Sunday, September 11, 2022

SPR at another 37½ year low; oil rigs at a 12 week low; natural gas rigs at a 37 month high

oil prices ended little changed this week, after diving 10% to an 8 month low early on, as lockdowns in China and a big build of US crude inventories were offset by a modest OPEC production cut and Russian threats to supplies....after falling 6.7% to $86.87 a barrel last week on new China lockdowns following reports that the US and Iran had reached an accord, the contract price for the benchmark US light sweet crude for October delivery jumped over $2 in overseas trading on Labor Day, ahead of an OPEC-plus meeting where output cuts were to be discussed, and advanced as much as 4.1% to over $90 a barrel, before paring some gains after OPEC and its partners agreed to reduce production by 100,000 barrels a day from October...the holiday oil rally unwound in New York trading on Tuesday, however, as concern returned about the prospect of more interest rate hikes and COVID-19 lockdowns weakening fuel demand, as prices fell from Monday's highs to settle just a penny above Friday's close at $86.88 a barrel, largely in response to fresh economic data out of Germany, showing industrial orders plummeted 13.6% from a year earlier...oil prices continued lower after hours after the API reported a surprise build of crude oil inventories, then turned mixed in early trading Wednesday as traders assessed the impact of the European Union governments' plan for a massive debt-funded fiscal stimulus to offset surging electricity and natural gas prices, before tumbling $4.94 or more than 5% to settle at a 7 month low of $81.94 a barrel on demand fears stoked by looming recession risks and downbeat Chinese trade data....oil prices edged higher in early trading Thursday, amid signs of accelerated demand destruction across the largest economies in Europe and Asia, as a slide in the U.S. Dollar ahead of an expected rate hike from the European Central Bank lent support to the oil complex, but slid in midday trading after the EIA reported the largest crude oil build in 5 months, but then rallied into the close to settle $1.60 or nearly 2% higher at $83.54 a barrel after Russia threatened to halt oil and gas exports to some buyers...after opening lower Friday, oil prices rose in volatile early trading, as Russia’s threat to halt oil and gas exports to Europe lifted prices, even as demand concerns amid renewed lockdowns in China limited the gains, and then rallied to settle $3.25 higher at $86.79 a barrel, supported by real and threatened cuts to supply, but still finished 0.1% lower on the week, largely on concerns about what China's Covid curbs would do to demand...

Meanwhile, natural gas prices fell for the third straight week on record production levels and on moderating weather forecasts... after falling 5.2% to $8.786 per mmBTU last week on a drop in European gas prices and a big injection of gas into US storage, the contract price of US natural gas for October delivery extended its recent losses in early trading on Tuesday, on a number of bearish developments, including strong domestic production and fading weather-driven demand. and tumbled 64.1 cents or more than 7% to settle at $8.145 per mmBTU because gas field output had soared to a record high over the weekend, and on forecasts for lower demand next week than had been expected...natural gas prices dropped again on Wednesday as traders assessed receding domestic demand, rising production, and an EPA decision against waiving an emissions limit at Cheniere Energy Inc’s LNG facilities that could imperil exports, and settled at $7.842 per mmBTU, down 30.3 cents on the day....natural gas prices rebounded a bit on Thursday after the EIA's storage report came in on par with expectations, and closed 7.3 cents higher at $7.915 per mmBTU, and then added 8.1 cents on Friday to settle at $7.996 per mmBTU on warmer forecasts for mid and late September, but still ended 9.0% lower on the week..

The EIA's natural gas storage report for the week ending September 2nd indicated that the amount of working natural gas held in underground storage in the US rose by 54 billion cubic feet to 2,694 billion cubic feet by the end of the week, which left our gas supplies 222 billion cubic feet, or 7.9% below the 2,916 billion cubic feet that were in storage on September 2nd of last year, and 349 billion cubic feet, or 11.3% below the five-year average of 3,043 billion cubic feet of natural gas that were in storage as of the 2nd of September over the most recent five years....the 54 billion cubic foot injection into US natural gas working storage for the cited week was generally in line with expectations indicated by the major surveys but was more than the 48 billion cubic feet that were added to natural gas storage during the corresponding week of 2021, while somewhat less than the average injection of 65 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

US oil data from the US Energy Information Administration for the week ending September 2nd showed that after a near record draw of oil from our SPR, an increase in our oil imports. a decrease in our oil exports, a decrease in our oil refining, and a decrease in​ those​ oil supplies that could not be accounted for, we had oil left to add to our stored commercial crude supplies for the 1st time time in 4 weeks, and for the 17th time in the past 41 weeks....Our imports of crude oil rose by an average of 824,000 barrels per day to average 6,779,000 barrels per day, after falling by an average of 216,000 barrels per day during the prior week, while our exports of crude oil fell by 534,000 barrels per day to average 3,433,000 barrels per day, which meant that the net of our trade in oil worked o​ut​to an import average of 3,346,000 barrels of oil per day during the week ending September 2nd, 1,358,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly unchanged at 12,100,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 15,​446,000 barrels per day during the September 2nd reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,929,000 barrels of crude per day during the week ending September 2nd, an average of 310,000 fewer barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net average of 188,000 barrels of oil per day were being added to the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures from the EIA for the week ending September 2nd appear to indicate that our total working supply of oil from net imports and from oilfield production was 670,000 barrels per day less than what was added to storage plus 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 (+670,000) 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....moreover, since last week’s EIA fudge factor was at (+1,237,000) barrels per day, that means there was a 567,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes in supply and demand from that week to this that are indicated by this week's report are pretty useless... however, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

This week's 188,000 barrel per day increase in our overall crude oil inventories came as 1,263,000 barrels per day were being added to our commercially available stocks of crude oil, while 1,075,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time.. That draw on the SPR was another installment of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump" (sic), that was intended to supply 1,000,000 barrels of oil per day to commercial interests over a six month period up to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising, at least up until then, and was apparently ​up by 637,000 barrels per day from last week because the administration is now attempting to use the Strategic Petroleum Reserve to manipulate prices on a weekly basis....Including the administration's initial 50,000,000 million barrel SPR release earlier this year, their subsequent 30,000,000 barrel release, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 213,670,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 25 months, and as a result the 442,471,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since November 23rd, 1984, or at a 37 1/2 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 during 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 rose to an average of 6,259,000 barrels per day last week, which was 1.5% more than the 6,164,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 12,100,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,700,000 barrels per day, while Alaska’s oil production was 4,000 barrels per day lower at 414,000 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 7.6% below that of our pre-pandemic production peak, but was 24.7% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021...

US oil refineries were operating at 9​0.9% of their capacity while using those 15,929,000 barrels of crude per day during the week ending September 2nd, down  from their 92.7% utilization rate during the prior week, and a refinery utilization rate that's a bit below the normal range for the week before Labor Day. The 15,929,000 barrels per day of oil that were refined this week were 11.4% more than the 14,302,000 barrels of crude that were being processed daily during week ending September 3rd of 2021 (after Hurricane Ida), but 9.0% less than the 17,495,000 barrels that were being refined during the prepandemic week ending September 6th, 2019, when our refinery utilization was at 95.1%, on the high side of the normal range for the Labor Day weekend...

Despite the decrease in the amount of oil being refined this week, the gasoline output from our refineries was higher, increasing by 74,000 barrels per day to 9,852,000 barrels per day during the week ending September 2nd, after our gasoline output had increased by 349,000 barrels per day during the prior week. This week’s gasoline production was still 2.7% less than the 10,122,000 barrels of gasoline that were being produced daily over the same week of last year, and 4.9% less than our gasoline production of 10,360,000 barrels per day during the week ending September 6th, 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 112,000 barrels per day to 5,031,000 barrels per day, after our distillates output had decreased by 281,000 barrels per day during the prior week. With that increase, our distillates output was 20.2% more than the hurricane impacted 4,185,000 barrels of distillates that were being produced daily during the week ending September 3rd of 2021, but 5.8% less than the 5,341,000 barrels of distillates that were being produced daily during the week ending September 6th 2019...

With the increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the 2nd time in 7 weeks; and for the 7th time out of the past thirty-one weeks, increasing by 333,000 barrels to 214,808,000 barrels during the week ending August 26th, after our gasoline inventories had decreased by 1,172,000 barrels during the prior week. Our gasoline supplies rose this week even though the amount of gasoline supplied to US users rose by 157,000 barrels per day to 8,727,000 barrels per day, because our imports of gasoline rose by 447,000 barrels per day to 1,031,000 barrels per day, while our  exports of gasoline rose by 136,000 barrels per day to 1,076,000 barrels per day.  but after 24 gasoline inventory drawdowns over the past 31 weeks, our gasoline supplies were 5.6% lower than last August 27th's gasoline inventories of 227,214,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of the year…

Even after the decrease in our distillates production, our supplies of distillate fuels increased for the 10th time in 16 weeks and for the 20th time in the past year, rising by 95,000 barrels to 111,801,000 barrels during the week ending September 2nd, after our distillates supplies had increased by 112,000 barrels during the prior week. Our distillates supplies rose this week even as the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 56,000 barrels per day to 3,624,000 barrels per day, and as our exports of distillates rose by 21,000 barrels per day to 1,565,000 barrels per day, while our imports of distillates fell by 35,000 barrels per day to 172,000 barrels per day.. After forty-eight inventory withdrawals over the past seventy-three weeks, our distillate supplies at the end of the week were 16.3% below the 133,586,000 barrels of distillates that we had in storage on September 3rd of  2021, and about 23% below the five year average of distillates inventories, for this time of the year...

Meanwhile, with higher imports, lower exports, less refining, and a big withdrawal of crude from the SPR, our commercial supplies of crude oil in storage rose for the 10th time in 20 weeks and for the 21st time in the past year, increasing by 8.845,000 barrels over the week, from 418,346,000 barrels on August 26th to 427,191,000 barrels on September 2nd, after our commercial crude supplies had decreased by 3,326,000 barrels over the prior week. After that big increase, our commercial crude oil inventories were about 3% below the most recent five-year average of crude oil supplies for this time of year, but still 23% above the average of our crude oil stocks as of the week before Labor Day 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 the Spring of 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 September 2nd were just 0.8% more than the 423,867,000 barrels of oil we had in commercial storage on September 3rd of 2021, and were 14.6% less than the 500,434,000 barrels of oil that we had in storage on September 4th of 2020, and 2.6% more than the 416,068,000 barrels of oil we had in commercial storage on September 6th of 2019…

Lastly, with our inventories of crude oil and our supplies of all products made from oil near multi-year lows over the most recent months, we are continuing to watch the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR. With the increases we've already noted, 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, rose by 3,680,000 barrels this week, from 1,663,939,000 barrels on August 26th to 1,667,619,000 barrels on September 2nd, after our total inventories had fallen by 3,257,000 barrels during the prior week. That left our total liquids inventories down by 120,814,000 barrels over the first 33 weeks of this year, and only 0.2% ​above a 13 1/2 year low... 

This Week's Rig Count

The number of drilling rigs running in the US fell for the fifth time in six weeks, but for only the 12th time over the past 102 weeks during the week ending September 9th, while they're still 4.3% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US decreased by 5 to 759 rigs this past week, which was still 256 more rigs than the 503 rigs that were in use as of the September 10th report of 2021, and was 1,170 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 decreased by 5 to ​at a twelve week low of ​591 oil rigs during the past week, after the number of rigs targeting oil had decreased by 9 during the prior week, while there are still 190 more oil rigs active now than were running a year ago, even as they amount to just 36.7% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are down 13.5% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 4 to 166 natural gas rigs, which was the most natural gas rig activity in 37 months, and up by 65 natural gas rigs from the 101 natural gas rigs that were drilling during the same week a year ago, even as they were still only 10.3% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….other than those rigs targeting oil and natural gas, Baker Hughes reports that two "miscellaneous" rigs continued drilling this week: a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, and a vertical rig drilling more than 15,000 feet into a formation in Humboldt county Nevada that Baker Hughes doesn't track....a year ago, there were was only one such "miscellaneous" rig running...

The offshore rig count in the Gulf of Mexico was down by 1 to 13 rigs this week, with all of this week's Gulf rigs drilling for oil in Louisiana's offshore waters....that's in contrast to a year ago, when only 4 Gulf rigs had restarted in the wake of Hurricane Ida...in addition to rigs drilling in the Gulf, we still have two offshore directional rigs drilling for natural gas in the Cook Inlet of Alaska; one is indicated to be drilling to between 10,000 and 15,000 feet, while the other one is indicated to be drilling to between 5,000 and 10,000 feet...a year ago, there were also two rigs drilling offshore from Alaska...

In addition to rigs running offshore, there are still 3 water based rigs drilling through inland bodies of water this week; those include a directional rig drilling for oil to between 5,000 and 10,000 feet in Cameron Parish, Louisiana; a directional rig targeting oil at a depth greater than 15,000 feet drilling through a lake on Grand Isle, Louisiana, and a directional rig drilling for oil in Terrebonne Parish, Louisiana, also at a depth greater than 15,000 feet...a year ago, there were no rigs drilling on inland waters...

The count of active horizontal drilling rigs was down by 3 to 692 horizontal rigs this week, which was still 231 more rigs than the 461 horizontal rigs that were in use in the US on September 10th of last year, but just over 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 24 vertical rigs this week, which was also down by 2 from the 26 vertical rigs that were operating during the same week a year ago…on the other hand, the directional rig count was up by 4 to 43 directional rigs this week, and those were up by 27 from the 16 directional rigs that were in use on September 10th 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 September 9th, the second column shows the change in the number of working rigs between last week’s count (September 2nd) and this week’s (September 9th) count, the third column shows last week’s September 2nd 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 10th of September, 2021...

as you can see by the basin count​ table​, it appears that most of this week's changes occurred in basins that Baker Hughes doesn't track...checking first the Rigs by State file at Baker Hughes for the changes in Texas Permian, we find that there were three oil rigs pulled out of Texas Oil District 8, which covers the core Permian Delaware, and that there was an oil rig pulled out of Texas Oil District 7B, which includes the easternmost county of the Permian Midland, but that that there was a rig added in Texas Oil District 8A, which covers the northernmost counties of the Permian Midland...combined, those changes indicate a 3 rig decrease in the Texas Permian, and since the national Permian basin count was just down by 2 rigs, we can conclude that the rig added in New Mexico was in the far west Permian Delaware...in the midst of those changes in the Permian, the basin's oil rig count fell by 3 to 334, while the Permian's nat​ural gas rig count was up by one to six...elsewhere in Texas, there was a rig added Texas Oil District 1, while there was a rig pulled out of Texas Oil District 4, which could have been offsetting changes in the Eagle Ford shale...in addition, there was an oil rig pulled out of the Haynesville shale in Texas Oil District 6, while there was a rig added in Texas Oil District 10, which could have been an addition in the Granite Wash​,​ if there were an offsetting removal from that basin in Oklahoma; the rig addition in the Mississippian shale was in Kansas...​ ​meanwhile, the removal of the oil rig from the Haynesville shale in Texas was offset by the addition of a natural gas rig in the Haynesville shale of northwestern Louisiana, and now all 71 Haynesville rigs are targeting natural gas...the Louisiana count is still down by one with the rig removals from southern Louisiana and the state's offshore waters...the rig that was added in Alaska appears to have been an oil rig on the north slope, while the rig that was added in Utah was the 3rd natural gas rig targeting the Uintah basin in that state; that accounts for one of the two natural gas rigs that were added this week in basins not tracked by Baker Hughes​; the other could have been in Texas District 1, or have been offset by an oil rig removal in the same area almost anywhere​...

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40 New Shale Well Permits Issued for PA-OH-WV Aug 29-Sep 4 | Marcellus Drilling News - Last week the three states with active Marcellus/Utica drilling, Pennsylvania, Ohio, and West Virginia, issued a collective 40 new drilling permits, way up from the 19 permits issued the week before. But there was a shocker. PA only issued nine new permits, while OH issued 14 new permits and WV issued a record high 17 new permits. Re: Antero Resources, Ascent Resources, Belmont County, Bradford County, Butler County, Carroll County, Chesapeake Energy, CNX Resources, Columbiana County, Elk County, Encino Energy, Energy Companies, Harrison County, Hilcorp Energy, INR, Marshall County,Monongalia County, PennEnergy Resources, Seneca Resources, Southwestern Energy, Tug Hill Operating, Tyler County, Wetzel County

Quantum Energy Partners to Take Major Position in EQT After $5.2B Transaction -EQT Corp. said late Tuesday it would bolt-on 90,000 net acres and associated midstream assets in West Virginia in a cash and stock transaction valued at $5.2 billion. EQT, the nation’s largest natural gas producer, is acquiring upstream assets from THQ Appalachia I LLC and midstream assets from THQ XcL Holdings I LLC. Both companies are backed by funds managed by private equity firm Quantum Energy Partners, which is poised to become a core EQT shareholder when the deal closes.The transaction would add 800 MMcfe/d of production from properties near EQT assets in the core of southwest Appalachia. It would provide 11 years of inventory in the Marcellus and Utica shales at current maintenance capital levels, EQT said. The transaction also includes 95 miles of midstream gathering systems connected to interstate pipelines in the region.“The acquisition of Tug Hill and XcL Midstream checks all the boxes of our guiding principles around [mergers and acquisitions], including accretion on free cash flow per share, [net asset value] per share, lowering our cost structure and reducing business risk, while maintaining an investment grade balance sheet,” said EQT CEO Toby Rice. Among the midstream assets being added are a 1 Bcfe/d rich gas trunkline, a 3.5 Bcfe/d lean gas trunkline with 600 MMcf/d of compression capacity, the 225 MMcf/d Clearfork processing plant and 20,000 b/d of condensate stabilization. EQT billed the transaction as a way to strengthen its business by boosting free cash flow (FCF), increasing operational control and expanding its footprint. The assets are expected to generate FCF at average natural gas prices above $1.35/MMBtu over the next five years. EQT would pay $2.6 billion in cash and issue 55 million shares of common stock valued at $2.6 billion, giving the Tug Hill companies and Quantum significant ownership positions. Quantum CEO and founder Wil VanLoh would join EQT’s board after the deal closes, which is expected in the fourth quarter. He said in a statement that he’s ready to work closely with “the EQT management team and board to enhance the long-term value of the company.” EQT expects to fund the cash consideration with money on hand, borrowings under its revolving credit facility and/or debt from the capital markets.

EQT's $5.2B deal marks 2022's largest shale M&A — here's what it means to the company - EQT Corp.'s planned $5.2 billion acquisition of Tug Hill and XcL Midstream will stand as the largest shale acquisition so far in 2022, and create either the natural gas producer's largest or second-largest shareholder. The deal with Quantum Energy Partners, based in Houston, would be the largest upstream shale acquisition in 2022, according to Enverus' tally. The $6 billion merger of Whiting Petroleum and Oasis Petroleum into a new company, Chord Energy, is technically larger but includes corporate debt. In Appalachia, there was also the $2.6 billion sale of Tug Hill and Chief Oil & Gas' northeastern Marcellus assets to Chesapeake Energy in January. Like those two deals, EQT's acquisition is from private equity companies looking to sell natural gas assets. But a significant difference is that Quantum isn't looking for an exit. The firm is taking half of the $5.2 billion in EQT common stock. That $2.6 billion translates into about 55 million common shares for Quantum Energy Partners. And Quantum's founder and CEO, Wil VanLoh, will join the EQT board of directors. Quantum's stake in EQT would be likely equal to or slightly ahead of BlackRock Inc., the New York-based investment company that as of the end of 2021 owned 54.9 million shares or 14.5% of the shares outstanding. The terms of the acquisition do not include any lockup, or restriction, on the sale of EQT stock gained in the transaction. For EQT, the acquisition follows what CEO Toby Z. Rice called "industrial logic." Tug Hill's operations in the two counties West Virginia counties of Marshall and Wetzel, representing about 800 million cubic feet per day of natural gas and liquids, plus its future acreage of about 90,000 acres and 300 locations in West Virginia, is adjacent to EQT's own drilling. EQT's operations are "literally right next door to where the Tug assets sit," Rice said. That's likely to translate into further benefits for the expanded EQT, which already has implemented a coordinated series of drilling and completion operations across much of its operations in Appalachia. And the Tug Hill operations are so low cost that they will help lower EQT's overall cost structure; the estimate is that it will lower EQT's breakeven price by 15 cents per million BTU. Tug Hill's acreage is, for the most part, centered in Marshall and Wetzel counties where there had been gold-rush-level interest in the early years of the Marcellus and Utica Shale play. EQT has also acquired a significant portion of acreage in that part of West Virginia from, among other places, its 2020 acquisition of Chevron Appalachia's assets. Tug Hill had run three drilling rigs recently, representing between 30 and 40 wells turned in line a year. Another benefit is that much of Tug Hill's production is liquids instead of straight natural gas, which will benefit EQT by diversifying its portfolio. Currently about 2% of 5.5 billion cubic feet per day of natural gas is liquids but that will go up to 6% when Tug Hill's production is accounted for moving forward. Then there's the other aspect of the acquisition, XcL Midstream. That brings with it 95 miles of trunk lines worth 4.5 billion cubic feet per day of rich and dry gas connected to the major long-distant pipelines that will allow EQT to send its natural gas and liquified natural gas even further. Having XcL Midstream "will help us with that interconnect even more and allow us to take Pennsylvania gas into that pipe and then down to the Gulf," said CFO David Khani. It will also add its water pipelines that will work well with EQT's efforts in that area.

What to expect on permitting reform as Congress returns - Progressives and their activist allies have been grumbling for weeks over a deal struck between Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) to pass legislation that would streamline environmental reviews of energy infrastructure projects.That deal was crucial to winning Manchin’s vote for the Inflation Reduction Act, which infused $369 billion in climate spending. And despite its apparent appeal to Republicans, party leaders have assailed the effort as part of a “political payback scheme.”Senate Democratic leaders said last month they intend to attach the yet-to-be-released legislative language to an upcoming stopgap government funding bill. That bill needs to pass before the new fiscal year begins on Oct 1.Senate leaders, including Schumer and Environment and Public Works Chair Tom Carper (D-Del.), said they intend to follow through with the agreement, even as progressives and their green group allies are aligning against the deal.“The agreement on energy project permitting reform was an essential part of getting the Inflation Reduction Act, and its historic climate and environmental justice provisions, enacted into law,” Carper said in an emailed statement. “My staff and I have been involved in discussions regarding this language to ensure that it aids our ability to meet our nation’s climate and energy goals and I intend to respect this agreement,” he added. A memo circulated by Manchin’s office last month outlined the broad framework of the deal. Changes would include setting a two-year deadline for environmental reviews, limits to judicial challenges and tweaks to Clear Water Act state authorities.Manchin has specifically heralded the agreement as also containing approval for the controversial Mountain Valley Pipeline — a project that is almost 95 percent complete and would move West Virginia natural gas to markets (Greenwire, July 28).Previously, some Democrats had said they would not rule the permitting idea out, noting a reform package could also help advance clean energy technologies and transmission deployment (E&E Daily, July 29).Manchin has insisted that the provision pass or else Democrats may suffer his wrath in a 50-50 Senate that requires unanimous Democratic support to advance contentious nominations and judicial picks.“It either keeps the country open, or we shut down the government. That’ll happen Sept. 30, so let’s see how that politics plays out,” Manchin told West Virginia Metro News last month when discussing the permitting deal and the government funding measure.

Manchin Plan to Fast-Track Energy Projects Heads for Showdown - Congress is headed for a showdown this month over Democratic Senator Joe Manchin’s plan to fast-track federal approvals of energy projects ranging from natural gas pipelines to wind farms. Manchin secured a pledge from congressional leaders to advance the legislation, but the proposal is already drawing fierce opposition from environmental activists and progressive Democrats, and the outcome is far from certain. The deal, which was blessed by the White House, could deliver speedier approval for Equitrans Midstream Corp.’s stalled $6.6 billion Mountain Valley gas pipeline crossing Manchin’s home state of West Virginia. It also may expedite approvals for new clean energy projects spurred by the climate law enacted last month. It could also make changes to bedrock environmental laws, by putting two-year time limits on project reviews and limiting the power of states in Clean Water Act approvals. If the legislation is passed, it would mark a big win for the oil and gas industry, which has long sought to accelerate federal permitting and scale back environmental reviews that can lead to years of delay and hundreds of millions of dollars in extra costs. But even some of the measure’s champions doubt it would achieve the sweeping permitting reform that’s been promised. And it’s not clear that the legislation, which could be unveiled as soon as this week, will make it through Congress. Despite Senate Majority Leader Chuck Schumer’s promise to attach the measure to government-funding legislation or some other must-pass bill, some Democrats are deeply opposed. “It’s basically an industry wish list that’s been around forever,” Representative Raul M. Grijalva, an Arizona Democrat who chairs the Natural Resources Committee, said in an interview. “I don’t feel compelled to back this up simply because it was a deal that was made in the Senate.” Other Democrats insist they aren’t bound by the Schumer-Manchin agreement. “To pretend that all of our hands are tied because Chuck Schumer and Joe Manchin cut a deal?” said Representative Jared Huffman, a Democrat from California. “Sorry, I don’t think it works that way.” Some Republicans, angry that Democrats jammed Manchin’s climate bill through the Senate on party lines, are also vowing to oppose the legislation even though it aligns with long-held energy industry priorities. Others say the legislation won’t achieve the permitting overhaul that’s needed. Early drafts of the legislation sought to impose limits on government reviews, shorten the amount of time the public can comment on some project analysis and require the president to give priority status to a list of at least 25 fossil fuel and mining projects. The 303-mile (488-kilometer) Mountain Valley Pipeline is seen as a prime beneficiary. Although developers say the pipeline that crosses into Virginia is more than 90% complete, construction work stalled after a federal court rejected a necessary permit for a national forest crossing. Manchin has complained about the slowdown and advanced proposals to finish the project, including by possibly moving litigation over the pipeline to a Washington, D.C.-based federal court. A summary circulated in recent days among Senate Democrats seen by Bloomberg emphasized the package wouldn’t weaken existing environmental statues. Instead, it cast the changes as critical to helping Biden achieve his climate and clean energy goals. For instance, the summary highlights how the measure would give federal regulators new authority to issue construction permits for power lines and transmission projects deemed in the national interest.

'We will get it done': Senate Dems vow permitting success - Senate Democrats are on a collision course with their House counterparts over permitting reform, as Senate leaders said Wednesday they still plan to advance the permitting bill by attaching it to a stopgap government funding measure. That announcement sets up a political fight with House progressives and Republicans wary of giving Democrats another legislative win — though Senate Republicans seem to be softening their stance. Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) both reiterated Wednesday that they intend for the permitting measure, which would speed environmental reviews on energy projects, to hitch a ride on the funding measure, known as a continuing resolution (CR). The CR is a must-pass bill to keep the government open when the fiscal year ends Sept. 30. That makes it an appealing vehicle for the permitting reform legislation Schumer agreed to as a condition of Manchin’s support for the Inflation Reduction Act, Democrats’ massive new climate, health care and tax law. “Permitting reform is part of the IRA, and we will get it done,” Schumer told reporters Wednesday. House progressives, however, say they don’t owe Manchin anything on the permitting measure, setting up a showdown at the end of the month. Even if leadership can secure 60 votes in the Senate, dozens of House Democrats have already come out against it, potentially derailing the combined permitting-stopgap spending bill in the lower chamber (E&E Daily, Sept. 6). Progressive groups are planning to protest the permitting effort outside the Capitol on Thursday afternoon. Legislative text of the overhaul is expected in the coming days. “I think people need to see what’s inside and what it does, how much good it does for our country,” Manchin told reporters Wednesday when asked about progressive opposition. Still, in the Senate, it appears many of Manchin’s Democratic colleagues are lining up behind the permitting proposal. Among other things, it’s expected to propose a two-year timeline for environmental reviews for energy and infrastructure projects, set a statute of limitations for judicial challenges and clear the way for the Mountain Valley pipeline, a natural gas project and a longtime Manchin priority.

10 New York Representatives Oppose Schumer’s Dirty Pipeline Deal - In a letter delivered to Speaker Nancy Pelosi today, more than 70 U.S. House members affirmed their opposition to a legislative deal crafted by Senators Schumer and Manchin that would fast-track fossil fuel infrastructure development. 10 New York Representatives were among the signatories: Bowman, Clarke, Espaillat, Jones, C. Maloney, Meng, Nadler, Ocasio-Cortez, Torres, and Velazquez. Representative Jeffries has been notably silent on this issue, as activists ramp up the pressure, protesting outside his Brooklyn office last week.The deal, which Schumer apparently intends to attach to an upcoming budget continuing resolution, would fast-track fossil fuel projects, including the highly controversial Mountain Valley Pipeline. Yesterday, activists in New York traveled to Washington, D.C. to protest the deal alongside hundreds of activists from across the country. In response, Food & Water Watch Northeast Region Director Alex Beauchamp issued the following statement:“Today, the New York House delegation issued a strong rebuke of Senator Schumer and his spineless dirty pipeline deal. Backroom deals that sell out frontline communities, sidestep state permitting authority and double down on climate-killing fossil fuels are no way to lead.“Schumer’s dirty pipeline deal is an affront to his own constituents’ fight for a livable future. For those that represent us, this is the time to choose — people or fossil fuels. Senator Schumer, stop the dirty deal.”

Sanders blasts permitting reform as Democrats' divide grows - Sen. Bernie Sanders said Thursday he would oppose a stopgap government spending measure that includes forthcoming permitting legislation, underscoring progressive resistance to the bill amid protests by environmental groups.Sanders, a Vermont independent who caucuses with Democrats, called the permitting proposal a “disastrous side deal” that would make it easier for fossil fuel companies to “pollute the environment and destroy our planet.”“At a time when climate change is threatening the very existence of our planet, why would anybody be talking about substantially increasing carbon emissions and expanding fossil fuel production in the United States?” Sanders asked on the Senate floor.Senate Majority Leader Chuck Schumer (D-N.Y.) struck a deal with Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) in July to pass the permitting overhaul in exchange for Manchin’s vote on the Inflation Reduction Act, Democrats’ sprawling climate, health care and tax law. Their plan is to attach it to the continuing resolution, the must-pass stopgap spending measure to keep the government open when the fiscal year ends Sept. 30.It will need 60 votes to pass the Senate, but most Democrats are rallying to support Manchin’s deal, and Republicans are beginning to soften their tone. Sanders’ opposition may not directly impact the bill’s fate in the upper chamber, but it’s part of a larger intraparty battle that could derail it.Manchin said Thursday he had been expecting Sanders to oppose it and reiterated that he expects permitting reform to ride on the CR.“We’re talking about small nuclear reactors, we’re talking about solar farms and wind farms, but we have to have the fossil horsepower that we need right now to run the country,” Manchin said.Other Senate climate hawks see potential benefits for clean energy projects they’re hoping to get off the ground with billions of dollars from the Inflation Reduction Act and a path to clearing backlogs for the transmission projects needed to escort renewable power around the country (E&E Daily, Sept. 8).Despite Sanders’ vocal opposition, fellow progressive Sen. Elizabeth Warren (D-Mass.) was noncommittal on the bill Thursday.“There’s no language out there right now,” Warren said. “I need to see what has been agreed to.”There’s a brewing battle, however, in the House, where progressives are publicly pressuring leadership to drop permitting from the CR or any other must-pass bill.House Natural Resources Chair Raúl Grijalva (D-Ariz.) is circulating a letter making that demand, and it now has signatures from more than 50 House Democrats, enough to derail the bill if Republicans do not end up supporting permitting reform (E&E Daily, Sept. 6). Sanders entered the letter into the congressional record during his floor speech.

West Virginians divided over unfinished natural gas pipeline : NPR — The Mountain Valley Pipeline exists as a 303-mile-long chain with hundreds of missing links. Without all of its federal permits, the natural gas project cannot cross Jefferson National Forest or many of the streams and wetlands in its proposed path from West Virginia to North Carolina.That includes one segment at the bottom of Maury Johnson's family farmland in mountainous Monroe County, W.Va."It's built from there over to the next hollow, and they can't cross that stream," Johnson says, pointing about halfway down the ridge, near a small patch where he grows corn, pumpkins and zinnias.That could change soon. When Congress passed historical climate spending last month, Sen. Joe Manchin (D-W.Va.) announced that his support had hinged on future legislation that would change the process for issuing permits for large energy infrastructure projects such as this one. A one-page summary released by Manchin's office explicitly named steps to support the completion and operation of the Mountain Valley Pipeline. With Congress back in session, debate over this deal and what it means for the future of fossil fuels in the United States is resuming. In West Virginia, supporters of the pipeline, including Manchin, say finishing it will bring in $40 million annually in tax revenue to the state and provide greater energy security for the United States."There's not another project in America today that will bring this much energy within four to five months," Manchin told West Virginia's MetroNews radio network in August. "This has everything to do not only with West Virginia, but our country and the security and energy that we need." But local environmental groups say this deal subverts community input processes, and new fossil fuel infrastructure is incompatible with U.S. climate goals."This is not just about Mountain Valley Pipeline, it's about every community that has been sacrificed across this country" to further fossil fuel extraction, says Johnson, an activist who says pipeline construction put sediment in his well water and degraded his farmland. Originally approved by the Federal Energy Regulatory Commission in 2017, the project was supposed to wrap up in 2018 with a budget of $3.5 billion. Environmental groups such as the Sierra Club and Appalachian Mountain Advocates sued federal agencies that issue the pipeline's permits, arguing they failed to adhere to environmental law, and succeeded in getting several permits thrown out, some more than once. The cost of the project ballooned to more than $6 billion. The area is too steep, too full of rivers and streams and home to endangered species such as the candy darter, a small colorful fish, for the pipeline to be completed, says Joe Lovett, founder and executive director of Appalachian Mountain Advocates. "It's just an inappropriate project. Some things just can't be built," he says.

Pipeline fight heads to Washington- Congress is about to hear from hundreds of angry anti-pipeline activists. They are en route from across the country, with some coming from as far away as Alaska, to urge lawmakers on Thursday to nix the controversial Mountain Valley pipeline — and scrub it from a side deal Democratic lawmakers made to advance President Joe Biden's climate law. After holding out for months, Sen. Joe Manchin of West Virginia finally agreed to support the climate measure on the condition that Senate Democrats ease permitting requirements. The deal would help expedite energy infrastructure projects, including the construction of the Mountain Valley pipeline, which is slated to transport natural gas from West Virginia shale reserves to energy markets in mid-Atlantic states. The story of the Appalachian pipeline, which federal regulators first approved in 2017, epitomizes the upcoming congressional battle over Manchin's deal. For Manchin, the 304-mile project is a perfect example of an inefficient and burdensome process to build critical energy infrastructure. Mountain Valley has been mired in legal battles and permitting delays for years. But others maintain that the embattled pipeline highlights the need for more robust environmental reviews and tighter checks on government agencies. While federal and state entities have continued to greenlight the project, courts have determined that the development plan for the pipeline does not comply with current environmental law. Its construction, the courts determined, could harm hundreds of waterways, wetlands and endangered fish in Appalachia. Senate Democratic leaders said last month they intend to attach a permitting proposal to the spending bill that needs to pass before October to avert a government shutdown. While the details of the proposal have yet to be released, opponents of the Mountain Valley pipeline are livid. More than 80 groups sent a letter Wednesday to congressional leadership, urging them to jettison the plan to fast-track the pipeline from the overall permitting proposal. Over 1,000 people plan to attend a rally Thursday evening at the Capitol, and hundreds more are slated to take part in lobbying meetings on the Hill. While progressive Democratic members have vehemently opposed the permitting proposal, party leadership have said they intend to honor the deal.

Appalachian, Indigenous pipeline foes protest climate deal - Roishetta Ozane and her six children squeezed into a three-bedroom trailer, paid for by FEMA, after their Southwest Louisiana home was destroyed by two hurricanes, only six weeks apart. The single mother and her children lived in this cramped space for nearly two years before Ozane, after working three jobs, could afford to buy a new home this past June. Ozane, 37, traveled this week from her home in Sulphur, La., to the nation’s capital to rally on Thursday with others who have beendisplaced by climate catastrophes and those who are advocating against pipelines in their communities. She said she is sharing her story in meetings on Capitol Hill in the offices of her local representatives in hopes that those in power listen to her concerns and reject any bills that further invest in polluting infrastructure.“For so long … these industries have been placed in BIPOC communities that are too often targeted by these projects. It’s time for them to stop. We can no longer be made sacrifices for oil and gas,” Ozane said, referring to Black and Indigenous people and other people of color. Emphasizing that her home near Lake Charles, La., is surrounded by oil and gas refineries, chemical manufacturers and other industries, she had this message for lawmakers: “Breathe the air we breathe. Drink the water we drink. And feel everything we feel in a community where everywhere we look we see industry.”Though last month’s passage of the Inflation Reduction Act — a climate, energy and health-care package — was the climate movement’s biggest legislative success, Ozane and others say their communities weresacrificed as a bargaining chip. To secure the support of Sen. Joe Manchin III (D-W.Va.), Democratic leadership reached a side deal with Manchin that would overhaul the process for approving new energy initiatives and expedite the 300-mile-long Mountain Valley Pipeline project — a natural gas pipeline across West Virginia and Virginia that those rallying in D.C. on Thursday have opposed for years. Ozane, an organizer for Healthy Gulf, an environmental justice organization, was one of the hundreds protesting Thursday at the Robert A. Taft Memorial Carillon, joining people from Appalachia and as far away as Alaska to demand that lawmakers reject this side deal, said Grace Tuttle, a lead organizer of the rally who has been advocating against the Mountain Valley Pipeline for three years. Tuttle said the demonstration will be a show of solidarity among communities affected “first and worst” by fossil fuel developments.The landmark Inflation Reduction Act will significantly advance the fight against climate change, spending about $370 billion to bring the country closer to achieving the emissions cuts scientists say are required to avoid the devastating consequences of the Earth’s warming. Rally organizers argue that the side deal, if passed, would “gut bedrock environmental protections, threaten tribal authority, endanger public health, fast-track fossil fuel projects, cut public input and push approval for Manchin’s pet project, the Mountain Valley Pipeline.”

Developer gets extension on LNG terminal - A company that wants to build New Jersey’s first terminal for exporting liquefied natural gas will get three more years to do so, water regulators at the Delaware River Basin Commission decided Thursday. The regulator’s commissioners — the governors of the four basin states plus a federal government representative — approved a resolution that extended a permit to build a dock on the Delaware River at Gibbstown until June 2025. The extension had already been approved by the commission’s executive director, Steve Tambini, but he sought a final decision from the commissioners after objections from environmental groups including Delaware Riverkeeper Network. The vote, with four in favor and one — New York state — abstaining, was a blow to Riverkeeper and other critics who have strongly opposed the project since it was proposed in 2019, and argued that Tambini exceeded his authority in approving the extension in June. “Today’s approval by the DRBC of the unjustified permit extension for the Gibbstown LNG export dock was a terrible mistake,” said Tracy Carluccio, deputy director of Riverkeeper. “The fact that they voted without public participation is a throwback to the shameful days when decisions were not made by substantive and public review but behind closed doors where the facts are not shared transparently and secret backroom deals are simply given an obligatory nod to legitimate them.” Riverkeeper and other opponents had hoped that they could delay or even derail the dock construction, which is part of a plan to ship super-cooled natural gas by truck or train from northeast Pennsylvania to Gibbstown where it would be loaded onto ships for export. The overall project, now estimated by the developer to cost $113 million, has been delayed by administrative and legal problems including a quasi-judicial hearing in May 2020 in which objectors put their arguments but resulted in the commission affirming its earlier approval.

Midwest grid operator feels heat as it signals need for gas - Grid operators like to be known as the Switzerland of energy: agnostic to the policies and fuels that keep the lights on and air conditioners humming. But recent actions by the Midcontinent Independent System Operator have some critics questioning MISO’s neutrality on an increasingly divisive issue: the role of natural gas in a cleaner grid. In July, MISO sent a letter to the Rural Utilities Service in support of a $600 million gas-fired power plant, an owner of which is seeking federal financing for its share of the project in Superior, Wis. Opponents contend the proposed plant, which has been approved by utility regulators in the states it would serve, isn’t needed and that cleaner options exist. Weeks later during a public briefing with Missouri regulators about how to meet the need for generating capacity in the state, a MISO executive told regulators, “We’re going to need some type of gas asset in the footprint that we can rely on.” In both instances, environmental groups and clean energy advocates said, the comments went too far given MISO’s role as the operator of the region’s electricity markets and its longstanding pledge to be indifferent to technology and policy. “It’s not appropriate for MISO to be putting their thumb on the scales of a certain technology like gas,” Andy Knott, central region director of Sierra Club’s Beyond Coal Campaign, said of MISO’s comments to the Missouri Public Service Commission. Knott said gas- and coal-fired generators weren’t all reliable energy sources during Winter Storm Uri in 2021 when millions of homes and businesses lost power. Melissa Seymour, the MISO vice president who made the comment to the Missouri Public Service Commission about gas, said the grid operator isn’t advocating for development of gas-fired generation or abandoning its fuel-agnostic stance. Seymour said coal-fueled generating capacity in Missouri is projected to shut down at a faster rate than it’s being replaced, leaving a gap. And it’s a gap MISO contends cannot solely be filled with renewables and batteries. That’s because generators provide more than just energy. They also offer other grid attributes needed for reliability, such as the ability to ramp up quickly and be dispatched on demand as well as provide voltage support. “Today, the only thing that we’re aware of that would provide those attributes are gas units,” Seymour said.

Huge amount of money' in climate law could spawn gas bans - The climate and energy law signed by President Joe Biden last month may reshape a national tug of war over gas bans and electrification, with the outcome influencing emissions and fossil fuel development for decades. Billions of dollars in new federal funds from the Inflation Reduction Act are set to flow to building owners and residents who swap out gas boilers, stoves and water heaters for electric-powered technologies. The dollars come on top of city-level policies in at least seven states banning fossil fuels in new buildings, including dozens of municipalities in California that followed the city of Berkeley in enacting the nation’s first gas ban in 2019. New York City, Seattle and much of the state of Washington followed with similar measures. Additional bans could emerge in new jurisdictions partly because of the new federal law, some electrification advocates said. The climate law signed by Biden in August “totally transforms all of those conversations [over banning fossil fuels] and makes all of this so, so much easier,” said Ben Furnas, a former sustainability chief for New York City, where lawmakers passed a law last year prohibiting new buildings from using fossil fuel heat, starting in 2023 (Energywire, Dec. 15, 2021). Yet gas advocates are vowing to fight electrification mandates, and they may get help from state officials, existing statutes and a lawsuit in California. Twenty states also have passed laws that preempt cities from restricting buildings’ access to fossil fuels, meaning the Inflation Reduction Act’s voluntary electrification programs won’t lead to New York City-style bans. “Over the past three years, we have seen the energy policy debate veer away from reducing greenhouse gas emissions to an anti-fossil fuel and anti-infrastructure push,” said George Lowe, vice president of governmental affairs and public policy for the American Gas Association, in a written statement. Limiting fossil fuel access is a “mistake” that would “negatively impact customers and keep us from achieving our shared goals” for decarbonization, Lowe added. “Over the next several years, we will continue to see these debates play out in state capitols across the country,” he predicted.

U.S. Coast Guard probes natgas pipeline explosion at Lake Lery, Louisiana | Reuters -The U.S. Coast Guard said on Thursday that it was responding to a natural gas pipeline explosion at Lake Lery, Louisiana, and there have been no reports of injuries, casualties or pollution, it said in a statement on Friday.The Coast Guard received a report of a large fire at Lake Lery, it said in a release."The pipeline has been secured. The cause of the incident remains under investigation."A Coast Guard spokesperson identified the line involved as the TOCA LINE, operated by Third Coast High Point Gas Transmission LLC, adding the fire was still burning at present.The company could not be immediately reached for comment."Preliminary information indicates a barge broke loose from its mooring and impacted the pipeline," a spokesperson from the U.S. Pipeline And Hazardous Materials Safety Administration (PHMSA) said."The pipeline has been shut down and the affected section of pipe has been isolated. Remaining gas will be allowed to burn off. PHMSA will continue to monitor this event."

U.S. Natural Gas Futures Shed Over 5% On Soaring Output - U.S. natural gas futures shed around 5% on Tuesday, hitting a four-week low as soaring output coupled with lower demand forecasts drags prices down, despite the fact that inventories are 11% lower than their five-year norm. U.S. natural gas was down 5.2% at 1:10 p.m. EST, to $8.38. Output is still holding strong after the latest report from the Energy Information Administration (EIA) for the week ending August 26, which showed a natural gas inventory build of 61 billion cubic feet. While that brings inventory to 2,640 Bcf, it is still 228 Bcf below levels at the same time last year–heading into the winter season. Also prompting the decline is the outage at the key Freeport LNG export plant on the Gulf coast. That outage means traders are calculating some 2 billion cubic feet of gas per day that is not being consumed by Freeport for export and is remaining on the domestic market. Freeport–which accounts for some 20% of U.S. LNG export capacity–looks set to remain offline until sometime in the first half of November, at which point we could see only a partial startup, ramping up to full capacity by the end of that month. Freeport, however, has already pushed back a restart date several times since declaring force majeure–and then revoking it–in June. On June 8, Freeport suffered an explosion, causing the plant to shut down for damage assessment and repairs. So far in September, even with the Freeport outage, Refinitiv data showed a rise in the average volume of natural gas being pumped into American LNG export plants to 11.2 Bcfd, up from the average of 11 Bcfd last month. Globally, natural gas prices continue to soar on the twin developments of supply disruptions and sanctions on Russia for its invasion of Ukraine. Prices continue on a fast upward trajectory in the aftermath of Russia’s cutoff of flows to Germany through Nord Stream 1 last week.

U.S. natgas futures drop 7% to near 4-week low on record output - (Reuters) - U.S. natural gas futures dropped about 7% to a four-week low on Tuesday as output soared to a record high over the weekend and on forecasts for lower demand next week than previously expected. In the U.S. West, however, spot power prices for Tuesday jumped in California and other states to their highest since California's electric grid operator imposed rotating outages in August 2020 as a brutal heat wave baked the drought-stricken region for more than a week. California's grid operator urged consumers to conserve energy for a seventh day in a row on Tuesday as the heat strains the grid and significantly increases the likelihood of rotating outages. The decline in futures prices, meanwhile, also came as the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in Texas leaves more gas in the United States for utilities to inject into stockpiles for next winter. Front-month gas futures fell 64.1 cents, or 7.3%, to $8.145 per million British thermal units (mmBtu), their lowest close since Aug. 9. That was the biggest one-day percentage decline since June. So far this year, gas futures were up about 119%, as higher prices in Europe and Asia keep demand for U.S. LNG exports strong. Global gas prices have soared due to supply disruptions and sanctions linked to Russia's Feb. 24 invasion of Ukraine. Gas was trading around $70 per mmBtu in Europe and $55 in Asia. Russian gas exports via the three main lines into Germany - Nord Stream 1 (Russia-Germany), Yamal (Russia-Belarus-Poland-Germany) and the Russia-Ukraine-Slovakia-Czech Republic-Germany route - averaged just 1.4 bcfd so far in September, down from 2.5 bcfd in August and 10.8 bcfd in September 2021. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 99.7 bcfd so far in September from a record 98.0 bcfd in August. With cooler weather coming, Refinitiv projected average U.S. gas demand, including exports, would slide to 92.3 bcfd next week from 96.8 bcfd this week. The forecast for next week was lower than Refinitiv's outlook on Friday before the U.S. Labor Day holiday on Monday. The average amount of gas flowing to U.S. LNG export plants rose to 11.2 bcfd so far in September from 11.0 bcfd in August. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG. The reduction in exports from Freeport is a problem for Europe, where most U.S. LNG has gone this year as countries there wean themselves off Russian energy.

Natural Gas Futures Prices Fall Further Amid Threats to LNG Exports, Waning Weather Demand - Natural gas prices dropped again Wednesday as traders assessed receding domestic demand prospects, rising production and possible peril for American LNG exports. The October Nymex gas futures contract settled at $7.842/MMBtu, down 30.3 cents day/day. November fell 31.1 cents to $7.901. Wednesday’s prompt month loss followed a 47.6-cent sell-off ahead of Labor Day Weekend and another 64.1-cent nosedive on Tuesday.Cash prices followed suit. NGI’s Spot Gas National Avg. shed 37.0 cents to $7.925 on Wednesday after losing 31.0 cents the prior day. NatGasWeather analysts attributed “strong selling” in large part to cooler temperature trends and robust production. The firm said national demand was expected to ease late this week and into next week as weather systems usher in rain and lower temperatures across large swaths of the Lower 48, including Texas and the West. U.S. production, meanwhile, hovered near 100 Bcf on Wednesday, according to Bloomberg’s estimate, putting output around an all-time high. Additionally, as EBW Analytics Group analyst Eli Rubin pointed out, an Environmental Protection Agency (EPA) decision against waiving an emissions limit requirement for turbines at Cheniere Energy Inc.’s liquefied natural gas facilities further empowered bears.The affected Cheniere operations at Sabine Pass and Corpus Christi currently account for more than half of U.S. LNG exports, “and any disruption could create chaos for U.S. and global natural gas markets,” Rubin said Wednesday. At issue: The Biden administration’s EPA is reviving enforcement of the National Emission Standards for Hazardous Air Pollutants, which aims to limit carcinogenic emissions after an 18-year stay, Rubin noted. As part of this, the agency denied Cheniere’s bid for an exemption from the rule. A Cheniere spokesperson said the change would not lead to any material impacts, given that the company can adjust gradually over time. This likely will happen over several years, Rubin said. “Alternatively, Cheniere may opt to pay noncompliance fines to ensure continued operations,” Rubin added. “Either solution is unlikely to disrupt near-term U.S. LNG exports.” Still, any specter of LNG disruption is bound to spook natural gas traders, he said, given mounting global demand. Europe’s outsized LNG appetite, in particular, is expected to endure as the continent endeavors to transition away from Russian gas imports amid the Kremlin’s war in Ukraine.

Natural Gas Futures Rebound After Storage Print Punctuates Magnitude of Robust Summer Demand - After steep drops the three prior sessions, natural gas futures bounced back Thursday, as traders digested a bullish inventory report – relative to historic norms – that reminded how strong demand proved over the bulk of summer. The October Nymex gas futures contract climbed 7.3 cents day/day and settled at $7.915/MMBtu. November gained 7.0 cents to $7.971. NGI’s Spot Gas National Avg., however, shed 11.5 cents to $7.810. The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 54 Bcf natural gas into storage for the week ended Sept. 2. The print came in roughly on par with expectations found by major polls, but it fell shy of the five-year average build of 65 Bcf. Analysts said it reflected the intense late-summer heat across large swaths of the country – continuing a summer-long trend of strong, steady demand for gas to cool homes and power businesses. EIA estimated U.S. consumption of natural gas would average 86.6 Bcf/d in 2022, up 3.6 Bcf/d from last year. Working gas in storage rose to 2,694 Bcf as of Sept. 2, according to EIA. However, stocks were 222 Bcf lower than a year earlier and 349 Bcf below the five-year average. Production climbed in late August and early this month, reaching a 2022 high this week, yet output has yet to fully align with demand. EIA estimated in a separate report this week that gas inventories ended August at 2.7 Tcf, 12% lower than the five-year average. It projected stocks would close the injection season around 3.4 Tcf, 7% below the five-year average. By region, the Midwest and East last week led with injections of 29 Bcf and 21 Bcf, respectively, according to EIA. The South Central increase of 6 Bcf followed and included a 9 Bcf injection into nonsalt facilities. Utilities withdrew 3 Bcf from salts. Mountain region stocks increased by 2 Bcf, while Pacific inventories fell by 3 Bcf. Early estimates submitted to Reuters for the week ending Sept. 9 showed an expected mean increase of 64 Bcf. That would again fall short of averages for this time of year. The actual build in the comparable week of 2021 was 78 Bcf and the five-year average was 82 Bcf. So far this month, some of the most intense heat – and greatest gas demand – has been in the West. Triple-digit temperatures have scorched stretches of California and the Southwest. “The heatwave that had started in California last week is still ongoing, and several decades-old temperature records were hit throughout the state” to date in September, Rystad Energy analyst Ryan Kronk said. The California Independent System Operator, the state’s grid operator, warned that capacity did not meet forecast demand Thursday; the same was true the four prior days. “This will bring increased power prices and higher chances of blackouts,” Kronk said. Power prices this week are “by far the highest California has experienced in the summer in the last decade.”

U.S. natgas futures up 1% on warmer forecasts for mid/late September - (Reuters) - U.S. natural gas futures edged up 1% on Friday on forecasts for warmer weather and higher gas demand in mid- to late September. In the West, a tropical storm approaching Southern California threatened to bring high winds that could whip up wildfires and heavy rainfall that could trigger flash floods, but the system will likely bring relief from a brutal, 10-day heat wave. The increase in gas futures came despite the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in Texas, which has left more gas in the United States for utilities to inject into stockpiles for next winter. Front-month gas futures rose 8.1 cents, or 1.0%, to settle at $7.996 per million British thermal units (mmBtu). That put the contract down about 9% for the week after sliding about 5% last week. It was the contract's biggest weekly loss since late June and the first time it fell for three weeks in a row since early July. So far this year, gas futures were up about 115% as higher prices in Europe and Asia keep demand for U.S. LNG exports strong. Global gas prices have soared due to supply disruptions and sanctions linked to Russia's Feb. 24 invasion of Ukraine. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 99.1 bcfd so far in September from a record 98.0 bcfd in August. Refinitiv projected average U.S. gas demand, including exports, would drop from 97.4 bcfd this week to 92.9 bcfd next week as the weather cools before rising to 93.3 bcfd in two weeks as the weather warms again. The forecast for next week was lower than Refinitiv's outlook on Thursday. The average amount of gas flowing to U.S. LNG export plants rose to 11.1 bcfd so far in September from 11.0 bcfd in August. That compares with a monthly record of 12.9 bcfd in March. The seven big U.S. export plants can turn about 13.8 bcfd of gas into LNG.

Why so many LNG terminals are adopting carbon capture - Liquefied natural gas companies are increasingly investing in carbon capture and storage to limit their emissions and bolster their climate credentials, despite the absence of a regulatory requirement for them to do so. They are voluntarily embracing the still sparsely deployed technology as a way to stay ahead of regulations at home and abroad and to maintain a social license to operate in a world that is increasingly anxious to contain emissions. U.S. LNG exporters such as Cheniere Energy Inc., NextDecade Corp. and Sempra Energy have announced plans in the last few years to use CCS to capture a share of their carbon emissions associated with liquefaction and transport of gas. Those efforts contrast with potential mandates on other industries. A Supreme Court decision this summer and the historic climate legislation passed last month have conspired to boost the likelihood that other sectors, like electric power, will soon face Clean Air Act regulations based on CCS. Cheniere spokesperson Eben Burnham-Snyder said in an email to E&E News that the company sees CCS as “a promising technology to support our climate strategies to reduce the greenhouse gas footprint of our product.” He added that the climate spending bill known as the Inflation Reduction Act, which expanded the 45Q tax incentive for capturing and storing carbon, “considerably improves the economics of CCS and likely accelerates the implementation of these solutions.” The LNG industry’s embrace of CCS is remarkable in light of the costs associated with the technology and the fact LNG isn’t likely to face mandates to use it any time soon. The International Energy Agency estimates the cost of CCS at a generic facility between $175 and $400 per ton, though that would now be partially offset by the 45Q tax credit of $85 per ton.

EPA Denies Permit For Proposed Bluewater Terminal In Texas -The U.S. Environmental Protection Agency (EPA) has denied a permit for a major offshore oil terminal proposed on the Gulf Coast near Corpus Christi, ruling that the Bluewater Texas terminal would need to reduce its toxic air pollution by about 95 percent. The Bluewater Texas offshore terminal, proposed in the Gulf about 25 miles southeast of Corpus Christi, is designed to handle 1.9 million barrels of crude oil per day from crude oil tankers, which would connect with the port via floating oil hoses. Bluewater Texas Terminal LLC applied to the EPA for a Clean Air Act permit to build the offshore oil terminal on May 30, 2019. It was supposed to export up to 384 million barrels of crude oil per year on large tanker ships. “We are relieved that EPA listened to the public and decided that this ridiculous project needs pollution controls after all,” said Gabriel Clark-Leach, Attorney for the Environmental Integrity Project, which objected to the permit with a coalition of 15 allied organizations. “EPA’s regulations require marine vessel loading operations—like the Bluewater port—to reduce toxic air pollution by 95 percent. The application of this rule will reduce the amount of pollution the Bluewater terminal – if it is built — will emit by a whopping 18,000 tons each year.” On November 12, 2020, EPA released a draft air pollution control permit for the terminal that would allow Bluewater to emit around 19,000 tons per year of emissions, 833 tons per year of air pollutants annually, including 66 tons per year of benzene, Environmental Integrity Project explained. In written comments submitted to the EPA on January 11, 2021, the environmental groups argued that EPA must amend the draft permit to require pollution controls that would reduce Bluewater’s emissions by at least 95 percent. The groups argued that these controls, including vapor recovery and vapor combustion systems, are legally mandated under the Clean Air Act.

$168M in Permian Basin oil and gas assets sold amid market growth - Despite a dip in oil prices to start September, energy companies continued to ramp up fossil fuel operations in the Permian Basin of southeast New Mexico and West Texas, riding an upward trend in fuel demand.The deal included about 37,000 acres of oil and gas development, mostly in Crane County, Texas, south of Odessa, Texas.

USD 2.23 billion growth in Oil Shale Market Size With 47% of the Contribution from North America -- The latest market analysis report titled Oil Shale Market by Application and Geography - Forecast and Analysis 2022-2026 has been added to Technavio's catalog. The report predicts the market to witness an accelerating growth momentum at a CAGR of 14.18%. The analysts at Technavio have categorized the global oil shale market as a part of the global oil and gas exploration and production market within the global oil and gas market under the energy sector. Our report provides extensive information on the value chain analysis for the oil shale market, which vendors can leverage to gain a competitive advantage during the forecast period. The data available in our value chain analysis segment can help vendors drive costs and enhance customer services during the forecast period. The report on the oil shale market provides a holistic update, market size and forecast, trends, growth drivers, challenges, and vendor analysis. The rising use of oil shale across various industries is one of the key factors likely to influence market growth positively during the forecast period. Some countries, such as Israel, Jordan, and Morocco, are interested in developing their oil shale resources since they have large quantities but lack alternative fossil fuels. Such factors are likely to positively impact the growth of the global oil shale market during the forecast period. However, The environmental impacts of shale oil extraction will be a major challenge for the oil shale market during the forecast period. The environmental effect of the global oil shale market takes into account concerns including land use, waste management, and water and air pollution caused by oil shale extraction and processing. The extraction of oil from shale has the potential to have a significant environmental impact. Such challenges are likely to affect the growth of the global oil shale market.47% of the market's growth will originate from North Americaduring the forecast period. US and Canada are the key markets for oil shale in North America. Market growth in this region will be faster than the growth of the market in other regions. The rising depletion of non-renewable energy sources, the demand for a cost-effective alternative to conventional energy, and the region growing oil and energy industry will facilitate the oil shale market growth in North America over the forecast period.

Oil and gas lease ban upheld in court, could set stage for future block in New Mexico --A federal judge upheld the government’s authority to block oil and gas leases on public land in New Mexico and other states after the administration of President Joe Biden did so upon assuming office in 2021.At the start of Biden’s tenure in office, the U.S. Department of Interior imposed a temporary halt on new federal oil and gas leases, seeking to reform its fossil fuel programs and intending to address the environmental impacts of extraction.The move drew immediate outcry from the oil and gas industry and its supporters, with several Republican-led states not including New Mexico suing the DOI and asserting the block on new leases was illegal under federal law.That summer, the DOI completed its review and sought to increase royalty rates and address pollution during an expanded review process that was also subsequently challenged in separate litigation.Lease sales resumed in New Mexico, with the Bureau of Land Management conducted a sale June 30, 2022 after reconducting its environmental reviews and imposed an increased royalty rate of 18.75 percent from the past rate of 12.5 percent.The sale included about 536 acres in Lea and Chaves county, targeting the southeast New Mexico Permian Basin region, and earned about $632,385.The BLM had yet to plan a subsequent sale despite calls from industry leaders that not leasing the land for energy production could stymie the industry and threaten U.S. fuel supplies. And despite the recent sale, critics of the federal government continued to challenge the administration’s authority in imposing the halt or subsequent pauses in Wyoming federal court.

Eagle County fires first volley in appeal of Uinta Basin train decision -Eagle County has fired its first volley in a last-ditch battle to block plans for millions of gallons of crude oil a week rolling along rails next to the Colorado River. The county joins several environmental groups appealing the Surface Transportation Board’s 2020 approval of an 88-mile stretch of new railroad in Utah connecting the state’s oil fields in Uinta Basin with the national rail network. The decision set the stage for 65,000 to 350,000 barrels of Uinta Basin waxy crude to roll through Colorado every day in 100-tanker-long trains, stretching 10,000 feet, as they cover a route running mostly along the Colorado River. Eagle County and several environmental groups are asking the U.S. Court of Appeals in Washington, D.C., to overturn the transportation’s board approval, noting the board’s “uninformed decision-making” in its environmental review of the project and “increased risk of environmental harm” from increased oil production and processing. “The railway not only increases ignition risks for dangerous disasters such as wildfires, it also will lead to the exploitation and burning of fossil fuels contributing to climate change, which will expose Eagle County and its residents to increased threats from extreme heat, extreme drought, and extreme weather, including fire- and flash flood-triggering thunderstorms,” reads a declaration by Eagle County Manager Jeff Shroll in the county’s opening brief filed this month. “In other words, the railway could both be lighting the match and fanning the flames for future impacts on Eagle County.” The groups and Eagle County point to how the quintupling of oil production in the Uinta Basin — producing up to 430,000 barrels of oil a day and requiring 3,330 new oil wells — would have “indirect effects” that include risks to the environment on the train route between Utah and Gulf Coast refineries and the climate impacts from processing and burning that oil. Eagle County’s opening brief argues the transportation board’s environmental review also failed to consider the impact of potential oil spills from 35 trains a week carrying millions of gallons of waxy-crude oil, along the Colorado River from the Utah border, through the Grand Valley and Glenwood Canyon into Grand County. Right now the thick crude from the Uinta Basin is trucked to refineries near Salt Lake City, which has limited production from the oil-rich basin and spurred the development of a railway.

Judge rules for tribe in Line 5 suit, says Enbridge is trespassing and must pay damages - Short of an order to decommission the Line 5 pipeline, an Ojibwe tribe on the south shore of Lake Superior secured a different legal victory Thursday in its federal lawsuit against Canadian pipeline company Enbridge. The Bad River Band of the Lake Superior Tribe of Chippewa Indians has been locked in a legal battle with Enbridge since July 2019 over the company’s continued operation through 12 miles of Bad River Reservation land, despite a major easement between the parties being expired since 2013. The embattled Line 5 pipeline originates at the tip of Northwest Wisconsin and continues for 645 miles into Michigan’s Upper Peninsula, under the Straits of Mackinac and out into Canada near Detroit. The pipeline corridor that traverses through the Bad River Reservation is approximately 60 feet wide and transports about 23 million gallons of crude oil and natural gas liquids daily. In the 56-page ruling in Wisconsin’s Western U.S District Court, Judge William Conley found that Enbridge has been trespassing since then and should pay damages to the tribe. He at one point called one of Enbridge’s arguments “tone-deaf and meritless.” Conley did not move to immediately decommission Line 5, as the tribe had ultimately hoped, for “public policy reasons” that require the input of more parties. But the judge did put a five-year timeline in place for Enbridge to build an off-reservation reroute — which the tribe also opposes for environmental reasons — or face increased monetary penalties. “This ruling is a turning point in the battle to protect Indigenous rights and the Great Lakes — it underscores again why Enbridge Energy should shut down Line 5,” said Beth Wallace, Great Lakes freshwater campaigns manager for the National Wildlife Federation (NWF). “This is a major victory in a battle that should have never taken place. The ruling shows that Line 5 should have been shut down in 2013. Enbridge does not deserve additional time to inflict harm on the Bad River Band,” Wallace continued. Since the tribe did not request a specific amount of monetary relief and neither side addressed how a profits-based remedy should be calculated, Conley said parties will now submit supplemental briefings on how the court should determine the monetary relief to which the tribe is entitled, and whether the ultimate decision of a dollar amount should be resolved by the court or a jury.

Judge: Pipeline Can Operate on Reservation Amid Reroute Work - (AP) — A federal judge will allow an oil and gas pipeline to continue to flow on a northern Wisconsin American Indian reservation while its operators work to reroute the line around the tribal land.The Bad River Band of Lake Superior Chippewa sued Enbridge in 2019 demanding it remove the section of line that runs across the tribe’s reservation in Ashland County. The tribe is concerned the pipeline could rupture and contaminate its drinking water.Enbridge has been working on a 40-mile reroute around the reservation.Western District Judge William Conley ruled Wednesday the company can continue to operate the line on the reservation until its relocation project is finished.The Line 5 pipeline carries oil and natural gas liquids from Superior to Sarnia, Ontario. Enbridge said agreements have been reached with all private landowners along the new route for the pipeline.The Wisconsin Department of Natural Resources is currently finalizing an environmental impact statement for the project. The agency’s draft environmental impact statement drew intense criticism from environmental groups, tribal members and activists who argued it didn’t adequately evaluate impacts, including the risk of spills.Last month, the DNR investigated a possible spill near the Bad River Reservation after a contractor reported some contaminated soil south of Ashland. Enbridge officials said they couldn’t find a leak in the pipeline and believe the contamination was from a past discharge, according to the DNR.

Oil company settles criminal cases in California spill - An oil company on Thursday pleaded guilty in federal court to negligently discharging crude off the Southern California coast when its underwater pipeline ruptured last year, a spill that closed miles of shoreline and shuttered fisheries. Meanwhile, Houston-based Amplify Energy and two of its subsidiaries agreed to enter no contest pleas to killing birds and water pollution in court on Friday in a settlement with the county and state officials stemming from the same October 2021 oil spill. Amplify's pipeline broke off the Orange County coast, spilling about 25,000 gallons (94,600 liters) of oil into the Pacific Ocean. The rupture closed beaches for a week and fisheries for more than a month, oiled birds and threatened local wetlands. "Amplify unequivocally hit the snooze button. They knew they had a leak. Their leak detection system detected a leak," said Orange County District Attorney Todd Spitzer. "Over and over, they kept ignoring it. That is criminal and that is why they've been charged." Spitzer and state Attorney General Rob Bonta announced the filing of six misdemeanor state charges against the company and two of its subsidiaries from the spill. The company will plead no contest to all six charges and pay $4.9 million in penalties and fines as part of a settlement, Spitzer said. Bonta called the penalty "historic," believed to be the largest state misdemeanor criminal fine ever in Orange County. The company will also be placed on 12 months of probation and make changes designed to avoid future spills, including increased inspections and technology to detect leaks, Bonta said.

Feds Seek to Reverse Offshore Fracking Moratorium off California Coast - The fight against fracking off the California coast still isn’t over. On Wednesday, the Department of Justice asked for a new hearing to again hash out whether an environmental review is required before fracking and acidizing permits are given to oil companies. Their moving papers are deeply in the regulatory weeds but argue that the appeals court ruling could affect offshore wind energy. Back in 2012, the Santa Barbara–based Environmental Defense Center (EDC) made the extraordinary discovery that the feds had issued 51 permits to frack and acidize offshore wells, including in the Santa Barbara Channel. Through lawsuits and appeals, EDC’s attorneys succeeded in convincing the Ninth Circuit Court of Appeals that fracking and acidizing used toxic chemicals and that an environmental impact statement was necessary to evaluate the potential harm; they also argued that the impact to endangered species, such as the Southern sea otter, meant that U.S. Fish & Wildlife should be consulted. “Put simply,” said EDC Chief Counsel Linda Krop, “we caught the government issuing permits for these really risky and polluting practices on our platforms. They’ve been told twice now that they can’t do that until they follow the environmental laws. But instead of doing that, they keep asking for relief. Instead of following the law, they keep fighting us,” Krop said on Thursday. It was really frustrating, she added, especially because Kamala Harris was California’s attorney general when the state’s lawsuit was filed in 2016. “When Biden took office, and Kamala Harris was his vice president, we thought, ‘Oh good, we can probably resolve this case,'” Krop said. The State of California had entered the case to assert the Coastal Commission must verify the federal action was consistent with the state’s coastal management plan. That consistency had not been ascertained, and the state won that appeal. The Center for Biological Diversity joined the suit in 2016. According to attorney Kristen Monsell, the government had attempted its technical challenge several times before: “Twice in district court and again before the Ninth Circuit — and lost every time,” Monsell said. “Their position is inconsistent with well-established caselaw, and we’re confident this bid to get the Ninth Circuit’s decision overturned will be rejected. One of the red herrings in the Petition for Rehearing En Banc filed by the feds on Wednesday is the implication that offshore fracking is gone. The petition states several times that no permits currently exist to allow well stimulation in the Pacific, adding, “No one is authorized to perform such treatments on the Pacific Outer Continental Shelf at this time.” Krop agreed the existing permits had expired, but she said the only reason no new permits had been issued was because the EDC had won an injunction to block them until environmental review was completed. And the oil companies definitely wanted to resume well stimulations because of the thickness of the crude they were encountering.

Drought Forces British Columbia To Suspend Water Permits For Oil Firms -Persistent drought in the Canadian province of British Columbia has prompted the local energy regulator to ration water use in the oil and gas industry and suspend some permits to firms for drawing water from rivers and lakes. CBC News reports that the BC Oil and Gas Commission (BCOGC) suspended on Thursday as many as 20 water permits previously granted to 12 oil and gas firms in several areas. “Low stream conditions are escalating concerns for impacts to fish, aquatic resources, and community supply,” the B.C. energy regulator wrote in a directive to the energy industry. Meteorologists have declared level 3 drought conditions in parts of northeastern British Columbia, and according to experts and the BCOGC, water levels are expected to continue dropping in the coming weeks. Rainfall has been scarce since early July, and drought conditions are expected to persist through September, CBC meteorologist Johanna Wagstaffe says. The energy regulator is also monitoring other rivers and lakes, and could suspend additional permits in the near future if levels drop too low. The BCOGC will help the energy firms “identify options for alternative short-term water supply.” The previous such suspension was in 2019 when the B.C. energy regulator suspended water drawing for a month because of a drought. This year, drought conditions in the northern hemisphere have tightened the energy markets in Europe and China just as the EU grapples with a worsening energy crisis. A combination of record-breaking natural gas prices, rising coal prices, and droughts across Europe puts the EU electricity market under massive pressure. China imposed last month shutdowns on industrial production in the Sichuan province as heatwaves and extreme drought in its southwestern regions boosted electricity demand while reducing hydropower production in the largest hydropower-generating province. In Sichuan, hydropower generation from the Yangtze River was falling, and factories were closing to ease the pressure on the grids.

Energy crisis lifeline: Truss primed to scrap red tape and end fracking ban 'within days' - The Foreign Secretary is reportedly planning on lifting the ban on fracking "within days" of becoming the next Prime Minister. Ms Truss is urged by industry experts to issue sweeping reforms on planning laws alongside a revival of fracking. Fracking, the process of extracting shale gas, was banned in 2019 after scientific analysis exposed the risk of seismic activity from the practice. The industry warned the Tory leadership favourite that “comprehensive policy support” was needed in order to speed up planning and environmental permissions for fracking. Ms Truss has repeatedly advocated for a return to the controversial gas extraction process, as a way to boost the UK’s energy security in the face of Vladimir Putin’s invasion of Ukraine. She recently reinforced the stance by telling BBC One’s Sunday with Laura Kuenssberg that extracting shale gas with onshore drilling was among her priorities. This came after reports claimed she would end the ban on fracking “within days” of becoming prime minister. However, the fracking industry has warned that in order to begin drilling with speed, Ms Truss would need to free companies from planning and regulatory burdens, according to the Telegraph. Charles McAllister, director at UK Onshore oil and gas, said: “In order to facilitate timely UK shale gas production in the national interest, comprehensive policy support from the Government is required. “This should include reform to the pace of decision making in planning and environmental permitting as well as ensuring that seismicity regulations for the industry are consistent with other sectors, such as quarrying and geothermal. “The failure to develop the abundant Bowland Shale in the north of England poses unacceptable economic, environmental and geopolitical risks to the UK.”

Exclusive: Fracking revival draws mixed response from industry analysts The growing possibility of fracking being revived in the UK has drawn a mixed response from energy analysts and think tanks. Liz Truss is widely expected to lift the moratorium on fracking within days, as the new Prime Minister is eager to ramp up domestic energy generation to meet the country’s consumption needs. This is an increasingly urgent issue - amid sustained fears of supply shortages this winter and spiralling energy bills, with the price cap set to rise to an eye-watering £3,549 per year in October. Kathryn Porter, energy consultant at Watt Logic told City A.M. she was in favour of easing requirements concerning tremor limits, which she believed should cap seismic activity to 2.5 on the Richter scale for fracking. This would be in line with geothermal drilling, and significantly higher than the current limits at 0.5 on the scale. However, she was unsure if there were sufficient supplies that could be affordably extracted to meet domestic energy demand. She said: “There are good reasons to believe that there are meaningful qualities of shale gas in Britain – the question is can it be extracted economically, and this is uncertain. We will only know if we allow exploratory drilling to re-start. I believe we should make every effort to increase domestic gas production, and properly evaluate the potential for shale gas.” The analyst warned the UK remained “decades away” from phasing out fossil fuels, meaning gas and oil that could be produced domestically without relying on overseas vendors would remain attractive for security and environmental reasons. Porter concluded: “Increasing production is the only credible way out of the current crisis, only a global increase in output to replace Russian gas will bring down prices. Whether British shale gas production can contribute to this is unclear, but it certainly won’t if we don’t re-start exploration.”

OEUK Hopes New PM Will Lead Nation Towards Energy Security - Offshore Energies UK (OEUK) greeted the announcement of Liz Truss as the UK’s new Conservative Party leader as a fresh chance to renew the nation’s approach to energy security and accelerate the transition to cleaner energies with careful long-term investment in its home-grown oil and gas resources. OEUK said that the new Prime Minister would need to balance the short-term challenge of helping families pay their bills with the longer-term challenge of keeping the lights on while tackling the climate emergency. “There is enough oil and gas in the UK continental shelf to power the UK into the 2040s and fuel the transition to renewables. OEUK stands ready to work closely with the new prime ministerial team in number 10 Downing Street and with the Chancellor as they are announced in the coming hours and days. OEUK has written to the incoming Prime Minister to propose a new summit for ministers and energy producers to help plan the way ahead,” OEUK stated. In her victory speech, Liz Truss made it clear that energy security and helping consumers is top of her priority list. OEUK welcomes her to this role at an extraordinary time for people and businesses across the UK and will work with her team from day one to deliver energy security for this country at the same time as the industry paying taxes to the treasury and supports around 200,000 jobs across the UK. “We welcome Liz Truss to her new role and wish her all the very best in challenging times. A big prime ministerial inbox awaits, on top of which sits UK energy security and its critical place in countering the threat from Putin’s weaponization of energy. As the new PM has said, we need to find a two-pronged solution both in the short- and long-term to the energy crisis.” “OEUK and our members remain steadfast partners for government, and we work with political parties of all colors to ensure we carefully nurture and invest in our homegrown oil and gas industry and boost its enablement of our transition to a renewable future. We look forward to meeting with the new PM and her top team shortly and ensuring our members are front and center of the conversations and the solutions,” OEUK’s Acting CEO, Mike Tholen, said. OEUK is the leading trade body for the UK’s offshore energy industries. Its 400 member organizations employ 200,000 people, 10,000 of them offshore, producing energy from oil, gas, and offshore wind. They produce, for example, about 40 percent of the UK’s gas supplies – a vital bulwark against the current global shortages. About 85 percent of UK homes rely on gas for heating. Gas is also essential to produce about 42 percent of UK power. Elizabeth Truss was appointed Prime Minister by Queen Elizabeth on September 6, 2022. She was previously Secretary of State for Foreign, Commonwealth, and Development Affairs from September 15, 2021.

UK Oil Industry Urges PM to Speed New North Sea Licenses - The UK’s offshore oil and gas industry called on new Prime Minister Liz Truss to speed the approval of more exploration licenses to help boost domestic fuel supplies. The lobby group identified £26 billion ($30 billion) of potential investments in the North Sea by the end of the decade that would enable the UK to meet about half its demand for oil and gas from domestic supplies. Without these projects, fuel demand would be met increasingly by imports, the group said. The UK’s petroleum industry has an opportunity to arrest its long-term decline as soaring energy prices bring concerns about security of supply to the fore. The situation threatens to devastate households and businesses this winter, and is already dominating Truss’s agenda just one day into her leadership. Linking the future of the North Sea to the way out of the current crisis could revive the fossil fuel industry even as the country seeks to transition to clean energy. “We need the new government to rapidly announce the next round of oil and gas exploration licenses and speed up production approvals,” said Mike Tholen, acting chief executive officer of Offshore Energies UK. “Our North Sea reserves mean the UK can protect itself -- provided we invest -- as well as building the low-carbon systems for the future.” In its annual economic report published on Wednesday, the industry group acknowledged that new investment won’t offer a near-term solution to the energy crisis. New fields currently under development won’t start producing until late 2026 with peak production coming a year later. That’s roughly in line with Shell Plc’s plans to bring on the Jackdaw gas field in the mid-2020s after taking a final investment decision on the project earlier this year. The push to boost the UK’s domestic oil and gas follows a long period when the main energy policy focus was on climate goals, and questions about whether investments in new fields should even be permitted. The country has committed to achieve net-zero emissions by 2050 and the Climate Change Committee sees oil demand falling by as much as 98% if this pledge is fulfilled. Offshore Energies said there will be a major role for oil and gas in the UK’s energy mix even as the country moves toward this target. “We must expand the supply of low carbon energy including wind and hydrogen but the scale-up will take time,” Tholen said. “UK gas will give us a bedrock of reliable energy through the transition and minimize reliance on imports.”

UK PM Truss announces cap on energy bills and lifts ban on fracking - British Prime Minister Liz Truss said Thursday that her government will cap domestic energy prices for homes and businesses to ease a cost-of-living crisis that has left people and businesses across the UK facing a bleak winter. She also said she will approve more North Sea oil drilling and lift a ban on fracking in a bid to increase the UK's domestic energy supply. Ms. Truss told lawmakers in Parliament that the two-year "energy price guarantee" means average household bills will be no more than 2,500 pounds a year for heating and electricity. Bills had been due to rise to 3,500 pounds a year from October, triple the cost of a year ago. Bills are skyrocketing because of Russia’s invasion of Ukraine and the economic aftershocks of Covid-19 and Brexit. "We are supporting this country through this winter and next and tackling the root causes of high prices so we are never in the same position again," Ms. Truss told lawmakers. Business and public institutions like hospitals and schools will also get support, but for six months rather than two years. The government says the cap will cut the UK's soaring inflation rate by 4 to 5 percentage points. Inflation hit 10.1% in July and has been forecast to rise to 13% before the end of the year. Read more New UK PM Truss promises to ride out economic storm with new-look top team The government hasn't said how much the price cap will cost, but estimates have put it at over 100 billion pounds. Ms. Truss has rejected opposition calls to impose a windfall tax on oil companies' profits. The cap will be paid for out of Treasury funds and by borrowing. The opposition Labour Party says that means British taxpayers will have to foot the bill. Labour energy spokesman Ed Miliband accused Ms. Truss of rejecting a windfall levy "purely on the basis of dogma." The announcement, on Ms. Truss’s second full day in office, comes after a summer in which the government refused to say how it would respond. Former prime minister Boris Johnson was not able to make major decisions after announcing in July that he would resign. Ms. Truss, who won the Conservative Party contest to replace Mr. Johnson as leader, declined to announce her plans before she was in office. Ms. Truss, a free-market conservative, has said she favors tax cuts over handouts, but has been forced to act by the scale of the crisis.

Fury as Liz Truss to allow fracking today despite her own Chancellor saying it won't work - Campaigners have reacted with fury as Liz Truss allows fracking today - despite her own Chancellor saying it won't solve the crisis. The Tory leader is expected to axe a 2019 ban on the fossil fuel extraction process as part of a wider energy bills strategy, announced at 11.30am. The Telegraph reported the change could be made quickly with a written statement to Parliament and the first permission requests for drilling could come within weeks. She is also expected to green-light a wave of oil and gas exploration in the North Sea. The manifesto-busting move enraged green groups, with Friends of the Earth saying it is "disruptive, unpopular and will do little to boost energy security or bring down bills". Critics questioned whether the policy will actually make much difference, since locals could block fracking wells in their area. Leveling-Up Secretary Simon Clarke confirmed: "Consent will lie at the heart of our energy policy - community consent." And Ms Truss's own Chancellor, Kwasi Kwarteng, said only six months ago that fracking was not the answer to the energy crisis.He wrote in the Mail on Sunday in March: "Those calling for its return misunderstand the situation we find ourselves in." He added: "Even if we lifted the fracking moratorium tomorrow, it would take up to a decade to extract sufficient volumes. "And it would come at a high cost for communities and our precious countryside." Mr Kwarteng went on: "Second, no amount of shale gas from hundreds of wells dotted across rural England would be enough to lower the European price any time soon. "And with the best will in the world, private companies are not going to sell the shale gas they produce to UK consumers below the market price. They are not charities, after all."

Liz Truss’s government denies abandoning climate targets despite plan to legalise fracking - Liz Truss's new government has denied that it is abandoning its net zero target climate commitments despite bringing forward plans to legalise fracking. Levelling-Up Secretary Simon Clarke on Thursday morning confirmed that the government would lift the ban on the controversial gas extraction process – Ms Truss's first announcement as PM. But environmentalists warned that the measure would do little to help with energy security and that they were "the root of so many of the problems we currently face". Britain already produces around half of its gas domestically, with most of the rest coming from Norway – but prices have surged because the commodity is sold on an open international market. In April Kwasi Kwarteng, who is now the chancellor, said that fracking "would certainly have no effect on prices in the near term" but said it could help meet demand in the future. But levelling-up secretary Mr Clarke told Sky News on Thursday morning: "If we want energy sufficiency we have to look at every source including clearly new nuclear, more renewables but we also want to look at technologies like fracking. "We have to do so in the most sensitive possible way with community consent at the absolute heart of our policies. "The net zero commitment that the Government has made by 2050 is critical. But in the near-term we need all kinds of gas as a transition fuel and that is something the Prime Minister will be saying more about." The UK's official Committee on Climate Change in February said that "any increases in UK extraction of oil and gas would have, at most, a marginal effect on the prices faced by UK consumers in future." It said there should be tighter limits on production and a presumption against exploration, which would "send a clear signal to investors and consumers that the UK is committed to the 1.5°C global temperature goal". The news comes amid concerns about the climate policy views of members of Ms Truss's cabinet and some of her new top advisors. Matthew Sinclair, a former head of the right-wing pressure group the Taxpayers' Alliance, claimed in a 2011 book that rising global temperatures could bring benefits and has attacked “the burgeoning climate change industry”. And in 2016 he said the UK had “pushed energy efficiency too far, too fast” and that British homes were too warm. He is now the prime minister's chief economic advisor. Responding to the government's announcement on fracking, Friends of the Earth campaigner Danny Gross said: “Fracking is disruptive, unpopular and will do little to boost energy security or bring down bills. “Fossil fuels are at the root of so many of the problems we currently face. “We need clean, modern solutions to the energy and climate crises. That means insulation, energy efficiency and developing cheap renewables like onshore wind and solar.”

Fracking ban lifted as Truss says shale gas could flow in six months - Liz Truss has vowed to get shale gas flowing out of Britain by next spring after lifting the ban on fracking. Under plans to make Britain energy independent again by 2040, the Prime Minister pledged to strengthen supplies with more domestic oil and gas extraction alongside the development of nuclear and renewable power schemes. She said this would see the moratorium on fracking – in place since 2019 – scrapped with immediate effect, paving the way for developers to begin extraction in as little as six months in areas “where there is local support”. From next week, the Government will also make more than 100 new licences for oil and gas extraction in the North Sea available. The changes, which could take years to bear fruit, will make no difference to supplies this winter. But they are aimed at helping Britain to become a net energy exporter by 2040, combined with plans already announced by Boris Johnson to build 24 gigawatts worth of nuclear power capacity by 2050, new offshore wind farms and solar farms. Ms Truss said the radical shake-up was necessary after “decades of short term thinking”, which had left the country exposed to surging energy prices following Russia’s invasion of Ukraine. The UK has been a net importer of energy since 2004, with the North Sea’s depleted reserves no longer meeting more than 50pc of the country’s consumption. Fracking was originally touted by David Cameron’s administrations as a way to boost domestic production, after the British Geological Survey estimated that some 1,300 trillion cubic feet of gas could lie underneath the UK. If only one tenth of that amount is extracted, it could potentially meet the UK’s gas needs for decades. But fracking – the process used to extract shale gas, pioneered in the US – was banned in England three years ago on safety grounds after Cuadrilla caused earth tremors far stronger than it had anticipated in Lancashire.

‘We will oppose this’: Truss fracking plans met with anger and dismay in Lancashire -It was 8.30am on August bank holiday Monday in 2019 and Chris Holliday, 60, a retired IT consultant, was with his wife, Susan, in their neat kitchen when all of a sudden the cups and saucers began to shake. “The crockery and glasses were rattling. The windows were rattling,” he said on Thursday. “It was frightening,” said Susan. “I personally felt seven or eight of these earth tremors and it’s quite a scary situation to live in – and to think that could start off all over the country.” The Holliday’s retirement home is barely 300 metres from Britain’s fracking frontier at Preston New Road in Lancashire. Cuadrilla was forced to stop drilling at the site in November 2019 when the government announced a temporary moratorium after repeated earth tremors above the 0.5-magnitude limit set by regulators. The site, set among acres of farmland on the Lancashire coast, is the only fracking operation in the UK in which horizontal wells have been drilled and hydraulically fractured into shale rock. Locals said on Thursday they feared it puts them back on the frontline after Liz Truss, just 48 hours into her premiership, lifted the moratorium on fracking, aiming to get gas flowing in six months. “It’s just dismay,” said Chris Holliday. “The drilling itself is very intrusive. The earth tremors put you on edge the whole time. You can’t really relax at all.” It was not just those who live nearby who felt the 2.9-magnitude tremor in August 2019. Nearly 200 properties, including some several miles away, reported damage, according to data collected by the British Geological Survey. Cuadrilla, which offered people “goodwill payments” of hundreds of pounds for the property damage, welcomed Truss’s announcement and promised to work with the government “to ensure this industry can start generating results as soon as possible”. Preston New Road became the focal point for anti-fracking protests from across the UK as campaigners, led by a group of women calling themselves the Nanas, frustrated Cuadrilla’s operations as activists blocked roads, chained themselves to fences, and forced the police to make arrests.

Fracking sites span Tory seats across red wall - Fracking sites which could be part of Liz Truss's energy plan span the Tory seats across the red wall, it has emerged. The moratorium on fracking in place since 2019 will be scrapped on Thursday by the Prime Minister, giving the green light for companies to seek planning permission to drill for shale gas in the UK.Implementing the change can be done simply with a written ministerial statement to Parliament rather than full legislation, meaning the removal of the ban will take effect rapidly.On Wednesday a fracking industry source predicted planning permission requests for new drilling would be submitted within weeks of the ban lifting.And a graphic (below) showing areas identified as having potential shale reserves as well as previously licensed sites show they cover vast swaths of the red wall seats in the north west seized upon by the Conservative Party in the 2019 General Election.At the beginning of this year, it seemed that more than a decade of controversy over fracking for gas in the UK was over, when energy company Cuadrilla announced that the country's only two shale wells were to be abandoned.But Russia's invasion of Ukraine pushed energy prices and security to the top of the agenda, prompting calls for the Government to rethink the moratorium it had imposed on fracking in England in 2019 in the wake of tremors in Lancashire.In her campaign to become Prime Minister, Ms Truss said in an interview: "I support exploring fracking in parts of the United Kingdom where that can be done."Any moves to lift the moratorium would be heavily criticised by opponents who have long warned that fracking can cause earthquakes, water contamination, noise and traffic pollution.Environmentalists also warn that pursuing new sources of gas - a fossil fuel - is not compatible with efforts to tackle climate change, and the focus should be on developing cleaner sources of energy such as renewables.

Lifting of fracking ban not miracle solution, minister admits -Plans to increase shale gas supplies by ending the moratorium on fracking are not a “miracle solution”, the communities secretary has conceded, before plans to curb spiralling energy bills this winter are announced.Simon Clarke said the government had to be pragmatic but added that community consent would “lie at the heart of our energy policy”.He defended the decision not to bring in a further windfall tax on oil and gas companies to pay for the long-awaited package, to be announced later on Thursday morning by Liz Truss.The Guardian understands an immediate lifting of the ban on fracking for shale gas will be ordered when the prime minister makes her announcement.In a major shift in tone from the Boris Johnson administration, Clarke also told people to be “disciplined” about their energy use this winter, saying the public can play a part “in helping to keep energy prices low and conserve our energy supplies”.The support package to prevent millions of people from falling into destitution due to the energy price cap rise in October is estimated to cost the taxpayer £130bn, as Truss grapples with the worsening cost of living crisis.Clarke refused to pre-empt her announcement, but said fracking was “something the PM will be talking about in her statement today”.Kwasi Kwarteng, now chancellor, said months ago when he was business secretary in the previous government that fracking would “take years of exploration and development before commercial quantities of gas could be produced for the market, and would certainly have no effect on prices in the near term”.Clarke said it was “absolutely right to say that this on its own won’t transform the economics of energy” but insisted it was not true that ending the fracking moratorium would make no difference to gas prices.He told BBC Radio 4’s Today programme: “There’s a middle ground here, where we can be realistic that taking more gas from all sources is a sensible thing to do if there is community consent. But we’re not going to have miracle solutions to the challenges we face.”Clarke added that “we need gas from all sources as part of our transition towards net zero” and blamed the Russian president, Vladimir Putin, for trying to “weaponise” energy to “break the resolve of the west”.Defending the decision not to impose a further windfall tax on offshore oil and gas companies, despite them reporting huge profits, Clarke said they already pay “their fair share of tax” and that imposing a further levy would curb investment and growth. He promised the package to be announced by Truss would provide “comfort and clarity”.

Gibraltar to reopen port after ship fuel spill emergency - Gibraltar authorities said on Wednesday the Rock's port would partially reopen later in the day following the removal of most of the oil from a stricken ship that collided in its bay area last week. The government said in a statement that some operations at the port would resume on Wednesday night, as part of a scaled re-opening. The government says the emergency status of the ship incident has been lifted because most of the fuel from the ship has been extracted. The ship ran aground in shallows after colliding on August 29 with another vessel, triggering fears of a major spillage. An unknown quantity of fuel oil seeped from the ship last on Thursday, causing a slick, and teams have been working to clean the area as well as remove the oil still on the ship. Fishing in the area has been prohibited. Several Gibraltar beaches and one in Spain temporarily prohibited bathing. The Gibraltar government said on Wednesday there were no reports of significant amounts of oil reaching the coast. Operations to remove the remaining fuel and other material from the ship are continuing. Authorities are still studying what to do with the ship structure once those operations are completed. Gibraltar said the 178-metre (584-foot), Tuvalu-registered OS 35 was carrying 250 tons of diesel. After the initial spill it still had 183 tons of fuel oil and 27 tons of lubricant oil in its tanks. The ship was carrying a cargo of steel bars when it collided with a liquefied natural gas carrier. The second ship sustained little damage. No one was injured in the collision.

Russia indefinitely suspends Nord Stream gas pipeline to Europe -Russia has indefinitely suspended natural gas flows through the Nord Stream 1 pipeline, exacerbating a squeeze on Europe's energy supplies, and deepening the recession risks faced in the EU. State-owned Gazprom said the shutdown was because of an oil leak discovered in the main gas turbine at the Portovaya compressor station near St Petersburg, which feeds the line that runs through the Baltic Sea to Germany. However, Siemens Energy, which manufactures and maintains the turbines that power the pipeline, cast doubt on this explanation.“Such leakages do not usually affect the operation of a turbine and can be sealed on site,” the German company said. “It is a routine procedure during maintenance work. In the past, the occurrence of this type of leakage has not resulted in a shutdown of operations.“Irrespective of this, we have already pointed out several times that there are enough additional turbines available at the Portovaya compressor station for Nord Stream 1 to operate,” Siemens Energy said.

Russia Admits Weaponization Of Gas, Halts NS1 Shipments "Until Sanctions Lifted" As EU Prepares Response To Energy Crisis - Putin is done playing around. Two days after Russia indefinitely halted nat gas supplies via the Nord Stream 1 pipeline for the amusing reason that there was an "oil leak" (shown below)... ... on Monday Russia finally admitted what everyone has known since February - namely that it has weaponized commodities in response to the West's weaponization of currencies (as Zoltan Pozsar has said all along),when the Kremlin said that Russia’s gas supplies to Europe via the Nord Stream 1 pipeline will not resume in full until the “collective west” lifts sanctions against Moscow over its invasion of Ukraine. Putin's spokesman, Dmitry Peskov, blamed EU, UK, and Canadian sanctions for Russia’s failure to deliver gas through the key pipeline, which delivers gas to Germany from St Petersburg via the Baltic sea. “The problems pumping gas came about because of the sanctions western countries introduced against our country and several companies,” Peskov said, according to the Interfax news agency. “There are no other reasons that could have caused this pumping problem.” Peskov’s comments were the most stark demand yet by the Kremlin that the EU roll back its sanctions in exchange for Russia resuming gas deliveries to the continent. It also confirms that Russia no longer needs to pretend it needs to export commodities to Europe - after all it has more than enough demand in China and India - and is willing to give Europe just enough to rope to... well, you know the rest. On Friday, Gazprom said it would halt gas supplies through Nord Stream 1 because of a technical fault, which it blamed on difficulties repairing German-made turbines in Canada. We now know that was a strawman; and in the latest confirmation of who has the upper hand in the ongoing commodity feud, the EU had already rolled back some sanctions against Russia explicitly to allow the turbines to be repaired. European leaders have said there is nothing to prevent Gazprom from supplying the continent with gas and had accused Russia of “weaponising” its energy exports. Meanwhile, as we reported over the weekend, Russia is still supplying gas to Europe via Soviet-era pipelines through Ukraine that have remained open despite the invasion, as well as the South Stream pipeline via Turkey. And in an ironic twist, the head of the Ukraine gas transit operator told Reuters that Ukraine could "technically" substitute full capacity of Nord Stream 1 via Ukraine's Sudzha entry point. In other words, Europe would pay Putin billions for Russian gas transiting through Ukraine with Russia using proceeds to fight Ukraine... Of course, nothing in today's "news" should come as a surprise: Russian officials have made little secret of their hope that the growing energy crisis in Europe will sap the bloc’s support for Ukraine. “Obviously life is getting worse for people, businessmen, and companies in Europe,” Peskov said. “Of course, ordinary people in these countries will have more and more questions for their leaders.”

Russia ends Nord Stream 1 gas exports to Europe as US prepares “more aggressive” involvement in Ukraine war - In a move that will have devastating consequences for hundreds of millions of Europeans, Russia has indefinitely ended natural gas exports to Europe via the Nord Stream 1 pipeline. Nord Stream 1 is the largest source of Russian natural gas exports to Europe, which up to this year amounted to 40 percent of European natural gas imports. Over the past months, Russia has repeatedly cut off supplies via Nord Stream 1 for days in a row. Prices for natural gas, the leading energy source for home heating, have already risen 10-fold over the past year and surged by more than 33 percent on Monday following the announcement. European households, facing surging energy and food prices, have been driven to the brink, and small businesses are facing bankruptcy throughout the continent. This massive social disaster is the consequence of the US-NATO war with Russia, which was instigated by the NATO powers by their efforts to bring Ukraine into the NATO alliance. The war has already led to the deaths of tens of thousands of Ukrainian soldiers and civilians, the deaths of tens of thousands of Russian soldiers and the shattering of Ukrainian economic life. The primary beneficiaries of the conflict have been US and European defense contractors, which are seeing the largest orders in decades, and US energy companies, which have surged energy exports onto the European market at record prices, leading to bumper profits. Despite the economic disaster looming for Europe, the US and NATO have only escalated their involvement in the war. The White House called on Congress Monday to appropriate a further $11 billion for the war in Ukraine, adding to the more than $50 billion that has been allocated to date. It has become undeniable that the White House is removing nearly all remaining restraints on US involvement in the war, which US President Joe Biden warned earlier this year might risk “World War III.” In an article entitled “Why the US is becoming more brazen with its Ukraine support,”the Hill reports that “the Biden administration is arming Ukraine with weapons that can do serious damage to Russian forces, and, unlike early in the war, U.S. officials don’t appear worried about Moscow’s reaction.”The article quoted William Taylor, the former US ambassador to Ukraine and a leading figure in the first impeachment of Donald Trump, saying, “Over time, the administration has recognized that they can provide larger, more capable, longer-distance, heavier weapons to the Ukrainians and the Russians have not reacted.”He continued, “The Russians have kind of bluffed and blustered, but they haven’t been provoked. And there was concern [over this] in the administration early on—there still is to some degree—but the fear of provoking the Russians has gone down.”

European NatGas Prices Soar As Moscow Tightens Screw On Supplies Via Nord Stream -News that Russia's energy giant Gazprom PJSC halted Nord Stream 1 pipeline flows to Europe sent natural gas prices soaring. European governments are preparing for a worsening energy crisis and the increasing probability of rationing. Benchmark EU NatGas futures jumped as much as 35%, and electricity prices across the bloc soared. The unexpected cutoff also sent European equities into a downward spiral -- the euro hit a two-decade low. Gazprom decided on late Friday not to restart the Nord Stream pipeline after three days of maintenance due to an oil leak detected at a turbine that helps pump NatGas. Traders are left with many uncertainties, such as no timeline on when Russia restarts the pipeline. Gazprom has released a photo of the alleged “oil leak” that’s going to keep the Nord Stream 1 gas pipeline closed for now. pic.twitter.com/91jH8P9qLi Europe's politicians are now rushing to pass additional emergency measures: Sweden and Finland will support struggling utilities with collateral requirements, a move to prevent a "Lehman-style" bust. Energy ministers from across the bloc will hold a meeting at the end of the week to discuss NatGas price caps and a suspension of power derivatives trading. Moscow's move will spark continued energy hyperinflation across Europe that will pressure households deeper into energy poverty -- triggering even more discontent. Tens of thousands of Czechs protested in Prague this past weekend against European sanctions on Russia that have backfired, resulting in a cost-of-living crisis for ordinary people. "Obviously, life is getting worse for people, businessmen, and companies in Europe," said Dmitry Peskov, President Vladimir Putin's spokesman. He added, "Of course, ordinary people in these countries will have more and more questions for their leaders." Peskov's comments are the starkest yet by the Kremlin that the EU must roll back sanctions in exchange for Russian NatGas, or it's going to be a very tough winter for the energy-stricken continent. And the deputy chair of Russia's security council, Dmitry Medvedev, said Berlin was "acting as an enemy of Russia" by supporting sanctions against Moscow and arming Ukrainians. "They have declared hybrid war against Russia ... this old man acts surprised that the Germans have some little problems with gas," he said. Even though the EU has been rapidly building up NatGas stockpiles, those reserves could be drained during the heating season in a matter of months. "Given the gas supply tightness, one cannot exclude mandatory gas curtailment for non-essential industries or even' rolling gasouts' this winter depending on the weather," JPMorgan analysts wrote in a note.

Euro slides below $0.99 after Russia halts gas supplies to Europe— The euro fell below 99 cents for the first time in 20 years Monday, after Russia said it would shut off its main gas supply pipeline to Europe indefinitely. The EU's common currency was trading around 0.9915 versus the dollar by 1:00 p.m. London time (8:00 a.m. ET), having climbed off lows of $0.9881 hit earlier in the day. The dollar index, which measures the greenback against six major currencies, also breached a fresh two-decade high as the British pound slid on fears over energy supply and European economic growth. On Friday, Russian energy supplier Gazprom said it would not resume its supply of natural gas to Germany through the key Nord Stream 1 pipeline, blaming a malfunctioning turbine. The announcement was made hours after the Group of Seven economic powers agreed on a plan to implement a price cap on Russian oil. The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was nearly 30% higher Monday morning, hitting 282.5 euros per megawatt hour. It comes ahead of a meeting of the European Central Bank Thursday, when economists expect it to raise rates by 50 or 75 basis points against a backdrop of concern over Europe's ability to meet its energy needs this winter and the potential for a hit to growth. "We expect that Russia is respecting the contracts that they have, but even if the weaponization of energy will continue or will increase in response to our decisions, I think that the European Union is ready to react," Paolo Gentiloni, the EU's economics commissioner, told CNBC over the weekend. "Of course, we have to save energy, we have to share energy, we have [a] high level of storage and we are not afraid of Putin's decisions." The British pound was down around 0.2% on the previous session at 1.1488 against the dollar at 1:20 p.m. London time, after it was announced Liz Truss would be the new U.K. prime minister. Truss must now reckon with a growing cost-of-living crisis fueled by soaring energy bills. Sterling fell 4.5% against the dollar in August, its worst month since Brexit, and one analyst forecast that it would "plumb new depths" due to political and economic uncertainty, potentially hitting $1.05 by the middle of next year. "These markets are selling off on any bad news related to the Russia gas flows narrative, whilst reluctant to rally on any marginal improvement in the energy crisis," "The market is under-appreciating the chance for policy intervention from government officials helping to reduce stagflation risks on the continent," he said, meaning the case for a euro rise to 1.05 against the dollar now looked equal to, if not greater, than the case for a fall to 0.95. Yesterday the German government announced a 65 billion euro package to reduce consumer energy bills and support businesses.

Russian Gas Supply Cuts To Europe Could Lead To Blackouts - The European energy sector continues to be shocked by price volatility and uncertainty over energy balances for the coming winter. Power spot prices across Western Europe have climbed to unparalleled levels: daily average prices have traded above $599 per MWh in Germany and $697 per MWh in France, with peak-hour spikes as high as $1,493 per MWh. Now there is a risk of even higher prices during the winter months as Russia has halted all gas exports through Nord Stream 1 for an indefinite period. However, the European Commission is still exploring alternatives to limit the impact of extreme prices on end users. Strong volatility in the gas market is the cause of these fluctuations, as some signals switched from bearish to bullish over the weekend. The market is also unsure how to react to the proposed EU market intervention, where one target seems to be capping gas prices and another decoupling the European gas and power markets. Rystad Energy research shows that if gas demand must be reduced, as seems increasingly likely, Europe will face a series of unenviable options – from cutting industrial power to rolling blackouts for consumers. Recent price rises have been caused by a perfect storm of lower Russian gas supplies; nuclear outages; low hydropower generation, and coal supply disruptions because of drought. Of these factors, lower gas supplies have the greatest effect because gas continues to be needed in the power mix and is the marginal source of supply and therefore hits prices the most. However, the historically high gas prices have so far not curtailed demand from the power sector significantly – which means tougher measures may be needed. EU member states last month committed to voluntarily reducing their gas demand by 15 percent from August 1 through March next year in case of supply shortages. If these 15 percent demand cuts become mandatory within the EU, an imbalance in power supply and demand could appear as soon as this month and worsen into 2023. The power deficit is estimated to reach a maximum of 13.5 TWh in January before gradually being reduced. A straight 15 percent gas-for-power demand cut is not the most likely, however, as other sectors such as industry would likely face a higher reduction to shield the power sector to ensure the security of supply. A worst-case scenario with very cold weather, low wind generation, and a 15 percent cut in gas-for-power demand would prove very challenging for the European power system and could lead to power rationing and blackouts. Overall, gas-power generation has grown 6% year-on-year to reach 39.1 TWh in July. Things will get even more challenging towards the end of the year as seasonal electricity demand increases – electricity consumption in December is normally 25% higher than in July, meaning that European consumption could reach more than 280 TWh per month. “The coming winter is certain to be the most challenging Europe has seen in decades – and consumers or governments are expected to pay the price. If gas demand needs to be cut, we expect to see power supply issues emerging this month and worsening into 2023,” says Carlos Torres Diaz, head of power at Rystad Energy.

Germany might consider gas rationing after Russia halts flows -Uniper CEO -German gas importer Uniper does not rule out Europe’s biggest economy will eventually consider gas rationing after Russia stopped flows via its main pipeline to the continent and confirmed it was weighing legal action against GazpromGAZP.MM. The comments by Uniper CEO Klaus-Dieter Maubach came as European gas prices surged after Russia said the Nord Stream 1 pipeline would stay shut indefinitely due to a fault, in another blow to the European Union as it struggles to recover from the pandemic. “We cannot rule out that Germany might look at rationing gas as something that might have to be considered,” CEO Klaus-Dieter Maubach told Reuters in an interview on the sidelines of an international gas conference in Milan. “We know that the government wants to avoid this as much as possible because that would be a disaster for so many reasons,” he added. The move by Gazprom meant that Germany was unlikely to reach a 95% filling target for its gas storage facilities by Nov. 1. Maubach, whose company is Germany’s biggest importer of Russian gas, said that gas demand in northwest Europe had declined by 15-20% against the weather-adjusted normal demand. Europe has accused Russia of weaponising energy supplies in retaliation for Western sanctions imposed on Moscow over its invasion of Ukraine. Russia says the West has launched an economic war and sanctions have caused the gas supply problems.

Europe Looks Set for Energy Rationing After Russian Gas Cut - Energy rationing in Europe this winter is starting to look all but inevitable. German officials on Saturday insisted that security of supply was guaranteed, at least for now, after Russia’s Gazprom PJSC made a last-minute decision not to turn the crucial Nord Stream pipeline back on after maintenance. Storage is filling up and new sources of gas are being procured. But Klaus Mueller, president of the Federal Network Agency energy regulator warned last month that even with gas storage 95% full, there would only be enough for 2-1/2 months of demand if Russia switched off flows. German storage now stands at about 85%. “The EU is now in the red zone as further demand destruction needs to take place,” said Thierry Bros a professor in international energy at Sciences Po in Paris. He estimates an extra 3% of demand needs to be cut. The European Union has already created a voluntary 15% demand reduction target for gas, with the option of making it obligatory if needed. As energy ministers prepare to meet for an emergency meeting on Sept. 9, steps that seemed unthinkable before are now likely to be considered, according to EU diplomats. Germany has its own emergency plan mapped out. The last stage -- yet to be enacted -- includes rationing. Europe’s politicians have been bracing for the prospect of supply cuts for weeks, and scrambling to find ways to cut demand. Industry is already shutting down and the euro is sliding because of the economic damage inflicted by Moscow’s energy war. As winter progresses, Europe’s resolve to keep backing Ukraine against Russia may be tested. While the 15% gas demand cut that the EU is pushing for could allow the bloc to avoid rationing, governments have so far been slow to act to reduce consumption. The European Commission warned in July that an unusually cold winter or lower gas imports from alternative sources would boost the risk of “further drastic reductions.” Gas prices had been dropping last week as traders increasingly expected Gazprom to reopen the link after signals from Moscow that a reopening was on the cards. Then in a last-minute move, just hours after the Group of Seven agreed to pursue a price cap on Russian oil, Gazprom said the link would stay shut as a fault had been found during maintenance. Already at four times the level of a year ago, prices are set to jump on Monday, piling more pressure on industries and households -- and on policy makers to act. The complete halt of Nord Stream, which runs under the Baltic Sea to Germany, leaves only two major routes supplying gas to the European Union: one via Ukraine and one via TurkStream through the Black Sea. Flows through Ukraine have also been severely curbed, with only one of two legs operating. Losing the key pipeline indefinitely also ramps up pressure on Germany to keep the nuclear power plants it had planned to close this year open for longer -- a decision that would be controversial. The government says it’s still waiting for the results of stress tests before making a decision, but the move looks increasingly likely.

European Stainless Steel Mills Are Closing Due To Energy Crisis - Stainless steel prices continue to struggle as we approach the final quarter of the year. Meanwhile, nickel prices float just above their 2021 average, closing August at $21,320 / mt. Both indices seem to indicate an overly-cautious marketplace, with buyers and sellers seemingly waiting to see what the other will do.This sort of “commodity” standoff is less than ideal. MetalMiner has recommended that buyers of flat-rolled stainless expect lower transaction prices as we move into autumn. After all, alloy surcharges are low, and competition between service centers is higher. In fact, many U.S. flat-rolled mills have no customers on allocation, thanks to imports affecting overall supply.Still, the battle between supply and demand is a never-ending one. And in a tight market full of people looking to maximize their dollar, anything can happen. What would happen if the stainless steel market suddenly lost millions of tons of production? We won’t have to wait long to find out the answer because it’s already happening. As August ended, more and more reports came in detailing European stainless steel producers having to scale back or shut down production altogether.Of course, Europe faces a catastrophic energy crisis. While many economists remain focused on the coming winter, Putin’s retaliatory gas cutoff has done plenty of damage already. So far, around three million tons of Europe’s stainless steel capacity is at risk. With energy costs surging, many plants simply can’t afford to “keep the lights on,” so to speak. Earlier in August, the Belgian Aperam Mill shut down its mill in Genk. Soon after, they reduced production at their Chatelet Mill. More recently, Spanish company Acrinox announced it would cut production and place around 85% of its employees on short-time work. Obviously, all eyes are now on other major European producers, many of whom have just as much incentive to cut and run.

Winter is coming: Russian gas supply cuts cause price volatility and potentially power cuts --The European energy sector continues to be shocked by price volatility and uncertainty over energy balances for the coming winter. Power spot prices across Western Europe have climbed to unparalleled levels: daily average prices have traded above $599 per MWh in Germany and $697 per MWh in France, with peak-hour spikes as high as $1,493 per MWh. Now there is a risk of even higher prices during the winter months as Russia has halted all gas exports through Nord Stream 1 for an indefinite period. However, the European Commission is still exploring alternatives to limit the impact of extreme prices on end users. Strong volatility in the gas market is the cause of these fluctuations, as some signals switched from bearish to bullish over the weekend. The market is also unsure how to react to the proposed EU market intervention, where one target seems to be capping gas prices and another decoupling the European gas and power markets. Rystad Energy research shows that if gas demand must be reduced, as seems increasingly likely, Europe will face a series of unenviable options – from cutting industrial power to rolling blackouts for consumers. Recent price rises have been caused by a perfect storm of lower Russian gas supplies; nuclear outages; low hydropower generation, and coal supply disruptions because of drought. Of these factors, lower gas supplies have the greatest effect because gas continues to be needed in the power mix and is the marginal source of supply and therefore hits prices the most. However, the historically high gas prices have so far not curtailed demand from the power sector significantly – which means tougher measures may be needed. EU member states last month committed to voluntarily reducing their gas demand by 15 percent from August 1 through March next year in case of supply shortages. If these 15 percent demand cuts become mandatory within the EU, an imbalance in power supply and demand could appear as soon as this month and worsen into 2023. The power deficit is estimated to reach a maximum of 13.5 TWh in January before gradually being reduced. A straight 15 percent gas-for-power demand cut is not the most likely, however, as other sectors such as industry would likely face a higher reduction to shield the power sector to ensure the security of supply. A worst-case scenario with very cold weather, low wind generation, and a 15 percent cut in gas-for-power demand would prove very challenging for the European power system and could lead to power rationing and blackouts. European utilities are, despite great efforts, struggling to reduce their dependence on gas. Gas-power generation has climbed because of the challenges mentioned above. Nuclear and hydropower generation in the EU have dropped 14% and 25% year-on-year, respectively, erasing 110 terawatt-hours (TWh) of electricity supply from the grid. This has been compensated by higher wind, coal, solar, and gas generation. Overall, gas-power generation has grown 6% year-on-year to reach 39.1 TWh in July. Things will get even more challenging towards the end of the year as seasonal electricity demand increases – electricity consumption in December is normally 25% higher than in July, meaning that European consumption could reach more than 280 TWh per month. “The coming winter is certain to be the most challenging Europe has seen in decades – and consumers or governments are expected to pay the price. If gas demand needs to be cut, we expect to see power supply issues emerging this month and worsening into 2023,” says Carlos Torres Diaz, head of power at Rystad Energy. In the first half of last year, Russia exported close to 350 million cmd of natural gas to Western Europe through its main export routes. Flows have dropped below 40 million cmd in recent days, down 89% year-on-year. Most of this decline has been the result of a halt in flows through Nord Stream 1 related to technical problems, though political issues related to the war in Ukraine are also widely believed to play a part. Flows through Poland and Ukraine are also down. Russia’s Gazprom halted all exports through Nord Stream 1 from August 31. Although flows were expected to resume after three-day maintenance in the remaining compressor, Russia has now stated that flows will not resume in full until sanctions are lifted. This latest move has significantly increased the risk that Europe may not get further gas flows through Nord Stream 1 for the whole winter. In a scenario where the EU’s efforts to reduce gas use results in total EU gas-for-power demand being cut by 15 percent compared to the five-year average, the lost supply – corresponding to about 5.5 TWh per month – would have to be replaced by other sources, demand reductions, or increased power imports into the bloc.

Swiss Citizens Who Overheat Their Homes This Winter Could Face Hefty Fines & 3 Years In Jail - After the Swiss and Finns joined the Germans, Austrians, and Swedes in bailing out there energy providers, who are facing trillions in margin calls; new legislation covering Switzerland’s energy supply will make heating homes to more than 19°C unlawful in the event of an energy shortage. In addition, hot water should not be heated to more than 60 degrees, and portable electric heaters, saunas, and heated swimming pools are prohibited. Remix News' Thomas Brooke reports that Swiss citizens found to be in violation of the country’s new heating rules, which prohibit warming homes above 19°C this winter, could face daily fines of up to 3,000 Swiss francs and up to three years in prison. To note, the World Health Organization has long held that a temperature no colder than 20°C is recommended for children, the elderly, and those with existing health conditions. Markus Spörndli, a spokesperson of the Swiss Department of Economics (DEF) explained that “infringements of the law on the supply of the country are always misdemeanors, even […] crimes, and must be prosecuted ex officio by the cantons.” The fine to be imposed on consumers found to be violating the new energy laws will range from 30 francs up to a maximum of 3,000 francs per day, Spörndli said, confirming the amount would be dependent on the nature of the offense and the economic situation of the perpetrator.

Putin threatens to let Europe 'freeze' over winter, raising risk of energy rationingEurope was already facing a difficult and unpredictable winter when it came to its energy supplies as it looks to phase out all Russian imports. But Russian President Vladimir Putin on Wednesday again threatened to completely stop all supplies, a move which he hinted would leave Europe to "freeze." Russia has already halted gas supplies to the region citing technical issues on the Nord Stream 1 pipeline, leaving the region vulnerable as it tries to replenish energy storage ahead of the colder months. Responding to EU proposals to implement price caps on Russian energy imports, Putin told business leaders in Vladivostok that Russia could yet decide to rip up existing supply contracts. "Will there be any political decisions that contradict the contracts? Yes, we just won't fulfill them. We will not supply anything at all if it contradicts our interests," Putin said at the Eastern Economic Forum in Russia's far east. "We will not supply gas, oil, coal, heating oil — we will not supply anything," Putin said. "We would only have one thing left to do: as in the famous Russian fairy tale, we would let the wolf's tail freeze," he said. Russian newspaper Pravda describes the tale as involving a cunning fox who made a stupid wolf catch fish in the frozen river by putting his tail into an ice hole. "The fox would hop around the desperate and hungry wolf saying "freeze, freeze, the wolf's tail" until the ice hole froze trapping the wolf in the ice. Men from the village then came and beat the wolf for all the bad things that he had done to them in summer. The wolf struggled and escaped, but his tail was left in the frozen ice hole," Pravda said. Energy rationing Putin's threat to halt all supplies raises the risk of energy rationing in Europe this winter. The EU has already called upon its members to voluntarily reduce their gas consumption by 15% in the fall and winter but that might not be enough to allay the need for restrictions on gas use. A number of European governments have announced measures to protect citizens from rocketing energy bills. In the meantime, Western nations are trying to put pressure on Russia's energy revenues, which they say are funding the unprovoked invasion of Ukraine, by proposing price caps on Russian oil and gas. European Commission President Ursula von der Leyen on Wednesday described the situation facing Europe as "extraordinary ... because Russia is an unreliable supplier and is manipulating our energy markets." She said the Commission would put forward immediate measures to help consumers, including a mandatory target for reducing electricity use at peak hours, a cap on revenues of companies producing electricity with low costs, and other plans to share the burden of energy price rises. "Low carbon energy sources are making unexpected revenues, which do not reflect their production costs. It is now time for consumers to benefit from the low costs of low carbon energy sources, like renewables," von der Leyen said in a statement, saying fossil fuel companies should also contribute to easing pressures on consumers. "Oil and gas companies have also made massive profits. We will therefore propose a solidarity contribution for fossil fuel companies. Because all energy sources must help address this crisis." Von der Leyen said energy utility companies must be supported to cope with the volatility of the markets and proposed a cap on Russian gas. "The objective here is very clear. We must cut Russia's revenues which Putin uses to finance this atrocious war against Ukraine."

Russia has warned against capping energy prices. But Europe is thrashing out the details regardless - European Union energy ministers on Friday gathered in Brussels for emergency talks on how to protect households and businesses from runaway gas and electricity prices ahead of winter. European Commission President Ursula von der Leyen sought to lay the groundwork for Friday's meeting with a five-point plan. This includes a price cap on Russian gas, a windfall tax on fossil fuel profits, a mandatory target for reducing electricity use and emergency credit lines for power companies. Russian President Vladimir Putin responded to the proposals by threatening to rip up existing supply contracts if a cap on Russian energy exports is imposed, warning that he was prepared to let Europe "freeze" during the colder months. Russian Foreign Ministry spokeswoman Maria Zakharova on Friday reportedly warned that the West failed to understand how energy price caps could impact their own countries. "The collective West does not understand: the introduction of a cap on prices for Russian energy resources will lead to a slippery floor under its own feet," Zakharova said, according to Reuters. It is not expected that EU member states will reach a decision on Friday regarding the proposed policy ideas. The 27-nation bloc has endured a sharp drop in gas exports from Russia, traditionally its largest energy supplier, amid the standoff over the Kremlin's onslaught in Ukraine. Imported Russian gas to Europe currently stands at 9%, representing a substantial fall from roughly 40% before the war. The bitter energy dispute between Brussels and Moscow has recently seen Russia completely halt gas flows via a major supply route to Europe, exacerbating the risk of recession and a winter shortage. Speaking in Brussels ahead of the talks, EU Energy Commissioner Kadri Simson told reporters that Friday's meeting was necessary to provide governments with the right tools to address the deepening energy crisis. "This is not only about prices," Simson said. "It is also a challenge on the aspect of the security of supply."

Europe’s Economic Controlled Flight Into Terrain by Yves Smith - It is extremely hard to understand the mass psychosis at work among European leadership. A huge energy crisis, driven by the great reduction in Russia gas supplies (to become 100% if the EU proceeds with its idea of a gas price cap) and set to be compounded by the G7 bright idea, which they are refusing to drop, of a cap on the price of Russian oil. To the extent that idea works, it will work in reverse. For instance:The planned enforcement mechanism is for UK and EU insurers to be barred from insuring Russia oil. Recall that the UK currently dominates maritime insurance. That won’t last with respect to oil. Aside from the fact that the incumbents do not want to be enforcers/inspectors, Russia, China, and other countries are perfectly able to step up. Bye bye London market share.As we and other have mentioned, and now the mainstream media is confirming, Russian oil was already being laundered either by going through various ports and ship before getting to the EU, and also by going to places like India to be refined and then sold on. Everybody gets fat and happy at Europe’s and to a lesser degree, the US’s expenseOPEC will not let the G7 break its cartel. OPEC just announced a modest reduction of output in light of softening prices. Mr. Market took it worse than it should have given that OPEC signaled it would likely tighten and the output cut was modest. But OPEC is quite capable of turning the pain dial up if it needs to to make a pointAs much as I am not a fan of trying to put officials on the couch, one way to think about the problem facing Europe is the speed of propagation of the energy crisis versus not one but three constraints: the reaction time of businessmen, the time it would take to make short term adaptions, and the time for any more meaningful remedies. Again, as we stressed in the global financial crisis, the timelines are badly mismatched.European leaders are refusing and/or unable to recognize the severity and speed of decay There is simply no fix that will meaningfully alleviate the loss of access to so much cheap energy so quickly. It doesn’t matter what combination of subsidies and prohibitions the EU tries to implement. The economy can’t absorb electricity and gas prices at their expected levels. Yes, the shock is made worse by an EU spot pricing regime, which likely facilitates some Enron-esque gaming.But charitably assume this picture is distorted a full 3x by bad market structure. You still have a 10X increase. By contrast, the US oil shock was only a 4x increase:Let us again be clear. First, this is a massive inflationary shock in economies already suffering high rates of inflation. It doesn’t matter what experts do. The actions they can take will only somewhat effect whose ox gets gored most badly.Second, the currencies will get weaker….which will also only make the energy and import terms of trade worse.Third, ultimately the end for higher energy prices is that they do kill demand. But to kill demand enough to lower energy use to available supply will kill most of these economies stone cold dead. Again, the only way to prevent devastation is to make up with Russia, which the pols, press and pundits have made impossible soon enough to prevent terrible outcomes. If we are to stoop to psychological models, the most apt might be Elizabeth Kubler-Ross’ five stages of grief. Western officials are in either the denial or anger phase, which is a long way from acceptance of loss, which here is loss of US/European dominance as well as their personal reputations.

German gas giant Uniper says the worst is still to come after Russia halts flows to Europe - German energy giant Uniper on Tuesday warned the worst is still to come as concerns over Russian gas supplies to Europe through fall and winter continue to push up prices. "I have said this a number of times now over this year and I'm educating also policymakers. Look, the worst is still to come," Uniper CEO Klaus-Dieter Maubach told CNBC's Hadley Gamble at Gastech 2022 in Milan. "What we see on the wholesale market is 20 times the price that we have seen two years ago — 20 times. That is why I think we need to have really an open discussion with everyone taking responsibility on how to fix that," he added. Russia's state-owned energy giant, Gazprom, on Friday indefinitely halted gas flows to Europe via a major pipeline, stoking fears that parts of Europe could be forced to ration energy through winter. Uniper, as Germany's biggest importer of gas, has been hit hard by vastly reduced flows via pipelines from Russia, which have sent prices soaring. The German government agreed in July to bail out Uniper with a 15 billion euro ($14.9 billion) rescue deal to provide the embattled company with some financial relief. Maubach said Tuesday that some of the details still needed to be ironed out with this stabilization package. Russia's halt to supplies via Nord Stream 1 and the subsequent spike in European gas prices are likely to exacerbate the situation for the company. Shares of Uniper were 3.5% lower on Tuesday morning. The Frankfurt-listed stock is down more than 88% year to date. Gazprom's announcement came shortly after the Group of Seven economic powers backed a plan to propose a cap on the price of Russian oil. Gazprom said the shutdown was due to an oil leak in a turbine. The Nord Stream 1 pipeline, which connects Russia to Germany via the Baltic Sec, had been scheduled to reopen on Saturday after three days of maintenance work. The Kremlin has since blamed European lawmakers for the halt to gas supplies via Nord Stream 1, saying economic sanctions imposed by the West following Russia's invasion of Ukraine had impeded repair work. It was widely interpreted as the clearest indication yet that Russia is likely to push for Europe to lift punitive economic sanctions in order for Moscow to turn the taps back on. EU policymakers have accused the Kremlin of weaponizing energy supplies in a bid to sow uncertainty across the 27-nation bloc and boost energy prices amid Russia's onslaught in Ukraine. Moscow denies using energy as a weapon. Asked whether it was possible that Uniper could work again with Gazprom should the Kremlin's war with Ukraine come to an end, Maubach said the company's relationship with Russia stretched back to the 1970s and he had personally defended Gazprom as a reliable energy supplier after the war started with Ukraine in late February. "That, in hindsight, maybe it was even a mistake to think that gas would not be used. Maybe it was just wishful thinking," Maubach said. "I think this partnership is broken and I don't think that we can reestablish that in the next weeks, months and years to come. So, we are focusing on replacing Russian gas," he added.

“Lehman Event” Looms For Europe As Energy Companies Face $1.5 Trillion in Margin Calls - European energy companies are facing margin calls of a total of $1.5 trillion in the derivatives market and many would need policy support to cover them amid wild swings and skyrocketing gas and power prices, an executive at Norway’s energy major Equinor told Bloomberg on Tuesday. According to Helge Haugane, Equinor’s senior vice president for gas and power, the $1.5-trillion estimate is even “conservative”.Liquidity at energy firms is drying up as many companies have started to struggle to meet their margin calls on the energy derivatives market.“If the companies need to put up that much money, that means liquidity in the market dries up and this is not good for this part of the gas markets,” Equinor’s Haugane told Bloomberg.Some countries in the EU have already decided to set up funds to avoid a collapse of their energy derivatives markets. Finland and Sweden put out plans this weekend to support their energy companies trading in the electricity derivatives markets, looking to avoid a “Lehman Brothers” event in their respective energy industries and financial systems.“This has had the ingredients for a kind of a Lehman Brothers of energy industry,” Finland’s Minister of Economic Affairs, Mika Lintila, said on Sunday, as carried by Reuters, commenting on the energy crisis in Europe.The crisis deepened after Russia said on Friday that the Nord Stream gas pipeline to Germany would remain closed indefinitely, and blamed on Monday the Western sanctions for this situation.Finland discussed stabilization measures required in the electricity derivatives market, and a proposed central government scheme “is a last-resort financing option for companies that would otherwise be at risk of insolvency,” the Finnish government said in a statement on Sunday.Finland will look to set up a loan and guarantee scheme of up to $9.92 billion (10 billion euro), under which the State may grant loans or guarantees to companies engaged in electricity production in Finland.In neighboring Sweden, the government proposed state credit guarantees to mainly electricity producers trading in the market for electricity derivatives. The total amount of required collateral in the market has since June increased from about $6.5 billion (70 billion Swedish crowns) up to about $16.6 billion (180 billion crowns), the government said.“The purpose of the measure is to prevent that the lack of liquidity could create risks for contagion to other parts of the financial system,” Sweden’s Finance Ministry said.

Europe’s Central Bank Rules Out Liquidity Support For Energy Firms - The European Central Bank will not give short-term financing to European energy firms struggling through the energy crisis, sky-high prices, and margin calls on the derivatives markets, ECB President Christine Lagarde said on Friday. “As far as the ECB is concerned, and the national central banks of the Eurosystem, of course we stand ready to provide liquidity to banks, not to energy utility firms,” Lagarde said at a news conference in Prague today, as carried by Bloomberg.“In this current, very volatile environment, it’s important that fiscal measures be put in place to provide liquidity to solvent energy-market participants, in particular utility firms,” the ECB chief added. Europe’s energy firms, for their part, are estimated to be facing margin calls of a total of $1.5 trillion in the derivatives market. Many of these firms will need policy support to cover those calls amid wild swings and skyrocketing gas and power prices. The $1.5-trillion estimate is even “conservative”, Helge Haugane, Equinor’s senior vice president for gas and power, told Bloomberg earlier this week. Liquidity at energy firms is drying up as many companies have struggled to meet their margin calls on the energy derivatives market. Some countries in the EU have already decided to set up funds to avoid a collapse of their energy derivatives markets. For example, Finland and Sweden have laid out plans to support their energy companies trading in the electricity derivatives markets, looking to avoid a “Lehman Brothers” event in their respective energy industries and financial systems. “This has had the ingredients for a kind of a Lehman Brothers of energy industry,” Finland’s Minister of Economic Affairs, Mika Lintila, said on Sunday, as carried by Reuters, commenting on the energy crisis in Europe. The EU energy ministers are meeting today to discuss measures to help alleviate the crisis for households and businesses. The European Commission plans to propose a mandatory EU target soon to cut power consumption at peak hours. They are also planning a revenue cap on electricity producers and fossil fuel companies.

‘Goldman Sees $2T Surge in Europe Energy Bills by 2023 - Energy bills for European households will surge by 2 trillion euros ($2 trillion) at their peak early next year, underscoring the need for government intervention, according to Goldman Sachs Group Inc. utilities analysts. At their height, energy bills will represent about 15% of Europe’s gross domestic product, the analysts, led by Alberto Gandolfi and Mafalda Pombeiro, wrote in a note dated Sunday. “In our view, the market continues to underestimate the depth, the breadth and the structural repercussions of the crisis,” they wrote. “We believe these will be even deeper than the 1970s oil crisis.” Stock investors are too pessimistic about the effect of regulatory efforts, Goldman said. Some of the steps being considered -- including price caps and a so-called tariff deficit -- could ease the overhang on stock prices by smoothing the increase in tariffs, limiting the near-term drop in industrial production, and largely defusing regulatory risk, the analysts wrote. The increase in energy bills has prompted a rush by governments to ease cost pressures on households and businesses. EU energy ministers will meet Friday to discuss measures including natural gas price caps and suspension of power derivatives trading. France and Germany support windfall taxes on energy profits. The introduction of price caps in power generation could save the bloc around 650 billion euros in power bills and offer consumers and markets some relief while allowing governments to forgo a windfall-profits tax, the Goldman analysts said. Price caps wouldn’t fully solve the affordability problem, meaning a tariff deficit might be needed to spread the spike in bills over 10-20 years, Gandolfi and Pombeiro said. Utilities would need to be able to securitize those future payments, allowing them to avoid an excess burden on their balance sheet.

Gazprom Starts Producing LNG at Plant Near Nord Stream Pipeline - Gazprom PJSC has produced its first liquefied natural gas at a small-scale facility on the Baltic Coast near the start of the shuttered Nord Stream pipeline to Germany. Two production lines at Portovaya LNG have produced some 30,000 tons of the super-chilled fuel, Gazprom Deputy Chief Executive Officer Vitaly Markelov said at the Eastern Economic Forum in Vladivostok. One tanker is already moored near the facility while another is expected to arrive soon, Markelov said, providing no comments on the destination. The LNG plant is located near the Portovaya compressor station, the starting point of the Nord Stream pipeline under the Baltic Sea that failed to return from maintenance on Saturday, exacerbating Europe’s energy crisis. Earlier this year, the facility was in the spotlight after NASA satellites detected flaring on Russia’s Baltic coast, raising concerns that the nation’s gas giant was burning fuel rather than supplying it to Europe amid sanctions over the war in Ukraine. Flaring is a normal part of the commissioning of LNG facilities. The facility completed 72 hours of testing on Monday, though “some paperwork is left to be done,” Markelov said. Portovaya LNG has an annual capacity of 1.5 million tons, or less than a sixth of the nameplate capacity of the Gazprom-led Sakhalin-2 site in Russia’s Far East. Portovaya is set to supply the super-chilled fuel to Russia’s Kaliningrad region, sandwiched between Lithuania and Poland, and increase Gazprom’s portfolio.

Russia’s Gas Giant Will See Revenues Surge 85% This Year - Russia’s gas giant Gazprom is set to rake in 85% higher revenues this year, to around $100 billion, as natural gas prices surged following the Russian invasion of Ukraine and the significant cut to Russian pipeline gas exports to Europe, an analyst told the Financial Times on Friday.By choking supply to Europe, Gazprom has driven natural gas prices three times higher than last year’s price, which more than offsets the lower volumes Russia is sending to Europe, Ron Smith, an oil and gas analyst at BCS Global Markets, told FT.“You can make a solid case that Gazprom will earn more from supplying less gas,” according to the analyst.After having gradually cut flows via the key route to Germany all summer, blaming gas turbine repair issues, Gazprom said last week that the Nord Stream gas pipeline would remain closed indefinitely. The Kremlin blamed on Monday the Western sanctions for this situation. “When it went offline on 31 August, Nord Stream 1’s 32mcm/day flows represented about 3% of total European supply. While a small amount, these molecules will need to be replaced by much more expensive methods – either drawing additional LNG from the global market or by destroying demand in Europe,” Thomas Rodgers, gas markets analyst at Independent Commodity Intelligence Services (ICIS), said on the day on which Gazprom said Nord Stream would halt supply indefinitely.As of September 2, remaining Russian flows to Europe accounted for about 7% of European supply, including LNG sendout, compared to more than a third of all supply to Europe coming from Russia at this time last year, ICIS notes. The EU is looking to limit Putin’s revenues from gas, and European Commission President Ursula von der Leyen said on Wednesday the Commission would propose a price cap on Russian gas as “We must cut Russia's revenues which Putin uses to finance this atrocious war against Ukraine.”Also on Wednesday, Vladimir Putin threatened the West that Russia would stop supplying all energy products to Europe if the EU and its Western allies impose price caps on Russian oil and natural gas.Several EU member states are opposed to the Commission’s plan on a price cap on Russian gas amid concerns that Putin would retaliate with a complete halt of all pipeline gas deliveries to Europe.

EU Energy Ministers Divided On Russian Natural Gas Price Cap --EU county energy ministers met on Friday in an emergency setting to discuss capping the price of Russian gas but ended the meeting without an agreement, according to a draft meeting summary seen by media. The issue of capping the price of Russian gas was discussed, and it was agreed that proposals for capping should be delivered by mid-September, stating that “further work is needed” on the possibility of such a gas cap measure. While EU energy ministers appear divided on the subject of capping Russian gas prices, the group reportedly remains committed to working towards a solution to their citizens’ exorbitant energy bills, adding that there was broad support for saving utility companies from the difficult economic conditions. Other measures the group discussed include decoupling the price of gas from other less expensive energy sources. The group will now work on drafting proposals for how a Russian gas price cap would work, although some in the group expressed there was an urgency required for such an agreement and the subsequent required action. For example, the Czech Industry Minister Jozef Silkela said, “We are in an energy war with Russia. We have to send a clear signal that we would do whatever it takes to support our households, our economies.” The countries that support a price cap include the Baltic states—which are not as reliant on Russian gas as some of the other states that are more reluctant to employ any measure that could incite the wrath of Russia, which has already promised to cut off the gas flows completely should a price cap be employed. A draft proposal seen by Reuters indicated that it would cap revenues from non-gas producers (coal, wind, nuclear) at 200 euros per MWh. Power prices are set by natural gas power plants—the excess revenues above the cap from the non-gas power plants would be used to subsidize energy bills for consumers.

"We've Lost Nothing" - Putin Warns Western Elites' "Sanctions Fever" Will See European People "Freeze" - Russian President Vladimir Putin blasted the ongoing "sanctions fever" in the West in a wide-ranging speech before the Eastern Economic Forum in Vladivostok, in the country's far east, where as we described earlier the Chinese delegation was the largest in attendance. Top Chinese legislator Li Zhanshu was in attendance when the Russian leader stressed, "no matter how much someone would like to isolate Russia, it is impossible to do this."Instead, he said the blowback from EU and US-led sanctions and attempts at decoupling from Russian fossil fuels is wrecking lives in the West. "Now we are seeing how production and jobs in Europe are closing one after another," Putin said, stressing that this is happening as "Western elites, who would not, or even cannot acknowledge objective facts."His theme, like in a number of prior major speeches, was Western elites' inability to recognize the inevitable shift from a unipolar to multipolar world (literally the name for this year's forum is "On the Path to a Multipolar World."), or away from "the world order that benefits only them, forcing everyone to live under the rules, which they invented and which they regularly break and constantly change depending on the situation," he said according to a state media translation. That they "would not, or even cannot acknowledge objective facts" about global changes reveals their "growing detachment" from the common people they claim to represent. And yet now, European populations could "freeze" while being denied crucial Russian energy by leaders who shortsightedly want to lash out in emotional response to the Ukraine invasion: "The [coronavirus] epidemic has been replaced by other global challenges that threaten the entire world," Putin told the Eastern Economic Forum in Russia’s Pacific port city of Vladivostok. "I’m referring to the West’s sanctions fever," he said, criticizing "blatant and aggressive" attempts to "subjugate" countries that have not imposed economic restrictions on Russia. He dismissed as "nonsense" the widespread allegations that Russia using using gas as an energy weapon, saying it's as simple as releasing the necessary parts for the safe and proper functioning of pipelines operated by Gazprom. "Give us turbines and we’ll turn on Nord Stream tomorrow, but they won’t give us anything," Putin told the audience, further addressing the latest global headlines of an EU-mulled price cap on Russian oil and gas, calling the proposal "another stupidity." He suggested the dilemma remains simple: "There are contractual obligations and if there are any political decisions that contradict them, then we simply won’t fulfill them. We won’t supply anything at all if it contradicts our economic interests, in this case. We won’t supply gas, oil, coal or heating oil."

Russia Privately Warns of Deep and Prolonged Economic Damage” Russia may face a longer and deeper recession as the impact of US and European sanctions spreads, handicapping sectors that the country has relied on for years to power its economy, according to an internal report prepared for the government. The document, the result of months of work by officials and experts trying to assess the true impact of Russia’s economic isolation due to President Vladimir Putin’s invasion of Ukraine, paints a far more dire picture than officials usually do in their upbeat public pronouncements. Bloomberg viewed a copy of the report, drafted for a closed-door meeting of top officials on August 30. People familiar with the deliberations confirmed its authenticity. Two of the three scenarios in the report show the contraction accelerating next year, with the economy returning to the prewar level only at the end of the decade or later. The “inertial” one sees the economy bottoming out next year 8.3% below the 2021 level, while the “stress” scenario puts the low in 2024 at 11.9% under last year’s level. All the scenarios see the pressure of sanctions intensifying, with more countries likely to join them. Europe’s sharp turn away from Russian oil and gas may also hit the Kremlin’s ability to supply its own market, the report said. Beyond the restrictions themselves, which cover about a quarter of imports and exports, the report details how Russia now faces a “blockade” that “has affected practically all forms of transport,” further cutting off the country’s economy. Technological and financial curbs add to the pressure. The report estimates as many as 200,000 IT specialists may leave the country by 2025, the first official forecast of the widening brain drain. Publicly, officials say the hit from sanctions has been less than feared, with the contraction possibly less than 3% this year and even less in 2023. Outside economists have also adjusted the outlooks for this year, backing off initial forecasts of a deep recession as the economy has held up better than expected. The document calls for a raft of measures to support the economy and further ease the impact of the restrictions in order to get the economy recovering to pre-war levels in 2024 and growing steadily after that. But the steps include many of the same measures to stimulate investment that the government has touted over the last decade, when growth largely stagnated even without sanctions. . “With diminished access to Western technologies, a wave of foreign corporate divestment and demographic headwinds ahead, the country’s potential growth is set to shrink to 0.5%-1.0% in the next decade. Thereafter, it will shrink further still, down to just above zero by 2050. Russia will also be increasingly vulnerable to a decline in global commodity prices, as international reserves no longer provide a buffer”,

Erdogan "Understands" Putin's Decision To Cut Off Gas To Germany, Blames West's "Provocations"By now it should be no surprise to anyone that President Recep Tayyip Erdogan tends to antagonize both sides of the Russia-West divide, all the while positioning himself as a "go between" so that Turkey gets just what it wants. This was very much on display throughout past years of the war in Syria, also evident with its controversial Russian S-400 acquirement. In but the latest salvo and breaking ranks from the NATO line on the matter, Erdogan on Wednesday charged the West with provoking Russia over Ukraine. He at the same time touted that his country has maintained a "balance" in policy approach and perspective concerning the war, and US-EU punitive sanctions. In addressing a news conference during a meeting with Serbian President Aleksandar Vucic in Belgrade, Erdogan went so far as to say that he understands Vladimir Putin's decision to cut off Europe from Russian gas, shuttering the Nord Stream pipeline. As AFP reports of the contrarian statements from the head of NATO's second largest military: He told reporters on a visit to Belgrade that he understood Putin's decision to cut off natural gas supplies to Germany via the Nord Stream pipeline. "I can say very clearly that I do not find the attitude of the West -- no need to mention names -- to be correct, because it is a policy based on provocations," Erdogan said. "As long as you try to wage such a war of provocations, you will not be able to get the needed result," he added while standing alongside Vucic. He summarized Turkey's stance throughout the crisis as follows: "As Turkey, we have always maintained a policy of balance between Ukraine and Russia. From now on, we will continue to follow that balanced policy," he was quoted as saying. As an example he touted the recent UN-brokered Black Sea export 'safety corridor', monitored from Istanbul, through which Ukrainian food exports have begun to flow. According to a Turkish media description of his Wednesday statements from Belgrade: Erdoğan added that it does not seem the Russia-Ukraine war will end "anytime soon," adding: "I say to those who underestimate Russia, you are doing it wrong. Russia is not a country that can be underestimated." The president also reiterated Ankara's balanced policy between Russia and Ukraine to help solve the crisis. The Turkish policy of keeping lines of diplomacy open with Russia has also resulted in Türkiye hosting the highest-level meetings of officials from Moscow and Kyiv since the war begin.

Europe Could Solve Gas Supply Problem With Return To Shale -Russia’s invasion of Ukraine has shaken things up, triggering a complete rethink of European energy strategy and policy. And as Europe searches for viable alternatives to Russian gas, LNG seems the most popular solution to plug the supply gap. But a more local, long-term supply option could be shale. A decade ago, Europe hosted some of the most active unconventional gas exploration programs outside North America. Then the commodity downturn in 2015 – combined with some high-profile dry holes – brought a swift end to almost all of Europe’s onshore exploration. Wood Mackenzie believes that unconventional gas could eventually become a meaningful part of the solution to Europe’s gas supply problem – and the numerous barriers. Europe’s gas balance has changed fundamentally because of the conflict. In January-August 2022, Europe’s imports from Russia totaled only 55 percent of the volumes in the same timeframe last year. The continent no longer has any illusions about the reliability of Russia as a gas supplier. In a hypothetical scenario where the EU stops importing Russian gas by the end of 2023, the next couple of years would see record-high import requirements. In the longer term, there is significant uncertainty around the demand – with a range of up to 100 bcm in terms of potential requirements. If demand remains resilient, Woodmac forecasted that the supply and demand gap would be about 300 bcm. In a scenario where Europe’s recent decarbonization and diversification plan, the REPowerEU, is successful, that gap would be closer to 210 bcm. In either scenario, Europe will turn to LNG to plug the gap. In the next couple of years, it will need to compete with Asia for limited supply – all while LNG prices are rising. Woodmac claimed that European shale has vast potential, but there has been no material production. Ten years ago, exploration and appraisal work across Europe spanned from Poland to the UK, Sweden, Germany, and Austria. Target plays were shale and tight gas sands, which both had huge resource potential. Parallels to the booming US unconventional gas supply were drawn, aided by some European shale plays showcasing excellent geologic and geochemical properties. However, none of the in-place gas volumes were commercialized, and in five years of evaluation, not much drilling and completion, progress was made. Even in the UK and Poland, where activity was the most promising, only a few wells were finished, and sky-high costs coupled with management fatigue in the 2015 downturn stalled the projects. The UK and Germany are both reportedly discussing lifting national bans on hydraulic fracturing. That would be a bold move that would set the stage for shale gas pilots again, according to Wood Mackenzie. To remind, in the first round of European shale gas exploration, many of the majors led this activity. Now, majors have shifted their unconventional focus to the Permian, or in some cases, scaled back global shale projects completely. Their shale portfolios appear to be largely set as they are unlikely to want more exposure to new unconventional assets.

Gazprom and Hungary agree on additional gas deliveries for winter - Hungary and Russia’s gas giant Gazprom have signed an agreement that will guarantee the delivery of up to 5.8 mcm gas per day to Hungary in September and October above the volume stipulated in the country's long-term contract signed in October, Hungary’s Foreign Minister Peter Szijjarto said. Gazprom delivered an extra 2.6 mcm of gas per day in August on top of its 15-year contract with the Russian gas giant, which guarantees the annual supply of 4.5 bcm of gas through Serbia and Austria, bypassing Ukraine. Hungary has been in talk with Moscow in the summer to obtain an additional 700 mcm of gas above the 4.5 bcm level. Hungary has opposed proposals for EU sanctions on Russian gas as well as calls for a voluntary 15% cuts in member states’ gas demand until the end of March next year. The government has blamed EU sanctions for the soaring energy prices in Europe.It has gone against the rest of the bloc by continuing to deepen its reliance on Russia. Viktor Orban's regime has boasted about how its good relations with Russia has given it favourable prices for gas and will enable it to ride out the current energy crisis. However, it has not revealed the cost of its gas deals with Russia, with an opposition website claiming that the price is above the market rate.The Hungarian government has also been forced to end its freeze of domestic tariffs, one of its signature economic policies. Three months after his landslide April election victory, the Orban government was forced to give up on its key policy as the budget gap widened and the forint weakened to historic lows.Due to Hungary’s geography, being a landlocked country, "it is physically impossible to ensure Hungary's energy supply without using and taking into account Russian gas sources", Szijjarto said.The additional volumes contribute to the safety of Hungary's energy supply, Szijjarto said, adding that there will be sufficient gas in Hungary. Reserves in Hungary's gas storage facilities have exceeded 36.5% of annual average consumption, compared to the EU average of 21.5%. Gas reserves stood at 61.3% of the total capacity of 6.33 bcm last week. Russia's Gazprom accounts for around 90% of Hungary's gas imports under a 15-year contract signed in October last year that guarantees at least 4.5 bcm of annual supply.

Lebanese protesters sail towards Israeli waters to highlight gas field dispute - Lebanese boats protesting against Israeli plans to drill for gas in a disputed area of sea were met by patrol vessels from Israel as they neared its waters on Sunday. Patrol boats from Lebanon were also seen in the area, AP reported. The protest comes before a new round of talks between Lebanese and Israeli delegations, mediated by the UN and, recently, the US. In June, the Israeli navy escorted a drilling rig operated by British company Energean to the Karish gas field, which is claimed by both countries and lies in an area of 860 square kilometres of disputed sea. Lebanon says its maritime border stretches further south than Israel’s claimed area of territorial waters. Israel says its maritime border lies further north of what Lebanon accepts. The US has released several optimistic statements hoping that the two countries can strike a compromise on the disputed energy resources. “We welcome the consultative and open spirit of the parties to reach a final decision with the potential to yield greater stability, security and prosperity for Lebanon as well as Israel,” US State Department spokesman Ned Price said in August. But Lebanese politicians have said the Israeli actions represent a violation of the country’s sovereignty. Militant group Hezbollah has gone further, launching unarmed drones towards the drilling rig in July, a move condemned by prime minister-designate Najib Mikati, who called Hezbollah’s actions “unacceptable” and said the group had exposed the country to “unnecessary risks”. Lebanon hopes to exploit offshore gas reserves as it grapples with the worst economic crisis in its modern history. Sunday's flotilla carried Lebanese flags and banners, with slogans in Arabic, French, and Hebrew expressing what they say is Lebanon’s right to its maritime oil and gas fields. “We are demanding our right to every inch of our waters,” Aya Saleh, one of the protesters on a fishing boat, told AP. “And we are sending a message from the Lebanese people.” Lebanese and Israel navy vessels were present, although there were no tensions. Amos Hochstein, a senior adviser for energy security at the US State Department, has shuttled between Beirut and Jerusalem to mediate the talks. He was last in Beirut in late July, when he informed Lebanese officials of Israel's response to a proposal Lebanon made in June, and signalled optimism after his trip. According to Lebanese President Michel Aoun’s office, Mr Hochstein notified adviser and deputy parliament speaker Elias Bou Saab that he will visit Beirut later this week.

India says it will look carefully at Russian oil price cap, rejects moral duty to boycott Moscow - Indian Petroleum Minister Shri Hardeep Singh Puri on Monday said the country will carefully assess whether to support a G-7 proposal to impose a cap on the price of Russian oil. "There are many conversations going on due to a large number of factors," Puri told CNBC's Hadley Gamble at Gastech 2022 in Milan, Italy. Asked whether India would sign up to the G-7 proposal to put a price cap on Russian oil, Puri said the world economy was still adjusting to the impact of the coronavirus pandemic and Russia's invasion of Ukraine. "Now, what will the proposal mean? We will look at it very carefully," he said. Puri added that it was still unclear which countries would take part in the proposed price cap on Russian oil and what the possible implications could mean for energy markets. Finance ministers representing the G-7 countries on Friday agreed on a plan to implement a price-capping mechanism for Russian oil exports. The initiative is designed to curtail the Kremlin's ability to fund its onslaught in Ukraine and better protect consumers amid soaring energy prices. Energy analysts have been highly skeptical about the integrity of the proposal, however, warning that the policy could backfire if key consumers such as China and India are not involved. 'I have a moral duty to my consumer' China and India have increased their purchases of Russian oil following the Kremlin's invasion of Ukraine, benefiting from discounted rates. Puri said India consumes around 5 million barrels of oil per day and this largely comes from Iraq, Saudi Arabia, Kuwait and the United Arab Emirates. Russia accounted for just 0.2% of India's oil imports at the end of March, Puri said, noting that some criticized India for increasing its supply of Russian oil following the Kremlin's invasion. "I said the Europeans buy more in one afternoon than I do in a quarter. I'd be surprised if that is not the condition still. But yes we will buy from Russia, we will buy from wherever," Puri said. Asked whether he had a moral conflict with buying Russian oil amid the Kremlin's onslaught in Ukraine, Puri replied, "No, there's no conflict. I have a moral duty to my consumer. Do I as a democratically elected government want a situation where the petrol pump runs dry? Look at what is happening in countries around India."

India Dashes US "Hopes" On Oil Price Cap: "We Will Buy From Russia, We'll Buy From Wherever" - The White House called on India and China to implement the G7’s price restrictions on Russian oil exports. Since the West started to curb energy exports from Moscow in response to the war in Ukraine, India and China have significantly increased their imports of Russian energy. On Tuesday, Moscow and Beijing signed a new agreement to trade oil in yuan and rubles. US Deputy Treasury Secretary Wally Adeyemo said he hopes China and India will join the G7’s price cap on Russian oil. "Our hope is that countries like China and India will join the price cap coalition, or take advantage of the price cap coalition, to lower the amount of money” that Russia makes from oil exports," the official said on Tuesday. Last week, the G7 announced it would set a maximum price for which Russia could sell its oil. In order for the West’s plan to work, Moscow and other countries must comply. The Kremlin reacted sharply to the announcement by indefinitely closing the Nord Stream 1 pipeline, a move which sent European gas prices skyrocketing. The price cap is the West’s latest move in a months-long economic war with Russia. In response to Moscow’s invasion of Ukraine, President Joe Biden said he would attempt to destroy the isolated economy. So far, the sanctions regime has largely backfired as Europeans suffer with gas prices at 10 times the average and the Russian economy has fared far better than expected. Part of the Kremlin’s economic success has been finding a market for its oil in China and India. The Centre for Research on Energy and Clean Air reports that Russia exported about $158 billion in oil from February to August. While most of that was exported to Europe, the EU decreased its imports over that period. India's oil minister had preempted Washington urgings by kicking off the week bluntly staying, "We will buy oil from Russia, we will buy from wherever... I have a moral duty to my consumer."

India is Likely Reselling Russian Oil to the West, Says Study -- India’s fast-rising Russian oil imports are being matched by its rising oil exports suggesting it may be reselling Russia’s oil to the West, a Petro Logistics studyclaims.India exported an estimated 308 kb/d (thousand barrels per day) of products to nations meaning they are likely to have used Russian crude oil, it said.“Over a third of these products are being imported by countries with some form of sanctions on Russia,” the study said. “The top five countries are South Korea, Singapore, the USA, Australia, and the Netherlands.” “Since the invasion of Ukraine in February, Indian refiners have taken advantage of steep discounts to make the country one of the largest importers of Russian oil,” the study said.Indian imports of Russian crude soared to an average of 583 kb/d from April to June 2022 following the war in Ukraine, said the study, 16 times more than 36 kb/d in 2021.In doing so, Indian companies have avoided the US dollar and are using Asian currencies to pay for Russian oil imports to avoid being tied up in sanctions, Insider reported.India’s trade has come at the expense of US oil sellers, it added, who sold 166 kb/d less oil to India since the war in Ukraine, a steeper decline than any other country. President Joe Biden previously told Indian Prime Minister Narendra Modi that buying more oil from Russia was not in India’s interest and could hamper the US response to the war in Ukraine.It is hard to draw any strong conclusions on which Indian imports can be precisely attributed to Russian crude, the Petro study said.Petro’s estimates suggest that America is importing Indian gasoline, Singapore is buying gasoil and South Korea purchasing naptha, all which are likely made using Russian crude.

India's PM Modi says he's keen to boost ties with Russia, including energy -India's Prime Minister Narendra Modi said Wednesday that he is keen to boost ties with Russia, even as the country has been ostracized from the international community following its war in Ukraine. During an online address to the Eastern Economic Forum in Vladivostok, Russia, Modi spoke of a "special partnership" between the two countries and expressed particular interest in bolstering their cooperation on energy and coking coal. The Indian leader also pointed to the impact of Covid-19 and the Russian-Ukraine war on global supply chains, and called for "diplomacy and dialogue" in ending the conflict. "In today's globalized world, events in one part of the world create an impact on the entire world," said Modi, in a translation first reported by the Hindustan Times. "The Ukraine conflict and the Covid pandemic have had a major impact on global supply chains. Food grain, fertilizer, and fuel shortages are a matter of great concern for developing countries," he continued. "From the very beginning of the Ukraine conflict, we have emphasized the need to adopt the path of diplomacy and dialogue. We support all peaceful efforts to end this conflict," Modi added. Western allies step up pressure on Russia The comments come as Western allies are seeking to step up their economic squeeze on Russia. Last Friday, the G-7 announced plans to impose a cap on the price of Russian oil in a bid to curtail the Kremlin's ability to fund its onslaught in Ukraine. However, to be successful, members said the initiative would require buy-in from the broader international community — specifically major economies such as India and China. Until now, India, which has upped its purchases of Russian oil following the Kremlin's invasion of Ukraine, has refused to be held on the issue. Speaking to CNBC Monday, India's Petroleum Minister Shri Hardeep Singh Puri said the country would consider the proposals "very carefully," but added that he felt no moral obligation to sign up. Watch CNBC's full interview with India's Petroleum Minister Hardeep Singh PuriWATCH NOW VIDEO15:47 Watch CNBC's full interview with India's Petroleum Minister Hardeep Singh Puri "No, there's no conflict. I have a moral duty to my consumer. Do I as a democratically elected government want a situation where the petrol pump runs dry?," Puri told CNBC's Hadley Gamble at Gastech 2022 in Milan, Italy. As of the end of March, Russia accounted for just 0.2% of India's oil imports, according to Puri, with the vast majority of the country's oil consumption — 5 million barrels per day — coming from Iraq, Saudi Arabia, Kuwait and the United Arab Emirates. Still, Modi in his speech Wednesday heralded the growing economic links between India and Russia. Specifically, he praised the 2019 launch of the "Act Far-East" policy, which saw India extend a $1 billion line of credit to the resource-rich region for developments in energy, diamonds and pharmaceuticals. "This policy has become a major pillar of the special and privileged strategic partnership between India and Russia," he said.

Shell and Total Namibia oil discoveries likely in billions of barrels –minister -- Namibian offshore oil and gas discoveries by TotalEnergies (TTEF.PA) and Shell (SHEL.L) are of commercial quantities, likely in the billions of barrells, the southern African nation’s mines and energy minister said on Friday. Both companies announced earlier this year that they had made “significant” discoveries offshore Namibia, and are currently making assessments. The companies did not detail the quantities found but a source told Reuters that Total’s discovery was more than 1 billion barrels of oil equivalent. The discoveries could make Namibia, the southern neighbour of OPEC member Angola, the latest oil producer along the African Atlantic coast. “The companies are cautious, but have talked about commercial quantities in billions of barrels,” Namibia Mines and Energy Minister Tom Alweendo told Reuters on the sideline of an oil conference in Dakar, Senegal. “The commerciality is there. They basically want to make sure that before they commit to production investment, they know what exact quantities are there,” Alweendo said. He added that the firms are in the process of drilling their second and third wells, and by the end of the year they would have done the appraisals and have estimated figures. The minister told the conference on Thursday that the companies could start production in four years./p>

Northern Groups Call for Removal of Petroleum Subsidy – Meanwhile, the Concerned Northern Forum (CNF) in Conjunction with some civil society groups have called on President Muhammadu Buhari to remove petroleum subsidy. The group also kicked against the N48 billion pipeline security contract awarded by the federal government to a former Niger Delta militant, Government Ekpemupolo, popularly known as Tompolo.Addressing a press conference yesterday in Kaduna, Chairman of CNF, Ibrahim Bature, said petroleum subsidy, “is the greatest crime being perpetrated against Nigerians.” The group said, “the subsidy regime which has regularly stopped the NNPC from contributing revenue to the federal government, has stunted infrastructural development.”Bature called on the federal government to consider the removal of the subsidy so as, “to take the feeding bottle away from the mouths of cartels stealing our common wealth.” The group also faulted claims by the NNPC and the Ministry of Petroleum Resources that an estimated 200,000-400,000 barrels of crude are stolen per day, arguing that recent statements by the Chief of Naval Staff, Vice Admiral Gambo and Ali, showed that such claim was outrageous and unrealistic.“We wish to call on Mr. President to look critically into the position of both the Nigeria Custom and Nigerian Navy over the outrageous claims of theft in the oil and gas sector by the NNPC. “Our group deduced that the subsidy regime which has regularly stopped the NNPC from contributing revenue into the Federation Account is the greatest crime being perpetrated against Nigerians.” Bature said. The group further declared that it is, “vehemently opposed,” to the pipeline Surveillance Contract the NNPC awarded to Tompolo, insisting that, “it should be terminated with immediate effect.”The CNF urged the federal government to channel the N48 billion contract to addressing the developmental and environmental challenges in the Niger Delta region. Bature also called on the president to immediately sack the Head of the Nigeria Communication Satellite (NIGCOMSAT), “for failing to effectively cover the territory and expose crime to the relevant authorities.” The group asked Buhari to declare a state of emergency in the NNPC, “by appointing a military administrator to watch over the affairs of the company pending when investigations will be concluded into the subsidy regime that cost the country trillions of naira annually.”

Shell Petroleum Development Company of Nigeria to Investigate Bayelsa Oil Spillage - Shell Petroleum Development Company of Nigeria (SPDC) says it is investigating an oil spill from its facility at Ogboinbiri in Southern Ijaw Local Government Area of Bayelsa State. The oil spill is believed to be due to an operational mishap on August 24 at the Diebu Creek Flowstation which discharged some volume of crude oil into the area. The people of Peremabiri community, which is close to the flow station, have already complained of the dangerous effect of the spill on the environment and pointed fingers at the SPDC for their negligence.. They lamented that the delay by SPDC in responding to the spill has caused more damage to the environment and also impacted a wider area, including land, rivers and streams. Mike Adande, spokesperson of SPDC in a statement on Monday, confirmed the oil spill, saying the company had received the report and was working with regulators and the local community to investigate the incident.

Greenpeace sounds fresh alarm over sale of oil field to Singapore firm involved in spills -Greenpeace has renewed its call for the Government to block the sale of the offshore Maari oil field to Singaporean firm Jadestone Energy, after the company was involved in an oil spill in Australia in June. Austrian oil giant OMV agreed in 2019 to sell its 69% interest the Maari field, which may be nearing the end of its productive life, to Jadestone.The deal, worth at least US$50 million (NZ$82m), would have Jadestone take over the operation of Maari, but Ministry of Business, Innovation and Employment (MBIE) petroleum manager Susan Baas said it had yet to decide whether it would recommend the Government approve the change of ownership and operator.In June, Australia’s National Offshore Petroleum Safety and Environmental Management Authority (Nopsema) ordered Jadestone to stop offloading fuel at its Montara oil field northwest of Darwin, after the firm reported spilling a few thousand litres of oil. Nopsema’s prohibition notice said its inspections showed a cargo tank holding 10,000 cubic metres of oil had “structural integrity issues” and there was the risk of an immediate and significant threat to the environment.Production resumed at Montara in July after a temporary fix was put in place, but has since been suspended after a further defect was found and the company decided to focus on remediation work.Last year, Nopsema ordered Jadestone to review its management of corrosion at the oil field after saying it was not satisfied with the results of inspections. Failings included Jadestone not taking sufficient action to identify corrosion-related hazards, “errors and omissions” in its calculations for servicing pipelines, and failures to show infrastructure was being suitably maintained.

New study suggests lacustrine shale reserves can bolster China's energy independence - Shale oil exploration has rapidly expanded since the beginning of the 21st century, particularly in North America. Since 2010, the production of marine shale oil has increased at an average rate of more than 25% annually, making the US the global leader in production with total recoverable resources pegged at approximately 20.7 billion tons. Developing shale oil resources has significant potential to shape energy security and geopolitics. In addition to marine shale oil, countries have also begun utilizing lacustrine basins for oil production. Lacustrine shale oil reserves are deemed optimal when their organic content is high, the reservoirs feature a suitably high pressure to facilitate formation, and the Ro value, which indicates the thermal maturity of shale, is greater than 1.0%. In China, the lacustrine medium-to-high maturity shale oil is characterized by mature liquid hydrocarbons and a high proportion of movable oil. While these characteristics make it a valuable resource, questions surrounding production costs and recoverable quantities remain. Furthermore, without low development costs it remains to be seen if these reserves can be utilized economically. Now, a group of petroleum scientists led by Dr. Wenzhi Zhao at the China National Petroleum Corporation, have presented their evaluation of the enrichment conditions and occurrence characteristics of lacustrine shale oil reservoirs in China. "We have proposed a set of evaluation parameters for shale oil enrichment zones and evaluated the occurrence of optimal areas. This data will serve as a good reference to help promote the development of these oil reserves economically," says Dr. Zhao while explaining the motivation behind the research. This study was recently published in Earth Science Frontiers. The team utilized data collected from lacustrine medium-to-high maturity shale reserves currently being developed in China for their analyses, and specifically determined the optimal conditions for shale oil accumulation and the characteristics of these deposits. Their analysis revealed that shale with a high organic content and appropriate thermal maturity favored oil retention. "The optimal organic content of this shale ranges from three to four percent, and kerogen I and II seems to be the dominant type of organic matter. Interestingly, the Ro values of this shale were greater than 0.9%. Finally, these reservoirs must exhibit a certain degree of brittleness and have porosities between three to six percent," says Dr. Zhao when asked to elaborate on the key findings. In addition to these parameters, shale oil with good mobility was found when large amounts of high-quality hydrocarbons were present, and the enrichment interval of this oil was highly dependent on the reservoir having a tightly sealed roof and floor. "What we see is that major enrichment of oil occurs at semi-deep to deep depositional zones. Moreover, the distribution of shale oil enrichment intervals is governed by the type of lithologies as oil and gas is retained in the source rock. Shale assemblages are the best lithologic sections while Mudstone is not," observes Dr. Zhao, surmising the characteristics of these shale oil deposits. The team pegs the total shale oil reserves in China with medium-to-high maturity to be close to 16.3 billion tons of which nearly 8.4 billion tons could be developed commercially.

ONGC denies reports on shale/gas oil exploration in Cauvery delta - The Oil and Natural Gas Corporation (ONGC) Ltd. has denied reports of shale/gas oil exploration in Cauvery delta. Referring to the charges levelled by Anti-Methane Federation recently that it had engaged M/s CONOCO Philips, U.S., for shale gas/ oil exploration in Cauvery delta, the ONGC in a statement said: "ONGC hereby clarifies that it is neither carrying out nor has any plans to explore shale oil/gas or coal bed methane in Cauvery basin in Tamil Nadu. The allegations are misleading." On its part, the Anti-Methane Project Movement reiterated its charge that the ONGC had a tie-up with M/s CONOCO Philips. In a press release, the chief coordinator of the Anti-Methane Project Movement K. Jayaraman claimed he had documentary evidences to establish collaboration between ONGC and the U.S.-based company for joint exploration in Damodar Valley, Cauvery basin and Krishna-Godavari basin under phase-I.

Damaged gas pipelines repaired in Balochistan: SSGC - Gas supply to affected areas of Balochistan will be restored shortly as the technical team of Sui Southern Gas Company has repaired the 12-inch diameter gas pipeline swept away by rains and floods in the Bibi Nani area of Bolan district. Talking to media on Sunday, the SSGC officials told that the repair work of the affected pipelines had been completed, after which the PNC branch gave the green signal to the SSGC’s transmission team for restoration of gas to parts of the province, including Quetta. The province is without gas for over a week following the damage caused by heavy rains and flash flood to 24 inch wide and 12 inch diameter gas pipelines in Bibi Nani area.

Adnoc awards key contract for giant onshore oilfield as it targets 5 million bpd capacity - Abu Dhabi National Oil Company (Adnoc) has awarded a prized contract to Dubai-headquartered Kent for work on the full field development of its onshore Bab Far North project. Two people familiar with the development told Upstream that the emirati giant recently awarded Kent a contract covering the front-end engineering and design following a competitive tender process. One person said the project is a key component of Abu Dhabi’s ongoing expansion plans, which aim to scale up the emirate’s oil production capacity to 5 million barrels per day by 2030, up from the existing 4 million bpd capacity. The oil-rich emirate is spending billions of dollars on onshore and offshore incremental and maintenance contracts, as it eyes a high production capacity by the end of this decade. A second source said the most recent development project is a follow-up to the ongoing CO2 WAG (water and gas injection) pilot scheme at the Bab Far North Area. The workscope for the latest contract involves 22 new oil producers and 32 WAG injectors, along with multiple pads, he noted. A carbon dioxide recovery plant and injection facilities, oil, water and CO2 injection networks and other associated surface facilities are also envisaged, project watchers said.

Clashes Between Libyan Armed Factions - In Libya, there were clashes between Libyan armed factions on the western outskirts of Tripoli in Wasrshafala as GNU allied forces further consolidated their power over the capital, Dryad Global noted in its latest Maritime Security Threat Advisory (MSTA). “Witness reports indicate that mortars were fired over the course of the fighting on 2-3 of September,” the MSTA stated. “This follows deadly clashes the previous week. Clashes are militia-based, short and targeted and primarily centralized to the outskirts of the city. There are no indications that there is an immediate threat to port infrastructure,” the MSTA added. “General Haftar claimed that he will not provide support to Bashagha to seize the capital, limiting Bashagha’s capabilities to launch an assault,” the MSTA continued. In its previous MSTA, Dryad highlighted that deadly clashes had broken out in Libya between militias loyal to parliament elected Prime Minister Bashagha and UN-backed Prime Minister Dbeibah. In a report sent to Rigzone on September 4, Fitch Solutions Country Risk and Industry Research noted that Libyan production has been volatile in the year to date. “The delay to presidential elections, scheduled for December 2021, has led to the re-emergence of two rival governments and an increase in political unrest and factional fighting,” Fitch Solutions analysts stated in the report. “In keeping with historical norms, oil production and export infrastructure has been targeted for leverage in the conflict, with output reaching a monthly low of 632,000 barrels per day in July,” the analysts added. “Production has since recovered and the country is now producing at its peak capacity of around 1.2 million barrels per day. We do not expect any meaningful political progress to made in the near term, with the two sides stuck in a stalemate. With output currently at its peak, this poses considerable downside risk to future production, with renewed outages likely to occur,” the analysts went on to note. In the report, the analysts also highlighted that “these outages tend to be brief and the market has become largely desensitized to them, blunting the impact on prices”.

Renewed Clashes In Tripoli Threaten Libyan Oil Production - Renewed clashes broke out over the weekend in oil-rich Libya’s capital as militia forces aligned with the Government of National Unity (GNU) moved to ensure continued control after a failed attempt by the rival eastern-backed prime minister to take Tripoli last week. Fighting took place in the city's western outskirts on Friday and Saturday, Reuters reports. Current interim prime minister Hamid Al-Dbeibah is attempting to shore up control and weed out militias aligned with newly appointed parliamentary-backed prime minister Fathi Bashagha. Dbeibah’s key concern now is gaining control of various armed factions within Tripoli that have not aligned definitively with one side or the other. Turkey could play the role of kingmaker here, with the ability to military intervene on either Dbeibah’s or Bashagha’s side, and both prime ministers visited the Turkish capital last week. Al-Monitor poses that a quiet Turkish intervention has “tipped the balance of power in favor of Dbeibah”, and cites unnamed sources as saying that Bashagha left the meeting in Ankara “disgruntled”, though there is no independent confirmation of this. At the same time, further fanning the flames, Libya’s former High Council of State head has accused the current head of the High Council of State and the speaker of the House of Representatives, the influential Aquila Saleh, of conspiring with Egyptian intelligence to install a new government without elections, the Libya Observer reports. A week ago, the Libyan National Oil Company (NOC) reported that production had hit 1.22 million bpd. Libya hopes to boost output to 2 million bpd over the next three to five years, but progress may be slowed by the country’s inability to resolve its internal political rivalries, with all factions vying for their share of the country’s oil wealth.

OPEC+ Flags Adverse Impact of Volatility -The latest OPEC and non-OPEC ministerial meeting, which was held on September 5, noted the adverse impact of volatility, the decline in liquidity on the current oil market and the need to support the market’s stability and its efficient functioning, OPEC outlined. According to a statement posted on OPEC’s website following the session, the meeting noted that higher volatility and increased uncertainties require the continuous assessment of market conditions and a readiness to make immediate adjustments to production in different forms, if needed. “OPEC+ has the commitment, the flexibility, and the means within the existing mechanisms of the declaration of cooperation to deal with these challenges and provide guidance to the market,” OPEC said in the statement. At the meeting, OPEC+ decided to revert to the production level of August 2022 for the month of October 2022, outlining that the upward adjustment of 100,000 barrels per day to the production level was only intended for the month of September 2022. The group also decided to request the chairman to consider calling for an OPEC+ meeting anytime to address market developments, if necessary, and to hold the 33rd OPEC and non-OPEC ministerial meeting on October 5. Saudi Arabia and Russia have the joint highest “required production” for October, at 11.004 million barrels per day, according to a production table posted on OPEC’s website. In a report sent to Rigzone on Monday, prior to OPEC+’s latest meeting, BofA Global Research highlighted that there were strong political, economic, strategic, and financial arguments to avoid implementing a production cut. “With global energy prices at exceptionally high levels due to the unfolding European gas and power crisis, a move by OPEC+ now to curb crude volumes could spook Washington, Brussels, and even Beijing,” BofA Global Research stated in the report. “In addition, OPEC+ government coffers are broadly in very good shape after Brent averaged $104 per barrel so far this year. Meanwhile, upstream capex has recovered a bit as well from the abysmal levels of 2020/21, with some OPEC+ members leading the charge and presumably wanting to grow market share into 2030, another reason to hold off on a cut for now,” BofA Global Research added. “Still, the main arguments against a production cut are economic. There is simply too much uncertainty around fundamentals going into the winter,” BofA Global Research continued.

Oil prices jump over $2 ahead of OPEC-plus meeting to discuss output cut - (Reuters) -Oil prices rose more than $2 a barrel on Monday, extending gains as investors eyed possible moves by OPEC+ producers to cut output and support prices at a meeting later in the day. Brent crude futures advanced by $2.43, or 2.6%, to $95.45 a barrel by 0850 GMT after rising 0.7% on Friday. U.S. West Texas Intermediate crude was up $2.21, or 2.5%, at $89.08 after a 0.3% gain in the previous session. U.S. markets are closed for a public holiday on Monday. At their meeting later on Monday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, will discuss oil output cuts of 100,000 barrels per day among other options, sources from the group told Reuters. "The group is expected to leave output targets unchanged, but it's likely that a cut will be at least discussed; which, if followed through on, would create more volatility and uncertainty at a time of considerable unease," said Craig Erlam, senior market analyst at OANDA. Russia, the world's second-largest oil producer and a key OPEC+ member, does not support a production cut at this time and the producer group is likely to decide to keep output steady, the Wall Street Journal reported on Sunday, citing unnamed sources. Oil prices have fallen in the past three months from multi-year highs hit in March, pressured by concerns that interest rate increases and COVID-19 curbs in parts of China could slow global economic growth and dent oil demand. Lockdown measures in China's southern technology hub of Shenzhen eased on Monday as new infections showed signs of stabilisingm though the city remains on high vigilance. Meanwhile, talks to revive the West's 2015 nuclear deal with Iran, potentially providing a supply boost from Iranian crude returning to the market, has hit a new snag. The White House on Friday rejected Iran's call for a deal to be linked with closure of investigations by the U.N. nuclear watchdog, a Western diplomat said.

Oil producer group OPEC+ surprises energy markets with a small production cut - A group of some of the world's most powerful oil producers on Monday agreed on a small output cut from next month, surprising energy markets at a time of considerable turmoil.OPEC and non-OPEC partners, an influential energy alliance known as OPEC+, decided to cut production targets by about 100,000 barrels per day from October.Energy analysts had broadly expected the group to stay the course with its production policy.Last month, OPEC+ agreed to raise oil output by just 100,000 barrels per day. The minuscule boost was widely interpreted as a rebuff to U.S. President Joe Biden after his visit to Saudi Arabia to ask the OPEC kingpin to pump more to cool prices and help the global economy."The President has taken action – including historic release of oil from U.S. and global strategic reserves and working with allies on a price cap on Russian oil to ensure we maintain a global supply of oil, even as we punish Putin for his action," said White House Press Secretary Karine Jean-Pierre.OPEC+ said in a statement that Monday's decision to revert back to August levels of production was because the upward adjustment was "intended only for the month of September."The next OPEC+ meeting is scheduled for Oct. 5.Oil prices traded sharply higher but were off the day's highs on Monday afternoon. International benchmark Brent crude futures were up 2.5% at $95.54 a barrel at around 1 p.m. ET, while U.S. West Texas Intermediate futures were up 2.6% at $89.16 a barrel.Oil prices have fallen around 25% since early June after touching multiyear highs in March. The decline has been fueled by growing concerns that interest rate hikes and Covid-related restrictions in parts of China could slow global economic growth and curtail oil demand.Monday's announcement from OPEC+ comes amid a bitter and escalating energy dispute between Russia and the West, with many in Europe deeply concerned about the prospect of recession and a winter gas shortage.Meanwhile, market participants are closely monitoring the prospect of asupply boost from Iranian crude if Tehran can secure a renewed version of the 2015 nuclear deal.

Oil climbs 4% after OPEC+ decides to trim output by 100,000 barrels a day -Oil prices jumped 4% on Monday after OPEC+ crude producers agreed to cut output quotas and Russia said it won't sell its exports to countries that abide by a US-led planned price cap. Members of the Organization of Petroleum Exporting Countries and their allies agreed at a meeting Monday to reduce production by 100,000 barrels a day from October, surprising analysts who widely expected the group to maintain current levels. Leading oil exporter Saudi Arabia floated the idea last month to ease pricing dysfunction in the oil market. Brent crude futures, the global benchmark, were up 4.0% at $96.77 at last check, while WTI crude futures, the US benchmark, were 3.8% higher at $90.19. Oil prices have slid about 20% from their June highs, in part because of growing concerns about a global recession that would knock demand. An OPEC+ cut to supply levels, even if small, could help support oil prices. The group said it was returning quotas back to August levels because its previously agreed addition of 100,000 barrels a day in September was intended for that month only. Oil market analysts had largely expected no change to supply from OPEC+, giving as one factor the the uncertainty around whether the Iran nuclear talks would add more barrels to the market. But SEB strategists predicted the group would cut levels as it is already undershooting its target by 3 million barrels a day, creating a disconnect between its cap and actual production. "Saudi Arabia is currently producing at close to 11 mb/d. It has only produced at this level twice in history (2018 and 2020) and then just for a month or two,"

Brent Falls 3% as Traders Assess Fallout from Nord Stream -- Following Monday's sharp rally triggered by a surprise production cut by the Organization of the Petroleum Exporting Countries and allied producers, oil futures were mixed in early trade Tuesday as investors assess the economic fallout from last week's announcement that Russia is planning to permanently shut down its main natural gas pipeline to Europe. Front-month Brent futures fell more than 3% early Tuesday in response to fresh economic data out of Germany, showing industrial orders plummeted 1.1% midsummer, bringing year-over-year contraction in the EU's largest manufacturing economy to 13.6%. These are staggering figures for Germany -- an EU powerhouse that is struggling to contain the economic hit from surging electricity and gas prices. On Monday, Dutch TTF futures once again leaped by a third before settling down 10% higher in response to Russia's announcement that its flagship gas pipeline, Nord Stream 1, with capacity to deliver 55 billion cubic meters will remain closed until the Europe Union removes all sanctions on Russia. While citing malfunctioning equipment at one of the compressor stations, Gazprom declined to reroute gas flows through functioning pipelines. As investors braced for an expected recession in the eurozone, the Euro sank below $0.99 on Monday to its lowest level in 20 years. Stocks fell in Germany, Italy, France, and other European markets. Markets staged a tepid rebound on Tuesday, with European equities rising in step with higher stock futures in the United States that were closed for the three-day Labor Day holiday weekend. Against this backdrop, OPEC+ agreed on Monday to cut oil production for the first time in over a year, lowering the collective target by 100,000 bpd for the month of October. The small cut would reverse the 100,000 bpd that OPEC+ said it would add to the market last month, meaning the group's production targets will remain virtually unchanged at the August level. The decision to reverse the small production increase designed for September is more symbolic than fundamentally significant but it sends a clear signal that the alliance stands ready to defend the market should prices continue to fall. Some analysts believe the production cut is also a response to deepening lockdowns in China, recessionary risks in Europe and slowing economic growth in the United States. Near 7:30 am ET, NYMEX October West Texas Intermediate futures slipped $0.15 to trade near $86.70 bbl, while Brent for November delivery plummeted to $93 bbl, down more than $2.70. NYMEX October RBOB futures softened 0.46 cents to $2.4590 gallon, and NYMEX October ULSD futures rallied to $3.6280 gallon, up by 5 cents.

Oil sinks as demand fears take steam out of OPEC-led rally - Oil prices fell on Tuesday as concern returned about the prospect of more interest rate hikes and COVID-19 lockdowns weakening fuel demand, reversing a two-day rally on OPEC+'s first output target cut since 2020. Brent crude settled at $92.83 a barrel, losing $2.91, or 3%. U.S. West Texas Intermediate (WTI) fell from Monday's trading to settle at $86.88 a barrel, up 1 cent from Friday's close. The U.S. benchmark had been trading since Sunday without settlement due to the Labor Day holiday. WTI prices are down more than 2% from the usual time of settlement on Monday, Refinitiv Eikon data show. "The OPEC+ news is now in the market and the focus has temporarily shifted to economic and inflationary concerns amongst which the two relevant factors are the extended COVID lockdowns in China and Thursday's ECB rate decision," China has eased some COVID-19 curbs but extended lockdowns in Chengdu, which added to worries that high inflation and interest rate hikes will hit oil demand. The European Central Bank is widely expected to lift rates sharply when it meets on Thursday. A stronger U.S. dollar, which was up about 0.6% on better-than-expected U.S. services industry data, also put pressure on oil prices. The reading on services sector activity fed into expectations that the Federal Reserve will keep raising interest rates, which could trigger a recession and bring down fuel demand. "Basically, it's all about tight supplies and concerns about an economic slowdown that might happen in the future," "This has created a lot of uncertainty in the market." On the supply side, signs that an agreement to resurrect Iran's nuclear deal with world powers was less imminent challenged crude prices by reducing the odds that OPEC+ would move forward with its output reduction plan. The European Union's foreign policy chief said on Monday he was less hopeful about a quick revival of the deal. "You might not get an OPEC production cut if the Iranians don't bring barrels to the market," The Organization of Petroleum Exporting Countries and allies led by Russia, known as OPEC+, decided on Monday to cut their October output target by 100,000 barrels per day (bpd). Prices rose on Friday ahead of the meeting and after the decision. .

Brent Crude Plunges Below $90, Posing A Major Challenge For OPEC+ --Oil is tumbling this morning with Brent slumping below $90 to the lowest since February and WTI dumping below $84 for the first time since January... ... as oil prices in the highest odds of any asset class as Goldman first pointed out last week. The drop has obviously undone all the earlier gains after Russian President Vladimir Putin underlined that his country won’t supply oil and fuel if price caps on the country’s exports are introduced, which briefly pushed oil higher. Putin’s comments follow the G7 most industrialized countries agreeing to back an oil price cap for global purchases of Russian oil. It remains unclear how many countries have signed up to put limits on Russia. The renewed weakness - which according to Bloomberg's Jake Lloyd Smith - is driven by a nasty combination of demand concerns plus the dollar’s jump to a record - will test OPEC+'s appetite for further action. When the cartel wrapped up its Monday meeting that endorsed a token 100,000 barrel a day cut in production, it also highlighted it would be willing to call another gathering “anytime to address market developments, if necessary.” Given the next scheduled talks are not until Oct. 5 - a full four weeks away - the latest selloff raises the possibility of an ad hoc session before then. After the tiny reduction in supply, OPEC+ kingpin Saudi Arabia showcased that OPEC+ would be “attentive, preemptive and pro-active” in terms of managing the world’s most important commodity market. Those very public comments, plus the subsequent weakness in prices, may herald a test of Riyadh’s resolve. Meanwhile, even as oil slides, the price of regular gasoline is once again rising in California after steady declines since mid-June reversed course over the Labor Day weekend. The end of the peak summer travel season typically brings lower fuel prices, but this year, a lack of imports and a refinery hiccup combined to drain stockpiles, sending wholesale and retail prices higher in the past week. Rising pump prices exacerbate the energy crisis Californians are already facing: a punishing heat wave and possible blackouts.

Oil slides to seven-month lows on economic woes -- Oil prices fell by more than $4 on Wednesday to their lowest since Russia invaded Ukraine on demand fears stoked by looming recession risks and downbeat Chinese trade data. Brent crude futures settled at $88 a barrel, for a loss of $4.83 or 5.2%. U.S. West Texas Intermediate crude settled $4.94, or 5.69%, lower at $81.94 per barrel. "The spectre of a demand-sapping recession across the Western world is closer to becoming reality as soaring inflation and rising interest rates dent consumption," Credit rating agency Fitch on Tuesday said that the halting of the Nord Stream 1 pipeline has increased the likelihood of a recession in the euro zone. The European Central Bank is widely expected to raise interest rates sharply when it meets on Thursday. A U.S. Federal Reserve meeting follows on Sept. 21. Weak economic data from China amid its stringent zero-COVID policy has also added to demand concerns. The country's crude oil imports in August fell 9.4% from a year earlier, customs data showed on Wednesday. Meanwhile, Britain's new prime minister, Liz Truss, on Wednesday said she wanted to see more extraction of oil and gas from the North Sea. Prices had been supported earlier by a threat from Russian President Vladimir Putin to halt all oil and gas supplies if price caps are imposed on Russia's energy resources. The European Union proposed to cap Russian gas only hours later, raising the risk of rationing in some of the world's richest countries this winter. Analysts already expect oil supply to be tight in the last quarter of the year. U.S. crude stockpiles are expected to have fallen for a fourth consecutive week, declining by an estimated 733,000 barrels in the week to Sept. 2, a preliminary Reuters poll showed on Tuesday.

JPMorgan Expects OPEC+ To Cut Another 1 Million b/d In Output As Biden Mulls More SPR Releases - Back in June we joked that it will be very funny when MBS cuts OPEC+ output after fistbumping Biden... ... and two months (and one de minimis output hike) later that's precisely what happened.And yet, even though Saudi Arabia draw a line in the proverbial desert sand making it clear that any further price drops would likely be met with more output cuts, the price of oil tumbled to fresh 2022 lows as discussed in "Brent Crude Plunges Below $90, Posing A Major Challenge For OPEC+" amid a bizarre ongoing liquidation that some suggest smells like yet another government intervention.The problem is that with Saudi Arabia having made it clear that Brent below $100 is frowned upon and below $90 is unacceptable even if it means angering Biden, JPMorgan energy strategist Christyan Malek wrote that OPEC is likely to step in with additional cuts if oil downward momentum persists. Some more details from his note (available to pro subscribers):Monday’s OPEC+ meeting reinforces our view that upcoming agreements will seek to align the market with underlying fundamentals and encourage future investment. Given heightened volatility and a further fall in oil prices since the cut was announced (Brent down 8% month to date as we write), we believe further intervention may be necessary and suggest a cut up to 1mb/d may be needed to stem the downward momentum in prices and realign physical and paper markets which appear disconnected. Moreover, this may prove necessary in the context of our commodities team forecast of a surplus for next year of up to 0.6mb/d assuming demand rises from 100.2mb/d to 101.1mb/d 2022/23. Despite the near-term volatility, we remain bullish on the energy macro outlook as we forecast a sustained multi-year oil deficit averaging 0.6mb/d 2022-25 And just to ensure that OPEC+ will cut more than even the 1 million speculated by JPM, on Thursday afternoon Energy Secretary Jennifer Granholm told Reuters that Biden's administration is weighing the need for further releases of crude oil from the nation's emergency stockpiles after the current program ends in October. This comes on a day when we learned that SPR was drained by a near record 7.5 million barrels and the total inventory in the emergency reserve dropped to just 442 million barrels, the lowest since 1984!

WTI Holds 'Death Cross' Losses After API Reports Surprise Crude Inventory Build - Despite OPEC+ cutting production at the margin, oil slumped below pre-Putin levels today as demand concerns emanating from China and increasingly hawkish rhetoric from central banks prompted a wave of selling that turned into a frenzy as prices breached technical warning levels.“Elevated volatility is the story here,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management. “There is no way to have conviction and want to place bets when the market trades in huge ranges with limited liquidity. The risk reward is just not there.”With prices at a key level and Putin outright threatening to withhold oil flows to 'unfriendly' nations, algos will be eagle-eyed on tonight's inventory data ahead of tomorrow's official print for signs that confirm fears of recession API:

  • Crude +3.645mm
  • Cushing -772k
  • Gasoline -836k
  • Distillates +1.833mm

For the first time in four weeks, US crude stocks increased last week (+3.645mm). Gasoline inventories drew-down for the seventh straight week... WTI suffered a 'death cross' today, pushing the price to its lowest since February... WTI was trading below $82 ahead of the print and held those losses...

WTI Slides After Biggest Crude Build In 5 Months, Record SPR Draw - Oil prices are up this morning, a brief respite after yesterday's tumble (and 'death cross') and follows API reporting an unexpected crude build. “Recession woes, weak Chinese export/import data and COVID-related lockdowns are the primary price drivers at the moment,” Oil’s deep loss on Wednesday came despite several supportive market factors. Russian President Putin said the country would not supply energy to any nations that backed a planned US-led price cap on the nation’s crude, and the EIA raised its outlook for global oil demand, while also cutting the forecast for US supply. DOE

  • Crude +8.845mm (+300k exp) - biggest build since April
  • Cushing -501k
  • Gasoline +333k (-1.4mm exp)
  • Distillates +95k (+200k exp)

After API reported an unexpected crude build, the official data confirmed it was even bigger with a 8.85mm barrel build. Additionally, gasoline and distillates also saw builds... The 8.8 million barrel build in commercial crude stockpiles was mostly offset by the withdrawal of 7.5 million barrels from the Strategic Petroleum Reserve. The net result was a nationwide crude build of just 1.3 million barrels in the week to Sept. 2. That’s the first build in total nationwide crude stockpiles in four weeks and the biggest build in two months.

Oil Edges up From Seven-Month Low as Russia Threatens Export Halt (Reuters) -Crude prices edged up about 1% on Thursday after dropping to a seven-month low in the prior session as some technical traders bought the dip and Russia threatened to halt oil and gas exports to some buyers. That price increase came despite a surprise build in U.S. crude inventories, news that the United States was weighing the need for more crude releases from strategic reserves and concerns China's COVID-19 lockdown extensions and rising global interest rates would slow economic activity and hit fuel demand. U.S. crude stockpiles surged by nearly 9 million barrels last week due to a combination of increased imports and ongoing releases from government emergency reserves, the Energy Information Administration said. The hefty build compares with the 250,000-barrel draw analysts forecast in a Reuters poll and data from American Petroleum Institute (API) industry group showing a 3.6 million barrel increase. [API/S] "Most of that oil in that build came from the Strategic Petroleum Reserve. The quicker we empty out the SPR, the bigger the draws are going to be in the future," said Phil Flynn, an analyst at Price Futures Group. U.S. Energy Secretary Jennifer Granholm said Joe Biden's administration was weighing the need for further releases of crude oil from the nation's emergency stockpiles. Brent futures rose $1.15, or 1.3%, to settle at $89.15 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.60, or 2.0%, to settle at $83.54. On Wednesday, both benchmarks dropped more than 5% to close at their lowest levels since mid-to-late January, putting WTI into technically oversold territory for the first time in a month. "Today’s advance ... appears motivated mainly by an oversold technical condition that allowed the complex to shrug off a seemingly bearish crude stock build per the EIA," analysts at energy consulting firm Ritterbusch and Associates said. Prices also drew support from Russian President Vladimir Putin's threat to halt oil and gas exports if price caps are imposed by European buyers. The European Union proposed capping Russian gas prices, raising the risk of rationing this winter if Moscow carries out its threat. Russia's Gazprom has already halted flows from the Nord Stream 1 gas pipeline. Belgium's energy minister proposed a cap on wholesale gas prices rather than just Russian imports. Britain said it will cap consumer energy bills for two years. Concerns about the health of the global economy and expectations of falling fuel demand led to sharp oil price falls in the previous session. China's Chengdu extended a lockdown for a majority of its more than 21 million residents to prevent further transmission of COVID-19. The European Central Bank (ECB) raised its key interest rates by an unprecedented 75 basis points and signalled further hikes, prioritising the fight against inflation even as the bloc's economy is heading for a likely winter recession. U.S. Federal Reserve Chairman Jerome Powell said the central bank is "strongly committed" to bringing down inflation and needs to keep going until it gets the job done. "Energy traders have mostly priced in the Chinese COVID shutdowns and demand concerns from aggressive tightening signals by the ECB and Fed,"

Global crude oil prices rise amid volatile trade - International crude oil prices recovered on Friday after opening in the negative territory amid volatile trade. Around 10.50 am, the November contract of Brent on the Intercontinental Exchange was at $89.90 per barrel, higher by 0.84% from its previous close. The October contract of West Texas Intermediate (WTI) on the NYMEX rose 0.65% to $84.08 a barrel. Analysts said that Russia’s threat to halt oil and gas exports to Europe in case price cap is imposed on energy exporting from the country, lifted the prices. However, demand concerns amid renewed lockdowns in China, one of the world’s largest importers of crude limited the gains. Further, the increase in US oil stocks also may weigh on the prices going ahead, according to analysts. Rahul Kalantri, VP Commodities, Mehta Equities Ltd: “We expect crude oil prices to remain volatile in today’s session." Sriram Iyer, Senior Research Analyst at Reliance Securities noted that oil prices recovered from session low and ended marginally higher on Thursday amid bargain buying and Russia’s threat to halt oil and gas exports to the European countries. He said that the upside remained capped in anticipation of lower demand for next week. “Looking ahead, crude prices could trade higher, but upside could be capped amid build in inventories, worries that central banks‘ aggressive rate hikes and China’s Covid-19 curbs will hurt demand." Investors would also eye the EU energy ministers‘ meeting at Brussels to discuss the ongoing energy crisis. The meeting, known as the European Energy Council, was called for by Czech industry minister Josef Sikela in late August after natural gas prices in the continental market continued to climb as a result of the Russo-Ukranian war.

Oil Rebounds as Supply Risks Outweigh Weak Global Economy -- Crude and refined products futures rallied 4% on Friday, although all petroleum contracts posted week-on-week losses. The gains came as traders balanced concerns over deeper demand destruction in Europe and the United States fueled by aggressive rate hikes from hawkish central banks against perceived risks of disruption in Russian oil supplies after Russian President Vladimir Putin threatened to freeze all energy exports to countries that choose to participate in a G7 agreement to cap prices on Russian oil flows. Markets continue to dissect incoming details over a proposed plan by G7 nations to cap the price of Russian oil exports, with plenty of ambiguity remaining over the plan's implementation and enforcement mechanism. During a panel discussion hosted by the Brookings Institute on Friday, U.S. Assistant Secretary of the Treasury Economic Policy Ben Harris explained the price cap would likely fall into three distinct categories -- crude oil, high-volume refined products and low-volume refined products. He said further that the price cap has yet to be finalized with all interested parties, but that the measure is designed to facilitate the flow of Russian oil into the market, not to block it. Hence, the price cap must be above the marginal production cost of Russian oil that averages between $30 and $40 per barrel (bbl), although remote basins in Eastern Siberia and Arctic have a much higher price tag due to harsh climate and infrastructure challenges. Should Putin choose to cancel export contracts and shut-in production, the market is heading for a massive supply shock this winter. While addressing the audience at the Eastern Economic Forum, Putin signaled just that, saying, "If any political decisions are made that contradict our contractual obligations, we simply will not comply with them. We will not supply anything at all -- not oil, gas, fuel oil or coal. Nothing." In financial markets, U.S. dollar index, which has an inverse relationship with West Texas Intermediate, nosedived 0.65% to a 1 1/2-week low 108.997 on Friday after European Central Bank on Thursday raised interest rates by 75 basis points -- the largest margin on record. The sharp increase is aimed at lowering inflation across the eurozone which surged 9.1% in August and is projected to top 10% in coming months. Cooling inflation should spur greater demand for oil if the central bank avoids tipping the economy into recession with aggressive rate hikes. According to a best-case scenario, ECB expects economic growth to slow to 0.9% next year, narrowly missing recession before recovering to 1.9% in 2024. In the downside scenario where Russia cuts off all natural gas supplies to Europe, the collective economy is seen contracting by 0.9% in 2024 with wide-ranging implications for energy demand. At settlement, NYMEX October West Texas Intermediate futures rallied $3.25 to $86.79 per bbl, while Brent for November delivery climbed to $92.84, up $3.69. NYMEX October RBOB futures advanced 8.7 cents to $2.4331 per gallon, and NYMEX October ULSD futures gained 3.86 cents to $3.5787 per gallon.

Oil rises 4% on supply threats, still set for weekly drop (Reuters) -Oil prices rose about 4% on Friday, supported by real and threatened cuts to supply, although futures posted a second weekly decline as aggressive interest rate hikes and China's COVID-19 curbs weighed on the demand outlook. Russian President Vladimir Putin has threatened to halt oil and gas exports to Europe if price caps are imposed and a small cut to OPEC+ oil output plans announced this week also supported prices. Brent crude rose $3.69, or 4.1%, to settle at $92.84 a barrel. U.S. West Texas Intermediate (WTI) crude rose $3.25, or 3.9% to settle at $86.79 a barrel. "Over the coming months, the West will have to contend with the risk of losing Russian energy supplies and oil prices soaring," Pressured by worries about a recession and demand, Brent is down sharply from a surge in March close to its all-time high of $147 after Russia invaded Ukraine. The Group of Seven is trying to find ways to limit Russia's lucrative oil export revenue in the wake of the invasion. A price cap that G7 countries want to impose on Russian oil to punish Moscow should be set at a fair market value minus any risk premium resulting from its invasion of Ukraine, a U.S. Treasury Department official told reporters on Friday. Despite Friday's bounce, both crude benchmarks were headed for a weekly drop, with Brent down about 0.2% on the week after at one point hitting its lowest since January. WTI posted a weekly decline of 0.1%. If the U.S. Federal Reserve is able to keep the unemployment rate below 5%, it can be aggressive on bringing down inflation but after that tradeoffs will appear, Fed Governor Christopher Waller said on Friday. The Fed should be aggressive with rate hikes while the economy "can take a punch," he said. A U.S. Department Of Energy official said the White House was not considering new releases from the U.S. Strategic Petroleum Reserve (SPR) at this time beyond the 180 million barrels that President Joe Biden announced months ago. Earlier, Energy Secretary Jennifer Granholm told Reuters the administration was weighing the need for further SPR releases. "The White House is backing off another release from the SPR," U.S. oil rigs fell five to 591 this week, their lowest since mid June, energy services firm Baker Hughes Co said, as the growth in the rig count and production has slowed despite relatively high energy prices. Meanwhile, European Central Bank's unprecedented rate hike of 75 basis points this week and more COVID-19 lockdowns in China have weighed on prices. The city of Chengdu extended a lockdown for most of its more than 21 million residents on Thursday while millions more in other parts of China were told to shun travel during upcoming holidays. Money managers cut their net long U.S. crude futures and options positions by 3,274 contracts to 165,158 in the week to Sept. 6, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

US Tells Israel Nuclear Deal With Iran Is Off The Table For Now - The Israeli news website Zman Yisrael said it has "learned" that a new nuclear deal between the US and Iran is off the table and will not be signed in the "foreseeable future." Zman Yisrael didn’t cite any sources but said that this message had been conveyed to Israeli Prime Minister Yair Lapid in recent conversations with President Biden and other US officials. Other major Israeli publications picked up on the story, as Bloomberg writes, "Top US officials have told Israel’s Prime Minister Yair Lapid that a nuclear deal between Iran and world powers won't be signed in the foreseeable future, The Times of Israel reported."Prospects for a revival of the nuclear deal, known as the JCPOA, seemed unlikely after the US slammed Iran’s latest response in the ongoing negotiations as "not encouraging" and "moving backwards."The EU’s foreign policy chief, Josep Borrel, has been brokering the negotiations, but said on Monday that he thinks the deal is "in danger." The comments marked Borrel’s most pessimistic remarks about the talks they were recently restarted by the EU.Israel is strongly opposed to the deal and has been pressuring the US to scrap negotiations. Lapid said on Tuesday that it was still "too early" to know if the pressure has worked and issued a fresh threat against Iran.Lapid said Israel must do what it takes to prevent a nuclear-armed Iran. But if that were his concern, he should favor a revival of the JCPOA as it puts Iran’s civilian nuclear program under strict limits and makes it subject to the most intrusive inspections in the world.Lapid is expected to play up the fact that he averted a new Iran deal by pressuring the US as part of his election campaign. Israel’s election will be held on November 1, and former Israeli Prime Minister Benjamin Netanyahu is a contender.

The Iran Nuclear Deal Is Falling Apart - In an unexpected move this week, Albania severed diplomatic ties with Iran over a cyberattack and then searched the empty Iranian embassy, where exiting diplomats had burned documents in a rush to vacate within the 24 hours demanded by Tirana. The severing of diplomatic ties was prompted by a cyberattack that took place in late July, exposing the names, addresses, and other personal information of Albanian opposition politicians, and attempting to paralyze public services and create chaos and insecurity. Iran has called the allegations that it was behind the cyberattack “baseless”. The Iran nuclear deal has lost further momentum following an IAEA report that says it is not possible to “provide assurance that Iran’s nuclear program is exclusively peaceful”, noting the past presence of nuclear material at undeclared sites. Israeli media is now suggesting that the Iran nuclear deal is “off the table”, with unconfirmed reports saying that US officials have indicated such to Israeli officials in recent conversations. Again, this cannot be confirmed. We continue to monitor the unstable situation in Iraq, which as we noted in previous briefings, has spread to the oil-producing governorate of Basra. This instability has the potential to take a serious amount of oil production offline. The Islamic State is also taking advantage of that instability to regroup and stage new attacks in northern…

Saudis Using Snitching App Sold By Google To Identify Dissidents - Saudi Arabians are using a mobile app sold by both Apple and Google to snitch on their fellow citizens for dissenting against government authorities. As a result, activists and others are going to prison for more than 30 years in some cases, Business Insider reported on Friday. On August 16, Saudi national Salma el-Shabab, a PhD student at Leeds University, was sentenced to 34 years in prison for tweets “in support of activists and members of the kingdom’s political opposition in exile,” the report said. Though the posts were made while she was in the UK, el-Shabab was nonetheless reported through the “Kollona Amn” app and immediately arrested upon returning home. “Every day we wake up to hear news, somebody has been arrested, or somebody has been taken,” Real, a Saudi women’s-rights activist using an alias, told Insider. Kollona Amn – which roughly translates to “We Are All Security” in Arabic – was launched by the Saudi Interior Ministry in 2017, but the last few years have seen a “dramatic” surge in court cases referencing the app, according to legal-rights activists. The app “encourages everyday citizens to play the role of police and become active participants in their own repression. Putting the state’s eyes everywhere also creates a pervasive sense of uncertainty – there is always a potential informant in the room or following your social media accounts,” said Noura Aljizawi, a researcher at Citizen Lab, which focuses on threats to free speech online. The Orwellian nature of the app is such that users often report on people “defensively,” fearing they could face punishment themselves for merely overhearing speech deemed offensive to the regime. In some cases, the app has also been used for “blackmail” and to “settle scores,” Insider noted. Despite its role in crushing dissent in the repressive Gulf monarchy, the app is still sold by both Google and Apple, neither of which responded to Insider’s requests for comment. Google, moreover, is set to open two new offices in Saudi Arabia sometime this year, and is now working on a controversial data partnership with the state-run oil firm Saudi Aramco. The tech giant insists it will safeguard user data, but some activists say the move will “risk lives” and hand the government additional tools to spy on citizens. In some cases, privacy concerns have led activists to keep two or three phones – one containing government apps and others without them – in an attempt to avoid the Kingdom’s totalitarian surveillance, facilitated by American companies. 

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