2nd largest build of gasoline stores on record: refinery utilization at the lowest since September 2008 (hurricane Ike), refining the fewest barrels in 9 years; rig count at a 40 month low
oil prices finished lower for the sixth week in the past seven despite an agreement between OPEC & Russia to cut a record amount of oil production, as analysts pointed out the cuts were less than half of what was needed to balance supply and demand in the wake of the global COVID-19 imposed economic shutdown... after rising 31.7% to $28.34 a barrel last week on hopes for an end to the Saudi-Russian price war and an agreement to cut supplies, the contract price of US light sweet crude for May delivery opened 8% lower at $26.09 a barrel after the OPEC+ video conference that was originally scheduled for Monday was delayed until Thursday amid an intensifying dispute between Russia and Saudi Arabia over who was to blame for falling crude prices, and despite moving back up to $28.24 during the Monday session on optimism that an agreement to cut production would be reached, faded near the close to end down $2.26 at $$26.08 a barrel.....oil prices rallied in Asia trading early Tuesday, with US crude trading at $27.15, after a Russian exec opined that his country was “very, very close” to an agreement to cut production, but opened at $26.34 in New York on doubts that any production cuts could be enough, and tumbled to $23.63 a barrel after the EIA cut its 2020 oil price outlook by over 20% and lowered its crude production forecasts...oil traded flat early Wednesday after the American Petroleum Institute and the EIA both reported huge crude oil inventory increases, but strengthened late in the session on hopes for a production cut agreement to end the day's trading $1.46, or 6.2% higher at $25.09 a barrel, as Russia signaled willingness to cut their output...oil prices then jumped 12% to trade at $28.36 per barrel early Thursday on a report that Saudi Arabia and Russia had reached a deal to cut as much as 20 million barrels per day, but then tumbled more than 20% in the afternoon after Mexico balked at the cuts they were expected to make, throwing the entire agreement into doubt, while US crude went on to close $2.33, or 9.3% lower at $22.76 per barrel....while US markets were closed Friday due to Good Friday and US crude thus finished the week 19.7% lower, Brent crude, the international benchmark, did trade on Friday and was down nearly 2.5% to $31.82 per barrel, despite the deal that should end the price war between Saudi Arabia and Russia...
on the other hand, natural gas prices finished higher on forecasts for cooler weather and a resumption of Chinese LNG imports... after bouncing off a series of 24 year lows to close at $1.621 per mmBTU last week, the contract price for natural gas for May delivery opened higher and rose 11.0 cents or 6.8%, to settle at $1.731 per mmBTU on forecasts for cooler weather and higher heating demand for the following week than was previously expected...the rally continued uninterrupted on Tuesday, on reports that deliveries of U.S. natural gas to China had resumed after more than a year, as May gas rose 12.1 cents, or 7.0% to $1.852 per mmBTU, the highest close in three weeks...however, a warmer turn in weather models ended the brief rally on Wednesday, as the May contract settled at $1.783 per mmBTU, down 6.9 cents, as the electricity trade group Edison Electric Institute said power demand fell to a 16-year low ...natural gas prices then fell 5 cents, or almost 3%, to $1.733 per mmBTU on Thursday on a bigger-than-expected storage build and long-range forecasts calling for demand destruction due to the coronavirus outbreak, but still ended the week 6.9% higher than the prior week's close...
the natural gas storage report from the EIA for the week ending April 3rd indicated that the quantity of natural gas held in underground storage in the US rose by 38 billion cubic feet to 2,024 billion cubic feet by the end of the week, which lifted our gas supplies to 876 billion cubic feet, or 76.3% higher than the 1,148 billion cubic feet that was in storage on April 3rd of last year, and 324 billion cubic feet, or 19.1% above the five-year average of 1,700 billion cubic feet of natural gas that has been in storage as of the 3rd of April in recent years....the 38 billion cubic feet that were added to US natural gas storage this week was well above the consensus estimate from a survey of analysts by S&P Global Platts for a 25 billion cubic feet addition, and was also above the 25 billion cubic feet of natural gas that have been pulled from natural gas storage during the same week over the past 5 years, and way above the 6 billion cubic feet addition of natural gas to storage during the corresponding week of 2019..
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending April 3rd indicated that a big drop in our oil production and a drop in our oil imports was not enough to offset a near-record pullback in our oil refining, leaving us with a record surplus of oil to add to our stored commercial supplies, the twenty-second addition of oil to storage in the past thirty weeks....our imports of crude oil fell by an average of 173,000 barrels per day to an average of 5,874,000 barrels per day, after falling by an average of 70,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 322,000 barrels per day to 2,833,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,041,000 barrels of per day during the week ending April 3rd, 149,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells fell by 600,000 barrels per day to 12,400,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 15,441,000 barrels per day during this reporting week..
meanwhile, US oil refineries reported they were processing 13,634,000 barrels of crude per day during the week ending April 3rd, 1,263,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a record average of 2,186,000 barrels of oil per day were being added to the supplies of oil stored in the US....so looking at that data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 361,000 barrels per day less than what what was added to storage plus what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (+361,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....
further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,144,000 barrels per day last week, now 8.4% less than the 6,709,000 barrel per day average that we were importing over the same four-week period last year....the 2,186,000 barrel per day addition to our total crude inventories was all added to our commercially available stocks of crude oil, while the quantity of oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported to be down by 600,000 barrels per day to 12,400,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was down by 600,000 barrels per day to 11,900,000 barrels per day, while a 16,000 barrel per day increase in Alaska's oil production to 475,000 barrels per day had no impact on the rounded national total....last year's US crude oil production for the week ending April 5th was rounded to 12,200,000 barrels per day, so this reporting week's rounded oil production figure was still 1.6% above that of a year ago, and 47.1% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 75.6% of their capacity in using 13,634,000 barrels of crude per day during the week ending April 3rd, down from 82.3% of capacity during the prior week, and the lowest capacity utilization rate since September 2008, when the aftermath of Hurricane Ike shut down Texas Gulf Coast refining....hence, the 13,634,000 barrels per day of oil that were refined this week were 15.3% fewer barrels than the 16,100,000 barrels of crude that were being processed daily during the week ending April 5th, 2019, when US refineries were operating at 87.5% of capacity, and also the fewest barrels refined in any week since February 18, 2011....
with the big drop in the amount of oil being refined, gasoline output from our refineries was much lower, decreasing by 1,638,000 barrels per day to a 35 year low of 5,818,000 barrels per day during the week ending April 3rd, after our refineries' gasoline output had decreased by 1,502,000 barrels per day over the prior week....after those two big drops in gasoline output, our gasoline production was 42.8% lower than the 9,813,000 barrels of gasoline that were being produced daily over the same week of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 16,000 barrels per day to 4,982,000 barrels per day, after our distillates output had increased by 128,000 barrels per day over the prior week...but even after this week's increase in distillates output, our distillates' production for the week was still 1.1% less than the 5,038,000 barrels of distillates per day that were being produced during the week ending April 5th, 2019....
even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week rose for the 2nd time in 10 weeks and by the second most in history, rising by 10,497,000 barrels to 257,303,000 barrels during the week ending April 3rd, after our gasoline supplies had increased by 7,524,000 barrels over the prior week...our gasoline supplies increased this week because the amount of gasoline supplied to US markets decreased by 1,594,000 barrels per day to 5,065,000 barrels per day, indicating the lowest gasoline demand on record, while our exports of gasoline rose by 97,000 barrels per day to 770,000 barrels per day and our imports of gasoline fell by 243,000 barrels per day to 493,000 barrels per day....after this week's big inventory increase, our gasoline supplies were 12.3% higher than last April 5th's gasoline inventories of 229,129,000 barrels, and roughly 10% above the five year average of our gasoline supplies for this time of the year...
with the increase in our distillates production, our supplies of distillate fuels increased for the first time in 12 weeks and for the 6th time in 27 weeks, rising by 476,000 barrels to 122,724,000 barrels during the week ending April 3rd, after our distillates supplies had decreased by 2,194,000 barrels over 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 100,000 barrels per day to 3,807,000 barrels per day, and because our exports of distillates fell by 206,000 barrels per day to 1,293,000 barrels per day and because our imports of distillates rose by 58,000 barrels per day to 185,000 barrels per day....but even after this week's inventory increase, our distillate supplies at the end of the week were still 4.2% below the 128,053,000 barrels of distillates that we had stored on April 5th, 2019, and about 12% below the five year average of distillates stocks for this time of the year...
finally, with the near-record pullback in our oil refining and the big drop in exports, our commercial supplies of crude oil in storage rose for the twenty-third time in forty weeks and for the thirty-third time in the past 52 weeks, increasing by a record 15,177,000 barrels, from 469,193,000 barrels on March 27th, 484,370,000 barrels on April 3rd, the largest increase on record....but even after 11 straight increases, our crude oil inventories were just 2% above the five-year average of crude oil supplies for this time of year, but 40.1% higher than the prior 5 year (2010 - 2014) average of crude oil stocks as of the first Friday in April , with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels, and continued rising from there....since our crude oil inventories have generally been rising over the past year and a half, except for during this past summer, after generally falling until then through most of the prior year and a half, our crude oil supplies as of April 3rd were 6.1% above the 456,550,000 barrels of oil we had in commercial storage on April 5th of 2019, and 13.0% above the 428,638,000 barrels of oil that we had in storage on April 6th of 2018, while at the same time remaining 9.2% below the 533,377,000 barrels of oil we had in commercial storage on April 7th of 2017...
This Week's Rig Count
the US rig count decreased for the 25th time in the past 30 weeks during the short week ending April 9th, and is now down 44.4% from the interim high at end of 2018 (note that because of the Good Friday holiday, this week's rig count was released a day early and hence only covers six days)....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 62 rigs to 602 rigs this past week, which was the least rigs deployed since December 2, 2016, and hence is a 40 month low for the US rig count...that total was also down by 420 rigs from the 1022 rigs that were in use as of the April 12th report of 2019, and 1,327 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business.....
the number of rigs drilling for oil decreased by 58 rigs to 504 oil rigs this week, which was also the least oil rig activity in 40 months, 329 fewer oil rigs than were running a year ago, and less than a third of the rigs than the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 4 to 96 natural gas rigs, which was the least number of natural gas rigs active since October 7th of 2016, and hence was a new 42 month low for natural gas drilling, down by 93 gas rigs from the 189 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, and one in Lake County, California... a year ago, there were no such "miscellaneous" rigs deployed..
the Gulf of Mexico rig count was unchanged at 18 rigs this week, with 17 of those rigs drilling for oil in Louisiana's offshore waters and one drilling for oil offshore from Texas...that's five less than the rig count in the Gulf a year ago, when 20 rigs were drilling offshore from Louisiana and three rigs were operating in Texas waters...there are no rigs operating offshore elsewhere at this time, nor were there a year ago, so the Gulf rig count is equivalent to the national rig count, just as it has been all winter...
the count of active horizontal drilling rigs decreased by 48 rigs to 545 horizontal rigs this week, which was the fewest horizontal rigs active since January 13th 2017, and hence is a 39 month low for horizontal drilling...it was also 344 fewer horizontal rigs than the 889 horizontal rigs that were in use in the US on April 12th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was down by six to 35 directional rigs this week, and those were also down by 43 from the 78 directional rigs that were operating during the same week of last year....in addition, the vertical rig count was down by 8 to 22 vertical rigs this week, and those were down by 33 from the 55 vertical rigs that were in use on April 12th of 2019...
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 April 9th, the second column shows the change in the number of working rigs between last week's count (April 3rd) and this week's (April 9th) count, the third column shows last week's April 3rd active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running 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 12th of April, 2019...
as you can see, this weeks basin totals indicate a decrease of 49 rigs, one more than the decrease of the horizontal rig count nationally, which thus means that a horizontal rig was added in a basin not tracked separately by Baker Hughes...to account for the 35 rig decrease in the Permian basin, we'll again start in Texas, where we note that 28 rigs were pulled out of Texas Oil District 8, or the core Permian Delaware, while a rig was actually added in Texas Oil District 7C, or the southern Permian Midland...that means that the Permian in Texas saw a total reduction of 27 rigs, which means that the 7 rigs that were shut down in New Mexico had been drilling in the western Permian Delaware, and still leaves us a rig short of the 35 Permian rigs that were stacked this week...assuming those totals are accurate, it's possible that a rig might have started up elsewhere in New Mexico, such as in the San Juan basin, while 8 Permian rigs were shut down in the state, or it's also possible that one of the three rigs pulled out ofTexas Oil District 1 could have been in the Val Verde basin along the Rio Grande, an area shown to be in the easternmost Permian on some maps; either way, it's a shift we hadn't seen previously...
elsewhere in Texas, two rigs were pulled from Texas Oil District 2, one rig was removed from Texas Oil District 3, and two more rigs were stacked in Texas Oil District 4, which together with the District 1 rig losses would more than account for the 6 rigs pulled out of the Eagle Ford formation...Texas Oil District 10 had one rig stacked, accounting for the decrease in the Granite Wash basin, and Texas Oil District 6 was again down a rig, thus accounting for the Haynesville shale natural gas rig loss, while the 25 Haynesville shale rigs deployed in northwest Louisiana again remained unchanged...
in other states, the two rig loss in the Williston shale includes 1 rig from North Dakota and 1 rig from Montana, and the two rigs pulled out of the Niobrara chalk were most likely from Colorado, while the 2 rigs pulled out of the Cana Woodford are the only named basin rigs that came out of Oklahoma, so there was another rig shut down in a basin not tracked separately by Baker Hughes...in addition, rig cutbacks you see above in Alaska, California, Utah, and Wyoming all came out of basins that Baker Hughes doesn't itemize...finally, to account for the decrease of four rigs seeking natural gas, we start with the Texas Haynesville rig and then add the rig pulled out of West Virginia's Marcellus, and then find that the other two natural gas rigs were also removed from one of those "other basins" not tracked separately by Baker Hughes...
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BG schools join consortium to get pipeline money - Two county school districts have addressed a resolution to join a pipeline consortium. The Bowling Green City Schools Board of Education voted in March to join the Ohio School Pipeline Coalition. The school board at Otsego Local Schools discussed the resolution at length in February and tabled it. “We are going to unite as one and hopefully keep the values where they proposed them to be initially,” said Bowling Green Treasurer Cathy Schuller at the March 19 meeting. The cost of membership in the consortium is $500 per year. The consortium will allow districts to “band together and basically create a PAC that will lobby to try to keep the values of the pipeline where they’re at,” said Superintendent Francis Scruci earlier this week. “When you look at potentially losing 50% of the value, $500 to have people lobby for you is a good investment,” he said. According to the resolution, the purpose of the pipeline coalition is to further the interests of the member boards of education by addressing the issues related to the reduction in property tax revenue stemming from natural gas transmission lines. It also will take any reasonable steps to protect the member boards of education, and perform related functions in compliance with Ohio law. The Rover and Nexus pipelines, which both traverse through Wood County, have appealed the valuation of their projects, cutting the initial amount expected to be sent to school districts. Schuller said this week that based on communication in December from the county auditor, the Rover appealed value is 54% of the original value. The revenue cited in October by the Wood County Auditor’s Office was $3.6 million. Schuller said the appealed amount is closer to what was cited in 2015, or $1.93 million. Otsego, after lengthy discussion, tabled joining the coalition. Plans to address the resolution in March were put on hold after coronavirus closed the schools. At their Feb. 27 meeting, Otsego school board members heard Superintendent Adam Koch describe the coalition as a way to work together “to make sure that the pipeline is fairly taxed.” Additional costs would be based on a district’s valuation.
Lawsuit stops virtual meeting on proposed injection well site in Belmont County— Attorney Michael Shaheen has won a complaint for injunctive relief against Ohio Department of Natural Resources on behalf of coal tycoon Bob Murray, who owns property near a proposed injection well site between U.S. 40 and State Route 331. Omni Energy Group seeks a permit to install two saltwater injection wells there, and the location has generated concern among residents, businesses, county commissioners, and Richland Township trustees."So, many local people, not just my client, Mr. Murray, but so many local constituents, residents of Richland Township, Belmont County at large, are invested in this situation. When I say invested, I mean emotionally health-wise, not financially. "At the county's request, ODNR agreed to hold an in-person public meeting. However, because of the COVID-19 pandemic, the meeting was set to take place via phone or computer.ODNR says the general assembly and the governor authorized the use of technology to satisfy public meeting guidelines.However, Friday’s scheduled meeting (at 12:30 p.m.), which was to be limited to 200 participants who must sign up to speak beforehand, will not happen, after a decision made by Judge John Vavra. Shaheen, Murray, commissioners and township trustees all reached out to ODNR voicing their opposition.
For the Ohio River Valley, an Ethane Storage Facility in Texas Is Either a Model or a Cautionary Tale - The Trump administration and industry leaders have pointed to a major petrochemical storage complex outside Houston as a model for the upper Ohio River Valley. If only they could find a place like Mont Belvieu, Texas, where geological features allow for large-scale underground storage of the chemicals used to make plastic products, there could be an economic resurgence to follow the collapse of steel and coal. Tens of thousands of jobs would follow. With enough storage of ethane from thousands of existing natural gas fracking wells in the Appalachian region's Marcellus and Utica shale deposits, the argument goes, several multi-billion-dollar plastic manufacturing plants could be built, lifting economic fortunes across four states: Pennsylvania, West Virginia, Ohio and Kentucky.But if Mont Belvieu—a massive chemical distribution center for what has been a booming Gulf Coast plastics and petrochemical industry—has been a model for those promoting an Appalachian petrochemical renaissance, it also serves as a cautionary tale to those who would rather the Appalachian region reject a boom-or-bust fossil fuel future.An examination of the chemical plants, pipelines and other gas handling equipment that sit atop the massive stores of natural gas liquids at Mont Belvieu reveals a history of fires, explosions, leaks, excess emissions, fines for air and water pollution violations, and an oversized carbon footprint."We have the evidence that this is harmful, and Mont Belvieu is the prime example of that," said Dustin White, project coordinator with the Ohio Valley Environmental Coalition, based in West Virginia. "The intention is to have a massive petrochemical buildout, and it's outlandish they want to build it here, especially in an area that already has major health issues due to existing fossil fuel industries." A January report meant as a warning to Appalachia, by the Environmental Integrity Project, a Washington-based watchdog group founded by former EPA staff, found that the Mont Belvieu complex was marked by multiple explosions, fires, evacuations and fatalities throughout the 1980s and 1990s, and continues to be a major polluter. The largest Mont Belvieu operator is subject to ongoing federal and state enforcement actions, InsideClimate News found."Communities in Appalachia are at risk from a plan for an aggressive expansion of the petrochemical and plastics production industry, including construction of a massive new ethane storage hub," the report concluded. "Area decision makers and residents need to consider the serious hazards that have arisen at a similar development complex in Mont Belvieu, Texas."
Coronavirus could increase interest in gas-driven Pennsylvania petrochemical growth - Pennsylvania Business Report - The vision of Pennsylvania becoming a center of the U.S. petrochemical industry could get a fresh boost from, of all things, the coronavirus.The high-profile supply squeeze on personal protective equipment (PPE) nationwide has the federal government seriously looking at shortening the supply chain for items such as respirator masks, gloves, face shields and other high-demand products made largely of plastic. And business leaders say Pennsylvania would be the perfect location for new PPE factories that would be a day’s drive from many major U.S. cities rather than a slow boat voyage from Asia.“The front line of our defense is chemicals,” Tom Gellrich, founder and CEO of TopLine Analytics, said at the first virtual edition of the “Think About Energy” series.George Stark, director of External Affairs for Cabot Oil & Gas and moderator of the panel, agreed and added, “We need to be thinking about on-shoring these industries again.” Healthcare safety equipment is just one of the product fields that would conceivably flourish in Pennsylvania thanks to an accompanying increase in the production of plastics and other chemicals using gas from the Appalachian Basin, particularly the Marcellus Formation. The proximity of Pennsylvania to industrial customers in the Northeast and Midwest should make the region a tempting location for new plants that manufactures not only PPE but scores of other products unrelated to coronavirus that depend on access to low-cost raw materials.
Pipeline Opponents Raise Coronavirus Concerns - Construction of the Mountain Valley Pipeline could resume this spring, but opponents of the project say crews from other states should not be coming to Virginia and West Virginia during a health emergency. Mountain Valley Pipeline suspended construction last year, and it still lacks key federal permits that would allow the work to resume, but the company says it still intends to complete the project by the end of this year. At a time when Virginians have been ordered to stay home, and many businesses have shut down to prevent the spread of the coronavirus, opponents of the project are saying, not so fast. 'They're coming from states in many cases that have higher COVID-19 rates than we do, like Louisiana where a lot of pipeline workers come from," said pipeline opponent Diana Christopulos. In West Virginia, the group Preserve Monroe is asking Governor Jim Justice to issue a stay that would prevent transient pipeline construction crews from entering the state. In a news release, the group described the workers' return as a "recipe for disaster." "This issue is not about whether the pipeline should be finished or should not be finished," said activist and landowner Maury Johnson. "This issue is what risk are they bringing to our rural communities." A spokesperson for MVP said the project team is focusing on environmental activities, including erosion and sediment controls that are essential requirements. Natalie Cox said the company can balance the need for environmental protection while operating under COVID-19 restrictions and guidelines. Diana Christopulos says it's not the work that concerns her the most. "They would be living here. They would be eating here. They would be grocery shopping here. They would be getting their healthcare here," she said. "Why can't they fall under the same kind of rules that the rest of us do?" she asked.
Contaminated Pipelining Soils from WV Delivered Illegally to KY - — A 2019 car crash lawsuit has revealed a conspiracy to illegally dump contaminated soil at the Big Run Landfill, according to a recently amended complaint.The lawsuit charges three environmental clean-up companies with civil conspiracy, fraud negligence. Two roadside assistance companies were also charged in the suit.The complaint alleges Clean Harbors Environmental Services Inc. and Valicor Environmental Services, LLC knowingly sent a truckload of contaminated soil from Poca, West Virginia, to the landfill located in Ashland on May 15, 2019. After the truck experienced a blowout on I-64 near Milton, West Virginia, it experienced brake failure, the complaint states. Once it made its way to exit 181 in Kentucky, the complaint states its brakes failed again and slammed into a vehicle with two teenagers inside.The amended complaint sheds light on why the 42,000-pound rollback truck continued its trek after already experiencing brake failure about 20 miles from where it left.Clean Harbors was contracted with disposing soil contaminated by the Mountain Valley Pipeline project in Braxton County, West Virginia, a more than two-hour drive from Boyd County, the complaint states. The soil was dirtied with fracking fluid, which can include lead, radium, uranium, methanol, mercury, hydrocholoric acid and formaldehyde, according to the suit. Due to the nature of the waste, it needed to be tested prior to being dumped at any landfill, the suit further elaborates. Initially, the load was stored by Safety-Kleen the suit states. Safety-Kleen nor Clean Harbors tested the soil, the complaint alleges.At the time, the Big Run Landfill had an agreed order that prevented it from accepting any waste created in West Virginia outside of Cabell and Wayne counties, the suit noted. The landfill could also not accept any contaminated soil without a test being run on it first, according to the suit. The suit alleges various companies cooked the books to keep the load legal on paper so the dump would accept it.
New York State Codifies Fracking Ban in Budget | NRDC - The New York State legislature permanently banned fracking in its Fiscal Year 2021 Budget yesterday—one of several budget items that prioritize the health and future of New York’s people and environment. This measure comes five years after Governor Andrew Cuomo initially banned fracking in New York State, which, while monumental, was accomplished through executive action, leaving it vulnerable to jettison by future governors. Codifying the ban makes it permanent, protecting generations to come. Fracking is a dangerous process that uses a mixture of water, salt, and thousands of toxic chemicals to extract fossil fuels like oil and gas from the earth. The thousands of chemicals used in fracking are harmful to human health, linked to cancer, mutations, and other adverse effects. The fracking process releases toxic pollutants into the air and sometimes drinking water, and is therefore especially damaging to people living in nearby shalefields. On an even larger scale, fracking fuels the climate crisis, releasing methane at all stages of the gas extraction, transmission, and combustion process. Methane is a particularly dangerous greenhouse gas that is 85 times more potent than carbon dioxide over a 20-year period. By memorializing the fracking ban in state law, New York is demonstrating leadership against fossil fuels and making way for a clean energy transition. New York’s new ban on fracking also institutes a moratorium on gelled propane fracking. While fracking typically refers to hydraulic fracturing, which uses water as the base fluid, gelled propane fracking uses gelled propane or liquefied petroleum gas as its base. Gelled propane fracking is as harmful to human and environmental health as hydraulic fracking. While the new law does not implement an outright ban on gelled propane fracking, it puts New York on track to do so in the future, and halts gelled propane fracking activity for the time being. While fracking itself is banned in New York, the fight is not over—gas pipelines still crisscross the state. The fight against proposed pipeline projects like the Williams Pipeline, which would transport fracked natural gas from Pennsylvania to New York, continues. Williams faces strong community opposition and rebukes from both New York and New Jersey, but both states still must deny the pipeline critical certifications under the Clean Water Act to block construction from moving forward.
LNG terminal hearing postponed by virus » An April 15 adjudicatory hearing on a proposed liquefied natural gas (LNG) terminal on the Delaware River in New Jersey has been postponed due to the coronavirus, Kallanish Energy reports. The quasi-judicial hearing on the plan by developer Delaware River Partners had been arranged by the Delaware River Basin Commission, a government agency that oversees the river. A hearing officer will hear evidence and then decide whether to recommend that the commission uphold or reject its approval of the project last June. The commission can accept or reject the recommendation. The public will not be allowed to speak during the multi-day hearing that was to have been held in Mercerville, New Jersey. The Delaware Riverkeeper Network had argued that the commission did not allow enough time for public comment in approving the project that would allow two tankers to dock at Gibbstown on the Delaware River in New Jersey’s Gloucester County. Those tankers would load LNG that had been moved about 200 miles by truck and rail from the Marcellus Shale in northeast Pennsylvania under the plan by Delaware River Partners and its parent company, New Fortress Energy LLC. The company received a special federal rail permit to be allowed to move LNG by rail in specially designed rail cars.
State advisory council members ask Whitmer to slow Enbridge tunnel permit On Wednesday, Enbridge submitted an application for a permit to build the Line 5 tunnel. The planned bedrock tunnel would encase the replacement for 67-year-old oil pipelines that currently sit on the lakebed beneath the Straits of Mackinac. Last week, tribal leaders raised the alarm about the state reviewing permits, holding public comment or engaging in tribal consultation during the COVID-19 pandemic. Tribal governments in the Straits area are unilaterally opposed to the tunnel. On Sunday, more than half the members of the Michigan Advisory Council on Environmental Justice sent a letter to Governor Gretchen Whitmer, asking her to use executive action to extend deadlines for public comment and participation on Enbridge's permit. "Starting the permitting process for this tunnel is inappropriate at a time when many tribal government offices are shut due to COVID-19," said the letter. "During this time of unprecedented crisis, it will be impossible for important stakeholders to adequately participate in the permit process. This not only includes tribes, but citizens, conservation organizations, businesses, and city governments." On Thursday, the Governor's Office had not yet replied to the letter. However, the Department of Environment, Great Lakes and Energy said the pandemic may slow the process down. EGLE has 30 days to review the application before anything happens, said spokesman Scott Dean. “It’s difficult to comment what the next steps will be in terms of timing," he said. "It’s a very dynamic situation with the pandemic.” According to a press release on the Canadian company's website, Enbridge still expects the replacement segment of the lines to be operational by 2024. “The Great Lakes Tunnel Project unequivocally is the most practical, long-term solution to delivering a secure energy supply to the region while enhancing environmental safeguards in the Straits,” said Amber Pastoor, Enbridge Tunnel Project Manager. “The existing Line 5 was designed to last and has served this region well for more than 60 years. With today’s technology, the Great Lakes Tunnel Project will help deliver an enhanced level of safe, reliable energy, along with measures to protect our waterways for generations.”
Dominion prepares to file Virginia IRP without natural gas buildout - Dominion Energy asked regulators for permission on Thursday, ahead of the filing of its 2020 Integrated Resource Plan (IRP), to avoid certain requirements that will no longer apply, such as a comprehensive analysis of new natural gas or nuclear power build-outs. The utility notified Virginia regulators that a natural gas build-out would not be viable in the state without "a threat to reliability or security of electric service." Dominion signaled the change in response to the 100% clean energy mandate by 2045 established by the Virginia Clean Economy Act, but the request on Thursday is "a procedural step to remove some outdated reporting requirements," according to a spokesperson. This marks a big shift for Dominion, the Chesapeake Climate Action Network (CCAN) noted, as its previous IRPs included scenarios with up to 10 new combined-cycle or combustion turbine facilities. Other environmental groups believe the lack of need for gas infrastructure could also extend to the construction of the Atlantic Coast Pipeline. In Virginia, IRPs are filed every two years to plan for for the next 15 years, and the 2020 IRP reflected several regulatory and legislative changes, from increased clean energy state measures to looser federal power plant regulations. Dominion wants to stop incorporating certain modeling and analysis as required under the Clean Power Plan, which the U.S. Environmental Protection Agency replaced in 2019 with the Affordable Clean Energy rule. Dominion said regulatory staff read this proposal and does not oppose its request to stop fulfilling requirements related to the Clean Power Plan. The State Corporation Commission (SCC) also asked Dominion in 2015 to include a risk analysis of constructing new natural gas and nuclear power generation. In the last five years, Dominion built several new gas units in the Greensville, Warren and Brunswick counties. But in 2015, clean energy advocates "were able to get the [SCC] to say, 'Hey, you need to do more assertive and more comprehensive risk assessments of these new gas builds,'" Amanda Levin, policy analyst at the Natural Resources Defense Council (NRDC), told Utility Dive. The utility also asked to stop modeling how competitive an addition of North Anna 3, a new nuclear unit, would be, as the company "paused material development activities" for the project, according to its request on Thursday.
Law creates barriers for Virginia utilities seeking to recoup gas capacity costs — A new Virginia law will require state regulators to scrutinize utility requests to pass on the cost of securing additional natural gas pipeline capacity to electricity ratepayers, potentially creating a barrier to infrastructure projects. Governor Ralph Northam signed Virginia House Bill 167 into law on April 6 after it passed in both chambers of the state legislature with bipartisan support. The law empowers the State Corporation Commission to reject an electric power utility's request to recover the cost of entering into a contract for new pipeline capacity. It requires utilities to prove they need additional fuel capacity to maintain reliable service and that reserving gas pipeline capacity is the lowest-cost option.The legislation comes amid a push to reassert the SCC's authority over electric utilities, including Dominion Energy. The bill's chief sponsor, Republican Delegate Lee Ware, has also co-sponsored the Fair Energy Bills Act, which would unwind a 2015 freeze on base rates and allow the SCC to order ratepayer refunds when utilities generate excess profits. Environmentalists and pipeline opponents said the law would prevent companies from charging Virginia ratepayers for pipelines that may become stranded assets in light of the Clean Economy Act. That bill, which is awaiting Northam's signature, would require Dominion, Virginia Electric and Power Co., and competitive electric power providers to obtain 100% of the power they supply from renewable or carbon-free sources by 2045. The law would not prevent pipeline construction, Appalachian Voices said, but it would shift the risk of pipeline investment from ratepayers to developers. Historically, the SCC has allowed utilities to recover the costs of reserving capacity on gas pipelines, even when they do not utilize that capacity. Under the new law, when electric utilities ask to recoup those costs, they must first show that they cannot maintain reliable service without securing additional fuel supplies. They must then identify how much new fuel capacity they require and when they will need it. Next, they will have to study all available options, including alternatives to gas capacity contracts. Finally, they must demonstrate that gas capacity contracts are the lowest-cost option, taking into account both fixed and variable costs and projections for future utilization of the capacity.The SCC's Division of Public Utility Regulation does not employ staff capable of conducting the reviews, and, therefore, the commission will have to hire consultants to review company filings. The consultant will make a recommendation to the SCC on whether the utility has satisfied each requirement "by a preponderance of the evidence." The law applies to proceedings for recovery of fuel costs where the utility is seeking to recoup the expense of entering into a natural gas capacity contract with a term of 10 years or more for supplies of at least 250,000 Dt/d.
FERC has a big pipeline problem - Virginia Mercury - The Federal Energy Regulatory Commission has a pipeline problem. A really, really big one. According to publicly available information on FERC’s website, the commission approved no fewer than 46 onshore gas pipeline “mega-projects” from 1997 to 2019. These largest-of-the-large pipeline projects consist of gas pipelines measuring 24 to 42 inches in diameter, with over 100 miles of new pipeline. FERC’s most productive years during this time period were 2007 and 2017, when the commission approved nine and eight pipeline mega-projects, respectively. What immediately stands out is how notorious the class of 2017 is in terms of environmental impacts and operational risks. The roster is a veritable who’s who of fracked gas behemoths, including the Mountain Valley Pipeline (MVP), Atlantic Coast Pipeline (ACP), and Rover Pipeline, among others. It seriously calls into question FERC’s understanding, and exercise, of its role as a true “regulatory” body. The Rover Pipeline is one of the most environmentally destructive gas pipelines in U.S. history, having incurred several million dollars in fines for environmental violations during construction in Ohio and West Virginia. In spite of that, the Rover Pipeline, unlike the MVP and ACP, was completed and is currently in service. The MVP continues to implode under its second project-wide stop work order – it is $2 billion over budget and two years behind schedule – and is awaiting the outcome of multiple court cases and agency permit review processes. The ACP is in extremis. To resume construction, the ACP first needs a favorable verdict in a case before the U.S. Supreme Court (one which will also impact the MVP). Then it will need a veritable cornucopia of other state and federal permits to be reissued. However, the devil is in the details. The final environmental impact statements for the MVP, ACP, and Rover pipelines are sobering documents. The damages and risks outlined are a strong indictment of the Kafkaesque process FERC employs to approve – indeed, to rubberstamp – interstate gas pipelines in the U.S. They clearly demonstrate FERC is not performing its most basic regulatory duty.
FACTBOX: Coronavirus keeps US gas oversupplied as LNG demand wanes | S&P Global Platts Onshore domestic and export prices for US natural gas continue to hover just above record lows this week as strong production outpaces demand. Anticipated cuts in associated gas production – which could range between 3 Bcf/d and 15 Bcf/d in April, May and June – could help offset demand destruction related to the coronavirus pandemic, S&P Global Platts Analytics forecasts show. With gas supply expected to tighten through the fourth quarter, forwards prices at the Henry Hub, Appalachian benchmark Dominion South and the Permian Basin's Waha hub have hit annual highs in recent trading.In the global market, continued demand weakness and low import prices in Europe and Asia could keep higher-priced Henry Hub-linked exports out of the money, potentially limiting utilization rates at US LNG export terminals as early as the third quarter."Fundamentals are now starting to point in a bearish direction in Asia, especially outside of China," said Jeffrey Moore, Platts Analytics manager for LNG in Asia, during a Platts webinar Wednesday. "There simply is less demand available within Asia than what we expected at the beginning of the year."Moore added, "It's our expectation that downward pressure will remain on spot prices because there is so much supply in the market." **Export prices for LNG shipped FOB from the US Gulf Coast were assessed Wednesday at $1.60/MMBtu, up 30 cents from a record low in late March.**Import prices for LNG delivered to Northeast Asia are hovering just above record lows, with Platts JKM assessed Wednesday at $2.40/MMBtu. **US Henry Hub cash prices traded Wednesday near $1.80/MMBtu; on April 3 the benchmark index tumbled to a 21-year low at $1.45/MMBtu.
U.S. natgas futures rise near 7% on cooler forecasts - (Reuters) - U.S. natural gas futures rose almost 7% on Monday on forecasts for cooler weather and higher heating demand next week than previously expected. "Today’s gains are led by a shift to stronger demand brought by cooler weather forecasts," said Daniel Myers, market analyst at Gelber & Associates in Houston. "If it materializes, the spell of April chill will still have enough bite to significantly restrain the first month of storage injections." Front-month gas futures for May delivery on the New York Mercantile Exchange rose 11.0 cents, or 6.8%, to settle at $1.731 per million British thermal units. Despite the increase, gas was still less than 20 cents over the $1.552 settle on April 2, its lowest close since August 1995. Even before the coronavirus started to cut global economic growth and energy demand, gas was already trading near its lowest in years as record production and months of mild winter weather enabled utilities to leave more fuel in storage, making shortages and price spikes unlikely. Gas futures, however, are trading much higher for the balance of 2020 and calendar 2021 on expectations demand will rise in coming months after governments loosen travel and work restrictions once the spread of coronavirus slows. As forward prices rise, speculators have been cutting their short positions on the NYMEX and Intercontinental Exchange. Last week, their net shorts fell for a fifth week in a row to their lowest since May 2019, according to data from the Commodity Futures Trading Commission. With cooler weather coming, data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, will rise from an average of 94.0 billion cubic feet per day (bcfd) this week to 100.3 bcfd next week. That compares with Refinitiv's forecasts on Friday of 94.6 bcfd this week and 97.9 bcfd next week. The amount of gas flowing to U.S. LNG export plants edged up to 8.2 bcfd on Sunday from a two-week low of 8.0 bcfd on Saturday, according to Refinitiv. That compares with an average of 8.9 bcfd last week due to a reduction at Cheniere Energy Inc's Sabine Pass export plant in Louisiana for pipeline work.
U.S. natgas futures jump to three-week high on cool forecasts -(Reuters) - U.S. natural gas futures jumped for a third day in a row to a three-week high on Tuesday on a confirmation of forecasts for cooler weather and higher heating demand next week. Traders noted that increase came despite lower liquefied natural gas (LNG) exports and higher gas production. Front-month gas futures for May delivery on the New York Mercantile Exchange rose 12.1 cents, or 7.0%, to settle at $1.852 per million British thermal units, their highest in three weeks. That put the front-month up about 21% over the past three days. Just last week the contract fell to its lowest since August 1995. Even before the coronavirus started to cut global economic growth and energy demand, gas was already trading near its lowest in years as record production and months of mild winter weather enabled utilities to leave more fuel in storage, making shortages and price spikes unlikely. With cooler weather coming, data provider Refinitiv projected gas demand in the U.S. Lower 48 states, including exports, will rise from an average of 93.3 billion cubic feet per day (bcfd) this week to 99.8 bcfd next week. That compares with Refinitiv's forecasts on Monday of 94.0 bcfd this week and 100.3 bcfd next week. The amount of gas flowing to U.S. LNG export plants, meanwhile, slipped to a near three-week low of 7.8 bcfd on Monday from 8.2 bcfd on Sunday, according to Refinitiv. That compares with an average of 8.9 bcfd last week due to reductions at Cheniere Energy Inc's Sabine Pass in Louisiana and Corpus Christi in Texas. Unlike the drop in energy use seen around the world so far, U.S. gas use has not yet shown much of an impact from the coronavirus. Analysts, however, expect to see production and demand drop in the second quarter. Energy Aspects projected industrial consumption would drop in the second quarter by 2.1 bcfd from the same period last year due to factory closures and lower manufacturing capacity utilization. The U.S. Energy Information Administration projected gas production and demand will drop in 2020 and again in 2021 from record highs in 2019 as steps to slow the spread of the coronavirus cut economic activity and energy prices.
UPDATE 1-U.S. natgas futures fall on forecast for less cool, big storage build - (Reuters) - U.S. natural gas futures fell almost 4% on Wednesday on midday forecasts calling for a little less cool weather over the next two weeks than earlier expected and analyst forecasts that last week's storage build was much bigger than usual. In addition, electricity trade group Edison Electric Institute (EEI) said power demand fell last week to a 16-year low EEI-. Analysts said steps to slow the spread of coronavirus reduced demand from commercial and industrial companies, as offices closed and factories run at lower capacities. Front-month gas futures for May delivery on the New York Mercantile Exchange fell 6.9 cents, or 3.7%, to settle at $1.783 per million British thermal units. The fall came after three days of gains that boosted the front-month by 19% on forecasts for cooler weather in mid April. Last week, the contract fell to its lowest since August 1995. Even before the coronavirus started to cut global economic growth and energy demand, gas was already trading near its lowest in years as record production and months of mild winter weather enabled utilities to leave more fuel in storage, making shortages and price spikes unlikely. Gas futures for the balance of 2020 and calendar 2021, meanwhile, are trading much higher than the front-month on expectations demand will jump in coming months as the economy recovers with the loosening of travel and work restrictions as the spread of the new coronavirus slows. The amount of gas flowing to U.S. liquefied natural gas export plants, meanwhile, edged up to 8.0 bcfd on Tuesday from a three-week low of 7.8 bcfd on Monday, according to Refinitiv. That compares with an average of 8.9 bcfd last week due to reductions at Cheniere Energy Inc's Sabine Pass in Louisiana due to a pipeline upgrade. Gas production in the Lower 48 states slipped to a two-week low of 92.5 bcfd on Tuesday from 93.2 bcfd on Monday, according to Refinitiv. That compares with an average of 93.1 bcfd last week and an all-time high of 96.5 bcfd on Nov. 30.
US working natural gas in underground storage rises 38 Bcf: EIA - The natural gas injection season started with a bang during the week ending April 3 as storage fields added 38 Bcf, well above the S&P Global Platts survey calling for a 25 Bcf build, prompting the NYMEX Henry Hub May contract to fall, reversing gains made earlier in the week. Storage inventories increased to 2.024 Tcf, the US Energy Information Administration reported Thursday morning. The injection also was above the 6 Bcf injection reported during the corresponding week in 2019 as well as the five-year average, which also comes to a 25-Bcf build. It was also 9 Bcf more than the Platts Analytics storage model, which underestimated the build in the South-Central region by 7 Bcf. Modeling errors for the US Gulf Coast have increased since mid-March, suggesting current models are underestimating demand destruction from the coronavirus pandemic. Industrial demand, given its size and capacity, would be the most obvious driver, but residential and commercial demand also is likely playing a role, according to Platts Analytics. Storage volumes now stand 876 Bcf, or 76%, above the year-ago level of 1.148 Tcf and 324 Bcf, or 19%, above the five-year average of 1.7 Tcf. With the injection season now underway, the natural gas market is in a precarious position, according to Platts Analytics, because of the coronavirus outbreak and oil price war. Demand destruction is nearly certain this summer. So too are declines in associated gas production as oil producers lay down rigs across the Permian Basin. The NYMEX Henry Hub May contract slipped 12 cents to $1.73/MMBtu in afternoon trading, following the release of the storage report. However, prices were up about 1 cent across the balance-of-summer Henry Hub contract strip, now pricing in at about $2.04/MMBtu. The winter strip rose about 3 cents to average $2.74/MMBtu. Platts Analytics' supply and demand model currently expects a 57 Bcf addition to US storage for the week ending April 10, which would be nearly double the five-year average build. US-level heating degree days dropped 17% for the week in progress, cutting into residential and commercial demand across the US as storage fields shift to injections.
UPDATE 2-U.S. natgas falls 3% big storage build, coronavirus demand destruction outlook (Reuters) - U.S. natural gas futures fell about 3% on Thursday on a bigger-than-expected storage build and longer-range forecasts calling for demand destruction from the coronavirus outbreak. The U.S. Energy Information Administration (EIA) said utilities injected 38 billion cubic feet (bcf) of gas into storage during the week ended April 3. That was much more than the 24-bcf build analysts forecast in a Reuters poll and compares with an increase of 25 bcf during the same week last year and a five-year (2015-19) average addition of 6 bcf for the period. The increase for the week ended April 3 boosted stockpiles to 2.024 trillion cubic feet (tcf), 19.1% above the five-year average of 1.700 tcf for this time of year. On the last day of trade before Good Friday and Easter holiday weekend, front-month gas futures for May delivery on the New York Mercantile Exchange fell 5.0 cents, or 2.8%, to settle at $1.733 per million British thermal units. For the week, the front-month was up 7% after falling about 1% last week to its lowest since August 1995. Analysts said steps to slow the spread of coronavirus reduced demand from commercial and industrial companies as offices closed and factories run at lower capacities. Electricity trade group Edison Electric Institute (EEI) said power demand fell last week to a 16-year low EEI-. The EIA projected U.S. gas consumption would fall to 83.79 billion cubic feet per day (bcfd) in 2020 and 81.24 bcfd in 2021 from a record 84.97 bcfd in 2019. That would be the first annual decline in consumption since 2017 and the first time demand falls for two consecutive years since 2006. In Texas, gas forwards for 2021 at the Waha hub in the Permian basin were trading at their highest levels in years, up from below zero now, on expectations gas supplies from oil drilling will drop as low crude prices prompt energy firms to cut rigs.
In Gulf’s Oil Rigs, Crews Fight Virus to Keep Crude Flowing - Inside more than a thousand offshore drilling rigs and oil production platforms that dot the Gulf of Mexico, workers navigate narrow corridors, sleep in shared rooms and dine in crowded mess halls. It’s an environment designed for efficiency -- not for keeping a lethal coronavirus at bay. “There’s no way to do social distancing on a rig,” said Tim Tarpley, vice president of the Petroleum Equipment and Services Association. That’s led to worries about the safety of the sites, the biggest of which resemble mini-cities with as many as 200 workers, and the nation’s dependence on their output. Oil wells in the U.S. Gulf of Mexico supply about 2 million barrels of crude a day, or 15% of U.S. production. Similar coronavirus concerns are affecting other energy businesses that rely on employees sleeping in cramped conditions on site -- from oil worker camps in North Dakota and Alaska’s North Slope to an aluminum smelter in Canada and copper mines in the Chilean desert. There have been notable outbreaks in other close quarters too, including the aircraft carrier USS Roosevelt and cruise ships, underscoring the challenge of containing a virus that spreads easily. The practical complication of extracting oil amid the coronavirus pandemic is only the latest headwind for an industry already reeling. Oil prices have crashed as Russia and Saudi Arabia engage in a price war even as the virus causes demand to plummet. In response to the outbreak, offshore operators have stepped up screening and cleaning, lengthened job assignments and subjected workers to isolation periods. Some officials have even gamed out hypothetical scenarios that include shutting down operations if the pandemic spreads. For now, the focus is on staying “fully operational,” Interior Secretary David Bernhardt told industry representatives in a conference call Friday, according to two people familiar with the discussion. Bernhardt also said he was deploying Interior’s top offshore drilling regulator, Scott Angelle, to Louisiana, in an effort to keep outer continental shelf oil operations running and ensure a nimble agency response.
Gulf oil spill still affecting wildlife, group says— A decade after the nation’s worst offshore oil spill, dolphins, turtles and other wildlife in the Gulf of Mexico are still seriously at risk, according to a report released Tuesday. The fact that the Gulf hasn’t fully recovered is “hardly surprising given the enormity of the disaster,” said David Muth, director of the Gulf of Mexico Restoration Program for the National Wildlife Federation, which authored the report. The April 20, 2010, explosion on the Deepwater Horizon drilling rig killed 11 workers and spewed what the nonprofit environmental organization Ocean Conservancy estimated to be 210 million gallons (795 million liters) of oil before it was capped 87 days later. What followed, Muth said, was the largest restoration attempt ever in the world, with billions invested or committed to projects to help restore the Gulf and its ecosystem, and another $12 billion to be spent through the year 2032. In the report, the NWF said it believes a large portion of the money should be spent on estuary restoration, where freshwater mixes with the saltwater of the Gulf. “Projects that restore wetlands, rebuild oyster reefs, protect important habitats from development, and recreate natural patterns of water flow and sediment deposition will help many species harmed by the oil. In addition to helping wildlife, many of these projects will help protect coastal communities from rising seas and extreme weather,” the report said.
Local oil industry group joins fight for federal relief - Houma-Thibodaux’s largest oilfield trade group has joined a widespread industry call for the federal government to temporarily cut the amount the federal government charges companies to drill in the Gulf of Mexico. The push by the South Central Industrial Association and others comes as a crude-oil price war and reduced demand amid the coronavirus pandemic spark work slowdowns and layoffs throughout the U.S. oil industry. The association’s board and officers, in a March 27 letter to President Donald Trump and Interior Secretary David Bernhardt, call the developments an “existential threat to America’s ability to continue to produce energy in the Gulf of Mexico and beyond.” The SCIA claims a membership of 250 companies that employ about 250,000 people combined. “As producers in the U.S. cut spending to adjust to lower prices and suppressed demand, we face a devastating domino effect throughout the supporting service and supply chain industry,” the SCIA board wrote. “Painful work stoppages and cuts to staff are beginning to ripple through the Gulf Coast and across the nation as capital spending among producers of all sizes evaporates.” Added to the mix are reports Thursday that Saudi Arabia and Russia, whose increased production has been cited as leading to a global crude glut and resulting price declines, had tentatively agreed on a deal that could reverse the trend. Oil prices dropped nonetheless after analysts suggested the production cuts wouldn’t be enough to offset the decreased demand caused by the pandemic. U.S. benchmark crude closed trading at $22.76 a barrel, down 9.3% for the day and 17% for the week. Brent, the global benchmark, closed at $31.48 a barrel, down 4.1% for the day and 7.8% for the week.
COVID-19 is Buying Time for Gulf Coast Towns Fighting Oil and Gas Projects - - Dozens of pipeline projects have been proposed to ship crude from the Permian Basin of West Texas to the Gulf Coast, where the product can be loaded onto tankers and shipped overseas. In January, those pipelines pushed crude export volumes from Corpus Christi to “truly astonishing” volumes, one market analyst says. The Texas coast has been the site of its own frenzied industrial buildout in recent years, as petrochemical companies have raced to construct ethane crackers, chemical processing plants, and oil export terminals, reaping profits but also spewing pollutants and spurring worker deaths from fires and explosions. But now, oil and gas economists told the Observer that the petroleum industry is in for an enormous slowdown. Revenues have been in freefall for years, despite a production boom in the Permian Basin that’s made Midland and Odessa some of the fastest-growing U.S. cities. An all-out price war between Saudi Arabia and Russia has flooded global markets with cheap oil, pushing crude prices to a dismal $20 a barrel. Stay-at-home orders in cities across the United States have decimated demand for gasoline. On top of all that, the country is poised for a recession, another stressor for the industry, says Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis. “The first response right now is save cash, cut your capital expenditures in the short term,” he says. To weather the financial storm, many proposed oil and gas projects will be stalled or eliminated in the near future. Phillips 66, for example, is cutting $3 billion from its budget and postponing upgrades at a Houston-area refinery. Oil and gas producer Devon Energy said on Monday that it would slash its capital spending by $300 million.. Altogether, oil and gas companies have cut $37 billion in capital expenditure spending for the year. That’s good news for the tourist town of Port Aransas, near Corpus Christi, where city leaders and a nascent advocacy group are fighting plans to construct a new crude oil terminal on Harbor Island. The plan would include dredging the shipping channel to 75 feet, churning up sediment that could shade out seagrass and threaten the coastal inflows and outflows that sweep shrimp and fish larvae into estuaries. The Port of Corpus Christi, the government agency pursuing the plan, is also seeking to dump contaminated soil from the construction site in the surrounding area, prompting concerns from residents about releasing pollutants in the diverse but fragile ecosystem.
Shocking drop in wholesale gas prices signals more refinery cutbacks and gasoline under $1 - Wholesale gasoline prices are collapsing, a sign that more refineries will cut back or shut down and prices at the pump could sink to under $1 a gallon in more parts of the country, analysts said. In some sections of the Midwest on Wednesday, distributors were getting just about 10 cents for a gallon of unleaded gasoline mixed with ethanol. Prices of less than 20 cents a gallon were found in Colorado, Wisconsin, Iowa, Montana and the Dakotas, but in other parts of the country they are higher. In Los Angeles, for instance, the price was about 35 cents per gallon, according to Oil Price Information Services. As the U.S. economy went into shutdown, an over supply of gasoline became a major glut, and even though refineries have cut back by about 20%, they are running out of places to put gasoline. “I’m pretty sure these wholesale prices and spot prices are as low as anything we’ve seen since before the Arab oil embargo” in the early 1970s, said Tom Kloza, head of global energy analysis at Oil Price Information Services. “I think you are going to see much more common sub-$1 gasoline prices in the nation’s midsection, and I think we are looking at a national average of $1.25 to $1.50″ at the pump. Unleaded gasoline retail prices averaged $1.90 per gallon nationally Wednesday, but were lower in much of the country, according to AAA. The states with the cheapest average prices include Wisconsin, Texas, Arkansas and Oklahoma. The highest prices were in the Northeast and Mid-Atlantic, and on the West Coast and other parts of the West. Many of these areas have higher gasoline taxes. “The sore spots extend from Ohio through to the Great Lakes and all the states that border that, and the Rockies,” said Kloza. He explained that the super low prices under 20 cents per gallon at the rack, where trucks fill up with fuel, are lower than spot prices in the wholesale market and are way below gasoline prices in the futures market. Government data shows that drivers used just 5.1 million barrels a day last week, well below the 9.8 million barrels a day at the same time last year. Kloza said the U.S. drivers last consumed that amount in 1968. “We’ve never been in a situation where demand ran into a brick wall and dropped precipitously in such a short time. In other situations, where we had economic shutdowns, we’ve seen a deterioration in demand over time — over months and years,”“When you see these discounts and you see these numbers, that tells you they can’t clear gasoline,” said Kloza. “In the country’s midsection, there is too much gasoline. There is more than 50 days supply there, and they are going to cut refinery runs.”
Some of America’s Oil Refineries May Be on Brink of Shutting - The next step for some U.S. refineries that have already cut way back may be a full stop. Marathon Petroleum Corp. will idle its Gallup, New Mexico, refinery and related assets April 15, the company said. It’s the first U.S. facility to shut as the coronavirus pandemic empties skies of passenger planes and the roads of cars. It’s not likely to be the last. Major U.S. refiners, including Marathon, Valero Energy Corp. and Phillips 66, have lowered rates at their facilities to be at or near minimum levels as storage tanks fill up with fuel they can’t sell. While that “minimum” level differs from company to company, and in fact from plant to plant, it’s seen typically somewhere around 60% to 65% of capacity. Below that, many facilities need to be idled. “If after cutting rates to a minimum, refiners are still unable to move their products, they are faced with the prospect of completely shutting down,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. Slowing down a refinery isn’t like turning down the fire on a gas range when the water threatens to boil over. A refinery is a complex web of interconnected units, so once the amount of crude being processed in the distillation unit falls too low, secondary units don’t have enough feedstock to keep running. Since many units operate under high pressure as well as high temperature, it becomes more difficult to maintain the proper conditions for operation. “It’s complicated to keep the refinery in balance,” said Stephen Wolfe, head of crude oil at consultant Energy Aspects Ltd. “The rule of thumb for me was always 65% of the CDU. Below that, things get complicated. As you reduce rates, all the downstream operations have to be properly supplied, there are hydraulics limitations to how low you can go.” Refiners have been forced to take drastic measures to reduce fuel supply with gasoline demand plunging by almost half and storage tanks filling up. Measures to slow the spread of Covid-19 have hit gasoline and jet fuel especially hard, sending wholesale prices in some markets below 20 cents a gallon and crushing profit margins. Marathon’s Gallup refinery will maintain regular staffing levels while it is down and will be returned to normal operations “as soon as demand levels justify doing so,” Jamal Kheiry, a spokesman, said Thursday. In Canada, Newfoundland’s only refinery, North Atlantic Refining Ltd.’s Come by Chance facility, has shut for as long as two to five months.
Texas Court Orders Patience For COVID Delay In Pipeline Row - Law360-- A Texas appellate court has declined to intervene inKinder Morgan’s fight to dissolve a temporary injunction blocking construction on the $2.2 billion Permian Highway natural gas pipeline, urging the developer to allow the trial court some more time to figure out the technology needed to hold a hearing during the coronavirus pandemic.A Third Court of Appeals three-judge panel told Kinder Morgan Texas Pipeline LLC and Permian Highway Pipelines LLC on Friday to allow a Hays County Court-at-Law judge another week to figure out the best way to hold a hearing remotely. The pipeline is fighting to dissolve temporary restraining orders that block construction on the pipeline granted to groundwater services company Electro Purification LLC, which operates groundwater wells on the contested pieces of land. Kinder Morgan had accused the judge of abusing his discretion by indefinitely postponing a March 24 hearing on the restraining orders. The developer told the appellate court that if the restraining orders stayed in place, they could result in “catastrophic consequences,” including costing Kinder Morgan $65 million to stop construction and reroute the pipeline around the contested pieces of land.But the panel said because of the “extenuating circumstances” caused by the coronavirus and the judge’s assurances that he was working on a solution, it could not conclude that the lower court judge had abused his discretion.“We recognize that these are unprecedented circumstances and that the trial court may need additional time to put an appropriate system in place to successfully hold a remote evidentiary hearing involving multiple law firms and attorneys, numerous litigants, and the submission of evidence,” the panel said. “We are also sympathetic to the trial court’s concern that it not endanger essential staff who fall into the category of people who are most at risk from an in-person hearing.”
US oil, gas rig count plummets 80 rigs to 641 on the week: Enverus— The US oil and natural gas rig count fell by 80 to 641 over the past week, the biggest decline in more than five years, as the industry sheds rigs and slows activity, rig data provider Enverus said Thursday. Not registered? Receive daily email alerts, subscriber notes & personalize your experience. Register Now Seventy-five of the rigs that halted operations over the past week, or 93%, were oil-weighted, leaving 511 in the field, while rigs chasing gas fell by five to 130 as demand destruction caused by the coronavirus pandemic and a global price war continued to ravage 2020 upstream budgets and shutter new drilling. Since March 11, the domestic rig count total is down nearly a quarter, falling 23%, or 194 rigs, from 835. "The thud you heard was the sound of the US rig count falling flat on its face," said Bob Williams, Enverus' director of content. The 75 oil rigs was "the biggest one-week decline in recent memory," Williams said. Among large basins, the biggest single chunk of rig reductions, 40, this week came from the Permian Basin, leaving 334 at work. "The ongoing collapse has gouged deeper in the Permian, where well breakevens have been among the best," Williams said. "Roughly half of the sidelined rigs were in the Bonespring and Wolfberry oil plays, where ExxonMobil has been the most active operator." Williams noted ExxonMobil on Tuesday announced a 30% cut in capital spending, but it is not known whether that cut includes operations covered in the latest Enverus weekly rig count. Multiple rigs were also shut down other plays over the last week. Oklahoma's SCOOP-STACK play lost eight rigs, leaving 26 operational; six rigs were dropped in the Williston Basin of North Dakota/Montana, for a total of 41; while five rigs halted operations in the Eagle Ford Shale of South Texas, leaving 58 at work. Rigs from gas-prone basins, on the other hand, barely moved. The count for the Marcellus Shale, which is largely located in Pennsylvania, dropped by just two over the week to 36, while the Utica Shale held steady at 10 for a fifth straight week, and the Haynesville Shale of Northwest Louisiana and East Texas gained a rig, making 38 at work.Click here for full-size image. Rig counts tend to drop rapidly in a price collapse. In the last downturn that began in late 2014 and lasted about three years, the US rig count tumbled more than 850 rigs in the four months from late October 2014 to late February 2015. "If the trajectory of cuts is similar to 2015, we'll likely be close to around 315 rigs before year-end," investment bank Tudor Pickering Holt said in a Monday note.
Texas Gets Double Punch From Coronavirus and Oil Shock. ‘There’s No Avoiding This One.’ – WSJ Texas had one of the best economic records of any U.S. state after the 2008 financial crisis. In this crisis, it faces the prospect of a deep and prolonged downturn.The Lone Star State is exposed to many of the pandemic and shutdown’s economic ill consequences, with three cities—Austin, Houston and Dallas—home to an abundance of service-sector jobs, especially at risk. A downturn in the oil industry and other businesses big in Texas, including airlines and ports, will likely amplify its pain. Industry analysts expect the oil downturn to outlast the current viral outbreak.Oil prices surged late last week on hopes of a global pact involving Russia, Saudi Arabia and possibly the U.S. to cut crude output. But the prospects are uncertain, and even sizable oil production cuts would fall short of making up for the enormous drop in demand for fuels caused by coronavirus. Prices remain below $30, at levels where most Texas producers cannot make money.Initial claims for unemployment benefits rose by 259,652 in Texas during the two weeks ended March 28, non-seasonally adjusted Labor Department data released Thursday show. Layoffs hit a broad range of businesses including accommodation and food services, transportation, health care, oil and gas, manufacturing, retail, real estate and construction, the data showed. Two major shale producers are asking Texas regulators to consider curtailing crude output for the first time since the 1970s. For Texas, “there’s no avoiding this one,” said James Gaines, chief economist at the Real Estate Center at Texas A&M University.
Railroad Commissioner asks state officials to extend oil & gas tax deadlines - Railroad Commissioner Christi Craddick, one of three officials elected to regulate the Texas oil and gas industry, is asking state officials to extend a monthly deadline for production taxes to help companies weather record low prices. In a public letter delivered on Monday, Craddick asked Texas Comptroller Glenn Hegar to extend the monthly deadline to file crude oil and natural gas production taxes for three to six months. Under state law, production taxes are due on 25th day of the month following the production month. Crude oil prices crashed in early March going from $43 per barrel down to $20 per barrel in less than two weeks as a price between Russia and Saudi Arabia exacerbated a global supply glut and shutdowns related to the coronavirus pandemic cut demand — leaving the industry to scramble for survival. "A delay in filings may make the difference for companies giving them time and the needed flexibility to get through this crisis," Craddick wrote.
IEEFA urges Texas Railroad Commission to curtail state oil production – Tom Sanzillo, Director of Finance at the Institute for Energy Economics and Financial Analysis (IEEFA), today submitted comments urging the Texas Railroad Commission(RRC) to approve production cuts for the state’s oil industry. The Commission will hold a public hearing on April 14 to address the measure. “The Texas Railroad Commission is being asked to set production goals for oil and gas producers. It should do so. U.S. companies now produce more oil and gas than any other country in the world. And, right now, the world wants less of it. Prices are low. Companies and countries are locked in a senseless competition. The economy is down, the people are crippled by a strange virus and worried about climate change. Patience is in short supply and there is no time to waste. The RRC is a blunt instrument trying to perform a delicate surgery. The situation is unprecedented, unfair, uncertain and unreasonable. Leadership is required,” said Sanzillo. The cuts were requested by two companies active in Permian Basin oil and gas exploration and production (E&P), Pioneer Natural Resources U.S.A Inc. and Parsley Energy, Inc. (“the complainants”). The fracking companies had asked the RCC to mandate production limits to protect the sector from decreased demand and plummeting prices. ACCORDING TO THE COMPLAINANTS, THE GLOBAL MARKET IS EXPERIENCING DISRUPTION due to two major “shocks” affecting both supply and demand: “a market share war between Russia and Saudi Arabia, resulting in a sudden, massive surge in the supply of oil; and the outbreak of the COVID-19 pandemic, resulting in the precipitous decline in oil demand.” The RRC invited comments on whether the complainants were characterizing the problem accurately.
Shale Cuts to Fall on Smaller Drillers as Glut Crushes Market- U.S. shale drillers are engaged in a bitter test of wills as sinking oil prices force the weakest operators to retreat just as OPEC urges the world’s biggest source of crude to help rescue a market roiled by the coronavirus pandemic. With American production expected to decline this year for the first time since 2016, it’s becoming increasingly clear any reductions in domestic output will fall on the companies that can least afford it. The result is likely to be a sector increasingly dominated by international behemoths that have the ability to endure the downturn and ramp back up once prices recover. “The pain is definitely going to be felt by smaller and medium players in second-tier acreage,” said Raoul LeBlanc, a Houston-based analyst at IHS Markit Ltd. “If you ramped it up in the last couple of years and you grew fast, you now have a hangover.” U.S.-focused oil producers have slashed more than $27 billion from drilling budgets this year in an unprecedented contraction in the sector responsible for the lion’s share of global supply growth over the past decade. But for the largest companies, such as Exxon Mobil Corp., the rout is only prompting a slowdown in growth rather than outright reductions. Exxon took an ax to its Permian Basin drilling budget on Tuesday, saying that the shale region would absorb the largest share of $10 billion in global cuts this year. Even so, production is expected to increase through the end of 2021. Chevron Corp. also probably will boost output this year, despite a 20% reduction in its forecast. Independent shale specialists like EOG Resources Inc., Pioneer Natural Resources Co. and Diamondback Energy Inc. are also pledging to keep production flat or slightly higher this year, despite cutting their budgets by at least a third. Marathon Oil Corp. announced a 46% spending cut on Wednesday without signaling whether output will be impacted. Those drillers are protected by financial hedges designed to blunt the worst excesses of the price collapse, which saw some North American crudes trading for less than $10 a barrel last month. The unwillingness of some of the marquee names in shale to curb output flies in the face of growing calls by Saudi Arabia and other major producers for a new era of supply restraint to arrest the freefall in prices. The Organization of Petroleum Exporting Countries and allies are scheduled to conduct an emergency session later this week.
Enbridge submits key Line 5 tunnel construction permits to state, feds -Enbridge submitted an application to state and federal regulators Wednesday seeking a permit to begin construction on a roughly 4-mile utility tunnel beneath the Straits of Mackinac. If granted, the permit would allow the Canadian oil pipeline giant to begin construction on the Great Lakes Tunnel Project next year with a target operational date in 2024. The tunnel would house Enbridge’s new Line 5 oil pipeline and replace a 67-year-old dual span that transports up to 540,000 barrels a day of natural gas liquids and crude oil along the lake bed between the Upper and Lower peninsulas. The project’s permit phase is moving forward under court order as Gov. Gretchen Whitmer and Attorney General Dana Nessel battle the continued operation of the existing pipeline in court. Both Whitmer and Nessel spoke out against the pipeline on the campaign trail and challenged Enbridge’s agreement with Republican former Gov. Rick Snyder shortly after taking office in 2019. The pipeline has been a source of concern for environmental groups worried about the catastrophic effects of a potential spill from the line, especially in light of the 2010 Enbridge spill along the Kalamazoo River in Marshall. “The existing Line 5 was designed to last and has served this region well for more than 60 years,” said Amber Pastoor, project manager for the tunnel. “With today’s technology, the Great Lakes Tunnel Project will help deliver an enhanced level of safe, reliable energy, along with measures to protect our waterways for generations.” A coalition of 16 environmental groups, Native American tribes and civic leaders asked Whitmer in a Wednesday letter to delay consideration of the permit applications because the statewide shutdown makes it more difficult for tribal and local governments to weigh in on the applications. “Our goal is to ensure that all Michigan citizens in every Michigan community that are interested in participating in the public comment process have ample opportunity to offer their views on the permit applications, including at public hearings and at public information meetings," the group said in its letter.
Canada's oil-industry implosion could affect Enbridge's Minnesota pipeline project - As Enbridge nears it goal of building a controversial $2.6 billion pipeline across northern Minnesota, Canada’s oil industry is imploding. The U.S. is the largest market for Canadian oil, and Enbridge’s corridor of six pipelines across Minnesota is its primary artery. Enbridge has spent years navigating Minnesota’s regulatory process to build a new pipeline to replace its deteriorating Line 3. The Canadian oil crisis opens the door for a last-ditch effort by Line 3 opponents to persuade the Minnesota Public Utilities Commission (PUC) to rethink its approval of the $2.6 billion project. “There is a lot of new evidence and changed circumstances,” said Scott Strand, attorney for Friends of the Headwaters, an environmental group opposing Line 3. “Our case is stronger. [Oil] demand is gone, and it’s not going to snap right back up. There are long-term demand problems.” Prices for Canadian crude have hit historic lows: Recently, it cost more to ship a barrel of Alberta oil than to buy it. And significant oil-production cutbacks are in the offing, analysts said. “Canada’s petroleum sector has never faced a greater threat to its existence than it does right now,” said a report from the University of Calgary’s School of Public Policy. Enbridge does not see any material changes to the information already submitted to the PUC, said Vern Yu, Enbridge’s executive vice president of liquids pipelines. “This temporary [demand] destruction will be very painful, but once we are through with COVID-19, demand will return to normal,” Yu said. The global oil industry is stuck in an unprecedented predicament: Demand has plummeted as the spread of COVID-19 has paralyzed economic activity, while a price war between big crude producers Russia and Saudi Arabia has created a supply glut. Canada is a higher-cost oil producer, and it tends to get particularly slammed in downturns. “There’s no question that Canada gets hit harder when global oil and gas fundamentals deteriorate, especially over the past month,” “Even under comparatively ‘normal’ market conditions, a significant portion of Canadian heavy oil production [at least 65%] is subject to higher sales risk.”
Amid COVID-19 Pandemic, Some Pipeline Projects Push Forward While Others Falter Nationwide - - Last Friday, the Iowa Utilities Board issued an order that would allow the Dakota Access pipeline (DAPL) to double the amount of oil that flows through the state from 550,000 barrels a day to 1.1 million barrels a day. The utilities board, which also announced it had waived a hearing on the matter, made its move over the objections of environmental organizations and other civic groupsopposed to DAPL operator Energy Transfer’s expansion plans. Iowa’s approval landed just two days after a federal judge in North Dakota found that the project must undergo a full environmental review in a March 25 order, throwing the pipeline’s legal status into question. U.S. District Judge James E. Boasberg, who issued that order, also asked attorneys involved in that dispute to submit briefs on whether DAPL should be shut down while the pipeline undergoes its environmental review.The DAPL expansion, meanwhile, still needs approval from Illinois state regulators, and environmental groups have asked the Illinois Commerce Commission to hold off from making any decisions for the time being, citing not only Judge Boasberg’s ruling but also the turmoil in the global oil market and the impacts of the COVID-19 pandemic on oil demand.In North Brooklyn, New York City, a National Grid pipeline — the 30-inch diameter Metropolitan Reliability Infrastructure Project planned to carry gas from Long Island and Massachusetts — had drawn community opposition and protests before the pandemic set in, in part due to climate concerns and objections to its $185 million price tag for National Grid customers, and in part because construction had proved disruptive for neighborhood businesses. On March 24, the Brooklyn Eagle reported that a construction worker had tested positive for COVID-19 — but it wasn’t until two days later, on March 26, that National Grid stopped work on the project, after photos showed workers were not social distancing (National Grid denied that there had been positive cases at its construction site, Brooklyn Eagle added).In Pennsylvania, the troubled Mariner East project has also been at the heart of controversy after its builder, Energy Transfer, sought to continue construction following the state’s shut down of all “non-life sustaining” businesses. Though the order, by Governor Tom Wolf, lists pipeline construction among industries required to shut down, it allows companies to seek waivers. Energy Transfer sought and obtained waivers allowing it to continue construction at 15 sites across Pennsylvania, according toState Impact.Further south, in Virginia, opponents of the $5.5 billion Mountain Valley Pipeline (MVP) have urged against resumption of construction on that project, which had been slated to re-start construction this spring. “They’re coming from states in many cases that have higher COVID-19 rates than we do, like Louisiana where a lot of pipeline workers come from,” said pipeline opponent Diana Christopulos told a local ABC News affiliate.
Trump Tells Aides He Opposes Cutting Oil Company Royalties -President Donald Trump has told aides he doesn’t support a broad plan to temporarily stop charging energy companies royalties for oil and gas produced on federal lands and waters, according to two people familiar with the matter.Trump ruled out a wide-ranging royalty relief proposal during a White House meeting Tuesday, according to the people, who asked not to be named describing a private discussion.Congressional and oil industry champions of the idea will continue pushing for a narrower, offshore-only focused approach, arguing it is necessary to keep Gulf of Mexico oil producers in business amid an epic downturn in demand. Trump has been known to change his mind on energy policy matters before, and the president’s verdict Tuesday may not be his final decision.A top administration concern has been protecting the budgets of states such as Wyoming, New Mexico and Utah that are reliant on a 50% share of royalties tied to oil and gas production on federal lands within their borders. Already, some New Mexico lawmakers have called for a special legislative session to reconsider the state budget as revenue tied to oil production has cratered along with the price of crude.Administration officials also have voiced concerns about doing anything that would appear to be a bailout for big oil companies. The Interior Department, in an email, said companies may apply for a suspension of lease requirements under an established procedure. “Such requests may be granted in cases where an operator is prevented from operating or producing on a lease for reasons beyond or outside their control,” Interior said.
Work starts in Montana on disputed Canada-US oil pipeline (AP) — A Canadian company said Monday that it’s started construction on the long-stalled Keystone XL oil sands pipeline across the U.S.-Canada border, despite calls from tribal leaders and environmentalists to delay the $8 billion project amid the coronavirus pandemic. A spokesman for TC Energy said work began over the weekend at the border crossing in northern Montana, a remote area with sprawling cattle ranches and wheat fields. About 100 workers will be involved in the pipeline’s early stages, but that number is expected to swell into the thousands in coming months as work proceeds, according to the company. The 1,200 mile (1,930 kilometer) pipeline was proposed in 2008 and would carry up to 830,000 barrels (35 million gallons) of crude daily for transfer to refineries and export terminals on the Gulf of Mexico. It’s been tied up for years in legal battles and several court challenges are still pending, including one that’s due before a judge next week. TC Energy’s surprise March 31 announcement that it intended to start construction came after the provincial government in Alberta invested $1.1 billion to jump start work. Montana’s Department of Environmental Quality on Friday issued the final state permits the company needed, agency spokeswoman Rebecca Harbage said. Leaders of American Indian tribes and some residents of rural communities along the pipeline route worry that workers could spread the coronavirus. As many as 11 construction camps, some housing up to 1,000 people, were initially planned for the project, although TC Energy says those are under review because of the virus. TC Energy says it plans to check everyone entering work sites for fever and ensure workers practice social distancing.
Cleanup complete at scene of Oil Tanker Crash In Santa Barbara County - Crews have completed cleanup at the site of a tanker truck crash in Santa Barbara County which spilled 4500 gallons of crude oil. The accident happened March 21st, on Highway 166 northeast of Santa Maria. The driver of the truck apparently lost control and crashed, with the overturned tanker ending up in the Cuyama River bed. The driver was unhurt, but there was a large oil spill. First responders built containment berms and deployed oil absorbing materials to keep the oil from spreading downstream. That effort was successful, and for the last few weeks crews have focused on removing the oil, and contaminated soil. Cleanup was completed over the weekend, and crews are now doing final on-site equipment decontamination. Some birds and turtles were taken to wildlife care facilities for decontamination.
Small oil spill reported at facility near Lompoc - Emergency crews were called to an oil production facility in the Lompoc area Wednesday morning for a small oil spill. It happened in the early morning at a facility in the 3900 block of Rucker Road. According to the Santa Barbara County Fire Department, four barrels of oil spilled. Three barrels worth of oil were contained. The spill has reportedly been stopped and crews are now working to mitigate the spill using a vacuum truck and other equipment. Fire officials say the cause was a failed gasket on a pump.
In Alaska’s North, Covid-19 Has Not Stopped the Trump Administration’s Quest to Drill for Oil - Along the Coastal Plain of the Arctic National Wildlife Refuge—the long-fought over stretch of wilderness that President Donald Trump has been working hard to open to drilling—a successful lease sale is looking less and less likely before the end of the year. But west of the refuge, in the National Petroleum Reserve-Alaska (NPR-A), the Interior Department is moving ahead with ConocoPhillips' Willow project. The project is a massive development expected to produce approximately 590 million barrels of oil over its 30-year life, and it could include a central processing facility, up to 250 wells, an airstrip, pipelines and a gravel mine. On March 20, the Bureau of Land Management opened a public comment period on the project that will last until May 4—colliding head-on with the coronavirus and making it harder for nearby communities like Nuiqsut to weigh in. Nuiqsut is home to fewer than 500 people and is nearly 90 percent native Alaskan. The village, which is already surrounded on most sides by drilling, is about seven miles from where the gravel mine is planned. At the time the BLM opened the comment period, one-fourth of Americans had been ordered to stay home due to the virus, a figure that's by Tuesday had grown to more than 90% of the U.S. population, or at least 311 million people. The public comment period will end just a few weeks after the pandemic is projected to peak in Alaska, and almost certainly before life has returned to normal. "Just think about how challenging it is in Alaska," said Adam Kolton, the executive director of the Alaska Wilderness League. "A lot of the people most impacted by potential oil and gas projects are in native villages, where sometimes internet access is limited, not widely available to everybody and public meetings with in-person dialogue are one of the ways that villages have to engage with the process." Nuiqsut is currently not reporting any Covid-19 cases—and hopes to keep it that way, which makes adherence to Alaska's shelter in place order so crucial. Health care options in the village are limited—the medical clinic is staffed by community health aides and is serviced by a doctor who visits the village for a week every three months. In March, Nuiqsut was one of several North Slope villages that began restricting access by land, sea or air. "We are bunkered down," said Martha Itta, the tribal administrator of Nuiqsut. Over in Prudhoe Bay, roughly 75 miles away, an oilfield worker with BP recently tested positive, which has set the community on edge. "But there's also a lot of concern about this project," said Itta.
America must take steps now to sustain its energy dominance - In recent weeks, global energy markets have been whipsawed. Pain has been especially acute in the U.S. oil patch where both majors and independents, along with oil field service companies, have fired or furloughed thousands of employees. Does this mean the end of U.S. energy dominance? Will the shale revolution that has made us the world’s No. 1 oil- and gas-producing country grind to a halt? Will we revert to becoming a net energy importer instead of a net exporter? Let’s hope not. But in the face of economic and political uncertainties, a number of initiatives and policy changes today could help sustain our energy industry and keep us globally competitive tomorrow. Oil and gas aren’t going away, at least for the next 50 to 60 years. Once the global economy starts to recover from the coronavirus, the demand for energy will grow quickly. To ensure America is able to meet that growing demand we should use this downtime to improve the infrastructure for transporting and processing our oil and gas resources. For example, in recent years serious mid-stream bottlenecks have occurred in the Permian because of a lack of pipeline takeaway capacity. Similarly, as production of natural gas has surged in the Marcellus and Utica shales of the Northeast, investment in pipeline infrastructure has lagged. Consequently, Marcellus gas sells at up to a 50 percent discount to the national benchmark at Henry Hub while New England relies heavily on imported liquefied natural gas (LNG), sometimes from Russia. Expediting the issuance of state and federal construction permits can help unclog these chokepoints. The same is true for LNG facilities and export terminals. LNG demand is projected to reach 500 million tons per year within a decade, with Asia the leading customer. This means permitting and building additional LNG trains and related infrastructure so U.S. producers can capture a substantial share of that market. Here again, regulations should be streamlined to expedite the construction of these facilities. Revising the Jones Act can also help America’s energy producers and consumers. This law, which has been around for 100 years, requires that all goods shipped between U.S. ports must be transported on ships that are built in the U.S., owned by U.S. companies, and operated by U.S. citizens or permanent residents under the U.S. flag. However, the average cost of operating a U.S.-flagged vessel is almost three times greater than a foreign-flagged vessel. What’s more, there are no LNG carriers compliant with the Jones Act. Thus, consumers in the Northeast can’t import abundant and inexpensive gas in liquefied form from ports in the Gulf of Mexico. Moving oil is another expensive logistical nightmare for domestic producers since it’s actually cheaper to ship oil to northeastern ports from Nigeria and Saudi Arabia than from the Gulf Coast.
Chaos and scrambling in the U.S. oil patch as prices plummet - (AP) — In Montana, a father and son running a small oil business are cutting their salaries in half. In New Mexico, an oil truck driver who supports his family just went a week without pay. And in Alaska, lawmakers have had to dip into the state's savings as oil revenue dries up. The global economic crisis caused by the coronavirus pandemic has devastated the oil industry in the U.S., which pumps more crude than any other country. In the first quarter, the price of U.S. crude fell harder than at any point in history, plunging 66% to around $20 a barrel. A generation ago, a drop in oil prices would have largely been celebrated in the U.S., translating into cheaper gas for consumers. But today, those depressed prices carry negative economic implications, particularly in states that have become dependent on oil to keep their budgets balanced and residents employed. “It's just a nightmare down here,” said Lee Levinson, owner of LPD Energy, an oil and gas producer in Tulsa, Oklahoma. “Should these low oil prices last for any substantial period of time, it's going to be hard for anyone to survive." Crude prices recovered some ground, trading at around $28 a barrel Friday, after a week in which President Donald Trump tweeted that he expects Saudi Arabia and Russia will end an oil war and dramatically cut production. On Friday, he met with oil executives but there were no announcements, and prices remain well below what most U.S. producers need to stay afloat. Among the latest casualties is Whiting Petroleum, an oil producer in the Bakken shale formation with about 500 employees that filed for bankruptcy protection Wednesday. Schlumberger, one of the largest oilfield services companies, slashed its capital spending by 30% and is expecting to cut staff and pay in North America. And Halliburton, another major oilfield services provider, furloughed 3,500 of its Houston employees, ordering workers into a one-week-on, one-week-off schedule. In New Mexico, where a third of the state's revenue comes from petroleum, the governor slashed infrastructure spending and will likely cut more in a special legislative session. In Texas, which produces about 40% of the country's oil and employs more than 361,000 people, the picture is especially bleak. “It’s dead. It’s dead as can be,”
Coronavirus May Kill Our Fracking Fever Dream - Ever since the oil shocks of the 1970s, the idea of energy independence, which in its grandest incarnation meant freedom from the world’s oil-rich trouble spots, has been a dream for Democrats and Republicans alike. It once seemed utterly unattainable — until the advent of fracking, which unleashed a torrent of oil. By early 2019, America was the world’s largest producer of crude oil, surpassing both Saudi Arabia and Russia. And President Trump reveled in the rhetoric: We hadn’t merely achieved independence, his administration said, but rather “energy dominance.” Then came Covid-19, and, on March 8, the sudden and vicious end to the truce between Saudi Arabia and Russia, under which both countries limited production to prop up prices. On March 9, the price of oil plunged by almost a third, its steepest one-day drop in almost 30 years. As a result, the stocks that make up the S.&P. 500 energy sector fell 20 percent, marking the sector’s largest drop on record. There were rumblings that shale companies would seek a federal lifeline. Whiting Petroleum, whose stock once traded for $150 a share, filed for bankruptcy. Tens of thousands of Texans are being laid off in the Permian Basin and other parts of the state, and the whole industry is bracing for worse. On the surface, it appears that two unforeseeable and random shocks are threatening our dream. In reality, the dream was always an illusion, and its collapse was already underway. That’s because oil fracking has never been financially viable. America’s energy independence was built on an industry that is the very definition of dependent — dependent on investors to keeping pouring billions upon billions in capital into money-losing companies to fund their drilling. Investors were willing to do this only as long as oil prices, which are not under America’s control, were high — and when they believed that one day, profits would materialize.Even before the coronavirus crisis, the spigot was drying up. Now, it has been shut off. The industry’s lack of profits wasn’t exactly a secret. The basic reason is that the amount of oil coming out of a fracked well declines steeply after the first year — more than 50 percent in year two. To keep growing, companies have to keep plowing billions back into the ground. The industry’s boosters argue that technological gains, such as drilling ever bigger wells, and clustering wells more tightly together to reduce the cost of moving equipment, eventually would lead to a gusher of profits. The promised profits haven’t materialized. In the first half of 2019, when oil was around $55 a barrel, only a few top-tier companies were profitable. “By now, it should be abundantly clear that the current shale oil business model does not work — even for the very best companies in the industry,” the investment firm SailingStone Capital Partners explained in a recent note.
Exxon cuts capital spending by 30%, but CEO says it's 'committed to maintaining' dividend - Exxon is slashing its 2020 capital spending plan as depressed oil prices hammer the energy sector, but CEO Darren Woods said that the company’s dividend is safe for the time being. “A lot of our shareholders are retail shareholders — people who depend on that dividend — so we’ve been pretty committed to maintaining that and if necessary in the short-term using the balance sheet to support it,” Woods said Tuesday on CNBC’s “Squawk Box.” “It’s a capital-intensive commodity business so we know we are going to go through cycles, and the way we have prepared ourselves to manage through those cycles is to maintain a strong balance sheet,” he added. Shares of Exxon rose about 5% during on Tuesday, although the stock has shed more than 38% this year. On Tuesday, the company said that it was reducing capital spending for 2020 by 30 % — from $33 billion to around $23 billion — and cutting operating expenses by about 15%. The largest share of the reduction will be in the Permian Basin, where it’s easier to adjust short-cycle investments, Woods said. U.S. West Texas Intermediate crude has slid 56% this year as the coronavirus outbreak has sapped demand. At the beginning of the year, a barrel of WTI fetched more than $60. Today, it trades around $26.44, hammering the highly-leveraged energy sector as producers struggle to break even with lower prices. “The fact that we’ve lost 23% of demand here in a very short order, that’s a huge transition for the industry to make. ... Capacity has to come offline and there will be economics that drive that, that force the producers to shut-in,” Woods said. “The market will address the shut in, and drive levels down, frankly, because there’s no demand for the product and so eventually you have to stop making it.”
Marathon Will Take Frac Holidays to Cut Spending-- Marathon Oil Corp. is reducing its capital spending this year to about half of 2019 levels, joining a parade of shale drillers doing the same with oil prices trading at depressed levels as demand suffers due to coronavirus. Capital expenditures in 2020 are now seen at $1.3 billion, a cumulative budget reduction of $1.1 billion from initial capital spending guidance for the year, according to a statement by the Houston-based company on Wednesday. Marathon joins drillers including EOG Resources Inc. and Murphy Oil Corp. and oil majors Exxon Mobil Corp. and Chevron Corp. in slashing budgets in response to U.S. crude oil trading in the $20-a-barrel range, down more than 50% since the start of the year. Marathon plans to take “frac holidays in both the Bakken and Eagle Ford” during the second quarter, Marathon Oil CEO Lee Tillman said in the statement. Marathon Oil previously said it would suspend its activities in Oklahoma. It also plans to suspend further drilling in the northern Delaware section of the Permian basin, with only a limited number of wells to sales expected through the rest of the year. Marathon will continue to optimize development plans in the Bakken and Eagle Ford, before moving to a lower and more continuous drilling and completion program over the second half of the year in both basins. “Against a highly volatile and uncertain environment, these decisive actions are designed first and foremost to protect our balance sheet and our hard-earned financial strength,” Tillman said.
Trump could impose 'very substantial' tariffs on oil imports, but doesn't think he'll need to do so - President Donald Trump on Sunday reiterated his threat to target foreign oil as global producer infighting continues to impact the price of crude, saying he could impose ‘very substantial tariffs’ to protect the American energy industry but doesn’t think he will need to do so. “I would use tariffs, if I had to. I don’t think I’m going to have to,” Trump said at a White House briefing on the coronavirus. Trump on Saturday also signaled a willingness to implement tariffs on foreign oil. The president said he thought there would ultimately be an agreement on production levels between Saudi Arabia and Russia. Along with a sharp reduction in demand from the coronavirus pandemic, disagreements on production cuts between Saudi Arabia and Russia that began in early March has caused the price of crude oil to fall dramatically. “It’s obviously very bad for them,” Trump said of low oil prices. Trump’s comments Sunday came as oil prices fell after a scheduled virtual meeting between OPEC and its allies was delayed. The meeting had been set for Monday but will “likely” be held Thursday, CNBC reported Saturday. Oil prices surged last week as Saudi Arabia called for the meeting. Last week, Trump told CNBC’s Joe Kernen in a phone conversation that he was anticipating a production cut of up to 15 million barrels to be announced by the leaders of Russia and Saudi Arabia. Declining oil prices have made it unprofitable for many U.S. firms to remain active, analysts have said. Trump also met with U.S. energy executives at the White House on Friday. “If I did the tariffs, we essentially would be saying we don’t want foreign oil. ... We’re just going to use our oil and that would help to save an industry,” Trump said Sunday.
US Will Return to Being Net Importer of Oil -The United States will return to being a net importer of crude oil and petroleum products in the third quarter of 2020 and remain a net importer in most months through the end of 2021. That’s what the U.S. Energy Information Administration (EIA) forecasts in its latest short-term energy outlook (STEO), which was released on Tuesday. “This is a result of higher net imports of crude oil and lower net exports of petroleum products. Net crude oil imports are expected to increase because as U.S. crude oil production declines, there will be fewer barrels available for export,” the report stated. “On the petroleum product side, net exports will be lowest in the third quarter of 2020, when U.S. refinery runs are expected to decline significantly,” the report added. The EIA projects that U.S. crude oil production will average 11.8 million barrels per day this year, which marks a 0.5 million barrel per day decrease from 2019 and the first annual decline since 2016. In 2021, the EIA expects U.S. crude production to decline by another 0.7 million barrels per day. “Typically, price changes impact production after about a six-month lag. However, current market conditions, combined with the Covid-19 pandemic, will likely reduce this lag as many producers have already announced plans to reduce capital spending and drilling levels,” the EIA stated in the report. In its latest STEO, the EIA forecasts that Brent crude oil prices will average $33 per barrel this year, which is $10 per barrel lower than last month’s STEO projected. The organization expects prices will average $23 per barrel during the second quarter of 2020 before increasing to $30 per barrel during the second half of the year. Average Brent prices are forecasted to rise to an average of $46 per barrel in 2021, “as a return to declining global oil inventories puts upward pressure on prices”. The EIA’s latest STEO assumes that there will be no OPEC+ deal during the forecast period. “Despite recent news of OPEC+ emergency meetings within the next few days to discuss production levels, without an agreement actually in place, EIA assumes no re-implementation of an OPEC+ agreement during the forecast period,” the EIA stated in the report. “If there is ultimately an agreement, this forecast will incorporate that information into its ensuing release,” the report added.
COVID-19 Is Killing Oil/Gas But Could Poison Renewables - Whiting Petroleum Corp. has succumbed to COVID-19 and the oil battle now taking place between Saudi Arabia and Russia. It filed for bankruptcy last week. Questions abound, ranging from how many more independent oil and gas operations could go under to what are the possible implications for energy markets. Given the economic downturn — 7 million jobs lost in March alone — the demand for oil and gas will remain weak. That will cause prices to fall even further, perhaps as low as $20 per barrel. But the dip will be relatively short-lived. And while oil prices are expected to climb again, green energy’s future is now in limbo. With gasoline prices so low, the pressure is off to invest in alternative fuels. “The sharp decline in the oil market may well undermine clean energy transitions by reducing the impetus for energy efficiency policies,” writes Fatih Birol, executive director of the International Energy Agency. “Without measures by governments, cheaper energy always leads consumers to use it less efficiently. It reduces the appeal of buying more efficient cars or retrofitting homes and offices to save energy.” World leaders have a prime role here: Birol says that, globally, $400 billion in fossil fuel subsidies exists and that 40% of those are designed to make oil cheaper and more affordable. The International Energy Agency says that governments have the most leverage to drive energy investment. And the agency credits policymakers for last year’s halt in global CO2 emissions — even as the world economy expanded by 3%; global emissions remained 33 giga-tonnes in 2019, which it attributes to the growing market share of wind and solar as well as the switch from coal to natural gas. It also praises the use of more nuclear energy generation. Emissions from the power sector alone fell to levels not seen since the 1980s as a result. “We may well see CO2 emissions fall this year as a result of the impact of the coronavirus on economic activity, particularly transport,” says Director Birol. “But ... this would not be the result of governments and companies adopting new policies and strategies. It would most likely be a short-term blip that could well be followed by a rebound in emissions growth as economic activity ramps back up.” The flip-side? Whiting Petroleum will be the first of many independents to restructure. With thousands of jobs at risk, the government may be forced to act: oil prices have fallen from $53 a barrel in mid February to $30 a barrel. A Wall Street Journal story says that producers could default on $32-billion in high-yield debt, citing companies like Chesapeake Energy Corp., Ultra Petroleum Corp. and California Resources Corp.
'We Need People's Bailout, Not Polluters' Bailout': Climate Groups Move to Preempt Big Oil Giveaway Amid Pandemic - A coalition of climate organizations strongly criticized President Donald Trump's in-person Friday meeting with the chief executives of some of the biggest fossil fuel companies in the world, saying the industry that fueled climate disaster must not be allowed to profiteer from government giveaways by getting bailout funds or preferred treatment during the coronavirus pandemic. The CEOs attending the White House meeting, scheduled for 3 p.m. Friday, have been dubbed "the seven oily henchman of the climate apocalypse" and reportedly include ExxonMobil's Darren Woods, Chevron's Michael Wirth, and Energy Transfer's Kelcy Warren, as well as billionaire and fracking pioneer Harold Hamm, who recently stepped down as CEO of Continental Resources CEO. The summit comes on the heels of a month in which more than 10 million Americans lost their jobs, and millions of Americans may be stuck waiting weeks to receive their one-time stimulus check while big businesses stand ready to reap benefits of their share of $500 billion in corporate bailout funds that were part of the coronavirus relief package passed last week."If corporations are people, they shouldn't be getting more financial assistance than the American people," said Mary Gutierrez, executive director of Earth Ethics. "This isn't the time for bailouts, it's the time for transitioning. We need to be transitioning from fossil fuels to renewable energy sources."Earth Ethics is part of the Stop the Money Pipeline coalition, which advocates for financial institutions to stop funding and investing in projects the group says amount to "climate destruction."The big oil summit, the coalition warned, must not lead to a bailout for the industry, especially at a time working Americans' needs must be centered and as the climate crisis necessitates huge investments away from dirty energy towards renewables.The meeting's agenda "is reportedly expected to include discussions about federal storage of oil, tariffs on foreign oil, and drilling on public land," CNBC reported Thursday. CNN added, "The American Petroleum Institute, the industry's biggest lobby, has said oil companies aren't seeking a bailout from Trump." But the climate coalition isn't convinced of that API claim. "Let's not be fooled by these CEOs' claims that they don't want bailout money: if they're going to the White House, it's either to ask for yet another spigot of federal government money for corporations or for yet another relaxation of environmental protection rules," said Moira Birss, Amazon Watch's climate and finance director. "It's unacceptable that Trump is more focused on serving corporate interests that are destroying our climate than responding to the urgent needs of workers, the unemployed, and the sick. We need a people's bailout, not a polluters' bailout!" she added.
Oil majors paid $216 billion more to shareholders than they earned directly from business over the past decade - ‒ The world’s five largest publicly traded oil and gas companies shelled out a total of $71.2 billion in dividends and share buybacks last year, while generating only $61.0 billion in free cash flow. This “deficit spending” points to a deeper crisis in the increasingly volatile industry, according to a briefing note released today by the Institute for Energy Economics and Financial Analysis (IEEFA). Performance of Oil Majors vs S&P 500In 2019, ExxonMobil paid $9.9 billion more to shareholders during the year than it generated from its core business operations, while Shell paid $7.4 billion more. Meanwhile, Chevron’s cash flow surplus declined by $6.4 billion, year over year, while Total and BP both improved their cash performance compared with 2018. With shareholder payouts exceeding free cash flow, ExxonMobil and Shell relied on other sources of cash to sustain dividends and share buybacks. “For the five supermajors, 2019 was a big comedown from the previous year, when they produced $17 billion more in free cash flow than they paid out to shareholders,” said IEEFA energy finance analyst and lead author of the report Clark Williams-Derry. All told, these five companies generated $340 billion in free cash flows from 2010 through 2019, while rewarding their shareholders with $556 billion in share buybacks and dividends—leaving a $216 billion cash flow deficit that these companies covered with other sources, including new borrowing and asset sales. In other words, over the last decade, these five companies covered only 61 percent of their shareholder payouts from free cash flows, while funding 39 percent of those payouts by other means. “Everything seems fine when the dividend checks keep coming in the mail, but there is an underlying weakness in the supermajors’ practices that should give investors pause,” said Tom Sanzillo, IEEFA’s director of finance.
Cargo vessel accident dumps 600 gallons of oil in Galapagos Islands - A devastating 600-gallon oil spill has occurred in the Galapagos Islands — a UNESCO World Heritage web site that’s residence to 1 of probably the most fragile ecosystems on the planet. The center-pounding caught-on-camera spill off the coast of Ecuador occurred Sunday morning when a crane loading a diesel container onto a neighborhood cargo vessel tipped over, inflicting the boat to overturn, CNN reported. Sailors will be seen diving to security because the crane plummets into the water with the driving force nonetheless inside, bringing the cargo ship and the large container of gas down with it. Nobody was injured, authorities stated. Emergency groups and the Ecuadorian army at the moment are working to manage the spill round San Cristobal Island, erecting containment boundaries and absorbents cloths despatched from Santa Cruz to scale back the environmental threat. Ecuador’s President LenÃn Moreno on Monday declared that the spill was beneath management, however native authorities nonetheless described the state of affairs as an emergency and ordered an investigation. San Cristobal Island is residence to sea lions and the area’s famed tortoises, that are the most important in the world. The Galapagos archipelago of volcanic islands is residence to many species that can not be discovered wherever else in the world and was acknowledged as a UNESCO World Heritage web site in 1978. Charles Darwin visited the islands in the 1830s — and his analysis on Galapagos was essential to the famed principle of pure choice he later developed. The spill has alarmed environmental teams, who’ve been more and more vocal concerning the area’s fragile ecosystem coming beneath menace from tourism. On Twitter, environmental group SOS Galapagos stated the catastrophe was the outcome of an “unlawful and harmful logistics operation” and referred to as for the port to be moved to a different web site.
Oil prices could plunge below $20 a barrel this quarter as demand craters: CNBC survey - The oil price bust may not be over. A historic demand shock sparked by the coronavirus pandemic is set to worsen in the current quarter, undermining any coordinated effort by heavyweight producers Saudi Arabia, Russia and the United States to cut supply aggressively and rebalance the market, according to a CNBC survey of 30 strategists, analysts and traders. Episodic spikes of $20 a barrel or more in benchmark crude oil futures of the type seen last week cannot be ruled out as rivals Saudi Arabia and Russia attempt to reverse a damaging battle for market share and engineer a global supply deal which could cut up to 15 million barrels a day, the equivalent of about 10% of global supply. But such price rallies are unlikely to last, according to the findings of the CNBC survey conducted over the past two weeks. Brent crude futures, the barometer for 70% of globally trade oil, are likely to average $20 a barrel in the current quarter, according to the median forecast of 30 strategists, analysts and traders who responded to a CNBC survey, or 12 out of 30 respondents. However, nearly a third, or nine of those surveyed, said prices may drop below $20 a barrel this quarter. Amongst the more pessimistic projections, ANZ’s Daniel Hynes saw the risk of prices in the ‘mid-teens’ while JBC Energy’s Johannes Benigni warned that both Brent and US crude futures could ‘temporarily’ fall to around $10 a barrel.
Brent crude could plunge to 'single-digit lows' if OPEC+ can't agree on output cuts, says Fitch - Brent crude futures could plunge to “single-digit lows” if major oil producers fail to reach a deal to cut output at a time when demand has collapsed due to the coronavirus pandemic, Fitch Solutions said in a Friday report. The Organization of the Petroleum Exporting Countries and its allies are expected to meet on Thursday — a delay from Monday — in an attempt to agree on production cuts. A previous deal by the group — commonly known as OPEC+ — expired in March after Saudi Arabia and Russia failed to reach an agreement. The fallout sent oil prices plummeting to multi-year lows. The expiry of the deal means that producers are free to increase output this month, with Saudi Arabia, United Arab Emirates and Russia among those saying that they would do so. Analysts from Fitch Solutions said a fall in demand and an increase in supply could result in more than 20 million barrel per day of excess oil. That would put the oil market under “extreme physical pressure,” they wrote in the report published before the OPEC+ meeting was postponed. “While it is unlikely that nominal storage capacity will be breached, it is possible that the sheer scale of the oversupply will overwhelm global logistics chains, plunging Brent into single-digit lows,” the analysts added. Oil futures have fallen by roughly 50% since the start of the year. On Monday, however, oil prices trimmed earlier losses after Kirill Dmitriev, the chief executive of Russia’s sovereign wealth fund, told CNBC on Monday that Moscow and Riyadh were “very close” to a deal. Brent crude fell by around 1.7% to $33.53 a barrel, while the U.S. West Taxes Intermediate crude dipped by 2% to around $27.72 a barrel.
Putin- Oil Glut Is Really About Saudi Desire To Crush US Shale - While it appears an expected emergency virtual OPEC+ meeting planned for Monday has been postponed, pushed back to later in the week to allow more time for negotiations, it's likely that we'll actually see the heated blame-game for the collapse in oil prices ratchet up — and oh, in the meantime oil is set to crater come Monday as the feud is only expected to get uglier. Indeed the aggressive war of words has started, with Putin offering a biting Russian narrative aimed at the Saudis in remarks Friday: “It was the pullout by our partners from Saudi Arabia from the OPEC+ deal, their increase in production and their announcement that they were even ready to give discounts on oil” that drove the crash alongside the double-whammy of the coronavirus-driven drop in demand, Putin said according to Bloomberg.“This was apparently linked to efforts by our partners from Saudi Arabia to eliminate competitors who produce so-called shale oil,” Putin continued. “To do that, the price needs to be below $40 a barrel. And they succeeded in that. But we don’t need that, we never set such a goal.”Thus in one fell swoop Putin, ironically enough, framed the new 'war on US shale' as in reality a Saudi dirty little secret and motive despite all spin to the contrary, perhaps also seeking to inject division and tension in the close Washington-Riyadh alliance.Both Russia and the Saudis opened the taps and prices plunged following Russia's early March declaration that it would be quitting the OPEC plan to slash output by 1 million bpd, conditioned also on Russia-led non-OPEC countries cutting 500,000 bpd. Moscow reasoned that ultimately US shale-oil producers would be the ones benefiting as they had previously, filling the gaps in earlier curtailments. Putin's attack has for the time being had the immediate effect of forcing Riyadh into the awkward position of having to deny it could have been a willing participant in deeper machinations to crush US shale producers in a price war. This as already the steep drop-off in prices have left some US shale producers saying they're ready to initiate voluntary production cuts amid the ballooning oil glut, as the WSJ reported Friday.
Moscow and Riyadh are 'very, very close' to an oil deal, says Russia's sovereign wealth fund chief - Russia and Saudi Arabia are “very, very close” to a deal on oil production cuts, according to the chief executive of Russia’s sovereign wealth fund RDIF. “I think the whole market understands that this deal is important and it will bring lots of stability, so much important stability to the market, and we are very close,” said Kirill Dmitriev, CEO of the Russian Direct Investment Fund. A virtual meeting between OPEC and its allies was scheduled to happen on Monday, but is now “likely” to take place on Thursday instead, sources familiar with the matter told CNBC. Reductions in oil output were expected to be discussed at the meeting that could bring the price war in oil to an end. Chart: World oil market share 200401 Asia Oil futures pared earlier losses after the report on Monday in Asia, with U.S. West Texas Intermediate crude down 2.86% at $27.53 after falling as much as 9% earlier in the session, and Brent crude down 3.31% to $32.98 after briefly turning positive. When asked if Riyadh and Moscow will get together by the end of this week for some kind of deal, Dmitriev said: “Well actually look, a very positive message, I think they’re very, very close.” He pointed to comments by Russian President Vladimir Putin last week when he proposed a combined production cut of 10 million barrels per day, according to a Reuters report. ″(Putin) talked about how important this oil deal is, so Russia is committed,” Dmitriev told CNBC’s “Capital Connection” on Monday. That sentiment was echoed by Andrey Kostin, chief executive of Russia’s VTB Bank. “Russia is definitely very much interested in stabilizing oil prices and ... there’s the political will,” he told “Squawk Box Europe.” “No one is interested in low oil prices. Neither the United States nor Russia, nor the Saudis,” he said. “From this point of view, I think there should be a reasonable agreement achieved at the end of the day.”
Crude Crashes Over 10% After OPEC+ Meeting Delays - As Ransquawk details, an OPEC+ call that was scheduled for Monday has been delayed until Thursday, amid an intensifying dispute between Russia and Saudi Arabia over who is to blame for falling crude prices. Participants are to discuss the demand hit to crude from COVID-19. Analysts do not seem to be convinced that the group will make sufficient progress; the Saudis and Russia have called for other global producers – namely US, Canada and Mexico – to share the burden of cuts, while Norway has also said it would consider cutting production in any coordinated global effort. LEVEL OF CUTS: Ahead of the now notorious March OPEC meeting, there was a recommendation to cut an additional 1.5mln BPD from April 2020 through the end of 2020, with a review in June. The deal was conditional on support from OPEC+, and OPEC said any deal could only be applied on a pro-rata basis, and proposed core members cut by 1mln BPD, and non-OPEC by 500k. Ahead of Thursday's meeting, a figure of 10mln BPD cut to output has been floated (around 10% of global supply), although following a call with Saudi Arabia, US President Trump last week indicated that it could be as much as 15mln BPD. A source has suggested that the 10mln should be slashed from current levels of output. Either way, Goldman Sachs thinks that the demand hit might actually be more like 26mln BPD, and a cut of 10mln BPD may prove to be insufficient.
OPEC+ likely to agree to cut production if U.S. joins effort: sources - (Reuters) - Major oil producers including Saudi Arabia and Russia are likely to agree to cut production at a Thursday meeting but only if the United States joins the effort, aimed at coping with the disastrous effect of the coronavirus on fuel demand, three OPEC+ sources told Reuters on Monday. Worldwide oil demand has dropped by roughly 30%, or about 30 million barrels a day, at the same time that Saudi Arabia and Russia have been flooding markets with extra supply. Last week, in response to a weeks-long market rout, the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, started talking about cutting production, but want other non-OPEC nations to participate, particularly the United States. “Without the U.S., no deal,” one of the sources said. Two OPEC sources said Thursday’s meeting would be held by video conference at 1400 GMT. The United States has not committed to taking part in any deal, which U.S. President Donald Trump has said could take 10% to 15% of world supply off the market. U.S. companies cannot coordinate production due to antitrust laws. The White House has said it was encouraging talks between the other countries, instead. Major U.S. oil companies and industry groups are opposed to mandated cuts, which would be an extraordinary step in the United States. On Friday, G20 energy ministers and members of some other international organisations will hold their own video conference, hosted by Saudi Arabia, a senior Russian source told Reuters. Efforts to get the United States involved in the production cut deal will be on the agenda, the source said.
Wall Street strategist is skeptical of Russia-Saudi 'dance,' says investors should wait - Cantor Fitzgerald’s global chief market strategist said Monday that he is skeptical of the “dance” between Saudi Arabia and Russia over oil production and that a deal from OPEC and its allies would likely not be enough to save struggling United States energy companies. “I’m really, frankly, not all that convinced that this is an all out fist-fight between Saudi Arabia and Russia. I think it might be a little bit more of a veiled attempt, frankly, by both of them to take a swipe at US E&P while US E&P has been shut out of the capital markets,” Peter Cecchini said on “Closing Bell.” Oil prices fell on Monday, with West Texas International futures falling roughly 8% and Brent crude futures slipping 3.1%. A virtual meeting between OPEC and its allies that was originally scheduled for Monday will now likely take place Thursday, sources told CNBC. The head of Russia’s sovereign wealth fund said a deal between his country and the Saudis was “very, very close.” However, Cecchini said that a deal likely wouldn’t boost oil prices enough to prevent more defaults in the energy industry. “I do, by the way, think on Thursday that we get some sort of deal that makes it look like there’s cooperation afoot. But let’s face it, with oil prices this low, for US E&P it doesn’t really matter that much,” Cecchini said. Energy stocks have been crushed this year, with the SPDR S&P Exploration and Production ETF down about 60% in 2020. However, Cecchini said investors should not try to buy the stocks that appear cheap because of the risk of bankruptcies.
Oil Prices Rally as Saudi-Russian Deal “Very, Very Close” – Oil prices rallied in Asia on Tuesday from a dramatic 8%-fall in their last session. International Brent Oil Futures rose 2.43% to $34.11 by 9:52 PM ET (2:52 AM GMT) and U.S. Crude Oil WTI Futures jumped 4.1% to $27.15. Russian Direct Investment Fund’s chief executive told CNBC overnight that his country and Saudi Arabia are “very, very close” to an agreement to cut production. “I think the whole market understands that this deal is important, and it will bring lots of stability, so much important stability to the market, and we are very close,” Kirill Dmitriev, who heads the Russian sovereign wealth fund, added in his interview. Andrey Kostin, chief executive of VTB Bank, agreed with Dmitriev as he said in a CNBC interview, “Russia is definitely very much interested in stabilizing oil prices and ... there’s the political will. No one is interested in low oil prices. Neither the United States nor Russia, nor the Saudis. From this point of view, I think there should be a reasonable agreement achieved at the end of the day.” But even as OPEC+ members are said to be preparing for a virtual meeting on Thursday, investors are focusing on whether the two producers can reach an agreement on production cuts amid plummeting demand. This Saudi-Russia rift, that’s really key to the deal,” Herman Wang, S&P Global (NYSE:SPGI) Platts Middle East and OPEC managing editor, told CNBC. “Set aside whether the U.S. will participate or not,” he said. “Without Saudi and Russia on the same page, there’s no deal to be had at all,” he added.
Oil gains as hopes rise for production cut amid coronavirus outbreak - Oil prices clawed their way into positive territory on Tuesday as hopes that the world’s biggest producers will agree to cut output outweighed analyst fears that a global recession in the wake of the coronavirus crisis could be deeper than expected. West Texas Intermediate crude was up 24 cents, or 0.8%, at $26.27, having dropped nearly 8% in the previous session. Brent crude fell 5 cents to $33 per barrel after falling more than 3% on Monday. “Oil prices are holding their ground with market expectations building on an agreement for an output reduction of 10 million barrels per day (bpd), or at least close to 10 million bpd,” BNP Paribas analyst Harry Tchilinguirian told the Reuters Global Oil Forum. The world’s main oil producers, including Saudi Arabia and Russia, are expected to agree to cut output at a meeting on Thursday, though that would depend on the United States joining in, sources told Reuters. However, the threat of a major recession hangs over the market after the hit to economic activity as a result of the coronavirus pandemic, with half the global population under some form of lockdown or social distancing measures. Worldwide oil demand has dropped by as much as 30%, coinciding with moves by Saudi Arabia and Russia to flood markets with extra supply after a previous output deal fell apart. “With 28 million bpd of oversupply in the oil market in April and 21 million bpd in May, the global coordinated production cuts that are really needed may be too large for the producers to accept; perhaps twice as large as the numbers being discussed,” said Rystad Energy’s Bjornar Tonhaugen. The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia, a grouping known as OPEC+, had been curtailing production in recent years even as the United States ramped up its own output to become the world’s biggest crude producer. There are questions whether the United States would join any coordinated action to curb supply. U.S. President Donald Trump on Monday said that OPEC had not asked him to push domestic oil producers to cut production to buttress prices. He also said that U.S. output was declining in response to falling prices.
EIA cuts 2020 oil price outlook by over 20%, lowers crude production forecasts - The U.S. Energy Information Administration lowered its 2020 forecast for West Texas Intermediate and Brent crude oil prices and cut its expectations for U.S. crude-oil production, according to theShort-Term Energy Outlook report released Tuesday. The EIA pegged its 2020 WTI oil price forecast at $29.34 a barrel, down 23% from its March forecast. It also cut its Brent crude price forecast by nearly 24% to $33.04 for 2020. The agency expects U.S. crude production of 11.76 million barrels a day this year, down 9.5% from the previous view, with its forecast for 2021 output down nearly 13% at 11.03 million barrels a day. In Tuesday trading, May WTI oil was up 26 cents, or 1%, at $26.34 a barrel and June Brent was down 2 cents, or 0.06%, to $33.03 a barrel.
Oil Tumbles 9% on Doubts Whether Any Producer Cuts Will Be Enough - The world is trying to get together to contribute oil production cuts to pacify the Saudi and Russian oil titans in the hope they’ll go back to cutting and cutting even more. Yet crude prices fell 9% on Tuesday, erasing early gains, as traders wondered whether any production restraints now will be enough to rescue a market facing a potential demand loss of 20 million to 30 million barrels per day due to the coronavirus pandemic.West Texas Intermediate, the New York-traded benchmark for U.S. crude, settled down $2.45, or 9.4%, at $23.63 per barrel.WTI rose to $27.24 earlier, trying to restart last week’s record 32% rally, on initial optimism about OPEC+-G20 meetings later this week could result in taking a total of 10 million bpd from the market. That would be the steepest coordinated production cuts in oil’s history and could include unprecedented commitments from Brazil and Canada.Brent, the London-traded global benchmark for crude, settled down $1.18, or 3.6%, at $32.16 per barrel.Brent hit $34.17 earlier before turning negative on doubts that the main actors in the game — Saudi Arabia, Russia and the United States — will be able to send a convincing message to the market on their commitment to put a floor under prices, which were down more than 50% on the year.“The Russians want to cut a nominal 0.5-1 million bpd according to reports and the U.S. might just come to the meetings, saying its production has already fallen 2 million bpd or so over the past month, so that’s it’s contribution,” said John Kilduff, founding partner of New York energy hedge fund Again Capital. “That means the ball will be back at the Saudis’ feet, to see if they’ll do more than the 3 million bpd everyone expects of them.” “The market isn’t inspired at the least by all this, and we could give back a chunk, if not all of the gains from last week, depending how these meetings go.”
A historic production cut from global oil powers this week 'won't necessarily help all that much' - Some of the world’s largest oil producers will meet to discuss a historic production cut later this week, with energy analysts split over the prospect of non-allied partners, including the U.S., signing up to a deal immediately thereafter. An emergency meeting of OPEC and non-OPEC partners, sometimes referred to as OPEC+, will be held on Thursday, as the coronavirus pandemic continues to ravage global oil demand. OPEC kingpin Saudi Arabia and non-OPEC leader Russia are seen as likely to agree to cut production in an effort to arrest an oversupplied market, but only on the condition that the U.S. joins a global pact, Reuters reported, citing unnamed sources. President Donald Trump said Monday that OPEC hadn’t asked “that question” yet, but suggested U.S. oil production had already fallen anyway. Crucially, G-20 energy ministers will convene for their own extraordinary meeting one day after OPEC+ producers sit down for talks. International benchmark Brent crude traded at $33.87 a barrel Tuesday morning, up around 2.5%, while U.S. West Texas Intermediate (WTI) stood at $27.04, more than 3.7% higher. Brent fell over 3% in the previous session, with WTI down more than 7% amid fading hopes of an unprecedented supply cut. Both benchmarks have fallen more than 50% from their January peak.
Oil futures end lower after EIA cuts price forecasts - Oil futures settled lower on Tuesday, giving up earlier gains after the Energy Information Administration lowered its U.S. and global benchmark crude price forecasts for this year and next. Traders also weighed prospects for a global output cut when major producers meet later this week. May West Texas Intermediate oil CLK20, 5.42% fell $2.45, or 9.4%, to settle at $23.63 a barrel on the New York Mercantile Exchange.
WTI Slides On Huge Crude Inventory Build - The American Petroleum Institute (API) estimated on Tuesday a huge crude oil inventory build of 11.938 million barrels for the week ending April 4 as demand destruction stemming from the coronavirus wears on. Today’s inventory move was expected to be for a large build of 9.27 million barrels. In the previous week, the API estimated a large build in crude oil inventories of 10.485 million barrels, while the EIA’s estimates were even more bearish, reporting a build of 13.8 million barrels for the week. Oil prices were trading sharply down on Tuesday afternoon prior to the API’s data release. At 4:02 pm EDT on Tuesday the WTI benchmark was trading down on the day by $1.65 (-6.33%) at $24.43, although it is still up $4 per barrel week over week. The price of a Brent barrel was also trading down on Tuesday, by $0.70 (-2.12%), at $32.35—up by roughly $6 week on week. The higher prices over last week was due mainly to optimism that OPEC+ could reach a production cut deal and bring other states on board the cuts as well. The API reported a large build of 9.445 million barrels of gasoline for week ending April 4, after last week’s 6.085-million-barrel build. This week’s build compares to analyst expectations for a 4.333-million-barrel build for the week. Distillate inventories were down, by 177,000 barrels for the week, compared to last week’s 4.458-million-barrel draw, while Cushing inventories saw a large gain of 6.804 million barrels. US crude oil production as estimated by the Energy Information Administration showed that production for the week ending March 27 was unchanged at 13.0 million bpd. At 4:36 pm EDT, WTI was trading at $24.05 while Brent was trading at $32.04
Oil Prices Tumble After Record Inventory Builds, Collapse In Demand - Oil prices have been on a vicious rollercoaster overnight, surging (oddly) after API reported US inventories rose by almost 12 million barrels last week (while those in Europe grew by a similar amount, according to data provider Kayrros); then tumbling as Europe opened, only to be panic-bid from around the US equity market open this morning (WTI testing up to $25). This came after the U.S. slashed its 2020 oil-production forecast by more than 1 million barrels a day on Tuesday, a move that could be enough to satisfy Riyadh and Moscow. “Many oil producers around the world are now increasingly forced to reduce or close production basically because pipelines and local storage facilities are full,” said Bjarne Schieldrop, chief commodities strategist at SEB AB. “Natural declines or forced production cuts will thus likely be counted as deliberate cuts” when OPEC and other producers thrash out a deal in talks on Thursday. So, all eyes once again on the official inventory data this morning as the real impact of global lockdowns begins to show itself. DOE:
- Crude +15.177mm - biggest build ever
- Cushing +6.417mm- biggest build ever
- Gasoline +10.497mm - second biggest build ever
- Distillates +476k
Massive surges in stockpiles last week, (and API reporting huge builds in the latest week) were followed in the latest week by even bigger builds...
Huge Inventory Build Halts Oil Price Rally - A week after reporting the largest oil inventory build since 2016, the EIA once again had bad news for oil bulls: inventories added 15.2 million barrels over the week to April 3, the authority said. This compared with a build of 13.8 million barrels for the week before and analyst expectations of a build of 10.13 million barrels. A day earlier, the API estimated inventories had added 11.94 million barrels in the first week of April. The EIA also reported gasoline inventories had increased by 10.5 million barrels and distillate fuel inventories had added 476,000 barrels. This compared with a gasoline inventory increase of 7.5 million barrels for the previous week and a distillate fuel inventory fall of 2.2 million barrels. A day before the EIA released its weekly petroleum report, it issued its latest-Short-Term Energy Outlook, in which the authority forecast a substantial decline in fuel demand over the first half of the year with the hardest blow to come in the current quarter. The EIA said it expected gasoline consumption alone to fall by 1.7 million bpd this quarter from last, to 7.1 million bpd. During the second half of the year, however, gasoline consumption should recover to 8.9 million bpd. Refineries processed 13.6 million bpd of crude last week, the EIA also said in its weekly report, which compared with 14.9 million bpd a week earlier as the first signs of the demand slump became visible. Gasoline production last week averaged 5.8 million bpd, with distillate fuel production at 5 million bpd. This compared with a daily average of 7.5 million bpd for gasoline and 5 million bpd for distillate fuels a week earlier. Despite the API’s gloomy weekly update on inventories and the EIA’s report today, oil prices may continue trending higher for at least another day. OPEC and its partners in the production cuts are scheduled to meet tomorrow to decide on another, much deeper cut that will involve other producers such as Canada and Norway as well.
OPEC+ oil cut talks head down to the wire, with Saudis, Russians still not on same page — Saudi Arabia's attempt to negotiate a global pact with Russia to rescue oil prices from the coronavirus crisis will come to a head Thursday, when ministers from OPEC and other key countries log on to a high stakes online summit to settle geopolitical scores and parcel out production cuts. Stay up to date with the latest commodity content. The meeting will not include the world's largest oil producer, the US, though Energy Secretary Dan Brioullete is expected to take part in an emergency Saudi-chaired G20 ministerial webinar Friday that could endorse and widen any OPEC+ accord to narrow the widening gap between surplus oil supply and sickly demand. With Trump administration officials exerting strong back-channel pressure on the countries to close a deal to stave off further industry bleeding, Saudi Arabia and Russia will likely be motivated to avoid a repeat of their last meeting a month ago, which ended in recriminations and launched a bitter price war. Dated Brent prices have fallen some 70% since that meeting, and the market is waiting to see if the so-called OPEC+ alliance can craft a deal that claws back 10 million-15 million b/d of global supply, as US President Donald Trump claimed last week was in the works. Russia would be willing to cut 1.6 million b/d from its Q1 production level, Tass news service reported Wednesday, while Saudi Arabia has not disclosed how much output it would be willing to rein in, as the two countries remain split over the baseline production figures from which to determine new quotas. "The dilemma for Saudi and Russia is whether they will benefit from throwing the high cost producers a lifeline," said Chris Midgley, global head of S&P Global Platts Analytics. Saudi Arabia and Russia, the two OPEC+ leaders, have insisted that they will only participate if the US also agrees to production cuts. US President Donald Trump, however, is hostile to the idea, and US officials instead have offered up as their contribution to a deal projections from the Energy Information Administration showing that American oil output will fall on its own by 1.81 million b/d in a year due to market forces. Russia, however, has rejected that line of reasoning, with Kremlin spokesman Dmitry Peskov telling reporters in Moscow that conflating involuntary declines with actual production cuts "is like comparing length and width."
Crude settles higher as Russia signals willingness to cut output — Crude futures settled higher Wednesday on optimism that Thursday's OPEC+ meeting would yield a production cut agreement.ICE June Brent settled 97 cents higher at $32.84/b and NYMEX May WTI was up $1.46 on the day at $25.09/b.Oil rallied in the final minutes of trading after the Tass news service reported that Russia would be willing to cut 1.6 million b/d from its Q1 production level. Crude futures shot to session highs following the report, with Brent and WTI jumping around $1.20/b and $1.60/b respectively.NYMEX May ULSD settled down 1.68 cents at $1.0107/gal and May RBOB was up 2.98 cents at 67.80/gal at market close.Ministers from OPEC, Russia and nine other producers - the so-called OPEC+ group - will log on to a high-stakes online summit Thursday to settle geopolitical scores and parcel out production cuts."The following 24 hours will be critical for global oil prices," OANDA senior market analyst Edward Moya said. "With global storage tanks nearing capacity, this OPEC members and allied producers meeting should see some consensus reached, otherwise ugly uncoordinated production cuts could happen over the next couple of months." The meeting will not include the world's largest oil producer, the US, though Energy Secretary Dan Brioullete is expected to take part in an emergency Saudi-chaired G20 ministerial webinar Friday that could endorse and widen any OPEC+ accord to narrow the widening gap between surplus oil supply and sickly demand. But Ryan Sitton, a commissioner at the Texas Railroad Commission, said Wednesday that US crude output would fall at least 4 million b/d over the next three months "organically."
Oil prices jump as focus swivels to OPEC, Russia meeting on output cuts - Oil prices jumped on Wednesday, supported by hopes that a meeting between OPEC members and allied producers on Thursday will trigger output cuts to shore up prices that have collapsed due to the coronavirus pandemic. Thursday’s videoconference meeting between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia is expected to be more successful than their gathering in March, which ended in a failure to extend supply cuts and a price war between Saudi Arabia and Russia. “The coming extraordinary producing-countries meeting is the only hope on the horizon for the market,” U.S. West Texas Intermediate crude rose 73 cents, or 3%, to trade at $24.34 per barrel. Brent crude gained 40 cents, or 1.3%, to trade at $32.26 per barrel. On Wednesday the U.S. Energy Information Administration said that inventory rose by 15.2 million barrels for the week ending April 3. Analysts had been expecting a build of 9.67 million barrels, according to estimates from FactSet. Crude has collapsed in 2020 because of a slide in demand due to the coronavirus outbreak and excess supply. Brent dropped to $21.65, its lowest since 2002, on March 30. While OPEC sources have said a deal to cut production is conditional on the participation of the United States, doubts remain as to whether Washington will contribute. The U.S. Department of Energy said on Tuesday U.S. output was already declining, without government action. U.S. crude production is expected to slump by 470,000 bpd and and demand is set to drop by about 1.3 million bpd in 2020, the U.S. Energy Information Administration (EIA) said on Tuesday. Before the OPEC and other producers’ meeting, the latest round of U.S. oil inventory data will be in focus on Wednesday. In a sign of excess supply, the American Petroleum Institute, an industry group, said U.S. crude inventories jumped by 11.9 million barrels.
Expectations for an oil deal remain low ahead of crucial OPEC+ meeting - Oil markets are facing their greatest moment of uncertainty in decades ahead of a virtual meeting of OPEC+ — the alliance of OPEC and non-OPEC producers — on Thursday, which was delayed from Monday over persistent disagreements and abrasiveness between some leading member states. In the spotlight will be whether countries can agree to communally cut crude production in order to salvage plunging prices at a time when no one is buying oil and the world is running out of places to put it. “Stalemate is not an option for any of the parties involved,” “It’s only a matter of time” until some agreement is reached, he said, predicting “a matter of weeks as opposed to months.” “It’s against everyone’s interest to oversupply the world,” Saleri said. “There is a common element here, and that is that everybody is hurting.” It comes as oil prices are down more than 50% year to date, with global benchmark Brent crude trading at $31.94 per barrel Wednesday and U.S. West Texas Intermediate at $24.18 per barrel 9:00 a.m. ET. Oil situation likely to endure whole 2nd quarter: Fmr Saudi Aramco executive vice president At the same, leading producers Saudi Arabia and Russia are engaged in a price war, increasing or maintaining production to grow their market share, while U.S. shale companies are pumping at record levels. Oil prices are at their lowest in nearly two decades, prompting massive capex and job cuts across the U.S. shale basin where high-cost operations are no longer economically viable. But Russia and Saudi Arabia’s market share strategies will be painful to sustain too, Saleri said. “The economies of Saudi Arabia and Russia are all being affected by the oil prices.” If Saudi Arabia and Russia are to cut their output — as President Donald Trump has called on them to — they want to see the U.S. play its part in cutting too. The tense dynamics of big egos and foreign relations among the world’s heavyweight energy players will now determine the future of the entire global oil industry. That now means not just OPEC+ producers, but also the U.S., Canada, Norway and Brazil. In the U.S., production levels are decided by individual companies, making a centralized cutting effort extremely difficult — and something that Trump has made clear he will not do. But even American executives are now calling for industry cuts, in line with market forces.
Oil prices rise on optimism OPEC+ meeting will result in supply cut - Oil prices rose on Thursday on expectations the world’s largest oil producers would agree to cut production at a meeting later in the day as the industry grapples with a coronavirus-driven collapse in global oil demand. Brent crude futures rose 1.2%, or 41 cents, to $33.25 a barrel as of 0529 GMT. The contract rose to an intra-day high of $33.90, climbing for a second day. U.S. West Texas Intermediate (WTI) crude futures were up 3.3%, or 82 cents, at $25.91 a barrel, after earlier climbing by as much as 6.1%. The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia — a group known as OPEC+ — are set to convene a video conference meeting on Thursday. The meeting is expected to be more successful than their gathering in March, where they failed to agree to extend supply cuts and triggered a price war between Saudi Arabia and Russia. Hopes of an agreement to cut between 10 million and 15 million barrels per day (bpd) rose after media reports suggested Russia was ready to reduce its output by 1.6 million bpd and Algeria’s energy minister said he expected a “fruitful” meeting. Such a sizable reduction would be far bigger than any production cut OPEC has ever agreed on before. “We’re waiting with bated breath,” said Lachlan Shaw, head of commodity research at National Australia Bank. “I think there’ll be a deal, which will bring a bit of cheer in the short run. Then everyone’s attention will refocus on the fundamentals. The fundamentals are appalling,” he said. Following the OPEC+ meeting, energy ministers from the Group of 20 major economies are set to meet to find ways to help ease the impact of the COVID-19 pandemic on global energy markets. “If the G20 came out and talked about adding to strategic reserves, that would be taken positively,” Shaw said. However with oil prices having lost half their value since the start of the year and oil demand forecast to slide as much as 30%, analysts are skeptical about how effective an OPEC+ cut would be in shoring up prices. “Ultimately, the size of the demand shock is simply too large for a coordinated supply cut,” Goldman Sachs said in a note. Moreover, given the rapidly rising oil inventories, the market is likely to be still awash with cheap oil even when demand recovers. U.S. Energy Information Administration data on Wednesday showed crude stocks rose by 15.2 million barrels, their biggest ever one-week rise.
These are the three big things to focus on from OPEC and the G-20 meetings over the next 48 hours - There are three big things to focus on from OPEC and the G-20 meetings over the next 48 hours: 1) total global output cut, 2) benchmark production levels for those cuts, and 3) the length of time of any formal deal. The world is expected to cut an unprecedented 12 million to 15 million barrels of oil per day from global production. Assuming talks don’t break down, here’s a very simplistic possible breakdown of how the cuts play out garnered from a variety of research:
- OPEC = 5 million to 6 million barrels per day
- Russia = 1.5 million barrels per day
- US = 1.5 barrels per day, within a few months
- Brazil, Canada, Mexico = 1.2 million to 1.5 million barrels per day
- Norway = 250,000 barrels per day
- Others = 1 million barrels per day
So by late Friday a variety of agreements could be made to remove nearly 12 million barrels of oil from the daily global market. But like everything with global energy politics, it’s not that simple. One major sticking point of any OPEC+ Russia deal is from what level of production do any Saudi cuts originate. Saudi production has risen over the past two months as the market share and price war kicked off. The Saudis are willing to cut more than any single producer, but Russia and Iran have made it fairly clear that whatever cuts come from the Kingdom must come from pre-output surge levels, not current production. In other words, if the Saudis cut, say, 3 million barrels per day, that should come off of the 10 million output figure, not the newer 12.5 million level, because then was it really a big cut at all? On the U.S. side, keep in mind that we have neither a national American producer nor an OPEC, so there is no way for us to assure OPEC or the G-20 that any cuts can be guaranteed. It’s every company for itself in the Permian Basin right now. Maybe even more vital than the output cut size are the length of any deals made. The world is oversupplied by 25 million to 30 million barrels per day of oil. So whatever happens at OPEC and the G-20 won’t be enough to balance the market. The goal is only to minimize the damage until the world can get back on its economic feet. An extra 30 million barrels of oil floating around the world (literally, now, on ships) could grow to 2.7 billion barrels over the next three months. That would completely overwhelm global storage and oil could quickly slide to single-digit prices. Taking 15 million barrels per day from that supply cuts 1.35 billion barrels from those totals over the next 90 days, and makes managing that storage a little easier, with hope that economies everywhere begin to recover sooner than later and demand picks back up. The longer a deal, the better, or markets may simply decide the path of least resistance for prices is down once again.
OPEC and allies to decide on historic oil production cut as coronavirus ravages demand - Some of the world’s largest oil producers will try to agree on the terms of historic output cuts on Thursday, as the coronavirus pandemic continues to crush worldwide demand for crude. An emergency video meeting between OPEC and non-OPEC partners, sometimes referred to as OPEC+, started shortly after 4:10 p.m. Vienna time. President Donald Trump has fueled hopes of a cut far larger than any deal OPEC+ has ever agreed on before, suggesting the energy alliance could take between 10 to 15 million barrels of crude off the market. International benchmark Brent crude traded at $35.86 a barrel Thursday afternoon, up over 9%, while U.S. West Texas Intermediate (WTI) stood at $27.92, more than 11% higher. Oil prices surged higher shortly after Reuters, citing one unnamed OPEC source and one unnamed Russia source, reported OPEC+ had secured a deal — one that could climb as high as 20 million barrels per day (roughly 20% of global supplies). A simmering feud between OPEC kingpin Saudi Arabia and non-OPEC leader Russia is thought to be one of many possible complications to an unprecedented production cut. On Thursday morning, Reuters, citing two unnamed OPEC sources, reported that Riyadh and Moscow continue to disagree over the baseline and volumes for any oil cuts. Shortly thereafter, a spokesperson for Russian President Vladimir Putin told Reuters that the Kremlin had no plans to discuss oil markets with the leadership of Saudi Arabia or the U.S. on Thursday.
Saudi Arabia, Russia strike deal to reduce oil production amid market tumult: reports - Russia and Saudi Arabia have agreed to cut oil production as world leaders eye historic cuts of as much as 20 million barrels per day in an effort to stabilize crashing oil markets, according to reports from multiple outlets. A trade war between the two nations has led to an oversupply in the oil market as coronavirus brings the economy to a standstill, crushing demand for petroleum. Saudi Arabia will limit production by 4 million barrels per day from April production totals, while Russia will reduce output by 2 million barrels per day, according to The Wall Street Journal. The deal was reached at a virtual meeting of the Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing countries. This falls below projections from President Trump, who hoped to strike a deal with the two nations to reduce production anywhere from 10 million to 15 million barrels per day. Energy Sec. Dan Brouillette told CNBC Thursday morning that surpassing the 10 million barrels a day figure could rely on securing commitments from other countries. “I think they can easily get to 10 million, perhaps even higher. And certainly higher if you include the other nations who produce oil, nations like Canada, Brazil and others, it’s easily, easily done,” he said. A 20 million barrel per day cut would represent a massive decline in global production equivalent to nearly 20 percent of global supplies, according to Reuters. Such a deal may be difficult to attain without commitments from multiple countries, leaving talk of a 10 million barrel per day cut very much on the table. Neither figure would compensate for the decline in oil demand, which has dropped 30 percent due to the pandemic. Oil was trading at roughly $26 a barrel Thursday morning, down from a February high of $53 per barrel.
Oil jumps 12% amid report Saudi Arabia and Russia have reached a deal, cut could reach 20 million barrels per day -- Oil prices jumped on Thursday on reports that Saudi Arabia and Russia have reached a deal on a deep output cut, according to Reuters which cited two sources, and that cuts could reportedly be as high as 20 million barrels per day. The reported deal comes as a virtual meeting between OPEC and its allies, known as OPEC+, kicked off in which some of the world’s largest producers were set to discuss production policy as the coronavirus pandemic saps demand for crude. U.S. West Texas Intermediate jumped 12% to trade at $28.36 per barrel, while international benchmark Brent crude rose 8.5% to trade at $35.79 per barrel. “We’re optimistic that they’ll reach an agreement between the Saudis and Russians in an effort to stabilize the markets,” U.S. Energy Secretary Dan Brouillette said Thursday on CNBC’s “Squawk Box” ahead of the meeting. “I think they can easily get to 10 million, perhaps even higher, and certainly higher if you include the other nations who produce oil, nations like Canada and Brazil and others. Easily, easily done,” he added. The virtual meeting, which was initially planned for last Monday, began around 10 a.m. ET. President Donald Trump had fueled hopes of a cut far larger than any deal OPEC+ has ever agreed on before, suggesting the energy alliance could take between 10 million to 15 million barrels of crude off the market. The meeting comes as relations between some of the world’s largest producers has grown fraught, and Saudi Arabia and Russia have signaled that any cut would need to include action from non-OPEC nations such as the U.S., Canada and Norway. “OPEC+ is trying mightily to cobble together a sizable production cut, and they are in full spin mode to try and rally prices,” Again Capital’s John Kilduff told CNBC. The “teleconference will be a make-or-break moment for the oil market. The math on a 10 million barrel per day cutback, which is the minimum necessary to stabilize the situation, is almost impossible to compute.” Energy ministers from the Group of 20 major economies will convene for their own extraordinary meeting on Friday, in which Energy Secretary Dan Brouillette will participate. The G-20 presidency said Tuesday that the meeting would be held “to foster global dialogue and cooperation to ensure stable energy markets and enable a stronger global economy.” When it comes to U.S. energy companies, Trump has commented that market forces will prevail, and on Wednesday said that producers have “already cut way back.” Brouillette echoed this on Thursday, telling CNBC that the “demand downturn has led to production cuts in the United States of about 2 million barrels per day thought the reminder of 2020.”
Too Little Too Late? Russia And Saudi Arabia Reach Truce In Oil Price War - OPEC+ leaders Saudi Arabia and Russia arrived at an historic crude production cut late Thursday, effectively halting a bitter oil war which saw prices implode by more than 50% from January highs. Details from the virtual OPEC+ conference have just emerged:
- Members will adjust downwards their overall crude oil production by 10.0 mb/d, starting on 1 May 2020, for an initial period of two months that concludes on 30 June 2020. For the subsequent period of 6 months, from 1 July 2020 to 31 December 2020, the total adjustment agreed will be 8.0 mb/d.
- To be followed by a 6.0 mb/d adjustment for a period of 16 months, from 1 January 2021 to 30 April 2022.
- The baseline for the calculation of the adjustments is the oil production of October 2018, except for the Kingdom of Saudi Arabia and The Russian Federation, both with the same baseline level of 11.0 mb/d.
- The agreement will be valid until 30 April 2022, however, the extension of this agreement will be reviewed during December 2021.
The U.S. shale patch has been rooting for such an agreement, which ideally would cut supply, raise prices, and toss a lifeline to an industry that has been buffeted by catastrophically low prices. President Trump pushed for a 10-15 million bpd OPEC production cut personally in an April 2nd phone call with Russia’s Vladimir Putin and Crown Prince Saudi Arabia Mohammed bin Salman. It seems OPEC listened.
Saudis, Russians Bury Differences, but Mexico Threatens Oil Deal – WSJ - Saudi Arabia and Russia agreed in principle Thursday to lead a 23-nation coalition in massive oil-production cuts after a monthlong feud and a drop in demand due to the coronavirus crisis devastated oil prices. But following more than 11 hours of negotiations, Mexico abruptly exited the talks, jeopardizing a final pact.Delegates said the talks would continue at a Group of 20 meeting of energy ministers set for Friday.Prices shot higher ahead of the Saudi-Russia announcement before abruptly losing momentum and reversing course. The benchmark U.S. crude price, for May delivery, ended 9.3% lower on the day at $22.76 a barrel.Two of the world’s top oil producers joined a coalition of other countries via teleconference, seeking a solution to the global crude glut. The meeting includes representatives from 13 countries in the Organization of the Petroleum Exporting Countries, 10 countries led by Russia, and a handful of other crude-producing nations.For Saudi Arabia, the output curbs will involve decreasing its current production level of 12 million barrels by 3.3 million barrels a day, while Russia has agreed to cut 2 million barrels a day from its current production of 10.4 million barrels a day.Most delegates in attendance agreed to reduce output by a collective 10 million barrels a day in May and June, OPEC said in a press release. They would then continue curbs of 6 million barrels a day until April 2022, it said.But the group said the agreement remains “conditional on the consent of Mexico.”Late in Thursday’s proceedings, Mexico, a member of the alliance, refused to join the cuts, putting the deal in jeopardy, they said.Mexican officials believe that stronger players in the oil market, such as the U.S., Russia and Saudi Arabia, should be cutting back more than Mexico, an oil official in that country said. But as a compromise, Energy Minister RocÃo Nahle said Mexico had proposed a reduction of 100,000 barrels a day in the next two months. Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, told the gathering there would be no final deal without resolving the Mexico issue and talks would continue at a G-20 meeting Friday, the delegates said. “No deal without Mexico, the Saudi prince said [it] loud and clear,” said a participant in the call. Even as the deal looked nearly completed, investors remained concerned that the cuts might not be enough to support higher prices in the coming weeks as world-wide lockdowns pummel demand for gasoline, diesel and jet fuel. The curbs will mitigate some issues in oil markets, “but in a sense, it’s too little, too late for this month, given the collapse in demand. The boats are loaded, the pipes are full and the refineries are cutting runs,”
Mexico throws OPEC's historic oil production cut into doubt ahead of G-20 meeting - Oil producer group OPEC and its allies failed to comprehensively secure a deal to take a historic amount of crude off the market on Thursday, after Mexico balked at the suggested production cuts. An energy alliance of some of the world’s most powerful oil producers, sometimes referred to as OPEC+, proposed a deal to cut 10 million barrels per day following a marathon video meeting that stretched deep into the evening. The deal was agreed on by all OPEC and non-OPEC producers participating in the conference, with the exception of Mexico. It means the cuts, which amount to roughly 10% of global supply, will not take place unless the broader alliance also receives their consent. U.S. West Texas Intermediate fell 9.29%, or $2.33, to settle at $22.76 per barrel on Thursday evening. Earlier in the session, the contract had been up more than 12% trade at a session high of $28.36. International benchmark Brent crude slipped 4.14% to settle at $31.48, after earlier hitting a high of $36.40. Both Brent and WTI futures are in bear market territory, down 53% and 63% respectively since climbing to a January peak. Oil markets are closed on Good Friday. To be sure, the suggested cuts are far larger than any deal OPEC+ has ever agreed on before, but many are concerned it won’t be enough to prop up prices with the market already awash with crude as the coronavirus crisis ravages global demand. Led by OPEC kingpin Saudi Arabia and non-OPEC leader Russia, the group outlined a cut of 10 million barrels per day from May 1 for an initial period of two months through to June 30. For the subsequent six months, OPEC+ said in a statement that from July 1 through to December 2020, the total adjustment agreed would amount to a cut of 8 million barrels per day. Thereafter, for a period of 16 months through to April 30, 2022, the cuts would amount to 6 million barrels per day. Following Thursday’s emergency meeting, Mexico’s Secretary of Energy Rocio Nahle said in a tweet that the country would be willing to cut production by 100,000 barrels per day for the next two months. OPEC+ had reportedly asked for a cut of 400,000 barrels per day, according to Reuters. Crucially, the record size of the potential cut was not contingent on nations outside of OPEC+ curbing production, which some had suggested might be a stipulation for Saudi Arabia and Russia to scale back production.
Oil Prices Crash Towards $20 Despite Historic Cuts -- OPEC+ agreed to the largest oil production cuts in history on Thursday, but oil prices crashed towards $20 as markets decided that a 10 million bpd cut was insufficient to balance the demand deficit. Today, the G20 will meet to discuss more cuts and more details will likely come out about the OPEC+ deal. Markets are closed today and so all eyes will be on developments over the weekend.OPEC+ agreed to joint cuts on the order of 10 mb/d, a historic agreement. The deal calls for both Saudi Arabia and Russia capping production at 8.5 mb/d for May and June, after which cuts would ease in phases – down to 8 mb/d and then to 6 mb/d of cuts. The deal was not received well by the markets, which sold off WTI and Brent over fears that the reductions are inadequate. “The supply and demand fundamentals are horrifying,” said OPEC Secretary-General Mohammed Barkindo. OPEC+ is also looking for help from other non-OPEC countries in the G20. Mexico temporarily held up the OPEC+ deal because it does not want to cut. At the time of this writing, Mexico’s president said that he spoke with President Trump, who promised to contribute to the cuts on Mexico’s behalf. “First they asked us for 400,000, then 350,000” Mexico’s President Lopez Obrador said. Mexico was only able to cut by 100,000 barrels a day, and Trump “very generously expressed to me that they were going to help us with an additional 250,000 to what they are going to contribute. I thank him.”. The OPEC+ deal is historically large, but still insufficient to plug a 20 to 30 mb/d decline in demand. Inventories are set to rise in the coming months. “The proposed 10 million bpd cut by OPEC+ for May and June will keep the world from physically testing the limits of storage capacity and save prices from falling into a deep abyss, but it will still not restore the desired market balance,” Rystad Energy said. Other analysts also said the risk is to the downside. “These cuts are not enough to prevent massive stockbuilds in May, let alone April,” JBC Energy wrote in a note. Oil prices could fall back despite the cuts.
Oil prices fall again despite Opec+ deal to cut production - Oil prices dropped on Friday as traders feared that an Opec deal to slash global supplies by 10% would not offset a historic drop in demand due to the coronavirus outbreak. The price of Brent crude fell nearly 2.5% to $31.82 per barrel on Friday, despite news that the oil cartel and allies – known as Opec+ – had reached a deal that would end a price war between Saudi Arabia and Russia that threatened to flood the market with more oil than the world could use. Mexico initially cast some doubt over Opec’s plans, after apparently refusing to sign up to its share of cuts, which would have been 400,000 barrels per day (bpd). The country instead offered to cut 100,000 bpd. The central American country signalled on Friday that the US may be willing to make further cuts to its production in order to allow Mexico to make less stringent reductions. Mexican president Andrés Manuel López Obrador said that US president Donald Trump had agreed to help out by cutting additional US output. However, G20 energy ministers did not mention production cuts in a statement released after a virtual summit hosted by Saudi Arabia on Friday. The meeting had been expected to seal the deal on production cuts but the statement pledged that the G20 would work together to ensure oil “market stability”. “We commit to ensure that the energy sector continues to make a full, effective contribution to overcoming Covid-19 and powering the subsequent global recovery,” the statement said.
Record oil production cut hangs in the balance as G20 meeting concludes with no specifics - A record oil production cut hangs in the balance after energy ministers from the Group of 20 major economies on Friday agreed that stabilization in the market is needed, but stopped short of discussing specific production numbers. “To underpin global economic recovery and to safeguard our energy markets, we commit to work together to develop collaborative policy responses,” a press release said. “We recognize the commitment of some producers to stabilize energy markets. We acknowledge the importance of international cooperation in ensuring the resilience of energy systems.” The energy ministers’ meeting came one day after oil producer group OPEC and its allies — in their own emergency meeting — proposed taking a record 10 million barrels per day of crude off the market. In a marathon video meeting that lasted for more than nine hours on Thursday, all members of OPEC and its allies, commonly known as OPEC+, agreed to the cuts apart from Mexico. This means the cut, which amounts to roughly 10% of global supply, is still subject to the country’s approval. On Friday President Donald Trump said the U.S. would cut production in an effort to get Mexico “over the barrel.” Mexico’s portion of the OPEC cut amounts to 400,000 bpd, which the country refused. Following Thursday’s meeting, Mexico’s Secretary of Energy RocÃo Nahle said the country would be willing to take 100,000 bpd offline. At a White House press briefing on Friday, Trump said he spoke to Mexico’s President Andrés Manuel López Obrador and had agreed to “pick up some of the slack” by cutting production on behalf of Mexico. He did not elaborate on how the cuts would be enacted, and said Mexico would reimburse the U.S. at a later date. Trump has sought to ease relations between Saudi Arabia and Russia since a price war broke out between the two powerhouse producers following OPEC+’s meeting on March 6. The OPEC+ meeting was scheduled after Trump said he spoke to Putin and Saudi Crown Prince Mohammed bin Salman, and expected them to announce a deal. While Trump has previously stopped short of saying the U.S. would scale back production, he has noted that market forces would naturally curb output. U.S. Energy Secretary Brouillette reiterated this point on Friday, saying that about two million bpd of U.S. production would have been taken offline by the end of the year, with the number potentially as high as three million. OPEC+’s proposed cut was not contingent on nations outside of the group curbing output, although the expectation is that there will be global efforts to prop up the market. The coronavirus-induced demand loss has sent oil prices tumbling to near two-decade lows.
Industrialized Nations Fail to Come Up With Oil-Market Fix – WSJ -- A virtual summit of Group of 20 energy ministers failed on Friday to devise a detailed plan to help resolve an unprecedented oil glut partly triggered by the coronavirus pandemic. Some producers continue to pin their hopes on President Trump, who has emerged in recent weeks as a top diplomatic presence in oil-market talks. The G-20 gathering came a day after an alliance of producers including the Saudi-led Organization of the Petroleum Exporting Countries failed to complete a collective oil truce with Russia and other oil-producing nations. The majority of countries at that meeting agreed to take part in oil-production cuts to support prices. Mexico refused to join production curbs and had yet to reach a deal with OPEC Friday, putting the broader international agreement in jeopardy. OPEC had expected Friday’s G-20 meeting to show that the U.S., Canada, the U.K. and other producers not allied with the cartel can pull back 4 million barrels a day of output, according to delegates at Thursday’s meeting. OPEC and its allies including Russia are trying to complete a deal that would have them cut 10 million barrels a day. But the meeting ended with a press release that didn’t mention specific targets for oil-output reductions. “We recognize the commitment of some producers to stabilize energy markets,” said the press release. “We acknowledge the importance of international cooperation in ensuring the resilience of energy systems.” Energy Secretary Dan Brouillette, who represented Mr. Trump at the G-20 meeting, told attendees Friday that U.S. production would fall by nearly 2 million barrels a day by the year’s end. And Norway and Brazil said they were either cutting production or planned to do so, according to people familiar with the deliberations. And the G-20 officials agreed to set up a special committee to monitor oil markets, according to the press release. Mr. Brouillette has been the Trump administration’s point man in its efforts to help resolve a month-long oil-price war between Saudi Arabia and Russia. Behind the scenes, Mr. Trump has been making frequent late-night phone calls to Russian President Vladimir Putin, King Salman of Saudi Arabia and other key players in the oil market.
US deal with Taliban breaks down while coronavirus spreads in Afghanistan - A “peace” deal concluded between Washington and the Taliban Islamist movement that was supposed to bring an end to US imperialism’s longest war is rapidly unraveling amid rising violence and the failure of the crisis-ridden Kabul regime to carry out a prisoner release agreement brokered by Washington. The Taliban warned on Sunday that the agreement signed in the Qatari capital of Doha on February 29 is breaking down under the impact of what it charges are US violations in the form of airstrikes that have targeted its forces and killed civilians. The latest reported airstrike took place early Sunday in the central Afghan province of Uruzgan, leaving at least eight civilians killed and two others gravely wounded according to regional officials. The Taliban blamed the US and its NATO-led “coalition” for the attack. In another incident on Sunday, the Taliban charged that an airstrike carried out against a funeral in southern Zabul province killed two civilians. The Afghan Ministry of Defense claimed that its forces had attacked Taliban fighters there after a clash at a checkpoint manned by security forces of the Kabul regime. Warning that its deal with the US was reaching the breaking point, the Taliban stated that the attacks had created “an atmosphere of mistrust that will not only damage the agreements, but also force the mujaheddin to a similar response and will increase the level of fighting.”
China Prepares To Close "Oil Deal Of A Lifetime" In Iraq - Over the past week or so, China has eased quarantine measures in Wuhan – the city in which the global coronavirus pandemic began – with the entire lockdown scheduled to end on 8 April. With China’s President Xi Jinpiang having visited the city just a few days ago, the industrial economy across China as a whole is back working and operating at levels even above the pre-coronavirus rates, although the service sector remains more cautious.For the oil industry, this means that China is back and busy taking up where it left off in terms of exploring and developing new field opportunities.This is at a time when the U.S. is just beginning to see the full onset of coronavirus mayhem. There has been no clearer sign of this move by China than last week’s awarding of a US$203.5 million engineering contract for Iraq’s supergiant oil field, Majnoon, to the little known China Petroleum Engineering & Construction Corp (CPECC).With the U.S.’ focus increasingly on fire-fighting the coronavirus outbreak at home, Beijing has good reason to believe that it has largely a clear run at target country Iraq, provided that it does not stick it too much in the U.S.’ craw. This specifically means continuing to develop oil and gas field opportunities in geopolitically ultra-sensitive areas, such as Iraq, on the basis of rolling contracts for specific work undertaken by companies that are not top of the U.S.’ radar, like CPECC.This method is also being used by Russia, and the focus of it right now is Iraq and Iran, two countries that are right in the centre of the Middle East and vital to both China’s ‘One Belt, One Road’ multi-generational dominance strategy and to Russia’s ongoing attempt to sequestrate the entire Middle East. Majnoon is a key focus in Iraq because it has so much oil that its very name in Arabic means ‘insane’, to signify the insane amount of oil that has always been present there. Before the U.S. noticed that China was stealthily acting hand in glove with Russia to provide the money where the muscle had been put in place, the ever-fractious senior Iraqi politicians had offered China a stunningly lucrative deal for the development of the Majnoon field. Specifically, the terms of the deal were that China would obtain a 25-year contract but one that would officially start two years after the signing date. This would allow China to recoup more profits on average per year and less upfront investment.
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