oil prices finished higher this week on strong US economic data after OPEC and the IEA had already revised their oil demand forecasts higher...after falling 3.5% to $59.32 a barrel last week on rising oil supplies and fears of falling demand, the contract price of US light sweet crude for May delivery slipped in thin trading early on Monday as rising Covid-19 case numbers globally kept a lid on prices, but recovered to close 38 cents higher at $59.70 per barrel on optimism over the pace of coronavirus vaccinations in the United States, and after the Yemeni Houthis said they fired missiles at Saudi oil sites...oil prices moved almost a dollar higher early Tuesday on the release of strong Chinese import data, but settled just 48 cents higher after the FDA halted use of Johnson & Johnson's COVID-19 vaccine over blood clot concerns...oil prices then jumped on Wednesday after the EIA reported a much larger draw from crude inventories than had been expected, and then finished $2.97 or nearly 5% higher at $63.15 a barrel on a report from the International Energy Agency that predicted global oil demand and supply would rebalance in the second half, and that producers might then need to pump an additional 2 million barrels per day to meet demand...oil prices moved lower early Thursday following that sharp rise on Wednesday, but rallied again on a big jump in US retail sales as Americans spent their pandemic relief checks, and as COVID-19 vaccinations allowed broader economic re-engagement, and closed 31 cents higher at a four week high of $63.46 per barrel...oil prices moved higher again early Friday after China reported their first-quarter GDP had jumped 18.3% year on year, but then drifted lower to close down 33 cents at $63.13 a barrel on concerns about rising Covid-19 infections in other major economies, but still managed to log a 6.1% gain on the week, with both US and global oil contracts posting their best weekly gains since the week ended March 5th...
natural gas prices also finished higher this week on stronger LNG exports and on an unexpected temperature drop...after falling 4.3% to $2.526 per mmBTU last week as it appeared the heating season had ended on warming April weather, the contract price of natural gas for May delivery opened fractionally higher on Monday and went on to gain 3.5 cents as a bout of chilly spring weather was forecast to sweep across large swaths of the Lower 48, likely providing a boost for gas demand and cash prices...natural gas prices rose another 5.8 cents to $2.619 per mmBTU on Tuesday as robust liquefied natural gas (LNG) levels fueled demand optimism and a dose of chilly weather also bolstered cash prices...natural gas continued higher on colder weather Wednesday, but faded as traders took profits late in the session prior to Thursday’s EIA inventory report, and ended a tenth of a cent lower at $2.618 per mmBTU...natural gas prices rebounded Thursday as the government’s weekly inventory report proved bullish, and both weather forecasts and demand for U.S. exports remained favorable, and closed 4.0 cents higher at $2.658 per mmBTU...the momentum continued into Friday as gas prices moved up another 2.2 cents on near-record LNG and pipeline exports, and on forecasts that power generators would burn more gas next week, to finish this week at a five-week high of $2.680 per mmBTU, also a 6.1% gain on the prior Friday's close...
the natural gas storage report from the EIA for the week ending April 9th indicated that the amount of natural gas held in underground storage in the US rose by 61 billion cubic feet to 1,845 billion cubic feet by the end of the week, which left our gas supplies 242 billion cubic feet, or 11.6% below the 2,087 billion cubic feet that were in storage on April 9th of last year, but now 11 billion cubic feet, or 0.6% above the five-year average of 1,834 billion cubic feet of natural gas that have been in storage as of the 9th of April in recent years....the 61 billion cubic feet that were added to US natural gas storage this week was less than the average forecast of a 65 billion cubic foot addition from an S&P Global Platts survey of analysts, and was also less than the 68 billion cubic feet added to natural gas storage during the corresponding week of 2020, but it far surpassed the average addition of 26 billion cubic feet of natural gas that have typically been injected into natural gas storage during the same week over the past 5 years..
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending April 9th indicated that despite an increase in our oil production and a decrease in our oil exports, we needed to withdraw oil from our stored commercial crude supplies for the third time in eight weeks and for the 25th time in the past thirty-eight weeks....our imports of crude oil fell by an average of 411,000 barrels per day to an average of 5,852,000 barrels per day, after rising by an average of 119,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 855,000 barrels per day to an average of 2,579,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,273,000 barrels of per day during the week ending April 9th, 444,000 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 was reportedly 100,000 barrels per day higher at 11,000,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production appears to total an average of 14,273,000 barrels per day during this reporting week...
meanwhile, US oil refineries reported they were processing 15,051,000 barrels of crude per day during the week ending April 9th, 7,000 more 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 net of 999,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US....so based on that reported & estimated data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from storage, and from oilfield production was a rounded 222,000 barrels per day more than 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 (-222,000) 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 there must have been a error or errors of that magnitude in this week's oil supply & demand figures that we have just transcribed.....furthermore, since last week's fudge factor was at +811,000 barrels per day, there was a 1,033,000 barrel per day balance sheet difference in the unaccounted for crude oil figure from a week ago, which renders the week over week supply and demand changes we have just transcribed meaningless....however, since most everyone treats these weekly EIA reports as gospel and since these figures often drive oil pricing and hence decisions to drill or complete wells, we'll continue to report them as they're published, just as they're watched & believed to be accurate by most everyone in the industry....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....
further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 5,971,000 barrels per day last week, which was 0.7% more than the 5,929,000 barrel per day average that we were importing over the same four-week period last year... the 999,000 barrel per day net withdrawal from our crude inventories included an 841,000 barrel per day withdrawal from our commercially available stocks of crude oil, and a 153,000 barrel per day withdrawal from our Strategic Petroleum Reserve, space in which has been leased for commerical purposes....this week's crude oil production was reported to be 100,000 barrels per day higher at 11,000,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 10,500,000 barrels per day, while Alaska's oil production at 457,000 barrels per day added 500,000 barrels per day the rounded national total (EIA's math)....our prepandemic record high US crude oil production during the week ending March 13th 2020 was at a rounded 13,100,000 barrels per day, so this reporting week's rounded oil production figure was 16.0% below that of our production peak, yet still 30.5% above 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 85.0% of their capacity while using those 15,051,000 barrels of crude per day during the week ending April 9th, up from 84.0% of capacity during the prior week, and the highest refinery utilization in 55 weeks, reflecting the utilization level during the last week before the Covid related slowdown...while the 15,051,000 barrels per day of oil that were refined this week were 18.8% higher than the 12,665,000 barrels of crude that were being processed daily during the week ending April 10th of last year, they were still 6.4% below the 16,078,000 barrels of crude that were being processed daily during the week ending April 12th, 2019, when US refineries were operating at an unusually low 87.7% of capacity...
with the ongoing increase in the amount of oil being refined, the gasoline output from our refineries increased by 336,000 barrels per day to a fifty-six week high of 9,615,000 barrels per day during the week ending April 9th, after our gasoline output had decreased by 60,000 barrels per day over the prior week...while this week's gasoline production was 62.6% higher than the 5,915,000 barrels of gasoline that were being produced daily over the same week of last year, it was still 3.6% lower than the March 13th 2020 pre-pandemic high of 9,974,000 barrels per day, and 3.0% below the gasoline production of 9,917,000 barrels per day during the week ending April 12th, 2019....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 4,000 barrels per day to 4,643,000 barrels per day, after our distillates output had decreased by 99,000 barrels per day over the prior week... but since the onset of the pandemic didn't appear to impact distillates' production, this week's distillates output was still 5.8% lower than the 4,927,000 barrels of distillates that were being produced daily during the week ending April 10th, 2020...
with the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the sixteenth time in twenty-two weeks, and for 20th time in 39 weeks, but only rose by 309,000 barrels to 234,897,000 barrels during the week ending April 9th, after our gasoline inventories had increased by 4,044,000 barrels over the prior week...our gasoline supplies increased by less this week because our imports of gasoline fell by 458,000 barrels per day to 839,000 barrels per day while our exports of gasoline fell by 129,000 barrels per day to 663,000 barrels per day, and because the amount of gasoline supplied to US users increased by 163,000 barrels per day to 8,944,000 barrels per day...but even after two inventory increases, our gasoline supplies were 10.4% lower than last April 10th's gasoline inventories of 262,217,000 barrels, and about 2% below the five year average of our gasoline supplies for this time of the year...
meanwhile, with the insignificant increase in our distillates production, our supplies of distillate fuels decreased for the 7th time in 11 weeks and for the 21st time in thirty-three weeks, falling by 2,083,000 barrels to 143,464,000 barrels during the week ending April 9th, after our distillates supplies had increased by 1,452,000 barrels during the prior week....our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 464,000 barrels per day to 4,128,000 barrels per day, and because our imports of distillates fell by 64,000 barrels per day to a 25 week low of 261,000 barrels per day, while our exports of distillates fell by 18,000 barrels per day to 1,074,000 barrels per day....even after this week's inventory decrease, our distillate supplies at the end of the week were still 11.2% above the 129,004,000 barrels of distillates that we had in storage on April 10th, 2020, and about 4% above the five year average of distillates stocks for this time of the year...
finally, despite the drop in our oil exports, our commercial supplies of crude oil in storage fell for the 13th time in the past twenty-two weeks and for the 26th time in the past year, decreasing by 5,890,000 barrels, from 498,313,000 barrels on April 2nd to 492,423,000 barrels on April 9th...after this week's decrease, our commercial crude oil inventories slipped to just 1% above the most recent five-year average of crude oil supplies for this time of year, and to about 43% above the average of our crude oil stocks as of the first weekend of April over the 5 years at the beginning of this decade, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories had jumped to record highs during the spring lockdowns of last year, our commercial crude oil supplies as of April 9th are now 2.2% less than the 503,618,000 barrels of oil we had in commercial storage on April 10th of 2020, but still 8.2% more than the 455,154,000 barrels of oil that we had in storage on April 12th of 2019, and also 15.2% more than the 427,567,000 barrels of oil we had in commercial storage on April 13th of 2018...
OPEC's Monthly Oil Market Report
Tuesday of this past week saw the release of OPEC's April Oil Market Report, which covers OPEC & global oil data for March, and hence it gives us a picture of the global oil supply & demand situation for the 3rd month after OPEC, the Russians, and other oil producers agreed to increase their oil production by 500,000 barrels per day starting January, from their prior commitment to cut production by 7.7 million barrels a day from an October 2018 peak, which had been earlier reduced from the 9.7 million barrels a day cuts they had imposed on themselves during May, June and July of 2020, and after the Saudis unilaterally decided to cut their own production by a million barrels per day during February and March of this year...before we start, we want to again caution that the oil demand estimates made herein, while the course of the Covid-19 pandemic still remains uncertain, should be considered as having a much larger margin of error than we'd expect from this report during stable and hence more predictable periods..
the first table from this monthly report that we'll check is from the page numbered 48 of this month's report (pdf page 58), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures...
as we can see from the above table of their oil production data, OPEC's oil output increased by a rounded 201,000 barrels per day to 25,042,000 barrels per day during March, up from their revised February production total of 24,842,000 barrels per day...however, that February output figure was originally reported as 24,848,000 barrels per day, which therefore means that OPEC's February production was revised 6,000 barrels per day lower with this report, and hence OPEC's March production was, in effect, a rounded 195,000 barrel per day increase from the previously reported OPEC production figure (for your reference, here is the table of the official February OPEC output figures as reported a month ago, before this month's revision)...
from the above table, we can see that a 137,000 barrels per day increase in Iran's production, an increase of 40,000 barrels per day in Angola's output, and a production increase of 26,000 barrels per day from Libya were the major factors in OPEC's March output increase; however, both Iran and Libya were exempt from quotas during March, and Angola's output increase is largely a reversal of their February production decrease, so OPEC's adherence to the negotiated production cuts appears to be intact...recall that last year's original oil producer's agreement was to cut production by 9.7 million barrels per day from an October 2018 baseline for just two months early in the pandemic, during May and June, but that agreement had been extended to include July at a meeting between OPEC and other producers on June 6th....then, in a subsequent meeting in July, OPEC and the other oil producers agreed to ease their deep supply cuts by 2 million barrels per day to 7.7 million barrels per day for August and subsequent months, which was thus the agreement that covered OPEC's output for the rest of 2020...the OPEC+ agreement for January's production, which was later extended to include February and March output, was to further ease their supply cuts by 500,000 barrels per day to 7.2 million barrels per day from that original baseline...however, war torn Libya and US sanctioned OPEC members Iran and Venezuela have been exempt from the production cuts imposed by these agreements, and as we can see above, they all posted production increases this month...
for those OPEC members that do fall under the output quotas imposed by that series of revised agreements, we finally have a revised table of the output levels they are "voluntarily" required to adhere to:
the above table was provided as a downloadable attachment to the press release following the press release following the 13th OPEC and non-OPEC Ministerial Meeting on January 5th of this year; it includes the reference production and expected production levels for the 10 members of OPEC that are expected to make cuts and for the other major oil producers who are party to what the press calls the "OPEC + agreement"....the first column in the above table shows the reference oil production baseline, in thousands of barrel per day from which each of the oil producers was to cut from, a figure which is based on each of the producer's October 2018 oil output, ie., a date before last year's and the prior year's output cuts took effect, and coincidently the highest monthly production of the era for most of the producers who are party to these cuts...the remaining columns show the adjustment, or cut, from that reference production level and then the oil output allowed for each producer under the agreement for the months of January, February and March...OPEC arrived at these figures by adjusting the 23% cut from the October 2018 baseline originally agreed to for May and June 2020 for subsequent agreements to "ease" that 23% cut by agreed to fractions, and it applied to all participants except for Mexico, who already had their oil production hedged to profit from lower prices...the OPEC member output quota is identical for each of the three months covered above; however, the ongoing agreements from theOPEC and non-OPEC Ministerial Meetings have allowed Russia and Kazakhstan to incrementally increase their oil output over February and March to meet seasonal increases in domestic demand...for March, Iraq, with an oil output of 3,914,000 per day, was the only OPEC member producing significantly more than their quota, which was more than covered by the Saudis unilaterally keeping their production a million barrels per day below their quota...
the next graphic from this month's report that we'll highlight shows us both OPEC and world oil production monthly on the same graph, over the period from April 2019 to March 2021, and it comes from page 49 (pdf page 59) of OPEC's April Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....
after this month's reported 201,000 barrel per day increase in OPEC's production from what they produced a month earlier, OPEC's preliminary estimate indicates that total global liquids production increased by a rounded 1,220,000 barrels per day to average 93.23 million barrels per day in March, a reported increase which apparently came after February's total global output figure was revised down by 270,000 barrels per day from the 92.28 million barrels per day of global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 1,020,000 barrels per day in March after that revision, with an increase of 930,000 barrels per day from the US alone accounting for most of the non-OPEC production increase in March, as US production rebounded from the February freeze...
after that increase in March's global output, the 93.23 million barrels of oil per day that were produced globally in March were still 7.22 million barrels per day, or 7.6% less than the revised 100.45 million barrels of oil per day that were being produced globally in March a year ago, which was the second month of additional production cuts of 500,000 barrels per day in an attempt to support prices (see the April 2020 OPEC report (online pdf) for the originally reported March 2020 details)...with this month's increase in OPEC's output, their March oil production of 25,042,000 barrels per day was at 26.9% of what was produced globally during the month, a decrease of 0.1% from their revised 27.0% share of the global total in February....OPEC's March 2020 production was reported at 28,612,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 3,570,000, or 12.5% fewer barrels per day of oil in March 2021 than what they produced a year earlier, when they accounted for 28.7% of global output...
Even after the increases in both OPEC's and global oil output that we've seen in this report, the amount of oil being produced globally during the month still fell a bit short of the expected demand, as this next table from the OPEC report will show us...
the above table came from page 27 of the April Oil Market Report (pdf page 37), and it shows regional and total oil demand estimates in millions of barrels per day for 2020 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2021 over the rest of the table...on the "Total world" line in the second column, we've circled in blue the figure that's relevant for March, which is their estimate of global oil demand during the first quarter of 2021... OPEC is estimating that during the 1st quarter of this year, all oil consuming regions of the globe have used an average of 93.43 million barrels of oil per day, which is a rounded 400,000 barrels per day upward revision from the 93.04 million barrels of oil per day of demand they were estimating for the first quarter a month ago (note that we have encircled this month's revisions in green), which still reflects quite a bit of coronavirus related demand destruction compared to 2019, when global demand averaged 99.98 million barrels per day....but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were only producing 93.23 million barrels million barrels per day during March, which would imply that there was a shortage of around 200,000 barrels per day in global oil production in March when compared to the demand estimated for the month..
In addition to figuring the March global oil supply shortfall that's evident in this report, the downward revision of 270,000 barrels per day to February's global oil output that's implied in this report, combined with the 400,000 barrels per day upward revision to first quarter demand noted above, means that the 760,000 barrels per day global oil output shortage we had previously figured for February would now be revised to a shortage of 1,430,000 barrels per day...similarly, the oil surplus of 190,000 barrels per day we had previously figured for January would be revised to a shortage of 210,000 barrels per day in light of the 400,000 barrel per day upward revision to first quarter demand...
Note that in green we've also circled an upward revision of 120,000 barrels per day to 2020's demand, which also means that the supply shortfalls or surpluses that we previously reported for last year's months would need to be revised....a separate table on page 27 of the April Oil Market Report (pdf page 37) indicates the revisions to 2020 demand included an an upward revision of 80,000 barrels per day to 4th quarter demand, and an upward revision of 400,000 barrels per day to 1st quarter 2020 demand...
based on OPEC revisions of a month ago, we revised the oil shortages we had previously computed for the 4th quarter months to 1,180,000 barrels per day for December, 1,780,000 barrels per day for November, and 3,080,000 barrels per day for October...the upward revision of 80,000 barrels per day to 4th quarter demand will now mean those shortages would be revised to 1,260,000 barrels per day for December, 1,860,000 barrels per day for November, and 3,160,000 barrels per day for October...there was also an oil supply shortfall in the third quarter months, but it was somewhat smaller...however, since global demand was still depressed in the second quarter of 2020 due to the initial Covid surge, surpluses of oil averaging around 9.5 million barrels per day were being produced over those three months...meanwhile, the last time we revised estimates for 1st quarter 2020 oil surpluses, we had a record surplus of 17,550,000 barrels per day in March, a 1,670,000 barrel per day global oil output surplus in February, and a 700,000 barrel per day oil output surplus in January...;.with OPEC's new upward revision of 400,000 barrels per day to 1st quarter 2020 demand, those surpluses would be reduced to 17,150,000 barrels per day in March, a 1,270,000 barrel per day surplus in February, and a 300,000 barrel per day oil surplus in January of last year....so despite the upward revision to 2020's demand and OPEC's deep production cuts beginning in May of last year, the quanities of oil produced globally in 2020 still averaged well over 3 million barrels per day more than anyone wanted...by maintaining their production cuts despite current month shortages, OPEC obviously knows that, they just aren't talking about it publicly...
This Week's Rig Count
The US rig count rose for the 28th time over the past 31 weeks during the week ending April 16th, but it still remains down by 44.6% from the pre-pandemic rig count....Baker Hughes reported that the total count of rotary rigs running in the US was up by 7 to 439 rigs this past week, which was still down by 90 rigs from the pandemic hit 529 rigs that were in use as of the April 17th report of 2020, and was 1,490 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 their first attempt to put US shale out of business....
The number of rigs drilling for oil was up by 7 to 338 oil rigs this week, after being unchanged the prior week, leaving us with 94 fewer oil rigs than were running a year ago, and at 21.0% of 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 was up by one to 94 natural gas rigs, which was up by 5 natural gas rigs from the 89 natural gas rigs that were drilling a year ago, but still just 5.9% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...meanwhile, the rig classified as 'miscellaneous' that had been drilling in the middle of the Permian basin in MIdland county Texas was shut down this week, leaving just one 'miscellaneous' rig, in Lake County, California, while a year ago there were two such "miscellaneous" rigs deployed...
The Gulf of Mexico rig count was up by 1 to 12 rigs this week, with 10 of those rigs drilling for oil in Louisiana's offshore waters and now 2 rigs drilling for oil in Alaminos Canyon offshore from Texas...that was 5 fewer Gulf of Mexico rigs than the 17 rigs drilling in the Gulf a year ago, when 16 Gulf rigs were drilling for oil offshore from Louisiana and one rig was drilling for oil in Texas waters...since there are no rigs operating off of other US shores at this time, nor were there a year ago, this week's national offshore rig totals are equal to the Gulf rig counts...in addition to those offshore, this week a platform was set up to drill through an inland lake in St Mary parish Louisiana, while a year ago there were no rigs deployed on inland waters...
The count of active horizontal drilling rigs was up by 4 to 398 horizontal rigs this week, which was still down by 85 rigs from the 483 horizontal rigs that were in use in the US on April 17th of last year, and less than a third of the record of 1372 horizontal rigs that were deployed on November 21st of 2014....at the same time, the directional rig count was up by two rigs to 20 directional rigs this week, but those were still down by 8 from the 28 directional rigs that were operating during the same week a year ago....meanwhile, the vertical rig count was up by one to 21 vertical rigs this week, and those were up by 3 from the 18 vertical rigs that were in use on April 17th of 2020....
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 16th, the second column shows the change in the number of working rigs between last week's count (April 9th) and this week's (April 16th) count, the third column shows last week's April 9th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 17th of April, 2020..
it appears that most of this week's changes were pretty straightforward...checking first for the details on the Permian basin in Texas from the Rigs by State file at Baker Hughes, we find that that one rig was added in Texas Oil District 8, which includes the core Permian Delaware, and one rig was added in Texas Oil District 7C, which includes the southernmost counties of the Permian Midland basin, and yet another rig was added in in Texas Oil District 8A, which includes the northern counties of the Permian Midland basin, which thus means the rig count in the Texas Permian was up by 3 this week, accounting for the national change.....elsewhere in Texas, there were two rigs added in Texas Oil District 1, while two rigs were pulled out from Texas Oil District 2, which all could have been in the Eagle Ford shale, which stretches in a narrow band through the southeast part of the state, still leaving no net change in that basin...the Texas rig count was up by 5, however, because an offshore platform was added in the state's waters, and there was also a rig added in Texas Oil District 10, which accounts for one of the rigs added in the Granite Wash, which thus means the other Granite Wash addition was in Oklahoma, accounting for that state's increase...elsewhere, the rig addition in Louisiana was the previously mentioned inland waters rig in St Mary parish, and another oil rig was added in North Dakota's Williston basin....meanwhile, the natural gas rig count was up by one despite the loss of one in Pennsylvania's Marcellus because the inland waters rig in Louisiana was a gas rig and one of the Permian rigs added this week was also targetting natural gas...
DUC well report for March
Monday of this past week saw the release of the EIA's Drilling Productivity Report for April, which includes the EIA's March data for drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions....that data showed a decrease in uncompleted wells nationally for the 10th month in a row, as both completions of drilled wells and drilling of new wells both increased, but remained far below the pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 177 wells, falling from 7,089 DUC wells in February to 6,912 DUC wells in March, which was also 17.5% fewer DUCs than the 8,379 wells that had been drilled but remained uncompleted as of the end of March of a year ago...this month's DUC decrease occurred as 464 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during March, up from the 396 wells that were drilled in February, while 641 wells were completed and brought into production by fracking, up from the 490 completions seen in February, but still down by 42.5% from the 1,115 completions seen in March of last year....at the March completion rate, the 6,912 drilled but uncompleted wells left at the end of the month represents a 10.8 month backlog of wells that have been drilled but are not yet fracked, down from the 14.7 month DUC well backlog of a month ago, with the understanding that this normally indicative backlog ratio is being skewed by a completion rate that is roughly half of the pre-pandemic norm...
both oil producing regions and natural gas producing regions saw DUC well decreases in March, as no basins were reported with DUC increases....the number of uncompleted wells remaining in the Permian basin of west Texas and New Mexico decreased by 56, from 3,219 DUC wells at the end of February to 3,163 DUCs at the end of March, as 214 new wells were drilled into the Permian during March, while 270 wells in the region were completed...at the same time, DUC wells in the Niobrara chalk of the Rockies' front range fell by 39, decreasing from 520 at the end of February to 481 DUC wells at the end of March, as 43 wells were drilled into the Niobrara chalk during March, while 82 Niobrara wells were being fracked....in addition, DUCs in the Eagle Ford of south Texas decreased by 28, from 1,037 DUC wells at the end of February to 1,009 DUCs at the end of March, as 44 wells were drilled in the Eagle Ford during March, while 72 already drilled Eagle Ford wells were completed...at the same time, there was also a decrease of 22 DUC wells in the Bakken of North Dakota, where DUC wells fell from 669 at the end of February to 677 DUCs at the end of March, as 25 wells were drilled into the Bakken during March, while 47 of the drilled wells in that basin were being fracked...meanwhile, the number of uncompleted wells remaining in Oklahoma's Anadarko decreased by 20, falling from 760 at the end of February to 740 DUC wells at the end of March, as 19 wells were drilled into the Anadarko basin during March, while 39 Anadarko wells were being fracked....
among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 11 wells, from 559 DUCs at the end of February to 548 DUCs at the end of March, as 71 wells were drilled into the Marcellus and Utica shales during the month, while 82 of the already drilled wells in the region were fracked....in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory decrease by 1 to 324, as 48 wells were drilled into the Haynesville during March, while 49 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of March, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a total of 165 wells to 6,040 wells, while the uncompleted well count in the natural gas basins (the Marcellus, the Utica, and the Haynesville) decreased by 12 wells to 872 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...
PUC judge orders Sunoco to improve its public safety guidance, and pipeline safety, on Mariner East project -- An administrative law judge with the Pennsylvania Public Utility Commissionruled on Monday that Sunoco Pipeline, a subsidiary of Energy Transfer, violated state and federal law by failing to adequately communicate public safety risks of their Mariner East natural gas liquids pipelines, which run through the densely populated Philadelphia suburbs. Judge Elizabeth Barnes ordered the company to edit its written material for nearby neighbors, schools, and nursing homes, to include the terms “property damage, personal injury, burns, asphyxiation, and death (fatality),” which could result from a leak or explosion of the highly volatile natural gas liquid lines. Barnes also ordered the company to expand its emergency contact list in Chester and Delaware counties to include police departments and school districts; undertake additional public outreach; and pay a $2,000 fine. The company must also bury deeper two currently operating lines that date back to the 1930s. Originally built as petroleum pipelines, Sunoco has repurposed them to carry the NGLs from western Pennsylvania to an export terminal in Delaware County. One of the lines is operating as a workaround because work on the Mariner East 2 line has been delayed by recurring sinkholes, or subsidence, in the region. The case Flynn v. Sunoco Pipeline, also known as the “Safety Seven” case, was filed by people who live along the line, and after consolidation of several similar lawsuits now includes additional people and a homeowner’s association. Both Delaware and Chester counties, as well as several area school districts and municipalities and the Clean Air Council, joined the case against Sunoco as intervenors. The ruling is limited to Delaware and Chester counties. “This entire case was a monumental effort on the part of regular residents living along the Mariner East pipeline,” said Eve Miari, who lives in the area and works for the Clean Air Council. “Residents really banded together in this grassroots movement, and they were joined by the counties and the townships and the school districts in bringing forward their very real and serious concerns about the safety impacts of this pipeline.” The judge did not go as far as shutting down the line, which the plaintiffs asked for and which they say is the only way to reduce the risk to zero.
Repairing the Damage from Hazardous Abandoned Oil & Gas Wells – Ohio River Valley Institute -- After more than a century of oil and gas drilling, unplugged or improperly plugged abandoned oil and gas wells are causing extensive environmental damage and imposing health and safety risks because they are leaching pollutants into the air and water. Some of these abandoned wells are leaking large amounts of harmful methane into the atmosphere, which is a powerful greenhouse gas that contributes to climate change, as well as volatile organic compounds (VOCs) that damage local air quality, and both of which can – under certain circumstances – pose serious public safety concerns. Leaks from abandoned wells, such as oil, brine and drilling byproducts, have also been linked to the contamination of groundwater supplies and soil, which can undermine drinking water, agriculture activity and property values. There have also been a number of dangerous explosions due to leaking gas or methane from wells.Over the last several years there has been growing attention at the state and federal level to address the problems associated with millions of abandoned and orphaned oil and gas wells across the nation. There is also great concern about the large share of low-producing wells that could be abandoned relatively soon, as well as the cost of plugging high volume hydraulic fracturing wells.How many abandoned oil and gas wells need to be cleaned up? No one knows for sure. The Interstate Oil and Gas Compact Commission’s (IOGCC) periodic survey of idle and orphan wells estimates in 2018 that there were 56,600 documented unplugged orphan wells, and up to 746,000 additional undocumented orphan wells, nationwide. The U.S. Environmental Protection Agency (EPA) estimates there are 2.1 million unplugged onshore abandoned wells. A recent report by Carbon Tracker estimates that there over 2.6 million unplugged onshore wells in the United States that are at risk of being orphaned with a total closure cost between $78 billion and $280 billion.While states allocate additional funds to plug abandoned and orphaned wells and conduct site restoration and remediation, the scale and cost of the problem is likely greater than they can afford, and it could take decades to plug and restore these well sites. Complicating matters, it is impossible to determine the owners of many of the wells because they predate modern regulation, so there is no way to recoup funds to pay for the restoration and plugging costs. As more oil and gas companies declare bankruptcy, it could make it harder for states to recover the cost of cleaning up well sites. In fact, a recent survey of seven large oil and gas producing states found that the total financial assurance coverage (bonds) for all wells at risk of being orphaned in those states would cover just one to six percent of the costs to plug them. There have been several federal proposals in 2020 to deal with the abandoned and orphan well crisis, including bills in congress and proposals by researchers. The purpose of this report is to examine the potential benefits of a large-scale federal program to plug abandoned oil and gas wells in the Ohio River Valley states of Kentucky, Ohio, Pennsylvania, and West Virginia. The report unfolds in five parts. First, it explores the estimated number of onshore abandoned and orphan oil and gas wells in the nation and the four-state region. Section Two discusses the problems associated with unplugged wells, including unfunded liabilities, greenhouse gas emissions, health and safety hazards, and problems with plugging. Section Three looks at the cost of plugging abandoned wells and the factors behind those costs in order to estimate the level of investment needed to plug abandoned wells in the four-state region. The fourth section looks at how a large-scale abandoned well cleanup program could boost employment in the region and reduce harmful greenhouse gases that are contributing to climate change. Lastly, the report reviews federal proposals to address abandoned and orphan oil and gas wells and proposes ways to fund a large-scale abandoned well federal program and makes recommendations.
EQT throws support behind reinstating methane rules --EQT Corp. on Thursday threw its support against a Trump administration plan that would have removed some methane regulations on oil and natural gas producers. The initiative had been unveiled in August 2020 in Pittsburgh by then Environmental Protection Agency Administrator Andrew Wheeler. It would remove the natural gas transmission and storage industry from the federal government’s methane emissions standards and cut down on the required checks for methane leaks at compressor stations. But Pittsburgh-based EQT Corp. (NYSE: EQT), the nation’s largest independent natural gas producer, supported House and Senate resolutions to disapprove what is called the Methane Rescission rule that had been published last September. EQT during the tenure of CEO Toby Rice has made deep investments into environmental initiatives, including just Thursday a deal with Equitable Origin and MiQ to certify its natural gas for environmental standards and best practices. The statement from EQT said that it supports bringing back the methane standards and working with regulators and others on environmental policy. “As the national’s largest natural gas producer, EQT knows that natural gas will continue to play a meaningful role in accelerating a sustainable pathway to a low-carbon future,” EQT said. “We believe the responsible development of natural gas will help meet future global energy demand as we address climate change together.” The EPA’s move last summer was controversial, even in the oil and gas industry. Methane, which is also known as natural gas, is a contributor to climate change and few, even in the industry, want it to go into the atmosphere unabated. There are not only environmental issues but also methane that leaks is natural gas that can’t be sold. Larger companies, which have the scale and capital to spend on methane reduction technologies, were cool to the EPA’s plan and preferred the methane rules stay in place. But others, small to midsized companies, were happy about the EPA’s move. Wheeler told the Business Times at the time that the oil and gas industry should be allowed to use innovation to reduce the levels of methane and not be mired in governmental red tape.
Biggest U.S. Gas Driller Calls for Tougher Emissions Curbs - EQT Corp. is calling for stricter caps on methane leaks from natural gas wells after the Trump administration relaxed the rules in a bid to boost the domestic energy industry. EQT, which pumps more gas than any other driller in the U.S., is supporting Congressional resolutions condemning last year’s rollback of Obama-era limits on emissions from new oil and gas wells, according to a statement on Thursday. Hours earlier, the Pittsburgh-based explorer unveiled plans to obtain third-party certification of the so-called responsible sourcing for most of its output. Restoring the federal standards would provide more transparency, and EQT as well as the “overwhelming majority” of the industry would be able to immediately comply with them after years of progress in reducing emissions, according to EQT Chief Executive Officer Toby Rice. “Frankly, the rollbacks weren’t necessary in the first place,” Rice said in an interview. “We already operate a whole lot cleaner and more efficiently than the general public give us credit for.” The fossil-fuel industry is facing increasing pressure from investors, policy makers and environmental activists to take concrete steps to confront climate change. Although gas is cleaner than coal in terms of carbon dioxide and other pollutants, methane itself is a potent greenhouse gas, which means accidental leaks and intentional releases pose a greater threat. Chesapeake Energy Corp. announced plans earlier this week for third-party certification of its gas as responsibly sourced. The initiative involves installing emission-monitoring gear at wells sites in Pennsylvania and Louisiana. A group of 41 natural gas companies under the ONE Future Coalition has already reached its long-term methane reduction goals, Rice said. There’s increasing demand from domestic utilities with decarbonization targets and from liquefied natural gas exporters for a product that’s certified as meeting environmental, social and governance criteria, Rice said. “That’s a real opportunity for EQT.” EQT’s move is also part of a broader industry effort to ensure that gas will continue to play a relevant role in decade-long transition away from fossil fuels. “What you’re seeing is a need to differentiate between natural gas and other forms of energy,” Rice said. “We think that natural gas is that is the cleanest form of energy that has a proved track record of operating at scale.”
EQT seeks independent carbon impact certification of Marcellus gas | S&P Global Platts — Most of EQT's Marcellus output will undergo an independent assessment of its environmental impact as the largest US natural gas producer recalibrates how shale is marketed amid the global energy transition away from fossil fuels.The company announced April 15 a program for about 4 Bcf/d of production from over 200 well pads in Pennsylvania to be certified based on the environmental, social and governance performance of how it is sourced. Methane emissions will be quantified.The effort, which EQT considers to be a pilot that could be expanded, is part of a trend across the upstream, midstream and LNG sectors to guard against a future in which global gas consumption may eventually decline.From detailing their carbon footprint to trying to capture carbon before it is released to identifying supplies that are responsibly sourced, the industry effort is partly about messaging that not all shale is created equal. In EQT's case, it hopes it can generate a premium for its gas if it can validate that its supplies are more environmentally friendly than supplies from other US basins."We want to differentiate our gas and Appalachia gas specifically as being the cleanest and the most responsibly produced," company spokesman Andrew Breese said in an interview.He added, "There's definitely some messaging to be had. Not necessarily shale gas, but Appalachia shale gas. Shale gas coming out of the Permian – shale coming out of the oil – is a whole different thing from an ESG perspective."Two groups, Equitable Origin and MiQ, will oversee the independent, third-party audit of EQT's natural gas production from the selected well pads in Pennsylvania. About 0.4 Bcf/d of gas production in Ohio and 0.7 Bcf/d of production in West Virginia is not covered by the program, according to EQT.The certification, or score, determined for the selected EQT gas production will be based on multiple factors, including corporate governance and ethics, social impacts, human rights and community engagement, and environmental impacts, biodiversity and climate change. The quantification portion of the assessment will account for methane intensity, company practices, and methane detection.Theoretically, with the certifications in hand, EQT could provide or sell them to end-users that procure supplies from the producer. That material could then be used by the end-users in their business processes around their carbon footprints.The certification program follows EQT's announcement in January of a separate project to certify gas produced from two of its well pads, also located in southwestern Pennsylvania. The earlier program is a partnership with Project Canary, an environmental standards company based in Denver. Gas producer Chesapeake Energy announced a similar pilot program with Project Canary on April 13 that will be tied to the Marcellus shale and Louisiana's Haynesville shale. Elsewhere across the gas value chain, Cheniere Energy, the biggest US LNG exporter and the country's biggest individual physical consumer of gas, said in February it would give its LNG customers emissions data associated with each cargo it produces at its two US export terminals. Tellurian CEO Octavio Simoes said in an interview with S&P Global Platts on March 25 that the developer of the proposed Driftwood LNG terminal in Louisiana supports a carbon tax to reduce greenhouse gas emissions.
Equitrans joins call to return methane limits to oil and gas industry - Equitrans Midstream Corp. on Friday said that it supporting efforts to rescind the Trump administration’s efforts to rollback methane restrictions on the oil and gas industry, the second Pittsburgh region-based natural gas company to do so in the past two days.Equitrans (NYSE: ETRN) owns and operates pipelines and gathering systems that take natural gas from the well pads to transmission lines connected to interstate pipelines that take the gas to market. It is also building, partially owns and will be the operator of the Mountain Valley Pipeline, the 303-mile line that will take Marcellus and Utica Shale gas through West Virginia and Virginia to Southeast markets.But, like former corporate sibling EQT (NYSE: EQT), Equitranssaid that it supports two actions in Congress, HJ Resolution 34 and SJ Resolution 14, that would derail the Environmental Protection Agency’s move to ease methane restrictions on the pipeline industry as well as natural gas operators. Equitrans said that it and the natural gas industry need to do more when it comes to climate change, including better measurement and tracking of greenhouse gas emissions including methane that is both a major contributor to GHG emissions and, essentially, the natural gas that is the industry’s major product.“We must continue to push our industry forward in a meaningful way in order to effectuate real mitigation of climate change impacts, and we support approval of the methane resolution under the Congressional Review Act,” Equitrans President and COO Diana Charletta said in a statement. Then-EPA Administrator Andrew Wheeler announced the measure in a speech in Pittsburgh back in August, saying that it would help small- to midsize natural gas producers that are be overburdened by red tape and regulations. Wheeler told the Business Times that the best way for emissions to be reduced is to allow the private sector to innovate and find ways to reduce them. The rule change got a cool reception from larger natural gas producers, which have increasingly discussed and implemented their own greenhouse gas and methane reduction policies. The latest was EQT, which on Thursday also issued a statement in support of the return of the methane limits. Equitrans has also set targets for emission reductions, aiming to cut methane by 50% by 2030 and a net zero carbon goal by 2050.
Two Chesapeake Energy natural gas well pads in Pa. getting methane monitors in pilot project - Methane gas monitors will be installed on two Chesapeake Energy Corp. well pads in northern Pennsylvania as part of a pilot program aimed at eliminating direct greenhouse gas emissions by 2025. The pads, one each in Bradford and Wyoming counties, have a total of nine wells, a Chesapeake spokesman said. Chesapeake, the state’s third-largest natural gas producer, is partnering with Denver-based Project Canary, a climate tech start-up company, to install the monitoring technology on the wells in Pennsylvania and in the Haynesville shale in Louisiana. The initiative is in response to environmental social governance expectations on oil and gas companies to have methane emissions minimized and gas produced in the most environmentally responsible manner, they say. The monitors are part of its pledge to eliminate routine flaring on all new wells completed beginning this year and reduce methane intensity to .09 percent by 2025, Chesapeake says. Chesapeake has drilled 65 wells in the Marcellus Shale in northcentral and northeastern Pennsylvania and has three active rigs there.
Democrats and Republicans square off in court over Delaware River Basin Commission fracking ban - The Harrisburg political battle over fracking has shifted venues from the Pennsylvania State Capitol to the U.S. District Court in Philadelphia.A group of Democratic State Senators on Thursday filed a motion to dismiss a federal lawsuit filed by Republican lawmakers earlier this year that challenges a ban on natural gas development in the Delaware River Basin, in northeastern Pennsylvania.The 16 Democratic senators said the Republicans lack standing to bring the suit and failed to state a claim upon which relief can be granted. “We argue that there are really no claims here,” Steve Miano, lawyer for the Democrats, said Thursday.The Democratic lawmakers seemed particularly irked that the Republicans, in challenging the drilling ban, invoked Pennsylvania’s Environmental Rights Amendment of 1971 to support their arguments that the state legislature has authority over natural resources. The Republican’s interpretation of the ERA, a law championed by environmentalists, was “perverse,” the Democrats said. State Sens. Gene Yaw (R., Lycoming) and Lisa Baker (R., Luzerne), the Pennsylvania Republican Caucus, and several local governments including Wayne and Carbon Counties filed suit to challenge a drilling moratorium imposed in 2010 by the Delaware River Basin Commission (DRBC), the interstate agency that manages water use in the vast Delaware watershed. The four-state agency upgraded the moratorium to a permanent fracking ban in February.The court last month allowed the Democratic senators to intervene in the lawsuit — all but four of the state’s 20 Democratic senators signed on. Their filing on Thursday is similar to a motion filed last month by the Delaware Riverkeeper Network, the environmental advocacy group that has also intervened in the lawsuit.
Activists say moratorium on new gas project is needed — New York should declare a moratorium as soon as possible on new natural gas plants, according to members of an advisory group that is helping the state plan its green energy future. The suggestion that new gas facilities should be halted came from members of the state’s Power Generation Advisory Panel, which met last week. The Power Generation Advisory Panel is one of several special groups or subcommittees that will advise the Climate Action Council, a 22-member organization charged with laying out a roadmap for meeting the state’s ambitious renewable energy goals. “We need this moratorium and we need it to start now,” said Betta Broad, director of New Yorkers for Clean Power. While the Panel members weren’t unanimous in their call for a moratorium, they planned to bring it up in May during a presentation to the Climate Action Council. While it’s far from clear that such a moratorium would be put in place, the discussion was an example of the many debates, exchanges and analyses that are taking place as New York policy makers prepare by the end of this year to develop concrete regulations and policies toward eliminating greenhouse gases. During last week’s brief discussion on a moratorium, some noted the need for the reliability of gas power since it’s not reliant on wind for turbines or sunshine for solar arrays. But those favoring a moratorium said the state also should look harder at battery storage – a developing technology that allows the capture and storage of power generated by wind and solar. Storing power for use on cloudy, windless days, or on very hot days when energy demand peaks, is a major consideration in developing clean energy strategies. The discussion of a moratorium also comes amid a request by the Orange County-based Danskammer gas plant to re-build and re-activate – a move opposed by environmentalists. They should have a decision from the state Public Service Commission by the end of the year. Moreover, the Indian Point nuclear power plant in Westchester is by the end of April expected to shut down the remaining of its two reactors. Once that nuclear plant stops operating, other gas plants will likely have to fill the gap, at least until solar and wind plants come on line. In addition to the Power Generation Advisory Panel, other panels are focusing on agriculture and forestry; energy efficiency and housing; power-intensive industry; land use; transportation and waste disposal. There is also a Just Transition Working Group that is looking at job-training and ensuring overlooked communities benefit from the transition to more renewable energy.
Glick spells out views on FERC's reach amid tempest over Weymouth gas compressor | S&P Global Platts — The Federal Energy Regulatory Commission may consider adding conditions and mitigation measures for natural gas projects, even after granting a certificate authorization, as part of its responsibility to protect the public interest, Chairman Richard Glick suggested in a letter April 12. His reasoning, laid out in a letter to Senate Energy and Natural Resources Committee Ranking Member John Barrasso, Republican-Wyoming, came as a group of former commissioners echoed gas industry warnings that FERC was threatening infrastructure development by undermining the finality of its approvals for multimillion-dollar projects. At issue is FERC's 3-2 Feb. 18 vote to establish a paper briefing (CP16-9-012) in relation to the start of service for the long-contested Weymouth Gas Compressor, a final part of Algonquin Gas Transmission and Maritimes & Northeast Pipeline's 132,705 Dt/d Atlantic Bridge Project. The briefing order relates to a request for rehearing and rescission of the in-service authorization, pitched by environmental groups, local officials and others who raised environmental and safety concerns, particularly in light of unplanned blowdowns that occurred in September during startup of the compressor. Pipeline companies have contended FERC lacked authority to revisit the now-final certificate order for the project, and Barrasso, in a March 30 letter, pressed Glick and other commissioners to spell out under what statutory authority FERC could reopen the case or order new mitigation. Responding April 12 to Barrasso, Glick said the briefing order does not revisit or otherwise reopen the certificate. "That certificate is now final," he said. Instead, he said FERC is examining whether new information and changed circumstances require FERC to take action to protect the public interest. "The commission is fulfilling its ongoing responsibility to the public interest, which continues throughout the construction and operation of certificated facilities, and even after the certificate becomes final," Glick said. In complying with that ongoing responsibility, he said FERC "may also consider whether additional conditions or mitigation measures are necessary and appropriate pursuant to that authorization." Discussing the matter in general terms, he said FERC delegates to the director of the Office of Energy Projects authority to take steps to ensure protection of environmental resources during construction and operation of a gas project, including by modifying conditions and adding measures deemed necessary to ensure continued compliance with the intent of the conditions of a certificate. By way of example, he cited requirements FERC staff set for the Rover Pipeline's in-service related to environmental restoration and horizontal directional drilling. He also highlighted FERC's post-certificate requirements to restore private property affected by construction, in recent compliance orders on Spire STL and Midship pipelines, as well as steps to address new safety concerns such as cracks in tanks containing LNG, as communicated in a joint FERC-Pipeline and Hazardous Materials Safety Administration letter to the Sabine Pass Liquefaction facility in July 2019. "In addition, it is not uncommon for more minor unexpected developments to arise during construction, or sometimes many years later, which require changes to the mitigation measures imposed in the original certificate," Glick wrote.
ENERGY POLICY: 'Seismic shift' at FERC could kill natural gas pipelines -- Tuesday, April 13, 2021 -- The Federal Energy Regulatory Commission's decision to assess a proposed pipeline's contribution to climate change could have major implications for natural gas infrastructure, analysts say.
Appalachian restraint - Gas producers in the Appalachian Basin, home to the Marcellus and Utica shale plays, are adapting to the new era of restraint in shale drilling. However, this does not mean that the region’s output will stop growing, even though some leading producers plan to keep their volumes flat this year compared with 2020 levels. Overall, Appalachian producers are expected to raise their output in 2021 even as they cut back spending or keep it unchanged from last year, showing that there is still potential for further productivity gains. Holding back Like other shale producers across the US, Appalachian drillers were already under mounting pressure to demonstrate fiscal discipline and prioritise returns before Covid-19 hit energy demand last year. ..
Legislative session comes up short on long-term funding for DEP oil, gas and air quality regulators - The state Department of Environmental Protection faces a $1.3 million shortfall as its main revenue pipeline, permit fees, has dried up amid oil and gas industry struggles. Last year, the office resolved to eliminate 14 of about 39 positions, saving around $1.1 million.There is currently no fee for oil- or gas-well permit modification applications. Other DEP permitting programs, including mining, air and water, have fees associated with modifications.Senate Bill 712, advanced by the Senate Energy, Industry and Mining Committee, would have imposed an annual $100 oversight fee for all unplugged wells producing 10,000 cubic feet or more of gas that are not solely providing free gas to a landowner, a category of about 13,000 wells statewide that the DEP estimated would have generated an additional $800,000 per year for the Office of Oil and Gas to erase the rest of its $1.3 million deficit.But that bill stalled in the Senate Finance Committee. House Bill 2725, which required well operators to submit an oversight fee of $100 for each unplugged well and was estimated by the DEP to bring in an estimated $6.8 million for the Office of Oil and Gas, was never taken up by the House Energy and Manufacturing Committee.“The office [of Oil and Gas] is starving,” West Virginia Surface Owners’ Rights Organization cofounder Dave McMahon said.“The Office of Oil and Gas I’m very worried about. That was very regrettable that the annual fee per well bill [SB 712] stalled out,” West Virginia Rivers Coalition Executive Director Angie Rosser said. “ … We’ll be watching closely what that’s going to mean over the next year. Will it mean more layoffs?”
McKinley leads forum on protecting pipeline jobs — While President Joe Biden is pitching a multi-trillion-dollar infrastructure package to Congress, First District Congressman David McKinley, R-W.Va., reminded people one of Biden’s first acts as president was canceling an infrastructure project with possible repercussions for West Virginia.“On his first day in office, President Biden revived the Democrats’ war on fossil fuels,” McKinley said. “In doing so, in this war on fuel countless jobs and billions of dollars in economic revenue have been lost. Money that supports our local schools and hospitals. These actions are destroying those communities reliant on fossil fuels for their livelihood.” McKinley was the moderator Tuesday afternoon of a virtual forum discussing Biden’s executive order canceling the Keystone XL pipeline in January 20 — his first day in office. McKinley said Tuesday’s hearing would be the first of several. “This is an innovative way for us to get the message across to people,” McKinley said.The Keystone XL pipeline, owned by TC Energy, was commissioned in 2010 to transport oil derived from Canadian tar sands from Alberta to storage tanks in Oklahoma and refineries in Illinois and Texas. According to an October 2020 news release, TC Energy had awarded more than $1.6 billion in contracts to six union contractors for more than 800 miles of pipeline construction through three states starting in 2021. The contracts would have resulted in hiring more than 7,000 union skilled workers. When combined with existing contracts, the project would have had 11,000 workers. “Now … President Biden revokes that permit retroactively,” McKinley said. “In reflecting on this denial, how do lost jobs and lost wages serve the national interest?”
Private Security Firm Accused of Working Illegally to Protect Oil and Gas Pipelines in Five States -Leighton Security Services, a private security company accused of working without a license during construction of the controversial Dakota Access pipeline, is facing similar allegations in Virginia.The complaint against Leighton is one of two recently filed against private companies providing security for theMountain Valley pipeline, a planned 300-mile pipeline that would carry fracked gas from northwestern West Virginia, through pristine mountain streams and Appalachian forests, to the Transcontinental Gas Pipeline Company’s (Transco) compressor station in southern Virginia.The complaints were filed anonymously in January with the state’s Department of Criminal Justice Services (DCJS) and shared with DeSmog. Virginia officials have confirmed to DeSmog that investigations are ongoing.According to one complaint, Leighton has subcontracted MVP security work to another unlicensed firm, The North Group, Inc., as well as to two unlicensed individuals. A second complaint seeks to hold The North Group directly responsible for operating without a license.Leighton owner James Kevin Mayberry denied the allegations to DeSmog, but acknowledged that the company was hired to provide security by Precision Pipeline, a business subcontracted by MVP to build the pipeline, and in turn subcontracted the work to The North Group.“In most cases, a security license is required to subcontract with another company,” Leon D. Baker, Jr., the director of Virginia’s licensing agency, said in email. “If they do, the subcontractor must also be licensed by DCJS.” The North Group co-owner Steven Hernandez has acknowledged to DeSmog that TNG and Leighton “have a relationship minimally.” But he denies that TNG has worked unlicensed in Virginia. “The North Group uses licensed subcontract vendors and performs work within accordance with all state and federal regulations,” said Hernandez, who declined to name the subcontractors used by TNG. The Mountain Valley pipeline has drawn fierce opposition from landowners and environmental activists in both West Virginia and Virginia, where police recently forcibly extracted and arrested two protesters from a tree sit after they blocked construction for two and a half years.Emily Satterwhite, a vocal pipeline opponent who says she has drawn the attention of private security agents at rallies and protests against the pipeline, finds the allegations against Leighton and TNG alarming. “To know that there are people like that who feel like they’re operating — and are operating — under the radar, it’s infuriating, but it’s also frightening,” she said.Satterwhite, an associate professor of Appalachian studies and popular culture at Virginia Tech, says men in unmarked white trucks have used “intimidation tactics” by following her and other pipeline opponents around town at all hours. Satterwhite doesn’t know who the men are. But the situation gives her pause. “If we don’t even know who they are and who they’re working for, and they have no licensing concerns, what might they do?” she said. “If I had a complaint about my treatment, where would I go and who would respond?”
Council on Environmental Justice asks Northam to institute fossil fuel infrastructure ban - The Virginia Council on Environmental Justice is asking Gov. Ralph Northam to issue a moratorium on all new fossil fuel projects and permits in the state. In an April 7 letter signed by 12 members of the 21-person advisory body, the council argues that a ban is necessary “to avoid future devastation” and calls on Northam “to fulfill your climate and environmental justice commitments.” “When we move rapidly and boldly from fossil fuels to clean affordable energy sources, we will transform our economy to be more just and sustainable,” council members wrote. “Widespread adoption of renewable energies will create new jobs, establish cleaner infrastructure, and ensure a healthier future for all.” Exactly whether Northam has the legal authority to issue such a moratorium is unclear. Michael Kelly, chief of staff for Attorney General Mark Herring, said in an email that “the specific question of authority is legal advice that we would only be able to provide to a state government client.” However, he wrote, “Attorney General Herring is extremely skeptical of the environmental and economic wisdom of significant new fossil fuel infrastructure at a time when we need to be investing in cleaner energy to address climate change and create jobs.” The council’s request comes as Mountain Valley Pipeline, the beleaguered 303-mile conduit intended to carry large quantities of natural gas from the Marcellus and Utica shale fields into Virginia and beyond, faces fresh challenges in obtaining necessary permits from Virginia. Because MVP currently lacks required stream-crossing and water protection permits, it would also be subject to the moratorium requested by the Virginia Council on Environmental Justice, said council member Tom Benevento. “The more of these fossil fuel infrastructures we put in, the more we’ll be dependent on them,” said Benevento, a social ecologist and community organizer with the New Community Project in Harrisonburg. “Because that’s a 40-year infrastructure system, and we need to shift quickly.”
Major Haynesville shale driller installing tech to monitor methane, reduce emissions - Chesapeake Energy Corp. is piloting new technology in North Louisiana to monitor methane gas emissions as it looks towards reducing the carbon footprint of its natural gas drilling operations. The company hired Project Canary, a Denver firm that sells emissions monitoring hardware and software. The monitoring system triangulates emissions using several devices at the well site and cost pennies on the dollar, compared to the drones or flyover aircraft with infrared cameras used in the past to detect methane leaks. The self-described "responsibly sourced natural gas" could hold a premium in the market hungry for less carbon intensive and less environmentally destructive methods for energy. "Expectations are increasing across the board," said Brian Miller, vice president of growth and policy at Project Canary. The startup company considers itself the oil and gas equivalent to LEED construction certification which is for buildings which require less energy to operate. In one situation a company used the tools to detect leaks in gaskets which were damaged by overexposure to the sun. The leaks weren't discovered by routine maintenance checks. The pilot project is expected to cover two pads across 10 wells in the Louisiana section of the Haynesville Shale but "the partnership may be expanded based on initial findings and market conditions", according to Chesapeake Energy. The company had 203,000 net acres leased which produce 521 million cubic feet of natural gas per day in the area.
EIA forecasts that U.S. natural gas consumption will decline through 2022 - U.S. natural gas consumption, after having reached an annual average all-time high of 85.2 billion cubic feet per day (Bcf/d) in 2019, declined year over year by 2.0 Bcf/d in 2020. According to our recently released April Short-Term Energy Outlook (STEO), we expect further annual declines, forecasting a decline in natural gas consumption of 0.2 Bcf/day in 2021 and a further decline of 0.9 Bcf/d in 2022. Lower 2020 consumption is attributed to warmer-than-normal weather and a decline in economic activity associated with the COVID-19 pandemic, which results in less natural gas consumption in the industrial sector.After being the only sector that had growth in natural gas consumption in 2020, we expect the electric power sector to be the only source of natural gas consumption decline in 2021. Natural gas prices in 2019 and 2020 were at historic lows, making natural gas more competitive than coal for generating electric power. However, higher forecast natural gas prices and expectations of increased competition with renewables in 2021 and 2022 have shifted coal and renewables into higher overall shares of electric generation, displacing natural gas in both of these years. We forecast that all other consuming sectors will have increases in demand, but the sum of those increases will not be enough to offset lower consumption in the electric power sector, leading to an overall decrease in 2021.STEO forecasts use macro-economic assumptions of continued economic growth in 2021 and 2022 produced by IHS Markit, which results in year-over-year forecast increases in industrial sector natural gas consumption during those years. In particular, the natural gas weighted manufacturing index (contained in Table 9a of the April STEO) shows substantial growth in both 2021 and 2022. Colder temperatures during the first quarter of 2021, and expectations for a return to normal weather during the last quarter of 2021 relative to a warmer-than-normal last quarter of 2020, result in higher forecast annual average 2021 consumption in the residential and commercial sectors, followed by a slight decline in 2022.
Modest Momentum Continues for Natural Gas Prices, with May Futures Ahead Fourth Straight Day -- Natural gas futures advanced for a fourth consecutive session on Monday as a bout of chilly spring weather was forecast to sweep across large swaths of the Lower 48, likely providing a boost for demand and cash prices. The May Nymex contract settled at $2.561/MMBtu, up 3.5 cents day/day. June climbed 3.8 cents to $2.643. As improved weather-driven demand loomed, spot gas prices ticked up as well. NGI’s Spot Gas National Avg. advanced 11.5 cents to $2.380 to start the week. Solid liquefied natural gas (LNG) levels added further support. LNG feed gas volumes hovered close to 2021 highs around 11 Bcf on Monday, as U.S. export demand from destinations in Asia and Europe held strong. “This week’s trading will be heavily affected by weather,” analysts at EBW Analytics Group LLC said. “If current forecasts hold, cooler weather should arrive by mid-week and continue for much of the rest of the month. While space heating demand is expected to be only slightly above normal, this should be sufficient to lift both cash prices and futures.” Bespoke Weather Services said forecasts shifted cooler over the weekend, showing elevated heating-degree days (HDD) in the middle of the nation and moving east this week. Colder air is expected to descend from Beyond weather, all eyes will soon turn to Thursday’s Energy Information Administration (EIA) storage report, Bespoke noted, with analysts expecting an increase in stockpiles. The forecaster estimated a storage build of 69 Bcf for the week ended April 9.
U.S. natgas futures rise for 5th day on cooler forecasts (Reuters) - U.S. natural gas futures rose for a fifth day in a row on Tuesday on forecasts for cooler weather and slightly higher heating demand next week than previously expected. Traders noted that even though temperatures may be lower, they were expected to remain around near-normal levels through late April. They also said mild weather last week probably caused utilities to boost injections into storage by so much that the total amount of gas in inventory likely rose above the five-year (2016-2020) average for the first time since the February freeze. EIA/GAS Front-month gas futures NGc1 rose 5.8 cents, or 2.3%, to settle at $2.619 per million British thermal units, their highest close since April 1 for a fifth day in a row. That was the first time the front-month climbed for five days in a row since January. Data provider Refinitiv said output in the Lower 48 U.S. states averaged 91.7 billion cubic feet per day (bcfd) so far in April, up from 91.6 bcfd in March but still well below the record monthly high of 95.4 bcfd in November 2019. Refinitiv projected average gas demand, including exports, would rise from 91.8 bcfd this week to 93.3 bcfd next week as the weather cools. Those demand forecasts were higher than Refinitiv projected on Monday. The amount of gas flowing to U.S. liquefied natural gas (LNG) export plants averaged 11.0 bcfd so far in April, which would top March's monthly record of 10.8 bcfd. Analysts, however, said they do not expect LNG feedgas to break March's record in April because flows were expected to decline later this month due to planned work on a couple of facilities and the pipelines serving them, including Cheniere Energy Inc's LNG.A Corpus Christi in Texas and Cameron LNG's plant in Louisiana. U.S. pipeline exports to Mexico averaged 5.8 bcfd so far in April. That compares with 5.9 bcfd in March and a record 6.0 bcfd in September 2020. On a daily basis, however, Mexico exports were on track to rise to 6.7 bcfd on Tuesday, their highest since hitting a record 6.9 bcfd on April 9, preliminary data from Refinitiv shows.
Weekly US natural gas storage injection dwarfs five-year average build: EIA | S&P Global Platts --Natural gas injected into US underground storage fields the week ended April 9 dwarfed the five-year average once again, but the Henry Hub summer strip gained some ground while the latest forecasts for the end-of-season total neared 3.5 Tcf. Inventories increased 61 Bcf to 1.845 Tcf, US Energy Information Administration data showed April 15. The build was less than the 65 Bcf addition expected by an S&P Global Platts' survey of analysts, but it far surpassed the five-year average build of 26 Bcf, according to EIA data. The week ended April 9 spanned the Easter holiday, which typically produces notable decreases in demand. Total demand fell 6 Bcf/d, with residential and commercial losses accounting for 4.5 Bcf/d of the drop, according to Platts Analytics. While gas continued to take incremental market share from coal, lower power loads resulted in a weakened call on thermal generation, producing a nearly 1 Bcf/d decline in gas-fired power generation week over week. The NYMEX Henry Hub May contract added 3 cents to $2.65/MMBtu in trading after the release of the weekly storage report. The summer strip, spanning May through October, added 2 cents to average $2.77/MMBtu. At $2.59/MMBtu, Henry Hub cash was up about 7 cents from one month prior. Stronger-than-expected US production has resulted in a 1 Bcf/d upward revision to Platts Analytics' summer 2021 production forecast and an increase to the October 2021 US storage forecast from 3.3 Tcf to 3.5 Tcf. This has translated to a lower summer Henry Hub price forecast, which dropped from $3.00/MMBtu to $2.80/MMBtu, marginally above the current summer strip. The South Central region added 30 Bcf, measuring 11 Bcf stronger than the five-year average. Permian production was on pace to average 11.75 Bcf/d in April, which would be flat to March but roughly 200 MMcf/d below pre-freeze levels in February and January, according to Platts Analytics. Due to the lower production and unconstrained outflow corridors, Waha basis in April was on pace to average 22 cents below Henry Hub with a monthly high of just 9 cents below Henry Hub. The support for Waha forwards has been more noteworthy. The balance-of-summer strip has tightened to 4 cents behind Henry Hub, pushing to 3- and 6-cent premiums for July and August, respectively. The upcoming winter strip was even stronger at a 2-cent premium to Hub, peaking in January and February at 10 cents above Henry Hub. The last time the monthly average settled above Henry Hub was Dec. 2015 with a 2-cent premium when Hub was $1.88/MMBtu. The significant strength in the forwards highlighted not only the expected supply shortage but the stiff competition for Permian gas between East Texas and the Southwest. Storage volumes now stood 242 Bcf, or 11.6%, less than the year-ago level of 2.087 Tcf; and 11 Bcf, or 0.6%, less than the five-year average of 1.834 Tcf. Platts Analytics' supply and demand model currently forecasts a 37 Bcf injection for the week ending April 16, which would match the five-year average.
Pressure Eases on Natural Gas Prices, with May Futures Up After Storage Report - Natural gas futures prices rebounded Thursday as the government’s weekly inventory report proved bullish, and both weather forecasts and demand for U.S. exports remained favorable. The May Nymex contract settled at $2.658/MMBtu, up 4.0 cents day/day. June gained 3.7 cents to $2.730. NGI’s Spot Gas National Avg. rose 4.5 cents to $2.565, continuing a weeklong rally amid chilly conditions and seasonally strong heating demand in the eastern half of the country. The prompt month ticked down by a tenth of a cent on Wednesday, ending a five-day winning streak. But a well-received U.S. Energy Information Administration (EIA) storage result for the week ended April 9 reopened the momentum door for futures. EIA reported an injection of 61 Bcf natural gas into storage.. That was below median estimates found by major polls and the year-earlier injection of 68 Bcf. The injection was “well under our estimate of 72 Bcf, and on the low end of the range of all market estimates,” Bespoke Weather Services said. “In our models, this is a strong number, confirming the tightening of balances we have been seeing over the last few weeks.” Prior to the report, a Bloomberg survey found injection estimates ranged from 62 Bcf to 79 Bcf, with a median of 67 Bcf. The median of a Reuters poll landed at a build of 66 Bcf; injection estimates spanned 50 Bcf to 79 Bcf. NGI forecasted an injection of 67 Bcf for the period.
U.S. natgas futures rise to 5-week high on record exports (Reuters) - U.S. natural gas futures rose to a five-week high on Friday on near-record liquefied natural gas (LNG) and pipeline exports and forecasts power generators will burn more gas next week. That price increase came despite forecasts for milder weather through the start of May than previously expected. Front-month gas futures NGc1 rose 2.2 cents, or 0.8%, to settle at $2.680 per million British thermal units, their highest close since March 10. That put the front-month up over 6% this week after losing over 4% last week. In the power market, meanwhile, traders noted real-time prices in the Electric Reliability Council of Texas (ERCOT) rose over $500 per megawatt hour for a 15-minute interval early Friday after mostly trading in the $30s on Thursday. Over the past few hours, however, prices have dropped back to the $30s and $40s. Data provider Refinitiv said gas output in the Lower 48 U.S. states averaged 91.7 billion cubic feet per day (bcfd) so far in April, up from 91.6 bcfd in March but still well below the record monthly high of 95.4 bcfd in November 2019. Refinitiv projected average gas demand, including exports, would rise from 92.3 bcfd this week to 96.0 bcfd next week as the weather cools before sliding to 89.3 bcfd in two weeks as the weather turns seasonally milder. The demand forecasts for this week and next were higher than Refinitiv projected on Thursday. The amount of gas flowing to U.S. LNG export plants averaged 11.1 bcfd so far in April, which would top March's monthly record of 10.8 bcfd. U.S. pipeline exports to Mexico averaged 6.1 bcfd so far in April, up from 5.9 bcfd in March and on track to top the monthly record of 6.0 bcfd in September 2020, according to Refinitiv data.
Qatar Could Throw A Wrench In America’s Ambitious LNG Plans - U.S. domestic demand for natural gas has been falling for a year now, according to EIA data. The authority expects demand will continue down this year as well because of cheap renewables and coal. And yet, production is on the rise—a combination that makes U.S. gas producers increasingly dependent on export markets. Reuters’ John Kemp wrote in a recent column that while U.S. natural gas production grew at some 4.3 percent between 2015 and 2020, domestic consumption of the commodity only increased at half that rate. Exports—via pipelines and as LNG—were what absorbed the excess. In a best-case scenario, they will continue to absorb it. In a worst-case scenario, competition on the LNG market could hit U.S. producers hard.Exports of American liquefied natural gas to the three top importers in Asia hit a record in February, reaching 3.2 million tons in February amid colder than usual weather for that time of the year. The February export amount was two and a half times greater than the previous monthly record set by U.S. exporters.LNG exports to Asia also surged by as much as 67 percent last year, which is certainly good news for producers and liquefiers. What’s not so good is that exports to Asia represented about half of all U.S. LNG exports last year.It’s obvious that Asia is the key market for LNG exporters: the continent is currently moving from coal to gas for its power generation and will drive demand for the commodity for probably decades to come. The problem with that, for U.S. LNG producers, is that they’re not alone on the market.The biggest threat comes from Qatar—reigning top LNG exporter and low-cost producer—which recently announced plans to expand its production capacity significantly.In February, Qatar announced the final investment decision on what it says will be the world’s largest LNG project, boosting the tiny Gulf nation’s annual total from 77 million tons to 110 million tons—a 40-percent capacity increase. The capacity increase will cost $28.75 billion and should become operational by 2025. Yet there is something even more significant in the Qatari project than its sheer size. The North Field East Project will feature a carbon capture and sequestration system, according to operator Qatar Petroleum. This means that the gas produced there will have a lower carbon footprint than LNG produced without a CCS system, which is most LNG today. Now, Europe is not Asia, for sure, but it is quite a big LNG buyer, too, and another key market for U.S. exporters of the superchilled hydrocarbon fuel. Besides a big buyer of LNG, Europe has also been a source of a stable stream of bad news that could be summed up with three words: European Green Deal. The EU’s energy transition plan involves ambitious emission targets, and these targets will likely make the bloc picky about the sources of its natural gas, which, according to the man who heads the green push, Frans Timmermans. Timmermans recently said gas has no viable future in Europe’s energy mix, and that was nothing if not a warning.
Coronavirus pandemic intensifies downward employment trends in Louisiana’s oil and gas industry –Employment in Louisiana’s oil and gas industry has been declining since 2014 and took another big hit during the COVID-19 pandemic, with layoffs of 7,500 more workers.The high-paying jobs have not come back yet even though world oil prices have rebounded to pre-pandemic levels. And as President Joe Biden pushes to accelerate a shift to renewable energy sources, oil and gas workers from Lafayette to Houma are feeling increasingly uneasy about the future.Loren Scott, an economist who does consulting work for the industry, said Louisiana has about 27,000 jobs in oil and gas extraction, or 7,500 fewer than in January 2020. That number reflects those working in oil and gas exploration and production.“The big hit that took place is a result of COVID just dealing another blow to the industry,” he said.Even with the rebound in crude oil prices over the last few months, the South Louisiana oil patch remains “one of the few sectors of the economy that did not show any improvement” in jobs, Scott said.Gary Wagner, an economics professor at the University of Louisiana at Lafayette, said that an array of businesses that support the oil and gas industry also have lost jobs, and adding these in brings the total job losses to at least 24,000 since the peak in 2014. Crude oil prices plunged from $106 a barrel in 2014 to $27 in 2016 before bouncing to more than $60 in January 2020.Patrick Courreges, the communications director at the Louisiana Department of Natural Resources, said the industry suffered last year as Americans cut back on travel and worked from home. That’s because many of the refined products, like gasoline, are for transportation. Courreges said that as oil prices dropped, rigs in production and drilling permits trended down. And when consumer demand fell with the spread of the virus, the industry took a beating like never before. As the economy reopens and Americans adjust to “the new normal,” he said, the industry is showing some signs of recovery. But in some places, the jobs picture has only gotten worse. The Houma area lost about 9,200 jobs of all types, or 11% of its total, when the pandemic hit, Scott said, with many of them related to oil and gas.\
What's a lift boat? More about Seacor Power, vessel that capsized off Louisiana's coast - The Seacor Power is a commercial lift vessel that capsized Tuesday in the Gulf of Mexico during a severe storm off Louisiana's coast. It is designed to become an offshore platform by dropping three towering legs down to the sea floor. A common name is a lift boat or a jackup barge. The Seacor Power lift boat, left, operates alongside an offshore oil platform in the Gulf of Mexico in an undated photograph provided by Seacor Marine.It travels to a location with its massive legs in the air and then the crew lowers the vessel's legs to stabilize the platform while they work.The Seacor Power, a 129-foot lift boat, capsized in the Gulf of Mexico about 8 miles south of Port Fourchon, officials said. Port Fourchon, Louisiana’s southernmost seaport, is a major base for the U.S. oil and gas industry, supporting most of Louisiana’s offshore platforms and drilling rigs.The vessel left Port Fourchon Tuesday at 2:12 p.m., according to Marine Traffic. The Coast Guard received an emergency distress signal from the Seacor Power at 4:30 p.m. Hit by the storm, the Seacor Power flipped over in the Gulf. Photos released by the Coast Guard show the corner of the vessel sticking up out of the water. The foot that normally goes on the sea floor is in the air and is in the retracted position used for travel. Here's a picture (on the left) of what the Seacor Power usually looks like when it is parked in the water with its legs extended to the sea floor.Messages left for the capsized vessel's owner, Seacor Marine, weren't immediately returned late Tuesday.
GOM Vessel Incident Declared Major Marine Casualty - The U.S. Coast Guard (USCG) revealed Thursday that an incident involving a capsized commercial lift vessel in the U.S. Gulf of Mexico has now been declared a major marine casualty. The USCG is leading a preliminary investigation in relation to the incident and the National Transportation Safety Board will be joining in that effort, the USCG outlined. The organization confirmed Thursday that it is continuing to search for 12 missing people from the capsized vessel eight miles south of Port Fourchon. “Coast Guard air and surface assets continued to search overnight, and the search will continue throughout the day,” the USCG said in a statement posted on its website on April 15. “Coast Guard crews have searched for a combined 70 hours covering approximately 6,380 square miles, an area roughly the size of Hawaii,” the USCG added. Divers were on scene Thursday to conduct an assessment and begin operations in support of the ongoing search and rescue effort, the USCG revealed. In a statement posted on its Twitter page Thursday, the USCG noted that divers knocked on the hull of the vessel without hearing a response. The USCG revealed Tuesday that it and multiple “good Samaritan vessels” had rescued six people from the capsized commercial lift vessel in the U.S. Gulf of Mexico. The organization announced Wednesday that it had recovered one unresponsive person and that it was continuing to search for 12 missing people from the vessel.
Appeals court backs drilling protections reinstated by Biden -A U.S. appeals court on Tuesday affirmed an earlier decision upholding Obama-era standards for Arctic Ocean and Atlantic Ocean protections.In an April 2017 executive order, then-President Trump unwound the Obama administration’s permanent ban on offshore gas and oil drilling in the oceans.But in 2019, the U.S. District Court for the District of Alaska ruled in favor of a coalition of conservation groups, finding that the Trump administration had overstepped its authority with the rollback. Plaintiffs in the case included the groups Earthjustice, the Natural Resources Defense Council, the Northern Alaska Environmental Center, Resisting Environmental Destruction on Indigenous Lands, the Sierra Club and The Wilderness Society.In its Tuesday order, the U.S. Court of Appeals for the 9th Circuit upheld an earlier decision by the U.S. District Court for the District of Alaska, noting that the Biden administration had issued an executive order revoking the Trump order.“We lack jurisdiction to consider ‘moot questions ... or to declare principles or rules of law which cannot affect the matter in issue in the case before [us],’” the ruling states. “Because the terms of the challenged Executive Order are no longer in effect, the relevant areas of the OCS [outer continental shelf] in the Chukchi Sea, Beaufort Sea, and Atlantic Ocean will be withdrawn from exploration and development activities regardless of the outcome of these appeals.” “We welcome today’s decision and its confirmation of President Obama’s legacy of ocean and climate protection. As the Biden administration considers its next steps, it should build on these foundations, end fossil fuel leasing on public lands and waters, and embrace a clean energy future that does not come at the expense of wildlife and our natural heritage,” Earthjustice said in a statement. “One obvious place for immediate action is America’s Arctic, including the Arctic Refuge and the Western Arctic, which the previous administration sought to relegate to oil development in a series of last-minute decisions that violate bedrock environmental laws.”
Biden budget would triple spending to clean abandoned wells -- Monday, April 12, 2021 -- The Biden administration's proposal to triple the budget for cleaning up abandoned oil and gas sites left environmentalists hopeful that the federal government would begin addressing a long-standing problem in the oil field that contributes to climate change.
Biden’s Promising, Problematic Plan to Plug Orphaned Oil and Gas Wells - Tucked into Joe Biden’s American Jobs Plan is a provision for “plugging orphaned oil and gas wells and cleaning up abandoned mines.” The plan’s fact sheet identifies plugging these sites, which tend to exist primarily in rural areas facing various forms of disinvestment, as a high priority, noting that “hundreds of thousands of former orphan oil and gas wells and abandoned mines pose serious safety hazards, while also causing ongoing air, water, and other environmental damage … President Biden’s plan includes an immediate up-front investment of $16 billion that will put hundreds of thousands to work in union jobs plugging oil and gas wells and restoring and reclaiming abandoned coal, hardrock, and uranium mine. It’s oil and gas wells in particular, though, that are of the most immediate concern. To define the term, an orphaned well is an idled oil or gas well whose owner or operator is unknown, out of business, or otherwise unable or unwilling to pay to plug it. This means the responsibility for plugging these wells falls to the states (the particulars of this definition vary from state to state). An unplugged well can spew everything from crude to methane to brine, which can have huge effects on greenhouse gas pollution and soil and groundwater contamination, among other things. Methane pollution in particular is extremely troubling, given the already sky-high levels of atmospheric carbon. In 2016, University of Cincinnati researcher Amy Townsend-Small tested abandoned wells in Colorado, Wyoming, Ohio, and Utah, and found that 40 percent were emitting methane. The Environmental Protection Agency estimates that the country’s abandoned wells are spewing greenhouse gas emissions equivalent to burning more than 16 million barrels of oil. Just how many orphaned wells exist in the United States currently is a matter of disagreement. The EPA says there are some two million orphaned wells, with 3.2 million abandoned wells (those for which an owner can be identified) nationwide. Industry groups say it’s much lower. Their states of decline are also contested: An unplugged well can be in disrepair, or with little change in its condition. According to a recent study from the Carbon Tracker Initiative, there are 2.6 million documented onshore wells in the U.S. alone that are currently unplugged, which will cost a staggering $280 billion to plug and remediate. There are, they estimate, another 1.2 million undocumented onshore wells that are unplugged on top of that, which sums to nearly four million. Cleaning and capping all the unplugged abandoned wells across the United States could cost as much as $300 billion.
House panel to debate $8B orphan well cleanup bill -- Monday, April 12, 2021 -- A House Natural Resources subcommittee will debate the merits of legislation that promises to clean up thousands of polluting oil and gas wells that have sat abandoned, in some cases, for decades.
Senate bill would provide $4.6B for orphaned wells -- Tuesday, April 13, 2021 -- Lawmakers are introducing bipartisan legislation in the Senate today to create a multibillion-dollar federal cleanup effort for the tens of thousands of abandoned and orphaned oil and gas wells throughout the United States.
Dems' $8B orphaned well cleanup bill gets GOP blowback -- Friday, April 16, 2021 -- House Republicans say they will fight an orphan well-plugging bill pushed by Democrats because they oppose bonding requirements and fees designed to ensure oil and gas companies have set aside enough money in the future to pay to clean up abandoned wells instead of taxpayers.
Congressional panel splits on regulation of ‘orphaned’ oil and gas wells - - Members of a U.S. House Natural Resources panel agreed Thursday on the need to clean up and cap thousands of abandoned oil and gas wells, including some in Virginia, but disagreed along party lines about the extent of the federal government’s role in well regulation. The Energy and Mineral Resources Subcommittee hearing was held to consider a bill introduced by Rep. Teresa Leger Fernandez, (D-N.M.), that would authorize $8 billion over 10 years to reclaim oil and gas wells that were abandoned by defunct companies and not properly cleaned up. The measure represents a first step in a priority laid out in President Joe Biden’s infrastructure and jobs plan late last month. Uncapped wells leak methane, pollute groundwater and harm ecosystems, witnesses told the panel. “Even after society transitions away from fossil fuels, abandoned and orphan wells may be emitting methane and impacting our water, air and ecosystem for many years, decades and possibly centuries,” said Mary Kang, an assistant professor of civil engineering at McGill University who has focused her research on the environmental impacts of energy development. Democrats and Republicans on the subcommittee voiced support for the idea of cleaning up and capping orphaned wells. But while some congressional Republicans have backed federal spending to help plug orphan wells, GOP committee leaders took issue with provisions in Leger Fernandez’s bill requiring states to strengthen regulations, including raising bond rates, in order to receive federal grant funding. “I see this attack for what it is: Another attempt at destroying the industry by over regulation and death by a thousand cuts,” said Rep. Pete Stauber of Minnesota, the subcommittee’s ranking Republican. Stauber said he would support a bipartisan approach to funding cleanup efforts. A bill in the Senate, authored by New Mexico Democrat Ben Ray Luján and North Dakota Republican Kevin Cramer, would provide about $4.7 billion to plug orphan wells but doesn’t include regulatory changes that are in the House version.
US oil drillers ‘dying on the vine’ as PE flight prompts funding drought | Financial Times --A vital source of funding for the US oil sector is drying up as private investors retreat, prompting stricken operators to make “last gasp” efforts to boost production and cash flow to lure in buyers. The exodus mirrors shale’s experience in public markets, where even before last year’s crash investors had soured on an industry notorious for poor returns and weak environmental, social and governance performance. “Private equity has been decimated in this downturn,” said Wil VanLoh, head of Quantum Energy Partners, one of the largest PE investors in the shale patch. “The total quantum of money available out there to private companies has shrunk and is going to stay much, much smaller.” Now scores of oil producers are “dying on the vine”, said Ben Dell, managing partner at rival Kimmeridge, as they are left without the regular cash infusions to bankroll the capital spending needed to keep on drilling. The private flight comes despite oil’s recovery to $60 a barrel — a price that allows many operators to break even and has raised investors’ hopes of a profitable final exit from the sector. Those notions gained strength this month when Pioneer Natural Resources, a large listed operator in the prolific shale fields of Texas’s Permian Basin, agreed to buyprivately owned rival DoublePoint Energy for $6.4bn — the biggest public-private deal in the US upstream oil and gas business in a decade.But investors say deals of that scale are unlikely to be repeated. private mood has been shifting for some time. Between the start of 2015 and the end of 2019, 136 private funds closed after raising an aggregate of $86bn to spend in US oil and gas, according to Preqin, a financial data provider. The influx helped to finance an unprecedented surge in American oil production to a record high of about 13m barrels a day last year. But the “dry powder”, as PE groups refer to investors’ capital, has diminished and the same “war chest mentality” is not evident in this recovery, according to Raoul LeBlanc, head of North American unconventionals for the consultancy IHS Markit. Just 11 funds closed last year and only $4.5bn was raised as oil prices crashed, according to Preqin. Production plunged and remains around 11m b/d now. “What’s different this time is there’s very little new private equity going into forming new private companies, because they don’t have capital to deploy,” said Kimmeridge’s Dell. “They are not confident they can raise more capital.” Some private oil operators are spending an unexpected bounty from higher oil prices into more drilling, hoping extra output will lift valuations and attract buyers — a “last gasp” effort to secure a profitable exit, said Van Loh. Rigs operated by private companies have climbed to about 50 per cent of the contiguous 48 states’ total this year, according to the consultancy Enverus. While public operators slashed capital spending and output last year, some private ones did the opposite. Quantum’s portfolio companies boosted total output by a quarter to 500,000 b/d by December, according to the consultancy Rystad Energy.According to PitchBook, another data provider, private equity deal values last year amounted to just $13bn from 35 exits — a fraction of previous years. The market does not seem to be rewarding dealmaking if investors think it points to more growth from public companies, analysts say. Pioneer’s shares are down more than 10 per cent since April 1, the eve of the DoublePoint deal, partly because of a perception that the company — which will be by far the Permian’s biggest producer after the deal closes — was chasing supply gains again. Initial public offerings, the other main exit route for private equity, are also difficult given capital markets’ lack of enthusiasm for fossil fuel producers and a shale sector that generated such poor returns in recent years. Another underlying problem, investors say, is the lack of assets of sufficient quality to attract public operators that have sworn off the fast-growth strategy and land-grab mentality of previous years.
Texas oil pipelines face dry months as production languishes (Reuters) -Nearly half of all oil pipelines from the Permian basin, the biggest U.S. oilfield, are expected to be empty by the end of the year, analysts and executives said. Pipeline companies went on a construction spree throughout 2018 and 2019 to handle blistering growth in U.S. crude production to a record 13 million barrels per day (bpd). However, the coronavirus pandemic crushed both fuel demand and oil production, and neither have recovered fully, leaving many pipelines unused. Major pipeline companies are exploring ways to ship other products in those lines and considering selling stakes in operations to raise cash. The coronavirus pandemic upended the global energy supply system and worldwide fuel demand. U.S. gasoline consumption is now estimated to be past its peak and as refiners process less crude, producers are not filling pipelines used to transport it. By the fourth quarter, total utilization of the largest oil pipelines from the Permian is expected to drop to 57%, consultancy Wood Mackenzie said. The nadir during the last market bust in 2016 was roughly 70%. U.S. crude output is currently about 11 million bpd, and is not expected to grow much until 2022. But more pipelines were already set to come online, growing the gap between production and capacity covered by long-term contracts to a record over 1 million bpd in February, according to energy research firm East Daley Capital. “We do not expect to be at pre-COVID production levels by end-2022,” said Saad Rahim, chief economist at commodities merchant Trafigura. The top three Permian pipeline companies are offering discounts to entice shippers and stem the fall in volumes. Companies rely on long-term contracts that require customers to ship a certain volume of oil or pay a penalty. Now companies are renegotiating those agreements at lower rates when they are close to expiring, to keep their customers. Magellan Midstream Partners LP’s transportation and terminals revenue slid 9% to about $1.8 billion in 2020, the lowest since 2017. The company has only enough long-term contracts to fill its 275,000-bpd Longhorn pipeline to 70% capacity over the next six years, Magellan said. With more pipelines adding to competition, Magellan expects daily volumes on Longhorn to drop to an average 230,000 bpd this year versus 270,000 bpd in 2020. A Magellan spokesman said the company could use its marketing arm to buy space on the Longhorn line and sell it to ad-hoc buyers. Plains All American Pipeline LP’s transportation revenues fell about 13% to $2 billion in 2020, and warned that earnings could suffer further if production declines. Plains did not comment for this story. Pipeline companies can make some money even when oil is not flowing through pipelines. Producers pay what are known as deficiency payments - penalties for not shipping oil. Still, those payments are small. Plains reported $71 million in deficiency payments in 2020, less than 4% of its overall transportation segment revenue. Some companies are considering retrofitting pipelines to ship liquids besides crude, such as renewable fuels.
Permian output nears levels not seen since pandemic start -- Wednesday, April 14, 2021 -- The Permian Basin, the U.S.'s most prolific shale patch, will produce crude oil at levels not seen since the start of the pandemic in the latest sign the global economy is heating back up.
Berkshire Hathaway’s backup power plan for Texas opposed by energy firms -- An $8.3 billion idea by Warren Buffett’s Berkshire Hathaway Energy to build 10 new natural gas power plants across the state for emergency use turned into formal legislation Thursday, when the proposal was introduced during a state Senate committee hearing.Berkshire executives, who pitched the plan to lawmakers in the weeks following February’s deadly winter storm, said revenue for the massive project would come through an additional monthly charge on Texans’ power bills.Republican state Sen. Charles Schwertner, R-Georgetown, put forward the legislation, saying it would create “a backstop” of “emergency supply” that would only be tapped when demand on the power grid is so great that the state may beforced into electricity blackouts.“We should look at all options to ensure Texans never have to face the devastation caused by the failure of the electric grid again,” Schwertner said.While Schwertner said Senate Bill 2109 is a starting point and that he welcomed expertise to improve the legislation, more than a dozen energy industry stakeholders testified in opposition to the bill.“This proposal creates an unfair economic advantage, undercutting existing participants that have made the decision to invest in Texas over the past 20 years,” testified Bill Barnes, director of regulatory affairs at energy company NRG, one of the legislation’s opponents. Amanda Frazier, a vice president at Vistra Corp., the largest power plant owner in Texas, said the bill would motivate some older power plants in the state to shut down for good.But Schwertner’s proposal is just one of several bills lawmakers are considering to address issues stemming from the winter storm. The state House has advanced legislation to reform the governance of the grid operator, the Electric Reliability Council of Texas, and the Public Utility Commission that oversees ERCOT. Lawmakers have also advanced legislation improving emergency communications between regulatory agencies and to create an emergency alert system to notify Texans of power outages.
No natural gas bans in state; nursing homes get immunity - Two significant and controversial pieces of legislation became Kansas law Friday. One concerns nursing homes, while the other prohibits natural gas bans.The governor didn't sign or veto the Energy Choice Act, merely letting it become law. Now, no Kansas municipality can put a ban on the use of natural gas, a result desired by those in the natural gas industry. This comes after fears that cities would have done so after Berkeley, California, put a ban into place in 2019. The city of Lawrence had opposed this bill, as it had committed previously to powering the city with all renewable energy by 2035. With the act now law, it's going to complicate if not outright stop, that effort.“The path that I’m seeing Kansas take is really shortsighted and morally wrong,” City Commissioner Lisa Larsen told the Lawrence Journal-World. “And if we continue along this path, there is no doubt in my mind that we are going to be on the wrong side of history.”But bill supporters framed it as giving choice to consumers, and they said banning natural gas could lead to less energy competition, meaning higher utility rates."These local bans will ultimately serve as regressive taxes that hurt low- and middle-income consumers and they will exacerbate energy poverty in our state,” said Americans for Prosperity's Elizabeth Patton.Those arguments even seemed to have won a couple Democrats over, as the act passed out of the Legislature with veto-proof majorities.
Reynolds signs child care bill, ban on local natural gas laws - Gov. Kim Reynolds on Monday signed a bill increasing the number of children who can be cared for at an unregulated caregiver’s home.House File 260 defines a “child care home” as one that can care for five or fewer children. Also Monday, Reynolds signed House File 555, which bans cities and counties from regulating the sale of propane or natural gas. The Iowa Environmental Council and organizations representing cities and counties opposed the bill, arguing it could expose Iowans to safety threats and higher energy costs. The bill also could impede efforts to shift to alternative energy sources, they said.
Judge: BP's Indiana refinery violated soot emission limits (AP) — A BP refinery in northwest Indiana repeatedly violated air pollution standards for soot emissions between 2015 and 2018, a federal judge ruled in a lawsuit brought by environmental advocates. U.S. District Judge Philip Simon issued his decision Wednesday. The Sierra Club and the Environmental Integrity Project sued BP in 2019 under the federal Clean Air Act after Indiana officials declined to take formal action against the company and it’s sprawling refinery in Whiting, 15 miles (24 kilometers) southeast of Chicago. Simon based his ruling largely on the results of nine pollution tests the oil giant provided to the Indiana Department of Environmental Management from 2015 to 2018. In eight of the tests, boilers at the refinery released soot concentrations that exceeded permitted limits. BP was legally obligated to fix the violations and retest its emissions but it failed to do so each time, Simon said. Simon has not ruled on whether BP must pay monetary damages. Bowden Quinn, director of Sierra Club Hoosier Chapter, called the ruling a major victory. “Today’s ruling stamps out BP’s profits-over-people approach and ensures it will be held accountable for endangering Northwest Indianans’ health and safety with their dangerous emissions,” Quinn said. A BP spokeswoman said the company is reviewing Simon’s ruling.
AIR POLLUTION: Exxon faces $1.5M fine for alleged violations at Ill. refinery -- Tuesday, April 13, 2021 -- Federal and state regulators plan to tag Exxon Mobil Corp. with about $1.5 million in fines for alleged environmental infractions at a Joliet, Ill., refinery, according to a pair of court filings today.
U.S. Startup Plans to Build First Zero-Emission Gas Power Plants - A new kind of power plant that doesn’t add greenhouse gases to the atmosphere is being built in the U.S., potentially providing a way for utilities to keep burning natural gas without contributing to global warming. Net Power intends to build two natural-gas power plants in the U.S. that will have all its emissions captured and buried deep underground. The startup licensed its technology to developer 8 Rivers Capital LLC, which will work with agriculture giant Archer-Daniels-Midlands Co. to replace some emissions from a coal power plant in Illinois. For the other plant, 8 Rivers is working with the Southern Ute Indian Tribe Growth Fund in Colorado. Both projects will be designed and developed this year, which 8 Rivers says requires spending tens of millions of dollars. A final decision on whether to go ahead with the facilities is due in 2022. Net Power’s technology uses a new kind of turbine to burn natural gas in oxygen, rather than the air. As a result, the plant only produces carbon dioxide and water as a byproduct. The water can be frozen out of the mixture and the pure stream of CO₂ can be buried in depleted oil and gas wells or similar geological structures. The required oxygen is secured by separating it from the air, which needs energy. But Net Power says its turbine is more efficient so that, on balance, the overall efficiency of the system matches that of an advanced natural-gas power plant that pumps its emissions into the atmosphere. Another upside of using oxygen is that Net Power plants do not produce any nitrogen emissions, which would cause local air pollution. The Illinois power plant will inject its emissions into an already existing CO₂ well, which currently buries emissions from an ethanol production facility. The Colorado plant hasn’t decided where to bury its emissions, but 8 Rivers says that the site of the power plant is close to a CO₂ pipeline which extends the area available for storing the carbon. Though the power plant won't produce any pollution, environmentalists are concerned about the continued use of natural gas. The production and transportation of the fossil fuel does lead to emissions, which companies that rely on natural gas will have to mitigate. Both plants will have access to a U.S. tax credit that amounts to about $50 for each ton of CO₂ injected into the ground. As in the case of solar and wind power, the credit seeks to subsidize early-stage climate technologies until they can compete with the existing fossil-fuel based incumbents.
BoC asks advocate to go rework and add to Line 5 resolution – The Iosco County Board of Commissioners have asked an advocate who is against Line 5 to make some changes to a resolution before they would consider adopting the measure at a meeting. The resolution would support the state’s decision to revoke Enbridge’s easement at the Straits of Mackinac to operate the Line 5 oil pipeline. This took place during a April 7 meeting of the Iosco County Board of Commissioners Committee of the Whole meeting. Jim Mortimer, who has continually spoke against Line 5, presented the resolution to commissioners. This was after a representative from Enbridge spoke about why having the oil pipeline, which is Canadian owned, shut down would affect Michigan residents negatively. The pipeline extends from Canada through the state, under the lake and then back over to Canada to Sarnia. Critics have cited the potential danger if the line were to breach, releasing petroleum products into the Great Lakes and causing an ecological nightmare. To combat this, the company had applied for permits to construct a tunnel, bored through the rock under the lake, to put the line, but Gov. Gretchen Whitmer has ordered the line closed, the easement revoked, and the operations to cease by May.
Enbridge’s Great Lakes Pipeline Is ‘Nonnegotiable’ for Canada - Enbridge Inc.’s contentious oil pipeline crossing the Great Lakes is “nonnegotiable” for Canada, and Justin Trudeau’s government spoke with U.S. President Joe Biden to defend it. With the Canadian pipeline giant and Michigan Governor Gretchen Whitmer locked in a legal battle over the state’s efforts to decommission Enbridge’s Line 5, Canadian Natural Resources Minister Seamus O’Regan said he has reached out to all levels of government in the U.S. Legislators on both sides of the border have also held over 20 meetings to seek an agreement, he said. He declined to say what Canada would do if a court orders the line to be shut. “We have signaled very clearly that this is nonnegotiable,” O’Regan, 50, said in an interview. “We have made our case extremely clear directly to the President of the United States.” Tensions over cross-border energy projects have cast a shadow over the relationship between Biden and Trudeau. While the two leaders share many of the same values and have pledged to collaborate on the fight against climate change, they remain divided on the role of oil and gas in transitioning to a greener economy. On his first day in office, Biden canceled the permit for TC Energy Corp.’s Keystone XL pipeline, which would have transported over 800,000 barrels a day of crude from oil-rich Alberta to refineries in the U.S. “Line 5 is very different from Keystone XL and we fully support it, and we will defend it,” O’Regan said. “We made our case with Republicans as well as Democrats.” A mediation in the dispute between Michigan and Enbridge is scheduled to start on April 16.
Work underway on natural gas pipeline through Racine County A pipeline to deliver more natural gas to southeastern Wisconsin is cutting a path across Racine County in a project that has temporarily dotted the landscape with green pipeline segments. We Energies is building the 46-mile pipeline to bring enough natural gas to the region to power the equivalent of 77,000 homes during a typical Wisconsin winter day. En route from Whitewater to its destination near Kenosha, the pipeline (using 24-inch pipes) is being installed in an east-west configuration that cuts through the Town of Burlington and City of Burlington, and runs just south of Union Grove. The "Lakeshore Lateral" natural gas pipeline for We Energies will cross about 46 miles, including nine miles in Racine County, where these segments are waiting to be assembled in the Town of Burlington. Although large segments of green pipeline can be seen sitting above ground along the route, crews eventually will bury the pipeline underground. From there, the operation will be largely unseen by the public. “Generally people aren’t going to know that anything was installed,” said Matt Fehler, an operations manager for We Energies. The Milwaukee-based utility company has received approval for the large pipeline project, known as the “Lakeshore Lateral,” from both the state Public Service Commission and the Wisconsin Department of Natural Resources. Work began last year. We Energies expects to have the pipeline completed by the end of 2021. Burlington Town Administrator Brian Graziano said the green pipeline scattered along highly visible areas near Highway 83 and elsewhere has not gone unnoticed by townsfolk. Graziano, however, said he is confident that the project will not cause any major troubles for the town. The DNR gave We Energies permission to clear trees, temporarily disturb wetlands, and to cross more than 20 navigable rivers and other waterways. it would be challenging to complete such an undertaking without temporary disturbance of wetlands or other environmentally sensitive lands. “It would be very difficult, if not impossible,” he said.
Driven by Industry, More States Are Passing Tough Laws Aimed at Pipeline Protesters - When Nancy Beaulieu’s Ojibwe ancestors signed a series of treaties with the federal government in the 19th century, one of the goals was to protect the land, she said. So she sees it as not just her right but her duty to protest the building of a major oil pipeline underway in northern Minnesota.As an organizer for the state chapter of 350.org, Beaulieu has helped lead a campaign against the replacement and expansion of Line 3, which carries oil from Canada’s tar sands to the United States. Advocates say more than 200 protesters have been arrested as part of the campaign, and Beaulieu said she intends to be arrested herself as construction continues this spring.But a bill currently pending in the state legislature threatens her right to do so, by increasing the penalties for trespassing on pipelines and other energy infrastructure.“These are our own lands in some areas, ceded lands. We never gave up the right to hunt, fish and travel. So just because we don’t hold title doesn’t mean we cannot protect. That’s what treaties are all about, is that responsibility,” she said. The Minnesota bill would impose a felony offense carrying up to five years in prison for anyone who enters a pipeline construction site with “intent to disrupt” operations.The legislation is just one of a growing number of such bills, backed by the oil and gas industry, that are pending in at least five states and have been enacted in 15 others over the last four years, according to the International Center for Not-for-Profit Law. While the details vary state by state, the legislation in many cases imposes felony charges for trespassing and “impeding” the operation of pipelines, power plants and other “critical infrastructure.”The bills emerged in 2017 after a pair of stinging losses for the pipeline industry. Activists had used civil disobedience and mass arrests to draw attention to the Keystone XL and Dakota Access projects, and the Obama administration eventually blocked both. States’ critical infrastructure legislation raised the stakes for protesters by increasing penalties for acts like blocking access to a construction site, in many cases converting the offenses from misdemeanors to felonies.Some of the laws include clauses allowing prosecutors to seek 10 times the original fines for any groups found to be “conspirators.” Those bills have prompted concerns on the part of civil liberties advocates and leaders of groups like the Sierra Club, who fear they could be roped into trials and face steep fines for having joined with broader coalitions that include an element of civil disobedience.The nation’s leading oil industry groups have been among the most vociferous advocates of the legislation, and in several states, including Kansas this year, lawmakers have openly introduced the bills on behalf of industry lobbyists. Enbridge, TC Energy and Energy Transfer—the companies behind Line 3, Keystone XL and Dakota Access pipelines—have been some of the most active corporations lobbying for the legislation along with Marathon Petroleum, according to Connor Gibson, an independent researcher who has tracked the bills for Greenpeace.
Enbridge taps new approach for pipelines - Indian Country Today --It’s the dead of winter in Minnesota, and the woman’s footsteps make a distinctive crunching sound as she walks down a snow-covered road. She and others are conducting an Ojibwe pipe ceremony along the Mississippi River, offering a ground blessing and prayers for the safety and health of people working on Enbridge’s Line 3 pipeline project. The pipe is loaded with tobacco, and people smudge themselves with burning sage. The scene – a traditional ceremony considered sacred by Ojibwe – is captured on a video posted on Enbridge’s website as an example of the company’s commitment, respect and connection to Native peoples and the lands affected by the Line 3 project. “I’m very honored to work with Enbridge,” says the woman, identified in the video only as Diane, a citizen of the Leech Lake Band of Ojibwe. “They want to do it the right way. They’re looking at our culture, and how to be respectful to the land and the people.” Enbridge’s use of the video – and the company’s extensive promotion of its programs and efforts to engage the Native community – is an example of a burgeoning business model called corporate social responsibility, experts say. “Their approach seems to be to get buy-in without affecting their bottom line.” What isn’t apparent in the video is that Diane was pilloried on social media for supporting the multibillion-dollar Line 3 project, which has divided Natives and non-Natives alike. Nancy Beaulieu, a citizen of the Leech Lake Band of Ojibwe, told Indian Country Today she was astonished by the video. “This is a dishonor to our culture,” she wrote on Facebook. “No tribal elected officials, no spiritual leader, no tribal members in attendance, just ‘Diane’ who says she likes working for Enbridge, and a few other Natives.” Daniseton Vendiola, of the Swinomish Indian Community, posted similar sentiments. “This is what you call MEDIA MANIPULATION,” he wrote on Facebook, “where a corporation tries to trick the community into thinking they are inclusive and considerate but are really showboating and exploiting to attain their means.” There are no official rules for using sacred Ojibwe items such as the pipe. There is no bible or handbook, or official process for sanctioning their perceived misuse. Through unspoken understanding, however, Ojibwe people are protective of their traditional spirituality and ceremonies. It’s unusual to see a video of an Ojibwe pipe ceremony shared publicly on the internet; many consider it unseemly.
HOUSE: Republicans warn about slippery slope on pipelines -- Wednesday, April 14, 2021 -- House Republicans warned yesterday that motivations behind the White House's action to cancel the controversial Keystone XL pipeline have the potential to affect other pipeline networks caught in the midst of environmental backlash.
KXL Pipeline developer presses land acquisition despite federal block on project -- Progress on the Keystone XL Pipeline halted in January due to a presidential order. Still, the Canadian developers are moving forward with plans to secure rights to lay pipe across private land. Earlier this year, TC Energy called the attorney representing 65 Nebraska landowners and let them know they intended to move forward with eminent domain proceedings to use their property to build the tar sands oil pipeline. Notice of the plans to hold on to the property rights came in a phone call from the company's lawyers to Brian Jorde, the attorney representing 65 hold-out landowners. Jorde told NET News his clients were "pretty frustrated, upset and wondering why the state of Nebraska isn't stepping in to stop this. With an executive order, President Biden withdrew permits allowing the pipeline to cross the border with Canada. TC Energy, formerly TransCanada, announced it would suspend plans to start laying pipe. It did not disclose it was continuing to move forward with acquiring the last remaining property rights along the 270-mile Nebraska route. "It means they're still fighting this battle," Jorde said. "They're still defending themselves, incurring costs for an easement that's supposed to apply to a project that is, at this point, null and void." In Jorde's interpretation, the Nebraska law regulating pipelines may not explicitly cover the question of what happens if a project can no longer proceed after being authorized by state regulators. For the landowners, in Jorde's view, the vagueness in law combined creates an added layer of uncertainly about the future of the KXL pipeline and the company's intentions."What could happen is TransCanada, to make a quick buck, could sell or flip the easement," and sell off the project or the pipeline subsidiary to another company. "All of a sudden, the landowner, for the rest of time, will be dealing with someone that they never got to size up (and) never had to say no."
Settlement with Merit Energy resolves violations of oil pollution - The U.S. EPA announced a proposed settlement with Merit Energy Company of Dallas, Texas, resolving alleged violations of the Clean Water Act.As a result, Merit is implementing regulations meant to prevent oil pollution, according to EPA.The violations include failure to comply with spill prevention, control, and countermeasure (SPCC) requirements at a tank battery facility operated by the company in Hot Springs County, Wyoming. The proposed agreement results in Merit agreeing to pay a civil penalty of $115,000 to resolve the alleged violations, according to EPA.The $115,000 penalty will be deposited into the Oil Spill Liability Trust Fund, which is a fund used by federal agencies to respond to discharges of oil and hazardous substances, according to EPA."Due to the harm oil spills can cause to public health and the environment, every effort must be made to prevent oil spills and to clean them up promptly once they occur," said the EPA Region 8 Enforcement and Compliance Assurance Division Director Suzanne Bohan, according to EPA. “We are encouraged by Merit’s actions to come into compliance with the laws and regulations that protect the environment from the damages that can occur when oil is discharged into navigable waters or adjoining shorelines.”The proposed settlement is a result of EPA’s investigation of an oil spill that occurred on June 19, 2018. The settlement alleges that Merit released approximately 455 barrels of crude oil from the Stateland Tank Battery Facility into Grass Creek, a tributary of the Big Horn River, reported EPA. After reviewing the spill, EPA discovered deficiencies in Merit’s SPCC plan for the facility and since the violation and the company has since submitted an updated plan to EPA. The Oil Pollution Prevention requirements of the Clean Water Act aim to prevent and facilitate the response to the discharge of oil from non-transportation-related onshore facilities, according to EPA. All facilities with 1,320 gallons of oil that have the potential for a spill to reach waters of the U.S. are required to have an SPCC Plan.
Fracking Lies & Greed Lead To Oil & Gas Spills On Native Lands (Video) - Fracking is another in a long list of incalculable losses that native peoples across North America have suffered. In the last decade alone, the US EPA stripped nearly 40 tribes of their ability to make fundamental decisions regarding fracking, agricultural pollution, and the dumping of toxic waste on their own lands.Two recent accidents on tribal land account for just 1% of oil- and gas-related incidents in northwestern New Mexico in 2019, according to statistics kept by the New Mexico oil conservation division (OCD). Since those two, there have been another 317 accidents in the region, including oil spills, fires, blowouts, and gas releases. There were 3,600 oil and gas spills over the previous decade, both smaller and larger. A land infused with centuries of indigenous history is now dotted with oil and gas wells, resembling more of an industrial landscape that a testimonial to the human-nature interface. Accident sites seem to evade the attention of the US Bureau of Land Management (BLM) and the Bureau of Indian Affairs (BIA), which, according to tribal members, hasn’t listened to their concerns about drilling in the area. A rectangular grid of private lands, federal lands, and Navajo Nation off-reservation trust lands are managed by the BIA on behalf of the Navajo and represents a clash of differing jurisdictions, rules, and interests. That frustration has touched off dozens of lawsuits — and more to come if the pattern doesn’t change. The tribes and environmental groups are looking to Interior Secretary Deb Haaland — a member of the Laguna Pueblo tribe — and her efforts to protect the Chaco area in order to gain a greater voice in federal oil, gas, and mining decisions. The most recent wave of drilling started around 2009 when land agents called Navajo families to the Chapter house to sign leases for the oil beneath their homes. The families were thrilled by the signing bonus. What they didn’t know is that their land sat atop vast oil resources. “When you have more than 70% unemployment and you have more than 70% of the population living in abject poverty, you can’t fault them for signing,” Daniel Tso, chairman of the health, education and human services Committee of the Navajo Nation Council, says., In February 2019, a burst water line went unnoticed due to its remote location. By the time the situation could be remedied, more than 1,400 barrels of fracking slurry mixed with crude oil had drained off the wellsite owned by Enduring Resources and into a snowy wash. Almost 59,000 gallons of the slurry flowed more than a mile downstream toward Chaco Culture national historical park. This network of historic archaeological sites holdsUnesco world heritage status and is of spiritual importance to Navajo and Puebloan people in the region. “To a non-indigenous person, they [are] ruins. But to an indigenous Pueblo person, they’re still active sites that are used in spiritual ways,” said Julia Bernal, the environmental justice director at the Pueblo Action Alliance, an indigenous sustainability organization formed in the wake of Standing Rock. “The fight has constantly been, ‘These are sacred sites.’ But the non-indigenous power is like, ‘Well prove to us these are sacred sites.’ How can we prove that when it’s our beliefs?”
Groups seek federal oil and gas leasing reform » As a public comment period on the federal mineral leasing program draws to a close today, Thursday, environmental and Indigenous groups in New Mexico’s oil- and gas-producing communities are seeking a complete overhaul of the system. Julia Bernal, a Sandia Pueblo member and Pueblo Action Alliance director, said during a panel discussion Wednesday that previous administrations had “gone off the rails” in leasing on culturally significant areas near Chaco Culture National Historical Park. “Meaningful tribal consultation hasn’t been fulfilled, nor has it been respected,” Bernal said. “Resource management plans should have tribal governments at the initial planning processes as the Indigenous nations in New Mexico have a large stake in how our water and land is managed.” President Biden ordered a pause on new fossil fuel leasing on federal lands in January. Interior Secretary Deb Haaland said the pause allows for a careful review of a program that operated under an “act now, think later” approach for the past four years. “In order to tackle the climate crisis and strengthen our nation’s economy, we must manage our lands and waters and resources, not just across fiscal years, but also across generations,” Haaland said during a March forum. The majority of New Mexico’s oil production occurs on public land. The industry contributes about 40% of the state’s general fund revenue. New Mexico wells produced a record 366.6 million barrels of oil in 2020, despite the pandemic. The Rev. Gene Harbaugh, a retired Presbyterian minister and member of Carlsbad-based Citizens Caring for the Future, said the government should consider long-term local impacts of the boom-and-bust cycle. “Short-term economic gains from the extraction industry have resulted in housing and educational and infrastructure problems that will have to be faced long after the man camps and the traffic has gone silent,” Harbaugh said. Gov. Michelle Lujan Grisham’s administration has finalized, or is developing, new industry regulations to address climate change. New rules include water use reporting requirements, and a ban on routine venting and flaring of natural gas. Interior will release a report this summer with recommendations for natural resource management on federal land.
February's blackouts caused North Dakota oil output to fall | State & Regional - North Dakota's oil production dropped in February beyond what state officials had anticipated due to cold weather that forced rolling blackouts in the Bakken. The state's daily oil output fell 6% to 1.083 million barrels per day that month, according to data released Thursday. Natural gas production fell 5% to 2.703 billion cubic feet per day. Official state oil and gas figures lag several months as officials gather data. The blackouts came about when a blast of cold weather hit the southern United States, stressing the Southwest Power Pool grid, which delivers electricity up the middle of the country all the way to North Dakota. The grid operator ordered rolling blackouts in North Dakota and other states to avoid bigger problems elsewhere on its system. State Mineral Resources Director Lynn Helms said that caused gas plants and related infrastructure to go offline for hours at a time. Some oil wells also stopped operating. "People got very little warning," he said. More recently, wildfires have plagued western North Dakota amid dry weather. Helms said they have not caused any problems for the oil and gas industry, though flares at oil wells started a few fires. That can happen in high wind, which causes the flame to touch down on grass. None of those fires caused any major damage, and they were put out quickly before growing very large, Helms said. North Dakota continues to meet its flaring target, though the percentage rose slightly in February. Statewide, 8% of all gas produced was wastefully flared that month. The target set by state regulators aims to keep flaring within 9%. Flaring occurs when an oil well is not connected to pipelines and processing plants, or when that infrastructure is down or already at capacity.
US will allow Dakota Access oil pipeline to operate during review - The $3.8 billion Dakota Access pipeline can continue to operate while the U.S. Army Corps of Engineers completes its environmental review of the project, likely to take until March 2022, but the question of a shutdown remains on the table. At an April 9 hearing, a U.S. Justice Dept. attorney told Brian Boasberg, U.S. district court judge in Washington, D.C. that the Corps doesn't plan to shut down the 1,172-mile pipeline, which starts in North Dakota and ends in southern Illinois. But it could change its mind after consulting with officials from tribes and North Dakota. The pipeline moves more than half a million gallons of crude oil daily. It crosses Lake Oahe, which the Standing Rock Sioux rely on for drinking water. Department attorney Ben Schifman said the Corps wants to take stakeholder's views into account before it decides, saying the agency is in a continuous process of evaluating the safety of the pipeline. He added the Biden administration could shut down operations at any time before the Corps completes an Environmental Impact Statement for the project. The pipeline has been operating for about three years. In a complicated case that has gone on for years, Boasberg ordered an immediate shutdown of the pipeline in 2020. The federal appeals court in Washington, D.C. overruled him but agreed the Corps violated federal law in 2016 when it issued permits for the pipeline to cross beneath the Missouri River. The EIS will study the risk that an oil spill poses to the Standing Rock Sioux and will decide whether to reissue the permit or require an alternative route that mitigates risk to the tribe. In 2015 the Corps issued a draft environmental assessment finding construction would have no significant environmental impact. Both the U.S. Dept. of Interior and the U.S. Environmental Protection Agency raised concern the assessment lacked significant analysis of the impact on water resources. The Corps decided in January 2017 to prepare an EIS, but the Trump administration directed the agency to expedite approvals and reconsider that decision. In February 2017, the Corps granted the easement for the pipeline to travel under the lake without the complete EIS.Jan Hasselman, an EarthJustice attorney representing the Standing Rock Sioux, expressed disappointment that Boasberg didn't order a shut down. Tribes and environmental groups were dismayed by Biden’s decision not to shut down the pipeline given his climate platform. But he said they would ask the judge “to shut the pipeline down under a judicial standard. We will continue this fight for as long as it takes.” According to Hasselman, in a press conference after the hearing, the Corps shut out the tribes and their cultural experts in developing the original environmental review. “It’s critical that the Corps take the time to engage with tribes as sovereign nations to make sure the decision is fully informed,” he said. Meanwhile, two ranking House and Senate Republicans urged President Joe Biden to allow the Corps to issue nationwide project water crossing general permits for those "with limited environmental impact," in an April 7 letter, as the administration reviews the project-wide permits that face new opposition and legal challenges.
Biden Refuses to Shut Down Dakota Access Pipeline, Despite Campaign Pledges on Tribal Relations and Climate - Indigenous leaders and climate campaigners on Friday blasted President Joe Biden's refusal to shut down the Dakota Access Pipeline during a court-ordered environmental review, which critics framed as a betrayal of his campaign promises to improve tribal relations and transition the country to clean energy."Biden's inaction to protect our fragile ecosystems, natural resources, traditional medicines, and Indigenous rights is a clear sign that this administration is the exact opposite of the climate leadership narrative they promised to lead during his campaign," said Tasina Sapa Win Smith of the Cheyenne River Grassroots Collective.Brooke Harper, campaign strategist for the environmental group 350.org, declared that "the Biden administration missed a huge opportunity today to take a step towards ensuring a livable future for everyone in this country.""The Dakota Access Pipeline violates treaty rights and endangers land, water, and communities," Harper said. "The climate crisis is here; we can no longer afford to build polluting, dangerous fossil fuel pipelines and delay a just transition to 100% clean energy. In solidarity with Indigenous water protectors, we call on President Joe Biden to stop the Dakota Access pipeline, Line 3, and all new fossil fuel projects immediately. If Biden wants to be a climate leader on the world stage, he needs to start at home." U.S. District Judge James Boasberg, who ordered the environmental impact assessment last year, held a hearing Friday afternoon so the U.S. Army Corps of Engineers could provide an update on whether the Biden administration planned to allow the pipeline known as DAPL to continue operating without a federal permit.After Ben Schifman, an attorney for the government, shared that the Army Corps of Engineers would not shut down the pipeline at this time but "is essentially in a continuous process of evaluating," Boasberg granted the 10-day continuance. The DC-based judge is expected to decide whether he will order DAPL to shut down by April 19. Indigenous water protectors and environmentalists have been fighting against the pipeline for years — opposition that's been met with forceful crackdowns by private security and law enforcement. Since it began operating in 2017, DAPL and the communities through which it runs have been plagued by repeated leaks. Dozens of Democrats have recently joined with tribal leaders and climate activists in calling on Biden to order a shutdown. Chairman Mike Faith of the Standing Rock Sioux Tribe said Friday that "we are gravely concerned about the continued operation of this pipeline, which poses an unacceptable risk to our sovereign nation." "In a meeting with members of Biden's staff earlier this year, we were told that this new administration wanted to 'get this right,'" Faith noted. "Unfortunately, today's update from the U.S. Army Corps of Engineers shows it has chosen to ignore our pleas and stick to the wrong path."
Dakota Access Pipeline Seeks to Scrap Environmental Review Order -Dakota Access pipeline lawyers are urging a federal appeals court to reconsider a recent ruling against the divisive oil project.Lawyers for the Energy Transfer LP line on Monday petitioned for rehearing before all active judges on the U.S. Court of Appeals for the District of Columbia Circuit, asking them to toss a three-judge panel’s January decision that said a critical easement violated the National Environmental Policy Act.The Biden administration granted Dakota Access a reprieve April 9, announcing it wouldn’t, for now, require the pipeline to shut down during a court-ordered environmental review. The pipeline company’s rehearing request targets the underlying legal conclusions that prompted the review.A federal district court last year said the Army Corps of Engineers violated NEPA by foregoing an environmental impact statement when it granted an easement for Dakota Access to cross part of the Missouri River. The agency should have done the in-depth analysis, rather than the narrower environmental assessment it performed, in light of expert disagreement over the impacts of a potential oil spill on nearby Indigenous tribes and resources, a judge ruled. The D.C. Circuit affirmed the ruling in January.The panel’s decision “impermissibly transforms NEPA from a procedural statute into one requiring particular results, and is inconsistent with decisions from the Supreme Court and other circuits,” Gibson, Dunn & Crutcher LLP attorney Miguel A. Estrada, representing Dakota Access, told the appeals court Monday.The D.C. Circuit rarely grants rehearing. Dakota Access is facing separate but related proceedings in district court, where the Standing Rock Sioux Tribe and other opponents have asked a federal judge to issue a shutdown order. The case is Standing Rock Sioux Tribe v. Army Corps of Engineers, D.C. Cir., No. 20-5197, petition for rehearing filed 4/12/21.
Corps stalls on Dakota Access shutdown decision; matter likely falls to judge - Whether the Dakota Access Pipeline can keep operating during a lengthy environmental review remains an open question following a court hearing April 9, in which the U.S. Army Corps of Engineers said it was in a "continuous process of evaluating" the situation. The Corps was expected to say whether it would force the pipeline to stop pumping oil temporarily, but that decision will likely now fall to a federal judge overseeing the pipeline litigation. U.S. District Court Judge James Boasberg said he was "surprised" by the announcement from the Corps, adding that he "would have thought there would be a decision one way or another at this point." He had granted the agency more time to brief incoming Biden administration officials on the matter ahead of the court hearing. Jan Hasselman, an attorney for the Standing Rock Sioux Tribe whose reservation lies just downstream of the pipeline's Missouri River crossing, said the tribe is "deeply disappointed." "The decision today is to continue to let it operate, which is the same decision as the previous administration," he said. "The pipeline is going to keep operating, exposing the tribe and its members to the risk of a disaster while the Army Corps studies what those risks are." The Corps has been weighing whether to shut down the pipeline for eight months, ever since a federal appeals court upheld part of a ruling revoking the easement for the pipeline's river crossing. Boasberg rescinded the permit last summer while the Corps conducts a court-ordered study that will go more in-depth into environmental issues surrounding the pipeline than previous work. The review began last September and is expected to take until March 2022, an attorney for the Corps said.
DAPL closure could shut 400,000 bpd of N. Dakota oil output -state official (Reuters) - The state of North Dakota could see 400,000 barrels a day of crude oil production temporarily wiped out if the Dakota Access Pipeline (DAPL) is shut, a state official said on Thursday. Energy Transfer LP ET.Nis in the middle of a years-long legal fight to keep open its 557,000-barrels-per-day pipeline, the largest out of the Bakken shale region of North Dakota and Montana, as U.S. officials conduct an environmental review of the line. If the U.S. district court judge considering the case orders DAPL to cease flows, multiple wells in the second-biggest crude oil state would be shut, North Dakota Department of Mineral Resources Director Lynn Helms said at a monthly briefing. "That would at least (lead) to some temporary shut-ins while people arranged alternate transportation," Helms said. North Dakota, which has seen its oil production plunge more than 30 percent to about 1.08 million barrels per day since its peak in November 2019, depends on DAPL to carry oil to the Midwest and then on to the U.S. Gulf Coast. Roughly 40% of the state's production is moved on the line, Helms has previously stated, and said it would take time for shippers on DAPL to find alternative routes for getting their oil to market.
Big Oil Fed Educators Stats to Push Back on Biden Climate Goals --For years, Big Oil has cozied up to American public schools—and now they seem to be cashing in their chips. New emails appear to show that some elected officials in charge of public schools may have been helped in attacking the Biden administration’s recent decision to pause oil and gas leasing on federal land by powerful oil industry lobbying groups. The emails, obtained by the watchdog group Accountable.us as part of a public records request, are exchanges from late January of this year between Kirsten Baesler, the superintendent of public schools in North Dakota, and two members of the North Dakota Petroleum Council, an industry advocacy group in the state.“Ron wanted me to send you some ND stats on oil impacts,” the first email from Kristen Hamman, the director of regulatory and public affairs at the North Dakota Petroleum Council, reads, referencing Ron Ness, the group’s president, who is also cc’ed. In the email, Hamman listed a series of statistics and employment numbers on the oil and gas industry in North Dakota and Wyoming. A little over two weeks after that exchange, on Feb. 16, Baesler joined four other state superintendents from Alaska, Utah, Montana, and Wyoming (the former two are governor-appointed while the latter two are elected like North Dakota’s) in penning a letter to the Biden administration. Their letter was in protest of, curiously for five educators, the administration’s decision to ban fossil fuel leasing on federal lands. The letter described the five states as dependent “on revenues from various taxes, royalties, disbursements, and lease payments to fund our schools, community infrastructure, and public services,” and goes on to list statistics about fossil fuel money and education—using some of the same statistics and numbers sent to Baesler by the North Dakota Petroleum Council.The North Dakota Petroleum Council, the organization’s website states, is partially sponsored by the American Petroleum Institute, the oil and gas industry’s biggest lobbying organization in the U.S. Around the time when the North Dakota Petroleum Council emailed Baesler, API was busy promoting various pieces of the same information on Facebook. API, of course, recently made headlines for coming out in support of a carbon tax, part of a seemingly industry-wide push to present itself as greener and carbon-free.“Oil and gas executives love to talk about working with the Biden administration to address climate change, but these documents show behind closed doors they are actively working to undermine that very effort,” said Kyle Herrig, president of Accountable.US, in a press release.
Former Secretary of State Pompeo to speak at North Dakota oil conference Former U.S. Secretary of State Mike Pompeo is set to headline a major oil conference in Bismarck next month. The North Dakota Petroleum Council announced on Monday, April 12, that Pompeo will speak on May 13, the final day of the trade group's Williston Basin Petroleum Conference. Pompeo, who previously led the CIA and served as a Republican congressman from Kansas, worked as the president of an oilfield services company before entering the national political scene. Former Republican President Donald Trump appointed Pompeo to the country's top foreign policy-making post in 2018 and he remains popular with Trump's loyal supporters. Widely rumored to be considering a run for president in 2024, Pompeo is a controversial figure nationally, taking heat from Democrats and political observers for failing to acknowledge that Trump had lost his bid for reelection last year. "(Pompeo) has an energy background and understands the important role our domestic energy industry plays in supporting our national security,” said Ron Ness, the council's president. “We look forward to hearing an encouraging message about the value of American energy to the world.” More than 70 speakers will take the stage during the three-day conference, including executives from oil giant ConocoPhillips and Dakota Access Pipeline operator Energy Transfer, according to a news release from the council.
California Senate Fails to Advance Fracking Ban Bill - A bill that would have banned fracking in California died in committee Tuesday.The bill, SB467, would have prohibited fracking and other controversial forms of oil extraction. It would also have banned oil and gas production within 2,500 feet of a home, school, hospital or other residential facility. The bill originally set the fracking ban for 2027, but amended it to 2035, The AP reported."Obviously I'm very disappointed," State Sen. Scott Wiener (D-San Francisco), one of the bill's two introducers, told the Los Angeles Times. "California really has not done what it needs to do in terms of addressing the oil problem. We have communities that are suffering right now, and the Legislature has repeatedly failed to act."The bill was introduced after California Gov. Gavin Newsom said he would sign a fracking ban if it passed the legislature, though his administration has continued to issue permits in the meantime, Forbes reported. Newsom has also spoken in favor of a buffer zone between oil and gas extraction and places where people live and learn, according to the Los Angeles Times. The latter is a major environmental justice issue, as fossil fuel production is more likely to be located near Black and Latinx communities.Urban lawmakers who want California to lead on the climate crisis supported the bill, while inland lawmakers in oil-rich areas concerned about jobs opposed it. The oil and gas industry and trade unions also opposed the bill. This opposition meant the bill failed to get the five votes it needed to move beyond the Senate's Natural Resources and Water Committee. Only four senators approved it, while Democrat Sen. Susan Eggman of Stockton joined two Republicans to oppose it, and two other Democrats abstained.Eggman argued that the bill would have forced California to rely on oil extracted in other states. "We're still going to use it, but we're going to use it from places that produce it less safely," Eggman told The AP. She also said that she supported the transition away from fossil fuels, but thought the bill jumped the gun. "I don't think we're quite there yet, and this bill assumes that we are," she added.Still, California's fossil fuel industry is at odds with state attempts to position itself as a climate leader. "There is a large stain on California's climate record, and that is oil,"
California bill to ban fracking dies, but other oil regulation measures win votes A tough bill that would have banned oil and gas production across California and required a 2,500-foot buffer between drilling sites and schools, home and playgrounds died in a committee vote in Sacramento on Tuesday. Senate Bill 467 by Sen. Scott Wiener (D-San Francisco) and Sen. Monique Limon (D-Santa Barbara) failed to muster the five votes needed to move it out of the Senate Natural Resources and Water Committee. Wiener decried the lack of a statewide public health buffer as "a stain" on California's vaunted global environmental reputation, noting even oil-friendly Texas has one. "In California it is legal to drill next to someone's home and that is indefensible. And when Texas has setbacks and California doesn't, I think that speaks volumes," said Wiener. "No offense to Texas." But three other bills to tackle the state's aging oil industry and its long-troubled top industry regulator all advanced, including one by Limon that would raise to $100 million the required industry funds for plugging and abandoning tens of thousands of idle wells. An expert study concluded last year that as much as $5 billion might be needed, and Limon and others said they don't want taxpayers stuck footing the bills. A pair of bills by Sen. Henry Stern (D-Los Angeles) that would require more transparency by the state's top oil regulator and digital production records from oil companies — and mandate that unionized California workers (rather than out-of-state workers) be hired to shut down old wells — also won the required votes. All will face more scrutiny in other committees and both houses of the legislature. Still, the divergent votes at a critical stage of bill-making show the might of California organized labor tied to energy production — particularly the Building and Construction Trades Council, which represents 450,000 workers across the state. One by one, representatives of carpenters, ironworkers, steelworkers and other locals stood in the committee chambers or phoned in to "stand in support of the Building Trades Council" and Stern's hiring bill. Sen. Shannon Grove (R-Bakersfield) voted no on all the bills, saying thousands of in-state employees working for non-union small companies or private contractors had lost their jobs due to previous organized labor agreements, and Kern County and the state already have stringent environmental regulations of the petroleum industry. She switched from polite but pointed questions to a harsh one-two punch against the public health buffer and the hiring bill shortly before the votes were called. "I do not think your bill is as big a threat. It doesn't have a chance in hell of passing," she told Wiener. "But SB 419 (Stern's union hiring bill) will destroy thousands of local jobs, particularly in Kern County."
Appeals court backs drilling protections reinstated by Biden --A U.S. appeals court on Tuesday affirmed an earlier decision upholding Obama-era standards for Arctic Ocean and Atlantic Ocean protections. In an April 2017 executive order, then-President Trump unwound the Obama administration’s permanent ban on offshore gas and oil drilling in the oceans. But in 2019, the U.S. District Court for the District of Alaska ruled in favor of a coalition of conservation groups, finding that the Trump administration had overstepped its authority with the rollback. Plaintiffs in the case included the groups Earthjustice, the Natural Resources Defense Council, the Northern Alaska Environmental Center, Resisting Environmental Destruction on Indigenous Lands, the Sierra Club and The Wilderness Society. In its Tuesday order, the U.S. Court of Appeals for the 9th Circuit upheld an earlier decision by the U.S. District Court for the District of Alaska, noting that the Biden administration had issued an executive order revoking the Trump order. “We lack jurisdiction to consider ‘moot questions ... or to declare principles or rules of law which cannot affect the matter in issue in the case before [us],’” the ruling states. “Because the terms of the challenged Executive Order are no longer in effect, the relevant areas of the OCS [outer continental shelf] in the Chukchi Sea, Beaufort Sea, and Atlantic Ocean will be withdrawn from exploration and development activities regardless of the outcome of these appeals.” “We welcome today’s decision and its confirmation of President Obama’s legacy of ocean and climate protection. As the Biden administration considers its next steps, it should build on these foundations, end fossil fuel leasing on public lands and waters, and embrace a clean energy future that does not come at the expense of wildlife and our natural heritage,” Earthjustice said in a statement. “One obvious place for immediate action is America’s Arctic, including the Arctic Refuge and the Western Arctic, which the previous administration sought to relegate to oil development in a series of last-minute decisions that violate bedrock environmental laws.”
U.S. boosts oil exports to Canada -Canada’s crude oil imports fell by 20 percent in 2020 due to lower demand in the pandemic, but the United States further cemented its position as top oil supplier to Canada, supplying nearly four out of every five barrels of oil, the Canada Energy Regulator said on Wednesday. Canada is a major crude oil producer and exports much more oil than it imports, almost exclusively to the United States. Yet, Canada imports oil from abroad to feed refineries in its Atlantic Provinces, Quebec, and Ontario. “Less than one third of Canadian crude oil is processed by Canadian refineries for a variety of reasons, such as lack of pipeline access to domestic supplies, specific product requirements of refineries, or because it costs less to import,” the regulator said in its analysis.Last year, total Canadian crude oil imports plunged by 20 percent annually to 555,000 barrels per day (bpd), down from 693,000 bpd in 2019, because the pandemic crushed demand for fuels. As imports dropped in volumes, the share of imports from the United States jumped to 77 percent of all imports in 2020 from 72 percent in 2019.The second-biggest oil supplier to Canada was the world’s top oil exporter, Saudi Arabia, with a 13-percent share of Canadian oil imports, followed by Nigeria with 4 percent of imports and Norway with 3 percent, the Canada Energy Regulator said.“The source for Canada’s crude oil imports has changed dramatically over the past decade. The United States has moved from a bit player in 2010 to a major supplier today, with the majority of oil imported into Canada coming from our southern neighbour,” Darren Christie, Chief Economist at the Canada Energy Regulator, said in a statement.
Argentinas Pampa to start producing Vaca Muerta oil — Pampa Energia, the fifth-biggest natural gas producer in Argentina, is taking its first steps to produce oil from the Vaca Muerta shale play while also stepping up gas output on a bet that a rise in domestic and export demand and prices will improve profits, Horacio Turri, the company's executive director of hydrocarbons, said April 14. Its first exploratory oil well in Rincón de Aranda, a block in Vaca Muerta's oil window, has shown "very promising signs," In March, Pampa said it plans to boost its gas production 28% to 9 million cubic meters/day this winter — June to August — from 7.1 million in winter 2020 after winning a contract to deliver the supplies at an incentivized price of $4.68/MMBtu. The higher price — up from less than $2.50/MMBtu in 2020 — stems from a 2021-24 stimulus program designed to rebuild production from a slump over the past year and a half from low prices. The government wants to eventually do away with imports and increase exports, now going to neighboring countries in small amounts. The challenge is to revert the decline first. Gas output fell 21% to 114.5 million cu m/d in February from a most recent peak of 144.4 million cu m/d in July 2019, according to the latest Energy Secretariat data. This has led the government to hire a second regasification terminal to boost LNG imports this winter, and there are expectations that imports will rise starting this year from an average of 19.9 million cu m/d in 2020 when production averaged 123.2 million cu m/d. Argentina consumes an average 140 million cu m/d. In the near term, companies can fill 7 million to 8 million cu m/d of spare capacity in the pipelines out of Vaca Muerta during winter to reduce the imports, but for longer-term growth, a new pipeline must be built, a project that the government shelved last year as the coronavirus pandemic and Argentina's financial crisis deterred bidders in an already-delayed auction. Turri expects that the government will revive the $2 billion project in the next few months given that the country's financial crisis is ebbing and the economy is rebounding from a slump last year. This will improve the possibility of companies securing financing to build the 1,000-km line with a full capacity for moving 40 million cu m/d, probably built in two stages. To prepare for sales growth, Pampa is investing $50 million to build a 4.8 million cu m/d treatment plant by the end of this year at El Mangrullo, its most productive gas field. This project, along with the expansion of other facilities, will boost its production capacity from the field to 9 million cu m/d from a current 5.2 million, Turri said. Most of the production is coming from tight plays, with five more wells planned for drilling and five for completions in El Mangrullo, plus another well to be drilled and four completed in Sierra Chata, its second-most-productive block.
Failed fitting caused oil spill - A Transportation Safety Board report says the failure of a fitting on a section of narrow tubing at a Trans Mountain pumping station in British Columbia was the cause of a crude oil spill last year.The investigation report into the spill on June 12, 2020, at the Trans Mountain Sumas pump station in Abbotsford confirms as much as 190,000 litres of crude, roughly 1,200 barrels, leaked when the fitting separated on the one-inch tube.A board report released Tuesday says tests show the compression fitting was not properly tightened when it was installed in 2015 on a tube that carries a small amount of oil to a section of the pump station for analysis.The pipeline was shut down within an hour of the spill at Trans Mountain's control centre in Edmonton, but the report says it took another four hours to find and manually close valves to the tube, spilling oil into a culvert, the water table and a neighbouring agricultural field.No one was hurt and no evacuation was ordered, but the safety board report says a "multi-year remediation plan" will be needed to recover contaminants in the area surrounding the pump station.
Total signs key deals for Ugandas Lake Albert project --Total said today that first crude exports from the long-delayed Lake Albert project are planned for 2025, after key final agreements needed to develop two oil fields in Uganda and a pipeline to Tanzania were signed yesterday. The two countries signed the agreements with Total and China's state-controlled CNOOC. "Uganda, Tanzania and oil firms Total and CNOOC [yesterday] signed the agreements that will kickstart the construction of a $3.5bn crude pipeline to help ship crude from fields in western Uganda to international markets," the Petroleum Authority of Uganda (PAU) said. "This implies that signatories have now agreed to start investment in the contruction of infrastructure that will produce and transport oil".The deal, which includes the shareholders' agreement for the pipeline between the two countries, and the tariff and transportation agreement to ship crude through it, will pave the way to award the main engineering, procurement and construction contracts, according to Total.The project involves developing the Kingfisher and Tilenga fields in Uganda's Lake Albert basin with a central processing facility, with production planned to plateau at a combined 230,000 b/d. Upstream partners comprise Total with 56.67pc, CNOOC with 28.33pc, and Uganda's state-owned oil company UNOC with 15pc. Total acquired London-listed Tullow Oil's stake in the project in November and will operate the Tilenga field, while CNOOC will operate Kingfisher.The heated East African Crude Oil Pipeline (EACOP) will transport around 216,000 b/d of Ugandan crude to the Tanzanian port of Tanga, while the rest will be used as feedstock for a proposed domestic refinery at Hoima, set to be completed in 2024. Total, UNOC, CNOOC and Tanzania's state-owned TPDC are shareholders in the pipeline. Ugandan energy ministry commissioner Frank Mugisha told Argus last month that Total will raise around $2.5bn in international finance to support its share of pipeline construction costs.
ExxonMobil temporarily slashes output at Liza-1 project - ExxonMobil has reportedly reduced production output at its Liza-1 project offshore Guyana by at least 75% after it detected problems with the gas compressor. Production has been temporarily reduced from 120,000 barrels per day (bpd) to 30,000bpd in order to maintain gas injection and fuel gas to the power generators, as well as to reduce flare. The US-oil giant company said it encountered a problem with the compressor’s discharge silencer during the final testing phase of the reinstalled flash gas compressor on the Liza Destiny FPSO. ExxonMobil public and government affairs adviser Janelle Persaud said: “Relevant Government agencies have been notified and we are continuing to work with officials to determine the next best steps. “ExxonMobil Guyana is extremely disappointed by the design issues and continued underperformance of this unit, and will be working with the equipment manufacturer MAN Energy Solutions and the vessel’s operator, SBM, to rectify the situation. “This performance is below ExxonMobil’s global expectations for reliability.” This is the third time the company has reduced output on the Liza Destiny FPSO vessel due to problems associated with the gas compressor since its commissioning in December 2019. The Liza-1 is the first development phase of Liza oil field located in the Stabroek Block, approximately 190km offshore Guyana.
Exxon Mobil plans closure of another Australian oil refinery - US petroleum giant Exxon Mobil earlier this year announced plans to close its oil refinery in Australia, claiming it is no longer “economically viable.” The Exxon Mobil facility in Altona, Melbourne, commenced operations in 1949. Now the jobs of 350 workers—most of them highly skilled specialists in a dangerous industry—are under threat. In October last year, BP announced its plans to close its Kwinana refinery in Western Australia. If BP’s planned April 2021 shutdown also proceeds, there will be only two refineries left in Australia, down from seven a decade ago. The trade unions have enforced repeated “orderly closures” of the refineries. United Workers Union (UWU) national secretary Tim Kennedy responded to the Exxon Mobil Altona announcement by again making clear there would be no struggle to defend jobs. Describing “the closure” of the plant (though this is not slated to begin until another six months) as a “terrible missed opportunity,” the UWU head pleaded with the federal government to “invest in just transition and quality jobs of the future.” Other sections of the trade union bureaucracy have made open appeals to nationalist-militarist calculations within the Australian ruling class on the question of oil refining capacity. The Maritime Union of Australia (MUA), a division of the Construction, Forestry, Maritime, Mining and Energy Union, responded to the BP Kwinana refinery closure announcement by urging the government to nationalise the facility. MUA Assistant National Secretary Ian Bray said, “The COVID crisis exposed how vulnerable Australia’s supply chains have become, highlighting that essential supplies can quickly run short if seaborne trade is disrupted by a pandemic, military conflict, natural disasters or an economic shock.” This reference to petroleum supply chains in the event of “military conflict” was made amid accelerating US plans for a military conflict with China, in which Australia would be immediately involved as Washington’s regional ally.
Sri Lanka seeks $17 million from Greek ship owner over oil spill - Sri Lanka on Friday lodged a claim for $17.38 million with the Greek owners of an oil tanker that caught fire and left a spill stretching 40 kilometres (25 miles) off the South Asian island. The New Diamond vessel was travelling from Kuwait to India with 270,000 tonnes of crude oil on board in September when a fire broke out as it passed Sri Lanka's east coast Sri Lanka on Friday lodged a claim for $17.38 million with the Greek owners of an oil tanker that caught fire and left a spill stretching 40 kilometres (25 miles) off the South Asian island. The New Diamond vessel was travelling from Kuwait to India with 270,000 tonnes of crude oil on board in September when a fire broke out as it passed Sri Lanka's east coast. The crude being carried as cargo was unaffected by the blaze but some of the tanker's fuel leaked into the Indian Ocean. Its skipper was in October fined $65,000 for causing the spill and failing to inform local officials of the environmental damage left behind. Authorities are now seeking compensation from Greek firm Porto Emporios Shipping Inc for the damage. "The Attorney-General forwarded the marine pollution claim for 3,423 million rupees ($17.38 million) to lawyers of the owners of MT New Diamond in respect of the oil spill caused in September," the office of Sri Lanka's state prosecutor said in a statement. Officials said about 400 to 480 tonnes of fuel had leaked from the Panamanian-registered ship. Firefighters led by India's coastguard as well as the Indian and Sri Lankan navies succeeded in putting out the blaze before the vessel was towed to the United Arab Emirates. Porto Emporios paid Sri Lanka $2.38 million for extinguishing the fire. The blaze started after an engine room boiler exploded, killing one crew member. The remaining crew of 22, including the skipper, were rescued.
PipeChina starts work on new gas pipeline project China's national oil and gas pipeline operator PipeChina has begun construction on the first phase of its Mengxi pipeline project, which will link existing national trunklines and facilitate the flow of domestic and imported gas to the key demand centre of Beijing-Tianjin-Hebei in north China. The first, 6.6bn m³/yr capacity phase of the Mengxi project run for 413.5km from the 2.2mn t/yr Tianjin LNG receiving facility to the Dingxing sub-transmission station at Baoding in Hebei province. The Mengxi trunkline is designed to facilitate the continuous flow of gas from the Tianjin LNG terminal to the Beijing-Tianjin-Hebei area and other northern China regions. It will help to connect such national gas pipelines as the Sino-Russian eastern pipeline, the Beijing-Tianjin-Hebei natural gas pipeline branch network and gas storage facilities in north China. Completion dates for each phase of the project are unclear. But PipeChina said a second phase may release a "bottleneck" at the Tianjin LNG receiving facility, allowing it to supply 25 counties along its route including the new Xiong'an area with 6.6bn m³/yr of gas output as well as imported LNG. PipeChina operates a floating storage regasification unit as an import terminal at Tianjin. The Mengxi pipeline will be the first trunkline connecting to Xiong'an, a new urban district being developed in Hebei province that was launched by China's president Xi Jinping in 2017.
Fire, oil spill at Chinas Penglai platform- Update --An offshore crude production platform in China's Bohai bay has caught fire and spilt oil, forcing output to be halted, market participants said. The accident happened on 5 April at the Penglai 19-3 field, which is operated by state-owned CNOOC in a 51:49 venture with US independent ConocoPhillips. The third wellhead production platform at Penglai's phase 3 caught fire and has been largely destroyed, leaving some workers missing, according to industry participants in China. The incident was confirmed by an employee at one of the companies involved, although the details are unclear. ConocoPhillips referred questions to CNOOC. CNOOC did not immediately respond to requests for comment. The platform is still on fire and at risk of collapse if the blaze is not extinguished soon, a market participant said. Penglai 19-3 was one of China's largest oil fields when it was discovered more than 20 years ago. ConocoPhillips also has a 49pc non-operating share in Penglai's 19-9 and 25-6 blocks, which together with the 19-3 field produced a combined 30,000 b/d in 2020. The phase 3 project comprises mainly three new wellhead platforms and a central processing facility. The Penglai fields produce heavy-sweet crude that is sold to CNOOC's own refineries and to independent refiners in Shandong province. An oil spill at the Penglai fields in 2011 resulted in CNOOC and ConocoPhillips paying several hundred million dollars in compensation.
Saudi Aramco in deal to sell 49pc stake in oil pipelines - State oil giant Saudi Aramco said it has reached a $12.4 billion agreement to sell a 49 per cent stake in its pipelines to a consortium led by US-based EIG Global Energy Partners (EIG), one of the world’s leading energy infrastructure investors. The transaction represents a continuation of Aramco’s strategy to unlock the potential of its asset base and maximize value for its shareholders. It also reinforces Aramco’s role as a catalyst for attracting significant foreign investment into the kingdom and optimising its assets through a lease-and-lease-back agreement involving its stabilised crude oil pipeline network. As part of the transaction, a newly-formed Aramco subsidiary, Aramco Oil Pipelines Company, will lease usage rights in Aramco’s stabilized crude oil pipelines network for a 25-year period. In return, Aramco Oil Pipelines Company will receive a tariff payable by Aramco for the stabilized crude oil that flows through the network, backed by minimum volume commitments. As per the deal, Aramco will hold a 51% majority stake in the new company and the EIG-led consortium will hold a 49% stake, said the statement from Aramco. As per the deal, the state oil giant will continue to retain full ownership and operational control of its stabilized crude oil pipeline network. The transaction will not impose any restrictions on Aramco’s actual crude oil production volumes that are subject to production decisions issued by the kingdom. Aramco President & CEO Amin H. Nasser said: "This landmark transaction defines the way forward for our portfolio optimization program. We are capitalizing on new opportunities that also align strategically with the kingdom’s recently-launched Shareek program. Aramco’s strong capital structure will be further enhanced with this transaction, which in turn will help maximize returns for our shareholders."
A Key Oil Spread Heralds Rising Competition Among Suppliers - The battle for oil sales is set to become more intense as rising output from OPEC+ and the Middle East boosts the competitiveness of the region’s shipments, potentially forcing other suppliers to discount their barrels. The warning signs can be seen in the widening of a key price spread that’s used by traders to determine the affordability of cargoes from the Middle East against Brent-linked barrels. Right now, the gap is close to the widest in more than 16 months, and that doesn’t bode well for oil that’s priced against Brent. Brent's premium to Dubai swaps at widest since late 2019 “There’s much cheaper crude, and a lot of it coming from the Middle East,” said Grayson Lim, a senior oil analyst at FGE. “Those Brent-linked cargoes will need to be offered at a huge discount for buyers in the region to snap up the barrels,” he said, referring to Asian users. “But if they’re heavily discounted, there’s a chance that Chinese buyers may come out to buy.” Earlier this month the Organization of Petroleum Exporting Countries and its allies decided to relax the deep production curbs that rescued prices from last year’s pandemic-driven collapse. The move will see more than 2 million barrels a day in supply restored in stages through to July amid expectations that the roll-out of vaccines will underpin further gains in energy consumption. So far, the plan has been defended by leading architect Saudi Arabia, with futures for Brent and West Texas Intermediate up almost a quarter this year. At the same time that the OPEC+ cartel is preparing to loosen off the taps, there have been continuous flows of clandestine Iranian oil to China. That -- plus planned maintenance of some North Sea fields, which will shrink the flow of Brent-linked barrels -- has pushed out the spread to the widest since late 2019, according to data compiled by Bloomberg. That’s a big reversal from just a few months ago. The so-called Brent-Dubai exchange of futures for swaps -- to give the marker its formal name -- showed Brent-Dubai at a small discount as recently as November. In October and September, Dubai-linked cargoes were also more costly on some days. The shift favoring Dubai-linked flows is likely to ripple through the market, prompting buyers to shop around and sellers to respond. In Asia, the widened spread means users will probably scoop up more affordable spot cargoes from the Middle East, unless oil from the Atlantic Basin and West Africa is slashed to stay competitive, according to traders who asked not to be identified. s See More There may be signs of that already. Last week, Angola’s Sonangol Group again reduced the offer price for a Dated Brent-linked Saturno cargo for May, with the shipment eventually taken by China’s Unipec. Nigeria has also cut official selling prices of Qua Iboe and Bonny Light to the lowest since November.
OPEC raises 2021 oil demand growth forecast on hope pandemic wanes(Reuters) -OPEC on Tuesday raised its forecast for growth in world oil demand this year on expectations the pandemic will subside, providing help for the group and its allies in their efforts to support the market. Demand will rise by 5.95 million barrels per day (bpd) in 2021, or 6.6%, the Organization of the Petroleum Exporting Countries forecast in its monthly report. That is up 70,000 bpd from last month. “As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programmes, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility,” OPEC said in the report. The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts because of continued lockdowns. A further recovery could bolster the case for OPEC and its allies, known as OPEC+, to unwind more of last year’s record oil output cuts. Oil gained further towards $64 a barrel after the report was released on Tuesday. Prices have risen to pre-pandemic highs above $70 this year, boosted by anticipation of economic recovery and OPEC+ supply restraint. OPEC made a small upward revision in its 2021 demand projection last month, but it has steadily lowered the forecast from 7 million bpd expected in July 2020. The group raised its forecast of 2021 world economic growth to 5.4% from 5.1%, assuming the impact of the pandemic is “largely contained” by the beginning of the second half of the year. “The global economic recovery continues, significantly supported by unprecedented monetary and fiscal stimulus,” OPEC said. “The recovery is very much leaning towards the second half of 2021.”
IEA ups oil demand forecast as vaccinations brighten outlook(Reuters) - Vaccine rollouts are brightening the outlook for global oil demand, the International Energy Agency (IEA) said on Wednesday, though rising cases in some major oil-consuming countries show a recovery may be fragile. “Fundamentals look decidedly stronger,” the IEA said in its monthly report. “The massive overhang in global oil inventories that built up during last year’s COVID-19 demand shock is being worked off, vaccine campaigns are gathering pace and the global economy appears to be on a better footing.” Citing rising cases in Europe, Brazil and the United States, the Paris-based watchdog said it remained concerned about new waves of the virus derailing progress. Still, the IEA predicted global oil demand and supply were set to re-balance in the second half of the year and that producers may then need to pump 2 million barrels per day more to meet the expected demand. OPEC and allies like Russia, a grouping known as OPEC+, would likely prove capable of tailoring its output to demand whether the virus is tamed or not, the IEA added. “The bloc’s monthly calibration of supply may give it the flexibility to meet incremental demand by ramping up swiftly or adjusting output lower should the demand recovery fail to keep pace.” The IEA said commercial oil stored in OECD countries fell for a seventh consecutive month in February, signalling a rise in demand and increased imports in the near future. Less developed countries faced a steeper climb out of the demand crater created by COVID-19, the IEA warned, as the differences between countries with prompt access to the vaccine and those without become more pronounced. “Some emerging countries with lower access are in a more difficult situation, with likely new COVID waves slowing economic activity and mobility,” the IEA said. “The situation is currently deteriorating sharply in some large non-OECD oil consumers (Brazil, Iran and India).”
Oil could plummet to $10 by 2050 if Paris climate goals are achieved, energy consultancy says — The price of oil could plunge to as little as $10 a barrel by 2050 if the world succeeds in electrifying the energy market and meeting Paris Agreement goals, a consultancy said on Thursday. Energy research and consultancy Wood Mackenzie said in a report that if world leaders took decisive action to limit global warming to 2 degrees Celsius by 2050, as set out in the landmark Paris climate accord, oil demand would drop "significantly." Wood Mackenzie said under its accelerated energy transition scenario, the energy market would be increasingly electrified through to 2050, squeezing out the most polluting hydrocarbons, like oil. Under this scenario, oil demand could fall 70% by 2050 from current levels, the report said. Wood Mackenzie forecast demand for oil would start to fall from 2023 under this scenario and this decline would quickly accelerate thereafter, with year-on-year falls of around 2 million barrels a day. The report said oil prices could go into "terminal decline," with international benchmark Brent crude falling to between $37 and $42 a barrel by 2030. Brent crude futures traded at $66.29 a barrel during morning deals in London, down around 0.4%. Wood Mackenzie said oil prices could slide to between $28 and $32 a barrel by 2040, before slipping to between $10 and $18 a barrel in 2050. Almost 200 countries ratified the Paris climate accord in 2015, agreeing to pursue efforts to limit the planet's temperature increase to "well below" 2 degrees Celsius above pre-industrial levels and to pursue efforts to cap the temperature rise at 1.5 degrees Celsius. It remains a key focus ahead of COP26, although some climate scientists now believe that hitting the latter target is already "virtually impossible." To be sure, a United Nations analysis published on Feb. 26 found that pledges made by countries around the world to curb greenhouse gas emissions were "very far" from the profound measures required to avoid the most devastating impacts of climate breakdown. Ann-Louise Hittle, vice president for macro oils at Wood Mackenzie, stressed that the consultancy's report was a scenario rather than a "base-case forecast." "Even so, the oil and gas industry cannot afford to be complacent," she added. "The risks associated with robust climate-change policy and rapidly changing technology are too great."
Oil prices drop as coronavirus caseloads rise - Oil slipped on Monday in thin trading as rising COVID-19 case numbers in some parts of the world kept a lid on prices, even as the Federal Reserve signaled the U.S. economy may soon rebound as vaccinations accelerate. Brent was up 28 cents, or 0.4%, at $62.67 a barrel by 0635 GMT, having risen to as high as $63.30 earlier. U.S. crude was down 23 cents, or 04%, to $59.09 a barrel, after rising as much as 46 cents earlier. Prices have changed little since a period of volatile trading ended last Monday. “At the moment, the market lacks direction,” the Schork Report, founded by Stephen Schork, said in a note. “We are waiting for a breakout of the current range.” While the United States has fully vaccinated more than 70 million people, and in Europe new infection numbers are falling as lockdowns take effect, India is reporting record new cases and other parts of Asia are seeing caseloads rise. That is likely to continue to keep a lid on any revival of global travel and keep prices rangebound as the summer approaches, analysts and traders said. The U.S. economy is at an “inflection point” amid expectations that growth and hiring will accelerate in the months ahead, but faces the risk of reopening too quickly and sparking a resurgence in coronavirus cases, Federal Reserve Chair Jerome Powell said in an interview broadcast on Sunday. “There really are risks out there. And the principal one just is that we will reopen too quickly, people will too quickly return to their old practices, and we’ll see another spike in cases,” Powell said
Oil rises on U.S. vaccine rollout, Middle East tension - Oil prices rose on Monday on optimism over the pace of coronavirus vaccinations in the United States and after the Yemen-based Houthi movement said it fired missiles on Saudi oil sites. Still, crude prices have remained rangebound in the past three weeks, as growing expectations of surging U.S. economic activity are balanced by the slow rate of vaccination in Europe and anticipation of additional supply from Iran in coming months. Brent rose 33 cents to settle at $63.28 a barrel. U.S. West Texas Intermediate (WTI) rose 38 cents to settle at $59.70 a barrel. The United States has fully vaccinated 22% of its population, while the United Kingdom has vaccinated 11% fully, according to the Reuters vaccine tracker here. Still, other countries are not faring as well, with France and Germany at around 6% vaccinated. “Oil prices rose today as a result of progress in vaccination campaigns in the U.S., which are helping the country’s plan to spend,” said Louise Dickson, Rystad Energy’s oil markets analyst. “The upward momentum in other countries is promising, but large discrepancies remain globally,” Dickson added. Prices also found some support after Yemen’s Iran-aligned Houthi movement said it had fired 17 drones and two ballistic missiles at Saudi targets, including towards Saudi Aramco refineries in Jubail and Jeddah. There was no immediate Saudi confirmation. Saudi Aramco, the state oil firm, did not comment when contacted by Reuters.
Oil rises after robust China data but J&J vaccine pause weighs - Oil prices rose about 1% on Tuesday on strong Chinese import data, but the rally was capped by concerns that pauses on the Johnson & Johnson vaccine could delay economic recovery and limit oil demand growth. Brent crude oil futures were up 64 cents, or 1%, at $63.91 a barrel, while U.S. crude oil futures settled up 48 cents to $60.18 per barrel. "We've been trading in a range, and need clear demand data and direction on U.S. inventories to break out of this trough," said Phil Flynn, senior analyst at Price Futures Group in Chicago. China's exports grew at a robust pace in March in yet another boost to the nation's economic recovery, as global demand picked up amid progress in COVID-19 vaccinations. Import growth surged to the highest in four years. Crude oil imports into China jumped 21% in March from a low base a year earlier as refiners ramped up operations. The Organization of the Petroleum Exporting Countries in its monthly report on Tuesday raised its forecast for 2021 oil demand growth by 70,000 barrels per day from its previous forecast to 5.95 million bpd, or 6.6%. Also supporting prices ahead of week data, U.S. crude oil stockpiles were expected to have fallen last week for a third straight week, while distillate and gasoline inventories likely grew, according to analysts in a Reuters poll. Still, U.S. oil output from seven major shale formations is expected to rise for a third straight month, the U.S. Energy Information Administration said on Monday. The slow rate of vaccinations in Europe and anticipation of additional supply of oil from Iran in the coming months capped price gains. Johnson & Johnson said it would delay the rollout of its COVID-19 vaccine in Europe and was reviewing cases of extremely rare blood clots in people after U.S. federal health agencies recommended pausing the use of the vaccine as six women under 50 developed rare blood clots after receiving the shot. Yemen's Iran-aligned Houthi movement said on Monday it had fired 17 drones and two ballistic missiles at targets in Saudi Arabia, including Saudi Aramco facilities in Jubail and Jeddah. Meanwhile, Tehran has said an explosion on Sunday at its key nuclear site was an act of sabotage by arch-foe Israel and vowed revenge. "The rise in geopolitical tension will only have a notable bullish impact on oil prices if it is coupled with actual physical supply disruption," PVM analysts said in a note.
Oil Prices Jump As EIA Reports A Crude Draw - Crude oil prices climbed on Wednesday morning after the Energy Information Administration reported crude oil inventories had shed 5.9 million barrels in the week to April 9. This compared with an inventory draw of 3.5 million barrels for the previous week. The EIA’s inventory estimate comes a day after the American Petroleum Institute reported a 3.6-million-barrel inventory draw in crude oil for the same period but a 5.565-million-barrel build in gasoline stocks, which prevented oil prices from swinging significantly up or down. For gasoline, the EIA estimated a modest inventory build of 300,000 barrels for the week to April 9, with production averaging 9.6 million bpd. This compared with a stock build of 4 million barrels for the previous week and an average production rate of 9.3 million bpd. In middle distillates, the authority estimated an inventory decline of 2.1 million barrels for the week to April 9, with production averaging 4.6 million bpd, virtually unchanged from the week before last, with inventories adding 1.5 million barrels. Brent crude traded at $65.04 a barrel at the time of writing, with West Texas Intermediate at $61.55 per barrel. Both were up by more than 2 percent from opening, supported by news of a 21-percent oil import increase in China last month. However, headwinds remain strong. “Prices are still locked in a sideways limbo, as bearish Covid-19 developments in some countries compete against bullish economic data and spending projections going forward in US and China,” Rystad Energy analysts said on Tuesday. Morgan Stanley, meanwhile, said in a new note that it expected prices to remain range-bound through the end of the summer, at between $65 and $70 per barrel for Brent. The slow rollout of Covid-19 vaccines in Europe and the news that vaccinations with Johnson & Johnson may be suspended temporarily because of rare blood clotting problems in several patients are also weighing on oil prices.
Oil climbs nearly 5% on signs of increasing crude demand (Reuters) -Oil prices surged almost 5% on Wednesday, after a report from the International Energy Agency, followed by U.S. inventory data boosted optimism about returning demand after the coronavirus lockdowns last year crushed fuel consumption. Brent crude futures rose $2.91, or 4.6%, to settle at $66.58 a barrel. U.S. West Texas Intermediate (WTI) crude ended $2.97, or 4.9%, higher at $63.15 a barrel. U.S. crude inventories fell by 5.9 million barrels last week, the Energy Information Administration said, exceeding analysts' forecasts for a 2.9 million-barrel drop. East Coast crude stocks hit a record low. [EIA/S] Gasoline supplied in latest week, indicating the U.S. consumption of the fuel, rose to 8.9 million barrels per day, the highest since August, the EIA report showed. Gasoline stocks edged higher by 309,000 barrels, less than expectations for a 786,000-barrel rise. Distillate stockpiles fell by 2.1 million barrels in the week, versus expectations for a 971,000-barrel rise. Earlier in the session, oil prices rose on a report from the International Energy Agency that predicted global oil demand and supply were set to rebalance in the second half of the year. It added that producers may then need to pump an additional 2 million bpd to meet the expected demand. "That IEA report is one of the best ones we've seen them publish in awhile in terms of being optimistic about the continued rebound in demand," Similarly, the Organization of the Petroleum Exporting Countries on Tuesday raised its global demand forecast by 70,000 bpd from last month's forecast and now expects global demand to rise by 5.95 million bpd in 2021. Signs of a strong economic recovery in China and the United States have underpinned recent price gains, but stalled vaccine rollouts worldwide and soaring COVID-19 cases in India and Brazil have slowed the market's advance.
Oil edges up to fresh 4-week highs as demand outlook improves (Reuters) -Oil prices edged up to fresh four-week highs on Thursday on positive U.S. economic data and higher demand forecasts from the International Energy Agency (IEA) and OPEC as countries start to recover from the COVID-19 pandemic. After rising almost 5% on Wednesday, Brent futures rose 36 cents, or 0.5%, on Thursday to settle at $66.94 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 31 cents, or 0.5%, to settle at $63.46. That was the highest closes for both benchmarks since March 17 for a second day in a row and put both contracts up for a fourth straight day for the first time since February. "Oil is beginning to reconnect with strong equities with further assistance from a weakening dollar," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois. U.S. retail sales rebounded more than expected in March as Americans received additional pandemic relief checks and as COVID-19 vaccinations allowed broader economic re-engagement. That data and upbeat earnings from several companies helped push the S&P 500 and the Dow Jones indexes to record highs, bolstering hopes of a broader economic rebound. The U.S. dollar was on track to fall to a four-week low against a basket of currencies. A weaker dollar makes oil cheaper for holders of other currencies, which traders said helps support crude prices. The IEA and the Organization of the Petroleum Exporting Countries this week made upward revisions to their global oil demand growth forecasts for 2021 to 5.7 million barrels per day (bpd) and 5.95 million bpd respectively. U.S. crude inventories, meanwhile, fell 5.9 million barrels last week, government data showed on Wednesday, with East Coast crude stocks falling to a record low. Supply discipline and rebounding economies are set to give oil a chance to break out of the recent range, analysts at Goldman Sachs said in a report. Despite all the bullish economic news, some energy traders noted oil price gains will likely be capped by OPEC's plans to ease production cuts starting next month.
Oil nudges down but secures weekly gain on recovery hopes (Reuters) -Oil settled modestly lower on Friday but secured a weekly gain on a stronger demand outlook and signs of economic recovery in China and the United States that offset concerns about rising COVID-19 infections in other major economies. Brent crude settled down 17 cents, or 0.3%, at $66.77 a barrel. The global benchmark finished up 6% on the week after rising in the past four sessions. U.S. West Texas Intermediate (WTI) crude settled down 33 cents, or 0.5%, at $63.13. China’s first-quarter gross domestic product jumped 18.3% year on year, official data showed. That followed a big increase in U.S. retail sales and a drop in unemployment claims released on Thursday. “Strong economic data, spurred by the Biden $1,400 stimulus check, is a huge positive development for the energy patch,” said Bob Yawger, director of energy futures at Mizuho. This week, both the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC) increased their forecasts for oil demand growth for 2021, citing the stronger-than-expected rebound in activity in certain economies. [IEA/M] [OPEC/M] Those forecasts were also supported by Wednesday’s government data that showed overall U.S. crude inventories fell by 5.9 million barrels as refining activity picked up. [EIA/S] Not all economies are recovering, however, as India’s coronavirus infection rate hit a record while Germany’s chancellor on Friday said a third wave of the virus had the country in its grip. Oil has recovered from pandemic-induced lows last year, helped by record cuts to oil output by OPEC and its allies, a group known as OPEC+. Some of the OPEC+ cuts will be eased starting in May, and the group meets on April 28 to consider further tweaks to the supply pact. In rival producer the United States, however, the number of drilling rigs has risen to the highest level since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
Oil prices finish lower, but score a more than 6% weekly climb -- Oil futures pulled back on Friday, settling lower after posting four consecutive session gains, but prices scored a more than 6% weekly climb.Support from a strong economic report from China helped to offset pressure from concerns that rising cases of COVID in parts of the world threaten a fitful recovery from the demand-sapping pandemic.The energy markets have so far been buttressed by monthly reports that point to a healthy recovery from the pandemic, as well as tensions between the U.S. and Iran and Russia, which could have some impact on crude markets.This week, the International Energy Agency lifted (link) its forecast for oil demand this year in its monthly report and data from the Energy Information Administration revealed (link) a third straight weekly decline in U.S. crude inventories. Those reports were the "biggest bullish forces this week, along with pretty good jobs data," Still, he believes "prices are near a peak for now," and that prices pulled back Friday due to profit taking.On Friday, West Texas Intermediate crude for May delivery fell 33 cents, or 0.5%, to settle at at $63.13 a barrel on the New York Mercantile Exchange.June Brent crude edged down by 17 cents, or nearly 0.3%, at $66.77 a barrel on ICE Futures Europe. It hit a notable intraday high on Friday above $67, after the global benchmark picked up 0.5% on Thursday.For the week, WTI saw a weekly gain of 6.4%, while Brent marked a rise of 6.1%, based on the front-month contracts, according to Dow Jones Market Data. Those were the best weekly returns for both contracts since the week ended March 5.Also on Nymex, May gasoline fell 0.6% to $2.04 a gallon, though tallied a weekly rise of 4%, while May heating oil lost 0.2% to nearly $1.90 a gallon, paring its weekly rise to 4.9%.May natural gas tacked on 0.8% to $2.68 per million British thermal units, settling up 6.1% for the week. On Friday, the focus for oil traders was on China which reported that its first-quarter gross domestic product jumped 18.3% on a year-on-year basis (link). A report on retail sales for the People's Republic, one of the biggest importers of crude, also showed a more than 34% rise.Global cases of COVID remain a key concern though, given the potential for economic disruption and lower energy demand. The World Health Organization warned Friday (link)that the global tally of confirmed cases of the coronavirus-borne illness COVID-19 has almost doubled in the last two months, and is now approaching the highest rate seen since the start of the pandemic. Case numbers are climbing in nearly all regions, including the Americas, with India, Brazil, Poland and Turkey becoming hot spots.U.S. sanctions imposed on Russia (link), over alleged election interference and hacking, were being weighed for their impact on energy trade. Russia is one of the world's biggest producers of crude and a member of group known as OPEC+, consisting of the members of the Organization of the Petroleum Exporting Countries and their allies.
IMF hikes growth forecast for the Middle East, says recovery will be 'divergent' - The International Monetary Fund has revised its growth forecast upward for the Middle East and North Africa region, as countries recover from the coronavirus crisis that began in 2020. Real GDP in the MENA region is now expected to grow 4% in 2021, up from the fund's October projection of 3.2%. However, the outlook will vary significantly across countries depending on factors such as vaccine rollouts, exposure to tourism and policies introduced, the IMF said in its latest regional economic report published on Sunday. Jihad Azour, director of the IMF's Middle East and Central Asia department, said the recovery would be "divergent between countries and uneven between different parts of the population." He told CNBC's Hadley Gamble that the growth would be driven mainly by oil-exporting countries that will benefit from the acceleration of vaccination programs and the relative strength in oil prices. Azour said each country's capacity to recover in 2021 varies a "great deal." "(The) vaccine is an important variable this year, and the acceleration of vaccination could contribute to almost one additional percent of GDP in 2022," he said. Some countries in the region — such as the Gulf Cooperation Council states, Kazakhstan and Morocco — started their vaccinations early and should be able to inoculate a significant share of their population by end-2021, the IMF said. Other nations including Afghanistan, Egypt, Iran, Iraq and Lebanon were classified as "slow inoculators" that will probably vaccinate a big portion of their residents by mid-2022. The last group — the "late inoculators" — are not expected to achieve "full vaccination until 2023 at the earliest," the report said. It added that early inoculators are expected to reach 2019 GDP levels in 2022, but countries in the two slower categories will recover to pre-pandemic levels between 2022 and 2023. Azour said innovative policies helped to speed up the recovery, but it's "very important to build forward better." That could include measures to improve the economy, attract investment, increase regional cooperation and address scars of the Covid crisis. "All these elements are silver linings that can help accelerate the recovery and bring the economy of the region (to) the level of growth that existed prior to the Covid-19 shock," he said.
Major powers respond to Israel’s criminal attack on Natanz with a shrug of the shoulders --The international response to Israel’s attack last Sunday on Iran’s main uranium enrichment facility at Natanz highlights the reality of geo-political relations. The attack took place as the US and Iran resumed supposedly “highly constructive talks” in Vienna on a possible return the 2015 nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), constraining Iran’s nuclear program. Israel is vehemently opposed to any resumption of the deal. The New York Times reported that, according to US and Israeli intelligence sources, Israel had played a role in the attack, involving the remote detonation of an explosive device—below more than 20 feet of reinforced concrete—smuggled into the plant. The explosion took out both the primary and backup systems supplying electricity to thousands of underground centrifuges at the Ahmadi Roshan nuclear enrichment facility, Iran’s main enrichment program. Israeli news outlets, citing intelligence sources, attributed the attack to Mossad, Israel’s spy agency. Prime Minister Benjamin Netanyahu’s government issued no official statement. The explosion follows a long list of actions taken by Israel against Iran’s nuclear program, including the use of the US-Israeli Stuxnet virus to disable 1,000 centrifuges and the assassination of its scientists. The blast was criminal and reckless. The loss of electrical power for any length of time could have had catastrophic consequences, as the 2011 Fukushima disaster in Japan demonstrated. The earthquake and subsequent tsunami knocked out all the electrical supply to the nuclear power station, including the emergency generators that keep the cooling systems running, leading to the second worst nuclear meltdown in history, rivaling Chernobyl. Iran condemned the blackout at the underground Natanz nuclear facility, branding it an act of “nuclear terrorism.” Saeed Khatibzadeh, the Foreign Ministry spokesman, called it “an act against humanity” that could have caused a disaster.
Iran to defy uranium enrichment limits of 2015 nuclear deal after attack on Natanz facility – Iran will begin enriching uranium at 60%, a significant step toward weapons-grade material, in response to an attack at a key nuclear site, the country's top nuclear negotiator told state media on Tuesday. Iran's deputy foreign minister, Abbas Araghchi, said he informed the International Atomic Energy Agency, which oversees the monitoring and inspection of nuclear sites, of Tehran's decision. An estimated 90% of enriched uranium is needed to develop a bomb. The move comes two days after Tehran said its underground Natanz atomic facility experienced a blackout. The Natanz facility has been previously targeted by cyberattacks. Iran's Ali Akbar Salehi, the head of the Atomic Energy Organization of Iran, described the event on Sunday as an act of "nuclear terrorism." A day later, Iran formally accused Israel of being behind the attack and vowed revenge. The blackout at Natanz coincided with Secretary of Defense Lloyd Austin's arrival in Israel for meetings with Prime Minister Benjamin Netanyahu and Defense Minister Benny Gantz. The Israeli government has not publicly commented on the incident. The White House on Monday said the United States was not involved in the attack. Iran's decision to increase its enrichment of uranium comes as the Biden administration works to revive the 2015 Joint Comprehensive Plan of Action, or JCPOA, nuclear agreement. The JCPOA, brokered by the Obama administration, lifted sanctions on Iran that had crippled its economy and cut its oil exports roughly in half. In exchange for billions of dollars in sanctions relief, Iran agreed to dismantle some of its nuclear program and open its facilities to more extensive international inspections. Alongside the United States, France, Germany, the U.K., Russia and China were also signatories of the agreement. In 2018, then-President Donald Trump kept a campaign promise and unilaterally withdrew the United States from the JCPOA calling it the "worst deal ever." Trump also reintroduced sanctions on Tehran that had been previously lifted. Following Washington's exit from the landmark nuclear deal, other signatories of the pact have struggled to keep the agreement alive.
China and Russia will keep Iran from building a bomb - The U.S. pursuit of a return to the Iran deal has received new strength after recent talks in Vienna appeared to indicate that working groups might bring Tehran and Washington closer to a series of agreements. The original 2015 Joint Comprehensive Plan of Action (JCPOA) was signed by China, France, Germany, Iran, Russia, the United States, United Kingdom and European Union. The complex deal was supposed to block Iranian pathways to a nuclear weapon in exchange for sanctions relief. It also was supposed to prevent a war with Iran. Largely absent in discussions about claims that Iran will develop a nuclear weapon if the U.S. doesn’t enter into a new Iran deal are questions about whether China, Russia and even Turkey might restrain Iran from its progress toward making a bomb. Because much of the discussion focuses on the U.S. and Iran, Tehran’s ties with Beijing and Moscow largely are ignored. Iran recently entered into a 25-year cooperation agreement with China. Both China and Russia don’t want a nuclear-armed Iran, and Iran’s neighbor Turkey likely would not want Iran to be armed with nuclear weapons in the region. Therefore, the real restraint on Iran’s nuclear ambitions may not be a U.S. strategy or a new Iran nuclear deal, but rather, Iran’s need to please other authoritarian regimes. The U.S. should consider this in its discussions with Iran. Recently, Iran met signatories of the JCPOA in Vienna while the U.S. was sidelined because Washington withdrew from the deal under the Trump administration. There is a lot of pressure on the Biden administration to cave to Iranian demands. At the heart of the problem is a misunderstanding of the current restraints on Iran’s nuclear program. Iran uses nuclear enrichment as leverage to goad the West into giving Tehran sanctions relief, essentially demanding cash in exchange for not building a nuclear bomb. Iran does this skillfully. It periodically releases information about its enrichment activities to put pressure on the U.S. For example, recent reports said Iran had 55kg of 20 percent-enriched uranium, a stockpile that violates the 2015 deal. Tehran’s message is that the U.S. must return to the deal and then Iran will reduce its stockpile. Iran never built a bomb. Instead it used claims that it was “moving toward a nuclear weapon” to wring concessions from other nations. It also used talking points about political “hardliners” and fear of “another war in the Middle East” to get the U.S. to the bargaining table. Now Iran once again has trotted out the “hardliners” equation, claiming that if the U.S. doesn’t agree to a new deal, the hardliners might win an upcoming election. This is a talking point that Iran uses only in its discussions with the West; it doesn’t appear to ever mention hardliners in its own media or in talks with Russia, China and Turkey. That means Iran doesn’t threaten Beijing or Moscow with “hardliners” who might emerge if those countries don’t give in to Iran’s demands. Having China and Russia as part of the Iran deal keeps Iran from developing a nuclear weapon because it would anger Moscow and Beijing — and Iran can’t risk its ties to those countries. Iran uses talk of uranium enrichment, political hardliners and possible war as leverage over the United States. But leaders in Beijing, Moscow and Ankara don’t appear to have much concern about such matters, including whether Iran builds a bomb or goes to war in the Middle East. This is because China and Russia are happy to use Iran’s destabilizing policies to counter and distract the United States, and realize that Iran apparently won’t violate the JCPOA to the extent of actually building a bomb (it had ample opportunity to do so before the accord).