Strategic Petroleum Reserve is at a new 39½ year low; oil and horizontal rigs fell below year ago levels for the first time of the pandemic recovery era; April DUCs down 32nd time in 34 months, DUC well backlog fell to 4.6 months
US oil prices finished higher for the first time in five weeks on hope for a debt ceiling deal, while widespread wildfires impacted Canadian oil production and exports to the US….after falling 1.8% to $70.04 a barrel last week on weak economic reports from the US and China and on the largest jump in US commercial oil supplies since February, the contract price for the benchmark US light sweet crude for June delivery rose slightly in Asian trading after a earlier decline on concerns over the US debt limit, as the possibility that the US would purchase oil for the Strategic Petroleum Reserve offset concerns about the us debt limit, and then moved higher in early US trading after Iran said it had seized another oil tanker in the Persian Gulf, and settled $1.07 higher at 71.11 a barrel, supported by news that wildfires in Alberta, Canada were shutting in large amounts of crude supply, and that flows of northern Iraqi crude to Turkey’s Ceyhan port had yet to resume...oil prices rose again in early Asian trading on Tuesday, as U.S. plans to purchase oil for the Strategic Petroleum Reserve (SPR) lent support, while raging wildfires in Canada fueled supply concerns. then steadied in London trading as concerns over China’s economic recovery offset bullishness around the U.S. plan to start refilling its depleted strategic reserves, but turned south in afternoon trade to settle 25 cents lower at $70.86 a barrel as weaker-than-expected retail sales and industrial production data from China and the US offset a forecast of higher global demand from the International Energy Agency...oil prices continued to trend lower in overnight trading and posted an early low of $70.04 following a late Tuesday report by the American Petroleum Institute of an unexpected big build in crude stocks, then pushed higher in pre-inventory trade Wednesday after that same industry survey showed domestic gasoline and distillate fuel inventories fell for a second week, and advanced further as traders embraced risky assets amid optimism on U.S. debt ceiling talks while awaiting the latest data on U.S. stockpiles….oil prices then slipped lower after the EIA reported an even larger unexpected inventory build, and smaller draws on fuel supplies than the API reported, but rallied again late to finish the session $1.97 higher at $72.83 a barrel after Biden voiced confidence that an agreement on the debt ceiling would soon be reached, easing concerns about a potential default and a cascading impact on the economy and energy demand....however, Wednesday's rally dissipated in Asia on Thusday morning, with prices turning south on the build-up of US oil inventories, and on weak economic data from the US and China, then traded in a narrow range in the New York session as markets awaited the outcome of the debt ceiling negotiations, before settling 97 cents lower at $71.86 a barrel, dragged down by a rallying U.S. dollar index after a better-than-expected reading for unemployment claims raised the odds for further Fed interest rate hikes this summer....oil prices powered higher early Friday after spreading wildfires in Canada's oil-producing region of Alberta shut-in some 250,000 barrels in daily output, but pared those early gains and settled 31 cents lower at $71.55 per barrel, hit by reports that the debt ceiling talks had paused after Republican negotiators walked out the meeting, offsetting recent optimism about an impending deal, but still ended 2.1% higher on the week...
Meanwhile, US natural gas prices finished higher for the fifth week in six, buoyed by prospects for a production pullback and tighter supplies….after rising 6.0% to $2.266 per mmBTU last week after drillers shut down the most natural gas rigs in seven years, the contract price of US natural gas for June delivery opened 9 cents higher on Monday as last week’s decline in active drilling rigs provided the momentum for a bullish start, and traded in a narrow range before settling 10.9 cents higher at $2.375 per mmBTU, as traders shrugged off continued mild weather forecasts and elevated supply data, seizing instead on a the potential decline in future production with fewer rigs in the field...after opening higher, natural gas prices faded on Tuesday after Platts forecast a string of triple-digit injections into our already oversupplied storage but still settled a tenth of a cent higher at $2.376 per mmBTU, still supported by expectations for slowing production...natural gas prices opened higher again on Wednesday, but soon started sliding as traders began betting on a larger than expected inventory increase, and settled 1.1 cents lower at $2.365 per mmBTU...however, with most traders on the wrong side of that bet, natural gas prices jumped about 10% to a nine-week high on Thursday following a smaller-than-expected U.S. injection of gas into storage, and settled 22.7 cents higher at $2.592 per mmBTU, as wildfires kept gas exports from Canada near a 25-month low…natural gas prices held near Thursday's highs on Friday, as a lack of wind power had forced electricity generators to burn more gas this week and settled seven-tenths of a cent lower at $2.585 per mmBTU, but still ended 14.1% higher on the week..
The EIA's natural gas storage report for the week ending May 12th indicated that the amount of working natural gas held in underground storage in the US increased by 99 billion cubic feet to 2,240 billion cubic feet by the end of the week, which left our natural gas supplies 521 billion cubic feet, or 30.3% above the 1,719 billion cubic feet that were in storage on May 12th of last year, and 340 billion cubic feet, or 17.9% more than the five-year average of 1,900 billion cubic feet of natural gas that were in storage as of the 12th of May over the most recent five years…note, however, that the oft quoted national average obscures the fact that gas supplies are 40.6% below normal for this date in the West, while 32.8% and 29.4% above normal in both the East and Midwest regions of the country at the same time....the 99 billion cubic foot injection into US natural gas working storage for the cited week was somewhat less than the 108 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, but it was more than the 87 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, and also more than the average 91 billion cubic feet addition to natural gas storage that has been typical for the same Spring 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 May 12th showed that after a big jump in our oil imports, an equally big jump in new oil supplies that the EIA could not account for, and another substantial release of oil from the SPR, we had surplus oil to add to our stored commercial crude supplies for the 3rd time in 8 weeks, and for the 23rd time in the past 37 weeks, even as our exports of crude also rose.sharply... Our imports of crude oil rose by an average of 1,306,000 barrels per day to 6,860,000 barrels per day, after falling by an average of 843,000 barrels per day the prior week, while our exports of crude oil rose by an average of 1,434,000 barrels per day to 4,310,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 2,550,000 barrels of oil per day during the week ending May 12th, 128,000 fewer barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly 100,000 barrels per day lower 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 14,750,000 barrels per day during the May 12th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,990,000 barrels of crude per day during the week ending May 12th, an average of 245,000 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 a net average of 373,000 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 May 12th appear to indicate that our total working supply of oil from net imports and from oilfield production was 1,614,000 barrels per day less than what we added to storage plus what our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [+1,614,000] 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 the week’s oil supply & demand figures that we have just transcribed…..Furthermore, since last week’s “unaccounted for crude oil” was at (+771,000) barrels per day, that means there was a 842,000 barrel per day difference between this week's oil 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 complete nonsense...However, since most oil traders treat these weekly EIA reports as accurate, and since these weekly figures therefore 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 reliable 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)
This week's 373,000 barrel per day net increase in our overall crude oil inventories came as an average of 720,000 barrels per day were added to our commercially available stocks of crude oil, while 347,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time, the seventh straight draw on the SPR this year, wherein government owned oil is being sold into the domestic markets as part of an earlier budget balancing withdrawal mandated by congress, and as a result the 359,586,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since September 23rd, 1983, or at a new 39 1/2 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's big SPR releases of last year. However, those Biden administration releases amounted to about 42% of what was left in the SPR when they took office, and that left us with what is now less than a 19 day supply of oil at the current consumption rate.
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,296,000 barrels per day last week, which was 0.3% more than the 6,276,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day lower at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,800,000 barrels per day, while Alaska’s oil production was 37,000 barrels per day lower at 405,000 barrels per day, but still added the same 400,000 barrels per day to the rounded national total as it did 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 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 92.0% of their capacity while using those 15,990,000 barrels of crude per day during the week ending May 12th, up from their 91.0% utilization rate during the prior week, and a rate that's on the high side of normal for mid May... The 15,990,000 barrels per day of oil that were refined this week were 0.3% more than the 15,935,000 barrels of crude that were being processed daily during week ending May 13th of 2022, but 4.1% less than the 16,676,000 barrels that were being refined during the prepandemic week ending May 10th, 2019, when our refinery utilization rate was at 90.5%, close to normal for this time of year...
Even with the increase in the amount of oil being refined this week, the gasoline output from our refineries was lower, decreasing by 341,000 barrels per day to 9,482,000 barrels per day during the week ending May 12th, after our gasoline output had increased by 445,000 barrels per day during the prior week. This week’s gasoline production was 1.0% less than the 9,574,000 barrels of gasoline that were being produced daily over the same week of last year, and 4.3% less than the gasoline production of 9,912,000 barrels per day during the prepandemic week ending May 3rd, 2019. On the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 250,000 barrels per day to 4,856,000 barrels per day, after our distillates output had increased by 30,000 barrels per day during the prior week. Even with that increase, our distillates output was 0.5% less than the 4,880,000 barrels of distillates that were being produced daily during the week ending May 13th of 2022, and 7.8% less than the 5,264,000 barrels of distillates that were being produced daily during the week ending May 10th, 2019...
With this week's decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the eleventh time in thirteen weeks, and for the 42nd time in 64 weeks, decreasing by 1,381,000 barrels to 218,330,000 barrels during the week ending May 12th, after our gasoline inventories had decreased by 3,167,000 barrels during the prior week. Our gasoline supplies fell by less this week because the amount of gasoline supplied to US users fell by 395,000 barrels per day to 8,908,000 barrels per day, even as our imports of gasoline fell by 9,000 barrels per day to 844,000 barrels per day, while our exports of gasoline rose by 179,000 barrels per day to 930,000 barrels per day. After eleven gasoline inventory decreases over the past thirteen weeks, our gasoline supplies were 0.8% below last May 13th's gasoline inventories of 220,189,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of the year…
Meanwhile, with this week's big increase in our distillates production, our supplies of distillate fuels increased for the 2nd time in 10 weeks, rising by 80,000 barrels to 106,233,000 barrels during the week ending May 12th, after our distillates supplies had decreased by 4,170,000 barrels to a six month low during the prior week. Our distillates supplies managed an increase this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 299,000 barrels per day to 3,736,000 barrels per day, and because our exports of distillates fell by 42,000 barrels per day to 1,236,000 barrels per day, while our imports of distillates rose by 17,000 barrels per day to 128,000 barrels per day.... Even after 64 inventory withdrawals over the past one hundred and three weeks, our distillate supplies at the end of the week were 2.0% above the 104,029,000 barrels of distillates that we had in storage on May 13th of 2022, but are still about 16% below the five year average of our distillates inventories for this time of the year...
Finally, even with 1.3 million barrels per day of new oil supplies that the EIA could not account for, our commercial supplies of crude oil in storage rose for the 15th time in 21 weeks and for the 28th time in the past year, increasing by 5,040,000 barrels over the week, from 462,584,000 barrels on May 5th to 467,624,000 barrels on May 12th, after our commercial crude supplies had increased by 2,951,000 barrels over the prior week. Even after several large oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories are still slightly below the most recent five-year average of commercial oil supplies for this time of year, but are around 30% above the average of our available crude oil stocks as of the second weekend of May 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. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, our commercial crude supplies as of this May 12th were 11.1% more than the 420,820,000 barrels of oil we had in commercial storage on May 13th of 2022, but were still 3.8% less than the 486,011,000 barrels of oil that we still had in storage in the wake of winter storm Uri on May 14th of 2021, and 11.1% less than the 526,494,000 barrels of oil we had in commercial storage after the pandemic effects took hold on May 15th of 2020…
This Week's Rig Count
The number of drilling rigs active in the US decreased for the tenth time in the past fourteen weeks during the week ending May 19th, and is now 9.2% below the prepandemic count, despite increasing ninety-nine times over the past 137 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 11 rigs to 720 rigs over the past week, which was 8 fewer rigs than the 728 rigs that were in use as of the May 20th report of 2022, and was also 1,209 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business. .
The number of rigs drilling for oil fell by 11 to 575 oil rigs during the past week, after the number of rigs targeting oil had fallen by two rigs during the prior week, and there is now one less oil rig active now than was running a year ago, as they amount to just 35.7% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are now down 15.8% from the prepandemic oil rig count of 683….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 141 natural gas rigs, which was still down by 9 natural gas rigs from the 150 natural gas rigs that were drilling during the same week a year ago, and as they now amount to just 8.8% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….
In addition to those rigs specifically targeting oil and natural gas, Baker Hughes shows that four rigs they've labeled as "miscellaneous" are drilling this week: those include a directional rig drilling to between 10,000 and 15,000 feet into a formation in Beaver county Utah, 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 into a formation 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....Four operating at once is unusual; a year ago, there were two such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was down by one to 21 rigs this week, with 18 of those rigs drilling for oil in Louisiana's offshore waters, one drilling for natural gas offshore from Vermilion, Louisiana, and two drilling for oil in Texas waters....that Gulf rig count is up by 4 from the 17 Gulf rigs running a year ago, when all 17 Gulf rigs were drilling for oil offshore from Louisiana…however, since there was a rig drilling offshore from Alaska during the same week a year ago, the national total of 21 rigs drilling offshore is up by 3 rigs from the national offshore count of 18 a year ago..
In addition to rigs running offshore, there are still two inland water based deployed this week...one is a vertical rig drilling for natural gas to between 10,000 and 15,000 feet on a lake in Jefferson Parish Louisiana, while the other is a directional rig drilling for oil at a depth of between 10,000 and 15,000 feet through an inland body of water in Lafourche Parish, Louisiana...a year ago, there was just one such rig drilling on inland waters...
The count of active horizontal drilling rigs was down by ten to 650 horizontal rigs this week, which was 14 fewer rigs than the 664 horizontal rigs that were in use in the US on May 20th of last year, and only 47.3% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014…at the same time, the directional rig count was down by 1 to 51 directional rigs this week, but those were up by 12 from the 39 directional rigs that were operating during the same week a year ago....on the other hand, the vertical rig count was unchanged at 19 vertical rigs this week, but those were down by 6 from the 25 vertical rigs that were in use on May 20th 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 May 19th, the second column shows the change in the number of working rigs between last week’s count (May 12th) and this week’s (May 19th) count, the third column shows last week’s May 12th 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 20th of May, 2022...
this week we'll start by checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian…there we find that there were five rigs pulled out of Texas Oil District 8, which overlies the core Permian Delaware, and that another rig was pulled out of Texas Oil District 8A, which includes the counties over the northern Permian Midland, while one rig was added in Texas Oil District 7C, which includes the counties over the southern Permian Midland.....since those changes indicate the Texas Permian rig count was down by 5 while the national Permian count was down by four, we can thus conclude the that rig added in New Mexico was set up in the far western Permian Delaware in the southeast corner of that state...meanwhile, in the Texas oil districts that include portions of the Eagle Ford Shale in Texas, which was down by 3 oil rigs this week, we find that three rigs were pulled out of Texas Oil District 1, that two more rigs were pulled out of Texas Oil District 2, and that another rig was pulled out of Texas Oil District 3, while two rigs were added in Texas Oil District 4, with all of those not all necessarily targeting the Eagle Ford...the net loss of four rigs in those four districts, plus the loss of 5 rigs in the Texas Permian thus accounts for this week's nine rig decrease in Texas drilling....
in other states, Colorado saw the removal of two oil rigs that had been drilling in the DJ Niobrara chalk, while Wyoming added a rig targeting that formation in Laramie County....the oil rig pulled from Oklahoma's Ardmore Woodford, meanwhile, must have been offset by the addition of another oil rig elsewhere in the state for the Oklahoma count to remain unchanged...at the same time, Louisiana was down a rig with the removal of an oil rig from the state's offshore waters, and California was down a rig with the removal of a shallow vertical oil rig that had been drilling in Kern county...
oddly enough, after last week had seen the largest drop in drilling for natural gas in over seven years, this week saw no net changes whatsoever among the natural gas rigs, although it's always possible that there were offsetting changes among gas rigs someplace that wouldn't show up in the totals..
DUC well report for April
Monday of the past week saw the release of the EIA's Drilling Productivity Report for May, which included the EIA's April data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (click tab 3)....that data showed an decrease in uncompleted wells nationally for the 32nd time out of the past 34 months, as both well completions and drilling of new wells fell in April, and remained well below the average pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 42 wells, falling from a revised 4,905 DUC wells in March to 4,863 DUC wells in April, which was also 8.0% fewer DUCs than the 5,288 wells that had been drilled but remained uncompleted as of the end of April of a year ago...this month's DUC decrease occurred as 1,021 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during April, down one from the 1,022 wells that were drilled in March, while 1,063 wells were completed and brought into production by fracking them, down from the 1,075 well completions seen in March , but up by 190 from the 873 completions seen in April of last year....at the April completion rate, the 4,676 drilled but uncompleted wells remaining at the end of the month represents a 4.6 month backlog of wells that have been drilled but are not yet fracked, down from the 4.7 month DUC well backlog of a month ago, but up from the 7 1/2 year low of 4.4 months of six months ago, despite a completion rate that is now about 13% below 2019's pre-pandemic average...
Oil basin DUCS fell in April while natural gas basin DUCs were a bit higher, as three out of the seven basins covered by this report saw DUCs increase....the number of uncompleted wells in the Permian basin of west Texas and New Mexico decreased by 36, from 951 DUC wells at the end of March to 915 DUCs at the end of April, as 474 new wells were drilled into the Permian basin during April, while 510 already drilled wells in the region were being fracked....at the same time, DUC wells in the Bakken of North Dakota were down by 12 to 565 by the end of April, as 79 wells were drilled into the Bakken during April, while 91 of the drilled wells in the Bakken were being fracked.....in addition, DUCs in the Eagle Ford shale of south Texas decreased by 8, from 502 DUC wells at the end of March to 494 DUCs at the end of April, as 110 wells were drilled in the Eagle Ford during March, while 118 of the already drilled Eagle Ford wells were fracked...on the other hand, DUC wells in the Niobrara chalk of the Rockies' front range increased by 7, rising from 702 at the end of March to 709 DUC wells at the end of April, as 117 wells were drilled into the Niobrara chalk during April, while 110 Niobrara wells were completed....at the same time, the number of uncompleted wells remaining in Oklahoma's Anadarko basin increased by 1, rising from 739 at the end of March to 740 DUC wells at the end of April, as 65 wells were drilled into the Anadarko basin during April, while 66 Anadarko wells were completed....
among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, decreased by five wells, from 708 DUCs at the end of March to 703 DUCs at the end of April, as 102 new wells were drilled into the Marcellus and Utica shales during the month, while 107 of the already drilled wells in the region were fracked....on the other hand, the uncompleted well inventory in the natural gas producing Haynesville shale of the northern Louisiana-Texas border region rose by 11, from 726 DUCs in March to 737 DUCs by the end of April, as 73 wells were drilled into the Haynesville during April, while just 62 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of April, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by 46 to 3,423 DUC wells, while the uncompleted well count in the major natural gas basins (the Marcellus, the Utica, and the Haynesville) increased by 4 to 1,440 DUC wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...
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Ohio Environmentalists, Oil Companies Battle State Over Dumping of Fracking Wastewater - Ten years ago, Tim Kettler asked local officials to stop spreading liquid waste from fracking on the road near his home in Warsaw, Ohio, because he was worried that the fluid would contaminate a pond where he gets his drinking water. They complied with his request, but the practice continues in many other places across the state, and threatens to taint its groundwater with radioactivity and a cocktail of other contaminants in the residue from natural gas drilling. Water from the pond, downhill from the road where the salty waste was once spread, remains clean and drinkable, but that hasn’t stopped Kettler and other activists in Ohio from campaigning against a practice that has been used for years to de-ice roads in the winter and keep dust down in the summer. They say that high levels of two kinds of radium in the waste, known as produced water, as well as its extreme salinity, is already damaging the environment where the brine is spread and will eventually find its way into underground sources where people get their drinking water. Millions of gallons of produced water from fracking in the region have been pumped into more than 200 underground injection wells—either purpose-built or reused oil and gas wells—as oil and gas production has surged in the Appalachian states, raising fears that the natural environment is being contaminated, and that public water sources are being poisoned. “Putting our water at risk, especially in the area where there are known earthquake faults, just seems pretty wrong-headed,” said Kettler, who owns a wastewater business, and is a member of the Ohio Brine Task Force, an advocacy group that works to stop produced water from fracking from being spread on roads. “The constituents of this wastewater are known to be toxic and radioactive. Putting that on the ground, especially where people use surface water for their domestic water supply, as I do—where runoff is inevitable—is a problem.” Ohio’s Department of Natural Resources says about 22 million barrels of produced water from Ohio sources—924 million gallons—were pumped into injection wells in 2022, and another 12 million barrels—504 million gallons—came from out-of-state sources, including Pennsylvania. Produced water contains dozens of highly toxic chemicals along with naturally occuring poisons like arsenic and radioactive material like radium 226 and 228. It is far saltier than ocean water, which makes it deadly to most plants and freshwater life. Pennsylvania has only 12 active injection wells for fracking waste because it does not have “primacy” over the wells, and so must obtain approval from the U.S. Environmental Protection Agency before issuing permits. By contrast, Ohio has primacy, and so has permitted many more injection wells. There are 234 now operating in Ohio plus “a few” applications pending, the Department of Natural Resources said.
Cleveland U Study: Ohio Utica Shale Investment Tops $100 Billion | Marcellus Drilling News -- JobsOhio, a private, nonprofit corporation that works on behalf of the state to drive job creation and new capital investment in Ohio by attracting business, contracts out economic research to Cleveland State University (CSU) to keep tabs on the Utica Shale industry. JobsOhio released the latest CSU updated report yesterday (full copy below), showing that more than $100 billion has been invested in Ohio across natural gas, natural gas liquids, and petrochemical supply chain industries in just over ten years. Massive!
Ohio's Growing Shale Energy Industry Attracted $2.8 Billion in Direct Investment in First Half of 2022, With Cumulative Investment Surpassing $100 Billion- Total investment in Ohio’s resource-rich shale energy sector was approximately $2.8 billion in the first half of 2022, according to a Cleveland State University (CSU) study. Prepared for JobsOhio, the latest report covers shale investment from January through June 2022 and cumulates total investment from 2011 forward. The study from CSU’s Energy Policy Center at the Maxine Goodman Levin College of Urban Affairs revealed that, with previous investments to date, cumulative oil and gas investment in Ohio through June 2022 is estimated to be $100.6 billion. Of this, $70.8 billion has been in upstream, $21.5 billion in midstream, and $8.3 billion in downstream industries. The study showed that cumulative shale investment steadily rose between 2016 and 2022, particularly with upstream investments. Overall upstream investments increased by about $628 million in the first half of 2022 compared to the second half of 2021, reflecting higher royalty earnings due to higher oil and gas prices and new well development. Indirect downstream investment, such as the development of new manufacturing due to lower energy costs, was not investigated as part of this study. “In just over ten years, more than $100 billion has been invested in Ohio across natural gas, natural gas liquids, and petrochemical supply chain industries. Vital to our growing and diverse economy, this important sector continues to provide high-paying jobs to hard-working Ohioans,” said J.P. Nauseef, JobsOhio president and CEO. “Manufacturers worldwide are now realizing that Ohio is one of the most advantageous states for natural gas and natural gas liquids consumption – that feedstock, combined with our infrastructure, access to end-use markets, and the highly-skilled workforce that calls Ohio home.” “The 30% increase in the number of new wells drilled is responsible for most of the new spending in the first half of 2022,” said Andrew Thomas, Director of the Energy Policy Center at Cleveland State University. “This increase indicates that the upstream industry has largely recovered from the supply chain problems that plagued the industry during the time of COVID.” Upstream activities, such as drilling, roads, and royalties, accounted for nearly $2.8 billion of this total investment. As determined from Ohio Department of Natural Resources Division of Oil and Gas (ODNR) data for shale well drilling, operators drilled 113 new wells during the first and second quarters of 2022, nine fewer than the number drilled in the second half of 2019 – the last pre-COVID study period. Data also indicated that the total volume of gas-equivalent shale production in the first half of 2022 was 2.7% less than overall production in the second half of 2021. Unsurprisingly, mid and downstream investments lag behind the upstream recovery. The first half of 2022 saw midstream investment of $37.1 million, around half the spending for this segment compared to the previous six-month period. Most midstream investment during the Study period ($30.8 million) was for gathering system buildout. Future midstream investment will include Ohio’s share of the $161 million Ohio Valley Connector Expansion project to increase takeaway capacity out of the region, which was actively under development as of March 2023. There were no significant downstream investments during the first half of 2022. However, site work has recently begun on the $1.2 billion natural gas-fired Trumbull Energy Center near Lordstown. Also, construction on a second natural gas-fired power plant in Oregon, OH, is planned to commence in the coming year. Natural gas-based hydrogen projects will present additional downstream opportunities in the next few years. In December 2022, JobsOhio released a study from Shale Crescent USA, a nonprofit focused on promoting the manufacturing advantages created by abundant natural resources available in Ohio, Pennsylvania, and West Virginia, dispels the long-held belief that plastic-based goods are cheaper to import than manufacture locally. The study revealed that the low-cost gas and natural gas liquids flowing from the U.S. Shale Gas Revolution has the potential to turn the $53 billion U.S. plastics importing industry on its head.
26 New Shale Well Permits Issued for PA-OH-WV May 8-14 | Marcellus Drilling News - New shale permits issued for May 8-14 in the Marcellus/Utica rose from the prior week. There were 26 new permits issued last week, up from 20 in the prior week (and 18 the week before that). Last week’s tally included 13 new permits for Pennsylvania, 10 new permits for Ohio, and 3 new permits in West Virginia. Last week the top receiver of new permits was CNX Resources, with 7 permits issued (5 of them in Westmoreland County, PA, and 2 in Greene County, PA). Encino Energy, showing up as EAP Ohio in the report, had the second-highest tally with 5 permits (issued in Harrison County, OH). Antero Resources, CNX Resources, Columbiana County, Encino Energy, Energy Companies, EQT Corp, Fayette County, Greene County (PA), Harrison County, Hilcorp Energy,Marshall County, Noble County, Olympus/Huntley & Huntley, Repsol,Southwestern Energy, Tioga County (PA), Tug Hill Operating, Westmoreland County, Wetzel County
O&G Contributed $143B, 847K Jobs in PA, OH, WV Economies in 2021 -- Marcellus Drilling News - Every so often, the lying left will poke its head up and make the wild claim that the shale industry hasn’t done a darned thing for the jobs or economy in various states–like Pennsylvania, Ohio, and West Virginia (see Heinz Endowments Launches Another Fake ‘Report’ Bashing the M-U). They say, “All those claims of jobs created and economic benefits are just smoke and mirrors.” We say the environmental left is full of (expletive deleted). And we can prove it. Earlier this week, the American Petroleum Institute (API) released a massive new report compiled by PricewaterhouseCoopers (PwC) on the growing economic contributions of America’s natural gas and oil industry in all 50 states, including PA, OH, and WV, in 2021. For those three states (PA, OH, WV) in 2021, the O&G industry (largely shale) collectively contributed over$143 billion to state economies and supported more than 847,000 jobs! Stick that in your bong and smoke it, Big Green.
Upgrades to Eastern Gas Metering Station in Plum Done by Summer --Marcellus Drilling News - Eastern Gas Transmission and Storage (EGTS), a subsidiary of Warren Buffett’s Berkshire Hathaway Energy company, provides natural gas transportation and storage services with one of the largest underground natural gas storage systems in the United States. Essentially EGTS is a pipeline network that connects to other pipelines to flow and store natural gas in six states: Maryland, New York, Ohio, Pennsylvania, Virginia, and West Virginia. An upgrade of an EGTS metering station in Plum (Allegheny County, PA, near Pittsburgh) is currently under construction and due to be complete “by summer.”
Mountain Valley Pipeline gets new permit to build in Appalachian national forest - (AP) — A controversial and long-delayed natural gas pipeline got the green light for construction on national forest land in Virginia and West Virginia after the U.S. Forest Service reissued its approval for a permit, despite past federal appeals court rulings determining developers had “inadequately considered” the project's environmental impact. Monday night's decision will allow the $6.6 billion Mountain Valley Pipeline to be built — for now — across a 3.5-mile (5.6-kilometer) corridor through the Jefferson National Forest. The 303-mile pipeline would transport natural gas that is drilled in Ohio and Pennsylvania across rugged slopes in the Appalachian Mountains. Environmental groups say construction has led to violations of regulations meant to control erosion and sedimentation. Mountain Valley Pipeline LLC, the joint venture behind the project, still has other federal permits it will need approved as it works to complete the pipeline by the end of this year. Environmental advocates like Wild Virginia Conservation Director David Sligh said Tuesday that the Biden administration is favoring fossil fuels even as it “claims to advance environmental justice.” “This is the third time those who should guard our public treasures have failed us,” Sligh said. In previous litigation, the 4th U.S. Court of Appeals has twice vacated U.S. Forest Service decisions allowing for the pipeline in the Jefferson National Forest. Sligh also said the pipeline “remains far from completion,” saying 88 miles of the proposed route is still incomplete in Virginia. That is despite assurances the project is almost finished from developers and pipeline-supporting politicians like U.S. Sen. Joe Manchin, a moderate Democrat from West Virginia who chairs the Senate Energy and Natural Resources Committee. Manchin said Tuesday the natural gas line is “a crucial piece of energy infrastructure” that is good for global supply and American energy security. The fact that the U.S. Forest Service has approved construction three times shows “the review has been exceptionally thorough,” he said in a statement. In a separate decision, the 4th U.S. Circuit Court of Appeals revoked a key water permit last month because it said West Virginia's environmental protection agency didn’t adequately address the pipeline’s history of water quality violations. It also ruled that the agency used the wrong standards to support the decision that in-stream activities would meet state water quality regulations. The permit is required under the federal Clean Water Act. The court noted at least 46 water quality violations and assessed civil penalties totaling roughly $569,000. U.S. Forest Service officials said in the agency's decision Monday that the amended plan will permit the project to move forward while “minimizing environmental impacts to soils, water, scenery and other resources.” The plan contains requirements like one that 85% of soils dedicated to growing vegetation be left in place and that revegetation of the area be completed within five years, with the exception of the construction zone and right-of-way. Jill Gottesman, a top regional director for The Wilderness Society, said in a statement this week that the decision means groups like hers opposing the project will have “no choice but to take this battle back to court.” “The Forest Service has bent to the will of the oil and gas industry, and is placing fossil fuel profits above our environment and public safety,” she said.
Mountain Valley Pipeline gains approval to pass through forest, still faces more hurdles - The U.S. Forest Service has approved Mountain Valley Pipeline’s passage through the Jefferson National Forest through West Virginia and into Virginia.The federal agency issued a record of decision on Monday, approving amendments to its Land and Resource Management Plan to do so. The pipeline project still faces additional regulatory and legal hurdles.“The agency’s decision is a notable step forward in completing this critical infrastructure project, and we expect the Bureau of Land Management to soon issue the project’s right-of-way permit to cross the Jefferson National Forest,” stated Natalie Cox, vice president for communications at Equitrans Midstream Corp., the pipeline’s developer.The decision pleased pipeline project supporters like Senator Joe Manchin, D-W.Va., and received criticism from environmental groups.“The Mountain Valley Pipeline is a crucial piece of energy infrastructure that will help balance global supply and demand while strengthening our energy and national security,” stated Manchin, chairman of the Senate Energy Committee.“The Forest Service has now reviewed and signed-off on this project three separate times, which should provide confidence for everyone, including the courts, that the review has been exceptionally thorough. While I’m pleased with the announcement from the Forest Service, the job isn’t done yet, and I will keep pushing the Administration and all involved to finally complete the last 20 miles of this vital pipeline.” The $6.6 billion pipeline project first got authorization from the Federal Energy Regulatory Commission in 2017, but its completion has been delayed by regulatory hurdles and court challenges.The Mountain Valley Pipeline is a proposed 303.5-mile interstate natural gas pipeline that would cross nine West Virginia counties to transport natural gas to East Coast markets. The pipeline’s developers have said they intend to bring the pipeline into service in the second half of 2023.The developers have said the pipeline’s construction is near completion, but it has faced multiple legal challenges to its permits, such as authorization to construct in the Jefferson National Forest.The 4th U.S. Circuit Court of Appeals has twice knocked down earlier Forest Service approvals for the pipeline, in 2018 and then again last year.
Manchin aims to bring energy infrastructure permitting reform bill to Senate floor for vote by August - Sen. Joe Manchin, D-W.Va., aims to bring bipartisan permitting reform legislation to the Senate floor for a vote by July 31, the tentative start of the chamber’s summer recess, he said Thursday. “That's pretty aggressive. We're going to get it done,” Manchin, chairman of the Senate Energy and Natural Resources Committee, said during a hearing on permitting reform. “We can get together much quicker if we’re all in this, and I think we are. We want this done and everybody wants it done.” Any permitting reforms must apply equally to all energy sources, said Wyoming Sen. John Barrasso, the energy committee’s top Republican. Several permitting reform bills have been introduced in the Senate. They include Manchin’s Building American Energy Security Act, which is similar to a bill he introduced last year, and the SPUR Actand RESTART Act offered separately by Barrasso and Sen. Shelley Moore Capito, R-W.Va., ranking member of the Senate Environment and Public Works Committee. Sen. Tom Carper, D-Del., chairman of the environment committee, plans to introduce a permitting bill, possibly this month. Also, the House in March passed permitting reform legislation that was included in a debt limit bill. “We all need to sit down and negotiate in good faith – putting politics aside – to craft the Bipartisan Permitting Reform Bill,” Manchin said, noting he plans to hold sector-specific energy permitting hearings to inform that effort. White House senior clean energy advisor John Podesta on Wednesday said the Biden administration supports Manchin’s bill. However, there are “yawning gaps” between Republican and Democratic permitting reform priorities, ClearView Energy Partners said in a client note Wednesday. “We do not observe many areas of overlap, and even fewer areas of real consensus between the partisan proposals,” the research firm said. “We think that Podesta’s speech clearly indicates that permitting reform is on the table, but agreeing to terms from such vastly different starting points remains a challenge.” Pioneer Public Affairs, a consulting firm, echoed ClearView’s analysis. “There is substantial – if not overwhelming – agreement that some changes to various permitting processes are needed; however, there is no consensus or general agreement on where to focus to make the biggest difference,” Pioneer said in a memo Wednesday.
Granholm defends support for gas pipeline, citing energy security - Energy Secretary Jennifer Granholm on Thursday defended her support for moving forward with the Mountain Valley Pipeline, an Appalachian natural gas project opposed by environmental activists — including several who disrupted POLITICO’s energy summit in D.C.Granholm endorsed the pipeline in a recent letter to the Federal Energy Regulatory Commission — the federal agency that regulates the nation’s sprawling pipelines — arguing the controversial project is needed for U.S. energy security, but is also crucial to transitioning to a zero-emissions power system. One of pipeline’s big champions is Senate Energy Chair Joe Manchin(D-W.Va.), who provided the crucial vote for President Joe Biden’s climate bill last year.“We know that there is a real desire to have energy security in areas where there’s huge demand for power,” Granholm said during the summit. “We also know that we have got to accelerate investment in clean [energy].”The remarks underscore the Biden administration’s balancing act in meeting its goals of ending carbon pollution from fossil fuels while acknowledging the continued role of the oil and gas industry in the economy.The secretary’s remarks were disrupted by a handful of protesters who rushed toward the stage, shouting variations of “no MVP” and “Granholm, you are killing me.”.In response to a later question on the Biden administration’s support for sending natural gas abroad to help U.S. allies cope with market disruptions from Russia’s invasion of Ukraine, Granholm acknowledged the trade-offs.“To the point of the protesters here, these are really hard decisions,” she said. “We are in this transition. We want to be able to ensure that our allies can turn on the lights.”The secretary said the U.S. has an abundance of natural gas and is going to be “a friend” to its allies, while also working with them to accelerate the transition to clean energy sources.
US NatGas Drilling Collapses At Fastest Rate Since 2016 -According to a new report from Baker Hughes Co., the US natural gas sector is rapidly pulling drilling rigs from the field due to oversupply conditions that have led to a collapse in NatGas prices over a nine-month period. Baker Hughes reported Friday that exploration companies reduced rigs by 16 to 141 this week. This is the most significant weekly decline since February 2016. Nabors Industries Ltd., one of the top providers of rigs to shale drillers, warned last month about the fall in rig orders. The rig provider expects a 9% slide in its US rig leases by the end of June. Its bearish forecast comes as prices once commanded more than $10 per million British thermal units in late August 2022 and have since plunged to $2.25. Bloomberg explained a combination of factors led to the NatGas glut:"The glut developed after a key US gas-export facility was shut by a fire and abnormally mild winter weather gutted heating demand."The good news is that low prices have pushed drillers to curtail production growth. Comstock Resources Inc. and Southwestern Energy Co. have already said drilling in Louisiana's Haynesville Shale region would be reduced. "What's going to suffer the most is the number of drilling rigs," said Angie Gildea, who heads KPMG LLP's US energy, natural resources, and chemicals team. She noted companies "will take lower production growth over having to reduce dividends to shareholders." Meanwhile, Citigroup Inc. analysts warn some exploration companies are shutting down existing wells due to the supply glut and low prices. "We expect further reductions across both natural gas rigs and frac fleets in the Haynesville, while throttling and shut-ins are likely to be needed across all basins by the summer," Citigroup's Paul Diamond wrote in a note to clients. Low NatGas prices plus tighter credit conditions will make it even more challenging for drillers to tap credit lines from big banks. This is the necessary step to correct oversupply conditions.
Natural Gas Futures, Cash Prices Rally on Heels of Rig Count Drop --Natural gas futures traders shrugged off continued mild weather forecasts and elevated supply data, seizing instead on a sharp drop in the weekly rig count to push prices higher for a second day. Following a 7.6-cent gain to close out last week’s trading, the June Nymex gas futures contract on Monday advanced 10.9 cents day/day and settled at $2.375/MMBtu. July followed suit, rising 10.4 cents to $2.542. NGI’s Spot Gas National Avg. jumped 38.5 cents to $2.035, rebounding from losses the prior week. Production held strong at 100 Bcf/d on Monday, according to Bloomberg’s estimate, within 2 Bcf/d of 2023 highs. However, the latest Baker Hughes data showed natural gas-directed rigs dropped by 16 to 141. The BKR data, released Friday and covering the week ended May 12, pointed to a potential pullback in production later this year. This galvanized bullish market sentiment because it is a sign that producers are beginning to move rigs away from gas-focused areas in response to low prices this year, The drop in gas-directed rigs marked the most precipitous decline since 2016 and followed comments during the first quarter 2023 earnings season from several producers that a slowdown loomed. Prices heading into this week were more than 70% lower than the peaks of 2022 in large part because of robust supplies and weak demand through what proved a mostly mild winter. New liquefied natural gas facilities are slated to open over the next few years to support expected long-term global demand for U.S. exports. This, by extension, could bolster prices over the long haul. Producers may be willing to stomach lower prices for longer in order to maintain momentum for the future demand jump. Meanwhile, weather-driven demand in the near-term remains elusive, production is steady and supplies in storage are stout. The combination is expected to result in triple-digit storage injections through the remainder of May and into early next month, There is “the potential the streak extends to five or six weeks without hotter trends in early June,” “Clearly, weather patterns are to the bearish side, and it doesn’t help that the background state remains quite bearish with surpluses at plus-332 Bcf, while forecast to increase to plus-375 Bcf by the end of May.”
US natgas jumps 10% to nine-week high on small storage build, Canada wildfires (Reuters) - U.S. natural gas futures jumped about 10% to a nine-week high on Thursday on a smaller-than-expected U.S. storage build and as wildfires kept gas exports from Canada near a 25-month low. Energy analysts also noted prices extended their gains after breaking through a key level of technical resistance. The U.S. Energy Information Administration (EIA) said utilities added just 99 billion cubic feet (bcf) of gas to storage during the week ended May 12. That, however, was still more than usual for this time of year because mild weather kept demand for the fuel low for both heating and cooling. But it was less than the 108-bcf build analysts had forecast in a Reuters poll and compared with an increase of 87 bcf in the same week last year and a five-year (2018-2022) average increase of 91 bcf. Last week's increase boosted stockpiles to 2.240 trillion cubic feet (tcf), or 17.9% above the five-year average of 1.900 tcf for the time of year. Front-month gas futures for June delivery on the New York Mercantile Exchange rose 22.7 cents, or 9.6%, to settle at $2.592 per million British thermal units (mmBtu), their highest close since March 13. That was also the contract's biggest one-day percentage gain since it jumped about 11% in late April. Data provider Refinitiv said average gas output in the U.S. Lower 48 states held at 101.4 billion cubic feet per day (bcfd) so far in May, matching the monthly record high in April. The amount of gas flowing from Canada to the U.S. dropped to a fresh 25-month low of 6.4 bcfd on Wednesday as wildfires in Alberta caused some producers to shut oil and gas output and pipeline flows over the past couple of weeks. During those two weeks, U.S. gas futures gained about 20% as Canada exported an average of just 7.1 bcfd of gas to the U.S. That is down from an average of 8.4 bcfd since the start of the year and 9.0 bcfd in 2022. About 8% of the gas consumed in the U.S. or exported as liquefied natural gas (LNG) or via pipelines comes from Canada. Meteorologists projected the weather in the U.S. Lower 48 states would switch from near-normal levels from May 18-27 to warmer than normal from May 28-June 2. Refinitiv forecast U.S. gas demand, including exports, would slide from 93.0 bcfd this week to 89.6 bcfd next week. Gas flows to the seven big U.S. LNG export plants fell from a record 14.0 bcfd in April to an average of 12.9 bcfd so far in May due to maintenance work at several plants, including Cameron LNG in Louisiana and Cheniere Energy Inc's Sabine Pass in Louisiana.
US natgas holds near 9-week high on low wind power, Canada wildfires (Reuters) - U.S. natural gas futures held near a nine-week high on Friday after a technical bounce in the prior session and as a lack of wind power this week caused generators to burn more gas to produce electricity. Traders also said prices were supported this week by a drop in gas exports from Canada due to wildfires in Alberta and other western provinces. The amount of U.S. power generated by wind this week was on track to drop to just 7% of the total versus a recent high of 17% during the week ended April 21, according to federal energy data. That means power generators had to burn more gas to produce electricity, and there will be less of the fuel available to go into storage. The amount of power generated by gas was on track to hit 43% this week, up from a recent low of just 37% during the windy week ended April 21. Front-month gas futures for June delivery on the New York Mercantile Exchange fell 0.7 cents, or 0.3%, to settle at $2.585 per million British thermal units (mmBtu). On Thursday, the contract jumped about 10% to settle at its highest since March 13. For the week, the contract gained about 14% this week after rising about 6% last week. That was its biggest weekly percentage increase since early March when it soared about 23%. But all gas prices were not up. In the spot market, mild weather and ample hydropower in the U.S. West pressured next-day gas for Friday at the PG&E Citygate in Northern California to $3.62 per mmBtu, its lowest since April 2021. Over the past couple of weeks the average amount of gas flowing from Canada to the U.S. averaged just 7.1 billion cubic feet per day (bcfd) as wildfires in Alberta and other western provinces caused some producers to shut oil and gas output, according to data provider Refinitiv. That is well below the 8.4-bcfd average amount of gas exported from Canada to the U.S. since the start of the year and 2022's average of 9.0 bcfd. On a daily basis, Canadian gas exports were on track to reach 7.3 bcfd on Friday, up from a 25-month low of 6.4 bcfd on Wednesday. In the U.S., meanwhile, Refinitiv said average gas output in the Lower 48 states held at 101.4 bcfd so far in May, matching April's monthly record. Meteorologists projected the weather in the U.S. Lower 48 states would remain mostly near normal through June 3. Refinitiv forecast U.S. gas demand, including exports, would slide from 93.0 bcfd this week to 89.4 bcfd next week before rising to 90.7 bcfd in two weeks. The forecasts for this week and next were similar to Refinitiv's outlook on Thursday.
Global Natural Gas Demand Projected to Decline Through Remainder of Year, IEA Says - Global natural gas demand is expected to remain flat in 2023 with modest growth in the Asia-Pacific region offset by projected declines in Europe and North America, according to the International Energy Agency (IEA). The world’s natural gas consumption declined 1.5% year/year in 2022, driven largely by a sharp increase in prices after Russia invaded Ukraine and upended trade flows. The decline in demand, IEA said in its latest quarterly gas report, continued into the early months of this year due to favorable weather and “timely policy actions” in response to the energy crisis. “The improved outlook for gas markets in 2023 is no guarantee against future volatility and should not be a distraction from measures to mitigate potential risks,” IEA said.
Shale Drillers Are Auctioning Off Rigs at Bargain Basement Prices --The much-touted second shale boom has lately been getting a reality check as equipment demand declines sharply, a worrying sign that drilling in U.S. shale energy regions is leveling off. The Financial Times has reported that next week, Texas auctioneer Kruse Asset Management will auction off two unused, top-of-the-line drilling rigs valued at $40 million and $30 million when built in 2019 at starting bids of just $12.9M and $2.3M, respectively.“There’s no reason for them to be so cheap, but there’s just no demand,” Dan Kruse, chief executive of Kruse Asset Management, has told the Financial Times.According to Baker Hughes data, U.S. oil and natural gas rig count has declined 6% in the year-to-date to 731 last week, reversing a steady climb since the depths of the pandemic. The current tally is a far cry from the nearly 2,000 rigs that were running around mid-2014 at the peak of the shale boom. Last week, rig count for gas-directed rigs dropped by 16, or 10 per cent--the steepest weekly fall since 2016. Expectations foranother shale boom are getting tamped down due to rising costs as well as limited supplies of labor and equipment that continue to hamstring efforts by U.S. shale producers to quickly ramp up production.Still, a number of experts have predicted that U.S. production will continue growing. A week ago, the Energy Information Administration (EIA) forecast U.S. crude production will rise about 5% in 2023, while fuel demand will increase 1%.
Lower 48 Natural Gas Production Growth Seen Slowing in Latest EIA Modeling - Natural gas production growth from seven key Lower 48 regions will slow — but not stall — from May to June, adding 256 MMcf/d sequentially to crest the 97 Bcf/d mark, updating modeling from the Energy Information Administration (EIA) shows. EIA’s latest projections, published in its Drilling Productivity Report Monday, reflect a reduced sequential natural gas production growth rate when compared to previous modeling from the agency. In the month-earlier period, EIA modeled natural gas production growth of 332 MMcf/d from April to May from the seven plays tracked in the report. The month before that, the DPR had modeled growth of 420 MMcf/d from March to April. EIA’s DPR analyzes production trends in the Anadarko, Appalachia and Permian basins, as well as in the...
U.S. Natural Gas Pipeline Exports to Mexico Dip for First Time in Over a Decade Amid Record Prices - U.S. natural gas gas exports to Mexico via pipeline fell on a year/year basis in 2022 for the first time since 2010, according to the U.S. Department of Energy (DOE). DOE compiles a quarterly report on the North American natural gas trade. Gas flows to Mexico dipped to 5.7 Bcf/d in 2022 from 5.9 Bcf/d in 2021. “Exports to Mexico fell in every month relative to 2021, except for January and February,” DOE researchers said. The average price of gas exports to Mexico increased by 15.7% to $6.26/MMBtu. Nonetheless,“U.S. exports to Mexico have grown substantially in the past 20 years, especially in the past five years,” the DOE team said. “Growing demand for power generation and industrial uses in Mexico and an increase in pipeline capacity has been widely cited as the cause"... © 2023
Markey bill would restore ban on US fossil fuel exports - Sen. Ed Markey (D-Mass.) introduced legislation Thursday that will reimpose a ban on U.S. fossil fuel exports, citing environmental hazards and possible impacts on domestic prices. The measure would “help prioritize American consumers, protect our climate and promote environmental justice and put the United States on a path to self-sufficiency through domestic clean energy production,” Markey said Thursday at a press conference on Capitol Hill, flanked by supporters of the bill from communities in the Rio Grande Valley and the Gulf Coast. Markey disputed the idea that the ban would result in higher prices for American consumers, pointing to International Energy Agency data indicating that increased U.S. exports were accompanied by higher domestic prices for natural gas. “So ordinary families have to pay more on their natural gas bill, because the big oil and gas companies want to sell it overseas, but that leaves less here, which drives up the price for natural gas for people who are trying to heat their homes,” he said. Then-President Obama signed a bill in 2015 lifting a four-decade restriction on U.S. oil exports. Since the Russian invasion of Ukraine last February, U.S. exports of liquefied natural gas (LNG) in particular have surged as European nations end their imports of Russian oil. Reps. Adriano Espaillat (D-N.Y.) and Yvette Clarke (D-N.Y.) introduced corresponding legislation in the House. The bill is likely doomed in the GOP-majority House, but it marks the latest collaboration between Markey and climate-focused House Democrats aimed at promoting aggressive climate action.
Report: US Gulf of Mexico Oil Production Leads on GHG Intensity - The US National Ocean Industries Association (NOIA) has released a study on global oil production emissions that finds that the greenhouse gas intensity of US oil production, particularly in the U.S. Gulf of Mexico, is significantly lower than most other regions around the world. Prepared by ICF, the GHG Emission Intensity of Crude Oil and Condensate Production report, calculates that total US oil production has a carbon intensity 23% lower than the international average outside of the US and Canada. Additionally, the US Gulf of Mexico has a carbon intensity 46% lower than the global average outside of the US and Canada, outperforming other nations like Russia, China, Brazil, Iran, Iraq and Nigeria but not Saudi Arabia. Using the largest crude category from the Gulf of Mexico (API Gravity 37.5), instead of similar crudes from outside the US and Canada, could result in a 50% reduction in the average international carbon intensity. The report includes a sensitivity analysis of global methane emissions, indicating that US production, especially in the Gulf of Mexico, performs much better relative to the global average in terms of emissions intensity even when measured using other methane estimation methodologies. NOIA President Erik Milito says, “The US Gulf of Mexico energy production sets the standard for oil and gas production worldwide. The world needs both climate solutions and a growing amount of energy, and we don't have to choose between the two. Thanks to the remarkable efforts of the women and men producing energy in the Gulf of Mexico, we have an incredible source of reliable and responsibly produced energy. “The Gulf of Mexico produces a massive amount of energy with a remarkably small footprint, and its continued success is critical for our energy security, national security, and energy affordability. This study validates the importance of the US Gulf of Mexico as a source of energy with demonstrably lower carbon intensity barrels.”
US Plans To Buy 3 Million Barrels For SPR Days After It Drained 2.9 Million In One Week - With oil stubbornly the only asset class that is pricing in if not a depression then certainly a deep recession - even as every other asset is already pricing in the inevitable Fed easing in response to said recession - and the price of WTI tumbling as low as $63 at the start of May, the credibility behind the Biden administration's promise to restock the recently drained SPR has become the butt of all jokes. As a reminder, last Fall the White House said the aim was to refill the reserve when prices were at or below about $67-$72 per barrel. Since then oil prices had fallen far below without as much as a squeak from Biden's energy guru, Hunter. But that doesn't mean the pathological liars in the presidency will stop lying about refilling the Strategic Petroleum Reserve; in fact just the opposite... and mere days after the DOE again moved the goalposts to a June "refill", moments ago Bloomberg reported that the US is preparing to buy up to a whopping 3 million barrels of crude oil - or one tanker's worth - to begin refilling its depleted Strategic Petroleum Reserve. After selling more than 200 million barrels from the emergency stockpile last year to curb high energy prices and arrest the collapse of Democratic approval ratings, the Energy Department plans to solicit offers to replenish the reserve, which has fallen to the lowest level since 1983, according to Bloomberg. Which would be believable if only it wasn't one of the most recurring lie dispensed by an admin that views the price of gas like a hawk as if only gas prices will decide if the 80 year old Biden will get reelected. Of course, you will forgive us if we call even more bullshit from the admin that has taken lying to an artform, and which just last week drained 2.9 million barrels of oil from the SPR, long after it was supposed to have restarted refilling it. In addition to direct purchases, the agency has said part of its strategy for refilling the reserve includes a return of oil from previous exchanges, and avoiding “unnecessary sales unrelated to supply disruptions.” The department successfully cancelled some 140 million barrels of oil sales mandated by Congress. Last week, Energy Secretary Jennifer Granholm said the government would repurchase crude oil for the reserve after a congressionally mandated drawdown ends in June. She also claimed that the refill the SPR as soon as maintenance work is completed... or generally just kicking the can to doing anything at all. Case in point: an earlier attempt to refill the reserve, via another 'gargantuan' 3 million barrel-purchase, was canceled by the Energy Department in January, saying the offers it received were either too expensive or didn’t meet other specifications. Both explanations are the kind of pure, unadulterated bullshit one has come to expect from the most corrupt administration in US history, and explains why not only Gulf nations but US energy companies are counting the days until the senile occupant of the White House is once again voted out (only this time the fake mail in ballots won't keep him employed).
Methane Mitigation in Texas Could Create Thousands of Jobs in the Oil and Gas Sector - A new report finds that methane regulations proposed by the Environmental Protection Agency could spur job growth in Texas as oil and gas operators measure, monitor and mitigate the harmful greenhouse gas.While Texas officials argue the methane regulations would kill jobs, the report, published today by the Texas Climate Jobs Project and the Ray Marshall Center at the University of Texas, Austin, found that new federal methane regulations could create between 19,000 and 35,000 jobs in the state. Oil and gas producing regions, including the Permian Basin, would need a significant workforce to detect methane leaks, replace components known to leak the gas and plug abandoned wells. Previous research shows the methane mitigation industry is already growing.In the absence of state methane rules, the EPA’s draft methane rule, first issued in November 2021 and strengthened in a supplemental filing last November, along with a new methane fee under the Inflation Reduction Act, will have a major impact on oil and gas operations in the Lone Star state. The EPA’s methane regulations, to be finalized later this year, would reduce methane emissions 87 percent below 2005 levels by 2030. The Inflation Reduction Act’s first-ever methane fee for large emitters will also start in 2024 at $900 per ton of methane and increase to $1,500 per ton by 2026.Reducing methane emissions is one of the most effective short-term measures to slow the pace of climate change because methane traps about 80 times more heat in the atmosphere over a 20-year period than carbon dioxide.But Texas has been a stubborn opponent of federal methane regulations. In January 2021, shortly after Biden ordered the EPA to develop new methane rules, Gov. Greg Abbott issued an executive order directing state agencies to use every legal avenue to oppose federal action challenging the “strength, vitality, and independence of the energy industry.”
Oneok to Add Refined Products, Crude Oil Transportation Services with $18.8B Magellan Deal - Natural gas midstream company Oneok Inc. on Monday announced that it has agreed to purchase Magellan Midstream Partners LP for $18.8 billion, giving the Tulsa-based firm entry into the transportation of crude oil and refined products.
TC Energy finishes recovering oil from Kansas creek in Keystone spill (Reuters) – TC Energy Corp finished recovering oil from a rural Kansas creek where its Keystone Pipeline spilled 14,000 barrels of oil in December, the company said on Friday.The pipeline operator expects to remain onsite until the third quarter of this year to finish restoring the Mill Creek shoreline, TC Energy said in a statement.
Keystone pipeline owner says recovery of spilled oil into Kansas creek is complete | Nebraska Examiner — A Canadian pipeline company says it has completed the recovery of oil spilled into a Kansas creek following a record leak on the Keystone Pipeline. TC Energy, in a press release Thursday, said it continues to restore the shoreline of Mill Creek as well as adjacent areas affected when the high-pressure, 36-inch pipeline sprang a leak in December, releasing more than 500,000 gallons of crude oil. It was the largest oil pipeline spill in the U.S. in nine years and the largest leak on the 12-year-old Keystone pipeline. The pipeline leak was just across the Nebraska border near Washington, Kansas. The company said it expects to continue its work at the spill site until the third quarter of the year. TC Energy said it employed “sophisticated recovery and water filtration techniques” to collect the oil. The work was done under the oversight of the U.S. Environmental Protection Agency and Kansas Department of Health and Environment. The company has said that a flaw in a weld combined with “inadvertent bending stresses” on an elbow fitting during installation in 2011, combined with the high pressures employed to transport the oil, eventually led to the pipeline failure. Environmental groups have said the Keystone should be shut down because of its design flaws and that it’s only a matter of time before there’s another leak.
Keystone pipeline oil spill result of design and construction issues, operations lapses: report — Pipeline design issues, lapses by its operators and problems caused during its construction led to a massive oil spill on the Keystone pipeline system in northeastern Kansas, according to a report for U.S. government regulators. An engineering consulting firm said in the report that the bend in the Keystone system where the December 2022 spill occurred had been “overstressed” since its installation in December 2010 — likely because construction activity itself altered the land around the pipe. The U.S. Department of Transportation’s Pipelines and Hazardous Materials Safety Administration posted a redacted copy of the report online May 15, about three weeks after it was completed by RSI Pipeline Solutions, based in the Columbus, Ohio, area. The report raised questions about Canada-based TC Energy Ltd.’s oversight of the manufacturing of its pipeline, saying the report’s authors could find no record of a pre-installation inspection of the welds on the Washington County bend. The report concluded that TC Energy underestimated the risks associated with the bend going from its round shape when installed to a more-restricted oval shape within two years and didn’t replace the bend after excavating it in 2013. The company said in February that a faulty weld in the bend caused a crack that grew over time under stress. The spill dumped nearly 13,000 barrels of crude oil — each one enough to fill a standard household bathtub — into a creek running through a rural pasture in Washington County, Kan., about 240 kilometres northwest of Kansas City. It was the largest onshore spill in nearly nine years. “When you have a pipeline that is spilling and having as many problems as Keystone One, it is clearly a red flag that there are bigger issues going on,” said Jane Kleeb, who founded the Bold Nebraska environmental and landowner rights group that helped fight off TC Energy’s plan to build a second pipeline, the Keystone XL. The U.S. Department of Transportation has documented 22 leaks along the Keystone pipeline since it was built in 2010. The one in Washington County was by far the largest. “At what point, does the federal government … step in and say this has reached a point where we need to shut the full line down to do a full review of the pipeline?” Kleeb said. The 4,345-kilometre Keystone system carries heavy crude oil extracted in western Canada to the Gulf Coast and to central Illinois. Concerns that spills could pollute waterways ultimately scuttled TC Energy’s plans to build the Keystone XL across 1,900 kilometres of Montana, South Dakota and Nebraska.
Keystone Pipeline was under stress for 12 years before Kansas oil spill, new report shows -December’s massive oil spill in rural northern Kansas may have been more than a decade in the making, a newly released third party report shows.The Pipeline and Hazardous Materials Safety Administration (PHMSA), which regulates oil pipelines in the U.S., released a partially redacted version of the 240-page report this week, more than six months after the spill.In it, the engineering consulting group RSI Pipeline Solutions concludes that extreme external pressure from the surrounding environment caused the pipeline segment in question to deform over time, losing its round shape in a process called “ovalization.”This pressure also exacerbated cracks in a faulty weld made in 2010, eventually causing the pipeline to burst.The spill released nearly 13,000 barrels of a thick crude oil called diluted bitumen into the river just outside the city of Washington, Kansas.It was the largest spill in the Keystone pipeline’s history, and larger than all its previous 22 spills combined. The spill killed more than 100 animals, and has taken six months to clean up.On the heels of the report, the EPA announced Wednesday that the oil cleanup process is completed. TC Energy will now begin working to restore Mill Creek, a small nearby river that crews diverted during the cleanup effort, to its original condition.The spill was due to a combination of faulty welding and extreme pressure causing the pipeline to deform, the report states.In December of 2010, pipeline operators TC Energy discovered quality issues with many elbow fittings along the Keystone Pipeline. The exact number of defective pieces is redacted in the report, but it says that the company replaced them all.These new parts were sealed into place with a circular weld all the way around the pipeline called a “gird weld.” But at least one of these welds — at the junction where the pipeline eventually burst — had three weak points that slowly grew over the next 12 years.Additional pressure from outside the pipeline worsened this structural flaw.This wasn’t just normal pressure from the soil above the pipeline. Instead, significant land movement or heavy machinery may have caused the pipe to deform into an oval shape over time, said Richard Kupriewicz, an independent pipeline advisor who has testified before Congress on pipeline safety and hasover 20 years of experience advising on pipeline operation and regulation.“Just because you threw dirt over it, it doesn’t crush the pipe,” he said. “It can tolerate some loading (weight), but it wouldn’t necessarily cause the pipe to lose its roundness.”A slightly deformed shape, external pressure, gaps in welding — none of these factors are unusual in pipelines around the country, he said. Alone, they’re typically not a cause for concern. But the combination can create a “perfect storm” and cause a significant spill.
Wisconsin tribe asks court to shut down Enbridge pipeline due to oil spill risk (AP) — Attorneys for a Wisconsin Native American tribe argued Thursday that a federal judge should order an energy company to shut down an oil pipeline the tribe says is at immediate risk of being exposed by erosion and rupturing on reservation land. The Bad River Band of Lake Superior Chippewa asked U.S. District Judge William Conley last week to issue an emergency ruling forcing Enbridge to shut down the Line 5 pipeline after large chunks of riverbank running alongside it were washed away by the river in northern Wisconsin. The tribe says less than 15 feet (4.6 meters) of land now stands between the Bad River and Line 5 in four locations on the reservation. In some places, more than 20 feet (6 meters) of riverbank has eroded in the past month alone. Experts and environmental advocates have warned in court that an exposed section of pipeline would be weakened and could rupture at any time, causing massive oil spills. Enbridge’s engineers contend there is almost no chance the pipeline will be exposed by erosion, let alone rupture, in the next year. The company said in court filings that the tribe has not cooperated with its repeated requests to line the riverbank with sandbags that would protect against erosion. Enbridge also asked the tribe Monday for a permit to install stabilizing barricades made of trees along the riverbank. Judge Conley signaled frustration with the tribe’s lack of action as Thursday’s hearing began. “The band has not helped itself by refusing to take any steps to prevent a catastrophic failure at the meander,” Conley said. “You haven’t even allowed simple steps that would have prevented some of this erosion.” The Bad River tribe sued Enbridge in 2019 to force the company to remove the roughly 12-mile (19-kilometer) section of Line 5 that crosses tribal lands, saying the 70-year-old pipeline is dangerous and that land agreements allowing Enbridge to operate on the reservation expired in 2013. Conley sided with the tribe last September, saying Enbridge was trespassing on the reservation and must compensate the tribe for illegally using its land. But he would not order Enbridge to remove the pipeline due to concerns about what a shutdown might do to the economy of the Great Lakes region.
Judge signals hesitance to shut down pipeline, pleads with Wisconsin tribe to work with oil company - Wisconsin Watch -A federal judge signaled Thursday he will not force an energy company to shut down an oil pipeline in northern Wisconsin, despite arguments from a Native American tribe that the line is at immediate risk of being exposed by erosion and rupturing on reservation land.The Bad River Band of Lake Superior Chippewa asked U.S. District Judge William Conley last week to issue an emergency ruling forcing Enbridge to shut down the Line 5 pipeline after large chunks of riverbank running alongside it were washed away.But Conley voiced frustration with the tribe at Thursday’s hearing for not allowing Enbridge to reinforce the land around the pipeline. “The band has not helped itself by refusing to take any steps to prevent a catastrophic failure at the meander,” Conley said. “You haven’t even allowed simple steps that would have prevented some of this erosion.”The tribe says less than 15 feet (4.6 meters) of land now stands between the Bad River and Line 5 along a meander on the reservation. In some places, more than 20 feet (6 meters) of riverbank has eroded in the past month alone. Experts and environmental advocates have warned in court that an exposed section of pipeline would be weakened and could rupture at any time, causing massive oil spills.Conley said before testimony began that it might be necessary for him to order a shutdown at some point, but he was not convinced it was the only option left on Thursday.Enbridge has repeatedly asked the tribe for permission to place sandbags along the riverbank to prevent erosion. It also requested a permit Monday to install barricades made of trees to protect the pipeline.Tribal officials have not approved any of the company’s requests.Judge Conley said the tribe’s inaction undermined claims it has made time and again that the pipeline must be shut down.“It looks like a strategy, even if it’s just idiocy,” he said. “I’m begging the band to just act. Do something to show you’re acting in good faith. The Bad River tribe sued Enbridge in 2019 to force the company to remove the roughly 12-mile (19-kilometer) section of Line 5 that crosses tribal lands, saying the 70-year-old pipeline is dangerous and that land agreements allowing Enbridge to operate on the reservation expired in 2013.Conley sided with the tribe last September, saying Enbridge was trespassing on the reservation and must compensate the tribe for illegally using its land. But he would not order Enbridge to remove the pipeline due to concerns about what a shutdown might do to the economy of the Great Lakes region.Instead, Conley told Enbridge and tribal leaders last November to create an emergency shutoff plan for the pipeline. His ruling said there was a significant risk it could burst and cause “catastrophic” damage to the reservation and its water supply. Line 5 transports up to 23 million gallons (about 87 million liters) of oil and liquid natural gas each day and stretches 645 miles (1,038 kilometers) from the city of Superior through northern Wisconsin and Michigan to Sarnia, Ontario. If the pipeline were shut down, gas prices would likely increase, refineries would shut down, workers would be laid off and the upper Midwest could see years of propane shortages, according to reports Enbridge submitted in court. Enbridge has proposed a 41-mile (66-kilometer) reroute of the pipeline to end its dispute with the tribe and said in court filings that the project would take less than six years to complete. But the Department of Natural Resources has not granted the permits Enbridge needs to begin construction. A draft analysis of the project’s environmental impact submitted in December 2021 received thousands of public comments, with many criticizing the report as insufficient. The company is still responding to the DNR’s requests for more information.Line 5 has also faced resistance in Michigan, where Enbridge wants to drill a new tunnel under a strait connecting two of the Great Lakes but Michigan Gov. Gretchen Whitmer and Attorney General Dana Nessel have sought to shut down the pipeline. Nessel filed a brief Wednesday in support of the tribe’s request, saying a rupture in Wisconsin would also cause irreparable environmental damage in Michigan.
Northwest New Mexico could provide needed insight into finding orphaned oil and gas wells - A largely abandoned oil and gas field in northwest New Mexico could help a team of researchers develop ways to identify and characterize orphaned wells.A team from Los Alamos National Laboratory that is involved in the multi-lab initiative visited the Horseshoe Gallup field west of Farmington last week. There are more than two dozen wells identified in that field as eligible for federal funding intended to help plug orphaned wells.Don Schreiber, a San Juan Basin activist who is part of an effort to get the Horseshoe Gallup field cleaned up, guided the team along with Earthworks thermographers.“This well and many others here are still listed as active, but they may have produced 10 barrels in the last 10 years,” he told the LANL crew.Schreiber and others involved in the cleanup effort say that, though the wells are still listed as active, they are actually orphaned and the companies listed as their most recent owner are mainly no longer in existence.An orphaned well is one that has no legal owner. One common reason this occurs is because of bankruptcy, but there are other reasons as well.LANL teamed up with several other national labs, including Sandia National Laboratories, in October to develop a way to identify orphaned wells and characterize them. This will help prioritize where plugging occurs. The consortium began working together on orphaned wells in light of new federal funding available through the Infrastructure Investment and Jobs Act, or the bipartisan infrastructure law, to plug orphaned wells.The U.S. Department of the Interior has identified more than 130,000 orphaned wells in 30 states including in New Mexico. But many more remain unidentified. The U.S. Environmental Protection Agency estimates there could be millions of orphaned and abandoned wells. Finding each one individually could be a challenge, so the team hopes to develop a way to use drones over oil fields to locate unidentified wells.Orphaned and abandoned wells can continue to leak methane and toxic pollutants into the atmosphere.
Oil Company Cancels Colorado Open Space Drilling Proposal --Colorado’s Boulder County won’t be forced to lease oil and gas located miles below open space purchased with taxpayer dollars after an energy company withdrew the project from consideration by state regulators. Following a five-year effort to get the proposal approved, Extraction Oil & Gas canceled its application with the Colorado Oil and Gas Conservation Commission for its 32-well “Blue Paintbrush” development on May 2. Theproposal encompassed a 2,270-acre area in Boulder and Weld counties, about 30 miles north of downtown Denver. The company’s decision came just before it reassured investors in a May 3first-quarter filing that it intended to “vigorously defend” against claims by Boulder County that leases it currently holds for minerals in the project area are invalid. County officials welcomed the news, yet cautioned that the project might not be dead. “There are many details yet to be worked out,” said Senior Assistant County Attorney Kate Burke in a May 4 statement. “Extraction has stopped its effort to forcibly develop the county’s property for now, but it’s not clear what will become of the Blue Paintbrush project,” she added. “We will continue our efforts to protect county property and enforce our lease rights.” Conflicts between Coloradans and energy companies are escalating as hydraulic fracturing, or fracking, allows operators to drill a mile or more down before turning the bit horizontally and traveling several thousand feet across to penetrate rock and release oil and gas. The industrial practice is moving ever closer to fast-growing metro Denver suburbs, where eight of 10 residents don’t own their oil and gas rights — and don’t know who does. Colorado is the nation’s fifth biggest oil producer and eighth largest producer of gas.
North Dakota oil, natural gas production 'mixed bag' - North Dakota oil production fell 3% in March while the state's natural gas output was flat. "Kind of a mixed bag" was how Lynn Helms, North Dakota's minerals director, summed it up in a news conference on Friday. He also criticized new federal environmental rules unveiled this week, which could greatly affect North Dakota's coal and electricity industries. North Dakota, the nation's third largest oil-producing state, pumped out 1.12 million barrels of crude per day in March. That's down from 1.16 million barrels per day in February when the state posted its highest production since November 2021. The number of drill rigs in North Dakota, a harbinger of future oil production, has been falling significantly this year — from 46 in February to 43 in April and 39 currently. A monthly state oil report blamed the decline on seasonal road restrictions. North Dakota had 17,650 active oil wells in March, up a bit from February, meaning that output per well declined from month to month. In addition to being a big oil state, North Dakota is a big producer of coal-fired power with five plants situated next to coal mines. On Thursday, the U.S. Environmental Protection Agency laid out new rules on carbon dioxide emissions. "It is the Clean Power Act on steroids," Helms said, referring to an Obama-era proposal to mitigate carbon dioxide. The new EPA rules call for an end to CO2 emissions from fossil fuel power plants by 2038. "I am sure the state of North Dakota will be very actively resisting these new EPA regulations," Helms said. Most of Minnesota's coal plants will be closed by 2030. The state's natural gas power generators will be around for years thereafter. But Minnesota passed a law earlier this year requiring electricity producers to generate 100% clean power by 2040. "Minnesota's 100% law is very closely aligned with the timing of the EPA rule," said Allen Gleckner, a lead director at advocacy group Fresh Energy in St. Paul.
It Could Cost $21 Billion to Clean Up California’s Oil Sites, Study Finds. The Industry Won’t Make Enough Money to Pay for It.— For well over a century, the oil and gas industry has drilled holes across California in search of black gold and a lucrative payday. But with production falling steadily, the time has come to clean up many of the nearly quarter-million wells scattered from downtown Los Angeles to western Kern County and across the state.The bill for that work, however, will vastly exceed all the industry’s future profits in the state, according to a first-of-its-kind study published Thursday and shared with ProPublica.“This major issue has sneaked up on us,” said Dwayne Purvis, a Texas-based petroleum reservoir engineer who analyzed profits and cleanup costs for the report. “Policymakers haven’t recognized it. Industry hasn’t recognized it, or, if they have, they haven’t talked about it and acted on it.”The analysis, which was commissioned byCarbon Tracker Initiative, a financial think tank that studies how the transition away from fossil fuels impacts markets and the economy, used California regulators’ draft methodology for calculating the costs associated with plugging oil and gas wells and decommissioning them along with related infrastructure. The methodology was developed with feedback from the industry.The report broke down the costs into several categories. Plugging wells, dismantling surface infrastructure and decontaminating polluted drill sites would cost at least $13.2 billion, based on publicly available data. Adding in factors with slightly more uncertainty, like inflation rates and the price of decommissioning miles of pipeline, could bring the total cleanup bill for California’s onshore oil and gas industry to $21.5 billion.Meanwhile, California oil and gas production will earn about $6.3 billion in future profits over the remaining course of operations, Purvis estimated.Compounding the problem, the industry has set aside only about $106 million that state regulators can use for cleanup when a company liquidates or otherwise walks away from its responsibilities, according to state data. That amount equals less than 1% of the estimated cost.Taxpayers will likely have to cover much of the difference to ensure wells are plugged and not left to leak brine, toxic chemicals and climate-warming methane. .“These findings detail why the state must ensure this cost is not passed along to the California taxpayer,” state Sen. Monique Limón, a Santa Barbara Democrat who has written legislation regulating oil, said in a statement. “It is important that the state collect funding to plug and abandon wells in a timely and expeditious manner.”Representatives of the state’s oil regulatory agency, the California Geologic Energy Management Division, did not respond to ProPublica’s request for comment on the report’s findings.Rock Zierman, CEO of the California Independent Petroleum Association, an industry trade group, said in a statement that companies spent more than $400 million last year to plug and clean up thousands of oil and gas wells in the state. “This demonstrates their dedication to fulfilling their obligations and mitigating the environmental impact of their operations,” he said.Fees on current oil and gas production will offset some of the liabilities, but they’re nowhere near enough to address the shortfall quantified by the new report.“It really scares me,” Kyle Ferrar, Western program coordinator with environmental and data transparency group FracTracker Alliance, said of the report’s findings. “It’s a lot for the state, even a state as big as California.”
California Bill Would Hit Oil Companies With $1 Million Penalty for Health Impacts -The first of its kind legislation holds companies liable for illness from urban drilling. Monic Uriarte was thrilled to get approved for an affordable apartment in Los Angeles’ University Park, close to USC. But soon after she and her family moved there in 2004, they started experiencing headaches and other illnesses.Her mother was diagnosed with asthma at age 70. Her daughter had to sleep propped up because she’d get nosebleeds so bad she’d choke. On sweltering days, when they opened the windows, they noticed the air had a nauseatingly sweet taste. Uriarte eventually learned they’d moved into an apartment just 30 feet from an area with dozens of oil wells and a gas processing facility, hidden behind layers of brick and iron and trees.“Our bodies were the oil company’s filters,” Uriarte said.That realization kick-started Uriarte’s career as an environmental activist. Now she’s advocating for a statewide measure, backed by climate and environmental groups, that would impose what is likely the strongest law in the nation to hold oil and gas companies accountable when their operations make people sick. The bill, SB 556, comes on the heels of an industry-funded referendum campaign that halted a law to create buffer zones, or “setbacks,” between oil and gas wells and homes, schools, parks and health clinics. It also emerges in the context of the U.S. Supreme Court ruling on April 24 that allows lawsuits filed by cities and states against fossil fuel companies over climate change to move forward in state courts. Hundreds of such climate cases have been filed worldwide, but SB 556 may be the first policy that would specifically link drilling to paid compensation for acute health impacts. It’s already passed out of an important legislative committee, despite a pro-business law group’s warning that it would be extremely difficult to attribute harm to specific wells.In the last decade, much more research on the harmful effects of oil and gas wells on human health has been published, including their disproportionate impacts on low-income communities, where the dirtiest and most productive wells are often located. Chronic exposure is as harmful as breathing freeway exhaust or secondhand smoke. A recent study that examined the health of residents living within the Las Cienegas Oil Field in South Los Angeles — where Uriarte lived with her family — found that people within 200 meters (656 feet) and downwind from wells reported symptoms including wheezing; eye and nose irritation; sore throats; dizziness; and weaker lungs overall.SB 556 says children or seniors diagnosed with lung ailments, those who endure dangerous pregnancies and residents diagnosed with cancer who live within 3,200 feet of an active well can sue companies and their board members. The payout runs between $250,000 and $1 million, with potential for doubling or tripling penalties as a “deterrent.” About 2.76 million peoplein California live within that zone, according to FracTracker. State prosecuting authorities would also have the ability to sue companies to recoup costs for public health programs.
Wildfires burn millions of acres in Canada, send oil prices higher - Wildfires burning across western Canada have forced thousands of people to evacuate their homes and have prompted some oil and gas companies to curb production as blazes approach pipelines.The fires have burned about 478,000 hectares, or 1,800 square miles, across Alberta, British Columbia and Saskatchewan as of Monday — 10 times the average area burned for this time of year, according to the NASA Earth Observatory.There were nearly 90 fires burning in the province of Alberta, a quarter of which are expected to get larger, according tothe Canadian Wildland Fire Information System. More than 20,000 people have had to evacuate their homes. The fires have had a notable impact on the region's oil industry, as some drillers were forced to halt a small percentage of production in a precautionary measure due to shifting fire conditions. This week, benchmark Canadian heavy crude prices tightened to multi-month highs over concerns about the blazes.Nearly 2.7 million barrels of daily oil sands production in Alberta is in "very high" or "extreme" wildfire danger zones, according to Rystad Energy, an energy consulting firm.As of Monday, outage volumes stood at about 240,000 barrels of oil equivalent per day. However, the ultimate damage to production will likely exceed that number, Thomas Liles, vice president of Rystad Energy's upstream research, wrote in a market update.The smoke also has caused poor air quality and hazy skies in parts of southern Canada, as well as in North Dakota, Minnesota and several other states. The spread of the smoke, which contains particles called aerosols, has prompted concerns over the impact of poor air quality on respiratory and cardiovascular health.The air quality levels in several cities in Alberta this week have been ranked as "very high risk" by Canada's Air Quality Health Index, the highest-ranking category determining health risk. Wildfire smoke is forecast to linger and potentially increase over the coming week.
Global Natural Gas Demand Projected to Decline Through Remainder of Year, IEA Says - Global natural gas demand is expected to remain flat in 2023 with modest growth in the Asia-Pacific region offset by projected declines in Europe and North America, according to the International Energy Agency (IEA). The world’s natural gas consumption declined 1.5% year/year in 2022, driven largely by a sharp increase in prices after Russia invaded Ukraine and upended trade flows. The decline in demand, IEA said in its latest quarterly gas report, continued into the early months of this year due to favorable weather and “timely policy actions” in response to the energy crisis. “The improved outlook for gas markets in 2023 is no guarantee against future volatility and should not be a distraction from measures to mitigate potential risks,” IEA said. “Global gas...
Derbyshire climate campaigners accuse council of leaving door open for fracking -- --The Derbyshire Climate Coalition, formed of green groups across the county, are pressing for changes to the county council’s draft minerals plan which it believes is crucial to whether planning applications to extract minerals and fossil fuels – including by fracking – receive approval or not. A Derbyshire Climate Coalition spokesman stated: “The coalition believes that the policies relating to climate change need to be strengthened further to be in line with national and county carbon targets, and that there should be more emphasis on reducing energy demand and renewable energy rather than extraction of onshore gas and oil.” While the council has amended a previous version of the plan in response to concerns from the community about climate change, according to Derbyshire Climate Coalition, the group believes the latest version still leaves the door open to unnecessary fossil fuel extraction in the county. Derbyshire Climate Coalition’s Laura Stevens said: “National planning policy calls for radical reductions in greenhouse gas emissions. It makes no sense to be extracting fossil fuels from Derbyshire. or anywhere in the UK when the Government continues to ignore opportunities for significant energy savings and has effectively banned onshore wind. We are off-track to meeting our carbon targets, the last thing we need is more damaging fossil fuels.” The draft plan, which is being consulted on until May 2 is being approved by Derbyshire County Council before submitting it to the Secretary of State to be considered by an independent inspector at a public examination later this year. In the meantime, other Derbyshire groups are also making their own submissions including CPRE Derbyshire, Transition Chesterfield and Derbyshire Mineral Plan Community Action Group which represents most of the groups in North East Derbyshire and Bolsover districts with an interest in the natural environment, climate change and hydrocarbon operations.
UK and Norway sign security partnership to counter undersea threats - The UK and Norway have signed a security partnership to counter undersea threats and protect critical energy infrastructure in the wake of last year’s attack on the Nord Stream gas pipeline. The two nations agreed to increase cooperation to improve their ability to detect submarines, counter mine threats and generally enhance North Atlantic security. Defence Secretary Ben Wallace and his Norwegian counterpart Bjorn Arild Gram signed a statement of intent during a visit to the Maritime Operations Centre on the Northwood military base on Thursday. The UK and Norway have already jointly increased security patrols in the region where the unexplained Nord Stream pipeline explosions occurred. The blasts are subject to investigation but are believed to have been intentional. Building on this, the new agreement will bolster the development of capabilities to protect shared interests in the North Sea while streamlining the process for other allies to join their activity, according to the Ministry of Defence. Mr Wallace said: “Cooperating through the JEF (Joint Expeditionary Force) and the Northern Group with our long-standing defence partner and Nato ally Norway, we are heightening our joint capabilities to protect Western critical national infrastructure on the seabed. “The attack on the Nord Stream pipeline has determined even closer collaboration across our collective assets to detect and defend against subsea threats and ensure continued North Atlantic security.” Four leaks were discovered last September on the Nord Stream 1 and 2 gas pipelines that run from Russia to Germany through the Baltic Sea. The pipelines were not operational at the time because of disputes between Russia and the European Union over Moscow’s invasion of Ukraine but were filled with natural gas.
Pastoralists divided on gas industry, as NT government clears fracking in Beetaloo Basin - Tom Stockwell has watched for years as roads and other infrastructure in regional parts of the Northern Territory have gone backwards. Key points: Some pastoralists see the benefits of gas industry through improved infrastructure Others are concerned about risks to groundwater Pastoralists have no right to veto a gas development on their land "The money that's gone into roads and telecommunications, and any sort of public infrastructure, has just been declining," Mr Stockwell said. But the pastoralist, who lives at Sunday Creek Station, 600 kilometres south-east of Darwin, said an emerging gas industry could hold the answer to the region's economic woes. "The whole pastoral enterprise relies on being able to get big, heavy road trains in, with supplements and inputs, and out with cattle that earn export dollars," he said. "Roads are an absolutely critical piece of infrastructure. "[And better roads] could be a significant spin-off from the gas industry being developed."The NT government gave the green light for full-scale gas production in the Beetaloo Basin earlier this month, claiming it had completed all 135 recommendations of the Pepper Inquiry as promised.That claim has since been disputed by the government's own independent overseer for implementing the inquiry's recommendations, which were aimed at mitigating the risks associated with fracking.Lingiari MP Marion Scrymgour this week called for an urgent pause to production approvals, labelling the NT government's claim as "inaccurate".More than 30 pastoral leases are covered by exploration permits from three gas companies across the 28,000-square-kilometre basin.To the north of Sunday Creek, Carina James at Cow Creek Station said the potential risks to groundwater from fracking far outweighed any benefits to the region."There's no permanent water above ground here, so I am 100-per-cent reliant on underground water," she said."I've got thousands of head of cattle and they're reliant on that."She said if given a "choice between a road and my water, I'd take water quality … and quantity every time.""Unless somebody can give me a 100-per-cent assurance that we are not going to have anything affect our water, which is the core pillar and foundation of our business, then I'm always going to choose the water."
Promise of Beetaloo Basin fracking jobs prompts mixed views from NT's Aboriginal people - The gas industry's promise of fracking-related jobs in the Beetaloo Basin has divided Aboriginal people in the Northern Territory, leaving some feeling hopeful and others suspicious. Jeremy Jackson works at Indigenous labour hire company Triple P Contracting, in the small NT town of Elliott. The company previously worked for Origin Energy removing waste, conducting weed surveys and checking well sites. Now, the labourers work for the Beetaloo Basin's largest stakeholder, Tamboran Resources. "It was the only way we could go, to get a bit of benefit out of it, to get some work and maybe some community benefit in the long term," Mr Jackson said. "We need to be smarter and wiser, to actually meet with these companies to actually negotiate with them and get a better deal for us Indigenous people." Elliott is home to about 287 people, according to the last census.(ABC News: Hamish Harty) In the town of Elliott, which lies roughly halfway between Alice Springs and Darwin, jobs and training opportunities are scarce. That is why some residents were cheering on the proposed Sun Cable solar farm at the nearby Newcastle Waters cattle station. "A lot of people are keen on going out and working," Mr Jackson said. "It's just a matter of ... getting these companies to actually employ our local people." In a statement, a Tamboran Resources spokesman said development of the Beetaloo Basin would provide "significant employment, training and business development opportunities for local Indigenous people". "Tamboran currently employ local Indigenous staff and utilise local Indigenous contracting services for exploration activity," the spokesman said. "Our aim is to see this increase as the project moves from the exploration to production phase."
Russia oil exports hit post-invasion high --Russia’s oil exports last month rose to the highest level since its invasion of Ukraine, boosting revenues US$1.7 billion despite Western sanctions, the International Energy Agency (IEA) said yesterday. The Paris-based organization said that Russian exports increased by 50,000 barrels per day to 8.3 million barrels per day last month, estimating that the country did not fully deliver on a threat to cut production sharply. “Indeed, Russia may be boosting volumes to make up for lost revenue,” the IEA said in its monthly oil market report. The country’s oil export revenues rose US$1.7 billion to US$15 billion last month. However, that figure was 27 percent lower than the same month last year. Russia’s tax receipts from its oil and gas sector were down by 64 percent year-on-year, the agency added. G7 nations and Australia have set price caps on Russian petroleum products and crude in coordination with the EU in an effort to cut a key source of funding for its war on Ukraine. The EU has also imposed embargoes on the country’s key oil exports. In response, Russia has threatened to cut off countries and companies that comply with the price cap. It has also announced a production cut of 500,000 barrels per day while its allies in the OPEC+ group of oil producers, including Saudi Arabia, also agreed to slash output. The IEA said that Russia’s crude output held “broadly steady” at 9.6 million barrels per day last month and that the country must cut a further 300,000 barrels per day this month to bring itself into line. “Russia seems to have few problems finding willing buyers for its crude and oil products, frequently at the expense of fellow OPEC+ members in the two-tier market that has emerged since the embargoes came into force,” the IEA said. The agency said that China and India accounted for nearly 80 percent of Russian crude export destinations. China’s emergence from nearly three years of COVID-19 restrictions is also expected to lift world oil demand this year as the IEA raised its forecast by 2.2 million barrels per day to an average of 102 million barrels per day. This is 200,000 barrels per day above the previous forecast. “China’s demand recovery continues to surpass expectations, with the country setting an all-time record in March” at 16 million barrels per day.
Russia reached oil output cuts volume of 500000 bpd since May /TASS/ Russia has reached the volume of reducing oil output by 500,000 barrels per day (bpd) since May, Russia’s Deputy Prime Minister Alexander Novak told reporters. "As for the current situation, Russia is cutting [output] by 500,000 barrels per day. We have reached [the announced reduction volume] in May," he said. From March 1, 2023, Russia started reducing oil output by 500,000 barrels per day from March. According to Russian Deputy Prime Minister Alexander Novak, Russia has made the choice voluntarily, without consulting with the OPEC+ countries. Novak's representative explained that the reduction would affect only oil output, excluding gas condensate. The production quota will be distributed evenly among oil companies depending on their level of production. At the end of April, Novak said that Russia had already reached the volume of voluntary production cuts. At the same time, he did not give an exact figure for the level of production after the cuts. At the same time, the International Energy Agency (IEA) claimed in its May report that Russia had not reached the declared volume of production cuts.
Russia’s Putin says oil output cuts needed to maintain prices --Russian President Vladimir Putin said on Wednesday that oil production cuts were required to maintain a certain price level, contradicting assurances from other leaders of the OPEC+ group of producers that it was not seeking to manage the market in that way. The US and Europe have accused Russia of weaponizing energy to contain the West in its drive to weaken Moscow’s military campaign in Ukraine. Moscow, in its turn, accuses the West of weaponizing the dollar and financial systems such as the international payments mechanism SWIFT in retaliation for Russia sending troops into Ukraine in February 2022. Speaking at a televised government meeting, Putin said that the situation on the global oil market was, on the whole, “absolutely stable” as Russia maintains output cuts to support prices. He also said that Russia had been cutting production, which was at the “required level”. Putin added: “But all our actions, including those related to voluntary production cuts, are connected precisely with the need to maintain a certain price environment on world markets, in dialog and contact with our partners in OPEC+.” Saudi Arabia, the kingpin of the Organization of the Petroleum Exporting Countries (OPEC), and other OPEC members have repeatedly said that they are not targeting a specific price for oil, which large fuel consumers such as the United States have accused the group of unlawfully trying to do. At the same time, some OPEC observers said that the organization needed higher oil prices due to rising inflation. Russia said on April 2 it would extend an oil production cut of 500,000 barrels per day (bpd) - about five percent of its crude output - until the end of the year, compared with February levels. Leading OPEC members announced cuts on the same day. “We are reducing production, but nevertheless it is at the required level,” Putin said. Russian Deputy Prime Minister Alexander Novak, during a visit to Iran, said later on Wednesday that Russia has reached its oil output cuts of 500,000 bpd this month. Last week, oil pricing benchmarks fell for a fourth consecutive week, the longest streak of weekly declines since September 2022, over fears of a US recession and risks of a historic default on government debt in early June.
India's Russian oil buying hits record high, slashes Mideast, Africa share -- India's oil imports from Russia rose to a fresh record high in April, further reducing the share of Middle Eastern and African grades to their lowest level in at least 22 years, data obtained from trade sources showed. Refiners in India, the world's third-biggest oil importer and consumer, are on a Russian oil-buying binge after some countries shunned purchases from Moscow over its invasion of Ukraine in February last year. Asia's third-largest economy imported about 1.9 million barrels per day (bpd) of Russian oil in April, about 4.4 per cent higher than the previous month, the data showed. That accounts for about two-fifths of the nation's overall purchases. Higher imports from Russian raised the share of oil from the CIS countries - Azerbaijan, Kazakhstan and Russia - to 43.6 per cent of an overall 4.81 million bpd imported by India last month. That narrowed the share of the Middle Eastern grades, which traditionally have accounted for the bulk of total oil imports, to about 44 per cent and African oil to 3.4 per cent last month, the data showed. Russia remained the top oil supplier to India for the sixth-straight month in April, followed by Iraq and Saudi Arabia. "Indian refiners have cut their spot purchases of Middle Eastern and West African grades as we are getting supply of Russian oil at lower prices," said an Indian refining official at an Indian refinery.
Oil spill by Shell in Nigeria polluted water and killed wildlife --A 16,000 litre oil spill by Shell last summer in Nigeria allegedly polluted drinking water, contaminated farmland and killed hundreds of birds, The Ferret can reveal. Our international investigation also found that a community affected by the leak – which, it is claimed, came from a corroded pipeline owned by the oil giant – has not received any compensation for environmental damage that occurred in August 2022. Local people from Bodo, in the Gokana area in the Niger Delta, have spoken to The Ferret about the impact of oil spills in the region. The Shell Petroleum Development Company of Nigeria (SPDC) confirmed there were three oil spills in Bodo last August. The company also said it works quickly to clean up spills and that compensation is paid to individuals and communities who are impacted. The Ferret’s investigation follows Shell reporting it expected to make a profit of £7.6bn for the first three months of 2023. Last August, Shell reported that five barrels of oil were spilled in Bodo but an analysis by The Ferret found the oil firm spilled over 103 barrels that month. There were three incidents involving Shell in Bodo in August 2022: the first spill occurred on August 2, the second on August 3, and a third spill on 25 August which locals said impacted farmland and rivers, and affected livestock. The third spill led to 16,000 litres of crude oil polluting 3900 square metres in Bodo, according to data gathered from the Nigerian Oil Spill Monitor. The Ferret collected samples of water from Bodo: one from a community drinking well water, and another from the Bodo river.They were collected to ascertain the level of total hydrocarbons in the water. Hydrocarbons are found in crude oil and a total hydrocarbon test is used to detect the level of crude oil pollution in water. The drinking well water had 316.5mg/litre and the level of total hydrocarbons in the Bodo River was 304mg/litreThe United States Environmental Protection Agency (US EPA) says a total hydrocarbon limit of at 0.5 mg/litre is “quite high”. Drinking water containing petroleum hydrocarbons can cause stomach cramps, nausea, vomiting, and diarrhoea. When The Ferret visited the area four months after the spill, Livinus’s compound still smelled of crude oil. “My pineapple tree and other aquatic life are all gone. I had about 300 fowls but it killed them,” he claimed.
Cleanup of oil-polluted Nigerian state would cost $12 bn: report– Cleaning up decades-long oil pollution and restoring environmental health in just one of Nigeria's crude-producing states will cost at least $12 billion, investigators said on Tuesday. Bayelsa state, home to some two million people, "is in the grip of a human and environmental catastrophe of devastating proportions," they warned in a much-awaited report. Lying in the Niger Delta region, Bayelsa is where oil was first discovered in Africa in the 1950s, and where companies Shell and Eni have operated for decades. "Once home to one of the largest mangrove forests on the planet, rich in ecological diversity and value, the region is now one of the most polluted places on Earth," the report said. "At least $12 billion" is needed to "clean up the soil and drinking water, reduce the health risk to people and restore mangrove forests essential to stopping floods." The four-year investigation was carried out by the Bayelsa State Oil and Environmental Commission -- an international panel of experts and prominent figures who worked at the request of the local government. It called on Shell and Eni, whose local subsidiaries still operate in the region, to pay a share of the bill. "We are asking Shell's new CEO Wael Sawan, before selling off Shell's remaining onshore oil assets, to commit immediately to paying their share of the $12 billion bill," said the commission's chairman, John Sentamu, a member of Britain's House of Lords and former Archbishop of York. In a written statement to AFP, Shell said it had not seen the report and could therefore not respond to its conclusions at this time. Eni also said that it had not been consulted about the report and rejected allegations of "environmental racism" made by the commission. In response to AFP's request for comment, Eni said it "conducts its activities according to the sector's international environmental best practices, without any distinction on a country basis." Both companies have blamed most oil spills on sabotage and theft. "Regardless of the cause of a spill, we clean up and remediate areas affected by spills originating from our facilities," a Shell spokesperson said. Eni also said the company "undertakes to remedy in all cases" when spills occur. Litany of problems The report is based on over 2,500 pieces of evidence including 500 interviews and analysis of 1,600 blood samples from local people. Over the years, "as much as one and a half barrels of oil has been spilled in Bayelsa for every man, woman and child living in the state today."
Bayelsa requires $12bn to clean-up crude oil spill in 12 years — Gov Diri Separato -The Government of Bayelsa State has said it requires $12bn to clean-up millions of barrels of crude oil that have been spilled into the environment as result of crude oil exploration activities across the state. The Governor of Bayelsa State, Senator Douye Diri, stated this on Tuesday during the presentation of 211-page report titled: “An Environmental Genocide: Counting the Human Cost of Oil in Bayelsa, Nigeria”, a detailed documentation of the over 60 years of oil exploration and pollution by the state’s Oil and Environmental Commission (BSOEC) at the House of Lords in London. Speaking further, Senator Diri said that the BSOEC in its report recommended that $12billion is needed for over 12 years to “repair, remediate and restore the environmental and public health damage caused by oil and gas exploration activities and that his administration is willing to act on the recommendations and seek partners to ensure that the report was implemented. He commended the commissioners, researchers, non-governmental organisations and the Commission’s secretariat that painstakingly put the report together as well as the people of Bayelsa for “coming forward to make their voices heard.” “I, on behalf of the government and people of Bayelsa State, pledge our commitment to act decisively and speedily on the recommendations of this report. In doing this, we remain open to robust and genuine engagements with all stakeholders.”
Nigeria needs $12 billion to clean up oil spills -- The Oruma community in Nigeria's oil-rich Niger Delta region is still suffering from a spill in 2005 when oil leaked from a Shell pipeline onto farmland.The crude oil leak caused extensive damage to local ecosystems, turning the lush forest — once the main source of income for farmers and fishers — into a contaminated landscape.One of the fishponds, which used to teem with fish, has been neglected for many years because it no longer produces anything for the farmers. Moreover, a close look at the surface reveals that water still smells of crude oil."Even though we plant, the oil inside will surely kill the crops that we plant," Chief Ernest Oginaba, a local farmer, told DW. "So we feel very bad. All these places are condemned, nobody can use it again." Nigeria is Africa's biggest oil producer and churns out nearly 1 million barrels of crude every day.
Exclusive: South Africa circles back to shale gas as power crisis drags | Reuters -- South Africa will auction at least 10 new onshore blocks for shale gas exploration in the environmentally sensitive Karoo region, a government official told Reuters, as the country eyes alternative energy sources to ease its worst-ever power crisis. South Africa’s first competitive auction for oil and gas resources, expected in 2024 or 2025 once legislation making provision for the bid round is passed, includes acreage once held by Shell.“We are potentially looking at a minimum of about 10 shale gas blocks in the Karoo that will be released through competitive bidding,” Bongani Sayidini, chief operating officer at the Petroleum Agency of South Africa (PASA) said.PASA estimates the Karoo Basin holds around 209 trillion cubic feet (tcf) of technically recoverable shale gas resources, although a 2017 study by geologists at University of Johannesburg said this was probably 13 tcf, the lower end of estimates ranging between 13 tcf to 390 tcf.Even 5 tcf would be enough for a 1 000 megawatt (MW) to 2 000 MW gas-fired power plant to supply electricity for up to 30 years, the Academy of Sciences of South Africa said in its Karoo shale gas action plan released last year.It isn’t clear how the cost would compare to existing coal fire power stations or the ever-cheaper wind and solar energies that are gradually replacing them.Fracking in the Karoo Basin, a vast area covering more than half of South Africa’s land surface, has been shelved for a decade because of resistance from environmental activists and farmers, and regulatory uncertainty.Shell’s 90 000 square kms is available after the oil major early last year withdrew an application to explore, Sayidini said.Confirming the withdrawal, a Shell spokesperson said they are focusing upstream investment on fewer basins that align with global strategy and where Shell has competitive advantages.New shale blocks offered will be smaller to increase participation, Sayidini said. It could take a decade or longer for the first gas output, if sufficient resources are found.
Iraqi production drops sharply as pipeline outage shuts KRG fields - Iraq’s nationwide crude oil production slumped by 320,000 barrels per day (bpd) in April compared with the previous month, pushed down by a dramatic fall in output from the semi-autonomous Kurdistan Regional Government (KRG), where fields were shut down due to the continued closure of the northern export pipeline through Turkey.Iraq Oil Report calculates national production by gathering data monthly from the country’s producing fields. Federal and KRG production in April combined for an average of 4.30 million bpd,down from 4.63 million bpd in March.*Almost all of the decline came from fields in Iraqi Kurdistan, which have either shut down entirely or throttled back in response to the pipeline outage. KRG production had been averaging over 430,000 bpd over the past year, but it fell below 415,000 bpd in March and down to about 117,000 bpd in April, with output going to domestic refineries.
Iran to launch $15 billion oil and gas projects this year - Iran will launch about $15 billion worth of oil and gas projects in 2023, according to the country’s oil minister Jawad Owji. All of the launched projects have had a direct impact on increasing the production capacity of the country, he added. In the last Iranian year (March 2022-23), $12 billion worth of oil, gas and petrochemical projects were launched. Currently, Iran’s daily crude oil production is 3 million barrels and natural gas output is 1 billion cubic meters, while the annual production capacity of petrochemical products is about 95 million tons, the Oil Ministry’s news service Shana reported. Meanwhile, Russia and Iran have made progress regarding the participation of Russian companies in new oil and gas projects in Iran, Russian Deputy Prime Minister Alexander Novak said during talks with Owji in Tehran this week. “We are implementing projects to develop oil fields in Iran and have outlined new projects, where I expect progress soon,” Novak said.
Opec sec gen invites Ecuador to rejoin producer group - Opec secretary general Haitham al-Ghais has invited Ecuador to rejoin the producer group, three and a half years after it left. In a letter to Ecuadorean energy minister Fernando Santos, dated 12 May and made public by the ministry today, al-Ghais said Opec saw Ecuador's return "as a top priority" that would "greatly benefit" the South American nation. "Ecuador is an important oil producer and exporter, and the secretariat believes that your esteemed country would greatly benefit from the information and knowledge that Opec shares with its member countries, as well as the possibility of strengthening diplomatic ties with like-minded oil producing countries," the letter said. Al-Ghais said he was prepared to visit Ecuador "to personally explain the multiple advantages of joining Opec" to Santos and President Guillermo Lasso. The country joined Opec in 1973, and suspended its membership in 1992. It reactivated that in 2007, only to leave again at the end of 2019 as part of a government belt-tightening programme. "The decision is based on the internal affairs and challenges that the country has to assume, related to fiscal sustainability," the ministry said at the time, adding that it aligned with the government's plan to cut spending and generate new revenues. At that time, Ecuador's crude production was around 550,000 b/d, making it the Opec group's fourth smallest producer behind Congo (Brazzaville), Equatorial Guinea and Gabon. Its output has been edging down ever since, with latest figures from the Ecuadorean central bank putting production at 461,000 b/d in the first quarter of this year. The energy ministry in March revised down its production target for the year, by 6pc to 490,000 b/d from 521,000 b/d, because of indigenous communities' strikes, power outages and the shutdown of main pipelines at the start of the year.
OPEC Cut Failed To Lift Oil Prices, But The Year Isn’t Over Yet Crude oil prices have been on a losing streak for four consecutive weeks now, erasing all the gains they booked after OPEC’s latest supply cut announcement as economic fears take precedence over demand expectations.When the cartel announced the cuts, almost every bank with a commodities department rushed to update their price forecasts, expecting prices to jump even higher than before. Morgan Stanley was a rare exception: it revised its price forecast for oil downwards. “OPEC probably needs to do this to stand still,” Martijn Rats, chief commodity strategist at the investment bank, said at the time, adding that the OPECc+ decision “reveals something, it gives a signal of where we are in the oil market. And look, let’s be honest about this, when demand is roaring…then OPEC doesn’t need to cut.”He seems to have been right, for the most part. Only it’s not demand itself that was the problem. It has been the popular expectation of worsening demand that has been driving the price decline.Indeed, the daily media updates on oil prices have, in the past four weeks, repeated the same refrain over and over again: weak U.S. and Chinese economic data, fears of more interest rate hikes in the U.S., fears of a recession, which is already a fact in certain industries, notably freight transport. Clearly, these expectations have had a sound basis. The thing about oil demand, however, is that the U.S., or the rest of the developed world, is not where additional oil demand will be coming from in the rest of the year and future years. It’s the developing world that will see growth in oil demand with the potential to drive prices higher.Dutch ING said in a recent oil market update that while oil prices remain depressed for now, things could very well change in the second part of the year, with a deficit looming on the horizon. The basis for this forecast is a combination of lower OPEC+ output, higher demand outside the OECD, and a smaller-than-expected growth in U.S. output, according to ING. What’s more, there is always the possibility that OPEC+ will cut output again, adding to oil’s upside potential.The Dutch financial services major is not the only one expecting higher prices later this year. Citi’s commodities head Ed Morse recently told CNBC that oil prices may have bottomed out, and we’re entering peak demand season in the much more populated northern hemisphere.Goldman is another bank that’s optimistic about the immediate future of oil prices. In a note from early March—weeks before the surprise OPEC+ cut announcement, the bank said Brent could reach $100 by the end of the year if OPEC keeps its 2-million-barrel output cut agreement in place.
Funds bearish on oil even after price slide: Kemp (Reuters) - Portfolio investors are very bearish about the outlook for oil in the short term even though prices are already below their long-term average in real terms. Hedge funds and other money managers sold the equivalent of 17 million barrels in the six most important futures and options contracts over the seven days ending on May 9. Funds had sold a total of 249 million barrels in the three weeks since April 18, halving their previous holding, according to records published by ICE Futures and the U.S. Commodity Futures Trading Commission. The combined position was cut to just 285 million barrels (6th percentile for all weeks since 2013) down from 534 million barrels (38th percentile) on April 18. The ratio of bullish long to bearish short positions was cut to 2.03:1 (12th percentile) from 5.00:1 (64th percentile) over the same period. The most recent week saw sales of Brent (-25 million barrels) and U.S. gasoline (-9 million) partly offset by purchases of NYMEX and ICE WTI (+11 million), European gas oil (+3 million) and U.S. diesel (+2 million). Bullishness sparked by unexpected output cuts announced by Saudi Arabia and its OPEC allies at the start of April has given way to pessimism about oil consumption stemming from a deteriorating economic outlook. Portfolio investors are more bearish towards petroleum, especially Brent, than before OPEC surprised the market on April 2. U.S. crude prices have fallen to $70 per barrel (43rd percentile for all days since 2000) from more than $83 (56th percentile) on April 12 and a high of $131 (90th percentile) in March 2022, after adjusting for inflation. Investors remained cautious about the outlook for U.S. gas with ultra-low prices failing to erode the surplus inventories accumulated last winter. Funds sold the equivalent of 37 billion cubic feet over the seven days to May 9, taking total sales over the most recent three weeks to 206 billion cubic feet. The combined position slipped to 120 billion cubic feet net short (28th percentile for all weeks since 2010) down from 87 billion cubic feet net long (35th percentile) on April 18. U.S. gas inventories were still +257 billion cubic feet (+14% or +0.58 standard deviations) above the prior ten-year seasonal average on May 5. The surplus was basically unchanged from +256 billion cubic feet (+15% or +0.60 standard deviations) eight weeks earlier on March 5. Inflation-adjusted prices have remained in the 5th percentile since 1990, or below, since early March, creating the strongest possible incentive to reduce drilling rates and increase consumption. The signal may be starting to work, with the number of rigs drilling for gas down by 16 over the seven days ending on May 12, the fastest weekly decline since 2016.
IEA: Oil Bears Are Disregarding An Imminent Supply Shortage The decline in oil prices over the past few weeks contrasts with an expected tightening of the market later this year when demand exceeds supply by nearly 2 million barrels per day (bpd), the International Energy Agency (IEA) said on Tuesday.Since the middle of April, oil prices have lost all the gains from OPEC+’s latest announcement of new production cuts.Early on Tuesday, WTI Crude traded at around $71 per barrel, down from more than $80 a barrel in the days following OPEC+’s surprise news of more than 1 million bpd cuts between May and December 2023.In the latter part of April and early May, the price of Brent oil slumped by $16 a barrel in just two weeks, as concerns about the economy and future demand weighed on market sentiment, the IEA said in its closely-watched Oil Market Report today. Oil prices registered last week their fourth week of weekly losses as concerns about the Chinese and U.S. economies continued to negatively impact market sentiment. This was the longest weekly losing streak for oil since November 2021. “Prices were pressured lower by muted industrial activity and higher interest rates, which, combined have led to recessionary scenarios gaining traction and worries of a downward shift in oil demand growth,” the IEA said in its report, commenting on the oil prices.“The current market pessimism, however, stands in stark contrast to the tighter market balances we anticipate in the second half of the year, when demand is expected to eclipse supply by almost 2 mb/d,” the international agency added.Global oil supply has been lower in recent weeks due to outages in Iraq, Nigeria, and Brazil, and supply losses are set to increase in May with wildfires shutting in part of Canada’s production and OPEC+ producers starting to implement the latest cuts, the IEA noted.
Oil Edges Higher After Iran Seizes Oil Tanker -- Oil futures edged higher early Monday after Iran said it had seized another oil tanker in the Persian Gulf, leading to heightened tensions in a strategically important region for the global oil trade, while investors looked for more clarity on the potential restart of Kurdish oil exports through the Turkish port of Ceyhan amid a highly contested presidential elections. Two oil tankers, the Advantage Sweet, flagged to the Marshall Islands, and the Niovi, flagged to Panama, were seized in less than one month by the Iranian Revolutionary Guard. While the seizure of two ships may not seem like a crisis just yet, traders expect it could lead to a risky situation where the U.S. Navy will have to protect commercial shipping in the Gulf from Iranian aggression. This seizure appears to be the Iranian response to the recent apprehension of Iranian crude in the vessel Suez Rajan off the coast of Singapore for sanctions violations. Tehran will likely attempt to negotiate the release of Advantage Sweet in a trade for the oil in Suez Rajan. Also, this week, investors are monitoring the results in Turkey's presidential elections, where neither of the candidates appears to have received more than 50% of the vote. Turkey has stopped exports of Kurdish oil through its Mediterranean port of Ceyhan on March 28 in a bitter standoff with the Iraqi government that has contested the legitimacy of those sales. With a contested presidential election, it is unlikely the issue will be resolved anytime soon, shutting down nearly 250,000 barrels in daily oil exports from the Kurdistan region. The oil exports from Kurdistan to Turkey were expected to begin in April following a trilateral deal, but Turkey has not given the green light allowing exports. The halt of oil flows is threatening the Kurdistan Region's oil sector due to the lack of storage capacity in the region. Norwegian oil company DNO, one of the operators in the region, said on Thursday it will reduce operations in Kurdistan amid uncertainty of the dispute with Turkey. The stoppage of Kurdish oil flows has depressed production volumes from the Organization of the Petroleum Exporting Countries last month, according to OPEC's Monthly Oil Market Report. OPEC showed its collective oil production fell by 191,000 barrels per day (bpd) in April to 28.6 million bpd just as some of the group's largest producers have started production cuts aimed for May. The drop off in production pressed Iraqi crude production 292,000 bpd below its voluntary quota established in October 2022, and 81,000 bpd less than its quota that took effect this month. Near 7:45 a.m. EDT, West Texas Intermediate climbed to $70.45 barrel (bbl), up $0.42 bbl in overnight trade, while international crude benchmark Brent for July delivery advanced to $74.60 bbl. NYMEX RBOB June futures edged higher by $0.0069 to $2.4371 gallon, while ULSD June futures gained $0.0155 to $2.3210 gallon.
The Oil Market Rallied Higher on Monday on Concerns About Lower Supplies in Canada and Elsewhere -- The oil market rallied higher on Monday on concerns about lower supplies in Canada and elsewhere. The market continued to trend lower and posted a low of $69.41 in overnight trading before it bounced off its low and retraced its earlier losses. The market was well supported by news of the wildfires in Alberta, Canada shutting in large amounts of crude supply. At least 300,000 bpd of oil equivalent production was shut in last week in Alberta. Also, supporting the market was the expectations that the U.S. could begin repurchasing oil for the SPR after completing a congressionally mandated sale in June following a statement made by U.S. Energy Secretary, Jennifer Granholm last week. Also, flows of northern Iraqi crude to Turkey’s Ceyhan port have yet to resume following Baghdad’s request to restart them last week. The market rallied to a high of $71.69 in afternoon trading. The June WTI contract retraced some of its gains and settled in positive territory for the first time in four sessions, up $1.07 at $71.11. The July Brent contract settled up $1.06 at $75.23. Meanwhile, the product markets settled sharply higher, with the heating oil market settling up 7.25 cents at $2.3780 and the RB market settling up 4.18 cents at $2.472. Trading and shipping sources said flows of northern Iraqi crude oil to Turkey's Ceyhan port have not resumed following Baghdad's request to restart them last week. Iraq's Oil Minister wanted flows to resume on Saturday at a rate of 500,000 bpd after they had been halted since March 25th. A source said operators at Ceyhan have not even received instructions to prepare for restart of flows. Canada’s Prime Minister, Justin Trudeau was meeting soldiers helping fight wildfires in Alberta that forced people to evacuate homes in Canada’s main oil-producing province over the weekend. There were more than 100 wildfires this month, at one point pushing more than 30,000 people out of their homes while oil and gas producers shut in at least 319,000 bpd of oil equivalent or 3.7% of national production. The EIA reported that total oil production in the shale regions for June is forecast to increase by 42,000 bpd to 9.332 million bpd, the highest level on record in June, following a 53,000 bpd increase in May. Bakken oil production for June is seen increasing by 13,000 bpd to 1.232 million bpd following a 15,000 bpd increase in May, while Eagle Ford oil output for June is forecast to increase by 2,300 bpd to 1.108 million bpd following a 9,600 bpd increase in May. Permian Basin oil production in June is expected to increase by 15,000 bpd to 5.707 million bpd, the highest level on record, following a 13,000 bpd increase in May. Saudi Arabia’s crude oil exports have been declining in May as a voluntary production cut pledged by the kingdom and other OPEC+ producers take hold after an increase in April. Petrologistics’ data showed that Saudi Arabia increased its crude exports in April by 470,000 bpd on the month. Kpler estimated Saudi Arabia’s oil exports in April at 7.58 million bpd, up 390,000 bpd on the month. Kpler’s data shows Saudi crude exports are likely to average 6.48 million bpd in May. IIR Energy reported that U.S. oil refiners are expected to shut in about 351,000 bpd of capacity in the week ending May 19th, increasing available refining capacity by 282,000 bpd.
US confirms buying 3mln barrels in first bid to refill heavily drawn-down oil reserve -The Biden administration will buy three million barrels in its first bid to refill the country’s heavily-drawn oil reserve, the Department of Energy said in a statement on Monday. “The “DoE …will purchase up to 3 million barrels of oil for the Strategic Petroleum Reserve (SPR) in continuation of the Biden-Harris Administration’s three-part replenishment plan,” the statement said, adding that the department “intends to purchase more oil later this year”. Since last week, news wires have used sources within the DoE or the administration to report about the government’s attempts to refill the SPR. The Biden administration has leaned heavily on the SPR since late 2021 to offset tight crude supplies that had raised fuel costs for Americans. As of last week, the SPR’s crude balance was at its lowest since November 1983 after the release of about 200 million barrels or more from the reserve over the past 18 months. The administration’s use of the SPR has been a highly-charged matter for oil bulls and opponents of President Joe Biden. Both sides accuse him of indiscriminately releasing hundreds of millions of barrels from the stockpile to subdue crude prices and shore up his political standing with American voters — when the reserve is meant for emergency use, in times of critically short oil supply. In his defense, Biden said he was acting to reduce record-high fuel pump prices, which stood at above $5 per gallon last June and now hover at around $3.50. The administration also blames the previous year’s high crude prices for US inflation getting to four-decade highs of above nine per cent in June. The DoE statement on Monday reinforced the president’s argument, saying that analysis by the Treasury Department indicated that last year’s SPR releases, along with coordinated releases of oil reserves by international partners of the United States, succeeded in reducing pump prices of US gasoline “by up to roughly 40 cents per gallon compared to what they would have been absent these drawdowns”. It added that the three-part replenishment strategy involved direct purchases with revenues from emergency sales; exchange returns that include a premium to volume delivered; and securing of legislative solutions that avoid unnecessary sales unrelated to supply disruptions so as to strategically maintain volume. It said the DoE has also secured the cancellation of 140 million barrels in congressionally mandated sales scheduled for fiscal years 2024 through 2027. “This cancellation has already led to significant progress toward replenishment and will allow the SPR to have the same number of barrels in reserve by the end of FY 2027 that it would have had emergency barrels not been sold in 2022,” the statement said. London-traded Brent crude, the global benchmark for oil, settled up $1.06, or 1.4%, at $75.23 per barrel. Brent dropped by 14 per cent over the previous four weeks. New York-traded West Texas Intermediate, or WTI, crude settled up $1.07, or 1.5%, at $71.11 per barrel. WTI had fallen by 15 per cent over the past four weeks. WTI jumped briefly in post-settlement trade to $71.67, reacting to reports about the DoE’s planned purchase of crude for the SPR.
Crude oil prices extend gains on US plans to refill reserve, Canada’s wildfires -- Oil prices rose for a second day early on Tuesday, as U.S. plans to purchase oil for the Strategic Petroleum Reserve (SPR) lent support while raging wildfires in Canada fuelled supply worries. Brent crude futures rose 31 cents, or 0.4%, to $75.54 a barrel by 0043 GMT, while U.S. West Texas Intermediate crude was at $71.38 a barrel, up 27 cents, or 0.4%. Both benchmarks rose more than 1% on Monday, reversing a 3-session losing streak. The U.S. Department of Energy said on Monday it would buy 3 million barrels of crude oil for the SPR for delivery in August, and asked that offers be submitted by May 31.”The market got a boost from expectations that the U.S. repurchase of oil for the strategic reserve will continue if WTI prices fall near or below $70 a barrel,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd. “Behind the gain was also bargain-hunting by some investors after the recent sharp declines,” he said. Last week, Brent and WTI futures fell for a fourth straight week over fears of a U.S. recession and risks of a historic default on government debt in early June. The benchmarks last recorded a similar streak of weekly declines in September 2022. Oil prices on Tuesday, however, drew support from supply worries stemming from wildfires in Canada.The widespread blazes in Alberta, Canada forced more than 30,000 people out of their homes at one point and shuttered at least 319,000 barrels of oil equivalent per day (boepd), or 3.7% of national production. Global crude supplies could also tighten in the second half as OPEC+ – the Organization of the Petroleum Exporting Countries and allies including Russia – plan additional output cuts. On the other hand, U.S. oil output from the seven biggest shale basins is due to rise in June to the highest on record, data from the Energy Information Administration showed. Venezuelan state energy company PDVSA’s new management expects to boost the country’s oil production to 1.17 million barrels per day (bpd) by year end while increasing refining and exploration activities, an internal planning document showed.
The Market Weighed the Weaker Than Expected Economic Data The oil market traded mostly sideways on Tuesday as it posted the day’s trading range by mid-day. The market weighed the weaker than expected economic data from China and the U.S. against a forecast of higher global demand from the IEA. The market was pressured early in the session in light of data showing that Chinese industrial output and retail sales growth were below market expectations in April, suggesting China’s economy lost momentum at the beginning of the second quarter. Meanwhile, U.S. data showed that retail sales increased less than expected in April. However, the market traded to a high of $71.79 early in the session on the IEA raising its forecast for global oil demand by 200,000 bpd this year to 102 million bpd and the Department of Energy announcement that it would buy 3 million barrels of oil in August to begin refilling the SPR. Despite the bullish news, the market later gave up its gains and sold off to a low of $70.45 before it settled in a sideways trading range during the remainder of the session as it awaited the outcome of the debt limit talks between President Biden and the Speaker of the House and other congressional leaders on Tuesday afternoon. The June WTI contract settled down 25 cents at $70.86 and the July Brent contract settled down 32 cents at $74.91. The product markets ended mixed, with the heating oil market settling down 1.41 cents at $2.3639 and the RB market settling up 71 points at $2.4791. On Tuesday, White House energy adviser, Amos Hochstein, said the Biden administration does not expect a big rally in summer oil prices this summer that would impact its strategic petroleum reserve efforts, one day after the U.S. Energy Department announced plans to buy 3 million barrels of crude oil to refill the SPR in August. The DOE said it aims to repurchase crude at a lower price than the average of about $95/barrel it was sold for in 2022. The DOE also said it secured the cancellation of 140 million barrels in congressionally mandated sales scheduled for fiscal years 2024 through 2027. The International Energy Agency said weeks of declining oil prices due to concerns over a possible recession contradict an outlook for scarce supply and increased demand later in the year. Demand is expected to eclipse supply by almost 2 million bpd in the second half of the year. The IEA raised its forecast for global oil demand by 200,000 bpd to 102 million bpd, noting that China's recovery after the lifting of COVID-19 curbs had surpassed expectations with demand reaching a record 16 million bpd in March. A rebound in domestic travel is the main reason for the recovery. It said China is set to account for nearly 60% of global demand growth in 2023, offsetting, along with India and the Middle East, sluggish demand in developed countries. The United States and Brazil will lead modest growth in oil supply of 1.2 million bpd for the year as OPEC+ cuts agreed in April mean volumes from the producer group will fall by 850,000 bpd from then through December. Meanwhile, non-OPEC+ supply is expected to increase by 710,000 bpd from April through December. The IEA said global oil supply fell by 230,000 bpd to 101.1 million bpd in April. The EIA reported that oil production from seven major regions in the U.S. will increase by 41,000 bpd to 9.332 million bpd from May to June. According to company forecasts and analysts, U.S. oil refiners aim to operate at up to 94% of a total 17.9 million bpd processing capacity this quarter, driven in part by expectations of seasonal travel demand.
Oil Futures Gain on US Retail Sales, Product Draws -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange pushed higher in pre-inventory trade Wednesday after an industry survey showed domestic gasoline and distillate fuel inventories fell for the second week through May 12, while solid U.S. retail sales for April offered more evidence that consumer spending is likely to support demand expansion into the summer months. The American Petroleum Institute reported Tuesday commercial gasoline inventories dropped by 2.46 million barrels (bbl) last week, nearly twice calls for a 1.3-million-bbl draw. Further details of the report showed distillate fuel inventories also declined by 886,000 bbl in the reviewed week compared with estimates for no change. If confirmed by official data from the U.S. Energy Information Administration, this would mark the second consecutive weekly drawdown from commercial fuel inventories. EIA will release its weekly data at 10:30 a.m. EDT. Meanwhile, U.S. commercial crude oil inventories unexpectedly built by 3.69 million bbl versus an expected decline of 800,000 bbl. Stocks at the Cushing, Oklahoma, tank farm -- the New York Mercantile Exchange delivery point for West Texas Intermediate futures -- increased 2.87 million bbl. Expectations for a modest crude draw are due partly to a Department of Energy announcement Monday indicating it disbursed another 2.4 million bbl of crude last week from the nation's Strategic Petroleum Reserve to the commercial side. That brings emergency crude supplies down to a more-than 40-year low of 360 million bbl. In financial markets, the U.S. Dollar Index jumped against global peers to a 1-month high 102.795 Wednesday morning after government data showed Americans increased their retail spending in April for the first time in three months. Tuesday's data showed China's retail sales and industrial production for April broadly missed expectations amid an uneven recovery. Industrial production rose 5.6% year-on-year compared to the 10.9% expansion expected by economists and a mere 1.7% above the March level. This follows the latest PMI data that showed business activity across China's manufacturing sector fell into contraction last month for the first time since the lifting of COVID lockdowns in late 2022. Without adequate demand for manufactured products from Western countries, China is likely to struggle with the trajectory of its post-COVID recovery. Near 7:30 a.m. EDT, West Texas Intermediate for June delivery advanced $0.30 to $71.15 bbl and international crude benchmark Brent for July delivery gained to $75.22 bbl, up by $0.31 bbl in overnight trade. NYMEX RBOB June futures added $0.0179 to $2.4970 gallon, while ULSD June futures firmed to $2.3730 gallon.
WTI Slides After Big Crude Build, 7th Straight Weekly SPR Drain By Biden Admin Oil prices have whipped around overnight since API reported a big crude build (and Cushing stocks soaring) as hopes for debt ceiling deal trumped the latest (weak) China demand signals. The International Energy Agency on Tuesday said it expects demand to outstrip supply by more than two-million barrels per day in the second half of 2023. The prediction is being widely ignored by the market as it remains focused on a potential US debt default as debt-ceiling negotiations continue, while slowing OECD economies amid rising interest rates raise recession worries. API
- Crude +3.69mm (-800k exp)
- Cushing +2.87mm - biggest build since Jan '23
- Gasoline -2.46mm (-1.3mm exp)
- Distillates -886k (unch exp)
DOE
- Crude +5.04mm (-800k exp) - biggest build since Feb 2023
- Cushing +1.46mm - biggest build since Jan 2023
- Gasoline -1.38mm (-1.3mm exp)
- Distillates +80k (unch exp)
Confirming API's report, the official data showed big builds in total crude stocks and at Cushing while Gasoline inventories drew down as expected...Graphics Source: Bloomberg While the Biden admin proclaimed their intent to buy 3mm barrels to start refilling the SPR this week, they drained another 2.4mm barrels - the 7th straight weekly drain (draining 11.993mm barrels)US Crude production was flat at cycle highs despite the ongoing slide in rig counts... WTI was hovering around $71.80 ahead of the official data, and extended losses on the crude build..."Crude oil continues to trade with a negative bias on near-term demand concerns, especially in China, and the US debt ceiling debacle which is lowering the general level of market risk appetite. The IEA concluded the monthly batch of oil market reports by joining OPEC in saying global oil demand in 2023 will be stronger than previously expected, rising by 2.2m b/d to a record 102m b/d as China demand recovery surpasses expectations, clearly not a view that is being shared by the market at large," Saxo Bank noted.
Oil, Equities Rally on Optimism Over Debt Ceiling Deal -Oil futures settled Wednesday's session with sharp gains spurred by risk-on sentiment in financial markets after U.S. President Joe Biden voiced confidence that an agreement on the debt ceiling would be reached in coming days, easing concerns about a potential default and the cascading impact on energy demand. At the conclusion of a meeting between Biden and congressional leaders on Tuesday, House Speaker Kevin McCarthy said, "We now have a structure to come to a conclusion" on debt ceiling negotiations, adding that it's "possible to get a deal done by the end of the week." As investors grew increasingly hopeful that there would be a resolution in U.S. debt talks, Dow Jones Industrials rallied more than 350 points to 33,380, and the S&P 500 advanced 1.1%. The risk-on sentiment in financial markets spurred gains in the oil complex, sending front-month West Texas Intermediate futures $1.97 per barrel (bbl) higher to $72.83 per bbl, and the international crude benchmark Brent contract for July delivery settled just a tad below $77 per bbl at $76.96 per bbl, rallying more than $2 per bbl on the session. NYMEX RBOB June futures advanced $0.0901 to $2.5692 per gallon, while ULSD June futures firmed to $2.4226 per gallon, up $0.0587. Wednesday's higher settlements in the oil complex came despite a mostly bearish inventory report released Wednesday morning from the U.S. Energy Information Administration showing commercial crude oil inventories climbed 5 million bbl last week compared with estimates for an 800,000 bbl drawdown. The stock build was realized, in part, due to a 2.4-million-bbl transfer of crude oil from the nation's Strategic Petroleum Reserve to the commercial side last week, according to data released by the Department of Energy. Oil stored at Cushing, Oklahoma, the delivery point for WTI, increased by 1.5 million bbl. U.S. crude oil production, meanwhile, fell 100,000 barrels per day (bpd) last week to 12.2 million bpd. The U.S. refining utilization rate jumped 1% from the previous week to 92%, with refiners processing 245,000 bpd more crude than the previous week's average. In the gasoline complex, commercial stockpiles declined 1.4 million bbl to 218.3 million bbl, close to analyst expectations for a 1.3-million-bbl decrease to have occurred. Demand for the ground transportation fuel decreased 395,000 bpd to 8.908 million bpd, bringing the four-week average to 9.1 million bpd or 2.9% above last year's weekly demand rate. Distillate fuel inventories increased slightly to 106.2 million bbl and now stand about 16% below the five-year average. Distillate fuel consumption declined 299,000 bpd to 3.736 million bpd.
Oil settles up $2 on optimism about US debt ceiling, demand --Oil prices settled up about $2 on Wednesday as optimism over oil demand and U.S. debt ceiling negotiations outweighed worries about abundant supply. Brent crude futures settled up $2.05, or 2.7%, to $76.96 a barrel. West Texas Intermediate U.S. crude settled up $1.97 or 2.8% to $72.83. "Today's strong oil trade was all about the expectation of a debt ceiling agreement, likely by the end of this week, that appeared to lift a negative burden across most asset classes, including oil," President Joe Biden and top U.S. congressional Republican Kevin McCarthy on Wednesday underscored their determination to reach a deal soon to raise the federal government's $31.4 trillion debt ceiling and avoid an economically catastrophic default. After a months-long standoff, the Democratic president and speaker of the House of Representatives on Tuesday agreed to negotiate directly. An agreement needs to be reached and passed by both chambers of Congress before the federal government runs out of money to pay its bills, as soon as June 1. The optimism outweighed a crude inventory increase of 5 million barrels in the week ended May 12 reported by the Energy Information Administration. Analysts polled by Reuters had expected a 900,000 barrel drop. The crude inventory build added to concerns about U.S. growth after data showed retail sales rose 0.4% in April, short of estimates for an increase of 0.8%. However, gasoline stocks drew down by 1.4 million barrels as the four-week gasoline product supplied - a proxy for demand - rose to its highest level since December 2021. The International Energy Agency on Tuesday predicted demand would outpace supply by 2 million barrels per day (bpd) in the second half of the year, with China making up 60% of oil demand growth in 2023. In China, April industrial output and retail sales growth undershot forecasts, suggesting the economy lost momentum at the beginning of the second quarter. "A bunch of Chinese macro-economic data for April released on Tuesday confirmed the narrative of a patchy and slow recovery in the country and continue to weigh on oil market sentiment."
The Market Awaits the Outcome of the Debt Ceiling Negotiations The oil market on Thursday posted an inside trading day as the market awaits the outcome of the debt ceiling negotiations. Early in the session, the market posted a high of $72.87 before it found some selling pressure amid the strength the dollar and increasing expectations that the Federal Reserve could increase interest rates again at its June meeting. The strength in the dollar came from lower than expected initial jobless claims and optimism about a possible U.S. debt ceiling deal. Meanwhile, Dallas Federal Reserve President, Lorie Logan, said she is concerned that inflation is not falling fast enough to allow the Fed to halt its interest rate hike campaign in June. The crude market retraced more than 50% of its previous gains as it traded to $71.42 ahead of the close. The June WTI contract settled down 97 cents at $71.86 and the July Brent contract settled down $1.10 at 75.86. The product markets settled in negative territory, with the heating oil market settling down 2 cents at $2.4026 and the RB market settling down 9 points at $2.5683. Vice President Kamala Harris and President Joe Biden’s top economic adviser, Lael Brainard, said that a U.S. debt default would throw the U.S. economy into a recession. Meanwhile, U.S. House Speaker, Kevin McCarthy and Senate Majority Leader, Chuck Schumer, are making plans for votes in the coming days on a bipartisan deal to avoid a U.S. debt default. The House Speaker said the negotiators on the federal debt limit may reach an agreement in principle as soon as this week. He said the House will need to vote by next week on any compromise produced by the negotiators. Senator Chuck Schumer said the Senate would take up the legislation after House passage. He said that lawmakers should be ready to return to Washington on 24-hours’ notice during next week’s recess, as debt ceiling talks make progress towards a possible deal to avoid default. Bloomberg said that in a scenario where a default is avoided a short, mild recession currently expected becomes a deeper one, with an annualized GDP decline of 1.8% in the second half of 2023. The unemployment rate increases to 5.3% by mid-2024. If the Treasury is forced to cut spending to service debt, a conservative estimate would put the GDP decline at 8%.The EPA said the U.S. generated 603 million biodiesel (D4) blending credits in April, down from 619 million credits in March. It also reported that the U.S. generated 1.16 billion ethanol (D6) blending credits in April, down from 1.22 billion in March.Colonial Pipeline Co is allocating space for Cycle 31 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.The International Energy Forum said, citing data from the Joint Organizations Data Initiative that Saudi Arabia's crude oil exports in March increased by 65,000 bpd to 7.52 million bpd from 7.455 million bpd in February. Saudi Arabia’s crude oil production in March increased by 14,000 bpd to 10.46 million bpd.
Oil Futures Advance as Wildfires Disrupt Canadian Output -- Oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange powered higher early Friday, with all petroleum contracts on course for solid gains this week after spreading wildfires in Canada's oil-producing region of Alberta shut-in roughly 250,000 barrels (bbl) in daily output. More than 2.7 million bbl in daily oil production is located within areas of "very high" or "extreme" wildfire danger rating zones, according to an independent research firm Rystad Energy. Unusually high temperatures for this time of the year have aided the intense spring wildfires in western Canada, displacing thousands of people and destroying property. Satellite images show that toxic cloud of burned particles has blanketed the region and dipped across the border into the United States. Further spurring gains in the oil complex, the U.S. Dollar Index pulled back from Thursday's two-month high 103.455 settlement after several Federal Reserve officials indicated the U.S. central bank is not done with raising interest rates amid continued strength in the economy and labor market. St. Louis Federal Reserve President James Bullard in a Financial Times interview said he is leaning toward another 0.25% hike in the federal funds rate at the next meeting in June as "an insurance against inflation." Similar sentiment was echoed in the comments from the Dallas Fed President Lorie Logan who said, "The pause is not in order, though that could change in the coming weeks depending on the data." The U.S. economy defied all expectations this year while sustaining a low unemployment rate amid high inflation and increasingly restrictive interest rates that are now above the annual rate of inflation. Thursday's economic data showed the number of Americans filing for unemployment benefits unexpectedly dropped last week by the most since 2021, while continued claims that measure those who receive unemployment benefits for consecutive weeks also dropped to 1.79 million. With the labor market largely intact, Americans increased their retail spending in April for the first time in three months, according to the U.S. Commerce Department. Retail sales -- a measure of spending at stores, online and in restaurants -- rose a seasonally adjusted 0.4% in April from the previous month after declining in February and March -- a sign of consumers continued resilience despite high inflation and rising interest rates. Faced with this conundrum, some Fed officials even suggested that the Federal Open Market Committee could "skip" the meeting in June to adopt a "wait-and-see" approach before committing to either pausing or raising interest rates further. Near 7:45 a.m. EDT, West Texas Intermediate futures for June delivery advanced $0.80 to $72.63 bbl, and the international crude benchmark Brent contract gained to $76.67 bbl, up $0.83 bbl. NYMEX RBOB June futures rallied $0.0192 to $2.5875 gallon, while ULSD June futures advanced $0.0146 to $2.4172 gallon.
Oil down as U.S. debt talks hit brakes; Crude still up on week -- Crude prices reversed early gains to end lower on Friday as talks to raise the U.S. debt ceiling hit an impasse again. But oil bulls still had some hurrah: the first weekly rise in five from gains between Monday and Wednesday. President Joe Biden and his main Republican rival in Congress Kevin McCarthy had previously said they were closer than before to a deal to raise the $31.4 trillion U.S. debt ceiling, and that a conclusion could come as early as Sunday to avoid a federal default on payments by June 1. By Friday though, it was clear that the talks were going nowhere. “White House is not being reasonable,” said a headline citing Republican debt negotiators. Another, which ran on Fortune.com and quoting Republican negotiator Garret Graves, was more affirmative on the standoff. “It’s time to press pause because it’s just not productive,” Graves was quoted as telling reporters. McCarthy himself said: “We’ve got to get movement from the White House, and we don’t have any movement yet.” He added that he and Biden had not spoken on Friday. New York-traded West Texas Intermediate, or WTI, crude settled down 31 cents, or 0.5%, at $71.55 per barrel. Week-to-date though, WTI was up about 2%. The U.S. crude benchmark fell a cumulative 15% over four prior weeks. London-traded Brent crude, the global benchmark for oil, settled down 28 cents, or 0.4%, at $75.58. For the week, Brent was also up 2% after four previous weeks of losses totaling 14%. Both WTI and Brent had rallied by more than $1 earlier on Friday on optimism that the debt ceiling talks were making progress. “Traders were reluctant to go into the weekend short, on the off chance that an agreement to raise the U.S. government’s debt ceiling is struck over the weekend,” “[A U.S. debt] default was almost certainly never a realistic possibility in the first place,” Also boosting oil was a weaker dollar, which makes commodities like crude which are priced in the greenback more affordable to holders of other currencies. The Dollar Index was down for the first time in five sessions even as some speculators held to the belief that the Federal Reserve will raise rates for an 11th straight time when the central bank’s policy makers meet on June 14.
Iran Seizes Third Oil Tanker As U.S. Boosts Military Presence -Iran has seized yet another oil tanker bringing the tally to three tankers seized in the space of just 19 days as tensions in the Persian Gulf heat up. The tanker in question is said to be an Iranian oil tanker that had been seized by a foreign company five years ago, according to state-run IRNA news agency, which describes the seizure as the reclamation of that previously seized Iranian tanker.“The seized 10,000-ton oil tanker Purity had been illegally leased to a foreigner by falsifying documents since 2018 and its Iranian owners were deprived of the benefits of the oil tanker,” Mojtaba Qahremani, head of the justice department in Iran’s southern province of Hormozgan, was quoted as saying.The Bahrain-based U.S. fleet continues to monitor the situation in the Persian Gulf. Over the past two years, Iran has attacked, interfered with or harassed the navigational rights of 15 internationally flagged commercial vessels, U.S. officials have revealed. Late last month, Iran’s state television showed footage of the country’s navy commandos in a helicopter operation boarding the Marshall Islands-flagged tanker Advantage Sweet. The Turkish-operated, Chinese-owned tanker was reportedly bound for Houston, Texas carrying Kuwaiti crude oil for U.S. energy giant Chevron Corp. Iran claimed that the tanker collided with an unidentified Iranian vessel hours prior to its seizure, with several crew members reportedly falling overboard while others were left injured. The tanker then fled the scene and ignored radio calls for eight hours before a court ordered its seizure.
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