oil prices fell to a 15 month low on the biggest weekly drop since the pandemic hit; oil drilling is at 9 month low; global oil production exceeded demand by 620,000 barrels per day in February, despite OPEC production that was 927,000 barrels per day below their reduced quota
US oil prices fell to a 15 month low this week in the wake of the second and third biggest bank failures in US history...after falling 3.8% to $76.68 a barrel last week as traders repriced the likelihood of a demand crushing recession following hawkish comments from Fed Chairman Powell, the contract price for the benchmark US light sweet crude for April delivery fell as much as $4 in early trading on Monday as the collapse of Silicon Valley Bank roiled markets and raised fears of a new financial crisis, but came off the lows to move higher as a recovery in Chinese demand provided support for prices, but still settled $1.88 lower on the day at $74.80 a barrel as emergency measures taken by the Fed, the FDIC, and the Treasury Department to shore up confidence in the banking sector had just a limited effect in countering a selloff in the shares of regional lenders....oil prices fell more than $2 a barrel in Asian trading on Tuesday, extending the previous day's slide, alongside a continued slide in rattled equities markets, and continued on its downward path in New York trading on concerns of a broader recession that could reduce demand following the release of the Consumer Price Index report, and settled $3.47 lower at a three month low of $71.33 a barrel on a stronger U.S. dollar tied to expectations for another rate hike from the Fed next week, and persistent concerns over fuel consumption in the US along with uncertainty about a rebound in Chinese demand....Oil prices rebounded in Asian trading on Wednesday on an improving fuel demand outlook in China after OPEC raised its forecast for Chinese oil demand growth in 2023, but dropped more than 1% in early New York trading after the International Energy Agency forecast that the global oil market is likely to remain in surplus for the first half of this year, with oil inventories held in OECD countries climbing to 18-month highs on the back of strong Russian crude oil exports, and then tumbled to settle $3.72 or more than 5% lower at $67.61 a barrel, the lowest settlement since December 2021, as financial firms trying to limit their exposure to falling prices in the options market began dumping crude futures in a strategy known as delta hedging....oil prices moved up in Asian trade early Thursday, after markets received the welcome news that Swiss regulators had pledged to assist the beleaguered megabank, Credit Suisse, then climbed 1% in choppy US trading as Saudi-Russian assurances on production cuts and remarks that the U.S. banking system was ‘safe and sound’ amid the rescue of another lender helped restore some confidence, and settled 74 cents higher at $68.45 a barrel even as the European Central Bank lifted its benchmark lending rate by 50 basis points, defying expectations of a pause in rate hikes amid the banking turmoil, in a move that boosted the Euro against the U.S. dollar and hence boosted prices of commodities trading in dollars...oil prices recovered some more ground early Friday following support measures from the European Central Bank and U.S. lenders, but then turned lower after the bailed out Silicon Valley Bank filed for bankruptcy, and slid 3% to settle $1.61 lower at $66.74 a barrel on the session, the lowest close since December 2nd 2021, dogged by the banking sector crisis and worries about a possible recession...US oil prices thus finished the week down 13.0%, their worst weekly decline since April 2020, pressured by growing concerns that the banking turmoil in the United States and the European Union would trigger a financial crisis in coming months, wiping out a large chunk of the post-pandemic gains in oil demand growth..
Meanwhile, natural gas prices also finished lower, as the collapse in oil prices and the widespread market rout spread into other commodity contracts....after falling 19.2% to $2.430 per mmBTU last week on lower demand expectations following moderating temperature forecasts, the contract price of US natural gas for April delivery opened lower along with other energy commodities on Monday, but soon reversed and moved higher to settle up 17.6 cents on the day at $2.606 per mmBTU, on forecasts for demand to rise next week as gas flowing to LNG export plants was on track to hit a record high and on longer-range weather maps that continued to favor a cool start to April....natural gas prices opened higher on Tuesday, but pulled back as the 5% drop in oil futures weighed on all energy contracts and settled 3.3 cents lower at $2.573 per mmBTU as broader market concerns about inflation and panic in the financial sector helped slow price momentum....another 5% drop in the price of oil on Wednesday took natural gas prices down with it, and they settled 13.4 cents, or 5.2% lower at $2.439 per mmBTU, as analysts expected another weak EIA reading on underground inventories the next day....but natural gas prices moved higher Thursday after the reported withdrawal of natural gas from storage was well below historical pulls, but close to market expectations and settled 7.5 cents, or 3.1% higher at $2.514 per mmBTU as lower heating demand kept gains in check...however, natural gas prices moved lower again on Friday as the intimidating storage levels for the fuel: up 36% from the year-ago level and 24% above the five-year average, offset colder forecasts and sent prices tumbling 17.6 cents or 7% to $2.338 per mmBTU, and they thus finished 3.8% lower on the week...
The EIA's natural gas storage report for the week ending March 10th indicated that the amount of working natural gas held in underground storage in the US fell by 58 billion cubic feet to 1,972 billion cubic feet by the end of the week, which left our natural gas supplies 521 billion cubic feet, or 35.9% above the 1,451 billion cubic feet that were in storage on March 10th of last year, and 378 billion cubic feet, or 23.7% more than the five-year average of 1,594 billion cubic feet of natural gas that were in storage as of the 10th of March over the most recent five years….the 58 billion cubic foot withdrawal from US natural gas working storage for the cited week was lower than was expected by analysts surveyed by Reuters, whose average forecast called for a 62 billion cubic feet withdrawal, and it was much less than the 86 billion cubic feet that were pulled out of natural gas storage during the corresponding week of 2022, and also less than the average 77 billion cubic feet of natural gas that have typically been withdrawn from our natural gas storage during the same late 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 March 10th indicated that even after a big jump in our oil exports, we had surplus oil to add to our stored commercial crude supplies for the 11th time in 12 weeks, and for the 30th time in the past 47 weeks, largely due to a big jump in oil supplies that the EIA could not account for... Our imports of crude oil fell by an average of 55,000 barrels per day to average 6,271,000 barrels per day, after rising by an average of 63,000 barrels per day during the prior week, while our exports of crude oil rose by 1,665,000 barrels per day to 5,027,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,189,000 barrels of oil per day during the week ending March 10th, 1,720,000 fewer barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly unchanged at 12,200,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have averaged a total of 13,389,000 barrels per day during the March 10th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,398,000 barrels of crude per day during the week ending March 10th, an average of 430,000 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 221,000 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 March 10th appear to indicate that our total working supply of oil from net imports and from oilfield production was 2,230,000 barrels per day less 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 [+2,230,000] barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed..... Furthermore, since last week’s “unaccounted for crude oil” was at [-384,000] barrels per day, that means there was a 2,614,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, thus rendering any such comparisons nonsensical.... 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)….(NB: there is also a more recent twitter thread from an EIA administrator addressing these errors, and what they hope to do about it)
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,255,000 barrels per day last week, which was 1.1% less than the 6,327,000 barrel per day average that we were importing over the same four-week period last year. This week's 221,000 barrel per day increase in our overall crude oil inventories was all added to our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve remained unchanged.. This week’s crude oil production was reported to be unchanged at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,800,000 barrels per day, while Alaska’s oil production was 3,000 barrels per day higher at 440,000 barrels per day and added 400,000 barrels per day to the the rounded national total, same as Alaska added last week....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 6.9% below that of our pre-pandemic production peak, but was 25.8% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.
US oil refineries were operating at 88.2% of their capacity while using those 15,398,000 barrels of crude per day during the week ending March 3rd, up from their 86.0% utilization rate during the prior week, as US refineries are beginning to ramp up after completing their seasonal maintenance... The 15,398,000 barrels per day of oil that were refined this week were still 1.3% less than the 15,601,000 barrels of crude that were being processed daily during week ending March 11th of 2022, and 3.9% less than the 16,020,000 barrels that were being refined during the prepandemic week ending March 8th, 2019, when our refinery utilization was 87.6%, close to normal for early March ...
Even with that big increase in the amount of oil being refined this week, the gasoline output from our refineries was again lower, decreasing by 446,000 barrels per day to 9,111,000 barrels per day during the week ending March 10th, after our gasoline output had decreased by 179,000 barrels per day during the prior week. This week’s gasoline production was 2.9% less than the 9,380,000 barrels of gasoline that were being produced daily over the same week of last year, and 6.4% less than the gasoline production of 9,735,000 barrels per day during the prepandemic week ending March 8th, 2019. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 97,000 barrels per day to 4,428,000 barrels per day, after our distillates output had decreased by 84,000 barrels per day during the prior week. With this weeks decrease, our distillates output was 10.5% less than the 4,945,000 barrels of distillates that were being produced daily during the week ending March 11th of 2022, and 8.8% less than the 4,856,000 barrels of distillates that were being produced daily during the week ending March 8th, 2019...
With the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the sixth time in eighteen weeks and for the 16th time in 31 weeks, decreasing by 2,061,000 barrels to 235,997,000 barrels during the week ending March 10th, after our gasoline inventories had decreased by 1,134,000 barrels during the prior week. Our gasoline supplies fell by more this week as the amount of gasoline supplied to US users rose by 32,000 barrels per day to 8,594,000 barrels per day, and because our exports of gasoline rose by 60,000 barrels per day to 891,000 barrels per day, while our imports of gasoline rose by 4,000 barrels per day to 450,000 barrels per day.. Following four straight gasoline inventory decreases, our gasoline supplies were 2.1% below last March 11th's gasoline inventories of 240,991,000 barrels, and about 3% below the five year average of our gasoline supplies for this time of the year…
With the decrease in our distillates production, our supplies of distillate fuels decreased for the 6th time in 11 weeks, and for the 24th time over the past year, falling by 2,537,000 barrels to 119,715,000 barrels during the week ending March 10th, after our distillates supplies had increased by 138,000 barrels during the prior week. Our distillates supplies decreased this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 222,000 barrels per day to 3,736,000 barrels per day, and because our exports of distillates rose by 77,000 barrels per day to 1,209,000 barrels per day, while our imports of distillates rose by 14,000 barrels per day to 155,000 barrels per day.. Even after fifty-eight inventory withdrawals over the past ninety-six weeks, our distillate supplies at the end of the week were 4.8% above the 114,206,000 barrels of distillates that we had in storage on March 4th of 2022, but still about 8% below the five year average of our distillates inventories for this time of the year...
Finally, with nearly two and a quarter million barrels per day of new oil supplies that could not be accounted for, our commercial supplies of crude oil in storage rose for the 18th time in 31 weeks and for the 25th time in the past year, increasing by 1,550,000 barrels over the week, from 478,513,000 barrels on March 3rd to 480,063,000 barrels on March 10th, after our commercial crude supplies had decreased by 1,694,000 barrels over the prior week. With several large oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories were about 7% above the most recent five-year average of commercial oil supplies for this time of year, and also about 45% above the average of our available crude oil stocks as of the first weekend of March over the 5 years at the beginning of the past decade, with the apparent 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 March 10th were 15.4% more than the 415,907,000 barrels of oil we had in commercial storage on March 11th of 2022, but 4.1% less than the 500,799,000 barrels of oil that we had in storage after winter storm Uri on March 12th of 2021, while 5.8% more than the 444,119,000 barrels of oil we had in commercial storage on March 13th of 2020…
OPEC's Report on Global Oil for February
Tuesday of this past week saw the release of OPEC's March Oil Market Report, which includes the details on OPEC's & global oil data for February, and hence it gives us a picture of the global oil supply & demand situation during a period when demand for oil was increasing in the 2nd month after China had reopened to foreign travelers and removed the Covid-related lockdowns on its citizens, while oil supplies from Russia were further reduced by the European Union's ban of Russian oil imports by sea, and by the G7's Russian oil price cap....February was also the fourth month that OPEC and aligned oil producers were operating under a 2 million barrel per day production cut, meant to take roughly 2% of global oil supplies off the market, in response to a perceived global surplus and related lower prices...
The first table from this month's report that we'll review is from the page numbered 50 of this month's report (pdf page 60), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC has used an average of production estimates by as many as eight "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA), the industry newsletter Petroleum Intelligence Weekly, the energy consultancy Wood Mackenzie and the research and intelligence firm Rystad Energy, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures….
As we can see in the bottom right hand corner of the above table, OPEC's oil output increased by a rounded 117,000 barrels per day to 28,924,000 barrels per day during February, up from their revised January production total that averaged 28,807,000 barrels per day....however, that January output figure was originally reported as 28,876,000 barrels per day, which therefore means that OPEC's January production was revised 69,000 barrels per day lower with this report, and hence OPEC's February production was, in effect, just 48,000 barrels per day more than the previously reported OPEC production figure (for your reference, here is a copy of the table of the official December OPEC output figures as reported a month ago, before this month's revision)...
while OPEC and other aligned oil producers agreed to reduce production by 2,000,000 barrels per day beginning in November, and while the net 605,000 barrel per day they've cut since were well short of that, OPEC's production was already running 1,585,000 barrels per day below what they were expected to produce when this policy was initiated in October, so the 28,924,000 barrels per day they produced in February still leaves them short of what they were expected to produce during the month, as we'll see in the next table...
The above table was originally included as a downloadable attachment to the press release following the 33rd OPEC and non-OPEC Ministerial Meeting on October 5th, 2022, which set OPEC's and other aligned oil producers' production quotas for November and the following months through the end of 2023, and the quotas shown above were reaffirmed by the cartel for the first 6 months of 2023 in during the 34th OPEC and non-OPEC Ministerial Meeting on December 4th, 2022....the first column above, labeled "August 2022 required production", actually matches the October 2018 baseline production level on which OPEC and aligned producers have based all of their quotas since the onset of the pandemic, and the "Voluntary adjustment" is the production cut each country is expected to make from that level, leaving each with a Volunary Production level they're expected to hit during 2023, whether they've produced that much recently or not....since war torn Libya and US sanctioned producers Iran and Venezuela have been exempt from the production cuts imposed by the joint agreement that has governed the output of the other OPEC producers since May 2020, they are not shown on the above list, and OPEC's quota excluding them is aggregated under the total listed for the 'OPEC 10', which you can see was expected to be at 25,416,000 barrels per day from November 2022 through December 2023...therefore, the 24,489,000 barrels those 10 OPEC members actually produced in January were still 927,000 barrels per day short of what they were expected to produce during the month, with Nigeria, Angola and Saudi Arabia accounting for the majority of this month's production shortfall...
The next graphic from this month's report that we'll look at shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from March 2021 thru February 2023, and it comes from page 51 (pdf page 61) of OPEC's March Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....
Including this month's 117,000 barrel per day increase in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate is that total global liquids production increased by a rounded 600,000 barrels per day to average 101.90 million barrels per day in February, a reported increase which came after January's total global output figure was apparently revised down by a rounded 400,000 barrels per day from the 101.70 million barrels per day of global oil output that was reported for January a month ago, as non-OPEC oil production rose by a rounded 500,000 barrels per day in February after that downward revision, with most of February's production growth coming from the OECD Americas and OECD Europe, which were partially offset by production declines in Latin America and Kazakhstan.…
After that 600,000 barrel per day February increase in global output, the 101.90 million barrels of oil per day that were produced globally during the month were 2.61 million barrels per day, or 2.6% more than the revised 99.29 million barrels per day that were being produced globally in February a year ago, which was the seventh month of the series of 400 million barrel per day production increases that OPEC and their allied producers implemented as their fourth output policy reset in response to the global demand recovery, following the early pandemic lockdowns (see the March 2022 OPEC report for the originally reported February 2022 details)…with this month's increase in OPEC's output somewhat smaller than the reported global increase, their February oil production of 28,924,000 barrels per day was down by 0.1% to 28.4% of what was produced globally during the month, after their share of the global total in December was revised up 0.1% from the 28.4% reported last month (due to the large downward revision to global output)….OPEC's February 2022 production was ultimately revised to 28,500,000 barrels per day with the April 2022 OPEC report, which means that the same 13 OPEC members who were part of OPEC last year produced 843,000 barrels per day, or 1.5% more barrels per day of oil this February than what they produced last February, when they accounted for 28.8% of a smaller global output total…
With the increase in global oil output that we've seen in this report, the amount of oil being produced globally during the month was again above the expected global demand, as this next table from the OPEC report will show us...
The above table came from page 29 of the March Oil Market Report (pdf page 33), and it shows regional and total oil demand estimates in millions of barrels per day for 2022 in the first column, and then OPEC's estimate of oil demand by region and globally, quarterly over 2023 over the rest of the table…on the "Total world" line in the second column, we've highlighted in blue the figure that's relevant for February, which is their estimate of global oil demand during the first quarter of 2023….OPEC is estimating that during the 1st quarter of this year, all oil consuming regions of the globe have been using an average of 101.28 million barrels of oil per day, which is an upward revision of 20,000 barrels per day from their estimate 101.26 million barrels per day for 1st quarter demand of 2023 a month ago (the revisions to 2023 demand estimates are highlighted in green)…but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were producing 101.90 million barrels per day during February, which would imply that there was surplus of around 620,000 barrels per day of global oil production in February, when compared to the demand estimated for the month...
In addition to figuring February's global oil supply surplus that's evident in this report, the downward revision of 400,000 barrels per day to January's global oil output that's implied in this report, slightly offset by the 20,000 barrels per day upward revision to first quarter demand noted above, means that the 440,000 barrels per day global oil output surplus we had previously figured for January would now be revised to a surplus of just 60,000 barrels per day for that month...
Also note that in orange we've also circled an upward revision of 30,000 barrels per day to 2022's demand, which also means that the supply surpluses and shortfalls that we previously reported over last year would have to be revised....a separate table on page 28 of the March Oil Market Report (pdf page 38) indicates the revisions to 2022 demand included an a downward revision of 70,000 barrels per day to 4th quarter demand, an upward revision of 50,000 barrels per day to 3rd quarter demand, an upward revision of 70,000 barrels per day to 2nd quarter demand, and an upward revision of 70,000 barrels per day to 1st quarter demand...we're not inclined to go back and recompute each month of 2022, but we have totals for each month of the year accompanying our review of OPEC's December report, should anyone want to review how 2022's oil supply & demand shook out..
This Week's Rig Count
The number of drilling rigs active in the US increased for the first time in five weeks during the week ending March 17th, but were 4.9% below the prepandemic count, despite increasing ninety-six times over the past 128 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US rose by 8 to 754 rigs over the past week, which was also 91 more rigs than the 663 rigs that were in use as of the March 18th report of 2022, but was 1,175 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business. .
The number of rigs drilling for oil decreased by 1 to to a nine month low of 589 oil rigs during the past week, after the number of rigs targeting oil had decreased by 2 during the prior week, but there are still 65 more oil rigs active now than were running a year ago, even as they amount to just 36.6% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are now down 13.8% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 9 to 162 natural gas rigs, which was also up by 25 natural gas rigs from the 137 natural gas rigs that were drilling during the same week a year ago, even as they were still only 10.1% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….
In addition to those rigs targeting oil and natural gas, Baker Hughes continues to show that three rigs they've labeled as "miscellaneous" are still drilling this week: those include a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, 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, and a directional rig drilling to between 5,000 and 10,000 feet into a formation in Pershing county Nevada, also unnamed by Baker Hughes….While we haven't seen any details on any of those wells, in the past we've identified various "miscellaneous" rig activity as being for exploration rather than production, for carbon dioxide storage, and for utility scale geothermal projects....a year ago, there were two such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was up by two to 16 rigs this week, with 15 of those rigs drilling for oil in Louisiana's offshore waters, and one drilling for oil in Texas waters….that Gulf rig count is also up by 4 from the 12 Gulf rigs running a year ago, when 11 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas…in addition to rigs drilling in the Gulf of Mexico, this week saw the startup of a directional rig drilling for oil at a depth between 10,000 and 15,000 feet, offshore from the Kenai Peninsula Borough of Alaska, as apparently the weather has moderated enough for Alaskan offshore drilling to resume...hence, we now have a total of 17 rigs drilling offshore, up from the national offshore count of 12 a year ago..
In addition to rigs running offshore, there is also a water based directional rig drilling for oil at a depth greater than 15,000 feet through an inland body of water in Terrebonne Parish, Louisiana this week...a year ago, there were three rigs drilling on inland waters...
The count of active horizontal drilling rigs was unchanged at 692 horizontal rigs this week, which was still 86 more rigs than the 606 horizontal rigs that were in use in the US on March 18th of last year, even as it was just over half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014.....meanwhile, the vertical rig count was up by three to 15 vertical rigs this week, which was still down by 6 from the 21 vertical rigs that were operating during the same week a year ago…at the same time, the directional rig count was up by 5 to 47 directional rigs this week, and those were also up by 11 from the 36 directional rigs that were in use on March 18th 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 March 17th, the second column shows the change in the number of working rigs between last week’s count (March 10th) and this week’s (March 17th) count, the third column shows last week’s March 10th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 11th of March, 2022...
even with a nine rig increase in natural gas drilling this week, the Utica shale count was down by four gas rigs to eleven; three of those gas rigs were pulled out of Ohio, while the lone Utica rig that had been drilling in Pennsylvania was also shut down.... but Pennsylvania saw an increase of three rigs drilling in the Marcellus, while two more Marcellus rigs were added in West Virginia, and hence the Marcellus rig count was up by five...four more natural gas rigs were added in the Eagle Ford shale of southeast Texas, while 6 oil rigs were pulled out of the Eagle Ford at the same time, leaving the Eagle Ford rig count down by two, with 62 oil rigs and 8 targeting natural gas deployed in the basin...another natural gas rig was added in the Permian basin, which also saw 6 oil rigs added at the same time, leaving the Permian with 345 oil rigs and 5 targeting natural gas...in addition, three natural gas rigs were added in the Haynesville shale in Texas, but the Haynesville shale count remained unchanged because three natural gas rigs were pulled out of the Haynesville in Louisiana at the same time... finally, three more natural gas rigs were added in "other" basins that are not tracked by Baker Hughes...it's not evident from the summary tables where those might have been added, and the only way to find out for sure would be to tediously scan through the individual well records found in the North America Rotary Rig Count Pivot Table...
meanwhile, checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian, we find that there was one rig added in Texas Oil District 8A, which overlies the northern part of the Permian Midland, and that 2 rigs were added in Texas Oil District 7C, which includes two counties in the easternmost Permian Midland...since the Texas Permian rig count was thus up by 3 rigs while the national Permian count was up by 7, we can figure that the 3 rigs added in New Mexico were set up to drill in the western Permian Delaware, in the southeast corner of that state....in addition, since another rig must have been added somewhere else in the Permian, it must have been offset by a concurrent removal of a rig in the same area, such that it wouldn't show in the totals....
in the Eagle Ford region of Texas, the rig count was down by seven in Texas Oil District 1, but up by eight in Texas Oil District 2, and up by two in Texas Oil District 3, but down by three in Texas Oil District 4...since the Eagle Ford count was down by two, two of the noted rig additions weren't targeting the Eagle Ford, but another basin that Baker Hughes doesn't track; among the other Eagle Ford additions, at least 4 were targeting natural gas, while among the Eagle Ford removals, six had been targeting oil; the remainder would be combinations of offsetting changes of similar rigs that would add up to zero, and hence not appear in the summary data...
elsewhere in Texas, there was a rig pulled out of Texas Oil District 5. which had apparently been targeting a basin not tracked by Baker Hughes, while were there three natural rigs added in the Haynesville shale in Texas Oil District 6, which we only know because there were three rigs removed from the Haynesville shale region of Louisiana at the same time, while the national Haynesville count remained unchanged; the Louisiana rig count ended up down by two with the addition of two rigs in the state's Gulf waters, and the concurrent removal of the only land based rig which had been drilling in the southern part of the state..
in other parts of the country, the rig added in Oklahoma was targeting a basin not tracked by Baker Hughes, while the rig added in Colorado was set up to drill for oil in the Niobrara chalk of the Rockies front range...meanwhile, the Alaska rig count remained unchanged despite the addition of the aforementioned rig offshore from the Kenai Peninsula because a directional rig that had been added in Alaska last week to target oil at depth of between 10,000 and 15,000 feet with its location in Alaska blank is no longer shown this week, almost calling into question that odd addition..
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Lorain County Auditor continues to fight Nexus Pipeline settlement - In a controversial move, Lorain County Auditor Craig Snodgrass is appealing to the Ohio Supreme Court to challenge its most recent and final decision against the Ohio Board of Tax Appeals regarding the valuation of the Nexus Pipeline system.“After lengthy consideration and input from multiple stakeholders in Lorain County and throughout the state of Ohio, I have decided to file an appeal,” Snodgrass wrote in a news release issued March 13. Nexus Gas Transmission (NEXUS) is an approximately 256-mile, 36-inch pipeline through 12 Ohio counties and into a portion of Michigan, the company’s website stated Lorain County Commissioner Michelle Hung stated in a news release March 13 that she supports the legal move. “I don’t see a downside to taking it to the Supreme Court to let them make the rule on this matter,” Hung stated. “The value was $1.6 billion and the tax commissioner has settled on a value of $950 million what leaves a shortfall to Lorain County of approximately $4 million per year, every year.“It’s not a one-time loss. It will be our schools and our children (who) suffer the effects of a shortfall. The residents don’t have high priced lobbyists working for them, and they look to their elected officials to make sure this is a good deal for the schools and our children’s future.“I am not ok with the schools losing money, and the possibility of the residents, being asked yet again for a levy to support the schools because corporate business isn’t paying their fair share.”The higher the value of the gas line, the more money schools and other government agencies receive in funding from tax money collected in those areas where the gas line operates.The two sides worked out a settlement agreement valuing the pipeline at $950 million for tax year 2019, $946 million in tax year 2020; $934 million in tax year 2021 and the estimated value of $901 million for 2022.
Auditor takes Nexus tax appeal to Ohio Supreme Court - orain County Auditor Craig Snodgrass is taking his legal dispute with the Ohio Board of Tax Appeals, Ohio Tax Commissioner and owners of the Nexus pipeline to the next level: The Ohio Supreme Court. The fight is over whether Nexus should pay the share of property taxes it promised to Lorain County entities when its backers first proposed building the natural gas pipeline. Snodgrass estimates the pipeline will underpay the Ohio counties along its route $600 million over the next 30 years. Lorain County was promised $7.3 million in taxes the first year Nexus was in operation, but received less than half that in back taxes under a settlement between state tax officials and Nexus owners. Under the deal, the multimillion-dollar corporations would pay taxes on only 58 percent of the Nexus property tax valuation. "After lengthy consideration and input from multiple stakeholders in Lorain County and throughout the state of Ohio, I have decided to file an appeal with the Ohio Supreme Court to challenge the final decision and order of the Ohio Board of Tax Appeals relating to the valuation and assessment of the Nexus pipeline system for tax years 2019, 2020, and 2021," Snodgrass announced in a news release Monday. "I have made this important decision because I believe that an appeal would be in the best interests of Lorain County and the political subdivisions in Lorain County, and would be in the best interests of county auditors throughout the State of Ohio," he wrote. Snodgrass has said Nexus is not paying enough and has shorted the Lorain County JVS, Firelands, Keystone, Midview and Oberlin school districts; Lorain County Public Health; the Wellington Fire District; the Central Lorain County Ambulance District; Kipton and several Lorain County townships of promised tax revenue. The disputed tax value also will affect Columbiana, Erie, Fulton, Henry, Huron, Lucas, Medina, Sandusky, Stark, Summit and Wayne counties. In his statement, Snodgrass wrote that Ohio legislators "expressly provided county auditors with the statutory right to appeal any final determination made by the Tax Commissioner relating to the 'true value' of public utility personal property. This statutory right was granted because county auditors are in a position to provide an important check on the Tax Commissioner's rulings." A BTA decision, a 2-0 vote made Feb. 9, strips Snodgrass of his legal right to appeal and challenge the value of the pipeline from 2019-2021 "and every year thereafter," he said. That will cost Lorain County and political subdivisions within $15.7 million for the last four tax years, 2019-2022 "and significantly more in personal property tax revenue thereafter," Snodgrass said Monday. An appeal also saves his office and other county auditors the "time and expense of intervening in all future personal property tax proceedings filed with the Board of Tax Appeals in order to protect their statutory rights, even if they agree with the Tax Commissioner's determination," he said.
Officials plead with Lorain County Commission to stop Auditor's appeal of Nexus funding - Multiple elected officials are urging Lorain County commissioners to stop the county auditor’s appeal of the Nexus Gas Pipeline funding to the Ohio Board of Tax Appeals. “Please consider accepting the decision of the Tax Commissioner of Ohio to deny the appeal filed by the Lorain County Auditor of the Nexus Gas Pipeline Tax Valuation Settlement and urge your auditor to not pursue a further appeal,” wrote Ted Kastor who serves as both the vice president of Perkins Schools Board of Education as well as sits on the sits on the Erie County Economic Development Corp., in a letter March. 4. Lorain County Commissioner Jeff Riddell released multiple letters and issued his statement March 14 against Auditor Craig Snodgrass filing an appeal March 13 to the Ohio Supreme Court which holds the settlement money in an escrow account that can’t be spent by the school districts. “The uncertainty of a further appeal will continue to have a negative financial impact on the schools,” Kastor wrote. “In Erie County, three school districts have new facility projects totaling over $200 million that will be impacted by a further appeal.” Kastor addressed Midview Schools’ leadership team in an email which also was sent to the commissioners. Also two weeks before Snodgrass’ deadline of March 13 to file the appeal, Rick Jeffrey, the Erie County Auditor also penned a letter opposing the appeal. Jeffrey wrote on his behalf as well as that of auditors in Stark and Wayne counties, according to the document. The auditors asked the commissioners to “reach out to your counterparts in the Lorain County schools listed at the bottom of this email string, using the talking points we have put together to attempt to convince them to reach out to Auditor Craig Snodgrass and encourage him to walk away from this issue,” according to the document. “There is a tremendous risk in the time element,” according to a letter from Stark County Auditor Alan Harold. “Every year that goes by, has the potential to increase the refund by the school district to Nexus.“For many districts, including those in Lorain County, this could be millions of dollars that need to be repaid. Districts need certainty.” Harold urged Lorain County commissioners to reach out to each of the school districts he listed to fully understand the impact of the decision to appeal the Nexus agreement, the document stated. Mike O-Keefe, president of the Firelands Local Schools district, who is listed on Harold’s letter, said Snodgrass is simply “doing his due diligence.”
Scientists Sound Alarm on Fracking Near Muskingum OH Watershed - The Muskingum Watershed Conservancy District is drawing ire for its continued leasing of land for fracking. Last year, the district, which stewards more than 56,000 acres of land, completed negotiations for an oil and gas leasefor nearly 7,300 acres, the largest land lease to date on conservancy property. The five-year contract includes the drilling of at least fifteen wells.Randi Pokladnik, an environmental scientist and member of Mid-Ohio Valley Climate Action, explains fracking comes with a host of air and water pollution risks, including the release of thousands of chemicals, which can end up in groundwater."You've got an industry that is basically, because of the Halliburton loophole, unregulated," Pokladnik pointed out. "So they don't have to disclose certain chemicals that they put in the frack fluid, because it's quote, unquote, private, and it's patented. So people don't even know for sure what's in that fluid."The conservancy district argued revenues from leasing allow it to upgrade watershed facilities and campgrounds. Since 2011 Ohio has allowed companies to lease state land for oil and gas drilling. Earlier this year, Gov. Mike DeWine signed House Bill 507 into law, which makes it easier to approve licenses for companies seeking to extract natural resources from state lands.James O'Reilly, volunteer professor in the department of environmental health at the University of Cincinnati College of Medicine, said conservancy districts were originally created to protect natural resources and the residents who depend on them. "But in this case the Conservancy District is being used to remove a valuable resource without giving due consideration to the health of the public that is impacted," O'Reilly asserted. According to the National Resources Defense Council, documented health issues associated with living near fracking sites include severe headaches, asthma, childhood leukemia, heart problems and birth defects.
Ohio's Fourth Quarter Report Shows Oil Production on the Upswing - (includes table of wells) The Ohio Department of Natural Resources (ODNR) recently published 2022 fourth quarter production totals that showed oil production reached nearly 5.9 million barrels this past quarter and is up 33 percent over the fourth quarter of 2021 and 16 percent over the third quarter of 2022. The state currently ranks 12th in the nation for oil production and is the top oil producer in the Appalachian Basin.In total, Ohio produced 900,000 more barrels of oil compared to the third quarter of 2022, started approximately 23 new wells, and produced nearly two million barrels more than in the fourth quarter of 2021.As Chief of the Division of Oil and Gas Resources Management for ODNR Eric Vendel said when discussing the industry’s outlook at the recent Ohio Oil and Gas Association’s Annual Meeting:“Permitting is up, drilling is up, and oil production is up. We’re on the upswing, which is a healthy sign for the industry.”Natural gas production in the fourth quarter saw a slight decrease in production at 539 billion cubic feet compared to 576 billion in the fourth quarter of 2021. Despite this decline, Ohio remains one of the top producers of natural gas in the country, ranking sixth on the Energy Information Administration’s state rankings for 2021 and likely to hold a similar position when 2022 data become available.This past quarter saw 3,033 producing wells out of a total of 3,116 horizontal shale wells that on average produced: Guernsey and Carroll counties were responsible for the top ten oil producing wells in the fourth quarter of 2022, with Ascent Resources and Encino Acquisition Partners (EAP Ohio) each having five of the top ten highest producing wells.In total, Carroll County produced 2.4 million barrels, while Guernsey County produced almost two million barrels this quarter. Together, they produced more than 89 percent of all oil this past quarter, highlighting how important these two counties are to Ohio’s oil production.Similarly, Jefferson and Harrison counties continue to have the highest producing natural gas wells in the fourth quarter of 2022, with Ascent Resources Utica having four of Ohio’s top ten highest natural gas producing wells – EAP Ohio and Gulfport Appalachia each had three of the top ten producing wells.
Ohio Utica Shale Production 2022 – Top 25 Gas & Oil Wells | Marcellus Drilling News -The Ohio Dept. of Natural Resources (ODNR) issues an update on Utica (and Marcellus) oil and natural gas production each quarter. ODNR no longer issues a press release to summarize the results as they once did, which means the quarterly updates fell off our radar. Now and again something jogs our memory to revisit and share with you the production reports from the ODNR, to bring you the top 25 wells by production for both natural gas and oil production. Today we look back at all of 2022. ODNR publishes a detailed spreadsheet of all active wells showing oil and gas production by well. We make a copy of that spreadsheet, enhance it to make it more usable, and link to it. Below are the results.
Ascent Resources Outlines Steady Utica Drilling Plan as Natural Gas Prices Seen Weakening Privately-held Ascent Resources Utica Holdings LLC, Ohio’s largest natural gas producer, is joining its publicly-traded peers in keeping production and activity flat this year as the commodity outlook has softened.Ascent, also one of the nation’s largest private natural gas producers, is guiding for 2-2.1 Bcfe/d of production in 2023, in line with the 2.1 Bcfe/d it produced last year. Like its peers grappling with inflationary pressures, the company has budgeted more to reach the same level of output. Ascent expects capital expenditures to come in between $920-955 million, up from the $710-770 million it budgeted at this time last year. The company also plans to spud 70-75 wells with up to four rigs across its 350,000 net acres in Southern Ohio. The company drilled 75 wells in 2022 with lateral lengths of 13,400 feet. It plans to push horizontals further to an average of 14,500 feet this year. CEO Jeff Fisher said the company managed to produce 2.2 Bcfe/d in the fourth quarter despite subfreezing temperatures that impacted production across much of the Appalachian Basin at the end of December. Full-year production was up from 2 Bcfe/d in 2021, and fourth quarter production was up from the 1.94 Bcfe/d the company reported in the year-ago period. Fisher said the company notched its third consecutive year of positive free cash flow in 2022. Average realized prices, including the impact of settled commodity derivatives, increased from $2.99/Mcfe in 2021 to $3.75/Mcfe last year. As a result, revenue increased from $1.2 billion to $2.5 billion over the same time. Ascent reported fourth quarter net income of $1.6 billion, compared to net income of $1.1 billion in the year-ago period. For the full year, net income was $361 million, up from a net loss of $806 million in 2021 that resulted from a loss on derivatives.
30 New Shale Well Permits Issued for PA-OH-WV Mar 6-12 | Marcellus Drilling News - New shale permits issued for Mar. 6-12 in the Marcellus/Utica increased by one from the prior week. There were 30 new permits issued in total last week, including 21 new permits for Pennsylvania, 5 new permits for Ohio, and 4 new permits issued in West Virginia. Last week the top receiver of new permits was EQT with 7 new permits–all of them (interestingly) issued in Lycoming County, PA. The second highest number of permits went to Repsol, with 6 permits in (also interestingly) Columbia County, PA. Chesapeake Energy came in third with 5 permits for Bradford County, PA. Antero Resources, Ascent Resources, Belmont County, Bradford County, Carroll County, Chesapeake Energy, Columbia County, EQT Corp, Harrison County,INR, Lycoming County, Repsol, Southwestern Energy, Susquehanna County, Wetzel County
Opinion: Now is good time for regulations on fracking - The Norfolk Southern train derailment and detonation of five railcars filled with toxic chemicals killed an estimated 43,000 fish and animals. The incident traumatized Ohio and Pennsylvania communities rightly concerned about immediate and long-term health effects − especially for children and the elderly − and effects on their land, air, water and animals. Imagine the health impact and outrage if that toxic plume appeared over a large Ohio city.Now imagine the outrage and health impact when fracking occurs in Ohio state parks − and a large chemical spill, methane leak or groundwater poisoning incident occurs.There are 4,000 active oil wells and 900 abandoned oil and natural gas wells right now in Ohio. The oil and gas industry needs more strict state and federal oversight and regulation, not less. H.B. 507, the new law going into effect April 7, requires fracking in state parks and on public lands. It’s a horrible law.There have been low-level earthquakes in eastern Ohio and other states in the wake of fracking activities since the early 2000s. While oil and gas industry geologists claim toxic chemicals used in fracking fluid are injected deep into the earth, beneath our groundwater − perfectly safe − the more we frack and swiss-cheese the earth beneath us, the more we risk creating tectonic shifts that could release these toxins and allow them to percolate into our groundwater, making parts of Ohio uninhabitable Superfund sites.Remember that in 2018, one Belmont County, Ohio fracked gas well leaked 120 million metric tons of methane over 20 days − more than countries like Norway and France annually.Methane leaks and flares occur as a part of oil and gas production. Methane accounts for more than 25% of global carbon emissions, too. Methane is 80 times more potent than carbon dioxide in trapping heat in the atmosphere.News reports say a small number of oil and gas sites with high emissions are responsible for the majority of methane releases. Is Ohio one of those culprits?We don’t need more natural gas production in Ohio; we need the expansion of affordable, green, sustainable energy. In fact, wind and solar capacity is already slated to overtake natural gas and coal by 2024 due to falling costs and energy security concerns.Why risk Ohio’s clean air, land and precious drinking water now for more dirty-fuel profits?Big Oil companies undermine our national interests regarding the war in Ukraine, too. They export oil at a time when domestic demand is down. Additionally, they price-gouged Americans at the gas pump last year and still do today. Big Oil reported record profits of $200 billion in 2022.The public needs to know the ingredients and percentage of toxic chemicals in fracking fluid, especially since the average fracked well uses about four million gallons of water. This is similar to the amount of water New York City uses in about six minutes. Question for state and federal legislators: Were vinyl chloride, benzene and 2-butoxyethanol on the Norfolk Southern train slated to become fracking fluid ingredients? Right now, by law − or the absence of law − the Ohio oil and gas industry doesn’t have to tell us.
Pa. Panel Says PUC Wrong To Skip LNG Enviro Impact – Law360 - A Pennsylvania appellate panel has found that the state's Public Utility Commission erred in its approval of the construction of a liquefied natural gas pumping station in Delaware County's Marple Township for failing to conduct sufficient environmental review. .
Pa. annual natural gas production falls for first time in 10 years | StateImpact Pennsylvania Pennsylvania’s natural gas production fell for the first time in a decade last year. An analysis from the state’s Independent Fiscal Office shows drillers produced 1.6% less gas in 2022 than the year before, the first annual drop since data became available in 2012. According to data from the Department of Environmental Protection, production in the final quarter of 2022 was down 5.1% from the same time a year earlier. That’s the largest year over year decline recorded since 2015. The IFO says lower average productivity per well suggests that the share of older, less productive wells has grown and new drilling hasn’t been enough to offset losses. Annual growth in producing wells has been declining since 2019, according to DEP data. Federal data shows other major gas-producing states did not see a decline. Texas drillers pulled nearly 6% more gas from the ground last year and Louisiana production grew by 17%. Though they pulled less gas from the ground, Pennsylvania companies drilled 10% more wells in 2022 than the year before. However, drilling slowed in the last three months of the year, and preliminary data shows new wells are down so far in 2023. The average price of natural gas in Pennsylvania was $4.45 per million British thermal units (MMBtu) at the end of last year. That’s 12% higher than the same time the year before, but down from a high of $6.89 per MMBtu earlier last year. The IFO says the price drop was mainly because mild winter weather kept demand down.
Pennsylvania's natural gas production had historic year in 2022, and probably not in the way you're thinking - Pittsburgh Business Times - Pennsylvania's natural gas production dropped 1.6% in 2022, the first time in the decade since Marcellus Shale and Utica Shale production began to be measured.There were 7,439 billion cubic feet of natural gas produced in the commonwealth through horizontal drilling, which is the type of natural gas production in the Marcellus and Utica shales, according to data released by the Independent Fiscal Office and the Pennsylvania Department of Environmental Protection. Data began to be collected in 2012.Pennsylvania remained the second-largest natural gas producing state in the country, with Texas in first place but Louisiana far behind Pennsylvania. It also was the only state among the top five that had a drop in production between 2021 and 2022. West Virginia, No. 5 on the list, saw its production up 5.8% year over year, and Louisiana saw its production jump 17.3%.About 99% of all natural gas production in Pennsylvania is from the Marcellus and Utica unconventional wells.The natural gas industry had a miserable 2020 with the pandemic and other reasons, but came roaring back in 2021 with increases of about 7% in the last two quarters of 2021. But 2022 saw a slight decline (just under 1%) in the first quarter, flat in the second quarter, another drop of just under 1% in the third quarter and then a drop of 5.1% year-over-year in the fourth quarter."It also represents the strongest year-over-year decline in quarterly production since monthly production data have been published," IFO said.That's not due to pricing, which in December was still pretty strong. But several of the major shale players saw midstream and weather issues complicate production, issues that sometimes continued into early January.Also down in the fourth quarter was the beginning of new wells. There were 136 wells spud in the fourth quarter in Pennsylvania, a drop of 11.7%. It was the biggest drop in wells spud since the second quarter of 2020, in the early days of the Covid-19 pandemic, and also the second-lowest number of wells since the third-quarter of 2021. Data for January and February 2023 show another year-over-year decline, IFO said.The top five producing counties in Pennsylvania also saw declines in production volume:
- Susquehanna, -3.9%
- Washington, -5.1%
- Bradford, -3.2%
- Greene, -0.3%
- Lycoming, -12.4%
Pennsylvania Posts Largest Annual Decline in Natural Gas Production - Pennsylvania’s natural gas production declined by 5.1% in the final quarter of 2022, the largest year/year decline since monthly production data began, according to the state’s Independent Fiscal Office (IFO). This was the fourth consecutive quarter in which production did not increase on a yearly basis, according to the IFO’s Natural Gas Production Report compiled by Jesse Bushman and Rachel Flaugh. In the Keystone State, unconventional drilling yielded 1.856 Tcf in 4Q2022, down from 1.956 Tcf the year prior. In 2022, Pennsylvania’s oil and gas operators produced 7.439 Tcf, a 1.6% decrease from 2021. The decline continues the trend of drooping production that began in 1Q2022, when output fell 0.6% year/year. Production then remained flat on an annual basis in 2Q2022. It declined again by 0.7% year/year in 3Q2022. NGI market analyst Josiah Clinedinst noted that many major oil and gas producers in the region posted decreases in production at the end of the year, including EQT Corp., Chesapeake Energy Inc., Coterra Energy Inc. and Southwestern Energy Inc.“The four largest publicly traded U.S. producers saw a discernible decrease in fourth quarter production,” Clinedinst said.Combined production from the four reached “15.2 Bcf/d in the fourth quarter, down nearly 4% quarter-over-quarter. That’s a material response from the industry’s largest players, and the Appalachia is a big driver behind that,” Clinedinst said. “All four cited takeaway capacity constraints as the main reason for reducing production overall in Appalachia,” he noted. Years after major pipeline projects like PennEast Pipeline, Constitution Pipeline and Atlantic Coast were scrapped, Appalachia-focused producers have had to operate mostly in maintenance mode. By and large, flat production profiles have been adopted by most major producers in the basin.“Until pipeline takeaway capacity is increased in Appalachia we will likely see the maintenance mode, free cash flow generating production of 2022 in 2023,” Clinedinst added. He also noted that Appalachia saw a “very cold December,” impacting production levels.Wells spud in the fourth quarter also decreased to 136 from 158 in 3Q2022. “The quarter-to-quarter decline in new wells from the third to fourth quarter was the largest such decline since the second quarter of 2020,” IFO said. Preliminary data for January and February 2023 are pointing to a 10.8% decline from the same period a year ago. However, 574 new wells were added in 2022, representing a 10.8% increase from 2021. This was the second consecutive year the state increased drilling activity after the slowdown from Covid-19 in 2020. Horizontal producing wells, which account for 99% of the production, picked up throughout 2022. They rose by 4.6% in the first quarter, followed by 4.8% in 2Q2022, 4.4% in 3Q2022 and 5.5% in the final quarterGrowth in producing wells from the third to the fourth quarter marked a “notable uptick” from previous quarters. IFO reported it was the largest increase in producing wells since mid-2018. “The uptick in producing wells was likely the result of increased drilling in 2022, which should lead to further increases in producing well growth,” IFO said.
Action needed to combat plastic life cycle - The lifecycle of plastic, from extraction to disposal, is linked to significant harms: climate change, poor quality air, water, and soil, decreased biodiversity, social and environmental injustice, and numerous, sometimes fatal health problems for all forms of life. The lifecycle of plastic begins with fracking. Ethane gas, collected during the fracking process, is used to make nurdles. Nurdles are the feedstock for creating all plastic materials. According to FracTracker, “As of Jan. 11, 2023, there are records of 218,260 drilled and proposed wells in Pennsylvania, which have been assessed 64,880 violations since 2008.” Fracking impacts our aquifers, rivers, and lakes. Roughly 4-12 million gallons of water are taken from our watersheds to frack a single well, according to the Susquehanna River Basin Commission. Each well can be fracked 20 times and can contain more than 20,000 proprietary chemicals, including hazardous benzene, radium, & Per, and poly-fluoroalkyl substances (PFAS). PFAS is a class of up to 12,000 manmade chemicals used for thousands of everyday products. Called “forever” chemicals because they don’t break down naturally, they bioaccumulate in the environment for centuries. PFAS are linked to reduced fetal/infant growth, cancers, thyroid, reproductive problems, and lowered vaccine efficacy. PFAS contamination has numerous sources and can be found in drinking water, soil, food, and dust. Researchers estimate that contaminants can be detected in 97% of Americans. It takes less than six parts per trillion (ppt) or a fraction of a grain of salt in an Olympic-sized swimming pool to cause health and environmental harm. For over a decade, hydraulic fracturing and other oil and gas wells across the U.S. have used PFAS. Fracking waste means nearly 100 potential PFAS-polluted sites exist in Pennsylvania, Ohio, and West Virginia. FracTracker identified 97 additional new possible contamination locations on a map for Environmental Health News (EHN). These poisonous chemicals leak into groundwater and nearby land water bodies. Flowback fluid containing these chemicals are used to deice our roads, and then run off into farm fields. In 2020, DEP recorded 244,000 tons of drill cuttings taken to landfills. The plastic lifecycle contributes to greenhouse gas emissions. Pennsylvania’s Beaver County Ethylene Cracker plant CO2 emissions equal half the amount produced by the city of Pittsburgh. Annually, 1,000 new wells will be needed to maintain production. This will take us further from solving our climate crisis. Nurdles often spill into waterways and absorb mercury, pesticides, and PCBs (Polychlorinated biphenyl). To fish, they resemble eggs, so the chemicals bioaccumulate in the food chain. Half of all plastic produced is single-use plastic. The waste resulting from disposal, minimal recycling, and incineration makes up 20% of human-caused methane emissions contributing to climate change. January 18, 2022, the journal Environmental Science and Technology, reported 14 scientists determined we have surpassed the safe planetary boundary for pollutants and plastic exposure known as novel entities. The number and amount of chemicals produced have increased 50-fold since 1950 and will triple again by 2050. The Earth can’t absorb, dilute or break down these newly synthesized chemicals. Plastic production is driving chemical production. The microplastics in our soil are changing soil structure and ecology. This is impacting the very fabric of living and non-living interconnected systems. Microplastics and their chemicals have been found in all 53 Pennsylvania waterways. We want our regulating and governing bodies to address these vast concerns. We need leadership to bring us a regenerative economy that supports the health and well-being of all citizens and the systems we depend on. Our constitution guarantees us the right to clean air, pure water, and preservation of the environment’s natural, scenic, historic, and esthetic values. Tackling the single-use plastics problem is key to addressing climate change, air and water pollution, and deleterious environmental and human health impacts in Pennsylvania.
Study links fracking to heart disease in nearby communities | University of Chicago News - A new University of Chicago study examining Medicare claims found older adults living near fracking sites in Pennsylvania were more likely to be hospitalized for cardiovascular diseases than those who lived in nearby New York state, where fracking is banned. The research was published March 6 in The Lancet Planetary Health. Prachi Sanghavi, Assistant Professor of Public Health Sciences at UChicago and senior author on the paper, said she first became interested in studying the potential health impacts of fracking in the early 2010s. This was during the peak of the unconventional natural gas development boom, colloquially known as “fracking.”“There was a lot of buzz about the environmental effects of unconventional natural gas development, and several documentaries were produced on the subject,” she said. “I do a lot of work with Medicare claims data, and I realized that we could use that approach to determine if there was a measurable effect on population health based on what the stories were suggesting.” Her team collected Medicare claims data for tens of thousands of patients generated between 2002 and 2015 in both northern Pennsylvania, which experienced a fracking boom, and next-door New York state, where the practice was banned.The team found an association between the development of new fracking sites and increased rates of hospitalization for health conditions such as acute myocardial infarction, heart failure and ischemic heart disease.“Although we can’t point to one specific part of fracking operations as the culprit, folks living near fracking sites could be affected by exposure to things like air or water pollution that often come with fracking activity,” said Kevin Trickey, first author on the study and a former research analyst in the Sanghavi lab.“Our study connects nearby fracking activity to real, serious human health outcomes, suggesting it’s not just a matter of economics or environmental sustainability — but that policymakers and residents alike should start prioritizing the health of citizens, whether drilling new wells or plugging old ones,” he said. “There is a measurable association with people’s health.”Researchers have previously found elevated levels of airborne hydrocarbons and other pollutants near fracking sites, but a clear relationship between those pollutants and negative health outcomes has not yet been established.While prior studies have indicated a likelihood of this connection, this study applies statistical analysis to economics data for causal inference analysis to more directly connect fracking to specific negative health outcomes in older adults.In the current study, the team determined there were an additional 11.8, 21.6 and 20.4 hospitalizations for acute myocardial infarction, heart failure and ischemic heart disease, respectively, per 1,000 Medicare users than would be expected if there were no fracking in the area.The effects were not just limited to the initial phases of unconventional natural gas development. The study found that the risk continued even after drilling ended, indicating that the health impacts could be connected to the byproducts of the regular functioning and production of the well.
EIA: US natural gas consumption set nine monthly records and an annual record in 2022 - In 2022, US natural gas consumption averaged a record 88.5 billion cubic feet per day (Bcf/d)—the highest annual natural gas consumption, according to records beginning in 1949, according to the US Energy Information Administration (EIA). US natural gas consumption last year increased 5% (4.5 Bcf/d) from 2021, the second-fastest year-over-year growth since 2013. Natural gas consumption in the United States set monthly records in 9 of 12 months in 2022. Natural gas consumption peaks twice a year in the United States, driven by the residential and commercial sectors during the winter and electric power sector during the summer. Newly retired coal-fired generating plants, relatively high coal prices, and lower-than-average coal stocks limited the electric power sector’s coal consumption last year, which led to increased natural gas consumption for electricity generation. Compared with 2021, natural gas consumption increased in all sectors, but the electric power sector consumed more natural gas than any other US end-use sector, accounting for 38% of US natural gas consumption. Natural gas consumption peaked in January and in July in 2022. In January 2022, the residential and commercial sectors, combined, consumed 9% more natural gas than in January 2021, and the electric power sector consumed 10% more year over year. Natural gas consumed for electric power reached a new record in January 2022, pushing overall natural gas consumption to a monthly record high. Summer 2022 was the third-warmest on record in the US Lower 48 states, leading to strong demand for air conditioning and resulting in new daily records for electricity generation in July. As a result, more natural gas was consumed in the electric power sector, pushing consumption in July to be the highest for the summer. The year ended with another monthly record for natural gas consumption. In December, in much of the Lower 48 states, below-normal temperatures in the mid to late part of the month led to increased natural gas demand, both directly and indirectly, from natural gas-fired plants to generate electricity for space heating.
High Consumer Prices, Energy Rationing Loom Absent More Natural Gas Pipelines - Absent a surge in natural gas pipelines and related infrastructure, companies may struggle to get ample supplies to utilities, leaving consumers grappling with either lofty prices or the difficult decision to substantially scale back their energy consumption.Such was the warning from executives and regulators alike during CERAWeek by S&P Global. But they also emphasized at the event in Houston last week that rapidly evolving technology, coupled with price incentives, could simplify matters.Incentives crafted by regulators and implemented by utilities could empower consumers to adjust the daily rhythms of their lives to avoid activities that require energy during peak demand periods. In turn, they would be rewarded with lower bills and help conserve natural gas for when it is needed most at the height of summer or depth of winter. “We have to empower consumers with choice,” NRG Energy CEO Mauricio Gutierrez said. This will require more price transparency from utilities – including how to secure price breaks – and this likely means regulators would need to implement and enforce new rules on this front.Michael Caron, a commissioner with the Connecticut Public Utilities Regulatory Authority, said state and federal authorities are taking seriously the possibility of a years-long stretch in which natural gas supplies to several areas of the country are insufficient. The West in the summer and Northeast in the winter are prime examples of regions hindered by inadequate pipeline capacity, he said. This may eventually get offset by fuels such as wind and solar, but the transition is likely to prove bumpy, given that renewables are intermittent energy sources and further advances are needed. As such, Caron agreed consumer energy rationing may become necessary. “Regulators are going to have a very keen eye” on ensuring consumers are treated fairly, he said.He said consumers would need to be involved in plans for change – to have a stake in the process – and regulators from the state level up to the nation’s capital must make sure that price incentives are easy to understand. If the process becomes complicated, too many people will throw up their arms in frustration.Still, he added, consumers would ultimately prefer a different option: More natural gas pipelines to deliver supplies to the regions most in need. This would ensure plenty of gas at reasonable rates to meet energy needs.Executives across the industry sounded alarms about the need for more infrastructure and a more efficient approval process throughout CERAWeek. They said demand across the Lower 48 is steady and global calls for U.S. LNG are rising as populations grow throughout Asia and as Europe works tooffset lost Russian gas because of the Kremlin’s war in Ukraine.However, executives said, new pipeline projects are mired in regulatory red tape and legal challenges. Several called on Congress to pass permitting reform legislation that would set firm time limits on infrastructure project reviews. They also want lawmakers to require legal challenges to demonstrate they have evidence of potential problems in order to proceed in the courts. “No question it needs to get done,” EQT Corp. CEO Toby Rice said. “Clearly, more natural gas is key.”
US natgas futures jump 7% on rising flows to LNG export plants (Reuters) - U.S. natural gas futures jumped about 7% on Monday on forecasts for demand to rise next week with the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants on track to hit a record high for the month. Prices jumped despite a 5% drop in crude futures earlier in the day and forecasts for less cold weather over the next two weeks than previously expected. Front-month gas futures for April delivery rose 17.6 cents, or 7.2%, to settle at $2.606 per million British thermal units (mmBtu). On Friday, the contract closed at its lowest since Feb. 23. Oil prices fell on Monday along with equities as the collapse of Silicon Valley Bank raised fears of a fresh financial crisis. The gas market has been extremely volatile in recent weeks as traders bet on the latest weather forecasts. The front-month fell to a 28-month low below $2 per mmBtu in intraday trade on Feb. 22 on forecasts for warmer weather before jumping 9% to settle at a five-week high above $3 just over a week later on March 3 on forecasts for colder weather. It plunged 15% on March 6 on an outlook for warmer temperatures. Freeport LNG's export plant in Texas was on track to pull in 1.0 billion cubic feet per day (bcfd) of gas on Monday, up from 0.7 bcfd on Sunday, according to data provider Refinitiv. The plant exited an eight-month outage in February caused by a fire in June 2022. When operating at full power, Freeport LNG, the second-biggest U.S. LNG export plant, can turn about 2.1 bcfd of gas into LNG for export. Federal regulators approved the restart of two of Freeport LNG's three liquefaction trains (Trains 2 and 3) in February and the third train (Train 1) on March 8. Liquefaction trains turn gas into LNG. Total gas flows to all seven of the big U.S. LNG export plants rose to an average of 13.1 bcfd so far in March from 12.8 bcfd in February. That would top the monthly record of 12.9 bcfd in March 2022, before the Freeport LNG facility shut.
US natgas drops over 5% on banking rout-led risk sell-off (Reuters) - U.S. natural gas futures dropped more than 5% on Wednesday, pressured by a broader sell-off across financial markets as concern over Credit Suisse reignited banking worries and stifled appetite for risky assets, while expectations for lower heating demand also weighed on prices. Front-month gas futures for April delivery slipped 13.4 cents, or 5.2%, to settle at $2.439 per million British thermal units (mmBtu). "Concerns about the banking sector and Credit Suisse has led to a lot of liquidation in a lot of markets and the natural gas market is getting caught up in that selling that's pressuring things around the globe," "Obviously, weather and concerns about what the injection number are all going to be playing into this but I think predominantly the reason we're down as much as we are is because of the risk-off situation," he added, referring to Energy Information Administration (EIA) data due out on Thursday. In broader financial markets, equities, oil and bonds tumbled while the dollar rallied as Credit Suisse shares plunged to record lows following the collapse of Silicon Valley Bank last week, deepening the banking sector crisis. Further weighing on natgas prices were forecasts for milder weather. Data provider Refinitiv estimated 300 heating degree days (HDDs) over the next two weeks, down from 318 HDDs estimated on Tuesday. HDDs estimate demand to heat homes and businesses by measuring the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius). Refinitiv forecast U.S. gas demand, including exports, would slide from 120.8 bcfd this week to 120.0 bcfd next week. Milder winter weather so far this year has also prompted utilities to leave more gas in storage than usual. Meanwhile, gas flows to LNG export plants have been on track to hit record highs since Freeport LNG's export plant in Texas exited an eight-month outage in February. When operating at full power, Freeport LNG, the second-biggest U.S. LNG export plant, can turn about 2.1 bcfd of gas into LNG for export.
US natgas firms, but lower heating demand checks gains (Reuters) - U.S. natural gas futures firmed on Thursday, tracking gains in broader financial markets, but gains were limited as data showed utilities drew less fuel from storage for heating after forecasts for less cold weather. Front-month gas futures for April delivery rose 7.5 cents, or 3.1%, to settle at $2.514 per million British thermal units (mmBtu). The U.S. Energy Information Administration (EIA) said utilities pulled 58 billion cubic feet (bcf) of gas from storage during the week ended March 10. That was lower than 62-bcf withdrawal analysts forecast in a Reuters poll and compares with a decrease of 86 bcf in the same week last year and a five-year (2018-2022) average decline of 77 bcf. That decrease cut stockpiles to 1.972 trillion cubic feet (tcf), or 36% above the five-year average. "I don't see demand rising. If anything, we're probably moving towards the spring season here. There's a little bit of cold in the forecast, but this kind of feels like the last leg of any kind of winter demand," said Robert DiDona of Energy Ventures Analysis. Data provider Refinitiv estimated 281 heating degree days (HDDs) over the next two weeks, down from 300 HDDs estimated on Wednesday. Refinitiv forecast U.S. gas demand, including exports, would slide from 120.5 bcfd this week to 117.8 bcfd next week. "The only major thing that we're watching out for now is any negative or potentially positive response from the financial situation with banks," DiDona said. Natgas futures settled over 5% lower on Wednesday, weighed down by a broader risk-off sentiment as the Credit Suisse crisis deepened the banking sector turmoil. Prices stabilized on Thursday as Swiss regulators offered assistance to Credit Suisse, providing some respite to financial markets.
Natural gas down 7% as intimidating storage brings market back below mid-$2 - In the dying days of winter, forecasts are still coming in for some cold here and there. But against the intimidating storage level for the fuel, the market is barely giving gas bears the chill. The front-month April gas contract on the New York Mercantile Exchange’s Henry Hub settled at $2.338 per mmBtu, or metric million British thermal units — down 17.6 cents, or 7%. A mostly warm 2022/23 winter has led to considerably less heating demand in the United States versus the norm, leaving more gas in storage than initially thought. 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 before trading mostly at mid-$2 levels over the past month. Gas in storage stood at a total 1.972 tcf, or trillion cubic feet, as of March 10 — up 36% from the year-ago level of 1.451 tcf and 24% higher than the five-year average of 1.594 tcf, the EIA, or Energy Information Administration, reported. That balance was after another unimpressive weekly drawdown of just 58 bcf, or billion cubic feet, from storage versus forecasts for a 62 bcf deficit and the previous week’s drop of 84 bcf. Analysts doubted that weekly draws of gas in the near term will make a measurable dent in storage to push prices up. “With around 3 weeks left in the withdrawal season and current inventories of 1.97 tcf, the remaining withdrawals will have to average around 60 bcf, much higher than expectations,” analysts at Houston-based energy markets consultancy Gelber&Associates said in a note. Weather forecasts as of Friday morning were calling for heavy snow across portions of the central plains and upper US Midwest, Gelber said, adding that a winter storm was likely to linger through Friday and Saturday but not expected to cause disruptions to natural gas production. “Currently, it seems that the market may have a hard time getting down to 1.8 Tcf carry out, even with some cold,” the Gelber note added.
U.S. Drilling Makes Gains As Gas Rig Count Jumps -- The total number of total active drilling rigs in the United States rose by 8 this week, with gas-directed rigs making all the gains, according to new data from Baker Hughes published on Friday.The total rig count rose to 754 this week—91 rigs higher than the rig count this time in 2022 and 321 rigs lower than the rig count at the beginning of 2019, prior to the pandemic.Oil rigs in the United States decreased by 1 this week, to 589 on top of the 2 rigs lost in the week prior. Gas rigs was a different story, gaining 9 in the week to 162. Miscellaneous rigs stayed the same.The rig count in the Permian Basin rose by 7, more than offsetting last week’s 6-rig decline. Rigs in the Eagle Ford decreased by 2.Primary Vision’s Frac Spread Count, an estimate of the number of crews completing unfinished wells—a more frugal use of finances than drilling new wells—stayed the same for the week ending March 10. The frac spread count held steady at 276. This is 4 more than a month ago, and 4 more than a year ago.Crude oil production in the United States stayed at 12.2 million bpd for the week ending March 10, according to the latest weekly EIA estimates. U.S. production levels are up 600,000 bpd versus a year ago.At 12:49 p.m. ET, the WTI benchmark was trading down $1.76 (-2.57%) on the day at $66.59 down nearly $10 per barrel from this time last week, as the rosy Chinese oil demand outlook gave way to market panic over a possible bank collapse contagion. The Brent benchmark was trading down $1.91 (-2.56%) at $72.79 per barrel on the day, also down nearly $10 per barrel from this time last Friday.WTI was trading at $66.72 minutes after the data release, down 2.38% on the day.
DOE Invests $47 Million to Reduce Methane Emissions From Oil and Gas Sector | Department of Energy— The U.S. Department of Energy (DOE) today announced nearly $47 million in funding for 22 research projects to advance the development of new and innovative measurement, monitoring, and mitigation technologies to help detect, quantify, and reduce methane emissions across oil and natural gas producing regions of the United States. Methane emissions are the second largest contributor to climate change—only carbon dioxide ranks ahead of methane as a greenhouse gas source. The selected projects will help to ensure an efficient, resilient, and leak-tight U.S. natural gas infrastructure and support President Biden’sU.S. Methane Emissions Reduction Action Plan and the Biden-Harris Administration climate goal of a net-zero emissions economy by 2050. “Methane is a much more potent greenhouse gas than carbon dioxide, making methane reduction a critical part of our nation’s long-term climate solution,” said U.S. Secretary of Energy Jennifer M. Granholm. “The projects announced today will help DOE accelerate the deployment of technology that detects and reduces methane emissions across the oil and gas sector—our largest source of industrial methane—leading to long-lasting health and environmental benefits for communities across the country.” DOE’s methane mitigation program addresses critical environmental issues associated with the production, transmission, and storage of domestic oil and natural gas. Projects will focus on technical challenges of quantifying and mitigating methane emissions along the U.S. oil and natural gas supply chain, including the development and demonstration of an efficient integrated methane monitoring platform to enable early detection of methane emissions.
The Government Is This Close to Reining in Some of the Worst Air Pollution - The New York Times op-ed— For one 73-year-old patient in our hospital system, the simple act of breathing has become so difficult that a short walk during a medical appointment caused his blood oxygen levels to dangerously plummet. A retired Marine, he has chronic obstructive pulmonary disease and uses supplemental oxygen but can no longer walk to his pickup truck without a struggle.I can’t say with complete certainty why this patient’s breathing has deteriorated so much in recent years, especially since he stopped smoking about 15 years ago.But I have seen too many patients getting sicker and sicker in the same ways. I see them in areas where the oil and gas industry exposes people to constant air pollution, from the San Juan Basin in the north to the Permian Basin in the south.The science is clear that when oil and gas are extracted and transported from wells, methane and other pollutants, including volatile organic compounds, leak out. V.O.C.s are known to form ozone and may cause cancer and birth defects, and affect the nervous system. Emissions from oil and gas production alsoproduce nitrogen oxides, which can exacerbate lung disease.Methane is also a powerful greenhouse gas, over 80 times more potent than carbon dioxide in its warming power, though its life span in the atmosphere is much shorter. One of the fastest and cheapest ways to reduce these emissions and improve health is to prevent methane leaks, venting and flares, which would also go a long way in reducing ozone pollution. But many oil well operators just vent it into the air, or burn it off as a flare, which adds to the air pollution burden in communities near the wells.This year, the federal government has a huge opportunity to reduce methane emissions, improve health and slow climate change. The first and most important way is through a rule proposed by the Environmental Protection Agency to cut pollution, including methane, from new and existing oil and gas operations nationwide. The prospective rule strengthens a 2021 E.P.A. proposal and would benefit communities like the one where the retired Marine lives. While New Mexico has already moved toward stricter methane regulations, the supplemental E.P.A. rule now under review would reinforce them and help reduce emissions that blow downwind from other states like Texas.While the E.P.A.’s proposal is strong, the agency should make it even more forceful by banning flaring in all but a few limited cases. Just last month, more than 75 lawmakers submitted commentsagreeing that the E.P.A. must enforce stricter limits.The rule is not yet final, and some powerful voices, including the Railroad Commission of Texas, are calling on the E.P.A. to water down its key provisions. The oil and gas industry is also speaking up; it spent $124.4 million in 2022 on federal lobbying, including pressuring federal agencies on methane rules. The E.P.A. must not yield, and instead should strengthen the proposal so that communities can start seeing the benefits right away.
Texas Natural Gas, Oil Employment Continues Rally as ‘Strong Demand for Talent’ Still Seen - Upstream oil and natural gas employment in Texas rose by 13.7% year/year in January to a total of 198,100 jobs, according to the Texas Independent Producers and Royalty Owners Association (TIPRO). The figure was up by 1,700 jobs versus December 2022, the group said, citing data from the U.S. Bureau of Labor Statistics (BLS).The Houston metropolitan area saw a year/year increase of 6,200 jobs to a total of 66,400 direct positions, TIPRO researchers said. The increase included 400 jobs in oil and natural gas extraction, and 5,800 jobs in the services sector.Demand for workers remains strong, the group said. It cited 12,478 active unique job postings in the Texas oil and gas industry in January. These included 5,313 new job postings added during the month by companies.“There continues to be a strong demand for talent in the Texas oil and natural gas industry in line with growing exploration and production activity in the state and rising demand for our product,” said TIPRO’s Ed Longanecker, president. “Our industry is one of the only remaining sectors in the country that provides a pathway for the middle-class to support their families, something we must preserve.“Policy decisions being made at the state and federal level should not hinder an industry that is critical to our state, country and allies abroad from an economic and energy security perspective.”The top three cities for total unique oil and natural gas job postings were Houston (4,149), Midland (905) and Odessa (472), the trade group said.The most sought-after industry jobs in January included heavy tractor-trailer truck drivers with 373 postings, maintenance and repair workers (361) and managers (310), TIPRO said. The group also highlighted that the oil and gas industry generated nearly $800 million in tax revenue for Texas in February. Oil producers paid $492 million in production taxes, while natural gas producers paid $305 million, TIPRO said, citing data from the state comptroller’s office. The Texas Oil & Gas Association (TXOGA), for its part, highlighted that since the pandemic-induced low point of September 2020, months of increase in Texas upstream oil and gas employment have outnumbered months of decline by 25 to three.“Industry has added 41,100 Texas upstream jobs, averaging growth of 1,468 jobs a month,” TXOGA researchers said. “These jobs pay among the highest wages in Texas, with employers in oil and natural gas paying an average salary of approximately $115,000 in 2022.”
As Enforcement Falls Short, Many Worry That Companies Are Flouting New Mexico’s Landmark Gas Flaring Rules - Kayley Shoup drove southeast out of Carlsbad through an area that was once ranchland. Today it’s a patchwork of compressor stations, tank batteries and drilling pads, testimony to the Permian Basin’s booming oil and gas industry. Cold wind whipped through creosote bushes lining the road. Transmission lines and flare stacks dotted the horizon. In the distance, Shoup spotted the flames of a flare from gas being burned off an oil well. And then another. And another. One flare sent off dark smoke, a sign that it wasn’t burning efficiently. Flares are designed to eliminate methane from natural gas. But unlit flares and inefficient combustion mean that flaring still emits large amounts of methane, a potent greenhouse gas, into the atmosphere. The Environmental Defense Fund’s Permian MAP project found that the Permian Basin in West Texas and southeastern New Mexico was the highest methane-emitting oil and gas basin in the nation. Shoup is an organizer with Citizens Caring for the Future, the only grassroots environmental organization in New Mexico’s stretch of the Permian Basin. She first started worrying about the environmental and health impacts of the region’s oil and gas boom in 2018, when Carlsbad’s streets were clogged with trucks and the population swelled. Since then, a climate-conscious governor, Michelle Lujan Grisham, has taken office and the state has adopted landmark regulations to limit flaring and venting. But Shoup is skeptical that the industry is changing its habits. In May 2021, New Mexico’s Energy, Minerals and Natural Resources Department, or EMNRD, adopted new rules that prohibit routine flaring and venting and require operators to achieve a 98 percent gas capture rate by 2026. February 28 was the deadline for operators to certify that they were on track to comply. But environmental advocates and lawyers say that in the absence of rigorous state field enforcement, oil and gas companies are continuing wasteful methane flaring and venting. Recent flyovers by the federal Environmental Protection Agency, independent monitoring by environmental advocates and NASA satellite imagery have documented significant methane releases. To date, only two companies have been fined for unauthorized flaring since the rules went into effect. While operators still have time to achieve full compliance with the new rule, industry watchdogs warn that counting on operators to self-report flaring and venting is a failing strategy. Meanwhile, regulators say they are hamstrung by budget limitations. “What we’re seeing, unfortunately, is there’s a lot of talk about protecting clean air and the climate in New Mexico, but not much follow-through.” said Jeremy Nichols, climate and energy program director at the Santa Fe-based nonprofit WildEarth Guardians. “It’s not enough to say there are good rules on the books.”
Regulators cut pressure on pipeline after Kansas oil spill (AP) – U.S. government regulators have stopped allowing a large part of the Keystone oil pipeline to operate at higher-than-normal pressures following a massive oil spill in northeastern Kansas in December. The order from the U.S. Department of Transportation’s pipeline safety arm covers 1,220 miles of the Keystone pipeline in seven U.S. states. The Keystone system plays a key role in delivering Canadian and U.S. crude oil supplies to markets around North America. It stretches 2,687 miles from Alberta to refineries in Illinois, Oklahoma and the U.S. Gulf Coast. Regulators already had ordered the system’s operator, Canada-based TC Energy, to reduce the pressure on a 96-mile segment of the pipeline from southern Nebraska near the Kansas border into central Kansas, where the spill occurred. The regulators’ action came ahead of the first hearings in the Kansas Legislature on the spill. A TC Energy official is set to face questions from lawmakers Tuesday during a joint meeting of two House committees. TC Energy said in a statement Friday that it already was operating within the pressure limits set by last week’s order and that it would continue to comply. “Our commitment to the safe operations of our system is unwavering,” the company said. But Zack Pistora, a lobbyist in Kansas for the Sierra Club, said Friday that perhaps regulators should reconsider the Keystone pipeline’s operation “in its entirety.” The system has had more than 20 spills since it began operations in 2010, and the one in Kansas was the system’s largest and the largest U.S. onshore spill in nine years, according to the regulators. “There’s no confidence that this pipeline won’t be breaking again in the near future, even with less pressure,” Pistora said. The latest order from regulators directed TC Energy to lower the maximum pressure by 10% on the pipeline from North Dakota’s border with Canada to northern Oklahoma, as well as the system’s spur from southern Nebraska through Missouri into central Illinois. That would bring the maximum pressure into line with what’s normally allowed after TC Energy had received a special permit to exceed it six years ago. A pipeline rupture Dec. 7 dumped nearly 13,000 barrels into a creek through rural pasture land in Washington County, Kansas, about 150 miles northwest of Kansas City. No one was evacuated following the spill, and officials said it did not affect the two larger rivers and reservoir downstream from the affected creek. With regulators’ permission, the company reopened the affected segment a little more than three weeks after the spill. However, in a separate Jan. 6 cleanup order, the U.S. Environmental Protection Agency said the amount of oil spilled was “a harmful quantity” violating the nation’s clean water laws. The Associated Press obtained a copy of the EPA order through a Freedom of Information Act request. TC Energy must notify the state and the EPA’s on-site coordinator before shipping out any hazardous materials. Also, the company will pay the U.S. government’s costs from the cleanup and faces a fine of nearly $52,000 a day if it violates the EPA order.
Kansas lawmakers briefed on Keystone pipeline oil spill in Washington County (AP) — State lawmakers worried Tuesday that southern Kansas is vulnerable to oil spills from the Keystone pipeline system because earthquakes have become more frequent there, as they questioned an executive for the pipeline’s operator about a massive spill in northeastern Kansas in December.Gary Salsman, a vice president for field operations for Canada-based TC Energy, was briefing three Kansas legislative committees about the Dec. 7 rupture on the Keystone pipeline in Washington County, Kansas, about 150 miles northwest of Kansas City. It was the largest U.S. onshore spill in nearly nine years, and the company expects to spend $480 million cleaning it up, with those efforts lasting at least into the summer.Salsman told a joint meeting of the Kansas House energy committee and its water committee that safety is TC Energy’s top priority and that the company will stay in Washington County until the cleanup is complete. He later gave a similar briefing to the Senate Utilities Committee.But several lawmakers said they are nervous about the pipeline in the Wichita area, about 160 miles (260 kilometers) south of the Washington County spill site. The area began experiencing an increase in earthquakes in 2013, after Keystone opened its Kansas pipeline segment, tied to activities associated with hydraulic fracturing, or fracking, in oil and natural gas production. “My concern is not this spill so much as what’s lurking, moving forward, especially as you get down south,” said Republican state Rep. Leo Delperdang, of Wichita, the House energy committee chair. “We get earthquakes. What happens with the ground movement?”During the House committees’ hearing, Rep. Jerry Stogsdill, a Kansas City-area Democrat, asked whether the Keystone pipeline needed “exceptional engineering” in southern Kansas.The company said later in an email to The Associated Press that seismic activity is considered in pipelines’ design and routes, and U.S. government regulators require it to be factored into maintenance plans.“Our pipeline corridors are patrolled several times per year,” the company said, adding that seismic activity is assessed so the company can respond.TC Energy reported last month that a faulty weld at a bend in the pipeline under the Washington County creek caused a crack that then grew over time because of the stress on the bend. The rupture dumped nearly 13,000 barrels of crude oil, each enough to fill a standard household bathtub, into the creek and on the surrounding pastureland.Salsman told legislators that 95% of the crude has now been recovered. The company said later that it is transported elsewhere “for treatment and disposal.”
Lawmakers worried that oil spills will become more common in southern Kansas due to earthquakes (AP) — State lawmakers worried Tuesday that southern Kansas is vulnerable to oil spills from the Keystone pipeline system because earthquakes have become more frequent there, as they questioned an executive for the pipeline’s operator about a massive spill in northeastern Kansas in December. Gary Salsman, a vice president for field operations for Canada-based TC Energy, was briefing three Kansas legislative committees about the Dec. 7 rupture on the Keystone pipeline in Washington County, Kansas, about 150 miles (240 kilometers) northwest of Kansas City. It was the largest U.S. onshore spill in nearly nine years, and the company expects to spend $480 million cleaning it up, with those efforts lasting at least into the summer. Salsman told a joint meeting of the Kansas House energy committee and its water committee that safety is TC Energy’s top priority and that the company will stay in Washington County until the cleanup is complete. He was also expected to testify before the Senate Utilities Committee. But several lawmakers said they are nervous about the pipeline in the Wichita area, about 160 miles (260 kilometers) south of the Washington County spill site. The area began experiencing an increase in earthquakes in 2013, after Keystone opened its Kansas pipeline segment, tied to activities associated with hydraulic fracturing, or fracking, in oil and natural gas production. “My concern is not this spill so much as what’s lurking, moving forward, especially as you get down south,” said Republican state Rep. Leo Delperdang, of Wichita, the House energy committee chair. “We get earthquakes. What happens with the ground movement?” During the House committees’ hearing, Rep. Jerry Stogsdill, a Kansas City-area Democrat, asked Salsman whether the Keystone pipeline needed “exceptional engineering” in southern Kansas. Salsman acknowledged that he’s not an expert on the topic, but added: “When we design pipeline, we take all of those factors into consideration and I would think that, that was part of our design criteria.” TC Energy reported last month that a faulty weld at a bend in the pipeline under the Washington County creek caused a crack that then grew over time because of the stress on the bend. The rupture dumped nearly 13,000 barrels of crude oil, each enough to fill a standard household bathtub, into the creek and on the surrounding pastureland.
Colorado takes aim at oil and fracking water use in new bill - Denver Business Journal -Newly proposed legislation in Colorado would require oil and gas companies to start using mostly recycled water for fracking and drilling wells and nearly phase out using fresh water by the end of the decade — a proposal that has the industry nervous.A bill chiefly sponsored by Democrats Rep. Andrew Boeseneker, a Fort Collins; and Rep. Junie Joseph, of Boulder; and Lisa Cutter, of Littleton, would require 75% of drilling and fracking use recycled water by 2027 and increases that to 90% by 2030.The bill contrasts the millions of gallons currently used to drill and hydraulically fracture, or “frack,” each well in Colorado with the growing scarcity of fresh water in the region.“We are in the middle of a megadrought, and we need to do whatever we can to protect our communities and water resources,” Boeseneker said, in a statement. “This bill will provide much-needed transparency and water recycling requirements for oil and gas operations in Colorado.” Joseph said she wants the legislation to preserve more of the state’s increasingly precious water resources for human consumption.The question of oil's water use comes after years of unprecedented drought in the Western U.S. has forced a reconsideration of how water is allocated on the Colorado River and prompted demand for water conservation by communities across the region.Oil and gas operators use an average of 17.8 million gallons of water when they drill and frack each well in Colorado, according to data submitted by companies to the Colorado Oil & Gas Conservation Commission.Much of that water, and often some groundwater, flow back out of wells over time, mixed with the oil and natural gas liquids. That water is contaminated with chemicals, salts and often radioactive elements.Companies separate the water, treat it to remove many contaminants, and usually take it to specialized injection wells designed for water disposal, where the water is pumped back underground.The bill proposes to require that water from oil and gas wells, known as “produced water,” be treated and then reused in drilling and fracking. If the bill becomes law, that water, along with the occasional municipally recycled sources of water, would replace most of the use of fresh water in oil and gas.Doing so would require setting up water treatment near wells — powered only by renewable energy, according to bill requirements — and water storage be established for millions of gallons used in drilling and fracking phases.Colorado oil and gas industry groups worry the requirements make current levels of oil and gas development in the Denver-Julesburg Basin unrealistic, all in pursuit of cutting water use by an industry that’s a relatively insignificant user compared to agriculture and other industries.“As currently drafted, House Bill 1242 is a prescriptive and unworkable solution in search of a problem,” said Lynn Granger, the Denver-based director of the American Petroleum Institute’s chapter in the Midwest and Mountain region.She noted that past studies have shown the oil industry uses under 1% of the water demand along the South Platte River, and even less statewide, and she raised concerns about the physical demands of the bill’s water reuse requirements.“This bill supposes a scale of recycled or reused water that far exceeds any real or imagined storage capacity in the Denver-Julesburg Basin and imposes a regulatory burden far exceeding the current capacities of the Colorado Oil and Gas Conservation Commission,” she said.
U.S. Crude Production Steady But Off 2023 Peak; Russia Pulls Back - American exploration and production firms’ (E&P) continued to drive oil output at strong levels over the last two weeks, though activity slipped from the highs of the year. E&Ps generated 12.2 million b/d for the week ended March 10, even with the prior week, according to the U.S. Energy Information Administration’s (EIA)Weekly Petroleum Status Report on Wednesday. The last two EIA prints, however, fell 100,000 b/d shy of the February average. The production level last month also matched the high point of both 2023 and the pandemic era that began in March 2020.The latest EIA result topped the year-earlier level of 11.6 million b/d and kept crude stocks at a strong surplus relative to historic averages. Inventories for the March 10 period, excluding those in the Strategic Petroleum Reserve, totaled 480.1 million bbl – 7% above the five-year average.U.S. E&Ps have maintained solid levels as OPEC and Russia – the world’s other top producers – scale back.The Saudi Arabia-led OPEC-plus launched an effort in late 2022 to cut production by up to 2.0 million b/d from the highs of last year. It has since confirmed intentions to stick with lighter output levels.Russia in February threatened to trim its 10 million b/d oil production by 5% to retaliate against European Union sanctions imposed to protest the Kremlin’s war. Russian Energy Minister Nikolai Shulginov on Wednesday told lawmakers in Moscow that he intended to follow through on the threat.“For 2023, we expect oil production levels to be slightly lower…because of the voluntary reduction in output,” Shulginov said, according to Russian news agency Interfax.The International Energy Agency (IEA) forecast in its February Oil Market Report global oil demand would rise about 2 million b/d this year to nearly 102 million b/d. That would set a record. Researchers said the Chinese government’s decision early this year to substantially ease pandemic-related economic restrictions would drive increased activity and oil consumption.Still, IEA estimates show supply and demand roughly balanced through this year, thanks to U.S. production. But researchers emphasized that the supply side is vulnerable to geopolitical challenges, particularly Russia’s war in Ukraine.Total U.S. petroleum demand for the March 10 period ticked up slightly from the prior week – by less than 1%. Total products supplied over the last four-week period, however, averaged 19.7 million b/d, down by 6% from a year earlier.
Explaining the EIA's Huge Unaccounted Crude Oil Imbalances - The numbers don’t add up. Literally. The most closely watched energy statistics in the world have a problem, and it’s been getting worse over the past two years. We’re talking about EIA’s U.S. crude oil supply, demand and inventory balances, which are published each week and then trued up about 60 days later in monthly data. The problem is that the balances don’t balance. EIA uses a plug number alternatively called “adjustment” or “unaccounted for” to force supply and demand to equate. That would not be an issue if the plug number was small and flipped frequently from positive to negative, likely due to timing inconsistencies with the input data. But that’s not the case. The number is mostly positive, meaning more demand than supply. And the difference can be mammoth: last week it was 2.3 MMb/d, or 18.4% of U.S. crude production. It seems like barrels are somehow materializing out of nowhere. But now we know where, because EIA just finished a 90-day study of the crude imbalance that reveals the sources of the problem and what it is going to take to fix it. In today’s RBN blog, we will delve into what has been causing the problem, what it means for interpreting EIA statistics, and what EIA is doing to address the issues. Before we get to the problem, let’s go through a quick primer on this piece of EIA’s responsibility: U.S. crude oil supply/demand statistics. When they hit the street, these numbers move markets, not just here in the U.S. but around the world. The weekly inventory numbers take center stage, but changes in stocks are meaningless unless you know why the inventory level changed. Is production up? Exports down? Imports increasing? Refinery runs decreasing? It’s the “why” that market analysts need to assess to make sense out of market developments, and of course, what those developments are likely to mean for the price of crude oil — literally the most important commodity price in the world. In theory, it’s a pretty simple equation. Production + Imports +/- Stock Change = Demand + Exports In other words, if you take into consideration the change in inventory, then by definition, supply equals demand. All crude that comes into the market must go somewhere. It can’t disappear. Nor can it appear from nothingness. The equation must balance. But what if it doesn’t? Well, it means something is wrong with the data. Because the equation must balance in “real life.” It is only in the accounting for what happens in real life that we have a problem. To see what the problem looks like, let’s consider Figure 1, which shows weekly EIA stats for the week ended February 24 and was published by EIA on March 1 in its comprehensive Weekly Petroleum Status Report (WPSR). Production and imports total 18.5 MMb/d. Adjusting for 0.2 MMb/d that went into inventory (the weekly stock change divided by 7 to make it a daily number), total supply available to meet demand was 18.3 MMb/d. On the demand side, refiners took 15 MMb/d and 5.6 MMb/d went to exports, for a total demand of 20.6 MMb/d. So where did the difference between 20.6 and 18.3 come from. Answer? We don’t know. All we do know is that 2.3 MMb/d came from somewhere. Or more accurately, either demand is overstated, supply is understated, or some combination of the above. Note that this discrepancy does not mean that we can’t get a lot from the stats. Inventories come from operators of tankage, so they are good numbers. Refiner inputs come directly from the refineries. Imports are from EIA data forms (EIA-814 survey for monthly numbers, EIA-804 for weeklies), but exports come from customs filings with Customs and Border Protection, with the monthly CBP scrubbed by (believe it or not) the Census Bureau. But when you add it all up, something does not balance. So EIA just plugs in the number in a column called “Weekly U.S. Unaccounted for Crude Oil” in the WPSR.
Did The EIA Finally Get Realistic About U.S. Shale Output? - Readers will recall that, for the last several months, I have noted that US oil production per the EIA's weekly Petroleum Status Report was inconsistent with the data from the EIA's monthly Drilling Productivity Report (DPR) The graph below shows the state of play as of last week. The two red arrows at right show the contradictory trends, with total oil production essentially flat while shale oil production is shown rising at a healthy clip. I have noted that this contradiction would have to be resolved by either increasing the weekly numbers or reducing shale oil output. We now have the answer.The graph below shows the state of play as of March 14th, when the EIA issued the March DPR. It shows simply massive downward reductions in US shale oil output. In the March report, shale oil output from the key plays is reduced by 443,000 bpd for January and 250,000 bpd for February. If we go back one more month to the January DPR, shale oil production has been reduced by 542,000 bpd for December 2022. This is a huge revision, more than 4% of total US crude and condensate production over a two month period. With this revision, as the current graph (below) shows, US shale oil production is largely flat over the last four months, and trends in shale oil supply are consistent with the overall US crude oil supply (including conventional onshore wells, Gulf of Mexico offshore, and Alaska). I need hardly point out that this is not good news, as the visible peak of horizontal oil rigs is now beginning to pair up with plateauing oil production, just as we would expect.The most plausible interpretation is that US crude and condensate production will stagnate for the balance of the year. As I wrote in The Oil Supply Outlook(Feb. 2), the plateau has been expected since at least 2017 (see Fig. 6), so it should come as no surprise. I think the surprise, however, will be in production trends going forward. The EIA sees a long plateau in US oil production. I think it is more likely that we'll see the beginning of an erosion in supply from 2024.In light of this, President Biden's approval of drilling in Alaska is not hard to understand, but don't expect it to have a material impact on supply anytime soon.
Bakken Shale Natural Gas Prices ‘In the Tank’ as Production Rebounds From Winter Storm Shut-ins - Bakken Shale natural gas prices remain at pandemic-era lows amid an overall softening of the North American market, according to North Dakota’s Department of Mineral Resources (DMR). - The price of natural gas delivered to TC Energy Corp. and Oneok Inc.’s Northern Border pipeline system at Watford City, ND, stood at $2.08/Mcf as of Wednesday (March 15). “Natural gas prices are really in the tank,” DMR’s Lynn Helms, Oil and Gas Division director, said during a press briefing.He cited that U.S. natural gas storage inventories currently sit comfortably above the five-year average for this time of year, a bearish indicator. Due to regulatory and investor pressure to stamp out routine gas flaring, low prices put “a lot of stress on the system,” Helms said. “It’s very difficult to make progress on gas capture.”North Dakota producers nonetheless managed to capture and market 95% of gas production during January, meaning just 5% was flared, vented or leaked. “We’re working on some proposals within the legislature to try to incentivize increased gas capture,” Helms said. Low prices notwithstanding, production showed a strong recovery in January versus December, due to milder weather.North Dakota’s natural gas production averaged 2.8 Bcf/d in January, up 7.23% from December, according to DMR.Helms said DMR expects “another major increase” in February production, although March could be “a bit of a struggle” due to weather impacts this month.Helms was joined by the North Dakota Pipeline Authority’s Justin Kringstad, director. He cited recent comments from Oneok management that the firm saw increased volumes on Northern Border during the fourth quarter. Oneok COO Kevin Burdick said there is still potential for Bakken volumes to displace about 300-400 MMcf/d of Canadian volumes on the system. Burdick also said that projects are advancing to expand gas egress capacity from the Bakken into the Cheyenne natural gas hub, which straddles the Powder River and Denver-Julesburg basins. North Dakota’s oil production, meanwhile, rose 11% month/month in January to 1.06 million b/d.The number of wells permitted in February totaled 70, down from 79 in January and 94 in December, DMR data show. The state’s drilling rig count was holding steady at 45 as of Wednesday (March 15), following monthly averages of 44, 46 and 46 in December, January and February, respectively. North Dakota’s drilled but uncompleted well count stood at 469 as of January, up from 450 in December. Well completions totaled 96 in February, according to preliminary estimates. This compares to 67 in January and 104 in December. There were 18 active completion crews as of Wednesday, Helms said.
Biden blocks some Arctic oil drilling as Willow decision looms The Biden administration on Sunday announced actions aimed at limiting oil and gas drilling in Alaska as it is also expected to soon approve a controversial 30-year oil project. The Biden administration is blocking 2.8 million acres in the Arctic Ocean from oil and gas drilling and will also propose additional protections for 13 million acres of federally owned land in Alaska that have significant natural and historic value, according to an Interior Department Press release. There has not been a federal lease sale in the Arctic Ocean since 2007, according to the department. Leasing is an early step in extracting oil and gas from federal lands and waters. The protections from oil that Biden will announce on Monday come as the administration has also indicated that it is likely to approve a controversial oil development project. That project, known as the Willow Project, would allow ConocoPhillips to extract as many as 629 million barrels of oil from an area known as the National Petroleum Reserve — Alaska over a 30-year period. The Willow Project is highly controversial among environmentalists, who point to the oil’s anticipated contribution to climate change, as it is estimated to contribute 278,000 metric tons of carbon dioxide to the atmosphere over the project’s 30-year lifespan. Although the administration proposed approving the project last month, White House press secretary Karine Jean-Pierre said Friday that a final decision had not been made amid reports that the administration was moving ahead with the project. An administration official said Sunday that the administration will issue its decision on Willow “soon” and said that it has had limited options since ConocoPhillips has held some of its drilling leases for decades. The Sierra Club in a new statement on Sunday praised the reported protections, but also said the administration should not approve the Willow Project. “However, the benefits of these protections can be undone just as quickly by approval of oil and gas projects on public lands, and right now, no proposal poses a bigger threat to lands, wildlife, communities, and our climate than ConocoPhillips’ Willow project,” Supporters of the Willow Project have said that it will bring economic benefits to Alaska and contribute to the global oil supply.
Biden Interior approves controversial Alaska oil drilling project -The Biden administration approved a major and controversial oil drilling plan in Alaska, known as Willow, just one day after unveiling protections for more than 16 million acres of land and water in the region.The $8 billion plan, led by Alaska's largest crude oil producer, would produce about 600 million barrels of oil over 30 years and generate around 278 million metric tons of carbon emissions, according to estimates from the U.S. Department of the Interior.Under the plan, ConocoPhillips will be allowed to develop three well pads within the National Petroleum Reserve-Alaska, a 23 million-acre area that is the largest expanse of public land in the U.S.The approval of Willow is one of the president's most consequential climate decisions. Environmental groups have long condemned the plan, arguing it undermines the administration's pledge to combat climate change and reduce greenhouse gas emissions. The project's emissions would be about equivalent to what 66 new coal-fired power plants produce in a year. Proponents of Willow, including the state's congressional delegation and some Alaska Native tribal governments and residents of Alaska's North Slope, have said the plan would create about 2,500 jobs, deliver up to $17 billion in revenue for the federal government and boost U.S. domestic energy security.Prior to the president's decision, the Interior Department's Bureau of Land Management released an environmental analysis last month that proposed lowering the number of drilling sites from five to three under the project. The Interior said it had "substantial concerns" about Willow, including its direct and indirect emissions and its impact on local wildlife.In addition to lowering the number of drill sites, the Interior said Monday that ConocoPhillips would relinquish rights to about 68,000 acres of existing leases in the National Petroleum Reserve-Alaska to the government, a decision it said would create a buffer from exploration and development in the region outside the project.Ryan Lance, ConocoPhillips chairman and chief executive officer, in a statement, said the approval "was the right decision for Alaska and our nation.""Willow fits within the Biden administration's priorities on environmental and social justice, facilitating the energy transition and enhancing our energy security, all while creating good union jobs and providing benefits to Alaska Native communities," Lance said.In an apparent effort to offset criticism about the project's climate impact, the administration on Sunday declared the Arctic Ocean off limits to oil and gas leasing and said it will also impose regulations to protect nearly 13 million acres in the National Petroleum Reserve-Alaska.
Biden just betrayed the planet – and his own campaign vows | Rebecca Solnit --The Willow project is an act of terrorism against the climate, and theBiden administration has just approved it. This massive oil-drilling project in the wilderness of northern Alaska goes against science and the administration’s many assurances that it cares about climate and agrees that we must make a swift transition away from fossil fuel. Like the Canadian prime minister, Justin Trudeau, Joe Biden seems to think that if we do some good things for the climate we can also do some very bad things and somehow it will all even out.To make that magical thinking more obvious and to try to smooth over broad opposition, the US federal government also just coughed up some protections against drilling in the Arctic Ocean and elsewhere in the National Petroleum Reserve (and only approved three of the five drilling sites for ConocoPhillips’ invasion of this wilderness). Of course, this is like saying, “We’re going to kill your mother but we’re sending guards to protect your grandmother.” It doesn’t make your mom less dead. With climate you’re dealing with physics and math before you’re dealing with morality. All the carbon and methane emissions count, and they need to decrease rapidly in this decade. As Bill McKibben likes to say, you can’t bargain with physics.You can try to bargain with the public, but the motivation behind this decision is hard to figure out. The deal was inherited from the Trump administration, and rejecting it would have been a break with convention, but convention dooms us, and we need the break.Biden was elected in no small part by the participation of young voters who supported his strong climate platform. As a candidate he promised: “And by the way, no more drilling on federal lands, period. Period, period, period.” Six million letters and 2.3m comments opposed to the project were sent to the White House, many from young people galvanized by social media. The American public, Republican minority aside, is strongly engaged with the reality of climate crisis now and the urgency of doing something about it.I call it an act of terrorism, because this drilling project in Alaska produces petroleum, which will be burned, which will send carbon dioxide into the atmosphere, where it will contribute to climate chaos that will affect people in the South Pacific, the tropics, the circumpolar Arctic, will affect the melting of the Greenland ice shield (this month reaching a shocking 50F warmer than normal). It doesn’t just produce petroleum; it produces huge quantities of it, resulting in an estimated 278m metric tons of carbon emissions.This makes it, like the Permian Basin oil extraction in the US south-west and the tar sands in Alberta, a carbon bomb. Former vice-president Al Gore recentlyput it this way: “The proposed expansion of oil and gas drilling in Alaska is recklessly irresponsible … The pollution it would generate will not only put Alaska Native and other local communities at risk, it is incompatible with the ambition we need to achieve a net zero future.”
ConocoPhillips ramped up lobbying spending during fight over an $8 billion Alaskan oil project • ConocoPhillips spent $4.6 million on lobbying in the first three months of 2022 as it sought final approval for a delayed $8 billion oil project in Alaska’s federally-administered National Petroleum Reserve. The multimillion dollar lobbying blitz is the most the oil company has spent lobbying in a single quarter since 2011 and more than its total lobbying budget in most prior years. The so-called Willow project was greenlit in the final months of former President Donald Trump’s administration, but a federal judge halted development last August pending additional review. Climate advocates, who argue Willow undercuts President Joe Biden’s goal of reducing greenhouse gas emissions, want his administration to end it for good. Oil and gas companies are expanding efforts to shape federal legislation as the industry emerges from the pandemic. An OpenSecrets analysis of disclosures filed last month found that the industry spent more than $34.8 million on lobbying in the first quarter of 2022, an increase of 17% compared to the same period in 2021. Texas-based ConocoPhillips is driving much of that increase by lobbying on a range of issues, including Willow and federal leasing. The company’s first-quarter spending in 2022 increased threefold from less than $1.4 million during the same period in 2021, surpassing the company’s annual lobbying spending in nine of the last 10 years. ConocoPhillips was the industry’s top spender in the first three months of the year.
Biden closes Arctic to oil — after Willow -As the Biden administration signaled it could soon approve a massive oil project on public lands in Alaska, President Joe Biden on Sunday declared the entire Arctic Ocean off-limits to oil and gas leasing. As part of a “fire wall” against future drilling in the far north, the White House announced it is also preparing to overhaul management of the National Petroleum Reserve-Alaska (NPR-A), expanding protections in a large portion of the 24-million-acre swath of public lands in the Arctic. Biden’s sudden conservation announcements arrive as the Interior Department is poised to greenlight ConocoPhillips’ contentious Willow project in the NPR-A, bucking a concerted effort over recent weeks from environmental groups, climate activists and some Alaska Native leaders to block the project. Since Friday, several news organizations have reported that the White House is expected to approve the project in Alaska’s North Slope. In approving the $8 billion development in some form, the White House would be siding with oil advocates in the fierce political divide over whether climate change should dramatically reshape how the nation manages its vast oil and natural gas wealth. Biden has made international commitments to draw down methane and carbon pollution in the United States, support the build-out of clean energy like offshore wind, and supercharge the growth of electric vehicles in the country. But the president has proved more ambivalent about decreasing oil production on public lands, even as his administration has taken hits from Republican lawmakers for not doing enough to boost domestic oil and gas. An administration official implied Sunday night that the president faced limited choices when it came to Willow. The official emphasized discussions about the project have focused on the Biden administration’s “legal constraints to stop or substantially limit Willow, given ConocoPhillips has held some leases for decades.” This limited the administration’s options, the official said. But the potential trade-off was immediately greeted with skepticism from environmental groups that have lobbied tirelessly to get Biden to reject Willow. “The benefits of these protections can be undone just as quickly by approval of oil and gas projects on public lands, and right now, no proposal poses a bigger threat to lands, wildlife, communities, and our climate than ConocoPhillips’ Willow project,” said Athan Manuel, the Sierra Club’s Lands Protection Program director, in a statement. “Oil and gas leasing on public lands and waters must end — full stop. The eyes of the world are watching.”
The dubious economic calculus behind the Willow project --President Joe Biden’s decision to approve the massive Willow oil project earlier this week infuriated climate advocates and environmentalists while drawing praise from Alaska politicians and oil industry figures. As the Biden administration weighed the benefits and drawbacks of the project over the past year, the latter camp argued that the project would help replace Russian oil supplies as well as deliver an economic boon for Alaskans.The Willow project’s champions have stressed the need for the U.S. to achieve energy independence in light of Russia’s invasion of Ukraine. Senator Lisa Murkowski, an Alaska Republican, said last month that Willow could help “reduce our energy imports from some of the worst regimes in the world.” Mary Peltola, a Democratic representative and Alaska Native who was elected to Congress last year, said just last week that the project could “make us all safer in a world that has grown more unpredictable after Russia invaded Ukraine.”There’s no doubt that the Willow project, led by ConocoPhillips, represents the largest new Alaskan oil project in decades. At full capacity, it could increase total oil production in the state by more than a third. But experts told Grist that the energy and economic benefits of the project are smaller and less certain than its boosters have suggested. Not only will the Willow project provide an insufficient substitute for Russian oil, but it will also deliver an ambiguous mix of costs and benefits to Alaska state coffers, which have long relied on fossil fuel revenue that is increasingly hard to come by — even with new drilling in the Arctic.It’s not clear how much the Willow project would help replace Russian oil supplies. First there’s the matter of timing: The project will not deliver its first barrels until 2028 or 2029, and it will take even longer for all three well pads that the Biden administration approved to start producing at full capacity. It’s possible the global oil supply picture will look very different by then: Western countries may have access to new sources of oil, like recent offshore projects in places like Guyana, and where crude prices will be is anyone’s guess.Second, the particular kind of oil that Willow will produce isn’t a perfect substitute for the oil that the U.S. once bought from Russia. The chemistry of petroleum beneath Alaska’s North Slope is different from both light shale oil and the heavier oil that tends to come from places like Russia and Venezuela, so it will need to be blended with other oil in order to enter domestic refineries, which are mostly designed to refine specific types of crude. That’s why the United States kept importing oil even after the fracking boom began, and it’s why much of Willow’s oil wouldn’t replace imports from other countries.
Where Biden's Arctic oil strategy may succeed — or fail - The Biden administration promised this week to ink new protections against oil drilling in the Arctic in an apparent counter to approval of ConocoPhillips’ Willow oil project. But will the administration’s plan help curb the industry’s future expansion in the National Petroleum Reserve-Alaska as the White House claims? And is it a winning political strategy for President Joe Biden? Many observers are skeptical, and industry sees an oil revival for public lands in the far north. “The decision is a milestone for Alaska’s upstream sector,” explained Mark Oberstoetter, upstream oil and gas analyst for Wood Mackenzie, pointing to several adjoining projects on nearby state and Alaska Native lands that together constitute enough oil to push Alaska back from the brink of significant decline. “A revival of North Slope production is now on.” The administration may need to harness a 1976 law granting the Interior Department authority to protect the Arctic ecosystem and wildlife if it wants to counter that narrative, although it’s unclear how the law’s language might be interpreted to change the status quo, experts say. The administration may expand wetlands and river corridors that are already largely cut off from drilling, while also making the oil industry’s attempts to build out infrastructure more difficult by delaying approvals. It also has the option of refusing to hold lease auctions that would give companies further drilling rights. Others argue the administration should limit new oil and gas activity from now on in the reserve on the grounds that Willow would release large amounts of greenhouse gases, exceeding the remaining carbon budget on federal lands in the Arctic. But even a smorgasbord of new rules or administrative delays are not expected to keep the NPR-A from becoming a hot spot for oil and gas drilling on Alaska’s North Slope, representing a severe blow to conservation groups and some Alaska Native organizations that tried to block Willow on climate grounds. “You can’t move forward with significant oil and gas development on the one hand and have protections that are meaningful on the other hand,”
Biden's green allies promise lawsuit over Alaska oil project - The approval Monday of ConocoPhillips’ massive Willow project in Alaska’s National Petroleum Reserve is teeing up a new high-profile legal brawl that will likely align the Biden administration and Republican lawmakers against environmentalists who have largely backed the president’s climate agenda. The pared-down project opens up three new oil and gas drilling areas of the western North Slope — two fewer than originally proposed by the oil company — but green groups say the approval still undermines the Biden administration’s commitment to halve nationwide greenhouse gas emissions by 2030. The brewing legal battle highlights a sharp divide between a Democratic administration and environmental groups over the extent to which public lands and federal waters should be available for oil and gas development. “We are going to work with our clients to move forward with litigation,” said Bridget Psarianos, senior staff attorney at Trustees for Alaska, which previously led a successful lawsuit challenging the Trump administration’s approval of the Willow project. “We’ll be moving quickly on that.” Alaska Sen. Dan Sullivan (R) — a staunch Willow supporter — said he was already preparing to help defend the Biden administration from “frivolous legal challenges” against the $8 billion project. “We are coordinated and ready to defend this decision,” he told reporters Monday. Biden officials have sought to balance interest in continued leasing in oil- and gas-producing states like Alaska with the president’s clean energy priorities. Environmentalists who have generally backed the president’s climate initiatives have also repeatedly pushed the federal government to go even further by eliminating new oil and gas leasing on federally controlled lands. Cancellation of the Willow project would have been a key win to block future fossil fuel extraction on public lands. Now environmentalists’ pressure campaign against the project is transitioning to legal action against the approval process by the Interior Department’s Bureau of Land Management.
Greens sue Biden over Willow oil project approval – A coalition of environmental groups on Tuesday filed a quick legal challenge against the the Biden administration’s decision to approve the controversial Willow oil project in Alaska. Biden’s decision to allow ConocoPhillips to build its massive project on federal land in the Alaska wilderness has caused an uproar among environmentalists. They argued in their lawsuit that the approval violated four environmental laws despite the fact that the Bureau of Land Management greenlit a smaller version of the project than ConocoPhillips had sought. “Willow would result in the construction and operation of extensive oil and gas and other infrastructure in sensitive arctic habitats and will significantly impact the region’s wildlife, air, water, lands, and people,” the groups wrote in their lawsuit, which asks the Alaskan court to vacate the Biden administration’s approval of the project. BLM failed to follow requirements under the National Environmental Policy Act to consider alternatives that would lessen the project’s impact on the National Petroleum Reserve–Alaska, or NPR-A, or to take a required “hard look” at the project’s cumulative impacts, including on climate change, the suit alleges. The groups also charge BLM with failing to consider the project’s impacts on lands used for subsistence by Alaska Natives. And the suit argues the Fish and Wildlife Service failed to properly consider Willow’s potential impacts on endangered species such as polar bears. “Interior attempted to put a shiny gloss over a structurally unsound decision that will, without question, result in a massive fossil fuel project that will reduce access to food and cultural practices for local communities,” Bridget Psarianos, lead attorney for Trustees for Alaska, which represents the environmental groups, said in a statement. “This new decision allows ConocoPhillips to pump out massive amounts of greenhouse gases that drive continued climate devastation in the Arctic and world. The laws broken on the way to these permits demonstrate the government’s disregard for those who would be most directly harmed by industrial pollution and ignores Alaska’s and the world’s climate reality.” Willow is estimated to produce about 600 million barrels of oil, with production projected to be over 180,000 barrels of oil per day at its peak. The project is also expected to generate around 280 million tons a year of greenhouse gases over its expected 30-year lifetime — the equivalent of two coal-burning power plants every year, according to government estimates.
Lawsuit: Biden Willow approval violates NEPA - Environmentalists filed a lawsuit Tuesday against the Biden administration’s approval of ConocoPhillips’ Willow project, marking a new stage in the fight over drilling in the National Petroleum Reserve-Alaska.The hotly contested $8 billion project opens three new drilling areas in the remote wilderness of Alaska’s western North Slope and is estimated to be capable of producing about 600 million barrels of oil over its three-decade lifespan.The lawsuit, filed by Trustees for Alaska on behalf of a coalition of environmental and Indigenous groups, called on the U.S. District Court for the District of Alaska to scrap the approval because the federal government failed to consider the project’s indirect and direct climate risks, as well as harm to wildlife such as denning polar bears and subsistence hunting.“The Biden administration’s approval of the ConocoPhillips Willow project makes no sense for the health of the Arctic or the planet and comes after numerous calls by local communities for tribal consultation and real recognition of the impacts to land, water, animals, and people,” said Siqiñiq Maupin, executive director of Sovereign Iñupiat for a Living Arctic (SILA), in a statement.SILA, along with the Alaska Wilderness League, Environment America, the Northern Alaska Environmental Center, the Sierra Club and the Wilderness Society, are all parties to the lawsuit.The groups claimed that the Bureau of Land Management’s approval of Willow did not take the required “hard look” under the National Environmental Policy Act, and violated provisions of the Naval Petroleum Reserves Production Act, the Alaska National Interest Lands Conservation Act, procedural law and other federal statutes.“These laws require consideration of alternatives and thorough, transparent, and careful analysis of the impacts of ConocoPhillips’ proposal by BLM. BLM violated these laws by failing to consider reasonable alternatives that would lessen the impacts to the Reserve,” Trustees for Alaska told the court. The lawsuit also alleges the Fish and Wildlife Service acted arbitrarily and capriciously by finding the project did not adequately consider the risk to polar bears from the oil and gas development.The challengers further alleged that the Biden administration’s environmental review did not respond to all the concerns raised by Judge Sharon Gleason of the U.S. District Court for the District of Alaska in an 2021 order blocking the project. The Trump administration had originally given ConocoPhillips the green light for five drilling areas in 2020, as part of a push to expand domestic fossil fuel production under its energy independence agenda.
White House: Biden's hands were tied on Willow - The White House on Thursday defended the administration’s decision to approve a massive oil and gas drilling project in Alaska after widespread criticisms that the move undercuts President Joe Biden’s promises on climate change and the environment. The Interior Department announced earlier this week that it had approved a scaled-back version of ConocoPhillips’ plans to drill in the northeast portion of the National Petroleum Reserve on Alaska’s North Slope. The announcement came after decades of industry effort to advance the project since the oil and gas giant first acquired leases during the Clinton administration. Critics of the drilling plan, known as the Willow Project, assailed it as a “carbon bomb” after Biden pledged on the campaign trail that there would be no new drilling on federal lands. Environmentalists are suing the administration over the plan. “The president kept his word when he can where he can by law,” White House press secretary Karine Jean-Pierre told reporters Thursday. “As the Interior Department said, some of the company’s leases are decades old, granted by prior administrations,” she added. “The company has a legal right to those leases. The department’s options are limited when there are legal contracts in place.” Biden, she said, “is delivering the most aggressive climate agenda in the U.S. history, and that is going to be his continued commitment to the American people.” She declined to comment on the pending litigation.
Historic Deal Reopens B.C. Indigenous Land to Fracking, Promises Surface Restoration - A landmark agreement seeks to rectify decades of environmental destruction sanctioned by British Columbia policy-makers on Indigenous land, but also reopens one of Canada’s most prolific shale formations to the fossil industry, inviting them back to resume drilling a land once left “decimated” by extraction. Years in the making, the Blueberry River First Nations Implementation Agreement comes 18 months after the B.C. Supreme Court ruled that the cumulative impacts of the province’s long and “aggressive” support for resource extraction on Blueberry River First Nations (BRFN) lands breached their right under Treaty 8 to use their territories for hunting, fishing, and cultural activities. The agreement assures a C$200-million restoration fund by June 2025 to support the healing of the land. An additional $87.5 million will be paid “as a financial package over three years, with an opportunity for increased benefits based on petroleum and natural gas (PNG) revenue-sharing and provincial royalty revenues in the next two fiscal years.”It also guarantees limits on new development, protecting more than 650,000 hectares of land from PNG and forestry activities.And it fills the negotiation void that existed before, which served to turn the territory into what The Narwhal describes as “industrial wasteland.”“The agreement charts a path forward from a past where the province excluded the community from resource decisions and infringed on the nation’s constitutionally protected rights,” The Narwhal writes. Two days after signing its agreement with BRFN in mid-January, B.C. inked similar deals with the four other Treaty 8 nations in the region: Doig River, Halfway River, Saulteau, and Fort Nelson. “Collectively, the agreements represent a way out of conflict and a shared goal to heal the land.”But the Blueberry River agreement “is not a cap on production, it’s a cap on land disturbance,” B.C. Premier David Eby told media following the announcement. The oil and gas industry will need to be “innovative” in its search to “find ways to work with less land disturbance.”The agreement has left stakeholders from extraction industries celebrating in step with the BRFN. Fossil gas projects stalled by the courts can now proceed, they say, with regulatory certainty sweetening the pot for prospective investors.
Canada is sitting on 12 'carbon bombs.' Here's where they are | CBC News - Just under the surface of B.C. and Alberta, in a rock formation known as the Montney Play, lies enough potential greenhouse gases to blow past Canada's 2030 emissions targets 30 times over.It's one of 12 fossil fuel reserves researchers in the journal Energy Policy have identified in Canada — called "carbon bombs" — that would each release a billion tonnes or more of carbon into the atmosphere if their resources were extracted and burned. This would be catastrophic for the world's efforts to slow rising global temperatures, the authors argue.But development in the Montney is set to ramp up in the next few years, and government subsidies for the natural gas industry mean many of these projects have been earmarked to make important contributions to the economy. Kjell Kühne, the lead researcher on the paper and a director of Leave it in the Ground, an initiative aimed at stopping the extraction of fossil fuels, says Canada needs to find a way to stop these projects, or risk increasing our contribution to climate-related disasters."You are basically betting on humanity continuing to burn down the house at the same rate in order for you to make money, and that is a very risky bet," he said.Kühne and others identified 425 "carbon bombs" around the world, and collectively, they would blow the carbon budget needed to keep global temperatures from rising more than 1.5 C twice over. Researchers measured the carbon dioxide emissions that would result if each country extracted and burned its largest fossil fuel reserves. Thinking about these projects as "carbon bombs" includes the downstream emissions of actually burning the fuel, which is a better way of measuring climate impact than how the Canadian government tallies emissions, said Julia Levin, associate director of Environmental Defence, who was not involved in the research.The Canadian government reports only carbon dioxide emitted in Canada. It does not count the greenhouse gas emissions produced when those fossil fuels are exported and burned somewhere else. "It allows countries — big producers of oil and gas, like Canada — to completely abdicate climate responsibility for the oil and gas that we pull out of the ground," said Levin.
West Indies Petroleum steps in to assist with oil spill - West Indies Petroleum stepped in on Tuesday to assist crew members of a Canadian ship recover roughly 3,000 litres of diesel oil from Jamaican waters.The Jamaica Observer understands that an oil spill occurred at approximately 4:00 am on Tuesday at Reynold's Pier in Ocho Rios, St Ann, as the ship's crew carried out internal operations.Major Luis Cheverria, West Indies Petroleum's group manger of health, safety, security and environment, told the Observer that the oil spill did not impact their operations but a team had to step in and assist as they, too, are stakeholders in the industry and it was in their best interest to ensure it was cleaned and that there was no environmental damage."About 3,000 litres was released accidentally. They responded to it but did not have sufficient response material. We learned of it about 7:00 am on Tuesday and we deployed our oil spill response team. The team did the assessment and found that the spill was contained to a large extent but they needed additional absorbent material to recover the oil properly from the sea. They needed around four bails of absorbent material which we assisted them with. We provided all our resources on stand by until the spill was totally cleaned up by midday and recovered. They kept it on their vessel," said Cheverria."Representatives from National Environment and Planning Agency attended the scene. The harbour master from Port Authority of Jamaica was also there and an inspector from MAJ (Maritime Authority of Jamaica) was also on the scene. We coordinated with them," he said.
Balcombe anti-fracking group launches crowd-funding campaign against hydrocarbon exploration at Sussex oil well | SussexWorld -- The Frack Free Balcombe Residents Association (FFBRA) has nearly reached its initial £5,000 target to cover pre-action legal costs and now aims to raise £35,000 to cover the cost of the action.The campaign comes after an independent Planning Inspector permitted an appeal from Angus Energy to undertake 30 months of hydrocarbon exploration at the existing oil well at the Lower Stumble Exploration site, off London Road. The decision, which was made on February 13 and was welcomed by Angus Energy, was met with dismay from FFBRA members and some Mid SussexDistrict councillors. The Frack Free Balcombe Residents Association (FFBRA) has launched a crowd funding campaign to challenge the government’s decision to allow Angus Energy to test for hydrocarbons near their village. FFBRA chair Sue Taylor said: “It is extraordinary that a small village has to take the Secretary of State for Levelling Up, Housing and Communities, Michael Gove to the High Court to stop oil exploration in an Area of Outstanding Natural Beauty.”Mid Sussex District councillor Jenny Edwards (Green Party, Ardingly and Balcombe) said: “This decision threatens not just the environment but the proper functioning of the democratic process in this country. The application was unanimously rejected by WSCC and yet it is still going ahead. We need to fight this tooth and nail.”
Putin rejects theory about Ukrainian role in pipeline blasts - (AP) — Russian President Vladimir Putin on Tuesday dismissed as "sheer nonsense" allegations that Ukrainians could be behind the blasts that damaged the Nord Stream gas pipelines in the Baltic Sea last year, and again pointed the finger at the U.S. Putin spoke after The New York Times, The Washington Post and German media published stories last week citing unidentified U.S. and other officials as saying there was evidence Ukraine, or at least Ukrainians, may have been responsible. The Ukrainian government has denied involvement. Germany's Die Zeit newspaper and German public broadcasters ARD and SWR reported that investigators believed five men and a woman used a yacht hired by a Ukrainian-owned company in Poland to carry out the attack. German federal prosecutors confirmed that a boat was searched in January but have not confirmed the reported findings. Putin rejected the notion as “sheer nonsense.” "Such an explosion, so powerful and at such depth, could only be conducted by experts backed by the entire potential of a state that has relevant technologies,” he said in televised remarks. The Russian leader insisted that the U.S. had a motive to stage the explosion, saying it wanted to halt supplies of cheap Russian natural gas to Germany and to provide it with more expensive liquefied natural gas. The Kremlin last week described the claims about Ukrainian involvement in the explosions as part of a cover-up by the West. Putin on Tuesday poured scorn on European leaders for keeping quiet about the incident, charging that their attitude reflected what he described as Europe's subservient position in relation to the U.S. “The Europeans have lost a gene of independence, sovereignty and national interest,” Putin said with a smirk. “The more they hit them on their noses or the top of their heads the lower they bend and the broader they smile.” September's explosions that hit the Nord Stream 1 and Nord Stream 2 pipelines rendered them inoperable and caused significant leaks of gas that was idle in the pipelines. No one claimed responsibility.
Europe turns to gas storage to offset French LNG halt --European countries are increasing withdrawals from underground sites to offset a halt to regasification from France's four LNG terminals. European regasification fell to its lowest since 23 October 2022 on 11 March as industrial action halted output from French terminals (see sendout graph). The Elengy-operated 8mn t/yr Montoir, 6.6mn t/yr Fos Cavaou and 2.2mn t/yr Fos Tonkin facilities halted operations at 13:00 CET (12:00 GMT) on 6 March, followed by the 12.4mn t/yr Dunkirk terminal at the start of the 7 March gas day. French sendout collapsed to just 90 GWh/d on 6-12 March from 1.2 TWh/d earlier in the month. And the shortfall in supply is having ripple effects throughout the continent. France has increased its withdrawals from underground storage as a share of consumption since the beginning of the strikes. Withdrawals accounted for 60pc of total supply on 6-11 March — according to the latest data — up from 48pc earlier in the month and 46pc in January-February (see French stockdraw graph). And the uptick in withdrawals relative to consumption has also been felt by neighbouring countries, previously reliant on regasified supply from France, although the effect has been muted by mild weather, which has led to a fall in heating demand. France has reversed its pipeline flows and imported supply from Spain in recent days to make up for the shortfall in LNG. Exports towards Belgium have also fallen, reversing to net imports on 7-8 March. And flows towards Germany have halted while exports to Switzerland — most of which then transits to Italy — have also slowed (see supply graph). The halt in exports towards Belgium has led onward eastward flows from the country towards Germany and the Netherlands to fall sharply. Belgian exports towards Germany fell to their lowest since March 2022 on 11 March. And Belgium imported from the Netherlands on 6-8 March for the first time since late January. And with less pipeline supply reaching Germany from Belgium, France and the Netherlands, the country's withdrawals have risen. The German stockdraw rose to 1.2 TWh/d on 6-11 March — according to the latest available data from GIE — from 1 TWh/d earlier in the month. And withdrawals as a share of German consumption rose to 36pc over the period, from 28pc earlier in the month and in January-February (see German stockdraw graph). Italian withdrawals also slightly increased their share of the country's consumption as imports at Tarvisio — where Italy imports from France via Switzerland — halted completely on 9-12 March. The Italian stockdraw accounted for 24pc of Italian consumption on 6-10 March up from 22pc earlier in the month. But Italian consumption fell to 2.1 TWh/d on 6-12 March from 2.7 TWh/d earlier in the month, which may have limited the draw on underground stocks.
Four Reasons For Europe's Record-Breaking Drop In Natural Gas Demand -- Natural gas consumption in OECD Europe fell by an estimated 13% in 2022, its steepest decline in absolute terms in history, IEA said in its quarterly gas report at the end of February. Demand in Europe fell amid mild winter weather and demand reduction in industry due to high prices. Significant changes in the energy mix, economic activity, weather, and consumer behavior were responsible for the dramatic shift in natural gas consumption in Europe last year, IEA’s analysts Peter Zeniewski, Gergely Molnar, and Paul Hugues wrote in the commentary.Record additions of solar and wind power helped lower gas demand, but record-high gas prices in the summer of 2022 also led to a lot of industry curtailments and lower consumption by industries and businesses, according to the IEA.Yet, the extent to which the high prices will lead to permanent reductions in demand in gas-intensive industrial sectors remains unclear, the IEA’s analysts say. In Europe’s industry, gas use fell by 25 bcm, or around 25%, in 2022, due to production curtailment and fuel switching, as the energy-intensive industries were the first to respond to the gas price shocks last year, the IEA said.In household consumption, “Policy measures – such as renewable support schemes, grants and preferential loans for housing retrofits and heat pump installations, alongside campaigns to encourage behavioural change – all played a part in moderating gas demand,” according to the analysts.The European Union managed to beat its target for cutting gas demand this winter, Eurostat data showed last month.According to the data, the EU’s winter demand has so far dropped by 19.3% compared to the five-year average, beating the 15% goal it set for itself to help it survive the winter without gas shortages.
Russia was producing 9.8 mln barrels of oil daily in January, February —-TASS - Oil production without gas condensate in Russia was at the level of 9.8 mln barrels daily in each of January and February 2023, the Organization of Petroleum Exporting Countries (OPEC) said in its March report. Russia boosted liquid hydrocarbons production by 36,000 barrels daily to 11.2 mln barrels per day in January, OPEC said. In 2023, the indicator is expected to drop by 0.7 mln barrels daily to 10.1 mln barrels a day. The forecast for oil production in Russia is characterized by a high degree of uncertainty, the Organization said. The discount for the Russian Urals oil blend in Northwestern European ports in February increased by $1.31 against January and stood at $35.72 per barrel, OPEC estimated.
Russia Says Bombs Found At A Druzhba Pipeline Station In Latest Sabotage Attempt -- Officials with the Russian oil company Transneft say they've uncovered a failed bomb plot to sabotage the Druzhba oil pipeline and maim civilians in the western Bryansk region of Russia. Transneft spokesman Igor Demin told TASS on Wednesday that two explosive devices were found at a pumping station. The devices, while they didn't detonate, had some degree of damage due to the likelihood they were dropped from drones, he explained. "The character of the explosive parts — metal balls — indicates that the organizers of this sabotage did not intend to damage equipment, but rather to kill people, namely civilian workers at a pumping station on the Druzhba [pipeline]. Investigations are underway," Demin said. The station in question, identified in Bloomberg as the Novozybkov station, "hasn’t been used for oil pumping so far this year; its reservoirs are empty," according to reports. Demin noted that no part of the station was damaged. The Russian Defense Ministry didn't immediately comment on Transneft's statements, but the Kremlin has of late ratcheted its accusations that Ukrainian saboteurs are engaging in cross-border attacks. President Putin has recently ordered his federal security services (FSB) to tighten border security after a string of brazen cross-border incidents. This year has also seen an unprecedented number of drone incursions over Russian territory, and Moscow has gone so far as to allege Western state backing of such operations.
Russian oil flows rebound as India snaps up more pacific cargoes --Russia’s seaborne crude flows rebounded last week, with Indianow making inroads into the country’s Pacific exports having taken the bulk of cargoes shipped from western ports after a European embargo.
In the seven days to March 10, Russia’s shipments recovered 40 per cent of the previous weeks’ loss, rising to 3.33 million barrels a day. The less-volatile four-week average also rose.
There has been no obvious decline in Russia's seaborne exports since its troops invaded Ukraine more than a year ago, though there may have been an overall drop in flows because tankers have taken on some crude previously sent to Europe through the Druzhba pipeline. As yet, there’s no sign of flows being impacted by the 500,000-barrels-a-day output cut that Russia said it would impose in March. India overtook China as the biggest buyer of Russian seaborne crude in early November and has continued to buy more than its neighbor ever since. Increasing quantities of the Pacific ESPO crude grade are heading to India’s ports, after months in which Chinese refiners had snapped up almost every available shipment. India will not breach Western sanctions on Russia — including the price cap of $60 a barrel imposed on purchases of oil from Moscow — according to people familiar with the matter, who said the authorities have asked banks and traders to adhere to the rules. The combined volume of crude on vessels heading to China and India plus smaller flows to Turkey and quantities on ships that haven’t yet shown a final destination rebounded in the latest four-week period, to an average 3.28 million barrels a day, setting a new high.As the ultimate destinations of cargoes loading in late January and early February become apparent, flows to China rose to new post-invasion highs. Historical patterns suggest that most of the cargoes currently identified as “Unknown Asia” and heading for the Suez Canal will end up in India.Ship-to-ship transfers of cargoes in the Mediterranean continue apace. This has been most visible off the Spanish north African city of Ceuta and off the Greek coast near Kalamata. At least 46 cargoes have been transferred between ships in those two locations since the start of the year. The volume transferred off the coast of Greece, mostly in the Bay of Lakonikos, soared in February, rising to more than 10 million barrels, equivalent to 360,000 barrels a day. That compares with 4.4 million barrels, equivalent to 156,000 barrels a day transferred off Ceuta.
Russia's oil revenues fall sharply as the West's price cap starts to bite, IEA says -The International Energy Agency on Wednesday said Russia's oil export revenues fell sharply in February, prompted by bans and price caps designed to curtail President Vladimir Putin's ability to finance the war in Ukraine. The IEA said Russia's estimated oil export revenues fell to $11.6 billion last month, down $2.7 billion from January when volumes were significantly higher. "It remains to be seen if there will be sufficient appetite for Russian oil products now that the price cap is in place or if its production will start to fall under the weight of sanctions. Revenues are already dwindling," the group said in its latest oil market report. The energy agency said, citing the Russian finance ministry, that Moscow's fiscal receipts from oil sales were just 45% of the level from a year earlier. The latest figures come shortly after the IEA said in mid-February that the West's oil war against Russia appeared to be having the "intended effect" despite surprisingly resilient production and exports in recent months. Ukrainian officials and campaigners have previously called for Western policymakers to ramp up the financial pressure on Russia by targeting its oil revenues in order to help Kyiv prevail. The European Union's embargo on Russian oil products came into effect on Feb. 5, building on the $60 oil price cap implemented by the Group of Seven major economies on Dec. 5. The latter measure also coincided with a move by the EU and U.K. to impose a ban on the seaborne import of Russian crude oil. Asked on Tuesday whether he was concerned last year that the Russian economy might have collapsed due to international sanctions, Putin said he had been worried but that Russia's "economic sovereignty" now was a major result. The foundations of Russia's economic stability were "stronger than anyone thought," he added. Putin said Russia's financial system had got stronger and that Western companies that left Russia last year thought the economy would collapse "but it didn't."
India Takes A Leading Role In De-Dollarization -- Reuters reported on Wednesday that “India’s Oil Deals With Russia Dent Decades-Old Dollar Dominance”, which informed their audience that the growing trend of those two using national or third-party currencies like the UAE’s is something significant for everyone to pay attention to. To that outlet’s credit, it also reminded readers that IMF Deputy Managing Director Gita Gopinath foresaw in the month after Russia’s special operation began that the West’s sanctions “could erode the dollar’s dominance”. Lo and behold, that’s precisely what happened, with India of all countries accelerating de-dollarization through its non-dollar-denominated energy deals with Russia. About them, Russia has since become India’s largest supplier over the past year and now provides a whopping 35% of that country’s needs, which is also the world’s third-largest oil importer and fifth-largest economy. Their new energy ties, and particularly the growing de-dollarization dimension of their deals, are thus globally important. None of what was just described is driven by any anti-American animus on India’s part since everything is purely motivated by the pursuit of that country’s objective national interests. Delhi had no choice but to gradually diversify away from dollar-denominated energy deals with Moscow due to Washington’s illegal sanctions. Its multipolar leadership wasn’t going to let the world’s most populous country slip into an economic crisis just to please the US by eschewing the import of discounted oil from Russia. By defying American pressure upon it to unilaterally concede on those aforementioned objective national interests, India’s economy ended up growing at twice the pace of China’s, which contributed to catapulting that country to the forefront of the global systemic transition to multipolarity. Amidst the impending trifurcation of International Relations, India is now poised to de facto lead the Global South in helping fellow developing countries balance between the Golden Billion and the Sino-Russo Entente. Had India complied with the US’ illegal sanctions, then the New York Times wouldn’t have recently admitted that those restrictions failed just like the West’s efforts to “isolate” Russia did as well. It was largely due to that South Asian Great Power’s truly independent grand strategy that this latest phase of the New Cold War didn’t decisively end in the Golden Billion’s victory over Russia and the restoration of unipolarity, which would have been detrimental to India and every other developing country’s interests. India therefore changed the course of history by remaining committed to the pursuit of its objective national interests, which to remind everyone, aren’t driven by any desire to harm the interests of third parties like the US. Its leading role in de-dollarization via its increasing number of non-dollar-denominated energy deals with Russia is also reshaping the global financial system by reducing that currency’s prior dominance and thus leading to a more multipolar state of affairs for everyone. Even the US itself seems to have finally accepted that it can’t reverse this trend, which is evidenced by former Indian Ambassador to Russia Kanwal Sibal recently telling TASS that “Lately, the discourse from Washington has changed and India is no longer being asked to stop buying oil from Russia. In a recent visit to India, the US Treasury Secretary actually said that India can buy discounted oil from Russia as much as it wants so long as western tankers and insurance companies are not used.”
Emirates News Agency - India to account for 25% growth in global energy demand: Minister - India will account for approximately 25 percent of the growth in global energy demand in the two-decade period up to 2040, according to India’s Minister for Petroleum and Natural Gas, Hardeep Singh Puri. Quoting both industry and research estimates, Puri said India’s energy strategy is based on such an expectation and has been acknowledged as being pragmatic and balanced. “Ensuring energy access, availability and affordability for our large population is imperative,” he noted. Puri said India plans to double its geographic area under oil and gas exploration from 0.25 million sq km to 0.5 million sq km. “Prohibited or no-go areas in the country’s exclusive economic zones have been reduced by 99 percent, releasing nearly one million sq km for exploration,” he added. “We are also rapidly expanding our petrochemical production. India is now a global exporter of petroleum products and its refining capacity is the fourth largest globally. Efforts are underway to further enhance this capacity to 450 million metric tons by 2040,” according to the Minister.
Oil spill: Shell incidents rise 100% to 12 in 1 month — Report --Oil spills recorded by Shell Petroleum, the largest petroleum producer in Nigeria, increased month-on-month, MoM, by 100 per cent to 12 in February 2023, from six recorded in the preceding month of January 2023. Also, on year-on-year, YoY, the incidents rose by 33.3 per cent to 12 in February 2023, from nine recorded in the corresponding period of 2022. The development, mainly attributed to sabotage, culminated in the loss of commercial quantity of crude oil, thus impacting revenue and the environment. In its latest Oil Spill Data, obtained by Vanguard, weekend, Shell Petroleum disclosed that the incidents occurred at different locations, including Yokri well flowline at Yokri, Ogale-Bomu pipeline at Kpite, Rumuekpe Nkpoku pipeline at Ibaa, Kolocreek-Rumuekpe pipeline at Odau and Gbaran flowline at Opolo during the period. In its Briefing Notes, the company, stated: “Shell Companies in Nigeria have a track record of strong production but in 2021, the combined production from the SPDC Joint Venture, JV, and SNEPCo (Bonga) fell to 493,000 barrels of oil equivalent per day from 614,000 in 2020. “The SPDC JV produced 383,000 barrels of oil equivalent in 2021, compared with 497,000 barrels of oil equivalent in 2020. The fall in output was largely a result of curtailed oil production because of heightened security issues, such as crude oil theft and illegal oil refining. ”Production numbers were also down as a result of divestment action, including the sale of SPDC’s 30% interest in OML 17 for $533 million. “In the last quarter of 2021, crude oil theft from pipelines across the region increased ostensibly as a result of rising oil prices, which made the activity more profitable. Security risks have heightened and production in some areas has been put on hold. ”The situation is impacting operators across the Niger Delta. The Nigerian National Petroleum Corporation, NNPC, has reported that crude thefts in 2021 reached 200,000 barrels per day – a quarter of onshore production.
100K people affected, 122 sickened in Philippine oil spill - -The oil spill from a sunken oil tanker off the coast of the Philippines’ Oriental Mindoro province has affected nearly 100,000 people and sickened 122, provincial governor Humerlito Dolor said. Authorities are still scrambling to contain the spread of the oil leaking from the tanker carrying 800,000 litre of industrial fuel oil that sank on February 28. Dolor told a local radio on Monday that 122 residents in the province, southwest of the national capital Manila, reported respiratory-related symptoms, vomiting, and diarrhoea. “Pola town is heavily damaged, with the shoreline of all its coastal villages covered with oil,” Dolor said, adding that the town experienced fish kills, and some seagrasses, corals, and mangroves were damaged. The coastal Pola town is heavily affected by the spill. Town mayor Jennifer Cruz said many residents have fallen ill, suffering from headaches, stomach pain, dizziness, chest pain, eye irritation, cough and cold, Xinhua news agency reported. Authorities asked fisherfolks to refrain from fishing hours after news broke out about the sea accident due to water pollution and the smell of the oil that coats the shoreline. The Marine Science Institute at the University of the Philippines has warned that the spill threatens to reach other areas of the country which has a high concentration of coastal fishes, corals, crustaceans, mollusks, sea grasses, and mangroves. Philippine President Ferdinand Romualdez Marcos has ordered government agencies to work for a speedy oil spill clean-up in about four months. The oil tanker was travelling from Bataan province in Luzon island to the central Philippines to deliver 800,000 litre of industrial oil when it sank off the coast of the Oriental Mindoro province.
PCG says a month not enough for oil spill cleanup - — Cleaning up the oil spill from the motor tanker that sank in the waters off Oriental Mindoro would likely take more than a month, the Philippine Coast Guard (PCG) said on Tuesday. PCG Commandant Admiral Artemio Abu cited the lack of manpower and equipment as the main challenges in cleanup operations. “Let us be honest and candid about it. One month time? Hindi ganun kadali ‘yan [It’s not that easy],” Abu told reporters. “This is the reason why we are promoting everybody’s involvement…most especially the LGUs (local government units) and the community. We are not sure or certain yet when oil from the vessel will be completely released," he added. The PCG official said the embassies of Japan and the United States in Manila expressed their intent to assist the country in responding to the oil spill. Asked how other nations could help, Abu said they can send people to help in the cleanup. Authorities are rushing to contain the oil spill from the sunken MT Princess Empress, as they warn of its impact on the environment and on the health of residents in Oriental Mindoro and nearby areas. The Department of Health (DOH) earlier said toxic chemicals from the spill can cause skin and lung complications, aside from nausea, vomiting, and upset stomach. In a briefing also on Tuesday, DOH Undersecretary Maria Rosario Vergeire said the agency received reports of some residents along the shoreline experiencing headache and nausea. She noted these are short-term symptoms, which disappear a few hours after the patients receive medical help. MT Princess Empress was transporting 800,000 liters of industrial oil when it capsized and sank last Feb. 28 near Naujan town. On Monday, authorities said they detected the possible site of the vessel northeast of Pola town. According to the Department of Environment and Natural Resources (DENR), the tanker is believed to have moved southeast from its last known position where it completely submerged. The DENR said officials will still have to verify the exact location of the vessel through the deployment of a remotely operated vehicle.
Tanker owner liable for over ₱330M in damages for Mindoro oil spill – lawmaker — The owner of MT Princess Empress, the tanker that caused the oil spill in Oriental Mindoro, is liable for over ₱330 million for the damages it caused under international conventions, a lawmaker said on Monday. According to Aklan Second District Rep. Teodorico Haresco Jr., tanker owner RDC Reield Marine Services is liable under several international conventions, including the 1992 International Convention on Civil Liability for Oil Pollution Damage (1992 CLC). Under the 1992 CLC, the firm is liable for up to ₱331.3 million and additional liabilities under the International Oil Pollution Compensation Fund should they fail to comply. “Beyond cleanups, we must make an effort to make MT Princess Empress and its owners RDC Reield Marine Services accountable to the government for damaging our tourism industries and marine resources and to the affected communities whose health and livelihood are heavily compromised,” Haresco said in a statement. The lawmaker added the tanker owner is also liable under the United Nations Convention on the Law of the Sea, the International Convention for the Prevention of Pollution from Ships, and the International Safety Management Code. He also recommended that the insurance company of MT Princess Empress be pursued by the Insurance Commission. Concerned that Aklan might also be affected, Haresco filed House Resolution No. 842 that seeks to conduct an inquiry into the extent of the oil spill’s damage. RDC Reield Marine Services has apologized for the oil spill and assured all those affected that it is taking steps to address the problem and minimize its impact. The University of the Philippines Marine Science Institute (UPMSI) assessed that over 24,000 hectares of coral reef in Oriental Mindoro may be at risk due to the oil spill in waters off the province. The UPMSI also said some of the slick off Oriental Mindoro could reach the Verde Island Passage by March 16, putting marine biodiversity and other endangered and threatened species at risk. “We must employ a whole-of-government approach in seeking for justice, mitigating the devastating effects of the oil spill, and dealing with the recovery and rehabilitation of the affected communities and environmental resources,” Haresco said.
Sunken tanker in oil spill lacked permits — The MT Princess Empress oil tanker – which sank in the waters off the coast of Oriental Mindoro carrying 800,000 liters of industrial fuel oil – sailed without an updated certificate of public convenience (CPC), lawmakers uncovered yesterday during a hearing of the Senate committee on the environment. “The ship has no authority to operate in the form of an amendment to its certificate of public convenience issued to RDC Reield Marine Services,” Sen. Cynthia Villar said, reading a report from the Maritime Industry Authority (MARINA), which is in charge of issuing CPCs. At the hearing, senators asked the Philippine Coast Guard (PCG) whether it made all the necessary inspections before the tanker was allowed to sail. Asked by Sen. Raffy Tulfo asked why the vessel was allowed to sail, PCG Vice Adm. Joseph Coyme replied that in the checklist, the inspectors did not tick the box on CPC. Tulfo said PCG officials responsible for allowing the tanker to sail should be jailed. “If you did your jobs, we would not be all here,” he said. Fritzie Tee, vice president of RDC, said the tanker was new and the company had applied for an amended CPC in November. The company has a CPC but the new vessel necessitates an amendment that is to be approved by the MARINA. MARINA administrator Hernani Fabia said the CPC application was still being processed. He agreed with Sen. Risa Hontiveros that the tanker should not have sailed. Upon questioning by Sen. Francis Escudero, Tee said MT Princess Empress had sailed at least nine times before the incident. Escudero said it was possible the owners were thinking the CPC would be released anyway so they allowed the tanker to be deployed. Villar and Tulfo warned that claimants – individuals and local government units – may not be able to receive insurance compensation from RDC Reield Maritime Services, since it was not supposed to deploy the tanker without an updated CPC. Oriental Mindoro Gov. Humerlito Dolor told the inquiry that RDC lawyers earlier gave assurances that the company will immediately put up claims offices. Reports said RDC told the PCG that it was insured for $1 billion. “I don’t want the people to rely on the $1-billion insurance… we should plan accordingly that we would not get that… the insurance company will find a basis to not pay them,” Villar said.
Revenue from oil taxes should fund Mindoro oil spill cleanup —Recto -- Government revenues from taxes imposed on petroleum products should be used to aid residents affected by the Mindoro oil spill and finance subsequent cleanup, House Deputy Speaker Ralph Recto said Wednesday.Recto said a mere one day’s worth of oil tax collections is already worth P1 billion, an amount that would be enough to jumpstart “abatement and alleviation” measures in areas hit by the ecological disaster.Oriental Mindoro Governor Humerlito Dolor earlier said the oil spill from sunken MT Princess Empress carrying 800,000 liters already affected the livelihood “Ang katas ng buwis ng langis dapat gamitin panglinis ng tagas sa lumubog na barko,” Recto said.(The taxes collected from oil products should be used to clean up the oil spill.)
Thailand rushes to avert spill after accident on oil storage ship – (Reuters) – Authorities in Thailand on Thursday were working to avert a leak from a storage vessel carrying 400,000 barrels of crude oil.One crew member was killed after seawater entered the hull of The Benchamas 2 when a seal malfunctioned during maintenance earlier this week.
Authorities rush to contain oil spill moving toward eastern Thailand resort island Authorities are rushing to prevent an oil spill in eastern Thailand from damaging fragile corals, after officials said on January 30 that the leak that began last week was drifting towards more coastal areas. Minister of Natural Resources and the Environment Varawut Silpa-archa said it was crucial to try to prevent the main mass of oil from reaching the shore at Ao Prao, a small bay on Koh Samet, which is a popular resort island. “If the oil reached inside this area it could impact the beach and cause heavy damage to the shallow water corals,” Varawut said. The oil began leaking from a pipeline owned by Star Petroleum Refining Public Company Limited (SPRC) late on Tuesday. Before it was brought under control, an estimated 50,000 liters (13,209 gallons) of oil escaped into the ocean 20 km (12 miles) from the coastline of eastern Thailand. Mae Ramphueng Beach in Rayong province was declared a disaster area after some oil came ashore there late on Friday. The latest satellite image from the government’s Geo-Informatics and Space Technology Development Agency (GISTDA) showed the oil spill has spread to cover 67 sq km (25.87 sq miles) area of the sea. Most of the oil had formed a thin film rather than a thick oil slick, navy spokesman Vice Admiral Pokkrong Monthatphalin told reporters, citing aerial photographs.
Decaying oil tanker off Yemen could be offloaded by September if remaining $34m is raised: UN – The UN said Wednesday that it could finish offloading oil from a decaying tanker off Yemen if donors quickly provide the remaining $34 million that is needed, Anadolu News Agency reports.The UN recently purchased a ship that it hopes will avert a catastrophic spill from the decaying vessel. "There has also been progress on the Safer tanker. Last week, UNDP announced the purchase of a replacement vessel that should arrive in Hudaydah in May," Assistant Secretary-General for Humanitarian Affairs and Deputy Emergency Relief Coordinator, Joyce Msuya, told the 15-member Security Council."This means the offloading operation could finish by September – if donors quickly provide the remaining $34 million needed."The FSO Safer oil tanker is a floating storage and offloading unit located off the western coast of Yemen, 60 kilometres (37 miles) north of the port of Al-Hudaydah. It is used for storing and exporting oil coming from oilfields in the oil-rich central province of Marib.Now under the control of Houthi rebels, the tanker has not undergone maintenance since 2015 and more than 1 million barrels of crude oil have been sitting on a decaying vessel in the Red Sea.A statement released last week by the United Nations Development Program (UNDP) said a major spill would devastate fishing communities on Yemen's Red Sea coast, likely instantly wiping out 200,000 livelihoods."Whole communities would be exposed to life-threatening toxins. Highly polluted air would affect millions," it said. The cost of cleanup of a potential oil spill alone is estimated at $20 billion, according to the UNDP.
Saudi oil giant Aramco posts record $161.1 billion profit for 2022 --Saudi Arabia's state-controlled oil giant Aramco on Sunday reported a record net income of $161.1 billion for 2022 — the largest annual profit ever achieved by an oil and gas company.Aramco said net income increased 46.5 percent over the year, from $110 billion in 2021. Free cash flow also reached a record $148.5 billion in 2022, compared with $107.5 billion in 2021. "This is probably the highest net income ever recorded in the corporate world," Aramco CEO Amin Nasser said on a Sunday earnings call. The results are nearly triple the profit that oil major ExxonMobil posted for 2022, bolstered by soaring oil and gas prices through last year, along with higher sale volumes and improved margins for refined products. Oil and gas prices surged at the start of 2022, with western sanctions on Russia for its invasion of Ukraine steadily tightening access to Moscow's supplies, particularly seaborne crude and oil products.Oil prices have since pulled back more than 25% year-on-year, with hot inflation and rising interest rates overshadowing a more bullish demand outlook from China. Brent and WTI prices fell 6% last week alone. Brent last traded at around $80 dollars per barrel. "We are cautiously optimistic," Nasser said. "If you consider China opening up, the pickup in jet fuels and the very limited spare capacity, we are cautiously optimistic in the short to mid-term [that] markets will remain tightly balanced."Aramco raised its fourth-quarter dividend by 4% to $19.5 billion, to be paid in the first quarter of 2023. Aramco also said it would issue bonus shares to eligible shareholders as a result. "We're aiming to sustain [the dividend] at this level," Aramco Chief Financial Officer Ziad Al-Murshed told the earnings call. "We have the financial strength to go through the ups and downs of the cycle."Nasser also used the results release to repeat his warning about "persistent underinvestment" in the hydrocarbons sector. "Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real, including contributing to higher energy prices," Nasser said on Sunday, echoing comments made during a recent interview with CNBC.At both a ministerial and Aramco level, Saudi Arabia has been a proponent of avoiding short-term fuel shortages through the dual funding of fossil fuel supplies and the green transition."We don't see enough investment getting into the markets right now," he reiterated on the Sunday call. "We encourage the industry, policymakers, investors… to avail additional investment to really increase the amount in the sector, so that we can meet future demand."Aramco said average hydrocarbon production last year was 13.6 million barrels of oil equivalent per day, including 11.5 million barrels per day of total liquids. Saudi Arabia most recently produced 10.39 million barrels per day of crude oil in January, the International Energy Agency found in the February issue of its Oil Market Report.As chair of the influential OPEC+ producers' alliance, Saudi Arabia has been leading by example the group's efforts to collectively reduce their output targets by 2 million barrels per day, agreed in October and reaffirmed at technical and ministerial meetings since. The group's move towards limiting supply availabilities has put OPEC+ at odds with some international consumers, sparking a war of words with Washington towards the end of the last year, as U.S. President Joe Biden's administration stressed the need to easing the burden on households.Long-time rivals Saudi Arabia and Iran on Friday struck a China-brokered deal to resume diplomatic relations. Iran has previously been blamed for amajor attack on Aramco's facilities in 2019 that caused a dramatic spike in prices and undermined the stability of global supplies. Tehran has denied involvement."The deal will hopefully result in less geopolitical tension and enhance regional stability, which will definitely have a positive impact on the global market," Nasser said in response to a question about the Saudi-Iran development.
OPEC raises Chinese oil demand growth view, flags econ risks (Reuters) - OPEC on Tuesday further raised its forecast for Chinese oil demand growth in 2023 due to the relaxation of the country’s COVID-19 curbs, although it left the global total steady citing potential downside risks for world growth. World oil demand in 2023 will rise by 2.32 million barrels per day (bpd), or 2.3%, the Organization of the Petroleum Exporting Countries said in a monthly report. This was unchanged from last month’s forecast. While faster Chinese demand could support the oil market, crude prices have fallen this week as the collapse of Silicon Valley Bank has sparked fears about a fresh financial crisis. OPEC flagged potential downside risks for the world economy from rising interest rates. “China’s reopening, following the lifting of the strict zero-COVID-19 policy, will add considerable momentum to global economic growth,” OPEC said in the report. “The rapid rises in interest rates and global debt levels could cause significant negative spill-over effects, and may negatively impact the global growth dynamic,” OPEC added. OPEC expects Chinese oil demand to grow by 710,000 bpd in 2023, up from last month’s forecast of 590,000 bpd and a contraction in 2022. Last month’s report had also raised the Chinese forecast. The global total was steady due to downward revisions elsewhere, including the United States and Europe. OPEC was cautious on economic prospects, leaving its 2023 global growth forecast at 2.6%. The report cited the U.S. Federal Reserve successfully managing an inflation slowdown as among potential upside factors. Oil weakened after the report was released, extending an earlier decline. Brent crude was down over $1 to below $80 a barrel. The report also showed OPEC’s oil production rose in February despite output cuts by the wider OPEC+ group. OPEC+ includes the 13 OPEC members, plus Russia and other outside producers. For November last year, with prices weakening, OPEC+ agreed to a 2 million bpd reduction in its output target - the largest since the early days of the pandemic in 2020. OPEC’s share of the cut is 1.27 million bpd. OPEC said its crude oil output in February rose by 117,000 bpd to 28.92 million bpd, helped by a further recovery in Nigeria which has boosted supply due to improved security in its oil-producing Delta region. Despite the rise, OPEC is still pumping much less than called for by the OPEC+ agreement, as Nigeria, Angola and other members struggle to reach their targets. The report also trimmed its estimate of the amount of crude OPEC needs to pump in 2023 to balance the market by 200,000 bpd to 29.3 million bpd, suggesting a less tight market outlook than previously thought.
Chinese oil demand growth outweighs OECD weakness: Opec - Opec has increased its 2023 oil demand growth forecast for China, outweighing a far weaker growth outlook in the OECD. In its latest Monthly Oil Market Report (MOMR), Opec says its 2023 world oil demand growth forecast remains unchanged at 2.3mn b/d, with OECD Americas and OECD Europe both revised slightly lower, but Chinese growth revised higher, with jet/kerosene and gasoline leading demand growth. OECD demand is expected to grow by 0.2mn b/d on the year to 46.23mn b/d, after a 0.35mn b/d forecast made in the previous MOMR. Demand in the non-OECD world is forecast to increase by 2.1mn b/d to 55.67mn b/d. China leads the way, jumping by 0.71mn b/d to 15.56mn b/d. The rise was forecast at 0.59mn b/d in the previous MOMR, and the higher revision comes after a rebound of 0.8mn b/d in January — from 0.2mn b/d in December — as the country abandoned its zero-Covid strategy and transport, economic and social activities could return to normal. Oil demand dropped by 0.5mn b/d on the year in December in OECD Europe, a fourth consecutive monthly annual fall, Opec said, weakened by macroeconomic effects and "geopolitical developments", meaning the war in Ukraine and resultant sanctions. Diesel demand has been weak for seven months in Europe because of the faltering economic situation, and Opec expects European oil demand to show no growth this year, a revision down from its expected growth of a modest 40,000 b/d made a month ago. US oil demand growth is also expected to be modest this year, at 90,000 b/d. Demand there fell by an unexpected 1.2mn b/d on the year in December, affected by bad weather. Non-Opec liquids supply growth is forecast at 1.4mn b/d this year, to 67.2mn b/d, unchanged from last month's MOMR, with growth driven by the US, Brazil, Norway, Canada, Kazakhstan and Canada and declines primarily in sanctioned Russia. Opec expects Russian output to drop by 750,000 b/d this year to 10.3mn b/d, sharply lower than the 900,000 b/d drop forecast last month after higher than expected output in the first quarter this year. Opec said there are large uncertainties over non-Opec output growth because of the impact of "ongoing geopolitical developments", and the potential for US shale. Opec puts the call on its members crude at 29.3mn b/d this year, up by around 800,000 b/d from 2022 and down by 100,000 b/d from last month's update. Argus estimates Opec crude output was 28.88mn b/d in February.
OPEC sees improved Chinese oil demand more than offset by resilient Russian output - With Russian oil output proving resilient to sanctions, OPEC downgraded its estimate of how much crude it will need to pump to balance the market, despite increasing its forecast for Chinese demand. At its current production rate, more OPEC crude will not be required until the second half of the year, the secretariat said in an oil market outlook published March 14, with volumes from outside the bloc expected to rise more than previously thought. OPEC said it now saw Russian liquids production falling 750,000 b/d year on year, less than the 900,000 b/d drop anticipated in its February report, largely on the back of higher than expected Q1 volumes. That mostly accounted for OPEC's upward revision to its 2023 non-OPEC supply forecast to 67.20 million b/d. But even with China's oil demand now expected to rise 710,000 b/d for 2023, up from the 590,000 b/d forecast in February, OPEC kept its estimate of overall global consumption essentially unchanged at 101.90 million b/d, due to weaknesses emerging in some western economies. The group said the rapidly changing economic conditions continued to warrant a cautious approach to managing oil production volumes. OPEC pumped 28.91 million b/d in February, according to secondary sources used by the secretariat to monitor output, almost 300,000 b/d above the so-called "call on OPEC" in the second quarter. The call then rises significantly in the second half of the year to average 29.26 million b/d for the full year, which is still a downward revision of 160,000 b/d from the February estimate. OPEC has allied with Russia and several other key oil producers on a series of output cuts, the latest of which are scheduled to last through the end of 2023. The OPEC+ coalition's nine-country ministerial monitoring committee, co-chaired by Saudi Arabia and Russia, next convenes April 3. "Given the ongoing high level of uncertainty with regard to the timing and extent of a full global economic recovery to pre-pandemic levels in all sectors, the OPEC and non-OPEC countries participating in the [Declaration of Cooperation] continue to carefully monitor market developments and address challenges in order to ensure sustainable market stability for the benefit of the global economy," the report stated, referring to the alliance. The market report came as crude prices have tumbled while US officials seek to stabilize a financial system hit by the collapse of Silicon Valley Bank, which has triggered fears of another banking crisis. Front-month Brent futures, which had breached $86/b just days earlier, were trading at $79.09/b as of 1333 GMT, their lowest since early January. OPEC producers have been hoping for a robust Chinese economic reopening from its strict COVID-19 restrictions to boost oil demand, and signs of such green shoots were promising. The report projected that non-OECD oil demand has already surpassed pre-pandemic levels, as the travel and transportation sectors recover, while OECD demand will fall just slightly short. But western sanctions targeting Moscow have so far kept most Russian oil export volumes intact beyond most market expectations, while clamping down on its revenues.
OPEC predicts “modest” oil surplus amidst demand lull for Q2 2023 - The Organization of Petroleum Exporting Countries is pumping about 28.92 MMbpd, or about 300,000 a day more than it expects will be needed in the second quarter, it said in a monthly report. World oil consumption typically eases around this time, a softer patch between the end of winter and start of the summer driving season. The surplus could be even larger if oil production from Russian continues to prove resilient to international sanctions, because OPEC’s outlook assumes a sharp drop in the country’s output next quarter. “There exist some upside potential and downside risks” to demand, OPEC’s Vienna-based research department said in the report on Tuesday. “Given the ongoing high level of uncertainty with regard to the timing and extent of a full global economic recovery to pre-pandemic levels,” the OPEC+ coalition will need to remain cautious. Led by Saudi Arabia, OPEC and its partners are restraining output to keep world markets in balance amid a shaky rebound in consumption and fragile economic outlook, which has faltered further this week in the wake of a bank collapse in the U.S. Oil prices plunged below $80 a barrel in London on Monday for the first time in a month. Despite this turmoil, OPEC largely left estimates for average global supply and demand this year unchanged, projecting that world consumption will climb by 2.3 MMbpd to a record of 101.9 million a day. The group sharply increased estimates for supplies this quarter from Russia, which have remained surprisingly strong despite international sanctions over the invasion of Ukraine and Moscow’s threats of retaliatory cuts. OPEC expects Russia will pump 10.9 MMbpd this quarter, about 620,000 bpd more than it estimated in last month’s report. Nevertheless, OPEC kept forecasts for Russian output during the rest of the year unchanged, predicting that it will plunge next quarter by 900,000 bpd — an even bigger drop than was witnessed during the international backlash when Moscow when launched its war a year ago. Key members of the OPEC+ coalition are due to hold an online monitoring session to review oil market conditions early next month, and a full ministerial meeting at its Vienna headquarters in June. Group leader Saudi Arabia has said the alliance intends to keep oil production levels unchanged for the entire year, regardless of what happens in the market.
Global oil stocks at 18-month high: IEA Global oil stocks have built to their highest level in 18 months, the IEA said today, which could provide a buffer later in the year when supplies will be "nowhere close" to matching demand. The IEA's monthly Oil Market Report (OMR) said global inventories rose by 52.9mn bl in January to 7.8bn bl, the highest since September 2021. There were big builds in OECD countries, driven by reduced demand and by European nations filling storage ahead of the complete embargo on Russian oil, with smaller increases in non-OECD nations. Preliminary indicators for February suggest a further stockbuild."Building stocks today will ease tensions as the market swings into deficit during the second half of the year when China is expected to drive world oil demand to record levels," the IEA said. Although it kept its forecast for global demand this year all but unchanged from its previous OMR at 102mn b/d, it said demand growth will be skewed towards the latter part of the year, driven by a rebound in air traffic and a post-Covid-19 lockdown recovery in China. It forecasts demand to grow by 710,000 b/d in the current quarter and by 2.6mn b/d for October-December.The IEA said matching the implied 2mn b/d year-on-year growth this year will be a challenge given the uncertainty over Russian output. It forecast 2023 liquids supplies at 101.6mn b/d, up by 300,000 b/d from its last forecast, "enough to meet demand in [the first half of the year] but falling short in the second half" when it sees demand at an all-time high of 103.2mn b/d.The IEA acknowledged Russian production has remained steady near pre-war levels, and has certainly performed better than the IEA projected in the immediate aftermath of Moscow's invasion of Ukraine, but noted a 500,000 b/d fall in its exports in February."Willing buyers in Asia, namely India and, to a lesser extent, China, have snapped up discounted crude oil cargoes. But increasing volumes on the water suggest the share of Russian oil in their import mix may be getting too big for comfort," it said. Russia has said it will cut production by 500,000 b/d for March, casting the move as a response to the G7 crude price cap.
Bank Collapse Contagion Fears Spread To Oil Prices - Oil prices have fallen over $2 on Monday, and were down as much as $4 in early trading, as fears of a contagion spread following the sudden collapse of Silicon Valley bank on Friday. By 10:20 a.m. EST on Monday, Brent crude had fallen 2.31% to $80.87, with WTI down 2.62% at $74.67. The Dow was also plunged over 243 points early on Monday, clawing back some of those losses by 10:20 a.m., for a 70 point downswing. Oil prices likely would have fallen even more had not Chinese demand data not provided a counterweight. Fears of a pending financial crisis were sparked on Friday when the U.S. government seized the assets of Silicon Valley Bank (SVB) ADVERTISEMENT SVB, the go-to lender for tech startups backed by venture capitalists, failed dramatically on Friday, with shares plunging 60% before the SEC halted trading. On Wednesday, the bank announced a massive capital raise, saying it would sell $2.25 billion in new shares to fix the balance sheet. That created a panic and a run on the bank, sending shares tanking by Friday, leading to an FDCI takeover. On Sunday, Washington launched emergency measures to avoid the contagion spreading into a wider financial crisis. The Biden administration pledged that banks will bear the losses, not taxpayers. "No losses will be — and this is an important point — no losses will be borne by the taxpayers; let me repeat that, no losses will be borne by the taxpayer," Biden said Monday in remarks at White House. "Instead the money will come from the fees that banks pay into the Deposit Insurance Fund." Following the bank’s failure, Goldman Sachs has forecast that the Federal Reserve will now pause rate hikes during its meeting next week. Others agree. "We think the steps taken by the Fed, Treasury and (the Federal Deposit Insurance Corp) will decisively break the psychological 'doom loop' across the regional banking sector," Karl Schamotta, chief market strategist at Corpay in Toronto, told Reuters.
The Market Whipsawed on Monday Amid Worries of a Possible Banking Crisis - The oil market posted an outside trading day as the market whipsawed on Monday amid worries of a possible banking crisis. The market traded to a high of $77.47 in overnight trading due to a weaker dollar. However, the market gave up its gains and sold off sharply as the collapse of Silicon Valley Bank raised fears of a new financial crisis. On Sunday, state regulators closed New York-based Signature Bank. The sudden shutdown of SVB Financial triggered concerns about risks to other banks from sharp rate hikes by the Fed over the last year but also spurred speculation about whether the central bank could slow the pace of its monetary tightening. The oil market extended its losses to over $4.30 as it sold off to a low of $72.30 at the bottom of its one-month trading range. The market later bounced off its low and traded in a range from $74.30 to $76.30 during the remainder of the session. The April WTI contract settled down $1.88 at $74.80, the lowest level since February 22nd while the May Brent contract settled down $2.01 at $80.77. The product markets also ended the session lower, with the heating oil market settling down 1.14 cents at $2.7615 and the RB market settling down 5.44 cents at $2.5914.The oil market on Tuesday is seen trading sideways ahead of the release of the consumer price report. The Federal Reserve will likely have a harder time raising rates aggressively following the collapse of SVB, which should cause some weakness in the dollar and thus support the oil market. The EIA reported that U.S. total shale regions oil production for April is forecast to increase by 69,000 bpd to 9.214 million bpd, the highest level since December 2019. In March, total shale output increased by 86,000 bpd. It reported that U.S. Bakken oil production for April is seen up 18,000 bpd at 1.163 million bpd, the highest level since March 2022, following an increase of 19,000 bpd in March. Eagle Ford oil production for April is seen up 9,400 bpd at 1.132 million bpd, the highest level since April 2020 following an increase of 11,000 bpd in March and Permian Basin oil production for April is seen increasing by 26,000 bpd to 5.622 million bpd, the highest level since December 2022 following an increase of 35,000 bpd in March.IIR Energy reported that U.S. oil refiners are expected to shut in about 1,273,000 bpd of capacity in the week ending March 17th, increasing available refining capacity by 274,000 bpd. Offline capacity is expected to fall to 1,127,000 bpd in the week ending March 24th.Colonial Pipeline Co is allocating space for Cycle 17 on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina. The current allocation is for the pipeline segment north of Collins, Mississippi. Fitch Ratings increased its oil price assumptions on expectation that geopolitical issues will extend the period before prices moderate towards lower, long-term levels. It said its 2023 Brent and long-term oil price assumptions remain unchanged. U.S. President Joe Biden pledged on Monday to do whatever was needed to address a banking crisis threatened by the collapses of Silicon Valley Bank and Signature Bank, which forced regulators to step in with emergency measures.
Concerns of a Broader Recession that Could Reduce Demand | Sprague --The oil market continued on its downward path on Tuesday following Monday’s trading session, when the market saw a $5 trading range. The market posted a high of $74.90 in overnight trading before the market extended the previous day’s decline as the collapse of Silicon Valley Bank added to concerns of a broader recession that could reduce demand. The market traded down to $72.66 following the release of the Consumer Price Index report, which showed that consumer prices increased 0.4% in February, which would lower the year-on-year increase in the CPI to 6.0% in February and mark the smallest year on year increase since September 2021. The market bounced off that level and retraced its losses as OPEC indicated in its monthly report that stronger demand in China may provide some support and offset the weakness in the U.S. and Europe. However, the market once again erased its gains and breached its support at $72.25 as it extended its losses and posted a low of $71.36 ahead of the close amid a rebound in the dollar. The April WTI contract settled down $3.47 at $71.33, the lowest settlement since December 9th and continued to trend lower in the post-settlement period, trading to a new low of $70.78. The May Brent contract settled down $3.32 at $77.45. The product market settled in negative territory, with the heating oil contract settling down $3.42 at $2.7144 and the RB market settling down 3.84 cents at $2.5530. According to OPEC, global oil markets appear on track for a modest surplus next quarter amid a seasonal lull in demand. OPEC is producing about 28.92 million bpd or about 300,000 bpd more than it expects will be needed in the second quarter. It said the surplus could be even larger if production from Russia continues to prove resilient to international sanctions. OPEC expects Russia to produce 10.9 million bpd this quarter, about 620,000 bpd more than it estimated in last month’s report. OPEC kept forecasts for Russian output during the rest of the year unchanged, predicting that it will fall next quarter by 900,000 bpd. OPEC raised its forecast for Chinese oil demand growth in 2023 due to the relaxation of the country's COVID-19 curbs, although it left the global total steady, citing potential downside risks for world growth. In its monthly report, OPEC said world oil demand in 2023 will increase by 2.32 million bpd or 2.3% to 101.9 million bpd. This was unchanged from last month's forecast. OPEC expects Chinese oil demand to grow by 710,000 bpd in 2023, up from last month's forecast of 590,000, although the global total was steady due to downward revisions elsewhere. The report also showed OPEC's crude oil production increased in February despite the wider OPEC+ alliance last year pledging output cuts to support the market. OPEC said its crude oil output in February increased by 117,000 bpd to 28.92 million bpd. OPEC cut its global demand forecast for its crude in 2023 by 200,000 bpd. U.S. senators reintroduced a bipartisan bill on Tuesday that would allow nationwide sales of gasoline with a higher blend of ethanol year-round. Senators Deb Fischer and Amy Klobuchar argue that the expanded sales of E15 or fuel containing 15% ethanol would decrease gasoline prices and reduce U.S. dependence on foreign oil. The API supported the bill when it was introduced last autumn.
WTI Slides to 3-Month Low on Firmer USD, Fuel Demand Concerns -- Oil futures settled Tuesday's session sharply lower on a stronger U.S. dollar tied to expectations for another rate hike from the U.S. Federal Reserve next week and persistent concerns over fuel consumption in the United States along with uncertainty about a post-lockdown rebound in Chinese demand. On the session, the U.S. dollar index strengthened a modest 0.03% against a basket of foreign currencies to settle at 103.215, pressuring West Texas Intermediate futures which has an inverse relationship to the U.S. currency. WTI for April delivery declined $3.47 to $71.33 bbl, and international crude benchmark Brent contract for May delivery fell to $77.45 bbl, down $3.32. NYMEX RBOB April futures dropped back $0.0384 to $2.5530 gallon, and ULSD April futures retreated $0.0471 to $2.7144 gallon. Greenback's rebound after three down sessions follows a strong reading on core U.S. consumer price index, which is considered a barometer of a long-term inflation trend, increased 0.5% in February, according to data published this morning by the Bureau of Labor Statistics. Shelter was once again the largest contributor to the monthly rise in consumer prices, accounting for over 70% of the increase, with the indexes for food, recreation, and household furnishings and operations also boosting consumer prices. That is bad news for the Federal Reserve that has tried to ease price pressures in the services industry for over a year now. All else equal, a resurgence of faster inflation in the core services might have led the Federal Open Market Committee to approve a 50-basis point increase in the federal funds rate next week after gradually moderating the pace of rate hikes. However, the collapse of the Silicon Valley Bank and the risks to the financial system likely took this option off the table, at least according to money markets. U.S. funds rates futures, however, point to a higher chance for the FOMC to approve a 25-basis point rate increase at their March 21-22 meeting. Also Tuesday, oil traders positioned ahead of the weekly inventory report from the American Petroleum Institute on tap for 4:30 PM ET release, followed by official data from the U.S. Energy Information Administration Wednesday morning. Analysts expect U.S. commercial crude oil inventories to have increased by a marginal 100,000 bbl last week, with estimates ranging from a decrease of 3 million bbl to an increase of 3.5 million bbl.
Oil prices rebound on improving China outlook after 4% fall - Oil prices rebounded on Wednesday on an improving fuel demand outlook in China after interest rate concerns and a broader market-sell off triggered by the collapse of an American bank dragged futures lower by more than 4 per cent the previous day. Brent, the benchmark for two thirds of the world’s oil, was trading 1.43 per cent higher at $78.51 a barrel at 9am UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 1.51 per cent at $72.41 a barrel. On Tuesday, Brent settled 4.11 per cent lower at $77.45 a barrel while WTI was down 4.64 per cent at $71.33. Opec on Tuesday raised its forecast for Chinese oil demand growth in 2023 on the relaxation of Covid-19 measures, but stuck to its global demand estimate of 2.3 million barrels per day, citing a potential economic slowdown in Europe and the Americas. The oil producers' group, which expects China’s crude consumption to rise by about 700,000 bpd this year, said the world economy had continued to face challenges ranging from elevated inflation to the Ukraine war. “Overall, oil demand continues to be driven by the ongoing recovery in the travel and transportation sectors,” it said. China, the world’s second-largest economy and top crude importer, reopened its borders in January after adhering to a strict zero-Covid policy for about three years. The country is aiming for gross domestic product growth of 5 per cent in 2023, after it grew by 3 per cent in 2022. The US consumer price index, a key inflation metric, rose by 0.4 per cent in February from January, the Labour Department reported on Tuesday. On an annual basis, prices increased by 6 per cent, which was down from 6.4 per cent in January. Core inflation, which excludes food and energy prices, grew by 0.5 per cent from January and increased by 5.5 per cent on the year. “A mostly in-line inflation report sealed the deal for at least one more [US Federal Reserve] rate hike,” s “The Fed’s tightening work is not done just yet and the chances are growing that they will send the economy into a mild recession, and as risks remain that it could be a severe one,” Global markets have been hit hard after the failure of California-based Silicon Valley Bank triggered concerns of a US banking crisis. On Friday, US regulators closed SVB, the 16th largest bank in the country, after depositors hurried to withdraw money amid concerns about the bank’s health. It was the second biggest retail bank failure in US history, after the 2008 collapse of Washington Mutual due to the global financial crisis. US crude stocks recorded a small increase of 1.1 million barrels last week, according to the American Petroleum Institute.
Oil Falls After IEA Signals Global Oil Market in Surplus -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange dropped more than 1% early Wednesday after the International Energy Agency forecast that the global oil market is likely to remain in surplus for the first half of the year, with oil inventories held in OECD countries climbing to 18-month highs on the back of strong Russian crude oil exports. In its monthly oil market report released Wednesday morning, the IEA estimated global oil supply leapt 830,000 barrels per day (bpd) in February to 101.5 million bpd, driven by a rebound in the U.S. and Canada after weather-related disruptions along with ample crude exports from Russia that are being rerouted to new destinations in Asia. The agency forecasts output growth in non-OPEC countries will continue to outstrip lackluster demand in the first half of the year, but seasonal trends and China's post-COVID recovery are still set to tip the market balances into deficit in the second half of the year. Global oil demand is set to accelerate sharply over the course of 2023, rising from a 710,000-bpd year-on-year increase in the first quarter 2023 to 2.6 million bpd in the fourth quarter. Rebounding air traffic and the release of pent-up Chinese demand dominate the recovery. The most recent data out of China showed the economy picked up some momentum at the start of the year, with retail sales rising 3.5% in January and February compared to year-ago levels and industrial output jumping 2.4% as local governments increased infrastructure spending. However, the unemployment rate, particularly among young people, increased to almost 18%, pointing to protracted weakness in domestic demand. Despite these uncertainties, the IEA sticks to its bullish call on China, expecting the momentum in Asia's largest economy to drive global demand to a record 102 million bpd. For Russia, the IEA expects average oil production will stand at 10.4 million bpd this year, 300,000 bpd more than it was forecasting last month, but still 740,000 bpd less than in 2022. Russia has largely managed to maintain its production levels as it has sought out alternative customers, particularly in India and China. Stable crude oil exports are seen lifting the Russian economy into positive growth this year, according to economists from the International Monetary Fund. The IMF, known for its gloomy forecasts, upgraded Russian gross domestic product estimates from a 2.3% decline seen at the end of 2022 to a positive 0.3% in February. Separately, the American Petroleum Institute reported Tuesday U.S. commercial crude oil inventories increased by a larger-than-expected margin during the week ended March 10, while draws in gasoline and distillate fuel stockpiles surpassed expectations. Details of the report showed an increase of 1.155 million barrels (bbl) in commercial crude oil stocks last week, well above calls for a 100,000-bbl gain. Stocks at the Cushing, Oklahoma, tank farm -- the New York Mercantile Exchange delivery point for West Texas Intermediate futures -- fell 946,000 bbl on the week. Gasoline inventories dropped 4.587 million bbl through March 10, more than three times the estimate for a 1.2-million-bbl draw. API data show middle distillate inventories were drawn down 2.886 million bbl, more than four times the expected 600,000-bbl decline. Near 7:45 a.m. EDT, West Texas Intermediate contract for April delivery declined $0.98 to $70.34 bbl, and the international crude benchmark Brent contract for May delivery fell to $76.38 bbl, down $1.04. NYMEX RBOB April futures dropped back $0.0261 to $2.5269 gallon, and ULSD April futures retreated $0.0402 to $2.6742 gallon.
WTI Holds Losses After Big Product Draws Oil prices have collapsed further this morning - after bouncing last night on API-reported product inventory drawdowns - as last night's China macro data didn't suggest a strong re-opening and Europe's banking system joining the systemic crash freight train is not helping sentiment as oil stands alone for now in pricing an imminent recession. "The energy complex appears to be connecting the dots between the recent banking issues and a possible recession," Additionally, the EIA says global oil markets are contending with a surplus as Russian production defies predictions of a slump while fuel demand slowly picks up. “World oil supply should comfortably exceed demand in the first half of the year,” said the agency, which advises major economies. “Much of the supply overhang reflects ample Russian barrels racing to re-route to new destinations.” API
- Crude +1.16mm (+100k exp)
- Cushing -950k
- Gasoline -4.59mm (-1.2mm exp)
- Distillates -2.89mm (-600k exp)
DOE
- Crude +1.55mm (+100k exp)
- Cushing -1.916mm - biggest draw since May 2021
- Gasoline -2.061mm (-1.2mm exp)
- Distillates -2.527mm (-600k exp)
US Crude stocks rose last week but Products and Cushing saw considerable drawdowns... Graphics: Bloomberg The now much-watched 'adjustment factor' on the DOE data is back near record highs... Total crude stocks remain at highest since May 2021...Inventory levels at the Cushing hub are rolling over from two year highs... US crude production was flat last week as rig counts trend lower... WTI was trading just below $69 ahead of the official data and rose modestly after...
Oil tumbles to lowest level since December 2021 as banking crisis routs markets - Oil prices fell sharply Wednesday, as traders feared a brewing banking crisis could dent global economic growth. West Texas Intermediate futures fell more than 5% to settle at $67.61 per barrel, reaching its lowest level since December 2021. Brent crude , the international benchmark, slid 4% to $74.36 per barrel. "The oil market is going to be stuck in a surplus for most of the first half of the year, but that should change as long as we don't see a major policy mistake by the Fed that triggers a severe recession," A retest of October's lows could add increased downward pressure on WTI crude, he said, adding that energy stocks may struggle given the weakening demand outlook and surplus likely to persist in the short-term. "Longer-term views however still support having energy in your portfolios as a lot of the oil giants have robust balance sheets that support continued buybacks and dividends," he added. The drop came as global risk markets sold off following news that Credit Suisse's biggest investor, the Saudi National Bank, would not provide more assistance for the embattled bank. The news led to a more than 20% drop in the bank's U.S.-listed shares. It also raised concern over the state of the global banking system less than a week after two U.S. regional banks failed. The stress in smaller banks led Goldman Sachs to cut its U.S. GDP growth forecast. "Small and medium-sized banks play an important role in the US economy," Goldman economists wrote. "Banks with less than $250bn in assets account for roughly 50% of US commercial and industrial lending, 60% of residential real estate lending, 80% of commercial real estate lending, and 45% of consumer lending." "US policymakers have taken aggressive steps to shore up the financial system, but concerns about stress at some banks persists," they added. "Ongoing pressure could cause smaller banks to become more conservative about lending in order to preserve liquidity in case they need to meet depositor withdrawals, and a tightening in lending standards could weigh on aggregate demand." The Federal Reserve is slated to hold a policy meeting next week. Entering this week, traders had priced in at least a 25 basis-point rate hike. However, CME Group's FedWatch tool now shows nearly a 2-to-1 chance of rates staying at current levels.
Oil’s Tumble to 15-Month Low Accelerated by Algos, Options Moves -- Oil closed at a 15-month low as a wave of technical selling and options covering accelerated a three-day slide. The US benchmark plunged more than 5% Wednesday, plagued by banking-sector turmoil that’s eroding oil-demand optimism. Adding to the chaos, financial firms trying to limit their exposure to falling prices in the options market began dumping crude futures in a strategy known as delta hedging. West Texas Intermediate crude has lost 10% of its value in March, prompting analysts to wonder how far prices must fall before OPEC+ adjusts output quotas. While the cartel has said it’ll keep production unchanged this year, headwinds are bearish: US crude stockpiles are expanding again, Russian exports remain resilient in the face of sanctions and the International Energy Agency expects a surplus in the first half of the year. “The path of least resistance is clearly to the downside for oil,” Fawad Razaqzada, a market analyst at StoneX, said in a note. As long as oil prices stay below $70 a barrel, he added, “the sellers will remain in control.” Until recently, oil was stuck in a $10 range with traders balancing aggressive monetary tightening with optimism around China’s demand recovery. Now, with an unfolding banking crisis driving investors from risky assets, oil may have further to fall.
The Oil Market Sold Off to its Lowest Level in More Than a Year - The oil market sold off to its lowest level in more than a year as a brewing banking crisis could impact global economic growth. In overnight trading, the oil market retraced some of its previous losses and posted a high of $72.56 amid an increase in China’s economic activity in the first two months of the year. However, early signs of a return to calm faded after Credit Suisse's largest investor, the Saudi National Bank, said it would not provide the Swiss bank more assistance, sending its shares and other European equities lower. It also raised concern over the state of the global banking system less than a week after two U.S. regional banks failed. The crude market erased its gains and sold off sharply throughout the session, extending its losses to over $5.60 as it posted a low of $65.65 in afternoon trading as the selloff in bank shares stoked fears of a recession. The April WTI contract later bounced off its low ahead of the close and settled down $3.72 or 5.2% at $67.61, the lowest level since December 3, 2021 and the largest one-day percentage decline in more than two months. The May Brent contract settled down $3.76 or 4.85% to $73.69. The product markets ended the session sharply lower, with the heating oil market settling down 10.95 cents at $2.6049 and the RB market settling down 11.46 cents at $2.4384.The International Energy Agency said global oil demand is increasing slowly but is set for a large increase from resumed air travel and China's economic reopening after the end of its COVID-19 curbs. The IEA said "Rebounding jet fuel use and a resurgent China will see an overall 1Q-4Q ramp-up of 3.2 million bpd, the largest relative in-year increase since 2010." The agency kept its forecasts for Chinese and global demand relatively steady from the previous month, at 16 million bpd and 102 million bpd, respectively. The IEA said that oil supply is still outstripping relatively slow demand, but added that the market is set to balance by around the middle of the year with China and developing countries driving demand. The IEA warned that high inflation and investor concerns over high interest rates cloud the economic horizon and could pose a risk to fuel demand, adding that concerns over the health of the U.S. banking sector also carried potential downside risks. The IEA also stated that global oil stocks are at nearly 7.8 billion barrels, the highest level since September 2021. In regards to Russia, the IEA said the country’s oil exports fell by more than 500,000 bpd to 7.5 million bpd in February. Its oil revenue fell by $2.7 billion on the month to $11.6 billion or nearly half of pre-war levels. Russian oil production remained near pre-war levels in February. It said much of the supply overhang reflected Russian supply seeking new destinations after European Union bans. Bloomberg reported that Saudi Arabia believes its economy can decouple from oil that crude prices soon will not be a decisive factor in shaping fiscal policy.Algeria's Energy Minister, Mohamed Arkab, said he is "extremely attentive" to recent developments in financial markets and the short and medium term impact on oil markets.IIR Energy reported that U.S. oil refiners are expected to shut in about 1,314,000 bpd of capacity in the week ending March 17th, increasing available refining capacity by 61,000 bpd. Offline capacity is expected to fall to 1,157,000 bpd in the week ending March 24th.
Oil Wobbles After Selloff Ahead of ECB Rate Announcement -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange flipped between modest gains and losses early Thursday after Credit Suisse announced it would receive a $54 billion loan against its collateral from the Swiss National Bank to shore up liquidity and confidence in the troubled bank. This has lifted sentiment ahead of the highly anticipated rate decision from the European Central Bank with investors paring bets on another half-point rate hike amidst the banking turmoil. Shares of Credit Suisse jumped over 30% at the market's open Thursday after the bank said it would borrow up to $54 billion from the Swiss National Bank. In a joint statement released Thursday morning, the Swiss National Bank and the Swiss Market Supervisory Authority said Credit Suisse "meets the capital and liquidity requirements imposed on systemically important banks." The funding deal calmed markets for the time being, with European equities recouping some of Wednesday's steep losses and equity futures on Wall Street trading mixed as the U.S. dollar retreated. At last look, the U.S. dollar weakened 0.10% against the basket of foreign currencies to 104.175 after a blow-out rally tied to investors fleeing riskier assets for the safety of the U.S. currency. Next, investors will turn their attention to the European Central Bank, which is expected to announce its rate decision at 9:15 a.m. EDT. Markets are now pricing in a 60% chance of a 25-basis-point hike in Euro Zone rates compared to a 90% chance of a 50-basis-point hike just a day earlier. ECB policymakers are also set to release fresh quarterly economic forecasts for the Euro Zone that could show headline inflation receding faster than previously seen -- even as underlying price gains, known as core inflation, prove stickier. The turmoil at one of Europe's largest banks follows the collapse of two regional banks in the United States -- Silicon Valley Bank and Signature Bank -- both casualties of poor hedging in the face of eight interest rate hikes by the Federal Reserve in the last 12 months. As interest rates were close to zero, banks profited from the chance to acquire an abundance of bonds and treasury securities. With the subsequent Fed rate hikes implemented to fight inflation, these assets have been losing value. Against this backdrop, rating agency Moody's this week downgraded its outlook for the U.S. banking system, citing the rapid deterioration of the conditions facing the sector. Near 7:30 a.m. EDT, West Texas Intermediate contract for April delivery softened $0.31 to $67.30 barrel (bbl), and the international crude benchmark Brent contract for May delivery slipped to $73.48 bbl. NYMEX RBOB April futures softened $0.0066 to $2.4318 gallon, and ULSD April futures retreated $0.0510 to $2.5526 gallon.
Oil climbs on Saudi, banking assurances; U.S. crude still under $70 -- Oil prices settled up about 1% Thursday, after a 5% drop the previous day, as Saudi-Russian assurances on production cuts and remarks that the U.S. banking system was ‘safe and sound’ amid the rescue of another lender helped restore some confidence to the upside. New York-traded West Texas Intermediate, or WTI, settled up 74 cents, or 1.1%, at $68.35 a barrel. The U.S. crude benchmark earlier fell to $65.75, resting just a dime above Wednesday’s 15-month low of $65.65. London-traded Brent settled up $1.01, or 1.4%, at $74.70. The global crude benchmark earlier plumbed a low of $71.92, resting slightly above the previous session’s trough of $71.67. Thursday’s rebound in risk assets came after a consortium of U.S. banks led by the country’s largest — JPMorgan Chase — led rescue efforts for First Republic Bank, the latest lender in trouble. Treasury Secretary Janet Yellen, meanwhile, urged depositors to have confidence in the U.S. financial system. “Our judgment is [that] this banking system overall is safe and sound,” Yellen said in testimony before the Senate. Crude prices suffered their worst drop for 2023 on Wednesday as a U.S. banking crisis that began with last week’s collapse of Silicon Valley Bank and Signature Bank extended towards Europe with financial troubles at Zurich-based Credit Suisse (NYSE:CS) — one of the world’s preeminent names in global investment banking. The Federal Deposit Insurance Corp also rapidly took charge of the U.S. banks that collapsed last week, before JPMorgan and the rest of the industry stepped in on Thursday to help out First Republic. All of the troubled banks experienced deposit runs, or pulling out of money by customers. On the oil front particularly, crude prices benefited from the signals given by Saudi Arabia and Russia that they stood by to support the market with production cuts. A day after the worst selloff in crude for this year, Saudi state media reported that Saudi Energy Minister Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak met in the Saudi capital to discuss the OPEC+ group's efforts to maintain market balance. At the meeting, the two officials reaffirmed their support for the daily cut of 2 million barrels decided in October by the 13-member Saudi-led Organization of the Organization of the Petroleum Exporting Countries and its 10 allies steered by Russia.
Banking rout fuels U.S. oil hedging, as investors seek to limit losses (Reuters) - Oil producers, banks and hedge funds have increased purchases of put options to protect themselves from further losses, market sources said this week, as crude futures hit their lowest level since December 2021 on concern that the rout in the banking industry could trigger a global recession and cut fuel demand. Oil futures have fallen over 8% since last Friday as the collapse of SVB Financial and peer Signature Bank prompted concerns of a wider banking crisis. Credit Suisse on Thursday sought to shore up its liquidity and restore investor confidence by borrowing up to $54 billion from Switzerland's central bank. The Swiss lender is the first major global bank to be thrown an emergency lifeline since the 2008 financial crisis. Investors in the oil market, including oil producers, have rushed to buy put options, used to either bet on or protect against downside movement. Some hedge funds had short positions on options, two market sources said, in a bet that prices will fall farther. "There is a fear that if the global economy comes down we could be talking about oil going lower," Volume in puts for the U.S. crude futures contract for April delivery gained on Friday over 30% from the previous session to 30,594, CME Group data showed. From Friday to Wednesday, volumes rose even further, climbing over 60% to 50,255 puts. There were about 36,394 call options, or bets on a higher price, bought on Wednesday in comparison. For U.S. crude futures options open interest, the ratio of puts to calls is the highest since August 2022. A U.S. based trader said investors were reluctant to buy and hold due to the high volatility and was therefore focused on short term positions in the market. "Shorting these levels could turn quickly on you," the trader added. However, if oil prices fall further, buying put options to protect against the downside would become more expensive as demand goes up, though puts costs vary. The discount of later-dated oil futures contracts to the front-month contract tightened on Wednesday, indicating that market participants were less confident in short-term demand. The premium of U.S. crude's front-month contract to U.S. crude's price in half a year tightened to as little as 29 cents a barrel, the lowest since Feb. 7, Refinitiv Eikon data showed. For international benchmark Brent crude futures, the front-month contract's premium to the contract in half a year tightened to $1.31 a barrel, the lowest since Jan. 31.
Energy Aspects: OPEC+ Will Not Rush To Act After Oil Price Rout - The OPEC+ group will not be racing to react to this week’s oil price plunge and will wait for financial markets to calm down after the banking sector scare, consultants at Energy Aspects said in a note carried by Bloomberg on Thursday.“It would be premature for OPEC+ to take action without first understanding what the risks are,” Energy Aspects analysts said in the note.The Fed and the European Central Bank (ECB) will need to “address market conditions before OPEC+ makes any moves,” according to the consultancy. Oil prices plunged this week, settling on Wednesday at the lowest level in 15 months, after panic for Credit Suisse roiled the financial markets, rekindling concerns about the banking system following the collapse of Silicon Valley Bank (SVB) in the U.S. at the end of last week.Early on Thursday, oil prices were slightly up, with WTI trading below the $70 mark, at $67 per barrel, and Brent at just below $74, down by 10% in three days.But OPEC continues to see strong demand and fundamentals not justifying the selloff in oil, according to Energy Aspects.“The last thing OPEC+ wants is to even mention a possibility of production cuts out of concerns that the market will misconstrue these comments as fear of demand weakness,” the analysts wrote in the note.The OPEC+ Joint Ministerial Monitoring Committee (JMMC), the panel recommending oil policy actions, has a meeting slated for April 3. There hasn’t been an emergency meeting of OPEC+ of any kind called in the meantime, Energy Aspects noted. Earlier this week, before the Credit Suisse scare spooked markets, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman told Energy Intelligence that the OPEC+ group would keep its oil production targets unchanged until the end of the year in view of the high level of uncertainty on the global markets and with global economic growth.
Oil Prices Advance Over 1% As Investors Take Stock Of Banking Crisis - Oil prices advanced on Friday after a meeting between Saudi Arabia and Russia calmed markets, but crude benchmarks were still headed for a second weekly fall after a banking crisis sparked a sell-off in global financial markets this week. Brent crude futures edged up 2 cents to $74.72 a barrel by 01:33 GMT, having snapped three days of losses to settle 1.4 percent higher on Thursday. US West Texas Intermediate crude was at $68.33 a barrel, down 2 cents after closing 1.1 percent higher in the previous session. Both contracts hit their lowest in more than a year this week and are set to post their biggest weekly falls since December at about 10 percent. Oil and other global assets were undercut this week as the collapse of Silicon Valley Bank (SVB) and Signature Bank sent the US and Swiss governments scrambling to shore up liquidity at banks. Probal Sen, Energy Analyst at ICICI Securities said that crude prices fall is led by demand issue rather than supply. He also added that this decline is positive for marketing OMC business. Contagion risks among banks are still keeping investors on edge, curbing their appetite for assets such as commodities as they fear a further rout could trigger a global recession and cut oil demand. "The sudden failure of SVB and Signature Bank forced a rethink about the health of the broader economy and spooked markets," JPMorgan analysts said in a note. "Oil demand is being repriced, but we see little change in fundamentals and are inclined to ride out financial sector volatility, keeping our price forecasts unchanged for now as we await updates on potential policy actions in the coming weeks," the analysts said, referring to an OPEC+ meeting and Washington likely moving to start refilling strategic reserves. The advisory committee of the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, will meet on April 3. Further decline in prices may prompt OPEC+ to reduce supplies to prevent a forecast inventory build in the second quarter, analysts at National Australia Bank said in a note. WTI fell under $70 a barrel for the first time since December 2021, possibly making prices attractive enough for the US government to start refilling its Strategic Petroleum Reserve, which is sitting at record low levels.
Oil Futures Register Weekly Losses of 13% on Banking Turmoil - West Texas Intermediate April futures traded on the New York Mercantile Exchange and Brent crude for May delivery on the Intercontinental Exchange eroded more than 3% on Friday. Futures were pressured by growing concerns the banking turmoil in the United States and the European Union would trigger a financial crisis in coming months, wiping out a large chunk of the post-pandemic gains in oil demand growth. Financial and commodity markets took a beating this week as investors fled risky assets for the safety of the U.S. dollar, Treasury bonds and gold. The failure of Silicon Valley Bank and troubles at Credit Suisse Group AG compounded by fears of further rate increases by central banks triggered a three-day rout in the oil complex that sent crude prices to their lowest price point in 15 months. Oil futures briefly halted their decline on Thursday after the Swiss National Bank stepped in to rescue Credit Suisse and a consortium of large U.S. lenders came to the rescue of the troubled First Republic Bank on Thursday in a bailout plan supported by the U.S. government. On Friday morning, however, oil prices resumed losses once again. Not even another decline in the number of active oil rigs in the United States which has now fallen to its lowest level in nine months helped oil complex climb into the green. Baker Hughes data released Friday afternoon showed the U.S. oil rig count continued lower for a fifth straight week, down one to 589 as of March 17, the lowest level since the week ended June 17, 2022, but 65 more than the same week in 2022. On Friday, the WTI contract for April delivery eroded $1.61 for a $66.74-per-barrel (bbl) settlement, down more than $10 per bbl on the week, and the international crude benchmark Brent contract for May delivery declined to $72.97 per bbl, shedding $10.27 per bbl since last Friday's settlement. NYMEX RBOB April futures retreated $0.0020 to $2.5015 per gallon. Exception in the oil complex was front-month ULSD futures that firmed $0.0352 on Friday for a $2.6787-per-gallon settlement. Both RBOB and ULSD futures declined more than 0.15 cent from the prior week. Elsewhere, the European Central Bank on Thursday delivered another 50-basis-point increase to its benchmark lending rate but refrained from signaling any further rate moves in coming months. "The Governing Council is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area. The ECB's policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy," said the ECB in announcing the rate hike. ECB President Christine Lagarde in a news conference following the rate decision stressed still high inflation across the euro area that is projected to "remain too high for too long," while emphasizing the bank's data-dependent approach to monetary policy.
Oil endures worst week since pandemic amid banking crisis - The crisis in U.S. banking isn’t abating and it's dragging oil further and further down with it. Crude prices tumbled on Friday for a fourth time in five days, finishing with their worst week since the outbreak of the coronavirus pandemic three years ago, which practically destroyed demand for oil. The slump this time, however, had little to do with supply-demand but more with the crisis of confidence at banks which provide the liquidity for trading in crude and all other commodities. Persistent interest rate hikes by the Federal Reserve have also led to fears that the U.S. economy could end up in a deep recession. “Crude prices remain heavy as banking turmoil won’t be going away anytime soon and over fears that the Fed’s rate hiking cycle is starting to take down the economy,” New York-traded West Texas Intermediate, or WTI, settled down $1.61, or 2.4%, at $66.74 per barrel, after a 15-month low at $65.27. For the week, the U.S. crude benchmark was down 13%. It was WTI’s worst weekly decline since the back-to-back crash of nearly 20% ia week during the first two weeks of April 2020. London-traded Brent settled down $1.73, or 2.3%, at $72.97. The global crude benchmark earlier plumbed a session low of $71.44 and was down more than 13% on the week. Moya said energy traders are not sure what could be a catalyst to raise oil prices given all the doom and gloom happening with short-term crude demand outlooks. Russian oil stockpiles were reported on Friday to be at their highest since April amid the sanctions imposed on Moscow for its February 2021 invasion of Ukraine. “It seems that the oil bump that we got earlier in the month from China’s reopening was premature," "Clearly China’s recovery still needs more support. The Fed’s forecasts will closely be watched as that will signal if we are at a greater risk of a policy mistake. For now oil will remain heavy as traders try to figure out what type of recession policymakers will trigger in the U.S.” The U.S. banking crisis began after two mid-sized lenders — Silicon Valley Bank and Signature Bank — were rescued by the Federal Deposit Insurance Corp last week as depositors yanked billions of dollars from them after fearing about their solvency. Silicon Valley eventually filed for bankruptcy protection over the past 24 hours. A third bank, First Republic, is also in trouble despite receiving a $30 billion cash infusion from a consortium of banks. Elsewhere, the banking crisis has spread to Europe, with Credit Suisse, one of the preeminent names in global investment banking, having to seek help from Switzerland’s central bank.
Two Rockets Fired at US Base in Occupied Syrian Oil Field --Two rockets were fired at a US base in an occupied oil field in eastern Syria on Monday, according to US Central Command (CENTCOM). “On March 13, at 8:23 pm local time in Syria, two rockets landed near Coalition Forces at Mission Support Site Green Village in northeast Syria,”CENTCOM said in a press release. The US base at Green Village is in Syria’s largest oil field, known as al-Omar. CENTCOM said there were no casualties in the attack. “No US or Coalition troops were killed or wounded and there was no damage to Coalition infrastructure or equipment,” the command said. The US has about 900 troops stationed in eastern Syria and backs the Kurdish-led SDF in the region, allowing the US to control about one-third of Syria’s territory. The area is where most of Syria’s oil fields are located, and the occupation is part of the US economic war against Damascus and the people living in government-controlled territories.Several rocket attacks have targeted US bases in Syria this year, although there have been no casualties. Four US troops were wounded in a raid against ISIS in the country last month, prompting Rep. Matt Gaetz (R-FL) to introduce a War Powers Resolution that would have ordered President Biden to withdraw from Syria.Gaetz’s resolution was brought to the floor on March 8 and failed in a vote of 103-321, with 56 Democrats and 47 Republicans voting in favor of the bill. The Florida congressman vowed that the resolution wouldn’t be the end of his effort to end US involvement in Syria and in other conflicts.
Over half of Syria Population is going Hungry, says the World Food Programme – Over half of Syria’s population is going hungry as the war-torn and divided country continues to deal with the ongoing 12-year-long civil war and recent earthquakes, the World Food Programme (WFP) has announced.The FAO explains, “A person is food insecure when they lack regular access to enough safe and nutritious food for normal growth and development and an active and healthy life.”According to a report published by the WFP yesterday, around 12.1 million Syrians are suffering from food insecurity, while almost three million more are at risk of sliding into hunger.That number is almost double the amount of food insecure people in Syria back in 2018, proving a sharp decline in the situation of much of Syria’s population.The Agency also noted the rise in malnutrition within the country, citing recent data, as showing that 28 per cent of children are being stunted in their growth and development, as a result.The WFP Country Director in Syria, Kenn Crossley, stated that Syrians have endured “Bombardment, displacement, isolation, drought, economic meltdown and, now, earthquakes of staggering proportions. Syrians are remarkably resilient but there’s only so much that people can take.” He asked, “At what point does the world say ‘enough’?”
Syrian Sanctions Punish Earthquake Victims - On February 6th, 2023, Northern Syria and Southern Turkey was struck by a 7.8 magnitude earthquake. For reference, the famous 2010 Haiti earthquake that dominated headlines for weeks was a 7.0 on the Richter Scale. For Syria – a country already war-torn from over a decade of conflict – the tremors brought devastating results. More than 7,000 deaths and 8,700 injuries have been reported thus far, and more than 10,000 buildings were partially or completely destroyed.Relief efforts in the country have been impeded by the presence of sanctions, which the United States and western allies have levied against Syria for over forty years. After originally claiming that the sanctions would have no effect on relief efforts, the Biden Administration quickly announced a 180-day temporary window where the sanctions would not be enforced. As welcome as this news was, local humanitarian groups maintained that this limited window was still not enough. Three weeks after the earthquake, on February 27, the U.S. House of Representatives voted on House Resolution 132, which stated that although the House "mourns the horrific loss of life" and "expresses its deep condolences to the families", none of the sanctions on Syria would be lifted. The bill passed, with 414 voting in favor, and only 2 voting against. I’m sure their condolences were well-received by the Syrian people.Unfortunately, this earthquake and its aftermath is just the latest in a long line of sanction-induced suffering by the Syrian people.In 2011, following the famed "Arab Spring" protests, civil war broke out in Syria between the Bashar Al Assad regime and coalition rebel forces – dubbed the "Syrian Free Army". Despite these rebel forces being dominated by Al-Qaeda affiliated forces, the CIA supported them with weapons and munitions in an effort to overthrow Assad and bring Syria under the US sphere of influence. The result was a bloody civil war that raged on for the better part of a decade and killed more than 300,000 Syrian civilians. In an effort to escape the brutal fighting, Syria became the source of an unprecedented immigration crisis, with an estimated 6.8 million Syrian citizens fleeing the country to nations all over the world. Furthermore, the war decimated the Syrian economy, cutting GDP from 252.2 billion USD in 2010 to just 12.6 billion USD in 2016.With the destruction caused by the February 6th earthquake, the needs of the Syrian people are at an all-time high. What was the United State’s response to this crisis? Well, we feel bad for you, but because your country has the wrong government, nothing is going to change. Sure, they get a 180-day window, but after that the strangling of Syria will continue as scheduled. Perhaps I am overly optimistic, but I would have thought that even the cold-blooded creatures in Washington D.C. would have some heart in such a desperate situation. Such is the mentality of empire. The mantra of the United States’ foreign policy was and remains geopolitical interests above all else – regardless of the consequences. The result of this myopic focus has been repeated foreign policy failures and humanitarian crises to boot. We can see this pattern at work in Somalia, Yemen, Iraq, and Syria.
Report: Arab Nations Look to Make Deal on Syria Reconstruction, Normalization - The Wall Street Journal reported Thursday that Arab countries are offering a deal to Syrian President Bashar al-Assad that would restore ties between Damascus and most countries in the region. The report, which cited unnamed Arab and European officials, said in talks initially led by Jordan, the Arab nations have proposed billions worth in aid to help the country rebuild after 12 years of war and to lobby the US and European governments to lift sanctions.In exchange, the Arab nations want Assad to engage with Syria’s political opposition, allow troops from other Arab states inside Syria to protect returning refugees, crack down on drug trafficking, and prevent Iran from expanding its presence in Syria.The report said the talks are still in their early stages, and it’s not clear if Assad is willing to accept the initial offer. The US has also shown no interest in lifting sanctions on Syria as the House recently voted to maintain them following the devastating earthquake that hit Syria and Turkey on February 6.The US sanctions on Syria are specifically designed to prevent Syria’s reconstruction, and the Biden administration has said it opposes regional countries upgrading or normalizing ties with Damascus, even if it’s related to helping the country with earthquake relief.The Journal report said what’s significant about the effort is that Saudi Arabia is on board, as Riyadh was previously strongly against steps to normalize with Assad. Saudi Arabia hasn’t had formal diplomatic relations with Syria since 2012, but Saudi Foreign Minister Faisal bin Farhan al-Saudrecently called for dialogue with Damascus.“In the Arab world there is a consensus growing that the status quo is not workable. We all have policies but we don’t have any strategy to implement that policy,” he said last month.
China brokers agreement between Iran, Saudi Arabia - A deal to reestablish relations between Saudi Arabia and Iran was brokered by China, sending a message about Beijing’s potential new role in the Middle East. After four days of talks in Beijing, both Tehran and Riyadh agreed to reestablish relations and open up embassies in their respective countries following seven years of hostilities. The news is bringing hopes that both nations will whittle down support for opposing factions in the deadly Yemen civil war. The announcement was a major diplomatic and political win for China, whose top diplomat, Wang Yi, hailed it as a “victory” and said Beijing would continue to address global issues. Jonathan Fulton, a nonresident senior fellow for Middle East Programs at the Atlantic Council, said the deal “may lead to something positive” or “it may fizzle.” “It’s too early to proclaim it anything other than a good first step,” Fulton wrote in an analysis. “It is, however, significant as China’s first major foray into regional diplomacy. Beijing has been signaling since at least last January that it is willing to promote a non-US centered vision of the Middle East, and this is a sign of things to come.” The U.S. role in the Middle East remains under question as some nations in the region see Washington slowly pulling out after the 2021 withdrawal from Afghanistan and downsizing in Syria. Also, tensions with Iran have soared and relations with Saudi Arabia are frosty after the killing of U.S.-based journalist Jamal Khashoggi in 2018. But the White House dismissed those concerns as National Security Council spokesperson John Kirby told reporters the U.S. is not stepping back from its role in the region. Meanwhile, President Biden welcomed the easing of tensions in the Middle East. “The better the relations between Israel and their Arab neighbors, the better for everybody,” Biden said during remarks on the U.S. economy on Friday. Alex Vatanka, the director of the Iran Program at the Middle East Institute, pumped the brakes on China’s victory lap, telling The Hill the agreement might not be a “major loss” for Washington in the long term. “It symbolically makes the United States look like it’s not able to be a key player,” he said. “But it’s not going to be a Chinese-dominated Middle East.”
Chinese-brokered deal between Iran and Saudi Arabia raises alarm bells in Washington - In what is something of a diplomatic coup for China, an agreement between Saudi Arabia and Iran to ease tensions and reestablish diplomatic relations was announced in Beijing last Friday. The two rival powers have been engaged in a fierce competition for influence throughout the Middle East that has been a significant factor in the region’s conflicts and worsening instability. Formal diplomatic relations ended after the Saudi regime, which is based on an extreme form of Sunni fundamentalism, executed prominent Shiite cleric and government critic Nimr Baqir al-Nimr in 2016. His beheading prompted protests inside Iran that led to the storming of the Saudi diplomatic mission. Since then, relations have only deteriorated as the countries backed opposing sides in the wars in Yemen and Syria. Under last Friday’s agreement, Saudi Arabia and Iran will have two months to negotiate the re-establishing diplomatic relations and the reopening of embassies, as well as to activate security cooperation arrangements. Few details have been made public but the deal is reportedly said to include reducing mutual propaganda warfare as well as direct and indirect attacks on each other’s interests in the region. According to the Wall Street Journal, Saudi Arabia agreed to rein in Iran International, a Saudi-funded, Farsi-language satellite news channel which Tehran has accused of fomenting the months of anti-government protests in Iran. The head of Iran’s intelligence agency has branded the channel as a terrorist organisation. Iran has agreed to curb cross-border attacks on Saudi Arabia by Houthi rebels in Yemen who control large areas of the country and have been fighting a war against a Saudi-led military coalition since 2015. A truce negotiated last year remains in place as the Houthis and Saudis have held talks aimed at ending the conflict. While efforts to ease tensions have been underway for several years with Iraq and Oman acting as mediators, China played the main role in securing the deal. Last Friday, top Beijing diplomat Wang Yi hailed the agreement as a “victory” adding that China would continue to address global issues. He declared that it “set an example for resolving conflicts and differences among countries through dialogue and consultation.” In what was a thinly-veiled criticism of the US, Wang declared that the agreement demonstrated how the two nations were “getting rid of external interference, and truly taking the future and destiny of the Middle East into their own hands.” The Chinese diplomatic intervention in the Middle East comes as the US is escalating its war against Russia in Ukraine and accelerating preparations for conflict with Beijing in Asia.
Saudi Arabia could invest in Iran 'very quickly': finance minister - Saudi Arabia may soon be investing in its longtime regional foe Iran following a breakthrough agreement reached between the two countries to re-establish diplomatic relations, the kingdom's Finance Minister Mohammed Al-Jadaan said Wednesday. Asked by CNBC's Hadley Gamble in Riyadh how soon the world might see the wealthy Saudi kingdom making significant investments into Iran and vice versa, Al-Jadaan replied: "I would say very quickly." "When people really stick to the principles of what was agreed, I think that that could happen very quickly. Our aim, and I think this has been made very clear previously by our leadership, is to have a region that is stable, that is able to provide for its people, and prosper. And there is no reason for that not to happen," the minister said. Riyadh and Tehran agreed to resume diplomatic relations and reopen embassies in each other's countries following China-led negotiations in Beijing that culminated on March 10. They also vowed to affirm "the respect for the sovereignty of states and the non-interference in internal affairs of states," a major step after years of mutual animosity, suspected attacks and espionage between the two countries. Some regional analysts and Western policymakers are skeptical as to whether the countries — Iran in particular — will stick to the pledges, which has yet to be seen. The two Middle Eastern powers are still ideologically at odds, and neither countries' suspicions of the other will disappear overnight. Still, the Saudi finance minister appeared optimistic. "Iran is our neighbor, and has been and will continue to be for hundreds of years," Al-Jadaan said. "So I don't see any issue that would prevent normalization of the relationship, cross-investments etc., as long as we stick to agreements — you know, respecting sovereign rights, not interfering in others' affairs, respecting united nation conventions and others. So I don't see any, really, impediments." The countries have additionally agreed that previous cooperation accords — namely a "Security Cooperation Agreement" from 2001 and a "General Agreement for Cooperation" from 1998 covering the fields of trade, economy, sports, technology, science, culture, sports and youth — would be revived. "The three countries expressed their keenness to exert all efforts towards enhancing regional and international peace and security," the Saudi statement announcing the deal said, referring to itself, Iran, and China.
Israeli Official Blames American “Weakness” For China's Iran-Saudi Deal - Israeli officials are expressing dismay at the Iran and Saudi Arabia peace deal which was announced from Beijing last Friday, with an aide to Prime Minister Benjamin Netanyahu telling reporters that it's the result of American "weakness" as well as failings of the prior Israeli government."There was a feeling of US and Israeli weakness and this is why the Saudis started looking for new avenues. It was clear that this was going to happen," the unnamed senior official said while traveling in Netanyahu's entourage in Rome, according to Axios. Axios reported further, "The senior Israeli official who briefed reporters said the Israeli government is not concerned that the new Saudi-Iranian agreement will hamper the efforts to achieve a breakthrough that could lead to the normalization of relations between Israel and Saudi Arabia."But the former Israeli leaders hurled the same accusation at Netanyahu, saying the new coalition government is to blame. Former Israeli Prime Minister Yair Lapid and current opposition head in the Knesset, also lamented that the Saudi-Iran deal signals the "collapse of the regional defense wall that we started building against Iran.""This is what happens when one deals with legal insanity all day instead of doing one’s job against Iran and strengthening relations with the United States," Lapid said, commenting on the Netanyahu government’s judicial overhaul, and the chaos it has sparked in Israeli politics along with massive street protestIsrael's number one priority has long been to isolate Tehran as a regional power, especially because of Iranian entrenchment in Syria as well as its longtime support to Lebanese Hezbollah. Closer Israeli relations with Riyadh were toward that end, but now the China-brokered deal puts all of this into question.
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