Sunday, January 23, 2022

oil hits 7 year high as US supplies near 10 year low; 3 week gasoline supply increase is largest ever; global oil shortage at 1.24 mbpd; DUCs lowest since Feb 2014

oil prices hit a 7 year high as US oil supplies neared a 10 year low and Strategic Petroleum Reserve fell to another 19 year low; gasoline inventory increase over 3 weeks is largest on record, gasoline imports at a 53 week low, gasoline exports at an 82 week low; December global oil shortage was 1,240,000 barrels per day as OPEC output was 625,000 barrels per day short of quota; global oil shortage for 2021 was 1,446,300 barrels of oil per day…DUCs are lowest since February 2014; DUC backlog of 5.1 months is lowest since December 2014

Oil prices rose for a fifth consecutive week and hit a 7 year high in the process, on supply disruptions in the Middle East and on rising tensions between NATO and Russia...after rising 6.3% to $83.82 per barrel last week on a softening of Fed rhetoric and on a production shortfall by OPEC+, the contract price for US light sweet crude for February delivery opened 50 cents higher on Tuesday after the MLK holiday as rising geopolitical tensions in the Middle East and Europe threatened to disrupt supplies, and subsequently rose to a 7 year high on an upbeat demand forecast from OPEC that minimized the impact of the Omicron surge on global oil consumption, before settling $1.61 or nearly 2% higher at $85.43 a barrel, as robust domestic demand and strained supplies kept US markets running hot...oil prices jumped to another 7 year high early Wednesday after the International Energy Agency forecast that global oil demand would surpass pre-pandemic levels this year, supported by a robust recovery in jet fuel consumption, and approached $88 a barrel after a fire on a pipeline from Iraq to Turkey briefly stopped oil flow, before settling $1.53 higher at $86.96 a barrel, its highest settlement since Oct. 9, 2014, as demand for oil continued to prove resilient to omicron....oil prices eased early Thursday, as traders took profits after the weekly report from the American Petroleum Institute showed U.S. crude and gasoline stocks rose last week, but reversed to move higher in late morning trade despite weekly inventory data from the EIA showing U.S. commercial crude and gasoline inventories increased more than expected, as domestic refiners scaled back crude throughputs amid still sluggish demand for gasoline, but then softened near the close on the mixed inventory data and a stronger US dollar to settle 6 cents lower​,​ as trading in February oil expired with the contract priced at $86.90 a barrel...with oil quotes now referencing the lower priced contract for US light sweet crude for March delivery, which had closed Thursday down 25 cents at $85.55 a barrel, oil prices opened nearly $1 lower and tumbled more than $1 more in early trading on Friday as oil traders took profits after Thursday's inventory reports​,​ but reversed in afternoon trading to settle just 41 cents, or 0.5% lower, at $85.14 a barrel, as analysts said they expected the pressure on prices to be limited​,​ due to supply concerns and rising demand...​but even after falling Friday, oil prices still finished 1.6% higher on the week, with the contract price for US light sweet crude for March delivery finishing 2.2% higher, as geopolitical tensions threatened greater supply outages alongside stronger demand figures, despite the omicron variant...

With oil prices hitting a 7 year high this week, we'll put up a long term graph here and take a look..

The above is a screenshot of the current interactive oil price chart from barchart.com, which i have set to show front month oil prices monthly over the past 10 years, which means you're seeing the same range of oil prices that were quoted by the media over that stretch....this interactive chart can also be reset to show prices of front month or individual monthly oil contracts over time periods ranging from 1 day to 30 years, as the menu bar on the top indicates, and also to show oil prices by the minute, hour, day, week or month for each...each bar in the graph above represents the range of oil prices for a single month, with months when prices rose indicated in green, with the opening price at the bottom of the bar and the closing price at the top, and months when prices fell indicated in red, with the opening price at the top of the bar and the closing price at the bottom, while the small sticks above or below each monthly bar represent the extent of the price change above or below the opening and closing price during the month in question....meanwhile, the bars across the bottom show trading volume for the front month oil contract for the months in question, again with up months indicated by green bars and down months indicated in red...you might note on this graph that th​is week's 7 year high came as we eclipsed the 7 year high established back in October...October prices of seven years ago, ​on the other hand, were in a period when oil prices were rapidly collapsing from above $100 a barrel to below $50 a barrel, so it is unlikely that we'll extend our interim price​ ​record ​beyond seven years anytime soon..

Natural gas prices, on the other hand, finished lower for the first time in four weeks, as key temperatures warmed and forecasts moderated as the week progressed...after rising 8.8% to $4.262 per mmBTU last week on an outbreak of polar air in the densely populated northeastern US, the contract price of natural gas for February delivery opened nearly 2% higher on Tuesday on forecasts for colder weather and higher heating demand over the next two weeks than had been forecast before the holiday weekend. but backtracked to settle just 2.1 cents higher at $4.283 per mmBTU, as prices pulled back sharply in the volatile Northeast amid a spell of moderate weather to start the week...prices then tumbled 25.2 cents, or nearly 6% to $4.031 per mmBTU on Wednesday after the latest forecasts pulled back modestly from earlier expectations for a bitter cold pattern over the northern and eastern US, and then fell another 22.9 cents or 5.6% to $3.802 on Thursday, as weather conditions warmed, eclipsing ​the impact of ​record export volumes, production threats and the biggest storage drawdown of the season...natural gas recovered most of that drop on Friday, rising 19.7 cents to $3.999 per mmBTU, amid updated forecasts for freezing conditions to extend into next month and amid expectations for stout withdrawals from storage, but still finished 6.2% lower for the week...

The EIA's natural gas storage report for the week ending January 14th indicated that the amount of working natural gas held in underground storage in the US fell by 206 billion cubic feet to 2,810 billion cubic feet by the end of the week, the largest gas storage withdrawal since February 19th of last year, which left our gas supplies 226 billion cubic feet, or 7.4% below the 3,036 billion cubic feet that were in storage on January 14th of last year, but still 33 billion cubic feet, or 1.2% above the five-year average of 2,777 billion cubic feet of natural gas that have been in storage as of the 14th of January over the most recent five years....the 206 billion cubic foot withdrawal from US natural gas working storage for the cited week was somewhat more than the average forecast for a 193 billion cubic foot withdrawal from a S&P Global Platts' survey of analysts, and was well more than the 179 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, and also quite a bit more than the average withdrawal of 167 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 14th indicated that due to a big jump in our oil imports, an ongoing refinery slowdown, and a moderate withdrawal of crude from our Strategic Petroleum Reserve, we had enough oil left to add to our stored commercial crude supplies for the first time in 8 weeks and for the 11th time in the past thirty-four weeks….our imports of crude oil rose by an average of 675,000 barrels per day to an average of 6,745,000 barrels per day, after rising by an average of 185,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 655,000 barrels per day to an average of 2,610,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 4,135,000 barrels of per day during the week ending January 14th, 20,000 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 unchanged 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 15,835,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,453,000 barrels of crude per day during the week ending January 14th, an average of 120,000 fewer barrels per day than the amount of oil that our refineries processed during the prior week, when refinery throughput had fallen by 293,000 barrels per day, while over the same period the EIA’s surveys indicated that a net of 119,000 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 a rounded 500,000 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 (-500,000) 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...since last week’s EIA fudge factor was at (-934,000) barrels per day, that means there was a 434,000 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 pretty useless.....however, since most everyone treats these weekly EIA reports as gospel and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

This week's 119,000 barrel per day decrease in our overall crude oil inventories left our total supplies at 1,005,847,000 barrels, the lowest level since January 20th 2012, or just days short of a 10 year low....this week's oil inventory decrease came as 74,000 barrels per day were being added to our commercially available stocks of crude oil, while 193,000 barrels per day of oil were being 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 64,107,000 barrels have been removed from the Strategic Petroleum Reserve over the past 18 months, and as a result the amount of oil left in our Strategic Petroleum Reserve has fallen to the lowest since November 15th, 2002, or to another new 19 year low of 592,034,000 barrels per day, as repeated tapping of our emergency supplies for political expediency or to “pay for” other programs had already drained those supplies considerably 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 rose to an average of 6,433,000 barrels per day last week, which was still 4.7% more than the 6,142,000 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 unchanged at 11,700,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,300,000 barrels per day, while Alaska’s oil production was 6,000 barrels per day lower at 455,000 barrels per day but 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 88.1% of their capacity while using those 15,453,000 barrels of crude per day during the week ending January 14th, down from a utilization rate of 88.4% the prior week, and lower than the historical utilization rate for early January refinery operations…the 15,453,000 barrels per day of oil that were refined this week were still 4.7% more barrels than the 14,760,000 barrels of crude that were being processed daily during the pandemic impacted week ending January 15th of 2021, but 8.3% less than the 16,857,000 barrels of crude that were being processed daily during the week ending January 17th, 2020, when US refineries were operating at what was then a more seasonal 90.5% of capacity...

Even with the decrease in oil being refined this week, gasoline output from our refineries was again higher, increasing by 114,000 barrels per day to 8,688,000 barrels per day during the week ending January 14th, after our gasoline output had increased by 68,000 barrels per day over the prior week.…however, this week’s gasoline production was still 2.2% less than the 8,885,000 barrels of gasoline that were being produced daily over the same week of last year, and 8.9% less than the gasoline production of 9,535,000 barrels per day during the week ending January 17th, 2020.....on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 60,000 barrels per day to 4,728,000 barrels per day, after our distillates output had increased by 177,000 barrels per day over the prior week…even after those decreases, our distillates output was still 4.4% more than the 4,529,000 barrels of distillates that were being produced daily during the week ending January 15th of 2021, but 4.6% less than the 4,954,000 barrels of distillates that were being produced daily during the week ending January 17th, 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 sixth time in eight weeks, after falling each week over the preceding six weeks, increasing by 5,873,000 barrels to 240,748,000 barrels during the week ending January 14th, after our gasoline inventories had increased by 19,089,000 barrels over the prior two weeks...our gasoline supplies increased by less this week because the amount of gasoline supplied to US users increased by 318,000 barrels per day to 8,224,000 barrels per day, after falling by 266,000 barrels per day to an eleven month low the prior week, while our imports of gasoline fell by 198,000 barrels per day to a 53 week low of 391,000 barrels per day and our exports of gasoline fell by 133,000 barrels per day to a 82 week low of 393,000 barrels per day…after three straight big inventory increases, our gasoline supplies are now 0.6% higher than last January 15th's gasoline inventories of 240,748,000 barrels, but still about 2% below the five year average of our gasoline supplies for this time of the year…the gasoline inventory increase of 23,962,000 barrels over the past 3 weeks was the largest in any three week period on record, and even exceeded the 4 week inventory increase of 23,952,000 barrels that we saw at the outset of the pandemic lockdowns from mid-March to mid April of 2020..

On the other hand, with the recent decreases in our distillates production, our supplies of distillate fuels decreased for the fourteenth time in twenty-one weeks, falling by 1,431,000 barrels to 127,952,000 barrels during the week ending January 14th, after our distillates supplies had increased by 2,537,000 barrels during the prior week….our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 807,000 barrels per day to 4,556,000 barrels per day, even as our exports of distillates fell by 209,000 barrels per day to 683,000 barrels per day, and as our imports of distillates rose by 90,000 barrels per day to 306,000 barrels per day....after twenty-seven inventory decreases over the past forty-one weeks, our distillate supplies at the end of the week were 21.8% below the 163,662,000 barrels of distillates that we had in storage on January 15th of 2021, and about 16% below the five year average of distillates inventories for this time of the year…

Meanwhile, with the refinery slowdown and the big jump in our oil imports, our commercial supplies of crude oil in storage rose for the 8th time in 24 weeks and for the 18th time in the past year, increasing by 515,000 barrels over the week, from 413,298,000 barrels on January 14th to 413,813,000 barrels on January 14th, after our commercial crude supplies had decreased by 4,553,000 barrels over the prior week…after this week’s increase, 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 30.6% above the average of our crude oil stocks after the second 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 spring 2020 and remained elevated for most of the year after that, our commercial crude oil supplies as of this January 14th were 15.0% less than the 486,563,000 barrels of oil we had in commercial storage on January 15th of 2021, and are now 3.3% less than the 428,106,000 barrels of oil that we had in storage on January 17th of 2020, and also 7.0% less than the 445,025,000 barrels of oil we had in commercial storage on January 18th of 2019…

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 2,840,000 barrels this week, from 1,783,651,000 barrels on January 7th to 1,780,811,000 barrels on January 14th...that left our total supplies less than a million barrels higher than the seven year low of 1,779,614,000 barrels of three weeks ago, or at the 2nd lowest level since August 29th, 2014.....

OPEC's January Oil Market Report

Tuesday of this week saw the release of OPEC's January Oil Market Report, which includes OPEC & global oil data for December, and hence it gives us a picture of the global oil supply & demand situation for the fifth month after 'OPEC+' agreed to increase their output by 400,000 barrels per day each month from the previously agreed to July level, which was in turn part of the fifth production quota policy reset that they've made over the past twenty months, all in response to the pandemic-related slowdown and subsequent irregular recovery...​.with Omicron cases increasing at the time of this report, ​we ​need to again caution that the oil demand estimates made by OPEC herein, while the eventual course of the Covid-19 pandemic still remains uncertain, should be considered as having a much larger margin of error than we'd expect from this report during stable and hence more predictable periods..

the first table from this monthly report that we'll review is from the page numbered 47 of this month's report (pdf page 57), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures...

As we can see on the bottom line of the above table, OPEC's oil output increased by​ 166,000 barrels per day to 27,​882,000 barrels per day during December, up from their revised November production total which averaged 27,715,000 barrels per day....however, that November output figure was originally reported as 27,717,000 barrels per day, which therefore means that OPEC's November production was revised 2,000 barrels per day lower with this report, and hence OPEC's December production was, in effect, a 164,000 barrel per day increase from the previously reported OPEC production figure (for your reference, here is the table of the official November OPEC output figures as reported a month ago, before this month's revision)...

According to the agreement reached between OPEC and the other oil producers at their Ministerial Meeting on July 18th, 2021, the oil producers party to that agreement were to raise their output by a total of 400,000 barrels per day each month through December, which would include an increase of 254,000 barrels per day from the OPEC members listed above...but as we can see from the above table, OPEC's increase of 166,000 barrels per day was quite a bit less than that...the apparent reasons for their production shortfall in December were the 83,000 barrel per day decrease in Libya's output, and the 43,000 barrel per day decrease in Nigeria's output,,,both of those countries saw production problems in December, which persist to this day, so expectations are increasing that they'll not be able to produce their quota any time soon...

Recall that last year's original oil producer's agreement was to cut oil production by 9.7 million barrels per day from an October 2018 baseline for just two months early in the pandemic, during May and June of last year, but that initial 9.7 million bpd production cut agreement had been extended to include July 2020 at a meeting between OPEC and other producers on June 6th, 2020....then, in a subsequent meeting in July of last year, OPEC and the other oil producers agreed to ease their deep supply cuts by 2 million barrels per day to 7.7 million barrels per day for August 2020 and subsequent months, which thus became the agreement that governed OPEC's output for the rest of 2020...the OPEC+ agreement for this January 2021 production, which was later extended to include February and March and then April's output, was to further ease their supply cuts by 500,000 barrels per day to a cut of 7.2 million barrels per day from that original baseline...then, during a difficult meeting on April 1st of last year, OPEC and the other oil producers that are aligned with them agreed to incrementally adjust their oil production higher each month by an uncomputed, pre-set amount over the following three months, thus extending their joint output cut agreement through July....production levels for August and the following months of this year were to be determined by a July 1st OPEC meeting, but that meeting was adjourned on July 2nd due to a dispute between the UAE and the Saudis over the 2018 reference production levels, and a subsequent attempt to restart that meeting on July 5th was called off....so it wasn't until July 18th 2021 that a tentative compromise addressing August​'s output​ quotas was worked out, allowing oil producers in aggregate to increase their production by 400,000 barrels per day in August, and again by that amount in each of the following months, and also boosting reference production levels for the UAE, the Saudis, Iraq and Kuwait beginning in April 2022....OPEC and other producers then agreed to increase their production in January 2022 by a further 400,000 barrels per day in a meeting concluded on the 2nd of December​, 2021​, and reaffirmed their intention to continue that policy with another 400,000 barrel per day increase in February at a meeting concluded January 4, 2022, a little over two weeks ago...

hence OPEC arrived at the production quotas for August through December of this year by repeatedly adjusting the original 23%, or 9.7 million barrel per day production cut from the October 2018 baseline that they first agreed to for May and June 2020, first to a 7.7 million barrel per day output reduction from the baseline for the remainder of 2020, then to a 7.2 million barrel per day production cut from the baseline for the first four months of this year, which was actually raised to an 8.2 million barrel per day oil output reduction after the Saudis unilaterally committed to cut their own production by a million barrels per day during February, March, and then later during April of last year....under the agreement prior to the current one, OPEC's production cut in April 2021 was at 4,564,000 barrels per day from the October 2018 baseline, which was lowered to a cut of 3,650,000 barrels per day from the baseline with the prior comprehensive agreement, which thus set the July production quota for the "OPEC 10" at 23,033,000 barrels per day, with war torn Libya and US sanctioned producers Iran and Venezuela exempt from the production cuts imposed by thiat agreement....for OPEC and the other producers to increase their output by 400,000 barrels per day from that July 2021 level, each producer would be allowed to increase their production by just over 1% per month...for the ten members of OPEC who agreed to impose ​production ​cuts on themselves, that would mean their August output quota would be roughly 23,277,000 barrels per day, then 23,531,000 barrels per day in September, then roughly 23,786,000 barrels per day in October, then 24,041,000 barrels per day in November and finally 24,295,000 barrels per day in December....therefore, the 23,670,000 barrels those 10 OPEC members produced in December were 625,000 barrels per day short of what they were expected to produce during the month, with Nigeria, Angola, and the Saudis accounting for the most of this month's shortfall....

The next graphic from this month's report that we'll highlight shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from January 2020 to December 2021, and it comes from page 48 (pdf page ​58) of OPEC's December Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....

Including this month's 166,000 barrel per day increase in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate indicates that total global liquids production increased by a rounded 650,000 barrels per day to average 98.51 million barrels per day in December, a reported increase which came after November's total global output figure was apparently revised down by 420,000 barrels per day from the 98.28 million barrels per day of global oil output that was estimated for November a month ago, as non-OPEC oil production rose by a rounded 480,000 barrels per day in December after that downward revision, with 320,000 barrels per day of the increase coming from OECD countries, predominantly Canada and Norway, while non-OECD countries increased their output by 120,000 barrels per day, primarily driven by production increases from Brazil and Guyana...

After that increase in December's global output, the 98.51 million barrels of oil per day that were produced globally during the month were 5.82 million barrels per day, or 6.3% more than the revised 92.69 million barrels of oil per day that were being produced globally in December a year ago, which was the fifth month after OPEC and other producers agreed to reduce their output cuts from the original 9.7 million barrels per day to 7.7 million barrels per day (see the January 2021 OPEC report (online pdf) for the originally reported December 2020 details)...with this month's increase in OPEC's output, their December oil production of 27,882,000 barrels per day amounted to 28.3% of what was produced globally during the month, unchanged from their revised share of the global total in November....OPEC's December 2020 production was reported at 25,362,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 2,520,000 barrels per day, or 9.9% more barrels per day of oil this December than what they produced a year earlier, when they accounted for 27.3% of global output...

Even after the increases in OPEC's and global oil output that we've seen in this report, the amount of oil being produced globally during the month again fell short of the expected global demand, as this next table from the OPEC report will show us....

The above table came from page 27 of the OPEC January Oil Market Report (pdf page 37), and it shows regional and total oil demand estimates in millions of barrels per day for 2020 in the first column, and then OPEC's estimate of oil demand by region and globally, quarterly over 2021 over the rest of the table...on the "Total world" line in the fifth column, we've circled in blue the figure that's relevant for December, which is their estimate of global oil demand during the fourth quarter of 2021... OPEC has estimated that during the 4th quarter of last year, all oil consuming regions of the globe were using an average of 99.75 million barrels of oil per day, which ​was a 260,000 barrel per day upward revision from their estimate for the 4th quarter a month ago, still reflecting a bit of coronavirus related demand destruction compared to 2019, when global demand averaged over 101 million barrels per day during second half of the year....but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were only producing 98.51 million barrels per day during December, which would imply that there was a shortage of around 1,240,000 barrels per day in global oil production in December when compared to the demand estimated for the month...

in addition to figuring the December oil shortage that's indicated by this report, the upward revision of 260,000 barrels per day to 4th quarter demand we've circled in green above, combined with the downward revision of 420,000 barrels per day to November's global oil output that's implied in this report means that the 1,210,000 barrels per day global oil output shortage we had previously figured for November would now be revised to an oil shortage of 1,890,000 barrels per day...likewise, the upward revision of 260,000 barrels per day to 4th quarter demand noted above means that the 2,090,000 barrels per day global oil output shortage we had previously figured for October would now be revised to an oil shortage of 2,350,000 barrels per day...

However, note on the table above that we've also circled in green a downward revision of 240,000 barrels per day to the third quarter's demand....that means that the 1,840,000 barrels per day global oil output shortage we had previously figured for September would now be revised to a shortage of 1,600,000 barrels per day....in like manner, the 240,000 barrels per day downward revision to 3rd quarter demand means that the shortage of 2,350,000 barrels per day we had previously figured for August would now be revised to a shortage of 2,110,000 barrels per day, and that the shortage of 1,930,000 barrels per day barrels per day we had previously figured for July would have to be revised to a shortage of 1,690,000 barrels per day...

At the same time, you can see in green that we've also circled a ​much ​more modest downward revision of 20,000 barrels per day to the second quarter's demand, a quarter when there was also a shortage of oil being produced globally....based on that downward revision to demand, our previous estimate that there was a shortage of 740,000 barrels per day in June would now be revised to a 720,000 barrels per day shortage, the oil shortage of 2,070,000 barrels per day that we had previously figured for May would have to be revised to a shortage of 2,050,000 barrels per day, and that the 2,420,000 barrels per day global oil output shortage we should have figured for April would have to be revised to a shortage of 2,400,000 barrels per day...

Meanwhile, since there are no revisions that apply to the first quarter, the global oil output shortage of 810,000 barrels per day we had previously figured for March, the global oil output shortage of 1,820,000 barrels per day we had previously figured for February, and the global oil output surplus of 600,000 barrels per day we had previously figured for January would remain unchanged from our previous estimate...

With our estimates for all of the months of 2021 thus complete, we should be able to compute the global oil production shortfall for the year...based on the 12 monthly oil market reports that OPEC released over the past year, and the monthly revisions to the supply and demand figures therein, we find that the world was short 527,910,000 barrels of oil in 2021, which works out to a shortage of 1,446,300 barrels of oil per day....we're still far from running out, however, because the quantities of oil being produced globally during the pandemic of 2020 still averaged over 3 million barrels per day more than anyone wanted....

This Week's Rig Count

The number of drilling rigs running in the US increased for the 59th time over the past 70 weeks during the week ending January 21st, but were still 23.8% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by three to 604 rigs this past week, which was also 226 more rigs than the pandemic hit 378 rigs that were in use as of the January 22nd report of 2021, but was also still 1,325 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the ​global ​market with oil in an attempt to put US shale out of business….

The number of rigs drilling for oil was down by 1 to 491 oil rigs during this week, after they had increased by 11 during the prior week, but there are still 202 more oil rigs active now than were running a year ago, even as they still amount to just 30.5% 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 4 to 113 natural gas rigs, which was also up by 25 natural gas rigs from the 88 natural gas rigs that were drilling during the same week a year ago, but still only 7.0% 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 unchanged at 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 rigs 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 also 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 3 to 544 horizontal rigs this week, which was also 206 more rigs than the 338 horizontal rigs that were in use in the US on January 22nd of last year, but still 60.0% 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 37 directional rigs this week, and those were also up by 15 from the 22 directional rigs that were operating during the same week a year ago….on the other hand, the vertical rig count was down by 2 rigs to 23 vertical rigs this week, while those were still up by 5 from the 18 vertical rigs that were in use on January 22nd 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 21st, the second column shows the change in the number of working rigs between last week’s count (January 14th) and this week’s (January 21st) count, the third column shows last week’s January 14th 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 22nd of January, 2021...

since this week's rig increase was driven by the four rig increase in rigs targeting natural gas, we'll start ​by looking at those...three of them are pretty obvious​: two natural gas rigs were added in Pennsylvania's Marcellus, and one natural gas rig was added in northeast Louisiana's Haynesville shale...the last one is problematical, since Baker Hughes lists it as being in an "Other" basin, which they don't track...our first guess was that it might have been added in Utah, where both oil and natural gas are being targeted in the Uintah basin...but in checking the individual well records for Utah in the North America Rotary Rig Count Pivot Table (Feb 2011 - Current) at Baker Hughes, we f​ound that another oil rig was added in that state...since Oklahoma is the only other state showing a rig increase, and there are no Oklahoma basins showing an increase, we'll assume that last natural gas rig must have been added somewhere in that state...if you need to know for sure, feel free to compare the 50 Oklahoma drilling activity records for the week ending January 21st in that file to the 49 Oklahoma drilling activity records for the week ending January 14th​, in order​ to verify the difference..

similarly, the rig pulled out of Wyoming was not associated with any basin tracked by Baker Hughes, and we figure it to have been an oil rig, since the national oil rig count was down by one while we've already seen an oil rig addition in Utah...lastly, checking the Rigs by State file at Baker Hughes for changes in Texas, we find that two rigs were pulled out of Texas Oil District 8, which encompasses the core Permian Delaware, and that another rig was pulled out of Texas Oil District 7B, which includes the easternmost counties of the Permian Midland, but that two rigs were added in Texas Oil District 8A, which covers the southern counties in the Permian Midland....since those were the only changes in Texas this week, they thus account for both the rig count decreases in both the Permian and the state of Texas overall..

DUC well report for December

Monday of the past week saw the release of the EIA's Drilling Productivity Report for January, which includes the EIA's December data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions....that data showed a decrease in uncompleted wells nationally for the 19th consecutive month in December, as both completions of drilled wells and drilling of new wells remained below average pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 214 wells, falling from 4,830 DUC wells in November to 4,616 DUC wells in December, which was the lowest number of US wells left uncompleted since February 2014, and also 40.0% fewer DUCs than the 7,737 wells that had been drilled but remained uncompleted as of the end of December of a year ago...this month's DUC decrease occurred as 686 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during December, up from the 659 wells that were drilled in November, while 900 wells were completed and brought into production by fracking, up from the 885 completions seen in November, and up from the pandemic hit 586 completions seen in December of last year....at the December completion rate, the 4,616 drilled but uncompleted wells left at the end of the month represents a 5.1 month backlog of wells that have been drilled but are not yet fracked, down from the 5.5 month DUC well backlog of a month ago, and the lowest backlog since December 2014, despite a completion rate that is almost 20% lower than the pre-pandemic norm...

once again, both oil producing regions and natural gas producing regions saw DUC well decreases in December, while none of the major basins​ covered here​ reported a DUC well increase....the number of uncompleted wells remaining in the Permian basin of west Texas and New Mexico decreased by 91, from 1,537 DUC wells at the end of November to 1,446 DUCs at the end of December, as 315 new wells were drilled into the Permian during December, while 406 wells in the region were being fracked...at the same time, DUCs in the Eagle Ford shale of south Texas decreased by 36, from 760 DUC wells at the end of November to a record low of 724 DUCs at the end of December, as 67 wells were drilled in the Eagle Ford during December, while 103 already drilled Eagle Ford wells were completed....in addition, there was also a decrease of 27 DUC wells in the Bakken of North Dakota, where DUC wells fell from 485 at the end of November to a record low of 458 DUCs at the end of December, as 46 wells were drilled into the Bakken during December, while 73 of the drilled wells in the Bakken were being fracked....meanwhile, the number of uncompleted wells remaining in Oklahoma's Anadarko basin decreased by 14, falling from 787 at the end of November to 773 DUC wells at the end of December, as 50 wells were drilled into the Anadarko basin during December, while 64 Anadarko wells were completed.....in addition, DUC wells in the Niobrara chalk of the Rockies' front range decreased by 11, falling from 362 at the end of November to a record low of 351 DUC wells at the end of December, as 87 wells were drilled into the Niobrara chalk during December, while 98 Niobrara wells were being fracked...

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 27 wells, from 513 DUCs at the end of November to a record low of 486 DUCs at the end of December, as 71 wells were drilled into the Marcellus and Utica shales during the month, while 98 of the already drilled wells in the region were fracked....meanwhile, the uncompleted well inventory in the natural gas producing Haynesville shale of the northern Louisiana-Texas border region was down by eight wells to 378 DUCs, as 50 wells were drilled into the Haynesville during December, while 58 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of December, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a total of 179 wells to 3,752 DUC wells, while the uncompleted well count in the natural gas basins (the Marcellus, the Utica, and the Haynesville) decreased by 35 wells to 864 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...

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Columbiana County seeks to strengthen ties between shale business, education - Youngstown Business Journal - Oil and gas business spurred from the Utica-Point Pleasant shale formation, South Field Energy’s electric generation plant in Wellsville, and Royal Dutch Shell’s cracker plant under construction in nearby Monaca, Pa., stand to have a major impact on Columbiana County’s economy, providing job opportunities for residents here, officials say. Central to achieving this is building a skilled workforce by enhancing the relationship between local business, education, and economic development initiatives, says Tad Herold, economic development director for Columbiana County and chairman of the Columbiana County Business Advisory Council. “Right now we have a core of about a dozen businesses, who have been very active at the business advisory council,” he said, noting he would like to see its ranks expand. “We’d like to see that be a dozen, two dozen or 50 because the more input we get from various sectors in various employers, the more responsive we will be to their needs.” Herold says the business advisory council’s purpose is to see how schools can ensure they are meeting the needs of employers, providing them a trained workforce with in-demand skills. The organization hosted a forum at Kent State University Salem Campus Thursday to encourage closer working relationships between business, education and economic development within the county to bolster the area workforce. Representatives from area schools, businesses, and representatives from the Mahoning Valley Manufacturers Coalition, Lt. Gov. Jon Husted and U.S. Rep. Bill Johnson, R-6, attended. While there are no new multibillion-dollar projects bound for the county anytime soon, Herold says the region is preparing for smaller companies that use materials manufactured from these large projects – plastic pellets produced from Shell’s ethane cracker, for example, or low-cost energy from the Utica shale – to relocate to the region.

More money for Pa. towns: Marcellus Shale impact fees projected to surge as gas prices rise -Impact fees collected for 2021 from Pennsylvania’s shale gas wells are projected to bounce back from the previous year’s record low to the highest level in three years. A new report from the Independent Fiscal Office credits a surge in natural gas prices for driving impact fees to an estimated $233.8 million for 2021. The total collection is projected to be $87.6 million higher than the previous year, when the pandemic cratered the price of natural gas and the fees paid per well.Rising global demand outpaced natural gas supply as economies began to recover from the pandemic last year. The annual average price at Pennsylvania natural gas trading hubs more than doubled in 2021 from the 2020 average to $3.15 per thousand cubic feet, according to the fiscal office.Those higher prices combined with moderate production growth to nearly quadruple the market value of all of the shale gas produced in Pennsylvania last year to $17.8 billion, the report said. That means, even though total impact fees will rebound this year, the effective tax rate is estimated to be 1.3%, the lowest on record. Most gas-producing states tax natural gas based on price and production volumes, but Pennsylvania’s impact fees are assessed per well and depend on factors including age, inflation and the average annual price of natural gas on the New York Mercantile Exchange.Impact fees are paid in April for the prior calendar year and distributed in July. They were imposed beginning in 2012 to compensate the state and local communities for the industry’s impacts on roads, public services and the environment.The age of Pennsylvania’s oldest Marcellus Shale wells is expected to play a bigger role than normal in the total collection. Nearly 3,200 wells reached their 11th year in operation and so will pay roughly half the fee amount paid by wells in their fourth through 10th years, the fiscal office said. That step down in the fee schedule is expected to depress the collection by about $10.4 million. Counties and municipalities that host wells are expected to split $129 million when payments are disbursed, or $53 million more than last year. Impact fee revenue is also dedicated to state environmental, infrastructure, emergency management and housing programs.

Marcellus/Utica permits issued for two counties in West Virginia (WV News) — Eighteen permits were issued to drill new shale wells last week.Permits were allowed in Marcellus/Utica, a deep natural gas reserve running under parts of New York, Pennsylvania, Ohio, West Virginia, Maryland and Virginia.West Virginia had two permits: One in Lewis and one in Wetzel.

Big fish eat smaller fish in Appalachia: More consolidation expected in 2022 - S&P Global Chesapeake Energy Corp. will get a discount on Chief Oil & Gas LLC if it goes through with a rumored $2.4 billion deal for the privately held Marcellus Shale driller that would continue a trend of consolidation in Appalachian shale gas operations. Citing unnamed sources, Reuters reported Jan. 19 that Chesapeake was finalizing a deal for Chief, Chesapeake's neighbor in the dry gas window of northeast Pennsylvania and one of four Marcellus drillers considered prime buyout targets. "We think this deal is more likely with the valuation reset from more than $3.0 billion in October to $2.4 billion," said veteran shale gas analyst Gabriele Sorbara, a managing director at boutique investment services firm Siebert Williams Shank & Co. In October 2021, Reuters reported that Chief was marketing its assets, consisting of just over 1 Bcf/d of production from 450 active wells in five counties, for $3 billion. "Given the quality of the Chief assets, we do not see this potential deal as a major concern, as it should be accretive to free cash flow and capital returns at the right valuation," "Assuming the deal is confirmed, it seems that Chesapeake lost out to EQT Corp. on the $3 billion [Alta Resources LLC] deal and didn't want to miss out on the last real opportunity for consolidation in northeast Pennsylvania," credit research firm CreditSights senior analyst Charles Johnston said. "Chief's acreage position is a strong fit for Chesapeake and some of the best dry gas acreage in the Marcellus." At the start of the year, CreditSights predicted shale oil and gas M&A would continue in 2022 with operators buying out their neighbors. Shale oil and gas equities have seen healthy gains over the past year, making company stock a viable currency and reducing the amount of cash that must be borrowed to finance a transaction. EQT bought the southwest Pennsylvania operations of Chevron Corp. in 2020. The same year, northern Pennsylvania operator National Fuel Gas Co. bought Royal Dutch Shell PLC's operations along the New York border, and Southwestern Energy Co. purchased Marcellus and Utica shale driller Montage Resources Corp. "Deals are growing in size with a greater focus on consolidating around a core asset base rather than expansion into new growth areas," CreditSights said Jan. 4. "Energy M&A has also been balance sheet friendly, with the vast majority of deals entirely (or largely) equity funded and accretive to credit profiles. In a slower growth world, consolidation reduces costs, improves scale and increases operator efficiency with greater blocks of contiguous acreage for upstream players." Pennsylvania's five largest producers — EQT, Chesapeake, Coterra Energy Inc., Range Resources Corp. and Southwestern — account for about three-quarters of the state's shale gas production.

EQT Achieves Certification for 4 Bcf/d of Appalachian Natural Gas Production - EQT Corp. said 80% of its natural gas now holds the certified designation, giving it a potential leg up for premium pricing. The top natural gas producer in the United States, which produced an estimated 5.6 Bcfe/d during the third quarter, said most of the Marcellus and Utica shale production achieved the certification label last November under standards set by Equitable Origin (EO) and MiQ. An independent audit by Responsible Energy Solutions assessed roughly 200 well pads in Pennsylvania’s Greene and Washington counties that collectively produce about 4 Bcf/day. “These results not only enable us to unlock growing domestic and international markets that are valuing a differentiated commodity, they also serve as an important validation of the environmental attributes of Appalachian natural gas,” said EQT CEO Toby Z. Rice. EQT last April said it was working to ensure most of its Appalachian Basin supply was responsibly sourced. The Pennsylvania-based exploration and production company’s total output “now comprises 4.5% of all natural gas produced in the U.S.” The certifications “provide a transparent, verified method” to track environmental, social and governance (ESG) commitments. The goals include reducing direct and indirect greenhouse gas emissions (Scope 1 and 2), and reducing EQT’s methane emissions intensity by 65% by 2025. The EO100 Standard for Responsible Energy Development process focused on the ESG performance, while MiQ verified the methane emissions.

EQT, Seneca Capture Certification Designations for Appalachian Natural Gas - The amount of U.S. natural gas gaining a certification designation is moving up, with Appalachian pure-plays EQT Corp. and Seneca Resources Corp. each gaining the designation for supply. EQT, the largest U.S. gas producer, said 80% of its supply has been certified, giving it a potential leg up for premium pricing. EQT, which produced an estimated 5.6 Bcfe/d during the third quarter, said most of the Marcellus and Utica shale output achieved the certification label last November under standards set by Equitable Origin (EO) and MiQ. An independent audit by Responsible Energy Solutions assessed roughly 200 well pads of EQT’s in Pennsylvania’s Greene and Washington counties that collectively produce about 4 Bcf/d. “These results not only enable us to unlock growing domestic and international markets that are valuing a differentiated commodity, they also serve as an important validation of the environmental attributes of Appalachian natural gas,” said EQT CEO Toby Z. Rice. EQT last April said it was working to ensure most of its Appalachian Basin supply was responsibly sourced. The Pennsylvania-based exploration and production company’s total output “now comprises 4.5% of all natural gas produced in the U.S.” The certifications “provide a transparent, verified method” to track environmental, social and governance (ESG) commitments. The goals include reducing direct and indirect greenhouse gas emissions (Scope 1 and 2), and reducing EQT’s methane emissions intensity by 65% by 2025. The EO100 Standard for Responsible Energy Development process focused on the ESG performance, while MiQ verified the methane emissions. EQT achieved “the highest initial certification score ascribed” by EO “to any upstream producer domestically or abroad to date, reflecting EQT’s commitment to being the operator of choice for all of its stakeholders,” EO noted. “EO100 certification is enabling differentiation and recognition of responsibly produced gas,” CEO Soledad Mills said. “The certification standards developed by MiQ and Equitable Origin aim to bring transparency to an opaque market, drive demand for certified natural gas and help operators differentiate themselves through methane-emissions performance and overall responsible energy production.”

Supreme Court requests 5% budget hike; DEP seeks support to hire gas, oil well inspectors - West Virginia Supreme Court justices are seeking a 5% increase in their budget for ¦scal year 2023, Supreme Court Chief Justice John Hutchison told the Senate Finance Committee Tuesday afternoon. In total, justices and court administrators are asking for $146.318 million for FY 2023. The Legislature allocated $138.963 million to the state’s judicial branch for the current ¦scal year. The costs associated with establishing the new Intermediate Court of Appeals is part of the request for the 5% increase, Hutchison told the committee. The intermediate court opens July 1, the same day the next fiscal year begins.While the actual cost of the intermediate court appears to be coming in $75,000 less than ¦scal notes estimated, the court still is set to cost $5 million during its ¦rst year, Hutchison said. The increase request includes other support for the more than 1,400 Supreme Court employees across the state, Hutchison said. The Supreme Court provides administrative oversight to circuit courts, family courts and magistrate courts. Hutchison said the court experienced budget cuts between 2018 and 2020, in the wake of proceedings that saw four of the five Supreme Court justices impeached. The court received modest increases in the 2021 and 2022 budget years, Hutchison said.

Markey says FERC rethinking Weymouth Compressor - FEDERAL ENERGY regulators will reconsider their approval for the controversial natural gas compressor station in Weymouth less than a year and a half after they gave it the OK to go into service, US Sen. Ed Markey said Friday. Other than saying that the Federal Energy Regulatory Commission “announced it will reconsider the authorization of the Weymouth Compressor Station,” Markey’s office did not provide any details. But the docket numbers associated with the Algonquin Gas Transmission and Maritimes & Northeast Pipeline-owned compressor station are listed on the agenda for unspecified action at a Federal Energy Regulatory Commission meeting planned for Thursday. “The Weymouth compressor station is a clear threat to our communities and the environment and does nothing to address energy reliability in Massachusetts. I am pleased that FERC has finally heeded my repeated calls to revisit the unwarranted approval of this dangerous project,” Markey said in a statement. “Local community members and environmental justice advocates have long opposed this project, and its repeated emergency gas releases and shutdowns have only given credence to their concerns … I look forward to continuing to work with the Weymouth community and the dedicated activists to ensure that FERC does the right thing and finally shuts this project down for good.” In February, FERC said that it would reexamine the Weymouth compressor station in light of two emergency shutdowns at the facility in the fall of 2020. FERC authorized the facility to go into service in September 2020 and “received numerous pleadings expressing concerns about public safety and air emissions impacts from the station’s continued operation” over the next few months, the agency said last year. The facility has for years drawn sharp opposition from state lawmakers, environmental and health activists, and groups of local residents. It received all necessary permits from the Baker administration and from federal officials.

As electric rates rise, gas-fired power emerges as both scapegoat and savior - — In a building bigger than a football field, one of two 185-ton natural gas-fired turbines inside the Westbrook Energy Center is ramping up on a cloudy December afternoon. A day earlier, the region’s electric grid operator in Massachusetts told the energy trading desk at Calpine Corp. in Houston to start the plant at 2 p.m. the following day and run until midnight. Calpine is obligated every day to offer up to 550 megawatts of capacity from this plant to a wholesale energy bidding process run by regional grid operator ISO New England. That’s enough electricity to meet the needs of 550,000 homes. These “day-ahead” bids are meant to assure that on each following day, the region will have enough generating capacity every second of every hour, regardless of weather or demand. Westbrook doesn’t get selected every day. But when it does, it’s not hyperbole to say the plant is helping to keep the lights on in New England. Despite its essential role, natural gas is under fire. In mid-November, the Maine Public Utilities Commission directly blamed high wholesale natural gas prices for the more than 80 percent jump in “standard offer” electric supply rates that most Central Maine Power and Versant Power home customers are starting to see in their bills this month. Even more ominous, ISO New England warned in early December that limited gas pipeline capacity and liquified natural gas deliveries could put the region’s electricity supply in a “precarious position” if there’s an extended cold snap between now and spring. So as winter deepens, natural gas is a study in contradictions. It seems to be simultaneously keeping the lights on, raising electric bills and contributing to the risk of rolling blackouts.Policymakers in Maine and the rest of New England are pushing an urgent transition to renewable energy to fight climate change, largely by encouraging solar and wind power. But despite the growth of renewables, natural gas plants such as the one in Westbrook will still make up half of the region’s generating capacity in 2022.

Gas Line Struck In Downtown Baltimore, Fire Officials Say – CBS Baltimore — Crews with Baltimore Gas & Electric have stopped a gas leak about an hour after workers struck a high-pressure natural gas line in the unit block of E. Baltimore Street, according to Baltimore Firefighters IAFF Local 734. Buildings near the leak were being ventilated, the union said. About 3:08 p.m., the union tweeted about the leak, saying E. Baltimore Street had been shut down between N. Charles and Light streets. A nearby apartment tower at 10 Light St. was evacuated by the fire department. (article includes extensive commentary on twitter)

Chickahominy Pipeline representative attending Hanover Supervisors meeting Wednesday | Govt. and Politics - During last month’s virtual town hall meeting hosted by Chickahominy Pipeline LLC, in which company representatives sought to answer questions from the public about the 83-mile pipeline they wish to build through five central Virginia counties, Hanover County’s retired deputy county administrator, Frank Harksen, asked company representatives if they’d attend a Board of Supervisors meeting. For the first time since the pipeline was brought to the county’s attention last summer, they will. The meeting begins at 2 p.m., but Chickahominy is not listed on the agenda until 6 p.m. Hanover County Administrator John Budesky said the timing is interesting, given that the State Corporation Commission last month rejected a request by Chickahominy to build the pipeline without commission approval. The commission’s Dec. 22 order started with a Sept. 3 request by Chickahominy to build a pipeline to transport natural gas through Louisa, Hanover, Henrico, New Kent and Charles City counties to a natural gas power plant in Charles City. The power plant would burn the gas to create electricity that would be sold into a large market of numerous states. Chickahominy argued that it did not need permission to build the pipeline because it’s not a public utility — meaning not selling to retail customers — but rather, it was merely transporting the gas to the power plant. The commission, however, found that Chickahominy is a public utility under the law, agreeing with an SCC hearing examiner who reviewed the case. Minear, in response to the SCC ruling, said last month by email that the company was weighing its options on how to proceed, and “whether it will appeal, file an application for a certificate, or consider other options, all are on the table. “Chickahominy Pipeline still plans to pursue this project.”

Federal pipeline agency shifts focus to cut methane - The Pipeline and Hazardous Materials Safety Administration is readying its first-ever restrictions on methane emissions and planning to press pipeline companies on the issue in the coming months, marking a significant shift for a federal agency traditionally focused on safety and oil spills.PHMSA was given a broad new responsibility by Congress to limit greenhouse gas emissions, and the "thousands" of inquiries it’s planning to make to companies about their methane emissions this year will be some of the earliest tangible signs of that mandate."Congress was very clear that we must not just reduce these emissions, but we must do all we can to minimize these emissions," Tristan Brown, PHMSA’s deputy administrator, said in a speech late last year.In late 2020, Congress ordered pipeline companies to update their inspections and maintenance plans to find ways to reduce methane emissions (Energywire, Jan. 29, 2021). It ordered PHMSA to check those plans with inspections. Meanwhile, the agency is also writing rules on methane, requiring companies to find and fix leaks. It says it’s aiming to have a proposed rule published in the Federal Register by May. Participating in President Biden’s climate agenda represents a new focus for PHMSA, a relatively young, small agency that has traditionally viewed leaks through the lens of physical safety (Energywire, May 19, 2021). The agency’s environmental efforts previously had been geared toward preventing and dealing with spills of hazardous liquids such as crude oil. Gas pipeline leaks in unpopulated areas, if they didn’t explode or catch fire, were not considered a major safety threat. Big interstate gas pipeline companies are supportive of the effort on methane and say they are already working to reduce greenhouse gas emissions. "PHMSA and EPA regulations that embrace innovation to protect public safety, energy affordability and reliability, and our climate will bolster our efforts," the Interstate Natural Gas Association of America said in a statement to E&E News. Many large oil and gas companies have dropped their objections to direct regulation of methane in order to improve the image of natural gas as a lower-carbon fuel. But many environmental groups are fighting gas projects, saying they continue dependence on fossil fuels.

Federal pipeline standards backed by top energy regulator after Colonial Pipeline hack - New federal powers are needed to prevent major energy disruptions like the cyberattack on the Colonial Pipeline that left the East Coast short of gas at the pumps for days, the chairman of the federal commission overseeing energy and some U.S. House Democrats said Wednesday. A House Energy and Commerce subcommittee discussed a proposal by Rep. Bobby Rush, (D-Ill.), that would give the Federal Energy Regulatory Commission the power to impose basic standards for natural gas pipeline reliability and security. Such standards don’t now exist. Members of the House panel aimed to address a joint report from FERC and the North American Electric Reliability Corporation following a devastating Texas winter storm in 2021 that also showed how pipelines can fail. The report recommended a single federal agency be responsible for ensuring pipeline reliability, full committee Chairman Frank Pallone, (D-N.J.), said. He praised Rush “for taking those recommendations seriously.” The Colonial Pipeline ransomware attack, when Russian hackers shut down a key pipeline owned by Colonial Pipeline of Alpharetta, Ga., affected a conduit for gasoline to 17 states in the South and East and the District of Columbia. Shortages and panic buying ensued. “As some recent high-profile events have proven, disruption to our energy supplies has some dire consequences,” Rep. Mike Doyle, (D-Pa.), said. “And the need for reliability is only going to increase as we see more extreme weather events and the proliferation of cyberattacks.” FERC can enforce reliability standards regarding electricity delivery and other matters, but lacks such authorities when it comes to regulating pipelines. “Lack of mandatory reliability standards, especially for natural gas pipelines, poses a risk to the reliability of the bulk power system to the interdependency of our nation’s gas electric infrastructure,” FERC Chairman Richard Glick told the panel. Republican members of the panel opposed the bill expanding FERC’s reach. “The topic of this hearing is completely off base, out of touch with the realities facing Americans today,” said Rep. Fred Upton of Michigan, who is the ranking Republican on the subcommittee. “This bill would dramatically expand FERC, transforming a relatively tiny agency into a behemoth with regulatory powers over America’s energy system.”

Republicans, industry resist FERC oversight of pipeline reliability, security as Glick cites grid threats - House Republicans and the fossil fuel industry are opposed to legislation directing the Federal Energy Regulatory Commission to develop reliability and cybersecurity standards for natural gas and other energy pipelines. Trade groups and conservative lawmakers argue the bill is duplicative, costly and creates conflicting authorities. The House Subcommittee on Energy held a Wednesday hearing to consider H.R. 6084, the Energy Product Reliability Act. There are no mandatory reliability standards for gas pipelines and that "poses a risk to the reliability of the bulk power system," FERC Chairman Richard Glick told lawmakers. The Interstate Natural Gas Association of America (INGAA) and seven other groups object to the bill, pushing instead for lawmakers to address "capacity constraints resulting from federal and state permitting obstacles." Republican lawmakers say their priority is to slow rising energy costs. There are now 93 FERC-approved mandatory reliability standards for the bulk power system, but none for gas and other pipelines moving energy. HR 6084 is similar to parts of the Energy Policy Act of 2005, which called for the development of reliability standards for the power grid now overseen by the North American Electric Reliability Corp. (NERC). Gas made up 37% of U.S. electricity generation in 2021, Glick told lawmakers. If a pipeline failure or cyber attack disrupts gas supplies, then "electric generation capacity dependent on that pipeline could be lost, possibly leading to blackouts on the electric grid," he said. "This is more than a hypothetical situation," he added, pointing to Winter Storm Uri, which last year caused blackouts in Texas and the South Central U.S. when gas production facilities froze, among other weather-related impacts. A joint FERC-NERC report in November recommended Congress designate a single federal agency with authority over pipeline reliability. The ransomware attack on Colonial Pipeline in May of 2021 also highlighted the risks, said Glick. In that instance, the largest oil pipeline on the East Coast shut down preemptively to keep malware from infecting its operational systems. "A similar attack against a natural gas pipeline serving electric generators has the potential to also impair the reliability of the electric grid," Glick said. "In my view, it is critical that energy pipelines also be subject to mandatory cybersecurity standards."

EnCap-Backed Clearfork Gains Entry into Haynesville with Azure Acquisition - Fort Worth, TX-based Clearfork Midstream LLC said Tuesday it plans to acquire Azure Midstream Energy LLC, giving it entry into the core areas of the Haynesville Shale in North Louisiana and East Texas. The price was not disclosed for the takeover, which was funded by Clearfork sponsor EnCap Flatrock Midstream LLC (EFM). The private equity firm backed Clearfork’s start-up in 2020 to provide midstream solutions for oil and gas producers in North American basins, with an emphasis on the Haynesville. A team of industry veterans works with Overstreet, including COO George Grau Jr., Chief Commercial Officer Corey Lothamer and Executive Vice President Kevin Venturini. Prior to forming Clearfork, Overstreet was an executive at Azure, most recently serving as vice president of corporate development and gas supply from 2017 to 2020. Azure’s natural gas gathering and treating platform spans the core areas of the Haynesville formation and includes more than 500 miles of pipeline and 1.2 Bcf/d of treating capacity across systems. The firm has nine downstream interconnects offering access to major market hubs, including Henry Hub, Houston Ship Channel/Katy, Carthage, Columbia Gulf Mainline, Perryville and Agua Dulce.

U.S. natgas futures edge up on colder forecasts (Reuters) - U.S. natural gas futures edged up on Tuesday on forecasts for colder weather and higher heating demand over the next two weeks than previously forecast before the long Martin Luther King Jr Day holiday weekend. In a reminder of last winter's February freeze, traders noted daily gas demand was expected to reach record highs on Friday as frigid weather blankets much of the United States later this week. Front-month gas futures NGc1 for February delivery on the New York Mercantile Exchange (NYMEX) rose 2.1 cents, or 0.5%, to settle at $4.283 per million British thermal units (mmBtu). Speculators last week boosted their net long futures and options positions on the NYMEX and Intercontinental Exchange by the most in a week since June as they covered their shorts with the front-month up 9% in volatile trade, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report. During the February freeze, gas futures climbed a bit - gaining as much as 7% on Feb. 16 - but did not soar like the spot market. Next-day gas jumped to record highs in several parts of the country - gaining over 1,100% on Feb. 12 at the Waha hub NG-WAH-WTX-SNL 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, frigid 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 for much of the past week. Traders noted more cold was on the way later this week and next. Lingering cold since New Year's Day continued to depress output through well freeze-offs and other weather-related equipment issues 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 output in the U.S. Lower 48 states averaged 94.6 billion cubic feet per day (bcfd) so far in January, down from a record 97.6 bcfd in December. With even colder weather coming, Refinitiv projected average U.S. gas demand, including exports, would jump from 135.6 bcfd this week to 143.2 bcfd next week as homes and businesses crank up their heaters. On a daily basis, Refinitiv projected total U.S. gas demand plus exports would reach 153.4 bcfd on Jan. 21, which would top the 149.8 bcfd high seen so far this year on Jan. 7 and the current record of 150.6 bcfd on Jan. 30, 2019.During last year's February freeze, daily demand hit 147.2 bcfd on Feb. 12, 2021, the day before Winter Storm Uri caused power and gas demand to drop as millions lost their access to electricity and heat for days.

Natural Gas Futures Flop Despite Looming Cold Fronts, Elevated Exports; Cash Cruises Higher -- Natural gas futures dived lower Wednesday even as demand for U.S. exports held strong, forecasts called for the harshest freeze of the winter and analysts expected a hefty storage withdrawal. The February Nymex gas futures contract lost 25.2 cents day/day and settled at $4.031/MMBtu. March fell 20.3 cents to $3.845. Cash markets moved in the opposite direction as near-term demand loomed large. NGI’s Spot Gas National Avg. jumped $1.010 cents to $6.520. The latest forecasts pulled back modestly from expectations earlier in the week for a bitter cold pattern over the northern and eastern United States for late January into early February. But the anticipated bursts of Arctic air were still expected to make January the coldest since 2014 and drive robust heating demand over the next two weeks. The American weather model on Wednesday was “not quite as cold Jan. 28-Feb. 2,” though it “remained quite cold late this week and again Jan. 26-28 for very strong national demand,” NatGasWeather said in a midday note to clients. “Both the domestic and European models still forecast the coldest/best 15-day pattern so far this winter season as lows of minus 20s to 20s impact much of the northern two-thirds of the U.S., including anticipated freeze-offs of several Bcf/day to production,” the firm said. Bloomberg estimated production at around 94 Bcf on Wednesday, already well below late 2021 highs near 97 Bcf following freeze-offs earlier this month. More disruptions to output could further lower daily supply levels just as demand soars, NatGasWeather said. “However,” the firm added, “price is king and the natural gas markets are clearly stating they don’t view the coming pattern as cold enough to justify” prices near $4.30, a level the prompt month approached on Tuesday. Multiple news reports during the trading day also said that China was preparing to send to Europe some of the liquefied natural gas (LNG) that it had imported in 2021. This indicated that China, the world’s largest gas importer, was well-stocked and may not need further U.S. supplies in the near term. That noted, demand from Europe remains strong, Rystad Energy analysts said, owing to the geopolitical standoff between the United States and Russia – with the U.S. threatening new sanctions against Russia that could affect a natural gas pipeline that would deliver much-needed Russian gas to Europe. Russia has recently curtailed gas flows to Europe via other routes as well. Europe, already light on supplies heading into winter, is clamoring for U.S. LNG as a result. U.S. LNG feed gas volumes hovered above 12.5 Bcf on Tuesday, within striking distance of the record 13.2 Bcf level reached earlier in the week, according to NGI estimates.

Natural gas futures slump for second day despite winter’s biggest pullback - Natural gas futures floundered for a second straight day as weather conditions warmed, eclipsing record export volumes, production threats and the biggest storage drawdown of the season. A day after falling 25.2 cents, the February Nymex gas futures contract lost 22.9 cents day/day on Thursday and settled at $3.802/MMBtu. March fell 19.6 cents to $3.649. Bespoke Weather Services said Thursday’s weather patterns showed substantial warmer day/day trends. As a result, the company lowered its gas-weighted degree-day projections through Feb. 3 from 12.5. “While this is still a cooler than normal picture, we’re just not getting the extreme cold days that have been reported by many models over the past two weeks,” Bespoke said. . “Most importantly, signs of warming in February continue to grow as models gravitate more toward a western US trough and a ridge downstream of the eastern US, which would equate to a warmer than normal pattern nationally.” Even with signs of “material warming” next month, the firm said it was “a bit surprised” by the level of confidence the market was showing ahead of a milder February. “We still have big storage runs ahead of us,” Bespoke warned. Indeed, the Energy Information Administration (EIA) on Thursday reported a pull of 206 billion cubic feet from storage for the week ended Jan. 14. It’s the biggest drop of the season and reflects both strong weather demand during the period — freezing conditions gripped the Plains, Midwest and East — and relatively modest production levels. The EIA recorded a pull of 179 billion cubic feet for the same week a year earlier, while the five-year average is 167 billion cubic feet. Production over the last covered week hovered several billion cubic feet below the late-2021 peak of around 97 billion cubic feet, largely due to freezes. Estimates on Thursday put production at 92 billion cubic feet. “It should bounce back significantly higher once the chill wears off, but exactly how high remains to be seen,” Bespoke said. In the meantime, Bespoke and other forecasters are expecting spells of freezing air at the end of this week and again next week which could lead to strong heating demand in the eastern half of the country and potentially interrupt again. the production. The company also expects storage decreases to exceed 200 billion cubic feet with each of the next two EIA printings. Additionally, if estimates hold, U.S. liquefied natural gas (LNG) export volumes hit a new record high above 13.2 billion cubic feet on Thursday amid continued strong demand from Europe. LNG feed gas volumes eclipsed the 13 billion cubic feet level several times in January. .

U.S. natgas climbs over 5% as cold drives demand to record high — חדשות - U.S. natural gas futures climbed over 5% on Friday on what is expected to be the country's biggest gas demand day on record with forecasts for more cold weather and higher-than-expected heating demand over the next two weeks. In addition to boosting gas demand, the cold this week cut gas output to its lowest in four months as wells and other equipment froze in Texas, Pennsylvania and elsewhere. It was a reminder of the last time gas demand was expected to reach record highs before last February's freeze. Analysts expect the cold will boost heating demand and keep forcing utilities to pull huge amounts of gas from storage over the next few weeks, causing overall inventories to slip below the five-year average for the first time since mid-December. Front-month gas futures rose 19.7 cents, or 5.2%, to settle at $3.999 per million British thermal units. On Thursday, the contract closed at its lowest since Jan. 4. For the week, the front-month fell about 6% after rising about 9% last week. Last winter, next-day gas jumped to record highs in several parts of the country -- gaining over 1,100% on Feb. 12 at the Waha hub in West Texas -- as a winter storm left millions without power and heat for days after freezing gas wells and pipes in Texas and other U.S. central states. In the current spot market, frigid weather and high heating demand for much of the week 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 cold was expected later this week and next. For the first time since 2019, Excelerate Energy started using its Northeast Gateway liquefied natural gas (LNG) import terminal in the Boston Harbor to deliver fuel into the New England market. The cold snap put U.S. gas production on track to drop to its lowest since September after lingering cold since New Year's Day had already depressed output through well freeze-offs and other weather-related equipment issues 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 output in the U.S. Lower 48 states averaged 94.3 billion cubic feet per day (bcfd) so far in January, down from a record 97.6 bcfd in December. Refinitiv projected average U.S. gas demand, including exports, would jump from 134.8 bcfd this week to 141.4 bcfd next week as homes and businesses crank up their heaters before sliding to 134.5 bcfd in two weeks. The forecast for this week and next were higher than Refinitiv projected on Thursday.

Zorn bill would preempt local bans on natural gas use — State Sen. Dale Zorn, R-Ida, introduced legislation to stop local governments from prohibiting the use of natural gas in Michigan homes and businesses. “The terrible idea of banning the use of clean and affordable natural gas at the local level is the latest example of environmental extremism — one that would have a huge impact on Michigan families and small businesses,” Zorn said. “This bill would protect homeowners across our state by preemptively stopping these dangerous policies — which have been adopted in cities from Seattle to New York City — from coming to Michigan.” Senate Bill 820 would prohibit a county, city, village or township in Michigan from adopting or enforcing an ordinance, resolution or policy banning the use of natural gas or the installation of natural gas infrastructure. “The vast majority of Michigan residents use natural gas to heat their homes,” Zorn said. “Not only is a piecemeal energy policy bad for our state, banning the use of natural gas in homes without the electric infrastructure to replace it or assistance to help struggling families get new equipment is morally reprehensible.” In December, New York City banned natural gas connections in new buildings by 2027 and the state of New York is considering a bill to mandate all-electric buildings by 2023. Last year, Seattle also strengthened its restrictions on natural gas in new commercial and multifamily buildings and now bans natural gas use for heating. Since 2020, twenty states have passed similar laws to block local governments from banning the use of natural gas.

US weekly LNG exports go up by one vessel - Weekly exports of LNG from the United States have increased by one vessel from last week, according to data from the Energy Information Administration (EIA). In the latest Short-Term Energy Outlook for the week between 6 and 12 January, EIA reports 25 LNG vessels departed the United States. This is one more than the last reported week. Nine LNG carriers were from Sabine Pass, five from Freeport, four each from Cameron and Corpus Christi, two from Cove Point and one from Elba Island. They held a combined LNG-carrying capacity of 92 billion cubic feet. The Henry Hub spot price also rose from $3.79 per million British thermal units (MMBtu) last Wednesday to $4.59/MMBt this week. Natural gas deliveries to LNG export facilities (LNG pipeline receipts) averaged 12.2 Bcf/d, or 0.3 Bcf/d higher than last week.

Tribal testimony partially tossed from Line 5 tunnel case review - Portions of testimony from two of Michigan’s tribal leaders won’t be considered as a state agency considers whether to allow Enbridge to relocate a segment of its Line 5 pipeline into an underground tunnel beneath the Straits of Mackinac. Administrative Law Judge Dennis Mack ruled to exclude portions of witness testimony by Whitney Gravelle and Jacques Leblanc, Bay Mills Indian Community’s president and vice-president, respectively. Enbridge sought to strike much of their testimony as irrelevant and outside the scope of the permit review by the Michigan Public Service Commission. Gravelle and Leblanc testified about the risks they believe a pipeline tunnel poses to public safety, tribal sovereignty and accelerated climate change. The tribe intervened in the case to argue the tunnel would be a risk to Indigenous food and water supplies, medicinal plants, economic livelihood, and their preserved treaty rights. “The Straits of Mackinac is a place of deep spiritual and cultural meaning to my people, where there are important cultural and historic resources still being learned of, and where Bay Mills and other Tribal Nations have Treaty rights,” Gravelle offered in her written testimony. “It is dangerous to construct a tunnel and route a pipeline through lands and waters that are central to our existence as indigenous people and as a Tribal Nation,” she wrote. Leblanc is a lifelong tribal fisherman who testified to the state that any oil spill would have both immediate and intergenerational effects. “Beyond the harm that an oil spill or other event would have on the health of lake trout and whitefish, any disruption of the fishery for an extended period would stifle the transfer of fishing knowledge to younger generations,” Leblanc said in his written testimony. Enbridge officials said the company is committed to engaging with Indigenous peoples to better understand their concerns as they build the tunnel. But the state permit process has specific requirements and the Canadian pipeline company argued Gravelle and Leblanc’s testimony didn’t meet those standards. “Testimony outside the scope of the proceedings is inadmissible and not allowed into the record, regardless of the party that offers it,” said Enbridge spokesperson Ryan Duffy in an email. An attorney for Bay Mills and other tribal governments said the judge’s decision to exclude parts of the tribal leaders’ input was a disappointment. “The testimony that was stricken explains the impact, the potential impacts of this project on treaty-protected rights,” said Debbie Chizewer, Earthjustice Midwest office managing attorney.

Line 5 tunnel could be a ‘stranded asset’ in 20 years, report suggests - Critics of a plan to relocate the Line 5 pipeline into a tunnel beneath Great Lakes waters argue Enbridge’s own federal filings prove there’s no need for the infrastructure to be built.Opponents of the Canadian company’s plan to build a $500 million tunnel through the bedrock beneath the Straits of Mackinac said the project would become a “stranded asset” by the end of 2040. That’s when the company set the truncation date for its Lakehead pipeline system, of which Line 5 is a part, according to a depreciation report Enbridge filed last year with the Federal Energy Regulatory Commission.Officials from the Oil & Water Don’t Mix citizens campaign are pointing to a 2021 Enbridge depreciation study – which was filed with U.S. energy regulators so the company could raise tariffs – as evidence Line 5 will be obsolete by 2041, only 13 years after the tunnel construction is expected to be done. They argue that contradicts agreements Enbridge made with Michigan officials to build the tunnel and use it for a pipeline for 99 years.“That raises questions. The primary one being, did Enbridge enter an agreement with the state while knowing the pipeline wasn’t going to be in the ground for 99 years, that they’d have to replace it, or, based on their own study, they’d be put out of business,” said David Holtz, from Oil & Water Don’t Mix.“Did Enbridge enter into those agreements in good faith?”The citizens campaign, which represents more than a dozen environmental organizations and tribal governments, sent a letter to the Mackinac Straits Corridor Authority to recommend a halt to all state support for and spending on tunnel engineering work. The group also said the state should consider an independent analysis of the implications of building the tunnel given the company’s own economic projections, and additionally request federal safety officials and pipeline regulators consult in the case.

Massive New Orleans oil spill revealed weeks after incident killed thousands of fish -A ruptured fuel pipeline spilled more than 300,000 gallons of diesel fuel into the waters near New Orleans for days before the public knew about it, according to an Associated Press report. A rupture was discovered in late December along a 125-mile fuel line that terminates near St Bernard Parish, New Orleans, according to federal records. Since then, roughly 2,300 fish and more than 100 other animals including 39 snakes, 32 birds and other creatures have died. Still, according to the Louisiana Oil Spill Coordinators office, the spill, most of which went into nearby “borrow” pits, caused “minimal” harm to wildlife, and a mix of a containment wall and rapid cleaning from emergency officials kept the diesel from going into nearby wetlands, the Gulf of Mexico, and other waterways close by. Wildlife officials have been using propane cannons that make a sound akin to a gunshot to scare off migratory birds from the spill. Collins, a subsidiary of the New Jersey-based PBF Energy, was aware its infrastructure near the site was decaying before the spill. A 2020 inspection of the Meraux pipeline showed deep corrosion, with a loss of up to 75 per cent of the present metal at its worst sections. Still, work was delayed on the pipeline after a second inspection concluded the damage wasn’t bad enough to mandate immediate repair under federal rules. An October 2021 email to federal regulators indicates the company repaired another damaged section, and was waiting for federal approval to fix a section near the eventual rupture zone. Working with local officials, the pipeline operator has recovered roughly 315,000 gallons of fuel from the surface of the water. The broken fuel line was repaired at a cost of $500,000, and operations have resumed.

Gators fouled by diesel spill get a scrubbing, teeth cleaned - (AP) — Wildlife rehabilitators are decontaminating dozens of alligators, brushing their pointy teeth and scrubbing their scaly hides in the weeks after a pipeline rupture dumped 300,000 gallons (1.1 million liters) of diesel fuel into a New Orleans area wetland. Diesel poured into the area outside the New Orleans suburb of Chalmette on Dec. 27 after a severely corroded pipeline broke, according to federal records. Seventy-eight alligators have since been rescued, and 33 of them had been cleaned and released by Friday into a national wildlife refuge located in New Orleans and about 10 miles (16 kilometers) from the spill site in St. Bernard Parish, the Louisiana Department of Wildlife and Fisheries said. Cleaning a six-foot-long (2-meter) alligator on Thursday required eight people: four holders, two scrubbers, one person with a hose for hot-water rinses and one to change the wash water, said Laura Carver, who became the department's oil spill coordinator in February 2010, less than three months before a massive BP oil spill off Louisiana in the Gulf. Carver said the impact of December's diesel spill on wildlife was relatively high compared to most spills in Louisiana. Rehabilitating that many alligators at once “is a new one for us,” Carver said. She said a hard piece of wood “almost like a really old-fashioned mop handle” is used to hold the alligator's jaw open while its teeth are scrubbed. The teeth cleaning comes toward the end of a series of body washes using gradually smaller concentrations of Dawn dish detergent to clean off the gunk. “They literally get their mouths washed out with soap. But it’s the only thing that works,” Carver said. She said nearly all of the spill went into two artificial ponds, and only the smaller pond was completely covered with diesel. The vast majority has been recovered from the ponds and contractors for operator Collins Pipeline Co. of Collins, Mississippi, are working on plans to deal with contaminated soil, Louisiana Department of Environmental Quality spokesman Gregory Langley said Friday. Collins Pipeline, a subsidiary of New Jersey-Based PBF Energy, had known about corrosion on the outside of the pipe at the site of the spill since an Oct. 2020 inspection, according to federal records. However, it delayed repairs after a second inspection showed the corrosion was not bad enough to need immediate attention. At the time of the spill the company was awaiting permits for the work and planned to start it later this month, the records show.

Mitch Landrieu announces $4.7 billion plan to clean up orphaned oil and gas wells -- Federal agencies have reached an understanding, which will kick off a $4.7 billion campaign to clean-up orphaned oil and gas wells that were abandoned years ago by the energy industry, former New Orleans Mayor Mitch Landrieu, who now is the president’s infrastructure czar, said during a White House press conference Tuesday. “Millions of us, millions, live within a mile of hundreds of thousands of orphan wells that leak and spew. These wells jeopardize public health and safety by contaminating ground water, seeping toxic chemicals, emitting harmful pollutants including methane,” Landrieu told reporters. “Cleaning it up will take an all-government approach.” He was named Infrastructure Implementation Coordinator by President Joe Biden to handle the roll-out of the $1.2 trillion Infrastructure Investment and Jobs Act that is spending more than has been spent in a generation to fix and upgrade roads, bridges, airports and other pieces of the nation’s long neglected infrastructure. The law includes $4.7 billion to cleanup orphan well sites, plugging remediation and restoration activities. But the first step was to work out a “memorandum of understanding” between the federal Departments of the Interior, Agriculture, and Energy, the Environmental Protection Agency, and the Interstate Oil and Gas Compact Commission that would detail how the work that would be done and identify which agency responsible for what tasks.

Biden Administration Sets Framework to Fund $4.7B US Orphan Well Cleanup - The Biden administration has laid out an interagency framework for working with states and tribes to distribute the $4.7 billion allocated for closing and remediating abandoned oil and gas well sites across the US under the Infrastructure Investment and Jobs Act signed into law in November. Four federal agencies: The US Environmental Protection Agency, and the Depts. of Interior, Agriculture and Energy, and the Interstate Oil and Gas Compact Commission, whose members are governors from oil and gas-producing states, signed a memorandum of understanding on Jan. 14 to establish a plan to work together to be able to roll out the funds quickly. The DOI has documented at least 130,000 abandoned oil and gas wells in the US. Sites that have no known owner, or the owner is insolvent and cannot pay for remediation, are considered to be abandoned. If the wells are not closed off, or “plugged," properly, methane and other chemicals can leak and contaminate nearby land and groundwater. The new infrastructure law allows states to apply for $25 million in initial grants, and establishes larger formula grants to fund proper closure and cleanup of orphaned oil and gas wells and well sites. Nearly every state with documented orphan wells submitted a notice of intent (NOI) by the Dec. 31, 2021, deadline declaring interest in applying for a formula grant, DOI says. The MOU establishes an interagency task force, led by the Bureau of Land Management, to identify and inventory orphaned wells and associated pipelines, facilities and infrastructure, and to prioritize for potential federal funding sites that pose the most risk to the environment or public health. The MOU also establishes state and tribal grant programs for states and tribes to establish and manage their own orphan well plugging, remediation and restoration programs. In a statement, Interior Secretary Deb Haaland said that the new infrastructure law “is poised to make critical investments to help clean up … legacy pollution – and it will take an all-of-government approach to implement the program.” DOE Secretary Jennifer Granholm said in a statement that capping unplugged oil and gas wells will provide construction workers in the oil and gas sector “to land skills-matched jobs that will protect the health of their communities.”

Abandoned oil well counts are exploding — now that there’s money on the table -It’s long been an open secret that abandoned oil and gas wells are dramatically undercounted in the United States. Now that the federal government is finally offering substantial funding to plug and clean up these environmental hazards, states are finally starting to admit it.From 2020 to 2021, the number of wells that the state of Oklahoma listed as abandoned — and therefore the government’s responsibility to clean up — jumped from 2,799 to a whopping 17,865. In Colorado, the orphan well tally hovered around 275 from 2018 to 2020 but increased by almost 80 percent last year. In California, the tally almost doubled in the last two years. (It started even lower in 2019, when the state identified just 25 abandoned wells.)What changed? In 2020, Congress began seriously consideringsending states money to plug orphan wells. The proposal had support from both political parties and was ultimately included in the Bipartisan Infrastructure Law enacted in November, which set aside $4.7 billion for this purpose. States have long known that their orphan well tallies are outdated and incomplete, but without a source of funding to clean up the wells, many didn’t invest the resources required to identify abandoned wells. That changed as the funding slowly became a reality over the past couple of years. In Oklahoma, the updated well count has been an even longer time coming. Three years ago, the state legislature funded an overhaul of the information technology systems of the Oklahoma Corporation Commission, the state agency responsible for plugging abandoned wells. As it migrated its oil and gas data to a new database, it found a slew of previously miscategorized orphan wells along the way. Additionally, when oil production plummeted during the early months of the pandemic, inspectors had fewer active wells to oversee and were reassigned to locating orphan wells in the field. Matt Skinner, a spokesperson for the Commission, said that this “perfect storm” of factors was accelerated by the fact that, once found, these wells now had a shot at being plugged and cleaned up.

Texas natural gas production falls as freezing weather sets in--Texas natural gas production dropped for the second time this month because of freezing temperatures settling over the state. Output on Thursday was down 6.2%, according to preliminary BloombergNEF data based on pipeline flows. That’s the biggest decline since Jan. 2, when a similar blast of frigid air curbed supplies. “It’s a safe assumption to call freeze-offs,” BloomberNEF analyst Jade Patterson said, adding that figures may still be adjusted throughout the day. Data from analytics firm RBN Energy Thursday show a 4.4% drop in production from the Permian Basin alone. Production shut-ins are not uncommon in Texas during cold weather, typically occurring at least once or twice a year. And while a single-day drop of 6% is bigger than usual, Thursday’s dip was largely offset by a jump in withdrawals from gas storage on the Gulf Coast, so gas and power prices weren’t affected. Yet the increasing frequency of such events -- two freeze-offs in a matter of weeks -- raises questions about Texas’s ability to avoid a repeat of the deadly energy crisis that crippled the gas sector and plunged millions into darkness less than one year ago. “First and foremost on people’s minds is last February,” said Luke Metzger, executive director of Environment Texas. “People like me went without power for several days and the primary reason being that there were disruptions in the natural gas supply chain.” Even modest production drops can affect the power supply. During the last cold blast at the beginning of January, gas output fell by about 7%. At the same time, Texas lost about 1.3 gigawatts of electrical generation due to gas-supply issues. The Texas Oil and Gas Association, which represents producers, downplayed the impact of Thursday’s drop. “TXOGA is confident the natural gas supply is strong,” said association President Todd Staples. “Feedback from our membership confirms production variations have been minimal and something less than 5% seems consistent statewide.”

Texas electricity firm says Energy Transfer threatens to cut gas supply --Vistra Corp. said two units of Energy Transfer LP are threatening to cut off natural gas supplies to power generation facilities it owns in Texas because of a payment dispute over last year’s catastrophic winter storm. Vistra subsidiaries including Luminant Energy asked Texas oil and gas regulators to prevent Energy Transfer from terminating gas service to Luminant’s power plants, which serve about 400,000 Texas homes, according to a complaint filed with the Texas Railroad Commission on Wednesday. The “threat to terminate service in the middle of winter is illegal and grossly irresponsible and should be prohibited by this commission,” Vistra said in the complaint. Energy Transfer said by email that it “will continue to sell them gas pursuant to the same process, terms and conditions that have been in place since Dec. 1, 2021.” The two units, Energy Transfer Fuel and Oasis Pipeline, are threatening to cease gas service by Jan. 24 because Vistra won’t pay $21.6 million in fees stemming from the February winter storm, when freezing temperatures knocked off gas supplies, contributing to widespread blackouts. The dispute comes as Texas is bracing for a new round of cold and sleet that will test the state’s power grid over the next several days. Vistra alleges in the filing that the fee is illegal and stems from the power generator securing and delivering gas into the pipeline operators’ systems during the storm.

Freezing weather returns to the Permian in renewed risk to gas production, prices - Low temperatures across West Texas are forecast to dip well below freezing from Jan. 20 to Jan. 23, potentially bringing wellhead freeze-offs and gas production curtailments to the Permian Basin. An updated forecast for Jan. 20 showed temperatures in Midland, Texas dipping to about 22 degrees Fahrenheit overnight, followed by a subsequent drop to just 19 degrees from Jan. 21 to Jan. 22. Subfreezing temperatures, which hit West Texas earlier this month, have often been associated with gas production declines in the Permian, either from voluntary curtailments or wellhead freeze-offs. Last winter's now infamous polar vortex event, which brought sub-zero temperatures to the Permian, triggered a historic price spike there, briefly sending prices at Waha to over $250/MMBtu. On Jan. 20, spot gas markets across the Lone Star State were actually down on the day, despite the freezing weather forecast. At the Waha Hub in West Texas, cash prices were down over 80 cents to $3.86/MMBtu. In East Texas, prices at Houston Ship Channel and Katy Hub were also down about 20 to 30 cents to around $4.20/MMBtu at both locations, preliminary settlement data from S&P Global Platts showed. In the forward market, meanwhile, traders have long been bracing for a potential spike in gas prices at Waha this winter. In late December, the hub's January 2022 forward contract briefly traded at upwards of 50 cents premium to Henry Hub. Since the start of the new year, the balance-of-month contract has traded as high as 44 cents premium to the benchmark. While the perceived risk of another freeze-off may just be recency bias, concern over the potential for another such event is very real for market participants and regulators. In addition to driving forward-market volatility at hubs in West Texas and the Midcontinent, the February 2021 freeze has motivated the Texas Railroad Commission to take regulatory action. Following an extensive inquiry into the Polar Vortex event last February, the TRCC last year proposed winterization standards for the state's oil and gas producers intended to avert a repeat of last winter's statewide energy emergency. After proposing an initial winterization scheme, the Texas regulator came under scrutiny from industry experts, lawmakers and public interest groups, for what they called an exemption loophole. In the originally proposed plan, most natural gas production, storage or midstream operators would have been allowed to file for an exemption to the winterization standard by submitting the appropriate paperwork to the TRCC and paying a $150 fee. On Nov. 30, though, the Texas regulatory body voted unanimously to close the earlier exemption loophole by designating certain natural gas entities as "critical" during an energy emergency with the new standard imposing basic winterization requirements on certain natural gas suppliers and customers.

Texas pipeline company walks back threat to cut off gas to power plants -After threatening to cut off fuel to roughly a third of the power plants owned by Texas’ biggest power generator, a major pipeline company said Thursday it will continue selling natural gas to the plants through the end of March. But the companies have still not resolved their underlying financial dispute stemming from last February’s deadly winter storm.Energy Transfer LP subsidiaries walked back their threat after Luminant, a Vistra Corp. subsidiary, on Wednesday asked state regulators to prevent the pipeline company from cutting off fuel to five Vistra power plants, which produce enough electricity to power 400,000 Texas homes, businesses and critical infrastructure such as schools and hospitals.The pipeline companies had told Vistra that gas would stop flowing to the power plants on Monday unless Vistra paid Energy Transfer $21.6 million that they claim Vistra owes them, according to Vistra’s complaint to the Railroad Commission of Texas, which regulates the state’s oil and gas industry.The “threat to terminate service in the middle of winter is illegal and grossly irresponsible and should be prohibited by this Commission,” Vistra said in the complaint. It called the move by Energy Transfer, run by billionaire Kelcy Warren, “a form of commercial extortion.”Energy Transfer responded Thursday in a short filing with the Railroad Commission, saying it would continue selling natural gas to Vistra on the spot market — a one-time open market transaction for immediate delivery of gas purchased “on the spot.”That would nullify the Monday deadline imposed by Energy Transfer. Vistra has been paying those spot market prices to Energy Transfer since Dec. 1, when its long-term contract for gas expired, and Energy Transfer said it would not negotiate another contract until Vistra paid the $21.6 million.For Vistra, paying spot prices means buying gas from Energy Transfer at between $15 and $25 per million British Thermal Units (BTUs), compared to the average national price of $3.91 per million BTUs in 2021, according to the Energy Information Administration.During last year’s winter storm — which caused the near-total collapse of the state’s power grid, left millions without power for days and caused hundreds of deaths — natural gas prices soared when a combination of freezing temperatures across the state and skyrocketing demand shut down natural gas facilities and power plants, which rely on each other to keep electricity flowing.Vistra spent approximately $1.5 billion for natural gas during the dayslong crisis, “twice its planned natural gas cost to fuel its entire Texas fleet for a full year,” the filing said.Vistra said in its filing that more than $600 million of that total was paid to Energy Transfer, “which is more than 96% of all amounts invoiced by [Energy Transfer].” While many companies lost money during the storm, Energy Transfer made $2.4 billion.

Texas Earthquakes Prompt New Fracking Rules – WSJ --Frackers in America’s hottest oil field are facing an expensive new setback: earthquakes. Shale companies in West Texas will have to pay more to move millions of barrels of wastewater that surfaces from oil wells and can aggravate tectonic fault lines when deposited underground. A recent spate of earthquakes prompted state regulators to stop companies from pumping as much water underground, forcing some drillers to move water farther afield. Most of the earthquakes have been relatively mild so far and have caused limited property damage. The rising number of earthquakes has led the Texas Railroad Commission, which regulates the oil industry, to shut or sharply reduce the capacity of scores of so-called disposal wells to protect nearby communities. The wells are used by large oil companies including Chevron Corp, ConocoPhillips and Coterra Energy Inc. to inject wastewater into geologic formations. The limitations have left Permian Basin drillers to find other ways to transport wastewater, including high-cost trucking. Trucking the water to disposal wells elsewhere is about five times the cost of using pipelines, according to shale executives and analysts. Some companies said they can avoid trucking by sending water through a network of pipelines to regions unaffected by seismic activity. The added expenses come as frackers are already facing higher costs from labor and supplies. Permian producers’ collective annual cost to jettison that water could increase, conservatively, by more than $200 million if they have to truck it all out, according to market intelligence firm Sourcenergy. If companies are unable to find new means of disposal, they may have to curtail tens of thousands of barrels a day of oil production. The setback could also limit some producers’ ability to increase output in response to the highest oil prices in years. Many that are forced to truck water elsewhere will likely have to shift drilling rigs away from the areas where the Railroad Commission concentrated its cutbacks, executives said. “If you’re forced to truck it, it’s going to have a devastating impact on your lease operating expenses,” said Richard Jennings, president of private West Texas oil producer Atlantic Operating II LLC, which says it operates shallow disposal wells unaffected by the restrictions. In 2020, the latest year for which data is available, oil producers pumped about 342 million barrels of water into the saltwater disposal wells that the Railroad Commission began restricting last fall. The regulator acted after a sharp uptick in earthquakes, including near populated areas like Midland and Odessa. The number of earthquakes with a magnitude of 3.0 or larger in the Texas portion of the Permian rose to 176 last year, up from 51 in 2020 and nine in 2019, according to Sourcenergy, which analyzed state seismic activity data. U.S. seismologists have linked seismic activity to wastewater disposal in oil fields. In Oklahoma a few years ago, regulators moved to limit injections in some areas following a rise in earthquakes that damaged buildings and caused injuries. The large volumes of injected water can increase pore pressure in certain geologic formations, and if faults run through those formations, the pressure pushing against them can cause seismic events, scientists say.

New Data Shows Massive Climate-Warming Leaks by New Mexico Oil and Gas Operators - In New Mexico, new state rules sparked a dramatic increase in reported incidents of vented and flared natural gas in 2021 — and reveal that the oil and gas industry has been losing vastly more of the climate-change-driving fossil fuel than previously reported. “The state’s updated reporting requirements were long overdue,” says Jon Goldstein, senior director of regulatory and legislative affairs at the Environmental Defense Fund. The new numbers are in line with previous EDF research showing huge amounts of vented and flared natural gas in recent years. A review of year-end data from the state’s Oil Conservation Division (OCD) shows that producers vented or flared enough natural gas to power nearly 39,000 homes for a year — roughly the number of households in Las Cruces, the state’s second-largest city. The actual total for the year is likely much higher as the new reporting only began in May. Not only that, but the new reporting system also reveals that the state’s largest natural gas producer, Hilcorp Energy of Houston, reported surprisingly low numbers of incidents — about a hundred times lower than either similarly sized competitors or the size of its operations would suggest. “Unsurprisingly, I’m unsurprised,” says rancher Don Schreiber. Hilcorp has 122 wells scattered across his ranch in the San Juan Basin, and Schreiber keeps a close eye on them. He says that the small number of official reports from the company reflects “just a failure of the system and a failure of the operator.” The company also owns the state’s greatest number of wells — over 11,500 — all of them in the San Juan Basin in the northwest corner of New Mexico. Yet, as of Dec. 31, it had reported just 26 incidents total for the whole year, roughly the same as before the new reporting requirements.

COPL Makes Significant Wyoming Oil Find - Canadian Overseas Petroleum Limited has announced a “significant” conventional light oil discovery at its Wyoming asset. The company noted that the discovery has been confirmed on COPL’s large leasehold position in the Converse and Natrona Counties in four Frontier Fm. and one Dakota Fm sands. The business currently estimates the total reservoir volume of the discovery to be 1.5 billion to 1.9 billion barrels of oil in place, of which 1.27 billion to 1.64 billion barrels of oil in place underlays company lands, COPL revealed. “We estimate the Frontier element of the discovery to cover an area of approximately 51 square miles with the capacity of up to three horizontal wells per square mile each initially producing 1,000 - 3,000 barrels per day,” Millholland added in the statement. “We plan a phased production program and have already applied for permits covering four horizontal wells. We will use internal resources to cover the initial costs of development whilst full field development plans are evaluated. This discovery highlights the long-term sustainable production outlook from this outstanding asset,” the COPL CEO went on to say. Millholland noted that conventional light oil discoveries of this magnitude have been rare in continental North America for years, if not decades. In its latest operations update, which was released in November 2021, COPL revealed that its net crude oil sales in the third quarter, before royalties, averaged 1,077 barrels per day. This compared to 796 barrels per day in the second quarter of 2021, the company outlined. COPL describes itself as an international oil and gas exploration, development and production company actively pursuing opportunities in the United States with operations in Converse County, Wyoming, and in sub-Saharan Africa through its ShoreCan joint venture company in Nigeria, as well as independently in other countries.

A year after breach, Enbridge says it’s stopped Line 3 groundwater aquifer leak - MPR - A year after workers installing the Line 3 oil pipeline pierced an aquifer in northwestern Minnesota, Enbridge Energy has told state regulators it has stopped the uncontrolled flow of groundwater.Pipeline opponents are marking the anniversary of the breach by calling for more accountability and details about the incident, and others where Line 3 construction might have disturbed groundwater, rivers or wetlands.In January 2021, crews were working on the new pipeline near Enbridge's terminal in Clearbrook, Minn. Instead of digging a trench 8 to 10 feet deep, as Enbridge’s plans called for, the workers apparently dug 18 feet down, and they drove sheet piling down even deeper to stabilize the soil. They punctured the soil layer covering an aquifer that's under pressure, causing groundwater to flow to the surface. Enbridge didn’t immediately report the breach to state regulators. It wasn’t until June that Minnesota Department of Natural Resources officials pieced together what had happened through reports from independent monitors.It’s not yet clear whether the breach caused any long-term environmental damage or affected aquifer levels in the area. There are concerns that sediment could end up in nearby streams or wetlands.There also are some rare wetlands called calcareous fens nearby that support diverse plant life, and rely on a flow of mineral-rich groundwater. Scientists are concerned that the interruption of that flow could negatively affect the fens.In September, the DNR ordered Enbridge to stop the flow of groundwater and restore the site. The agency ordered Enbridge to pay $3.32 million. That included more than $500,000 in penalties, mitigation for the loss of groundwater and monitoring of the rare wetlands nearby, and a requirement that Enbridge place $2.75 million in escrow to restore any damage to the fens.

Judge rejects North Dakota bid to force oil lease sales on federal lands -- — A judge has denied an attempt by North Dakota to force the U.S. government to hold sales for oil leases on federal lands, a lawsuit that the state pursued after President Joe Biden imposed a moratorium on such activity to address climate and environmental concerns. The order, issued Friday, Jan. 14, by U.S. District Judge Daniel Traynor, noted that the U.S. Department of the Interior is already planning to reopen leases for oil development on federal lands in North Dakota, effectively granting the relief that the state is seeking in its legal challenge. The ruling comes two days after Traynor, who was nominated to his post by former President Donald Trump, questioned lawyers from the North Dakota Attorney General's Office on the basis for their request in light of the plans for federal leasing to resume, and since a Louisiana judge had already ruled in favor of a group of oil and gas producing states in a similar lawsuit. North Dakota alleged that the Department of the Interior violated its legal duties and the order of the Louisiana court by not holding sales on eligible lands last year, while federal attorneys argued that leasing was paused for a review of its compliance with a key environmental law — a disagreement that Traynor said he could not resolve without a more complete factual record. While the judge said he was denying North Dakota's request "at this early stage" in the lawsuit, he left the door open for the state to try again if the verdict of the Louisiana case is overturned or its scope limited by an appeal.

Environmental groups: Biden administration has legal authority to end oil and gas leasing on public land - A coalition of more than 300 environmental and tribal organizations on Wednesday issued a petition calling on the Biden administration to fully phase out oil and gas production on federal land by 2035. In the petition, participating organizations argued the administration has the legal authority to phase out such activity. The framework they offer argues that the oil and gas industry has already acknowledged the Interior Department’s authority in the matter through the language in the leases they sign. Similarly, the petition notes, “for all offshore oil and gas operations, every fossil fuel company has already consented in each signed lease to only produce oil and gas only ‘at rates consistent with any rule or order issued’ by the president.” It goes on to argue that the industry has already demonstrated its capacity to alter its rate of production at will, as demonstrated by the practice of turning off valves amid Gulf hurricanes, as well as reduced production during the COVID-19 pandemic. The phaseout outlined in the petition calls for a 10 percent annual decline in production over eight years, beginning in 2022, followed by a 3 percent reduction for each year after. Petitioners include the Center for Biological Diversity, Friends of the Earth, the Sierra Club, the Western Environmental Law Center and Honor the Earth. The petitioners fault the administration for allowing leases to resume after a court struck down Biden’s order pausing leasing on federal lands and waters. “This petition offers a lifeline for our planet and a course correction for the Biden administration’s catastrophic failure of climate leadership,” Taylor McKinnon of the Center for Biological Diversity said in a statement. “The natural place to start phasing out climate-destroying oil and gas production is on our public lands and oceans, and Biden has the authority to do so. If the U.S. leads, the world will follow. Biden must keep his promise to end federal oil and gas extraction.” Asked if the petitioners would consider filing a lawsuit to compel the administration to take such action, McKinnon told The Hill, “If the administration fails to timely respond to the petition, that is a possibility. That would be a discussion we’d have co-petitioners down the road.” “That said, this is something Biden can and therefore should do now,” he added.

Post-pandemic oil prices expected to rise, but uncertainty increases too: Kemp –-- Full survey results: https://tmsnrt.rs/3fA6gvz (Reuters) - Oil prices will exceed pre-pandemic levels over the next few years but where they will settle remains extremely uncertain, my seventh annual survey of energy market professionals shows. Brent crude is expected to average $80-85 a barrel through the middle of the decade, up from expectations of $70 before the COVID-19 pandemic took hold in 2020. Expected prices are mostly $10-15 a barrel above where futures were trading at the time the survey was conducted between Jan. 11 and Jan. 14, against a pre-pandemic premium of $10 or less. The most significant post-pandemic change, however, is the large increase in dispersion of views, with many more respondents forecasting prices far above or far below the average. Both short-term forecasts for 2022-2023 and longer-term forecasts for 2025-2026 are characterised by much higher standard deviations than over comparable forecasting horizons before the pandemic. Coronavirus, recession, a record price slump, consolidation in the shale industry and emissions-related concerns about oil and gas investment have combined to make respondents much more uncertain about the price outlook. In the second year of the forecasting horizon, the standard deviation of responses jumps to $17 a barrel, up from $10-11 in the years before the pandemic. In the fifth year, the standard deviation jumps to $26, up from $19-20 in the surveys before March 2020. Most responses are clustered around $70 and $90 a barrel over the next four years, based on the inter-quartile range for responses between 2022 and 2025. And nearly all respondents think prices will average between $60 and $110 (10th to 90th percentiles) or $55 to $125 (5th to 95th percentiles) in 2025. But there has been an increase in number of respondents forecasting high prices averaging above $120 a barrel or very high prices averaging above $150 in the next five years. The increased dispersion points to disagreement about how much of the recent rise in prices is cyclical and likely to be reversed, and how much is structural and could be semi-permanent. The survey is based on a questionnaire emailed to more than 10,000 energy market professionals and others on the “best in energy” mailing list. There were almost 1,000 responses, similar to previous years. Among survey respondents, 21% are directly involved in oil and gas production (exploration, drilling, production, refining, distribution, marketing and oilfield services). Most of the rest work in banking and finance (17%), research (10%), professional services (9%), hedge funds (7%), physical commodity trading (6%), other non-energy corporations (5%) and other energy businesses (4%).

Oil producers aren’t keeping up with demand, causing prices to stay high - NYTimes - Nearly two years ago the world’s oil producers slammed on the brakes and drastically cut production as the pandemic gripped the world’s economies. The sharp pullback came with an implicit promise that as factories reopened and planes returned to the air, the oil industry would revive, too, gradually scaling up production to help economies return to prepandemic health. It isn’t exactly turning out that way. Oil producers are finding it harder than expected to ramp up output. Members of the cartel OPEC Plus, which agreed to cut output by about 10 million barrels a day in early 2020, are routinely falling well short of their rising monthly production targets. “In a lot of places, once output has been reduced, it is not easy to bring it back,” . Production in the United States, the world’s largest oil producer, has also been slow to recover from its one-million-barrel-a-day plummet in 2020, as companies and investors are wary of committing money amid climate change concerns and volatile prices. The Energy Information Administration forecasts that U.S. crude output in 2022, while rising, is likely to average half a million barrels a day below 2019 levels. This global pattern of lagging production has helped push oil prices to seven-year highs, stoking inflation, which has become a political issue in the United States and elsewhere. Brent crude, the international standard, is close to $84 a barrel, while West Texas Intermediate, the American benchmark, is selling for close to $82. A prolonged period when more oil has been consumed than pumped has drained tank farms to low levels. Investment in new drilling for new oil has also fallen to multiyear lows, though it is expected to pick up this year. At the same time, demand is expected to grow strongly, reaching prepandemic levels this year. “The oil market appears to be heading for a period with little margin of safety,”

Biden rattles his saber at oil producers as prices surge to 2014 high --The Biden administration is working with oil-producing countries to ensure supply rises to meet demand, according to the White House, as prices surge to the highest level in seven years. The White House plans to continue to monitor prices in the context of global growth and hold discussions with OPEC+ countries as needed, National Security Council spokeswoman Emily Horne said in a statement on Tuesday. “We continue to work with producer and consumer countries, and these steps have had real effects on prices and ultimately tools continue to remain on the table for us to address prices,” Horne said. Increased gasoline prices have been a major driver of inflation during Biden’s term, and the White House has sought to contain costs for motorists. Rising prices are hurting Biden’s approval rating and make it harder for Democrats to keep control of the House and Senate in November’s elections. In November, Biden announced the release of 50 million barrels from the Strategic Petroleum Reserve in a move coordinated with India, Japan, South Korea and China. The administration sold 18 million barrels of oil from the reserve that it expects will be delivered to the market in February and March, Horne said. Biden has also asked the Federal Trade Commission to investigate “potentially illegal conduct” by oil and gas companies. The White House has said that increases of prices at the pump even when crude oil was lower suggests the possibility of anticompetitive behavior. Biden is committed to working with other countries to bring down the cost of oil, and ultimately gasoline prices, Horne said. Oil is surging as robust demand and strained supplies make physical markets run hot in the world’s largest consuming region. Futures in New York climbed to $85.74 a barrel, the highest since October 2014. Traders are paying higher and higher premiums for cargoes in Asia, as fears fade over the demand impact from omicron, while supplies are tightened by a range of outages from Libya to North America.

API pins high energy costs on Biden policies - The president of the only national trade association representing all aspects of America’s oil and natural gas industry blamed surging energy costs on “restricting” government policies, including several put in place under the Biden administration. American Petroleum Institute President Mike Sommers gave a speech Wednesday on the “state of American energy” in 2022. “In so many ways, the state of American energy is strong,” Sommers remarked. “Even so, we begin 2022 with Americans viewing energy and its costs as major concerns. This is in part because lately we’ve seen policies aimed at restricting production and delivery of US natural gas and oil.” Sommers then listed a number of Biden administration policy decisions, including the Keystone XL pipeline cancelation and tax increases on natural gas, that he says have been restricting America’s domestic energy development. He also pointed to Biden administration policies limiting the development of new infrastructure, which he said has caused problems in production as well. Shortly after taking office, President Joe Biden issued an executive order placing a moratorium on oil and gas leasing on public lands. The move was later overturned by a federal judge, according to Reuters. The Biden administration then appealed but has since resumed leasing while the process plays out. “New leasing for energy development on federal acreage was stopped for many months,” Sommers noted. “Meanwhile, with inflation soaring to historic levels, we’ve seen proposals in Congress for a targeted tax increase on natural gas and even further restrictions on American energy development. These decisions exacerbate Americans’ concerns and put upward pressure on their energy prices.” Sommers urged lawmakers to avoid these policies, which he said, “don’t put America on a path to progress nor help us meet basic energy needs.” Sommers added U.S. policies that restrict domestic production “force our country to seek relief from OPEC,” which undermines America’s energy independence.

With Billions in Fines, U.S. Chamber of Commerce’s Ranks Are ‘Packed With Rogues’ -- The U.S. Chamber of Commerce, an ultra-powerful business lobby, does not disclose its members, but it represents the interests of America’s largest corporations — some of which have a long record of breaking state and federal laws.A new report from consumer watchdog group Public Citizen details how 111 known members of the Chamber — including major polluters and banks that back fossil fuels — have violated state and federal laws at least 15,896 times since 2000, totaling more than $156 billion in fines and penalties.These findings come after the Chamber attacked the Federal Trade Commission (FTC) late last year for the agency’s efforts to step up enforcement of unlawful corporate behavior, calling increased oversight a “war on American businesses.”“In fact, it is the Chamber’s ranks that are packed with rogues,” Rick Claypool, a Public Citizen research director and author of the report, said in a statement. “The time is long overdue for big corporations that engage in abusive, monopolistic, and predatory behaviors to face serious consequences. Corporate crime shouldn’t pay, and honest businesses should welcome the FTC’s recent pledge to crack down on corporate crime.”Of the 111 known members, JPMorgan Chase has paid the most penalties, racking up more than $35 billion over the past two decades, according to Public Citizen. Other banks also topped the list, including Citigroup and Wells Fargo.The oil, gas, and coal industries, including Occidental Petroleum, Duke Energy, Marathon Petroleum, and Chevron, are also prominent members of the U.S. Chamber of Commerce and have been frequent violators of state and federal laws.Occidental Petroleum was fined the most out of any energy company, hit with penalties an estimated 235 times. The bulk of the fines came from a massive $5.15 billion settlement between a subsidiary and the U.S. Environmental Protection Agency over the company’s attempts to evade its environmental cleanup liabilities by shifting troubled assets to a shell company.Another notable example is Duke Energy, which has paid more than $2.8 billion in penalties since 2000, much of which are related to the massive 2014 coal ash spill in North Carolina. The nature of the violations varies. For instance, Chevron has paid more than $975 million in penalties since 2000 (Violation Tracker data pegs it at $1.07 billion), with violations ranging fromwrongful termination of employees to a $30 million settlement over a kickback scheme related to Iraq’s oil-for-food program in 2001 and 2002. The oil giant has also accumulated a long list of environmental violations that often result in small civil penalties accompanied by commitments to spend much more on upgrading equipment. Range Resources, a Texas-based fracking company with a heavy drilling presence in Pennsylvania, has accumulated more than $16 million in penalties since 2000. That included pleading no contest in 2020 to a criminal investigation brought by the Pennsylvania Attorney General related to an incident in which the company covered up leaks from fracking waste storage ponds. In total, the Chamber of Commerce’s oil and gas members have logged more than 1,600 violations totaling $8.9 billion in penalties, the report said. “It’s a lot of lawbreaking. On the other hand, it can also be seen as the tip of the iceberg,” Claypool told DeSmog, referring to the all the violations committed by the Chamber of Commerce’s members.

Canada's Natural Gas Supply Getting Greener with US Imports - Though at the expense of lost sales from Alberta and British Columbia natural gas supplies, U.S. gas exports to Canada have fueled a significant reduction in greenhouse gas (GHG) emissions, according to the Canada Energy Regulator (CER). U.S. exports of 2.6 Bcf/d to Ontario and Quebec fueled the green gain by shrinking cross-Canada flows from the western provinces. From a peak of 12.6 million tons (Mt) in 1991, annual GHG emissions produced as exhaust from Canadian pipeline operating hardware have fallen by 34% to 8.3 Mt, CER data showed. Natural gas conduits dominate fossil fuel pipeline emissions by tapping their cargo for compressor fuel, according to the CER. Oil pipelines prefer electric pumps. Canadian pipeline GHG emissions dropped as low-cost Marcellus and Utica shale gas supply grew in the Appalachian region of the United States and increased northbound exports to the nearby eastern provinces. Gas trade scorecards compiled by the U.S. Department of Energy recorded more than six-fold growth of American exports to Canada to their current 2.6 Bcf/d level from 0.4 Bcf/d in 2001. In the 1990s, the volume hovered in a modest 0.08-0.2 Bcf/d range. Counting methane leaks, on top of exhaust from gas-fired compressors, total annual carbon-equivalent GHG emissions by Canadian long-distance pipelines plus local distribution companies are estimated at 10.7 Mt. “Many pipeline companies are actively working to reduce their carbon footprint by electrifying compressor stations, improving leak detection, and implementing waste heat recovery,” CER said. But the roles of pipelines and local distributors in Canadian GHG emissions – and the offset owed to gas imports from the United States – are modest. The delivery network accounted for only 5.6% of 191.4 Mt of emissions, or one-fourth of the national total – attributed to the Canadian fossil fuel industry by the latest official GHG record completed for 2019.

Mexico Is Buying a Texas Oil Refinery in a Quest for Energy Independence - The refinery purchase is part of President Andres Manuel López Obrador’s own bid for an independence of sorts. In an effort to achieve energy self-sufficiency, the president of Mexico is investing heavily in the state-owned oil company, placing a renewed emphasis on petroleum production and retreating from renewable energy even as some oil giants like BP and Royal Dutch Shell are investing more in that sector. Mr. López Obrador aims to eliminate most Mexican oil exports over the next two years so the country can process more of it domestically. He wants to replace the gasoline and diesel supplies the country currently buys from other refineries in the United States with fuel produced domestically or by the refinery in Deer Park, which would be made from crude oil it imports from Mexico. The shift would be an ambitious leap for Petroleos Mexicanos, the company commonly known as Pemex. The company’s oil production, comparable to Chevron’s in recent years, has been falling for more than a decade, and it shoulders more than $100 billion in debt, the largest of any oil company in the world. The decision to pay $596 million for a controlling interest in the Deer Park refinery, which sits on the Houston ship channel and would be the only major Pemex operation outside Mexico, is central to fulfilling Mr. López Obrador’s plans to rehabilitate the long-ailing oil sector and establishing eight productive refineries for Mexican use. Mexico also agreed to pay off $1.2 billion in debts that Pemex and Shell jointly owe as co-owners of the refinery, which is profitable. “It’s something historic,” Mr. López Obrador said last month. In a separate news conference last year, he said, “The most important thing is that in 2023 we will be self-sufficient in gasoline and diesel and there will be no increase in fuel prices.” While Mr. Lopez Obrador’s policies diverge from the rising global concern over climate change, they reflect a lasting temptation for leaders and lawmakers worldwide: replacing imported energy sources with domestically produced fuels. Further, the generally well-paying jobs the oil and other fossil fuel industries provide are politically popular across Latin America, Africa as well as industrialized countries like the United States. In the 1930s, the Mexican government took over Royal Dutch Shell’s operations south of the border as it nationalized the entire oil industry then dominated by foreigners. Now Mr. López Obrador is poised to go one step further, taking complete control of a big Shell oil refinery. The takeover is all the more pointed because it is happening in an industrial suburb that calls itself “the birthplace of Texas,” where rebels marched to the San Jacinto battlefield to defeat the Mexican Army — the event commemorated on the refinery murals. The battlefield is a five-mile drive from the refinery.

Unusual high waves from volcano eruption in Tonga cause oil spill in Peru - Unusually high waves attributed to the eruption of an undersea volcano in Tonga caused an oil spill on the Peruvian coast, but authorities said Monday the spill was controlled within hours and there's an ongoing process to clean the area.The Peruvian Civil Defence Institute said in a press release that a ship was loading oil into La Pampilla refinery on the Pacific coast on Sunday when strong waves moved the boat and caused a spill.The government didn't say how many gallons were spilled only that local and federal authorities were working to clean the coast. La Pampilla refinery, in the province of Callao near Lima's capital, belongs to the Spanish company Repsol. It's considered the main oil processing plant in Peru. Local authorities had closed area beaches to the public since Sunday. The eruption on Saturday caused waves that crossed the Pacific. In Peru, two people drowned off a beach and there were reports of minor damage from New Zealand to Santa Cruz, California.

Peru beaches suffer oil spill blamed on waves from Tonga volcanic eruption -- Peruvian authorities sealed off three beaches Monday after they were hit by an oil spill blamed on freak waves caused by the volcanic eruption in Tonga.The Pampilla Refinery, part of the Spanish company Repsol, said there had been a "limited spill" of oil off the coast of Callao and Ventanilla districts near Lima Saturday due to the violent waves produced by the eruption on the other side of the Pacific Ocean.It said the spill occurred during offloading from a tanker.The National Emergency Operations Center said in a statement that the spill had been brought under control.Environment Minister Ruben Ramirez said the accident had affected a three-kilometer (two-mile) stretch along three beaches."There is great damage to biodiversity, and it could even impact human health," he said."And so it has been ordered that the area is cut off for all kinds of activity," Ramirez told reporters.Pampilla could face a fine of up to $34.5 million, the environment ministry said, as prosecutors opened an investigation into the company for environmental contamination.Pampilla—which did not indicate exactly how much oil was spilled—said it was working with authorities to clean up the affected beaches.Ships worked on collecting oil still floating in the water, while workers in protective gear began cleaning oil that had washed ashore."We want to tell the environment ministry to please follow up, and that those responsible receive a punishment, because this affects the fishermen, the population that they feed with the fish, and marine animals," local Ventanilla resident Brenda Ramos told AFP.Elsewhere in Peru, two women drowned after being caught in waves caused by the volcanic eruption in Tonga.The island nation, in the southwest Pacific, has been nearly entirely cut off from the outside world after the eruption severed an undersea communications cable.The eruption was recorded around the globe and heard as far away as Alaska, triggering a tsunami that flooded Pacific coastlines f rom Japan to the United States.

Peru demands compensation for disastrous oil spill caused by Tonga volcano - Peru has demanded compensation from the Spanish oil giant Repsol after freak waves from a volcanic eruption near Tonga caused an oil spill described as the worst ecological disaster to hit the South American country in recent history. Peru’s prime minister, Mirtha Vásquez, told journalists on Wednesday that the Pampilla refinery, run by Repsol, “apparently” did not have a contingency plan for an oil spill. The country’s foreign ministry called on the company to “immediately compensate” for the damage caused by the spill on Saturday which had inflicted “serious harm to hundreds of fishermen’s families” and had “put in danger the flora and fauna” in two protected natural areas.Authorities cordoned off three beaches on Monday after 6,000 barrels of oil were spilled during the offloading of a tanker at La Pampilla refinery off the coast near Lima, just north of the capital Lima.Images on social media and TV showed blackened beaches and dozens of dead seabirds drenched in oil, among them the rare Humboldt penguin, in an area considered a marine biodiversity hotspot. Officials at the refinery, managed by Repsol, initially described the spill as “limited” and said it was working with authorities to clean up the beaches. However, there has been public indignation at what has been perceived as the company’s tardy response. Tine Van Den Wall Bake, a spokesperson for Repsol, denied it should accept responsibility for the incident.“We did not cause this ecological disaster and we cannot say who is responsible,” she told national radio on Wednesday. Environmental groups have criticized the company’s response, as well as that of the Peruvian authorities. The oil was spreading along Peru’s Pacific coast affecting seabirds, seagulls, terns, sea lions, otters and dolphins, Oceana Peru said in a tweet.“The environmental and social impacts of the Repsol oil spill in the short and long term are devastating, and the company’s response has been weak,” said Christel Scheske, conservation specialist from the Peruvian Society for Environmental Law.“The oil spill has affected a highly biodiverse part of the Peruvian coast, including two protected areas which are important not only for Peru’s astounding marine biodiversity, but also for over 1,000 artisanal fishers in the region that depend on them,” she said.“Heavy metals from the crude oil will remain in the ecosystem for many years, rendering fish, molluscs and other marine species dangerous for human consumption, and affecting the entire marine food web,” Scheske added.

Traditional fishermen in despair over Peru oil spill - Hundreds of traditional fisherman living just outside the Peruvian capital fear their livelihoods are ruined following an oil spill caused by a volcanic eruption thousands of miles away. Authorities called the spill, caused by an eruption on the other side of the Pacific near Tonga, the worst ecological disaster in Lima in recent times. Traditional fisherman in Ventanilla, a district to the north of Lima's port in Callao, on Wednesday protested outside the gates of the Pampilla Refinery owned by Spanish energy giant Repsol, demanding compensation for the spill that occurred as freak waves hit a tanker during offloading on Saturday. "How will we live now? That's our worry," Miguel Angell Nunez, who led the protest, told AFP. "We've lost our source of work and we don't know when this will end. "We want them to recognize the damage. The spill was caused by (Repsol's) negligence." It is an area teeming with sole, lorna drum and Peruvian grunt, commonly used in the local delicacy ceviche, a marinated raw fish dish that Peru is famous for. Traditional fishermen use small scale, low technology, low capital practices, mostly from the beach or rocks. The few that own small boats only travel short distances along the shoreline. The Ventanilla spill sent 6,000 barrels of oil into the sea. The environment ministry said 174 hectares -- equivalent to 270 football fields -- of sea, beaches and natural reserves were affected. The attorney general's office said the spill had "put at risk flora and fauna in two protected areas." Authorities pulled dead fish and birds covered in oil out of the sea, and had to seal off three beaches, meaning hundreds of fishermen had nowhere to go to work. Refinery officials said they had erected "containment barriers that cover all of the affected zones and brigades with specialist sea and land teams have been deployed." But fishermen, some of whom live hand to mouth, fear that they could be prevented from working for years.

Peru: 21 beaches polluted by spill linked to Tonga eruption — Peru declared an environmental emergency on Thursday after announcing that 21 beaches on the Pacific coast were contaminated by an oil spill at a refinery run by Spain-based Repsol, following surging waves caused by the eruption of an underwater volcano near Tonga. President Pedro Castillo said a committee will be formed to propose ways of dealing with the crisis, in keeping with national policies aimed at protecting the environment. Prime Minister Mirtha Vásquez said Repsol has promised to deliver a cleaning schedule, to incorporate local fishermen in the cleanup on beaches and to deliver food baskets to affected families. Vásquez said the United Nations will provide a team of experts to help Peru deal with the oil spill. People are barred for now from going to the 21 polluted beaches because of health concerns. Peruvian authorities say an Italian-flagged ship spilled 6,000 barrels in the Pacific on Saturday in front of the La Pampilla refinery. In recent days, environmental activists have collected oil-stained or dead seabirds. Repsol said Peruvian authorities had not provided a tsunami warning and that the ship was continuing to unload oil to the refinery when the waves hit. Two women in Peru drowned after being swept away by strong waves following the Tonga eruption

'Smells like death': Peru oil spill cleanup expected to take weeks - Spanish energy firm Repsol said the cleanup operation for a major oil spill on the coast near Peru's capital Lima would take until the end of February, in an environmental incident declared a 'catastrophe' by the government. Dead seals, fish and birds have washed up on the shore covered in oil, while fishing activities in the area have been suspended, the government has said. Almost a million litres of crude spilled into the sea on Saturday when a tanker was hit by waves while offloading at La Pampilla refinery in Ventanilla, 30 kilometres north of Lima. Its owner, Spanish oil company Repsol, attributed the accident to the swell caused by the volcanic eruption in Tonga, thousands of miles away. Repsol said it had enlisted fishermen to help clear-up the oil. "I used to collect crustaceans, but now, when I walk to the shore, they are dead," fisherman Walter de la Cruz told Reuters. "Fishermen used to go sell the seafood that we collect. But now everything smells like death." The Pacific Ocean off Peru is a significant source of marine life and seafood for Peruvians, who cherish dishes such as ceviche. The spill has dealt a blow to tourism at Peru's popular resort of Ancon, and to businesses who make most of their money in the summer season. "There were many people until Sunday; the stain arrived on Monday, and since then, no one is swimming anymore," said 48-year-old Richard Gutierrez, who has a food and soda stand on Miramar beach. "We cannot sell anything, there are no vacationers, there is no one" apart from about 100 cleanup workers - soldiers, Repsol hired hands and volunteers - removing the polluted sand with spades to be taken to a toxic waste treatment facility. Repsol said it deployed about 840 people to help with cleaning tasks. Repsol's La Pampilla accounts for 54 per cent of Peru's refining capacity.

Brent North Sea crude trades near 2014 highs as oil demand grows --Brent oil traded near the highest intraday level since 2014 as the market tightened and concerns about the impact of omicron eased. Futures in London held at about $86 a barrel after a fourth weekly advance on Friday, with gains tempered by signs of slowing Chinese economic growth. High prices are justified and futures could rise even further, according to trader Vitol Group. Oil’s market structure has firmed in a bullish backwardation pattern, indicating growing supply tightness. Oil has rallied more than 10% so far this year, in part due to outages in OPEC+ producers including Libya. The International Energy Agency said last week that global consumption has turned out to be stronger than expected, while the physical market is booming as buyers look beyond the spread of omicron. “There is a genuine belief that physical demand will keep exceeding supply,” said Tamas Varga, an analyst at brokers PVM Oil Associates Ltd. “On the demand side, the cold winter in North America is one of the major factors. Mild omicron symptoms and hopes that the rapid rise in cases is about to abate also contributed to the strength.” Brent for March settlement was steady at $85.87 a barrel on the ICE Futures Europe exchange at 10:09 a.m. in London after climbing 1.9% on Friday. Futures rallied to $86.71 earlier, 4 cents shy of the highest level since October 2014. The prompt timespread for Brent was 70 cents in backwardation, compared with 57 cents a week earlier. West Texas Intermediate for February delivery was little changed at $83.75 on the New York Mercantile Exchange. The Covid-Zero policy employed by China will probably ensure that there’s no omicron outbreak big enough to significantly diminish the use of oil products there, Mike Muller, Vitol’s head of Asia, said Sunday during a webinar hosted by Dubai-based consultants Gulf Intelligence. China’s central bank, meanwhile, cut its key interest rate for the first time in almost two years to help bolster an economy that’s lost momentum because of a property slump and repeated virus outbreaks. Official data Monday showed gross domestic product rose 4% last quarter from a year earlier, the weakest since early 2020.

Russia’s February gas-transit plan leaves Europe in the lurch --Russia is keeping Europe’s natural gas market on edge, with no relief in sight from the country’s preliminary supply plans for next month. The nation’s exporter, Gazprom PJSC, again opted not to book any extra pipeline space to ship the fuel westward through Ukraine during a monthly auction on Monday. On top of that, zero capacity was booked for February to deliver gas to Germany via the Mallnow station, where Russia’s Yamal-Europe pipeline terminates. Benchmark Dutch front-month gas briefly pared losses after the auctions but still traded down 4.2% at 83.31 euros a megawatt-hour by 12:05 p.m. in Amsterdam. Prices dropped as much as 7.8% earlier. Europe is grappling with its worst energy crisis in decades. The continent’s gas inventories are at the lowest on record for this time of year, with the heating season far from over. While shipments of liquefied natural gas from the U.S. have helped the region recover somewhat from lows earlier this winter, flows from top fuel supplier Russia remain far below normal. Concerns of a possible military action in Ukraine are also adding to uncertainty about Russian energy exports. “Auction results today will be particularly difficult to interpret,” Tom Marzec-Manser, an analyst for European gas and LNG at ICIS, said before the auctions. Last month, Gazprom booked about 21% of Mallnow’s capacity for January, yet there’s been no flow so far this month. Current supplies via Ukraine are also far below the 109.6 million cubic meters a day that Gazprom can send under its long-term transit contract. Russia has said this is due to lower demand from European buyers.

Russia denies responsibility for Europe’s winter energy crisis- Russia has nothing to do with the energy crisis in Europe, Deputy Prime Minister Alexander Novak said, rejecting allegations from the International Energy Agency that it’s holding back supplies and driving up prices of natural gas. “Neither Russia nor our main exporter Gazprom have anything to do with this,” Novak told state television Saturday, according to the Interfax news agency. Russia has “delivered significantly more” to clients such as Germany and Turkey that had exhausted their contracted limits, he said. Novak blamed “the shortsighted policy of the European Union and European Commission, which for many years has deliberately moved away from long-term contracts, shifted its energy sector toward reducing dependence on Russia.” Europe is grappling with an energy crunch that’s resulted in gas and power prices breaking multiple records over the past few months. The continent’s gas inventories are already at their lowest in more than a decade, and the two coldest months of the year have only just begun. Russia is ready to increase deliveries, Novak said, but needs long-term contracts to justify making investments in production. Novak was responding to comments earlier this week from IEA Executive Director Fatih Birol, who accused Russia of holding back supplies to the spot market despite high prices. He said Russia could boost deliveries by at least a third.

Russia-Ukraine crisis could spark a surge in Europe's gas prices and top last year’s highs - Growing tensions between Russia and Ukraine have cast a shadow over energy markets, and the uncertainty could mean a prolonged period of high gas prices for Europe, analysts say. "It's a very tight gas market ... and there's no question that this sense of imminent crisis building with Russia and Ukraine is also hanging over the market, particularly since Russia does provide about 35% of Europe's gas," energy expert Dan Yergin told CNBC on Monday. If the crisis escalates, gas prices in Europe – which soared to highs last year – could surge further, warned research firm Capital Economics in a note over the weekend. William Jackson, chief emerging markets economist at Capital Economics pointed out that in addition to Europe's reliance on Russia for gas, stock supplies are also low right now. "Were sanctions to be placed on Russia's energy exports or were Russia to use gas exports as a tool for leverage, European natural gas prices would probably soar," he said. Tensions between Russia and Ukraine have ratcheted up in recent months amid multiple reports that Russian troops have amassed at the border with Ukraine. The development prompted speculation that Russia is preparing to invade the country and set off fears of a repeat of Moscow's illegal annexation and occupation of Crimea in 2014. Moscow has repeatedly denied those allegations. U.S. representatives and NATO members emerged from several days of high-stakes discussions with top Russian officials with no resolution – but with warnings that the situation along the Ukraine border is in fact getting worse. The imminent crisis has sparked talk the U.S. could impose sanctions on Russia to stop the Kremlin from invading Ukraine. If that happens, according to Capital Economics, European gas prices will probably exceed the peak of 180 pounds per MWh seen late last year. VIDEO09:18 Can harsh U.S. economic sanctions deter Russia from invading Ukraine? "And some states that are very heavily dependent on Russian gas, particularly in Eastern Europe, might be forced to ration power," Jackson added.

U.S. voices misgivings on EastMed gas pipeline – Greek officials - The United States has expressed misgivings on a subsea pipeline designed to supply Europe with natural gas from the eastern Mediterranean, Greek government sources said, in an apparent U-turn over a project supported by the former Trump administration. Washington, under the Biden administration, let its concerns be known recently, in a note sent to Greece, another source said. Competing claims over gas reserves in the eastern Mediterranean are a point of tension between Turkey and ethnically-split Cyprus. Turkey opposes the pipeline project. Greece, Cyprus and Israel have approved an agreement for the EastMed pipeline, which has been in planning for several years. The countries had aimed to reach a final investment decision this year and have the 6 billion euro ($6.82 billion) scheme completed by 2025 to help Europe diversify its energy resources. “The American side expressed to the Greek side reservations as to the rationale of the EastMed pipeline, (and) raised issues of its economic viability and environmental (issues),” one source said. There was no immediate comment from Israel or Turkey. Concerns about the financial viability of the project have been heard before, but Greece, Israel and Cyprus have supported the project.

Europe's Largest Refinery Announces Five Months of Maintenance - Energy company Shell's Pernis refinery in the Netherlands is due to carry out significant maintenance in the first half of this year. The 404,000 b/d facility -- Europe's largest refinery -- is due to carry out maintenance on several units over the next five months, news agency Reuters reported on Thursday, citing comments from Shell. The company has not named the specific units involved. The Pernis refinery is a significant supplier of VLSFO and other bunker fuels to the Northwest European market. The work will start at the end of January and last until the end of June, according to the Reuters report.

Russia Seen Struggling to Keep Up With OPEC+ Hikes - Russia may be able to deliver only about half of its scheduled increases in crude production over the next six months, joining the ranks of OPEC+ nations that are struggling to ramp up even as fuel demand rebounds from the pandemic. With crude already trading above $85 a barrel in London, the outlook for Russian output leaves the global market looking even tighter than expected. It risks amplifying the energy-price surge that’s contributing to the highest inflation in decades. In the booming Asian physical market, Russian premium ESPO crude -- a favorite grade among Chinese processors -- has already surged to the highest since November amid declining inventories in China, according to traders. The OPEC+ member is supposed to be adding 100,000 barrels a day of crude to the market each month, but growth ground to a halt in December. Due to a decline in drilling last year, most analysts polled by Bloomberg News expect Russia’s actual monthly increases can go no higher than 60,000 barrels a day in the first half of 2022. “We have a hard time seeing Russian suppliers maintaining 100,000 barrels-a-day production increases each month for the next six months,” Bank of America Corp. analysts Karen Kostanyan and Ekaterina Smyk told Bloomberg. The Organization of Petroleum Exporting Countries and its allies are in the process of restoring output halted during the pandemic. The coalition is supposed to pump an additional 400,000 barrels a day each month, yet the actual production increases have fallen short due to factors ranging from internal unrest to insufficient long-term investment in a number of countries. Last month, OPEC boosted output by just 90,000 barrels a day. Russia’s production started stagnating in November, and in December it dropped below its OPEC+ quota for crude, according to Bloomberg estimates based on Energy Ministry statistics. The first days of January brought a less than 1% rise in the country’s total petroleum output, which includes crude and a light oil called condensate that is extracted from natural gas, according to Interfax. Russia’s top oil official, Deputy Prime Minister Alexander Novak, has said the country will continue to hit its production targets. Output of crude will rise to 10.1 million barrels a day this month, he told the Tass news agency last week. That would be in line with its OPEC+ quota and an increase of about 100,000 barrels a day from December. If OPEC+ continues to struggle to hit its production targets, there may be wider economic consequences. The recovery in oil demand has remained robust as the Omicron strain of the coronavirus has a milder effect on the global economy than anticipated.

India Oil Demand Recovery Poised to Weather Covid Comeback -- Indian oil refiner Hindustan Petroleum Corp. is cautiously optimistic that the nation’s recovery from the pandemic will remain largely intact, despite a recent spike in coronavirus cases. Infections have surged and fewer vehicles are traversing the streets of India’s capital, but authorities have so far refrained from instituting a nationwide lockdown, opting for targeted restrictions such as closing bars. While people are avoiding unnecessary travel, there hasn’t been a substantial impact to demand, according to Hindustan Petroleum Chairman Mukesh Kumar Surana. “There’s no doubt January will be subdued compared to December,” Surana said, predicting that the current surge in Covid-19 infections should flatten this month. “I’m not seeing a longish trend to this wave.” India was hit hard by a devastating outbreak of the delta variant early last year that overwhelmed the health system, although the nation was spared a collapse in oil demand similar to 2020 after avoiding a nationwide lockdown. The economy recovered over the second half of 2021 as vaccinations rates rose, with diesel consumption climbing to a two-year high in December and gasoline use at the highest in records going back to 1998. Over the first 10 days of 2022, sales of gasoline and diesel -- which together make up more than half of India’s overall petroleum consumption -- dipped by 2% to 3% from a year earlier, according to preliminary estimates by refinery officials with direct knowledge of the matter. Foot traffic through the nation’s airports has also dropped, data from the Civil Aviation Ministry show. The overall outlook still remains bullish. India’s total oil demand is expected to grow 4% to 5% over the 12 month ending March 31 compared with a year earlier, according to Prashant Vasisht, vice president at ICRA Ltd., the local unit of Moody’s Investors Service. The current virus wave won’t have a lasting impact on demand, Vasisht said, forecasting 3% to 5% growth next year. India’s refiners are also keeping crude purchases robust. Bharat Petroleum Corp. is seeking additional volumes from Saudi Arabia for February delivery, while top processor Indian Oil Corp. recently issued a tender seeking to buy crude from West Africa to the Americas for February and March loadings. “February onwards, it will be normal again,” Hindustan Petroleum’s Surana said.

China State Refiners Led Record Oil Processing Volumes - China’s oil processing volumes rose more than 4% to a record last year as state-owned refiners boosted output and new integrated plants came online. Crude refining climbed to 703.55 million tons, or 14.13 million barrels per day, according to data released Monday by National Bureau of Statistics and Bloomberg calculations. That was 4.3% more than in 2020 and 7.4% higher than 2019. Daily volumes in December were down 4.7% on the previous month. China Petrochemical Corp. and PetroChina Co. raised gasoline and diesel output in the second half of 2021 to fill in supply gaps left by independent processors. These refiners, known as teapots, cut production due to a consumption tax on dirtier feedstocks including light-cycle oil that took effect in June. The two state-owned behemoths also ramped up diesel output last quarter to avert an energy supply crisis after the prices of coal to gas soared in the autumn. Refining volumes are likely to continue rising this year as new plants -- such as Shenghong Group’s 320,000 barrel-a-day integrated refinery and PetroChina’s 400,000 barrel-a-day Guangdong complex -- start operations. China’s crude output, meanwhile, rose 2.4% in 2021 from a year earlier to 199 million tons, the statistics bureau data showed. CNOOC Ltd. boosted production at the Bohai field, making it the largest crude producer in China. Bohai produced 30.13 million tons last year, or about 605,000 barrels a day, surpassing PetroChina’s Changqing and Daqing fields to become the largest in the country.

China’s fuel exports drop for a second year as quotas tighten--China’s overseas shipments of fuels fell for a second year as Beijing tightened export quotas, in part to ensure sufficient domestic supply. Gasoline exports in 2021 slid 9.1% from a year earlier to 14.54 million tons, the lowest level in three years, government data show. That’s equivalent to about 333,000 barrels a day, according to Bloomberg calculations. China shipped the least amount of diesel since 2017, down 12.9% year-on-year. Exports slipped last year after state-run refiners were forced to provide more fuel to the domestic market to make up for a shortfall from independent oil processors. Supply from private operators declined after a consumption tax was levied on blending feedstocks. China has also been curbing exports to achieve its green goals of peak carbon emissions by 2030. China exported 940,000 tons of gasoline in December, 35% lower than a year earlier, government data showed. Diesel shipments were 330,000 tons last month, down 78% on December 2020. The fuel export quota for 2021 was 36% lower than 2020, or 21.4 million tons less, according to consultant OilChem. That trend looks like it will continue in 2022 after China slashed its quotas in the first allocation for the year. A quota of 13 million tons was granted in the first batch, including both general trade and tolling issuances, according to refinery officials with knowledge of the matter. That’s 56% less than the 29.5 million tons in the same batch for 2021. Consultant JLC predicts the overall allocation will be 40% lower in 2022.

UAE warns OPEC alone can’t solve global oil supply issues --OPEC and its allies are increasing oil production but can’t solve all the sector’s issues alone, the United Arab Emirates’ energy minister said. The industry needs investment, through the involvement of international oil companies, in order to provide adequate supplies, Suhail Al-Mazrouei said, according to the UAE’s state-run WAM news agency. Failure to provide sufficient capital may lead to future price hikes, he warned. Crude prices rallied to a seven-year high above $89 a barrel in London on Wednesday as global demand recovers from the pandemic and supplies are curtailed by a host of disruptions. It’s an increasing challenge for consumers as they grapple with inflation, from fuels to food prices. A large contributor to the rally has been the failure of many OPEC+ nations to restore output halted during the pandemic, as they contend with depressed spending of their own. The group added only 60% of its mandated output boost last month, according to the International Energy Agency. But diminished spending has also been an issue for the global industry, as a result of the 2020 price collapse and as investors divert cash away from fossil fuels. The UAE remains committed to increasing its output as part of the OPEC+ accord, Mazrouei said.

Vitol Group Says Oil Prices May Rise Even More - The world’s biggest independent oil trader said crude prices, already up more than 10% this year, could rise even further because of tight supplies. “These prices are justified,” Mike Muller, head of Asia for Vitol Group, said Sunday. “Strong backwardation is very much justified,” he said, referring to a bullish pattern whereby near-term futures are more expensive than later ones. Oil posted a fourth-straight gain last week, its longest rising streak since October, amid signs consumption will hold up despite the spread of the omicron variant of the coronavirus. At the same time, spare capacity is dwindling as some of the world’s biggest producers struggle to boost output. Brent crude has jumped 11% this year to over $86 a barrel, extending last year’s gain of 50%. Muller said that while natural gas prices have climbed enough to cause some industrial users -- including in Pakistan and Europe -- to cut back on consumption, the oil market hadn’t reached that point. What’s happening with gas “serves to remind us that people will abstain from buying expensive energy at some point,” he said on a webinar hosted by Dubai-based consultancy Gulf Intelligence. “The question is at what point that affects the oil market.” The White House will probably release more oil from its Strategic Petroleum Reserve than the 50 million barrels it announced in November, Muller said. President Joe Biden took that step to cool gasoline prices, which are around their highest in seven years in the U.S. “The market’s saying: ‘More, please,’” Muller said when asked about supplies. He said China’s zero-tolerance policy toward Covid-19 would probably ensure there’s no omicron outbreak there big enough to significantly diminish the use of oil products. “We’re nowhere near seeing a major demand hit in China,” s

Commodity trader King eyes $200 oil - A hedge fund run by commodities trader Doug King posted a record return last year, thanks to soaring energy, food, power and freight prices. King’s $244 million Merchant Commodity Fund gained 74%, beating its previous best of 59% in 2014, according to an investor letter seen by Bloomberg. London-based King, 55, is among a cadre of hedge fund managers, including Pierre Andurand, who made huge profits from commodities last year amid a global economic recovery from the coronavirus pandemic and supply disruptions. The Bloomberg Commodity Spot Index, which tracks energy, metals and crop futures, jumped 27% in 2021, the most in over a decade. Oil surged more than 50% to around $80 a barrel. It’s almost up another 10% so far this year. King said it could soon hit $100 and even $200 over the next five years due to a lack of exploration and investment to maintain existing supplies. “We believe in structural supply-side commodity inflation that most will not have ever seen — the highest since the 1970s,” he said in an interview. “Only OPEC will react to price metrics and they are undershooting every month.”

Oil Prices Hit Seven-Year High on Rising Geopolitical Tensions – WSJ - Crude prices rose to their highest level since the 2014 shale-induced oil crash, a milestone in a rally that is gathering momentum as geopolitical tensions threaten to knock supply.Futures for West Texas Intermediate, the main grade of U.S. crude, added $1.61 per barrel, or 1.9%, to $85.43 on Tuesday. That marks the highest closing level since October 2014, when oil prices were moving in the opposite direction as a gusher of U.S. crude flooded the market.Of the S&P 500’s 11 sectors, only energy rose Tuesday, while the broader index declined 1.8%.It took the oil market several years to recover from the price decline set in motion by America’s re-emergence as an oil-producing superpower. The rebound from the coronavirus crash of 2020—when U.S. crude futures turned negative as the world struggled to find places to store oil—has been much faster.Among the factors driving the rally are concerns that tensions in the Middle East and Europe will spill into energy markets by denting supplies from major crude producers, particularly Russia and the United Arab Emirates. Any outages are likely to goose prices in a market where demand is rising and stockpiles have fallen below recent norms, traders and analysts say. Adding to oil’s gains, the wave of infection caused by Omicron hasn’t reduced demand as much as traders thought it might when the variant was identified in late November. In a report published Tuesday, the Organization of the Petroleum Exporting Countries forecast that the world would consume 100.8 million barrels of oil a day this year, up 4.2 million barrels a day from 2021. The rise has been driven by rising demand for light distillates used in the petrochemical industry. Gasoline prices are rising, adding to inflationary pressures and complicating matters for President Biden, who released crude from the strategic reserve in the fall in an attempt to help drivers facing sticker shock. National average gasoline prices stand at $3.314 a gallon, according to AAA, up from $2.386 a year ago.It isn’t just crude futures that are rising. In the physical oil market, prices have jumped for grades of crude such as Forties, produced in the North Sea, and Nigeria’s Bonny Light, a sign that traders and refiners are snapping up barrels in a tightening market.The market “perceives a capacity crunch could happen later in the year and is trying to get ahead of that,” said Paul Horsnell, head of commodities strategy at Standard Chartered. He said traders worry that energy exports from Russia will take a hit from tensions with the U.S. over troops at the border with Ukraine, and are also concerned by attacks on the United Arab Emirates.Yemen’s Iran-backed Houthi rebels said they were behind aerial attacks that killed three people in the top-10 crude producer Monday. One of the strikes hit fuel trucks at Musaffah, near a major depot owned by Abu Dhabi National Oil Co., known as Adnoc, about 15 miles from the center of Abu Dhabi where trucks stock up on gasoline and diesel to distribute to forecourts.The attacks showed the Houthis are willing to strike in the heart of a country seen as the region’s main hub for international business. U.S., European and Israeli defense officials say the growing ability of Iran and its allies to deploy drones is changing the security equation in the Middle East.

Oil Rally Continues to Seven Year High | Rigzone - Oil surged to the highest level in seven years as robust demand and strained supplies make physical markets run hot in the world’s largest consuming region. Futures in New York closed up at $85.43 a barrel, the highest since October 2014. Traders are paying higher and higher premiums for cargoes in Asia, as fears fade over the demand impact from omicron, while supplies are tightened by a range of outages from Libya to North America. Meanwhile, a drone attack on oil facilities in the United Arab Emirates on Monday flared geopolitical risks. Adding to bullish indicators, Goldman Sachs Group Inc. raised its Brent forecasts through 2022 and 2023, and predicted $100 oil in the third quarter. Robust fundamentals have reversed last year’s price slump, keeping the market in a surprisingly large deficit, it said. “Oil was already vulnerable to price spikes as the market was tight before the recent wave of headlines,” Oil’s rally poses a challenge for consuming nations and central banks as they try to stave off inflation while supporting global growth. In particular, it’s a headache for U.S. President Joe Biden as his efforts to tame gasoline prices by tapping emergency stockpiles -- and by cajoling OPEC -- fail to yield results. Crude has made a red-hot start to the year with outages at producers including Libya adding to the bullishness brought about by strong demand. There are upbeat signals from across the oil complex, from diesel to jet fuel, which is soaring in Europe as air travel withstands the omicron impact. The Organization of Petroleum Exporting Countries said in its monthly report that it expects global oil markets to remain “well-supported” this year by robust demand. The group also reiterated its forecast from last month that “the impact of the omicron variant is projected to be mild and short-lived” -- a projection that has so far remained true. West Texas Intermediate for February delivery, which expires Thursday, rose $1.61 from Friday’s close to settle at $85.43 in New York. Brent for March settlement rose $1.03 to $87.51 a barrel. The prompt timespread is 73 cents a barrel in backwardation, compared with 64 cents a week earlier. The physical-market strength has been compounded by renewed tension in the Persian Gulf, home to about 40% of the world’s seaborne oil. Yemen’s Houthi fighters claimed to have launched a drone strike on the United Arab Emirates that caused an explosion and fire on the outskirts of the capital Abu Dhabi. The nation is the third-largest producer in OPEC. Low crude stockpiles mean there is no supply cushion for potential outages in producing countries, leaving the market susceptible to price increases, “When you have buffers, small outages like what we have seen over December and January matter a lot less, but we don’t have that luxury,”

Oil prices are at a 7-year high, but Exxon CEO Darren Woods is confident they will trend lower. - Oil prices rose to a seven-year high Tuesday amid ongoing supply concerns and escalating tensions in the Middle East, but Exxon Mobil CEO Darren Woods is confident they will trend lower. In the immediate future, however, the oil executive said the market should expect volatile prices as the industry's recovery from Covid-19 continues. "As you get supply and demand tighter, events that happen around the world ... lead to a lot more volatility because there's less of a buffer, and I think we're going to see that for some time now," he said Tuesday on CNBC's "Squawk Box." "Until industry begins to ramp up productions and increase the level of supply to meet this growing demand, or in turn demand starts to come down a little bit ... you're going to see a lot more volatility until we get better stability." Woods added that it's hard to predict when the market might balance out given the many players involved. West Texas Intermediate crude futures, the U.S. oil benchmark, traded as high as $85.74 per barrel on Tuesday, a price last seen in October 2014. The price marks a blistering recovery after the contract briefly traded in negative territory in April 2020, as the pandemic sapped demand for petroleum products. But Woods said he doesn't get "overly enamored" with today's high prices. When looking at new investments the company focuses on ensuring operations can be competitive across a wide range of price environments, he said. "[W]e anticipated higher prices. We also anticipate a lot of volatility. And frankly we're anticipating lower prices as we go forward," he said. Exxon said Tuesday it's targeting net-zero greenhouse gas emissions for its operated assets by 2050. The announcement follows similar targets from competitors, and comes as Exxon faces board pressure to act on climate change. In 2021, upstart activist firm Engine No. 1 successfully placed three of its candidates on the oil giant's board. Exxon's target does not include so-called Scope 3 emissions — the environmental footprint from the products a company generates — or the company's supply chain. Scope 3 emissions are typically the highest, and the hardest, to quantify. Tuesday's climate-focused pledge builds on prior announcements from Exxon on how it plans to cut its emissions. The company has also pledged billions of dollars to develop emissions-reducing technologies like carbon capture. Woods said the target is "more than just a pledge" and that the company has a "line of sight" for how it plans to slash its emissions. "We have road maps that we're developing in each of our facilities around the world to deliver those reductions," Woods said. "There are plans behind this ambition that takes us clearly through 2030 and then beyond that. I think that should give folks some confidence. This is more than just out there positioning on something; this is actually work that we're doing."

Oil markets may be even tighter than forecasters say --The oil market is getting tighter and there may be even less slack in the system than forecasts suggest. The latest outlooks from the International Energy Agency and the U.S. Energy Information Administration show the world needing more oil this year from the members of the Organization of Petroleum Exporting Countries than they did a month ago. The bigger worry is the growing mismatch between the level of oil stockpiles they can measure and the volumes their models predict. Stockpiles are one of the oil market's safety valves, alongside spare production capacity, for dealing with unexpected outages or soaring demand. With spare capacity among OPEC+ producers heading toward multi-year lows, any suggestion that oil stockpiles are lower than previously thought could put an even bigger fire under oil prices that have already climbed to a seven-year high. Some of the oil that can’t be seen may be in storage that is neither visible, nor reported — caverns that form part of China’s strategic stockpile, for example. But that doesn’t account for everything. Demand estimates may be too low, production numbers too high, or some combination of the two. The demand numbers are already looking stronger than they did a month ago with the omicron variant of the Covid-19 virus landing a smaller blow to consumption than many had feared. The IEA has increased its demand forecast for 2022 by almost 200,000 barrels a day and made a similar upward revision to its estimate for 2021 as well. The EIA also sees this year’s oil demand stronger than it did a month ago, but OPEC’s own analysts, who are often slower to revise their forecasts, have left their overall demand outlook for 2022 unchanged from December, though they have shifted some growth from the third to the fourth quarter. They have done the same for 2021. While they see stronger demand, the IEA and EIA are less upbeat on supply. Both have cut their forecasts for 2022 of all non-OPEC oil production since December. And in both cases the biggest downgrades are seen in the current quarter. The IEA pins the revision on global biofuels production, which it has cut by 200,000 barrels a day this quarter from its previous forecast. Elsewhere, it sees lower than previously expected Russian production offset by higher U.S. output. The U.S.-based EIA made downward revisions to its forecasts for domestic production, as well as supplies from Brazil and Ecuador. A downward revision to Russian production was offset by an increase in the forecast for neighboring Kazakhstan. As with demand, the OPEC analysts have left their supply forecasts essentially unchanged from December.

WTI Nears $87 on Tighter Fundamentals, Eyed Crude Draw -- Nearby delivery oil futures extended their recent rally into afternoon trade Wednesday, lifting both crude benchmarks to fresh seven-year highs propelled by expectations for stronger demand growth this year amid a muted impact from the omicron surge of infections and concerns over OPEC+ spare capacity as several members of the producer alliance appear to be reaching their respective production ceilings months ahead of schedule. Arguably, there are only three producers within OPEC+ group that could increase output today more than they could before the pandemic hit in March 2020 -- Saudi Arabia, United Arab Emirates and Kuwait. Analysis suggests Russia -- the second largest producer within OPEC+ -- is closing in on its maximum output capacity, pumping over 11.17 million barrels per day (bpd) in the fourth quarter 2021, according to OPEC's Monthly Oil Market Report. Impaired by a lack of investments into greenfield projects in the Arctic and east Siberia, Russia will likely struggle to raise crude production in line with its agreed OPEC+ quota in coming months. A host of smaller producers from Africa, Central Asia and Latin America have begun to underdeliver on their output targets in the second half of 2021 -- a trend that is unlikely to reverse quickly this year. The looming question is whether Saudi Arabia, Kuwait and the UAE are willing to open their taps more to cool off the rally or to instead allow global crude prices to remain elevated, which would allow them to capture more revenue, filling their state coffers more quickly to make up for revenue lost during the height of the pandemic. The International Energy Agency said Wednesday morning in its Oil Market Report that OPEC+ will have only 2.6 million bpd of additional output left in the second half of the year should the producer group continue to unwind 2020 supply cuts and Iran remains under sanctions. IEA trimmed its forecast for non-OPEC oil supply by 100,000 bpd to 66.5 million bpd, mostly reflecting constraints on Russian oil production growth. On the demand side, the Paris-based agency revised its 2022 forecast higher by 200,000 bpd to 99.7 million bpd, reflecting a "relatively subdued" impact from the spread of omicron variant on mobility and economic growth across industrialized nations. Global oil demand is now seen to have risen 5.5 million bpd in 2021 and is expected to grow by 3.3 million bpd this year, the IEA said, surpassing pre-pandemic levels by more than 150,000 bpd. "If demand continues to grow strongly or supply disappoints, the low level of stocks and shrinking spare capacity mean that oil markets could be in for another volatile year in 2022," IEA said. On the session, West Texas Intermediate futures for February delivery advanced $1.53 to $86.96 bbl, with the next-month March contract widening its discount to $1.16 bbl. International crude benchmark Brent March futures rallied to $88.44 bbl, adding $0.93 on the session. NYMEX February RBOB futures advanced 2.52 cents to $2.4570 gallon, and the front-month ULSD contract gained 1.83 cents to $2.6923 gallon.

Oil up, settles near 7-year highs after Iraq-Turkey pipeline outage -Oil prices settled higher on Wednesday after a fire on a pipeline from Iraq to Turkey briefly stopped flows, increasing concerns about an already tight short-term supply outlook. Flows have resumed through the Kirkuk-Ceyhan pipeline that carries crude from northern Iraq, the second-largest producer in the Organisation of the Petroleum Exporting Countries, to the Turkish port of Ceyhan for export. The explosion that set off the fire on the pipeline in the southeastern Turkish province was caused by a falling power pylon, not an attack, a senior security source said. Supply concerns mounted this week after Yemen’s Houthi group attacked the United Arab Emirates, OPEC‘s third-largest producer, while Russia, the world’s second-largest oil producer, has built up a large troop presence near Ukraine’s border, stoking fears of invasion. Brent crude futures settled up 93 cents, or 1.1%, at $88.44 a barrel. The global benchmark earlier touched $89.13, its highest level since Oct. 13, 2014. U.S. West Texas Intermediate (WTI) crude futures settled up $1.53 at $86.96 a barrel, its highest level since Oct. 9, 2014. OPEC officials and analysts say that an oil rally may continue in the next few months and prices could top $100 a barrel due to recovering demand despite the spread of the Omicron coronavirus variant. “Any way that the numbers are crunched, it appears that global inventory will continue to draw for a few more months with this implied tightening in the balances keeping this bull alive through the rest of this month and most of next,” OPEC+, which groups the cartel with Russia and other producers, is struggling to hit their monthly output increase target of 400,000 barrels per day (bpd). “Unplanned outages in Libya, Ecuador, and Kazakhstan, coupled with downgrades to U.S., Russia, and Brazil forecasts, together result in 1 million bpd lower supply this month than previously forecasted,” The International Energy Agency, however, said the oil market was due to flip into surplus in the first quarter as some producers are set to pump at or above all-time highs. An oil surplus should also lead to a build-up in inventories, as the IEA reported that commercial stocks in OECD countries were well below pre-pandemic levels at around seven-year lows. On Wednesday, President Joe Biden told a news conference he will work to try to increase oil supplies. The administration authorized the release of 50 million barrels of crude oil from the nation’s Strategic Petroleum Reserve last year when prices spiked. WTI Holds Gains Despite Crude Build, Gasoline Demand Remains Dismal - Oil prices extended gains this morning with WTI back above $86 as traders shrugged off a surprise crude build reported by API and ignored President Biden's pledge to maintain efforts to curb prices. “Underlying fundamentals remain strong as confirmed by the IEA in their monthly report,”. “But with technical indicators flashing overbought, a period of consolidation may soon emerge.” Oil has surged since the end of November as stronger-than-expected demand and supply outages tightened the market, leading to buyers in Asia paying much higher premiums for spot cargoes. Goldman Sachs is forecasting a return to $100 crude in the third quarter, while the International Energy Agency said consumption is on track to hit pre-pandemic levels. In the U.S., a blast of cold air across southern Texas is set to pass near one of the country’s major oil-producing regions. The front will raise concerns for power-grid operators and natural-gas drillers. API

  • Crude +1.404mm (-1.75mm exp)
  • Cushing -1.496mm
  • Gasoline +3.463mm (+2.4mm exp)
  • Distillates -1.179mm (-1.1mm exp)

DOE:

  • Crude +515k (-1.75mm exp)
  • Cushing -1.314mm
  • Gasoline +5.873mm (+2.4mm exp)
  • Distillates -1.431mm (-1.1mm exp)

The official data confirms API's report with an unexpected crude inventory build last week (+515k vs -1.75mm exp). Cushing also saw stocks drop for the second straight week and gasoline inventories surged for the third straight week...

NYMEX WTI, RBOB Gain Despite Crude, Gasoline Stock Builds -- Oil futures nearest delivery on the New York Mercantile Exchange reversed higher in late morning trade Thursday despite weekly inventory data from the U.S. Energy Information Administration (EIA) showing U.S. commercial crude and gasoline inventories increased above consensus during the week ended Jan. 14 as domestic refiners scaled back crude throughputs amid still sluggish demand for motor gasoline. U.S. commercial crude oil inventories increased for the first time in eight weeks during the period ended Jan. 14, rising 515,000 barrels (bbl) to 413.8 million bbl, the EIA said in its weekly report, although stocks are still about 8% below the five-year average. Markets mostly expected crude stockpiles would fall by 800,000 bbl from the prior week. Oil stored at the Cushing, Oklahoma, hub, the delivery point for West Texas Intermediate futures, fell 1.3 million bbl to 33.5 million bbl. U.S. crude oil production remained unchanged from the previous week at 11.7 million barrels per day (bpd), still some 1.3 million bpd below the pre-pandemic level. The crude build was realized as domestic refiners reduced run rates by 0.3% last week to 88.1%, processing 120,000 bpd less crude compared to the previous week. Gasoline stockpiles once again posted a hefty build, climbing 5.9 million bbl in the reviewed week to 246.6 million bbl compared with expectations for inventories to have increased by 2.1 million bbl. Demand for motor gasoline, meanwhile, reversed off an 11-month low 7.906 million bpd during the second week of January, gaining 4% or 318,000 bpd last week. Distillate stocks fell 1.4 million bbl to 128 million bbl, and are now about 16% below the five-year average, the EIA said. Analysts expected distillate inventories would fall 700,000 bbl from the previous week. Demand for distillate fuel surged 807,000 bpd during the reviewed week to 4.556 million bpd. EIA data was directionally in line with DTN Refined Fuels Demand data that found U.S. gasoline demand up 7.8% year-on-year for the week profiled but down 2.9% from the same week in 2020. Total U.S. diesel demand was up 5.6% year-on-year for the week and up 6% from the same week in 2020. Around noon New York time, February West Texas Intermediate futures gained $0.19 to trade near $87.15 bbl. NYMEX February RBOB futures surged 1.55 cents to $2.4725 gallon, with the front-month ULSD futures declining more than 2 cents to $2.6715 gallon.

Oil prices slip from 2014 highs, supply concerns limit losses - Oil slipped on Thursday as investors took profits after a recent price rally, but strong demand and short-term supply disruptions continue to support prices close to their highest since 2014. Brent crude futures settled 6 cents lower at $88.38 a barrel after dropping more than $1 in earlier trade. The global benchmark rose to $89.17 on Wednesday, its highest since October 2014. U.S. West Texas Intermediate (WTI) crude futures for February delivery settled 6 cents lower at $86.90 per barrel. The contract, which expires on Thursday, climbed to $87.91 on Wednesday. The more active March WTI contract was down 15 cents, or 0.1%, at $85.65 a barrel. "The voices of those forecasting $100 per barrel oil are getting louder by the day," Supply concerns have mounted this week after a fire temporarily halted flows through an oil pipeline running from Iraq's Kirkuk to the Turkish port of Ceyhan on Tuesday. An attack by Yemen's Houthis on the United Arab Emirates, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), heightened geopolitical risks. The market is also supported by supply shortfalls from the OPEC+ producer group comprising OPEC and allies led by Russia. The International Energy Agency (IEA) on Wednesday said that the group produced about 800,000 barrels per day (bpd) below its production targets in December. The IEA said that while the oil market could be in a significant surplus in the first quarter of this year, inventories are likely to be well below pre-pandemic levels. The agency also upgraded its 2022 demand forecast. A rise in U.S. oil inventories last week weighed on prices. Crude stocks rose by 1.4 million barrels last week while gasoline inventories rose by 3.5 million barrels and distillate stocks fell by 1.2 million barrels, according to market sources citing American Petroleum Institute figures on Wednesday.

Oil Futures Reverse Lower Friday Morning -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange declined in early trade Friday on profit taking, with both crude benchmarks retreating from seven-year highs that were spurred on concern over a tightening supply-demand disposition on the global oil market and limited OPEC+ spare capacity after several members of the alliance underproduced their quotas. Further weighing on the sentiment, U.S. commercial crude oil inventories unexpectedly increased during the week-ended Jan. 14, according to data from the Energy Information Administration, rising for the first time in nearly two months. The 514,000-barrel (bbl) build occurred as domestic refiners pulled back on crude throughputs, processing 120,000 barrels per day (bpd) less crude compared with the prior week. Gasoline stockpiles, meanwhile, jumped by a hefty 5.9 million bbl last week to 246.6 million bbl, now just 2% below the five-year average. Even though COVID-19 infections are falling across northeastern U.S. states, hospitalizations are still rising nationwide, averaging 156,505 each day -- up 54% from two weeks ago, and the most since the start of the pandemic. Thursday's EIA data suggests, however, that gasoline demand in the United States likely began a tepid recovery, surging 318,000 bpd or 4% last week from an 11-month 7.906 million bpd low reported in the previous week. Although up on the week, demand for the motor gasoline is still down compared to the fourth quarter 2021. This week, oil traders turned their focus to geopolitics after Yemen's Houthi group attacked the United Arab Emirates -- OPEC's third-largest producer. U.S.-Russia tensions were also in the news as Russia, the world's second-largest oil producer, has built up a large military presence along Ukraine's border and stoked fears of armed conflict. The International Energy Agency earlier this week in its Oil Market Report said OPEC+ will have only 2.6 million bpd of additional output left in the second half of the year should the producer group continue to unwind 2020 supply cuts and Iran remains under sanctions. IEA trimmed its forecast for non-OPEC oil supply by 100,000 bpd to 66.5 million bpd, mostly reflecting constraints on Russian oil production growth. Near 7:30 a.m. ET, West Texas Intermediate March contract fell to $84.40 bbl, down $1.14 from Thursday's settlement, and international crude benchmark Brent for March delivery dropped $1.05 to $87.28 bbl. NYMEX February RBOB futures slumped 2.42 cents to $2.4380 gallon, and the front-month ULSD contract dropped 1.74 cents to $2.6544 gallon.

Oil Fell Friday but Up on Week | Rigzone - Oil capped its fifth week of gains on continued signs of robust demand and strained crude supplies that have taken prices to seven-year highs. Futures in New York edged lower on Friday, just above $85 a barrel, but were still up 1.6% for the week. Oil neared $88 earlier this week for its highest level since 2014 as geopolitical tensions threatened greater supply outages alongside strong demand numbers, despite the omicron variant. As prices rise, much of Wall Street has been growing steadily more bullish. Morgan Stanley has joined Goldman Sachs Group Inc. in forecasting $100 oil later this year, and Bank of America reiterated that it expects oil to hit $120 a barrel by the summer. Citigroup Inc. cautioned that sticking to a bullish view could be dangerous after this quarter. Markets also dissected the strong picture of demand that multiple reports provided this week. The International Energy Agency said the oil market was looking tighter than previously thought, with demand proving resilient despite the rapid spread of omicron. Additionally, U.S. demand is still running hot, with the total volume of oil products supplied to the market at the highest for this time of year in at least 30 years, according to the U.S. Energy Information Administration. Earlier on Friday, futures fell over 3% alongside broader equity markets and raw materials including copper. While commodities have been extremely resilient at the start of the year due to supply risks and geopolitical concerns, they won’t “continue to be completely insulated,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. Crude’s bumper rally had pushed many of the main futures contracts into overbought territory on a technical basis. Brent, WTI and heating-oil futures all moved out of that zone amid the sharp price pullback early Friday. West Texas Intermediate for March fell 41 cents to settle at $85.14 a barrel in New York. Brent for March settlement slipped 49 cents to settle at $87.89 a barrel. Oil’s rally has also caught the eye of the White House as it poses a political risk for President Joe Biden. The U.S. is considering accelerating the release of strategic reserves, but many of Biden’s options to address the rally would be limited and likely short-lived.

Yemen Houthi rebels claim responsibility for deadly drone attack in Abu Dhabi - Yemen’s Houthi rebels have claimed responsibility for Monday’s drone attack in Abu Dhabi, the capital of the United Arab Emirates (UAE), that killed three people. The Houthi rebels directed the drone strike toward a key oil facility, according to The Associated Press.. The attack caused a fire at the Abu Dhabi International Airport. Two of the deceased individuals were identified by Emirati police as Indian nationals, and the third was Pakistani, according to the AP. A number of other individuals at an industrial area that houses Abu Dhabi’s state-owned energy company were wounded with minor to moderate injuries in the attack. The firm reportedly oversees a pipeline network in addition to a storage facility for an oil tanker. Three transport tankers located at the oil facility caught fire, according to the AP, while another blaze broke out at an extension of the airport. The Houthis claimed responsibility for the attack on Monday but did not disclose specifics, according to the AP. National Security Adviser Jake Sullivan on Monday said the U.S. condemns the “terrorist attack” in Abu Dhabi, adding that the U.S. will work with the UAE and international partners to hold the Houthis accountable. “Our commitment to the security of the UAE is unwavering and we stand beside our Emirati partners against all threats to their territory,” Sullivan added in a statement. The drone attack comes as Houthis are under pressure and undergoing losses amid a pushback by Yemeni government forces, the AP noted. Yemeni forces supported by the UAE have clamped back on the Houthis in crucial southern and central regions, which has stymied the rebels’ attempts to take control of the northern portion of Yemen.

Three dead, six injured in UAE fuel tanker explosions claimed by Yemen's Houthis — Three people are reportedly dead and six injured in an attack in Abu Dhabi on Monday claimed by Yemen's Houthi rebels. The attack caused fires and resulted in three petroleum tanker explosions near state oil firm ADNOC's storage facilities. The deceased are one Pakistani and two Indian nationals, according to UAE state news agency WAM. The six wounded are suffering from mild and medium injuries, WAM said, citing the Abu Dhabi police. The fires began Monday afternoon in the industrial area of Musaffah and at a construction site near Abu Dhabi International airport in the UAE capital, Abu Dhabi police said in a statement. Authorities believe the attack was carried out by drones. "Preliminary investigations suggest that the cause of the fires are small flying objects, possibly belonging to drones, that fell in the two areas. Teams from the competent authorities have been dispatched and the fire is currently being put out," the police statement said. The price of oil was unaffected, with international benchmark Brent crude trading at around $85.89 per barrel in the hours following the explosions, down about 0.2% from the previous day. The UAE is the third-largest oil producing member of OPEC, and ADNOC — the Abu Dhabi National Oil Company — controls oil operations in Abu Dhabi, home to the vast majority of the state's crude. The UAE is the world's seventh-biggest oil producer, pumping just over 4 million barrels per day. The initial statement said there were "no significant damages resulting from the two accidents", adding that an investigation has been launched. A spokesman for Yemen's Houthi movement, which since 2015 has been at war with a Saudi-led coalition that includes the UAE, said that its militants have launched a military operation in the Gulf sheikhdom and that it would reveal more details in the hours to come, according to Reuters. The UAE largely withdrew from Yemen in 2019, roughly four years into a bloody war that has plunged the Middle East's poorest country into mass starvation and fueled the proxy fighting between Saudi Arabia and its regional adversary Iran, which backs the Houthis with funding and weapons. Abu Dhabi still carries significant influence among Yemeni forces it has armed and trained to combat the Houthis, who in 2014 forced out Yemen's Saudi-backed government led by President Abdrabbuh Mansur Hadi. The Houthis have carried out thousands of cross-border missile and drone attacks into Saudi Arabia in the years since Riyadh launched its aerial assault on Yemen, which has killed tens of thousands of Yemenis.

Satellite photos show aftermath of Abu Dhabi oil site attack - (AP) — Satellite photos obtained by The Associated Press on Tuesday appear to show the aftermath of a fatal attack on an oil facility in the capital of the United Arab Emirates claimed by Yemen’s Houthi rebels. The attack brought the long-running Yemen war into Emirati territory on Monday. That conflict raged on overnight with Saudi-led airstrikes pounding Yemen’s capital, Sanaa, killing and wounding civilians. Meanwhile, fears over new disruptions to global energy supplies after the Abu Dhabi attack pushed benchmark Brent crude to its highest price in years. The images by Planet Labs PBC analyzed by the AP show smoke rising over an Abu Dhabi National Oil Co. fuel depot in the Mussafah neighborhood of Abu Dhabi after the attack. Another image taken shortly after appears to show scorch marks and white fire-suppressing foam deployed on the grounds of the depot. The Abu Dhabi National Oil Co., known by the acronym ADNOC, is the state-owned energy firm that provides much of the wealth of the UAE, a federation of seven sheikhdoms on the Arabian Peninsula and also home to Dubai. ADNOC did not respond to questions from the AP asking about the site and damage estimates from the attack. The company had said the attack happened around 10 a.m. Monday. “We are working closely with the relevant authorities to determine the exact cause and a detailed investigation has commenced,” ADNOC said in an earlier statement. The attack killed two Indian nationals and one Pakistani as three tankers at the site exploded, police said. Six people were also wounded at the facility, which is near Al-Dhafra Air Base, a massive Emirati installation that is also home to American and French forces. Another fire also struck Abu Dhabi International Airport, though damage in that attack could not be seen. Journalists have not been able to view the sites attacked and state-run media have not published photographs of the areas. Police described the assault as a suspected drone attack. The Houthis claimed they used cruise and ballistic missiles in the attack, without offering evidence.

UAE vows retaliation for Houthi-claimed attack, but questions emerge over potential Iran role - — The attack on Abu Dhabi claimed by Yemen's Houthi militants Monday threatens to derail fragile efforts at rapprochement between Gulf Arab states and Iran, even as clear attribution for the strikes — which caused fires and fuel tanker explosions that killed three people — is yet to be fully confirmed.It also could complicate the already challenging negotiations between the U.S. and Iran, the latter of which backs the Houthis financially and militarily, on reviving the 2015 Iran nuclear deal.The UAE's government has pledged to hold those responsible for the attack — suspected to have been carried out by drone — to account. Already on Tuesday, the Saudi-led coalition that's been at war in Yemen since 2015began carrying out airstrikes on camps and buildings in the capital of Sanaabelonging to Houthi militants, the coalition reported. The strikes around the Houthi-held city have so far killed around 20 people, a Houthi official told Reuters.But many regional analysts point to what they believe is likely the directing force behind the Houthis' attack: Iran. The UAE has been a part of the coalition fighting the Houthis since 2015, and though it significantly reduced its forces from the country in 2019, it still trains and supports anti-Houthi groups."I think the issue we've got to determine, first of all, was it the Houthis directly," Angus Blair, professor of practice at the University of Cairo in Egypt, told CNBC on Tuesday. "Nothing would have happened without Tehran's consent or direct engagement."Iran's foreign ministry, commenting on what it described only as "recent Yemen-linked developments," said Tuesday that "the solution to any regional crisis is not to resort to war and violence." Its spokesman did not mention the Houthis or the UAE attack, according to Reuters.While blaming Iran still remains speculative, Iran and the Gulf Arab states support opposing sides of numerous regional conflicts including those in Yemen, Syria and Lebanon. Saudi Arabia has accused Iran of attacking its oil infrastructure and of providing Yemen's Houthi rebels with missiles used to attack the kingdom, which Tehran has denied. Blair and others cite historical example to back up their suspicion. Iran has provided missiles and drones to the Houthis for several years, backing them as part of a broader proxy war with Saudi Arabia, which spearheaded an aerial assault on Yemen beginning in early 2015 after the rebel movement overran Yemen's Saudi-backed government.

US condemns ISIS attack in northeast Syria - The State Department condemned the recent ISIS attack in northeast Syria in a statement released Saturday. The attack, an attempt to free detained members of ISIS, occurred Thursday on a Provincial Internal Security Forces detention center located in Hasakah, Syria, per the statement. The Associated Press reported that the attack left dozens dead. Ned Price, spokesperson for the State Department, commended the Syrian Democratic Forces “for their swift response and continued commitment to the fight against ISIS in northeast Syria” in the statement. The statement also extended “sincere condolences” to the families of the Syrian guards who died in the attack. “This attack highlights the importance of, and the need to fully fund, the Global Coalition to Defeat ISIS’s initiatives,” the State Department’s press release read. “To improve the secure and humane detention of ISIS fighters, including by strengthening detention facility security.” It continued: “It also underscores the urgent need for countries of origin to repatriate, rehabilitate, reintegrate, and prosecute, where appropriate, their nationals detained in northeast Syria.” The State Department reaffirmed its commitment to "counter the remnants of ISIS" alongside partners in the region. “The losses sustained by our partners in these attacks are a stark reminder of the very real challenges the region continues to face,” Price wrote.

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