwater bid round in 2018, with work commitments amounting to 13 wells. Shell is pushing ahead despite the nationalist energy policy of Mexican President Andres Manuel Lopez Obrador, which has soured the environment for external investment. Other companies are also seeing through their planned programs, albeit with mixed results. Drilling activity in Mexico's waters declined in 2022, but records show that another ramp-up is imminent amid the larger global call for more supply in the fallout of the Ukraine crisis. Oil and gas firms are also loosening their purse-strings a bit for selective exploration activity. Italy's Eni is one company that has found success in Mexico's offshore, both with exploration and from revamping and producing from a discovery that state oil firm Pemex never developed. A new floating production, storage and offloading (FPSO) vessel was installed last year in the shallow-water Area 1 field in the Salina Basin, which includes the Amoca, Mizton and Tecoalli fields. The CNH reported that output from the field averaged more than 20,000 barrels per day in December. The Italian major is rolling the dice again in the Salina Basin with the Yatzil-1EXP and Nabte-1EXP wells, located in shallow and deep waters, respectively. Eni has hired the Valaris DPS-5 drilling rig, with operations to kick off as soon as January. Malaysian state oil company Petronas is looking to drill a pair of deepwater wells in the Salina Basin as well, Coatlicue-1EXP and Naajal-1EXP. The company has contracted the Noble Globetrotter 1 drillship through March.

Colombia oil output down by 49,500 bpd on roadblock, companies say - Energy companies operating in Colombia, including majority state-owned oil company Ecopetrol, on Monday raised concerns about a roadblock in the country’s Meta province, which led to prodcution cuts of more than 49,500 barrels of oil per day. The roadblock is impeding movement on the road between Puerto Gaitan and Rubiales, preventing fuel from reaching oil operations, companies said in a joint statement sent to journalists by Ecopetrol and private operators’ group the Colombian Petroleum Association (ACP). More than 5,332 oil workers and their families have been negatively impacted by the protest, which has continued for seven days, the statement said. “The social and economic impacts are enormous,” the statement said, citing the impact on oil production as well as delays moving food and other good. Signatories included Ecopetrol’s subsidiary Hocol, as well as Spanish oil company Cepsa CPF.GQ and Canadian producer Frontera Energy. The protests are also impacting operations at refineries in the cities of Cartagena and Barrancabermeja, the companies said, putting Colombia’s fuel supplies at risk. The energy ministry and the national police did not immediately respond to requests for comment. In late January Ecopetrol said it would reduce output at its Barrancabermeja refinery to 210,000 bpd, from 230,000 bpd, because of farmer protests in Magdalena Medio.

Fracking firm Cuadrilla in bid to extend Preston site permission by two years - - Fracking firm Cuadrilla has asked for permission to keep its Preston New Road site for another two years.The firm is currently not allowed to use its boreholes to explore for shale formations from which to extract gas, but remains hopeful that a resumption will eventually be allowed. Its permission to use the land is currently due to expire later this year, but Cuadrilla has asked Lancashire County Council for a two-year extension running until April 2025.A moratorium was imposed on fracking, which uses high-pressure liquid to release gas from shale formations, after a series of earthquakes at the site in 2019. Liz Truss had indicated plans to lift that effective ban during her brief tenure as Prime Minister, but her replacement Rishi Sunak has kept it in place.Reacting to that decision in October 2022, Cuadrilla chief executive Francis Egan said it "beggared belief" and pointed to Mr Sunak's conflicting remarks during the leadership election. Mr Egan said: “In the middle of an energy and cost of living crisis, when the UK and Europe is increasingly reliant on shale gas shipped across the Atlantic and liquified gas from Qatar to keep the lights on, it beggars belief that our Government should reintroduce a moratorium on exploring for and producing our own shale gas. “This new Government is turning its back on an industry that has the potential to create tens of thousands of jobs across the North of England, generate billions in private sector investment, and provide local councils with much-needed tax revenue. The industry has recently unveiled a community dividend package worth hundreds of millions of pounds per producing shale gas sites. This is money which would go directly towards helping local households and families, yet this announcement will prevent red wall communities benefitting from their own natural resources.” Opponents of the practice have consistently challenged those arguments and say that not only does the UK have the "wrong type of shale" but also that the practice would not lead to lower bills for those living nearby or across the country. They also say that the environmental concerns cannot be ignored.

Calls to brand fracking in North Yorkshire ‘inappropriate’ rejected - The leadership of a Conservative-led council which sparked an outcry by approving a proposal to frack has rejected calls to label the gas extraction method as “inappropriate”.North Yorkshire County Council’s executive said it would not support Liberal Democrat and Green motions to declare hydraulic fracturing as inappropriate in the county, despite the council having declared a climate emergency and pushing forward plans to reduce carbon.While the council’s leaders have pointed towards Rishi Sunak reimposing the government’s ban on fracking which was last year lifted by Liz Truss, opposition councillors have claimed the moratorium could be ended again.The recommendation to a full meeting of the authority later this month comes three years after Third Energy announced it would not use planning consent for the hydraulic fracturing of rock to extract gas in Ryedale which the council’s planning committee granted it, triggering a huge and sustained outcry.The planning decision in 2016 lead to hundreds of thousands of pounds of North Yorkshire taxpayers money being spent on policing protests outside the Kirby Misperton site.A meeting of the executive heard opposition members implore the authority to show leadership over climate change policies and agree that fracking, which was “the most polluting fossil fuel extraction” was incompatible with its ambition to be part of the country’s first carbon negative region.Green councillor Arnold Warneken said the motions simply looked to reinforce the council’s policies over fracking.He said: “In this case we are not discussing the rights and wrongs of what we allow in our county, we are talking about saving our very existence.“If we are going to ask all those third parties who are the major contributors to carbon emissions in this county to take us seriously, we can send strong messages out to tell them that we believe fracking is inappropriate.”

Attitudes toward green energy could be negatively affected by fracking debate --Public attitudes towards some new low-carbon technologies could be negatively influenced by the fracking debate, new research from Cardiff University suggests.A team from the University's School of Psychology found that acceptance of deep geothermal energy—technology to harness the heat beneath the Earth's crust—was affected by the backdrop of controversy and opposition towards fracking for oil and gas.Green hydrogen, on the other hand—which is produced by using green energy to power the electrolysis of water—was found to have been less impacted by concerns around fracking because of its perceived difference.The effect, known as "perception spillover," means that people's existing beliefs about one area influence another related area.Dr. Emily Cox said, "Our research shows that some people make spontaneous connections between fracking and deep geothermal energy."Some participants in our study brought up fracking within the first few minutes of discussion about deep geothermal energy. When others were prompted to think about fracking, triggering underlying associations, we saw the proportion of negative spillover increase to nearly half the survey sample."As green hydrogen was seen as different to fracking, the spillover effects were less strong. But, when prompted to consider fracking, 14% of our survey respondentsexpressed more positive perceptions of green hydrogen because of the perceived dissimilarity to fracking."The researchers conducted a nationally representative U.K. survey (927 participants) and two focus groups to explore whether the strong public response to fracking might impact public perceptions of other technologies, affecting their chances of successful deployment.Focusing on two of those technologies—deep geothermal energy and green hydrogen—the results suggest that techniques perceived to be similar to fracking, especially those with an underground drilling or injection component, are likely to be most vulnerable to perception spillover effects from fracking.

Shell directors sued by investor charity - In a “world-first” lawsuit, backed by institutional investors, Shell is sued by shareholder ClientEarth with claims that Shell’s energy transition strategy is insufficient. Environmental law charity ClientEarth has filed a lawsuit against the individual directors of oil giant Shell in a world-first lawsuit.The charity alleges that the 11 directors have breached their legal duties, under the UK’s Companies Act, by failing to adopt an energy transition strategy that aligns with the Paris Agreement.The claim, filed in the high court of England and Wales on Wednesday, received support from institutional investors holding more than 12 million of Shell’s 7 billion total shares. These equate to more than half a trillion US dollars in total assets under management and include pension funds in the UK, France, Belgium, Denmark, and Sweden.Mark Fawcett, chief investment officer of UK pension fund Nest said “Investors want to see action in line with the risk climate change presents and will challenge those who aren’t doing enough to transition their business. We hope the whole energy industry sits up and take notice.”ClientEarth said that this is the first lawsuit, filed by shareholders, that alleges that a company is failing to adequately move away from fossil fuels. The charity has a small shareholding in Shell, allowing it to file a lawsuit against them under the Companies Act.ClientEarth senior lawyer Paul Benson said of the lawsuit: “the board [of Shell] is persisting with a transition strategy that is fundamentally flawed, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success – despite the board’s legal duty to manage those risks.”In a response to Offshore Technology, Shell rejected ClientEarth’s allegations, stating that the company “believes our climate targets are aligned with the […] Paris Agreement”. The statement continued to say that Shell “will oppose [ClientEarth’s] application to obtain the court’s permission to pursue this claim” and that “the group of institutional investors collectively holding more than 12 million shares […] represent less than 0.2% of Shell’s total shareholder base.”The lawsuit comes a week after Shell’s record annual profits sparked criticism in the UK.

Nord Stream Sabotage Was CIA, US Navy Covert Op: Seymour Hersh Bombshell Prompts White House Response - Famed journalist and Pulitzer prize winner Seymour Hersh, who for decades was a star reporter writing for The New York Times and New Yorker, on Wednesday published a new bombshell as his first Substack post, prompting a quick White House response. After conducting his own investigation into who sabotaged the Nord Stream pipelines via a series of underwater blasts on Sept. 26, Hersh has concluded the United States blew up the Russia-to-Germany natural gas pipeline as part of a covert operation under the guise of the BALTOPS 22 NATO exercise. Hersh, relying on unnamed national security sources, describes months of discussions and back-and-forth involving the Biden White House, CIA, and Pentagon. The report says planning was in the works all the way back to December 2021, with a special task force formed under the aegis of US National Security Advisor Jake Sullivan."The Navy proposed using a newly commissioned submarine to assault the pipeline directly. The Air Force discussed dropping bombs with delayed fuses that could be set off remotely. The CIA argued that whatever was done, it would have to be covert. Everyone involved understood the stakes," the report, entitled How America Took Out The Nord Stream Pipeline reads. "The Biden Administration was doing everything possible to avoid leaks as the planning took place late in 2021 and into the first months of 2022," it continues. As momentum gained to proceed with a covert sabotage attack, "Over the next few weeks, members of the CIA’s working group began to craft a plan for a covert operation that would use deep-sea divers to trigger an explosion along the pipeline," Hersh writes. But there was significant push back within the intelligence community, but any reservations were overcome in the lead-up and aftermath of the Russian invasion of Ukraine in February 2022. According to the investigative report: Throughout “all of this scheming,” the source said, “some working guys in the CIA and the State Department were saying, ‘Don’t do this. It’s stupid and will be a political nightmare if it comes out.’”Nevertheless, in early 2022, the CIA working group reported back to Sullivan’s interagency group: “We have a way to blow up the pipelines.”What came next was stunning. On February 7, less than three weeks before the seemingly inevitable Russian invasion of Ukraine, Biden met in his White House office with German Chancellor Olaf Scholz, who, after some wobbling, was now firmly on the American team. At the press briefing that followed, Biden defiantly said, “If Russia invades . . . there will be no longer a Nord Stream 2. We will bring an end to it.”Twenty days earlier, Undersecretary Nuland had delivered essentially the same message at a State Department briefing, with little press coverage. “I want to be very clear to you today,” she said in response to a question. “If Russia invades Ukraine, one way or another Nord Stream 2 will not move forward.”As for Washington motives in such a risky covert sabotage mission, Hersh writes, "As long as Europe remained dependent on the pipelines for cheap natural gas, Washington was afraid that countries like Germany would be reluctant to supply Ukraine with the money and weapons it needed to defeat Russia."

Kremlin says those behind Nord Stream blasts must be punished (Reuters) -The Kremlin said on Thursday the world should know the truth about who sabotaged the Nord Stream gas pipelines and that those responsible should be punished after an investigative journalist said U.S. divers blew them up at the behest of the White House. A sharp drop in pressure on both pipelines was registered on Sept. 26 and seismologists detected explosions, triggering a wave of speculation about sabotage to one of Russia's most important energy corridors. In a blog post, Pulitzer Prize-winning investigative journalist Seymour Hersh cited an unidentified source as saying that U.S. navy divers had destroyed the pipelines with explosives on the orders of President Joe Biden. Reuters was unable to corroborate the allegations. The White House dismissed them as "utterly false and complete fiction". Kremlin spokesman Dmitry Peskov said Hersh's blog post deserved more attention and that he was surprised it had not been covered more fully by Western media. "The world must find out the truth about who carried out this act of sabotage," Peskov told reporters. "This is a very dangerous precedent: if someone did it once, they can do it again anywhere in the world." He called for "an open international investigation of this unprecedented attack on international critical infrastructure", adding: "It is impossible to leave this without uncovering those responsible and punishing them." Russia, without providing evidence, has repeatedly said the West was behind the blasts affecting the Nord Stream 1 and 2 pipelines last September - multibillion-dollar infrastructure projects that carried Russian gas to Germany. President Vladimir Putin has accused "Anglo-Saxon" powers of blowing up the pipelines, a Kremlin-designed project to circumvent Ukraine in exporting its gas under the Baltic Sea directly to western Europe. Investigators from Sweden and Denmark - in whose exclusive economic zones the explosions occurred - have said the ruptures were a result of sabotage, but have not said who they believe was responsible. In his blog post, entitled "How America Took Out The Nord Stream Pipeline", Hersh said a plan was hatched in 2021 at the highest levels in the United States to destroy the pipelines. The report said a Central Intelligence Agency (CIA) working group came up with a covert operation plan to put explosives on the pipelines. Russian Foreign Minister Sergei Lavrov said earlier this month that Washington was directly involved in the sabotage of the pipelines.

Still strong: European demand for Russian LNG not fading, says Novatek - European customers are as interested as ever in buying cargoes of liquefied natural gas from Russian projects — despite the fallout from the Ukraine conflict — according to Leonid Mikhelson, executive chairman of Russian independent producer Novatek. Speaking at the India Energy Week event in Bangalore, India, Mikhelson told reporters that satisfying European demand for gas presents attractive opportunities for Novatek as LNG was not included in EU sanctions imposed last year. Overall European demand for LNG has soared in direct proportion to the reduction in Russian gas pipeline supplies to the continent that predated Moscow’s decision to invade Ukraine, but intensified afterwards. The continent lost an equivalent of 43 million tonnes of LNG of Russian gas pipeline deliveries in 2022, Mikhelson has estimated. Mikhelson expects Europe to source between 40 million and 50 million tonnes of LNG to replace Russian gas pipeline supplies this year in order to pass another winter. But he warned that that volume could “easily grow” to between 60 million and 70 million tonnes if China and India start lifting more LNG under their long term contracts instead of permitting Novatek-led Yamal LNG and suppliers from other countries to divert contracted volumes to Europe for spot sales. The Mikhelson's assertion is in line with a last week's pronouncement from Shell chief executive officer Wael Sawan who talked about 50% of LNG, destined to be shipped to China under long-term deals, being sent instead to Europe because of record high gas prices on the continent during the last year.Novatek also pointed out that the withdrawal of Western contractors and suppliers from the operator’s Arctic LNG 2 project has not disrupted the project as much as Western nations may have expected.Novatek expects to start towing out of the first LNG train from a yard near the Russian port of Murmansk in August, with the facility planned to produce first LNG before end of this year. Mikhelson said sanctions had prompted the company to conduct most of its commissioning works while the train remains in the yard rather than after installation offshore from West Siberia’s Gydan Peninsula, as planned earlier.

Equinor annual operating profit surges to nearly $75bn - Norwegian energy major Equinor has reported an adjusted operating profit of $74.9bn for 2022, compared with $33.5bn a year ago. The earnings were boosted by a surge in oil and gas prices in the wake of Russia’s invasion of Ukraine. The Norwegian firm’s adjusted earnings after tax for 2022 were $22.7bn, against $10bn in the same period a year ago. For the period under review, the firm’s net operating income rose to $78.8bn from $33.66bn a year ago. The company’s net income for the year stood at $28.7bn while free cash flow was $23.4bn. Total revenues and other income increased to $150.80bn, from $90.92bn a year earlier. Equinor president and CEO Anders Opedal said: “Equinor is uniquely positioned to provide energy and contribute to decarbonisation while delivering strong returns. “Strong earnings and cash flow will enable continued competitive capital distribution and investments in high-value, resilient projects within oil and gas, renewables, and low carbon solutions.” “On the back of strong earnings, outlook, and balance sheet, we step up capital distribution to an expected $17bn in 2023.” Equinor announced a cash dividend of $0.30 per share and will also make an additional, extraordinary payment of $0.60 per share for Q4 2022. Furthermore, the company’s board has decided to increase the share buy-back programme from $1.2bn to $6bn in 2023.

Norway Steps Up as EU Supplier -- Norway’s role as a critical supplier of hydrocarbons to Europe came into sharp focus during 2022 after Russia’s war in Ukraine left the continent short of oil and gas. Oslo’s relatively stable fiscal terms have enabled companies to position themselves for the future and maintain high production levels offshore Norway to 2030. But non-EU member Norway is seeking greater clarity and commitment from the bloc around its future appetite for gas. Norwegian operators have stepped up to relieve Europe’s energy supply security concerns, with a record 24 upstream projects approved last year alone. That’s out of a total 35 projects sanctioned since 2020 under Oslo’s temporary tax regime, amounting to almost $43 billion of greenfield investment, according to consultancy Rystad Energy. Aker BP operates 17 of the 35 projects on the list, including the Yggdrasil hub (start-up 2027), currently Norway's biggest future oil and gas scheme. Equinor operates 11 projects, with Breidablikk (start up 2025) seen as a key contributor to oil output while Irpa (start-up 2026) and Shell’s Ormen Lange phase 3 (start-up 2025) will help maintain a high flow of gas to Europe. Norway’s fiscal terms have been an important factor in bolstering supplies to Europe at a critical time. The 35 projects sanctioned under the temporary tax regime will tap almost 2.5 billion barrels of oil equivalent of recoverable resources, keeping investment steady until the late 2020s and tax revenues flowing to government coffers. Rystad forecasts a steep production ramp-up from 2025, peaking at almost 4.49 million barrels of oil equivalent per day in 2027-28, with liquids output reaching 2.49 million boe/d. However, spending is projected to fall sharply to around 170 billion kroner ($16.8 billion) in 2027 by when most projects will be online. It reckons Norway will supply close to 30% of all European gas by 2028, up from around 24% now. The Norwegian Petroleum Directorate’s (NPD) more modest forecast sees output peaking earlier, reaching 4.3 million boe/d in 2025, up from 4.12 million boe/d in 2022. Norway exported 122 billion cubic meters of pipeline gas to Europe last year, up 8% from 2021 and the highest level recorded by the NPD. The upstream regulator sees gas exports peaking at 122.46 Bcm in 2025. Liquids production in 2022 was almost 7% lower than the previous year at 1.89 million barrels per day. Across the North Sea, the UK government’s extension of a national levy on companies’ windfall profits has had some unintended consequences. Operators there have been assessing what the latest fiscal intervention means for their investments and strategic goals. Harbour Energy — the UK’s biggest oil and gas producer — will continue to invest in existing opportunities in its portfolio. But it will scale back investment in other areas like exploration, cut jobs, and diversify away from the UK. TotalEnergies is cutting investment in the UK by 25% this year due to the levy, and other companies have warned that it could affect their investment decisions. North Sea drillers from the International Association of Drilling Contractors this week flagged the ongoing “migration” of rigs and equipment from the UK offshore due to the lack of opportunities and better prospects overseas. At the same time, Norway is seeking greater clarity and commitment from Brussels over its future gas needs and net-zero policy objectives to justify longer-term investment in projects and export infrastructure. The European Commission’s climate-related policy goal to ban Arctic hydrocarbon development and stop importing such hydrocarbons have added to the uncertainty. Indeed, wrangling over the EU's Arctic oil and gas policy has led to an impasse in negotiations with Norway over a “green industrial alliance.” According to Norwegian non-governmental organization Bellona, Oslo wants the draft agreement text to support activity in the Arctic region after 2030, which the EU rejects. Norway sees the Arctic Barents Sea as a significant source of untapped gas resources. And Bellona founder Frederic Hauge tells Energy Intelligence that gas lobbyists are pushing the EU hard for support for continued exploration to justify further investment, continuation and even potentially expansion of fossil activities. Still, he says, failure to forge closer ties on industrialized clean technologies with the EU, its most important trading partner, would be to the detriment of future-oriented industries in Norway and the development of markets for batteries, carbon capture and storage technology, and hydrogen.

EU Looks to Extend Mandatory Cuts in Gas Demand EU member states are expected to hold talks later this month about extending mandatory cuts in gas consumption, which are set to expire at the end of March.

Fracking is Extremely Polluting, Climate Website Warns -Hungary Today - The extraction of shale gas – fracking – is several times more polluting than conventional natural gas, writes Greendex, a Hungarian news site focused on environmental and climate issues.“Shale gas and natural gas are practically the same substance. The difference between them comes from where and how they are located deep in the earth. In simple terms, conventional natural gas, like artesian water, seeps through layers and collects there when it reaches a geological seal. In contrast, shale gas does not accumulate but is trapped in very small, sometimes microscopic, cavities, channels and capillaries of shale formations, which are also low permeability, deep in the earth,” the article explains. According to Greendex, European shale gas reserves are estimated to be around 89,000 billion cubic metres, which, assuming EU consumption of around 400 billion cubic metres in 2021, could cover EU consumption for more than 200 years. Of this, Hungary has a share of 813 billion cubic metres, which would be sufficient to meet domestic gas demand of close to 10 billion cubic metres per year until the end of the 21st century. Related article: Hungary Could Have Shale Gas Lasting a Century – - Fracking is becoming an important resource in times of energy crisis, but it comes with inevitable environmental costs.Continue reading In the US, production could in principle be ramped up in a relatively short time of a few years under optimal conditions, but the situation in Europe is very different from overseas, and for a number of reasons, a similarly rapid and large result cannot be expected here, the portal points out.European regulation is stricter, with many countries outright banning hydraulic fracking. It is a huge source of pollution and carries unforeseeable environmental risks. Any LNG is much more damaging to the climate than natural gas, especially if it comes by pipeline, the article concludes.

Bulgaria starts building natural gas interconnector with Serbia -Interconnector Bulgaria-Serbia (IBS) has begun building the 62-km, 28-in. OD Bulgarian section of the 1.8-billion cu m/year (174-MMcfd) natural gas pipeline, running from the border between the two countries to Novi Iksar, Bulgaria. Total length of the reverse-flow capable pipeline is 170 km. The project will also include automated gas-regulating stations at Slivnitsa and Dragoman, Bulgaria, and a gas-metering station at Kalotina. In a video message, European Union (EU) commissioner for energy, Kadri Simson, said: “The beginning of the works on IBS marks another critical milestone in the region's pathway toward diversification of sources and routes. It is now crucial that both governments and operators closely cooperate to ensure that the pipeline is ready and operational in the second half of 2023.” IBS is recognized as an EU project of common interest and was described by the Union as “part of a broader process of diversification of gas supplies and a steppingstone for further enhancement of energy security in the region.” The project is necessary to reduce import dependence on Russian gas and provide alternative supply routes in southeast Europe, the EU said. The EU co-funded the Bulgarian section of the €76.7-million pipeline segment with €27.6 million under the Connecting Europe Facility Energy program and €6 million from structural funds. Bulgartransgaz EAD is heading the project in Bulgaria. The EU also funded the Serbian section of the pipeline with a grant of €49.6 million through the Instrument of Pre-Accession scheme.

Russia, China Sign Intergovernmental Gas Deal | Energy Intelligence - Russia and China have signed an intergovernmental agreement on pipeline gas supplies via the "Far Eastern Route," according to a related document prepared by the Russian Energy Ministry.The document mentions that the intergovernmental agreement was signed by both countries on Jan. 31.The agreement defines key parameters of a 10 billion cubic meter per year gas supply contract signed by Russia's Gazprom and China National Petroleum Corp. (CNPC) in February 2022.It gives state-controlled gas giant Gazprom the exclusive right to supply gas to China via the cross-border section of the Far Eastern Route.The cross-border section will stretch from the Sakhalin-Khabarovsk-Vladivostok pipeline and run across the Ussuri River near the Russian border town of Dalnerechensk, which lies north of Vladivostok.It also notes that Russia and China are committed to supporting the use of their national currencies for payments under the contract.The Far Eastern Route contract is the second gas supply deal between Russia and China, following the 38 Bcm/yr Power of Siberia contract signed in 2014.Supplies via Power of Siberia started in late 2019, but it is not yet clear when supplies via the Far Eastern Route will start.The contract is part of Russia's plans to expand its gas exports to Asia — plans which have become increasingly important for Moscow after its invasion of Ukraine almost a year ago.The war led to a series of international sanctions against Moscow and the loss of most of its traditional pipeline gas exports to Europe.China remains central to Gazprom's diversification efforts. Russia is also talking to Beijing about a 50 Bcm/yr contract with CNPC to export gas via the proposed Power of Siberia 2 pipeline and a transit section in Mongolia dubbed Soyuz Vostok.Apart from monetizing new gas resources in East Siberia, Power of Siberia 2 would also take gas from West Siberian fields, which have traditionally supplied Europe and Russia's domestic market.Gazprom is also looking for opportunities to increase domestic gas consumption and find new markets in Asia, including Central Asia.It is also keen to keep exporting pipeline gas to Europe via a proposed gas hub in Turkey.Turkey had been planning to hold a summit in Istanbul on Feb. 14-15 to discuss the hub with potential gas suppliers and buyers. However, sources tell Energy Intelligence that the summit has been postponed until the second half of March because of the deadly earthquake that hit Turkey and Syria earlier this week.

India Predicts 500% Increase In Domestic Natural Gas Demand - Indian Prime Minister Narendra Modi on Monday projected that the country’s gas demand would rise 500% due to the rapid pace of development, while its share of global oil demand would more than double. While the Indian prime minister did not offer a specific time frame for this major boost in demand, he said that the country’s energy demand would be highest in the present decade. Modi’s statement, delivered during the opening ceremony of India Energy Week 2023, coincides with a recent OPEC report that expects India to be the largest contributor to incremental demand, with the country expected to add some 6.3 million bpd until 2045. Overall, OPEC said it saw demand increasing to 110 million bpd in 2045, up from 97 million bpd in 2021. Modi predicts India’s share in global oil demand will increase from 5% to 11%. The Indian prime minister used the occasion to highlight the country’s plans to boost exploration and production, which he said would provide opportunities for investors. Right now, India relies on imports for some 85% of its energy needs, with India and China being the largest importers of oil and gas in the world. With this in mind, India will remove significant restrictions on exploration, reducing “no-go” areas for E&P companies. India also plans to expand its refining capacity, along with its LNG import capacity by 2030. Asia is now the biggest buyer of Russian crude since the imposition of Western sanctions following Putin’s invasion of Ukraine. Some 70% of Russian Urals January loading cargoes were bound for India, according to Reuters data. India’s oil minister, Hardeep Singh Puri, also said on Monday that regardless of Western sanctions, the country would not shun Russian oil, which it receives at a discount to Brent crude.

Five dead after gas explosion in Russia's Novosibirsk (Reuters) - Five people including a two-year-old child were killed on Thursday in a gas explosion in a housing block in the city of Novosibirsk in Siberia, Russian media reported. Video published by Russia's emergencies ministry showed a section of a multi-story residential building largely destroyed, with the building's facade missing. Regional authorities said that 11 people had been hurt in the explosion. Russia's Investigative Committee, which is responsible for major crimes, said it had opened an investigation.

EU Agrees To $100 Russian Diesel Price Cap --EU members have agreed to support a price cap level of $100 per barrel on Russian diesel sales to third-party countries, people familiar with the matter told Bloomberg on Friday afternoon. The EU’s ban on Russian seaborne crude oil products imports, including diesel and naphtha, is scheduled to go into effect on February 5. The EU’s proposal, submitted last week, called for capping the price of Russian diesel sold to third countries at $100 per barrel for products that trade at a premium and $45 for those that sell at a discount. Similarly to the price cap on Russian crude, buyers outside the EU would continue to have access to Western insurance and financing for cargoes if they comply with the price cap.The proposal also included setting a price cap of $45 per barrel for discounted products such as fuel oil, which sources suggest has also been approved. The goal of the price caps is to limit Russia’s revenues derived from crude oil and its refined products, while keeping the market supplied with Russian energy.Despite the ban and price cap mechanism that are set to go into effect on Sunday, Russia’s energy minister said he saw no reason to reduce the country’s output on petroleum products, nor was it considering a reschedule for its refinery maintenance to make use of possible reduction in Russian demand.Although the price cap goes into effect on Sunday, there is a grace period for cargoes loaded before the cap was agreed to that runs until April. Russian diesel prices were about $90 earlier this week, below the cap. Wood MacKenzie said earlier this week that a $100 cap would not have a significant effect on Russian refiners, but could bring its diesel exports down about 200,000 bpd.

EU Embargo On Russian Oil Products Enters Into Effect --As of Sunday, no Russian oil products can be imported into the European Union, per the latest sanction hit of Brussels against Moscow.The embargo has been combined with a price cap, agreed upon with the G7 in the same way that the EU and the G7 coordinated the price cap on Russian crude last year.The price caps were agreed at $100 per barrel of diesel, which trades at a premium to crude oil, and $45 per barrel of fuel oil and other oil products that trade at a discount to crude oil. The price cap applies to Russian fuel cargoes shipped on vessels owned by companies based in the EU or G7.There is some concern among analysts that the end of Russian fuel deliveries will push prices in the EU higher, but the EU is hoping to avoid such a development by switching to new suppliers, mostly from the Middle East.Some have warned that the fuel embargo will have a more disruptive effect on energy markets than the crude oil embargo that went into effect on December 5 last year.Russia, in the meantime, is on track to export more refined products this month than it exported in January, according to traders and cargo data, reported by Reuters.Exports of low-sulfur diesel and gasoil from Russian ports on the Black Sea and the Baltic Sea are set for monthly growth of between 5 percent and 10 percent to a combined 4.3 million tons, the data showed. Yet Russian fuel exporters are facing challenges, such as a shortage of tankers to carry their products and the risk of port closures due to stormy weather. The price caps, on the other hand, could affect refiners’ margins and prompt them to reduce production.

Oil Industry Adapts to G7 Price Cap - It is early days but signs are emerging that the oil industry is learning to adapt to the G7 price cap on Russian crude just as a second cap on Russian oil products came into effect on Feb. 5. The G7 rationale behind the cap was to target Russian oil revenues while keeping the oil flowing to prevent global oil price spikes, but it is still hard to judge how effective the mechanism will be. So far, EU and UK-based tankers have mainly avoided transporting Russian barrels, with one estimate that only around one in 10 Russian crude fixtures is now being lifted by a tanker under G7 rules. Meanwhile, Moscow has said it will not cooperate with the price cap and Russian law prohibits sales of Russian crude and products to foreign companies that comply with the G7 caps. Instead, a large “shadow fleet” — estimated at some 650 tankers — has emerged to transport both Russian crude and products, with India and China the principal buyers. Shipping and trading sources have confirmed more than a dozen European-owned tankers loaded Russian crude oil in January on which the $60 per barrel price cap would have been applied. The dozen-plus tankers identified in January loaded cargoes at various Russian ports for different destinations, including India, China, Turkey and Bulgaria, data from BRS Shipbrokers show. Most of the oil was Russian Urals — excluding Kebco crude from Kazakhstan that is sold as Urals but not subject to any restrictions. There was also at least one shipment of East Siberia-Pacific Ocean (Espo) blend shipped from the Kozmino terminal in Russia’s Far East. Some of the vessels are managed by Greek firms such as Kyklades Maritime, TMS Tankers, Dynacom and Avin International, with some smaller Western operators also featuring.

Narendra Modi: India poised for five-fold rise in gas consumption - India’s gas consumption is set to jump by up to 500% in the coming years, along with a sizeable increase in gas infrastructure and liquefied natural gas import capacity, according to Prime Minister Narendra Modi. Speaking at the India Energy Week (IEW) conference in Bengaluru on Monday, Modi said the country is working on a “mission mode” to scale up consumption of natural gas, increasing its share of the country’s energy mix to up to 15% by 2030, up from the existing 6%. Modi did not elaborate on the timeframe for boosting India’s gas production five-fold, but industry sources told Upstream that the Indian government aims to achieve the target as early as end of this decade. “Domestic exploration and production will be increased as a part of India’s plans to boost gas consumption,” Modi noted. India’s gas consumption stood at close to 174 million cubic metres per day by end of 2022 and, along with a 500% boost, could reach as high as 870 MMcmd in the coming years, Upstream understands. India’s growing gas consumption is likely to come from increased domestic gas production along with a higher share of LNG imports. Domestic private sector company Reliance Industries recently said it is poised for a huge boost in gas production from its KG-D6 asset in the Krishna Godavari basin offshore India’s eastern coast. Managing director Mukesh Ambani said a joint venture with UK supermajor BP on KG-D6 is on track to reach 30 MMcmd of gas production in the 2023-2024 financial year after commissioning of the MJ field. State-owned Oil & Natural Gas Corporation (ONGC) is also expected to scale up its domestic gas production in the coming years, on the back of multiple gas-based developments across the country’s east and west coasts. Modi stated that India’s regasification capacity, which stood at 21 million tonnes per annum in 2014, has doubled by 2022 and is now expected to significantly go up in the coming years. India is the world’s fourth-largest impprter of LNG importer. It currently has six LNG import terminals with a combined nameplate capacity of up to 42.5 million tpa, which is expected to increase up to 70 million tpa by 2030. The share of LNG in India’s gas consumption is also expected to rise to 70% from the current 50% over a 10-year period, sources have told Upstream. Modi said that India has also been expanding its gas pipeline infrastructure, with the nation’s gas pipeline network poised to increase to 35,000 kilometres in the next five years, up from the existing 22,000 kilometres. Modi said that, as a key initiative to boost domestic exploration and domestic sector, the nation has freed up to 1 million square kilometres of “no go” region, which was earlier inaccessible for exploration purposes. “Up to 98% reduction in no-go areas has been achieved by the government,” Modi stated.

Russia accounts for 28% of India’s oil imports in January - The share of Russian crude rose to a record 28% of India’s oil imports in January, remaining the top supplier for the fourth month in a row on heavy bargain hunting by refiners, data from ship tracking showed.Russian crude accounted for 0.2% of India’s oil imports due to uneconomical transport logistics before Moscow sent troops into Ukraine on February 24 last year.As the the West responded with sanctions followed by a price cap and a ban on importing Russian crude, Indian refiners started lapping up the shunned barrels at discounts.The share of Iraq, which was relegated to the second spot in October 2022, stood at 20%, while Saudi Arabia stood third with a 17% share. Shipments from the US improved to 9% from 7% in December.At the India Energy Week 2023, oil ministry officials pointed to foreign minister S Jaishankar and oil minister Hardeep Singh Puri making India’s stand clear at various global forums broadly saying India will buy oil from anywhere in the world, including Russia, to fuel economic growth and lift millions out of poverty.Seaborne Russian oil continues to flow to India as refiners are buying on FOB (free on board) basis where the supplier arranges shipping and insurance, which have become difficult in view of the sanctions. The discounts to benchmark Brent keeps the price below the $60 per barrel cap.For Russia to keep oil sales going, it and its buyers need to use ships, insurance and financing outside the jurisdiction of the G-7. The US is comfortable with Russia selling its oil outside of the cap but using non-Western shipping, insurance and banking services would likely be more costly.

India's share in global oil demand expected to rise to 11%, gas to 500%: PM Prime Minister Narendra Modi on Monday said that India's share in the global oil demand is expected to increase to 11 per cent, while the gas demand is expected to rise up to 500 per cent. He underlined that new opportunities for investment and collaboration are being created by the expanding energy sector of India. He said this in his address while inaugurating the India Energy Week. Quoting the International Energy Association, the prime minister remarked that India's energy demands will be highest in the present decade which presents an opportunity for the investors and stakeholders of the energy sector. Later in the day, he also launched E20 fuel at 84 retail outlets of oil marketing companies in 11 states along the lines of the ethanol blending roadmap. E20 indicates a 20 per cent ethanol and 80 per cent petrol blend. The number 20 in the designation E20 refers to the proportion of ethanol in the petrol blend. In other words, the higher the number, the higher the proportion of Ethanol in the petrol. India's current ethanol mix with petrol is 10 per cent, which is higher than it has ever been.

Russia equipped to meet India’s rising crude oil demand: Rosneft CEO - Russia is prepared to meet India’s rising demand for crude oil, Rosneft CEO Igor Sechin told Oil Minister HS Puri on Monday. Puri met with Sechin on the sidelines of the India Energy Week (IEW) in the IT city. “During this short meeting, Sechin told the Minister that whatever is India’s requirement, they [Russia] are ready to supply it,” said a source. Russia has emerged as India’s largest crude oil supplier after Iraq. In December 2022, Russia supplied an average of 1.4 million barrels per day (MPD) against 1 MPS from Iraq, according to data from Kpler. During January this year, Russian crude imports stood at around 1.2 MPD, while Saudi Arabia supplied 670,000 barrels per day and Iraq 660,000 barrels per day. The development assumes importance as India’s crude oil demand is rising on the back of growing industrial activity, as well as rising domestic consumption in the households and transport & logistics sector. This was also highlighted by Prime Minister Narendra Modi in his inaugural address at the IEW on Monday. “Energy is a big factor in meeting the aspirations of the people of India. From industries to factories to offices to households, India’s energy demand is rising,” the PM said. In a session with Puri at the IEW, Sechin noted that India is emerging as a leader in the global economy, and has a young and ambitious population. In the same session, Puri stressed that energy security today means “availability, supply, predictability and affordability”. On India continuing to import higher quantities of crude oil from Russia, Kpler’s Lead Analyst (Dirty Products and Refining), Andon Pavlov, had earlier told the businessline “Mostly yes, the US has already more or less approved the India-Russia crude cooperation and so even considering that the delivered price for Indian refiners is not as low as international benchmarks will suggest (Urals trading at a sizeable discount to Brent), the price of Russian crude still remains consistently below other alternatives, so it makes sense for India’s refiners to continue buying a lot of Russian crude.”

Russian’s Lukoil breaks new ground with Kazakhstan state oil company - Russian privately held oil producer Lukoil has become the first foreign investor to agree to new operating terms approved by authorities in Kazakhstan in January. Luckoil has authorised its partner, Kazakh state oil and holding KazMunayGaz, to agree what is described as a standardised exploration and development contract for a large offshore block in the country’s sector of the Caspian Sea. Under the deal signed in Astana on Monday, KazMunayGaz and Lukoil take on a project to explore and develop the Kalamkas-more block. Besides an already discovered oilfield of the same name, the licensed shallow-water acreage also includes two more deposits — Khazar and Auezov, with estimated total recoverable reserves of 510 million barrels of oil and some 9 billion cubic metres of natural gas. According to a statement from the Kazakh Energy Ministry, KazMunayGaz and Lukoil have agreed to pay $32 million as a signature bonus, and have also committed to invest up to $6 billion into the project. Kazakh authorities expect the two partners to proceed to preparations for the development of the fields as soon as possible, as first oil production is hoped to be seen as early as 2028. Kalamkas-more and Khazar were part of a larger Kashagan development block until 2019 when the international operating consortium developing Kashagan opted to return the deposits to the government after being unable to agree upon suitable development options for the assets, expected to be capable of delivering a profit. The two deposits, which are located about 30 kilometres apart, are in water depths of just seven to nine metres in the Caspian Sea. However, installation of any structures in this sea area is challenged by strong ice movements during winter months. Earlier exploration drilling at the Kalamkas field was conducted by creating subsea stone mounds to enable installation of a drilling barge on top to hold it securely at the drill site. The Energy Ministry said the government acknowledges the licensed block is a “challenging offshore asset”, hence Lukoil will be provided with a “temporary package of regulatory and fiscal priviledges”. The ministry said that terms of the standardised contract Lukoil agreed to use will be applicable to other oil and gas projects in the country, with its general terms being open for perusal by potential investors into the country’s energy sector.According to these terms, the operator of the licensed block will receive temporary relief from paying a crude-oil export tax when shipping its production to international markets.

Rosneft CEO: The Price Of Russia’s Flagship Oil Will Now Be Set By Asia - The price of Russia’s flagship Urals oil blend is no longer set by Europe but by Asia, which has become the largest market for the commodity, Rosneft’s chief executive Igor Sechin said at the India Energy Week. "If Russian oil does not enter the European market, then there is no reference price. Reference prices will be formed where oil volumes actually go," Sechin said, as quoted by Reuters. "As it's scripted in Ecclesiastes: what is crooked cannot be straightened; what is lacking cannot be counted," he added. The European Union imposed an embargo on most seaborne Russian crude oil imports in December as part of its sanction push against Moscow for its invasion of Ukraine. The EU also set, together with the G7, a price cap for Russian crude oil shipments to other countries in a bid to stymie the Kremlin’s oil revenues further. The embargo and the price cap have widened the discount of Urals to Brent crude, making it attractive for buyers from China and India. In a matter of months, even before the December embargo went into effect, most of the Russian oil that used to go to Europe, had been redirected to the two Asian powerhouses. According to Reuters calculations, some 70 percent of the Urals cargoes loaded last month went to India. Russia has become India’s largest supplier of crude oil. Yet the two Asian majors are not just buying Urals. The prices of two other popular Russian blends—ESPO and Sokol—have been trading at above $70 per barrel recently. At the time of writing, ESPO had slipped below $70 but Sokol was above the threshold which is $10 per barrel above the EU/G7 price cap. Urals, at the same time, averaged $49.48 per barrel in January, according to Finance Ministry data cited by Reuters. This was 42 percent cheaper than its price for January 2022.

Russia's Oil And Gas Revenues Slump 46% Year-Over-Year - Russia’s budget revenues from oil and gas plunged in January by 46% compared to the same month last year due to the sanctions on Russian oil exports, which led to a slump in the price of Russia’s flagship crude grade. Russian budget revenues from energy sales – including taxes and customs revenues – plummeted last month to the lowest level since August 2020, according to data from its finance ministry compiled by Reuters.In January 2023, the price of Russia’s flagship Urals grade averaged 42% lower than in the same month of 2022, as its discount to Brent Crude grew wider following the EU embargo and the G7 price cap, which came into effect on December 5.The average price of Urals in January, at $49.48 per barrel, was over 30% lower than in January 2022, when it averaged $85.64 per barrel, Russia’s Finance Ministry said earlier this week. Russia calculates the export duty due to the budget based on the price of Urals. This has been reducing its revenues due to the wide discount of Urals to Brent, which has swelled to nearly $40 per barrel at times.Brent Crude was trading at around $82 a barrel early on Friday, while Urals, per Reuters estimates, was at around $53.60 per barrel. Russia is considering taxing its oil firms based on the price of Brent – instead of Urals – to limit the fallout on the Russian budget revenues due to the widening discount of Urals to Brent, Russian daily Kommersant reported on Friday, quoting sources. Russia is looking at ways to reduce the steep discount on Urals and to stabilize its oil revenues. At the end of January, Russian President Vladimir Putin ordered the government to submit within a month proposals to change the methodology for calculating the taxes from oil, Kommersant’s sources said. The EU oil ban and price cap are costing Russia an estimated $174 million (160 million euros) per day due to the fall in shipment volumes and prices for Russian oil, Finland-based Centre for Research on Energy and Clean Air (CREA) said in a report last month. The revenue losses are expected to rise to $304 million (280 million euros) per day with additional measures that are being implemented as of February 5, according to CREA.

Russia’s Oil Income Takes a Hit -- Russian oil export revenues will take a major hit this year, according to a new Energy Intelligence forecast. But heavy price discounting could see production fall less than expected.

Oil To Face "Serious" Supply Problem In 2024 As Production Capacity Runs Out, Goldman Warns --Heading into 2023, Goldman was bearish on most asset classes, except commodities where the bank forecast a 43% gain as "supply shortages bite." Since then the commodity picture has ebbed and flowed, and after commodities experienced a modest bounce following China's unexpected reopening, they have resumed sinking with oil trading just above the Biden admin's (supposed) SPR refill floor of $72, despite a near consensus that Chinese oil demand will hit record highs in 2023.So has the recent setback dented Goldman's optimism? Not at all: in fact, according to Goldman chief commodity strategist, not only will oil rise back above $100 a barrel this year, it will rise much more in 2024 when it will face a serious supply problem as spare production capacity runs out.Speaking on the sidelines of a conference in Riyadh, Saudi Arabia, on Sunday, Goldman chief commodity strategist Jeff Currie said that with sanctions likely to cause Russian oil exports to drop and Chinese demand expected to recover as the country ends its Covid Zero policy, prices will rise above $100 from their current level of around $80. Meanwhile, doubling down on his key long-term thesis, Currie said that a lack of spending in the industry on production needed to meet demand will also be a driver of higher prices, and this lack of capacity may become a big issue by 2024."The commodity super cycle is a sequence of price spikes with each high higher and each low higher,” said Currie, who predicted that by May, oil markets should flip to a deficit of supply compared to demand. That could use up much of the unused capacity global producers have, which will send prices higher.Currie reiterated Goldman’s view that OPEC+ will unwind production limits and look to raise output later this year. An OPEC+ market monitoring committee this month recommended that the group keep oil output unchanged.

Turkey Halts Operations At Ceyhan Oil Terminal After Huge Earthquake – A powerful earthquake of 7.8 magnitude on the Richter scale hit Turkey and Syria in the early hours of Monday local time, killing hundreds of people and injuring thousands more. Early estimates point to at least 600 people killed in the quake, whose epicenter was in the Pazarcik district of Kahramanmaras province in Turkey.The Ceyhan oil terminal is around 155 kilometers, or 96 miles, from the epicenter of the earthquake. As a whole, the ports in southern Turkey are affected by the earthquake, and there are delays to operations, according to a notice by Tribeca Shipping Agency carried by Reuters.Natural gas supply to the Turkish provinces of Gaziantep, Hatay, and Kahramanmaras was halted after a gas transmission line was damaged as a result of the earthquake, Turkish state pipeline operator BOTAS said today.But the key oil pipelines in Turkey have not been damaged as a result of the quake, an energy official in the country told Reuters.Those pipelines are the Kirkuk-Ceyhan pipeline and the Baku-Tbilisi-Ceyhan pipeline. Despite the fact that the oil pipelines are intact, there could be delays to operations at the Ceyhan oil terminal, the endpoint of the Kirkuk-Ceyhan pipeline, a major export line from Kirkuk in Iraq.The Baku–Tbilisi–Ceyhan (BTC) pipeline, for its part, is a 1,768 kilometers (1,100 miles) long crude oil pipeline from the Azeri-Chirag-Deepwater Gunashli (ACG) oil field in the Caspian Sea in Azerbaijan to the Mediterranean Sea. Kazakhstan, which looks to diversify its oil export routes to reduce dependence on the Russian oil terminal at Novorossiysk, on the Russian Black Sea coast, plans to move more crude to the Baku–Tbilisi–Ceyhan pipeline this year.In 2023, Kazakhstan hopes to deliver up to 1.5 million tons of oil through the Baku-Tbilisi-Ceyhan pipeline, as part of growing efforts to find export routes bypassing Russia.

Operations Halted At Ceyhan Oil Terminal After Huge Earthquake The Ceyhan oil terminal in southern Turkey has halted operations after the devastating earthquake in Turkey and Syria early on Monday, Tribeca Shipping Agency said, as carried by Reuters.A powerful earthquake of 7.8 magnitude on the Richter scale hit Turkey and Syria in the early hours of Monday local time, killing hundreds of people and injuring thousands more. Early estimates point to at least 600 people killed in the quake, whose epicenter was in the Pazarcik district of Kahramanmaras province in Turkey. The Ceyhan oil terminal is around 155 kilometers, or 96 miles, from the epicenter of the earthquake. As a whole, the ports in southern Turkey are affected by the earthquake, and there are delays to operations, according to a notice by Tribeca Shipping Agency carried by Reuters.Natural gas supply to the Turkish provinces of Gaziantep, Hatay, and Kahramanmaras was halted after a gas transmission line was damaged as a result of the earthquake, Turkish state pipeline operator BOTAS said today.But the key oil pipelines in Turkey have not been damaged as a result of the quake, an energy official in the country told Reuters.Those pipelines are the Kirkuk-Ceyhan pipeline and the Baku-Tbilisi-Ceyhan pipeline. Despite the fact that the oil pipelines are intact, there could be delays to operations at the Ceyhan oil terminal, the endpoint of the Kirkuk-Ceyhan pipeline, a major export line from Kirkuk in Iraq.The Baku–Tbilisi–Ceyhan (BTC) pipeline, for its part, is a 1,768 kilometers (1,100 miles) long crude oil pipeline from the Azeri-Chirag-Deepwater Gunashli (ACG) oil field in the Caspian Sea in Azerbaijan to the Mediterranean Sea. Kazakhstan, which looks to diversify its oil export routes to reduce dependence on the Russian oil terminal at Novorossiysk, on the Russian Black Sea coast, plans to move more crude to the Baku–Tbilisi–Ceyhan pipeline this year.

Turkey halts oil exports after earthquakes: Update - The Turkish government has declared a state of emergency after two huge earthquakes hit the southeast of the country near the border with Syria, leaving hundreds dead and disrupting oil exports from the Mediterranean port of Ceyhan. A 7.8 magnitude quake struck near the Turkish city of Gaziantep in the early hours of today, 6 February, and was felt as far away as Lebanon and Cyprus. A second earthquake measuring 7.5 hit the same region a few hours later, according to the US Geological Society. The latest death toll is almost 1,300. Turkish president Recep Erdogan said at least 912 people have been killed in Turkey and Syria's state news agency Sana said 371 people are dead in Syria. Operations at Ceyhan, a major oil export terminal on Turkey's Mediterranean coast, have been suspended as a precaution. Ceyhan receives crude from two major cross-border pipelines — the Baku-Tbilisi-Ceyhan (BTC) pipeline carries oil from fields offshore Azerbaijan across Georgia to Turkey's Mediterranean coast, while the Kirkuk-Ceyhan pipeline transports oil from northern Iraq. A spokesman for northern Iraq's Kurdistan Regional Government said operations at Ceyhan will resume once an inspection has been finalised. Turkish pipeline operator Botas said neither pipeline has been damaged. The Ceyhan terminal exported just over 1mn b/d of crude in January, according to Vortexa. This included around 665,000 b/d of Azeri crude through the BTC pipeline and 395,000 b/d of Iraq's Kirkuk blend through the Kirkuk-Ceyhan pipeline. Operations at the port of Dortyol — which sits across the Bay of Iskenderun from Ceyhan — are also suspended until further notice, according to shipping sources. Around 1.9mn t of oil products, LPG and biofuels were exported from the port last year, while almost 3mn t were imported, according to Vortexa. Fuel oil made up 41pc of the exports, while LPG accounted for 57pc of the imports. Diesel and gasoil took a 29pc share of exports and 27pc of imports. Dortyol is a bunkering hub, servicing vessel traffic calling at nearby ports for crude and dry bulk voyages. It also has storage and blending facilities.

Victims of oil spill in Nigeria demand justice, compensation - Bille and Ogale, two oil-producing communities in Nigeria’s Niger Delta region have been living for decades with the devastating effects of oil spills caused by Shell, the global fossil fuel giant. Now, over 13,000 residents of two communities have filed a lawsuit against Shell for oil spills which they say have affected their livelihoods, health and way of life.On Jan. 27, the residents filed individual claims at the High Court in London against Shell, demanding justice and compensation for environmental degradation caused by the energy giant in the region. Ogale has a total population of 40,000 people while Billie’s population is 15,000. The two communities are asking for a clean-up of their land and compensation for their loss of livelihoods as their ability to farm and fish has been largely affected, according to Leigh Day, the U.K. law firm representing the communities. The law firm said in addition to the individual claims, there are also two representative actions, one for each community, which seek compensation for damage to communally owned property. “This remedy would benefit all members of the communities living with the chronic pollution, even where they have not sustained individual losses,” it said. “This case raises important questions about the responsibilities of oil and gas companies,” said Daniel Leader, partner at Leigh Day. “It appears that Shell is seeking to leave the Niger Delta free of any legal obligation to address the environmental devastation caused by oil spills from its infrastructure over many decades.” Leader said at a time when the world is focused on the just transition, “this raises profound questions about the responsibility of fossil fuel companies for legacy and ongoing environmental pollution.”

Oil spills in Malir River due to leakage in supply line - Oil spill was reported in Malir River after a leakage in the main crude oil supply of a refinery, ARY News reported. As per the details, the oil spilled in the Malir River after a leakage in the main supply line of the refinery, reportedly caused by the accused to steal oil. After getting the information about the leakage, the staff of the refinery reached the spot and started repair work on the leaked oil supply line. Earlier, a Karachi man was caught and sent behind bars for ‘stealing’ oil from a main supply line in Bin Qasim. According to police, a man named Ashraf was arrested in injured condition after a shootout with the cops when he was stealing oil from Parco’s line in Bin Qasim’s Wali Town. The police said the arrested is a mastermind of a gang involved in stealing oil from the company’s oil supply line several times.

Jadestone plans February production restart at Montara - Jadestone Energy, Singapore, expects to restart oil production from its 100%-owned Montara oil field in the Timor Sea by the end of this month following completion of remedial work ordered by the Australian National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) in September 2022. NOPSEMA’s review of the remedial plans and operational readiness of the Montara Venture FPSO is complete, and the general direction issued by the authority has been closed, said Jadestone president and chief executive officer Paul Blakeley. Hull and tank repairs and the scheduled four-yearly plans for topside maintenance activities are progressing well, with operational readiness and production restart targeted for late February, he said. “We have elected to carry out most of this year’s planned annual shutdown work in parallel with the tank work to maximize efficiency during this period,” he added. Jadestone shut Montara field in 2022 following oil leakage from a storage tank and the subsequent discovery of a defect in a water ballast tank on the FPSO. Montara operations involve oil production from platform production wells for Montara field and subsea wells for nearby Swift, Skua, and Swallow fields. Oil from the subsea wells is piped via subsea flowlines to an unmanned wellhead platform and then to the Montara Venture FPSO.

Northern Territory faces legal challenge over approval of Tamboran drilling and fracking in Beetaloo basin | Northern Territory - Activists have launched a legal challenge to the Northern Territory government’s decision to approve drilling and fracking by resources company Tamboran in the Beetaloo basin.The Central Australian Frack Free Alliance (Caffa) is asking the NT supreme court to review the process that led to the approval of Tamboran’s environmental management plan, arguing the environment minister, Lauren Moss, failed to properly consider the environmental impacts of the project.In particular, Caffa will argue the minister failed to fully consider the climate consequences of the project, including the climate effects of future production in the Beetaloo that the exploration may facilitate.The approval allows Tamboran to drill and frack 12 exploratory wells 600km south of Darwin.Caffa’s case is a test of the NT’s petroleum regulations which were reformed in 2016. The group, represented by the Environmental Defenders Office, will argue those reforms provided for a wider assessment of the risks associated with gas or fracking activity.“By approving this exploration application, the minister is laying the grounds for potentially thousands of fracking wells to be drilled in the NT,” Caffa’s spokesperson, Hannah Ekin, said.“Tamboran’s project would help facilitate the drilling of vast new gas fields across the heart of the territory. This would have a catastrophic impact on runaway climate change and affect the lives of everyone who resides here in the territory.”

CSIRO research assesses mitigation and offset options for onshore gas in the Northern Territory - A report published today by Australia’s national science agency, CSIRO, provides an assessment of options to mitigate and offset greenhouse gas (GHG) emissions associated with potential production and Australian consumption of gas extracted from the Northern Territory’s Beetaloo Sub-basin.The research addresses a recommendation of the 2018 Scientific Inquiry into Hydraulic Fracturing in the Northern Territory, chaired by the Honorable Justice Pepper. Recommendation 9.8 was seeking to understand potential greenhouse gas emissions as a result from any onshore gas produced in the NT in order “That the NT and Australian governments seek to ensure that there is no net increase in the life cycle GHG emissions emitted in Australia from any onshore shale gas produced in the NT”.The research was undertaken by CSIRO as part of GISERA, an alliance led by CSIRO which is a collaboration between CSIRO, commonwealth, state and territory governments and industry.GISERA’s purpose is to work with the community to undertake research about the potential or actual impacts of gas development, across major environmental and socio-economic topics. The type of research projects GISERA delivers is decided by committees in each geographical region, with the community voice in each committee always carrying the greatest weight. All research is publicly reported and peer reviewed.The Beetaloo Sub-basin is situated southeast of Katherine in the Northern Territory and spans approximately 30,000 square kilometres. It has been identified as a potential area for gas production, with estimated resources of similar size to other major gas producing basins in Australia, such as the Surat Basin in Queensland and the Bonaparte/Browse basins in Western Australia. As there is currently no gas production in the Beetaloo Sub-basin, CSIRO researchers used a set of production scenarios spanning 2025-2050 to calculate the estimated annual and lifetime emissions. Researchers then assessed options for mitigating or offsetting the emissions estimated in these scenarios. The report was directed to provide technical analysis to estimate emissions and assess mitigation options only, and does not consider other social, environmental and policy factors.Four scenarios considered production of 365 PJ/year and one scenario of 1,130 PJ/year, with a variety of end use cases for the shale gas. The estimated annual emissions associated with these scenarios range from 6.6 million tonnes (Mt) to 33 Mt CO2e/year. For comparison, Australia’s actual GHG emissions in the 12 months to March 2022 were 487.1 Mt CO2e.

OPEC’s oil production decreased in January – -The oil production of the Organisation of Petroleum Exporting Countries fell in January by around 60,000 barrels per day (bpd) due to cuts by top producer Saudi Arabia which may have been steeper than the Kingdom’s quota, a survey by Bloomberg reported last week. According to the report, OPEC-13 member countries’ crude oil production decreased to 29.12 million bpd due to lower output from Saudi Arabia and Libya, partly offset by slight gains among some other members. Bloomberg’s survey showed that Saudi Arabia’s crude oil production is estimated to have dropped by 100,000 bpd to 10.38 million bpd, which is around 100,000 bpd lower than the Kingdom’s quota of 10.478 million bpd, set out at the October meeting and valid from November 2022 through December 2023, or until OPEC+ decides otherwise. The report stated that still, OPEC and the OPEC+ group, which includes Russia and a other non-OPEC producers, are pumping crude oil at levels well below the collective target the OPEC+ alliance set as of November 2022. Saudi Crown Prince Mohammed Bin Salman and Russian President Vladimir Putin discussed OPEC + cooperation on a phone call, according to various sources, with the focus on maintaining the stability of oil prices ahead of the virtual OPEC+ panel meeting. Russian oil production has held up in spite of new Western sanctions and price caps, and three OPEC+ delegates have told Reuters that the Wednesday meeting was likely to conclude without any output policy changes. Given the uncertainties about Chinese demand and Russian supply in February and March, OPEC+ was widely expected to keep the current production levels, which reduced target output by 2 million bpd from November onwards. Yet, the actual cut is estimated to have been around 1 million bpd.

Libya's Oil Minister confirms gas and oil output will increase by end of 2023 | The Libya Observer - The Libyan Minister of Oil and Gas Mohammed Oun confirmed in a meeting with the Dutch ambassador to Libya on Sunday that the oil and gas production rates will be increased by the end of this year on the condition that three factors are available for oil production to reach two million barrels. Oun discussed in the meeting several matters, including the efforts to increase oil and gas production in cooperation with specialized international companies, underscoring the role of the Dutch oil and gas company, Shell, and the history of its work in the Libyan energy sector. The Oil and Gas Ministry said on its Facebook page that Oun had assured the Dutch ambassador of the possibility of achieving the targets of increasing production in the coming years to two million barrels following needed efforts and work with high efficiency and in cooperation with international companies, adding that in the short term, production will be raised by the end of 2023. It also said that the Dutch ambassador confirmed his country's interest in the Libyan market and that it would work to encourage Dutch companies to return. He reiterated their willingness to participate and cooperate in developing the oil field through advanced training programs, especially in the field of natural gas and renewable energies.

World needs $12 trillion investment in Oil Exploration & Production by 2045: OPEC Secy General - The Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), Haitham Al Ghais, has said the global Oil Exploration & Production (E&P) sector requires about 12 trillion-dollar investment by 2045. "At OPEC, we strongly believe that this investment is required to ensure energy security for all," he said, speaking at the session "Prices & Supply volatility addressing global energy security need" as part of the India Energy Week event in Bengaluru, India. Al Ghais also said the sector has suffered "chronic under-investment" in the last few years and its production has fallen by about 6 percent, forgetting about growth to meet increasing global demand. He said the OPEC is in favour of transition and cleaner energy switching but said the issue here is not about the source but it is about emission. “We all need to work together to reduce the emission so that there is energy security for all,” he said. Al Ghais also said that 2022 has been a turbulent year for all of us in all respects as the fear of recession globally and lockdown in China and elsewhere reduced the oil demand by about 30 percent. "However, with the markets now opening, we at OPEC Plus are taking a cautious approach as we are dealing with the unknown (Covid virus)," he said.

Saudi Arabia Surprises Markets By Increasing Oil Prices To Asia -On Monday, Saudi Arabia raised the official selling price of its flagship crude going to Asia in March. The hike, which was the first in six months, was due to expectations of a rebound in Chinese demand.Saudi oil giant Aramco lifted the price of its flagship Arab Light grade to Asia for March loadings by $0.20 per barrel to a premium of $2.00 a barrel over the Dubai/Oman average, despite the fact that oil prices have fallen so far this year. That’s the first increase in the official selling prices (OSPs) for Asia since September, likely reflecting Saudi expectations that demand in Asia will be rising from the second quarter onwards.Last month, Saudi Arabia slashed the Arab Light price by $1.45 per barrel, setting the price for February loadings at $1.80 a barrel above the Dubai/Oman benchmark. The premium to the Dubai/Oman average for February is the lowest since November 2021, but it was generally in line with expectations.For March, however, the increase in Saudi prices came as a surprise to the market.“The OSP is quite unexpected. I think it indicates that Saudi is bullish on oil demand,” a Singapore-based oil trader told Reuters.The move was contrary to expectations in a Reuters survey of four refining sources from last week, in which participants said they expected the price of Arab Light to be cut by around $0.30 for March loadings. It’s also against the Bloomberg poll, in which traders and refiners expected a $0.20 cut from Aramco for next month.For other grades, Aramco cut the price for Arab Extra Light by $1.30 to $2.25 a barrel over the Oman/Dubai benchmark, but raised the OSPs for Arab Medium and Arab Heavy by $0.50.

Crude oil prices edge higher as IEA’s Birol talks up China demand outlook Oil prices inched up in early trade on Monday after falling around 8% last week to more than three-week lows as jitters over major economies outweighed signs of a demand recovery in China, the world’s top oil importer. Brent crude futures crawled up 16 cents, or 0.2%, to $80.10 a barrel at 0022 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose 15 cents, also 0.2% higher, to $73.54 a barrel. Last Friday, WTI and Brent slid 3% after strong U.S. jobs data raised concerns that the Federal Reserve would keep raising interest rates, which in turn boosted the dollar. While recession fears dominated the market last week, on Sunday International Energy Agency (IEA) Executive Director Fatih Birol highlighted that China’s recovery remains a key driver for oil prices. The IEA expects half of global oil demand growth this year will come from China, where Birol said jet fuel demand was surging. He said depending on how strong that recovery is, the Organization of Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, may have to reassess their decision to cut output by 2 million barrels per day through 2023. “If demand goes up very strongly, if the Chinese economy rebounds, then there will be a need, in my view, for the OPEC+ countries to look at their (output) policies,” Birol told Reuters on the sidelines of a conference in India.Price caps on Russian products took effect on Sunday, with the Group of Seven (G7), the European Union and Australia agreeing on caps of $100 per barrel on diesel and other products that trade at a premium to crude, and $45 per barrel for products that trade at a discount, such as fuel oil. “For the moment, the market expects non-EU countries will increase imports of refined Russian crude, thus creating little disruption to overall supplies,” ANZ analysts said in a client note. “Nevertheless, OPEC’s continued constraint on supply should keep the market tight,” they said.

ICE Brent Tops $81 After Saudi Hikes OSPs on China Outlook -- Oil futures settled Monday's session mostly higher after Saudi Arabia's state-owned oil company Aramco raised benchmark prices in all major markets for next month, signaling a stronger demand recovery as China reopens from COVID shutdowns and macroeconomic indicators from the United States and European Union indicate their economies picked up momentum. Saudi Aramco -- the world's top exporter -- lifted prices for its benchmark crude it sells to Asian buyers for the first time in six months, adding $0.20 bbl to March sales. The change means Saudi Light crude grade will carry a $2 bbl premium over the average of the Oman and Dubai benchmarks. OPEC's top official this morning said they expect strong demand growth in Asia this year, citing a sharp recovery in China's mobility. "There is a pent-up demand that accumulated over the pandemic," Sheikh Nawaf Al-Sabah, chief executive officer of Kuwait Petroleum, told Bloomberg TV on Monday, adding that "Now, with the opening up, we're seeing an increase in demand that is sustainable. This is not a dead-cat bounce." Aramco also raised prices of its Arab Light crude for customers in northern and southern Europe by $2 bbl, widening the premium over the Brent crude benchmark to $0.50 bbl. For U.S. buyers, Aramco lifted OSP prices by $0.30 bbl in March to a $6.65 bbl premium against the Argus Sour Crude index. Saudi Arabia emerged as a major supplier of crude oil and oil products into the European Union after EU banned all seaborne imports of Russian crude oil late last year. On Sunday (2/5), EU embargoed all purchases of Russian oil products, including gasoline, diesel, jet fuel, naphtha, and fuel oil. The trade restriction is complimented with a price cap agreed to by the Group of Seven nations -- the U.S., United Kingdom, Germany, France, Italy, Japan, and Canada. The cap prohibits shipping and insurance firms from trading Russian refined products unless they are below a cap of $100 bbl for gasoline, diesel, and jet fuel, and $45 bbl for naphtha and fuel oil. The cap on products follows a $60 bbl price cap on Russian crude oil exports that took effect in early December. The embargo and price caps are aimed at reducing the revenue Moscow receives from oil and product sales that can be used for its war in Ukraine while keeping Russian oil on the market. In the immediate term, the price caps are not seen having much effect considering Russian petroleum is trading within the set price ranges. Longer term, they may prove more effective at slowing Russian revenue inflows as the G7 and EU continue to diversify away from Russian energy. Earlier in the session, the oil complex got a leg up from reports suggesting Turkey shut down a key export port of Ceyhan on the Mediterranean Coast after a 7.7-magnitude earthquake struck the Kahramanmaras region, killing hundreds in Turkey and Syria. Ceyhan is the key hub for oil sales from northern Iraq, Azerbaijan, and Kazakhstan into the EU. The port exported over 1 million bpd in January, according to vessel tracking and Bloomberg data. So far, no leaks have been detected along the pipelines feeding oil to the port but damage assessment is still in the early stages. The Kerkuk-Ceyhan pipeline carrying oil from Iraq to Turkey and the Baku-Tbilisi-Ceyhan pipeline that connects oil fields in Azerbaijan, Turkmenistan, and Kazakhstan, with Turkish export ports are expected to restart on Monday. At settlement, West Texas Intermediate futures for March delivery advanced $0.72 to $74.11 bbl, and the international crude benchmark Brent contract rallied to $80.99 bbl, up $1.05 bbl. NYMEX RBOB March contract added $0.0524 to $2.3734 gallon, and March ULSD futures settled down modestly at $2.7687 gallon after trading at a $2.6653 one-year low on the spot continuous chart.

WTI Spikes as USD Eases on Powell's Inflation Comments -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled Tuesday's session sharply higher propelled by comments from Federal Reserve Chairman Jerome Powell, who signaled the central bank still expects inflation to come down significantly this year without tilting the labor market into recession, spurring an afternoon selloff in U.S. bonds and the dollar index. U.S. equities rallied, the dollar nosedived against foreign currencies, and Treasury yields retreated as investors digested the latest comments from Powell that once again were received as dovish by the market. When addressing Friday's strong employment report, Powell said, "It's a good thing that inflation has started to come down not at the expense of a strong labor market. But it shows you why the Fed thinks that bringing down inflation would be a process that takes significant time." "The disinflationary process, the process of getting inflation down, has begun and it's begun in the goods sector," Powell repeated. "But it has a long way to go. These are the very early stages of disinflation." In the aftermath of Powell's remarks, U.S. Fed Funds futures indicate the majority of the investors still expect the Fed to lift rates by 25-basis points in March followed by yet another rate hike of a similar size in May after which the central bank will keep the federal funds rate in a 5% to 5.25% range before cutting rates for the first time in December. On the session, the U.S. dollar shed 0.26% against a basket of foreign currencies to 103.298, spurring gains for front-month West Texas Intermediate futures that spiked to $77.14 bbl, up $3.03 on the session. The international crude benchmark Brent contract on ICE advanced to $83.69 bbl, up $2.70 bbl. NYMEX RBOB March contract rallied $0.0834 to $2.4568 gallon, and March ULSD futures climbed to $2.9044 gallon after trading at a $2.6653 one-year low on the spot continuous chart. Gasoline stockpiles are expected to have increased by 1.4 million bbl and stocks of distillates are seen to have edged up by 200,000 bbl. Refinery use likely increased by 0.5% to 86.2% of capacity after refiners unexpectedly cut run rates in the final week of January.

Oil up as much 4% on Turkey terminal outage, awaits U.S. inventory report - The outage of an oil export terminal after the earthquake in Turkey gave those long on crude the chance to push prices up sharply for a second day in a row on Tuesday, in a bid to close the gap on last week’s torrid selloff. New York-traded West Texas Intermediate, or WTI, crude for March settled up $3.03, or 4.1%, at $77.14 per barrel. The U.S. crude benchmark settled up 1% on Monday after plunging 7.5% last week, to a three-week low of $73.11, on recession fears and the uncertainty about the direction for U.S. interest rates after huge employment gains among Americans in January threatened to bump up inflation again. London-traded Brent crude for March delivery rose $2.70, or 3.3%, to finish Tuesday’s regular session at $83.69, extending Monday’s 1.3% gain.Like WTI, Brent, the global crude benchmark, tumbled 7.5% last week, touching a three-week low of $79.62. Operations at Turkey's 1 million barrel-per-day oil export terminal in Ceyhan were halted after a major earthquake hit the region, Reuters reported, adding that the facility, which exports Azeri crude oil to international markets, will be closed Feb. 6-8. Also supporting crude prices were continued bets on ramped-up Chinese consumption as the world’s largest crude importer returns from a long Lunar New Year break, into an environment free of COVID-19 restrictions. Adding to oil’s upside was a bold attempt by Saudi Arabia to raise for the first time in six months prices for its Asian-bound crude, also on bets over Chinese demand. The kingdom had previously ratcheted down the so-called OSP, or Official Selling Price, for its Arab Light crude to be competitive against Russia’s Urals crude, which had seen heavy discounting over the past year from Ukraine-war sanctions imposed by the West. Another positive factor for oil was the remark by Federal Reserve Chairman Jerome Powell that the central bank was willing to be patient to let disinflation, which has just begun in the United States, do its work rather than embarking on stronger rate hikes. Aside from these, oil market participants were on the lookout for weekly U.S. oil inventory data, due after market settlement from API, or the American Petroleum Institute. The API will release at approximately 16:30 ET (21:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended Feb. 1. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday. For last week, analysts tracked by Investing.com expect the EIA to report a a smaller crude stockpile build of 2.457 million barrels, versus the 4.14M barrel rise reported during the week to Jan. 27.

Oil up 3rd day in row as bulls defy U.S. crude build -- Oil prices rose for a third day in a row as bulls in the space were defiant on Wednesday to data showing a seventh straight build in weekly crude stockpiles amid rising production and falling exports. Generous builds were also noted in inventories of gasoline and distillates in the Weekly Petroleum Status Report issued by the EIA, or Energy Information Administration, for the week ended Feb. 1. The rise in gasoline stockpiles raised questions about demand for the automotive fuel as warmer-than-usual winter weather should have, theoretically, seen more people get behind the wheel at this time of the year versus seasonal norms. The build in distillates is also bucking trends as demand for heating oil would be stronger now, if not for the unusually warm winter. Notwithstanding these, oil prices rose more than 1% Wednesday as those long the trade tried to stay focused on impending demand from China, the world’s largest crude importer which has been off COVID-related restrictions since the start of the year — a development that should lead to more energy usage. Oil bulls also ignored news that Turkey resumed crude-oil flows to the Mediterranean export terminal of Ceyhan late on Tuesday following two devastating earthquakes in the region. Operations at the 1 million barrel-per-day export terminal, which provides Azeri crude oil to international markets, were halted on Monday and were supposed to have remained shut until the end of Wednesday at least. The only thing materially bullish for oil and other commodities on Wednesday was a weakening of the dollar, which experienced a modest drop. The dollar has been trying to find its footing since Federal Reserve Chair Jerome Powell said on Tuesday that the Fed wished to give disinflation, which has just begun, a chance to work instead just resorting to higher interest rates to bring inflation hovering at 6.5% per annum to the central bank’s target of 2%. The dollar, however, got a morale boost on Wednesday when New York Fed President John Williams said U.S. interest rates need to stay high for ‘a few years’ to bring inflation down meaningfully. New York-traded West Texas Intermediate, or WTI, crude for March settled up $1.33, or 1.7%, at $78.47 per barrel. The U.S. crude benchmark had risen more than 5% in the prior two sessions after plunging 7.5% last week, to a three-week low of $73.11, on recession fears and the uncertainty about the direction for U.S. interest rates after huge employment gains among Americans in January threatened to bump up inflation again. London-traded Brent crude for March delivery settled up $1.40, or 1.7%, at $85.09. The global crude benchmark rose just under 5% over the past two sessions, after tumbling 7.5% last week, to a three-week low of $79.62. ” Chinese 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 recent Reuters report said. Part of the decline in Chinese imports was likely due to the week-long Lunar New Year holiday, which fell on January 22 this year, the report said. Analysts at ANZ, meanwhile, note the sharp jump in traffic in China’s 15 largest cities following the Lunar New Year holiday but also acknowledged that Chinese oil traders had been “relatively absent” from the market to aid in futures volumes. In the Weekly Petroleum Status Report, the EIA said U.S. crude oil stockpiles had risen seven weeks in a row to 20-month highs as plant outages and weaker demand for fuels led to lower-than-usual refining activity at this time of the year. Crude inventories rose by 2.423M barrels during the week ended February 1, the Energy Information Administration, or EIA, said in its Weekly Petroleum Status Report. The EIA has reported a total crude build of almost 37M barrels over the past seven weeks. That had led to crude stockpiles reaching their highest since June 2021, said the EIA, which serves as the statistical arm of the U.S. Energy Department. Crude output itself rose by 100,000 barrels per day, or bpd, to reach 12.3M bpd. That was the highest output since April 2020, when the outbreak of the coronavirus pandemic then left production sky-high and demand rock-bottom. Crude exports, meanwhile, tumbled 17% on the week, to 2.9M bpd from 3.492M bpd the prior week. On the gasoline inventory side, the EIA reported a build of 5M barrels, versus the forecast for a 1.271M-barrel rise and the previous week’s growth of 2.576M barrels. Gasoline inventories have picked up by almost 16M barrels since 2023 began. Automotive fuel gasoline is America’s No. 1 fuel product. Distillate stockpiles, meanwhile, rose by 2.932M barrels versus the expected build of 0.097M. In the previous week, there was a distillate build of 2.32M. Until recently, 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 two weeks ago, distillate stockpiles had fallen by around 5M barrels over four weeks. Oil up 3rd day in row as bulls defy U.S. crude build 3 Comments (3)

WTI Slides After Across-The-Board Inventory Builds, Crude Production Hike --Oil prices extended gains overnight after API reported a surprise crude draw which was supported by growing confidence in demand from China's reopening (as Aramco increased its selling prices for shipments to Asia). “In the grand scheme, essentially you have contrasting forces of rising inventories and a bullish outlook on demand,” Additionally, Iran’s liaison to OPEC said on the sidelines of the India Energy Week conference in Bengaluru this morning that oil prices may rise to $100 a barrel in the second half of the year as China’s economy emerges from anti-virus lockdowns. “We have some constraints in the market that could put pressure on prices,” “I think oil prices could go to $100 per barrel.” So with all eyes on inventories, it appears (given the API prints) that the effects of the nationwide deep freeze have finally rolled out of the data.

API

• Crude -2.184mm (+2.1mm exp)
• Cushing +178k
• Gasoline +5.261mm (+1.6mm exp) - biggest build since July 2022
• Distillates +1.109mm (+100k exp)

DOE

• Crude +2.423mm (+2.1mm exp)
• Cushing +1.034mm
• Gasoline +5.008mm (+1.6mm exp)
• Distillates +2.932mm (+100k exp)

Unlike API, the official EIA data showed a bigger than expected crude inventory build (the 7th weekly build in a row) and in fact saw builds across the board (with gasoline stopcks soaring)Source: Bloomberg Bloomberg's Lucia Kassia reports that we are entering the thick of the refinery turnaround season in the US. In the past decade, refineries reduced runs to an average of 87.6% of utilization countrywide on a seasonal basis. Two of the biggest fuelmakers, Marathon and Phillips 66, expect to run their refineries at the high-80% and mid-80%, respectively, during the first quarter due to planned maintenance. That points to overall lower utilization rates in the country.

ICE Brent Spikes After Turkey Reports Ceyhan Pipeline Damage -- Reversing earlier losses triggered by a bearish U.S. oil inventory report, oil futures settled higher Wednesday after Turkish officials acknowledged damages to the Kirkuk-Ceyhan pipeline carrying oil from Iraq to Mediterranean ports as the key export facility in Ceyhan remains shutdown a third straight day. Turkey's oil terminal at Ceyhan, with export capacity of 1 million bpd or 1% of the global oil supply, has been shut down temporarily after the deadly earthquake Monday disrupted oil flows on Kerkuk-Ceyhan pipeline and Baku-Tbilisi-Ceyhan pipeline. Both pipelines have remained shut down since Monday morning. On Wednesday afternoon, Turkish officials admitted that one of the pipelines carrying oil from Iraq has indeed sustained "some damages" but refused to give details on the extent. The pipeline runs from the Iraq border in eastern Turkey to Ceyhan, passing through the region north of south-central Turkey's Gaziantep where a magnitude 7.8 quake struck early Feb. 6 causing thousands of deaths and extensive damage. During 2022, Iraqi flows through the Iraq-Turkey pipeline to Ceyhan averaged 477,000 bpd, down 6.8% from 2021 and down 10.3% from 2019. Kurdistan exported 376,000 bpd through the pipeline in January, down from 417,000 bpd in December, figures show. Oil traders will continue to closely monitor the situation around the pipeline's restart. Limiting gains for the oil complex is yet another bearish inventory report released this morning by the U.S. Energy Information Administration, showing total crude and petroleum products supplies spiked more than 10 million bbl last week as domestic producers raised output to the highest level since April 2020. U.S. commercial crude oil inventories increased for an eighth consecutive week through Feb. 3, building by a massive 34.4 million bbl since the start of the year. At 455.1 million bbl, nationwide crude-oil inventories currently stand 4% above the five-year average. A larger-than-expected build occurred even as exports softened to 2.940 million bpd, down 592,000 bpd from the previous week, and producers boosted output to 12.3 million bpd -- the highest output rate since the coronavirus pandemic erased a chunk of domestic oil production. That more than offset a larger-than-expected increase in refinery crude throughput to 15.4 million bpd. On the week, refiners raised run rates by 2.2% to 87.9% of capacity compared with expectation for a 0.5% bump. Oil stored at the Cushing, Oklahoma hub, the delivery point for West Texas Intermediate, jumped 1.1 million bbl from the previous week to 39.1 million bbl. In the gasoline complex, commercial stockpiles built by 5 million bbl in the reviewed week to 239.6 million bbl compared with expectations of a 1.4 bbl increase. Demand for motor fuel remained anemic at 8.428 million bpd, down by 62,000 bpd. Distillate demand, however, increased by 70,000 bpd to 3.762 million bpd. Domestic distillate stocks increased by 2.9 million bbl to 120.5 million bbl. At settlement, West Texas Intermediate futures for March delivery rallied to $78.47 bbl, up $1.33 on the session. The international crude benchmark Brent contract on ICE advanced to $85.09 bbl, up $1.40 bbl. NYMEX RBOB March contract rose 0.60cts to $2.4628 gallon, and March ULSD futures declined 1.11cts to $2.8933 gallon.

Builds in Oil Inventories Reported by the EIA on Wednesday Helped Limit the Market's Gains --The crude market posted an outside trading session as the market was initially buoyed by hopes of increased Chinese demand while the builds in oil inventories reported by the EIA on Wednesday helped limit the market’s gains. The market was also pressured as U.S. Federal Reserve officials said more interest rate hikes are on the cards as the bank continues with its efforts to lower inflation. The oil market breached its resistance at its previous high and 62% retracement level at $78.57 and posted a high of $78.84 early in the morning. However, the market erased its gains and extended its losses to $1.95 as it posted a low of $76.52. The crude market later bounced off its low and retraced some of its losses ahead of the close. The March WTI contract settled down 41 cents at $78.06, halting a three day streak of gains and bringing prices back towards the middle of its recent trading range from $72 to $82. Meanwhile, the April Brent contract settled down 59 cents at $84.50. The product markets also ended the session lower, with the heating oil market settling down 7.79 cents at $2.8154 and the RB market settling down 1.53 cents at $2.4475. Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Tuesday, February 7th totaled 41,782,289 barrels, down 234,906 barrels on the week but up 18,076 barrels from Friday, February 3rd. BP Azerbaijan said Azeri crude oil exports from Turkey’s Ceyhan port remain halted after sustaining earthquake damage, while Azeri crude oil continued flowing to Ceyhan via a pipeline. The company did not specify how many more days it could continue pumping before storage was filled. Sources previously told Reuters that there were 4 days’ worth of storage capacity at the Sangachal terminal in Azerbaijan once Ceyhan hits its maximum. According to a source, exports of Azerbaijan’s oil from Turkey are unlikely to resume this week because a control room at the port of Ceyhan suffered earthquake damage. Another source said loadings are unlikely until late next week.Plains All American Pipeline LP expects crude oil production in the Permian Basin to increase by as much as 500,000 bpd in 2023, with horizontal oil rig counts consistent with current levels.Oil and oil product exports from Russian Black Sea ports of Tuapse and Novorossiisk and from a terminal of the Caspian Pipeline Consortium are suspended due to a storm.Euroilstock reported that European refiners’ crude intake in January increased by 6.3% on the year and by 0.7% on the month to 9.75 million bpd, as they increased runs ahead of an EU ban on Russian oil product imports. European refiners’ crude and oil product stocks stood at 1.004 billion barrels in January, up 1.3% on the year and by 1% on the month. According to Energy Aspects, China’s state-owned oil majors have increased Russian imports in a sign that China is ready to approve more purchases of the country’s crude. PetroChina Co and CNOOC Ltd recently resumed imports of waterborne Russian oil, with at least three supertankers of Urals grade crude signaling China as a destination.

Oil Futures Fall While Traders Assess Ceyhan Port Damages - - Oil futures nearest delivery declined on Thursday as investors sought clarity on the potential restart of Turkey's Ceyhan export hub after Azerbaijan declared force majeure on crude loading along the Baku-Tbilisi-Ceyhan pipeline, which carries around 1.2 million bpd of oil from Caspian fields to the Turkish port. Wire services on Thursday reported that there are signs of extensive damage at one or two of the storage tanks at the Ceyhan port, with combined throughput capacity of 1 million bpd or 1% of global oil supply. Ceyhan port has now been shut for a fourth day following a 7.8 magnitude earthquake that struck the northeastern part of Turkey and Syria, killing more than 20,000 people. Loading operations from the BTC terminal have been temporarily interrupted, according to a force majeure notice released by BP Azerbaijan, as further assessments are carried out on pipeline operations. Bloomberg News further reported that Azeri crude loadings at the Turkish port of Ceyhan are not expected to be restored until late next week. Wednesday afternoon, Turkish officials admitted that one of the pipelines carrying oil from Iraq has indeed sustained "some damages" but refused to give details on their extent. The pipeline runs from the Iraqi border in eastern Turkey to Ceyhan, passing through the region north of south-central Turkey. During 2022, Iraqi flows through the Iraq-Turkey pipeline to Ceyhan averaged 477,000 bpd, down 6.8% from 2021 and down 10.3% from 2019. Kurdistan exported 376,000 bpd through the pipeline in January, down from 417,000 bpd in December, figures showed. Oil traders will continue to closely monitor the situation around the port's restart. Another bearish inventory report released Wednesday by the U.S. Energy Information Administration weighed on the oil complex, showing total crude and petroleum products supplies spiked more than 10 million bbl last week as domestic producers raised output to the highest level since April 2020. Commercial crude inventories increased for an eighth consecutive week through Feb. 3, building by a massive 34.4 million bbl since the start of the year. At 455.1 million bbl, nationwide crude oil inventories currently stand 4% above the five-year average. A larger-than-expected build occurred as exports softened to 2.940 million bpd, down 592,000 bpd from the previous week, and producers boosted output to 12.3 million bpd -- the highest output rate since the coronavirus pandemic erased a chunk of domestic oil production. That more than offset a larger-than-expected increase in refinery crude throughput to 15.4 million bpd. On the week, refiners raised run rates by 2.2% to 87.9% of capacity compared with expectations for a 0.5% bump. Oil stored at Cushing, Oklahoma hub, the delivery point for West Texas Intermediate, jumped 1.1 bbl from the previous week to 39.1 million bbl. In the gasoline complex, commercial stockpiles built by 5 million bbl in the reviewed week to 239.6 million bbl compared with expectations of a 1.4 bbl increase. Demand for motor fuel remained anemic at 8.428 million bpd, up by a modest 70,000 bpd. Distillate demand, however, increased by 70,000 bpd to 3.762 million bpd. Domestic distillate stocks increased by 2.9 million bbl to 120.5 million bbl. At settlement, WTI futures for March delivery declined to $78.06 bbl, down $0.41 on the session. The international crude benchmark Brent contract on ICE fell below $85 bbl to $84.50 bbl, down $0.59 bbl. NYMEX RBOB March contract dropped $0.0153 to $2.4475 gallon, and March ULSD futures declined a steep $0.0779 to $2.8154 gallon.

WTI Near $80 After Russia Announces Output Cut for March - West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange advanced more than 2% Friday after Russia announced a unilateral 500,000-barrels-per-day (bpd) production cut for March in retaliation for Western sanctions on its oil and product exports as OPEC+ producers are not expected to raise crude output to offset Russian losses, according to the delegates. Russia's Energy Minister Alexander Novak said Friday morning Moscow would decrease oil production next month, catching markets and colleagues from OPEC+ coalition by surprise. "Russia has not held any consultations on oil curbs. Moscow believes that the mechanism of price caps on Russian oil and petroleum products is an intervention in the market and an extension of destructive energy policies of the collective West." said Novak. The fact that Russia chose to act unilaterally without a forward guidance to the markets or OPEC+ members could be a canary in the coal mine for further price volatility. So far, Russian oil production has been surprisingly resilient in the face of Western sanctions, rebounding to 10.9 million bpd from post-invasion low of 10.5 million bpd in April. Major forecasting agencies this week revised higher their estimates for Russian oil production this year and in 2024. The announced cut would depress Russian oil output to 10.3 million to 10.4 million bpd. Additionally, Moscow's move would deepen the 2-million-bpd supply curb announced late last year by OPEC+, which Russia leads along with Saudi Arabia. At a committee meeting earlier this month, ministers from the coalition saw no need to change their production limit, which lasts until the end of 2023. As of this morning, OPEC+ delegates said Moscow's decision to unilaterally reduce production would not change forward policy. The situation remains fluid. Elsewhere, Turkey's export port of Ceyhan on the Mediterranean coast remained closed on Friday after a 7.8-magnitude earthquake struck the region, disrupting infrastructure and killing over 25,000 people. Turkish President Tayyip Erdogan estimated that some areas affected by the disaster will be "uninhabitable for years." Ceyhan is a key export hub for Azeri, Kazakh and Iraqi oil exports, processing around 1 million barrels daily. That accounts for roughly 1% of global oil supply. On Thursday, BP Azerbaijan declared force major on crude loadings along the Baku-Tbilisi-Ceyhan (BTC) pipeline as further assessments are carried out on pipeline operations. Bloomberg News further reported that Azeri crude loadings toward the Turkish port are unlikely to restart until late next week. Making matter worse, wire services reported that one or two storage tanks at the Ceyhan port might have sustained damages despite earlier assurances from Turkish officials that the port has been unscathed by the earthquake. In absence of clear information, the disruption at the Ceyhan port will continue to support oil prices into next week, adding to concerns over available oil supplies on the global market. Near 7:45 a.m. EST, WTI futures for March delivery climbed to $79.63 bbl, up by $1.58 in overnight trading. The international crude benchmark Brent contract on ICE spiked to $86.28 bbl, up $1.81 bbl. NYMEX RBOB March contract rallied $0.0528 to $2.5003 gallon, and March ULSD futures added $0.0555 to $2.8709 gallon.

Oil jumps as Russia retaliates on caps; G7 warns about Moscow stunt -- Oil markets jumped 2% on Friday as Russia hit back at the G7’s price caps by announcing production cuts and its own minimum price structure, while the global coalition behind the penalties warned the market against believing Moscow’s stunts. Russia will cut oil production by 500,000 bpd, or barrels per day, accounting for 5% of its output, in March, Deputy Prime Minister and de facto energy minister Alexander Novak said. OPEC+, the alliance of 23 oil producers that Saudi Arabia leads with Russia’s assistance, wasn’t involved in the decision, Novak said. The United States singled out the Saudis for criticism last year when OPEC+ announced a 2-million-bpd cut in October. Separately, the Kremlin plans to set a fixed $20 per barrel differential for its Urals crude to dated contracts of global benchmark Brent for “tax purposes”, energy industry officials in Moscow were quoted as saying by Reuters. Russia currently uses Urals price assessments in Europe's Rotterdam and Augusta ports, provided by commodity price reporting agency Argus, to determine its mineral extraction tax, additional income tax, oil export duty and reverse excise on oil. According to Russia's Finance Ministry, the average price of its Urals in January was $49.48 a barrel, down 42% from January 2022. The G7+ responded swiftly to the Russian announcements, cautioning about the possibility of Moscow trying to pull off a stunt. “It is critical not to take Russian statements about oil production cuts at face value,” a so-called G7 Price Cap Coalition official was quoted saying by Reuters. “Global energy markets remain stable, with benchmarks largely unchanged since the implementation of the crude cap in December,” the G7 official said. “According to public reporting, a large volume of Russian seaborne oil was delivered via price cap-compliant tankers.” The official added that the price cap — of $60 per barrel on Russian crude and at $100 on diesel and $45 on fuel oil and naphtha — “continues to meet its dual objectives.” The U.S. Treasury Department has repeatedly said that it wants to limit what the Kremlin can earn per barrel in order to squeeze Moscow’s funding for the war in Ukraine, while ensuring Russian oil supplies reach markets that need them. On that score, the G7 official said “any Russian production cuts will disproportionately hurt developing countries.” New York-traded West Texas Intermediate, or WTI, crude for March was up $1.66, or 2.1%, at $79.72 per barrel. The session high was $80.33, its loftiest since Jan. 30. For the week, the U.S. crude benchmark was up almost 9%, overwriting last week’s 7.5% plunge. London-traded Brent crude for March delivery finished the regular session up $1.89, or 2.2%, at $86.39, after a session peak at $86.89. Brent was up 8% on the week, erasing last week’s 7.5% decline. Running counter to the bullish sentiment were large builds across the board in crude, gasoline and distillates in the Weekly Petroleum Status Report released by the U.S. Energy Information Administration on Wednesday.

Oil prices posts gains after Russia says it will cut output by 500,000 barrels a day -Russia will cut oil output by 500,000 barrels per day in March, Deputy Prime Minister Alexander Novak said on Friday, following Western bans on Moscow's crude and oil products implemented in the past few months. The announced production decline amounts to roughly 5% of Russia's latest crude oil output, which Paris-based watchdog the International Energy Agency estimated was down at 9.77 million barrels per day in December. The Brent contract for April delivery rose 2.24% to settle at $86.39 a barrel, having risen more than 8% for the week. U.S. West Texas Intermediate crude futures rose 2.13% to settle $79.72 a barrel, and rose 8.63% for the week for to notch the best week since October. Novak said that the reduction will "help restore market relations," according to a Google translation of comments reported by state news agency Tass. He noted that the cut does not apply to gas condensate and will be calculated from actual output levels, not from Russia's quota under the OPEC+ output agreement. The decision was not made in consultation with the OPEC+ coalition, which Moscow co-chairs. OPEC+ producers must typically agree consensus on output policy, with members bound to their targets. But the group has previously allowed voluntary gestures that honor the spirit of existing output agreements — in this case, the Russian decline would build on a previous OPEC+ decision to lower production by a combined 2 million barrels per day, agreed in October last year. Other OPEC producers facing sanctions, such as Venezuela and Iran, have requested and received exemptions from their production quotas. Several OPEC+ delegates previously told CNBC that Russia had so far signaled no intention to ask for similar accommodations. The EU implemented bans on seaborne imports of crude oil on Dec. 5 and of oil products this week. Under a program passed by the G-7 wealthiest nations, Western providers may continue to supply key financial and shipping services to transport Russian volumes to non-G7 destinations, provided these fuels are purchased beneath specific price caps. "As previously stated, we will not sell oil to those who directly or indirectly adhere to the principles of the 'price ceiling'," Novak reiterated on Friday, adding that the price cap program could lead to oil and oil products shortages. "Lower Russian production together with China's reopening should tighten the oil market further over the coming quarters," UBS Strategist Giovanni Staunovo said in a Friday note to clients.

Iraq Daily Roundup: Six Killed --At least six people were killed, and four more were wounded in recent violence:In Baghdad, a body was found. A civilian was gunned down in a drive-by shooting. A woman’s body was found bearing gunshot wounds.A decapitated body was found in Karbala.A dumped body was found in Qayara.In Sadr City, two people were wounded when gunmen shot them. Separately, a dumped body was found. A bomb in Mosul, wounded two people.

How the Media Ignores Yemen - Since 2014, the tiny country of Yemen has been devastated by the ongoing civil war following the Houthi takeover of the government. It only got worse as in March 2015; President Barack Obama began to aid the Saudi Arabians in the war effort. As of February 2022, over 370,000 people have lost their lives thanks to the war thanks to lack of food, medical necessities, and bombings. Despite the severity of the war, the press has covered extraordinarily little of the war. Between 2015 and 2019, the media only covered about ninety-two minutes of the ongoing war. Based on the atrocities, this is shockingly low. It is especially low when the media chose to cover the false Russian election meddling. MSNBC even went an entire year without mentioning the conflict.With this in hand, you might be asking yourself, why isn’t the media covering this? The reasoning for this is because the United States would be seen as bad guys.Ever since our involvement in the war, the United States has done nothing but harm to the region. Not even a year into United States involvement, and the United States was already being accused of war crimes by the HumanRights Watch. They reported 10 unlawful airstrikes by the Saudi-led coalition led to over 300 civilians dying and 400 more wounded in 2015.In October 2016, a Saudi Arabian bomb was dropped on funeral ceremony in Sanaa, Yemen’s capitol. Over 100 people died and 500 wounded; many of whom were children in an apparent war crime. Footage shows charred and mutilated bodies strewn in and outside of the funeral hall.Another horrible incident occurred in September 2018, when a bomb was dropped on a school bus on a field trip. Many of the children on board were under the age of 15; all 40 of the children would die in another war crime.To make things worse for the United States (who is on the side of Saudi Arabia), these bombs were manufactured by an American company calledLockheed Martin.The Saudi-led coalition continued to do harm towards the people of Yemen. They would begin to target grain silos, livestock, horses, irrigation systems, trucks, and other aspects of food distribution.The United States has continued to make the humanitarian crisis even worse by installing a naval blockade on the country that had become 90% dependent thanks to the government destroying domestic food distribution.