US oil exports at a six month low, gasoline exports at a 7 month high; distillates exports at a 6 month high, distillates demand at a 9 month low, SPR at a 39½ year low, OPEC production was 869,000 barrels per day below their lowered targets in June, but global oil supply and demand were balanced
US oil prices finished higher for a third straight week as moderating inflation reduced the risk of interest rate hikes and the major international oil agencies forecast a widening supply deficit for the second half of this year....after rising 4.6% to a nine week high of $73.86 a barrel last week after the Saudis and Russia extended their supply cuts and a weak US jobs report diminished fears of tighter monetary policy, the contract price for the benchmark US light sweet crude for August delivery slid in Asian trading on Monday, after data showed China’s factory prices fell at the fastest pace in more than seven years in June, indicative of a slowing recovery in the world’s second-largest economy, and continued lower during the New York session as traders looked to the twofold risk to the demand outlooks in China and the US, where a softening labor market and faded post-pandemic recovery offset prospects of lower crude supplies from the OPEC+ alliance, and settled 87 cents lower at $72.99 a barrel on the increasing likelihood of more U.S. interest rate hikes, even as crude supply cuts from top oil exporters Saudi Arabia and Russia limited the losses...however, oil prices jumped about 2% to a 10-week high in Asian trading on Tuesday, boosted by a falling U.S. dollar, hopes for higher demand in the developing world and supply cuts by the world’s biggest oil exporters. then continued on its upward trend in US trading, supported by the supply cuts by Saudi Arabia and Russia for August, and hopes for higher demand in the second half of the year after China said it would take more steps to revive its economy with additional stimulus, and settled $1.84 or 2.5% higher at $74.83 a barrel, propelled by expectations that U.S. commercial crude oil inventories had declined for a fourth consecutive week, while a sharp drop in the U.S. dollar further boosted prices across the oil complex.....oil prices steadied near a three month high early Wednesday, as traders turned cautious ahead of the release of the EIA's inventory report and the report on June's consumer inflation, and then held those gains despite the EIA report of a large US crude inventory build when the market was expecting a modest draw, and went on to settle 92 cents higher at a 10 week high of $75.75 a barrel after U.S. consumer price data suggested that inflation was slowing enough to allow the Fed to stop tightening U.S. monetary policy....oil prices rose in early London trading Thursday, with North Sea Brent, the international benchmark, trading above $80 for the first time since April, after the International Energy Agency (IEA) predicted demand would reach a record high and outstrip supply for the rest of the year, then extended those gains in New York after the U.S. Energy Information Administration (EIA) revealed its latest price forecasts in its monthly short-term energy outlook then advanced on perceptions of easing inflation to a near three month high at $77.33 a barrel, before settling with a $1.14 gain to $76.89 a barrel on the day after both the IEA and OPEC forecasted a widening supply deficit on the global oil market in the second half of the year, while an ongoing selloff in the dollar index sent the U.S. dollar to a new 15-month low after the US Producer Price Index rose at the slowest pace since August 2020, further boosting the oil complex...oil prices were little changed in early overseas trading on Friday, as supply disruptions in Africa and a reduction in shipments from Russia tightened the market, but faded from its three month high during the US session, pressured by a rebounding U.S. dollar, and settled $1.47 lower at $75.42 a barrel as traders locked in their profits ahead of the weekend, but still ended with a 2.1% gain for the week...
Natural gas prices, on the other hand, ended lower for a second week follwing a four week run up in June, on lower demand from LNG export facilities and on moderating temperature forecasts for the densely populated Northeast...after falling 7.7% to $2.582 per mmBTU last week as production trended near record levels and natural gas drilling saw its biggest jump since 2016, the contract price of US natural gas for August delivery opened Monday's trading lower, as gas producers continued to pull near record amounts of gas out of the ground, but rallied to settle 8.7 cents higher at 2.669 per mmBTU, bolstered by forecasts for peak summer heat and robust cooling demand...natural gas prices rallied early on Tuesday, supported by a dip in production and forecasts for increasing national heat, and held steady throughout much of the session before closing out the day 6.2 cents higher at $2.731 per mmBTU on a drop in daily output and forecasts for hotter-than-normal weather to continue through late July, especially in Texas...natural gas prices rallied again early Wednesday on another daily drop in output and ongoing forecasts for hotter-than-normal weather, but turned lower to settle with a 9.9 cent loss at $2.632 per mmBTU on meager export volumes and expectations for the Thursday inventory report to show continued stout supplies in underground storage... natural gas traded in a wide range from the opening bell on Thursday to the time of the weekly storage publication, then began a staggered descent on the bearish storage figures and settled 8.7 lower at a three week low of $2.545 per mmBTU as the amount of gas flowing to the country's LNG export plants remained low due to ongoing maintenance at some facilities....natural gas prices held near that 3 week low in trading on Friday, and settled down six-tenths of a cent at $2.539 per mmBTU, on forecasts for less hot weather in the U.S. Northeast, a rise in output and reduced amounts of fuel flowing to the country's LNG export plants, and thus finished 1.7% lower for the week
The EIA's natural gas storage report for the week ending July 7th indicated that the amount of working natural gas held in underground storage in the US had increased by 49 billion cubic feet to 2,930 billion cubic feet by the end of the week, which left our natural gas supplies 569 billion cubic feet, or 24.1% above the 2,361 billion cubic feet that were in storage on July 7th of last year, and 364 billion cubic feet, or 14.6% more than the five-year average of 2,566 billion cubic feet of natural gas that were in working storage as of the 7th of July over the most recent five years… however, natural gas supplies are still 15.4% below normal for this date in the region defining the Pacific states, while 19.4% and 17.0% above normal in both the East and Midwest regions of the country at the same time....the 49 billion cubic foot injection into US natural gas working storage for the cited week was slightly lower than the 51 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, and was also less than the 59 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, and less than the average of 55 billion cubic feet addition to natural gas storage that has been typical for the same early July 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 July 7th showed that after a big drop in our oil exports and a big increase of new oil supplies that the EIA could not account for, we had oil left to add to our stored commercial crude supplies for the 6th time in sixteen weeks, but for the 18th time in the past 29 weeks, even after a big jump in our refinery throughput.....Our imports of crude oil fell by an average of 1,158,000 barrels per day to 5,880,000 barrels per day, after rising by an average of 418,000 barrels per day the prior week, while our exports of crude oil fell by an average of 1,757,000 barrels per day to a six month low of 2,144,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 3,736,000 barrels of oil per day during the week ending July 7th, 599,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly 100,000 barrels per day lower at 12,300,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have averaged a total of 16,036,000 barrels per day during the July 7th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,659,000 barrels of crude per day during the week ending July 7th an average of 630,000 more barrels per day than the amount of oil that our refineries were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 792,000 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 July 7th appear to indicate that our total working supply of oil from net imports and from oilfield production was 1,415,000 barrels per day less than what we added to storage plus our oil refineries reported they used during the week. To account for that obvious disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [ +1,415,000 ] 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 error of that magnitude in the week’s oil supply & demand figures that we have just transcribed....However, since last week’s “unaccounted for crude oil” figure was only at [+69.000] barrels per day, that means there was a 1,346,000 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 off by that much, and therefore useless...However, since most oil traders respond to these weekly EIA reports as if they were 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 had hoped to do about it)
This week's 792,000 barrel per day increase in our overall crude oil inventories came as an average of 849,000 barrels per day were being added to our commercially available stocks of crude oil, while 57,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time, the fourteenth 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....as a result of that withdrawal, the 346,758,000 barrels of oil that still remain in our Strategic Petroleum Reserve are again the lowest since August 19th, 1983, or at a new 39 1/2 year low, as repeated tapping of our emergency oil 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 fell to an average of 6,415,000 barrels per day last week, which was 0.3% more than the 6,435,000 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 12,300,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,900,000 barrels per day, while Alaska’s oil production was 13,000 barrels per day lower at 417,000 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 still 6.1% below that of our pre-pandemic production peak, but was 26.8% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.
US oil refineries were operating at 93.7% of their capacity while using those 16,659,000 barrels of crude per day during the week ending July 7th, up from their 91.1% utilization rate during the prior week, and a utilization rate that's now back to within the normal range for the beginning of July... The 16,659,000 barrels per day of oil that were refined this week were less than 0.1% more than the 16,640,000 barrels of crude that were being processed daily during week ending July 8th of 2022, but 4.5% less than the 17,438,000 barrels that were being refined during the prepandemic week ending July 5th, 2019, when our refinery utilization rate was at 94.7%, also within the normal range 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 158,000 barrels per day to 10,107,000 barrels per day during the week ending July 7th, after our refineries' gasoline output had increased by 148,000 barrels per day during the prior week. This week’s gasoline production was 13.3% more than the 8,921,000 barrels of gasoline that were being produced daily over the same week of last year, but 3.0% less than the gasoline production of 10,418,000 barrels per day during the prepandemic week ending July 5th, 2019. At the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 236,000 barrels per day to 5,086,000 barrels per day, after our distillates output had increased by 141,000 barrels per day during the prior week. Even after those increases, our distillates output was 0.9% less than the 5,133,000 barrels of distillates that were being produced daily during the week ending July 8th of 2022, and was 5.1% less than the 5,358,000 barrels of distillates that were being produced daily during the week ending July 5th, 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 fifteenth time in twenty-one weeks, albeit just by 4,000 barrels to 219,452,000 barrels during the week ending July 7th, after our gasoline inventories had decreased by 2,549,000 barrels during the prior week. Our gasoline supplies fell by less this week because the amount of gasoline supplied to US users fell by 843,000 barrels per day to 8,756,000 barrels per day, even as our exports of gasoline rose by 253,000 barrels per day to a seven month high of 1,116,000 barrels per day, while our imports of gasoline fell by 72,000 barrels per day to 779,000 barrels per day. . After fifteen gasoline inventory decreases over the past twenty-one weeks, our gasoline supplies were 2.4% below last July 8th’s gasoline inventories of 224,937,000 barrels, and still about 7% 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 eighth time in eighteen weeks, rising by 4,815,000 barrels to 118,181,000 barrels during the week ending July 7th, after our distillates supplies had decreased by 1,045,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 842,000 barrels per day to a six month low of 2,969,000 barrels per day, and even as our exports of distillates rose by 198,000 barrels per day to a six month high of 1,499,000 barrels per day while our imports of distillates fell by 42,000 barrels per day to a three year low of 71,000 barrels per day....Meanwhile, the six month low for product supplied led the 4 week average of that metric, a proxy for distillates demand, to a 9 month low of 3,51,000 barrels per day....With 34 inventory increases over the past sixty weeks, our distillates supplies at the end of the week were 0.4% below the 113,803,000 barrels of distillates that we had in storage on July 8th of 2022, and are now about 14% below the five year average of our distillates inventories for this time of the year...
Finally, with the big decrease in our oil exports, our commercial supplies of crude oil in storage rose for the 17th time in 28 weeks and for the 28th time in the past year, increasing by 5,946,000 barrels over the week, from 452,182,000 barrels on June 30th to 458,128,000 barrels on July 7th, after our commercial crude supplies had decreased by 1,508,000 barrels over the prior week. With that increase, our commercial crude oil inventories are now about 1% above the most recent five-year average of commercial oil supplies for this time of year, and are about 32% above the average of our available crude oil stocks as of the first week of July 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, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this July 7th were 7.3% more than the 427,054,000 barrels of oil we had in commercial storage on July 8th of 2022, and were 4.7% more than the 437,580,000 barrels of oil that we still had in storage on July 9th of 2021, but are 13.8% less than the 531,688,000 barrels of oil we had in commercial storage on July 10th of 2020, after early pandemic precautions had left a lot of oil unused…
OPEC's Report on Global Oil for June
Thursday of this past week saw the release of OPEC's July Oil Market Report, which includes the details on OPEC's & global oil data for June, and hence it gives us a picture of the global oil supply & demand situation as Chinese demand for oil picked back up after levelling off in May, during the sixth month after they had reopened to foreign travelers and removed the Covid-related restrictions on its citizens, while oil supplies from Russia continued to be further reduced by their independent production cut in response to the European Union's ban of Russian oil imports by sea and other sanctions...June was also the seventh month that OPEC and aligned oil producers were operating under a 2 million barrel per day production cut, meant to take roughly 2% of global oil supplies off the market, in response to a perceived global surplus and related lower prices, and the second month of a Saudi led cut of an additional 1.16 million barrels per day, which, when combined with the unilateral Russian cut, was intended to take an additional 1.66 million barrels per day off the market for the rest of this year..
The first table from this month's report that we'll review is from the page numbered 47 of this month's report (pdf page 57), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC has used an average of production estimates by as many as eight "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA), the industry newsletter Petroleum Intelligence Weekly, the energy consultancy Wood Mackenzie and the research and intelligence firm Rystad Energy, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures….
As we can see in the bottom right hand corner of the above table, OPEC's oil output increased by an upwardly rounded 91,000 barrels per day to 28,189,000 barrels per day during June, up from their revised May production total that averaged 28,099,000 barrels per day....however, that May OPEC output figure was originally reported as 28,065,000 barrels per day, which therefore means that OPEC's May production was revised 34,000 barrels per day higher with this report, and hence OPEC's June production was, in effect, 124,000 barrels per day more than the previously reported OPEC production figure (for your reference, here is a copy of the table of the official May OPEC output figures as reported a month ago, before this month's revision)...
in addition to the 2 million barrel per day production cut that the joint agreement imposed on all producers in October, six OPEC oil producers, led by the Saudis, and two other oil producers aligned with OPEC+ came to an agreement at the beginning of April to further reduce their combined production by an additional 1.16 million barrels per day beginning in May, over and above the formal OPEC cuts...in addition, Russia agreed to extend their ongoing 500,000 barrels per day cut for the rest of the year for a total cut of 1.66 million barrels per day from those nine producers...production cuts for OPEC members under that agreement included 500,000 barrels per day (bpd) from the Saudis, 211,000 bpd from Iraq, 140,000 bpd from the Emirates, 128,000 bpd from Kuwait, 48,000 barrels per day from Algeria, and 8,000 barrels per day from Gabon...a month ago, our assessment was that only the Saudis managed to hit the additional production cut target in May, and the table above indicates that only Algeria joined them in June, indeed, most of the others increased their production in June, rather than cutting it....hence, the net reduction from June's production remains less than half of what had been committed to by the parties to that April 2nd agreement..
furthermore, OPEC and other aligned oil producers had previously agreed to reduce production by 2,000,000 barrels per day beginning in November, so the net 1,328,000 barrels per day they've cut since then is also short of that...however, OPEC's production was already running 1,585,000 barrels per day below what they were expected to produce when that policy was initiated in October, so the 28,189,000 barrels per day they produced in May leaves them far short of what they were expected to produce during the month, as we'll see in the next table...
The above table was originally included as a downloadable attachment to the press release following the 33rd OPEC and non-OPEC Ministerial Meeting on October 5th, 2022, which set OPEC's and other aligned oil producers' production quotas for November and the following months through the end of 2023, and the quotas shown above were reaffirmed by the cartel for the first 6 months of 2023 in during the 34th OPEC and non-OPEC Ministerial Meeting on December 4th, 2022....the first column above, labeled "August 2022 required production", actually matches the October 2018 baseline production level on which OPEC and aligned producers have based all of their quotas since the onset of the pandemic, and the "Voluntary adjustment" is the production cut each country is expected to make from that benchmark level to achieve a 2 million barrel per day cut for the cartel as a whole, leaving each country with a Voluntary Production level they're expected to hit each month during 2023, whether they've produced that much recently or not....since war torn Libya and US sanctioned producers Iran and Venezuela have been exempt from the production cuts imposed by the joint agreement that has governed the output of the other OPEC producers since May 2020, they are not shown on the above list, and OPEC's quota excluding them is aggregated under the total listed for the 'OPEC 10', which you can see was expected to be at 25,416,000 barrels per day from November 2022 through December 2023...
with the April 2nd agreement, six members of OPEC agreed to further reduce their production by 1,035.000 starting in May and through the end of the year....thus the new voluntary production level for the OPEC 10 would be 24,381,000 through December...therefore, the 23,512,000 barrels those 10 OPEC members actually produced in May were 869,000 barrels per day short of what they were expected to produce during the month, with Nigeria and Angola still accounting for the majority of this month's production shortfall...
The next graphic from this month's report that we'll look at shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from June 2021 thru May 2023, and it comes from page 48 (pdf page 58) of OPEC's July Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....
Including this month's 91,000 barrel per day increase in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate is that total global liquids production increased by a rounded 600,000 barrels per day to average 101.2 million barrels per day in June, a reported increase which came after May's total global output figure was apparently revised up by 400,000 barrels per day from the 100.2 million barrels per day of global oil output that was reported for May a month ago, as non-OPEC oil production rose by a rounded 500,000 barrels per day in June after that upward revision, with most of June's production increase due to greater oil output from the OECD Americas and from "other Eurasian" countries, which more than offset lower production from Russia...
After that 600,000 barrel per day increase in global output, the 101.20 million barrels of oil per day that were produced globally during June were 2.30 million barrels per day, or 2.3% more than the revised 98.90 million barrels per day that were being produced globally in June a year ago, which was the eleventh month of the series of 400 million barrel per day production increases that OPEC and their allied producers implemented as their fourth output policy reset in response to the global demand recovery, following the early pandemic lockdowns (see the July 2022 OPEC report for the originally reported June 2022 details)…with this month's modest increase in OPEC's output accounting for just a small fraction of the reported global increase, their June oil production of 28,189,000 barrels per day was 27.9% of what was produced globally during the month, down from their 28.0% share of global output last month….OPEC's June 2022 production was ultimately revised to 28,680,000 barrels per day with the August 2022 OPEC report, which means that the same 13 OPEC members who were part of OPEC last year produced 491,000 barrels per day, or 1.7% fewer barrels per day of oil this June than what they produced last June, when they accounted for 29.0% of a smaller global output total…
With the big increase in global oil output that we've seen in this report, the amount of oil being produced globally during the month was pretty close to the expected global demand, as this next table from the OPEC report will show us...
The above table came from page 26 of the July Oil Market Report (pdf page 36), and it shows regional and total oil demand estimates in millions of barrels per day for 2022 in the first column, and then OPEC's estimate of oil demand by region and globally, quarterly over 2023 over the rest of the table…on the "Total world" line in the third column, we've circled in blue the figure that's relevant for June, which is their estimate of global oil demand during the second quarter of 2023….OPEC has estimated that during the 2nd quarter of this year, all oil consuming regions of the globe were using an average of 101.22 million barrels of oil per day, which was revised 420,000 barrels of oil per day higher than the 100.80 million barrels per day estimated for the second quarter a month ago (we've circled revisions in green)...that's down from the first quarter's demand figure because the most populated areas of the globe don't need oil to heat during the Spring, and don't start vacation traveling until Summer.…and as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were producing 101.20 million barrels per day during June which would imply that there was an inconsequential shortage of around 20,000 barrels per day of global oil production in June, when compared to the demand estimated for the month...
In addition to figuring June's global oil supply surplus that's evident in this report, the upward revision of 420,000 barrels per day to second quarter demand that's shown circled in green above, which was almost entirely offset by the with the 400,000 barrel per day upward revision to May's global oil supplies that's implied in this report, means that the 600,000 barrels per day global oil output shortage we had previously figured for May would now be revised to a shortage of 620,000 barrels per day...on the other hand, the upward revision of 420,000 barrels per day to second quarter demand means that the 420,000 barrels per day global oil output surplus we had previously figured for April would now have been eliminated by increased demand...
Note that in green we have also circled an upward revision of 60,000 barrels per day to OPEC's previous estimates of first quarter demand...for March, that means that the 240,000 barrels per day global oil output surplus we had previously figured for March would be revised to a surplus of 180,000 barrels per day.. similarly, the upward revision to first quarter demand means that the global oil surplus of 540,000 barrels per day we had previously figured for February would now be revised to a surplus of 480,000 barrels per day, but that the 220,000 barrels per day global oil output shortage we had previously figured for January would be revised to a shortage of 280,000 barrels per day, in light of the 60,000 barrel per day upward revision to first quarter demand....
This Week's Rig Count
The number of drilling rigs active in the US decreased for the tenth time in eleven weeks during the week ending July 14th, and are now 14.9% below the prepandemic rig count, despite increasing ninety-six times during the 123 weeks of the post pandemic recovery... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 5 rigs to 675 rigs over the past week, which was 81 fewer rigs than the 756 rigs that were in use as of the July 15th report of 2022, and was also 1,254 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 was down by three to 537 oil rigs during the past week, after the number of rigs targeting oil had decreased by five rigs during the prior week, leaving 62 fewer oil rigs active now than were running a year ago, as they now amount to just 33.4% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, while they are now down 21.3% from the prepandemic oil rig count of 683….at the same time, the number of drilling rigs targeting natural gas bearing formations fell by 2 to 133 natural gas rigs, which left natural gas rigs down by 20 from the 153 natural gas rigs that were drilling during the same week of 2022, as they now amount to just 8.3% 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 reports that five rigs they've labeled as "miscellaneous" continued to drill this week, including a vertical rig targeting the Marcellus at between 10,000 and 15,000 feet in Monongalia county West Virginia; 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. We've recently learned that the Beaver county Utah well is for a utility scale geothermal project, and we suspect that's also the case with the drilling in Hawaii, in the past we've also identified various "miscellaneous" rig activity as being for exploration rather than production and for carbon dioxide storage...
The offshore rig count in the Gulf of Mexico was down by one to 18 rigs this week, and included 16 rigs drilling for oil in Louisiana's offshore waters, and two drilling for oil in Texas waters....the Gulf rig count is now up by 5 from the 13 Gulf rigs running a year ago, when all 13 Gulf rigs were drilling for oil offshore from Louisiana…while there are no rigs drilling off our other shores this week, there was a rig drilling offshore from Alaska during the same week a year ago, so the national total of 18 rigs drilling offshore is up by 4 rigs from the national offshore count of 14 a year ago..
In addition to rigs drilling offshore, there are are now five inland water based deployed this week, all in Louisiana...new this week 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 Saint Mary Parish; legacy inland waters rigs include a directional rig drilling for oil at a depth of between 10,000 and 15,000 feet in Vermilion Parish, a directional rig drilling for oil at a depth of between 5,000 and 10,000 feet through an inland body of water in Lafourche Parish. a directional rig drilling for oil at a depth of less than 5,000 feet on inland waters in Lafourche Parish, and a directional rig drilling for oil at over 15,000 feet through an inland body of water in Terrebonne Parish Louisiana...a year ago, there were four such rigs drilling on inland waters...
The count of active horizontal drilling rigs was down by 5 to 606 horizontal rigs this week, which was also 80 fewer rigs than the 682 horizontal rigs that were in use in the US on July 8th of last year, and only 44.1% 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 one to 52 directional rigs this week, while those were up by 12 from the 40 directional rigs that were operating during the same week a year ago....on the other hand, the vertical rig count was up by one to 17 vertical rigs this week, while those were down by 13 from the 30 vertical rigs that were in use on July 15th 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 July 14th, the second column shows the change in the number of working rigs between last week’s count (July 7th) and this week’s (July 14th) count, the third column shows last week’s July 7th 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 15th of July, 2022...
Since it's apparent that the Permian basin drop accounts for this week's decrease, we'll start by checking the Rigs by State file at Baker Hughes for the changes in Texas Permian...there we find that there were two rigs pulled out of Texas Oil District 7C, which overlies the southern Permian Midland, and that six rigs were pulled out of Texas Oil District 8, which overlies the core Permian Delaware, while one rig was added in Texas Oil District 8A, which includes the counties over the northern Permian Midland... since the Texas Permian was thus down by seven rigs while the national Pemain count was down by five, we can therefore figure that the two rigs that were added in New Mexico were set up to drill in the far western Permian Delaware, in the southeast corner of that state...further checking the deployment in the Permian, we find that oil rigs deployed in the basin were down by 4 to 326, while Permian basin natural gas rigs were down by one to 11...since we saw last week that all 12 natural gas rigs were drilling in New Mexico, that means that New Mexico lost the natural gas rig, and was hence up by three oil rigs at the same time..
Elsewhere in Texas, there was a rig pulled out of Texas Oil District 4, which accounts for loss of a natural gas rig in the Eagle Ford shale, which leaves nothing but oil rigs in the Eagle Ford...meanwhile, a natural gas rig was also pulled out of the Haynesville shale in Texas Oil District 6...however, there was a rig added in Texas Oil District 5 targeting a basin not covered by Baker Hughes at the same time...
In other states, Louisiana saw two rigs added across it's southern tier, one on inland waters in Saint Mary Parish, and the other land based over a basin not covered by Baker Hughes, while an oil rig was pulled from the state's offshore waters at the same time...In Oklahoma, oil rigs were pulled out of the Cana Woodford and from the Mississipian shale, but since the state count was only down by one, a rig must have been added elsewhere in the state targeting a basin not covered by Baker Hughes at the same time...finally, an oil rig was added to those targeting the Bakken shale in the Willison basin of North Dakota, as the state now accounts for all Williston basin activity...
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Ohio citizens need to act now to protest first batch of proposals to drill under our parks - cleveland.com (letter to editor) House Bill 507, signed into law by Gov. Mike DeWine earlier this year, purports to regulate the sale of “poultry chicks” but is stuffed with a pernicious law requiring state agencies to open public lands (state parks and wildlife refuges) for fracking by oil and gas corporations. Fracking spews methane gas and poisons fresh water. People and other living creatures close to fracking wells risk being exposed to cancer-causing chemicals. The well drilling pads cause 24-hour light and noise pollution, interfering with the life cycles of the creatures living in the park. No one wants to see our beloved parks destroyed.The excuse for this travesty is that fracking brings royalty money to Ohio, but that likely won’t trickle to the communities who will suffer the most from the devastation. Were the Ohio politicians passing HB 507 the beneficiaries of large donations?As of May 30, oil and gas companies have begun “nominating” parcels to start drilling. The first batch of park nominations include several parcels in Salt Fork State Park and the Valley Run, and Zepernick wildlife areas. Ohioans have until July 20 to protest the nominations. Go to www.saveohioparks.org to get more information and send a protest letter. Susan Busch, Peninsula
Activists rally to prevent fracking under Ohio's Salt Fork State Park - WOSU Public Media -Activists who want to prevent fracking in Ohio’s state parks are trying to rally more people to their cause. They’re fighting against a new law that requires the state to consider proposals to drill for oil and natural gas under Ohio’s public lands. “Make no mistake, the decision has been made without the consent of the public to whom these lands belong and against the desperate warnings of scientists that our continued exploitation of fossil fuels will send the human race to its grave,” said Aaron Dunbar, of Mid-Ohio Valley Climate Action. He was speaking to a gathering of about 65 people at a pavilion near the beach at Salt Fork State Park in Guernsey County, southeast Ohio, in early JulyIn January, Governor DeWine signed a bill requiring the state to consider proposals to drill under state-owned property, like parks and wildlife areas. Agencies have had the authority to approve drilling projects since a 2011 law allowed for it, but that law stated that agencies “may” lease state lands for oil and natural gas production. The new law now says they “shall” lease it.Since then, the Oil and Gas Land Management Commission has created a process to accept drilling applications on state land. Twelve have been submitted so far, though the names of the companies are being kept confidential by the commission.Some proposals are along highways, in wildlife areas, and at Wolf Run State Park. Three are at Salt Fork State Park. Salt Fork has hiking trails, marinas, a resort lodge and an 18-hole golf course.“[These are]…state taxpayers’ lands that we own, we pay for, and we use,” said long-time environmental activist Roxanne Groff.More than 14,000 acres of the 17,000-acre park have been proposed for fracking, a process that includes drilling horizontal wells for miles underground. A new group, Save Ohio Parks, organized this rally against the plan. People hung signs in the pavilion that read “Ohio: Fracking the Heart of It All,” and “No fracking on public lands.” “Every inch of this park will have a lateral under it, sucking out the oil and gas,” Groff said.
Columbiana County, OH Evacuates 450 After Hilcorp Gas Well Accident -- Roughly 450 people within a one-mile radius of a Hilcorp Energy well pad in Fairfield Township (Columbiana County, OH) were evacuated following a mishap at the pad. Hilcorp says a third-party contractor “struck a well head” on the pad around 9:00 a.m. Tuesday, causing natural gas to leak into the air. What does that mean, that someone struck a well head?
One-mile evacuation order currently in effect near Crestview High School --There is currently a one-mile evacuation order in effect near Crestview High School. Columbiana police and fire dispatch has confirmed with 21 News that a one-mile evacuation order is currently in effect due to an uncontrolled natural gas well. Dispatchers confirmed that the incident originated at the Tarka Pad on Fairfield School Road. The road is currently closed to traffic and Hilcorp Energy is assessing the situation. According to a press release from Ohio Governor, Mike DeWine, a third-party contractor struck a well head at around 9:00 a.m. Tuesday morning. Emergency shutdown devices for the remaining 12 wells on the pad were activated and all remaining wells and pipelines are shut in. At this point, it's unknown how long the evacuation order will be in effect, but Columbiana County EMA Director, Peggy Clark tells 21 News that the well control company is expected to be on site Tuesday evening. According to a representative from Hilcorp Energy, no injuries have been reported so far and Hilcorp is working with local emergency crews to establish a perimeter while crews respond. Additionally Ohio EPA is on scene conducting air monitoring and providing incident support until the situation is under control. ODNR is working with authorities as well to monitor the situation.The Ohio EPA also says that no ground-level contaminants have been detected at this time, and they continue to monitor ground level for methane and volatile organic compounds. So far, they say gas is ejecting straight up into the atmosphere where it is dispersed. In the meantime, folks are asked to avoid the area and a claims hotline has been established for those affected by the incident. Governor DeWine is advising residents to stay in their homes with all doors and windows closed unless ordered to evacuate and close the fresh air intake of their air conditioning systems if possible.Anyone experiencing unusual shortness of breath, dizziness or clumsiness that they believe to be related to this incident should contact their local health care provider.Currently, the Columbiana Fire Department, East Palestine Fire Department and Red Cross are all at the evacuation site. 21 News crews at the scene say there are currently six evacuees at the site, but Governor DeWine says over 450 people have been safely evacuated from the area. The Columbiana County Sheriff posted the following information on Facebook: There has been a gas line leak. We are evacuating a 1 mile radius from Fairfield School Road just North of State Route 517. The evacuation is from North of Woodvale Lane to the South and Just North of Crestview Road. Lower Elkton Road to the West at State Route 558 and West of Crestview High School. The Crestview Elementary School is available for shelter. Red Cross has been notified. Thank You- Sheriff Brian McLaughlin
New Drilling Permits Sought in Columbiana County - – EAP Ohio LLC, a subsidiary of Houston-based Encino Energy Partners, has plans to drill four new horizontal wells in Columbiana County, according to data released from the Ohio Department of Natural Resources. EAP has requested permits to drill in Butler Township at the Lehwald Farm, according to ODNR. No final permits for the wells have been issued…
TWO EASTERN OHIO OIL AND GAS ACCIDENTS HIGHLIGHT HAZARDS OF FRACKING OHIO STATE PARKS, WILDLIFE AREAS – Save Ohio Parks An oil spill and a methane gas leak occurring within a week of each other in pristine, rural eastern Ohio have citizen environmentalists at Save Ohio Parks up in arms. “There have been two oil and gas accidents in Ohio within the last week — and yet the oil industry wants to surround our public lands with frack pads,” said Cathy Cowan Becker, co-founder at Save Ohio Parks. “What if this had happened next to a state park or wildlife area? How will the ODNR and OEPA evacuate an entire park full of campers, hikers, swimmers, hunters, and tourists? How will the air and water pollution affect these pristine spaces? We cannot entrust our public lands to an industry that extracts them for profit.”July marks the height of Ohio’s tourism season. Tourism generates an estimated $47 billion per year for the state.News 5 Cleveland reported that a methane gas leak at a well pad in Columbiana County, Ohio, caused the evacuation of 450 people within a mile radius of a well pad accident on Tuesday. The Columbiana well pad accident occurred 20 miles northeast of Zepernick Wildlife Area, which is on the Ohio Department of Natural Resources’ list of state parks and wildlife areas nominated for fracking under a new state law kickstarting fracking in Ohio state parks, forests, wildlife areas, and public lands.ODNR’s Division of Oil and Gas Resources Management was responding to the accident, which occurred when a third-party contractor struck a wellhead on the pad. Hilcorp Energy Company reported that emergency shutdown occurred for 12 wells on the pad, a statement by Gov. Mike DeWine said.A claims hotline has been established and residents are urged to stay indoors with windows and doors closed.The Akron Beacon Journal reported Monday, July 10, that an oil spill on Tuscarawas River near Barberton, Ohio, was killing wildlife and fish. A bicyclist noticed the spill on Wednesday, July 5, and reported it to the Ohio Environmental Protection Agency (OEPA). He later posted video of the spill on social media Monday when he noticed a barrier designed to stop oil on the river was compromised and allowed oil to travel down river. FOX 8 reported that oil recycler Noble Oil of North Carolina was responsible for the motor oil spill that is turning the water black and killing wildlife. OEPA is leading the cleanup.“Once again the oil and gas industry proves it cannot operate without accidents that endanger the public and our environment,” said Randi Pokladnik, Ph.D., an ecologist, research chemist and volunteer with Save Ohio Parks. “Yet Ohio’s politicians think this industry can be trusted to frack our precious state parks.”
Ohio commission considers state park drilling requests -A state commission will soon decide whether to greenlight drilling for natural gas under Ohio state parks, wildlife areas, and other state-owned lands. Ohio’s Oil & Gas Land Management Commission is currently considering a dozen applications to extract natural gas from state property under new rules adopted pursuant to a state law that requires it to expedite such requests. Public comments on the first batch of proposals, which include parcels at Salt Fork State Park and Valley Run and Zepernick wildlife areas, are due July 20. Comments on proposals affecting Wolf Run State Park and other parcels are due July 28 or Aug. 11. Rulings could come in the next few months.The commission was created under a 2011 state law that gave agencies the option of directly leasing state property for oil and gas drilling until the commission had leasing procedures in place. A last-minute amendment to an unrelated bill this spring would have automatically mandated agency leases for drilling until the commission adopted procedures and lease terms. A lawsuit by groups opposing that law is pending in the Franklin County Court of Common Pleas. Meanwhile, the commission adopted those rules in May, along with a lease form that took effect on May 28. Drilling proposals started coming in two days later.Gov. Mike DeWine said in January that his administration’s policy against new surface drilling in state parks would continue. However, the new procedures allow applications for horizontal drilling under parks from well pads situated just beyond the surface boundaries of parks and wildlife areas.“A frack rig right outside the park borders is still going to have a major effect on the experience in that park,” said Cathy Cowan Becker, a co-founder of Save Ohio Parks. People come to Ohio parks and wildlife areas for hiking, camping, swimming, boating, fishing and other activities, Becker said, and their use and enjoyment would be adversely affected by lights, noise, increased traffic and air emissions from well pads. Ohio has also had multiple accidents relating to oil and gas. A July 5 oil spill reached the Tuscarawas River, and a July 11 methane leak 20 miles north of the Zepernick Wildlife Area required the evacuation of 450 people. “What if this had happened next to a state park or wildlife area?” Becker said. “How will the ODNR and [Ohio Environmental Protection Agency] evacuate an entire park full of campers, hikers, swimmers, hunters, and tourists? How will the air and water pollution affect these pristine spaces?”Even without accidents, drilling fracked gas from state parks or wildlife areas would affect the resources and habitats there, said environmental scientist Randi Pokladnik. Horizontal fracturing of a formation to get natural gas to flow out requires millions of gallons of water, plus smaller amounts of potentially toxic chemical mixtures whose makeup is kept secret.Those massive amounts of water must come from somewhere. And even if the water did not directly come from a lake where people swim, boat or fish, withdrawing the necessary quantities could lower water levels throughout an area, Pokladnik said. Dust and silt from well pad construction and traffic could also negatively impact species in streams, such as hellbenders, she added. Huge amounts of water do flow back up after fracking, along with substantial concentrations of salt and some radioactive compounds. Trucks transport much of the flowback water toinjection wells, where it’s removed from the water cycle, but massive spills have happened, including one in Noble County in 2021. Smaller amounts of wastewater also come up when wells are in production.“We’re open to considering presentations from anyone,” commission chair Ryan Richardson said at the May 15 meeting when the procedures for picking parcels were finalized. And Pokladnik did make a short presentation at the commission’s June 28 meeting. FracTracker’s Great Lakes Program Coordinator Ted Auch also spoke, as well as emergency response and hazardous materials expert Silverio Caggiano, a former battalion chief at the Youngstown Fire Department. By then, the comment period was already running on some of the parcel nominations. One commissioner didn’t show up, another was late, and those who were there “didn’t ask me anything about the issues related to the forest ecosystem,” Pokladnik said.
Buckeye Brine Seeks Permit for 4th Injection Well in Coshocton, OH - Marcellus Drilling News - MDN has covered news about wastewater injection well company Buckeye Brine for more than a decade (see our Buckeye Brine stories here). Over the years, the company has drilled and safely operated three injection wells at the same location in Coshocton County, OH. Buckeye recently filed an application with the Ohio EPA to drill and operate a fourth wastewater injection well at the Coshocton location. The OEPA recently held a hearing, and as before, a group of activists and local residents turned up to oppose the plan.
New sinkhole forms along Mariner East pipeline in Chester County - StateImpact – NPR - The Pennsylvania Public Utility Commission is investigating a newly formed “earth feature” along the Mariner East natural gas liquids pipeline in Chester County.More often referred to as land subsidence or a sinkhole, it occurred in the area of Lisa Drive, West Whiteland Township, where multiple sinkholes first appeared during construction of the pipeline in March 2018.At that time, the PUC ordered a temporary shut down of a parallel natural gas pipeline, citing a “catastrophic” effect if it led to a leak. At least five homes on Lisa Drive were later sold to the Texas-based pipeline builder and operator Energy Transfer after its work damaged the aquifer and left gaping holes in residents’ backyards.Sinkholes caused by construction continued to appear in Chester County, including near the Chester Valley Trail and the Exton Library. The area sits on limestone, a porous rock that was prone to sinkhole development even before construction of the Mariner East.In this most recent incident, Energy Transfer notified the Department of Environmental Protection that on July 6, a new sinkhole, 18 inches in diameter and 54 inches deep, opened up near its natural gas liquids lines along the Lisa Drive right-of-way. The company reported it had excavated and backfilled the sinkhole, according to a DEP spokesperson.In an emailed statement to WHYY, the PUC said its “independent Bureau of Investigation – which includes the Pipeline Safety Division – was notified of, and responded to, an earth feature on the Lisa Drive right-of-way in West Whiteland Township, Chester County. I&E will continue their investigation, as appropriate.”Ginny Kerslake, a Chester County resident and organizer with Food and Water Watch, visited the site after hearing from a nearby resident. On Tuesday, she said she saw fresh straw on top of what looked to be the site of the newly remediated sinkhole. Energy Transfer did not respond to a request for comment by Wednesday evening. In December 2022, the company filed a brief in a case before the Public Utility Commission where Chester and Delaware county residents sought a complete shutdown of the pipeline system for safety reasons. In the brief, one of the company’s experts, Dr. Timothy Bechtel, vouched for the subsequent remediation of the Lisa Drive sinkholes. He referred to the area as “the most intensely geophysically investigated real estate of which I am aware…the most geophysically studied parcel on the planet.” Alex Bomstein, an attorney with the Clean Air Council, a plaintiff in the case, was surprised when informed of the new sinkhole.“This was supposed to be put to rest,” Bomstein said. “So why is this extremely analyzed piece of earth shifting once again beneath our feet?”The Mariner East pipelines carry volatile natural gas liquids from the Marcellus Shale gas fields in Ohio and western Pennsylvania across the state to the Marcus Hook industrial complex in Delaware County. Construction of the three-line project began in February 2017 but became mired in legal challenges and mishaps, and was subject to a number of consent decrees resulting from citizen lawsuits. It was completed in February 2022, several years behind schedule.The DEP has issued dozens of notices of violations to Energy Transfer, which has paid more than $20 million in fines and assessments since construction began.In August 2022, the company agreed to pay an additional $10 million while “accepting criminal responsibility” for dozens of charges related to construction of its Mariner East pipeline project and the 2018 explosion of the Revolution pipeline in Beaver County.
PA DEP Forms Ctte to Dole Out $5M in Shell Cracker Shakedown Cash -Marcellus Drilling News - Although Shell maintains flaring and accidental emissions from its new multi-billion-dollar ethane cracker in Beaver County, PA, have not violated state and federal air standards, the Pennsylvania Dept. of Environmental Protection (DEP) says they have–on numerous occasions. Shell didn’t argue the point, and in May, the company agreed to pay nearly $10 million in fines and “contributions” to benefit local communities (see Shell Cracker Agrees to $10M Shakedown from PA, Restarting Now). The DEP announced yesterday that it had appointed a 17-member committee to figure out how to dole out $5 million to fund local community projects near the cracker.
Bidenistas Dispense $163 Million to Plug Old O&G Wells in OH-PA-WV - Marcellus Drilling News - In the fall of 2021, President Biden signed into law the so-called Infrastructure bill, some $1.2 trillion in pork barrel spending, passed with the help of turncoat Republicans (seeBiden So-Called $1.2T Infrastructure Bill Passes Thanks to RINOs). Only about 9% of the $1.2 trillion will go to actual infrastructure projects like roads and bridges. One of the line items in the bill (so small it’s a rounding error) is money to plug orphaned and abandoned oil and gas wells. A small amount of money was distributed last fall, a year after the bill became law (see PA DEP Solicits Bids to Plug First 50 Orphaned Wells Using Fed $$). The Bidenistas are now issuing the next round–some $660 million in total, of which $163 million (or 25%) will go to Ohio, Pennsylvania, and West Virginia.
39 New Shale Well Permits Issued for PA-OH-WV Jun 26-Jul 2 | Marcellus Drilling News - New shale permits issued for Jun 26 – Jul 2 in the Marcellus/Utica saw a dramatic increase, thanks to a bump in Pennsylvania’s numbers. There were 39 new permits issued last week, way up from 11 issued the previous week. Last week’s permit tally included 30 new permits in Pennsylvania, 8 new permits in Ohio, and just 1 new permit in West Virginia. Coterra Energy scored the most new permits with a whopping 12 issued in Susquehanna County, PA (for two well pads). Range Resources had the second most new permits, with 7 permits issued in Washington County, PA (for one pad). ANTERO RESOURCES | APEX ENERGY | BRADFORD COUNTY | CAMPBELL OIL & GAS | CARROLL COUNTY | CHESAPEAKE ENERGY | CLEARFIELD COUNTY | CNX RESOURCES |COTERRA ENERGY (CABOT O&G) | DODDRIDGE COUNTY | ENERGY COMPANIES | EQT CORP | FAYETTE COUNTY | GREENE COUNTY (PA) | GREYLOCK ENERGY | INR | NOBLE COUNTY | POTTER COUNTY | RANGE RESOURCES CORP | SUSQUEHANNA COUNTY | TRIBUNE RESOURCES | WASHINGTON COUNTY | WESTMORELAND COUNTY
Appeals court orders temporary halt to Mountain Valley Pipeline construction - The stay was ordered despite language in the debt ceiling law directing federal agencies to issue permits needed for the controversial pipeline. A federal appeals court on Monday ordered the backers of the Mountain Valley Pipeline to halt construction in a national forest while it reviews a request by environmental groups to challenge the Biden administration’s approval of the natural gas pipeline. A panel of judges on the U.S. Court of Appeals for the 4th Circuit, which has previously rejected permits for the project, unanimously decided to grant the motion to stop construction. The ruling came after language in the debt ceiling law directed federal agencies to issue permits needed for the controversial pipeline favored by Senate Energy Chair Joe Manchin (D-W.Va.). The judges agreed with the argument that the Wilderness Society and other environmental groups made last week that construction on the proposed natural gas pipeline through the Jefferson National Forest should stop while the court weighs the request to review the Interior Department’s record of decision allowing pipeline construction in the national forest to begin.“The court grants the motion and stays construction during the pendency of this petition for review,” the ruling read. A spokesperson for Mountain Valley Pipeline noted the decision was only related to construction in the Jefferson National Forest, a three-mile stretch of a pipeline that is planned to travel more than 300 miles.“We will have additional comment regarding the decision in the coming days,” the spokesperson said in an emailed statement.Ben Tettlebaum, director and senior staff attorney at the Wilderness Society, praised the decision in a statement.“Time and time again, Mountain Valley has tried to force its dangerous pipeline through the Jefferson National Forest, devastating communities in its wake and racking up violations,” Tettlebaum said. “We’re grateful that the Court has given those communities a measure of reprieve by hitting the brakes on construction across our public lands, sparing them from further irreversible damage while this important case proceeds.”Manchin, who provided the crucial vote for President Joe Biden’s climate bill last year and has been one of the pipeline’s big champions, protested the court’s decision.“The law passed by Congress & signed by POTUS is clear - the 4th Circuit no longer has jurisdiction over MVP’s construction permits,” Manchin said in a tweet Monday night. “This new order halting construction is unlawful, & regardless of your position on MVP, it should alarm every American when a court ignores the law.”
Appeals court blocks construction on Mountain Valley Pipeline - WFMJ - (AP) — A federal appeals court has again blocked construction on a contentious natural gas pipeline being built through Virginia and West Virginia, this time doing so even after Congress ordered the project's approval. The stay issued Monday by the 4th Circuit Court of Appeals in Richmond comes after Congress passed legislation last month requiring all necessary permits be issued for construction of the Mountain Valley Pipeline. The law also stripped the 4th Circuit from jurisdiction over the case. Environmentalists, though, argued that Congress overstepped its authority by enacting the law, saying it violates the separation of powers outlined in the Constitution. “Congress cannot pick winners and losers in pending litigation by compelling findings or results without supplying new substantive law for the courts to apply,” lawyers for the environmentalists wrote in court papers. Equitrans Midstream, one of the companies building the pipeline, issued a statement Tuesday saying it is considering an emergency appeal to the U.S. Supreme Court. It said the ruling jeopardizes its plan to complete the pipeline by the end of the year. "The court’s decision defies the will and clear intent of a bipartisan Congress ... to expedite completion of the Mountain Valley Pipeline project, which was deemed to be in the national interest, the company said. The law greenlighting the pipeline was passed last month as part of a bipartisan bill to raise the debt ceiling. The provision that deals exclusively with the Mountain Valley Pipeline was included after negotiators failed to reach an agreement on broader regulatory reform. The White House supported putting the provision in the debt ceiling bill — over the objections of environmentalists and some Democrats — as a concession to Sen. Joe Manchin, a West Virginia Democrat and pipeline supporter who was a key vote for last year’s sweeping legislation that included deep investments in climate programs. The stay issued Monday focuses on a 3-mile (5-kilometer) section of that cuts through the Jefferson National Forest. Environmentalists say the construction plan will cause erosion that will ruin soil and water quality. On Tuesday, the court issued a similar stay in connection with parallel litigation alleging the pipeline would violate the Endangered Species Act. Environmentalists made similar constitutional arguments in that case. “Congress cannot mandate that federal regulators throw caution to the wind — environmental laws are more than just mere suggestions, and must be adhered to,” Sierra Club Executive Director Ben Jealous said in a statement. The Fourth Circuit has blocked construction of the pipeline on multiple occasions over the years. In court papers, lawyers for the pipeline say Congress is within its rights to strip the court from jurisdiction over the case. They also say that any debate over the law's constitutionality should be heard not by the 4th Circuit but by an appellate court in Washington, because the law passed by Congress last month spells out that precise scenario. “Granting a stay of any kind would fly in the face of this recent, on-point, and emphatic Congressional command that the remaining construction of the Mountain Valley Pipeline must proceed without further delay,” the project's lawyers wrote in court briefs. Mountain Valley Pipeline says the project is already substantially complete and that only three acres (one hectare) of trees need to be cleared, compared to more than 4,400 acres (1,700 hectares) already cleared. The $6.6 billion, 300-mile (500-kilometer) pipeline is designed to meet growing energy demands in the South and Mid-Atlantic by transporting gas from the Marcellus and Utica fields in Pennsylvania and Ohio. The stay includes no explanation of the court's rationale. It remains in place only until the court issues a full ruling on the merits of the case.
Colluding 4th Circuit Judges Do It Again – MVP Halted in Jeff Forest - Marcellus Drilling News -Three judges from the U.S. Court of Appeals for the Fourth Circuit (i.e., clown judges from 4th Circus) yesterday Congress, the President, and the entire country the judicial equivalent of the double-barrel middle finger by illegally ruling to block the construction of the Mountain Valley Pipeline (MVP) through 3.5 miles of Jefferson National Forest–for a fourth time. The three judges–Judge Stephanie Thacker, appointed by Barack Hussein Obama, Judge James Wynn, appointed by Barack Hussein Obama, and Chief Judge Roger Gregory, appointed by William Jefferson Clinton–are (in our opinion) corrupt and should immediately be impeached and removed from the bench. Their malfeasance has gone on long enough.
All Construction of MVP Stopped as 4th Circuit Stays Second Permit - Marcellus Drilling News - Yesterday MDN told you that on Monday, the clown judges from the U.S. Court of Appeals for the Fourth Circuit (i.e., the 4th Circus) illegally stayed a THIRD permit issued by the U.S. Forest Service (USFS) for Mountain Valley Pipeline (MVP) to traverse a piddly 3.5 miles of the federally-owned Jefferson National Forest (see Colluding 4th Circuit Judges Do It Again – MVP Halted in Jeff Forest). No sooner had we delivered that news than the clowns returned (cue Judy Collins, Send in the Clowns). Yesterday the 4th Circus judges slapped a stay on a second permit, a THIRD permit issued by the U.S. Fish and Wildlife Service (USFWS) concerning endangered species. Both stays, which are blocking new construction, are illegal according to the recently adopted law known as the Fiscal Responsibility Act (FRA) of 2023 (see Equitrans Announces Mountain Valley Pipe to Get Completed in 2023).
Mountain Valley Pipeline construction delayed yet again -- The legal roller coaster that is the Mountain Valley Pipeline took another sharp turn this week.In decisions late Monday and early Tuesday, the 4th U.S. Circuit Court of Appeals issued two stays that essentially stop all construction of the highly disputed project, which has proceeded piecemeal over the past five years through repeated court battles.A three-judge panel of the court gave no explanation in a two-sentence order that idles work crews just as they were returning to Southwest Virginia for what was expected to be the final phase of construction.Long delayed by legal battles with environmental groups, Mountain Valley was seemingly bailed out last month by a federal law that fast-tracks completion of the 303-mile pipeline.A key question, yet to be decided by Fourth Circuit, is whether Congress violated the separation of powers outlined in the Constitution by overstepping its authority. The stays will remain in effect until that decision is reached.
Equitrans Midstream Releases Statement Related to Mountain Valley Pipeline's Jefferson National Forest Authorizations --Equitrans Midstream Corporation today released a statement related to the July 10, 2023, decision by the U.S. Court of Appeals for the Fourth Circuit regarding construction in the Jefferson National Forest for the Mountain Valley Pipeline project."We are disappointed with the U.S. Court of Appeals for the Fourth Circuit’s remarkable decision to grant a one-sentence stay halting all construction in the Jefferson National Forest with no explanation. The Court’s decision defies the will and clear intent of a bipartisan Congress and this Administration in passing legislation to expedite completion of the Mountain Valley Pipeline project, which was deemed to be in the national interest. We believe the Court also exceeded its authority, as Congress expressly and plainly removed its jurisdiction. Further, the fact that the Court issued the stay prior to receiving full briefing from the federal government and Mountain Valley is particularly telling and demonstrates why Congressional intervention was appropriate. We are evaluating all legal options, which include filing an emergency appeal to the U.S. Supreme Court. Unless this decision is promptly reversed, it would jeopardize Mountain Valley’s ability to complete construction by year-end 2023."
Mountain Valley Pipeline Developer Weighs Supreme Court Appeal - Mountain Valley Pipeline developer Equitrans Midstream Corp. is considering filing an emergency appeal to the Supreme Court following the Fourth Circuit’s decision to pause the project’s construction in Virginia’s Jefferson National Forest. Equitrans was “disappointed” with the decision, saying the court defied the “will and clear intent” of Congress and the Biden administration that passed legislation to complete the project. “We believe the Court also exceeded its authority, as Congress expressly and plainly removed its jurisdiction,” the company said Tuesday in a statement.“Further, the fact that the Court issued the stay prior to receiving full briefing from the federal government and Mountain Valley is particularly telling and demonstrates why Congressional intervention was appropriate,” the company said. “We are evaluating all legal options, which include filing an emergency appeal to the U.S. Supreme Court.”On Monday, the US Court of Appeals for the Fourth Circuit temporarily blocked construction of a portion of the pipeline in a case brought by the Wilderness Society. The Fourth Circuit on Tuesday also granted a stay to environmental groups led by Appalachian Voices in another case challenging the more than 300-mile gas project stretching from northwestern West Virginia to southern Virginia.The court in that case halted the US Fish and Wildlife Service’s biological opinion and incidental take statement under the Endangered Species Act, which is used to determine impacts on endangered species and critical habitats—and had been petitioned for review in April.On June 26, organizations including Appalachian Voices, the Sierra Club, and the Center for Biological Diversity pushed back against the Interior Department’s motion to dismiss the case and called the provisions of the debt-limit law protecting the project unconstitutional.The Wilderness Society echoed those arguments in their own case.The Interior Department and Mountain Valley Pipeline LLC argued on Monday in both cases that the court didn’t have jurisdiction due to the language in the debt-limit law.Appalachian Voices claimed that language only applies to new challenges to the project, not litigation prior to the law’s passage on June 3. The Wilderness Society said the court has jurisdiction because their claim has to do with environmental statutes and falls under the Administrative Procedure Act.The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.The Southern Environmental Law Center represents the Wilderness Society. The respondents in that case are represented by the Justice Department, and Mountain Valley Pipeline LLC is represented by Hunton Andrews Kurth LLP and Munger, Tolles & Olson LLP.Appalachian Voices and the other petitioners are represented by the Sierra Club, Appalachian Mountain Advocates, and the Center for Biological Diversity. The respondents in that case are also represented by the Justice Department, and Mountain Valley Pipeline LLC is represented by Hunton Andrews Kurth LLP, Beveridge & Diamond PC, Holland & Hart LLP, and Munger, Tolles & Olson LLP.On June 26, organizations including Appalachian Voices, the Sierra Club, and the Center for Biological Diversity pushed back against the Interior Department’s motion to dismiss the case and called the provisions of the debt-limit law protecting the project unconstitutional.The Wilderness Society echoed those arguments in their own case.The Interior Department and Mountain Valley Pipeline LLC argued on Monday in both cases that the court didn’t have jurisdiction due to the language in the debt-limit law.Appalachian Voices claimed that language only applies to new challenges to the project, not litigation prior to the law’s passage on June 3. The Wilderness Society said the court has jurisdiction because their claim has to do with environmental statutes and falls under the Administrative Procedure Act.The cases are Appalachian Voices v. United States Department of the Interior, 4th Cir., No. 23-01384, 7/11/23 and Wilderness Society v. Bureau of Land Management, 4th Cir., No. 23-01594, 7/10/23.
Extreme Heat Drives U.S. Toward Fossil Fuel Milestone -The United States is set to use more natural gas to generate electricity than ever before this summer as extreme heat sends demand for air conditioning skyrocketing. In its latest monthly forecast, the U.S. Energy Information Administration projected the country to burn 4% more gas in July and August this year than during the same months of 2022. For weeks now, heat waves have clocked unprecedented triple-digit temperatures across the U.S., from Puerto Rico to the Pacific Northwest. The combination of global warming and El Niño temperature patterns is only expected to worsen as the months go on, spurring more Americans to crank electricity-hungry air conditioning units to avoid the deadly effects of overheating. “As coal provides less and less power to the grid, we expect the contributions of natural gas and renewables in particular to increase.” Renewables such as solar and wind are projected to pump out a 6% increase in electricity throughout the next month and a half compared to the same period last year. Nuclear plants, long in decline in the U.S., are on track for a 2% uptick in generation between now and August as the first new reactor built in the country in decades comes online. The growth of those zero-carbon sources of electricity may only temper the effects of surging gas use. Since photovoltaic panels and wind turbines only generate electricity sometimes, gas has become the nation’s primary power source, both as a replacement for coal and as backup for renewables. The price of natural gas has come down since soaring to the highest level since 2008 last July as the Russian invasion of Ukraine sent energy markets into chaos. Russia is the world’s No. 2 producer of the fuel behind the U.S., and until last year provided the bulk of Europe’s supply. While prices are expected to remain relatively low this summer in the U.S., analysts predict big swings will remain the norm for natural gas for years to come. With prices falling, the number of new drilling rigs deployed at oil and gas wells across the U.S. fell for a second straight month at the end of June, a sign of a pullback even as the industry sees demand ratcheting upward.
Leaks Can Make Natural Gas as Bad as Coal for Climate, Study Says - The New York Times --Natural gas, long seen as a cleaner alternative to coal and an important tool in the fight to slow global warming, can be just as harmful to the climate, a new study has concluded, unless companies can all but eliminate the leaks that plague its use.It takes as little as 0.2 percent of gas to leak to make natural gas as big a driver of climate change as coal, the study found. That’s a tiny margin of error for a gas that is notorious for leaking from drill sites, processing plants and the pipes that transport it into power stations or homes and kitchens.The bottom line: If gas leaks, even a little, “it’s as bad as coal,” said Deborah Gordon, the lead researcher and an environmental policy expert at Brown University and at the Rocky Mountain Institute, a nonprofit research organization focused on clean energy. “It can’t be considered a good bridge, or substitute.”The peer-reviewed study, which also involved researchers from Harvard and Duke Universities and NASA and is set to be published next week in the journal Environmental Research Letters, adds to a substantial body of research that has poked holes in the idea that natural gas is a suitable transitional fuel to a future powered entirely by renewables, like solar and wind.The findings throw up difficult questions about how much more money the nations of the world should invest in gas infrastructure to ward off the worst of global warming. The $370 billion Inflation Reduction Act passed by the United States Congress last year, designed to move the country away from fossil fuels and toward renewables, includes credits that would apply to some forms of natural gas.When power companies generate electricity by burning natural gas instead of coal, they emit only about half the amount of planet-warming carbon dioxide. In the United States, the shift from coal to gas, driven by a boom in oil and gas fracking, has helped reduce carbon emissions from power plants by nearly 40 percentsince 2005.But natural gas is made up mostly of methane, which is a far more potent planet-warming gas, in the short term, than carbon dioxide when it escapes unburned into the atmosphere. And there’s mounting evidence that methane is doing just that: leaking from gas systems in far larger quantities than previously thought. Sensors and infrared cameras are helping to visualize substantial leaks of methane from oil and gas infrastructure, and increasinglypowerful satellites are detecting “super-emitting” episodes from space.
Chart: The US is now exporting more LNG than ever before - While the Biden administration touts the success of the Inflation Reduction Act and its other clean energy accomplishments, a contradictory trend is quietly unfolding: The U.S. is exporting record-breaking amounts of liquefied natural gas. In April, the country sent more LNG abroad than in any other month, ever — a milestone that contrasts sharply with the global need to stop burning planet-warming fossil fuels. The rise in U.S. LNG exports has in turn helped drive an increase in global trade of the fuel, which last year rose to record-high volumes. Global LNG exports ticked up by 5 percent compared to 2021 levels. Meanwhile, U.S. export volumes jumped 16 percent over the same period — an increase that helped the U.S. tie with Qatar for the dubious achievement of the world’s top LNG exporter. The U.S.’ rising export volumes are in part the result of increased fossil gas production, which grew by 4 percent last year.The country’s growing LNG exports threaten not only its own goals for cutting carbon emissions but international climate targets as well. LNG operations create emissions — including via leaked methane, a very potent greenhouse gas — at nearly all points of production: the extraction of the gas itself, its transport via pipelines, the liquefaction operations and ultimately the end site where the gas is burned.Less than a decade ago, the U.S. exported virtually no LNG. But starting in February 2016, the lower 48 states began exporting the fuel when the country’s first liquefaction terminal, built by gas giant Cheniere, opened in Louisiana. The country’s shift from being a major fossil-fuel importer to its current role as a leading fossil-fuel exporter was only made possible by the hydraulic fracturing, or “fracking,” revolution, which leveraged novel drilling techniques to unlock massive amounts of cheap U.S. fossil gas. The U.S. shows no signs of slowing down its push to dominate global LNG exports. In fact, the country is currently building infrastructure that would boost its LNG export capacity by 5.7billion cubic feet per day by 2025, according to the Energy Information Administration. There are more than a dozen additional export terminals that have been approved by the Federal Energy Regulatory Commission, as well as a handful that have been proposed but not yet approved. The Environmental Integrity Project estimates that the new proposed LNG terminals alone could emit more greenhouse gases each year than 20 new coal-fired power plants.The expansion could also come at a significant cost to environmental justice. Residents living near the sites of the new liquefaction and export terminals have pushed back against the buildout, citing concerns about air and water pollution impacts on nearby communities of color and lower-income neighborhoods, especially in the Gulf Coast, where most of the development is concentrated. Canary Media visited a community impacted by a proposed LNGterminal in Florida last year and talked to community members about their fight against the project.As the U.S. attempts to lead the way on the global transition away from fossil fuels and to clean energy sources, the country’s rising prominence as a global LNG power broker could undermine those efforts.
USA LNG Cargoes Poised to Shift to Asian Ports LNG cargoes from the U.S. are poised to shift to Asian ports as prices fall in Europe, a new Rystad Energy gas and LNG market update, which was sent to Rigzone on Wednesday, stated. “Gas prices on the Netherlands-based Title Transfer Facility (TTF) fell 14 percent to around $9.4/MMBtu as of 11 July due to weak demand and healthy supply,” Rystad Energy Senior Analysts Masanori Odaka and Ade Allen said in the update. “In Asia, spot LNG prices are fluctuating around $11/MMBtu for August delivery as of 11 July, with the monthly average expected to settle at $12/MMBtu or slightly below. This has incentivized some players with U.S. free on board LNG cargoes to direct their LNG towards Asia rather than Europe,” they added. “However, finding Asian importers may be difficult as some countries still face high inventory, subject to demand fluctuation during summer,” the analysts continued. In the report, the analysts highlighted that spot LNG prices for northwest Europe delivery were about $8.9 per MMBtu on July 11, which they noted was 18 percent lower on the week. The analysts also pointed out that Europe continues to inject gas into storage, “with storage levels well above 2021 and 2022 for this time of the year”. “Storage facilities are currently 80.1 percent full at roughly 90.9 billion cubic meters, well positioned to reach the 90 percent target before November,” the analysts stated in the update. “The withdrawal rate is currently around 29.8 million cubic meters per day at an injection rate of 279 million cubic meters per day,” they added. The analysts noted in the update that, in the Asian spot LNG market, several sell tenders emerged from Indonesia’s Bontang LNG for September and October delivery, “with deadlines on 11 July”. “On the buy side, pockets of demand emerged from South Asia, while buying interest from East Asian importers remained limited despite strengthening downstream demand in some countries,” the analysts said in the update. “China and South Korea’s LNG inventories … stay high, prompting some importers to delay the delivery of cargoes. Higher than normal inventory levels in East Asia could dissuade major purchasers in Northeast Asia from spot market purchases,” they added. “At the time of writing on 12 July, players with U.S.-origin LNG cargoes are likely to bring their volumes to Asia rather than Europe as the arbitrage is open for September and October delivery, even when considering total shipping cost. Consequently, we will likely see more U.S.-origin LNG in Asia in the coming months,” the analysts continued. In a portion of the update penned by Allen alone, the Rystad analyst said U.S. LNG exports averaged 1.75 Mt last week but warned that the figure could be reduced this week “due to potential issues at Sabine Pass Train 3”. “We expect exports to average close to 13 billion cubic feet per day in July, barring unforeseen circumstances,” Allen said in the update. “Robust exports will be necessary to keep the market balanced, especially since production remains resilient,” Allen added.
Energy Transfer Enters into LNG Offtake Agreements for Lake Charles Project - Dallas-based Energy Transfer LP has entered into three long-term offtake liquefied natural gas (LNG) agreements for its Lakes Charles LNG project, the company said in a news release. The three non-binding heads of agreement (HOAs) combine for 3.6 million metric tons per annum (mtpa) of LNG to be exported to customers in Asia and the USA. The HOAs are subject to the negotiation and execution of definitive agreements, Energy Transfer said. The first HOA is with an unidentified Japanese consortium for the purchase of 1.6 mtpa for a 20-year term, subject to an option to convert the offtake arrangement to equity participation providing for the same volume of LNG, the news release said. The second HOA is for Chesapeake Energy Marketing LLC to supply Lakes Charles LNG with volumes of natural gas sufficient to produce 1.0 mtpa of LNG for 15 years, after which Gunvor Singapore Pte Ltd would buy LNG from Chesapeake at a price indexed to the Japan Korea Marker for a period of 15 years, according to the news release. The third HOA is with an unnamed USA customer and “relates to a tolling arrangement for 1.0 mtpa for a 15-year term”, Energy Transfer said. “We are pleased with the continued confidence of our customers in the Lake Charles LNG project”, Lake Charles LNG President Tom Mason said. “These HOAs are important for the successful development of the project, along with the continuation of certain pre-FID [final investment decision] work with one of our EPC [engineering, procurement, and construction] contractors.” The Lake Charles LNG project failed to meet the seven-year construction deadline of the USA Department of Energy (DOE) for LNG export permits. In May, the DOE denied Energy Transfer’s request for a three-year extension of the project, saying it did not meet its criteria for granting second extensions. The company requested a rehearing, and in June the DOE said it would not rehear the request, saying it was not convinced by the company’s arguments. Energy Transfer had sought the extension in part due to a variation in the design of the project to include a major carbon capture and sequestration (CCS) component, according to an earlier report from Reuters. According to the company website, the Lakes Charles project is for the development of a large-scale LNG export facility in Lake Charles, Louisiana located on the Calcasieu Ship Channel. The project will convert Energy Transfer’s existing Lake Charles LNG import and regasification terminal into an LNG export facility, “providing a cost advantage over other proposed LNG projects on the Gulf Coast”. The project is fully permitted for three 5.5 mtpa liquefaction trains, which will utilize existing infrastructure. The Lake Charles LNG import and regasification terminal has approximately 15.1 million cubic feet (430,000 cubic meters) of above-ground LNG storage capacity, two deepwater docks capable of handling ships with up to 7.66 million cubic feet (217,000 cubic meters) of capacity, and a deepwater turning basin, according to the company website.
Developer Confirms Funding For Massive Rio Grande Gas Terminal - After years of delays, an industrial developer said on Wednesday that it had funding to proceed with construction of a massive new gas liquefaction plant and export terminal in the wild green fields and wetlands of the Rio Grande delta. In an announcement, Houston-based NextDecade said it secured $5.9 billion in financing from international partners to begin work on the terminal’s first three compressors to liquify natural gas from Texas’ shale fields for export on global markets. When completed, five giant compressor units, each designed to process 5.4 million metric tons of liquified natural gas per year, will make the 750-acre Rio Grande LNG facility among the largest gas export terminals in the world. Its location in the Port of Brownsville-–the last major deepwater port in Texas that remains undeveloped by large fossil fuel projects—will complete the energy sector’s coastal sprawl from Louisiana to Mexico. Once constructed in several years, Rio Grande LNG will join the growing Gulf Coast energy export boom, which has pushed oil and gas production in Texas to record high levels. In the Wednesday announcement, NextDecade CEO Matt Schatzman called the financing agreement “a landmark event reflecting years of hard work and dedication by NextDecade’s employees, shareholders, construction partners, equipment suppliers, and customers.” Seven such LNG export terminals have cropped up on U.S. coastlines in the last eight years, according to the Energy Information Agency. Another three are under construction and another 11 have been approved by federal regulators. Accompanying the Rio Grande terminal, the planned Rio Bravo Pipeline will deliver 4.5 billion cubic feet of Permian gas per day to the South Texas coast, where compressor trains at Rio Grande LNG will super-cool the gas to -260 degrees Fahrenheit and then load it onto ocean-going tankers for sale overseas. The facility will occupy 750 acres of greenfield, including 182 acres of wetlands, on a 984-acre waterfront tract. Initially scheduled for completion in 2023, years long delays had plagued the project. Campaigns by local activists and indigenous leaders prompted three French banks, SMBC Group, BNP Paribas and Société Générale, to withdraw their financial commitments. Three nearby municipalities of Laguna Vista, South Padre Island and Port Isabel adopted resolutions opposing the project. A federal court ordered regulators to modify the conditions of their approval following challenges by local organizers who hoped to preserve the Rio Grande Delta as the last major inlet on the Gulf Coast of Texas still free from fossil fuel facilities like refineries, chemical plants and terminals.
US natgas prices rise 3% as hot weather boosts cooling demand (Reuters) - U.S. natural gas futures climbed about 3% to a one-week high on Monday on forecasts for hotter weather that should boost cooling demand more than previously expected through late July, especially in Texas. That price increase materialized even though drillers were pulling near record amounts of gas out of the ground. The Electric Reliability Council of Texas (ERCOT), the state's power grid operator, projected electricity use would reach new record highs on Tuesday and Thursday as homes and businesses crank up their air conditioners to escape the latest heat wave. The current record was hit on June 27. Extreme heat boosts the amount of gas generators burn to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest from wind (22%), coal (16%), nuclear (8%) and solar (4%), according to federal energy data. Front-month gas futures for August delivery on the New York Mercantile Exchange rose 8.7 cents, or 3.4%, to settle at $2.669 per million British thermal units (mmBtu), their highest since July 3. Last week, speculators boosted their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges to their highest levels since June 2022 for a third week in a row, according to the U.S. Commodity Futures Trading Commission's Commitments of traders report. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 102.2 billion cubic feet per day (bcfd) so far in July, up from 100.9 bcfd in June. That is on track to top the monthly record high of 101.9 bcfd in May. Meteorologists forecast the weather in the Lower 48 states would turn hotter-than-normal through at least July 25. With higher temperatures coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 103.0 bcfd this week to 107.1 bcfd next week. Those forecasts were similar to Refinitiv's outlook on Friday. Gas flows to the seven big U.S. LNG export plants rose to an average of 13.1 bcfd so far in July from 11.4 bcfd in June. That is still well below the monthly record of 14.0 bcfd in April due to ongoing maintenance at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana and Corpus Christi in Texas.
US natgas prices drop 3% to three-week low as LNG feedgas remains low (Reuters) - U.S. natural gas futures fell about 3% to a three-week low on Thursday on some forecast for less hot weather and as the amount of gas flowing to the country's liquefied natural gas (LNG) export plants remains low due to ongoing maintenance at some facilities. That price decline came despite a slightly smaller-than-expected storage build last week, another decline in daily output, and forecasts for the weather to remain mostly hot and cooling demand high through the end of July, especially in Texas. Power demand in Texas hit a record high on Wednesday, and is expected to top that on Thursday and Friday as homes and businesses keep their air conditioners cranked up to escape another brutal heat wave, according to the Electric Reliability Council of Texas (ERCOT), the state's power grid operator. Extreme heat boosts the amount of gas generators burn to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. The U.S. Energy Information Administration (EIA) said utilities added 49 billion cubic feet (bcf) of gas into storage during the week ended July 7. Analysts said that was lower than normal for this time of year because hotter-than-normal weather caused power generators to burn more gas to keep air conditioners humming. That was slightly lower than the 51-bcf analysts forecast in a Reuters poll and compares with an increase of 59 bcf in the same week last year and a five-year (2018-2022) average increase of 55 bcf. Front-month gas futures for August delivery on the New York Mercantile Exchange fell 8.7 cents, or 3.3%, to settle at $2.545 per million British thermal units (mmBtu), their lowest since June 20. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 101.8 billion cubic feet per day (bcfd) so far in July, up from 101.0 bcfd in June. That compares with a monthly record high of 101.8 bcfd in May. On a daily basis, however, output fell about 3.0 bcfd over the past six days to a preliminary two-week low of 99.7 bcfd on Wednesday due mostly to declines in Pennsylvania, Texas and North Dakota. Traders, however, noted preliminary data is often revised later in the day. Meteorologists forecast the weather in the Lower 48 states would remain hotter-than- normal through at least July 28. With hotter weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 100.9 bcfd this week to 105.9 bcfd next week. Those forecasts were higher than Refinitiv's outlook on Wednesday. Gas flows to the seven big U.S. LNG export plants rose to an average of 12.7 bcfd so far in July from 11.6 bcfd in June. But, that is still well below the monthly record of 14.0 bcfd in April due to ongoing maintenance at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana and Corpus Christi in Texas.
Has Texas Heat Affected Oil and Gas Operations? - Texas has been hot lately. Temperatures hit a maximum of 103F (39.44C) in the Midland-Odessa area of Texas on July 9, according to online weather data from the U.S. National Oceanic and Atmospheric Association, which showed that the maximum temperature in the area was 98F (36.66C) on July 8, 96F (35.55C) on July 7, 97F (36.11C) on July 6, and 98F on July 5. When Rigzone asked the Texas Independent Producers and Royalty Owners Association (TIPRO) if the recent heat in Texas has been affecting oil and gas operations, the organization’s President, Ed Longanecker, said, “most operators we talked to did not experience any significant disruptions during extreme heat conditions”. Longanecker added, however, that “one operator said it was more difficult to operate at times compared to winter weather”. The TIPRO President also told Rigzone that “some producers mentioned that they experienced some challenges with equipment due to the heat, including compressors, electrical submersible pumps and propane refrigeration at a gas plant, which caused minor and temporary disruptions”. “Many crews were instructed to start an hour earlier in the day so they could shut down earlier in the afternoon to avoid so much of a duration in the extreme heat, to take more breaks, and hydrate,” Longanecker added. When Rigzone posed the same question to the Railroad Commission of Texas (RRC), an RRC spokesperson told Rigzone that “no disruptions in the supply of oil and natural gas have been reported related to the heat”. Rigzone also asked the Texas Oil and Gas Association (TXOGA) and the American Petroleum Institute (API) if the recent heat in Texas has been affecting oil and gas operations. At the time of writing, these organization have not yet responded to Rigzone. As of July 10, 03.58 CDT, the National Oceanic and Atmospheric Association’s National Weather Service website was transmitting 16 heat advisory alerts, one excessive heat warning alert, and two flood advisory alerts for Texas. According to the latest Texas oil and gas production statistics from the RRC, which were released in June and were for March this year, the preliminary reported total volume of crude oil in the state was 115.34 million barrels back in March. The preliminary reported total volume of natural gas in Texas during that month was 896.19 billion cubic feet, the RRC revealed last month. The top three Texas crude oil producing counties ranked by preliminary production in March 2023 were Midland, with 17.62 million barrels, Martin, with 15.35 million barrels, and Upton, with 7.522 million barrels, the RRC highlighted in its latest production statistics report. The top three Texas gas producing counties ranked by preliminary production in March were Reeves, with 84.45 billion cubic feet, Webb, with 79.80 billion cubic feet, and Midland, with 65.72 billion cubic feet, according to the RRC. The RRC highlighted in the report that these preliminary figures are based on production volumes reported by operators and noted that they will be updated as late and corrected production reports are received.
Exxon in $4.9B Denbury Deal | Rigzone - Exxon Mobil Corporation has announced that it has entered into a definitive agreement to acquire Denbury Inc. (NYSE: DEN), which it describes as an experienced developer of carbon capture, utilization, and storage (CCS) solutions and enhanced oil recovery. In a statement posted on its site, Exxon noted that the acquisition is an all-stock transaction valued at $4.9 billion, or $89.45 per share based on ExxonMobil’s closing price on July 12. Under the terms of the agreement, Denbury shareholders will receive 0.84 shares of ExxonMobil for each Denbury share, Exxon highlighted in the statement. The boards of directors of both companies have unanimously approved the transaction, which is subject to customary regulatory reviews and approvals, Exxon said in the statement, adding that it is also subject to approval by Denbury shareholders. The deal is expected to close in the 4th quarter of this year. Exxon noted in the statement that the transaction synergies are expected to drive strong growth and returns for the company. The company said in the statement that its acquisition of Denbury provides it with the largest owned and operated CO2 pipeline network in the U.S. at 1,300 miles, “as well as 10 strategically located onshore sequestration sites”. A cost-efficient transportation and storage system accelerates CCS deployment for ExxonMobil and third-party customers over the next decade and underpins multiple low carbon value chains including CCS, hydrogen, ammonia, biofuels, and direct air capture, Exxon noted in the statement. Exxon highlighted that the acquisition also includes Gulf Coast and Rocky Mountain oil and natural gas operations. The company outlined in the statement that these operations consist of proved reserves totaling over 200 million barrels of oil equivalent, “with 47,000 oil-equivalent barrels per day of current production, providing immediate operating cash flow and near-term optionality for CO2 offtake and execution of the CCS business”. “Acquiring Denbury reflects our determination to profitably grow our Low Carbon Solutions business by serving a range of hard-to-decarbonize industries with a comprehensive carbon capture and sequestration offering,” Darren Woods, the Chairman and CEO of Exxon, said in a company statement.“The breadth of Denbury’s network, when added to ExxonMobil’s decades of experience and capabilities in CCS, gives us the opportunity to play an even greater role in a thoughtful energy transition, as we continue to deliver on our commitment to provide the world with the vital energy and products it needs,” he added.
Fossil fuel workers are dying inhaling gases – despite US warnings to big oil - Jeff Springman climbed the metal stairs on an oil storage tank at a production site in west Texas and opened the small hatch at the top. He was going to test the fluid in the tank before pumping it into his truck, a practice known as manual gauging. Instead he was engulfed by invisible chemicals that had built up inside. Springman passed out. A man he was training on the job that day in October 2019, Greg Fausto, caught him from falling several feet to the ground below, according to both men. When Springman came to, he saw that his gas monitor was beeping with a reading showing that the concentration of gas in the air had reached a flammable level. He had a nosebleed and felt nauseous. “My mouth was caked with some kind of weird film,” Springman said. “Everything was just wrong.”Springman, who was working for an oil and gas transport company called Pilot Transportation, hauling oil for Diamondback Energy, finished the job that day with Fausto’s help, but since then his health has deteriorated. He has cardiac arrhythmia, a known side effect of breathing in hydrocarbon gases, as well as nervous system damage.He has a blood clot in his lung that cannot be treated with blood thinners because of his ongoing gastrointestinal bleeding, according to medical records viewed by Drilled. “There’s nothing they can do for me,” Springman said. “If the blood clot leaves my lung and goes to my brain, I’m done.”He’s not alone. After multiple worker fatalities related to manual gauging, the US government warned that the practice was dangerous. There were nine incidents of workers dying from inhaling gases while gauging tanks between 2010 and 2014, according to two government agencies. All of the workers died alone. Most of their bodies were found slumped over thief hatches at the top of storage tanks. But the oil industry seems not to have taken note. Since 2016, at least a dozen more workers have died as a result of manual gauging, though some experts think that is likely to be an undercount. Sharon Wilson, a longtime environmental advocate who researches methane emissions, says she still sees workers manually gauging tanks in Texas all the time.Wilson carries an optical gas imaging camera capable of viewing emissions coming off tanks, meaning she can see the gases that workers cannot. “When I see a worker opening a thief hatch” – the name for the hatch on top of a tank – “it can look like a volcano erupts”, as hydrocarbon gases spew forth. “It’s terrifying because I know when I see a worker walking up the stairs, I know what they’re gonna do and I know that I could sit there on the side of the road and watch a worker die.”
EPA Fines Callon Petroleum Unit $1.3MM for Emissions Violations - The USA Environmental Protection Agency (EPA) has fined Callon Petroleum subsidiary Callon Permian LLC roughly $1.3 million for excess emissions at the company’s oil and gas facilities in the West Texas Permian Basin, according to a statement from the agency on Thursday. The EPA detected emissions from tanks, flares, and other equipment using a helicopter equipped with a special infrared camera that detects hydrocarbon leaks. Callon Permian failed to comply with requirements for flares, tanks, and combustors, as well as general requirements of the federally approved Texas State Implementation Plan, the agency said. In a consent agreement and final order issued by the EPA, Callon Permian is required to do site-specific corrective actions, inspections, equipment upgrades, and permitting and operations reviews. The settlement also requires the company to conduct optical gas imaging surveys at each of its facilities, tank pressure monitoring, and combustion control device monitoring to ensure future compliance. According to the statement, Callon Permian will perform corrective actions at 13 of the company’s oil and gas facilities in the West Texas Permian Basin, resulting in an estimated reduction of over 1.2 million pounds of volatile organic compound emissions, which “contribute to the formation of ozone (smog), which can result in health problems such as asthma, lung infections, bronchitis, and cancer”, the EPA said. The settlement will also reduce an estimated 4.6 million pounds of methane emissions. “This settlement will help protect residents of the Permian Basin from hazardous emissions and sends a strong message to facilities in the area that violate the health standards outlined in the Clean Air Act”, EPA Regional Administrator Earthea Nance said. “By using state-of-the-art technology and helicopter surveillance, we are able to detect these hazardous emissions over a large geographic area. EPA will continue to deliver cleaner air for communities by holding companies accountable through enforcement and compliance.”
Study: Domestic oil and gas production responsible for $77 billion in health impacts yearly - Oil and gas production have long been a cornerstone of the Texas economy, often seen as an aspect of the state’s identity. But the industry has long faced criticism, as well, particularly as climate change continues to be a growing concern.While the environmental cost remains a prominent target for those doing the critiquing, a new study has given us the numbers behind the human cost of the oil and gas industry – particularly as it relates to health.A joint study by the Boston University School of Public Health, the University of North Carolina Institute for the Environment, PSE Healthy Energy and the Environmental Defense Fund has found air pollution from domestic oil and gas production to be responsible for about $77 billion in health impacts nationwide every year, with Texas among the states with the highest proportion of associated health damages.Lead researcher Jonathan Buonocore, assistant professor of environmental health at Boston University’s School of Public Health, joined Texas Standard to discuss the report’s findings. Listen to the interview above or read the transcript below.This transcript has been edited lightly for clarity:
Biden administration announces $650 million to plug orphaned gas and oil wells --The Interior Department announced Monday more than $650 million in Bipartisan Infrastructure Law funding to plug abandoned oil and gas wells. The $660 million in funding, available to 27 states, will go toward the plugging of so-called orphan wells, or wells abandoned for extraction by the oil and gas industry. Orphan wells are associated with major safety and health hazards, many of them associated with methane leaks. Methane is also a major driver of climate change, due to its capacity to trap more heat in the atmosphere than carbon dioxide. The Environmental Defense Fund estimates about 14 million Americans live within a mile of an orphaned well. Separate research indicates such infrastructure particularly affects communities of color, which because of the practice of redlining host a disproportionate amount of urban gas and oil wells. “These investments are good for our climate, for the health of our communities, and for American workers,” Interior Secretary Deb Haaland said in remarks Monday in Kansas with Rep. Sharice Davids (D-Kan.). “With this additional funding, states will put more people to work to clean up these toxic sites, reduce methane emissions and safeguard our environment.”
States struggle to plug oil wells with infrastructure law cash - — Across Schuyler Wight’s two West Texas ranches, about 250 abandoned oil and gas wells sit open and unused, creating a link from the dusty surface to smelly chemicals and gases thousands of feet underground. Some of the wells are constantly bringing up noxious liquid, creating poisonous puddles and pools across Schuyler’s land that have killed cattle. Other wells bubble with methane, releasing the greenhouse gas silently into the air. “Over time with these wells, the casing rusts, they get pipes stuck. There’s caverns that form, there’s all kinds of crazy things that can happen,” Schuyler said. “It’s an expensive process to go out there and fix those once things get too old.” There may be as many as 800,000 orphaned wells across the country, according to some estimates. In 2021, states reported 126,806 to the Department of Interior, although many experts say that number vastly understates the problem. Along with being eyesores, the wells may be polluting groundwater and are estimated to be the 10th largest source of methane emissions in the U.S., according to a study by McGill University in Canada. The bipartisan infrastructure law signed into law in November 2021 included $4.7 billion in federal grants to start plugging the wells, creating new programs in many states. But the new federal money is creating logistical and regulatory challenges, state officials told E&E News, raising many questions about whether the money will live up to its promise. Some officials say they are having a hard time finding enough crews to plug the wells under the timelines dictated by the federal funds, and available workers are charging higher prices than originally anticipated. State counts in some of the most prolific oil states are lower than expected, raising concerns about whether the money is flowing to where it’s most needed. State agencies need to create methods for prioritizing which wells should be plugged. Many orphaned wells also remain undiscovered, putting pressure on states to develop new methods for finding and plugging them.
EIA Reveals Latest Oil Price Forecasts | Rigzone - The U.S. Energy Information Administration (EIA) has revealed its latest Brent and West Texas Intermediate (WTI) oil price forecasts in the July edition of its short-term energy outlook (STEO). According to the July STEO, the EIA now sees the Brent spot price averaging $79.34 per barrel in 2023 and $83.51 per barrel in 2024, and the WTI spot price averaging $74.43 per barrel this year and $78.51 per barrel next year. The latest price projections reflect very little movement compared to the EIA’s June STEO, which saw the Brent spot price coming in at $79.54 per barrel in 2023 and $83.51 per barrel in 2024, and the WTI spot price averaging $74.60 per barrel in 2023 and $78.51 per barrel next year. In a quarterly price breakdown included in the latest STEO, the EIA highlighted that the Brent spot price averaged $81.04 per barrel in the first quarter of this year and $78.02 per barrel in the second quarter, while the WTI spot price averaged $75.96 per barrel in the first quarter and $73.49 per barrel in the second quarter. Looking further ahead, the latest STEO projected that the Brent spot price would average $78.32 per barrel in the third quarter of this year, $79.97 per barrel in the fourth quarter, $81.98 per barrel in the first quarter of next year, $83 per barrel in the second quarter of next year, $84 per barrel in the third quarter of 2024, and $85 per barrel in the fourth quarter. The EIA’s July STEO anticipated that the WTI spot price would come in at $73.32 per barrel in the third quarter of 2023, $74.97 per barrel in the fourth quarter, $76.98 per barrel in the first quarter of next year, $78 per barrel in the second quarter of 2024, $79 per barrel in the third quarter of next year, and $80 per barrel in the fourth quarter. “The Brent crude oil spot price in our forecast gradually increases in the coming months, reflecting our expectation that global oil inventories will decline,” the EIA stated in its July STEO. “The Brent price averaged $75 per barrel in June, unchanged from May, as ongoing concerns regarding weakening global economic conditions continued to limit expectations for global oil demand growth, which countered upward price pressure from tighter near-term oil supplies,” the EIA added. “The reduction in expected near-term oil supplies was the result of the OPEC+ extended crude oil production cuts announced on June 4 and an extension of voluntary cuts through August announced by Saudi Arabia on July 3. We expect the production cuts and rising demand to increase prices going forward,” the EIA continued. In a report sent to Rigzone this week, Standard Chartered projected that the ICE Brent price would come in at $91 per barrel this year and $98 per barrel in 2024. The company expects the NYMEX WTI price to be $88 per barrel this year and $95 per barrel next year, according to the report, which also included a quarterly price breakdown. Brent is anticipated to come in at $88 per barrel in the third quarter of this year, $93 per barrel in the fourth quarter, $92 per barrel in the first quarter of next year, $94 per barrel in the second quarter of 2024, $98 per barrel in the third quarter of 2024, and $106 per barrel in the fourth quarter of next year, the report showed.
California new oil well approvals have nearly ground to a halt (Reuters) - California, the seventh-biggest U.S. crude oil producer, has put a near halt on issuing permits for new drilling this year, according to state data. The state's Geologic Energy Management Division, known as CalGEM, has approved seven new active well permits in 2023. That compares with the more than 200 it had issued by this time last year. The stalled approvals represent the latest tension between California's bold environmental ambitions and its role as a major oil and gas producer and consumer. New drilling permits have steadily declined since Gavin Newsom became governor in 2019, but the current rate of approval represents a sudden and dramatic drop. "It's just fallen off the cliff," Rock Zierman, chief executive of the California Independent Petroleum Association (CIPA), said in an interview. The industry has more than 1,400 permit applications for new wells awaiting CalGEM approval, half of which are more than a year old, he said. In an email, CalGEM attributed the smaller number of approvals to both the broader decline in California oil production and litigation that has paused permitting by Kern County, the center of the state's oil industry. CalGEM is processing far more approvals to permanently close wells than for any other activity, the agency said. "We expect this permitting trend to continue as California transitions away from fossil fuels," CalGEM said.
Big Oil’s Radical Proposal: Curtail Consumption, Not Production --Last year, in the middle of an energy crunch, European governments called on their citizens to consume less energy. They also lashed out at Big Oil for making billions from the squeeze.Now, Big Oil is the one calling for a reduction in energy consumption. Essentially, supermajors have suggested that people should use less of their products. But they don’t want to slash production.The seemingly paradoxical message came out earlier this week from a conference in Vienna, where OPEC leaders met with their Big Oil counterparts from BP, Shell, and other oil companies to discuss the future of global energy.As might have been expected in this day and age, the message to come out of the gathering was that everyone is committed to a net-zero world in the future but that right now, everyone was committed to ensuring there is enough energy for those who need it, regardless of the source.What was, perhaps, less expected was the reported call from Big Oil for governments to focus on demand reduction rather than supply limitation as a means of enabling that net-zero world. OPEC officials, meanwhile, focused on the importance of energy security as they have done before.“We must do everything we can to reduce emissions, not to reduce energy,” OPEC secretary-general, Haitham al Ghais said, as quoted by Euronews. “There is a misconception going around about reducing production and reducing investment in oil and gas, we do not agree with that message.”One would assume the reason OPEC disagrees with this message is that it would lead to lower profits for its members. But according to Big Oil, the motive for switching from a focus on supply to one on demand will avoid even higher profits for oil producers. Not that the executives put it quite this way.The report on that call comes from Reuters, which was once again refused access to the conference but quoted sources present there. And that call follows statements made by Big Oil executives that they will slow down with their pivot away from their core business.From an activist perspective, Big Oil is trying to justify its renewed focus on oil and gas at a time when oil and gas are making record profits. From an energy security perspective, it is difficult to argue that reducing the supply of a commodity while leaving demand unchanged could only have one result: a sharp rise in the price of that commodity.Of course, there is a case to be made that right now, despite stable and growing demand for oil, prices are depressed—but this is because factors different from oil’s fundamentals are running the show, as it were. These factors include GDP growth in big consumers, inflation, and central bank monetary policy. But there is also the perception that there is an abundant supply of oil that has contributed to the pressure on prices. So, what Big Oil executives are basically saying is that governments—and activists—have got the wrong end of the stick: they are trying to reduce the supply of oil and gas without addressing demand. And that is an approach that is doomed to failure, as we saw last year when the same governments that berated Big Oil for its profits subsidized the consumption of Big Oil’s products to avoid riots on their hands. Meanwhile, at another recent event, other Big Oil executives dared speak a truth that few leaders in the West would even acknowledge in private. That truth amounts to the fact that oil and gas are going nowhere in the next few decades, no matter what green transition plans governments are making. “We think the biggest realization that should come out of this conference … is oil and gas are needed for decades to come,” is how Hess Corp.’s John Hess put it. “Energy transition is going to take a lot longer, it’s going to cost a lot more money and need new technologies that don’t even exist today.”Naturally, this would be a welcome opportunity for a climate advocate to argue that Big Oil is trying to save its bacon when the world is turning vegan, but even that climate advocate would be hard-pressed to explain why, if the world’s moving away from hydrocarbons, China is building coal plants and India is building refineries.The truth is that the world is not moving away from hydrocarbons. Demand for oil has hit 102 million barrels daily. Demand for gas is soaring, too, notably from transition poster continent Europe. U.S. oil consumption is also growing after a drop in 2020—the lockdown year.There may be something, then, in a call for addressing demand for oil and gas instead of calling for less production. But addressing demand with a view to essentially discouraging it will be tricky—and also highly unpopular among voters. Germany is a good example worth studying by other transition-minded countries. It shows that forcing the transition down people’s throats does not usually yield the expected results.
IEA trims oil demand forecast for the first time this year on 'persistent' economic headwinds - The International Energy Agency on Thursday cut its global oil demand growth forecast for the first time this year, primarily citing a worsening economic outlook that weighs “especially heavy” on wealthy countries. The world’s leading energy watchdog said global oil demand is now on track to climb by 2.2 million barrels per day in 2023 to reach an average of 102.1 million barrels per day. China is set to account for 70% of the demand growth increase, the IEA said. This forecast nevertheless represents a downward revision of 220,000 barrels per day from last month’s report, when the IEA predicted an increase of 2.4 million barrels per day of worldwide growth. “Persistent macroeconomic headwinds, apparent in a deepening manufacturing slump, have led us to revise our 2023 growth estimate lower for the first time this year,” the IEA said in its latest monthly oil market report released on Thursday. “World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy in many advanced and developing countries over the past twelve months,” the agency added. Looking ahead to next year, the IEA expects demand growth to slow to 1.1 million barrels per day, “as the recovery loses momentum and as ever-greater vehicle fleet electrification and efficiency measures take hold.” The IEA last month said that global demand will trickle nearly to a halt in the coming years and peak before the end of the decade as the transition away from fossil fuels gathers pace. The Thursday report comes at a time when recent U.S. inflation and economic data renewed hopes that the Federal Reserve may be closing in on an end to its rate hiking cycle. Oil prices traded slightly higher on Thursday morning, extending gains month-to-date. Brent crude futures with September expiry were up around 0.4% at $80.42 a barrel at around 9 a.m. London time, while U.S. West Texas Intermediate crude futures with August delivery rose 0.3% to trade at $75.98 a barrel.
Investigations continue into source of oil spill {carlow-nationalist.ie} THE source of an oil spill into the River Slaney in Tullow has yet to be identified.Council official confirmed last week that despite increasing the number of absorbent booms and ongoing investigations in the area, the source remains a mystery.At the July meeting of Carlow County Council, cllr John McDonald asked for an update on the oil spill in Tullow; however, director of services Padraig O’Gorman indicated that the search for the source continues.South of Tullow, the oil has been visible across the surface of the River Slaney for a number of weeks, causing serious concern among the public, particularly for local fishermen and farmers. The council has urged members of the public to support them in the search for the source and thanked the people of Tullow for their support to date, adding that manholes and back gardens in numerous private homes and businesses in the area have been examined as part of the search.
Protests over fracking rig in Northern Territory -- The most powerful on-shore drilling rig in Australia is believed to be on its way to the Beetaloo Basin despite protests in Darwin. A woman locked herself to a gate outside the city's port on Friday in a bid to stop Tamboran Resources moving the rig to the drill site. In a video posted online, Kat McNamara said she would prefer not to take such action to stop fracking in the Territory. "I'm here because I feel morally obliged to be here," she said. "If we don't act now, we are going to find ourselves in a situation that we can't come back from and we're going to wish people had done things like this. "We know that the community stands with us, the science stands with us." However, the GetUp organisation said four trucks carrying the rig had since left the port. About 500 kilometres southeast of Darwin, the Beetaloo Basin contains an estimated 500 trillion cubic feet of gas, making it one of Australia's most energy resource-rich areas. While fracking for gas in Australia has been used in coal seams in the past two decades, shale fracking - which is done much deeper below the surface - is yet to be trialled. After a recent Senate inquiry into activities in the basin, Tamboran said it was pleased its "activities in the NT have been shown to be beyond reproach". In May the NT government also lifted its five-year moratorium on fracking. But environmental, Indigenous and some farming groups remain concerned about the impacts of unconventional mining operations, particularly on groundwater reserves. Tamboran had no comment in relation to Friday's protest or the movement of the rig. It previously welcomed its arrival, saying it was expected to deliver significant improvements in drilling efficiency and horsepower. "Once operational, this onshore drilling rig will be the most powerful rig in Australia, capable of drilling more than 3000m horizontal sections," managing director and chief executive Joel Riddle said. NT police was at the port protest but said no arrests were made.
Nigeria flares $3.9b gas in four years amid pollution, revenue leakage concerns— Nigerian National Petroleum Company Limited (NNPCL), Shell, ExxonMobil, Chevron, Total and other oil companies operating in the country flared about $3.9 billion (about N3 trillion) worth of gas in the last four years, despite growing environmental concerns and revenue leakages in the nation’s petroleum industry. Although the companies pledged commitment to environmental sustainability and climate change, their operations have left Nigeria with 1.2 trillion standard cubic feet of gas with expected carbon dioxide emissions of 65.9 million tonnes. At a time when the government is borrowing at least N11 trillion to fund the 2023 budget, the gas flare alone, if monetised, could provide almost 30 per cent of the needed budget. With many elusive targets to end gas flaring in the Niger Delta, statistics provided by the National Oil Spill Detection and Response Agency (NOSDRA) and the Gas Flaring Tracker satellite of the World Bank puts the volume of gas flared in 2022 at 224.9 billion standard cubic feet (SCF), which translates to $787.2 million The gas flared in 2021 was 260.3 billion SCF, which translates to about $911 million; in 2020, 260 billion cubic feet of gas was flared, which was about $909 million. In 2019, 466 bscf of gas was flared, translating to about $1.7 billion. The gas flared by the companies in four years is equivalent to about 128,500 gigawatts of electricity in a country that is struggling with gas to power about 80 per cent of electricity generation plants. In 2022, the worth of gas flared could generate 22,500 gigawatts hour of electricity (GWh). Coming at a time the Federal Government is championing a decade of gas, National Gas Expansion Programme (NGEP), auto-gas policy, zero gas flare target and others, Nigeria’s gas flare, though reducing slowly, fails to hit projected targets on the backdrop of poor infrastructure and funding despite the leeway in the Petroleum Industry Act (PIA). Besides, concerns are rising that most operators are under-reporting gas flare figures to evade fines after the country’s latest regulations changed the penalty for gas flaring to $2 per 1,000 standard cubic feet of gas. Nigeria has the largest gas reserves in Africa, hovering around 209 trillion standard cubic feet. The ‘2022 Global Gas Flaring Tracker Report’ of the World Bank showed that Nigeria ranked seventh on the list of top 10 countries involved in gas flaring in 2021. Combined with the pollution from oil production, the World Bank estimated that around two million people in Nigeria live less than four kilometres away from a flare site, a development which poses danger to their lives, especially those of children. Many attempts to bridge the gap in flaring over the years have been elusive as pronouncements by government officials and policymakers are often not taken seriously.
PCG eyes 2 ships as source of Southern Leyte spill — The Philippine Coast Guard (PCG) has started investigating two ships that could have been responsible for an oil spill that damaged the coastal areas of San Ricardo town in Southern Leyte. Lt. Comdr. Donna Liza Duran, PCG Southern Leyte station commander, said they took oil samples from LCT Georgia-1 and MV San Ric Ferry 20, both of which were docked in a private port in Barangay Benit of the town when the spill was spotted on July 7. LCT Georgia-1 is a cargo ship while MV San Ric Ferry 20 is an interisland passenger vessel that plies the route between San Ricardo and Surigao City. According to Duran, the Marine Environmental Protection Group of the Southern Leyte Coast Guard station, together with barangay officials and residents, immediately conducted manual scooping and shoreline cleanup to get rid of the oil slick. “We already took samples of the oils that spilled in the sea on Friday and will match these to the oil from the two ships so we can determine where they came from,” Duran said on Monday. The oil spill, which was reported by residents of Barangay Benit on Friday morning, had spread about 500 meters from the shore of the village. “There’s no need to panic because the spilled oil was already contained, including those left in the debris and stones at the shoreline,” she said. As of Sunday, authorities already used 100 pieces of absorbent pads to contain the oil spill. Duran advised residents not to fish at this time for safety purposes.
Yemen: Transfer of oil from decaying ship expected to start next week— Carrying over 1.1 million barrels of oil, the supertanker FSO Safer was abandoned off Yemen’s Red Sea port of Hudaydah after the civil war broke out in the country in 2015. Since then, the vessel has deteriorated significantly in absence of any servicing or maintenance, prompting fears of a major environmental disaster. According to David Gressly, UN Resident and Humanitarian Coordinator for Yemen, the vessel Nautica is preparing to sail from Djibouti. It will moor alongside the Safer and once the transfer starts, it will take about two weeks. “The completion of the ship-to-ship transfer of the oil by the start of August will be a moment when the whole world can heave a sigh of relief,” Mr. Gressly said, adding that the “worst-case humanitarian, environmental and economic catastrophe from a massive oil spill will have been prevented.” After the oil has been off-loaded, the next critical step will include delivery and installment of a catenary anchor leg mooring (CALM) buoy, which is secured to the seabed, and to which the replacement vessel will safely be installed. The CALM buoy needs to be in place by September. Backed by generous funding from Member States, the private sector, and the general public, which contributed $300,000 through a crowdfunding campaign, UN raised about $118 million of the $148 million estimated budget for the undertaking. The broad coalition working to prevent the catastrophe also includes environmental groups, including Greenpeace and, in Yemen, Holm Akhdar; as well as several UN entities.
Saudi energy minister says latest Riyadh-Moscow oil cuts showed unity with Russia -- The latest round of voluntary crude oil output cuts evidence the cooperation between heavyweight producers and allies Russia and Saudi Arabia, the kingdom’s Energy Minister Prince Abdulaziz bin Salman said on Wednesday. On Monday, Saudi Arabia said it would extend the 1-million-barrel-per-day production cut it had initially flagged for July into August, while Russia announced a 500,000 barrel-per-day decline in exports next month. This adds to the just over 1.66 million-barrels-per-day of voluntary drops that some members of the Organization of the Petroleum Exporting Countries and its allies — known as OPEC+ — had first declared in April, then agreed to stretch until the end of 2024 during the coalition’s ministerial meeting of June. Unlike alliance-wide OPEC+ policy decisions, voluntary production declines do not require unanimous approval and need not be implemented by all group members. Addressing the latest Riyadh-Moscow drops agreed for August at an OPEC+ seminar in Vienna Wednesday, Prince Abdulaziz said: “In the last move this week, yes, we are all continuing with our voluntary cut, but again, part of what we have had done with our colleagues from Russia was also to mitigate the cynical side of spectators about what was going on with Saudi Arabia and Russia.” Some questions had surfaced over the extent to which Russia will be honoring its voluntary crude production decline pledges, given ongoing opacity over its refinery consumption and seaborne exports — which are no longer accepted in Europe since December and have been rerouted to Asia. The Russian administration has suspended publishing official statistics for oil, natural gas and gas condensate production until April 2024, according to Russian state news agency Tass. Implementing a cut on exports, rather than on output, will allow market participants who rely on independent third-party tracking data to verify the extent to which Russia stands by its commitments. “It was a voluntary cut that was not imposed on them … including delivering, that they will do it from their exports, because it is more meaningful,” Abdulaziz said Wednesday.
Oil Lower as China's Faded Recovery Overshadow OPEC+ Cuts -- Following a three-session rally, oil futures settled Monday's session lower as market participants look to a twofold risk to the demand outlook in China and the United States, where a softening labor market and faded post-pandemic recovery have undermined prospects of lower crude supplies from the OPEC+ alliance. Monday's move lower in the oil complex comes as traders once again shifted their focus to weak demand signals out of China -- the world's largest crude-oil importer, where the economy struggles to pick up momentum after nearly three years of rolling lockdowns. China's inflation data released overnight revealed the producer price index slid deep into negative territory last month at –5.4% rate from a year ago, meaning demand for Chinese manufactured goods is lagging far behind last year's levels. Globally, manufacturing has remained in recession for nearly a year under pressure from rising interest rates across Western economies and demand rotation from goods-producing sectors into services. China is an export-oriented economy that requires sustained demand for its manufacturing industries which is far from certain in an environment of geopolitical tensions and de-coupling from Western economies. Domestically, investors await the release of the consumer price index for June, scheduled for publication at 8:30 AM ET Wednesday, with expectations for inflation to have eased amid a continued retreat in energy and food prices. The Survey of Inflation Expectations released this afternoon from the New York Federal Reserve showed that Americans anticipate short-term inflation will fall to the lowest level in just over two years at 3.8% compared to 4.1% expected in May. The longer-term inflation outlook, however, picked up pace slightly, with inflation projected three years ahead rising to 3% from May's 2.7% reading. The Federal Reserve inflation target is 2%. The easing short-term inflation outlook in the United States could finally be driven by a softening labor market, with Friday's employment report showing employers added the fewest number of monthly jobs in June since late 2020. The headline employment number for June was 209,000, with most of the job gains concentrated in sectors of government, social assistance, and health care. The categories associated with post-pandemic job creations, including leisure and hospitality along with professional services, showed little change from the prior month. What's more, employment for both May and April were also revised lower, with average job growth over the two-month period now 110,000 lower than previously reported. These data points bode well for the Federal Reserve's efforts to cool the labor market and broader economy for over a year now with the most aggressive rate hiking campaign in decades. Investors in financial markets upped their bets that the central bank would not have to raise the federal funds rate much higher from the current 5% to 5.25% target range. Still, more than 92% of investors anticipate the Fed would lift rates by another 25 basis points during their July 26 meeting, according to the CME FedWatch Tool. At settlement, the U.S. dollar index retreated against a basket of foreign currencies to finish at 101.642. NYMEX August West Texas Intermediate futures declined to $72.99, down $0.87 bbl on the session. ICE September Brent crude fell back $0.78 to $77.69 bbl. NYMEX August RBOB futures dropped $0.0197 to $2.5696 gallon, and August ULSD futures softened $0.0059 to $2.5532 gallon.
Oil dips 1% on US interest rate fears but OPEC+ cuts limit decline - Oil prices eased 1% on Monday on the increasing likelihood of more U.S. interest rate hikes, but crude supply cuts from top oil exporters Saudi Arabia and Russia limited the losses. Brent crude futures settled down 78 cents, or 1%, at $77.69 a barrel after touching their highest level in more than two months earlier in the session. U.S. West Texas Intermediate crude fell 87 cents, or 1.2%, at $72.99. "Traders are very nervous about higher interest rates, which could kill demand very quickly," adding that some investors were also engaging in profit-taking after last week's gains. Both benchmarks rose more than 4.5% last week after Saudi Arabia and Russia announced fresh output cuts bringing total reductions by the OPEC+ group to around 5 million barrels per day (bpd), or about 5% of global oil demand. San Francisco Federal Reserve President Mary Daly on Monday repeated that she believes two more rate hikes this year will likely be needed to bring down inflation that is still too high, while Cleveland Fed President Loretta Mester also signaled more rate rises. Higher interest rates could slow economic growth and reduce oil demand. The U.S. Labor Department reported last Friday the smallest monthly job gain in 2-1/2 years along with strong wage growth. The data strengthened the likelihood that the Fed would raise interest rates at its meeting later this month. Meanwhile, China's factory gate prices fell at the fastest pace in more than seven years in June, according to government data, indicating a slowdown in the recovery in the world's second-largest economy. However, oil demand from China and developing countries, combined with OPEC+ supply cuts, is likely to keep the market tight in the second half of the year despite a sluggish global economy, the head of the International Energy Agency (IEA) said. Markets are also focusing on the release of U.S. Consumer Price Index data, a key inflation report, and a slew of economic reports from China later this week to ascertain demand.
The Oil Market on Tuesday Continued on its Upward Trend as it Remained Supported by the Supply Cuts --The oil market on Tuesday continued on its upward trend as it remained supported by the supply cuts by Saudi Arabia and Russia for August and hopes for higher demand in the second half of the year, as China said it will take more steps to revive its economy with additional stimulus. The market was supported amid indications that Russian crude oil production is declining. Bloomberg reported that the average shipments of Russian crude have declined below their February averages. The oil market opened higher and sold off to a low of $72.98 in overnight trading before it bounced higher and breached its previous high. The extended its gains to over $1.60 and posted a high of $74.96 ahead of the close. The oil market was also well supported by the weakness in the dollar, as it fell to a two-month low after several Federal Reserve officials on Monday signaled the central bank was near the end of its tightening cycle. The August WTI contract settled up $1.84 at $74.83 and the September Brent contract settled up $1.71 at $79.40. The product markets remained supported, with the heating oil market settling up 3.05 cents at $2.5837 and the RB market settling up 5.31 cents at $2.6227. The EIA raised its 2023 world oil demand growth forecast by 170,000 bpd to 1.76 million bpd and cut its oil demand growth estimate for 2024 by 60,000 bpd to 1.64 million bpd. Total world oil demand in 2023 is forecast to increase to 101.16 million barrels and to 102.8 million barrels in 2024. World oil output is expected to increase by 1.25 million bpd to 101.1 million bpd in 2023 and increase by 1.47 million bpd to 102.57 million bpd. It reported that OPEC production is forecast to fall by 650,000 bpd to 28.02 million bpd in 2023 and increase by 470,000 bpd to 28.49 million bpd in 2024. U.S. oil output is forecast to increase by 670,000 bpd to 12.56 million bpd in 2023 and increase by 290,000 bpd to 12.85 million bpd in 2024. The EIA also reported that U.S. petroleum demand in 2023 is forecast to increase by 160,000 bpd to 20.44 million bpd and by 350,000 bpd to 20.79 million bpd in 2024. U.S. gasoline demand is forecast to increase by 140,000 bpd in 2023 to 8.92 million bpd and by 10,000 bpd to 8.93 million bpd in 2024, while U.S. distillate demand is expected to fall by 50,000 bpd to 3.91 million bpd in 2023 and increase by 50,000 bpd to 3.96 million bpd in 2024. The EIA forecast that the Brent crude price will average $78/barrel in July and gradually increase to about $80/barrel in the fourth quarter. The price of Brent crude is expected to average about $84/barrel in 2024. OPEC’s Secretary General, Haitham Al Ghais, said global energy demand is forecast to increase by 23% through 2045. Saudi Arabia’s cabinet reaffirmed the country’s desire to increase precautionary efforts by OPEC and their allies to stabilize oil markets. JP Morgan said OPEC+ needs to deepen its cuts by another 700,000 bpd in the second half of 2023 in addition to the announced reductions. It said the 700,000 bpd addition cut would need to be extended into 2024 in order to offset both non-OPEC supply growth and increasing output from some non-core OPEC members.
WTI Rallies 2.5% on USD Weakness Ahead of Inventory Report -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange powered higher during the afternoon session Tuesday, lifting front-month West Texas Intermediate to the highest settlement since early May propelled by expectations for U.S. commercial crude oil inventories to have declined for a fourth consecutive week, while a sharp drop in the U.S. dollar further boosted the oil complex. The U.S. dollar index extended losses on Tuesday to the lowest level since May 11 at 101.335 as investors positioned ahead of June's inflation report in the United States, scheduled for an 8:30 AM ET Wednesday release. Economists widely expect headline inflation to have declined for the 12th consecutive month in June, dropping from May's 4% reading to 3.1%. If realized, this would mark the lowest reading since March 2021. The core consumer price index, which excludes energy and food prices, is also seen to have retreated to 5% from a decades-high 6.4% led by a gradual but slow easing of housing prices. Further pressuring the U.S. dollar, Friday's employment report for the month of June revealed U.S. employers added the fewest number of jobs since late 2020, with job gains mostly driven by the government and healthcare services. Combination of easing inflation and a softening labor market might suggest that the Fed's efforts to cool the economy with the most aggressive rate hiking campaign in decades is finally bearing results. As of Tuesday afternoon, the majority of investors still expect the Federal Reserve to raise rates by 0.25% on July 26 to a 5.25% by 5.5% target range. However, bets for further rate hikes in September and November are quickly fading. Oil is bought and sold around the world in U.S. dollars, therefore a cheaper greenback makes crude more attractive for foreign buyers. On the session, West Texas Intermediate for August delivery advanced $1.84 or 2.5% to $74.83 bbl and international crude benchmark September Brent contract rallied to $79.40 bbl, up $1.71 bbl on the session, with both settlements the highest since May 1. NYMEX August RBOB futures added $0.0531 for a $2.6227 gallon settlement, and August ULSD futures gained $0.0305 to $2.5837 gallon. Also on Tuesday, oil traders positioned ahead of the weekly release of the U.S. inventory report from the American Petroleum Institute at 4:30 PM ET, followed by official government data from the U.S. Energy Information Administration Wednesday morning. U.S. commercial crude oil stockpiles are projected to have declined by 100,000 bbl for the week ended July 7, which would mark the fourth consecutive weekly drawdown in commercial stockpiles. Since mid-June, commercial stockpiles fell by a combined 14.9 million bbl to a better-than-five-month low 452.182 million bbl.
Oil Steadies Near 3-Month High Ahead of EIA Inventory Report -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange traded little changed early Wednesday as investor sentiment turned cautious ahead of the release of the inventory report from the U.S. Energy Information Administration and update on inflation levels last month, with consensus calling for further easing of consumer prices amid a cooling economy. Economists forecast headline inflation in the United States continued to decelerate in June, dropping from 4% year-over-year in May to 3.1%, led by a retreat in energy and food prices. The core consumer price index, which excludes energy and food prices, is also seen to have retreated to 5% from a decades-high 6.4%, led by a gradual but slow easing of housing prices. Some caution, however, that although inflation in the goods sector remains subdued and housing likely saw further deceleration of prices, the Fed needs to see more of a slowdown in core services ex-housing to be confident that headline inflation is headed to the 2% target. The combination of easing inflation and a softening labor market might suggest that the Fed's efforts to cool the economy with the most aggressive rate hiking campaign in decades is finally bearing results. As of Wednesday morning, a majority of investors still expect the Federal Reserve to raise rates by 0.25% on July 26 to a 5.25% by 5.5% target range. However, bets for further rate hikes in September and November are quickly fading. Oil is bought and sold around the world in U.S. dollars, therefore a cheaper greenback makes crude more attractive for foreign buyers. Near 7:30 a.m. ET, NYMEX August West Texas Intermediate was little changed near a three-month high $74.88 bbl and the international crude benchmark September Brent contract slipped to $79.39 bbl. NYMEX August RBOB futures traded also flat near $2.6220 gallon, and August ULSD futures edged higher to $2.5877 gallon, up by $0.0040 in overnight trading.
WTI Holds Gains Despite Large Crude Build; Biden Admin Drains SPR For 15th Straight Week - Oil prices extended gains overnight with Brent at its highest since April and WTI testing $76, breaking out of its two month range.Prices have climbed since OPEC+ heavyweights Saudi Arabia and Russia pledged even more output reductions in an effort to rebalance the market. Strong Russian supply - despite sanctions due to the war in Ukraine - has been a headwind for the market.Those flows are now showing signs of dropping, with average shipments falling below February averages. Additionally, the global market is expected to tighten in the second half and stockpiles are forecast to draw through 2024, according to a report by the Energy Information Administration, which is due to release its weekly inventory figures later Wednesday.Finally, this morning's cooler-than-expected CPI offers hope for a less tight Fed and less drag on demand for the energy complex.All that being said, last night's unexpected crude (and product) build, reported by API, is not what the bulls want to see continuing.API
- Crude +3.026mm (-1.00mm exp)
- Cushing -2.15mm - biggest draw since May 2022
- Gasoline +1.00mm (-1.1mm exp)
- Distillates +2.908mm (+150k exp)
DOE
- Crude +5.946mm (-1.00mm exp)
- Cushing -1.605mm
- Gasoline -4k (-1.1mm exp)
- Distillates +4.815mm (+150k exp)
The official data confirmed API's with large crude and Distillates builds and a significant draw at the Cushing Hub... Graphs Source: BloombergFor the 15th week in a row, the Biden admin drained the SPR (401k barrels)... Bear in mind, the magic that is the 'adjustment factor; suddenly re-emerged (as prices ready to break out?)...US Crude production slipped marginally off cycle highs as the rig count plunges... Gasoline demand pulled back hard from the previous week’s 19-month high -- retailers are likely still working down the gallons they bought ahead of the July 4th travel weekend. The four-week average slipped, but remains 6% above the same time last year, which was when consumers began to hold back at the pump after retail prices hit record highs.WTI was hovering around $76 ahead of the official print, having broken above the Saudi-cut highs...
U.S. Inflation Data Suggested that Inflation Was Slowing Enough to Allow the Federal Reserve to Stop Tightening U.S. Monetary Policy - On Wednesday, the oil market was well supported after U.S. inflation data suggested that inflation was slowing enough to allow the Federal Reserve to stop tightening U.S. monetary policy. The Consumer Price Index report showed U.S. consumer prices, excluding food and energy, in June increased by 0.2% on the month, the smallest increase since August 2021. The WTI market breached the $76 level and the Brent market traded over the $80 level for the first time since May following the report. The oil market retraced some of its gains following the release of the EIA weekly petroleum stocks report, which showed a larger than expected build in crude stocks of over 5 million barrels and a larger than expected build in distillates stocks of over 4.8 million barrels. However, the crude market later continued on its upward trend, trading to a high of $76.15 by mid-day. The market later settled in a sideways trading range ahead of the close. The August WTI contract settled up 92 cents at $75.75 and the September Brent contract settled up 71 cents at $80.11. The product markets ended higher, with the heating oil market settling up 1.59 cents at $2.5996 and the RB market settling up 4.43 cents at $2.6670.The EIA reported that net input of crude oil by U.S. refineries increased to 16.7 million barrels last week, its highest level since June 2022. U.S. West Coast refinery utilization increased to 96.7%, the highest level since September 2018, while utilization by Midwest refineries increased to 98.6%, the highest level in two years.IIR Energy reported that U.S. oil refiners are expected to shut in about 408,000 bpd of capacity in the week ending July 14th, increasing available refining capacity by 82,000 bpd. Offline capacity is expected to fall to 272,000 bpd in the week ending July 21st.Colonial Pipeline Co is allocating space for Cycle 41 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee.U.S. consumer prices increased modestly in June and posted their smallest annual increase in more than two years as inflation continued to subside. The U.S. Labor Department said the CPI gained 0.2% in June after increasing 0.1% in May. The CPI was lifted by rises in gasoline prices as well as rents, which offset a decrease in the price of used motor vehicles. In the 12 months through June, the CPI increased 3.0%. That was the smallest year-on-year increase since March 2021 and followed a 4.0% rise in May. Excluding the food and energy categories, the CPI increased 0.2% in June. It was the first time in six months that the core CPI did not post monthly gains of at least 0.4%. In the 12 months through June, the core CPI increased 4.8% after increasing 5.3% in May. Traders said inflation is slowing fast enough to allow the Federal Reserve to stop tightening U.S. monetary policy after what is still widely expected to be an interest rate increase at its meeting in two weeks’ time. The contract pricing still shows traders expect the policy rate to increase a quarter point to a 5.25%-5.5% range at the Fed’s July 25th-26th meeting but now see about a 25% chance of another rate increase before year’s end, down from about 35% before the report.The Fed Beige Book released today noted that overall economic activity in the U.S. increased slightly since late May and overall economic expectations for the coming months generally continued to call for slow growth. It noted that its survey found wage increases were returning to or nearing pre-pandemic levels and market expectations for price increases were generally stable or lower over the next several months.
OPEC+ Gets Glimmers Of Hope As Oil Passes $80 --After months of fruitlessly toiling to bolster global oil markets, OPEC+ is finally seeing some glimmers of hope as Brent prices near $80 a barrel in London. Whether they last is another question. Oil-market intervention by Saudi Arabia and its partners this year has largely been met with indifference by traders: crude prices have sagged even as the cartel repeatedly slashes production, and even an extra 1 million barrel-a-day cut by the kingdom elicited little more than a shrug. The situation appears to be changing, as Brent futures approach $80 for the first time since May. The US government’s Energy Information Administration has now flipped its outlook for 2023 as a whole from a surplus to a deficit. The crossover may have taken place as far back as early June, according to consultants FGE. The supply shortfall will more than double in the coming months, draining global oil inventories by a hefty 2.8 million barrels a day in August, Standard Chartered estimates. The supply shortfall will more than double in the coming months, draining global oil inventories by a hefty 2.8 million barrels a day in August, Standard Chartered estimates. In the physical market, there are clear signs that the OPEC+ curbs are starting to bite, as price differentials climb for crude grades similar to those shipped by the Saudis. Meanwhile, the Brent forward curve has returned to displaying a premium for immediate deliveries after flirting with a discount weeks ago, a symptom of renewed tightness. OPEC is even getting more co-operation from its partner, Russia, which has frustrated the group with its reluctance to implement its agreed share of output cutbacks. Moscow has seemed intent on maximizing sales to fund its war against Ukraine, but tanker tracking shows the country pared exports by roughly 25% in the four weeks to July 9. But it’s still too early for OPEC+ to celebrate. Even at $80 a barrel, prices are far below the $100-mark that Bloomberg Economics estimates the Saudis might need to cover government spending. Supplies in many corners of the market remain plentiful, and continue to rise from OPEC+ nations like Venezuela and the kingdom’s adversary, Iran. Parts of Wall Street continue to sour on crude, with JPMorgan contending that OPEC+ needs to slash output by a further 700,000 barrels a day to regain market control. World markets will be inundated again with renewed oversupply in early 2024, Morgan Stanley warns. To be sure, rising US interest rates have posed a severe headwind for prices this year, and if crude buckles in the face of the latest weaker inflation data, its prospects for a sustained move higher will look doubtful
Oil rises above $80 per barrel for first time since April as IEA predicts record demand --Oil prices are hovering above $80 per barrel for the first time since April, with the International Energy Agency (IEA) predicting demand will reach a record high and outstrip supply for the rest of the year in its latest market report.The Paris-based climate agency anticipates a resurgent China will make up more than two-thirds of this year’s demand growth as it finally recovers from the pandemic, boosting demand.It predicts oil demand will reach a record 102.1m barrels per day (bpd) and also raised expectations for next year despite the growing embrace of electric vehicles and energy efficiency measures across developed economies.Meanwhile oil demand growth will still halve next year to 1.1m bpd, the IEA revealed, reflecting vehicle electrification and energy efficiency, though it raised its view from a 860,000 bpd rise it forecast last month.“World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy in many advanced and developing countries,” the IEA said in its monthly oil report.Brent Crude was up 0.27 per cent at $80.33 per barrel in this morning’s trading, while WTI Crude had risen 0.12 per cent at $75.84 per barrel.Meanwhile, encouraging inflation data from the US indicated interest rates in the world’s largest economy were finally reaching a peak.This follows only a modest rise in consumer prices rose last month in the US, with the 0.2 per cent rise in June taking annual price hikes to three per cent – the smallest rise since 2021 as inflation continued to ease.There are now expectations of just one more rate hike from the US Federal Reserve, which has increased rates 10 times since last March, with interest rates currently at 5 to 5.25 per cent.Higher rates are a tool to tame inflation, but typically lead to slow economic growth and reduce oil demand.The return of prices above $80 per barrel will be a relief for OPEC, the world’s most influential oil cartel, which has gambled on improving economic conditions to boost prices after slashing supplies by nearly 5m barrels per day.Indications markets could be tightening, in line with its forecasts, include a $2.64 per barrel premium on six month future contracts to February 2024, having previously traded at a discount.The futures contract structure of the global benchmark Brent indicates the market is tightening and that OPEC could be succeeding in its mission to support the market.However, economic challenges remain that could weigh down prices, as Europe remains subdued amid manufacturing slumps, while OECD developed countries on the continent are on course to register four consecutive quarters of contracting demand up to the final quarter of 2023.“China’s widely anticipated reopening has so far failed to extend beyond travel and services, with its economic recovery losing steam after the bounce earlier in the year,” the IEA said.The IEA has also lowered its forecast for growth of the first time this year, by 220,000 barrels per day to 2.2m, meaning record demand would be slightly less than previously anticipated.
Brent Futures Top $81 on USD Selloff, Tighter OPEC+ Supply -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange advanced for the third consecutive session on Thursday, sending the international price benchmark above $81 bbl after International Energy Agency and Organization of the Petroleum Exporting Countries forecasted a widening supply deficit on the global oil market in the second half of the year, while an ongoing selloff in the dollar index triggered by a softer inflation print in the United States further boosted the oil complex. U.S. dollar index hit a new 15-month low of 99.425 against a basket of foreign currencies Thursday, extending losses for a sixth consecutive session after the Producer Price Index released Thursday morning offered fresh evidence of easing inflation. PPI, a measure of inflation at the wholesale level, rose at the slowest pace since August 2020, gaining a mere 0.1% in the 12 months ending in June. Figures for May were also revised lower to show the index falling to a negative 0.4% instead of the previously reported 0.3%. PPI measures price changes for produced goods at the factory gate before they reach consumers and therefore are often seen as an early indicator of inflation reflected in the Consumer Price Index. Earlier this week, investors got a glimpse of inflation at the consumer level, with the CPI falling for a 12th consecutive month in June to the lowest level in over two years. What's more, core consumer prices, excluding energy and food prices, fell below a 5% annualized rate for the first time since December 2021, suggesting the disinflationary trend that first started in the goods-producing sectors of the economy has now spread into labor-intensive services. This matters greatly for the Federal Reserve that has stressed the importance of disinflation to take hold in the services sector before the central bank would pause its aggressive rate-hiking campaign. As of Thursday afternoon, 92.4% of investors still expect the Federal Reserve to raise rates by another 25 basis points during the July 26 meeting to a 5.25% by 5.5% target range. However, prospects for further rate increases are now less certain, undermining bullish bets for the U.S. dollar. . On the session, NYMEX August West Texas Intermediate advanced $1.14 to $76.89 bbl and the September Brent contract rallied $1.25 to $81.36 bbl. NYMEX August RBOB futures gained $0.0116 to $2.6786 gallon, and August ULSD futures moved $0.0108 higher to $2.6104 gallon. Also on Thursday, IEA and OPEC released their monthly market reports with both the Pairs-based agency and cartel forecasting a widening supply deficit on the global market despite taking a somewhat different view on demand outlook. IEA in its report downgraded its worldwide oil consumption projection by 220,000 bpd this year to 102.1 million bpd, which is still a record high. In contrast, OPEC revised projected 2023 demand up by about 100,000 bpd from last month's assessment to 102 million bpd, mainly due to higher demand estimated in China for the second quarter. IEA, meanwhile, revised China's demand growth lower.
Oil On Track For Third Weekly Gain Amid Supply Concerns -- Oil prices were little changed on Friday, but were on track for a third weekly gain, drawing support from tighter supply amid issues in Libya and Nigeria and signs of easing U.S. inflation. Benchmark Brent crude futures were virtually unchanged at $81.36 a barrel, while WTI crude futures were down marginally at $76.86. The oil market is expected to be very tight due to declining Russian crude exports and supply disruptions in Libya and Nigeria. Production at Libya's El Feel, Sharara and 108 oilfields was shut on Thursday in a protest by a local tribe against a kidnapping of a former minister. Separately, Shell has suspended loadings of Nigeria's Forcados crude oil due to a potential leak at a terminal, Reuters said citing a spokesperson for its local subsidiary, SPDC. Protests in Libya alone could take away more than 250,000 barrels of oil per day from the market, according to ANZ Research. Meanwhile, traders remain hopeful of higher demand for crude due to easing worries about inflation and interest-rate hikes in the U.S. Weaker-than-expected U.S. consumer price inflation and producer price inflation data released earlier this week spurred hopes that interest rates in the U.S. are very near their peak.
Oil Fades from 3-Month High on Profit-taking as USD Rebounds -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange retreated on Friday pressured by a rebounding U.S. dollar, while all petroleum contracts registered weekly gains amid an improving inflation outlook in the United States and supply disruption in Libya, a major oil producer in northern Africa, where violent protests shut down three of the country's largest oil fields. Investors continue to monitor an evolving situation in Libya amid a sudden escalation of conflict between tribal forces in Benghazi and the United Nations-backed government in Tripoli. Protestors in the southern regions of Libya began shutting down major oil fields on Thursday after an arrest of a former finance minister, Faraj Bumatari, by government forces. "We affirm the continuation of the oil closures, and we may escalate the situation to more than that if our son, Faraj Bumatari, is not released," stated protesters in a released video on social media. The government in Tripoli is yet to comment on the developing situation. As of Friday afternoon, El Feel, Sharara and Waha oil fields remain closed with a combined production of more than 500,000 bpd or 0.5% of global oil supplies currently offline. Before the disruption, Waha and Sharara oil fields produced roughly similar amounts of oil, averaging between 250,000 and 290,000 barrels daily. Most of the oil produced at these two fields has been exported to southwestern Europe, including Spain, Italy, and France. The disruption in Libya comes as major forecasting agencies, including the International Energy Agency and Organization of the Petroleum Exporting Countries, said the global oil market is likely to fall into deeper deficit in the second half of the year. A combination of fewer supplies available from Russia and Saudi Arabia, two of the world's largest oil producers, along with demand gains in the United States and China will result in a 2 million bpd global shortfall between production and demand during the fourth quarter. OPEC in its Monthly Oil Market Report estimated Russian oil production will drop by a staggering 1.28 million bpd from the second quarter to 9.55 million bpd for the third quarter. That would be 750,000 bpd below the 2022 output rate. Meanwhile, Saudi Arabia said it would cut oil production to a multidecade low 9 million bpd in July and August as a unilateral 1 million bpd production cut takes effect. Underlying gains in the oil complex this week is an improving inflation outlook in the United States where the labor market along with consumer prices showed signs of easing. The U.S. Producer Price Index, which measures inflation at the wholesale level, offered fresh evidence on Thursday that inflation is easing across the U.S. economy. PPI last month rose at the slowest pace since August 2020, gaining a mere 0.1% in the 12 months ending in June. Offering further evidence of retreating inflation, the U.S. consumer sentiment index jumped this month to the highest level in nearly three years, according to the bimonthly report released Friday morning by the University of Michigan. All components of the index increased considerably, led by a 19% surge in long-term business conditions and 16% increase in short-run business conditions. "Overall, sentiment climbed for all demographic groups except for lower-income consumers. The sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets," said Surveys of Consumers Director Joanne Hsu. Following the data's release, the U.S. dollar index firmed 0.15% against a basket of foreign currencies to 99.605. Front-month West Texas Intermediate on NYMEX fell $1.47 to $75.42 bbl, and ICE September Brent contract fell $1.49 to $79.87 bbl. NYMEX August RBOB futures declined $0.0349 to $2.6437 gallon, and August ULSD futures eased to $2.5979 gallon, down $0.0125 on the session.
Oil settles on 3rd straight weekly gain after hitting 3-month high; check key triggers for crude next week Even after falling more than a dollar a barrel in the previous session, crude oil benchmarks recorded their their-straight weekly gain as the dollar strengthened and oil traders booked profits from a strong rally fueled by softer US inflation. Last week, oil had been on a record-gaining streak with prices hitting nearly three-month highs with global oil benchmark Brent hovering above $80 per barrel-mark after US inflation data implied rate-hike cycle could be nearing an end in the world's biggest economy.Brent crude futures settled at $79.87 per barrel, down $1.49, or 1.8 per cent on July 14, while the US West Texas Intermediate crude futures fell $1.47, or 1.9 per cent, to settle at $75.42 a barrel. The futures contract structure of the global benchmark Brent indicates the market is tightening and that the Organisation of Petroleum Exporting Countries and its allies (OPEC+) could be succeeding in its aim to support the market. Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a July 19 expiry, settled lower by 0.67 per cent at ₹6,204 per bbl, having swung between ₹6,175 and ₹6,321 per bbl during the session so far, compared to their previous close of ₹6,246 per bbl. US dollar, supply cuts by producers: Key factors driving crude oil:
- -The US dollar index edged higher after hitting a 15-month low during the session, as investors consolidated ahead of the weekend. A stronger greenback reduces oil demand, making crude more expensive for investors holding other currencies.
- -Oil prices gained nearly two per cent on a weekly basis, after supply disruptions in Libya and Nigeria heightened concerns that the markets will tighten in coming months. Several oilfields in Libya were shut down because of a local tribe's protest against the kidnapping of a former minister. Separately, Shell suspended loadings of Nigeria's Forcados crude oil owing to a potential leak at a terminal.
- -The Libya disruption is halting an estimated 370,000 barrels per day (bpd) while the loss from the Nigerian outage is pegged at 225,000 bpd, PVM analyst John Evans told Reuters.
- -Russian oil exports have also decreased significantly and, if this trend continues next week, it would probably drive prices up further since Russian oil exports are set to be reduced by 500,000 bpd in August, according to Commerzbank analysts.
- -Oil prices have now rallied by around 12 per cent in two weeks, primarily in response to supply cuts from top producers Saudi Arabia and Russia. Top producer Saudi Arabia had pledged to extend a production cut of 1 million bpd in August.
- -Official data released last week showed US consumer prices rose modestly in June and registered their smallest annual increase in more than two years as inflation continued to subside. Easing inflation in US provided a boost to prices as it lowered rate-hike concerns on markets.
- -‘’Next week, the rally could resume as easing inflation, plans to refill the U.S. strategic reserve, supply cuts and disruptions could support the market, Rob Haworth, senior investment strategist at US Bank Wealth Management told news agency Reuters. “While oil prices are likely slightly overbought in the very near term, touching the highest levels since early May, the bias appears to be for a grind higher," he added.
US Claims Drone Strike Killed ISIS Leader in Eastern Syria - US Central Command on Sunday said that it killed an ISIS “leader” in a drone strike in eastern Syria that it launched on July 7 and suggested that a civilian may have also been injured in the bombing.“On July 7, US Central Command conducted a strike in Syria that resulted in the death of Usamah al-Muhajir, an ISIS leader in eastern Syria,” CENTCOM said in a press release.The press release said there were no “indications” that civilians were killed in the strike but that CENTCOM was “assessing reports of a civilian injury.” A recent CENTCOM drone strike launched on May 3 killed a civilian in northwest Syria.CENTCOM has been accusing Russia of “harassing” its drones over Syria and said the MQ-9 Reaper drone that launched the July 7 strike was “the same MQ-9s that had, earlier in the day, been harassed by Russian aircraft in an encounter that had lasted almost two hours.”Russia is an ally of the Syrian government based in Damascus, which opposes the US occupation of eastern Syria. Damascus and its allies are all sworn enemies of ISIS and would continue fighting the terrorist group if the US pulled out of Syria.
US Launches Series of Airstrikes in Somalia - US Africa Command (AFRICOM) said Sunday that it launched three airstrikes in Somalia and claimed the bombardment killed 10 al-Shabaab fighters.The command said the strikes were launched in a remote area about 65 miles north of Kismaayo, a port city in southern Somalia. AFRICOM said the strikes were conducted to support Somali government forces who were fighting al-Shabaab on the ground.AFRICOM claimed that its “initial assessment” found no civilians were harmed, although the Pentagon is notorious for undercounting civilian casualties, especially in Somalia, where US operations are shrouded in secrecy.The incident was the first airstrike AFRICOM reported in Somalia since one launched on June 1. However, it’s not clear if the command is reporting every US airstrike in the country. According to the monitoring group Airwars, suspected US airstrikes hit al-Shabaab fighters in Somalia on June 11 and June 16.The US escalated airstrikes in Somalia after President Biden ordered the deployment of up to 500 troops to the country in May 2022. The US-backed Mogadishu-based government launched an offensive against al-Shabaab in September of last year, leading to heavy fighting on the ground and more US airstrikes.
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