oil prices drop 13% on new Covid variant; Strategic Petroleum Reserve at a 18 year low as US plans further withdrawals; another 48 month low for gasoline inventories; a 23 month low for distillate inventories, and an 82 month low for total inventories...
oil prices fell nearly 10% this week, their fifth decrease in a row, as the discovery of a new Covid variant sent global equity and commodity markets tumbling on Friday....after the contract price for US light sweet crude for December delivery fell 5.6% to $76.10 a barrel last week on heavy profit-taking ahead of potential release of strategic oil reserves, trading in that oil contract expired, and this week's oil trading opened with the contract for US light sweet crude for January priced at $75.75, down 19 cents from last week's close, which then fell more than $1, as expanded Covid-19 restrictions across European Union fueled demand fears...however, oil prices reversed course by midday on speculation that OPEC would respond to any coordinated oil reserves release to settle 81 cents higher at $76.75 a barrel on reports that OPEC+ would adjust plans to raise oil production if large consuming countries released crude from their reserves or if the coronavirus pandemic dampened demand (note that AP incorrectly reported "oil for January delivery rose 65 cents to $76.75 a barrel", referencing the increase from last week's closing price for December oil, and that error was widely repeated elsewhere)...oil prices erased early losses and jumped on Tuesday morning following the announcement from the U.S. that it would make available 50 million barrels of oil from the Strategic Petroleum Reserve and ended $1.75, or 2.5% higher at $78.50 a barrel as traders dismissed Biden's plan to lower prices and instead assessed the risks from the expect OPEC response...oil prices first softened in early trading on Wednesday after industry data from the American Petroleum Institute reported that U.S. commercial crude and gasoline inventories unexpectedly increased last week, but then edged higher following the release of EIA data showing domestic production rose to 11.5 million barrels per day (bpd), offsetting larger-than-expected drawdown from fuel supplies, only to fade near the close and settle 11 cents lower at $78.39 a barrel as the US dollar hit a 17 year high, and as traders awaited OPEC+’s response to the coordinated release of strategic reserves by several countries...oil prices slid more than 1% early Friday after the holiday on concerns that a global supply surplus could swell in the first quarter following that US led coordinated release of crude reserves and then tumbled more than $6 or nearly 9% midday, hitting a two-month low as a new COVID-19 variant spooked traders and added to concerns that a supply surplus could swell in the first quarter and settled down by $10.24, or more than 13% lower at $68.15 a barrel, the largest daily drop since April 2020 (when oil prices had fallen below $0) amid a broad sell-off in global markets, as the new Covid-19 strain sparked fears that demand would slow just as supply was to increase...that Friday selloff left oil prices down more than 10.4% on the week, while the January contract, which had ended last week priced at $75.94, finished almost 10.3% lower...
meanwhile,natural gas prices moved higher for the 11th time in 15 weeks on forecasts for higher domestic heating demand, as global gas prices also pushed higher....after rising 5.6% to $5.065 per mmBTU last week as global prices hit new highs and forecasts turned colder, the contract price of natural gas for December delivery opened more than 3% lower on Monday and tumbled to settle down 27.6 cents near an 11 week low of $4.789 per mmBTU, on forecasts for milder than normal weather over the next two weeks, near record U.S. output, and a decline in European gas prices....but US prices recovered quickly Tuesday and rallied to close 17.8 cents or 3.7% higher at $4.96.7 per mmBTU as a sharp increase in global gas prices kept demand for US LNG exports near record highs...prices completed the recovery of Monday's losses on Wednesday, rising 10.1 cents or 2% to $5.068 per mmBTU on forecasts for cooler weather and an increase in heating demand over the next two weeks, as the EIA reported the first withdrawal of natural gas from storage of the 2021-22 heating season...natural gas prices then soared 37.9 cents to $5.447 per mmBTU on Friday on forecasts for higher heating demand than was previously expected, thus finishing the week 7.5% higher, the largest weekly jump in almost 2 months, as trading in the December natural gas contract expired....
The EIA's natural gas storage report for the week ending November 19th indicated that the amount of working natural gas held in underground storage in the US fell by 21 billion cubic feet to 3,644 billion cubic feet by the end of the week, the first withdrawal of the season, which left our gas supplies 320 billion cubic feet, or 8.1% below the 3,943 billion cubic feet that were in storage on November 19th of last year, and 58 billion cubic feet, or 1.6% below the five-year average of 3,681 billion cubic feet of natural gas that have been in storage as of the 19th of November over the most recent years...the 21 billion cubic foot withdrawal from US natural gas working storage this week was just below the average forecast for a 23 billion cubic foot withdrawal from a S&P Global Platts survey of analysts, but it was almost double the 11 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2020, while it was less than half of the average withdrawal of 44 billion cubic feet of natural gas that have typically been pulled out 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 November 19th showed that a big drop in our oil exports, a modest increase in our oil imports, a modest withdrawal of oil from our Strategic Petroleum Reserve and incrementally higher oilfield production together meant we had a little surplus oil to add to our stored commercial crude supplies for the seventh time in nine weeks and for the twelfth time in the past thirty-four weeks….our imports of crude oil rose by an average of 245,000 barrels per day to an average of 6,436,000 barrels per day, after rising by an average of 83,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 1,021,000 barrels per day to an average of 2,605,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 3,831,000 barrels of per day during the week ending November 19th, 1,266,000 more barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude oil from US wells was reportedly 100,000 barrels per day higher at 11,500,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 15,331,000 barrels per day during the cited reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,640,000 barrels of crude per day during the week ending November 19th, an average of 243,000 more barrels per day than the amount of oil they processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 89,000 barrels of oil per day were being pulled out 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 220,000 barrels per day less 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 plunked a (+220,000) 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 balance sheet fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed...and since last week’s EIA fudge factor was at (+668,000) barrels per day, that means there was a 448,000 barrel per day difference in the EIA's crude oil balance sheet error from a week ago, and hence the week over week supply and demand changes indicated by this week's report are fairly useless...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 oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….
This week's 89,000 barrel per day net decrease in our crude oil inventories came as 145,000 barrels per day were added to our commercially available stocks of crude oil while 235,000 barrels per day of oil were pulled out of our Strategic Petroleum Reserve, apparently still part of an emergency loan of oil to Exxon in the wake of hurricane Ida...including the 16,797,000 barrels per day drawdown from the Strategic Petroleum Reserve under that emergency program, a total of 51,642,000 barrels per day have been removed from the Strategic Petroleum Reserve for a series of other "emergencies" over the past 16 months, and as a result the amount of oil in our Strategic Petroleum Reserve has fallen to an 18 year low of 604,505,000 barrels per day, as repeated tapping of our emergency supplies for political expediency or to “pay for” other programs have already drained those supplies over the past dozen years...with the BIden administration's announcement this week that another 50 million barrels of oil will be released to incentivize continued use of American gas guzzlers, we will now initiate weekly coverage of the SPR storage status on this blog...
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,227,000 barrels per day last week, which was 18.5% more than the 5,253,000 barrel per day average that we were importing over the same four-week period last year….this week’s crude oil production was reported to be 100,000 barrels per day higher at 11,500,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,100,000 barrels per day, while a 5,000 barrel per day increase in Alaska’s oil production to 449,000 barrels per day had no impact on the reported rounded national production total….US crude oil production had hit a pre-pandemic record high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was still 12.2% below that of our pre-pandemic production peak, but 36.4% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016...
US oil refineries were operating at 88.6% of their capacity while using those 15,640,000 barrels of crude per day during the week ending November 19th, up from 87.9% of capacity the prior week, but still a bit below normal utilization for late-autumn refinery operations…the 15,640,000 barrels per day of oil that were refined this week were 9.7% more barrels than the 14,263,000 barrels of crude that were being processed daily during the pandemic impacted week ending November 20th of last year, but 4.4% less than the 16,334,000 barrels of crude that were being processed daily during the week ending November 22nd, 2019, when US refineries were operating at what was then also a bit below normal 89.3% of capacity...
With the increase in the amount of oil being refined this week, the gasoline output from our refineries was also higher, increasing by 177,000 barrels per day to 10,099,000 barrels per day during the week ending November 19th, after our gasoline output had decreased by 132,000 barrels per day over the prior week.…this week’s gasoline production was also 14.1% more than the 8,850,000 barrels of gasoline that were being produced daily over the same week of last year, and a bit more than the gasoline production of 10,065,000 barrels per day during the week ending November 22nd, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 58,000 barrels per day to 4,784,000 barrels per day, after our distillates output had decreased by 26,000 barrels per day over the prior week…despite the recent decreases, our distillates output was 4.3% more than the 4,587,000 barrels of distillates that were being produced daily during the week ending November 20th, 2020, but 5.7% less than the 5,075,000 barrels of distillates that were being produced daily during the week ending November 22nd, 2019..
Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week decreased for the tenth time in thirteen weeks, and for the nineteenth time in thirty-one weeks, falling by 603,000 barrels to another 48 month low of 211,393,000 barrels during the week ending November 19th, after our gasoline inventories had decreased by 707,000 barrels to a 48 month low over the prior week...our gasoline supplies decreased again this week because the amount of gasoline supplied to US users increased by 93,000 barrels per day to 9,334,000 barrels per day, and because our imports of gasoline fell by 340,000 barrels per day to 843,000 barrels per day, while our exports of gasoline fell by 223,000 barrels per day to 608,000 barrels per day…after this week’s inventory decrease, our gasoline supplies were 8.1% lower than last November 20th's gasoline inventories of 230,147,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of the year…
With the decrease in our distillates production, our supplies of distillate fuels decreased for the eleventh time in thirteen weeks and for the 23nd time in 33 weeks, falling by 1,968,000 barrels to a 23 month low of 121,717,000 barrels during the week ending November 19th, after our distillates supplies had decreased by 824,000 barrels to a 19 month low during the prior week….our distillates supplies fell by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 41,000 barrels per day to 4,350,000 barrels per day, and because our exports of distillates rose by 151,000 barrels per day to 1,007,000 barrels per day while our imports of distillates rose by 93,000 barrels per day to 332,000 barrels per day....and after twenty-three inventory decreases over the past thirty-three weeks, our distillate supplies at the end of the week were 14.7% below the 142,632,000 barrels of distillates that we had in storage on November 13th, 2020, and about 8% below the five year average of distillates stocks for this time of the year…
Meanwhile, with this week's drop in our oil exports, the increase in our oil imports, and the withdrawal of oil from our Strategic Petroleum Reserve more than offsetting the increase in refinery demand, our commercial supplies of crude oil in storage rose for the tenth time in the past twenty-six weeks and for the 19th time in the past year, increasing by 1,017,000 barrels over the week, from 433,003,000 barrels on November 12th to 434,020,000 barrels on November 19th, after our commercial crude supplies had decreased by 2,101,000 barrels over the prior week…after this week’s increase, our commercial crude oil inventories remained around 7% below the most recent five-year average of crude oil supplies for this time of year, but were still about 27% above the average of our crude oil stocks as of the third weekend of November over the 5 years at the beginning of the past 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 Covid lockdowns of last spring and remained elevated for most of the year after that, our commercial crude oil supplies as of this November 19th were 11.2% less than the 488,721,000 barrels of oil we had in commercial storage on November 20th of 2020, and are now 4.0% less than the 451,952,000 barrels of oil that we had in storage on November 22nd of 2019, and 3.7% less than the 450,485,000 barrels of oil we had in commercial storage on November 23rd of 2018…
Finally, with our inventory of crude oil and our supplies of all products made from oil all at or near multi year lows, we are continuing to track the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....the EIA's data shows that total oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, fell by 7,620,000 barrels this week, from 1,830,012,000 barrels on November 12th to 1,822,392,000 barrels on November 19th, which is our lowest level of total US inventories since January 23rd, 2015, and are therefore at a 82 month low...
This Week's Rig Count
The number of drilling rigs active in the US increased for the 53rd time during the past 62 weeks with this week's report, which only covers the five days ending Wednesday, November 24th, due to the Thanksgiving holiday....Baker Hughes reported that the total count of rotary rigs running in the US increased by six to 569 rigs over that period, which was also 249 more rigs than the pandemic hit 310 rigs that were in use as of the November 25th report of 2020, but was also still 1,360 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global oil market in an attempt to put US shale out of business….
The number of rigs drilling for oil was up by 6 to 467 oil rigs during this period, after they had increased by 7 oil rigs the prior week, and there are now 226 more oil rigs active now than were running a year ago, even as they still amount to just 29.0% of the 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 unchanged at 102 natural gas rigs, which was still up by 25 natural gas rigs from the 77 natural gas rigs that were drilling during the same week a year ago, but still only 6.4% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….note that last year's rig count also included 3 rigs that Baker Hughes had classified as "miscellaneous', while there are no such "miscellaneous' rigs deployed this week...
The Gulf of Mexico rig count was unchanged at fifteen rigs this week, with thirteen of this week's Gulf rigs drilling for oil in Louisiana waters and two more drilling for oil in Alaminos Canyon, offshore from Texas....the Gulf rig count is still up by three rigs from the twelve rigs in the Gulf a year ago, when 11 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil in Texas waters…since there is now no drilling off our other coasts, nor was there a year ago, the Gulf rig count is equal to the national offshore totals..
In addition to those rigs offshore, we continue to have two water based rigs drilling inland; one is a directional rig targeting oil at a depth of over 15,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, and the other is drilling for oil in the Galveston Bay area, and hence the inland waters rig count of two is up from one from a year ago..
The count of active horizontal drilling rigs was up by 7 to 513 horizontal rigs this week, which was 81.3% more than the 283 horizontal rigs that were in use in the US on November 25th of last year, but was 62.7% less than the record 1,374 horizontal rigs that were deployed on November 21st of 2014..…on the other hand, the directional rig count was down by one to 34 directional rigs this week, but those were still up by 12 from the 22 directional rigs that were operating during the same week a year ago….meanwhile, the vertical rig count was unchanged at 22 vertical rigs this week, and those were up by 7 from the 15 vertical rigs that were in use on November 25th 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 November 24th, the second column shows the change in the number of working rigs between last week’s count (November 19th) and this week’s (November 24th) count, the third column shows last week’s November 19th 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 25th of November, 2020...
as you can see, this week's change was driven by the four rig increase in North Dakota, which were all oil directed rigs targeting the Bakken shale in the Williston basin...however, the Williston count was only up by 3 because a Williston rig was removed from Montana at the same time...next, checking the Texas Permian basin in the Rigs by State file at Baker Hughes, we find that two rigs were added in Texas Oil District 8, which is the core Permian Delaware, and that rig counts in the other Texas Permian districts were unchanged, thus indicating the overall two rig increase in the Texas Permian, and matching the national count shown... elsewhere in Texas, we find that a rig was added in Texas Oil District 5, but that a rig was pulled out of Texas Oil District 6 at the same time...both of those rigs could have been targeting the Haynesville shale, since that basin shows an increase of one oil rig and a decrease of two natural gas rigs, with no obvious activity in the Haynesville shale region of Louisiana...whatever the case, the natural gas rig count was still unchanged this week because a natural gas rig was added to the Marcellus in Pennsylvania, and another natural gas rig was added to a basin that Baker Hughes doesn't track...
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Seven Athens County protesters face felony charges over Minnesota pipeline protests -- A national campaign launched last week calls on Minnesota officials to drop charges against protestors who attempted to stop an oil pipeline, including seven Athens County individuals facing felony charges. “I’m hoping that the felony charge is dropped, but I feel like I had to do what I did,” said Athens resident, Judy Smucker. “I think about the future of my grandchildren, and I feel like I have a moral obligation to do what I can.”Smucker is among the seven locals facing felony charges for participation in protests designed to block the construction of Embridge Energy’s Line 3, which has since been completed, according to a release from the Canadian company. The pipeline carries tar sands oil and regular crude oil from Alberta to Wisconsin.Protestors argue the pipeline will worsen climate change while violating Native American treaty rights — because spills from the pipeline could adversely impact sensitive areas where Anishinaabe people are guaranteed the right to harvest wild rice, hunt and fish, according to MinnPost. Claudia Sheehan, another Athens County resident facing felony charges due to involvement in the protests, said, “The charges should be dropped because we weren’t trespassing — (Embridge was) trespassing. If we respected our treaties, they wouldn’t have been there.” “Embridge is breaking treaties which are supposed to be the supreme law of the land, yet nothing is being done to the corporation,” Smucker said. “I feel like they’re the ones that should be charged.” As The Athens Messenger previously reported, Sheehan and Smucker are among three local grandmothers who were arrested at the Line 3 protests in July. According to a release from Athens County’s Future Action Network, the grandmothers were arrested for blockading a pipe yard near the Mississippi headwaters in northern Minnesota. Over 1,000 arrests were made during the nine months in which Line 3 was under construction, according to a release from Stop Line 3 activists. Over 700 individuals face charges related to the protests, while over 100 face felony charges. Seven of the 100, including the three grandmothers, are from Athens County. The campaign argues the arrests and charges against protestors were part of a crackdown directly funded by Embridge.The Guardian reported that the Canadian company reimbursed U.S. police $2.4 million for arrests and surveillance of demonstrators.
Groups Say Ohio Needs to Strengthen Rules for Oil and Gas Waste - Public News Service -- Groups say new draft rules proposed by the Ohio Department of Natural Resources (ODNR) do not go far enough to properly regulate oil and gas waste facilities, or injection wells, used to dispose of liquid waste. A hearing is set for Dec. 6. Megan Hunter, senior attorney for Earthjustice, said the rules lack transparency, and fall short of what is necessary to protect human health and the environment, because of loopholes and how much discretion they give to the agency to waive requirements.She argued neither waste facilities nor injection wells are required to be set far enough back from surface water."They can be located within 100 feet of surface waters, within a developed drinking-water well, for example, and the same is true for the injection wells," Hunter outlined. "And that's just not a great enough distance to be protective of surface and groundwater."Hunter noted Ohio receives liquid oil and gas waste from Pennsylvania and West Virginia in addition to its own products. She contended one of the biggest problems with many injection wells is they do not require the waste to be properly characterized, meaning first responders who may be dealing with a leak or a spill might not know what kinds of chemicals or radioactivity they could be facing. Silverio Caggiano, retired battalion chief for the Youngstown Fire Department, said if his team gets a call about a leak, it can be dangerous if they don't know what they could be exposed to. He pointed to what are known as "right-to-know" laws, where companies are required to offer information about what chemicals are used and stored in their facilities. "On a fire-department and first-responder level, the reason why those Right to Know laws are placed in there was so I can prepare for something," Caggiano explained. "If XYZ company is going to put something in there, and they're going to be using this chemical, I have to figure out if I have the ability to detect it and mitigate it." Groups emphasized the new rules require less oversight than current regulations. They urged the ODNR to hold the oil and gas industry accountable by requiring regular reporting and transparency.
Ohio missed out on $1.2 billion plus in severance tax revenue --It is time for Ohio’s oil and gas drilling corporations to pay their fair share. Ohio still has significant untapped reserves of hydrocarbons and their extraction should be subject to a severance tax at the level of other major gas- and oil-producing states.A fair state-level severance tax would help ensure that the exploitation of Ohio’s hydrocarbons funds critical state services responding to the pressing needs of all Ohioans and the prospects of their children. Furthermore, a severance tax permanent fund — sometimes called a legacy fund — like those of other gas-producing states and tribal nations, would go a long way toward a thriving Ohio beyond the ups and downs of the fracking boom.A permanent fund produces a sustainable investment endowment that generates revenue from interest earnings that can be used to finance the needs of a region or state.Over the years there have been several attempts to legislate a fair severance tax in Ohio. In 2015, Republican Gov. John Kasich proposed a 6.5% severance tax on gas and oil production and a 4.5% tax on natural gas liquids.Years earlier, Policy Matters Ohio proposed a flat 5% severance tax on gas and oil and, after certain trigger points, a 2.5% fee toward a legacy fund that could provide long-term benefits despite the volatility of oil and gas markets. However, after an aggressive lobbying campaign from the Ohio Oil and Gas Association and the American Petroleum Institute, lawmakers refused to act.Ohio drilling operators pay a dime per barrel of crude oil and half a nickel per thousand cubic feet of natural gas. This is one of the lowest severance taxes in the country and it means that years of gas and oil production have enriched corporations and drillers but not the communities that host them nor the state that supports them.The promises made by oil and gas corporations never materialized and the Appalachian counties that were supposed to thrive have grown poorer. According to a recent Ohio River Valley Institute report, in the period between 2008 and 2019, gas-producing counties (Belmont, Carroll, Guernsey, Harrison, Jefferson, Monroe and Noble) had a net job loss of 8%, growth in personal incomes lagged state and national averages, and the local population decreased by over 5%. These statistics only scratch the surface of the negative local impacts that have ravaged eastern Ohio in the past decade. All this while the same counties grew, in terms of GDP, five times faster than the state of Ohio and four times faster than the nation as whole. In other words, Ohio’s gas producing counties are being drained of both their natural resources and their economic vitality at the same time.
Ohio energy execs express concerns to Rep. Latta about Line5, supply chain issues - Toledo Blade - U.S. Rep. Bob Latta (R., Bowling Green) spent an hour Monday morning hearing officials from the natural gas and propane industries express concerns about the pandemic-driven supply chain backlog, a shortage of commercial truck drivers, and other issues that could complicate efforts to keep Ohioans warm this winter. But Mr. Latta also made it clear while briefing journalists after the meeting that the ultimate fate of Enbridge’s Line 5 has become a major source of anxiety in Washington as well as the Great Lakes region.“Everybody’s talking about Line 5,” he said. At issue is the degree to which the federal government will exert control over oil and gas pipelines during a time it is trying to get the nation more serious about addressing climate change.With Canadian Prime Minister Justin Trudeau taking the unprecedented move of invoking America’s 1977 treaty with Canada over Line 5, the Biden administration can’t continue to be neutral on the subject, Mr. Latta said, adding he is interested in upcoming diplomatic talks over Line 5 between the leaders of the two countries.Mr. Latta, a member of the House Energy and Commerce Committee, joined U.S. Rep. Tim Walberg (R., Jackson, Mich.) and 11 other congressmen — many of them Michigan Republicans — in signing a Nov. 4 letter to President Biden which implored him to keep the pipeline open. Mr. Walberg’s district includes Michigan’s Monroe and Lenawee counties.On Monday, the DeWine administration announced that Gov. Mike DeWine and Lt. Gov. Jon Husted sent a letter of their own to Mr. Biden, urging him to help keep Line 5 open. The two said that "any disruption in Line 5 operations would have a devastating impact on the economy of Northwest Ohio, further harming industry supply chains, eliminating thousands of good-paying jobs, and increasing the cost of fuel for transportation, heat for homes, and products Americans use every day." Derek Dalling, Ohio Propane Gas Association executive director, told The Blade he believes Line 5 proponents got at least a partial reprieve when U.S. District Judge Janet Neff ruled last week that the litigation over Line 5’s future should remain in federal court, as Enbridge wanted.Michigan Gov. Gretchen Whitmer and Michigan Attorney General Dana Nessel had been fighting to get the matter back in state court, where it was originally filed. The two contend Enbridge is in violation of a 1953 easement agreement with the state of Michigan.“It means Line 5 probably stays open at least through this winter,” Although the focus has been on crude oil that Line 5 supplies to refineries, about one-seventh of what’s transported through Line 5 is propane. Disrupting that flow would be devastating to propane companies supplying fuel to heat homes, he said.
US to boost current natural gas capacity 6% by 2025 – but why? --Between 2022 and 2025, 27.3 gigawatts (GW) of new natural gas-fired capacity is scheduled to come online in the US, boosting its existing capacity of 489.1 GW as of August 2021, according to the US Energy Information Administration (EIA). Here’s where it’s headed. Illinois, Michigan, Ohio, and Pennsylvania account for a combined 43% of the natural gas-fired capacity that’s planned to come online between 2022 and 2025. Those states have pipeline access to the fossil fuel in the Appalachia region’s Marcellus and Utica shale plays that spread across Ohio, Pennsylvania, and West Virginia. Of those four states tapping into the Appalachian shale plays, Illinois has the most natural gas-fired capacity additions (3.8 GW), followed by Michigan (3.2 GW), Ohio (2.9 GW), and Pennsylvania (1.9 GW).Florida is also planning to bring 3.2 GW of capacity online between 2022 and 2025. It pipes the fossil fuel from out of state:Five new natural gas-fired plants plan to start commercial operations in Florida between 2022 and 2025: three plants are currently under construction, and two plants are not yet under construction but are scheduled to be completed by 2024.Meanwhile, more natural gas is produced in Texas than any other state. The EIA writes: Most of its natural gas production comes from the Haynesville and Eagle Ford formations and multiple shale formations in the Permian Basin. As of August, 70.7 GW of natural gas-fired capacity is currently operating in Texas, and another 2.8 GW of capacity additions is planned to come online between 2022 and 2025. We know that drilling for the polluting fossil fuel is being ramped up because of higher prices and resurgent demand, but this ultimately makes no sense in the long term.Methane is the primary component of natural gas, and as of November 4, more than 100 countries promised to cut methane emissions by at least 30% by 2030 at COP26. It particularly doesn’t make sense in Illinois, which just passed the historic Climate and Equitable Jobs Act in September. That law dictates that all of the state’s fossil fuel plants be shut down by 2045. So why is Illinois still planning to add 3.8 GW in the next three years? Why not scrap that and focus on renewables, which cost less for consumers to boot?Further, Florida Power & Light intends to collect an additional $810 million from customers in 2022 because of higher-than-expected natural gas costs. This is not only bad for the environment, it isn’t sensible business, either.
Pa. commission approves pipeline failure settlement — The Pennsylvania Public Utility Commission approved a settlement related to a massive pipeline failure and fire in Beaver County involving the “Revolution Pipeline” — resulting in nearly $2 million in civil penalties and additional preventative measures required by the pipeline operator, Nov. 18. The Revolution Pipeline is a 24-inch natural gas pipeline operated by Energy Transfer Company, doing business as ETC Northeast Pipeline. Early on the morning of Sept. 10, 2018, a portion of the pipeline failed in Center Township, Beaver County. That incident released more than three million cubic feet of natural gas and caused a fire that burned for several hours, destroying a nearby home and garage, damaging several electric transmission lines and towers in the area, and burning several acres of surrounding woodland. The commission voted 3-0 to approve the settlement, which resolves an investigation conducted by the Safety Division of the commission’s independent Bureau of Investigation and Enforcement, which is responsible for inspecting pipelines and investigating and enforcing safety violations for the commission. The settlement includes the following: A $1 million civil penalty, to be paid by ETC to the Commonwealth of Pennsylvania within 30 days of final approval of the settlement. Approximately $975,000 in additional safety-related measures, including added pipeline start-up procedures, including 24-hour monitoring during start-up, along with employees onsite at each valve station who are qualified to operate those valves, continuing until the pipeline reaches operating pressure. Incorporation of preconstruction research into pipeline design, to ensure that the information about the evaluation of geohazards is conveyed to the design team and construction inspectors working in the field. In-line inspections of the Revolution pipeline, prior to the start-up or operation date for that pipeline. Multiple annual in-line inspections on the Revolution pipeline, to verify the integrity of the pipeline. Immediate notice to the commission’s Bureau of Investigation and Enforcement of any slope failure affecting pipeline integrity, and enhanced procedures to monitor and patrol the entire Revolution pipeline right of way. Implementation of a quality assurance/quality control program to oversee pipeline siting and construction practices for the company’s gas and hazardous liquids pipelines in Pennsylvania.
America’s Biggest Natural Gas Well Operator Is Not Who You’d Expect – Forbes - If you asked the average person on the street which company operates the most oil and gas wells in the United States, it’s a safe bet the most common answer would be ExxonMobil. But the correct answer to that question is actually a little-known company based in Birmingham, Alabama called Diversified Energy, which operates about 69,000 mature oil and gas wells with a heavy focus on natural gas production in the northeast and central parts of the country. I was able to spend an hour interviewing Diversified’s founder and CEO, Rusty Hutson, Jr., when he was in Houston recently for an investor day. “I started Diversified in 2001 from scratch. Just 35 wells that I bought in West Virginia,” Hutson told me. “I’m from West Virginia, and at that time was working at Compass Bank in Birmingham.” A son, grandson and great-grandson of men who spent their careers in oil and gas, Hutson said he had no interest in following that family tradition when he entered college, where he obtained his degree in Accounting. “It was the last thing I wanted to do.” But that initial 35-well stake - a package of mature, predictable low-maintenance wells that his father actually brought to his attention - has now grown into a complex empire with production in 9 states, including West Virginia, Pennsylvania, Ohio and, thanks a recent major acquisition, Louisiana, Texas and Oklahoma. Hutson was able to operate his initial set of wells as a sideline as he worked at Compass Bank through 2005, and gained a real respect for a business model that focuses on acquiring and extending the life of these mature wells. “I think people have a misperception, because we started the company in the Appalachian conventional space, that that automatically you have a bunch of wells that are ready to die off,” he said. “That’s not the case. Conventional Appalachia is one of the oldest producing regions, but a majority of our portfolio has a lot of life left in it. These wells can go for 50, 60 years or more, and we have a lot of them.
FERC reduces ROE rate for agreement to keep Massachusetts gas plant running --The US Federal Energy Regulatory Commission modified a July order and reduced the rate of return on equity for a cost-of-service deal to keep two natural gas units in Massachusetts afloat. In July, the commission set a 9.33% rate of ROE on a deal to keep the Mystic Generating Station running for another two years. However, following requests for rehearing, FERC voted Nov. 18 to modify that order, reducing the rate to 9.19% as of June 1, 2022 (ER18-1639). The commission also told Mystic to submit a compliance filing within 30 days revising the agreement. Exelon wanted to retire the 1,700-MW Mystic Generating Station by the end of May 2022, but doing so could threaten reliability and fuel security for ISO New England, the grid operator said. As a result, ISO New England, Exelon and its subsidiary Constellation Mystic Power came to an agreement to continue operating the units from June 2022 to May 2024. That agreement also helps Mystic recover the bulk of the costs associated with a neighboring LNG terminal that fuels the plant. Connecticut regulators complained that FERC failed to apply a "natural break analysis" to results from the discounted cash flow model used to determine the ROE rate. The commission should have excluded Otter Tail from that analysis, given its high cash flow result that suggested it was an outlier, according to the state regulators. FERC determined in its reconsideration that Otter Tail was an outlier and should be excluded from the results. Doing so reduced the averages of the study, resulting in a risk premium of 9.19%, the commission said. Commissioner Allison Clements issued the lone dissent, as she did in July, critiquing the commission's ROE policy for applying a "flawed methodology that does not adequately protect consumers and does not yield just and reasonable rates." That policy also extends to transmission rates, she added, and the nation will need significant transmission investments in the coming years. "This investment can ultimately be a net win for consumers," Clements said. "But the value proposition for consumers is in no small part dependent on this commission's rigorous scrutiny of the rates charged for transmission service, of which ROE is a central component." Commissioner James Danly wrote in a concurrence that FERC's revised ROE methodology is "too complicated and threatens to cause great uncertainty going forward." "The inevitable consequence will be the chilling of investment in transmission development," Danly said. "I would likely not have voted in favor of our revised ROE methodology had it come before me in the first instance, but I also have not seen the kind of evidence that would be necessary to justify jettisoning it for yet another revised methodology."
Most planned US natural gas-fired plants are near Appalachia and in Florida and Texas – EIA - Between 2022 and 2025, 27.3 gigawatts (GW) of new natural gas-fired capacity is scheduled to come online in the United States, according to our latest Monthly Electric Generator Inventory. This added capacity would increase current capacity (489.1 GW as of August 2021) by 6%. Many of the planned natural gas-fired capacity additions are located close to major shale plays in the Appalachia region and Texas and in Florida.The Appalachia region’s Marcellus and Utica shale plays stretch across Ohio, Pennsylvania, and West Virginia. These shale plays have led the growth in U.S. natural gas production over the past several years, accounting for 34% of U.S. dry natural gas production in the first half of 2021.Illinois, Michigan, Ohio, and Pennsylvania—states with pipeline access to natural gas from the Marcellus and Utica shale plays—account for a combined 43% of the natural gas-fired capacity planned to come online between 2022 and 2025. Among these four states, Illinois has the most natural gas-fired capacity additions (3.8 GW), followed by Michigan (3.2 GW), Ohio (2.9 GW), and Pennsylvania (1.9 GW). Natural gas transport infrastructure continues to be added to this region to increase pipeline takeaway capacity and to bring natural gas to demand markets in the Midwest, Northeast, Southeast, and Canada.After Illinois, Florida has the second-most natural gas-fired capacity additions planned to come online between 2022 and 2025 (3.2 GW). Although Florida does not produce significant amounts of natural gas, its regional pipeline networks have been continually expanding to serve natural gas-fired generation units as older coal- and oil-fired units retire. Five new natural gas-fired plants plan to start commercial operations in Florida between 2022 and 2025: three plants are currently under construction, and two plants are not yet under construction but are scheduled to be completed by 2024.More natural gas is produced in Texas than any other state. Most of its natural gas production comes from the Haynesville and Eagle Ford formations and multiple shale formations in the Permian Basin. As of August, 70.7 GW of natural gas-fired capacity is currently operating in Texas, and another 2.8 GW of capacity additions is planned to come online between 2022 and 2025. Growth in natural gas production in Texas has encouraged natural gas-fired capacity additions and regional pipeline expansions to accommodate growing natural gas exports to Mexico, as well as record-high liquefied natural gas (LNG) exports from terminals in South Texas and in Louisiana.
Towns join push to block ‘bomb trains’ - A dozen South Jersey towns and some activist groups are urging the Biden administration to deny any attempt to renew a permit that allows liquefied natural gas to be shipped by rail to a planned export terminal at Gibbstown in Gloucester County. They are part of a coalition from New Jersey and Pennsylvania that submitted more than 3,600 petitions to the federal government last week, calling on it not to grant an extension of the permit that expires Nov. 30. The Special Permit, issued by the Trump administration in December 2019, would allow Energy Transport Solutions, a unit of New Fortress Energy, to run up to two 100-car trains a day from a planned liquefaction plant at Wyalusing, Pennsylvania, to Gibbstown. There the fuel would be loaded onto ships at what would be New Jersey’s first LNG export terminal. The facility would represent an expansion of an existing port called the Gibbstown Logistics Center. Critics say that transport of the fuel in tank cars — dubbed “bomb trains” by opponents — through densely populated areas including Camden and Philadelphia exposes populations to a risk of catastrophic explosions and should be blocked by federal and state authorities. They also argue that exporting LNG would stimulate the production of natural gas and lead to more leaks of methane, a potent greenhouse gas, at a time when world leaders are trying to curb carbon emissions to slow climate change. Jim Stewart, a New Jersey-based opponent, argued that there is no benefit to the state in allowing the project to move ahead since the LNG would be exported. “In our presentations to local town councils we talk about the lack of benefit of this project to New Jersey,” Stewart said. “There is none. Many people are aware of the environmental threats because of the recent climate crisis events and therefore are more likely to be concerned with this project.
Effort underway to simplify natural gas property tax assessment — Legislation passed toward the end of the 2021 regular session was supposed to fix constitutional issues with the way West Virginia assesses the value of property with natural gas production. Instead, no one is happy with the new rules. Lawmakers passed House Bill 2581 in April over the objections of several Northern Panhandle and North Central West Virginia elected leaders. The bill required the State Tax Commissioner to develop a revised methodology to value oil and natural gas properties. The State Tax Department submitted an emergency rule over the summer for how it planned to carry out HB 2581, though the Legislature’s Rule-Making Review Committee has yet to take up the final rule. But Marshall County Assessor Eric Buzzard hopes lawmakers can scrap the rule and start over during the 2022 legislative session. According to the emergency rule, the value of oil and natural gas-producing property is determined by applying a yield capitalization model based on a weighted average cost of capital to the net receipts (once royalties and annual operating costs are subtracted from gross receipts) for working interest, with a yield capitalization model applied to gross royalty payments for royalty interest. “The key methodology changes have been a statutory move to actual receipts less costs … the new capitalization rate that is now derived using a weighted average cost capital approach which we believe is a more accurate representation of the actual cost of employing capital in the investment and more likely captures the risk,” said Erin Winter, acting deputy tax commissioner, during a legislative interim meeting in September. The State Tax Department also eliminated the provision that called for the 18 months of decline from the discounted cashflow analysis, and natural gas liquids — along with the value reduction costs to make it marketable — are included as a value item. What does any of that mean? That’s a question that major natural gas producers, accountants, and county assessors would like to know.
Spire pipeline flap in Missouri reveals deeper questions about natural gas --Spire Missouri has spent weeks telling its St. Louis-area natural gas customers that they might go without heat this winter, all because of a legal challenge to a pipeline one of its affiliate companies built in 2018.The claims have prompted rebuke from clean energy advocates and elected officialswho say the utility is needlessly and disingenuously spreading alarm and fuelingthreats against an environmental organization.As the back-and-forth reached a fever pitch last week, a development Thursday at the Federal Energy Regulatory Commission pointed to a likely extension of the pipeline’s emergency permit, cooling the issue for now. The temporary resolution, though, will do little to settle a broader if lower-profile debate simmering in the state over the role of natural gas. Demand for natural gas in the St. Louis area is projected to remain flat or decline, as filings by Spire and its opponents have acknowledged. Clean energy advocates say rather than building new pipelines and natural gas infrastructure, the state should be investing in energy efficiency, electrification and renewable electricity generation that can replace natural gas. As they see it, Spire was hoping to build public support for natural gas by stirring up emotions over the pipeline permit even though there was virtually no chance FERC would order the pipeline shut down during the winter. “The (STL) pipeline is part of the industry’s larger goal of putting infrastructure in the ground to make it harder to make the necessary transition, the transition we have to make if we are going to battle catastrophic climate change, away from their very dangerous product, methane gas,” said Michael Berg, Missouri Sierra Club political director. “It’s part of a larger strategy of Spire and the gas industry.”
U.S. natgas drops to near 11-week low on mild weather, lower demand (Reuters) - U.S. natural gas futures dropped over 5% to a near 11-week low on Monday on forecasts for milder than normal weather and lower demand over the next two weeks than previously expected. Traders said prices also slumped on near record U.S. output, healthy U.S. stockpiles and a decline in European gas futures. Front-month gas futures fell 27.6 cents, or 5.4%, to settle at $4.789 per million British thermal units (mmBtu), their lowest close since Sept. 7. Traders noted the front-month briefly dipped below its 100-day moving average on Monday for the first time since April. Before the latest price drop, speculators boosted their net long positions on the New York Mercantile and Intercontinental Exchanges last week for the first time since September as liquefied natural gas (LNG) exports jumped to record highs with soaring global gas prices keeping demand for U.S. LNG strong. Global gas prices had hit record highs as utilities around the world scrambled for LNG cargoes to replenish extremely low stockpiles in Europe and meet insatiable demand in Asia, where energy shortfalls have caused power blackouts in China. Following those global gas prices, U.S. futures jumped to a 12-year high in early October, but have pulled back since because the United States has plenty of gas in storage and ample production for the winter. Overseas prices continue to trade about six times higher than U.S. futures. Analysts have said European inventories were about 17% below normal for this time of year, compared with just 2% below normal in the United States. EIA/GASNGAS/POLL Data provider Refinitiv said output in the U.S. Lower 48 states averaged 96.1 billion cubic feet per day (bcfd) so far in November, up from 94.1 bcfd in October and a monthly record of 95.4 bcfd in November 2019. Refinitiv projected average U.S. gas demand, including exports, would rise to 114.1 bcfd next week from 111.4 bcfd this week as the weather turns seasonally colder and homes and businesses crank up their heaters. The forecast for next week, however, was lower than Refinitiv's forecast on Friday. The amount of gas flowing to U.S. LNG export plants averaged 11.2 bcfd so far in November, up from 10.5 bcfd in October as the sixth train at Cheniere Energy Inc's LNG.A Sabine Pass plant in Louisiana started producing LNG in test mode. That compares with a monthly record of 11.5 bcfd in April.
US natural gas storage posts first net withdrawal of 2021-22 heating season | S&P Global Platts -- US natural gas storage fields posted the first net withdrawal of the 2021-22 heating season, but injections continued in two of the five storage regions. Storage fields withdrew 21 Bcf for the week ended Nov. 19, according to data released by the US Energy Information Administration Nov. 24. The data was released one day earlier than usual to account for the Thanksgiving holiday. Although the week ended Nov. 5 is typically the final injection of the year, mild weather drove builds past that point in 2021. The withdrawal was just below the 23 Bcf pull expected by a survey of analysts by S&P Global Platts. Responses to the survey ranged from a 12 to 30 Bcf withdrawal. The draw was less than the five-year average pull of 44 Bcf but more nearly double last year's 11 Bcf withdrawal in the corresponding week. Working gas inventories decreased to 3.623 Tcf. US storage volumes now stand 320 Bcf, or 8%, less than the year-ago level of 3.943 Tcf and 58 Bcf, or 1.6%, less than the five-year average of 3.681 Tcf. While the East, Midwest and Mountain regions all posted drawdowns, net injections occurred in the Pacific and South Central regions of the US. This narrative quickly changes once we get to the week in progress, where the South Central appears to be firmly in withdrawal mode based on pipeline sample data, but even still there are some facilities in the South Central and even in the East region where nominal injections are taking place, if not daily then at least on a few days this week. Industrial demand in the Southeast and Texas is on the path to fully recover from the impacts of Hurricane Ida in late August after lingering outages and maintenance works prolonged its rebound to prehurricane levels, according to Platts Analytics. November industrial demand is averaging 11.5 Bcf/d, up 800 MMcf/d from October and up 1.5 Bcf/d from September, which saw the height of hurricane-related impacts. Platts Analytics' supply and demand model forecast a 62 Bcf withdrawal for the week ending Nov. 26, which is nearly double the size of the five-year average. Another above-normal draw is also expected for the week ending Dec. 3. The NYMEX Henry Hub December contract added 10 cents to $5.06/MMBtu in trading following the release of the EIA's storage report. The remaining winter strip months, January through March, also crept higher. The strip has been revolving around the $5/MMBtu mark for the past two weeks.
U.S. natgas soars over 7% on forecasts for higher demand - U.S. natural gas futures jumped more than 7% in holiday-thinned trading on Friday, registering their best week in nearly two months, supported by forecasts for slightly higher heating demand than previously expected. On its last day as the front-month, gas futures for December delivery rose 37.9 cents or 7.5% to settle at $5.447 per million British thermal units (mmBtu). For the week, the contract is up 7.5% after gaining about 5.8% last week. "With colder weather coming up, traders are out there saying 'Okay, we can buy,'" Robert DiDona of Energy Ventures Analysis said. "The market has largely been bouncing back and forth in a small range, and then we finally got some short covering on a thin day." Data provider Refinitiv projected average U.S. gas demand, including exports, would rise from 112.0 bcfd this week to 112.8 bcfd next week as the weather turns seasonally colder and homes and businesses crank up their heaters. With gas prices around $30 per mmBtu in Europe and $36 in Asia, compared with about $5 in the United States, traders said buyers around the world will keep purchasing all the LNG the United States can produce. The amount of gas flowing to U.S. LNG export plants averaged 11.3 bcfd so far in November, up from 10.5 bcfd in October as the sixth train at Cheniere Energy Inc's Sabine Pass plant in Louisiana started producing LNG. That compares with a monthly record of 11.5 bcfd in April. Meanwhile, data provider Refinitiv said output in the U.S. Lower 48 states averaged 96.3 billion cubic feet per day (bcfd) so far in November, up from 94.1 bcfd in October and a monthly record of 95.4 bcfd in November 2019.
Cash Markets See-Saw, But Weekly Natural Gas Prices Find Path Higher Through Northeast - Volatility in the Northeast sent natural gas spot prices on a rollercoaster ride during an abbreviated holiday week, with prices spiking in the region Monday, plunging the next day and then soaring anew to close the trading period. When the dust settled, weekly cash prices advanced along with Northeast gains. NGI’s Weekly Spot Gas National Avg. for the Nov. 22-24 period – shortened because of the Thanksgiving Day Holiday – rose 13.5 cents to $5.010. Gas traded during the period was scheduled to flow from Nov. 23-29. Weather conditions were benign in most parts of the Lower 48 during the period, generating modest heating demand. But the pair of Northeast surges – one on Monday and the next two days later – powered the overall average higher. Algonquin Citygate jumped $2.465 to $7.360, while Iroquois Zone 2 climbed $1.270 to $6.290 and Maritimes & Northeast soared $3.790 to $9.505. Propelled by continued strong demand for U.S. liquefied natural gas (LNG), the December Nymex contract rallied during the week and finished strong. The prompt month settled at $5.068/MMBtu to close the trading week on Wednesday, up slightly from the prior week’s finish of $5.065. Looking ahead, while the December outlook was bearish prior to the holiday weekend, NatGasWeather said a wintry mix of rain and snow would push across the Great Lakes into the Northeast to start the week ahead. However, the firm added, temperatures were expected to prove 10-30 degrees warmer than normal in early December. “The weather data is so bearish for the first week of December, it would be difficult to be more so.”
Alabama Power to buy Calhoun plant despite rising gas prices - - Alabama Power has petitioned the Alabama Public Service Commission to buy a 743 MW gas-fired power plant in Calhoun County, Alabama, despite its parent company’s net-zero emissions target and sharply rising gas prices that risk driving up customers’ bills. Alabama Power’s move to purchase the plant, which is already in service and owned by an independent power producer, comes in addition to the utility’s plans to increase its gas generating capacity by almost 2,000 MW, which the Alabama Public Service Commission (PSC) approved in 2020. Alabama Power currently has an agreement to purchase power from the Calhoun plant, which is scheduled to end in 2022.Alabama Power’s request for permission from the PSC to buy the Calhoun County gas plant did not specify what assumptions the utility used to project the future price of gas.Alabama Power had previously called methane gas a “persistently” low-cost resource in a January 2020 filing with the Alabama PSC. At that time, the Henry Hub Spot Price, a commonly used metric for gas prices, was at $2.02 per MMBTU. By October of 2021, gas prices had soared to $5.51 per MMBTU.In addition to risking bill increases for customers, the gas plant purchase by Alabama Power does not seem to comport with a goal set by its parent company, Southern Company, to reach “net-zero” emissions by 2050. The utility has defended its use of gas as part of its net-zero emissions target, despite the fact that burning methane gas in power plants emits carbon dioxide, and that methane leaks upstream of gas-fired power plants emit methane, a powerful greenhouse gas, into the atmosphere directly. The utility’s net-zero implementation plan, released in September 2020,showed that it would operate gas-fired power plants up to 2050 and Alabama Power received approval from the AlabamaPSC to operate a new gas-fired power plant as late as 2060.Alabama Power’s moves to purchase power plants from independent power producers have raised questions of anti-competitive behavior, echoing a Department of Justice (DOJ) investigation of Entergy more than ten years ago that accused the utility of blocking competitors from selling power and later purchasing the power plants at artificially low costs. Entergy later joined a competitive market to alleviate the DOJ’s concerns. Alabama Power is not a member of a competitive market.
Goodrich Going Private in $480M Deal as Haynesville - and Natural Gas Prices - Heat Up - Publicly listed independent Goodrich Petroleum Corp. has agreed to be taken private by Paloma Partners VI Holdings LLC in a deal valued at roughly $480 million. Paloma, an affiliate of EnCap Energy Capital Fund XI LP, plans to launch a tender offer to acquire for $23/share in cash all of Goodrich’s outstanding common stock. Goodrich operates primarily in the Haynesville Shale. The board has unanimously approved the offer price, which represents a roughly 7% premium to Goodrich’s closing price last Friday (Nov. 19), management said. The tender offer is expected to be completed in December “and followed promptly by a second-step merger,” the company said. “Upon completion of the transaction, Goodrich will become a privately held company and shares of Goodrich common stock will no longer be listed on any public market.”Private equity has been pouring into the Lower 48 oil and gas patch as publicly traded names have maintained capital discipline despite rising commodity prices. The gassy Haynesville, which extends from East Texas into Northern Louisiana, in particular has seen a surge in activity from private and public companies alike. Comstock Resources Inc. and Diversified Energy Co. plc have sought to capitalize on favorable gas pricing in the basin and liquefied natural gas (LNG) export demand along the Gulf Coast. Southwestern Energy Co. in September also completed a $2.7 billion takeover of Haynesville pure-play Indigo Natural Resources LLC.
Targa Eyeing Another Permian Natural Gas Processing Expansion - After seeing better-than-expected growth in gathering volumes in the Permian Basin, Targa Resources Corp. is planning for another processing plant in the Midland sub-basin. The Houston-based midstreamer reported that system inlet volumes rose 7% sequentially in the third quarter, with total Permian inlet volumes reaching a record 2,952 MMcf/d. Management now expects volumes this year to exceed the top end of its previously disclosed 5-10% growth over 2020. Discussing results earlier this month, CEO Matt Meloy said the 200 MMcf/d Heim cryogenic gas processing plant, which began full operations in September, is running near capacity. The 250 MMcf/d Legacy plant, meanwhile, remains on track to begin operations in 4Q2022. “With robust activity levels expected to continue into next year and beyond, we are evaluating the timing of our next Midland plant, after Legacy, and are now ordering long lead items,” Meloy said during the 3Q2021 earnings call. It’s not clear when the additional plant may be needed, and Targa is still in the evaluation stage, he said. However, growth capital expenditures in 2022 are expected to be higher than the projected $450 million this year, largely because of the new plant, well connects and compression. Targa plans to issue its 2022 operational and financial outlook in February, with details on the timing of the plant expected then. Completions and activity also continue to ramp in the Permian Delaware, but Targa has adequate processing capacity to accommodate the anticipated near- to medium-term growth.
Northern Oil Builds on Acquisition Spree with Another Permian Deal - - Northern Oil and Gas Inc. has agreed to acquire “substantially all” the nonoperated Permian Basin assets owned by affiliates of Veritas Energy LLC, including 6,000 oil-weighted net acres. The transaction for $406.5 million was announced earlier this month. “This transaction completes the strategic transformation of our business that began in 2018,” CEO Nick O’Grady said. “It will drive immediate significant accretion across the board to our investors, increased cash returns, and importantly, creates a truly diversified business of scale, with substantial free cash flow that can self-fund future growth.” The acquisition includes about 6,000 net acres and about 45 undrilled locations in the Permian’s Delaware sub-basin in the New Mexico counties of Lea and Eddy and the Texas counties of Loving, Reeves, Ward and Winkler. The assets boast average production of 9,000-11,500 boe/d, 60% weighted to oil. The firm expects 2022 average production from the Permian acreage of 10,500 boe/d-plus, also 60% oil-weighted. The Veritas deal would give Northern 31.7 net producing wells, 5.6 net wells in process, four permitted net wells, aka authorized for expenditure, and 40.8 net future develop locations, said Northern. Of the assets being acquired, Northern said ConocoPhillips, Devon Energy Corp., EOG Resources Inc. and Mewbourne Oil Co. manage about 64% of the expected 2022 production.
Sino American, Estacado Considering Texas Oilfield Venture - Sino American Oil Co. reported Tuesday that it plans to acquire a majority stake in a North Texas oil field. The Wyoming-based company said that it would obtain a majority working interest in the Piave Oil Field, located in Throckmorton County, TX, by way of a newly signed memorandum of understanding (MOU) with Estacado Energy LLC. “This acquisition not only brings on current well production, but the upside of the certified geological reports also establishes notable upside potential,” said Sino American CEO Kim Halvorson. Halvorson told NGI’s Shale Daily that the Piave field is neither part of the currently defined Barnett Shale nor the Cline Shale. According to the Railroad Commission of Texas (RRC) online oil and gas database, Estacado has been the Piave field operator since March 2008. Veneto Exploration LLC had been the previous operator from August 2007, the RRC database showed. The RRC report stated that the Piave field produced a total of 31,874 bbl of oil through October. The MOU outlines a $600,000 purchase price, $200,000 of which would be in Sino American common stock. Sino American said that it would advance another $50,000 by Jan. 6 toward operations to recomplete existing wells and boost the production of other wells.
Texas adds 2,300 oil exploration, production jobs in October - Oil exploration and production companies in Texas added 2,300 jobs in October, the sixth straight month of gains. The state has 183,400 drilling and extraction workers, about 17 percent fewer than the 220,300 before the pandemic began in January 2020. Texas has recovered 25,900 — 43 percent — of the 60,000 upstream jobs lost during the pandemic, according to data from the Texas Workforce Commission and analyzed by the Texas Independent Producers and Royalty Owners Association, an industry trade group. “Following a tumultuous year for the energy markets in 2020 and the lingering effects of a global pandemic, the law of supply and demand has driven commodity prices higher this year, with a growing consensus around a new, multiyear super cycle for oil and natural gas,” TIPRO President Ed Longanecker said. On HoustonChronicle.com: Who benefits from Big Oil’s big profits? Not Houston’s laid-off oil workers. Oil companies laid off tens of thousands of workers statewide last year after oil demand and prices plunged amid economic lockdowns and travel restrictions. Oil demand and prices are recovering as vaccines have helped businesses reopen and boost travel. West Texas Intermediate, the U.S. crude benchmark, settled Friday in New York at $76.10 a barrel, down $2.91 from Thursday but up from $48 in January. Texas oil and gas companies posted 9,503 new job listings in October, an increase of more than 1,200 from September, according to TIPRO. Houston had the most job listings: 3,101; followed by Odessa with 707 and Midland with 697.
Texas oil production clashes with climate goals - The world needs to cut more than half its production of coal, oil and gas in the coming decade to maintain a chance of keeping climate change from reaching dangerous levels, according to a U.N.-backed study released last month.The report published by the U.N. Environment Program found that while governments have made ambitious pledges to curb greenhouse gas emissions, they are still planning to extract double the amount of fossil fuels in 2030 than what would be consistent with the 2015 Paris Climate Accord’s goal of keeping the global temperature rise below 1.5 degrees Celsius (2.7 degrees Fahrenheit).Even the less ambitious goal of capping global warming at 2 degrees C (3.6 degrees Fahrenheit) by the end of the century compared to pre-industrial times would be overshot, the report said. Climate experts say the world must stop adding to the total amount of greenhouse gas in the atmosphere by 2050, and that can only be done by drastically reducing the burning of fossil fuels as soon as possible, among other measures.The report, which was released days before a U.N. climate summit began Oct. 31 in Glasgow, found most major oil and gas producers — and even some major coal producers — are planning on increasing production until 2030 or even beyond. It also concluded that the group of 20 major industrialized and emerging economies have invested more into new fossil fuel projects than into clean energy since the start of 2020.The disparity between climate goals and fossil fuel extraction plans — termed the “production gap” — will widen until at least 2040, the report found.Nowhere is that gap wider than in Texas, where oil production in the Permian Basin is expected to grow 50% over the next decade alone.A report by Oil Change International, Earthworks and the Center for International Environmental Law highlights the stark contradiction between the Biden administration’s climate goals and the expected trajectory of oil and gas production in the Permian Basin.The report, The Permian Basin Climate Bomb, additionally reveals that burning the oil and gas projected to be produced in the Permian Basin by 2050 will release nearly 40 billion tons of CO2, almost 10% of the remaining global carbon budget for staying under 1.5 degrees C. 80% of these emissions, over 30.6 billion tons of CO2, would come from burning the liquids and gas produced from new wells that were not in production at the end of 2020.
Enviros, tribal leaders face right-wing, pro-Line 5 ‘echo chamber’ For years, Canadian pipeline company Enbridge has been pushing back against opponents of its controversial Line 5 oil pipeline by arguing that, should it be shut down, fuel prices would shoot up and propane supply would suffer. However, a shutdown doesn’t appear to be imminent, as Enbridge is locked in an array of court battles to keep the state from acting to do so and scored a victory last week. But Republicans in Michigan and elsewhere have locked onto that messaging and have been frequently mirroring Enbridge’s warnings — regardless of the veracity of the claims. Line 5 supporters have not only preemptively blamed Democratic Gov. Gretchen Whitmer for rising gas prices caused by a shutdown, but have also insinuated that President Joe Biden is involved in the effort, despite the Democrat’s lack of a public stance on Line 5. “It’s all politics,” said David Holtz, spokesperson for the anti-Line 5 Oil & Water Don’t Mix coalition. “What’s coming out of the right-wing echo chamber nationally is ridiculous. They’re trying to simply use Line 5 as a cudgel against President Biden on energy prices, when the fact is, Line 5 has really nothing at all to do with energy prices. “Gas prices go up and down. Right now, they’re up. Line 5 has little to do with prices at the pump,” Holtz said. Tribal citizens have long complained about Enbridge’s messaging tactics, some of which attempt to portray an “understanding” between the company and tribes, which they characterize as misleading and manipulative. All 12 federally recognized tribes in Michigan are publicly opposed to Line 5 and its tunnel-enclosed replacement project. “It’s a media tactic by Enbridge to do that, to raise questions as much as possible, to fearmonger, which seems to be a great tool of the right,” “It really elevates that whole concern by people that they’re going to experience much higher gas prices and experience scarcity when it comes to fuel. And really, the evidence is very much to the contrary,” .
Here’s Everything Enbridge Is Buying Cops to Fight Protesters – short excerpt - Though opposition to the pipeline has been building locally for years, protests didn’t ramp up until November of 2020, when the Army Corps of Engineers issued Enbridge the final documents it needed to complete construction on the pipeline: water-crossing permits that would allow it to traverse through waterways that local communities say are vital to their ways of life. A few months prior, in May of 2020, the Minnesota Public Utilities Commission (MPUC) issued Enbridge its own set of permits to route the pipeline from the North Dakota-Minnesota border to the Wisconsin-Minnesota border. This permit included an agreement that Enbridge would create a “public safety reimbursement fund” to pay state law enforcement back for expenses related to protecting public safety around Line 3. The account was to be managed by an independent party.This fund, established in an escrow account, set out to cover costs for “maintaining the peace in and around the [pipeline] construction site,” including emergency first responders and transportation management, according to the documentation. It was not designed to cover expenses like weapons, a representative from the MPUC told Motherboard in August. The approved invoices that Motherboard received via FOIA request showEnbridge has used the account to cover expenses for gun holsters, baton holders, riot helmets, and shields, all under a provision for “personal protective equipment” to keep officers safe during deployments. A $74,169 payout to the Beltrami County Sheriff’s Office on March 1, for instance, includes coverage of gas masks under this provision. “This is so that they, themselves can use tear gas on people and then they have to protect themselves from their own tear gas,” said Mara Verheyden-Hilliard, co-founder of the Partnership for Civil Justice Fund, who has represented Line 3 activists in litigation against Minnesota law enforcement. “They are allowing materials that we would believe are weaponry, even if they are trying to suggest that they are defensive.” One approved invoice, filed by the Plummer Fire Department in August, requests reimbursement for the cost of a 200-gallon Wildland Fire Engine (a firetruck with a hose) that officers noted was used explicitly for “protestor extrication. Meanwhile, hundreds of thousands of dollars have been charged to the account to send officers to take the Federal Emergency Management Agency’s (FEMA) Field Force Operations training, which teaches enrollees how to “use equipment to control crowds,” and “apprehend, search, and detain a subject” in mass-arrest scenarios, according to the FEMA website.This has led to what Verheyden-Hilliard calls “a concentrated and very astonishing level of policing” around the pipeline. She recalls a sudden point in her work around Line 3 that she began to notice police presence ramping up to levels that were far beyond what she would expect.
Let environmentalists bid for oil leases - Only days after the Glasgow Climate Pact called for a phaseout of fossil fuel subsidies, the Biden administration opened auctions for oil leases in the Gulf of Mexico on Nov. 17. Buyers such as Chevron, Anadarko and Exxon bid $191 million for 1.7 million acres at an average price of $112 per acre. Media reports called this an about-face of Biden’s primary campaign promise for “no more subsides for the fossil fuel industry” and “no more drilling on federal lands… including offshore.” Environmental groups such asEarthjustice filed lawsuits. Many others voiced disapproval. Is this sale a subsidy to fossil fuels? And why didn’t environmental groups try to block development by buying the leases themselves? A recent analysis in the journal Science I authored with a team of economists and law professors addresses these questions. We point out that environmentalists are precluded from federal auctions for minerals, forests, grazing land, and water, due to “use it or lose it” stipulations common in the U.S. and around the world. You can’t lease public resources with the intent to leave them be, as environmental activist Terry Tempest Williams learned in 2016. Upon winning a federal oil and gas lease and revealing that she intended to keep the oil in the ground, the Bureau of Land Management canceled the leases, arguing she violated the “diligent development requirement” of the 1920 Mineral Leasing Act, which requires lessees to have an intent to produce. Use-it-or-lose-it rules made sense a century ago to discourage waste and prevent speculation, but today they prevent willing buyers from expressing their preferences for conservation via market bidding. Revising federal policies to allow non-use would give people a way to buy conservation through voluntary leasing, rather than by joining interest groups to push for it through political, legal and administrative channels. Allowing them to bid would redirect money toward durable conservation, rather than toward influencing short-term policy decisions that change with political whims, as demonstrated by Biden’s flip-flopping on campaign promises. Consider that Earthjustice alone spent $95 million on litigation over 2019 to 2020 and other groups with comparable budgets, such as the Natural Resources Defense Council and the Sierra Club, also spend on litigation. But this is just the tip of the iceberg: Environmental groups are well equipped to tap the $12 billion crowdfunding market for donors wanting to support climate causes.
Ragnar Targeting The Madison WIth No Less Than Twenty-Three Horizontal Wells -- November 20, 2021 --Form the December, 2021, NDIC hearing dockets, these are cases, not permits:
- Case 29116, Ragnar Exploration LLC, Fryburg-Madison, establish five 320-acre units, S/2 section 21 and all of sections 20 and 22 - 139-100; one horizontal well one each unit; Billings County;
- Case 29117, Ragnar Exploration LLC, Norwegian Creek-Madison, establish fourteen 320-acre units, sections 23/26/35-139-100; and section 2/3/10/11-138-100; one horizontal well on each 320-acre unit, Billings County;
- Case 29118, Ragnar Exploration LLC, Rocky Hill-Madison, Billings County, establish four 320-acre units; sections 1/12-138-100; Billings County;
Unless someone has data to tell me differently, this is a new company operating in North Dakota. Since this company is targeting the Madison and not the Bakken, it will not be added to the list of "Operators" at this blog. Ragnar Exploration, LLC does not appear at the NDIC "well search" website, as of this date. Ragnar Technologies seems to be related;
- Billings County is not considered a core Bakken county
- it is rare to see horizontal drilling in the Madison
- this is a lot of drilling units in one case (fourteen drilling units in case 29117, for example)
- the target formation is not the Bakken; the target formation is the Madison
- these are going to be extremely short laterals; in the old days they would have been called directional wells
- we do not know if fracking will be required
There are several dry wells in the immediate area, but only one producing well, also a short lateral, drilled back in 2007 and it took 38 days from spud to total depth. These days, this well would be drilled to depth in less than a week: the gold standard would be one day for the vertical; a half day for the curve; a full day for the lateral. Come in to work el lunes y salir el viernes. There is no evidence that this one producing well in the immediate area was fracked.
Keystone Developers Seek $15 Billion From U.S. for Cancellation – Bloomberg - Developers of Keystone XL are seeking to recoup more than $15 billion in damages connected to President Joe Biden’s decision to yank a permit for the border-crossing oil pipeline even after construction began. With a request for arbitration filed Monday, Calgary-based TC Energy Corp.formally opened one of the largest trade appeals ever against the U.S. and asked to put its long-running dispute over Keystone XL in front of an international arbitration panel. The legal claim is being mounted under provisions of the North American Free Trade Agreement that allow foreign companies to challenge U.S. policy decisions.
Lawsuits Arise from the OC Oil Spill – --After the Oct. 2 oil spill in Southern California, alleged failure to properly maintain oil platforms and abide by existing plans and regulations has landed the federal government with notices of intent to sue. On Nov. 2 the Center for Biological Diversity filed a notice of its intent to sue the federal government in response to the Oct. 2 oil spill. The center is suing for alleged oversights allowing Platform Elly (which houses equipment to process oil from platforms Ellen and Eureka) and other offshore oil production in the Beta oilfield to operate under outdated drilling plans written in the 1970s and 80s. The center also filed a notice against the BOEM on Oct. 8 for failure to account for the impact offshore drilling has on endangered species. The Center recalled that the BOEM has failed to audit and require revision of the outdated plans. They believe BOEM has neglected its duties despite the recent oil spill, the age of the infrastructure, and other changes since the logistics were authorized about four decades ago. The Endangered Species Act (ESA) suit and the Outer Continental Shelf Act (OCS Lands Act) suit will both be directed against the BOEM. The Endangered Species Act-based notice from the Center also has intent to sue the National Marine Fisheries Service and U.S. Fish and Wildlife Service. All federal agencies considered to be expert wildlife agencies for ESA consultation that have the duty to reinitiate consultation, which lies with both them and the action agency. All agencies were being relied on by BOEM for requirements for offshore drilling, and all collaborated closely in process of constructing the regulations and requirements of the offshore platforms. The Center argues that offshore oil and gas drilling is inherently dirty and dangerous as shown by the recent spill from a pipeline connected to Platform Elly. They argue that the age of the infrastructure is responsible for littering the Pacific Ocean for over half a century, in turn heightening numerous inherent risks. As such, The Center requests that BOEM must immediately begin phasing out this treacherous activity on the Pacific Outer Continental Shelf (OCS) and all other regions.o
Coast Guard taps 2nd ship as party of interest in oil spill - U.S. Coast Guard investigators on Friday said they have identified a second ship suspected of dragging its anchor near an underwater pipeline that later leaked crude oil into the waters off the Southern California coast. The Coast Guard said in a statement that investigators boarded the BEIJING in the Port of Long Beach on Thursday and that the owner and operator of the vessel were designated as parties of interest in the probe of last month's oil spill. Authorities said the ship was suspected of dragging anchor during severe weather on January 25 near the pipeline that ferried crude from offshore platforms to the coast. The pipeline run by Houston-based Amplify Energy leaked about 25,000 gallons (94,635 liters) of crude into the ocean last month, prompting beach and fishery closures and raising concerns among environmentalists about the impact of oil washing up along the coast. The Coast Guard previously designated the owner and operator of the MSC Danit as parties of interest to the spill for suspected anchor dragging near the pipeline during the same weather event. Other vessels and scenarios remain under investigation.
Oil sheen spotted near Southern California's oil spill (AP) — Officials are investigating an oil sheen spotted Saturday near last month’s crude pipeline leak off Southern California’s coast. The U.S. Coast Guard says the oil sheen is about 70 feet by 30 feet and that it has dispatched “pollution responders, aircraft and boats” to investigate. The oil sheen is located in the same area where a massive oil spill was confirmed last month off the coast of Orange County. The spill confirmed Oct. 2 from a ruptured underwater pipeline owned by Houston-based Amplify Energy leaked up to about 25,000 gallons of crude.
Officials investigate California oil sheen near earlier leak - (AP) — An oil sheen spotted in the ocean near last month’s crude pipeline leak off Southern California was likely residual oil from the earlier spill, an official said Sunday. The U.S. Coast Guard on Saturday dispatched aircraft and boats to investigate the oil sheen measuring about 70 feet (21 meters) by 30 feet (9 meters) off the coast of Orange County. Coast Guard officials said Saturday night that the sheen had dissipated they would continue monitoring the area. The Los Angeles Times reported that divers preparing to do a routine inspection of the damaged pipeline noticed small oil droplets near the damaged section, which since the spill has been wrapped in a material called Syntho-Glass. The divers removed the wrap and replaced it with a new one, said Eric Laughlin, a spokesman for the California Department of Fish and Wildlife. The pipeline has been shut down and no oil has flowed through it since the Oct. 2 spill, Lughlin said Sunday. The oil spotted Saturday was “likely residual,” he said. The sheen was located in the same area where the underwater pipeline owned by Houston-based Amplify Energy leaked up to about 25,000 gallons (94,635 liters) of crude on Oct. 2. Oil washed ashore, tarring the feathers of dozens of birds and leading to rescues of marine mammals. The impact of the spill was less than initially feared, but it affected local wetlands and wildlife and shut the shoreline in surf-loving Huntington Beach for a week.
Concerns Linger Over a Secretive Texas Company That Owns the Largest Share of the Trans-Alaska Pipeline - Environmental organizations and pipeline experts continue expressing concerns about a secretive Texas petroleum company with a spotty safety record that acquired the largest share of the Trans-Alaska Pipeline last year as thawing permafrost and flooding linked to climate change threatened the massive oil conduit. The Regulatory Commission of Alaska voted 4-1 in December 2020 to allow Hilcorp Energy Co. to acquire BP’s Alaska oil and gas assets for $5.6 billion, a transaction described as the biggest Alaskan business deal in a generation. It involved one of the state’s most important pieces of economic infrastructure. The acquisition, which included the oil giant’s 49 percent share of the Trans-Alaska Pipeline System (TAPS), received approval despite hundreds of comments from opponents who said they did not believe Hilcorp had either the expertise or the resources to protect the pipeline from intensifying climate change. Much of the opposition centered on Hilcorp’s refusal to publicly reveal internal financial documents, which the commission permitted through issuance of a disclosure waiver in the runup to the sale. The decision followed a pattern of protection afforded Hilcorp by the commission, which had ruled in favor of keeping the company’s finances secret on 19 occasions since it began operations in Alaska in 2012. The approval provoked a strongly worded dissent from Commissioner Stephen McAlpine, a two-term lieutenant governor of Alaska whose time on the commission ended earlier this year. “I believe that airing these documents publicly and subjecting the entire transaction to intense debate far outweighs the petitioners’ interest in keeping them confidential,” McAlpine said in his written opposition. McAlpine said in an interview that his qualms about Hilcorp’s ability to maintain the pipeline are tempered somewhat because of the deep pockets of the pipeline’s other owners, Exxon and ConocoPhillips. He said he is confident those petroleum giants would step in to protect the pipeline—and consequently their investments in the pipeline—if Hilcorp faltered. “Will they step up to the plate? I don’t know the answer to that question; nobody does,” McAlpine said of Hilcorp executives. “It’s a legitimate question to ask and it begs answers that we just don’t have.” Hilcorp, a private corporation, has argued that “potential competitive harm” to its business model outweighed “the public interest in disclosure.”
Biden administration to release oil from strategic reserve: reports -The Biden administration is expected, alongside other countries, to release some of the spare oil stored in its strategic reserve, multiple news outlets reported on Monday. Bloomberg and Politico both reported that the administration was preparing to release barrels from its Strategic Petroleum Reserve, with Bloomberg reporting that this could happen as soon as Tuesday. Bloomberg reported that the release will happen alongside India, Japan and South Korea. The White House, however, said that no decision had been made when reached for comment by The Hill. The Energy Department did not respond to requests for comment. The reports come as the country has struggled for months with high energy prices. Gasoline, which is made from oil, averaged nearly $3.41 per gallon on Monday. A major factor in the prices has been a rebound in demand following the rollout of the vaccines that has not been matched with a supply return as major oil producing countries have not returned to pre-pandemic production levels. The Biden administration has asked a group of oil-producing countries called OPEC+ to add more oil to the market, but the group has rebuffed his requests. Other Democrats, including Senate Majority Leader Chuck Schumer (D-N.Y.), have called on the administration to release oil from the reserve to provide reprieve on the prices. Meanwhile, the administration has indicated that it was considering the oil reserve, with Energy Secretary Jennifer Granholm saying earlier this month that it’s something President Biden is “looking at.” And the head of the Energy Information Administration — the Energy Department’s statistics agency — told lawmakers last week that tapping into the reserve could provide some temporary relief amounting to about 5 to 10 cents at the pump.
U.S. to release oil from reserves in coordination with other countries to lower gas prices - President Joe Biden said Tuesday that the administration will tap the Strategic Petroleum Reserve as part of a global effort by energy-consuming nations to calm 2021's rapid rise in fuel prices.The coordinated release between the U.S., India, China, Japan, Republic of Korea and the United Kingdom is the first such move of its kind.The U.S. will release 50 million barrels from the SPR. Of that total, 32 million barrels will be an exchange over the next several months, while 18 million barrels will be an acceleration of a previously authorized sale.U.S. oil dipped 1.9% to a session low of $75.30 per barrel following the announcement, before recovering those losses and moving into positive territory. The contract last traded 2.5% higher at $78.67 per barrel.International benchmark Brent crude stood at $82.31 per barrel, for a gain of 3.2%.Rebecca Babin, a managing director at CIBC Private Wealth US, noted that a release was "well telegraphed" and therefore already priced into the market."Positioning across the crude complex has been drastically reduced over the past couple of weeks as traders lock in profits ahead of year end reducing the initial reaction," she added. Crude prices have pulled back after U.S. oil and Brent rose to their highest levels in seven and three years, respectively, in October.Tuesday's announcement follows the administration saying for months that it was looking into the tools at its disposal as West Texas Intermediate crude futures surged to a seven-year high, above $85.Prices at the pump have followed the ascent and are hovering around their highest level in seven years. The national average for a gallon of gas stood at $3.409 on Monday, according to AAA, up from $2.11 one year ago. Crude prices make up between 50% and 60% of what consumers pay to fill up their tanks, AAA said. "The President stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic," the White House said in a statement.
Will Biden's release of oil reserves ease prices? Experts say it's unlikely -- Americans are unlikely to see a significant drop in gas prices immediately after the Biden administration's decision to release 50 million barrels of oil from the nation's reserve. However, several factors are already in play that may drive prices down. The White House announced the release of 50 million barrels from the Strategic Petroleum Reserve (SPR) Tuesday morning. The announcement was made in concert with South Korea, China, Japan, India and the U.K., all of which will also release oil from their own strategic reserves.The rise in crude oil prices, and to some extent gasoline prices, has already slowed their upward climb amid negotiations in recent weeks, Tom Kloza, co-founder of the Oil Price Information Service, told The Hill.“Between Thanksgiving, and Groundhog Day, you normally see gasoline prices drop, because essentially, demand drops to about 2 million barrels a day less than it would be in the summertime,” Kloza added.“I think we're looking at maybe 60 to 75 days of wobbling a little bit lower,” he added, noting that both a steep plunge and a sharp increase are unlikely.Patrick De Haan, head of petroleum analysis at GasBuddy, told The Hill that oil prices had already been on the decline ahead of Tuesday’s announcement, and that other factors were also contributing to a reduction. One of the biggest, he said, was an increase in coronavirus cases in Europe, increasing the likelihood of new travel restrictions or lockdowns that would reduce demand.“Having said that, I think motorists will very soon in the next few days start to see the national average price of gasoline decline and it could decline anywhere from five to 15 cents a gallon over the next one to two weeks, and potentially more,” he said.That’s not guaranteed, however, because before the announcement was official, oil prices were lower, at about $76 a barrel, and “now that the announcement has been made, it does appear that the oil market is reacting with some disappointment,” he said.
Saudis, Russians Consider Pausing Oil Production Increases In Retaliation To Biden SPR Release When commenting on yesterday's SPR release announcement by the Biden admin and several assorted hanger-on nations - which has backfired spectacularly sending the price of oil soaring now that the rumor can no longer be sold so the news has to be bought in line with every single SPR release in the past..... we said that not only was the release far to small, but that in retaliation for the SPR release, "OPEC could easily consider halting its production hikes to offset the detrimental SPR impact of lower oil prices on the needed recovery in global oil capex, likely justifying such action as prudent in the face of COVID demand risks."Well, fast forward just a few hours when moments ago the WSJ reported that the leaders of OPEC+ and the world's two top oil producers Saudi Arabia and Russia, are considering a pause to their recent efforts to provide the world with more crude, citing to people familiar with those discussions. The move, as expected, is in retaliation to Washington releasing tens of millions of barrels of oil in an effort to lower prices.As a reminder, OPEC+ is meeting next week to review the long-term deal they reached earlier this year to boost their collective oil output - the deal involves boosting output by 400,000 barrels a day each month through next year, until the group hits its pre-pandemic pumping level and follows a sharp cut in output in 2020 as demand evaporated amid Covid-19 lockdowns.However, it now appears that OPEC+ may change its mind and not raise output at all; and while Biden is quick to note that oil prices have hovered near multiyear highs, OPEC and other forecasting agencies have struggled to predict demand amid the on-again-off-again nature of Covid-19 restrictions. Several countries in Europe, for instance, are moving ahead with, or considering, fresh restrictions that could sap economic activity—and by extension demand for oil. Meanwhile, the elephant in the room - the Biden-led crude release of up to 70 million barrels threatens to further scramble the supply-demand balance. As a result, and to compensate for the new supply, the WSJ confirmed our prediction and writes that Riyadh and Moscow are now considering a pause of the group’s monthly collective increase, even as US lackey, UAE - an OPEC member that has clashed with Saudi Arabia over OPEC policy in the past, and Kuwait are resisting a pause. Then again, what Russia and Saudi Arabia want, they will get. Saudi Arabia sees the released crude as potentially swelling global supply and threatening to reduce prices, according to people familiar with the country’s thinking. The question then is what will Biden do after a potential escalation in the oil war, and whether the US will halt oil exports in counter-retaliation. Such a move, as Goldman explained yesterday, would lead to a historic surge in oil prices and all hell breaking loose.
"I Don't Have That Number In Front Of Me" -- Perhaps The Most Basic Question Of All For An Energy Secretary -- November 23, 2021 --The Peter Principle in play. Link here. Reporter: "How many barrels of oil does the U.S. consume per day?" Biden's energy secretary: "I don't have that number in front of me" And a follow-up: what's the capacity -- either in gallons or barrels -- of Line 5? And does Line 5 import oil from Canada or export oil from the United States? A quick-thinking politico would have answered: "We'll provide a fact sheet for everyone after the press conference to make sure you have the exact numbers."
Japan to release a few hundred thousand kilolitres of oil from reserve (Reuters) - Japan will release a few hundred thousand kilolitres of oil from its national reserve, but the timing of the sale has not been made, the country's industry minister, Koichi Hagiuda, told reporters on Wednesday. Japan's Prime Minister Fumio Kishida said earlier that his government would release some oil reserves, after a U.S. request, in a way that does not breach a Japanese law, which only allows stock sales if there is a risk of supply disruption. One kilolitre is equal to 6.29 barrels of oil. Earlier the Nikkei newspaper reported that Japan will release about 4.2 million barrels of oil.
Goldman Sachs says global oil reserves release 'a drop in the ocean' (Reuters) - A coordinated release from government oil reserves led by the United States may add about 70 million to 80 million barrels of crude supply, smaller than the more-than-100 million barrels the market has been pricing in, analysts at Goldman Sachs said. "On our pricing model, such a release would be worth less than $2/bbl, significantly less than the $8/bbl sell-off that occurred since late October," the bank said in a note titled "A drop in the ocean", dated Nov. 23. Global oil prices rebounded to a one-week high on Tuesday after the move by the United States and other consumer nations to release oil from strategic petroleum reserves (SPR) to try to cool the market fell short of some expectations. On Wednesday, U.S. West Texas Intermediate crude CLc1 was down 35 cents to $78.15 a barrel by 0031 GMT. "The aggregate size of the release of about 70-80 mb (million barrels) was smaller than the 100+ mb the market had been pricing in, with the swap nature of most of these barrels implying an even smaller, about 40 million barrels net, increase in oil supplies over 2022-23," Goldman said. "That is in the context of a market drawing up to 2mb/d at present." Brent crude prices have also priced in an additional hit to global oil demand of 1.5 million barrels per day for the next three months from the impact of COVID-19 in Europe and China, Goldman said. While the coordinated government stock releases would warrant a $2 a barrel downgrade to the bank's year-end Brent price forecast, it expects the lack of progress on negotiations with Iran to offset risks.
No shock and awe after U.S.-led emergency oil release: Kemp (Reuters) - Oil prices rose after the U.S.-coordinated release of emergency petroleum stocks was announced on Tuesday, as the volume of extra petroleum offered to the market proved smaller than traders anticipated. The United States will make available 50 million barrels from the Strategic Petroleum Reserve (SPR), with deliveries beginning in mid-December and lasting through end-April 2022. The release includes 18 million barrels of outright sales previously mandated by Congress as part of the budget, which will be accelerated, and 32 million barrels of new swaps, which must be replaced no later than September 2024. The release "will be taken in parallel with other major energy consuming nations," including China, India, Japan, South Korea and the United Kingdom, the White House said in a statement. India has announced it will release 5 million barrels. Britain will allow refiners and importers to reduce their inventories by up to 1.5 million barrels, on a voluntary basis. Japan has indicated that it will release a few million barrels, though the amount has yet to be worked out. South Korea is discussing the details of its participation with the United States. But China has so far been non-committal, with the foreign ministry saying only that it would "organise a release of crude oil from state reserves according to its own actual needs". Unless China subsequently announces a very large draw down in its inventories, the global total is likely to be in the range of 60-75 million, far less than the 100 million barrels or more some in the market had expected. As a result, spot prices and calendar spreads both rose after the announcement, reversing some of their downward trend since the start of the month (Link). Front-month Brent futures rose by more than $2.60 per barrel on Tuesday, the largest one-day increase for three months, consistent with the stock release being smaller than expected. Brent’s calendar spread for the six-months between January and July 2022 rose by more than 40 cents per barrel, implying traders expect oil supplies to remain tight next year. Spot prices and especially spreads had been softening since the start of November, well before the release was formally announced. Some of this may have been in response to intensifying speculation about a future sale. The White House is likely to claim this shows the effectiveness of the stock release by reversing traders’ partially self-fulfilling expectations that spot prices and spreads would continue climbing. But it is hard to disentangle the impact of speculation about a stock release from other factors weighing on oil prices.
Biden Tapping Oil Reserves May Trigger OPEC War, Fail to Help Consumers: Strategists - President Joe Biden announced on Tuesday that he will be releasing 50 million barrels from the nation’s Strategic Petroleum Reserves (SPR) as part of coordination with several other advanced economies, including China, the United Kingdom, and India. The objective is to ease soaring energy prices by injecting more supply into global oil and gas markets.Soon after President Biden confirmed that the United States would be tapping into domestic inventories, December West Texas Intermediate (WTI) crude futures erased their losses and rallied 2.5 percent to nearly $79 a barrel. December RBOB gasoline futures also turned positive during the session, hitting an intraday high of a little more than $2.80.Strategists note that investors had priced in the multilateral relief measure, confirming why WTI and Brent contracts had slipped as much as 5 percent over the last month.Damien Courvalin, Goldman Sachs commodity strategist, explained in a note to clients that Biden’s announcement was “fully priced in,” suggesting that financial markets agreed that this offers a short-term remedy to the structural deficit. Still, it might fail to address the fundamental issues in the volatile sector in the long run.Although Energy Secretary Jennifer Granholm could not provide the amount of oil Americans consume each day during a Tuesday White House press briefing, Energy Information Administration (EIA) data show that consumers use between 18 and 20 million barrels a day. However, with 50 million barrels being pumped into the markets—18 million barrels of which will be going to China and India—the administration’s amount might only be enough for several days’ worth of consumption.Economists further purport that this will compound the problems weighing on the energy sector. By releasing oil from the SPR, the Biden administration could artificially lower prices. This would lead to a rise in demand and tightening inventories. Should prices slump, the downward trend would discourage greater crude exploration and output, contributing to deficits in global energy markets.Moreover, since these strategic reserves need to be replenished, industry observers aver that there will be an uptick in demand at a later period, referring to the policy as a “swap.” After the president approved the SPR release, it will take 13 days for these barrels of oil to reach the international marketplace.
Russia’s Oil Reserves Are Becoming Increasingly Hard To Recover - Nearly all of Russia’s oil production will consist of the so-called hard-to-recover crude reserves unless the country speeds up and incentivizes exploration, Russia’s Deputy Energy Minister Pavel Sorokin said on Wednesday.“Almost 100% of our production will be hard to recover over the term of ten years,” Sorokin said, as quoted by Russian news agency TASS.The hard-to-recover reserves will have much higher lifting costs than conventional reserves, according to the deputy energy minister.This is a problem for Russia, one of the world’s biggest oil producers, as it would see the quality of its reserves decline and make the extraction of oil much more expensive than it is now.Russia needs to incentivize exploration in order to replace the hard-to-recover reserves with new, potentially lower-cost, discoveries.In May this year, Russia’s Natural Resources Minister Alexander Kozlov said that oil reserves would last until 2080 at the current pace of annual production. Russia’s actual oil and gas reserves could even rise if it steps up exploration in hard-to-drill areas, the minister added, noting that Russia needs to develop exploration, including in hard-to-reach areas.Russia’s oil and gas discoveries fell to the lowest in five years in the first half of 2021, after last year’s crisis resulted in steep cuts in capital expenditures for exploration, data and analytics company GlobalData said earlier this month.In the first half this year, Russian companies found oil and gas at six very small fields, adding just 36 million barrels to reserves, which is equivalent to fewer than four days of Russian daily oil production, according to GlobalData’s estimates.
IEA says not enough oil and gas reaching consumers (Reuters) - Some countries have not taken a helpful position in terms of oil and gas prices, the head of the International Energy Agency said on Wednesday, saying not enough supply was reaching consumers. "(A) factor I would like to underline that caused these high prices is the position some of the major oil and gas suppliers, and some of the countries did not take, in our view, a helpful position in this context," Fatih Birol said in an online presentation. "Some of the key strains in today's markets may be considered artificial tightness ... because in oil markets today we see close to 6 million barrels per day in spare production capacity lies with the key producers, OPEC+ countries." The COP26 conference in Glasgow this month was a success, Birol added, saying the Paris-based agency's analysis showed commitments made at the meeting could reduce global temperature rises to 1.8 degrees Celsius above pre-industrial levels.
Gas explosion for Mushin Lagos claim lives - BBC News Pidgin - Three male adults don dey recovered from Tuesday gas explosion for Lagos, according to di State Fire Service . Di gas explode for Mushin area of Nigeria largest commercial city, Lagos in di morning. Di Director of di State Fire Service wey give dis informate inside statement no clear am if di three male adult dey recovered alive or dead. Margaret Adeeseye say rescue operation dey go on for di area. Gas explosion in Lagos: Gas wey explode for Mushin claim lives She add say informate about di gas incident land dia dormot around 8:45am on Tuesday and dem immediately begin rescue operation. However, eyewitnesses say at least five pipo wey include one teenager na im die for di gas explosion. Residents plus eyewitnesses say dem hear loud explosions for di busy market about 9:00am. Di Lagos State Fire Service say di scene of di incident na open space, where dem dey run plenty business operations. Gas explosions dey frequent for Lgos - Dis na foto of wia di Iju-Ishaga gas explosion bin happun for November 2020 in Lagos" Dis include beer parlour, mechanic workshop, spare parts sale and gas shop plus oda things. Di open space house makeshift structure. Dem tell BBC say di explosion affect several buildings wey include mechanic workshops, spare parts and gas shops. Cases of gas explosion dey common for Lagos and e dey attributed to operators' negligence and poor regulation.
FG adopts new strategy to tackle oil spill in Niger Delta The National Oil Spill Detection and Response Agency (NOSDRA) says it has rolled out strategies to tackle incessant oil spills in communities in the Niger Delta. NOSDRA Director-General, Idris Musa, disclosed this at a one-day Community-based Disaster Risk Reduction (DRR) plan on Tuesday in Port Harcourt, organised by NOSDRA to create awareness on the dangers of pipeline vandalism. Represented by Mr Oladipo Obanuwa, NOSDRA’s Director, Asset Safety and Mitigation, Musa said the new strategy involves the deployment of its DRR plan to all states in the region. “The DRR plan was first carried out in Bayelsa state in 2014, and will now be replicated in other oil-producing states and transit states. “The plan was developed by NOSDRA to create and sustain an interface with stakeholders that hitherto has not been effectively engaged in the effort to curb pipeline vandalism. “Even though crude oil spills can sometimes occur from failure of equipment, pipeline vandalism by unscrupulous elements contributes largely to this menace. “This menace has resulted in adverse socio-economic, health and environmental problems that have threatened the ecosystem and the people’s livelihood,” he said. Musa said the agency commenced test running the new strategy in Ikarama and Kalada communities as well as in 25 other participating communities between May 26 and August 27 2015. According to him, the DRR plan harmonises the roles and responsibilities of government, oil industry operators, host and transit communities, and other relevant stakeholders in addressing crude oil spills.r
Ijaw group demands $500,000 as FG probes Bayelsa oil spill - The Ijaw Diaspora Council has asked Aiteo Exploration and Production Ltd to provide immediate, interim response funding of at least $500,000 for the affected Ijaw people, to be used to support their initial sustenance in response to the spill. Aiteo Eastern Exploration and Production Company, the operator of Oil Mining Lease 29, said in a statement that it had on November 5 reported a hydrocarbon wellhead leak in its Santa Barbara, Southwest field, in Nembe Local Government Area of Bayelsa State. “This well, non-producing since Aiteo’s acquisition in 2015, was predominantly dormant, having been securely isolated since then,” it said, adding that an accurate cause of the leak had not been ascertained as it had been focused on containing the consequences of the incident. The company said immediately upon noticing the leak, it notified all relevant regulatory agencies and thereafter mobilised containment resources to limit the impact on the environment. An international oil spill advisor, Prof. Rick Steiner, who was appointed by the IDC as technical advisor, said in a statement, “After 15-20 days of continuous flow, the spill had already released a minimum of 150,000 barrels – 200,000 barrels of toxic hydrocarbons into the sensitive mangrove ecosystem in Nembe LGA, and possibly twice that much.” The IDC, in a letter addressed to the Chief Executive Officer, Aiteo Group, Mr Benedict Peters, said the major wellhead blowout from the oil well appeared to have begun on November 2, 2021. The letter was signed by the council’s President, Prof. Mondy Gold; Director of Community Outreach, Dr Festus Odubo, and the Director of Conflict Resolution, Dr Brisibe Nabena. It said, “From the evidence available, not limited to videos collected by local community members, it is estimated by international oil spill experts that the blowout has already spilled well over 100,000 barrels of toxic hydrocarbon fluids (methane and crude oil) into the productive coastal mangrove ecosystem. “We note that this is indeed a major spill by any standards, and its effects are clearly catastrophic ecologically, economically, and socially in the coastal communities affected.” Stating what it described as “specific urgent demands,” the council said
Nigerian oil spill: Santa Barbara River spoil wit weeks oil leak from AITEO OML 29 well1 - BBC News Pidgin - One oil and gas well wey leak inside Nembe, Bayelsa State, southern Nigeria still dey pour for di pass two weeks afta di oil spill occur. OML-29 Well-1 wey Aiteo Eastern Exploration and Production Company Ltd dey operate don dey pour for more than 14 days none stop. Di oil spill empty into River Santa Barbara for Nember and e don spread near Kula, a coastal community for neighbouring Rivers State. Di spill wey happen sake of alleged equipment failure don pollute rivers, waterways and farmlands. E don affect economic activities, pipo for di local communities wey be mostly fishermen no fit do any fishing activity since di oil spill happen on 5 November, 2021. Tori be say one four-year-old pikin for Nembe dey feared dead from alleged methane gas poisoning as a result of di oil spill. Ekine Japus, di President of Kula Youth Organizations Worldwide tell BBC Pidgin say di oil spill don spread cover di creeks and waterways. And e affect over 10 Kula communities wey include Aberebiya, Barapakama, Angbakiri, Kalawo kiri, New Camp and Inemaboko. Di oil spill also affect Robert kiri, Ofoinama, Belema and Kula main town. "Since dis oil spill happen, our pipo no fit go fishing because all di water dey polluted. "Our women sef no fit go pick periwinkle because all di mangroves dey covered wit crude oil from di spill and e dey spread to oda villages. "Three days ago we go visit di area to see di level of devastation and e dey massive." Di youth leader tok. "Evri wia dey smell. We don report to NOSDRA and even write to di oil company AITEO but we never get any response." E add Ekine Japus tok say "We also don report to DSS, di local goment council and to di State Ministries of Environment and Local goment affairs." "Wetin we want na for dem to stop di spill from di well head as e still dey spill crude oil. "And for di company to come clean up di area and pay compensation to di pipo because dem no fit do anytin since day time." Na so Oga Japus conclude.
Aiteo seeks international expertise to stop Bayelsa oil spillage - Aiteo Eastern Exploration and Production Company says it is seeking foreign technical expertise to halt the ongoing oil leak at an oilfield it operates in Nembe, Bayelsa State. The leak occurred on November 5. Aiteo, in a statement yesterday by its spokesman, Mathew Ndianabasi, noted that it has intensified its response by seeking the assistance of other oil and gas exploration firms to contain the spill. The statement is coming on the heels of a reaction by Governor Douye Diri, who criticised the pace of response and Aiteo’s inability to halt the leak, which has continued to pollute Nembe creeks and farmlands. Diri had warned the oil firm to be ready for the consequences of neglecting the negative impact of the incident believed to have been caused by equipment failure. The governor said his administration remained committed to defending the welfare of the impacted residents. The firm handed over four truckloads of food items, medical supplies and N5 million cash, while it battles to stop the leak. Aiteo, an indigenous oil firm, which acquired the Oil Mining Lease 29 following the 2015 divestment by Shell said that the leak was caused by sabotage by oil thieves who had become an obstacle to oil production and export from the asset. OML 29 acquired for about $2.4 billion, consists of the 97km Nembe Creek trunk line, which evacuates crude from onshore oil wells within the oil bloc and other operators to Bonny Export Terminal. “Though spills of this nature are not uncommon to the oil and gas industry, their resolution requires expert skills and equipment that are not routinely or readily available. “The typical process is to first kill the well and stop the leak and then focus on the clean-up, besides urgent possible technical responses to contain the leak. “Aiteo has sought active collaboration with Clean Nigeria Associates (CNA) and has since mobilised to site, in addition to Aiteo internal resources to reinforce containment and recovery efforts.
Guyana to request stronger financial guarantees from oil operators –official (Reuters) - Guyana is getting ready to raise requirements on oil operators to protect the nation against spills and future removal costs of production platforms, the head of its environmental agency told Reuters. Guyana currently requires financial assurance, a type of insurance, to cover emergency responses to accidents. Financial assurance is also used at times in some other countries to cover decommissioning infrastructure, especially offshore oil rigs. But as the newest South American crude-producing nation fashions a regulatory framework for its oil industry, it is pressing a consortium led by Exxon Mobil Corp for greater security, said Kemraj Parsram, head of Guyana's Environmental Protection Agency, in a interview last week. Under discussion with Exxon are a draft agreement that would adds parent guarantee and revise the type of events covered in the Exxon group's $5 billion self-insurance policy, he said. "We have to make sure there is adequate coverage," said Parsram. Exxon does not comment on commercial and regulatory discussions but follows international environmental standards where laws and regulations do not exist and goes beyond those where practical, spokesperson Meghan Macdonald said. Its existing agreement has "extensive assurances" and requires contractors "take responsibility for any adverse event," she said. The talks with Exxon, the operator in a group that includes Chinese state-run oil company CNOOC and Hess Corp, comes amid environmental permit reviews for a third project in the massive Stabroek block.
Indonesia awards PetroChina 20-year extension for Jabung block - Indonesia has awarded a contract extension to the Indonesian unit of China National Petroleum Corp (PetroChina), the country's oil and gas regulator said in a statement on Wednesday. The contract, which has been extended for 20 years from 2023 to 2043, is for Indonesia's Jabung oil and gas block. The Jabung block, located onshore in Jambi on Sumatra island, is Indonesia's seventh largest. From 1997 till the end of 2020, the block produced 362.22 million barrels oil equivalent of oil and gas. PetroChina began their operations there in 2002.
Oil futures hit by heavy selling: Kemp - (Reuters) - Petroleum futures and options were hit by heavy profit-taking last week as speculation about a potential release of strategic oil reserves and intensifying concerns about the state of the global economy hit sentiment. Hedge funds and other money managers sold the equivalent of 57 million barrels in the six most important petroleum-related futures and options contracts in the week to Nov. 16. Last week's sales were the highest for more than three months, according to position records from ICE Futures Europe and the U.S. Commodity Futures Trading Commission (https://tmsnrt.rs/30Os1n7). The heaviest selling was concentrated in NYMEX and ICE WTI (-34 million barrels) and Brent (-18 million), consistent with the possibility of a strategic stocks release led by the United States. Among the other contracts, sales of U.S. diesel (-2 million barrels) and European gas oil (-12 million) were largely offset by purchases of U.S. gasoline (+9 million). Across the six major contracts, portfolio managers have been sellers in five out of the last six weeks, reducing their positions by an aggregate 134 million barrels since Oct. 5. The combined position has fallen to 736 million barrels (66th percentile for all weeks since 2013) down from 871 million barrels (79th percentile) at the start of October. The adjustment has come mostly from the liquidation of previous bullish long positions (-115 million barrels) rather than the creation of new bearish shorts (+19 million), consistent with profit-taking after a big rally. As a result, the combined position has become less lopsided, with longs outnumbering shorts by a ratio of 5.3:1 (71st percentile) down from 7.0:1 (87th percentile) in mid-October. The transformation has been especially noticeable in Brent crude, where fund managers have cut their position by 111 million barrels in the last six weeks. Brent positions have fallen from 333 million barrels (68th percentile) to just 222 million barrels (41st percentile) while the long-short ratio has tumbled from 6.3:1 (68th percentile) to just 3.4:1 (31st percentile). By the start of October, speculation in the oil market had become overheated, with most investors anticipating further big gains in prices, even as prices were touching their highest level for three years. Since then, concerns about the sustainability of the global economic expansion and the resurgence of coronavirus cases in Europe and North America have taken some of the heat out of oil prices. The futures market is moving into the seasonally weaker half of the year, with talk about a coordinated release of strategic stocks adding to downward risks, prompting fund managers to realise some profits from the earlier rally.
Flush with cash, Saudi prince snubs Biden and sends a message - President Joe Biden sounded deeply frustrated. Inflation was heading toward a 30-year high and Americans, rich and poor, could see the price of gasoline going up almost daily. Politically, oil was toxic for the White House. "The idea that Russia and Saudi Arabia and other major producers are not going to pump more oil so people can have gasoline to get to and from work, for example, is not right," Biden said in late October. First in private and later more publicly, American envoys had spent weeks trying to convince the Saudis to pump more crude -- and quickly, according to officials on both sides. The diplomatic pressure was ultimately directed at a 36-year-old man who has the capacity to change the price of oil -- and the fortune of politicians in consuming nations -- on a whim: Saudi Crown Prince Mohammed bin Salman. But the kingdom’s day-to-day ruler didn't budge despite the overtures from American diplomats. Prince Mohammed was more worried about oil’s supply and demand fundamentals than the political needs of Washington. But if Biden wanted cheaper gasoline, the prince had his own wish list, including something he hasn’t yet got from the current White House -- access. Since taking office, Biden has only spoken with King Salman, Prince Mohammed’s father, and refused to deal directly with the crown prince, who’s still seen as a pariah in the U.S. after the killing of Washington Post columnist Jamal Khashoggi in 2018. “There’s a lot of Middle Eastern folks who want to talk to me,” Biden said in October, without directly naming Prince Mohammed. “I’m not sure I’m going to talk to them.” Ultimately, Biden didn't get the extra oil he wanted, forcing him to respond on Tuesday by tapping the country's strategic petroleum reserve -- a decision that risks a further escalation from the Saudi-led OPEC+ cartel. For Prince Mohammed, sitting atop what’s sometimes described as the central bank of oil, soaring crude prices are giving him the confidence to demand the attention of Biden, and everyone else. The influx of cash also helps his plan to make the kingdom a global investment powerhouse through the US$450 billion Public Investment Fund, the sovereign wealth fund which he also chairs and wants to grow to US$1 trillion by 2025.
Oil Futures Wobble as EU Lockdowns Fuel Demand Fears -- At the beginning of a holiday-shortened trade week, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange moved mixed, with expanded COVID-19 restrictions across European Union and chatter of potential Strategic Petroleum Reserve releases in Japan and China countering signs of strengthening fuel demand in the United States, with the number of Americans taking to the roads for the Thanksgiving holiday this week projected to reach pre-pandemic levels. High-frequency data suggests fuel demand in the United States will likely climb to its pre-pandemic level this week in the lead up to the Thanksgiving holiday on Thursday, with American Automotive Association projecting over 50 million Americans will hit the road this week. Furthermore, Transportation Security Administration reported Sunday passenger throughput at U.S. airports topped 2 million -- 12% below the level reported two years ago. Air travel is expected to be up 80% from last Thanksgiving. Demand for jet fuel in the United States has already recovered nearly 70% from the pandemic-caused contraction, according to the Energy Information Administration.In the most recent week, gasoline demand stood near 9.241 million barrels per day (bpd) -- about 100,000 bpd above the five-year average. If gasoline demand follows pre-COVID seasonality, it would trend lower through the fourth quarter before a final surge amid the Christmas holiday.Contrasting with reopenings in the United States, several European countries expanded COVID-19 restrictions this week in their bid to slow the viral spread heading into holiday season. Austria announced a fourth nationwide lockdown starting Monday, becoming the first EU country to take such a measure in the face of the COVID-19 resurgence.The announcement came days after Chancellor Alexander Schellenberg introduced a targeted lockdown for unvaccinated -- a measure that was widely expected to be insufficient to contain the viral spread. Additionally, Germany -- the EU's largest economy -- will introduce next week tighter COVID-19 restrictions on unvaccinated citizens, with most regions already barring unvaccinated citizens from public places such as restaurants and concert halls.
Oil Prices Settle up 1% on Reports OPEC+ Could Reassess Output (Reuters) -Oil prices rose on Monday, rebounding from recent losses, on reports that OPEC+ could adjust plans to raise oil production if large consuming countries release crude from their reserves or if the coronavirus pandemic dampens demand. Brent crude futures rose 81 cents, or 1%, to settle at $79.70 a barrel. WTI crude futures rose 81 cents, or 1%, to settle at $76.75 a barrel. Prices of the Brent and U.S. West Texas Intermediate (WTI) crude benchmarks fell more than $1 in early trading, hitting their lowest levels since Oct. 1. Japanese and Indian officials are working on ways to release national reserves of crude oil in tandem with the United States and other major economies to dampen prices, seven government sources with knowledge of the plans told Reuters. Such an announcement could come as early as Tuesday, according to a source familiar with the discussions, but White House and U.S. energy department officials said no official decision on a release had been made. The discussions have come after the U.S. government was unable to persuade the Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, to pump more oil with major producers arguing the world was not short of crude. The producer group agreed this month to stick to plans to raise oil output by 400,000 barrels per day (bpd) from December. Oil prices rose after Bloomberg News reported that OPEC+ may alter plans to keep boosting production, citing delegates. Reuters has not verified the report. "OPEC is sending a signal that if these players do this, they have some barrels they can withhold and will offset the impact of a release,"
Oil Up on Underwhelming SPR Announcement - Oil climbed by the most in two weeks as a landmark plan from consumer countries to tap their strategic oil reserves was less severe than markets expected. Futures in New York rose rose 2.3% after Tuesday’s statement from the White House announcing strategic reserve release. While the headline size of the U.S. release is large, a significant chunk of the crude will be borrowed -- to be returned later -- leaving traders expecting tighter balances down the line. The U.S. is making the move in concert with China, Japan, India, South Korea and the U.K.Oil prices have hit multiyear highs in recent months amid a global energy crisis that’s added hundreds of thousands of barrels a day to consumption, while the world economy is grappling with surging inflation. The decision puts major consumers on a collision course with OPEC+, which views such a release as unjustified and may reconsider plans to add more supply at a meeting on Dec. 2.“From OPEC’s perspective, a cautious ramp-up is still the way to go,” said Damien Courvalin, the head of energy research at Goldman Sachs Group Inc,, in a Bloomberg Television interview on Tuesday. “OPEC has no incentive to increase production aggressively and the SPR release probably comforts them.”The main announcements so far are:
- U.S.: 50 million barrels, 18 million of which are accelerated pre-approved sales while the remaining 32 million are part of an exchange
- India: 5 million barrels
- Japan: Several days worth of volume, according to local media
- China: At least 7.33 million barrels, according to industry consultant JLC
- South Korea: Said it would release an unspecified volume
- U.K.: 1.5 million barrels
“The added supply to the market is pretty small in the grand scheme of things,” said Rob Thummel, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets. “Clearly, the oil price was expecting something bigger than this.” Despite Tuesday’s rally, crude prices have dropped close to $10 from earlier this month as the U.S. signaled it may tap its reserves. The diplomatic push has also led to weaker so-called timespreads for nearby months. West Texas Intermediate crude’s prompt spread traded at 56 cents a barrel, down from about $1.79 a barrel in late October.
Oil Futures Rally on Expected OPEC Response to SPR Release -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange rallied Tuesday, lifting the U.S. crude benchmark above $78 barrel (bbl) as traders assessed risks of a potential supply response from the OPEC+ alliance to the multilateral release of petroleum reserves held by oil-consuming nations orchestrated by the Biden administration in a bid to lower domestic gasoline prices.Oil traders dismissed Biden's plan to release as much as 50 million bbl of crude oil from the Strategic Petroleum Reserve as a shortsighted and inadequate solution to rising inflation.In breaking down Tuesday morning's announcement from the Biden administration, out of the 50 million bbl of crude to be released, 32 million bbl would eventually be returned to the strategic reserve over the months ahead to replenish stockpiles, according to Department of Energy officials. Another 18 million bbl will be released as an acceleration of an oil sale authorized by Congress two months ago. Secondly, an SPR release would not change market fundamentals that are already tilting towards oversupply, according to all major forecasting agencies. As of Nov. 12, the U.S. SPR held 609.4 million bbl of crude in underground caverns in Louisiana and Texas, with the Congressional intent of the reserve for use in emergency situations such as natural disasters and wars, not to control oil prices. The last time there was international coordination in releasing strategic reserves was in response to a supply disruption in Libya when the nation plunged into civil war more than decade ago. This time, the White House faces growing political pressure to lower domestic gasoline prices as millions of Americans hit the roads for this week's Thanksgiving holidays.Retail gasoline prices across the United States are averaging $3.40 gallon this week, a seven-year high and more than $1 above a year ago.The plan also envisions other major oil consuming nations to release some of their crude stockpiles, but details of that release are not yet clear, especially in China and Japan. So far, India announced a 5 million bbl release from its nationwide petroleum stocks and United Kingdom pledged a 1.5 million bbl sale from strategic reserves.The release clearly failed to deliver the outcome the Biden administration hoped for, with both crude benchmarks reversing overnight losses to surge as much as 3% in the immediate reaction to the announcement.
Oil Futures Wobble Ahead of EIA Report, US Economic Data -- Following Tuesday's explosive rally triggered by chatter, OPEC+ will agree to deepen production cuts at their December meeting, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange softened in early trade Wednesday after industry data from the American Petroleum Institute reported U.S. commercial crude and gasoline inventories unexpectedly increased for the week ended Nov. 19, while an overnight rally in U.S. Dollar Index tied to the release of key economic data domestically further pressured the oil complex. Near 7:30 a.m. ET, NYMEX West Texas Intermediate futures for January delivery reversed overnight losses to trade near $78.69 per barrel (bbl), and international benchmark ICE January Brent traded little changed near $82.38 bbl. Both benchmarks rallied as much as 3% in the previous session. NYMEX RBOB December futures declined 1.51 cents to $2.3221 gallon and front-month NYMEX ULSD added 0.27 cents to $2.3870 gallon. The API data released late afternoon Tuesday was bearish for the oil complex, showing domestic crude oil inventories increased by 2.3 million bbl last week, contrasting sharply with market estimates for an 800,000 bbl drawdown. Gasoline stocks also unexpectedly gained 600,000 bbl from the previous week, while the market estimated a 500,000 bbl decline. Distillate stocks, meanwhile, declined by 1.5 million bbl, well above estimates for a 700,000 bbl draw. DTN Refined Fuels Demand data showed demand for diesel fuel in the United States decreased 0.1% in the reviewed week, likely having peaked seasonally for the fourth quarter, while remaining up 6.8% relative to the same week in 2019. Gasoline demand also decreased 0.1% last week, according to DTN Refined Fuels Demand data, while U.S. demand is down just 0.8% compared to the same week in 2019. Analysts previously projected gasoline demand would push higher this week in the lead up to Thanksgiving Day Thursday, with over 53 million Americans projected to hit the roads for the extended holiday period. Also, year-on-year strength in both gasoline demand and diesel demand should be expected to increase in the coming weekly reports from the Energy Information Administration given that at this time last year the United States was seeing the strongest surge of COVID-19 cases and hospitalizations of the pandemic.
WTI Holds Post-SPR-Release Gains After Surprise Crude Build - Crude prices are holding gains from yesterday's 'epic fail' SPR release after an unexpected crude build. Source: Bloomberg Stocks at the Cushing hub rose by the most since October, while marking a second weekly rise. Volumes are now sitting at a four-week high. Gasoline inventories continued to slide and are still at a four-year low as refineries runs continue to lag demand. Commercial crude stockpiles rose by just over 1 million barrels, which wasn’t much, considering that another 1.64 million barrels was drawn out of the SPR. If you add those two together, total U.S. Crude stockpiles actually fell by 625,000 barrels. Crude production rose last week, back to post-COVID highs... WTI is holding its post-SPR release gains... Total product supplied, a measure of oil consumption, is now sitting at the lowest volume since June on a four-week average. Seasonally we are over a million barrels a day short of 2019 figures when covid wasn’t a concern. Finally, there's no relief insight for record-California gasoline prices. West Coast gasoline stockpiles are at a fresh two-year low with the region still catching up from a spate of refinery outages that began with the Bay Area floods last month. Does Biden still have tools?
Oil Futures Mixed as US Crude Stocks Build, Products Draw -- Crude and refined product futures on the New York Mercantile Exchange moved mixed in midmorning trade Wednesday, with front-month West Texas Intermediate edging higher following the release of government data showing U.S. crude oil inventories unexpectedly increased during the week ended Nov. 19 and domestic production rose to 11.5 million barrels per day (bpd), offsetting larger-than-expected drawdown from fuel supplies as demand for petroleum products pushed higher ahead of the holiday season. Midmorning inventory data reported nationwide crude oil supplies increased 1 million barrels (bbl) from the previous week to 434 million bbl and are now about 7% below the five-year average. Earlier this week, analysts expected crude inventories would decline by 800,000 bbl. The crude build was realized even as domestic refiners increased run rates for the fifth consecutive week through Nov. 19, up 0.7% to 88.6%, compared with analyst expectations for a 0.3% increase. Domestic crude oil production, meanwhile, increased 100,000 bpd to 11.5 million, according to EIA. Oil stored at the Cushing, Oklahoma, hub -- the delivery point for WTI futures -- rose 787,000 bbl from the previous week to 27.4 million bbl. Additionally, gasoline stockpiles declined by 602,992 bbl from the previous week to 211.4 million bbl compared with analyst expectations for inventories to have decreased 500,000 bbl. Demand for motor gasoline gained 93,000 bpd from the previous week to 9.334 million bbl, while remaining more than 100,000 above the five-year average. Gasoline consumption in the United States typically strengthens heading into the Thanksgiving holiday, with over 53 million Americans expected to hit the road this week, according to the American Automobile Association. Distillate stocks fell 2 million bbl to 121.7 million bbl and are now about 5% below the five-year average. Analysts had estimated a smaller 700,000 million bbl decline from the previous week. Distillate demand extended higher for the third consecutive week to 4.391 million bpd. Total commercial petroleum inventories decreased 6 million bbl last week. Total products supplied over the last four-week period averaged 20.7 million bpd, up 7% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.3 million bpd, up 11.5% from the same period last year. Distillate fuel product supplied averaged 4.2 million bpd over the past four weeks, up 3% from the same period last year. Jet fuel product supplied was up 40.4% compared with the same four-week period last year. In late morning trading, NYMEX January WTI futures advanced $0.33 to trade at $78.83 bbl and NYMEX December RBOB futures traded unchanged near $2.3385 gallon. The front-month ULSD contract gained to $2.4025 gallon, up 1.82 cents on the session so far.
Oil skids on concerns of rising surplus in Q1 (Reuters) - Oil prices slid more than 1% on Friday on concerns that a global supply surplus could swell in the first quarter following a coordinated release of crude reserves among major consumers, led by the United States. Brent crude futures LCOc1 extended declines for a third session, falling 96 cents, or 1.2%, to $81.26 a barrel by 0130 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 was down $1.35, or 1.7%, at $77.04 a barrel. There was no settlement for WTI on Thursday because of Thanksgiving holiday. U.S. President Joe Biden's administration announced plans on Tuesday to release millions of barrels of oil from strategic reserves in coordination with other large consuming nations, including China, India and Japan, to try to cool prices. Such a release is likely to swell supplies in coming months, an OPEC source said, according to the findings of a panel of experts that advises ministers of the Organization of the Petroleum Exporting Countries (OPEC). The Economic Commission Board (ECB) expects a 400,000 barrels-per-day (bpd) surplus in December, expanding to 2.3 million bpd in January and 3.7 million bpd in February if consumer nations go ahead with the release, the OPEC source said. Forecasts of rising surplus oil clouds the outlook of the meeting between OPEC and allies, a group known as OPEC+, on Dec. 2 to decide on immediate production. The group is to decide whether it will continue raising output by 400,000 bpd in January. Still, the benchmark contracts are set to post their first weekly gain in nearly a month as the overall volume of the crude reserve release estimated at 70 million to 80 million barrels was smaller than market participants expected.
Oil prices dive to two-month lows on Covid-19 variant, surplus jitters | Deccan Herald -- Oil prices dived more than 5% on Friday, hitting a two-month low as a new COVID-19 variant spooked investors and added to concerns that a supply surplus could swell in the first quarter. Oil fell with global equities markets on fears the variant could dampen economic growth and fuel demand. Britain and the European states have restricted travel from southern Africa, where the variant was detected. Brent crude fell $4.28, or 5.2%, to $77.94 a barrel by 1329 GMT. US West Texas Intermediate (WTI) crude was down $4.31, or 5.5%, at $74.08 a barrel, after Thursday's Thanksgiving holiday in the United States. Both contracts are heading for their fifth week of losses. Investors were also watching China's response to the US release of millions of barrels of oil from strategic reserves in coordination with other large consuming nations, part of its bid to cool prices. Such a release is likely to swell supplies in coming months, an OPEC source said, based on findings of a panel of experts that advises ministers of the Organization of the Petroleum Exporting Countries. The Economic Commission Board expects a surplus of 400,000 barrels per day (bpd) in December, rising to 2.3 million bpd in January and 3.7 million bpd in February if consumer nations went ahead with the releases, the OPEC source said. The forecasts cloud the outlook for a Dec. 2 meeting of OPEC and its allies, known as OPEC+, when the group will discuss whether to adjust its plan to increase output by 400,000 bpd in January and beyond. "OPEC's initial assessment of the co-ordinated (stockpile) release and the sudden appearance of a new variant of the coronavirus raises serious concerns about economic growth and the oil balance in coming months," PVM analyst Tamas Varga said. Iranian production was also in focus, with indirect talks due to resume on Monday between Iran and the United States on reviving a 2015 nuclear deal that could lead to the lifting of US sanctions on Iranian oil exports. However, the failure of Iran and the International Atomic Energy Agency to reach even a modest agreement on monitoring of Tehran's nuclear facilities this week bodes poorly for next week's talks, Eurasia analyst Henry Rome said.
Oil drops 13% in worst day of 2021, breaks below $70 as new Covid variant sparks global demand concerns - Oil posted its worst day of the year on Friday, tumbling to the lowest level in more than two months as the new Covid-19 strain sparked fears about a demand slowdown just as supply increases. The leg lower came amid a broad sell-off in the market with the Dow dropping more than 900 points. The World Health Organization warned Thursday of a new Covid variant detected in South Africa. It could be more resistant to vaccines thanks to its mutations, although the WHO said further investigation is needed. U.S. oil settled 13.06%, or $10.24, lower at $68.15 per barrel, falling below the key $70 level. It was the contract's worst day since April 2020. WTI also closed below its 200-day moving average — a key technical indicator — for the first time since November 2020. International benchmark Brent crude futures slid 11.55% to settle at $72.72 per barrel. Both contracts registered their fifth straight week of losses for the longest weekly losing streak since March 2020. A decrease in travel and potential new lockdowns, both of which could hit demand, come just as supply is about to increase. "It appears that the discovery of a Covid-19 variant in southern Africa is spooking markets across the board. Germany is already limiting travel from several nations in the affected region," "The last thing that the oil complex needs is another threat to the air travel recovery," he added. On Tuesday the Biden Administration announced plans to release 50 million barrels of oil from the Strategic Petroleum Reserve. The move is part of a global effort by energy-consuming nations to calm 2021′s rapid rise in fuel prices. India, China, Japan, South Korea and the U.K. will also release some of their reserves. "This [the sell-off] is attributable to concerns about a sizeable oversupply in early 2022 that is set to be brought about by the upcoming release of strategic oil reserves in the US and other major consumer countries, plus the ongoing steep rise in new coronavirus cases," noted analysts at Commerzbank. "Furthermore, an even more transmissible variant of the virus has been discovered in South Africa, prompting a noticeable increase in risk aversion on the financial markets today." OPEC and its oil-producing allies are set to meet on Dec. 2 to discuss production policy for January and beyond. The group has slowly eased the historic output cuts it agreed to in April 2020 as the coronavirus sapped demand for petroleum products. Since August the group, known as OPEC+, has returned 400,000 barrels per day to the market each month. The group has maintained its gradual taper despite calls from the White House and others to hike output as oil prices surged to multi-year highs. West Texas Intermediate crude futures hit a seven-year high in October, while Brent rose to a three-year high. U.S. oil is now down more than $15 since its October high of $85.41. "The coordinated SPR release is getting a second look, as well, especially with OPEC decrying it and asserting that the release will tip the global market back into surplus. The release is much more than just a drop in the bucket,"
Oil prices are headed for $100 despite U.S. efforts to release reserves, analyst says - Oil prices could climb higher despite the U.S. and other major consumers releasing millions of barrels of oil from their reserves to try to keep energy prices down, one analyst told CNBC. "It's not going to work simply because the strategic petroleum reserve — any country's strategic petroleum reserve is not there to try to manipulate price," Stephen Schork, editor of the Schork Report, said Wednesday on CNBC's "Squawk Box Asia." Strategic petroleum reserves exist only to offset short-term, unexpected supply disruptions, he explained. "There's a considerable amount of bets out there that we will see $100 a barrel oil," Schork said, adding it could happen as early as the first quarter of next year, especially if there is a cold winter in the Northern Hemisphere. Oil prices have jumped more than 50% this year, with demand outstripping supply as more countries emerge from national lockdowns and severe restrictions imposed since last year due to the pandemic. Resumption of international travel as more nations re-open borders is also boosting jet fuel demand. Global benchmark Brent surpassed the psychologically key threshold of $80 per barrel in October and prices have held near that level. As of Wednesday afternoon in Asia, the international contract traded near $82.50. It is a clear sign of desperation that this is the only tool in the box and it is not going to work. U.S. President Joe Biden announced Tuesday that the U.S. will release 50 million barrels from its reserves as part of a global effort by energy-consuming countries to calm the rapid rise in fuel prices. Of that total, 32 million barrels will be an exchange over the next few months, and 18 million barrels will be an acceleration of a previously authorized sale. Other countries that made the joint commitment include China, India, Japan, South Korea and the United Kingdom. So far, the U.K. has agreed to release about 1.5 million barrels while India committed to 5 million barrels. China, Japan and South Korea have yet to announce specific numbers. "We are talking 50 million barrels coming out of the United States, potentially another 50 from our partners. That's 100 million barrels of oil — that is one day's worth of a global demand for crude oil," Schork said.
Russian rouble drops to 7-month low vs dollar as oil prices slide (Reuters) - The Russian rouble lost more than 1% against the dollar on Friday, sinking to a more than seven-month low as oil prices dived and as geopolitical concerns that have buffeted Russian assets all week remained on investors' minds. A global increase in risk aversion related to the detection of a new coronavirus variant also put pressure on the rouble. At 0650 GMT, the rouble was 0.9% weaker against the dollar at 75.34, earlier hitting 75.78, its weakest point since April 22. It had lost 1% to trade at 84.60 versus the euro EURRUBTN=MCX , earlier passing the 85 mark for the first time since lat September. The backdrop was particularly unfavourable for the rouble on Friday, said Promsvyazbank analysts in a note, suggesting that the currency would end the day trading nearer to 76 versus the greenback. The rouble has fallen in the past few weeks, weakening from a multi-month peak of 69.21 in late October, coming under selling pressure related to Western concerns over possible Russian military intervention in Ukraine. Russia has dismissed such concerns and has also complained about increasing activity in the region by the NATO military alliance. Brent crude oil LCOc1 , a global benchmark for Russia's main export, was down 2.8% at $79.95 a barrel.
Red Cross official 'livid' over holdups for Afghan aid -A senior Red Cross official expresses his frustration over the holdups of aid to Afghanistan pushing the healthcare system to the brink, Reuters reported. International Committee of the Red Cross operational director Dominik Stillhart said Monday the organization began paying salaries and providing medical supplies to 18 medical facilities in the country to prevent them from collapsing. Stillhart told reporters that salaries at government-run hospitals have been unpaid for months, leading some nurses to quit, and requiring others to walk to work for two hours as they can't afford transportation, according to Reuters. "Every single person I spoke to, be it hospital staff, patients, people in the street — they are seriously worried about how to make ends meet in the coming months," Stillhart said, via Reuters. "I am livid," he added. Stillhart added that cases of severe malnutrition, pneumonia and dehydration have doubled since August and September, causing up to three children to be squeezed into a single bed. Humanitarian workers have complained that the United Nations and the Taliban share responsibility for causing confusion that is preventing willing donors from increasing the aid flow, Reuters reported.
