Commercial crude supplies at 45 month low, total US supplies lowest since January 2012; gasoline demand at 11 month low

Strategic Petroleum Reserve at a new 19 year low; commercial crude inventories fall to 45 month low, total US oil supplies lowest since January 20th 2012; implied gasoline demand at 11 month low; largest jump in drilling rigs since April 1st as the Haynesville and the Marcellus are targeted for oil

oil prices rose for the fourth straight week on a softening of Fed rhetoric and on a production shortfall by OPEC and its allies....after rising 4.9% to $78.90 a barrel last week on political unrest and production difficulties among several OPEC allied producers, the contract price for US light sweet crude for February delivery traded higher early on Monday as supply disruptions in Kazakhstan and Libya offset worries about continued rise in Covid-19 cases worldwide, but weakened Monday afternoon after Libyan production ticked up and fears about demand stoked by the rapid global rise of Omicron infections overtook concerns about Kazakhstan, and settled 67 cents lower at $78.23 a barrel...but oil prices rallied early on Tuesday with rising equity markets as the U.S. dollar rapidly weakened against foreign currencies, and then surged in afternoon trading after Fed chair Powell’s comments to the Senate Banking Committee appeared to be less hawkish than the Fed had recently telegraphed to finish $2.99 higher at $81.22 a barrel, following surveys suggesting that a number of OPEC allied producers missed their quotas last month, thus underdelivering on their pledges to boost crude supplies...oil prices moved to fresh highs early Wednesday on expectations that U.S. crude oil inventories had declined for a sixth consecutive week and that global oil supply availability would tighten amid underproduction from those OPEC+ members, and then extended their gains after the EIA reported a crude inventory draw that was more than twice expectations, before finally settling $1.42 higher at a two month high of $82.64 a barrel, as the larger-than-expected drawdown from commercial crude inventories overshadowed another weekly build in gasoline supplies and a sharp contraction in fuel demand amid a consumer pullback on travel...oil prices moved lower on profitg taking amid interest rate hike worries early Thursday and settled down 52 cetns at $82.12 a barrel on deepening evidence of omicron-led demand destruction in the domestic gasoline market, as mixed economic data in the US overshadowed recent production shortfalls from several OPEC+ members....but the oil rally resumed on Friday, boosted by supply constraints and worries of a Russian attack on Ukraine, pushing prices toward their fourth weekly gain, despite sword that China was set to release crude reserves around the Lunar New Year. and settled the day's trading $1.70 or more than 2% higher at a nine week high of $83.82 per barrel, amid early signs that omicron infections were leveling off in the U.S. cities where the omicron variant had hit first, suggesting a national peak may be approaching, while broader commodity prices also got a lift from a weekly decline in the U.S. dollar. thus finishing 6.3% higher for the week.

natural gas prices also finished higher again on an outbreak of polar air in the densely populated northeastern US...after rising 5.0% to $3.916 per mmBTU last week amid vacillating weather forecasts, the contract price of natural gas for February delivery opened nearly 6% higher on Monday after gas demand in the Lower 48 states had jumped to a record high on Friday as cold weather had blanketed most of the country, and held most of the initial gain to settle 16.3 cents higher at $4.079 per mmBTU, as European calls for U.S. exports remained robust and forecasts pointed to continued strong domestic weather-driven demand...natural gas prices rose more than 4% for a second day on Tuesday after power prices in New England jumped to their highest since January 2018 amid the region's coldest day so far this winter, and settled 17 cents higher at $4.249 per mmBTU...natural gas prices then surged more than 14% on Wednesday as a blast of cold air was expected to test Texas production during the final 10 days of this month, and as LNG demand reached a record 13 billion cubic feet as Europe continued to suffer the effects of a cold winter and low gas stocks. with the February contract advancing 60.8 cdnts or 14.3% to finish the day's trading at $4.857 per mmBTU, the highest settlement since late November... however, gas prices nosedived on Thursday as traders took profits after a massive four-day rally, and the February contract dropped 58.7 cents or 12% to  $4.270 per mmBTU, reversing most of Wednesday's gain on forecasts for less cold weather and lower heating demand this week and next than had been previously expected...natrual gas prices steadied on Friday despite cold weather in New York and New England and higher prices in Europe and settled eight-tenths of a cent lower at $4.262per mmBTU, while still posting a 8.8% gain on the week

The EIA's natural gas storage report for the week ending Janaury 7th indicated that the amount of working natural gas held in underground storage in the US fell by 179 billion cubic feet to 3,016 billion cubic feet by the end of the week, which left our gas supplies 199 billion cubic feet, or 6.2% below the 3,215 billion cubic feet that were in storage on Janaury 7th of last year, but still 72 billion cubic feet, or 2.4% above the five-year average of 2,944 billion cubic feet of natural gas that have been in storage as of the 7th of Janaury over the most recent five years....the 179 billion cubic foot withdrawal from US natural gas working storage for the cited week was close to the average forecast for a 177 billion cubic foot withdrawal from a S&P Global Platts' survey of analysts, but quite a bit more than the 134 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, and also more than the average withdrawal of 155 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 January 7th indicated that despite a big drop in our oil exports, a concurrent shift of “unaccounted for crude oil” from supply to demand meant we still needed to pull oil out of our stored commercial crude supplies for the seventh week in a row and for the 23rd time in the past thirty-three weeks….our imports of crude oil rose by an average of 185,000 barrels per day to an average of 6,069,000 barrels per day, after falling by an average of 875,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 599,000 barrels per day to an average of 1,955,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 4,114,000 barrels of per day during the week ending January 7th, 784,000 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 lower at 11,700,000 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 15,814,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,573,000 barrels of crude per day during the week ending January 7th, an average of 293,000 fewer barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 693,000 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 934,000 barrels per day more than what our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (-934,000) 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...moreover, since last week’s EIA fudge factor was at (+238,000) barrels per day, that means there was a 1,172,000 barrel per day difference between this week's balance sheet error and 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 meaningless.....however, since most everyone treats these weekly EIA reports as gospel and since these figures often drive oil pricing, and hence decisions to drill or complete 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 693,000 barrel per day decrease in our overall crude oil inventories left our total supplies at 1,006,680,000 barrels, the lowest level since January 20th 2012, or nearly at a 10 year low....this week's oil inventory decrease came as 650,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while 43,000 barrels per day of oil were pulled out of our Strategic Petroleum Reserve, part of the first installment from Biden's plan to release 50 million barrels from the SPR, in order to incentive continued use of US gas guzzlers....including the drawdowns from the Strategic Petroleum Reserve under such politically motivated programs, a total of 57,937,000 barrels have been removed from the Strategic Petroleum Reserve over the past 18 months, and as a result the amount of oil in our Strategic Petroleum Reserve has fallen to the lowest since November 15th, 2002, or to an 19 year low of 593,382,000 barrels per day, as repeated tapping of our emergency supplies for political expediency or to “pay for” other programs had already drained those supplies over the past dozen years...based on an estimated prepandemic consumption level of 18 million barrels per day, the US will have roughly 30 1/2 days of oil supply left in the Strategic Petroleum Reserve when the Biden program is complete...

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,227,000 barrels per day last week, which was still 10.7% more than the 5,625,000 barrel per day average that we were importing over the same four-week period last year….this week’s crude oil production was reported to be 100,000 barrels per day lower at 11,700,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,300,000 barrels per day, while Alaska’s oil production was 1,000 barrels per day higher at 460,000 barrels per day and had no impact on the rounded national production total...US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 10.7% below that of our pre-pandemic production peak, but 38.8% 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 88.4% of their capacity while using those 15,573,000 barrels of crude per day during the week ending January 7th, down from a utilization rate of 89.8% the prior week, and lower than the historical utilization rate for early January refinery operations…the 15,867,000 barrels per day of oil that were refined this week were 8.3% more barrels than the 14,376,000 barrels of crude that were being processed daily during the pandemic impacted week ending January 8th of 2021, but 8.2% less than the 16,973,000 barrels of crude that were being processed daily during the week ending January 10th, 2020, when US refineries were operating at what was then a more seasonal 92.2% of capacity...

Even with the decrease in oil being refined this week, gasoline output from our refineries was a bit higher, increasing by 68,000 barrels per day to 8,574,000 barrels per day during the week ending January 7th, after our gasoline output had decreased by 1,607,000 barrels per day over the prior week.…this week’s gasoline production was 14.1% more than the anomalously low 7,512,000 barrels of gasoline that were being produced daily over the same week of last year, but 7.6% less than the gasoline production of 9,281,000 barrels per day during the week ending January 10th, 2020.....on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 177,000 barrels per day to 4,788,000 barrels per day, after our distillates output had increased by 30,000 barrels per day over the prior week…even after that decrease, our distillates output was still 2.7% more than the 4,661,000 barrels of distillates that were being produced daily during the week ending January 8th of 2021, but 8.0% less than the 5,205,000 barrels of distillates that were being produced daily during the week ending January 10th, 2020...

Even with our gasoline production remaining at depressed levels, our supplies of gasoline in storage at the end of the week rose for the fifth time in seven weeks, after falling each week over the preceding six weeks, increasing by 7,961,000 barrels to 240,748,000 barrels during the week ending January 7th, after our gasoline inventories had increased by 10,128,000 barrels over the prior week...our gasoline supplies increased again this week because the amount of gasoline supplied to US users decreased by 266,000 barrels per day to 7,906,000 barrels per day, the lowest level of implied gasoline demand in 11 months, while our imports of gasoline fell by 7,000 barrels per day to 589,000 barrels per day and our exports of gasoline rose by 56,000 barrels per day to 526,000 barrels per day…even after this week’s big inventory increase, our gasoline supplies were still 1.9% lower than last January 8th's gasoline inventories of 245,476,000 barrels, and about 3% below the five year average of our gasoline supplies for this time of the year…

Likewise, even with the decrease in our distillates production, our supplies of distillate fuels increased for the seventh time in twenty weeks, rising by 2,537,000 barrels to 129,383,000 barrels during the week ending January 7th, after our distillates supplies had increased by 4,418,000 barrels during the prior week….our distillates supplies rose again this week as the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 10,000 barrels per day to 3,749,000 barrels per day, and as our exports of distillates rose by 81,000 barrels per day to 892,000 barrels per day, and as our imports of distillates fell by 1,000 barrels per day to 216,000 barrels per day....but after twenty-six inventory decreases over the past forty weeks, our distillate supplies at the end of the week were still 20.7% below the 163,205,000 barrels of distillates that we had in storage on January 8th of 2021, and about 15% below the five year average of distillates inventories for this time of the year…

Meanwhile, even with the big drop in our oil exports, our commercial supplies of crude oil in storage fell for the 16th time in 23 weeks and for the 34th time in the past year, decreasing by 4,553,000 barrels over the week, from 417,851,000 barrels on December 31st to 413,298,000 barrels on January 7th, leaving our commercial crude supplies at the lowest level since October 5th, 2018, after they had decreased by 2,144,000 barrels over the prior week…with this week’s decrease, our commercial crude oil inventories remained about 8% below the most recent five-year average of crude oil supplies for this time of year, but were still around 27% above the average of our crude oil stocks as of the first week of January 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 January 7th were 14.3% less than the 482,211,000 barrels of oil we had in commercial storage on January 8th of 2021, and are now 3.6% less than the 428,511,000 barrels of oil that we had in storage on January 10th of 2020, and also 5.4% less than the 437,055,000 barrels of oil we had in commercial storage on January 11th of 2018…

Finally, with our inventory of crude oil and our supplies of all products made from oil all 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 the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 4,782,000 barrels this week, from 1,788,433,000 barrels on December 31th to 1,783,651,000 barrels on January 7th, leaving our total inventories at the 2nd lowest level since August 29th, 2014.....   

This Week's Rig Count

The number of drilling rigs ​running in the US increased for the 58th time over the past 69 weeks during the week ending January 14th, but ​they ​still remained 24.0% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs ​drilling in the US increased by thirteen to 601 rigs this past week, which was also 228 more rigs than the pandemic hit 373 rigs that were in use as of the January 15th report of 2021, but was also still 1,328 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 market with oil in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 11 to 492 oil rigs during this week, after they had increased by 1 during the prior week, and there are now 205 more oil rigs active now than were running a year ago, even as they still amount to just 30.6% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations was up by 2 to 109 natural gas rigs, which was also up by 24 natural gas rigs from the 85 natural gas rigs that were drilling during the same week a year ago, but still only 6.9% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….however, note that last year's rig count also included a rig that Baker Hughes had classified as "miscellaneous', while there are no such "miscellaneous' rigs deployed this week...

The Gulf of Mexico rig count was up by 2 to 18 rigs this week, with seventeen of this week's Gulf rigs drilling for oil in Louisiana waters and another rig drilling for oil in Alaminos Canyon, offshore from Texas....that's now two more Gulf rig​s​ than the 16 rigs that were active in the Gulf a year ago, when 15 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil in Texas waters…since there is not any drilling off our other coasts at this time, nor was there a year ago, the Gulf rig counts are equal to the national offshore totals for both years....

In addition to those rigs offshore, we now have 2 water based rigs drilling inland; one is a horizontal rig targeting oil at a depth of between 5000 and 10,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, and the other is a directional rig drilling for oil at a depth of over 15,000 feet in the Galveston Bay area...however, the inland waters rig count of two is still down from the three inland waters rigs that were drilling a year ago..

The count of active horizontal drilling rigs was up by 9 to 541 horizontal rigs this week, which was also 209 more rigs than the 3​32 horizontal rigs that were in use in the US on January 15th of last year, but still 61.3% less than the record 1,374 horizontal rigs that were deployed on November 21st of 2014....at the same time, the directional rig count was up by 2 to 35 directional rigs this week, and those were also up by 13 from the 22 directional rigs that were operating during the same week a year ago….in addition, the vertical rig count was also up by 2 rigs to 25 vertical rigs this week, and those were also up by 6 from the 19 vertical rigs that were in use on January 15th of 2021….

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 January 14th, the second column shows the change in the number of working rigs between last week’s count (January 7th) and this week’s (January 14th) count, the third column shows last week’s January 7th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 15th of January, 2021..

even as Texas again led this week's drilling increase, most new activity ​in the state ​was centered in the Eagle Ford shale, rather than in the ​dominant ​Permian basin...by checking the Rigs by State file at Baker Hughes for possible changes in that basin, we find that two rigs were pulled out of Texas Oil District 1, but that four rigs were added in Texas Oil District 2, and two more rigs were added in Texas Oil District 4...since the Eagle Ford rig count increased by 6, we have to assume that the two rigs removed from District 1 had not been targeting the Eagle Ford, but rather some other basin that Baker Hughes does not track....elsewhere in Texas, we had two rigs added in Texas Oil District 6, which ​should account for two of the Haynesville shale rig additions, and another rig added in Texas Oil District 8A, which would account for the Permian basin increase..

meanwhile, the Louisiana rig count was up by 3 this week with the addition of two Gulf of Mexico rigs in the state's offshore waters, and another rig in the northwestern part of the state, which accounts for the third rig added in the Haynesville shale...the rig added in Alaska was drilling for oil on the North Slope, as are all other Alaskan rigs, while two rigs were added in the Marcellus, one of which was drilling for natural gas in Pennsylvania, while the other was drilling horizontally for oil in Wetzel county, West Virginia, in the first Marcellus oil well since April 17, 2015...at the same time, two of this week's Haynesville rig additions were also targeting oil, bringing the Haynesville oil rig count up to four, the most oil rigs in that natural gas basin since November 1, 2013….but on the other hand, one of the Eagle Ford rig additions was targeting natural gas, which at 7 gas rigs now has the largest natural gas rig deployment since November 15 2019...the national natural gas rig additions finish at two, however, because there was also a natural gas rig pulled out of a basin that Baker Hughes doesn't track, possibly from Texas Oil District 1...

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Stop issuing fracking permits - Marietta Times LTE - I am a life-long resident of Appalachia. I grew up in West Virginia and for twenty years I have lived in beautiful Marietta, enjoying the local parks and walking them. That love of nature has been threatened by the fracking industry. For the past few years, every time I travel Third Street, I have encountered more and more tanker trucks. That got me to start asking questions and doing research, which became very troubling. As I am sure most of you know, all those trucks are carrying waste from the fracking industry, called brine. Fracking is “a process that injects liquid at high pressure into subterranean rocks, boreholes, etc. so as to force open existing fissures and extract oil or gas,” according to the Oxford Dictionary. What is most disturbing about this waste is that most is not only radioactive but also contains lead, arsenic, formaldehyde and mercury. Even though that’s only one percent of this in fracking waste, that’s one percent of, for example, the 1.9 million barrels of brine waste injected into waste wells in Washington County in 2011. Even more troubling, in 2019, Washington County had the second highest level of injection well activity in the state.One dangerous effect is the threat brine poses to our drinking water. According to Consumer Reports (December 3, 2020), brine “can contaminate [water] supplies when waste spills from trucks or pipelines moving it or when waste leaks from unlined disposal pits.” In fact, there was a spill of brine waste just outside of Marietta in January of 2021 at a pipeline owned by Deep Rock Disposal.Making matters even worse, the Ohio Legislature passed two bills which now allow for 333 times the radioactive brine waste recommended by health experts. Given this threat not only to our environment but to our health, it is imperative that we as residents of this county strongly urge the Ohio Department of Natural Resources at least to stop issuing permits in Washington County until injection wells are better monitored and until our drinking water can be guaranteed to be safe from these contaminants.—Margaret Meyer, Marietta

Exxon/XTO Energy Looking to Sell 27K Utica Shale Acres + 61 Wells -In late 2020, ExxonMobil released the outlines of its development plan for the next five years (see ExxonMobil Announces Plan to Divest “Certain” N.A. Dry Gas Assets). Exxon said it had decided to prioritize investing in “high-value assets” over the next five years–namely in Guyana and in the Permian Basin here in the U.S. The company hinted that asset sales for U.S. onshore shale outside the Permian were on the table. The hinting is done. Reuters is reporting that yesterday Exxon launched the sale of shale gas properties stretching across 27,000 acres in the Utica Shale of Ohio.Exxon subsidiary XTO Energy drills in both the Marcellus (in PA) and in the Utica (in OH). According to a marketing document viewed by Reuters reporters, Exxon/XTO is looking to sell 61 operated wells producing 81 million cubic feet per day (MMcf/d), along with another 274 non-operated wells in which the company owns a share. Exxon is hoping the assets fetch on the order of $200 million.Here’s the latest news coming out of the Utica: Exxon Mobil on Tuesday launched the sale of shale gas properties stretching across 27,000 acres in the Appalachian basin of Ohio, the company confirmed, part of an ongoing divestiture of U.S. assets.The top U.S. oil producer is marketing 61 wells that last year produced around 81 million cubic feet per day equivalent (mmcfd) of natural gas, according to a marketing document viewed by Reuters. The sale includes another 274 wells operated by other companies.A sale could value the assets at around $200 million based on current natural gas prices and existing production from the wells, a person familiar with the matter said.“ExxonMobil is providing information to third parties that may have an interest in the assets, but no agreement has been reached and no buyer has been identified,” said spokeswoman Sarah Nordin. Operations are continuing, she added.The company in 2020 took about a $20 billion writedown on properties, primarily purchased with subsidiary XTO Energy a decade earlier. It removed gas assets in Appalachia, the Rocky Mountains, Oklahoma, Texas and elsewhere from its development plan after the writedown.The Ohio properties produced around 250 mmcfd of gas in 2017 and are among assets that Exxon put on the market as it focuses development in Guyana, offshore Brazil and Texas’s Permian Basin shale field.U.S. natural gas futures settled at $4.219 on Tuesday, up more than 80% since the end of 2020.The company three years ago set a goal of raising $15 billion from asset sales, and last year accelerated its marketing efforts as energy prices recovered from the pandemic.*

Utica Shale Academy to create outdoor welding lab — Unhappy with the slow process of installing the welding lab in the basement of the Hudson Building housing the Utica Shale Academy in Salineville, the board went forward with plans to create an outdoor welding lab space. Both Superintendent Bill Watson and board member Mark Chronister emphasized the importance of students learning that if they are going to work in the welding industry, many times they may need to weld in less-than-ideal conditions. Chronister said people hiring welders note that often those jobs are not inside, especially in this area. People need to be able to weld in a muddy ditch in the cold and heat. Watson said after being assured the welding lab in the basement would be ready in August, he was later told the end of January. However parts of the project are still waiting for approval for the installation, which means students who were able to weld last year are not getting any practice during their senior year. The outdoor welding lab does not have all the same requirements needed for the basement lab. In the future, the school would like to have both labs up and running. During Tuesday’s meeting, the Utica Shale Academy board approved creating the new lab, which will be a concrete structure, a lean-to style building, according to Chronister, keeping the rain and snow off the students and equipment. It will include a 100-megawatt natural gas generator. The outdoor lab will be located at 65 East Main Street, a property the school purchased across from the current Shale Academy student parking area, and will hopefully be available for students to begin practicing welding skills as soon as mid-February. Eventually, that three-acre property also is slated to house the Kubota Tech program. Scott Shepherd with A&I Design Studio architecture will be working on the construction phases and coordinating with Columbia Gas.

24 New Shale Well Permits Issued for PA-OH-WV Jan 3-9 - Last week 24 permits were issued to drill new shale wells in the Marcellus/Utica. Pennsylvania had the lion’s share with 19 new permits–most of those (10) were issued for two Chesapeake Energy well pads in Bradford County in the northeastern part of the state. Ohio had just two new permits, both on the same Southwestern Energy well pad in Monroe County. West Virginia had three new permits, one in Pleasants County and two in Marshall County.

• Pennsylvania New Shale Permits Issued Jan 3-9
• Ohio New Shale Permits Issued Jan 3-9
• West Virginia New Shale Permits Issued Jan 3-9

With 1 Bcf/d Now Certified, Seneca Ready to Differentiate All Appalachian Natural Gas Output - Seneca Resources Co. LLC on Tuesday said 100% of its Appalachian natural gas production, which is 1 Bcf/d gross, has been deemed certified under performance targets set by Equitable Origin (EO). The exploration and production (E&P) arm of National Fuel Gas Co. (NFG) said the achievement was completed under the EO100 Standard for Responsible Energy Development. Many natural gas-directed North American E&Ps are differentiating their gas supplies through EO100 and other certification organizations. The EO100 process includes a series of environmental, social and governance targets, verified by independent third parties.The EO designation “validates our long-standing culture and history of environmental responsibility and community engagement,” Seneca President Justin Loweth said. “We will continue to embrace new technologies and implement best practices in order to remain on the leading edge of the industry’s sustainability initiatives.Seneca explores for natural gas and oil in the Marcellus and Utica shales, as well as in California. Seneca produced 83.1 Bcfe during the fiscal third quarter, up 48% year/year. The producer attributed the sharp increase to its acquisition in 2020 of 450,000 net acres in Pennsylvania from Royal Dutch Shell plc. In preliminary guidance for fiscal 2022, Seneca said it expects to produce 335-365 Bcfe, which would be 25 Bcfe higher than the midpoint of guidance for 2021. A team of auditors from engineering firm Geosyntec conducted an independent audit of Seneca’s Pennsylvania operations, EO noted. The auditors assessed the E&P’s alignment to the five EO100 principles: corporate governance and ethics; social impacts, human rights and community engagement; Indigenous Peoples’ rights; occupational health, safety and fair labor standards; and environmental impacts, biodiversity and climate change. Auditors examined Seneca’s documented programs, assessed field operations and conducted 30 interviews with internal and external stakeholders. NFG, whose footprint extends across the country, last September set a goal to lower its carbon footprint in 2030 by double-digits across the E&P, midstream and utility segments. For the consolidated company, NFG plans to reduce total greenhouse gas (GHG) emissions by 25% by 2030. The gathering arm and the utility unit have each set a methane intensity reduction target of 30% by 2030. In the pipeline and storage segment, the plan is to cut in half the intensity target reduction.

NYMEX Henry Hub gas futures cross $4 mark as US market balance tightens - S&P Global Platts - Prompt-month futures prices at the US Henry Hub edged back above $4 on Jan. 10 as more winter-like weather lifts heating demand to seasonal highs and a new year’s slump in domestic production persists. At mid-session, the prompt-month gas contract was up about 15-20 cents from its prior settlement to trade around $4.10/MMBtu. In the cash market, prices were up even more sharply to start the week, rising about 30 cents to $4.14/MMBtu, data from CME Group and the Intercontinental Exchange showed. Over the past month, Henry Hub futures and cash prices have mostly traded below $4 as weak seasonal demand has met with rising production and storage levels, easing earlier concerns over winter supply. Since the start of January, though, a tighter US supply-demand balance has reignited the market bulls.

Appalachia NGL Feedstock Looking to Support Region's Petrochemical Growth In 2022 - A long awaited petrochemical project is set to begin operations in the Appalachian Basin in 2022, and a second major investment in the region could get the green light this year. “A positive development before us in 2022 will be the anticipated start-up of Shell’s cracker facility in Beaver County,” President Daniel J. Weaver of the Pennsylvania Independent Oil and Gas Association (PIOGA), told NGI. Weaver was referring to the Pennsylvania Petrochemical Complex, a world-scale ethane cracker Shell plc is developing along the Ohio River northwest of Pittsburgh. The facility would produce polyethylene and ethylene from Appalachia-sourced ethane. Downriver in Belmont County, OH, Thailand-based PTT Global Chemical plc has proposed building another world-scale Appalachia ethane cracker. In 2020 Range Resources Corp. agreed to be the anchor ethane supplier for the facility, but PTT has yet to make a final investment decision. Spokesperson Mike Chadsey of the Ohio Oil and Gas Association (OOGA), told NGI his organization is eager to see whether this will be the year PTT reveals its intentions for the NGL complex. In addition, Chadsey, Weaver, and their peers with other trade associations in Pennsylvania and West Virginia shared with NGI some of their expectations for Appalachia oil and gas in 2022. Read on for their insights on major trends to watch in the region this year. In addition to witnessing the startup of Shell’s ethane cracker this year, Pennsylvania could see an infusion of federal money for plugging, remediating, and restoring orphaned oil and gas well sites, noted PIOGA’s Weaver. He said the “potential allocation of well-plugging funds from the federal government…could provide much-needed income to conventional producers ready to complete that work.” In November President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA) which, according to the U.S. Department of the Interior, includes $4.7 billion for orphaned oil and gas well site plugging, remediation, and restoration activities. “Pennsylvania is expected to receive $395 million” from the $4.7 billion earmarked in IIJA for orphaned wells, DEP Press Secretary Jamar Thrasher said. Terry Fletcher, acting communications director with the West Virginia Department of Environmental Protection (WVDEP), told NGI it is unclear how much his department’s orphan well program will receive from IIJA.The Ohio Department of Natural Resources (ODNR) told NGI that IJIA “aligns with the priorities of the DeWine/Husted administration to support economic development and job creation by focusing on our natural resources including the plugging of idle and orphan wells.”However, ODNR said its IIJA allocation remains to be seen.OOGA’s Chadsey said his organization “is cautiously optimistic” about 2022.m An issue that OOGA will continue to closely monitor in the new year will be ongoing and future oil and gas development within the Wayne National Forest (WNF) in southeastern Ohio, Chadsey noted. Oil and gas leasing in WNF has been the subject of a longstanding legal battle.Chadsey pointed out the WNF issue begs a number of questions for Ohio’s oil and gas community, including whether there will be a lease sale for Wayne, would anyone bid on Wayne acreage, and would any development occur there. The questions OOGA members seek to have answered in 2022 go beyond those tied to WNF leasing. Chadsey said the organization is eager to learn whether Congress “puts in place some type of methane tax/fee impacting producers’ ability to lease, drill, produce, and ship gas.”

Natural gas to gasoline: A $6 billion proposal in PA - A Texas-based energy company wants to build a $6 billion facility that would produce gasoline from natural gas near the Susquehanna River in northeastern Pennsylvania.The plant would be built on part of 3,000-acre abandoned coal mine site, which the company says it will rehabilitate.Nacero, founded in 2015, says its facility in Luzerne County, along with two other plants in Arizona and Texas, will produce the country’s first zero- and low-carbon footprint gasoline for everyday cars and trucks at competitive prices. Construction at the Pennsylvania site would begin by 2024.The company would produce gasoline from two sources of natural gas. One would be natural gas piped in from in the hydraulically fractured or “fracked” natural gas in Marcellus shale. Compared to petroleum gasoline, the company claims, the gas-derived fuel would have half the carbon lifecycle footprint — counting extraction, production, distribution and consumption. A second source would be methane gas released and captured from municipal landfills, decomposing animal waste and sewage plants. That gasoline would have a zero-carbon lifecycle footprint, according to the company.Both fuels would be free of sulfur, one of the main pollutants from refined-oil gasoline that is a precursor to smog and has health impacts.Under a law passed in 2020 to entice new petrochemical companies to locate in Pennsylvania’s fracking regions, Nacero would get about $6.7 million in tax breaks from the state, per year, for 25 years.Not everyone is on board, however. A coalition of 16 local and statewide environmental groups on Dec. 21 came out in opposition to the project. They said there is no evidence to back up Nacero’s claims of such large carbon-footprint reductions.“The environmental community is concerned that the proposed [project] will be the first in a new wave of proposals for fracked gas related projects marketed as good for the climate,” a spokesperson for the coalition said, “but that instead will pollute local communities while emitting significant amounts of greenhouse gases and expanding the fracked gas industry.”

Legal fights continue over the Mountain Valley Pipeline -- While cutting a 303-mile-long scar along the mountains of Virginia and West Virginia, the construction of a natural gas pipeline has also left a long trail of litigation with no end in sight.Four years ago, after the first trees were felled and a 125-foot-wide strip of land was cleared for the Mountain Valley Pipeline, lawsuits by environmental groups soon followed. A federal appeals court has struck down enough government permits to delay — but not to kill, at least so far — the $6.2 billion project.Three new legal challenges were filed in the past month. Since 2017, there have been at least 56 civil actions brought in state and federal courts in Virginia.“Mountain Valley Pipeline has faced an unusually high volume of litigation because it is an unusually unwise and unneeded project,” said Gillian Giannetti, a senior attorney with the Natural Resources Defense Council.Judges have pondered a host of issues: The actions of regulatory bodies, environmental damage caused by digging trenches to bury the 42-inch diameter pipe, the rights of the landowners who refused to sell their property to Mountain Valley, the fate of endangered species and claims that the project is not needed and will worsen climate change.

Newark NJ power plant: Groups urge Phil Murphy to block vote --Community groups and environmentalists are asking Gov. Phil Murphy to stop a plan to build a $180 million gas-fired power plant along the Passaic River in Newark that is scheduled for a vote this week. The proposal comes from the Passaic Valley Sewerage Commission, whose members are set to vote Thursday on a contract to build the backup power plant, which would keep its massive sewage treatment facility running during a prolonged power outage like the one it suffered during Superstorm Sandy in 2012. Opponents say the power plant would pump greenhouse gases into the atmosphere and exacerbate the strength and frequency of storms like Sandy, which caused the treatment plant to spew 840 million gallons of raw sewage into Newark Bay and surrounding waterways when power was disrupted.Those who live in the nearby Ironbound community worry that the plant would worsen the poor local air quality. They say it goes against both Murphy's clean power initiatives and his calls for environmental justice — the goal of building fewer polluting facilities in communities of color. The mammoth sewage treatment plant is the single largest user of electricity in New Jersey. It handles sewage from 1.5 million residents in 48 towns across Bergen, Passaic, Hudson and Essex counties. The plant was without any power for three days and without full power for three weeks after Sandy's 12-foot storm surge inundated the plant. It caused sewage to spill into the region's bays, rivers and harbors."A critical component for resiliency planning is the need to have an absolutely secure, reliable, on-site standby power generation facility," said Doug Scancarella, a spokesman for Passaic Valley. The proposed power plant would use three 28-megawatt turbines, although only 34 megawatts would be needed to run the plant, according to a recent presentation by the commission's contractors. It would be used in emergency situations and when there is peak demand in the region for electricity. In non-emergency situations, the turbines are each estimated to operate for 1,100 hours a year,The plant could emit as much as 8 tons of carbon monoxide, 3.5 tons of nitrogen oxide, 4.6 tons of particulate matter and other substances that would negatively affect air quality in nearby communities such as the Ironbound. Newark and the surrounding area already have high levels of childhood asthma.The plant could also emit as much as 39,000 tons of carbon dioxide each year, according to an air permit application by the commission. The commission's contractors say that would be less than what is currently produced using electricity from the grid.

U.S. natgas hits five-week high on cold Northeast and global prices U.S. natural gas futures gained more than 4% to a five-week high on Monday on expectations that the Northeast region will experience its coldest day of the winter on Tuesday and as soaring global gas prices bolster demand for U.S. liquefied natural gas (LNG). In addition, traders noted daily U.S. gas demand in the Lower 48 states jumped to a record high on Friday as cold weather blanketed most of the country. Earlier in the day, European gas futures jumped more than 8% on Monday. U.S. gas futures followed European gas prices about two thirds of the time during the fourth quarter of 2021 as utilities scrambled for LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia. Front-month gas futures rose 16.3 cents, or 4.2%, to settle at $4.079 per million British thermal units (mmBtu), their highest close since Dec. 3.29dk2902l Despite the cold expected on Tuesday in New York and New England, next-day power and gas prices for Monday eased in both regions. Power and gas prices in both regions jumped on Friday to their highest since January 2018. Some traders said New England power prices rose to about $180 per megawatt hour for Tuesday, which would again be their highest since January 2018. Lingering cold since New Year’s Day has continued to cause well freeze-offs in several regions, including the Permian in Texas and New Mexico, the Bakken in North Dakota and Appalachia in Pennsylvania, West Virginia and Ohio. Data provider Refinitiv said those weather-related issues, which are normal during winter months, have cut average output in the U.S. Lower 48 states to 94.6 bcfd so far in January, down from a record 97.6 bcfd in December. Refinitiv projected average U.S. gas demand, including exports, would slide from 133.7 bcfd this week to 130.2 bcfd next week. Those forecasts were lower than Refinitiv’s outlook on Friday. On a daily basis, Refinitiv said total U.S. gas demand plus exports hit a preliminary record high of 151.1 bcfd on Jan. 7. That would top the current record of 150.6 bcfd on Jan. 30, 2019, and the 147.2 bcfd hit on Feb. 12, 2021, just before Winter Storm Uri left millions without power and heat for days after freezing gas wells and pipes in Texas and other U.S. Central states. The amount of gas flowing to U.S. LNG export plants has averaged 12.0 bcfd this month, down from a record 12.2 bcfd in December. With gas prices around $29 per mmBtu in Europe and $34 in Asia, compared with about $4 in the United States, traders said buyers around the world would keep purchasing all the LNG the United States can produce.

U.S. natgas jumps to near 6-week high as Northeast freezes — U.S. natural gas futures jumped over 4% to a near six-week high on Tuesday on lingering cold-weather production declines and forecasts for higher heating demand next week than previously expected. The increase also came on the coldest day of the winter so far in the U.S. Northeast region. Front-month gas futures rose 17.0 cents, or 4.2%, to settle at $4.249 per million British thermal units (mmBtu), their highest close since Dec. 1. In the spot market, power prices in New England for Tuesday jumped to their highest since January 2018 as homes and businesses cranked up their heaters to escape the region's coldest day so far this winter. Data provider Refinitiv said output in the U.S. Lower 48 states has averaged 94.6 bcfd so far in January, down from a record 97.6 bcfd in December. Refinitiv projected average U.S. gas demand, including exports, would hold around 132.7 bcfd this week and next. The forecast for this week was lower than Refinitiv projected on Monday, while the outlook for next week was higher. On a daily basis, Refinitiv said total U.S. gas demand plus exports hit a preliminary record of 150.9 bcfd on Jan. 7. That would top the current record of 150.6 bcfd on Jan. 30, 2019, and the 147.2 bcfd hit on Feb. 12, 2021, just before Winter Storm Uri left millions without power and heat for days after freezing gas wells and pipes in Texas and other U.S. Central states. The amount of gas flowing to U.S. LNG export plants has averaged 12.1 bcfd this month, just below the 12.2-bcfd record in December. So global markets will have to wait until later this year for some of the 18 liquefaction trains under construction at Venture Global LNG's Calcasieu Pass in Louisiana to start producing LNG. The plant has been pulling in small amounts of feed gas since around September as it prepares to begin operating.

Natural gas surges 14% as cold snap ahead is expected to boost demand - U.S. natural gas futures surged more than 14% on Wednesday as temperatures drop and forecasts call for more winter weather ahead. The contract for February delivery advanced 14.3% to settle at $4.857 per million British thermal units, hitting the highest level since November. "The heating demand outlook for [the] eastern-third of the U.S. has strengthened materially for this weekend and for the last week of January," Saturday could see record natural gas demand due to a cold blast forecast for Friday. "The weather has gone from being a non-factor or bearish factor all season to being meaningful, again, for prices and demand," he added. After surging for much of 2021, natural gas prices dropped 36% during the fourth quarter following warm temperatures and as the omicron variant sent jitters through the market. Still, the contract posted a 47% gain for 2021, and is already up nearly 30% for 2022. "Due to the cold weather, and realistic worries about tighter supply, prices are moving higher across the North American complex," "Overall there just isn't the extremely slack supply of natural gas in the market that has been the prevailing trend over the past 10 years," he added. Jeff Kilburg, chief investment officer at Sanctuary Wealth, added that some of the price surge can be attributed to traders covering positions. "The perfect storm is hitting Nat gas futures as freezing temperatures are hitting the market as supply shortages still exist, and this is all being amplified as many short speculator traders were caught offsides and are being forced to cover their positions, exaggerating the move higher today," he said.

"No One Wants To Be Short" - US NatGas Futures Erupt As Cold Sweeps East Coast - U.S. natural gas futures jumped to levels not seen since early December amid a cold blast across the eastern U.S. and new threats of a winter storm over the weekend. Futures for February delivery soared 9.5% to $4.66 per million British thermal units, the highest price since Dec. In a weather forecast Tuesday, we noted that some of the coldest air in years is pouring into parts of the U.S. Major metro areas across the East Coast are seeing frigid temperatures, which are boosting heating demand. Average temperatures in NYC are expected to be well below the 30-year average through the end of the month. Heating degree days for NYC will be above normal through the second half of the month -- this means heating demand will soar. Dennis Kissler, a senior vice president at Bok Financial Securities Inc., told Bloomberg that the move in gas prices is"about short-covering and how much colder weather can get into January through February.""Add in the tight supplies in Europe that may bleed over to Asia, and no one wants to be short," Kissler said. "Front-month futures reached the highest seasonal price since 2010. Traders holding bearish positions are buying to close out their bets as the price crossed both the 200- and 50- day moving averages, which are bullish technical signals. The risk premium is being added back to winter gas prices, with the front-month contract advancing at almost twice the pace of April futures," Bloomberg said.

Impending Cold Blast in Texas Spelling Natural Gas Volatility – With freezing weather on the horizon throughout much of the United States, including Texas, February natural gas prices at hubs key to Mexico shot up this week.The Henry Hub February contract closed at $4.857/MMBtu on Wednesday, up 60.8 cents on the day and more than $1 from one week ago. Agua Dulcewas up by 81.3 cents at $5.447.Houston Ship Channel prices for February settled at $5.397, up 81.2 cents. Waha shot up 9.15 cents to close at $5.500.“This latest cold blast will be the first test of Texas production and gas flows since Winter Storm Uri in February 2021,” said NGI’s Patrick Rau, director of Strategy & Research. “The good news is the state has had nearly a year to prepare for such events. The bad news is any price spike in Texas will flow through to Mexico, because the overwhelming majority of gas imports into Mexico from the U.S. are tied to U.S gas prices. “This just underscores the need for liquid price indexes in Mexico that are based on Mexican supply and demand characteristics.”The cold blast is expected to hit during the final 10 days of this month, and prices are also being pressured by supply constraints. U.S. natural gas production had ticked up to start the year to 94 Bcf but output is still about 2 Bcf below late 2021 highs following freeze-offs early this year that curtailed producer activity. Further squeezing supply, NGI estimates on Wednesday showed U.S. liquefied natural gas (LNG) demand reached a record 13 Bcf for only the second time as Europe continued to suffer the effects of a cold winter and low gas stocks.“Gas consumption in the north of Mexico is going up because of the cold,” a trader told NGI’s Mexico GPI, and “there is a new round of nervousness about the weather in Texas.” To date, however, “it’s business as usual,” and the gas system in Mexico is “working fine.”Mexican demand is also being augmented by increasing domestic production. Preliminary data from Wood Mackenzie indicated that Mexican dry gas output is coming in strong so far this month. “In January-to-date terms, average production is hovering over 2.7 Bcf/d, a near-15% bump from December last year,” Wood Mackenzie analyst Ricardo Falcón told NGI’s Mexico GPI.More than 85% of the total supply gains correspond to Petróleos Mexicanos (Pemex) gas processing complexes in Tabasco and Veracruz. Pemex has also unveiled plans to ramp up production at the Ixachi field and to restart operations at the gas-rich deepwater Lakach asset amid a more competitive pricing environment.So far in January, estimated imports from the United States into Mexico are eclipsing the 5.5 Bcf/d mark. That is “slightly more than 1% above the December average,” Falcón said. “In Wood Mackenzie’s analysis, there is still upside potential this month as Mexico’s main gas-intensive sectors get fully back on track.”

For First Time in Five Sessions, Natural Gas Futures Falter as Traders Take Profits -The price of natural gas for delivery next month nosedived on Thursday as traders took profits after a massive four-day rally. The February Nymex gas futures contract settled at $4.270/MMBtu, down 58.7 cents day/day. March dropped 32.2 cents to $4.005. NGI’s Spot Gas National Avg., in contrast, continued to climb, gaining 89.0 cents to $6.450 on Thursday. The spike built on a 52.5-cent jump a day earlier.The prompt month on Wednesday had soared 60.8 cents, capping a multi-session bull parade that took futures to a 2022 high near $5. Modest production levels, robust demand for U.S. exports of liquefied natural gas (LNG) and expectations for an extended bout of frigid weather later this month combined to fuel the rally.Production, however, climbed about 2 Bcf over the past couple days and reached 95 Bcf on Thursday, according to a Bloomberg estimate. That put output back near 2021 highs after freeze-offs early this year curtailed producer activity.The rising output and profit-taking Thursday ended the rally, Marex North America LLC’s Steve Blair, a senior account executive, told NGI.“We also had some speculative buying ahead of Thursday’s storage report that probably made Wednesday’s surge a bit overdone,” Blair said.The U.S. Energy Information Administration (EIA) on Thursday reported a pull of 179 Bcf natural gas from underground inventories for the week ended Jan. 7, the largest so far this winter. The result was in line with market expectations. However, Blair said that, following harsh winter weather last week, some in the market had bet on an even larger withdrawal and bid up futures in advance of the report. When the EIA print essentially matched the midpoint of analysts’ estimates in major polls, speculators likely sold off some of their positions, adding to profit-taking already underway.

U.S. natgas futures steady as market rests after volatile week (Reuters) - U.S. natural gas futures were little changed on Friday ahead of the long Martin Luther King Jr Day holiday weekend as the market took a break after extreme, weather forecast-related volatility earlier in the week. Earlier in the week, prices soared 14% on Wednesday on colder forecasts - their biggest one-day percentage increase since September 2020 - and dropped 12% on Thursday after those forecast turned less cold - their biggest one-day percentage decline since January 2019. With extreme cold possible at any time and strong memories of price spikes during last February's freeze in Texas, traders said they expect the market to remain volatile in coming weeks with every change in the weather forecast. Friday's U.S. price decline came despite a 10% jump in European gas futures earlier in the day. Since the start of the year, the U.S. market has focused more on changes in U.S. weather and domestic supply and demand rather than what is happening around the world. So far in 2022, U.S. gas followed European prices only about a quarter of the time versus about two-thirds during the fourth quarter of 2021. But, traders said demand for U.S. liquefied natural gas (LNG) will remain strong so long as global gas prices keep trading well above U.S. futures. Global prices were currently trading about seven times above U.S. prices as utilities around the world scramble for LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia. Front-month gas futures NGc1 for February delivery fell 0.8 cents, or 0.2%, to settle at $4.262 per million British thermal units (mmBtu). That put the front month up about 9% for the week after gaining 5% last week. During last year's February freeze, gas futures climbed as much as 7% on Feb. 16, but did not soar nearly as much as the spot market. Next-day gas jumped to record highs in several parts of the country - jumping over 1,100% on Feb. 12 at the Waha hub in West Texas - as Winter Storm Uri left millions without power and heat for days after freezing gas wells and pipes in Texas and other U.S. central states. In the spot market this week, cold weather and high heating demand in the U.S. Northeast kept next-day power and gas prices in New York and New England at or near their highest since January 2018. Traders noted more freezing weather was on the way with Saturday expected to be the coldest day of the winter so far and below normal temperatures expected during the entire week of Jan. 23. Data provider Refinitiv projected average U.S. gas demand, including exports, would slide from 133.4 billion cubic feet per day (bcfd) this week to 131.8 bcfd next week as the weather turns less cold before soaring to 142.2 bcfd in two weeks.

Fight heats up to protect Everglades, Big Cypress - - The National Park Service faces growing pressure to block any additional oil exploration in Florida’s Big Cypress National Preserve, posing one of the first major tests for Chuck Sams, the agency’s new director.In a letter to Sams and Interior Secretary Deb Haaland, Florida Agriculture Commissioner Nikki Fried urged the park service to use its “broad legal authority” to stop proposed drilling by Texas-based Burnett Oil Co.“The fate of this vast wilderness, part of the most unique and delicate ecosystem on Earth, hangs in the balance with these decisions before you,” Fried said in her letter last week. Fried, a Democrat, is running for governor in an effort to unseat incumbent Republican Gov. Ron DeSantis.Many green groups and other Florida politicians from both political parties have issued similar pleas, arguing that the 729,000-acre preserve provides vital habitat for the endangered Florida panther and provides fresh water for nearby Everglades National Park.“There is simply too much at stake for this ecosystem for the National Park Service to get this wrong,” Alison Kelly, a senior attorney with the Natural Resources Defense Council, said in a blog post last month.Sams, who was sworn in just last month, has yet to weigh in on the issue. The National Park Service and Interior Department both declined to comment this morning.The latest pressure comes after 13 members of the Florida congressional delegation — 10 Democrats and three Republicans — wrote a letter to Haaland and President Biden in October, asking the administration to “deny any operations permits needed to advance any new oil drilling sites within the Everglades.”“There is fierce local opposition from the Seminole Tribe and other local communities,” the lawmakers wrote. “The recent California oil spill is the latest example of the irreparable harm oil drilling can have to our communities and environment. For these reasons, we believe the proposed oil extraction activity should not be authorized.” The push to protect the Everglades has won strong bipartisan backing and promises to be an environmental issue in this year’s Florida governor’s race.

Pipeline spills 300,000 gallons of diesel near New Orleans - A severely corroded pipeline ruptured and spilled more than 300,000 gallons (1 million liters) of diesel fuel just outside New Orleans, according to federal records. The spill from the 16-inch (40-centimeter) diameter line operated by Collins Pipeline Co. was discovered December 27 near a levee in St. Bernard Parish, just east of New Orleans, according to documents from the Pipeline and Hazardous Materials Safety Administration. In October 2020, an inspection of the 42-year-old pipeline had revealed external corrosion along a 22-foot (7-meter) section of pipe in the same area as the spill. But repairs were delayed and the line continued operating after a subsequent inspection indicated the corrosion was not bad enough to require work immediately under federal regulations, according to the pipeline agency. The spilled fuel contaminated soil and created a large pool of diesel in an environmentally sensitive area just a few hundred feet from the Mississippi River, the documents show. An estimated 50,000 gallons (227,000 liters) of diesel were later recovered and cleanup of the remaining fuel is ongoing, the documents show. Collins Pipeline is a subsidiary of Parsippany, New Jersey-based PBF Energy Inc. Company representatives did not immediately respond to email and telephone messages seeking comment.

Pipeline spills 300,000 gallons of diesel near New Orleans (AP) — A severely corroded pipeline ruptured and spilled more than 300,000 gallons (1.1 million liters) of diesel fuel just outside New Orleans after the operator delayed needed repairs, according to federal records. Most of the fuel drained into two artificial ponds called “borrow pits" and thousands of fish, birds and other animals were killed, state and local officials said Wednesday. The spill also contaminated soil, according to state and federal officials. The pipeline's owner said 315,000 gallons (1.2 million gallons) of fuel with some water mixed in had been skimmed and recovered, primarily from the ponds. Cleanup work is ongoing. The spill from the 16-inch-diameter (40-centimeter-diameter) line operated by Collins Pipeline Co. was discovered Dec. 27 near a levee in St. Bernard Parish, just east of New Orleans, according to documents from the Pipeline and Hazardous Materials Safety Administration. The spill had not been previously publicly reported. An inspection of the 42-year-old Meraux Pipeline more than a year earlier, in October 2020, revealed external corrosion along a 22-foot (7-meter) section of pipe at the same site as the spill, federal records show. The pipe had apparently lost 75% of its metal where the corrosion was worst, which would have required immediate repair, according to the records. But work was delayed and the line continued operating after a second inspection concluded the corrosion was not bad enough to require immediate repair under federal rules, the records show. The spilled fuel also contaminated soil in an environmentally sensitive area near the Mississippi River Gulf Outlet, a closed canal, according to state and federal officials. A small amount of diesel remains in the two borrow pits, said Louisiana Department of Environmental Quality spokesman Gregory Langley. The spill killed 2,300 fish and more than 100 other animals, including 39 snakes, 32 birds, a few eels and a blue crab, according to statistics provided by Robert “Trey” Iles, a spokesman for the Louisiana Department of Wildlife and Fisheries. Nearly 130 animals — 72 alligators, 23 birds, 20 snakes and 12 turtles — were captured for rehabilitation, he said. Diesel is a highly toxic petroleum product that can kill fish and plants that come into direct contact with it, according to the National Oceanic and Atmospheric Administration. Fuel from small spills can evaporate or disperse naturally in just a couple of days but larger spills can take months to degrade. A pipeline safety advocate said it was “maddening” that the corrosion was known about for more than a year prior to the spill yet fuel kept flowing through the 125-mile-long (200-kilometer-long) line from Chalmette to a storage terminal in Collins, Mississippi. “It’s especially maddening to learn that Collins Pipeline’s initial analysis deemed the pipe in such poor condition that it warranted an immediate repair,” said Bill Caram with the Pipeline Safety Trust. The Bellingham, Washington-based organization advocates for more stringent oversight of the nation’s sprawling network of pipelines transporting oil, natural gas and other hazardous fuels.

1st of 43 lawsuits accusing Big Oil of damaging Louisiana coast back to state court - again - A federal judge in New Orleans has again ruled that a wetlands damage lawsuit against six oil and gas companies with potentially vast consequences should be heard in state 25th Judicial District Court in Plaquemines Parish, instead of in federal court. In a 29-page ruling issued Tuesday, U.S. District Judge Martin L.C. Feldman of New Orleans said the oil companies failed to prove that the companies' development of dozens of wells in the Potash oil field being developed by the Humble Oil Co. during World War II was actually overseen by federal agents, which would have represented "federal officer jurisdiction" that would have required the cases to be heard in federal court. The ruling followed a hearing in federal court in New Orleans, where Plaquemines Parish's attorneys and attorneys representing the oil companies presented their arguments. "After nine years of Big Oil forum-shopping, the parishes now have the opportunity to demonstrate in state court how real and provable this damage is," said John Carmouche, lead attorney for the parishes. "The parishes will continue to fight and will not back down until our coast is restored." “Once again, the governor is pleased with the judge’s ruling," said Shauna Sanford, communications director for Gov. John Bel Edwards. "As he has said previously, these Louisiana claims should be heard in a Louisiana court.” “Defendants appreciated the opportunity to present their case to the court yesterday. We were, of course, disappointed with the outcome, and we are planning a prompt appeal," said Melissa Landry, a spokesperson for the legal teams representing BP America, Chevron, ConocoPhillips, Exxon Mobil Corporation and Shell, in this and other similar wetlands damage cases. In a joint statement on the ruling, the Louisiana Mid-Continent OIl and Gas Association and Louisiana Oil & Gas Association said that even if the cases remain in state court, proving damages is likely to be difficult. “In whichever court these cases proceed, they should face significant challenges," the statement said. "With these baseless claims, plaintiffs’ lawyers are seeking to reach back in time and impose liability on an entire industry for conducting activities that were conducted lawfully and created countless jobs and other economic benefits for communities across the state and nation." It's the third time that this lawsuit has been ordered returned to the Plaquemines court by a federal judge. But, as the attorney for the oil companies confirmed, it's likely this decision also will be appealed to the U.S. 5th Circuit Court of Appeals, and possibly to the U.S. Supreme Court.

Home to 4,605 orphan oil and gas wells, Louisiana seeks federal money to plug them -Louisiana is home to 4,605 orphan oil and gas wells, some of them threatening the environment, and now plans to ask the federal government for a Infrastructure Investment and Jobs Act grant to help pay the estimated $401.7 million cost of plugging them. It's one of 26 states that told federal ofwcials by the Dec. 30 deadline they want part of the $4.7 billion reserved in the law for plugging abandoned wells and restoring associated property. The effort is aimed at both cleaning up environmental issues at the well sites and, by plugging the wells, stopping the release of methane, the carbon-rich main ingredient of natural gas that's been linked to global warming. In requesting the states to apply for the money, President Joe Biden's administration said the plan was aimed at both its environmental benewts, especially for low- and moderate-income residents living nearby abandoned wells, and its expected economic benefits in an era of declining oil and gas service jobs. "These legacy pollution cleanup efforts will advance the department’s goals of environmental justice by helping historically marginalized communities address the devastating and long-lasting effects of legacy pollution," an Interior Department memorandum said. In its Dec. 23 declaration of interest in a grant, the Louisiana Department of Natural Resources estimated the state lost 12,256 oil and gas industry jobs between March 1, 2020, and Nov. 15, 2021, which represents a 23.4% reduction in that sector in Louisiana. Based on the state's estimates, it would be asking an average of $87,000 for each well it has listed as orphaned. However, the money set aside in the infrastructure bill would only be enough to pay an average $36,000 per well, if all 130,000 abandoned wells identiwed by Interior were funded. If all of Louisiana's orphan wells were targeted for plugging, the effort could employ about 1,000 people fulltime for a year, and could reduce methane emissions by 558 metric tons per year, according to a 2020 report by Columbia University and Resources for the Future, a Washington D.C. environmental policy think tank. The methane reduction is the equivalent of the annual greenhouse gas emissions of more than 3,000 cars. The Interior Department said Wednesday that the 26 states seeking grant money reported a total of more than 130,000 orphan wells. That's slightly fewer than the 131,227 documented orphan wells reported in the latest survey of the Interstate Oil and Gas Compact Commission of 32 states through 2020. The commission said its total represented a 23% increase since 2018.

Oilfield employment climbed in December despite cooling U.S. job market- Employment in the U.S. oilfield services and equipment sector rose by an estimated 7,450 jobs in December, despite the slow hiring in overall U.S. jobs, according to preliminary data from the Bureau of Labor Statistics (BLS) and analysis by the Energy Workforce & Technology Council (Council). Gains were made in oil and gas extraction, as well as machinery manufacturing. The 1.1% growth in December comes as overall U.S. job growth underperformed against analyst's expectations. After hitting a peak of more than 109,000 pandemic-related job losses in February 2021, the oilfield services and equipment sector has regained an estimated 62,289 jobs, according to BLS data. This brings the total pandemic employment losses to 47,172 jobs, resulting in $5.6 billion lost in annual wages. “As oil demand has pushed higher, it’s heartening to see continued job growth in the sector,” said Energy Workforce & Technology Council CEO Leslie Beyer. “The sector has recovered more than half of the jobs lost to the pandemic, and we expect continued growth in 2022.” Using BLS data, the Council, in consultation with researchers from the Hobby School of Public Affairs at the University of Houston, found that reductions were heaviest in April 2020, when the sector shed 57,294 jobs — the largest one-month total since at least 2013. Sector employment grew at an average monthly rate of 0.6% in 2021 as companies have maintained focus on reducing debt, repaying investors and investing in research and development. The Council is the national trade association for the energy technology and services sector representing 600,000 jobs in the technology-driven energy value chain. More than 450 member companies are involved in energy equipment manufacturing, drilling, well completions, well services, pressure pumping, renewable energy technology and servicing, geothermal development, and more. The innovative men and women who comprise this sector are leaders in developing and deploying innovative technologies on a global scale that increase efficiency, improve environmental performance, and reduce greenhouse gas emissions. Below are the top states for employment in the energy technology and services sector, and estimated job gains in December 2021 compared to the same month in 2020, according to BLS data:

Capline Pipeline reversal fully online with extra Canadian crude capacity Capline Pipeline reversal fully online with extra Canadian ..The reversed Capline Pipeline is fully online and has enough excess capacity to roughly double its current Canadian oil sands crude volumes. The Capline reversal project to send crude from Patoka, Illinois to St. James, Louisiana started interim service Dec. 18 and entered full service Jan. 1 with initial volumes of about 100,000 b/d. But the pipeline currently has capacity of about 200,000 b/d and excess capacity is available for both contracted and spot shipments, said Marathon Petroleum spokesman Jamal Kheiry. "Currently, there is available space on the 200,000 b/d pipeline. When additional capacity is required based on market demand, existing pump stations can be reactivated," Kheiry said in a statement. Capline is a 632-mile, 40-inch pipeline system that historically moved crude from the Louisiana Gulf Coast to Midwestern refiners. But, as demand has picked up for crude oil from Canada and the Bakken shale -- both for Gulf Coast refiners and export markets -- the decision was made to reverse the line and carry crude to the Louisiana Gulf Coast where it has easy access to refineries and LOOP. Capline, which is owned by Marathon and Plains All American Pipeline, connects to Canada via Enbridge's Mainline pipeline system Enbridge's 300,000 b/d Southern Access Extension pipeline, which Enbridge eventually plans to increase to roughly 400,000 b/d through optimization efforts. TC Energy's Keystone Pipeline also stretches to Patoka. However, Enbridge's expansion plans may be on hold after its Mainline contracting proposal was recently rejected by Canadian regulators. And how much crude flows into Patoka may limit the available volumes to move through Capline. Enbridge's contracting negotiations are expected to extend into 2023. Marathon and Plains have said that Capline will start out shipping "100% Canadian crude" -- as opposed to lighter barrels from the Bakken Shale. Future growth will depend on demand, as well as on Patoka volumes, said Plains Chief Commercial Officer Jeremy Goebel in a November earnings call. "I think there's a number of projects potentially restructuring how crude gets across the Canadian border and what markets it goes to," Goebel said. "And so, once there's clarity with Enbridge and its shippers and [TC Energy] and its shippers, I think we'll see how many barrels flow to Patoka and the potential to expand it. So we definitely think there's opportunities to increase from where it is today, but there needs to be certainty of which barrels end up in Patoka." Capline has maximum potential capacity of 1.2 million b/d, but money would need to be spent on reconfiguring more pumping stations to get there over time.

U.S. Crude Stocks Drop as Production Levels Off, Demand Increases - Inventories of U.S. oil continued to decline early in 2022 – extending a trend that developed last year – as petroleum demand climbed and production ticked down, the Energy Information Administration (EIA) said Wednesday. For the week ended Jan. 7, domestic commercial crude inventories, excluding those in the Strategic Petroleum Reserve, decreased by 4.6 million bbl from the previous week. At 413.3 million bbl, U.S. stocks are 8% below the five-year average, EIA said in its latest Weekly Petroleum Status Report.The decline reflects steady demand growth over the past several months that extended into January. Consumption of gasoline, diesel and jet fuel all have recovered substantial ground over the past year – following the pandemic-induced demand destruction of 2020 – and continue to advance. The U.S. demand trajectory is amplified by similar trends in Asia, Europe and other international markets as economies gather momentum, travel increases and consumption of fuel derived from oil mounts, Rystad Energy analysts said.Brent crude prices, the global benchmark, climbed Wednesday and approached $85/bbl – up more than 50% from year earlier levels.Oil prices are “buoyed by positive demand signals for 2022,” said Rystad senior analyst Louise Dickson. “The global demand outlook for 2022 is solid, as many countries keep their borders open and avoid implementing the strict lockdowns imposed during previous Covid-19 waves.”While the highly infectious Omicron variant of the coronavirus is driving surges in infections early this year, Dickson noted, to date it has proven “a less severe strain for most who contract it.”Total U.S. petroleum demand for the Jan. 7 period rose 6% week/week. Consumption has consistently exceeded year-earlier levels for several months. Total products supplied over the last four-week period averaged 20.8 million b/d, up 11% from the same period last year. Over the same stretch, motor gasoline demand averaged 8.7 million b/d, ahead 12%, and distillate fuel consumption averaged 3.8 million b/d, up 7%. Jet fuel demand spiked 28% to 1.5 million b/d.At the same time, particularly in the Lower 48, producers are under pressure to hold a conservative line on crude output and divert more investment dollars to renewable fuel projects, said BTU Analytics LLC President Kathryn Downey Miller.“Anticipation of the energy transition (and overzealous assumptions on timing) is scaring off just enough investment in the sector to buoy prices at levels producers once dreamed of,” she said. Domestic crude output last week declined by 100,000 b/d from the previous week to 11.7 million b/d. The late-December level had marked a high for 2021. It was up about 7% from a year earlier at the end of last month. But production was still more than 1 million b/d below pre-pandemic levels.Internationally, the Organization of the Petroleum Exporting Countries (OPEC), headed by Saudi Arabia, and a Russia-led group of allies known as OPEC-plus, last week agreed to increase production by 400,000 b/d in February, continuing a pace of monthly supply increases the cartel began in August.OPEC-plus officials said global supply and demand could align in the first half of this year as long as the cartel meets its targets in coming months and demand does not surge further. However, analysts noted that some oil producing countries are struggling to increase production, including war-torn Libya as well as both Nigeria and Angola, which have struggled with deteriorating infrastructure.In a separate report this week, EIA projected that global petroleum production would increase by 5.5 million b/d in 2022, driven by increases in the United States as well as among OPEC-plus members. EIA expects further output increases next year. The agency also forecast that global consumption would increase by 3.6 million b/d this year, boosted by demand in the United States and China, which together account for 39% of the expected growth.

U.S. Drilling Total Increases by Double Digits as Activity Climbs in Eagle Ford, Haynesville - On the strength of sharp gains in the Eagle Ford and Haynesville shales, the U.S. rig count surged 13 units higher to 601 for the week ended Friday (Jan. 14), according to the latest numbers from Baker Hughes Co. (BKR). Net gains in the United States included 11 oil-directed rigs and two natural gas-directed rigs, with 11 added on land and two in the Gulf of Mexico. The 601 active rigs as of Friday compares with 373 rigs running in the year-earlier period, according to the BKR numbers, which are partly based on data from Enverus. Nine horizontal rigs were added week/week, alongside two directional rigs and two vertical units. The Canadian rig count jumped 50 units for the period to 191 in the latest BKR count, including 43 oil-directed rigs and seven natural gas-directed. The combined Canadian count ended the period 30 units higher year/year. Broken down by major producing region, the Eagle Ford led with a net increase of six rigs for the week, bringing its tally to 50, up from 28 in the year-earlier period. The Haynesville picked up three rigs, while two were added in the Marcellus Shale. The Permian Basin added one rig during the week to bring its total to 293, versus 189 a year ago. Counting by state, Texas saw its total jump seven units to 281, while Louisiana added three rigs to raise its count to 55. Alaska, Pennsylvania and West Virginia each saw net increases of one rig for the period, according to the BKR data. The rising rig numbers have correlated with signs of activity growth for the oilfield services sector. The U.S. OFS and equipment sector added an estimated 7,450 jobs in December, the Houston-based Energy Workforce & Technology Council said recently. “As oil demand has pushed higher, it’s heartening to see continued job growth in the sector,” said Council CEO, Leslie Buyer. “The sector has recovered more than half of the jobs lost to the pandemic, and we expect continued growth in 2022.” The 1.1% jobs gain for December represents a month/month rebound. For November, the Council reported a 0.1%, or 815-job, decline in OFS employment. The 17,000-plus OFS employment increase reported for August through October dwarfed the November dip, however.

US oil, gas rig count leaps 15 on week to 722, but most big basins just add one: Enverus -- The US oil and gas rig count leaped 15 to 722 on the week, energy analytics and software company Enverus said Jan. 13, as E&P operators took advantage of replenished new year capital budgets to resume a brisk pace of rig adds. Oil-directed rigs jumped 13 to 707, while rigs chasing natural gas moved up two to 172 during a week where crude prices moved over $80/b. "The increase this week was impressive, but I wouldn't consider it to be out of the ordinary," Taylor Cavey, senior analyst-supply and production at S&P Global Analytics, said. "Looking back, there were several occasions with similar increases in the last few weeks and months. I wouldn't read too much into it." "We're expecting similar growth to 2021 through this year," Cavey said. Some 300 rigs were added to the rig count in 2021 after starting the year at 406. "Also, we generally don't make substantial changes to the rig forecast ... and don't foresee anything changing this month," said Cavey. Oil and gas prices moved up this week, according to S&P Global Platts estimates. WTI prices averaged $80.09/b, up $3.11, while WTI Midland averaged $81.32/b, up $3.38 and Bakken Composite averaged $80.40/b, up $3.79. Also, gas at Henry Hub averaged $4.11/MMBtu, up 40 cents while at Dominion South it averaged $3.87/MMBtu, up 61 cents. Most of the eight biggest domestic basins added a single rig for the week ended Jan. 12. That included the Permian Basin of West Texas/New Mexico, the Haynesville Shale of East Texas/Northwest Louisiana, the Eagle Ford Shale of South Texas, the SCOOP-STACK play in Oklahoma, the Marcellus Shale, largely sited in Pennsylvania and West Virginia, and the Utica Shale, mostly in Ohio. Permian again at 300 rigs That caused the Permian to tick up again to 300, a figure it has wobbled around in recent weeks, the Haynesville to 66, the Eagle Ford to 58, the SCOOP-STACK to 41, the Marcellus to 39, and the Utica to 11. The only two basins that didn't add a rig were the DJ Basin chiefly in Colorado and the Bakken Shale in North Dakota/Montana. The DJ rigs remained stable at 16 rigs for the week ended Jan. 12, while the Bakken lost a rig leaving 31. The Haynesville's 66 rigs represent a recent activity record – the highest level since the first week of March 2019. Directionally oriented rigs drove the rig count for the week ended Jan. 12, gaining eight to 77. Horizontal rigs were sluggish on the week, climbing by just three to 571, while vertical rigs gained four to 74. But horizontal rigs drove the year's rig adds, closing out 2021 at 563 after beginning the year at 333. But private E&P companies accounted for most of the total rig adds for the week ended Jan. 12. Privates added 12 rigs for a total 406. In contrast, majors and large-cap independents each added just two rigs as a group – pushing up large cap independents to 120 and majors to 49.

EIA expects shale to drive record U.S. oil production in 2023 --U.S. annual oil production is set to rise to a record next year as shale producers continue to boost output. Oil supply will average 12.41 million barrels a day in 2023, according to the Energy Information Administration. That would surpass the current annual high of 12.3 million barrels a day set in 2019, the EIA said in its monthly Short-Term Energy Outlook report. The agency also lowered its production estimate for this year to 11.8 million barrels a day. The projected rise in U.S. output would represent nine consecutive quarters of growth, beginning the last three months of 2021, the EIA said. U.S. crude production reached a monthly peak in late 2019, months before the pandemic jolted global markets and forced producers to slash output. Since then oil prices have recovered by more than 50% but major producers have been wary of bringing back supplies too quickly, keeping monthly figures below pre-pandemic highs. “Relatively high crude oil prices should result in an ample availability of funding to support the production increase,” the EIA said in the monthly report. The agency sees domestic output surpassing 12 million barrels a day from the fourth quarter of this year. Benchmark U.S. crude futures prices have been off to a strong start to the year, adding over $5 a barrel since 2021 ended. The agency also sees global petroleum supply rising to a record this year of 101.05 million barrels a day. That’s an upward revision from last month’s forecast of 100.93 million. The EIA expects global production will rise further to 102.8 million barrels a day in 2023. Global consumption is set to reach 100.52 million barrels a day this year from its previous estimate of 100.46 million, according to the report. Consumption is expected to jump to 102.3 million barrels a day in 2023.

Oil production to keep surging under Biden - U.S. crude oil production is projected to set a full-year record in 2023, the federal Energy Information Administration said in a new report. The forecast in EIA's wider monthly outlook yesterday signals the recovery from the pandemic-fueled production collapse in 2020. It also shows how oil-and-gas development is slated to remain robust even as the White House says it's aiming to reorient the economy around zero-carbon energy. By the numbers: EIA sees annual U.S. production averaging 12.4 million barrels per day (mbd) in 2023, slightly ahead of 2019's 12.3 mbd average, though they don't see the peak of nearly 13 mbd reached in late 2019. Yes, but: EIA monthly forecasts are a snapshot in time and bounce around based on variables like, say, the pace of pandemic recovery. EIA's current 2023 forecast is based on oil prices that are actually well below today's levels.

U.S. gasoline markets point to bad news for Biden this summer--The gasoline market is painting a picture of tight supplies this summer -- the last thing Joe Biden will want to see as he tries to contain high fuel prices. On the New York Mercantile Exchange, futures contracts for gasoline are in an increasingly bullish structure called backwardation. They show that those who trade the fuel expect a summer of relatively weak supply and strong demand. And that doesn’t bode well for a U.S. president who’s trying to keep fuel costs low. The U.S. typically builds its supplies of gasoline from November through February. Then, they’re drawn back down in spring and the summer driving season. This year, inventories are starting off well below the seasonal norm and there are signs that work on oil refineries could slow the buildup of stockpiles. ExxonMobil Corp.’s Baytown oil refinery, the fourth largest in the U.S., has suffered a fire and this spring’s refinery maintenance season is set to be heavy. Demand, meanwhile, has been trending above normal. Supplies are also low in Europe -- one of the country’s biggest suppliers. This summer’s backwardation -- whereby more immediate contracts are priced at a premium to later ones -- is currently much steeper than it’s been at this time of year since at least 2017. It’s also more deeply backwardated than Brent crude, the global oil benchmark. The Biden administration has invested a lot of time and effort in jawboning oil prices lower and orchestrating a global release of strategic petroleum reserves.

Oil jobs abound in West Texas, but obstacles hamper hiring -Brent crude oil futures were trading at $85 a barrel Wednesday and West Texas Intermediate at $83, which historically would have oil producers scrambling to drill. While we’ve seen a steady uptick in the rig count in places like the Permian Basin, it’s nothing like what we would likely have seen decades ago. But any uptick in oil and gas activity is welcome news for the economy of Midland, Texas, and the folks who live and work there. The unemployment rate in Midland is 4.5%, down from 6.7% over the summer, thanks in no small part to more activity in the oil fields. Grant Swartzwelder, president of OTA Environmental Solutions, an oil field services firm in the area, said there are jobs to be filled, but the tight labor market is making it tough to do so. Sign up for the daily Marketplace newsletter to make sense of the most important business and economic news. “When Whataburger will pay $15 an hour just to flip burgers, you know, that trickles all the way through to some mechanics” Swartzwelder said. But he said it’s not fast food restaurants he’s worried about. Big Oil companies poach his workers with higher pay. Swartzwelder’s been in the industry here for 37 years and said in the past when oil was $80 a barrel, people migrated here for work. “In boom times, you would see license plates from all over the 50 states here in Midland, and you’re not seeing that.” “Whether folks are just tired of the bust-boom cycles, and just saying, ‘You know, I don’t need that extra money, I’ll just stay put,’” he said. The United States is also trying to slowly wean itself off of fossil fuels, so oil and gas jobs could be short lived. But Garrett Golding, a business economist at the Federal Reserve Bank of Dallas, said people can’t just transition to green energy jobs overnight. “It’s hard to see how the workers that are out there doing that type of work are just going to drop everything and go work in the renewable sector. It’s not really that simple at all,” Golding said. A transition away from oil and gas tax revenue wouldn’t be simple, either.

U.S. Upstream Dealmaking Fueled by Permian, Haynesville - The Permian Basin and natural gas-rich Haynesville Shale accounted for nearly all of the upstream transactions in the final three months of 2021, but dealmaking overall was down sharply from the third quarter, Enverus reported. The value of Lower 48 merger and acquisition (M&A) activity between exploration and production (E&P) companies totaled $9 billion in 4Q2021, versus $18.5 billion in 3Q2021, the energy data analytics firm said. For the full year, M&A values reached $66 billion, 25% higher than in 2020, when oil and gas deal values were pummeled by Covid 19. The annual total for 2021 was below the $72 billion average fetched between 2015 and 2019, before the pandemic. “Since the emergence of Covid, upstream M&A has been characterized by fewer, but larger, deals,” said Enverus director Andrew Dittmar. “During 2020, that took the form of public companies consolidating amongst themselves…” Last year, the focus centered on “rolling up private E&Ps. But the volume of deals remained depressed, with 172 and 179 transactions in 2020 and 2021, respectively, versus an average of nearly 400 deals per year before Covid.” The No. 1 deal in the quarter was by Oklahoma City-based Continental Resources Inc. The E&P, long focused in the Midcontinent, entered the Permian with a $3.25 billion acquisition from Pioneer Natural Resources Co. At No. 2 was Southwestern Energy Co., which agreed to pay $1.85 billion to buy GEP Haynesville, which was the third largest private equity (PE) explorer in the Haynesville and Middle Bossier formations. In at third was Earthstone Energy Inc., which in December paid $604 million for PE-backed Chisholm Energy Holdings LLC for assets in the Permian’s Delaware sub- basin. The fourth biggest deal in the fourth quarter was by Paloma Resources LLC, an affiliate of PE giant EnCap Investments, which last month took Haynesville-focused Goodrich Petroleum Corp. private in a deal valued at around $480 million. Rounding out the top five was a $419 million deal by Diversified Energy Co. plc, which expanded into the Midcontinent by acquiring Oklahoma assets from PE-sponsored Tapstone Energy Holdings LLC. The Permian Delaware and Haynesville, researchers noted, were the two most active plays of 4Q2021 and combined to account for 80% of the quarter’s transaction value. “Buyers have been largely focused on adding high quality inventory to build out their runway and sustain the strong cash flow generation recently achieved,” Dittmar said. “The largest supply of inventory meeting buyers’ criteria is available for sale in the Delaware for oil and the Haynesville for gas. That is largely because both these plays had significant private investment in prior years that the sponsors are now looking to monetize via sales to a public company.”

Shale Drillers Avoid Emission Cuts From Rockies to Great Plains – --Less than half of oil and natural gas drillers in the U.S. Great Plains and Rocky Mountains plan to curb emissions of carbon dioxide and methane this year, according to the Federal Reserve Bank of Kansas City.Even fewer have any plans to cut back on flaring of excess gas or recycle water used in fracking wells, the Kansas City Fed found in its fourth-quarter survey of energy executives.Those same managers said they need benchmark crude prices to average about $73 a barrel to justify new drilling and higher output. They foresee oil prices remaining above the $75 level through at least the middle of the decade, the survey found.The Kansas City Fed’s jurisdiction includes Oklahoma, Wyoming, Colorado, Kansas, Nebraska and parts of Missouri and New Mexico.

Midcontinent, Rockies Record Highest Oil and Gas Prices in Years to Spur Drilling, Kansas City Fed Says - Average oil and natural gas prices of $73/bbl and $4.27/MMBtu, respectively, were needed to justify substantially more drilling during the fourth quarter of 2021, according to a survey of Midcontinent and Rockies energy firms by the Federal Reserve Bank of Kansas City. That translates into the highest “substantial increase price” average recorded for oil since 2Q2015 and the highest ever substantial increase price for gas since 2015, the Kansas City Fed noted. “District drilling and business activity continued to grow through the end of 2021,” The Kansas City Fed asks Midcontinent and Rockies firms every other quarter about oil and gas prices needed for drilling to increase substantially. Average prices for the 2Q2021 survey were $72 for oil and $3.82/MMBtu for gas. Energy firms surveyed operate in the Fed’s Tenth District, the Kansas City Fed’s jurisdiction. This spans Colorado, Kansas, Nebraska, Oklahoma, Wyoming, and parts of Missouri and New Mexico. The 4Q2021 survey ran from Dec. 15 to Jan. 3 and included 33 responses, the Kansas City Fed noted. In addition to asking firms about current-quarter substantial drilling increase prices, the Kansas City Fed sought their projections for West Texas Intermediate (WTI) crude oil and New York Mercantile Exchange Henry Hub natural gas prices in the coming years. In six months, firms on average foresee a $75 WTI price, increasing to $78 both one year and two years hence. The firms expect WTI prices to jump to $80 in five years. For the Henry Hub benchmark, Midcontinent and Rockies companies surveyed by the Kansas City Fed anticipate $3.66 in six months, $3.92 in one year, $3.97 in two years and $4.29 in five years. The survey results also suggest an uptick in year/year capital spending by Midcontinent and Rockies oil and gas players. “Firm revenues have risen along with higher wages and benefits for workers,” “Contacts also reported higher capital spending plans for 2022 compared to 2021.” About one-fifth of firms surveyed told the Kansas City Fed they plan to “significantly” increase capital spending in 2022 compared to year-ago levels. The Fed district said that “another 50% expected slight increases. Only 6% of firms expected capital spending to decline.” Roughly 25% project year/year capex to stay about the same, added the Kansas City Fed. It also reported that several firms cited inflation as the driver for higher capital spending on services and materials. “Inflation is hitting the equipment purchases for new wells,” said one respondent. Emissions reduction will be another priority for many Midcontinent and Rockies firms, according to survey results. When asked about environmental plans, 45% of firms surveyed noted they expect to lower carbon dioxide (CO2) emissions, the Kansas City Fed said. It said that another 41% aim to cut methane emissions, 28% plan to recycle/reuse water and 21% seek to reduce flaring. “Another 38% of firms indicated they did not have” plans linked to curbing CO2 or methane emissions, recycling or reusing water, and cutting flaring.

Why Is the Biden White House Refusing to Confront the Oil and Gas Industry? | Sierra Club -Last November, the Biden administration announced that it would protect the Greater Chaco Canyon landscape in New Mexico from future oil and gas leasing. The area is culturally significant for Pueblo peoples in the Southwest, and the decision was seen as both a victory for Indigenous nations and a setback for the fossil fuel industry. . The New York Times described the executive order as an element of the administration’s “ambitious climate agenda.” Just two days later, however, the Biden administration held a large auction for new oil and gas leases in the Gulf of Mexico. The lease sale had been ordered by a federal judge, who earlier in 2021 had ruled that the administration hadn’t followed the law in pausing oil and gas sales. Nevertheless, environmentalists were dismayed. Earthjustice called the lease sale a “huge climate bomb.” The contradictory moves—blocking oil and gas development in one area but greenlighting an expansion in another, even if under judicial duress—exemplify President Biden’s approach to climate change in his first year in office. While he has made some important steps to cut US greenhouse gas emissions, his administration's reluctance to directly confront the oil and gas industry is becoming increasingly apparent, according to environmental and Indigenous groups. “They can't have it both ways. They can't talk about climate and then commit massive amounts of new fossil fuels in the face of a climate crisis,” Taylor McKinnon, senior public lands campaigner at the Center for Biological Diversity, told Sierra. “They're plagued by a lack of climate ambition at the highest levels of the administration.” During his first days in office, Biden canceled the Keystone XL Pipeline and directed the Department of the Interior to pause oil and gas leasing on federal lands while it undertook a comprehensive review of the programs. Those moves signaled that climate change would be a central theme to the Biden era. In April, Biden held an international summit with global leaders, during which he announced a new emissions target—the United States would aim to cut emissions by 50 to 52 percent by 2030. The announcement also nudged other countries to ratchet up their ambition. During the summer, the Department of Treasury pushed multilateral development banks to end overseas financing for most fossil fuel projects, and this past fall, the EPA announced new regulations on methane emissions from the oil and gas industry. Right before Christmas, the EPA unveiled tough new fuel economy standards for cars and trucks—an especially important move, given that transportation is the largest source of US greenhouse gas emissions. Despite these moves, Biden’s climate record to date has been more piecemeal than transformational. The White House is not yet employing all of the levers available to the executive branch to tackle the climate crisis. So far, the Biden administration appears to be prioritizing the easy actions while avoiding moves that could antagonize political enemies—like the powerful oil and gas industry.

Anti-fracking Boulder advises residents to bundle up as natgas costs soar --The city of Boulder, a haven of anti-fracking activism, offered tips Monday to residents struggling with rising home-heating prices amid a global natural-gas shortage. The city’s website warned that residential natural gas bills are expected to increase this year by 37% over last winter and offered hints to keep costs down, including lowering the thermostat, washing clothes in cold water and dressing in layers. “It’s not just up to your furnace to keep you warm,” the Boulder website said. “Dressing in layers can keep you warm while relying less on your heat source.” Citing data from Xcel Energy, the city said that the average natural gas bill is expected to rise from $71 to about $98 per month, not including electricity costs. “Behind the bigger bills are higher energy costs nationally and natural gas supply challenges,” the Boulder tip sheet says. Its title is “Heating Costs Are Rising This Winter. Here’s How to Keep Your Bill Affordable.” The irony was not lost on the Colorado Republican Party, given Boulder’s years of hostility to the oil-and-gas industry. The city and county of Boulder filed a lawsuit in 2018 against ExxonMobil and Suncor seeking “damages related to climate change.” From 2013 to 2021, Boulder had a moratorium on hydraulic fracturing, which was lifted last month as the city council enacted tough new regulations on the industry. In 2018, Boulder voters approved an oil-and-gas pollution tax. “Boulder has blocked energy [development] at every turn, pushed statewide policies to ban fracking, and sued energy companies – now they are complaining about the high energy costs and supply challenges they helped create,” tweeted the Colorado GOP.

Longtime MPCA employee alleges retaliation over petroleum complaints | MPR News A longtime employee of the Minnesota Pollution Control Agency has filed a whistleblower lawsuit, claiming he faced retaliation for raising concerns about how the agency handles petroleum leak sites. Mark Toso resigned in June after nearly 30 years at the MPCA, the last decade as a hydrologist in the petroleum remediation program. The program is responsible for investigating, evaluating and removing risks from petroleum releases from storage tanks. Those leaks can contaminate soil and groundwater, create dangerous vapors and affect drinking water supplies. Mark Toso Mark Toso had worked at the MPCA for nearly 30 years.Courtesy photo In November, Toso sued the MPCA in Ramsey County District Court, alleging that the agency penalized him for voicing concerns that the program was failing to protect groundwater and endangering the public. "I'm hoping this lawsuit brings changes to the agency because they're sorely needed,” Toso said in an interview in December. Petroleum storage tanks — often buried underground — can corrode over time and leak chemicals into the soil and groundwater, the source of drinking water for three-fourths of Minnesotans. Since Minnesota’s petroleum remediation program began in the late 1980s, there have been more than 20,000 petroleum leak sites reported across the state. Most have been deemed no longer a risk to the environment or public health and closed by the MPCA, meaning there’s no further cleanup or monitoring, Toso said. “The problem is that they told everybody that they were cleaning up these sites and closing them,” he said. “But in reality, they weren’t.” Toso said about 5,000 closed sites involve leaded gasoline, banned in the U.S. in 1996. It contains toxic additives known as lead scavengers, which are designed to prevent lead deposits in engines and don’t break down easily.

Enbridge-funded state account has paid over $4.5M for Line 3 policing - Enbridge has doled out about $4.8 million to cover policing and public safety costs related to construction of its new Line 3 across northern Minnesota — and the final tab will be higher.Meanwhile, courts in counties along the pipeline's route are clogged with hundreds of cases involving protesters. Several have been charged with felony theft for chaining themselves to pipeline construction equipment.The felony theft charges, which have been levied in several counties, are prosecutorial overkill, said Joshua Preston, an attorney representing at least 35 defendants. "They are intended to have a chilling effect — to discourage people from engaging in protest."But Hubbard County Attorney Jonathan Frieden said by chaining themselves to equipment, protesters deprived contractors the use of their property, which is a theft under state law."When they break the law, we charge people," he said.Many protests were expected after Enbridge won final approvals in late 2020 to build its 340-mile new Line 3 across northern Minnesota.With that in mind, the Minnesota Public Utilities Commission (PUC) required Enbridge to fund a public safety escrow account when it approved new Line 3, a replacement for an aging and corroding pipeline.The safety fund was aimed at protecting cities and counties from being deluged with large bills for policing pipeline protests, which ended up being continual throughout the construction process, especially in the summer. The fund has been criticized by anti-pipeline groups that say Enbridge was able to use local police as a security force, something denied by both the company and law enforcement agencies.Through Jan. 7, the PUC had accepted 175 reimbursement requests from 86 state, county and local agencies — almost all of them law enforcement.Most of the money has covered officers' expenses and wages; police protective gear; and training and law enforcement preparation for protests. The largest recipient of Enbridge money so far: the Minnesota State Patrol, which submitted a bill for $1.5 million in December.Next largest, in order, were the county sheriff's departments for Cass, $907,507; St. Louis, $360,623; Beltrami, $251,086; and Pennington, $135,859. Hubbard County, a particular hotspot for protests, does not appear to have submitted its full bill yet.The PUC, which administers the account, set a reimbursement deadline of April 1 – which is 180 days after oil began flowing in the new Line 3. Enbridge initially contributed $250,000 and replenished the account as needed; there was no expense cap.The PUC has denied 25 applications for reimbursements, including two sheriffs' office requests of around $25,000 — one each from Polk and Cass counties — for certain types of equipment.Also, the PUC denied two requests from the Hubbard County Attorney's Office — which totaled about $27,000 — for wage and overtime costs. Prosecution expenses are not allowed for reimbursement, the PUC determined.Hubbard County Attorney Frieden protested to the PUC, but to no avail, PUC records show. Hubbard was the only county that attempted to get prosecution expenses covered by the public safety fund, according to the PUC.

Halo Effect; We Now Know Which Way The FBIR Johnson Wells Run (East-To-West) -- January 9, 2022 -Now that the Rimrock FBIR Johnson wells have come off confidential status we know which way the horizontals are running. And, whoo-hoo, I was correct; they run west to east: all of section 11; east half of section 10 and west half of section 12: 1280-acre spacing, one full section plus two halves of adjoining sections. These wells are tracked here. Of interest was the effect these east-to-west horizontals would have on the following north-to-south wells:

• 19696, not taken off line, jump in production; see below.
• 24131, not take off line; slight jump in production; see below.
• 24132, recently off line; maybe slight jump in production;
• 24130, not taken off line; production a bit down, if anything.
• 20417, taken off line; back on line; not jump in production.

Judge rules against North Dakota's federal oil leasing request - A judge has denied North Dakota's request for an order forcing the federal government to hold oil lease sales.The Bureau of Land Management is planning to hold such a sale in the first quarter of 2022 after canceling all sales last year. U.S. District Judge Daniel Traynor ruled against the state Friday in part because a U.S. Justice Department attorney offered an assurance earlier in the week that the bureau plans to hold the sale imminently.The dispute arose after President Joe Biden early last year issued an executive order pausing oil leasing on federal lands while a review of the leasing program could take place. A number of oil- and gas-producing states sued the federal government to try to force lease sales to resume. They scored an early victory in June 2021 when a federal judge in Louisiana issued a preliminary injunction prohibiting the federal government from enforcing the president's pause. The Louisiana judge's ruling applies nationwide. Attorney General Wayne Stenehjem filed a separate suit in U.S. District Court in North Dakota seeking additional relief that would force the federal government to hold the lease sales canceled in the state during 2021, along with future sales. Traynor wrote in his order that he agreed with the federal government's assessment that the state had made "a premature request" better dealt with later after the parties have a chance to provide more information to the court. "This preliminary injunction in the Louisiana case provides North Dakota with the protection it needs at this early stage," Traynor wrote. The federal government has appealed the Louisiana ruling. Traynor said North Dakota could try to raise its concerns again if that case is overturned or the scope of the injunction changes. Stenehjem said in a statement that his office "will be closely following the actions of the federal government agencies as they now proceed with the promised lease sales in February and thereafter." "We are fully prepared to hold their feet to the fire and will not hesitate to bring the matter before the Court again as the circumstances warrant," he said. The Justice Department did not immediately respond to a request for comment Friday afternoon. A lawyer for the department at a hearing earlier this week offered a different explanation for why lease sales were canceled in North Dakota last year, saying that the bureau needed to revisit the way it conducts environmental analyses following unrelated court rulings tied to leasing. A date has not yet been announced for the upcoming lease sale. It is expected to include 15 parcels of land in North Dakota. Oil companies can bid on the parcels to secure a lease, which then gives them 10 years to develop the federal minerals. A company must also secure a separate permit from the federal government before drilling for oil.

Oil well site explodes near Grenora; no injuries reported - An oil well site exploded Monday morning near Grenora. The oil storage tank holds approximately 1,300 barrels of oil, according to the Divide County Sheriff’s Department. The fire was contained on-site, and officials are letting it burn out. The cause of the explosion is unknown at this time.

Active oil well fire in Genora, ND - The North Dakota Oil and Gas Division is investigating an active oil well fire on Monday, about 3 miles north of Grenora, North Dakota. Koda Resources Operating, LLC reported the fire at a tank battery on location. The fire is being contained on-site and the wells have been secured. Local emergency response and a state investigator are on site. No injuries have been reported. Koda has estimated 1,362 barrels of crude oil and 1,672 barrels of produced water are on location but, until the fire is out, it is undetermined how much of that has burned up. Federal and state laws require federal and/or state agencies be notified in the event of accidental spillage of any materials that may pollute water, air or soil. More information about notifications and the public access tool can be found on North Dakota’s Unified Spill Reporting System page at spill.nd.gov

U.S. Moves to Restrict Oil Leasing in Alaska – WSJ –The Interior Department said Monday that it plans to block oil and gas leasing on about 11 million acres on Alaska’s North Slope, or roughly half of a 23-million acre reserve set aside for energy development decades ago.The action, announced in connection with a federal lawsuit brought by environmentalists, would reverse a Trump administration effort to expand oil production in the National Petroleum Reserve in Alaska.The reserve had been set aside for oil and gas development in the 1920s. Under former President Barack Obama, the federal government restricted oil and gas development to 11.8 million acres of the reserve.The Trump administration moved to expand that to 18.6 million acres, saying developing the resources would improve the nation’s energy security and boost the Alaskan economy.That drew a lawsuit from environmental groups. President Biden ordered a review, and on Monday Interior officials said that cutting back the area that can be leased will benefit threatened and endangered species without offering specifics. Its decision would revert to the Obama-era plan for the region, restoring restrictions on the 7 million acres of land the Trump administration had planned to open up.Mr. Biden has been looking to restrict oil production from federal land as a way to reduce the planet-warming gases that cause climate change.That is stirring opposition in Alaska, where the economy and state budget are deeply tied to the health of the state’s oil industry, but where swaths of land are controlled by the federal government.“This is another sign of the federal government turning its back on Alaska and hampering domestic energy production,” Alaska Gov. Mike Dunleavy’s office said. “The U.S. Department of Interior is putting the nation in a situation where we have to rely on foreign oil … at a time for growing prices and concern for American consumers.”Mr. Biden has been under pressure from environmental groups to fulfill a campaign pledge to ban new permits for oil and gas drilling on federal land and offshore.“That still falls far short of what the administration’s commitments are on climate,” said Jeremy Lieb, a lawyer with nonprofit Earthjustice, of Monday’s announcement.Mr. Biden has also suspended oil leasing in the Arctic National Wildlife Refuge, a largely untouched 19 million acres on the opposite side of Alaska’s Arctic, in the northeast corner of the state.

North Slope oil production holds steady as two new ConocoPhillips projects ramp up - North Slope oil production is holding steady and is set for an increase in January with two new ConocoPhilllips projects ramping up. ConocoPhillips started production Dec. 12 at GMT-2, an accumulation in the National Petroleum Reserve west of the Alpine field, and on Dec. 14, the company began sustained production at Narwhal, an oil accumulation extending south of the Alpine field. As production from both projects is gradually throttled up there will be an increase in total slope production through the spring. The Prudhoe Bay field in northern Alaska showed continued production increases in December, year-over-year, while other North Slope fields lagged mostly due to natural decline. While overall slope production held steady, Prudhoe Bay, operated by Houston-based major independent Hilcorp Energy, saw an increase, averaging 326,262 barrels per day in December, up from 311,172 barrels per day on average the same month a year earlier and 295,417 barrels per day on average in December, 2019. Other fields on the slope, including Kuparuk River, second largest on the slope and the smaller Lisburne field, showed declines. The Alpine field west of Prudhoe Bay and Kuparuk River showed a small increase in December thanks to the two new ConocoPhillips projects which produce oil into Alpine field processing plants and are counted as part of that field’s production total. Overall production from the North Slope in December averaged 501,741 b/d, basically on par a 500,020 barrels per day average in December 2020 but down somewhat from a 510,271 b/d averaged in December 2019. GMT-2 is approximately 25 miles west of Alpine and is connected to expected to pipeline and field infrastructure through two other ConocoPhillips projects in the petroleum reserve, GMT-1 and CD-5, which are both producing. GMT-2 is expected to peak at 30,000 barrels per day. The NPR-A is a large 23-million-acre federal enclave on the western North Slope that has seen extensive exploration over several decades but commercial discoveries only in recent years.

Coast Guard investigated minor oil spill near Sandy Beach - Personnel from Coast Guard Sector Juneau investigated an oil sheen near Sandy Beach on Monday, said a Coast Guard officer. Lt. Maren Balke, whose section is responsible for dealing with oil spills, discovered the sheen incidentally and called it into the National Response Center, said Lt. j.g. Stephen Mueller. “Pollution responders went out and did a preliminary investigation and couldn’t determine the source,” Mueller said. “It looks like it’s non-recoverable. It looks weathered. It doesn’t look like a significant amount.” There was a spill of heating oil from a breached tank in late December that has since been fully contained, Mueller said, but there’s no way to link this sheen to that leak. The sheen could also be from a different source that has only recently been opened by thawing ice and snow. The sheen could also come from something like snow scraped off a roadway, Mueller said. “They think maybe it was old oil, but they can’t determine where it came from,” Mueller said. The Coast Guard does not have any ongoing concerns about this spill at this time, Mueller said, as the amount spilled was very minor and doesn’t come from a continuous source.

EIA Raises Oil Price Forecast for 2022 -The U.S. Energy Information Administration (EIA) raised its Brent spot average price forecast for 2022, its January short term energy outlook (STEO) has revealed. The organization now sees Brent spot prices averaging $74.95 per barrel this year, which marks a $4.90 increase on its previous 2022 projection of $70.05, which was made in the EIA’s December STEO. Looking ahead to 2023 for the first time, the latest STEO forecasts that average Brent spot prices will drop to $67.50 per barrel next year. Brent spot prices averaged $70.89 per barrel in 2021, the EIA’s January STEO highlighted. In its latest STEO, the EIA projects that global oil inventories will increase at a rate of 500,000 barrels per day in 2022 and 600,000 barrels per day in 2023. The EIA estimates that global liquid fuels inventories fell by an average of 1.4 million barrels per day in 2021. These were said to have grown by 2.1 million barrels per day in 2020. The organization expects global liquid fuels consumption will grow by 3.6 million barrels per day in 2022 and by 1.8 million barrels per day in 2023. OPEC crude oil production is expected to rise by 2.5 million barrels per day to average 28.8 million barrels per day in 2022 and by a further 100,000 barrels per day in 2023 to average 28.9 million barrels per day. U.S. crude oil production is expected to average 11.8 million barrels per day this year before rising to a new record of 12.4 million barrels per day in 2023. The U.S. was shown to have averaged 11.2 million barrels per day in 2021. Its current record of 12.3 million barrels per day was set in 2019. The EIA notes that its latest STEO continues to reflect heightened levels of uncertainty as a result of the ongoing Covid-19 pandemic. “Notably, the Omicron variant of Covid-19 raises questions about global energy consumption,” the EIA noted in its January STEO. “In addition to macroeconomic uncertainties, uncertainty about winter weather and consumer energy demand also present a wide range of potential outcomes for energy consumption,” the EIA added. “Supply uncertainty in the forecast stems from uncertainty about OPEC+ production decisions and the rate at which U.S. oil and natural gas producers will increase drilling,” the EIA continued.

Where the oil industry is headed in 2022 - After recovering from a near-death experience in 2021, the U.S. oil and gas industry could be in for a bumpy ride in 2022 that will influence how much the industry drills, cuts emissions and invests in clean energy. While oil prices have begun to stabilize after crashing during the pandemic, the recovery creates a paradox for oil companies. It will repair their bottom lines, according to a recent report from Moody’s Investors Service, but also increases calls for the industry to lower its emissions of climate-warming pollution and transition away from fossil fuels. “The corresponding increase in carbon emissions from greater oil consumption will likely lead to added investor pressure on oil companies to transition their businesses, and to inspire more policy initiatives aimed at reducing demand for oil and natural gas,” the Thursday report said. Interior Department plans and pending rules from EPA on methane emissions could further change the trajectory for the sector across the country. Other changes in the industry, including technology and a drive for efficiency, also could shift the outlook this year for the workers and communities that rely on the industry for jobs. And while prices are higher than they were during the pandemic lows, they could whipsaw for the first half of the year, with repercussions for emissions and drilling levels, analysts say. Here are four industry trends to watch this year:

Canadian oil exports to Asia reach record with new U.S. link --Canada's oil sands producers were able to export a record amount of crude to overseas markets thanks to a new link to the U.S. Gulf Coast. The recent reversal of Marathon Pipe Line Inc.’s Capline pipeline is sending oil sands crude produced in landlocked Alberta to export terminals on Gulf Coast where it can be shipped to other countries. Exports to Asia were at their highest ever, with India the leading destination by far, followed by China and then South Korea, according to oil analytics firm Kpler. The development marks a sea change for Canada’s oil industry. The country holds the third highest crude reserves in the world, but exports to markets beyond the U.S. have been limited due to a lack of infrastructure. Canada has faced severe opposition from activists for building pipelines from the oil sands region to British Columbia’s Pacific Coast. Additionally, the Biden Administration last year blocked the Keystone XL pipeline, effectively shutting Canada’s crude out of the global market. “Looking ahead, Canadian crude exports out of the U.S. Gulf should continue to show strength,” said Matt Smith, oil analyst at Kpler. “With Venezuelan crude exports having tanked in recent years, and now with the prospect of Mexican crude being taken off the market, Canadian crude appears to be one of the leading beneficiaries of these changing dynamics.” Shipments of heavy crude jumped to more than 266,000 barrels a day in December after averaging over 180,000 through the year, according to Kpler. Canadian crude exports from the U.S. Gulf Coast averaged just 25,000 barrels a day in 2018, before rising to average around 70,000 in both 2019 and 2020. In October, overall Canadian shipments of oil to the U.S. jumped to more than 4 million barrels a day, highest volume since the start of the year thanks in part to the startup of a long-delayed Canadian pipeline.

Shrink to fit: the year Big Oil starts to become Small Oil --Europe’s Big Oil companies are planning to spend their windfall from high energy prices on becoming Small Oil. Surging oil and gas prices in 2021 delivered billions of dollars in profits to top oil companies, in stark contrast to the previous year when energy prices collapsed as the coronavirus pandemic hit travel and economic activity. Typically, companies would invest the lion’s share of that cash in long-term projects to boost oil and gas production and reserves after the previous year’s deep cuts. But unlike any other time in their history, BP, Royal Dutch Shell, TotalEnergies, Equinor and Italy’s Eni are focusing on returning as much cash as possible to shareholders to keep them sweet as they begin a risky shift towards low-carbon and renewable energy. “All of the large oil companies are managing decline to a degree,” by shifting to fields that provide larger investment returns for shareholders and leaving more mature assets behind, said Ben Cook, portfolio manager with BP Capital Fund Advisors. The growing pressure from investors, activists and governments to tackle climate change means that European oil giants are turning off the taps on spending on oil even as the outlook for prices and demand remains robust. The two-pronged strategy of reducing oil output and boosting shareholder returns was underscored when Shell sold its Permian shale oil business in the United States for $9.5 billion in September, promising to return $7 billion to investors. Investors in U.S. companies can also expect their payouts to rise to record amounts, but Exxon Mobil and Chevron, the top U.S. oil and gas companies, plan to continue ploughing money into new oil projects, encouraged by White House calls for more oil output to tackle high energy prices and inflation. In 2022, European firms are set to return to investors a record $54 billion in dividends and share buybacks, according to analysis by Bernstein, while Exxon and Chevron are set to pay more than $30 billion combined.

Emboldened green activists target Argentina’s offshore oil plans --Environmental activists in Argentina are trying to prevent new oil exploration in the resource-rich South American nation just days after forcing a governor in Patagonia to reverse course on silver mining. The government has been lobbying the case for drillers to search for oil in the Atlantic Ocean ever since protests last week in the coastal city of Mar del Plata that brought climate concerns to the fore. The high-profile rally came right after a big victory for Argentina’s green movement. Following violent protests in Chubut province, Governor Mariano Arcioni repealed a law on Dec. 20 that would have allowed Canada’s Pan American Silver Corp. to get to work on a $1 billion mine. Arcioni will instead call a referendum. The reversal in Chubut mirrored what happened in Mendoza province two years ago, when the governor there reacted to protests by revoking provincial legislation passed just days earlier to allow more mines. Argentina, which is trying to develop shale riches in the Vaca Muerta formation, auctioned off areas for deep sea exploration in 2019. Activists have pounced on the issue now because the government only recently gave environmental approval for seismic studies to Norway’s Equinor ASA, Argentina’s state-run YPF SA and Royal Dutch Shell Plc. “They’re trying to create the same gold-rush feeling as when Vaca Muerta was discovered, labeling anybody who opposes it as anti-progress,” Enrique Viale, an environmental activist and lawyer, said in an interview. Chevron Corp. also saw strong environmental resistance when it invested in Argentine shale in 2013. Government officials have spoken out since the Mar del Plata demonstration, saying Argentina needs more industry to help its struggling economy. “The path is to have productive activities while looking after the environment,” Production Minister Matias Kulfas said. But Viale said exploring for more fossil fuels doesn’t square with a government proposal to pay off some of its debt with policies to tackle climate change. Argentina’s environmental movement has been a thorn in the side of industry for years. As well as the victories in Chubut and Mendoza, a 2010 federal law protecting glaciers has limited mining activity more widely. Likewise, twin dams being built in Patagonia had to be scaled back because of concerns about their impact on glaciers upriver.

Senate plans Nord Stream 2 sanctions vote this week - The Senate plans to vote this week on Republican legislation to enact new, crippling sanctions against the Nord Stream 2 natural gas pipeline project from Russia to Germany. The vote stems from a deal between Majority Leader Chuck Schumer (D-N.Y.) and Sen. Ted Cruz (R-Texas) in December, which made way for the confirmation of dozens of President Biden’s ambassador nominees (E&E Daily, Dec. 20, 2021). Cruz and other Republicans had been delaying quick passage on the president’s picks to protest the White House’s decision earlier last year to waive congressionally mandated sanctions against Nord Stream. The president wanted to reset relations with Germany and said the pipeline was nearly complete. The big question this week is whether Democrats — most of whom oppose Nord Stream just as much as Republicans — will vote to approve new sanctions or side with the White House. Passage would require 60 yes votes. "Virtually every Democrat has voted for sanctions on Nord Stream 2 multiple times," Cruz said last week. "If this were a vote on the merits, it would be unanimous or nearly unanimous. There are multiple Democrats who have told me they’re either going to vote for it or they’re strongly considering voting for it. And it ought to be an easy vote." Former German Chancellor Angela Merkel helped lead the West’s resistance to Russian President Vladimir Putin’s expansionist policies. But Merkel was also a defender of Nord Stream. Now, many lawmakers are keen on the new German government’s view. Secretary of State Antony Blinken, in remarks alongside new German Foreign Minister Annalena Baerbock last week, said the threat of future sanctions against Nord Stream could deter Russia from invading Ukraine. “This pipeline does not have gas flowing through it at present, and if Russia renews its aggression toward Ukraine, it would certainly be difficult to see gas flowing through it in the future,” Blinken said. “So some may see Nord Stream 2 as leverage that Russia can use against Europe. In fact, it’s leverage for Europe to use against Russia.” Some Democrats have suggested voting on a separate bill, also this week, to impose sanctions if Russia goes ahead with invading Ukraine, but those plans don’t appear to be settled. "My understanding is that the agreement that was worked out at the end of last year is to just have an up-or-down vote on Cruz," said Sen. Chris Murphy (D-Conn.). "That doesn’t mean that we might not consider legislation later on that would include a more robust set of sanctions if Russia moves forward with an invasion."

Gas prices rise as Russian pipeline stays in reverse after three weeks -- A pipeline that usually sends gas from Russia to Europe was stuck in reverse after three weeks on Monday, pushing up prices in Europe at a time of political tension between Moscow and the West. Wholesale prices in Europe were up 6% on Monday as gas on the Yamal-Europe pipeline flowed east from Germany to Poland, adding pressure on the market along with lower wind output and weather outlook. It has now been flowing eastwards since Dec. 21, data from German network operator Gascade showed. Industry sources and analysts said last month that traders were preferring to take gas from stockpiles to supply European buyers and avoid paying near record-high prices. As Russian gas company Gazprom has not seen bids for westbound exports, the pipeline has switched flows. Ronald Smith, senior oil and gas analyst with Russian BCS brokerage, said European customers with prices linked to gas hubs – or central pricing points – “apparently not opting to take any more Gazprom gas than they absolutely have to.” Russian energy exports have been in the spotlight during a diplomatic standoff between Russia and the West, including over a Russian troop buildup near neighbouring Ukraine, which is trying to forge closer ties with NATO. U.S. and Russian officials were holding talks in Geneva on Monday which Washington hopes can avert the danger of a Russian invasion of Ukraine, but diplomats on both sides sounded pessimistic before they began. Some European Union lawmakers have accused Russia, which supplies more than 30% of the bloc’s natural gas, of using the crisis as leverage. They say Moscow has restricted gas flows to secure approval to start up the newly built Nord Stream 2 pipeline, which will supply gas to Germany. Russia has denied the allegations, and says the pipeline will boost gas exports and help alleviate high prices in Europe. It has said it is meeting its contractual obligations on gas deliveries.

Still no Russian gas auctions scheduled on Gazprom Export’s ESP - S&P Global Platts - Russia’s Gazprom Export will not hold any auctions for Russian gas on its Electronic Sales Platform in the week of Jan. 10-14, it said Jan. 10. The company said on its website there were “no planned sales sessions” for the current week, which continues the recent trend for ESP auctions to be suspended.The last scheduled ESP auctions were for the week of Oct. 25-29, while no sales have been recorded since Oct. 13. Gazprom Export launched the ESP in September 2018 as a tool to sell surplus gas into Europe outside of its traditional long-term contract model and has sold more than 51 Bcm of gas since its launch. However, sales slowed in the autumn and volumes sold in October totaled just 168 million cu m, then the smallest volume sold in a calendar month and lower even than the sales in the first month of operation in September 2018. Gazprom has come in for criticism for not increasing supply to Europe at a time of sky-high gas prices, but the company has repeatedly said it has been meeting all of its customer obligations in full. European gas prices hit repeated record highs toward the end of 2021, with unprecedented market volatility triggered by winter supply uncertainty. The TTF day-ahead price hit an all-time high of Eur182.78/MWh on Dec. 21, according to S&P Global Platts assessments, a 985% increase year on year. Prices have cooled somewhat since then, with Platts assessing the TTF day-ahead price at Eur86.73/MWh on Jan. 7.

IEA says oil demand more resilient than expected in the face of Omicron--Global oil demand has proven stronger than expected as the latest coronavirus variant inflicts a softer hit to the economy than anticipated, the International Energy Agency said. “Demand dynamics are stronger than many of the market observers had thought, mainly due to the milder Omicron expectations,” IEA Executive Director Fatih Birol said on a call with reporters on Wednesday. Crude prices have rallied this year, pushing further above $80 a barrel in London, as fuel use proves resilient while supplies suffer a range of setbacks from North America to Libya and Kazakhstan. “We see some of the key producers including Nigeria, Libya and also Ecuador that have serious supply disruptions,” Birol said. In its latest monthly report, the Paris-based agency forecast that world fuel consumption would slide by 740,000 barrels a day this quarter, compared with the preceding three months, as the new virus outbreak added to the typical seasonal slowdown in demand. Birol didn’t specify whether the institution would revise this forecast. It is scheduled to publish its next monthly report on Jan. 19.

CNOOC To Drill Nearly 360 New Wells This Year - CNOOC has announced in its business strategy and development plan for 2022 that it would increase its net production and drill over 350 wells. Chinese oil and gas major CNOOC Limited has announced in its business strategy and development plan for 2022 that it would increase its net production and drill over 350 wells. CNOOC said that its targeted net production for 2022 is 600 million to 610 million barrels of oil equivalent (boe), of which, production from China and overseas accounts for approximately 69 and 31 percent, respectively. The company’s net production for 2021 is expected to be approximately 570 million boe. In line with the 2022 increase, CNOOC’s net production for 2023 and 2024 is estimated to rise to around 640 to 650 million boe and 680 to 690 million boe, respectively. CNOOC added that its total capital expenditure for 2022 is budgeted at $14.2 to $15.7 billion. The capital expenditures for exploration, development, production, and others will account for approximately 20, 57, 21, and 2 percent of the total capital expenditure, respectively. In 2022, the company plans to drill 227 offshore exploration wells, 132 onshore unconventional exploration wells, and acquire approximately 17 thousand square kilometers of 3D seismic data. This year, 13 new projects are expected to come on stream. These include the Bozhong 29-6 oilfield development, the development of Kenli 6-1 oilfield Block 5-1, 5-2, 6-1, Enping 15-1/10-2/15-2/20-4 oilfields joint development, and the Shenfu South gas field development in China while Liza Phase II is expected to start up in Guyana and the 3M project will start production in Indonesia. To ensure shareholders’ return, subject to the approval by the general meeting of shareholders on the proposed dividends for each year, from 2022 to 2024, the expected annual payout ratio of the company will be no less than 40 percent, and the annual absolute dividend is expected to be no less than $0.09/share.

Weather-related issues add to Libya’s oil export woes--Libya’s oil exports, already sharply curtailed following a blockade by paramilitaries in the west, are set to fall further after bad weather closed ports in the east. The Es Sider, Ras Lanuf, Hariga and Zueitina terminals were shut Saturday and are likely to remain closed until early next week, two people said, asking not to be named as they’re not authorized to speak to media. It’s a further setback for the OPEC state, whose production has sunk below 1 million barrels a day. Libya in late December suspended crude exports from its western Zawiya and Mellitah ports after militias halted the country’s biggest oil field, Sharara. Daily crude exports in the first week of this year were 45% below the December average, data compiled by Bloomberg show. The only crude-oil port that’s still open is Brega, while Libya’s two offshore terminals -- Bouri and Farwah, which is served by the Al Jurf field -- are also operating. However, the three working export facilities are Libya’s smallest and usually responsible for only a quarter of the nation’s exports combined. Libya is now pumping around 900,000 barrels a day, roughly 350,000 a day less than a month ago, even after repairs were completed on a major pipeline in the east. If protracted, the current disruptions could undermine last year’s nascent oil-industry recovery, when production averaged 1.2 million barrels a day. Several key oil deposits continue to be closed by the Petroleum Facilities Guard, which is meant to protect fields but in recent years has carried out blockades to press demands. The PFG last month shut Sharara and other smaller western fields in a dispute over delayed salary payments. In theory, barrels can still be pumped to export facilities, although that depends how much oil is in storage. The closures come as political tensions rise. A presidential election was meant to be held on Dec. 24, but was delayed as disputes over the eligibility of candidates threaten to sow fresh turmoil in a country that’s been in conflict or civil war for much of the past decade.

OPEC targeting oil prices below $100, Oman’s oil minister says --OPEC and its allies don’t want crude prices to climb to $100 a barrel, and are reviving production quickly enough to prevent global markets from “overheating,” Oman’s oil minister said. The Organization of Petroleum Exporting Countries and its allies, a 23-nation group led by Saudi Arabia and Russia, continues to restore output halted during the pandemic at a gradual pace of 400,000 barrels a day -- though in practice its increases have been restricted by internal unrest and depressed budgets. Crude prices have rallied this year, topping $80 a barrel in London. “We’re very careful at OPEC+, we will look at each month as we go,” Omani Oil Minister Mohammed Al Rumhi said in an interview in Riyadh. “But so far, I think 400,000 is good because demand is increasing and we want to make sure that the market is not overheating. We don’t want to see $100 a barrel. The world is not ready for that.” Oil’s rally has alarmed many consuming nations as it stokes inflationary pressure that’s menacing the world’s economic recovery from the pandemic. Part of the problem has been a crunch in global production capacity following a run of reduced spending, Al Rumhi said. Over the past five years “investments have been limited in the industry and we’re paying the price for it now,” Al Rumhi said. It’s an issue afflicting OPEC+ themselves. OPEC made only part of its planned output increase last month as Nigeria and Libya were beset by disruptions. Many members of the wider coalition -- such as Angola and Malaysia -- are also seeing production falter because of diminished investment. Even Russia struggled to boost volumes last month. Separately, Oman is planning its first ever international bidding round for minerals, with companies from Japan and the U.K. having shown interest in investing in silicone extraction.

Oil bulls increasingly confident as Omicron risk fades: Kemp - (Reuters) - Oil markets attracted a new wave of interest from investors at the end of 2021 and start of 2022, as the threat of widespread economic and aviation disruption from Omicron seemed to recede. Hedge funds and other money managers purchased the equivalent of 31 million barrels in the six most important petroleum-related futures and options contracts in the week to Jan. 4. Portfolio managers have purchased a total of 102 million barrels in the three most recent weeks, after selling 327 million barrels in the previous 10 weeks (https://tmsnrt.rs/3f5QZ5B). In the most recent week, most of the buying came from the creation of new bullish long positions (+27 million barrels) rather than closure of old bearish short ones (-5 million). Bullish long positions now outnumber bearish short ones by a ratio of 5.18:1 (in the 67th percentile for all weeks since 2013) up from 3.83:1 (47th percentile) on Dec. 14. Last week's buying was broadly based, with purchases in Brent (+19 million barrels), U.S. gasoline (+7 million), U.S. diesel (+4 million) and European gas oil (+3 million), with sales only in NYMEX and ICE WTI (-2 million). The number of confirmed coronavirus infections per day worldwide has almost quadrupled to 308 per million in the seven days ending on Jan. 10 up from 78 per million on the seven days ending Dec. 14. But the link between confirmed cases, hospitalisations and deaths appears to have weakened, with the result many governments are imposing more limited restrictions on business activity and travel than in previous waves. The more limited response to this latest wave of the pandemic has encouraged bulls in their view that the impact on oil consumption will be relatively limited and short duration. As the current wave of infections fades in the spring, the continued cyclical upturn in the global economy is expected to result in further growth in oil consumption from the second quarter onwards. Coupled with limited production growth from OPEC, its allies, and U.S. shale producers, global petroleum inventories are likely to tighten further by the end of 2022. Hedge fund oil buyers are anticipating, accelerating and amplifying the move to an even tighter market by the end of this year. In consequence, front-month Brent futures prices have rebounded to within $5 per barrel of their previous cyclical highs in October 2021 and October 2018, and the gap is even closer if inflation is taken into account. Brent's six-month calendar spread has tightened into a backwardation of around $3.80 per barrel (93rd percentile for all trading days since 1990) up from $1.54 (67th percentile) in the middle of December.

Oil Prices Rise Despite Covid Worries -Oil prices traded higher on Monday as supply disruptions in Kazakhstan and Libya offset worries stemming from a continued rise in Covid-19 cases worldwide. Benchmark Brent crude futures rose half a percent to $82.14 a barrel, while WTI crude futures were up half a percent at $79.32. The upward momentum in oil prices remained intact after three straight weeks of gains on the back of fading Omicron concerns and a tightening global stock situation amid escalating unrest in Kazakhstan and outages in Libya. Despite a steep rise in coronavirus positive cases around the world, investors are pinning hopes the Omicron variant of the coronavirus will not significantly impact global oil demand. Business and enterprises deemed critical to the supply of daily goods have resumed normal operation from the weekend in Xi'an, capital city of Northwest China's Shaanxi Province, after the latest Covid-19 resurgence was largely brought under control. India began administering the precautionary dose or the booster shot of coronavirus vaccine to health and frontline workers and immuno-compromised senior citizens, as new confirmed coronavirus infections rocketed to over 179,000 today, nearly an eightfold increase in a week. Caseloads in the U.S. remain at critically high levels while vaccine skeptics and others angered by Covid curbs have protested in Brussels, Prague and other European cities.

Oil prices fall on demand concerns and rising Libyan output (Reuters) -Oil prices fell Monday as concerns about demand fears stoked by the rapid global rise in Omicron coronavirus infections overtook concerns about oil supply reduction from Kazakhstan. Brent crude fell 88 cents, or 1.1%, to settle at $80.87 a barrel. U.S. West Texas Intermediate (WTI) crude was down 67 cents, or 0.9%, at $78.23. In early trade, both contracts rose by about 50 cents. “Oil prices are following the stock market lower on Omicron fears,” World stocks stumbled again while the 10-year Treasury yield hit a two-year high as investors pared risky assets on bets the U.S. Federal Reserve could raise interest rates as soon as March. Concerns about the Omicron variant of the coronavirus bled into the oil market, pushing prices lower. Last week, oil prices gained 5% after protests in Kazakhstan disrupted train lines and hit production at the country’s Tengiz oilfield while pipeline maintenance in Libya lowered production to 729,000 barrels per day (bpd) from a high of 1.3 million bpd last year. Kazakhstan’s largest oil venture Tengizchevroil (TCO) is gradually increasing production to reach normal rates at the Tengiz field after protests limited output there in recent days, operator Chevron said on Sunday. Libyan production ticked up on Monday, and concerns about rising Libyan output overtook the market. Last week, oil found support from rising global demand and lower-than-expected supply additions from the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia, a group collectively known as OPEC+. OPEC’s output in December rose by 70,000 bpd from the previous month, versus the 253,000 bpd increase allowed under the OPEC+ supply deal. That deal restored output cut in 2020 when demand collapsed during COVID-19 lockdowns. The demand recovery and a sharp fall in oil inventories have pushed the market structure for Brent and U.S. crude into deep backwardation. A backwardated market structure means the current value is higher than it will be in later months and encourages traders to release oil from storage to sell it promptly.

Oil Futures Chase Equities Higher -- With U.S. dollar index rapidly weakening against foreign currencies, oil futures nearest delivery powered higher in early trade Tuesday as investors grapple with concerns over surging inflation across major economies compounded by an Omicron-led tsunami of coronavirus infections in the United States and European Union, while China is seeing an increase in cases despite Beijing's zero-tolerance policy and strict lockdown measures. Inflation in countries that are part of the Organization for Economic Cooperation and Development surged to a 26-year high 5.8% in November, according to OECD figures released Tuesday morning. Excluding food and energy, consumer prices were up 3.8%, contributing significantly to headline inflation in a number of economies. There were, however, large variations among the countries that are part of the economic bloc, with prices rising 6.8% in the United States, but only 0.6% in Japan. The fresh data came against a backdrop of increasing pressure on central banks to raise interest rates. Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said on Monday that he sees three interest rates hikes in the United States this year, with the potential for the fourth towards the end of 2022 should inflation pressures remain high. Fueled by federal stimulus, supply chain disruptions, and a tight labor market, inflation in the United States still has room to accelerate in coming months before abating in the second half of the year, according to economists. Earlier this week, oil futures came under some selling pressure from easing concerns over available supplies in African producer Libya, where political turmoil disrupted a portion of oil production. Meanwhile, Bloomberg News reported that oil exports from Libya's major ports will likely remain subdued this week due to bad weather in the Mediterranean Sea. Separately, crude production from the Tengizchevroil venture operated by U.S. oil major Chevron in western Kazakhstan is "gradually returning to normal levels," the company said on Sunday after it adjusted output when nationwide protests reached the field. Before the protests, Kazakhstan produced around 1.6 million bpd of crude oil. Near 7:30 a.m. ET, front-month West Texas Intermediate futures rallied $1.19 to $79.41 per barrel (bbl), and the international benchmark Brent crude for March delivery gained to $81.97 bbl, up $1.09 on the session. NYMEX February RBOB futures advanced more than 3 cents to $2.3100 gallon, while the front-month ULSD contract added 2.31 cents to $2.5102 gallon.

Oil prices surge as Fed chief’s comments less hawkish than expected--Oil jumped by the most in month after Jerome Powell’s comments to the Senate Banking Committee appeared to be less hawkish than the Federal Reserve had recently telegraphed. West Texas Intermediate crude rose, in tandem with equity markets, as much as 3.8%, to the highest since November 16. Markets were supported after the Federal Reserve Chair said at some point this year he and his colleagues will allow the Fed’s $8.77 trillion balance sheet to run off. Powell’s comments were a “a touch more dovish than what was implied in the recent minutes and suggested by other Fed speakers in the last few days,” said Vital Knowledge founder Adam Crisafulli. Oil has made a positive start to 2022 on expectations that demand will continue to expand as the pandemic’s impact on fuel consumption gradually eases, tightening the market. In the past few weeks, crude supplies from OPEC+ member nations Kazakhstan and Libya have been disrupted. Prices rose earlier in the session as traders focused on tightening supplies, with U.S. crude stockpiles forecast to decline for a seventh straight week. Analysts surveyed by Bloomberg estimate a crude stockpile decrease of 1.7 million barrels for last week, while the industry-funded American Petroleum Institute will release its report on inventories later Tuesday. “Storage has been down for weeks on end and as long as that continues, the market is going to continue to bid,”said Bob Yawger, director of the futures division at Mizuho Securities USA. “If stockpiles post a big draw, then we will be at the lowest level since 2018,” which would justify WTI trading between $75 and $85 a barrel, he added. Still, prices face headwinds from the omicron variant as cities worldwide consider tighter restrictions to curb the spread of the highly transmissible virus. In China, the largest crude importer, authorities have locked down a city of 5 million people, a day after detecting omicron in Henan province. The U.S. Energy Information Administration is set to publish its monthly oil-market outlook at 12 p.m. in Washington on Tuesday. Prices: WTI for February delivery advanced $2.79 to $81.02 a barrel at 11:54 a.m. in New York. Brent for March settlement gained $2.52 to $83.39 a barrel. Meanwhile, diesel markets in Europe and the U.S. are currently among the strongest oil-product sectors. Profits from turning crude into the fuel are at their highest since October in both regions as winter demand picks up, remaining relatively robust in the face of the omicron virus variant.

Oil Price Increases By 3% Amid Tighter Crude Supplies - Oil prices witnessed a 3 per cent increase on Tuesday on goals of tighter crude supplies. Experts believe that the rise may be related to expectations that the spread of the Omicron variant will not derail a global demand recovery.Consequently, the price of the Brent crude rose by $2.76 or 3.41 per cent to close at $83.63 per barrel, while the US West Texas Intermediate (WTI) crude rose by $3.10 or 3.96 per cent to trade at $81.33 per barrel.In the same vein, poor maintenance at export facilities drove the North African producer to shut in exports from the terminal, compounding weather-related woes which have made it hard for tankers to connect to loading facilities at the terminal.The announcement of new disruptions at Es Sider comes promptly after the El Feel field returned to production. The Petroleum Facilities Guard (PFG) had halted pipeline flows from the field in December 2021.This means that it won’t be able to add to supply additions by the Organisation of the Petroleum Exporting Countries (OPEC) which are running below the increase permitted under a pact with its allies.OPEC and its allies, OPEC+’s inability to ramp up production as quickly as it has agreed to is also lending support to crude oil prices.While the larger 23-man OPEC+ group has agreed to increase output at 400,000 barrels per day, it has been unable to achieve this volume in any month.Market analysts expect that US inventories data to show crude stockpiles fell by about 2 million barrels.

Oil at Fresh Highs Ahead of US Inventory - Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange moved higher in early trade Wednesday, continuing Tuesday's rally on expectations for U.S. crude oil inventories to have declined for a sixth consecutive week through Jan. 7 and for global oil supply availability to tighten amid underproduction from several OPEC+ members. Meanwhile, risk-on trade in U.S. equity markets following testimony from Federal Reserve Chairman Jerome Powell before a Senate Banking Committee on Tuesday where he reassured lawmakers the economy no longer requires aggressive stimulus measures lent additional support for the oil complex. Powell told lawmakers during his Senate hearing Tuesday that he believes the central bank would be able to tame inflation without hindering the economy. He did not, however, suggest a more hawkish response to recent price increases, noting only that the central bank would be "humble but a bit nimble" in executing rate hikes this year. Powell's tone provided a boost to stocks on Tuesday, while pressing the U.S. dollar index to a 95.535 six-week low against its global peers that helped lift oil prices to their highest levels since the Omicron variant was first detected in late November. The American Petroleum Institute reported on Tuesday oil supplies declined 1.077 million barrels (bbl) during the week ended Jan. 7, below calls for draw of 2.1 million bbl. The report shows stocks at the Cushing, Oklahoma hub posted a drop of 3.659 million bbl. Gasoline stockpiles spiked 10.86 million bbl in the week profiled, more than five times estimates for a 2.3 million bbl build, said API. API data also showed distillate inventories rose 3.035 million bbl, above calls for an increase of 1.2 million bbl. DTN Refined Fuels Demand data showed that gasoline lifted at terminals across the United States increased just 0.7% from the previous week last week, bringing the seven-day moving average to just 4% above the January 2021 level. That marked a sharp decline from 15% above the year-ago level in late December. Weak demand data comes amid record number of COVID-19 hospitalization in the United States that are pushing several states toward emergency staffing as they struggle to cope. . Internationally, Kuwait has become the latest National Oil Company to cut its February crude official selling price for Asian refiners, following a similar move from Saudi Arabia last week. The state-owned Kuwait Petroleum Corp reduced the February price of its flagship Kuwait Export Crude to DME Oman/Platts Dubai to $1.80 bbl for Asian customers. Near 7:30 a.m. ET, front-month West Texas Intermediate futures gained $0.36 to $81.59 bbl, while ICE Brent crude for March delivery edged $0.24 higher to $83.93 bbl. NYMEX February RBOB futures traded near $2.3594 gallon, and the front-month ULSD contract advanced 1.81 cents to $2.5817 gallon

WTI Extends Gains After Crude Draw, Shrugs Off Plunging Gasoline Demand -Oil prices are extending gains this morning after last night's API-reported crude draw and some relief that CPI (while at 39 year highs) was not worse than expected (prompting even more tightening from The Fed). Equity market gains and a weak dollar are also helping fuel the rally in crude, while European inventories are rising (+4.5% last week according to Genscape) and China ordered some independent oil refiners to reduce crude processing ahead of the Winter Olympics, according to industry consultant JLC.Bloomberg Intelligence's Senior Energy Analyst Vince Piazza notes that "despite OPEC+’s pledge to increase production for January and next month, we believe the cartel will add less to the market than planned. Meanwhile, cold weather is disrupting oil production temporarily, while flights have been scrubbed because of frigid temperatures and due to rising cases of the Covid-19 omicron variant." For now all eyes are on the product builds and implied gasoline demand for some color on omicron's demand impact. API:

• Crude -1.1077mm (-1.85mm exp)
• Cushing -3.659mm
• Gasoline +10.86mm
• Distillates +3.035mm

DOE

• Crude -4.553mm (-1.85mm exp)
• Cushing -2.468mm - first draw in 2 months
• Gasoline +7.961mm
• Distillates +2.537mm

Crude inventories fell for the 7th straight week. Official data confirmed the first Cushing draw in two months, and after the prior week's massive surge in product inventories, gasoline stocks rose significantly once again... Flight cancellations and mobility restrictions may continue to weigh on short-term jet-fuel demand, which has yet to recover to pre-pandemic levels, even during year-end holidays. Total crude stockpiles, including both commercial and strategic inventories fell by 4.85 million barrels, with just 300,000 barrels taken from the SPR adding to the commercial draw of 4.55 million barrels. Total US Crude stocks fell to their lowest since October 2018... After crashing the previous week, gasoline demand continued to tumble last week...According to GasBuddy data, Tuesday US gasoline demand fell 3.8% from the prior Tuesday and was down 7.9% from the average of the last four Tuesdays. It's the lowest Tuesday demand since 5/18/21. Graphs Source: Bloomberg. Not good...

WTI Climbs to 2-Month High on Falling US Stocks, Sliding USD -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Wednesday's session higher, with the U.S. crude benchmark notching a 1.5% gain on the back of a larger-than-expected drawdown from U.S. commercial crude oil inventories that overshadowed another weekly build in gasoline supplies and a sharp contraction in fuel demand amid consumer pullback on travel. Mobility across the largest cities in the United States declined markedly over the past 12 days as an omicron-led surge in COVID-19 infections rippled through the country, prompting shutdowns of schools and employee absenteeism. Apple mobility data shows in cities like New York and Chicago, driving plunged by more than 40% since the emergence of the omicron variant in late November. Restaurant reservations across the United States remained in negative territory each day so far this year, averaging 28% below the pre-pandemic level. More than 145,900 people were in U.S. hospitals with COVID-19 as of Tuesday -- a number that surpasses the previous peak from mid-January 2021 and is almost twice what it was two weeks ago, according to data from the Department of Health and Human Services. Oil traders pay close attention to those developments as they directly correlate with gasoline demand in the United States. The Energy Information Administration reported Wednesday morning gasoline supplied to the U.S. market -- a measure of demand -- slumped to the lowest weekly rate since February 2021 at 7.9 million barrels per day (bpd), down 266,000 bpd from the previous week. As a result, gasoline stockpiles built by more than 8 million barrels (bbl) in the reviewed week after surging 10 million bbl in the final week of December. Offsetting bearish parts of the report, U.S. crude oil inventories declined for the sixth consecutive week through Jan. 7, down 4.6 million bbl to 413.3 million bbl and remain about 8% below the five-year average. Oil stored at Cushing, the delivery point for West Texas Intermediate, fell 2.5 million bbl from the previous week to 34.8 million bbl. A crude draw was realized even as domestic refineries processed fewer barrels last week, with utilization rates slipping to 88.4% of capacity. U.S. inflation surged to the highest point in 40 years over the 12 months ending December, according to data released Wednesday morning by the U.S. Labor Department.. The energy index, however, declined 0.4% in December, ending a long series of increases, as the indexes for gasoline and natural gas both decreased. On the session, front-month WTI futures rallied $1.42 or 1.87% to $82.64 bbl, while ICE Brent crude for March delivery advanced $0.95 to $84.67 bbl. NYMEX February RBOB futures gained to $2.3908 gallon, up 3.34 cents on the session, and the front-month ULSD contract advanced 3.08 cents to $2.5942 gallon.

Oil edges lower on profit taking, rate hike worries - Oil prices edged lower on Thursday as investors took profits after two days of gains amid fears of aggressive U.S. interest rate hikes, but the losses were cushioned by expectations that a strong economic recovery will boost demand. U.S. West Texas Intermediate (WTI) crude futures settled 52 cents, or 0.63%, lower at $82.12 per barrel, after rising 5.6% over the last 2 days. Brent crude futures settled 0.24% lower at $84.47 per barrel. It had gained 4.7% over Tuesday and Wednesday. "The U.S producer price inflation data came in easily as hot as the last month and could put pressure on the Fed to rein in the economy, potentially being a drag on crude prices and supporting the dollar," Oil prices typically move inversely to the U.S. dollar, with a stronger greenback making commodities more expensive for those holding other currencies. Some investors were taking a deeper look at data from the U.S. Energy Information Administration (EIA) on Wednesday. While crude oil inventories fell more than expected, the report also showed fuel demand has taken a hit from Omicron. Gasoline stockpiles increased by 8 million barrels in the week to Jan. 7, compared with analyst expectations for a 2.4 million-barrel rise. "In reality, the weekly EIA report was less bullish than the headline number, as total crude oil inventories fell 4.8 million barrels but were more than offset by a stock build across refined products," The drop in crude inventories "might have been related to end-of-year tax issues on oil stocks onshore in Texas and Louisiana," the bank added. However, losses were limited by speculation that Omicron was not severe enough to derail a global demand recovery and cold weather in North America.

Crude Futures Drop Back From 2-Month Highs After 2-Day Rally (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Thursday's session mostly lower, sending the U.S. crude benchmark to just above $82 per barrel (bbl). Deepening evidence of omicron-led demand destruction in the domestic gasoline market along with mixed economic data in the United States overshadowed recent production shortfalls from several OPEC+ members. On the session, West Texas Intermediate futures for February delivery declined $0.52 to $82.12 per bbl, with the contract falling below $82 per bbl post-settlement, and ICE March Brent crude slipped to $84.47 per bbl, down $0.20 from Wednesday's settlement. NYMEX February RBOB futures softened 0.67 cent to $2.3841 gallon, and the front-month ULSD contract finished the session 1.43 cents higher at $2.6085 gallon, supported by still robust domestic demand for middle distillates. Thursday's mostly lower settlements were underpinned by growing concern over omicron's impact on fuel demand not only in the United States but also in the large economies of China and the European Union. Around 20 million people in China's northeastern coastal city of Dalian were placed under lockdown orders after a single individual arriving from the port of Tianjin contracted the omicron variant. Domestically, economic activity and mobility trends took a hard hit from the record-breaking surge in new COVID infections, with nationwide use of motor gasoline dropping last week to the lowest since February 2021. Commercial gasoline stockpiles built by more than 18 million bbl since Christmas. Further evidence of omicron's disruption to the economy could be found in the Federal Reserve's Beige Book released Wednesday afternoon, which showed an abrupt pullback in leisure travel, hotel occupancy and patronage at restaurants as the number of new COVID-19 cases grew rapidly in recent weeks. Against this backdrop, weekly unemployment claims in the United States unexpectedly increased during the week ended Jan. 8 to 230,000, up 23,000 from the previous week. The larger-than-expected increase in claim filings comes amid an Omicron-led spike in COVID-19 infections that has been sweeping through the country like wildfire in recent weeks, leading to widespread worker absenteeism and sick leaves. As of Wednesday, more than 145,900 people were in U.S. hospitals with COVID-19 -- a number that surpasses the previous peak from mid-January 2021 and is almost twice what it was two weeks ago, according to data from the Department of Health and Human Services.

Oil's bull run rolls on despite possible China reserves release - Oil futures settled higher on Friday, boosted by supply constraints and worries of a Russian attack on neighbouring Ukraine, pushing prices toward their fourth weekly gain despite sources saying China is set to release crude reserves around the Lunar New Year. Brent crude futures settled $1.59, or 1.9per cent, higher at a 2-1/2-month high of $86.06 a barrel, gaining 5.4per cent in the week. U.S. West Texas Intermediate crude gained $1.70 , or 2.1per cent, to $83.82 per barrel, rising 6.3per cent in the week. Both Brent and U.S. futures entered overbought territory for the first time since late October. Flynn added that traders did not want to be short in the market as tensions mounted between Russia and Ukraine and ahead of a long U.S. weekend for the Martin Luther King Jr Day holiday, U.S. officials voiced fears on Friday that Russia was preparing to attack Ukraine if diplomacy failed. Russia, which has massed 100,000 troops on Ukraine's border, released pictures of its forces on the move. The dollar appeared headed toward its largest weekly fall in four months. A weaker dollar makes commodities more affordable for holders of other currencies. Several banks have forecast oil prices of $100 a barrel this year, with demand expected to outstrip supply, not least as capacity constraints among OPEC+ countries come into focus. Libya's National Oil Corp Chairman Mustafa Sanallah said oil prices were "expected to continue to rise unless the market fundamentals change and global investment ... increases," adding that oil output from the country totalled 1.045 million barrels per day. Issues also remain unresolved in indirect talks between Iran and the United States on reviving the 2015 Iran nuclear deal, a source close to the talks said on Friday. If the United States lifts sanctions on Iran, the country could boost oil shipments, adding to global supply. Sources told Reuters China plans to release oil reserves around the Lunar New Year holidays between Jan. 31 and Feb. 6 as part of a plan coordinated by the United States with other major consumers to reduce global prices. The U.S. Energy Department on Thursday said it had sold 18 million barrels of strategic crude oil. U.S. oil rigs also rose 11 to 492 this week, their highest since April 2020. China posted its first annual decline in crude oil imports in two decades, though traders expect imports to recover this year. Fuel demand was pressured in the world's second-biggest oil consumer as the Omicron coronavirus variant spread. Many cities, including Beijing, have urged people not to travel during the Lunar New Year holiday.

WTI, Brent Futures Climb to 9-Week High as Omicron Fears Fade -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Friday's session sharply higher, lifting both crude benchmarks as much as 2% higher. The gains came amid early signs that omicron infections are leveling off in U.S. cities where the new variant hit first, suggesting a national peak may be approaching, while broader commodities also got a lift from a weekly decline in the U.S. dollar. The wave of omicron cases in the United States that has disrupted everything from flights to schools over the past month is likely to fade fast in the coming weeks, according to some public health officials. Former Food and Drug Administration Commissioner Scott Gottlieb told reporters, "It's peaking right now. If you look at the epidemiology on the East Coast, certainly ... you're seeing cases come down week over week." Some of the most populous U.S. states, including New York, Florida and California saw a 10% decline in new COVID-19 cases over the past week. A University of Washington model suggests the number of daily reported cases in the United States will top out at 1.2 million by Jan. 19 and then fall sharply, "simply because everybody who could be infected will be infected," said Ali Mokdad, a professor of health metrics sciences at the university. Oil traders pay close attention to pandemic trends as they correlate very closely with gasoline demand in the United States. During the first week of January, gasoline supplied to the U.S. market plunged to the lowest rate since February 2021 at 7.9 million barrels per day (bpd) amid widespread worker absenteeism and shuttered schools. As a result, gasoline stockpiles built by more than 8 million barrels (bbl) in the reviewed week after surging 10 million bbl in the final week of December. Mobility across the largest cities in the United States declined markedly over the past 12 days as an omicron-led surge in COVID-19 infections rippled through the country, prompting shutdowns of schools and employee absenteeism. Apple mobility data shows that in cities like New York and Chicago driving plunged by more than 40% since the emergence of the Omicron variant in late November. Restaurant reservations across the United States remained in negative territory each day so far this year, averaging 28% below the pre-pandemic level.On the session, West Texas Intermediate futures for February delivery advanced $1.70 to $83.82 per bbl, and ICE March Brent crude crested over $86 per bbl, up $1.59 on the session. NYMEX February RBOB futures rallied 3.49 cents or 1.7% to $2.4190 gallon, and the front-month ULSD contract gained 2.58 cents to $2.6343 gallon. U.S. dollar index firmed to 95.150 at settlement following a three-session losing streak, reversing off a 94.610 nine-week low overnight after finding buying support at the 100-day moving average.

Kazakhstan denies US-funded bio-lab was seized by protesters - Kazakhstan denies military laboratory was seized by rioters after Russia claimed a possible pathogen leak occurred at controversial facility, as country's health ministry says more than 160 have been killed during protests in the country - Officials in Kazakhstan have denied that a controversial 'military biological laboratory' was seized in the recent unrest, which has so far claimed 160 lives since starting on January 2. It is not clear if the 164 deaths refer only to civilians or if law enforcement deaths are included, but the number - provided by the health ministry to state news channel Khabar-24 - are a significant rise from previous tallies. Kazakh authorities said earlier on Sunday that 16 police or national guard members had been killed.Russian media highlighted claims that the US-funded facility near Almaty was compromised, resulting in a possible leak of dangerous pathogens. The airport, mayor's office and secret services buildings fell briefly into the hands of rioters during a wave of protests backed by shadowy armed cells.The secret bio-laboratory funded by the US defence department - which has links to Russian and Chinese scientists - was also compromised in the disturbances, according to social media claims that it was seized.'This is not true. The facility is being guarded,' said the health ministry which is responsible for the Central Reference Laboratory, in Almaty.Official Russian news agency TASS had highlighted alleged social media reports that it was taken over by 'unidentified people' and 'specialists in chemical protection suits were working near the lab so a leak of dangerous pathogens could have occurred'.The laboratory's existence has been controversial and in 2020 the country formally denied that it was being used to make biological weapons.At the time, the Kazakh government stated: 'No biological weapons development is underway in Kazakhstan - and no research is conducted against any other states.' It was built in 2017 and is used for the study of outbreaks of particularly dangerous infections. Dangerous pathogens are stored here, it is reported.

Kazakhstan officials say 164 dead in protests, country now ‘stabilized’— Kazakhstan government officials said Sunday that government buildings and institutions in all regions were back under state control after days of violence and bloodshed amid sweeping anti-government protests.While an ongoing Internet blackout makes the situation on the ground difficult to verify, Interior Ministry officials claimed the country had “stabilized” — as a separate English-language message from a presidential aide slammed foreign media for creating what he called a “false impression that the Kazakhstan government has been targeting peaceful protesters.”The claims, apparently aimed at the international community, appear to be part of an effort to change the public narrative after President Kassym-Jomart Tokayev announced a shoot-to-kill order to security forces during a nationally televised address.They come as security officers in the country’s capital, Nur-Sultan, search door-to-door to root out what the city’s law enforcement chief called “violators of public order.” Almaty’s airport remains closed, and authorities have urged citizens to stay indoors.The government said Sunday that 164 people have died during the demonstrations, including 103 people in Almaty. Videos on social media showed people lining up at morgues to see whether their relatives were among the dead. Nearly 6,000 people have been detained, according to a Kazakh television report. The Interior Ministry has said that at least 16 law enforcement officers have been killed and more than 1,300 injured. U.S. Secretary of State Antony Blinken said Sunday on ABC’s “This Week” that Tokayev’s shoot-to-kill order “is something I resolutely reject,” adding: “The shoot-to-kill order, to the extent it exists, is wrong and should be rescinded.”