Sunday, July 3, 2022

US oil supplies at an 18 year low, SPR at a 36 year low, total oil + oil products supplies at a 13½ year low

After finishing June with the first monthly price drop since November, oil prices rallied Friday to finish the week higher for first time in three weeks, as production outages in Libya, Ecuador and Norway offset recession fears...after falling 0.3% to $107.62 a barrel last week as fears of a monetary policy induced recession kept the pressure on prices, the contract price for US light sweet crude for August delivery edged higher in early trade Monday following reports that the Group of Seven wealthy countries was discussing a price cap on Russian crude oil sold under Western insurance and shipping mechanisms, and then rallied due to persistent fears of supply tightness, spurred by a worsening crisis in Libya and anti-government unrest in Ecuador to settle up $1.95, or 1.8%, at $109.57 a barrel as the prospect of even tighter supplies loomed after the Group of Seven rich nations vowed to tighten the squeeze on Russian oil...oil prices rose in Asian trading Tuesday, after China slashed the quarantine time for visitors, fuelling hope for a boost to demand and then extended those gains in early trading in New York as Saudi Arabia and the United Arab Emirates appeared unlikely to be able to boost output significantly, while political unrest in Libya and Ecuador added to supply concerns, and settled $2.19 higher at $111.76 a barrel as G7 leaders agreed to explore a Russian oil price cap and supply pressures mounted, while the easing of COVID curbs in China lifted hopes for demand....oil prices moved higher for a fourth straight session on Wednesday after EIA data showed a drawdown in U.S. crude stockpiles, adding to ongoing worries of tight supplies, but tumbled in afternoon trading to close $1.98 lower at $109.78 a barrel after June US consumer confidence data fell to the lowest since February 2021 and recession fears continued to loom...oil prices edged lower early Thursday, as traders weighed concerns of global supply and a build in U.S. fuel product inventories, and then fell further after OPEC+ confirmed it would only increase output in August as much as previously announced​,​ despite tight global supplies, but made no commitment for September​,​ and settled $4.02, or 3.7% lower at $105.76 a barrel, as traders squared their positions ahead of the 3-day Fourth of July weekend...oil prices extended those losses early Friday as lingering fears of a recession weighed on sentiment and put the benchmarks on track for their third straight weekly loss, but then rallied as supply outages in Libya and an expected shutdown in Norway outweighed expectations that an economic slowdown could dent demand and settled $2.67 higher at $108.43 a barrel, thus managing to salvage an 0.8% increase on the week...

meanwhile, natural gas prices finished sharply lower for a third straight week, as the damage at the Freeport LNG export terminal allowed ​even ​more gas to be added to domestic supplies than had been expected...after falling 10.4% to an eleven week low of $6.220 per mmBTU last week as the prospect of lower LNG exports more than offset rising domestic demand, the contract price of natural gas for July delivery rose 28.1 cents to $6.501 per mmBTU on Monday, as an early price slide on the outlook for cooler weather gave way to a technical bounce midday ahead of options expirations on the next day....July contract prices were up another 5.0 cents before that contract expired at $6.5510 per million British thermal units on Tuesday, while the contract price of natural gas for August delivery, which would be the quoted front month price the next day, settled 2.4 cents higher at $6.570 per mmBTU on a preliminary report of a drop in daily output and forecasts for hotter weather over the next two weeks...with price quotes now referencing the August contract, natural gas reversed and settled 7.2 cents lower at $6.498 per mmBTU on Wednesday, on expectations that the storage build would be near normal despite hotter weather, as the Freeport gas export plant outage left more gas available to stockpile for next winter...while natural gas prices initially moved higher early Thursday, the bottom fell out when the EIA reported ​a ​larger-than-expected storage injection, and as an update on the Freeport LNG outage sent prices tumbling further to levels not seen in months, and ended the session $1.074, or 16.5% lower at $5.424 per mmBTU​.​...prices recovered part of those losses on Friday, rising 30.6 cents to $5.730 per mmBTU on a technical bounce following the big price drop in the prior session, and on forecasts for hotter weather over the next two weeks than had been previously expected, but they still ended 7.9% lower on the week, while the August gas contract, which had finished the prior week at $6.281 per mmBTU​,​ logged an 8.8% loss...

The EIA's natural gas storage report for the week ending June 24th indicated that the amount of working natural gas held in underground storage in the US rose by 82 billion cubic feet to 2,251 billion cubic feet by the end of the week, which left our gas supplies 296 billion cubic feet, or 11.6% below the 2,547 billion cubic feet that were in storage on June 24th of last year, and 322 billion cubic feet, or 12.5% below the five-year average of 2,573 billion cubic feet of natural gas that have been in storage as of the 24th of June over the most recent five years....the 82 billion cubic foot injection into US natural gas working storage for the cited week was more than the average forecast for a 72 billion cubic foot injection from an S&P Global Platts survey of analysts, and higher than the 73 billion cubic feet that were added to natural gas storage during the corresponding week of 2021, and also more than the average injection of 73 billion cubic feet of natural gas that had typically been added to our natural gas storage during the same week over the past 5 years....  

The Latest US Oil Supply and Disposition Data from the EIA

The US oil data reported this week by the US Energy Information Administration includes updated data for the week ending June 17th, which should have been published last week but wasn't due to a hardware failure, and the new data for the week ending June 24th, published on schedule this week...while we're going to cover that most recent update as we usually do, we'll also try to include the most important changes for the week ending June 17th in our narrative...

The EIA's data for the week ending June 24th showed that after a big increase in our refinery throughput and a decrease in our oil imports, and even after the addition of more than a half million barrels per day in oil supplies that could not be accounted for and another big oil withdrawal from the SPR, we had to pull oil out of our stored commercial crude supplies for the 5h time in 7 weeks, and for the 19th time over the past 31 weeks…our imports of crude oil fell by an average of 228,000 barrels per day to an average of 5,998,000 barrels per day, after falling by an average of 759,000 barrels per day during the week ending June 17th, while our exports of crude oil fell by 192,000 barrels per day to 3,380,000 barrels per day, after falling by 153,000 barrels per day during the prior week, which meant that our trade in oil worked out to a net import average of 2,618,000 barrels of oil per day during the week ending June 24th, 36,000 fewer barrels per day than the net of our imports minus our exports during the week ending June 17th…over the same period, production of crude from US wells reportedly rose by 100,000 barrels per day to 12,100,000 barrels per day, after being unchanged during the week ending June 17th, 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 14,718,000 barrels per day during the June 24th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 16,666,000 barrels of crude per day during the week ending June 24th, an average of 403,000 more barrels per day than the amount of oil than our refineries processed during the week ending June 17th, while over the same period the EIA’s surveys indicated that a net of 1,387,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US, after an oil storage drawdown of 1,026,000 barrels of crude per day during the week ending June 17th...so based on that reported & estimated data, the crude oil figures from the EIA for the week ending June 24th appear to indicate that our total working supply of oil from storage, from net imports and from oilfield production was 560,000 barrels per day less than what our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+560,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed....even so, 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 1,387,000 barrel per day decrease from our overall crude oil inventories left our total oil supplies at 913,434,000 barrels at the end of the week, our lowest oil inventory level since March 12th, 2004, and therefore at an 18 year low….our oil inventory decreased this week as 395,000 barrels per day were being pulled out of our commercially available stocks of crude oil and 993,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, and came after 55,000 barrels per day were pulled out of our commercially available stocks and 971,000 barrels per day of oil were pulled out of our Strategic Petroleum Reserve during the week ending June 17th....those draws on the SPR would have included an emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump", that is expected to supply 1,000,000 barrels of oil per day to commercial interests from now up to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising further at least up until that time, as well as the previous 30,000,000 million barrel release from the SPR to address the initial Russian supply related shortfalls....the administration's earlier plan to release 50 million barrels from the SPR to incentivize US gasoline consumption wrapped up in May.... including that, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 158,279,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 23 months, and as a result the 497,868,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since April 25th, 1986, or at a 36 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's SPR releases....now the total 180,000,000 barrel drawdown expected over the current six month release program to November will remove almost a third of what remained in the SPR when the program started, and leave us with what would be less than a 20 day supply of oil at today's consumption rate... 

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,341,000 barrels per day last week, which was 5.1% less than the 6,683,000 barrel per day average that we were importing over the same four-week period last year….this week’s crude oil production was reported to be 100,000 barrels per day higher at 12,100,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,700,000 barrels per day, even as Alaska’s oil production was 25,000 barrels per day lower at 404,000 barrels per day but had no impact on the final rounded national 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 still 7.6% below that of our pre-pandemic production peak, but was 43.6% 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 95.0% of their capacity while using those 16,666,000 barrels of crude per day during the week ending June 24th, up from the 94.0% utilization rate during the week ending June 17th, and bit higher than the normal refinery utilization rate for early summer…the 16,666,000 barrels per day of oil that were refined this week were 2.3% more than the 16,299,000 barrels of crude that were being processed daily during week ending June 25th of 2021, but 3.9% less than the 17,337,000 barrels that were being refined during the prepandemic week ending June 21st, 2019, when refinery utilization was at a fairly normal 94.2% for late June...

With the increase in the amount of oil being refined this week, gasoline output from our refineries was also higher, increasing by 143,000 barrels per day to 9,497,000 barrels per day during the week ending June 24th, after our gasoline output had decreased by 665,000 barrels per day during the week ending June 17th…this week’s gasoline production was 0.8% less than the 9,926,000 barrels of gasoline that were being produced daily over the same week of last year, and 9.7% below our gasoline production of 10,512,000 barrels per day during the week ending June 21st, 2019, ie, during the year before the pandemic impacted US gasoline output....at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 85,000 barrels per day to 5,136,000 barrels per day, after our distillates output had increased by 93,000 barrels per day during the week ending June 17th…while our distillates output was 2.1% more than the 5,029,000 barrels of distillates that were being produced daily during the week ending June 25th of 2021, it was still 3.2% less than the 5,371,000 barrels of distillates that were being produced daily during the week ending June 21st, 2019...

With the increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the second consecutive week, after falling 18 out of the prior 19 weeks, increasing by 2,645,000 barrels to 221,608,000 barrels during the week ending June 24th, after our gasoline inventories had increased by 1,489,000 barrels during the week ending June 17th...our gasoline supplies increased this week even though the amount of gasoline supplied to US users increased by 417,000 barrels per day to 8,922,000 barrels per day, after domestic gasoline supplied had fallen 588,000 barrels per day during the week ending June 17th, while our imports of gasoline rose by 41,000 barrels per day to 824,000 barrels per day, and while our exports of gasoline rose by 39,000 barrels per day to 969,000 barrels per day ...but after 18 inventory drawdowns over the past 21 weeks, our gasoline supplies were still 8.3% lower than last June 25th's gasoline inventories of 241,572,000 barrels, and 8% below the five year average of our gasoline supplies for this time of the year…

After the recent increases in our distillates production, our supplies of distillate fuels increased for the 6th time in seven weeks and for the 16th time in forty-three weeks, rising by 2,559,000 barrels to 112,401,000 barrels during the week ending June 24th, after our distillates supplies had increased by 133,000 barrels during the week ending June 17th….our distillates supplies rose by more this week than last because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 294,000 barrels per day to 3,568,000 barrels per day, while our exports of distillates rose by 35,000 barrels per day to 1,299,000 barrels per day, and while our imports of distillates rose by 2,000 barrels per day to 97,000 barrels per day....but after forty-two inventory withdrawals over the past sixty-three weeks, our distillate supplies at the end of the week were still 18.0% below the 137,076,000 barrels of distillates that we had in storage on June 25th of 2021, and still about 20% below the five year average of distillates inventories for this time of the year…

Meanwhile, with the increase in oil going to refineries and the decrease in our oil imports, and even after this week's big release of crude from our Strategic Petroleum Reserve, our commercial supplies of crude oil in storage fell for the 7th time in 14 weeks and for the 32nd time in the past year, decreasing by 2,762,000 barrels over the week, from 418,328,000 barrels on June 17th to 415,566,000 barrels on June 24th, after our commercial crude supplies had decreased by 386,000 barrels over the week ending June 17th…after this week’s decrease, our commercial crude oil inventories remained about 13% below the most recent five-year average of crude oil supplies for this time of year, but about 18% above the average of our crude oil stocks as of the fourth weekend of June 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 commercial crude oil inventories had jumped to record highs during the Covid lockdowns of spring 2020, and then jumped again after last year's winter storm Uri froze off US Gulf Coast refining, our commercial crude supplies as of this June 24th were 8.1% less than the 452,342,000 barrels of oil we had in commercial storage on June 25th of 2021, and were 22.1% less than the 533,527,000 barrels of oil that we had in storage on June 26th of 2020, and 11.3% less than the 468,491,000 barrels of oil we had in commercial storage on June 28th of 2019…

Finally, with our inventories of crude oil and our supplies of all products made from oil remaining near multi year lows, we are continuing to keep track of 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 thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 602,000 barrels this week, from 1,679,111,000 barrels on June 17th to 1,678,509,000 barrels on June 24th, after our total inventories had fallen by 3,068,000 barrels during the week ending June 17th....that left our total liquids inventories down by 109,924,000 barrels over the first 25 weeks of this year, and at the lowest since October 24th, 2008, or at a 13 1/2 year low...

This Week's Rig Count

The number of drilling rigs running in the US decreased for just the second time in 36 weeks and for the 8th time over the prior 92 weeks during the week ending July 1st, and still remained 5.4% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US decreased by 3 to 750 rigs this past week, which was still 275 more rigs than 475 rigs that were in use as of the July 2nd report of 2021, but was also 1,179 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 increased by 1 to 595 oil rigs during the past week, after rigs targeting oil had risen by 10 during the prior week, and there are 219 more oil rigs active now than were running a year ago, even as they still amount to just 37.0% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 12.9% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations fell by 4 to 153 natural gas rigs, which was still up by 54 natural gas rigs from the 99 natural gas rigs that were drilling during the same week a year ago, even as they were still only 9.5% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition to rigs targeting oil and natural gas, Baker Hughes continues to show two "miscellaneous" rigs still active; one is a rig drilling vertically for a well or wells intended to store CO2 emissions in Mercer county North Dakota, and the other is also a vertical rig, drilling 5,000 to 10,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track...a year ago, there were no such "miscellaneous" rigs running...

The offshore rig count in the Gulf of Mexico was increased by 1 to 16 rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana waters....that's two more than the 14 offshore rigs that were active in the Gulf a year ago, when 13 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas.…in addition to rigs drilling in the Gulf, we also have an offshore rig drilling in the Cook Inlet of Alaska, where natural gas is being targeted at a depth greater than 15,000 feet, while year ago, there were no offshore rigs other than those deployed in the Gulf of Mexico....

in addition to rigs offshore, we continue to have 3 water based rigs drilling through inland bodies of water this week, including a directional rig drilling for oil at a depth between 10,000 and 15,000 feet, inland in the Galveston Bay area, and two directional inland water rigs drilling for oil in Terrebonne Parish, Louisiana, one of which is targeting a formation greater than 15,000 feet in depth, while the other is shown drilling to between 10,000 and 15,000 feet... during the same week of a year ago, there were two such "inland waters" rig deployed...

The count of active horizontal drilling rigs was down by three to 682 horizontal rigs this week, which was still 253 more rigs than the 429 horizontal rigs that were in use in the US on July 2nd of last year, but less than half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....at the same time, the vertical rig count was down by 2 to 25 vertical rigs this week, while those were still up by 9 from the 16 vertical rigs that were operating during the same week a year ago…on the other hand, the directional rig count was up by two to 43 directional rigs this week, and those were up by 13 from the 30 directional rigs that were in use on July 2nd 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 July 1st, the second column shows the change in the number of working rigs between last week’s count (June 24th) and this week’s (July 1st) count, the third column shows last week’s June 24th 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 2nd of July, 2021....

note that even though the Cana Woodford count was down by 5 oil rigs, the Oklahoma count was unchanged due to oil rig additions in the Arkoma Woodford and the Ardmore Woodford, and three oil rig additions in basins that Baker Hughes doesn't track....to account for the drop of four rigs in the Eagle Ford, we check the Rigs by State file at Baker Hughes for the changes in that area, where we find that four rigs were pulled out of Texas Oil District 1, but that a rig was added in Texas Oil District 2 and another rig was added in Texas Oil District 3....since the Eagle Ford shale was down by 4 rigs​ with the removal of two oil ​rigs ​and two gas ​rigs, those 4 must have come out of District 1, while the additions in Districts 2 and 3 must have been targeting basins that that Baker Hughes doesn't track in the same region....with those four rig removals, the Eagle Ford is left with 8 natural gas rig and 60 rigs targeting oil​ still drilling​...

in the Texas oil districts covering the Permian basin, we find that two rigs were added in Texas Oil District 7C, which includes the southern counties of the Permian Midland, but that rigs were pulled out of Texas Oil District 8, which covers the core Permian Delaware, from Texas Oil District 8A, which includes the northern counties of the Permian Midland, and from Texas Oil District 7B, which includes the easternmost counties of the Permian Midland...since that ​appears to indicate that the Texas Permian rig count was down by one, it's reasonable to conclude that the rig added in New Mexico must have been added in the western Permian Delaware in the southeast corner of that state...elsewhere in Texas, a rig was added in Texas Oil District 5, which appears to be targeting a basin that Baker Hughes doesn't track...

changes ​in drilling activity ​elsewhere include the offshore oil rig added in Louisiana's waters, the only change in that state, and rigs pulled out of Utah's Uintah basin, Ohio's Utica shale, and Pennsylvania's Marcellus...the latter two were natural gas rigs, and when added to the two natural gas rigs pulled out of the Eagle Ford, ​they ​account for this week's four gas rig decrease....

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Austin Master Services responds to complaint - Martins Ferry Times Leader - Austin Master Services, an environmental services firm specializing in radiological waste remediation, submitted its response to Martins Ferry City Council related to the verified complaint submitted by the Concerned Ohio River Residents group. “The team at Austin Master Services has been very receptive and cooperative in developing this response,” Martins Ferry Mayor John Davies said. “Their willingness to meet and discuss this matter has been very helpful as we continue our efforts to ensure the highest levels of quality among our water system.”According to a statement provided by Chris Martin of Agility PR Services, the Austin Master Services response includes clarification of the facility location regarding the Martins Ferry Source Water Protection Plan, the group’s designation of the facility and the processes that occur on site, secondary containment systems within the facility, perceived waste ponds, underground sources of contamination, and fire control.“Austin Master Services operates according to the Ohio Department of Natural Resources Chief’s Order and works with governmental agencies who have jurisdiction over their process and facility. The CORR group has no jurisdiction or oversight and continues to attempt to create issues when all authorized inquiries have resulted in a lack of findings,” said Martin, spokesperson for Austin Master Services. The Martins Ferry Austin Master facility is located in a former steel mill along First Street and processes waste from Gas and oil drilling and fracking operations. The Concerned Ohio River Residents group has expressed concern that radioactive contaminants from the facility may impact the city’s water source.

Commissioners did their job - Marietta Times -Kudos to the Washington County Commissioners for stepping up on behalf of their constituents on the issue of injection wells. All three commissioners (President Charlie Schilling, Jamie Booth, and Kevin Ritter) were in attendance at the June 2 meeting regarding the proposed additional injection well in Little Hocking, which was scheduled by the Ohio Department of Natural Resources (Division of Oil and Gas Resources Management).At that meeting 34 people offered comments and questions about the proposed injection well #2 –not one person spoke in favor of the application, which was submitted by an out-of-state company.The format of the meeting which was set by ODNR officials, made a mockery of the term, “public meeting.”There was no opportunity to get questions answered; when one of us asked the ODNR official who presided over the meeting about the format, he replied, “There will be no dialogue.”One of the major reasons that ODNR even agreed to a public meeting was that the county commissioners requested it.After the public meeting Commission President Charlie Schilling, arranged a meeting with the director of ODNR and officials from the Division of Oil and Gas Resources Management at their offices in Columbus.At this June 16 meeting Mr. Schilling asserted his interest in obtaining answers to the many questions from his constituents about the proposed injection well and the whole process of public review of injection well applications.He was able to extract a commitment from these officials for modifying the format of public meetings on injection wells so that questions can be addressed and for informing relevant county commissioners and township trustees when an application for an injection well is first submitted to ODNR (in the case of the application in question the applicant submitted documents in March 2021; ODNR reviewed the application for a full year before making the public announcement about the application, and gave the public–including public officials–30 days to respond).Fracking waste, aka brine water, contains carcinogenic substances, chemical toxic metals, and when they are injected into permeable rock, they can migrate up to abandoned oil and gas wells. This seepage of brine waste has led to the damage and destruction of oil and gas production wells. Leaking injection wells can also contaminate aquifers (containing drinking water), rivers and lakes, thereby pose serious threats to human health. Washington County has had enough with serving as the trash heap for fracking waste from eastern Ohio, Pennsylvania, and West Virginia.

Coretrax Completes World Record Project at 3 Wells in Utica Shale - Coretrax describes itself as a global well integrity and production optimization expert. Last week the company announced it had completed a world record-breaking project in the Utica Basin. Coretrax successfully deployed its ReLineMNS system across three wells and expanded a total of more than 27,000 feet of tubulars (pipelines) across the campaign. With one of the expandable liners reaching 9,000 feet in its expansion, all installations smashed the previously held record of 7,243 feet by at least 1,000 feet.

Ascent Resources enters bolt-on acquisition of Utica shale assets - Ascent Resources LLC, Oklahoma City, has agreed to acquire all Utica shale assets in Ohio from an undisclosed seller for $270 million.The acquisition expands the private company’s asset base in the Ohio Utica shale play by about 26,800 net acres and increases net production by about 60 MMcfed, the company said in a release July 1. Ascent already holds working interests in a material portion of the acquired production, it continued.The deal comes with an inventory of identified drilling locations in both the Utica and Marcellus, and requires no incremental overhead or external financing, the company said. Ascent Resources currently holds a contiguous acreage position of about 337,000 net leasehold acres, including about 73,000 mineral acres, in the core of the southern Utica Shale, primarily in Belmont, Jefferson, Guernsey, Harrison, and Noble counties Ohio. The company also owns royalty interests in about 5,700 mineral acres being developed by third-party operators.

Gulfport Energy considers merger with Encino Energy – Bloomberg -Gulfport Energy is considering merging with closely held Encino Energy after discussions with rival oil and gas explorer Ascent Resources collapsed, Bloomberg reported Thursday. Gulfport and Encino have discussed a stock-based deal, according to the report, which said talks are at an early stage and a deal is not imminent. Gulfport, which emerged from bankruptcy last year, is active in Ohio's Utica shale, where Encino also has operations after an affiliate bought Chesapeake Energy's operations in the basin for ~$1.9B in 2018. Bloomberg reported in March that Gulfport had discussed merging with Ascent in a deal that would value the combined company at ~$8B.

Duke Energy seeks regulatory review of natural gas rates - Duke Energy Ohio announced Thursday it is requesting the Public Utilities Commission of Ohio review its natural gas rates, which it plans to increase. The company says the regulatory review request is because of infrastructure improvements to enhance service to customers. Duke Energy Ohio is a natural gas service provider to more than 450,000 customers in nine counties in Ohio, including Butler, Warren and Hamilton counties. It is also the main electric provider in these areas. The company is seeking approval to increase its current natural gas base rates by approximately $48.8 million. “Under the company’s proposal, residential customers who use an average of 57 Ccf (100 cubic feet) per month will see a $6.08 — or 6.7% — increase on their monthly natural gas bills, from $90.14 to $96.22,” Duke officials said. “This proposed increase will vary depending on the amount of natural gas a customer uses, a customer’s rate type and the prevailing cost of the natural gas commodity,” the company stated in a news release.

PA Enviro Left Fails to Block On-Site Water Recycling for Fracking | Marcellus Drilling News - The Pennsylvania Dept. of Environmental Protection (DEP) published a final regulation over the weekend–at the specific direction of the PA legislature–that allows shale drillers to operate temporary waste process facilities at shale pads and other locations. The regs, called Residual Waste General Permit WMGR163, are aimed at allowing Marcellus (and Utica) drillers to clean up and use brine and wastewater coming from the ground so it can be reused for fracking. The new provision cuts down on the need for freshwater in fracking. Predictably, anti-fossil fuelers are not happy.

Gas Piped Into Homes Contains Benzene and Other Risky Chemicals, Study Finds - The natural gas delivered to homes contains low concentrations of several chemicals linked to cancer, a new study found. Researchers also found inconsistent levels of odorants — substances that give natural gas its characteristic “rotten egg” smell — which could increase the risk of small leaks going undetected. The study, which was published in the journal Environmental Science & Technology, adds to a growing body of research that links the delivery and use of natural gas to detrimental consequences for public health and the climate. Most prior research has documented the pollutants present where oil and gas extraction takes place, but there are “fewer studies as you work your way down the supply chain,” said Drew Michanowicz, the lead author of the study, looking at “where we actually use it, in our homes.” Over 16 months, researchers led by the Harvard T.H. Chan School of Public Health collected 234 samples of unburned natural gas from 69 homes in the Boston metropolitan area that received natural gas from three suppliers. They found 21 “air toxics” — an Environmental Protection Agency classification of hazardous pollutants known or suspected to cause cancer, birth defects or adverse environmental effects — including benzene, which was detected in 95 percent of the samples. Short-term exposure to high levels of benzene in particular could lead to drowsiness, dizziness, headaches and irritation of the eyes and skin, according to the Centers for Disease Control and Prevention. Longer-term exposure can increase the risk of blood disorders and certain cancers like leukemia. The highly flammable chemical is colorless or light yellow, and is found in products made from coal and oil including plastics, resins and nylon fibers, and also some types of rubbers, dyes and pesticides. It is also regularly found in vehicle exhaust, tobacco smoke and gasoline. The concentrations of benzene that the researchers found in the natural gas samples were “much lower compared to the amount in gasoline,” Dr. Michanowicz said on Friday during a conference call with reporters. Even so, he said, the finding is concerning since “natural gas is used so widely in society and in our indoor spaces.”

Equitrans requests 4-year Mountain Valley pipeline extension - Equitrans Midstream Corp. has requested a 4-year extension from the US Federal Energy Regulatory Commission (FERC) to place its 303-mile Mountain Valley natural gas pipeline into service. Its current deadline is Oct. 13, 2022. The project is 94% complete but has been delayed by multiple legal challenges and regulatory issues. Equitrans says it still plans to finish construction in second-half 2023. Mountain Valley would carry 2 bcfd of natural gas from production in northern West Virginia through Virginia to an interconnect near the North Carolina border. Aboveground infrastructure has been completed and Mountain Valley says it has been actively addressing steps necessary to restore required permits from the US Army Corps of Engineers, Forest Service, and Bureau of Land Management. It plans to submit its species analysis to the Fish and Wildlife Service in early July 2022. Earlier this year, FERC issued an order amending the project’s certificate to permit Mountain Valley to (OGJ Online, Apr. 11, 2022):

  • • Change the crossing for 183 waterbodies and wetlands at 120 locations from open-cut to trenchless.
  • • Slightly shift the permanent right-of-way at mileposts 0.70 and 230.8 to avoid one wetland and one waterbody, respectively.
  • • Conduct 24-hr construction activities at eight trenchless crossings.

FERC conditioned the amendment order on Mountain Valley completing construction by the Oct. 13, 2022. Ongoing litigation and remand proceedings related to several permits and authorizations, however, prompted Mountain Valley to request an extension to Oct. 13, 2026, to place the pipeline into service. The project remains fully subscribed under binding long-term agreements. Initial plans called for Mountain Valley’s completion in fourth-quarter 2018 at a cost of $3.7 billion. Its estimated cost has since grown to $6.6 billion. Equitrans owns 48% of the project. Partners include NextEra Energy Inc., Consolidated Edison Inc., AltaGas Ltd., and RGC Resources Inc.

D.C. Circuit rejects NEPA challenge to Va. pipeline expansion - Federal judges yesterday dismissed environmentalists’ challenge of a key approval for an extension of the embattled Mountain Valley natural gas pipeline.In its ruling, the U.S. Court of Appeals for the District of Columbia Circuit found that the Federal Energy Regulatory Commission had made adequate determinations on the Southgate extension’s financial and environmental impacts.“Because the Commission’s decisions on both scores were reasonable and supported by substantial evidence, we deny the petition for review,” wrote Judge Robert Wilkins, who was appointed during the Obama administration.Wilkins was joined in his decision by Chief Judge Sri Srinivasan, another Obama appointee, and Judge Justin Walker, a Trump pick.During oral arguments earlier this year, the panel of judges seemed inclined to side with FERC and the pipeline developer in the fight over Southgate, which would lengthen Mountain Valley’s 304-mile route through West Virginia and Virginia another 75 miles into North Carolina (Energywire, Jan. 20).The Sierra Club and environmental challengers had argued — as now-FERC Chair Richard Glick did in an earlier dissent — that FERC should not have granted Southgate, which is an extension of an existing pipeline, a higher rate of return usually given to new projects that require investors to absorb additional risk.Challengers also claimed that FERC fell short of its requirements under the National Environmental Policy Act when it analyzed Southgate’s sedimentation and erosion impacts.The D.C. Circuit disagreed on both counts.“NEPA does not mandate that the Commission formulate a specific mitigation plan, only that it discuss mitigation ‘in sufficient detail to ensure that environmental consequences have been fairly evaluated,’” Wilkins wrote.Despite yesterday’s D.C. Circuit decision, Mountain Valley still faces “strong headwinds” inside and outside of the courts, the Sierra Club said in a statement yesterday.“Unfortunately, today’s decision will hit vulnerable communities the hardest and sacrifice our water quality, all for the benefit of wealthy investors,” said Caroline Hansley, Sierra Club senior campaign representative. “This project is not needed and is years behind schedule — with no completion in sight, billions over budget, and still lacking multiple necessary permits.”Backers of the project have said the project is essential for energy security and reliability (Energywire, April 11).Mountain Valley has recently lost key permits in the 4th U.S. Circuit Court of Appeals, and the D.C. Circuit is currently considering a challenge to FERC’s decision to extend the main project’s certificate (Energywire, April 8).Other natural gas pipelines — like the Atlantic Coast project, which would have followed a route similar to Mountain Valley’s — have recently been canceled after suffering comparable setbacks. Mountain Valley developers last week asked the commission for four more years to complete the project, citing “ongoing litigation” (Energywire, June 27).

Kinder Morgan’s TGP receives FERC approval for producer-certified gas pooling service proposal - Tennessee Gas Pipeline Co. LLC (TGP), a Kinder Morgan Inc. subsidiary, received approval July 1 for its producer-certified gas (PCG), or responsibly sourced gas (RSG), aggregation pooling service from the Federal Energy Regulatory Commission (FERC). The service is now available at all pooling points across the TGP system. Kinder Morgan said in a release July 1. PCG is conventional natural gas sourced from production facilities that have been certified by a qualified third party to meet certain environmental, social and governance standards that typically focus on management practices for methane emissions, water usage, and community relations, according to Kinder Morgan. The service is designed to enable shippers on TGP to purchase and sell PCG supply at non-physical pooling locations, ultimately serving end-users, utilities, power plants and LNG facilities connected to the TGP system. Parties who have obtained certifications from qualified third-party organizations are supplying the PCG needed for the pooling service, and the supply is expected to grow, the company continued. TGP is an 11,760-mile pipeline system that transports natural gas supplied from the northeast US to end-use demand markets including New York City and Boston in the Northeast, the Louisiana and Texas Gulf Coast, and Mexico.

Technicals Drive Natural Gas Futures Rebound as Cash Rises on Lingering Heat - An early slide along the Nymex natural gas futures curve gave way to a technical bounce midday, ultimately boosting the July contract by 28.1 cents to a $6.501/MMBtu settlement. August futures climbed 26.5 cents to $6.546. Spot gas prices also were mostly higher after the weekend, even as temperatures moderated from the unusually high levels seen last week. NGI’s Spot Gas National Avg. picked up 10.5 cents to reach $6.085. With the expiration of the July futures contract looming on Tuesday, some renewed volatility hit the market as traders weighed a suite of fundamentals that were both partly bullish/partly bearish. On the weather front, after a steamy June, outlooks showed cooler weather ahead. NatGasWeather said weather systems and associated cool fronts are forecast to sweep across the interior United States through the middle of the week. Highs in the 70s and 80s are expected across the region, including deep into Texas. There should be some regionally strong demand over the West Coast, as well as South Texas and the Southeastern coast. However, national demand is expected to hold near normal levels during this time. By the end of the week, though, the hot upper ridge is expected to spring back, according to NatGasWeather. Heat is seen gaining in coverage over much of the country, and continuing through at least July 10. The forecast views the pattern as “relatively bullish,” but said it would be more intimidating if not for the ongoing outage at the Freeport liquefied natural gas (LNG) facility. The outage, which leaves 2 Bcf/d of gas available to meet demand or inject into storage, is working to limit the impact of widespread above-normal temperatures. However, NatGasWeather noted that the projected heat still should prevent storage deficits from improving through the first half of July. Therefore, it expects deficits to remain near 340 Bcf. “As we’ve been stating, the more days with above-normal temperatures in July and August, the shorter the duration the Freeport LNG outage will have to improve supplies,” the forecaster said. “As such, while the near-term impacts to prices from Freeport going offline led to strong selling, if heat holds most days through August, deficits will still have an opportunity to increase ahead of winter if the outage doesn’t extend past 90 days.” Production, meanwhile, remains key to price direction as the market looks for signs of sustained growth, according to Aegis Hedging Solutions LLC. Output hit a year-to-date high of 97.36 Bcf/d over the weekend, but top-day data indicated a retreat on Monday.

July Nymex Natural Gas Contract Loses Momentum, but Still Expires Nickel Higher - Natural gas futures extended their rally as a hotter long-range forecast, a dip in production and bullish technical momentum lifted the prompt month ahead of expiration. The July Nymex contract rolled off the board at $6.551/MMBtu, up 5.0 cents on the day. The August contract, which moves to the front of the Nymex curve on Wednesday, settled 2.4 cents higher at $6.570. Spot gas prices also strengthened, with hefty gains of 50 cents or so across several U.S. locations. NGI’s Spot Gas National Avg. climbed 39.5 cents to $6.480. Fresh off a 28.1-cent jump for futures on Monday, bulls were eager to keep the momentum going at the start of Tuesday’s session. Fundamentals lent a hand in boosting the July 2022 contract on its final day on the Nymex strip. The prompt month surged to a $6.765 intraday high before a sell-off in the last half hour of trading. Weather data remained supportive by trending hotter for the July 1-12 period, according to NatGasWeather. The forecaster said a strong upper high pressure is expected to rule most of the Lower 48, with daytime temperatures reaching the upper 80s to 100s for strong national demand. Although the midday model run gave back a small amount of projected demand, the pattern still leaned bullish overall. Tropical Disturbance Meanwhile, the National Hurricane Center (NHC) was monitoring a tropical disturbance in the northern Gulf of Mexico (GOM). As of Tuesday afternoon, the system had a 40% chance of cyclone formation in the next 48 hours as it remained unorganized. However, some additional development is possible as it moves slowly westward or west-southwestward and approaches the Texas coast in the next two days.

U.S. natgas down 1% as Freeport LNG outage leaves more fuel for storage (Reuters) - U.S. natural gas futures fell about 1% on Wednesday on expectations last week's storage build will be near normal despite hotter than usual weather as the Freeport liquefied natural gas export plant left more fuel available for utilities to stockpile for next winter. Prices dropped despite a drop in daily output this week and hotter weather forecasts through early July. Analysts forecast U.S. utilities added 74 billion cubic feet (bcf) of gas to storage during the week ended June 24, about even with 73 bcf in the same week last year and a five-year (2017-2021) average increase of 73 bcf. On its first day as the front month, gas futures for August delivery on the New York Mercantile Exchange fell 7.2 cents, or 1.1%, to settle at $6.498 per million British thermal units (mmBtu). With the U.S. Federal Reserve expected to keep raising interest rates, investors pared risky assets further, and open interest in NYMEX futures NG-TOT fell on Tuesday to its lowest since July 2016 for a second day in a row. So far this year, U.S. gas futures are up about 75% as much higher prices in Europe and Asia feed strong demand for U.S. liquefied natural gas (LNG) exports. Russia's Feb. 24 invasion of Ukraine stoked fears Moscow might cut gas supplies to Europe. Gas was trading around $42 per mmBtu in Europe and $37 in Asia. Data provider Refinitiv said average gas output in the U.S. Lower 48 states slid to 95.1 billion cubic feet per day (bcfd) so far in June from 95.2 bcfd in May, off the monthly record of 96.1 bcfd in December 2021. Daily output on Wednesday was on track to drop 2.1 bcfd over the past four days to a preliminary two-week low of 94.0 bcfd. It hit a six-month high of 96.1 bcfd on Saturday. Preliminary data is often revised later in the day. With hotter weather coming, Refinitiv projected average U.S. gas demand including exports would rise from 94.2 bcfd this week to 95.5 bcfd next week; that forecast was lower than Refinitiv's outlook on Tuesday. The amount of gas flowing to U.S. LNG export plants dropped from an average of 12.5 bcfd in May to 11.2 bcfd so far in June and off the monthly record of 12.9 bcfd in March. The June 8 outage at Freeport LNG's plant in Texas is expected to last about three months. Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 bcfd of gas before it shut, so a 90-day outage would leave around 180 billion cubic feet (bcf) of gas available to the U.S. market.

US natural gas working stocks increased by 82 Bcf during the week ended June 24, reducing the deficit to the five-year average to its lowest point yet this injection season and helping plunge natural gas futures to a three-month low. Storage inventories rose to 2.251 Tcf in the week ended June 24, the US Energy Information Administration reported on June 30. The weekly build outpaced even the highest estimate received in an S&P Global Commodity Insights' survey of analysts, which called for a 72 Bcf weekly injection. Survey responses ranged from a low of 65 Bcf to a high of 79 Bcf, a far narrower range than those observed in recent weeks. The injection was more than the 73 Bcf build reported during both the corresponding week in 2021 and the five-year average, according to EIA data. As a result, stocks were 296 Bcf, or 11.6%, below the year-ago level of 2.547 Tcf and 322 Bcf, or 12.5% lower than the five-year average of 2.573 Tcf. The storage deficit to the five-year average last fell below 13% in February, making the most recent report the lowest level since injection season began. June has seen a tug-of-war emerge for the balance between supply and demand as market watchers attempt to reconcile growing production, weak LNG feedgas demand, and record-breaking heat waves that have spiked gas-fired power demand. The uncertainty has kept NYMEX Henry Hub futures in a holding pattern in recent trading, with the contract settling within a tight $6-$7/MMBtu range over the last eight sessions. The above-average June 30 weekly storage report helped break the stalemate, with NYMEX Henry Hub August plummeting to levels not seen since late March. The prompt-month contract closed at $5.424/MMBtu on June 30, down $1.074 from its prior-day settlement, preliminary data from CME Group showed.

Natural Gas Futures Take Beating, Drop $1-Plus on Storage, Freeport News -- Natural gas futures took one (actually two) on the chin Thursday as a larger-than-expected storage injection and an update regarding the Freeport liquefied natural gas (LNG) outage sent prices tumbling to levels not seen in months. The August Nymex futures contract plummeted $1.074 to $5.424/MMBtu. September lost $1.101 cents to land at $5.392. Spot gas prices also softened as rains were expected along the Texas coast for the remainder of the week, driving cooling demand lower. NGI’s Spot Gas National Avg. fell 38.0 cents to $6.230. After a relatively quiet opening for Thursday’s trading session, the latest government inventory data quickly changed the game. The Energy Information Administration (EIA) reported another larger-than-expected 82 Bcf injection into storage, confirming looser balances as a result of an explosion at the Freeport liquefied natural gas export terminal. The bearish EIA surprise – the second in a row – quickly sent prices crashing lower. Within a half hour of the report, August futures had fallen as low as $5.967. Bespoke Weather Services, which had called for a 75 Bcf injection, said the latest data seemingly confirms that more gas is getting into storage than its data and those by others is detecting. The 82 Bcf injection surpassed the highest of expectations ahead of the EIA report by 2 Bcf. Major surveys showed a range of estimates from 68 Bcf to 80 Bcf. The median of 12 estimates submitted to Bloomberg as of early Thursday was a 75 Bcf build, while a Reuters poll produced a median increase of 74 Bcf. A Wall Street Journal poll averaged a 75 Bcf injection. The EIA’s latest figure also bested both last year’s and the five-year average increase of 73 Bcf. Total working gas in storage as of June 24 was 2,251 Bcf, which is 296 Bcf below the year-earlier level and 322 Bcf below the five-year average, according to EIA. Around midday, the gas market got knocked around again when the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Notice of Proposed Safety Order to Freeport LNG in response to a preliminary investigation into the June 8 explosion. In addition to the preliminary findings of the investigation, the PHMSA order outlined measures Freeport must complete before returning to service. The order did not indicate whether the project could be off longer than Freeport has suggested. The facility was expecting a return to partial service within three months, with a full restart by year’s end. However, bears appeared to take the news and run with it, with even more aggressive selling into the close.

U.S. natgas jumps 6% after big loss on hot weather, technical bounce (Reuters) - U.S. natural gas futures jumped about 6% on Friday ahead of the long three-day U.S. July 4 holiday weekend due to a technical bounce following a big price drop in the prior session and forecasts for hotter weather and higher demand over the next two weeks than previously expected. "Today’s ... price jump higher is somewhat a result of calmer minds taking over the market, as the front month attempts to balance out some of yesterday’s move," analysts at Gelber & Associates said, noting the price rise was justified by forecasts for higher air conditioning and liquefied natural gas (LNG) demand. Friday's price rise came after futures plunged 17% on Thursday following the release of a federal report that analysts said would keep Freeport LNG's export plant in Texas shut for longer than the three months the company has forecast. U.S. pipeline safety regulators said they found unsafe conditions at Freeport and will not allow the plant to restart until an outside analysis is complete. "Based on the latest report, it would suggest that Freeport's restart date will be significantly pushed back by more than the initial three-month shutdown period," Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8. So long as the plant remains shut, that gas will remain in the United States and allow utilities to boost the country's low stockpiles ahead of next winter. Having that extra gas has already caused U.S. prices to drop over 40% from a near 14-year high over $9 per million British thermal units (mmBtu) in early June just before the Freeport outage. Front-month gas futures for August delivery on the New York Mercantile Exchange (NYMEX) rose 30.6 cents, or 5.6%, to settle at $5.730 per million British thermal units (mmBtu). On Thursday, the contract closed at its lowest since March 29. Since gas futures started trading on the NYMEX in 1990, the contract has closed down over 15% in 11 sessions, including Thursday. In the prior 10 sessions, the contract averaged a 4% gain the next day. Despite recent declines, the front-month was still up about 54% so far this year as much higher prices in Europe and Asia fed strong demand for U.S. LNG exports. Russia's Feb. 24 invasion of Ukraine stoked fears Moscow would cut gas supplies to Europe. Gas was trading around $45 per mmBtu in Europe and $39 in Asia. Data provider Refinitiv said gas output in the U.S. Lower 48 states held at a preliminary 95.1 bcfd on the first day of July, the same as the average for June. That compares with a monthly record of 96.1 bcfd in December 2021. The amount of gas flowing to U.S. LNG export plants rose to a preliminary 11.5 bcfd on the first day of July with several plants running near full capacity, up from an average of 11.2 bcfd in June.

US Drilling Total Slides on Drop in Natural Gas Activity - The U.S. natural gas rig count fell four units to 153 during the week ended Friday (July 1), offsetting a one-rig increase in the oil patch to drop the overall domestic tally three units to 750, the latest numbers from Baker Hughes Co. (BKR) show. The 750 active U.S. rigs as of Friday compares with 475 rigs running in the year-earlier period, according to the BKR numbers, which are partly based on data from Enverus. Land drilling declined by four units in the United States week/week, while the Gulf of Mexico added one rig to raise its total to 16. Declines of three horizontal rigs and two vertical rigs were partially offset by a two-rig increase in directional drilling, the BKR data show. In Canada, seven natural gas-directed rigs and five oil-directed rigs were added. That lifted the Canadian rig count 12 units overall to 166 for the week, up from 136 in the year-ago period. Broken down by major region, the Cana Woodford saw a five-rig decrease week/week, lowering its total to 27, versus 17 a year ago. Four rigs exited in the Eagle Ford Shale, while the Marcellus and Utica shales each posted one-rig declines. On the other side of the ledger, the Ardmore Woodford and Arkoma Woodford each added a rig, according to the BKR data. Counting by state, Texas dropped two rigs week/week, while Ohio, Pennsylvania and Utah each dropped one. Louisiana and New Mexico each added a rig. Earlier in the week, OPEC-plus affirmed its intentions to ramp up production in July and August. The cartel is targeting output growth of 648,000 b/d both months. Should OPEC-plus meet its target, its average crude generation would climb to nearly 44 million b/d by August, on par with pre-pandemic levels.

Williams makes FID on Louisiana Energy Gateway project - Williams, Tulsa, Okla., reached a positive final investment decision on Louisiana Energy Gateway (LEG), a project designed to gather 1.8 bcfd of Haynesville natural gas and connect it to Transco natural gas pipeline system markets and Gulf Coast LNG markets.The project is expected to go into service late 2024, the company said in a June 29 release.With the project, Williams will offer “an infrastructure solution that integrates real time emissions monitoring and emissions reduction strategies,” said Chad Zamarin, senior vice-president, corporate strategic development. The project is positioned to incorporate carbon capture and storage (CCS) as a further decarbonizing solution for natural gas production in the play, he continued.Earlier this year, Williams signed a Memorandum of Understanding with Quantum Energy Partners to form a joint venture enabling Quantum to become an equity investor and partner in the project. As part of its Haynesville expansion, Williams’ March 2022 deal to acquire the Haynesville gas gathering and processing assets of Quantum’s Trace Midstream for $950 million included a long-term capacity commitment by Trace customer and Quantum affiliate Rockcliff Energy in support of Williams’ LEG project (OGJ Online, Mar. 14, 2022).

LNG explosion shines light on 42-year-old gas rules - The last time the federal government wrote regulations for the liquefied natural gas industry was 1980, and the idea of chilling natural gas to subzero temperatures and loading it onto ships was a novelty in the United States. Forty-two years later, the LNG industry is growing rapidly — along with local pollution, climate-warming methane emissions, and the risk of fires and explosions to communities. By the end of this year, the Transportation Department’s pipeline safety regulator may have new guidelines for the industry. But the process is fraught with uncertainty: It has failed once before, in 2016, and the industry is already lining up to argue for a light-handed approach. In the meantime, near-misses and environmental problems highlight the risk. Most recently, a fireball at a plant near Freeport, Texas, touched off a fire that burned for 40 minutes, led to the temporary closure of the plant and knocked about 20 percent of U.S. export capacity offline for months, disrupting the United States’ plan to replace Russian gas in Europe (Energywire, June 15). “It’s important to remember that LNG poses unique safety risks, often above and beyond those posed by other hydrocarbon transportation, due to the high pressure and density,” Seven LNG plants are currently operating, handling billions of cubic feet of methane every day and making the United States the leading exporter of natural gas. More than a dozen new plants or production lines are planned or under construction. The United States exported nearly 10 billion cubic feet of LNG per day last year, up from essentially nothing in 2015. The industry has indicated that it is open to new rules from the Pipeline and Hazardous Materials Safety Administration (PHMSA), but is already setting expectations. The Center for Liquefied Natural Gas is calling for flexible, “nimble” regulations and a “holistic” approach that “exchanges expertise and innovation between safety officials and industry.” “We absolutely will be submitting comments” on the upcoming proposed rules, said Daphne Magnuson, spokesperson for the Center for Liquefied Natural Gas, an industry group that is part of the Natural Gas Supply Association. Any complaints from the industry that new protections could slow development or reduce exports could now have increased salience. Russia’s invasion and bombardment of Ukraine, and the sanctions imposed in response, have positioned U.S. LNG as a way for Europe to replace Russian gas. And the Biden administration has promised to help. Environmental groups and others, however, are increasingly fighting natural gas exports from the United States, pointing to international calls from scientists that fossil fuel use must rapidly decline if the world is to avoid the worst impacts of climate change.

Freeport LNG Outage Proves Need to Boost Natural Gas Output, Says Huntsman CEO - Barring an increase in domestic natural gas production, the United States should stay the course with regard to liquefied natural gas (LNG) export volumes, the top executive at global chemical manufacturer Huntsman Corp. told NGI.“I don’t think we should be exporting any more LNG than we are today if we’re not going to, conversely, produce more on the supply side,” CEO Peter Huntsman said. He cited the aftermath of the Freeport LNG explosion early this month as “real-time market evidence” of the need to produce more gas domestically. After Freeport LNG Development LP said the export facility would be offline for a longer period than initially expected, gas prices dropped because domestic supply is increasing as a result, Huntsman explained. More supply available to U.S. consumers lowers gas prices, he said.Exporting more LNG, given current U.S. gas production would negatively affect “American competitiveness, American jobs, and American revenue.”The global petrochemicals industry is grappling with the past year’s sharp overall rise in natural gas prices on multiple fronts, Huntsman said.In addition to relying largely on natural gas-fired power, the industry uses natural gas liquids (NGL) for raw materials, according to the American Chemistry Council (ACC). ACC’s Martha Moore, managing director for economics and statistics, told NGI that more than two-thirds of the total energy the chemical industry consumes, both in fuel and feedstock, is derived from natural gas and NGL production. The industry in 2020 used nearly 2.7 Tcf of natural gas, or 8% of total U.S. production, she said. It also consumed 2.2 quadrillion Btu of NGL and liquefied petroleum gas, primarily sourced from natural gas processors, for feedstocks, she added. “About three-quarters of the industry’s natural gas consumption was used for fuel and power, with the remaining quarter used as feedstock,” Moore said. Huntsman pointed out the higher raw materials costs “will put a tremendous amount of inflationary pressure on our pricing. It makes us globally less competitive, and it means that we’re chewing up more money in raw materials and not in research and development.”Furthermore, the inflationary ripple effect, he noted, reaches far and wide, given the breadth of products that integrate petrochemicals: airplanes, automobiles, clothing, food packaging, houses, refrigerators, solar panels, windmills and much more.“And so when that inflationary bubble goes in, it ultimately hits the consumers as it is right now.”

Report: Last Decade Has Seen Too Many Methane Gas Leaks -A new report found in the last decade, there have been nearly 2,600 methane gas pipeline incidents in the U.S. serious enough to require reporting to the federal government; one leak every roughly 40 hours.Of those incidents, 850 resulted in fires, and more than 325 in an explosion, killing more than 100 people and injuring more than 600. Deirdre Cummings, consumer program director for the Massachusetts Public Interest Research Group Education Fund, said Massachusetts knows the dangers of gas leaks all too well. She pointed to the 2018 Merrimack Valley gas explosions at Columbia Gas in Lawrence, Andover and North Andover. There was one death, 22 hospitalizations and 50,000 residents were evacuated."Unfortunately, what we found in this report is that house explosions and leaking pipelines aren't isolated incidences," Cummings reported. "They're the result of an energy system that pipes dangerous, explosive gas across the country, and actually through our neighborhoods. "She argued it is time to move away from gas in this country and toward safer and cleaner renewable and geothermal energy. According to the report, emissions from the 2,600 leaks over the last decade are equivalent to 2.4 million passenger cars driven for a year.Randi Soltysiak, spokesperson for Mothers Out Front, noted in Somerville, residents fought for two years to get energy company Eversource to fix a string of leaks blamed for killing all the trees along a half-mile stretch of a major corridor for pedestrians, bikes, cars, trucks, buses and trains."In addition to causing explosions, gas leaks are associated with asthma," Soltysiak pointed out. "And can cause other problems for human health and well-being by killing trees, resulting in hotter cities with worse air quality."She added regulatory reforms are needed as well to transition away from methane gas. Research shows methane emissions from gas infrastructure and use in U.S. cities are underestimated by the Environmental Protection Agency, and in Boston, methane emissions are six times higher than reports from the Massachusetts Department of Environmental Protection.

Industry Insiders Question Louisiana Regulators Over Cleanup on ExxonMobil Land, Amid Corruption Claims and Pollution Fears – DeSmog - If you had ventured down a dirt road running through remote marshland along the Gulf Coast in Vermilion Parish, Louisiana, at just the right time back in late February, you might have come across a pit of gray muck. Down in that pit, you’d find a contractor welding a steel cap about the size of a dinner plate onto a stub of pipe jutting up from the mud below. That pipe was the last visible sign of an old oil and gas wastewater well that once dropped over a half-mile deep into the earth, now plugged up and sealed by contractors hired by the state.For decades, oil and gas companies disposed of millions of barrels of waste down that hole, ringed with cement and steel, dubbing the wastewater well Freshwater City SWD 01, according to state records. Experts told DeSmog the well was defective and that using it put underground supplies of drinking water in the area at risk.“It’s a mess,” said Cornell engineering professor Anthony Ingraffea, who reviewed public well records provided by DeSmog and found that Freshwater City was riddled with flaws. That means the process of “abandoning” the old well creates new problems. “If they just do the usual plugging job, and now there’s a suspicion that this well was leaking over some period of time and contaminating the water supply,” he said, “you’ve lost the opportunity to do the diagnosis.”Properly plugging and abandoning oil and gas wells is vital to protect the environment and stop methane leaks – but for decades, oil operators have often slipped away without paying to clean up, leaving millions of deteriorating abandoned wells across the U.S.

Biden’s Inner Circle Debates Future of Offshore Drilling - — President Biden’s top aides are weighing whether to ban new oil and gas drilling off America’s coasts, a move that would elate climate activists but could leave the administration vulnerable to Republican accusations that it is exacerbating an energy crunch as gas prices soar. By law, the Department of Interior is required to release a plan for new oil and gas leases in federal waters every five years. Deb Haaland, the Interior secretary, has promised Congress a draft of the Biden plan will be available by June 30. With the administration acutely aware that inflation and high prices at the pump are weighing on voters ahead of November’s midterm elections, the White House is shaping the plan, two administration officials said. Discussions about whether and where to allow drilling are being led by Bruce Reed, the deputy chief of staff, and include chief of staff Ron Klain and longtime adviser Steve Ricchetti, said the officials, who spoke on the condition of anonymity because they were not authorized to discuss the deliberations. “The Biden administration is in a difficult place,” said Sara Rollet Gosman, a professor of environment and energy law at the University of Arkansas. “If the Department of the Interior decides to eliminate offshore lease sales or to offer only a few sales, it does the right thing for the climate. But it also gives ammunition to fossil fuel companies to argue that President Biden doesn’t care about high gas prices.” Several people familiar with the administration’s decision-making said it is likely to block new drilling in the Atlantic and Pacific oceans in the face of widespread bipartisan opposition from members of Congress and leaders from coastal states. The eastern Gulf of Mexico has been closed to drilling since 1995. Still under consideration is whether to continue to allow lease sales in parts of the Arctic Ocean as well as the western and central Gulf of Mexico. As a candidate, Mr. Biden pledged to end new drilling on public lands and in federal waters. Environmental activists have argued offshore drilling has no place in a clean energy future. They are pressuring the administration to prohibit drilling throughout the entire outer continental shelf to reduce the United States’ contribution to climate change. “We’ve been very clear in our conversations with Interior that we expect the president to uphold his campaign commitment to ending new leasing,” said Diane Hoskins, a campaign director at Oceana, an environmental advocacy organization.

Biden administration punts on whether to open up more offshore drilling - The Biden administration is punting a decision on whether to open up more lease sales for offshore drilling. In a statement issued Friday, the administration said it is still working on a plan, and that when issued it could include as many as 11 specific lease sales for offshore oil and gas drilling or as few as zero. An Interior Department official said equal consideration is being given to scenarios with zero sales, some sales or all 11 sales. The statement and department’s proposal for the program’s future was issued one day after a previous five-year offshore drilling plan expired. That plan had been finalized by the Obama administration. The sales under consideration include an area in the Cook Inlet near Alaska, and as many as 10 sales in the Gulf of Mexico, where much of the country’s offshore drilling currently happens. Earlier this year, the department canceled a planned lease sale in Cook Inlet, citing lack of industry interest. The move comes as the administration grapples with the politics of high gasoline prices, which recently reached as high as $5 per gallon nationally. It also follows a major Supreme Court decision curbing the Environmental Protection Agency’s powers to regulate the climate contributions of power plants. And it comes as Democrats are still trying to sell their social and climate agenda to swing vote Sen. Joe Manchin (D-W.Va.), who is generally supportive of fossil fuels. Manchin, in a statement, said he was “pleased” that the department released its proposal, but “disappointed” that the zero-sale option is being considered. “I hope the Administration will ultimately greenlight a plan that will expand domestic energy production, done in the cleanest way possible, while also taking the necessary steps to get our offshore leasing program back on track to give the necessary market signals to provide price relief for every American,” he said. If the Biden administration eventually decides not to hold any new lease sales, the move will not affect offshore drilling that is currently underway, but it will prevent new drilling in the future. It can take several years for offshore leases to bring new oil to the market, and so whatever decision it ultimately makes will not immediately impact oil supplies.

Activity In Tropics Emerges As Next Big Hurricane Could Send Gas Prices To "Apocalyptic" Levels -- Three tropical disturbances are being closely monitored for development in the Atlantic as fears mount that above-average storms could wreak havoc on oil/gas operations in the Gulf of Mexico and send gas prices at the pump to "apocalyptic" heights. "The lull in the tropics has come to an end as we're now watching three different areas for development from the Gulf of Mexico to the central Atlantic," The Weather Channel reports. The first system is an area of low pressure in the northern Gulf of Mexico and is expected to track westward early this week and could dump heavy rains along with parts of the Texas coast. Even though the storm has low probabilities of formation over the next 2-5 days, the system is situated near the Gulf Coast (PADD 3), which has the highest concentration of US refineries. The second is a disturbance located 900 miles east-southeast of the southern Windward Islands and has a 70% chance of cyclone formation in 2 days with probabilities at 90% for five days. Called Invest 94L, the storm is expected the strengthen as it enters the Caribbean Sea this week. Behind Invest 94L is a tropical wave with a 20% probability of developing into a storm over the next five days. The elevated tropical activity comes as OPIS energy analysis global head Tom Kloza told Fox Bussiness," if we have an active tropical season" that impacts domestic refining efforts in the Gulf of Mexico, then it could send gas prices to "apocalyptic" heights.

Oil Tanker Is Stopped by U.S. in Transit From Russian Port to New Orleans – WSJ - U.S. authorities have stopped a ship traveling from Russia to Louisiana with a cargo of fuel products, say people familiar with the matter.The Daytona tanker is owned by Greek shipowner TMS Tankers Ltd. and was chartered by Vitol, a commodity trading house based in Switzerland. It sailed from Russia’s Taman peninsula in the Black Sea in early June carrying fuel oil and vacuum gasoil, the data showed, and was planning to arrive in New Orleans on Sunday.

Ship from Russia, carrying oil, arrives in New Orleans area, despite federal sanctions - U.S. authorities intercepted a New Orleans-bound ship from Russia on suspicion that its cargo might violate a federal ban on Russian oil imports enacted after that country invaded Ukraine, according to The Wall Street Journal. The Daytona tanker is now moored in the Mississippi River at St. Rose, near the community’s volunteer fire department. On Wednesday afternoon there appeared to be no activity on board. The ship’s intended destination was unclear. A Port of New Orleans spokesperson said it was headed for the Valero terminal in St. Charles Parish. A representative for Valero didn’t return a message Wednesday. The U.S. Department of Homeland Security’s press office didn’t respond to an email Wednesday. But, according to The Journal, the ship was carrying fuel oil and vacuum gasoil, and was scheduled to dock somewhere in or near New Orleans earlier this week. Vacuum gasoil is refined into gasoline and diesel, the Journal report said. A representative for the company that chartered Daytona told The Journal that it fully complies with all laws, including federal sanctions. The government’s March embargo banned imports of Russian crude oil, petroleum, liquefied natural gas and coal. The Journal report said the ship was being checked by the U.S. Customs and Border Protection. At issue is whether Daytona’s load originated in Russia, or if the ship was passing through with cargo from another country. A terminal on Russia’s Taman peninsula in the Black Sea transports products from Russia and Kazakhstan, according to The Journal, though the report said tracking data indicated Daytona’s cargo came from Russia. The U.S. ban does not include products from Kazakhstan.

Strained gasoline supplies lead American fuelmakers to maximize output— It may not be quite throwing caution to the winds, but the prospect of hefty profits and supply that may not stretch to meet consumer demand is enticing U.S. refiners to run at a 21-month high, testing equipment limits to sustain high rates without breakdowns. Gasoline stockpiles remain the lowest seasonally in seven years. A major breakdown when supplies are constrained by several years of closures that wiped out more than a million barrels of capacity could be disastrous. Stockpiles would shrink further and already high pump prices could surge higher, causing some drivers to curtail or reduce travel plans. “Running hard increases general stress on a unit, increasing the risk of an unplanned outage,” said Robert Campbell, head of oil products research at London consultancy Energy Aspects Ltd. Some sites delayed maintenance to the fall and even to early next year to prevent shutting any unit vital to producing more fuel at a time when supplies are tight and profit margins are high. The risk: Running hard, particularly in summer heat, wears units down faster, reducing the time between turnarounds and increasing the cost of repairs when they do finally get taken down for maintenance. Most immediately, high run rates risk abrupt breakdowns that could force a refiner to seek replacement products that cost more to buy than make. That would almost guarantee a spike in pump prices. Genscape’s Wood Mackenzie has reported multiple instances in June of crude units, gasoline-making FCC units and reformers that make high-octane gasoline blendstock suddenly reducing production with no maintenance planned or abruptly shutting down for a day or more. “When the weather is hot, cooling tower efficiency is reduced and everything needs the cooling,” Campbell said. In the week ended June 24, refinery runs were the highest since January 2020. Capacity utilization was 95%, highest since September 2019. East Coast and Gulf Coast oil processing plants ran at about 98%. Some refineries, according to people familiar with operations, are running above nameplate capacity to squeeze out every drop of product they can. On the positive side, the pump price for a gallon of regular gasoline was $4.84 Thursday, according to AAA, down from a record $5.016 on June 13. Meanwhile, crude oil, which also influences gasoline prices, posted its first monthly decline this year in June. Contributing to the urgency to run hard while the market is favorable: US consumer spending fell in May for the first time in 2022 and prior months were revised lower. “There’s risk when you run at the top of your engineering design rates and refiners know that,” ;

U.S. emergency oil reserve draws by 6.9 mln barrels to lowest since 1986 - U.S. crude inventory in the Strategic Petroleum Reserve (SPR) fell by 6.9 million barrels in the week to June 24, according to data from the Department of Energy. Stockpiles in the Strategic Petroleum Reserve (SPR) fell to 497.9 million barrels, the lowest since April 1986.

Permian Highway Pipeline takes FID on expansion project -Permian Highway Pipeline LLC (PHP) made a positive final investment decision (FID) to proceed with expansion after securing binding firm transportation agreements for all available capacity, Kinder Morgan Inc. said in a release June 29. A binding open season for shipper commitments was held earlier this year (OGJ Online, Apr. 26, 2022). The project, which will increase PHP’s capacity by about 550 MMcfd, will involve primarily additional compression on PHP to increase natural gas deliveries from the Waha area to multiple mainline connections, Katy, Tex., and various US Gulf Coast markets. Pending the timely receipt of required approvals, the target in-service date is Nov. 1, 2023. The expansion will not only foster future natural gas production growth in West Texas and provide liquefaction plants along the Texas Gulf Coast with supply, but it will provide access to premium priced markets and transportation flow assurance, which are critical to minimizing flared volumes, said Jamie Welch, president and chief executive officer, Kinetik. PHP is jointly owned by subsidiaries of Kinder Morgan Inc., Kinetik Holdings Inc., and ExxonMobil, with an ownership interest of 26.7%, 53.3%, and 20%, respectively.

More Oil Workers Being Trained to Operate in Permian -More oil workers are being trained to operate in the Permian, suggesting that the industry is working on resolving labor constraints that had been holding back production growth. That’s what energy and environmental geo-analytics company Kayrros stated in its latest oil market note, which was sent to Rigzone on Saturday, adding that the number of workers active in the Permian has dramatically increased since the invasion of Ukraine in late February. “A recent peak followed by a slight decline appears to show workers being temporarily gathered in the field for training,” Kayrros stated in the market note. “This would indicate that the industry is rebuilding its workforce and may soon overcome the widely reported labor shortages that had been holding back development and oil production,” Kayrros added in the note. A graph included in the market note highlighting Kayrros oilfield worker activity in the Permian basin, which contains data stretching back to the beginning of this year, shows that the number of people/unique IDs in the region surpassed 5,000 this month, before dipping to between 4,500 and 5,000. The graph, which shows that this figure has been climbing throughout the year, highlights that the number of people/unique IDs in the Permian was sitting under 3,500 back in January. Kayrros also outlined in the note that the number of frac crews active in the Permian passed the 100 mark last week for the first time since the start of the Covid pandemic, according to preliminary data. Across other major tight oil basins, the aggregate number of horizontal well completions continues to creep up too, and recently reached its highest level since the early days of the pandemic in 2020, Kayrros stated in the market note.

World’s Biggest Oil Field, Permian Basin, Faces New Air-Pollution Curbs – Bloomberg --The Biden administration is considering triggering tougher anti-smog requirements that could curb drilling across parts of the Permian Basin, the world’s biggest oil field that straddles Texas and New Mexico. The Environmental Protection Agency is weighing labeling parts of the Permian Basin as violating federal air quality standards for ozone -- a designation that would force state regulators to develop plans for cracking down on that smog-forming pollution. The move, outlined in a regulatory notice, could spur new permitting requirements and scrutiny of drilling operations.Ozone levels in the basin have surpassed a federal standard “for the last several years -- really since the fracking boom took off in the Permian,” said Jeremy Nichols, climate and energy program director for WildEarth Guardians. The conservation group formally petitioned EPA for the so-called non-attainment designation in March 2021 and, roughly six months later, warned the agency it intended to sue to force action. The designation “basically says you’ve got to clean up this mess or the consequences are going to get even more severe as far as restricting your ability to permit more pollution and more development,” he said. While Texas does not have monitors taking ozone readings on its side of the Permian, monitors just over the border in the Eddy and Lea counties of New Mexico have recorded average ground-level ozone levels exceeding the 2015 standard of 70 parts per billion several years running. Even at low levels, ozone can worsen asthma, emphysema and other respiratory illnesses. If the region is deemed in violation, state regulators would have three years to develop plans for lowering ozone levels, including by preventing new industrial facilities from worsening air quality and ensuring existing sites deploy technology to keep pollution at bay. The resulting uncertainty could constrain energy development in the region, said Todd Staples, president of the Texas Oil and Gas Association. “Creating uncertainty on permitting and inserting unnecessary regulatory barriers will only negatively impact the production necessary to meet the needs of consumers."

Rising number of earthquakes in Texas ‘linked to oil and gas production’ - A rising number of earthquakes recorded in West Texas can be linked tooil and gas production in the region, new research has found.Since 2009, earthquakes have been rapidly rising in the Delaware Basin - a prolific oil-producing region in West Texas and New Mexico, according to researchers at The University of Texas.The authors of the study published in Seismological Research Lettersanalysed data that tracked seismicity and oil and gas production in the region from 2017 to 2020. They found that 68 per cent of earthquakes above magnitude 1.5 were “highly associated” with one or more oil and gas production activities.. These activities were hydraulic fracturing, commonly known as fracking - a process that uses pressurised fluid to create and enlarge fractures in the rock to increase the flow of oil and gas - and the disposal of what is referred to as “formation water” into geological formations. Formation water is produced with oil and gas, it is then disposed of by injecting it into geological formations, the researchers said. Alexandros Savvaidis, a researcher at the University of Texas and the study’s co-author, said these production activities are known to increase “subsurface pore pressure”, a mechanism for triggering earthquakes. “This paper shows that we now know a lot about how oil and gas activities and seismic activity are connected,” Mr Savvaidis said. “The modelling techniques could help oil and gas producers and regulators identify potential risks and adjust production and disposal activity to decrease them.”

68 Percent Of Earthquakes In West Texas Linked To Oil And Gas Production, Study Finds - A recent rise in the number of earthquakes experienced in Texas over the last decade are likely due to oil and gas production, including the highly contentious fracking, suggests a new study. Tracking all of the earthquakes of magnitude 1.5 and above from 2017 to 2020, the study found almost 70 percent of them were directly linked to activity in oil and gas, whether it be direct hydraulic fracturing, or dumping the wastewater into geological formations. The research, which was published in Seismological Research Letters, should act help production companies to reduce their impact on the environment and seismological activity, according to the researchers. “This paper shows that we now know a lot about how oil and gas activities and seismic activity are connected,” said co-author Alexandros Savvaidis in a statement. “The modeling techniques could help oil and gas producers and regulators identify potential risks and adjust production and disposal activity to decrease them.” Hydraulic fracturing is the process of extracting natural gas and oil from often deep pockets under the Earth’s surface by pumping fluids down wells, which causes fractures in the rock formations adjacent to them. The pressure then forces the fluid – now called formation water – back up and sand or another incompressible material is pushed into the cracks to keep them open. Doing so increases the yield of resources the company can get out of wells. Hydraulic fracturing is a sore subject across the US and the rest of the world, for relatively good reason. Fracking, as it’s known by many, uses vast amounts of energy and leaks gas into the environment, alongside producing toxic chemicals in the formation water, which is tough to get rid of. In this study, researchers scanned around 5,000 earthquakes of magnitude 1.5 or above in the Delaware Basin, West Texas, looking for correlations between fracking, formation water disposal, or other factors. Of these earthquakes, 43 percent were linked to injection of formation water into shallow sedimentary formations; 12 percent were linked to injection into formations below fracking depth; and a further 13 percent were directly linked to fracturing rock using hydraulic fluids. Combined, the overall process accounts for 68 percent of all earthquakes in the region. One particular earthquake in Mentone, Texas in 2020 (magnitude 5.0) occurred in a region known for injection of formation water into deep rock pockets.

Frackers Push Into Once-Dead Shale Patches as Oil Nears $100 a Barrel - The Wall Street Journal - Spurred by the highest oil prices in years, shale companies are moving drilling rigs back into oil fields that were all but abandoned a few years ago.Private oil producers are leading an industry return to places like the Anadarko Basin of Oklahoma and the DJ Basin in Colorado, where drilling had almost completely stopped in mid-2020 when those areas became unprofitable because of lower oil prices. The average number of active drilling rigs in the Anadarko Basin has surged from the pandemic low of seven to 46, according to energy data analytics firm Enverus.

US Shale Producers Seeking to Boost Oil Production Through Re-Fracking - Shale oil producers in the United States are resorting to “re-fracking” to boost the country’s oil output, as well as generate additional profits without having to make significant new investments. Re-fracking refers to the practice of an oil company returning to old shale oil and gas wells that were fracked in the past, but are no longer in production. The process allows oil producers to take advantage of the higher than $100 per barrel oil price while also creating a higher output with a smaller investment, rather than having to develop an entirely new well. “You go back and find where you maybe under-completed and under-fracked in the beginning,” Catherine Oster, who manages Devon Energy’s midcontinent properties, told Reuters. “We’ve made the infrastructure investment. As you learn about your resource, you get those technical learnings” that help decide which wells will benefit from a second shot. Garrett Fowler, chief operating officer for ResFrac, which helps producers optimize the technique, has seen inquiries for re-fracking double in recent times compared to previous years. The process can increase oil flows from aging wells by two to three times, he said. Experts estimate re-fracking to potentially be up to 40 percent cheaper compared to new wells.

High pressure fracking again being used by US oil companies - Amidst the rise of "re-fracs" in the U.S. as part of the efforts to boost domestic oil production, American shale oil producers are successfully returning to existing wells and giving them a second, high-pressure blast. The re-fracs, which are increasingly popular as shale oil producers look to take advantage of $100 per barrel crude, without making large investments in new wells and fields, were triggered by the global oil shortage, causing U.S. President Joe Biden to call upon shale producers to spend more of their profits on increasing output. However, the firms have been under pressure from their shareholders to focus on returns, rather than production growth. Since January, shortages of steel, diesel and workers have doubled oilfield inflation, making re-fracing even more attractive as a discounted way of increasing production. According to experts, re-fracing can be up to 40 percent cheaper than drilling a new well. It can also double or triple oil flows from aging wells, said Garrett Fowler, chief operating officer for ResFrac, a firm that helps producers install re-fracing, which has seen about twice as many inquiries compared to prior years. For oil producers, re-fracs can add output to existing pipelines while being affordable, as their shorter completion time can be scheduled between work on new wells, said Catherine Oster, head of Devon Energy's mid-continent properties. "You go back and find where you may be under-completed and under-fracked in the beginning," she added, as quoted by Reuters. ResFrac's Fowler said the most common re-frac method is to place a steel liner inside the original well bore and then blast holes through the steel casing to access the reservoir, and in some cases, the process uses half as much steel and frac sand, compared to drilling a new well. U.S. oil production remains about one million barrels per day (bpd) below the 12.8 million bpd peak, with output being limited by the rapid decline of shale wells. Flat spending could restrain output to current levels.

Fracking Fluid And Chemicals Market Growth 2022 Growing Rapidly With Recent Developments, Industry Share, Trends, Demand, Revenue, Key Findings And Latest Technology - Kenneth Research recently added a report on ' Fracking Fluid and Chemicals Market ' which offers a complete evaluation of the market and its growth prospects along with new business opportunities in the industry. The report contains the market size and annual growth rate for a forecast period between 2022 and 2031.U.S. Market recovers fast; In a release on May 4th 2021, the U.S. Bureau and Economic Analsysis and U.S. Census Bureau mentions the recovery in the U.S. International trade in March 2021. Exports in the country reached $200 billion, up by $12.4 billion in Feb 2021. Following the continuous incremental trend, imports tallied at $274.5 billion, picked up by $16.4 billion in Feb 2021. However, as COVID19 still haunts the economies across the globe, year-over-year (y-o-y) avergae exports in the U.S. declined by $7.0 billion from March 2020 till March 2021 whilest imports increased by $20.7 billion during the same time. This definitely shows how the market is trying to recover back and this will have a direct impact on the Healthcare/ICT/Chemical industries, creating a huge demand for Fracking Fluid and Chemicals Market products. Moreover, amongst all the continents that used pesticides, Asia registered as the largest user of pesticides by attaining a share of 52.4% in the year 2018. It was followed by the Americas, Europe, Africa and Oceania with 32.3%, 11.6%, 2% and 1.7% respectively. The statistics also stated that China was the largest user of pesticides amongst all the nations worldwide, utilizing 1,763,000 tonnes of pesticides for agricultural use. Proppants and chemical additives to release natural gas or petroleum for extraction. It has changed the overall global energy landscape and this process relies on fracking fluids. A mixture of chemicals and fluids is used to fracture the non-conventional and conventional formation of older gas and oil fields those having higher production rate. There are many factors which act as drivers for the market such as continued use of hydraulic fracturing to get fuel from unconventional energy sources such as tight sand stone, coalbed methane etc. Other key drivers of the field include rising global natural gas prices, the need to fill the gap between supply and demand of oil and gas reserves. Continuous R&D is taking place in the field which is resulting in the development of better products such as development of eco friendly chemicals, waterless fracturing foam etc. Some of the restraints of the market which are hindering its growth are problems related to environmental safety, health hazards occurring due to it and technical complexities which are based on geological conditions.

Biden administration to hold its first oil drilling lease sales on federal lands -The Biden administration is set to hold lease sales for new oil and gas drilling on public lands starting this week and, for the first time, it will implement new regulations for producers. The oil auctions will effectively be the administration’s first, since the only other lease sale it has held was tossed in court on environmental grounds. But neither industry nor green groups are particularly pleased with the sales, as industry wanted more land and fewer stipulations while many climate hawks wanted no lease sales at all. The Biden administration is expected this week to auction off parcels of federally owned land for drilling in seven Western states. The sale in Wyoming is expected to be by far the largest, with 130,000 acres available for lease, while the next largest comes in at just a few thousand acres. The other sales will take place in Montana, North Dakota, Nevada, Utah, New Mexico and Colorado. When it announced the sales in April, the Interior Department said it was shrinking the overall land it was making available by 80 percent compared to the total amount of land it originally considered for the sale. The department also announced that it would hike fees that oil companies pay to the government for the oil they extract, raising royalty rates from the 12.5 percent imposed on previous sales to 18.75 percent for the new sales.

Biden administration oil, gas auctions kick off with thin industry response (Reuters) - The Biden administration's first sale of oil and gas drilling rights on federal land garnered thin industry interest on June 29 .while environmental groups filed two separate lawsuits seeking to invalidate the results.The sales, which will continue on June 30 and cover eight states, were viewed as a test of oil industry demand for federal acreage amid soaring fuel prices and calls from President Joe Biden to increase domestic output.The first day of bidding on 120,000 acres in Wyoming wrapped up with no bids on more than a third of the 105 parcels offered, according to online auction platform EnergyNet. Of the $12.5 million in high bids generated on June 29, $8.9 million was for a single 1,480-acre parcel in Converse County.

Biden faces major climate decision: ConocoPhillips’s Willow project on Alaska’s North Slope - — On the fifth day of the gas leak, Bruce Nukapigak loaded 14 relatives into three cars and fled through a blizzard toward the nearest town of Deadhorse. He passed his old caribou hunting campsite — now hemmed in by oil pipelines — and drove over the concrete bridge built by the energy giantConocoPhillips, where he used to set nets for salmon in an Arctic stream.Nukapigak, a 37-year-old power-plant operator, took pride in the fact that his remote hometown at the top of the world helped supply the country’s energy. But he had lived through oil disasters before — his infant son was airlifted from the village during a blowout a decade earlier — and he knew a knife’s edge could separate routine work from catastrophe.“I understand this country needs energy. And we provide it,” he said. “But all the bad stuff that comes with it — we’re left to fend for ourselves when it happens.”The dilemma Nukapigak wrestled with as he sped over the tundra in March is now facing the Biden administration, in what could soon become one of the administration’s most significant environmental decisions. At a time of soaring gas prices and mounting climate emergencies, the administration is weighing a proposal by ConocoPhillips for the next major phase in Arctic oil exploration: a network of new drilling pads that would further encircle Nuiqsut with oil infrastructure.The $6 billion endeavor, known as the Willow project, includes hundreds of miles of roads and pipelines, airstrips, a gravel mine, and a major new processing facility — all in the middle of pristine Arctic tundra and wetland, on the nation’s single largest block of public land.The decision will directly test how the administration is weighing pressure to deepen America’s ability to produce oil — at a moment that high energy prices, in part because of the Russian invasion of Ukraine, represent a major political threat to Biden and economic threat to the country — against a desire to make progress curbing climate change and bolstering environmental protection.Last year, a federal judge blocked construction permits for the project, approved during the final year of the Trump administration, because the government failed to assess how burning the oil pulled from the ground would warm the planet.The Biden administration, which defended the Willow project in court, will soon complete a new environmental review. Conservation groups are warning that the impact from the project’s emissions — even if a scaled-down version is approved — could be larger than the Trump administration ever considered. A ConocoPhillips official last year told investors that the Willow infrastructure could ultimately help unlock 3 billion barrels of oil — far more than the 586 million barrels that the Bureau of Land Management used to evaluate its climate impact.

DOE: Major LNG project 'would not increase' CO2 - A proposed liquefied natural gas project in Alaska would not raise greenhouse gas emissions, according to a new federal environmental review that assumes LNG exports elsewhere will continue to meet demand even if the planned pipeline and terminal aren’t built. The draft supplemental environmental impact statement was originally seen as a hurdle for the project, which includes building 800 miles of pipeline and an export facility in Nikiski, Alaska, to move LNG to primarily Asian markets. The Trump administration greenlighted exports from the proposed terminal in mid-2020, but the Biden administration announced nearly a year ago that it would conduct a supplemental analysis (Energywire, July 6, 2021). Backers of the proposed project cheered the review’s findings, asserting that they “validate previous federal authorizations.”The review “affirms what I and many Alaskans have been arguing for years: Natural gas is a proven source of desperately needed energy that also presents the opportunity to reduce global greenhouse gas emissions,” Sen. Dan Sullivan (R-Alaska) said in a statement, adding that “this report bolsters the case for the Alaska LNG Project, which remains the only West Coast U.S. LNG export project that has secured all of its federal permits.” The Department of Energy’s draft SEIS includes a life-cycle analysis of the greenhouse gas emissions tied to the project’s LNG exports. It finds that “exporting [liquefied natural gas] from the North Slope would not increase GHG emissions when providing the same services to society,” as the No Action Alternative, a scenario where the Alaska LNG project is not developed. Under a scenario where the Alaska project does not proceed, DOE said it modeled greenhouse gas emissions linked with LNG produced and supplied from the Lower 48, noting that “energy demand from foreign markets would remain and would need to be fulfilled from an alternate source under that scenario.” “Overall, life cycle [greenhouse gas] emissions under the Proposed Action, including emissions from construction and operation of project activities, as well as upstream production and downstream processing, transport, and end-use, would be no higher than under the No Action Alternative,” the report said. The analysis, issued on June 24, also said project construction and operation “would contribute incrementally to global climate change.”

DOE keeps hiring oil industry public relations firm - The Department of Energy retained a global public relations firm with longstanding fossil fuel ties, continuing a practice that ramped up during the Trump administration.The global firm Edelman in April signed a $500,000 contract to promote the new Office of Clean Energy Demonstrations, which the Biden administration established with infrastructure law funding and billed as “a turbocharger of our net-zero future.”The Edelman deal has drawn scrutiny from critics who have long been skeptical of the prominent firm. DOE has paid the PR firm more than $14 million since 2018, according to USAspending.gov, a public database.Edelman, meanwhile, has long trumpeted its commitment to climate action.“Edelman works with a broad range of clients in many industries and global markets, including clients across the energy sector,” said a company spokesperson in 2015. “As previously reported, we do not accept client assignments that aim to deny climate change.”Such statements have made the firm a target of watchdogs and activists, who don’t hesitate to point out when they see Edelman being hypocritical. Working for the trade group American Fuel & Petrochemical Manufacturers was one of the company’s recent infractions in the view of critics. “Edelman is really leading the charge on protecting old energy at the same time they are promoting new energy,” said Duncan Meisel, director at Clean Creatives, a group that has petitioned public relations firms and ad agencies to cut ties with oil companies and their trade groups.

U.S. retreats from pledge to end gas investments - Dozens of countries rallied around phasing out fossil fuel financing during global climate negotiations seven months ago. Yesterday, those efforts were weakened by the world’s most powerful economies. The shift illustrates how the fear of losing access to energy imports — due to Russia’s war against Ukraine — is testing the commitment of countries that have been among the most vocal advocates of curbing climate change. Leaders of the Group of Seven nations — the United States, United Kingdom, Canada, Germany, Italy, France and Japan — agreed to support public investments in the natural gas sector “as a temporary response” to the abrupt shortfall in global gas supplies created by the pariah status of Russian fossil fuels. The move announced yesterday at the end of the G-7 summit in Germany threatens to undermine commitments announced by the United States and more than 30 other countries at the climate talks in Glasgow, Scotland, to stop spending public money on international fossil fuel projects by the end of this year (Climatewire, Nov. 4, 2021). A communiqué released by G-7 leaders sought to soften those concerns by saying its support for continuing gas investments would be “implemented in a manner consistent with our climate objectives and without creating lock-in effects.” “On one hand there is a strong affirmation of the objectives of the Paris Agreement and of domestic [climate] ambitions, but those ambitions threaten to be undermined by continued support for gas investments,” said Luca Bergamaschi, executive director of ECCO, an Italian climate change think tank. Gas projects can take years to construct, he added, a timeline that raises questions about the emissions impacts of building liquefied natural gas facilities or pipelines that can be used for decades to come. That may not matter to G-7 leaders if the investments are directed outside their borders, since that would not defy their commitments to largely decarbonize their transport and power systems by 2030 and 2035, respectively.

New UK Oil Tax Raises Risk of Energy Shortages -The UK government’s decision to impose a 65 percent tax rate on the nation’s offshore energy providers will do long-term damage to the industry and raise the risk of future energy shortages, industry body Offshore Energies UK (OEUK) has told the government. In a letter sent to the UK Chancellor of the Exchequer on behalf of the offshore energy industry, OEUK Chief Executive Deirdre Michie warned that the new tax risks driving away UK oil and gas investment. Michie also outlined that the government’s climate ambitions would not be helped by the tax. A government consultation on how the new tax will work closed just before midnight on June 28. The new tax imposes a 25 percent surcharge on the profits made by companies producing oil and gas on the UK continental shelf, in addition to the 40 percent tax rate they were paying, OEUK highlighted in a statement posted on its website accompanying the letter. The total effective tax rate is 65 percent, meaning the total tax rate is over three times greater than any other UK sector, OEUK noted. OEUK highlighted that the UK gets 75 percent of its total energy from oil and gas and that the nation’s oil and gas operators collectively produce about a third of the nation’s gas and the equivalent of three-quarters of its oil. Production from those existing oil and gas fields is predicted to dwindle rapidly in the next few years without further investment as they age and become depleted, OEUK warned. “This is a tough tax for our industry, and it could reduce our ability to invest in the UK’s future energy supplies just as energy security is moving to the heart of national security,” Michie said in an OEUK statement. “Right now, the world is at risk of shortages and price rises that will have huge impacts on consumers and on our economy, so we should be doing all we can to maximize our own supplies, not deterring investment with new taxes,” Michie added. “We all want to move quickly to a cleaner energy future, but our ambitions must be grounded in realism if we are to avoid dramatically increasing our reliance on imported energy in the short term. It’s why we continue to raise concerns about the impact of the levy on the UK’s energy security, economy and thousands of jobs,” Michie went on to say.

Fracking firms could share in UK fossil fuel tax breaks worth billions - Fracking companies are likely to be eligible for tax breaks, potentially worth billions, that the government is extending to oil and gas companies to encourage new exploration of fossil fuel resources. Combined with high gas prices, the extra funding – which amounts to a subsidy, according to campaigners – could provide a strong incentive to restart fracking operations if a moratorium in the UK is lifted, which could happen as early as this week. Oil and gas companies will benefit from a loophole in the government’s windfall tax, which allows exemptions for companies that invest in the exploration of new fossil fuel resources. Legal advice provided to the campaigning group Uplift suggests fracking companies would also be eligible for this incentive, based on the way the windfall tax – officially known as the energy profits levy – is currently written. Tessa Khan, the director of Uplift, said: “Despite a historic cost of living crisis, the government is trying to rush through yet another massive subsidy for oil and gas companies. The energy levy is supposed to ease the burden of rising energy bills for UK households, but this investment loophole allows companies to slash their tax bill if they build more polluting, unsustainable oil and gas projects. “It is outrageous that fracking companies may be able to benefit from this subsidy, when fracking – like all oil and gas drilling – does nothing to ensure safe, affordable energy for people in the UK.” The Labour party said the loophole meant oil and gas companies would receive 20 times more in taxpayer incentives than renewable energy firms are eligible for. Labour’s analysis of government data shows that about £4bn could flow to oil and gas companies via the loophole in the windfall tax and “super-deduction” tax credits. According to Labour’s analysis, the new rules mean that for every £100 an oil and gas company invests in the North Sea, the company receives £91.50 from the taxpayer. For every £100 invested in renewable energy, the renewables company receives £25, but that will fall to £4.50 from April 2023.

Fracking ban could be axed in days in potential boost to our gas supplies, source says -The ban on fracking could be lifted within days if a scientific review finds the risk of earth tremors can be minimised. The British Geological Survey is due to report to ministers on whether new techniques could limit the potential effects of fracking for natural gas. The ban was imposed in 2019 over concerns about earth tremors and the impact on the Government's net zero emissions target. A Government source said safety concerns remained paramount, but added: 'The war in Ukraine has shifted the dial on this. The ban on fracking was imposed in 2019 over concerns about earth tremors and the impact on the Government's net zero emissions target. The industry looked set to be wound up in the UK earlier this year, with fracking firm Cuadrilla ordered to fill in its last two remaining wells in Lancashire. Pictured: The Cuadrilla fracking site in Blackpool 'Russia's actions have made security of supply a bigger issue. And... gas produced here will have a lower carbon footprint than gas we are importing.' Britain has vast reserves of shale gas underground. Some experts say 10 per cent of the resources would make the UK self-sufficient in energy for 50 years. The new report has been completed but is now being peer-reviewed in the United States, where fracking is a major industry, before being handed to ministers. Tory MP Lee Anderson said ministers could reduce opposition by offering steep discounts on people's bills. Mr Anderson, a former coal miner, said: 'I'm very pro-fracking - we should be making the most of our natural resources if it can be done safely. 'If the United States hadn't gone for fracking a few years ago then the whole world would be in trouble now. We could be enjoying the same low prices as them. 'Of course it has to be safe but we also have to be offering massive financial incentives to local communities - I think if you did that you would see a lot of opposition melt away.'

Shell Chief Says World Heading for Turbulent Period -The world is heading for a “turbulent period” as tightening supplies of liquefied natural gas and oil exacerbate a global energy crunch, Shell Plc Chief Executive Officer Ben van Beurden said. Speaking in Singapore, the CEO painted a bleak picture of an energy supply that will struggle to replace large swathes of Russian oil and gas that still flow into Europe. “There will be more LNG supply coming into Europe, but will there be a lot of extra new LNG supply to plug the gap? I don’t think so,” Van Beurden, 64, said Wednesday. The world is grappling with a natural gas shortage amid supply disruptions from Russia to the US, and strong demand for the power plant fuel as economies recover from the coronavirus pandemic. Moscow has curbed gas supplies via a key pipeline to Europe amid escalating tensions related to the war in Ukraine, and that has governments across the continent preparing for a total shutdown of shipments. “Spare capacity is very low, demand is still recovering,” he said. “So with that, also the uncertainties with the war in Ukraine and sanctions that may come from it, there is a fair chance we will be facing a turbulent period.” Russia accounts for about a third of Europe’s natural gas imports through the Nord Stream pipeline, he said. Europe could extract as much as 50 billion cubic meters of additional gas a year from the controversial Groningen gas field in The Netherlands, but that would be a measure of last resort for the Dutch government, Van Beurden said. Output from the field has been restricted for years because of earthquakes triggered by drilling for gas. The outlook for oil isn’t much rosier, with Van Beurden saying spare capacity from OPEC was lower than most believed or hoped. Still, demand has reached pre-pandemic levels and will continue to increase for years to come.

Germany sees possible Russian 'blockade' of key gas pipeline -(AP) — Germany's vice chancellor said Thursday he suspects that Russia may not resume natural gas deliveries to Europe through the Nord Stream 1 pipeline after planned maintenance work in July, complicating the outlook for this winter. Russia reduced gas flows to Germany, Italy, Austria, the Czech Republic and Slovakia this month, just as European Union countries scramble to refill storage facilities with the fuel used to generate electricity, power industry and heat homes in the winter. Russian state-owned energy giant Gazprom has blamed a technical problem for the reduction in gas flowing through Nord Stream 1, which runs under the Baltic Sea from Russia to Germany. The company said equipment being refurbished in Canada was stuck there because of Western sanctions over Russia's invasion of Ukraine. German leaders have rejected that explanation and called the reductions a political move. Vice Chancellor Robert Habeck, who is also Germany’s economy and climate minister and responsible for energy, said a “blockade” of the pipeline is possible starting July 11, when regular maintenance work is due to start. In previous summers, the work has entailed shutting the for about 10 days, he said. “But given the pattern we have seen, it wouldn't be so super-surprising if some little technical detail is found and then they say, ‘We can’t switch it on again; now we found something during maintenance and that's it,'” Habeck told a forum organized by the Sueddeutsche Zeitung newspaper. “So the situation is certainly tight,” he said, stressing the importance of filling storage and getting liquefied natural gas terminals up and running. At present, Germany is continuing to store gas, albeit at about half the rate it was before deliveries through Nord Stream 1 were reduced, the vice chancellor said. A week ago, Habeck activated the second phase of Germany's three-stage emergency plan for natural gas supplies, warning that Europe’s biggest economy faced a “crisis” and storage targets for the winter were at risk.

Total shutdown of Russian gas pipelines to Europe 'is not inconceivable' - The Group of 7 nations need to brace for a complete shutdown of Russian gas pipelines in the near term, and it could have severe consequences for Europe's economy, one analyst warned."The G-7 have to prepare for a shutdown of gas. The G-7 can deal with a cutback on oil. There are other supplies that could be gotten around the world, but the gas could be shut off and that would have consequences," said Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, told CNBC on Monday."Russia already has cut back substantially on gas flowing to Germany and through Ukraine, so shutting down the pipelines is not inconceivable. Russia also sells some LNG to Europe but not that much," he said in an email after the interview."The total cut-off of Russian supplies would prompt gas rationing at least for the short term," he said. "Russian supplies would be partially offset by increased LNG imports, increased supplies from Norway and Algeria, fuel-switching to coal, and conservation measures."Gazprom, Russia's state-backed energy supplier, has reduced its gas flows toEurope by about 60% over the past few weeks. The move prompted Germany, Italy, Austria and the Netherlands to all indicate they could turn back to coal once again.His comments came as the leaders of the G-7 wealthiest nations met in Munich, Germany, for their latest summit. As global pressure continues to pile on Russia over its assault on Ukraine, Europe is facing "a very tight situation," Schott told CNBC's "Street Signs Asia" on Monday."They're playing for time. The more there is a hostility against Russia, the more Putin threatens and perhaps acts to cut off more gas to Europe. I see that coming sooner rather than later," he added.European leaders have been growing increasingly concerned about the possibility of a total shutdown of gas supplies from Russia.Germany declared recently it is moving to the so-called "alert level" of its emergency gas plan, as reduced Russian flows exacerbate fears of a winter supply shortage.On Thursday, Economy Minister Robert Habeck announced that Germany would move to stage two of its three-stage plan — an indication that Europe's largest economy now sees a high risk of long-term gas supply shortages. The EU receives roughly 40% of its gas via Russian pipelines and is trying to rapidly reduce its reliance on Russian hydrocarbons in response to the Kremlin's months-long onslaught in Ukraine.

IEA: Europe Will Have To Cut Gas Usage By Nearly One-Third - In the first quarter of next year, the countries of the European Union will have to cut their usage of natural gas by up to 30% in preparation for a complete stoppage of Russian gas flows, according to the International Energy Agency (IEA). IEA Director Fatih Birol on Tuesday said that “a complete cut-off of Russian gas supplies to Europe could result in storage fill levels being well below average ahead of the winter, leaving the EU in a very vulnerable position.” “In the current context, I wouldn’t exclude a complete cut-off of gas exports to Europe from Russia,” he stated. Citing technical issues related to the Nord Stream pipeline, Russia earlier in June cut flows of gas to Germany by 60%. Plans to boost natural gas storage filling in Europe would not withstand a full Russian cut-off if it were to happen between now and the fourth quarter of this year. By the first of November, the European Union should have its gas storage filled to 90%; however, a complete Russian cut-off would reduce that significantly, leading to another surge in natural gas prices, which have already tripled year-on-year, according to Bloomberg, citing figures from the ICE Endex. European natural gas prices remained steady from Monday to Tuesday, in part due to a resumption of the flow of Russian gas through the TurkStream pipeline, which was undergoing maintenance. The pipeline has a 31.5-billion-cubic-meter capacity, Bloomberg reports. On Tuesday, Dutch front-month gas futures dropped 0.2% at the close. Also steadying natural gas prices in Europe on Tuesday were new estimations for demand, which could see a drop due to sunnier weather that can better support solar energy. This is not enough to calm nerves in Germany. Last week, German officials warned that the country is under threat of having to ration gas usage, which would have a devastating effect on the economy. German Minister for Economic Affairs Robert Habeck said the country had entered the “second alert level” of its emergency gas plan.

Prelude LNG Shipments Disrupted Until Mid-July Over Pay Spat - Shell’s massive Prelude FLNG simply can’t catch a break as the company announced that shipments from the facility will be disrupted until at least mid-July. Shell stated that shipments of the chilled fuel from the Prelude FLNG would be disrupted until at least mid-July due to work bans by unions fighting for better pay. "We have issued a notice to customers that cargoes will be impacted until at least mid-July due to the industrial action," a Shell spokesperson told Reuters. Since the very start of LNG production Prelude has had issues cropping up. Namely, the first problem in the facility occurred in February 2020 when an electrical trip caused Shell to shut down production. It was not brought back online until January 2021. Then, the facility experienced an unplanned event that resulted in a complete loss of power at the facility on December 2, 2021, which led to unreliable and intermittent power availability over three days. Inspectors determined that Shell did not have a sufficient understanding of the risks of the power system on the facility, including failure of mechanisms, interdependencies, and recovery. That meant that Prelude FLNG would be out for most of the first quarter of 2022. In late March, Australian watchdog NOPSEMA closed the investigation into the latest issues that caused Shell’s Prelude FLNG facility to halt production, clearing the path for restart. Shell finally resumed shipping liquefied natural gas from the Prelude FLNG facility in April. Shell completed the loading of the 170,000-cbm GasLog Partners-owned Methane Becki Anne LNG carrier that left the Prelude FLNG site on April 10 and started its journey towards Kogas’ Tongyeong LNG import facility in South Korea. This latest issue means that the Prelude FLNG facility was able to work for less than three months without disruption after a four-month long shutdown.

G7 Weighs Russia Oil Price Cap - Group of Seven nations are discussing a cap on the price of Russian oil that would work by imposing restrictions on insurance and shipping, according to people familiar with the matter. The potential mechanism would only allow the transportation of Russian crude and petroleum products sold below an agreed threshold, the people said. Discussions among G-7 leaders and officials are ongoing, and an agreement has yet to be reached, they said. President Vladimir Putin’s invasion of Ukraine and its economic fallout are the key topics under discussion at a three-day summit under way in the Bavarian Alps. G-7 states are seeking ways to limit the Kremlin’s energy revenue while mitigating the impact on their own economies amid surging inflation and efforts to curb a reliance on Russian oil and gas. While a mechanism is on the agenda and the concept could be agreed in principle, it is not yet clear whether leaders will be able to pin down specific details, such as the level of the price cap, before the summit’s end, two of the people said. European Council President Charles Michel confirmed that leaders were planning to discuss the proposed cap in detail, but that there were “many challenges” to be overcome. “We are ready to take a decision together with our partners, but we want to make sure that what we decide will have the negative effect on Russia and not a negative effect on ourselves,” Michel told reporters at the summit. A German government official told reporters on Saturday that while the questions that needed solving were not trivial, the group was at least on a path to finding an agreement. The US is also confident a resolution will be found, a senior Biden administration official said. The European Union agreed last month to introduce a ban on insurance related to the transportation of Russian oil, and any move to add on a waiver would require the backing of all 27 member states. Some officials have raised concerns about re-opening that legal text as it took weeks to agree in the first place. Still, incorporating a new transportation ban in any mechanism could help to soften objections linked to weakening the insurance ban.

G7 Set To Impose "Price Caps" On Russian Oil; Unclear What This Actually Does - In the latest bizarro move by western nations meant to hurt Russia, but will blow back and help Putin get even richer while impoverishing western motorists with even higher gas prices, G7 leaders meeting at a Bavarian Alp summit, plan to impose a “price cap” on Russian oil as the group works to curb Moscow’s ability to finance its war in Ukraine, the FT reported. The latest sanction follows news that the same G7 will also impose an import ban on Russian gold, which western nations already can't buy, and which will only push even more physical gold into the willing hands of India and China while pushing global prices higher. Talks were set to continue on Monday, having begun on Sunday in the luxury resort of Schloss Elmau, where leaders want to enlist a range of countries beyond the G7 to put a ceiling on the price paid for Russian oil. It isn't exactly clear just what such a cap would achieve since western nations have already "agreed" to ban Russian oil imports some time in 2023 (or maybe that was 2024... or 2025), but according to the FT, leaders hope a cap will limit the benefits of the soaring price of crude to the Kremlin. Of course, that won't work since non-G7 member states will pay Moscow anything it wants to be paid and as such the price cap will only demonstrate to the world just how meaningless G7 "unity" is in world where the two largest nations - India and China - side with Russia. The idea of an oil price cap comes as the high price of crude means Russia’s revenues from oil exports have surged declined despite western restrictions on Russian oil imports. Concern is also mounting that attempts to ban ships carrying Russian oil from accessing western insurance markets this year could drive global oil prices to unprecedented levels. The International Energy Agency warns it could contribute to the shutdown of more than a quarter of Russia’s pre-invasion production. Under the price-capping scheme, Europe would limit the availability of shipping and insurance services that enable the worldwide transport of Russian oil, mandating that the services would only be available if the price ceiling was observed by the importer. A similar restriction on the availability of US financial services could give the scheme added impact. Obviously, this naive proposal has had the full backing of the Biden admin and recent comments by German officials suggested Berlin was also coming around to the idea. Officials said that Mario Draghi, Italy’s prime minister, told fellow G7 leaders that energy price caps were needed because “we must reduce the amount of money going to Russia and get rid of one of the main causes of inflation”. While it is understandable that Europe is angry that its actions have helped Russia claim a record current account surplus, even as the US current account deficit hits an all time high... ... it is not at all understandable how a self-imposed "price cap" by European nations - who have already made buying of Russian oil effectively illegal - and which needs to be implemented by all nations in the world and won't be with China and India holding out, will achieve anything. In any case, the FT reports that on Monday, the caps will be debated by a broader group when the leaders of Germany, the US, UK, France, Italy, Japan and Canada are joined by “partner” countries invited to the summit. These include India, which has become a big buyer of discounted Russian oil since the invasion of Ukraine, as well as Argentina, South Africa, Senegal and Indonesia.

Russia-Ukraine war: G7 leaders mull untried plan to manipulate oil prices --Leaders of the Group of 7 nations said they would stop buying gold from Moscow and discussed a new American proposal to undercut its oil revenues, even as Russian forces rained missiles on Kyiv for the first time in weeks. The dueling escalation underscored how the war in Ukraine has consumed global politics and the world economy. President Biden and the British government said members of the Group of 7 — Canada, France, Germany, Italy, Japan, Britain and the United States — would move on Tuesday to ban imports of Russian gold. Representatives for the assembled countries were also negotiating toward an agreement to buy Russian oil only at a steep discount. American officials see both the gold import ban and the possible oil price cap as ways to undercut key sources of revenue for Moscow’s war effort and further isolate it from the international financial system. Such a push was a theme at the meeting, both publicly and behind the scenes, as leaders sought to project solidarity with Ukraine. As the fighting in Ukraine grinds into its fifth month, the leaders of Group of 7 countries — the world’s wealthiest large democracies — are seeking to maintain unity against Russia in the face of the war’s growing toll on the global economy. Western sanctions intended to create pain for Russia have sent food and energy prices skyrocketing across the world, even as Moscow’s war machine has shown little sign of slowing down. Russia appeared to be sending a message of defiance to the G7 leaders on Sunday morning, when it unleashed a new round of missiles at an apartment building in Kyiv, killing at least one person. The top three floors of the nine-story building were reported destroyed. Rescuers were able to pull a 7-year-old girl from the rubble, but her father was killed and her mother, a Russian citizen, was injured, the authorities said. Before a working lunch meeting, Prime Minister Boris Johnson of Britain and Prime Minister Justin Trudeau of Canada were overheard by reporters mocking Russia’s president, Vladimir V. Putin, joking that they should take their shirts off — a jab at Mr. Putin’s penchant for horseback riding. The first step in renewing the group’s solidarity came before the summit formally began, with the announcement of the ban on gold imports from Russia. US banned oil and gas from Russia, and Europe will prohibit most Russian oil while reducing gas imports by the end of the year. The United States, the European Union and their allies have also placed sanctions on Russian officials and other members of the elite and imposed punishments on Russian banks, airlines and other companies.

“G7 Aims to Hurt Russia with Price Cap on Oil Exports” - by Yves Smith - We are taking the liberty of hoisting the title of the Financial Times story on this new-improved-but-still-as-delusional West-is-gonna-punch-Russia-in-the-nose-but-good sanctions scheme. Quite honestly, I thought surely someone would put this one out of its misery. But it seems there is never an idea so bad that it won’t be put into practice. So the US and EU are really mad that their sanctions have backfired. They are paying even more for oil and gas. They are even madder that Russia structures its taxes so they come mainly from foreign oil sales, so that the Russian government is awash with receipts.1 The EU and US making all kinds of noises that they will shellack Russia by going cold turkey on Russian oil and gas. But that’s proven to be sheer bluster. The US said it was going to embargo Russian oil but quietly backed away from that idea.2 Europe can’t replace Russian gas by this winter; it was going to fake its way to that end by maxing out on storage by the fall and then pretending that getting through the winter on previously-purchased Russian gas was the same as not getting through the winter with Russian gas. Similarly, it took quite a while to conclude the sixth EU sanctions package, the centerpiece of which was a Russia oil embargo. Hungary resisted fiercely because all its oil from Russia is via pipeline, so it can’t finesse its origin, unlike oil carried by tanker. So the compromise, agreed at the end of May, was a “partial ban’, supposedly 2/3 immediately via banning all oil via tankers, and 90% by year end, with the only exception as of then being pipeline gas delivered through the southern segment of the Druzhba pipeline. It appears that no one in the G7 got the memo that “Just say no” means going without, which as we can see, the West is willing to do only optically. Avoiding being seen with your favorite guy and then shagging him in a closet doesn’t work. From the Financial Times:G7 leaders meeting for a summit in the Bavarian Alps are seeking a deal to impose a “price cap” on Russian oil as the group works to curb Moscow’s ability to finance its war in Ukraine…They hope a cap will limit the benefits of the soaring price of crude to the Kremlin war machine while cushioning the impact of higher energy prices on western economies.The proposal has been strongly promoted by the US and recent comments by German officials suggested Berlin was also coming around to the idea.Officials said that Mario Draghi, Italy’s prime minister, told fellow G7 leaders that energy price caps were needed because “we must reduce the amount of money going to Russia and get rid of one of the main causes of inflation”.On Monday, the caps will be debated by a broader group when the leaders of Germany, the US, UK, France, Italy, Japan and Canada are joined by “partner” countries invited to the summit. These include India, which has become a big buyer of discounted Russian oil since the invasion of Ukraine, as well as Argentina, South Africa, Senegal and Indonesia.I can’t imagine India will go along. India has pointedly resisted Western pressures to join in the “punish Russia” enterprise. Russia also just agreed to allow major Indian retailers to open stores in Russia. And the global South has also been very much put off by the open display of racism and colonial attitudes. If the G7 was offering important inducements like food shipments, that might be enough to turn them, but Russia is more likely to be a key provider of needed commodities than the G7. So why are they supposed to go along? Because the West wants their help? Charitably assuming this deal gets done, it can go one of two ways. One is that it’s a damp squib, except for Russia stopping deliveries of pipeline oil to Europe, assuming they are on a floating rather than fixed price contract. That would hurt Hungary, which has made the mistake of trying to be sane (i.e., maybe the real point is to punish Hungary). Since pretty much no other oil is supposedly going to Europe, how can oil that it theoretically not (much) arriving be subject to price caps? Similarly, according to the EIA, the US is not getting any oil from Russia:

Oil Gains On The Day But Loses For The Month As JPMorgan Worries About $380 Per Barrel Prices - - Ahead of the U.S. holiday weekend and with a force majeure in Libya benefitting oil prices, crude on Friday eked out gains; however, it posted a third consecutive weekly loss and ended June down 8 percent on the month. Brent settled up $2.60 at $111.63 per barrel, and West Texas Intermediate settled up $2.67 at $108.43 per barrel; for the week, Brent lost 1.3 percent while WTI rose 0.8 percent. Reuters calculated that a planned strike among Norway's oil and gas workers next week could cut the country's overall petroleum output by around 8 percent or 320,000 barrels of oil equivalent per day, unless a last-minute agreement is reached. Potentially further exacerbating a tight market is India, whose government on Friday increased levies on shipments of gasoline and diesel as part of a drive to control a worsening currency deficit. "The ability of the complex to post a strong advance today in the face of significant U.S. dollar strength and a weak equity trade suggests some refocus on tight oil supplies." Friday also saw a continuation of the criticism against Europe's planned oil cap against Russia for invading Ukraine, with JPMorgan Chase & Co worrying that global oil prices could reach a "stratospheric" $380 per barrel if Russia decides to enact retaliatory crude output cuts. JPMorgan analysts wrote that Moscow could afford to slash daily crude production by 5 million barrels without excessively damaging the economy, and that a 3 million barrel cut to daily supplies would push benchmark London crude prices to $190, while 5 million could result in $380 crude. They added, "The most obvious and likely risk with a price cap is that Russia might chose not to participate and instead retaliate by reducing exports; it is likely that the government could retaliate by cutting output as a way to inflict pain on the West. "The tightness of the global oil market is on Russia's side."

Oil Market Confronts US And EU Policymakers With Daunting Choices: Kemp - With global inventories steadily falling and spare capacity eroding, the oil market resembles a geological fault line in which stress is quietly accumulating and will eventually be relieved by an earthquake of as yet unknown magnitude. The most likely stress relief will come from a deceleration in oil consumption as a result of a recession or mid-cycle manufacturing slowdown in the major oil consuming economies of North America, Europe and Asia.Economic growth is already slowing in the United States and faltering in Europe and China under the combined impact of accelerating inflation, rising interest rates and coronavirus controls. Financial conditions are tightening rapidly as central banks raise interest rates and commercial banks enforce tougher lending standards.Unlike previous cyclical slowdowns, central banks are likely to continue tightening financial conditions as the economy slows to snuff out inflation.The alternative is for a sharp acceleration of production ― meaning more output from OPEC members, U.S. shale producers, other non-OPEC suppliers, or currently sanctioned countries. Most OPEC members are already producing at full capacity, with the exception of Saudi Arabia and the United Arab Emirates.The precise amount of spare capacity available in Saudi Arabia and the United Arab Emirates is disputed given the secrecy which surrounds their production systems. But it is unlikely to be much more than around 1 million barrels per day (bpd) based on historic production rates (“Can Saudi Aramco Meet Its Oil Production Promises?”, Bloomberg, June 29).U.S. shale producers are already increasing drilling rates, which will translate into higher production over the next 6-12 months, once the wells have been drilled, fractured and linked up to pipeline systems.The largest shale producers remain committed to restraining output growth to avoid flooding the market and return capital to shareholders, which is likely to limit growth from this source.Non-OPEC non-shale producers (NONS) are expected to increase production by under 1 million bpd in both 2022 and 2023 (“EIA forecasts growing liquid fuels production in Brazil, Canada and China”, EIA, June 17).The only other source of increased production would come from easing sanctions on Venezuela, Iran or Russia, which could add several million barrels daily to the market depending on which sanctions were relaxed.Brent’s spot price and calendar spreads are sending contrasting signals about the tightness of oil supplies, implying the market is storing up volatility which is likely to be unleashed over the next few months. Front-month futures prices are high, but not extremely so once adjusted for inflation, lying in the 85th percentile for all months since 1990 and the 78th percentile for all months since 2000. The implication is the market is short of petroleum but the shortfall is not (yet) critical and expected to be resolved relatively easily by an increase in production, a reduction in consumption, or both. But Brent’s six-month calendar spread, usually seen as a clearer signal about the balance between production, consumption, inventories and spare capacity, is trading near record levels. Brent spreads are signalling the market is already exceptionally tight, with shortages becoming critical and difficult to relieve without a massive increase in output, a recession-driven fall in consumption, or both. Other calendar spreads, including the very short-term dated Brent spreads for cargoes scheduled to load in the next few weeks, and Murban crude futures, the benchmark in Asia, are already at record levels. The tightness in some of these short-term spreads is likely exaggerated by squeezes, so the price structures should be interpreted with care, but squeezes would not be possible if the market was not under-supplied. Critical calendar spreads are signalling an extreme shortage of crude - even though the U.S. Strategic Petroleum Reserve (SPR) is discharging 1 million barrels per day until the end of October.

Who's Still Buying Fossil Fuels From Russia? - Despite looming sanctions and import bans, Russia exported $97.7 billion worth of fossil fuels in the first 100 days since its invasion of Ukraine, at an average of $977 million per day. So, which fossil fuels are being exported by Russia, and who is importing these fuels?The infographic below, via Visual Capitalist's Niccolo Conte and Govind Bhutada, tracks the biggest importers of Russia’s fossil fuel exports during the first 100 days of the war based on data from the Centre for Research on Energy and Clean Air (CREA). The global energy market has seen several cyclical shocks over the last few years.The gradual decline in upstream oil and gas investment followed by pandemic-induced production cuts led to a drop in supply, while people consumed more energy as economies reopened and winters got colder. Consequently, fossil fuel demand was rising even before Russia’s invasion of Ukraine, which exacerbated the market shock.Russia is the third-largest producer and second-largest exporter of crude oil. In the 100 days since the invasion, oil was by far Russia’s most valuable fossil fuel export, accounting for $48 billion or roughly half of the total export revenue.While Russian crude oil is shipped on tankers, a network of pipelines transports Russian gas to Europe. In fact, Russia accounts for 41% of all natural gas imports to the EU, and some countries are almost exclusively dependent on Russian gas. Of the $25 billion exported in pipeline gas, 85% went to the EU.The EU bloc accounted for 61% of Russia’s fossil fuel export revenue during the 100-day period. Germany, Italy, and the Netherlands—members of both the EU and NATO—were among the largest importers, with only China surpassing them. China overtook Germany as the largest importer, importing nearly 2 million barrels of discounted Russian oil per day in May—up 55% relative to a year ago. Similarly, Russia surpassed Saudi Arabia as China’s largest oil supplier.The biggest increase in imports came from India, buying 18% of all Russian oil exports during the 100-day period. A significant amount of the oil that goes to India is re-exported as refined products to the U.S. and Europe, which are trying to become independent of Russian imports.In response to the invasion of Ukraine, several countries have taken strict action against Russia through sanctions on exports, including fossil fuels. The U.S. and Sweden have banned Russian fossil fuel imports entirely, with monthly import volumes down 100% and 99% in May relative to when the invasion began, respectively.

IEA: Global refinery capacity increases gather pace in 2023 | Oil & Gas Journal - After posting its first decline in 30 years during 2021, global refining capacity will increase 1 million b/d this year and a further 1.6 million b/d in 2023, the International Energy Agency (IEA) said. This is a result of 4.1 million b/d of new capacity coming online, offset by 1.6 million b/d of permanent shutdowns. The closures are front-loaded, with 1.1 million b/d set to shut in 2022. Still, the pace of capacity shutdowns is slowing somewhat, compared to 1.8 million b/d in 2021. Over 2022 and 2023, net capacity growth is slightly less than in 2019, but is among the fastest rates for net additions observed over the last two decades, according to IEA data. East of Suez delivers 70% of global net additions in 2022-23, led by major projects in the Middle East and China. After 4 years of capacity decline, the Atlantic Basin will finally see net growth, thanks to African and North American projects. “When looking at a 5-year period of 2019-23, the role of East of Suez is even more prominent – it delivers all the growth globally, offsetting the net 700,000 b/d decline in the Atlantic Basin. China alone accounts for almost 70% of global net additions in 2019-2023, even as the rate of the capacity additions in the country slows in 2022-23. Excluding China, global capacity additions during 2019-2023 amount to just 1 million b/d,” IEA said. Among additions, 2.8 million b/d are greenfield sites, while the rest is expansion projects at existing refineries. Five projects, including mega-refineries in Nigeria and Kuwait and large sites in China and Mexico, contribute 2.3 million b/d, which is just over half of total gross additions. “Assumed start-up dates for these particularly big projects mostly reflect the initial launch of the first train where the projects consist of several trains. There is also the usual degree of uncertainty around the start-up dates due to operational issues, logistical challenges, and supply chain disruptions, among other various unforeseen circumstances affecting the planned timing of projects,” IEA said.

Concerns grow that India is back door into Europe for Russian oil - The Asian nation’s willingness to snap up Russian crude at discounts of up to 30% has undermined efforts from the US, Europe and the UK to deplete Vladimir Putin’s war coffers by curtailing imports. Russia raked in $20bn from oil exports in May, bouncing back to pre-invasion levels. Now, concerns are growing that India is being used as a potential back door into Europe for Russian oil supplies,given the surge in imports. Before the invasion of Ukraine, India’s imports of Russian oil were negligible due to high freight costs. But recently, imports of Russian oil to India have increased. Vadinar’s owner, Nayara, purchased Russian oil in March – just before international restrictions on its exports were introduced – after a gap of a year, buying about 1.8m barrels from Trafigura, Reuters reported.The volumes that India has been buying and exporting, however, suggest that some of the refined Russian crude may ultimately be used in Europe’s filling stations. It is not clear where the Russian crude brought into Vadinar on the SCF Primorye will be used. Vadinar’s owner’s declined to comment on the shipment or whether it was shipping Russian oil to Europe.In May, India imported about 800,000 barrels of oil per day from Russia in Mayand the rating agency Fitch predicts that imports could soon increase further to 1m barrels per day, or 20% of India’s total imports. India, China and the United Arab Emirates have picked up the slack as Russian crude oil imports into the EU fell by 18% in May.Putin told the Brics (Brazil, Russia, India, China and South Africa) business summit this week that “Russian oil supplies to China and India are growing noticeably”.India’s 1.4 billion-strong population gives it reason to seek cheap supplies. But it’s a dangerous political game. “India is walking a tightrope,” said Alan Gelder, the vice-president of refining, chemicals and oil markets at Wood Mackenzie. “If you take too much, you do not want the west to sanction the rest of your economy.”The Centre for Research on Energy and Clean Air said Reliance Industries’ Jamnagar refinery in Gujarat received 27% of its oil from Russia in May, up from 5% in April. The centre said about 20% of exported cargoes from Jamnagar left for the Suez canal, indicating that they were heading to Europe or the US. Shipments were made to France, Italy and the UK. However, there is no evidence that these shipments included Russian oil.The UK has committed to phasing out Russian oil by the end of the year. Britain did not import any petrol before the war but diesel accounted for 18% of total demand. While trading Russian oil remains legal, the stigma attached to it means some international companies involved in fuel supplies may attempt to mask its origins. Some energy firms rushed to cut shipments from Russia but industry watchers said some drivers in the south-east of England were still likely to be filling up with diesel refined in Russia.State processors of oil are attempting to secure six-month supply contacts for Russian crude to India, Bloomberg reported this month. The trio of state refiners – Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum – declined to answer questions on whether they were importing Russian oil or exporting it to Europe.Industry sources said tracking shipments of Russian oil to Europe via India is proving very difficult. “You’ll find that several shipments of crude will arrive at a port from different countries and be blended together. Tracking a hydrocarbon is basically impossible.”There are several tactics shippers are using to hide the origin of Russian oil, sources said. Financially, paying in Chinese currency – rather than the industry standard dollar – is an option. Yuan-rouble trading volumes have surged 1,067% since February’s invasion of Ukraine. Transfers of oil cargoes from ship-to-ship have also spiked, suggesting oil is being switched from Russian flagged-vessels to other ships. Increasing numbers of vessels have been “going dark” by switching off their automative identification systems as thousands of gallons of the black stuff are transferred on the waves.A third, more niche option to hide Russian transactions is to cut out using a currency and trade oil directly for other products, such as gold, food or weapons. Iran has previously taken payment from trading partners in gold rather than dollars.“If a country or oil operator wants to hide the source of crude or oil products, it can very easily do so,”

Petroleum Products: India's petroleum products' export falls 1% in May after rising 22% in April - Export of petroleum products fell 1% in May over the year after rising 22% in April as demand soared in the domestic market, according to the oil ministry data. India exported 5.7 million metric tonnes (MMT) of petroleum products in May, 6% higher than in April but 1% lower than in May 2021. Imports increased 14% to 3.2 MMT in May over the year, compared to 3.8 MMT in April. Net export contracted 0.4 MMT during the month over the year. Indian refiners have been working overtime to meet the soaring fuel demand. The average run at Indian refineries has jumped to 110% in May from 93% a year. Declining net export of refined fuel suggests the domestic market, where demand soared 24% over the year in May, is gobbling most of the output. Diesel and petrol make up three-fourths of India’s petroleum products exports in volume terms while LPG comprises 40% of the imported fuels. In value terms, exports nearly doubled to $6.5 billion over the year in May while imports rose nearly two-thirds to $2.3 billion. Refiners processed 5.35 million barrels per day (mb/d) of crude in May, compared to 4.49 mb/d a year earlier. Refiners are enjoying near-record margins on petrol and diesel these days due to a combination of strong demand, lower global refinery capacity, and loss of Russian exports. Indian state-run refiners buy refined fuels from private refiners to meet the domestic demand they can’t meet on their own.

Mangaluru: Indian Coast Guard monitoring oil spill from cargo ship that sunk- Indian Coast Guard has continued to monitor the situation around the grounded merchant ship MV Princess Miral of New Mangalore for any probable leakage of oil from the ship. The ship had sunk two days ago. The State administration along with other stakeholders is also coordinating for shore line cleanup in case of any oil spill.Constant surveillance has been undertaken by Coast Guard aircraft and ships in the area around the vessel and onshore for pollution response since June 21. A fully equipped Pollution Control Vessel, ICGS Samudra Pavak from Porbandar, arrived on Saturday morning off New Mangalore and joined the Pollution Response operation at sea along with ICG ships and aircraft. As on date, 9 ships of Coast Guard and resource agencies, 3 Coast Guard aircraft are on task for assessment and monitoring the sea area of New Mangalore. These assets are continuing the necessary preventive measures. Netravati river is in close proximity of the vessel which is grounded close to shore. Therefore as a precautionary measure, the river mouth has been barricaded from the seawards side using inflatable booms so as to prevent containment of the river in case of any leakage of oil from the ship. Coast Guard Pollution Response team and experts are continuously analysing the situation and also assisting State Administration and New Mangalore Port Authorities by conducting Pollution Response and shore line cleanup training sessions and mock drills.

Fuel yet to be removed from ship - While the Coast Guard continues to keep an eye for oil spill, if any, from the sunken merchant vessel Princess Miral near Batpady, the district administration continued its mock drill to prevent the spread of oil spill along the coast for the second day on Sunday. There was no headway in defuelling the ship. The Coast Guard has positioned its fully-equipped Pollution Control Vessel, ICGS Samudra Pavak, which sailed out from Porbandar, for pollution response operation at sea. Nine ships of the Coast Guard and resource agencies and three Coast Guard aircraft are also being used for assessment and monitoring the area of the incident. As the sunken vessel is close to the shore in Batpady, the Coast Guard has barricaded the Netravathi river mouth from the seaward side using inflatable booms to prevent the spread of oil spill, if any. On the ground, the district administration continued its mock shore clean-up drill on Sunday on Ullal Beach. Apart from personnel from the State Disaster Response Force and National Disaster Response Force, Firemen, Home Guards, Karnataka State Pollution Control Board and personnel from MRPL, ONGC and other strategic firms were involved in the mock drill. Local fishermen too were involved in the exercise. The mock drill was conducted by trained staff of Coast Guard.

Kolkata port continues to bear loss as Bangladeshi ship blocks berth at NSD - It’s been over three months now since a Bangladeshi container ship capsized inside the Netaji Subhas Docks (NSD) in Kolkata but the possibility to salvage it and clear the berth in the near future looks bleak. Syama Prasad Mookerjee Port (SMP), Kolkata, has already lost several crores over the last 90-odd-days as it is unable to use the berth. “The owners of the vessel have abandoned it. It’s a legal issue now. We have got in touch with the insurers of the ship and other agencies to resolve the issue. We can’t go ahead and salvage the ship. After all, she is not our property. Under the circumstances, only the insurers can engage salvage agencies to recover the vessel and pay us demurrage charges. Such a situation is unprecedented in the long history of the port,” an SMP, Kolkata spokesperson said. Around 9 a.m. on March 24, MV Marintrust 01 loaded 165 containers at Berth 5 NSD. The gross weight was 3,089 tonnes. The ship was to sail for Chittagong on March 25. Around 10.40 a.m., the ship keeled to Port (left side) and capsized. The incident took barely 15 minutes. Most containers remained on the vessel while a few sank and others had to be tethered with ropes to keep them from floating away. SMP, Kolkata also adopted measures to contain an oil spill if any. “The port is not involved with the incident in any way. We are just the facilitator. The cargo was loaded by an agency under the guidance of the ship’s master and other crew. If the placement of the containers was wrong, the master and the agency involved will have to share blame. However, a thorough inquiry will only be possible once the vessel is salvaged. All 15 crew members are still in Kolkata and their statements will be important once the ship is salvaged,” a port official said. Bangladesh has been trying its best to get the crew back home but Indian authorities are firm. “That may have been possible had the owners not abandoned the ship. Now, the crew is the only link. SMP, Kolkata that is suffering a loss of revenue daily due to blockage of the berth can’t be expected to spend several crores to salvage the wreck without being compensated,” an Indian official said.

Pakistan’s fuel oil imports hit 4-yr high as it struggles to buy LNG -- Pakistan’s monthly fuel oil imports are set to hit a four-year high in June, Refinitiv data showed, as the country struggles to buy liquefied natural gas (LNG) for power generation amid a heatwave that is driving demand. The resurgence in residue fuel demand at power plants underscores the energy crisis faced by the South Asian country and slows its efforts to switch to cleaner fuel. Pakistan had cut fuel oil imports since the second half of 2018 as LNG prices were low, but it had to at times switch back to oil since July 2021 because of sky-high LNG prices. The country’s fuel oil imports could climb to about 700,000 tonnes this month, after hitting 630,000 tonnes in May, according to Refinitiv estimates. Imports last peaked at 680,000 tonnes in May 2018 and 741,000 tonnes in June 2017. A spokesman for Pakistan’s energy ministry cited global prices as the reason for the surge in fuel oil imports. The trend is set to continue in July too, as Pakistan State Oil (PSO) received offers from Coral Energy to supply two high sulphur fuel oil (HSFO) cargoes and one low sulphur fuel oil (LSFO) cargo for second-half July delivery, industry sources said. PSO had sought five cargoes in the tender, according to its website. “Import data indicates that thermal power generating companies in Pakistan made the initial switch from gas to fuel oil late last year and the price dynamic provides an ongoing incentive to max out fuel oil purchases over LNG,” said Timothy France, a MENA senior oil analyst at Refinitiv. Asia LNG spot prices jumped last week, tracking European gas prices, as an extended shutdown at a U.S. export plant prompted buying by Japan and South Korea. Pakistan LNG, in its second attempt to buy four LNG cargoes for July delivery, received only a single supply bid for one cargo from QatarEnergy on Thursday. Pakistan LNG, however, did not pick up the supply bid due to the cost. The country, which is facing a severe energy crisis, has been in a conservation mode to reduce consumption and stave off blackouts.

Bankrupt Sri Lanka runs out of fuel - Sri Lanka has virtually run out of petrol and diesel after several expected shipments were delayed indefinitely, the energy minister said Saturday while apologising to motorists for the worsening fuel crisis. Kanchana Wijesekera said oil cargoes that were due last week did not turn up while those scheduled to arrive next week will also not reach Sri Lanka due to "banking" reasons. Sri Lanka is facing a serious shortage of foreign exchange to finance even the most essential imports, including food, fuel and medicines and is appealing for international handouts. Wijesekera said the state-run Ceylon Petroleum Corporation was unable to say when fresh oil supplies will be on the island. The CPC had also shut its only refinery over a shortage of crude oil, he added. The refinery started operation earlier this month using 90,000 tonnes of Russian crude oil bought through Dubai-based Coral Energy on two-month credit terms. Wijesekera said he regretted that deliveries of "petrol, diesel and crude oil shipments due earlier this week and next week" would not be fulfilled "on time for banking and logistical reasons". Scarce supplies left in the country will be distributed through a handful of pumping stations, he said. Public transport and power generation will be given priority, Wijesekera added, urging motorists not to queue up for fuel. "I apologise for the delay and inconvenience," the minister said as hundreds of thousands of motorists spent long hours waiting for petrol and diesel across the impoverished nation. Last week, the government shut non-essential state institutions along with schools for two weeks to reduce commuting because of the energy crisis. Several hospitals across the country reported a sharp drop in the attendance of medical staff due to the fuel shortage. Prime Minister Ranil Wickremesinghe warned parliament on Wednesday that the South Asian nation of 22 million people will continue to face hardships for a few more months and urged people to use fuel sparingly. "Our economy has faced a complete collapse," Wickremesinghe said. "We are now facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food." Unable to repay its $51 billion foreign debt, the government declared it was defaulting in April and is negotiating with the International Monetary Fund for a possible bailout.

Sri Lanka to send ministers to Russia seeking discounted oil -- Cash-strapped Sri Lanka has announced it will send ministers to Russia and Qatar to try and secure cheap oil a day after the government said it had all but run out of fuel. Energy Minister Kanchana Wijesekera said two ministers will travel to Russia on Monday to discuss getting more oil following last month’s purchase of 90,000 tonnes of Siberian crude. That shipment was arranged through Coral Energy, a Dubai-based intermediary, but politicians have been urging the authorities to negotiate directly with President Vladimir Putin’s government. “Two ministers are going to Russia and I will go to Qatar tomorrow to see if we can arrange concessionary terms,” Wijesekera told reporters in Colombo on Sunday. Wijesekera had announced on Saturday that Sri Lanka was virtually out of petrol and diesel after several scheduled shipments were delayed indefinitely due to “banking” reasons. Fuel reserves were sufficient to meet less than two days’ demand and it was being reserved for essential services, Wijesekera said, apologising for the situation. The state-run Ceylon Petroleum Corporation on Sunday hiked the price for diesel by 15 percent to 460 rupees ($1.27) a litre and petrol by 22 percent to 550 rupees ($1.52). Since the beginning of the year, diesel prices have gone up nearly fourfold and petrol prices have almost tripled. Wijesekera said there would be an indefinite delay in getting new shipments of oil, and urged motorists not to queue up until he introduces a token system to a limited number of vehicles daily. People, already waiting in kilometres-long, snaking queues outside pumps, are unlikely to get fuel as the government will focus on issuing the remaining stocks for public transport, power generation and medical services, Wijesekera said. The military, which has already been deployed at fuel stations to quell unrest, will now issue tokens to those waiting, sometimes for days, he said, adding that ports and airports will be given fuel rations. Meanwhile, the government extended a two-week closure of non-essential state institutions until further notice to save fuel, maintaining only a skeleton staff to provide minimum services.

Fuel to be supplied only for essential services until July 10 - Fuel volumes will be dispensed only to vehicles attached to essential services with effect from midnight today (June 27) until the 10th of July, Minister Bandula Gunawardena says. He revealed this addressing a special media briefing held today to announce the decisions taken at the meeting of the Cabinet of Ministers. Accordingly, the Ceylon Petroleum Corporation (CPC) will supply diesel and petrol only to essential services such as ports, health sector, distribution of essential food items, and transportation of agricultural products hereafter, the cabinet spokesperson noted. The Cabinet of Ministers decided to continue essential services and suspend other operations until the 10th of July, the minister said further. He went on to assure that a mechanism to provide a continuous supply of LP gas and fuel would be in place after the 10th of July. Inter-provincial transport services will be temporarily halted due to the availability of limited stocks of fuel, Minister Gunawardena added. Meanwhile, school principals and provincial education authorities are given permission to decide on how lessons are delivered to the students amidst this crisis situation.

Oil imports surge in first five months - As crude oil prices rise sharply this year due to the war in Ukraine, the value of Taiwan’s oil imports surged by 75.6 percent to US$11.9 billion in the first five months of this year compared with the same period last year, the Ministry of Finance said in a report on Thursday. The import value is expected to reach from US$28 billion to NT$31 billion by the end of the year, the highest in eight years, the ministry said. Taiwan is almost entirely dependent on imports for its oil supply, the ministry said, adding that the import volume was stable from 2012 to 2019, at above 300 million barrels a year, while the import value fluctuated with changes in international oil prices. Taiwan last year imported 282.88 million barrels of oil, up 6.6 percent from a year earlier, while the import value rose 59 percent to US$19.9 billion, as the reopening of major economies boosted crude oil prices, the ministry said. That was in contrast to 2020, when the nation imported 265.26 million barrels of oil, down 18 percent from a year earlier, while the import value plunged 41.5 percent to US$12.5 billion, the lowest in 18 years, after responses to the spread of COVID-19 wreaked havoc on the global economy and severely dented oil demand and prices, the ministry said. Oil imports this year have extended momentum from last year, as the war in Ukraine drove oil prices to more than US$100 per barrel, it said. The nation imported 121.86 million barrels of oil in the first five months, up 10.9 percent from a year earlier, at average prices of US$97.80 per barrel, the ministry said. Most of the nation’s oil imports came from the Middle East, with Saudi Arabia accounting for 34.5 percent and Kuwait contributing 20.1 percent in the first five months, while those from the US comprised 21.1 percent of the total during the first five months thanks to an increase in shale oil imports, it said. Taiwan’s exports of refined petroleum products also have a high correlation with oil prices, the ministry said. In 2013, exports of such products reached US$22.9 billion, but dropped in subsequent years, with the value falling to US$5.7 billion in 2020, the lowest in 17 years, it said. Exports of refined products last year increased 68.8 percent from a year earlier to US$9.7 billion, and increased 100.5 percent to US$6.5 billion in the first five months of this year, of which diesel exports accounted for 55 percent of the total and gasoline products comprised 20 percent, the ministry said.

Oil production increase leads Venezuela’s economy to see most growth in 15 years - Venezuela’s economy is forecast to expand at its fastest pace in 15 years, marking a rebound for a country that recently emerged from the deepest recession in Latin America. Gross domestic product is expected to grow 8.3% this year, from 1.9% in 2021, according to a Bloomberg survey of five economists. The country is getting a lift from a rise in oil production and seeing tax revenue and banking credit expand, which suggests domestic demand is rising. Economists had forecast growth of 5.2% as of December. The central bank hasn’t published official GDP data since 2019. To be sure, the economy is a sliver of what it once was. A seven-year recession that ended in 2021 and was marked by bouts of hyperinflation and a migration crisis has left the country hollowed out. Over the past decade, gross domestic product shrunk to around $49 billion from $352 billion in 2012, according to the International Monetary Fund. “The headline could be: the country that has always done poorly is now growing. But when we look at recent history, we see that it’s nothing compared to the levels of recession we’ve had,” said Angel Alvarado, senior fellow at the University of Pennsylvania and founder of the Venezuelan Finance Observatory during a presentation in which he released a forecast of 11.5% growth this year. Alvarado said the country would need to post double-digit growth for a decade for it to return to the size it was in 2012.

Will Colombia’s New President Upend Its Oil Industry? --Leftist candidate Senator Gustavo Petro emerged victorious from Colombia’s June presidential run-off as the strife-torn country’s president elect. On 7 August 2022 Petro will be sworn into office becoming the 34th president of the Republic of Colombia. This has roiled Colombian financial markets and the Andean country’s currency the peso. Since Petro beat multimillionaire businessman Rodolfo Hernandez the Colombian peso has tumbled by almost 6% while the domestic stock market has shed 6.1%. The president-elect’s proposed policies of reforming the economy, boosting taxation, and ending extractivist industries, including ending contracting for petroleum exploration have unnerved financial markets and investors. Petro has also made it clear (Spanish) that hydraulic fracturing, known as fracking, and the exploitation of unconventional hydrocarbon deposits will not be permitted in Colombia. Colombia’s highest administrative tribunal, the State Council, has already placed a moratorium on fracking, although pilot projects are allowed. That, along with Petro’s intention to end the development of offshore hydrocarbon deposits spells the end of Colombia’s oil industry, which even before his victory was facing an extremely uncertain future. Petro’s policies have sparked a frenzied debate in Colombia about the future of the Andean country’s oil industry which is a key driver of the economy. For the first four months of 2022 petroleum exports (Spanish) generated $6.6 billion, making crude oil responsible for 36% of all export earnings for that period. Total petroleum and derivative products exported represent around 70% of Colombia’s petroleum production. During 2019 Colombia’s oil industry was responsible for(Spanish) 3.4% of the Andean country’s gross domestic product, while for the last four quarters from the second quarter of 2021 that fell to 2.7% despite the latest oil price rally. According to Colombia’s peak hydrocarbon industry body, the Colombian Petroleum Association (ACP -Spanish initials) crude oil is responsible for nearly a fifth of the central government’s fiscal income. Those numbers emphasize how critical the oil industry is to Colombia’s economy and for ensuring the crisis-driven country’s energy security. For these reasons, Petro’s plans to end contracting for oil exploration have triggered considerable conjecture that it will significantly impact government revenues, preventing the president-elect from implementing his economic reforms. It is estimated that the president-elect’s plans will be impacted by a massive budget black hole which will worsen if Petro ends extractivist industries in Colombia. Petro’s plans essentially mean Colombia’s petroleum industry will gradually wind down as proven reserves are depleted. At the end of 2021, it was calculated that Latin America’s third largest oil producer only had meager proven reserves of 2 billion barrels, which at the current rate of production will only last for a further seven years. That production life falls to less than six years if Colombia’s oil output returns to one million barrels per day, which was last witnessed in 2015. While Colombia’s 23 basins are under-explored for the presence of hydrocarbons there has been a notable absence of significant oil discoveries over the last two decades. That points to the Andean country not possessing the substantial oil potential required to sustain production of 700,000 barrels per day or more, nor the long-term operation of its petroleum industry. For these reasons, the future of Colombia’s oil industry, even without Petro’s policy to end contracting for hydrocarbon exploration, is questionable.

Rubis fined $225k for 2019 terminal oil spill - Cayman News Service -Almost three years after 3,700 gallons of oil leaked at Rubis’ Jackson Point Terminal due to a rusty tank, the Utility Regulation and Competition Office (OfReg) has fined the supplier $225,000 following a successful prosecution. The discovery of the leak was not reported to the public for six months, and the report on the independent investigation into the cause was only made public after CNS acquired a copy. But OfReg said it had “acted quickly” and established the cause, and despite the large quantity of diesel leaked, the regulator also said it had found no significant impact on the environment.The investigation found sufficient grounds to file charges against Rubis earlier this year. Following initial legal proceedings brought before the courts, Rubis has now agreed to settle the matter and accept an administrative fine, including investigative and related costs.“As the regulator for the fuel sector, OfReg has a legal duty to ensure all operators operate and maintain critical national infrastructure to the highest standard in order to deliver the required benefits to consumers and the jurisdiction,” OfReg CEO Peter Gough said. “This particular incident, thankfully, has not had a significant impact on our environment, but as our investigation has determined, had the operator adhered to the codes, standards and their own operational procedures, the leak could have been prevented.”According to the report, Rubis was aware of the problem with the tank for six years before it began to leak. The tank suffered a “bottom plate failure resulting from severe rust and degradation due to corrosion”, which was preventable, according to the independent investigation.Gough said the decision to prosecute and the size of the fine reflected the seriousness of the offence and the regulator’s commitment to holding licensed operators accountable for their actions. “The matter is now closed, and we are clear in our mandate to ensure that this should not happen again and that there will be severe consequences for those that fail to meet the requirements and terms of their permits and licences,” he added. The fine is in line with the one issued to Sol Petroleum Limited — CI$

Another oil spill occurs in Niger Delta - The National Oil Spills Detection and Response Agency (NOSDRA) has confirmed an oil wellhead leak at Oil Mining Lease (OML) 18, operated by an indigenous operator, Eroton Exploration and Production Limited. OML 18, which produces and exports crude through the 97 kilometres Nembe Creek Trunkline (NCTL), is located near the corridors of the export line in Rivers. Residents said the facility had been discharging oil and gas into the coastal environment for the past one week. The Director-General of NOSDRA, Idris Musa, confirmed the oil and gas leak to the News Agency of Nigeria (NAN) on Saturday. Mr Musa said NOSDRA had received the report on the incident and efforts were being made to plug the leaking oil well. “The company reported and oil recovery is underway. Efforts are on to stop the source which is a wellhead,” Mr Musa said. Also, a notification report by the Corporate Communications Lead of Eroton, Odianosen Massade, indicated that the incident occurred on June 15, while a site assessment visit was carried out on June 23. The oil firm said that preliminary findings indicated that the incident was due to suspected vandalism. “This is to bring to your attention the loss of control of Cawthorne Channel well 15 resulting to oil spill,” the company said. CAWC015L/S is a dual string well which started production in May 1977. The short string was shut-in in 1988 due to the high gas oil ratio (HGOR), while the long string watered out and well quit in 1991. “The spill started on the 15th of June 2022 and immediately an emergency response procedure was activated. “The operations team quickly visited the site for preliminary investigation and discovered that the wellhead was vandalised. “It was also observed that the wellhead platform was removed, and this will compound the difficulties in gaining access to the wellhead. “Our team of Well Engineers are working with contractors and evaluating the safest procedure that will be required to bring the well under control.

NOSDRA confirms crude oil spill at Eroto’s OML 18 in Bayelsa — The National Oil Spills Detection and Response Agency (NOSDRA), yesterday, confirmed an oil wellhead leak at Oil Mining Lease (OML) 18, operated by an indigenous operator, Eroton Exploration and Production Limited, along the 97-km Nembe Creek Trunkline (NCTL) located near the corridors of the export line, in Rivers State. Residents said that the oil facility has been discharging oil and gas into the coastal environment for the past one week. The Director-General of NOSDRA, Mr. Idris Musa, who confirmed the leakage, said that efforts were on to contain the menace, adding that “the company reported that an oil recovery was underway. Efforts are on to stop the source which is a wellhead.” Also, a notification report by Mr. Odianosen Masade, Corporate Communications Lead at Eroton, indicated that the incident occurred on June 15, while a site assessment visit was carried out on June 23. The oil firm said that preliminary findings indicate that the incident was due to vandalism. “This is to bring to your attention the loss of control of Cawthorne Channel Well 15 resulting in an oil spill. CAWC015L/S is a dual string well, which started production in May 1977. The short string was shut-in in 1988 due to the high gas-oil ratio (HGOR), while the long string watered out and well quit in 1991. “The spill started on June 15, 2022, and immediately an emergency response procedure was activated. “Our team of good engineers is working with contractors and evaluating the safest procedure that will be required to bring the well under control. A similar incident reported on Nov 5, 2021, at nearby OML 29 operated by Aiteo Eastern Exploration and Production, discharged more than 8, 000 barrels of crude oil for some 32 days before the leak was plugged.

Reps probe oil spills, abandoned wells in Niger Delta - House of Representatives had mandated its Committees on Petroleum Resources (Upstream) and Environment to investigate the actual cause of the oil leaks at OML 18, OML 29 and OML 63 and abandoned wells in Niger Delta.The Committees were also saddled with the responsibility of determining the magnitude, scope, and effect of the leaks on affected host communities, examine the scope and liability for required relief and compensation, inquire the nature and details of the JV agreement between Aiteo and NNPC to determine veracity of ownership of percentage stake and financial obligations and as well confirm the claim by Aiteo of engagement of a foreign company to stop the leak, the cost of doing so and the financial claim made by Aiteo to NAPIMS in this regard. The mandate was sequel to the consideration of a motion of under matters or urgent public importance moved at Wednesday plenary by Hon. Ibrahim Isiaka.Isiaka in his motion said he was jolted by the confirmation by the National Oil Spill Detection Agency (NOSDRA) on Saturday 25 June 2022 of a weeklong spill.He said: “The oil leak is from Cawthorne Channel Well 15; an idle and isolated well on Oil Mining Lease (OML) 18. A large oil bloc located towards the south of Port Harcourt, Rivers State, operated by Eroton Exploration and Production Limited which has 45% stake in a Joint Venture (JV) agreement with the Nigerian National Petroleum Corporation (NNPC) Limited atter Shell Petroleum Development Company of Nigeria Limited (SPDC) divested her interest in the bloc, in 2015. Informed that the Corporate Communications Lead of Eroton reported an oil leak. which eventually resulted to a blowout of crude oil and gas into the environment on 15th June, 2022. Whereas, NOSDRA’s only reported the incident on 23rd June 2022 (10 days thereafter).

Well run by Nigeria's Eroton spills oil and gas for over a week – A well at a site operated by local Nigerian firm Eroton Exploration and Production Limited has been spilling oil and gas into the Niger Delta for more than a week, the company and an agency responsible for detecting oil spills said.Eroton produces and exports crude from its Oil Mining Lease 18 block through the Nembe Creek Trunkline.Last year, a nearby well run by Aiteo Eastern E&P spilled oil for more than a month, polluting the Delta creeks before it was successfully shut.Idris Musa, head of the National Oil Spills Detection and Response Agency said on Sunday Eroton had reported the spill to authorities, blaming it on a leak from a wellhead.Eroton said in an undated statement seen by Reuters on Sunday that the incident started on June 15 and preliminary findings showed vandalism was the cause.The wellhead platform had been removed, making it difficult to gain access to the well, it added.“Our team of well engineers are working with contractors and evaluating the safest procedure that will be required to bring the well under control,” the company said.It was not immediately clear how much oil is produced from the well, which is part of assets that Eroton bought in 2015 from oil major Shell, which is selling its onshore assets to concentrate on deepwater drilling.Oil spills, sometimes due to vandalism or corrosion, are common in the Niger Delta, a vast maze of creeks and mangrove swamps criss-crossed by pipelines and blighted by poverty, pollution, oil-fuelled corruption and violence.

Shell suspends multibillion-dollar assets sale in Nigeria -- Shell Group says it has suspended the divestment of its interest in its Nigeria subsidiary-Shell Petroleum Development CompanyThe IOC in a statement signed by its Managing Director of SPDC and Chairman, Osagie Okunbor, on Thursday, said the sale of the assets had been put on hold pending the outcome of its appeal at the Supreme Court.“The Shell Group has confirmed separately that it will not progress the divestment of its interest in SPDC until the outcome of SPDC’s appeal”, the statement partly said.The SPDC had faced multiple court cases in the past over oil spills.

Cilacap: Pertamina investigates oil spill in Donan River - ANTARA News- State oil company PT Kilang Pertamina Internasional’s (KPI's) Refinery Unit (RU) IV Cilacap is investigating a crude oil spill in Donan River, Cilacap district, Central Java, which was detected on Monday.While issuing a press statement in Cilacap on Tuesday, communication relations and CSR area manager of PT KPI RU IV Cilacap, Cecep Supriyatna, said that based on observations, the spill involved crude oil and the estimated volume was 1,900 liters."As for the cause, it is still under investigation," he added.Before the spill was detected, oil was loaded from a pipeline to a tanker in Area 70 of Pertamina Cilacap, he informed."Staff in Area 70 are looking for the source of the oil spill," he said.The PT KPI RU IV Cilacap team will try to localize the oil spill by using an oil boom if weather conditions are favorable, he added.Once localized, the spilled oil would be sucked and separated from water by an oil skimmer before being put back into the tank. "Since last night, we have been cleaning as much as possible because it is the wind and wave conditions, so it is not optimal," Supriyatna said.Based on drone monitoring, the area affected by the oil spill is not very wide, he added. "Only around Batre Pier or Wijayapura," he informed.The refinery will compensate residents participating in efforts to clean up and collect the spilled oil."At the moment, we are still focusing on handling efforts. We will also coordinate with the Environment Office regarding the next steps," he said.

Sonatrach Makes Massive Gas Find In Sahara Desert -Algeria's state-owned oil and gas company Sonatrach has made a massive new gas discovery that could hold as much as 12 trillion cubic feet of reserves. Sonatrach said in a statement that the discovery was located in the Sahara Desert and that it is the country's biggest discovery in the last 20 years. The discovery, which the company hopes to bring on stream this year, will massively increase Algeria’s ability for the country to boost gas production. To remind, Eni has already signed a deal with Sonatrach for an increased supply of gas to Italy. Along with Italy, the European Union will also be looking to find alternatives for supplies of Russian gas. The Algerian company has not provided any data if this latest find was made with a new exploration well or was it made during an ongoing appraisal and development campaign into new plays in and around the massive and producing Hassi R'Mel field, some 340 miles south of Algiers. Sonatrach added that the new resource lies close to the Hassi R'Mel field and its infrastructure, so the company can fast-track the discovery to first production in November this year. It is worth noting that production rates are forecast to be around 350 million cubic feet per day. According to a preliminary assessment, Sonatrach said the resource potential of the discovery ranges between 3.5 Tcf and 12 Tcf, plus condensate. The company believes that the new resource ‘has highlighted the significant hydrocarbon potential’ of the LD2 reservoir which is part of the Lias Carbonate play in the greater Hassi R'Mel area. Sonatrach claimed that the discovered volumes were one of the largest reserve evaluations in the last 20 years and that a campaign was underway to confirm estimated volumes and achieve fast-track production.

China’s Deep Sea No. 1 gas field reaches 2 bcm milestone - Deep Sea No. 1, China’s independently developed, ultra-deepwater gas field, has produced more than 2 billion cubic meters of natural gas by Saturday since it was put into operation one year ago, its operator China National Offshore Oil Corporation (CNOOC) said on Saturday, the Xinhua News Agency reported. The gas field, which is located 150 kilometers from Sanya, South China's Hainan Province, was put into use on June 25, 2021. It is China’s deepest marine gas field and the most difficult one to exploit with a maximum operational water depth of 1,500 meters and proven geological reserves of natural gas exceeding 100 billion cubic meters. The field’s full-year gas production is expected to reach 3 billion cubic meters in 2022, according to CNOOC. As an important source of clean energy for the Hainan Free Trade Port and the Guangdong-Hong Kong-Macao Greater Bay Area, the gas field is of great strategic significance in guaranteeing national energy security. CNOOC has set up a team for the Deep Sea No. 2 project using technicians previously based in the Deep Sea No. 1 gas field as the backbone to accelerate the construction of the new project, which is set to be China's first deep-water gas field for high temperature and high pressure environment, CNOOC said. The new project will be fully integrated into the existing gas supply system, expanding the scale of deepwater gas production and increasing China’s energy self-sufficiency rate.

First-Ever 8th Gen Drilling Juggernaut Delivered To Transocean - The first-ever newbuild 8th generation drillship, the Deepwater Atlas, has been delivered in Singapore to U.S. offshore driller Transocean. Based on Sembcorp Marine’s proprietary Jurong Espadon 3T design, Deepwater Atlas is the first of two ultra-deepwater drillships built for Transocean, the other is Deepwater Titan. Both units are of the highest specifications and the only pair in the world to feature net 3-million-pound hook-load hoisting capacity and well control systems with the ability to accommodate a 20,000-psi drilling and completion operations. Currently, the drillship has a 15,000-psi blowout preventer. “The successful construction and delivery of Deepwater Atlas is a testament to Sembcorp Marine’s continuous progress up the value chain and its proven capabilities and track record in providing leading-edge advanced drilling rig solutions,” Sembcorp Marine said in a statement on social media. The drillship is capable of operating at 12,000 feet water depth and drilling to depths of 40,000 feet. It also operates with a lower level of emissions as it uses hybrid power with an energy storage system. With the capacity to accommodate a crew of 220, the drillship is designed and equipped to optimize fuel consumption and lower emissions to support the industry’s commitment to a reduction in the carbon footprint.

Shelf Drilling Buying Five Noble Rigs For $375 Million - UAE-based offshore drilling contractor Shelf Drilling has signed a deal to acquire five jack-up rigs from Noble Corporation which could be the solution to UK competition regulator concerns over Noble’s merger with Maersk Drilling. Noble Corporation entered into an asset purchase agreement to sell five jack-up rigs for $375 million to a newly formed subsidiary of Shelf Drilling whose obligations under the asset purchase agreement will be guaranteed by Shelf Drilling. The sale, subject to approval of the UK Competition and Markets Authority (CMA), is intended to address the potential concerns identified by the CMA in the Phase I review of the proposed business combination between Noble and Maersk Drilling. The proposed merger between Noble and Maersk Drilling was announced in November 2021. The UK’s CMA launched its merger inquiry in February 2022. Before the CMA’s decision, Noble and Maersk announced that they would have to sell certain North Sea rigs to get the UK regulator’s clearance. Following the announcement, the CMA claimed that it might accept a remedy proposal. This so-called ‘remedy rig sale agreement’ includes the rigs Noble Hans Deul, Noble Sam Hartley, Noble Sam Turner, Noble Houston Colbert, and Noble Lloyd Noble and all related support and infrastructure. Associated offshore and onshore staff are expected to transfer with the rigs. Following the sale, Noble expects to continue to perform the current drilling program for the Noble Lloyd Noble under a bareboat charter arrangement with Shelf Drilling until the second quarter of 2023 when the primary term of its current drilling contract is expected to end.

Iran’s day-to-day gas output capacity surpasses 1,000 mcm The amount of Iran’s day-to-day natural gas output surpassed 1,000 million cubic meters (mcm) in the last Iranian calendar year (ended on March 20), a statement issued by the Oil Ministry’s Planning Directorate displayed. As stated by the ministry, the nation's natural gas output volume recorded the stated peak for the initial time in the prior year when gas output from the South Pars gas field rose by over 4 percent in comparison to the year before (1399). As Shana mentioned in reports, the expansion of the South Pars field, which Iran shares with Qatar in the Persian Gulf, has been finished apart for phase 11 whose progress is proceeding. As shown in the report, the physical development of the South Pars Phase 11 development venture at the end of 1400 was over 34 percent.

Libya Says It May Suspend Oil Exports from Key Terminals - Libya’s state oil company said it may suspend exports from the Gulf of Sirte, which contains many of the OPEC member’s main ports, in the next three days amid a worsening political crisis. The National Oil Corp. said it could declare force majeure, a clause in contracts allowing shipments to be halted, within 72 hours, according to a statement on Monday. The Gulf of Sirte includes the exports terminals of Es Sider, Ras Lanuf, Brega and Zueitina. Libya’s crude production has roughly halved since mid-April to 600,000 barrels a day, according to Bloomberg estimates. That has further tightened a global oil market in which prices have surged 45% this year to around $110 a barrel, mostly due to the fallout of Russia’s invasion of Ukraine. The NOC’s move comes as Libya grapples with protests that are forcing many oil fields and ports to shut down. No individual or minister should be allowed to use the oil sector as a bargaining chip, NOC Chairman Mustafa Sanalla said. “The situation is quite dangerous,” he said. “There are closures in the Sirte region and there are people who try to demonize the oil sector.” The nation has been mired in conflict since the fall of dictator Moammar Al Qaddafi in 2011. It’s now facing a standoff between two politicians -- Abdul Hamid Dbeibah and Fathi Bashagha -- who each claim to be the legitimate prime minister. There’s also a power struggle between Sanalla and the oil ministry, headed by Mohamed Oun. Their relationship between has deteriorated since Oun’s appointment last year, with the minister on several occasions trying to dismiss Sanalla. Recently, Oun has complained that the NOC is not sending production figures to the ministry.

OPEC+ running out of oil production capacity, Nigeria says — The OPEC+ alliance of oil producers is running out of capacity to pump more crude, including its biggest member Saudi Arabia, according to Nigeria’s petroleum minister. “Some people believe the prices to be a little bit on the high side and expect us to pump a little bit more but at this moment there is really little additional capacity,” said Nigeria’s Minister of State for Petroleum Resources Timipre Sylva in a briefing with reporters Friday. “Even Saudi Arabia, Russia, of course Russia, is out of the market now more or less.” The extended group will meet next week Thursday to decide whether to proceed with a planned August oil production increase. Over the last year the cartel has been boosting output in a series of planned increases. “At this moment I think the prices are firming up and I don’t think there will be any surprises in OPEC in August,” Sylva said. Nigeria, Africa’s biggest producer, has struggled with declining production for years, with international majors selling onshore and shallow-water fields to Nigerian independent producers for more than a decade. The country pumped 1.49 million barrels a day in May, according to a Bloomberg survey, with a quota allowance to produce 1.77 million barrels a day in June and 1.80 million in July. Struggling even to meet the quota has been “very sad for us” and operators have planned to fill the gap within a couple of months, Sylva said. “By end of August generally the commitment is that we’re at least going to produce our OPEC quota and then of course look at going even beyond that after August,” he said.

France’s Macron tells Biden that UAE, Saudi pumping near oil limits — French President Emmanuel Macron said that the United Arab Emirates’ ruler confided to him that OPEC’s two leading oil exporters are already pumping almost as much oil as they can. The UAE is “at maximum” output and neighboring Saudi Arabia can promptly add only about 150,000 barrels a day, Macron said, relaying a conversation with Sheikh Mohammed bin Zayed to President Joe Biden. The remarks were caught by Reuters TV at the Group of Seven meeting in Bavaria, Germany. UAE Energy Minister Suhail Al Mazrouei promptly sought to clarify the comments, saying that Abu Dhabi is producing close to the ceiling permitted by its agreement with OPEC+. That deal expires in the next few months. The figures cited by Macron -- which contradict official data from the two Persian Gulf energy giants -- would suggest that the buffer of spare production capacity in global oil markets is nearly exhausted, complicating efforts to squeeze out Russian supply in protest over the Ukraine invasion. Macron said that MBZ, as the UAE leader is known, “told me two things.” “One, I am at maximum” oil output levels, amounting to the UAE’s “complete commitment” in this area, Macron said. “Second, he told me the Saudis can increase a little bit,” about 150,000 barrels a day or “a little more,” he added. “They don’t have huge capacities” that can be activated in less than six months, he said. Al Mazrouei said on Twitter that the UAE is “producing near to our maximum production capacity based on its current OPEC+ baseline” of 3.168 million barrels a day. The baseline -- stipulated in a deal between the OPEC cartel and its allies -- remains in effect until the end of the year, he said.

UN coordinator urges public to help stave off ‘5th largest oil spill from a tanker in history’ - Only days before emergency operations are scheduled to take place to head off a decaying oil tanker threat, a UN Humanitarian Coordinator has urged the public to help with funding to prevent a catastrophic oil spill in the Red Sea, as the work to transfer the oil to a safe vessel is already delayed because of insufficient funding.The UN Resident and Humanitarian Coordinator for Yemen, David Gressly, in a post on Twitter from Sunday, 26 June 2022, called on the public to help “cross the finish line” to get the required funds in place for the first part of the operation to take place.Back in September 2021, the United Nations’ senior management instructed Gressly to coordinate all efforts to mitigate the threat posed by an aging supertanker in an advanced state of decay, known as the FSO Safer, and strengthen contingency plans in the event of a catastrophic oil leak. Following several months of discussions with all relevant stakeholders, an UN-coordinated operational plan was presented to address the threat. The UN informed that the Government of Yemen in Aden supports this initiative along with the Sana’a-based authorities, who control the area where the vessel is located. To this end, a memorandum of understanding (MoU) was signed with the Houthi stronghold Sana’a on 5 March, establishing a framework for cooperation in which the Sana’a authorities have committed to facilitating the success of the project.The plan to address the threat posed by the FSO Safer comprises two critical tracks. This refers to the installation of a long-term replacement vessel or another capacity equivalent to the FSO within a target of 18 months. Since the situation is perceived to be too dangerous to wait for the replacement vessel, a four-month emergency operation by a global maritime salvage company is required to eliminate the immediate threat by transferring the oil from the FSO Safer to a secure temporary vessel.However, as the implementation of this plan cannot start without donor funding, the goal is to raise funds to start the $80 million emergency operation to transfer oil from the FSO Safer to prevent an oil spill that could spell disaster for the region and beyond.

Oil Prices Buck Recession Trend -As investors are increasingly concerned about recessionary risks, Brent oil prices have bucked this trend, reflecting significant supply destruction in the wake of Russia’s invasion of Ukraine, BofA Global Research outlined in a new report sent to Rigzone recently. In the report, BofA Global Research acknowledged one of the “key lessons” from this century’s three recessions has been an average 66 percent drop in oil prices and noted that applying such a drop to today’s Brent oil price “would leave us with little more than $35 per barrel at the trough of any upcoming recession”. BofA Global Research stated in the report, however, that, in “stark contrast” to conditions ahead of previous recessions this century, “we believe the energy sector today offers significant cushions mitigating the impact of any recessionary demand destruction on the sector’s financial health”. “Sector cash flows are higher today than in previous cycles - partly due to simultaneous supply destruction in the wake of Russia’s invasion of Ukraine pushing gas prices as well as refining margins to record levels,” BofA Global Research said in the report. “Using $105 per barrel Brent, we still see average 21/44 percent upside to 2022 consensus for Big Oil earnings and free cash flow - indicating this still ‘hidden’ earnings upside,” BofA Global Research added in the report. In a separate report sent to Rigzone on June 14, BofA Global Research highlighted that a record net 73 percent of participants in its European fund manager survey expected slower global growth, while a net 54 percent expected a European recession over the next year. At the time of writing, the price of Brent crude oil is trading at $117.04 per barrel. Brent started the year trading around the $80 per barrel mark, before closing at $127.98 per barrel on March 8. The commodity went on to close above $120 per barrel on several more occasions this year.

Esoteric Oil Gauge Spikes to Unprecedented Level -The oil market is so strong some gauges are at previously unthinkable levels. Nowhere in the world is that as stark as in a flagship futures contract in the United Arab Emirates, currently the third-largest producer in the Organization of Petroleum Exporting Countries. Murban crude oil futures for August are trading at about $8.90 a barrel higher than for the following month. The same spread closed at a record $9.52 on June 24. The jump is so eye-watering that the equivalent marker for global benchmark Brent has never traded at that level. With oil refining margins at incredibly high levels globally, traders are willing to pay significantly more for get-it-now crudes. Shipments of Middle Eastern crude to Europe, including Murban, have grown in recent months. The flows have likely increased as refiners seek to replace Russian supplies, which have been shunned since it invaded Ukraine. While the price spike has been enabled by an incredibly strong crude market -- both Brent and US benchmark West Texas Intermediate are back in a superbackwardation that characterizes extremely tight markets -- liquidity in the emergent Murban contract is more limited than for the main benchmarks. Total open interest across all Murban futures is about 40,000 contracts and volume rarely surpasses 5,000 contracts a day, a fraction of that for Brent or WTI. But the jump is a reminder of the strength in physical crude oil right now. Key North Sea swaps have also surged in recent days, in another sign of wider market strength.

Goldman Sachs sees oil prices rising 22% this summer as Europe eyes switch to crude from gas amid Russian supply cutoff - Goldman Sachs doubled down on its forecast for oil prices hitting $140 per gallon over the summer after crude suffered two consecutive weekly losses for the first time since April.The bank's chief commodities strategist, Jeff Currie, told CNBC the the recent price pullbacks are a buying opportunity and that under-investment in the space continues to drive the view for oil climbing higher."The situation across the energy space is incredibly bullish right now," he said. Currie's comments back up a note published by Goldman on June 7 that predicted Brent crude prices will hit $140 per barrel. Oil has surged as much as 50% from the start of 2022 as Russia's invasion of Ukraine has upended global markets and pushed buyers away from Moscow's supply.On Monday, Brent futures rose 1.56% to $114.88 a barrel, meaning Goldman's forecast represents upside potential of more nearly 22%."Investment continues to run from the space at a time it should be coming to the space," Currie told CNBC. "Ultimately, the only way you're solving these problems is through increased investments."He also pointed to turbulence in the European energy market as Russia has slashed flows of natural gas from the Nord Stream 1 pipeline in recent weeks. "You're going to have to replace that gas, and oil is going to be one of the [things] to replace it with," Currie said. "The upside risk on oil and oil products is tremendously high right now."

Oil Markets Could Face A Doomsday Scenario This Week --Global oil markets are going to be very volatile in the coming months if news emerging from OPEC’s main producers about production capacity constraints turns out to be true. OPEC will be meeting again in the coming days to discuss its export agreements, while today the oil group is presenting its Annual Statistical Bulletin (ASB) 2022. While the media is likely to be focused on rumors in the next 24 hours of a possible change in the export strategy of OPEC+, the real focus should be on whether or not the oil cartel is even capable of substantially increasing its production. For years, OPEC producers have been the main swing producers in oil markets. With a presumed spare capacity of more than 3-4 million bpd, Saudi Arabia and the UAE have always been seen as a point of last resort in case of a major crisis in oil and gas markets. During the former global oil glut, it seemed nothing could threaten the oil market, even when major conflicts emerged in Libya, Iraq, or elsewhere.The re-opening of the global economy after COVID-19, however, has brought fear back into the market that leading oil producers, including the USA and Russia, are unable to supply adequate volumes to the market. OPEC kingpins Saudi Arabia and the UAE are now being looked upon to increase production to historically high levels and bring oil prices down. Russia’s war against Ukraine, removing a possible 4.4 million bpd of crude and products in the coming months, has thrown this spare capacity problem into sharp relief.This week, a possible doomsday scenario could emerge in oil markets, based not only on OPEC+ export strategies but also due to increased internal turmoil in Libya, Iraq, and Ecuador. Possible other political and economic turmoil is also brewing in other producers, while US shale is still not showing any signs of a substantial production increase in the coming months.Global oil markets have long believed that OPEC has enough spare production capacity to stabilize markets, with Saudi Arabia and the UAE just needing to open their taps. There is, however, no real evidence to suggest that OPEC has increased production capacity in place in the short term. A research note by Commonwealth Bank commodities analyst Tobin Gorey already noted that OPEC’s two leaders are producing at near-term capacity limits. At the same time, UAE Minister of Energy Suhail Al Mazrouei put even more pressure on oil prices as he stated that the UAE is producing near-maximum capacity based on its quota of 3.168 million barrels per day (bpd) under the agreement with OPEC and its allies. That comment could still indicate that there is some spare capacity left in Abu Dhabi, but the remarks were made after French President Emmanuel Macron had stated to US president Biden during the G7 meeting that not only is the UAE producing at maximum production capacity, but also that Saudi Arabia only has another 150,000 bpd of spare capacity available.

Oil Wavers as G7 Nations Mull Price Cap on Russian Oil -- Except for the ULSD contract, oil futures nearest delivery edged higher in early trade Monday following reports the Group of Seven wealthy democracies is discussing a price cap on Russian crude oil sold under Western insurance and shipping mechanisms in a move that could potentially add more Russian oil on the global market while limiting revenues the Kremlin would receive from the sales. Although the details are still being finalized, with the G7 Summit to conclude on Tuesday, the proposal reportedly includes an exemption to the European ban on insuring shipments of Russian oil that would allow insurers to cover those shipments only if the sales price falls under a cap. No details of what that price cap would look like have been released. G7 nations are set to issue coordinated steps on Tuesday, according to people familiar with negotiations. The goal in the talks is to keep Russian oil available on the global market, which could help stabilize prices already trending at roughly double pre-pandemic levels, while constructing a mechanism that Western countries could use to restrict Russian revenues from the sales. Italian Prime Minister Mario Draghi told the meeting that the price cap is "a promising avenue" against Russia because it would cut financial flows to Moscow while reducing inflation, which has surged across the West partly driven by energy prices. In the European Union, the annual rate of inflation surged to a record high 8.1% in May, with energy being the primary driver of rising consumer prices. Some EU member states recorded a double-digit rise in consumer prices this spring -- well ahead of the United States and the rest of the world. Analysts say that the real challenge of the agreement is to get commitment from nations outside the G7, notably China and India that have ramped up their purchases of Russian oil under steep discounts. India bought an average of 1 million bpd of Russian crude oil in June compared with 30,000 bpd in February, according to Kpler data. That puts India's purchases at more than a quarter of Europe's total. India's finance minister defended the country's purchases of discounted Russian oil, saying the government is simply doing what was best for its people and the economy. "My national interest tells me I should buy it where it is cheaper," Finance Minister Nirmala Sitharaman said in an interview with The Wall Street Journal. Potentially supporting higher oil prices today is an ongoing supply disruption in Libya, where violent protests shut in nearly all of the country's 1.2 million bpd of oil output. Since then, crude production has recovered to 700,000 bpd, according to the country's oil minister, although it's not clear if Libya is able to export any of this oil to the global markets. Analysts believe that additional supplies from Libya could partially offset the loss of Russian oil on the global market but caution that production remains volatile amid political turmoil. Near 7:30 AM ET, NYMEX August West Texas Intermediate futures edged up $0.28 to $107.85 bbl and ICE Brent crude for August delivery advanced $0.47 to $113.61 bbl. NYMEX RBOB July contract gained 0.99 cents to $3.8947 gallon and NYMEX July ULSD futures declined 2.18 cents to $4.3411 gallon.

Oil Rises on Libya, Equador Tensions, As G7 Prepares To Discuss Russian Price Cap - The roller coaster of volatility that is the crude trading market saw the commodity on Monday achieve price gains due to the persistent fear of supply tightness, spurred by a worsening political crisis in Libya that could suspend exports. The National Oil Corp. said it could declare force majeure and cause shipments to be halted, within 72 hours, according to a statement on Monday. Anti-government unrest in Equador posing an even quicker potential for oil production problems was also a major concern for traders: that country's energy ministry stated in an email that production is likely to halt completely within 48 hours if road blocks and vandalizing of oil wells continue. Brent on Monday settled up $1.97, or 1.7 percent higher, at $115.09 per barrel, while West Texas Intermediate closed up $1.95, or 1.8 percent, at $109.57 per barrel. Also keeping traders on edge is Iran's chief negotiator and his U.S. counterpart heading to Qatar in the latest attempt to revive the nuclear deal between the two countries, which if ratified could add millions of barrels of oil to the global market. Monday also saw the Group of Seven nations set to announce an effort to pursue a price cap on Russian oil, according to U.S. officials. Negotiators want to install a system that limits the flow of money to Russia while allowing oil's availability to large buyers like China and India, in order to avoid further price shocks; the U.S. has suggested applying restrictions on insurance and other services needed to transport Russian oil. But critics expressed their doubts about the cap doing anything other than exacerbating an already dire situation. Vivek Dhar, analyst at Commonwealth Bank of Australia, noted that there was "nothing stopping Russia from banning oil and refined product exports to G7 economies in response to a price cap, exacerbating shortage conditions in global oil and refined product markets."

Oil Rises $2/bbl After G7 Vows New Russian Sanctions - (Reuters) -Oil rose $2 a barrel on Monday on the prospect of even tighter supplies loomed over the market as the Group of Seven nations promised to tighten the squeeze on Russian President Vladimir Putin's war chest while actually lowering energy prices. Brent crude futures settled $1.97, or 1.7% higher, at $115.09 a barrel, while U.S. West Texas Intermediate crude closed up $1.95, or 1.8%, at $109.57 a barrel. The group of wealthy nations vowed to stand with Ukraine "for as long as it takes", proposing to cap the price of Russian oil as part of new sanctions to hit Moscow's finances. "I think if they were to implement a price cap on sale and purchase of Russian oil, it's difficult for me to imagine how this is going to be implemented, especially when China and India have become Russia's biggest customers," said Houston-based oil consultant Andrew Lipow. Commonwealth Bank of Australia analyst Vivek Dhar noted that there was "nothing stopping Russia from banning oil and refined product exports to G7 economies in response to a price cap, exacerbating shortage conditions in global oil and refined product markets." The international community should explore all options to alleviate tight energy supplies, including talks with producing nations like Iran and Venezuela, a French presidency official said. Both OPEC members' oil exports have been curbed by U.S. sanctions. Both crude benchmarks closed down for the second week in a row on Friday as interest rate hikes in key economies strengthened the dollar and fanned fears of a global recession. Recession fears and expectations of more interest rate hikes have caused volatility and risk aversion in the futures markets, with some energy investors and traders paring back, while spot crude prices have remained strong on high demand and a supply crunch. For now, pressing supply worries outweighed growth concerns. Members of the Organization of the Petroleum Exporting Countries and their allies including Russia, known as OPEC+, will probably stick to a plan for accelerated oil output increases in August when they meet on Thursday, sources said. The producer group also trimmed its projected 2022 oil market surplus to 1 million barrels per day (bpd), down from 1.4 million bpd previously, a report seen by Reuters showed. OPEC member Libya said on Monday it might have to halt exports in the Gulf of Sirte area within 72 hours amid unrest that has restricted production. Adding to the supply woes, Ecuador also said it could suspend oil production completely within 48 hours amid anti-government protests in which at least six people have died.

Crude Futures Extend Gains after UAE Flags Capacity Limits -- Oil futures extended higher in early trade Tuesday after Saudi Arabia and the United Arab Emirates signaled they were unlikely to boost oil production significantly in the coming months, while political unrest in Libya and Ecuador added to concerns over a tight global oil market. UAE's Energy Minister Suhail al-Mazroui on Monday said the major oil producer was near its maximum production capacity based on its current OPEC+ production baseline, which is 3.168 million barrels per day (bpd). The UAE along with Saudi Arabia can only add about 150,000 bpd over the next six months, according to remarks by al-Mazroui to French President Emanual Macron, reminding policymakers and investors how tight the global oil market actually is amid talks of a new round of sanctions against Russian oil exports. The Group of Seven Wealthy nations, known as G7, agreed in principle to study a potential price cap on Russian oil and gas exports, which could include the lifting of an EU shipping ban agreed upon earlier this month, while no further details of negotiations have been made public. The proposal reportedly includes a stipulation that would allow insurers to cover Russian oil shipments only if the sales price falls under a cap. No details of what that price cap would look like have been released. Separately, Libya's National Oil Corp. said on Monday it might have to declare force majeure in the Gulf of Sirte area within the next three days unless production and shipping resume at oil terminals there. The NOC's move comes as Libya grapples with protests that are forcing many oil fields and ports to shut down. In Ecuador, antigovernment protests are about to bring oil production there to a standstill within 72 hours, according to the country's oil minister Juan Carlos Bermeo. The former OPEC country was pumping around 520,000 bpd before the protests. Led by umbrella indigenous organization CONAIE, demonstrators are demanding higher fuel subsidies, a moratorium on new oil and mining projects, and a slowdown of moves to privatize state assets amid broader criticism of conservative President Guillermo Lasso's plan to overhaul the economy with support from the International Monetary Fund. Ecuador preemptively declared force majeure on oil contracts to avoid penalties from being unable to ship scheduled deliveries. It's the second force majeure since Dec. 12 after erosion threatened to snap its two oil pipelines. Oil production dipped to a low of 101,700 bpd during that event, the lowest since at least January 2010. Near 7:30 AM ET, NYMEX August West Texas Intermediate futures advanced $1.67 to $111.26 bbl and ICE Brent crude for August delivery rallied above $117 bbl, up $2.06. NYMEX RBOB July contract advanced 5.4cts to $3.8812 gallon and NYMEX July ULSD futures decline 1.17cts to $4.2185 gallon.

Energy Stocks Rip Higher as Oil Hits Highest Since Mid-June - Oil prices rose about 2% on Tuesday, extending gains for the third session, underpinned by a slew of positive news. U.S. West Texas Intermediate (WTI) crude advanced $2.19, or 2%, to $111.76 per barrel — its highest since Jun 16. Oil’s uptick was primarily driven by the market’s precariously low level of spare capacity. Contrary to popular perception, it appears that two major producers — Saudi Arabia and the UAE — will be unable to boost output sufficiently enough to help fill Russia's supply gap. While UAE is already churning out at full throttle, Saudi Arabia could add just 150,000 barrels daily. In essence, this leaves the market quite vulnerable to future supply outages. Further supporting crude prices is China’s emergence from its strict COVID-19 restrictions. As the world’s biggest oil importer eases its zero-COVID lockdowns that suppressed economic activity, energy consumption is expected to rise, which is a positive for crude demand and prices. Then again, a bunch of better-than-expected economic data over the past few days bolstered prices. Upbeat durable goods orders has painted a positive demand picture, while an increase in pending home sales has signaled strength in the housing market. Production disruptions in Libya and Ecuador, plus speculation about a G-7 decision to cap Russian crude prices to prevent Moscow from benefiting from its energy trade, also sent oil higher. Yesterday’s buying pushed the Energy Select Sector SPDR — an assortment of the largest U.S. energy companies — up 2.7% to be the leader of the S&P sector standings, while all other sectors lost value. Consequently, the three biggest winners of the S&P 500 on Tuesday were all energy-related names — Hess Corporation HES, Occidental Petroleum OXY and Marathon Oil MRO. The Zacks Consensus Estimate for Hess’ 2022 earnings has been revised 41.8% upward over the past 90 days. HES beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 12.7%.

Oil Rises as G7 Leaders Assess Capacity Limits -Oil rose for a third day as global output threats compound already red-hot markets for physical supplies, while the Group of Seven agreed to look into a price cap for Russian oil. West Texas Intermediate futures rose to trade near $112 on Tuesday. G-7 leaders said they want ministers to urgently examine how prices of Russian oil and gas can be curbed, a move that comes as government data shows that Urals has appreciated relative to Brent crude. The most notable moves in recent days have been in more specialist market gauges. A contract known as the Dated-to-Frontline swap -- an indicator of the strength in the key North Sea market underpinning much of the world’s crude pricing -- hit a record of more than $5 a barrel. The rally comes amid growing supply outages in Libya and Ecuador, exacerbating ongoing market tightness. “We’re in the crunch period, it’s hard to see any meaningful price relief for crude,” said John Kilduff. There’s a lot of strength with China relaxing its Covid restrictions and starting its independent refiners, “we’re going to have another chunk of demand for crude oil,” as China relaxes its Covid-19 restrictions. Oil is up about 50% this year, but the strength in physical markets has run contrary to a sharp slide in headline prices in recent weeks. While fears of a global economic slowdown have weighed on futures, demand remains robust for now. US retail gasoline prices remain near record highs, causing pain for consumers. A recovery from Covid-19 and a shortage of refining capacity to make fuels continue to keep prices at record highs. The tight supply situation in is revealing itself in the WTI-Brent spread, grew to $6.19, the widest in almost three months. “European demand will remain robust, especially as natural gas supplies run out, while the North American demand for crude is weakening,” . WTI for August delivery rose $2.19 to settle at $111.76 a barrel in New York. Brent for August settlement gained $2.89 to $117.98 a barrel. Oil also rose as broader sentiment was boosted by China’s move to halve the amount of time new arrivals must spend in isolation, the biggest shift yet in its pandemic policy. Travelers to China must spend spend seven days in centralized quarantine, then monitor their health for another three days at home, according to a government protocol. That compares with 14 days of hotel quarantine in many parts of China currently, and as many as 21 days of isolation in the past.

WTI Extends Gains After Unexpected Crude Draw --Oil prices are higher today following relatively positive news from China (easing some of its COVID quarantine restrictions), Macron-inspired doubts over the ability of Saudi Arabia and the United Arab Emirates to significantly boost output, and unrest in Ecuador and Libya helped lift prices.“We’re in the crunch period, it’s hard to see any meaningful price relief for crude,” There’s a lot of strength with China relaxing its Covid restrictions and starting its independent refiners, “we’re going to have another chunk of demand for crude oil,” as China relaxes its Covid-19 restrictions. With no EIA data released last week due to a "systems issue" (they have issued a statement confirming that the data - and the newest data - will both be released tomorrow), the only guidance we have for now on the past week's inventory changes is from API... API (last week)

  • Crude +5.607mm
  • Cushing -390k
  • Gasoline +1.216mm - first build since March
  • Distillates -1.656mm

API (this week)

  • Crude -3.799mm
  • Cushing -650k
  • Gasoline +2.852mm
  • Distillates +2.613mm

    Crude stocks unexpectedly fell last week, almost erasing the major build from the week before (according to API). Gasoline stocks rose for the second straight week WTI was hovering around $111.75 and pushed up to $112 after the unexpected crude draw... Finally, we note that the tight supply situation in oil (especially European) is revealing itself in the WTI-Brent spread, grew to $6.19, the widest in almost three months.

Oil Extends Gains After Indirect US-Iran Nuclear Talks Fail In Qatar - High hopes had been placed on the indirect talks set to be held in Qatar starting Tuesday between Iran and the United States, which involved the European Union mediating between the two; however after the second day the Iranian side is reporting that talks have already ended without an agreement or any breakthrough. "Indirect talks between the United States and Iran to revive a 2015 nuclear agreement have ended in Qatar without a result, Iran's semi-official Tasnim news agency reported on Wednesday," Reuters reports. Underscoring the importance of the Qatar-hosted talks as a restored nuclear deal still hangs from a thread, and is looking more unlikely than ever at this point, EU foreign policy chief Josep Borrell traveled to Doha to help mediate, after days prior meeting with Iranian officials in Tehran.Most crucially from the viewpoint of the West, lack of progress in these last ditch efforts further means there's no full-scale return of Iranian oil to international markets on the horizon... Crude prices rose steadily throughout the morning, after edging higher since the start of the week and the G7 summit's pledge of 'tougher' action against Russia and Vladimir Putin, also as they continue mulling plans for imposing a price cap on Russian energy as part of exploring ways to ensure the Kremlin's war machine doesn't benefit from soaring energy prices. The Biden administration has been scrambling to tap heretofore inaccessible supplies of crude, including from Venezuela, also as the Saudis appear cool on Washington efforts to get them to pump more. Al Jazeera reviews of where things stand in the indefinitely stalled efforts at a restored JCPOA, which earlier centered on the Vienna process: Meanwhile, the Iranians have remained insistent that it is only the US side holding things up, and that essentially the ball is still in Washington's court, and it is for the Biden administration to act, perhaps also with an understanding that Russia-Ukraine events add pressure to the White House stance vis-a-vis Iran.

Crude oil futures dip as 3-day rally loses steam, US consumer confidence falls -Crude oil futures were lower in mid-morning trade in Asia June 29 in a sign that a three-day rally has run out of steam, with latest US consumer confidence data for June falling to the lowest in more than a year. At 10:09 am Singapore time (0209 GMT), the ICE August Brent futures contract was down 98 cents/b (0.83%) from the previous close at $117/b, while the NYMEX August light sweet crude contract was 69 cents/b (0.62%) lower at $111.07/b. Oil prices had surged more than 7% over the previous three sessions as supply disruptions in Libya and Ecuador and a reported lack of spare capacity in the UAE and Saudi Arabia boosted sentiment. Recession fears, however, continued to loom. Data from The Conference Board released June 28 showed US consumer confidence in June fell to the lowest since February 2021, a sign that Americans were growing increasingly pessimistic about the economy. The Consumer Confidence Index fell to 98.7 in June from 103.2 in May, the board said, while the Expectations Index, a gauge of consumers' short-term economic outlook, fell to 66.4, the lowest level since March 2013. "Rising prices continue to take a toll on consumer spending intentions, while ongoing rate hikes from the Fed are likely to dim sentiment ahead as well," IG market strategist Yeap Jun Rong said in a June 29 note. "US consumers are clearly pessimistic about the economic outlook, with forward-looking expectations at the lowest level since 2013." Market watchers were awaiting the OPEC meet later June 29 and the larger OPEC+ group meet June 30 for further cues. Expectations are for the group to stand pat on its policy agreed upon earlier in June for output hikes of 648,000 b/d in July and August. Analysts said actual output figures will likely be much lower, given group members' difficulties in raising production. "As we have seen in recent months, it is highly unlikely that the group will be able to boost supply by this amount, given the limited spare capacity amongst members and the expectation that Russian oil output will decline as we move closer to the EU's ban on Russian seaborne crude oil imports," ING analyst Warren Patterson said. Data from the American Petroleum Institute June 29 showed a large draw in US crude oil stocks in the week ended June 24, while gasoline and distillate stocks were reported to have risen, according to media reports. Dubai crude swaps and intermonth spreads were mostly higher in mid-morning trade in Asia June 29 from the previous close.

WTI Extends Gains After 'Delayed' DoE Data Show Cushing Stocks Near 'Operational Low' Limits --After "systems issues" 'delayed' last week's inventory, supply, and demand data from the EIA, the admin will report this week's data as well as last week's combined following API reported a notable build the prior week and a surprise draw last week. So over the last two weeks, API reports (net) a small crude build, notable Cushing draw, large gasoline build and small distillates build.Oil prices are notably higher again today following reports that Iran-deal-talks have failed and news that Libya has halted oil exports. Additionally, OPEC's pre-meeting reportedly concluded with no discussion of oil policy, focusing instead on administrative affairs, including an update to the group’s manifesto of guiding principles known as its Long-Term Strategy.Meanwhile, a deluge of ugly macro data provides some fodder for the oil bears (though it is being dominated by supply fears for now)...“Recession fears are just that -- fears,” said Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd.“In the meantime, oil fundamentals remain solid.”So all eyes are back on the official inventory and demand data... DOE (net of the two weeks)

  • Crude -2.762mm
  • Cushing -782k
  • Gasoline +2.645mm
  • Distillates +2.559mm

The official data shows a small crude draw (API showed a small crude build), Cushing a 6th weekly draw of the last 7 (confirming API's net draw). On the product side both gasoline and distillates showed unexpectedly large inventory builds (also confirming API's data)...The headline draw in crude stockpiles of 2.76 million barrels was boosted by the withdrawal of another 6.95 million barrels of crude from the SPR last week.However, as Bloomberg's Javier Blas noted in a tweet:"Over the last 2 weeks, the US gov has injected 13.7 million barrels from the SPR into the market. And yet, commercial oil stockpiles still fell 3 million barrels over the period. Just imagine if the SPR wasn't there. Or what would happen post-Oct when sales end"

Oil prices rise for 4th day on supply worries as US inventories down - (Reuters) -Oil prices gained for a fourth straight session on Wednesday as data showed a drawdown in U.S. crude stockpiles, adding to ongoing worries of tight supply, which have offset concerns over a weaker global economy and demand. Brent crude futures for August rose $1.42, or 1.2%, to $119.40 a barrel as of 10:59 a.m. ET (1459 GMT). The August contract will expire on Thursday and the more-active September contract was at $115.35, up $1.52. U.S. West Texas Intermediate (WTI) crude gained $1.13, or 1%, to $112.89 a barrel. Both contracts rose more than 2% on Tuesday as concerns over tight supplies due to Western sanctions on Russia outweighed fears of that demand may slow in a potential future recession. U.S. crude inventories fell last week despite production hitting its highest level since April 2020, during the first wave of the coronavirus pandemic. However, fuel stocks rose as refiners ramped up activity, operating at 95% of capacity, the highest for this time of year in four years. [EIA/S] Prices rose as G7 countries agreed to explore options to impose price caps on Russian oil exports. "Given that almost 1/5 of global oil producing capacity today is under some form of sanctions (Iran, Venezuela, Russia), we believed there is no practical way to keep these barrels out of a market that was already exceptionally tight," JP Morgan said in a research note. Norbert Rucker from Julius Baer said the price cap concept was difficult to grasp given the presence of multiple oil prices for multiple grades and thousands of actors along the supply chain. "Buyers would need to collude in a cartel and build a credible 'threat' backdrop, both of which are challenging," he said. OPEC and its allies such as Russia that form the OPEC+ group, began a series of two-day meetings on Wednesday with sources saying chances of a big policy change look unlikely this month. Analysts are concerned that Saudi Arabia and the United Arab Emirates may not have enough spare capacity to make up for lost Russian supply. French President Emmanuel Macron said this week he was told these producers will struggle to increase output further. However, the UAE energy minister said that the country, which is producing about 3 million bpd, does have some spare capacity above its OPEC quota of 3.17 million bpd. Analysts also warned that political unrest in Ecuador and Libya could tighten supply further.

RBOB, ULSD Drop 3% on Flagging Demand, Fuel Stocks Rise -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange turned lower in afternoon trade Wednesday, sending gasoline and distillate contracts down 3% or more. The losses came after weekly inventory data from the U.S. Energy Information Administration showed a bearish 5.2 million-barrel (bbl) build in domestic fuel inventories amid flashing signs of demand destruction. Wednesday's inventory report, the first in two weeks following a server failure experienced by the government entity, was overall bearish, showing weak product deliveries that pushed supply into inventory, and recovering crude oil production that climbed to the highest output rate since the beginning of the pandemic in 2020. Domestic producers pumped 12.1 million barrels per day (bpd) of crude during the week ended June 24, up 100,000 bpd from the previous week. U.S. output remains about 1 million bpd below the pre-pandemic high. Gasoline stockpiles rose 2.6 million bbl from the previous week to 221.6 million bbl compared with analyst expectations for inventories to have decreased by 800,000 bbl. Meanwhile, implied demand for gasoline recovered last week, up 417,000 bpd from a 12-week low 8.505 million bpd during the week ended June 17, EIA data show. Distillate fuels supplied to the U.S. market fell 294,000 bpd to a 3.568 million-bpd 11-week low last week, with lower diesel demand aligning with a slowing U.S. economy. Distillate stocks rose 2.6 million bbl to 112.4 million bbl and are now about 20% below the five-year average. Bullish elements in the report could be found in crude stocks that fell by a larger-than-expected 2.8 million bbl from the previous week to 415.6 million bbl last week and are now about 13% below the five-year average. The hefty draw occurred as refiners jacked the national run rate up 1% to 95% of capacity last week, processing 16.7 million bpd of crude oil, up 403,000 bpd from the previous week to the highest input rate since before the pandemic in January 2020. A 700,000-bbl draw from crude oil stored at Cushing tanks in Oklahoma, the delivery point for the NYMEX West Texas Intermediate futures, pressed inventory there to a 21.3 million bbl 7-1/2-year low. Inventory at Cushing is near the minimum operating level that's estimated between 16 million and 22 million bbl. WTI and Brent futures traded 2.5% higher earlier in the session after reports emerged suggesting Saudi Arabia, OPEC's largest producer, might have less spare capacity than previously believed. The reality is Saudi Arabia has never produced above 11 million bpd for a prolonged period, with the maximum output of 11.5 million bpd reached in April 2020 at the height of Saudi market share war with Russia. At settlement, NYMEX August WTI futures fell $1.98 to $109.78 per bbl on the session, and down from an intrasession high of $114.05 per bbl. ICE Brent crude for August delivery declined $1.72 to $116.26 per bbl after breaching $120 with a $120.41 intrasession high ahead of expiration Thursday afternoon, with the September contract settling at a $3.81 discount. NYMEX July RBOB dropped 10.81 cents to $3.8270 per gallon, with the next-month contract expanding its discount to the expiring contract to 10.37 cents. NYMEX July ULSD futures, which also expire Thursday afternoon, fell 16.27 cents to $4.0367 per gallon and August ULSD futures settled at $3.9563 per gallon.

Oil Rebounds As OPEC+ Confirms Expected Supply Hike - The OPEC+ coalition ratified an oil-production increase that completes the return of supplies halted during the pandemic, while deferring discussions on its next move for another day.The 23-nation group led by Saudi Arabia rubber-stamped plans to add 648,000 barrels a day in August, restoring the final tranche of the 9.7 million barrels a day that was shuttered just over two years agoBut with most members besides the Saudis and their neighbors unable to raise output, the decision is largely symbolic.As a reminder, OPEC+ is falling further and further behind its production goals...Is Macron right and OPEC+ producers are at or near their capacity limits?“Spare capacity is very low, demand is still recovering,” Shell Plc Chief Executive Officer Ben van Beurden said in Singapore on Wednesday. “There is a fair chance we will be facing a turbulent period.”WTI rallied back. Full OPEC+ Statement:

Oil On Course For First Monthly Decline In 8 Months - Oil prices may be heading for their first month of declines since November as fears intensify about the global economy swinging into a recession, in large part because of high oil prices.As OPEC+ meets today to discuss production policy, with no surprises expected from the extended cartel, both Brent crude and West Texas Intermediate have been trending down over the past four weeks.The decline can be attributed to central banks rushing to tighten monetary policy in the face of persistent inflation in a bid to put a lid on it. However, there is a risk in this fast tightening, and this risk is of a full-blown recession, which would likely affect oil demand, and, as a result, prices. Even so, the upside potential of crude oil prices remains substantial as it becomes clear that the world’s spare capacity may not be as significant as previously believed. This week, oil went on a three-day rise as it became clear that Saudi Arabia and the UAE may be close to their maximum possible output rates.Reuters broke the news, citing a conversation between French President Emmanuel Macron and Joe Biden. Macron told Biden—while Reuters was recording nearby—that in a chat with the ruler of the United Arab Emirates, he had told Macron the UAE was pumping near its maximum and that the Saudis could only add about 150,000 bpd.UAE oil minister Suhail al Mazrouei later sought to clarify that Sheikh Mohammed bin Zayed al-Nahyan was referring to the maximum for the UAE’s baseline production rate, but the news worried the market because Saudi Arabia is believed to have spare capacity of some 2 million barrels daily.Meanwhile, other OPEC members are still struggling to even reach their self-assigned production quotas, with outages in Libya and Ecuador tightening supply from the cartel further recently.

Oil Futures Lower on Slowing Demand ahead of Expirations -- For the final session of the second quarter, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange were lower for a second day early Thursday amid slowing fuel demand in the United States while OPEC+ is expected to agree to a 648,000 barrels per day (bpd) increase in crude oil production for August. Meeting by way of videoconference this morning, OPEC+ is set to return all of the production it cut in the second quarter 2020 in response to lost demand during COVID-19 pandemic lockdowns. While the large increase in output by the producer group is bearish, OPEC+ is estimated to be underproducing its quota by 2.8 million bpd. Today's expected agreement to further lift output is seen widening the deficit amid a lack of spare capacity. Earlier this week during the Group of Seven meeting in Germany, French President Emmanuel Macron was overheard telling U.S. President Joe Biden United Arab Emirates had no additional spare capacity and that Saudi Arabia could only lift output by 150,000 bpd over the next six months, underpinning August Brent crude's push above $120 bbl on Wednesday. UAE oil minister Suhail Al Mazrouei was quick to note UAE would meet its quota, which will be 3.17 million bpd should OPEC+ agree to the August production hike. UAE produced 3.046 million bpd in May according to OPEC, citing secondary sources. UAE's production quota for July is 3.127 million bpd. Saudi Arabia's July production quota is 10.833 million bpd, with an agreement by OPEC+ today to lift the kingdom's quota to 11 million bpd, a production rate the Saudi's have only reached twice -- in November 2018 and April 2020. In May, Saudi oil production was estimated by secondary sources at 10.424 million bpd, although the Saudis self-reported an output rate of 10.538 million bpd. Saudi Arabia previously said their production capacity was above 12 million bpd and UAE said they could produce 4 million bpd. Amid the tight oil market, Western nations led by the United States are pushing for Saudi Arabia and UAE to lift output well above OPEC+ quotas to offset sanctioned Russian oil, leading to analysts questioning if the two countries actually have the spare capacity. EIA shows days of forward supply for distillate fuels increased to 30.6 as of June 24, a more than five-month high. Gasoline days of forward supply increased for a second week to a five-week high 24.8 days ahead of the July 4th holiday, when AAA has forecasted record road travel of 42 million. NYMEX July RBOB futures are down more than 12.5cts to $3.7015 gallon ahead of expiration this afternoon, with the August contract trading at a roughly 9cts discount to the expiring contract. NYMEX July ULSD futures are about 2cts lower near $4.0165 gallon, with the August contract about 7cts below July delivery. NYMEX August West Texas Intermediate futures were $1.30 lower at $108.50 bbl. ICE August Brent crude is down $0.75 near $115.50 ahead of expiration later today, with the September contract trading at a roughly $3 discount.

Oil falls 3% on uncertainty over future Opec+ output, recession fears - OIL prices sank around 3 per cent on Thursday (Jun 30) as Opec+ confirmed it would only increase output in August as much as previously announced despite tight global supplies, but left the market wondering about future output. Brent crude futures for September delivery fell US$3.42, or 3 per cent, to settle at US$109.03 per barrel. The August contract, which expires on Thursday, fell US$1.45, or 1.3 per cent, to settle at US$114.81 a barrel. US West Texas Intermediate (WTI) crude futures fell US$4.02, or 3.7 per cent, to settle at US$105.76 a barrel. The Opec+ group of producers, including Russia, on Thursday agreed to stick to its output strategy after 2 days of meetings. The producer club avoided discussing policy from September onwards. Previously, Opec+ decided to increase output each month by 648,000 barrels per day (bpd) in July and August. Sanctions on Russian oil since Russia's invasion of Ukraine have helped send energy prices soaring, stoking inflation and recession fears. Oil prices fell alongside Wall Street on Thursday. The S&P 500 was set up for its worst first 6 months since 1970, on concerns that central banks determined to tame inflation will hamper global economic growth. Price declines in the oil market were exacerbated as US traders squared positions ahead of the 3-day Fourth of July holiday weekend. "People are taking money off the table," said Phil Flynn, analyst at Price Futures Group in Chicago. But further disruptions to supply could limit price declines amid a suspension of Libyan shipments from 2 eastern ports while Ecuador output fell because of ongoing protests. In Norway, 74 offshore oil workers at Equinor's Gudrun, Oseberg South and Oseberg East platforms will go on strike from Jul 5, the Lederne trade union said on Thursday, likely shutting about 4 per cent of Norway's oil production. Meanwhile, Russian Deputy Prime Minister Alexander Novak said on Thursday that a possible import price cap imposed on Russian oil could push prices higher.

Oil prices up 2% on supply outages - Oil prices rose about 2% on Friday, recouping most of the previous session's declines, as supply outages in Libya and expected shutdowns in Norway outweighed expectations that an economic slowdown could dent demand. Brent crude futures were up $2.20, or 2%, at $111.23 a barrel by 1348 GMT, having dropped to $108.03 a barrel earlier in the session. WTI crude futures gained $2.25, or 2.1%, to $108.01 a barrel, after retreating to $104.56 a barrel earlier. Both contracts fell around 3% on Thursday, ending the month lower for the first time since November. We "still see risks to prices as skewed to the upside on tight inventories, limited spare capacity and muted non-OPEC+ supply response," Barclays said in a note. Libya's National Oil Corporation declared force majeure on Thursday at the Es Sider and Ras Lanuf ports as well as the El Feel oilfield. Force majeure is still in effect at the ports of Brega and Zueitina, NOC said. Production has seen a sharp decline, with daily exports ranging between 365,000 and 409,000 bpd, a decrease of 865,000 bpd compared to production in "normal circumstances", NOC said. Elsewhere, 74 Norwegian offshore oil workers at Equinor's Gudrun, Oseberg South and Oseberg East platforms will go on strike from July 5, the Lederne trade union said on Thursday, likely halting about 4% of Norway's oil production. Ecuador's government and indigenous groups' leaders on Thursday reached an agreement to end more than two weeks of protests which had led to the shut-in of more than half of the country's pre-crisis 500,000 bpd oil output. On Thursday, the OPEC+ group of producers, including Russia, agreed to stick to its output strategy after two days of meetings. However, the producer club avoided discussing policy from September onwards. Previously, OPEC+ decided to increase output each month by 648,000 barrels per day (bpd) in July and August, up from a previous plan to add 432,000 bpd per month.

Forget June Plunge; Oil Back on High Octane from Supply Squeeze - Crude prices flew higher on Friday as trading began for July on the back of fresh supply scares out of Libya — which called for a force majeure in exports — and Norway, where an oil workers’ strike loomed. Barely 24 hours after June’s price plunge — the first for a month since November — it was a sign that oil bulls had recaptured at least some of their mojo even as an impending recession threatened market outlook over the coming months. “Crude is rebounding on the back of the quarter-end selling being done and more issues in Libya,” “It’s so easy to look at all of this and just be bullish. My sense is that people are just heading to the sidelines as they are tired of the extreme noise and ‘hot takes’ on demand destruction and recession fears. At some point, crude oil prices are going to make a parabolic move in my view that will be led by the physical market as there simply isn’t enough oil production to offset refiner demand with the losses from Libya, Russia and OPEC constantly failing to make [its] quota.” U.K. bank Barclays, a typical cheerleader for oil, concurred, saying it “still see[s] risks to prices as skewed to the upside on tight inventories, limited spare capacity and muted non-OPEC+ supply response.” New York-traded West Texas Intermediate, or WTI, settled up $2.67, or 2.5%, at $108.43 per barrel. The U.S. crude benchmark finished June down more than 7%. London-traded Brent crude, the global benchmark for oil, settled up $2.60, or 2.4%, at $111.63 on its most-active September contract. It fell nearly 6% for all of last month. Libya’s National Oil Corporation, or NOC, declared force majeure on Thursday at the Es Sider and Ras Lanuf ports as well as the El Feel oilfield. Force majeure was also in effect at the ports of Brega and Zueitina, Reuters said in a report. It said production at NOC has seen a sharp decline, with daily exports ranging between 365,000 and 409,000 bpd — a drop of 865,000 bpd compared to production in “normal circumstances.” Elsewhere, 74 Norwegian offshore oil workers at Equinor’s Gudrun, Oseberg South and Oseberg East platforms will go on strike from July 5, likely halting about 4% of Norway’s oil production, the Lederne trade union was quoted saying on Thursday, Offsetting some of the bullish impact from the events in Libya and Norway was news that Ecuador’s government and indigenous groups’ leaders have reached agreement to end more than two weeks of protests that had led to the shut-in of more than half of the country’s pre-crisis 500,000 bpd oil output. Over the next two months though, oil market participants have two major challenges coming their way that could pull prices in both directions: the Atlantic hurricane season and an increasingly-likely U.S. recession. While hurricanes come and go each year, any storm in 2022 could have a rippling impact on energy infrastructure, supply and prices due to the squeeze already on barrels from sanctions piled on Russia; the apparent inability of OPEC+ to produce what consuming countries want; and US shale being slower than ever in returning to its pre-pandemic drilling glory. “You cannot afford to lose a single barrel this summer. That’s the reality,”

USA Condemns Mortar Attacks on IKR Oil Infrastructure - U.S. Department of State Spokesperson Ned Price has stated that the U.S. stands with its partners in condemnation of the repeated rocket and mortar attacks directed at the Iraqi Kurdistan Region, “including three attacks in Sulaimaniya in the last four days on oil and gas infrastructure”. “These attacks are designed to undermine economic stability just as they seek to challenge Iraqi sovereignty, sow division, and intimidate,” Price said in a State Department comment published on Sunday. “They must be investigated and those responsible must be prosecuted. We continue to stand with the Iraqi people, including our partners in the Kurdistan Region, against this kind of unacceptable violence, and we will continue to seek every opportunity to support Iraq’s security and prosperity,” Price went on to say. In a statement published on the Kurdistan Regional Government website on June 26, Masrour Barzani, the Prime Minister of the Kurdistan Regional Government, said he had directed ministers of Peshmerga Affairs and Interior to take all measures necessary to protect critical public infrastructure and oil and gas installations. “As part of the plan, we have agreed to reinforce the area with additional forces. More measures will be reviewed in the coming day,” Bazrani said in the statement. “The KRG deeply values and will defend and protect investments in its oil and gas sector and all public infrastructure. I have made it clear that an attack anywhere on Kurdistan is an attack on all of Kurdistan and its peoples,” he added in the statement.


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