US gasoline supplies at an 8 year low, Strategic Petroleum Reserve at a 38½ year low, oil + oil products supplies at another 17½ year low…
US oil prices finished lower for the first week in three this week, as a widening Covid outbreak in China and subsequent lockdowns drove global prices all week... after rising 5.4% to $92.61 a barrel last week following Biden's threat to impose a windfall profit tax on oil companies if they didn't lower prices, the contract price for the benchmark US light sweet crude for December delivery fell nearly 2% in early Asian trade on Monday after Chinese officials reaffirmed their commitment to a tough approach to containing the Coronavirus, thwarting hopes of a recovery in demand for oil, but steadied with support from a weaker dollar and on recovering Chinese crude imports, and then climbed early during the New York session on a Wall Street Journal report that Chinese leaders were considering reopening their economy from the strict COVID-19 restrictions they had imposed, but were just proceeding slowly and had set no timeline, but faded near the close to settle 82 cents lower at $91.79 a barrel, as traders turned cautious ahead of U.S. inflation data that could impact monetary policy and the midterm elections, that could see one or both chambers of Congress shift to Republican control....oil prices slipped further in overseas trading Tuesday morning, as recession concerns and worsening COVID-19 outbreaks in China heightened fears of lower fuel demand. then sold off in afternoon trading after China tightened COVID controls in its largest cities as a response to a swelling number of infections, reaffirming its commitment to demand-sapping lockdowns, and settled $2.88 or 3% lower at $88.91 a barrel as players on crude futures markets tried to limit their exposure ahead of the midterm results and the weekly U.S. inventory data due on Wednesday...WTI oil prices extended the session's losses after the close following an API report of an unexpectedly large crude inventory build, then traded lower on Wednesday morning in Asia on that same inventory news, and on concerns that a rebound in COVID-19 cases in China would hurt fuel demand, with the losses accelerating after the EIA confirmed the large crude inventory build to settle $3.08 or 3.4% lower at $85.83 a barrel, after the head of the International Energy Agency cautioned that oil prices "flirting with $100" were a real risk for the global economy....oil prices fell for a fourth day in Asian trading on Thursday on growing concerns that new Covid curbs in China, the world's biggest crude importer, would impact fuel demand. but then advanced that same morning on NYMEX as the consumer price report indicated US inflation had unexpectedly slowed, and settled 64 cents, or nearly 0.8% higher at $86.47 a barrel, with prices supported by a pullback in the U.S. dollar following inflation data that suggested a less restrictive monetary policy...oil prices then jumped by more than 3% in Asian markets on Friday after health authorities in China shortened quarantine times for close contacts of positive cases and inbound travelers by two days and eliminated a penalty on airlines for bringing in infected passengers, and held onto most of those gains in the New York session to settle $2.49, or 2.9% higher at $88.96 a barrel, on hopes for improved economic activity and demand in the world's top crude importer, but still finished 3.9% lower on the week as “sheer confusion” surrounding Chinese energy demand and “clear as mud" Chinese COVID-19 policy drove wide market fluctuations in the price of oil...
Natural gas prices also finished lower for the first time in three weeks, after a Twitter spoof led to a 9% drop in prices on Friday morning....after rising 12.6% to a three-week high of $6.400 per mmBTU last week after fluctuating weather forecasts ended on a colder note, the contract price of US natural gas for December delivery opened 55 cents or nearly 9% higher on Monday and spiked to a six-week intraday high of $7.221 per mmBTU by 11:15 a.m., as supportive weather forecasts grew more confident, and settled 54.4 cents higher on the day at $6.944 per mmBTU, on a much colder outlook, with lows in the teens to 30s forecast to advance more aggressively into the southern and eastern U.S. than what the data had showed Friday....however, natural gas prices reversed lower in early trading Tuesday, and were down 43.3 cents to $6.511 per mmBTU by 8:40 a.m. on the threat of demand destruction as tropical cyclone Nicole was on track to reach Florida and the Southeast later in the week, and ultimately tumbled 80.6 cents, or 11.6% on the day, to settle at $6.138 per mmBTU, the biggest one-day percentage drop since June 30th, on rumors that the Freeport LNG export plant might not return to service in November, and on forecasts for less cold weather through late November than had been expected...natural gas prices opened another 31 cents lower on Wednesday, as the latest forecasts showed warming toward month-end, and as Nicole barreled closer to the southeast coast, and settled 27.3 cents lower at $5.865 per mmBTU, as traders focused on the Hurricane threat to demand...however, gas prices reversed on Thursday after the EIA reported a smaller-than-expected storage build, and rose 37.4 cents, or 6.4%, to settle at $6.239 per mmBTU on forecasts for heating demand to rise next week when the weather turns much colder,...but natural gas prices almost reversed that again on Friday, falling 36.0 cents, or 5.8%, to settle at $5.879 per mmBTU, after corporate impersonators on Twitter sank natural gas prices 9% in late morning trading by circulating tweets that purported to indicate that restarting the Freeport gas-export terminal, offline since a June fire, would be further delayed...that was enough to leave natural gas prices 8.1% lower on the week, although a moderating forecast as the week progressed likely contributed as well...
The EIA's natural gas storage report for the week ending November 4th indicated that the amount of working natural gas held in underground storage in the US rose by 79 billion cubic feet to 3,580 billion cubic feet by the end of the week, which still left our gas supplies 37 billion cubic feet, or 1.0% below the 3,617 billion cubic feet that were in storage on November 4th of last year, and 76 billion cubic feet, or 2.1% below the five-year average of 3,656 billion cubic feet of natural gas that were in storage as of the 4th of November over the most recent five years....the 79 billion cubic foot injection into US natural gas working storage for the cited week was smaller than the average forecast for an injection of 84 billion cubic feet from a Reuters poll of analysts, but it dwarfed the 15 billion cubic feet that were added to natural gas storage during the corresponding week of 2021, as well as the average injection of 20 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 November 4th indicated that after an increase in our oil production, an increase in our oil imports, a decrease in our oil exports, and an increased withdrawal of oil from our SPR, we had oil left to add to our stored commercial crude supplies for the 6th time time in 10 weeks, and for the 15th time in 29 weeks, despite an increase in the amount of oil used by our refineries....Our imports of crude oil rose by an average of 249,000 barrels per day to average 6,454,000 barrels per day, after rising by an average of 25,000 barrels per day during the prior week, while our exports of crude oil fell by 404,000 barrels per day to 3,521,000 barrels per day, which together meant that the net of our trade in oil worked out to an import average of 2,933,000 barrels of oil per day during the week ending November 4th, 653,000 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 200,000 barrels per day higher 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 averaged a total of 15,033,000 barrels per day during the November 4th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,089,000 barrels of crude per day during the week ending November 4th, an average of 247,000 more barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net average of 50,000 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 November 4th appear to indicate that our total working supply of oil from net imports and from oilfield production was 1,106,000 barrels per day less than what was added to storage plus our oil refineries reported they used during the week. To account for that big inexplicable disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+1,106,000) 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....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 50,000 barrel per day rounded increase in our overall crude oil inventories came as an average of 561,000 barrels per day were being added to our commercially available stocks of crude oil, while 510,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve. That draw on the SPR was the last regular 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 from its inception to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising, at least up until now... The SPR withdrawals under that program have been fluctuating in recent weeks because the administration has been attempting to use the Strategic Petroleum Reserve to manipulate prices on a weekly basis; in addition, a couple weeks ago Biden announced a final 15,000,000 barrel release from the Strategic Petroleum Reserve to run thru December, while simultaneously announcing he'd buy crude to replenish the SPR if oil prices fall to or below the $67-72 a barrel range, effectively putting a floor under oil at that price.....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 259,930,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 28 months, and as a result the 396,219,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since April 27, 1984, or at a new 38 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. The total 180,000,000 barrel drawdown of the current release program, now scheduled to run through December, 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 6,187,000 barrels per day last week, which was 1.6% more than the 6,090,000 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 200,000 barrels per day higher at 12,100,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 200,000 barrels per day higher at 11,700,000 barrels per day, while Alaska’s oil production was unchanged at 446,000 barrels per day. US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was still 7.6% below that of our pre-pandemic production peak, but was 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 92.1% of their capacity while using those 16,089,000 barrels of crude per day during the week ending November 4th, up from their 90.6% utilization rate during the prior week, and above their historical utilization rate range for this time of year.. The 16,089,000 barrels per day of oil that were refined this week were 4.7% more than the 15,366,000 barrels of crude that were being processed daily during week ending November 5th of 2021, and 1.1% more than the 15,919,000 barrels that were being refined during the prepandemic week ending November 8th, 2019, when our refinery utilization was at 87.8%, within the normal range for the beginning of November...
With the increase in the amount of oil being refined this week, the gasoline output from our refineries was also somewhat higher, increasing by 274,000 barrels per day to 9,754,000 barrels per day during the week ending November 4th, after our gasoline output had increased by 43,000 barrels per day during the prior week. This week’s gasoline production was still 3.0% less than the 10,054,000 barrels of gasoline that were being produced daily over the same week of last year, and 4.1% below the gasoline production of 10,173,000 barrels per day during the week ending November 8th, 2019. At the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 87,000 barrels per day to 5,204,000 barrels per day, after our distillates output had increased by 139,000 barrels per day during the prior week. With those increases, our distillates output was 6.9% more than the 4,868,000 barrels of distillates that were being produced daily during the week ending November 5th of 2021, and 3.3% more than the 5,039,000 barrels of distillates that were being produced daily during the week ending November 8th 2019...
Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the 6th time in 7 weeks; and for the 31st time out of the past forty weeks, decreasing by 900,000 barrels to a 95 month low of 205,733,000 barrels during the week ending November 4th, after our gasoline inventories had decreased by 1,257,000 barrels during the prior week. Our gasoline supplies fell again this week because the amount of gasoline supplied to US users rose by 351,000 barrels per day to 9,011,000 barrels per day, while our imports of gasoline rose by 203,000 barrels per day to 489,000 barrels per day, while our exports of gasoline rose by 155,000 barrels per day to 992,000 barrels per day. And after 31 gasoline inventory drawdowns over the past 40 weeks, our gasoline supplies were 3.3% lower than last November 5th's gasoline inventories of 212,703,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of the year…
Meanwhile, even with the increase in our distillates production, our supplies of distillate fuels decreased for the 10th time in 25 weeks and for the 29th time in the past year, falling by 521,000 barrels to 106,263,000 barrels during the week ending November 4th, after our distillates supplies had increased by 427,000 barrels during the prior week. Our distillates supplies fell this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 96,000 barrels per day to 4,161,000 barrels per day, because our exports of distillates jumped by 525,000 barrels per day to 1,446,000 barrels per day, while our imports of distillates rose by 207,000 barrels per day to 328,000 barrels per day.. But after fifty-two mostly larger inventory withdrawals over the past eighty-one weeks, our distillate supplies at the end of the week were were 14.7% below the 124,509,000 barrels of distillates that we had in storage on November 5th of 2021, and about 17% below the five year average of distillates inventories for this time of the year...
Meanwhile, after the increases in our oil field production and our oil imports and the decrease in our oil exports, our commercial supplies of crude oil in storage rose for the 15th time in 29 weeks and for the 21st time in the past year, increasing by 3,925,000 barrels over the week, from 436,830,000 barrels on October 28th to 440,755,000 barrels on November 4th, after our commercial crude supplies had decreased by 3,115,000 barrels over the prior week. After this week's increase, our commercial crude oil inventories remained around 3% below the most recent five-year average of crude oil supplies for this time of year, but were still 38.9% more than the average of our crude oil stocks as of the first weekend of November over the 5 years at the beginning of the past decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. And after our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, and then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, our commercial crude supplies as of this November 5th were 1.3% more than the 435,104,000 barrels of oil we had in commercial storage on November 5th of 2021, while 9.8% less than the 488,706,000 barrels of oil that we had in storage on November 6th of 2020, and 1.8% les than the 449,001,000 barrels of oil we had in commercial storage on November 8th of 2019…
Finally, 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 also continuing to watch the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR. With the modest gasoline and distillates inventory decreases we've already noted for this week, the EIA's data shows that the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 4,386,000 barrels this week, from 1,623,891,000 barrels on October 28th to 1,619,505,000 barrels on November 4th, after our total inventories had decreased by 2,639,000 barrels during the prior week. This week's decrease left our total liquids inventories down by 168,928,000 barrels over the first 44 weeks of this year, and at the lowest level since March 18th, 2005, or at a new 17 1/2 year low...
This Week's Rig Count
The number of drilling rigs running in the US rose for the eighth time in fifteen weeks, and for the 89th time over the past 111 weeks during the week ending during the week ending November 11th, but they're still 1.8% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by 9 rigs to 779 rigs this past week, which was also 223 more rigs than the 556 rigs that were in use as of the November 12th report of 2021, but was 1,150 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business….
The number of rigs drilling for oil increased by 9 to 622 oil rigs during the past week, after the number of rigs targeting oil had increased by 3 during the prior week, and there are now 168 more oil rigs active now than were running a year ago, even as they amount to just 38.7% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 8.9% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 155 natural gas rigs, which was still up by 53 natural gas rigs from the 102 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.7% 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 also reports that two "miscellaneous" rigs continued drilling this week: one of those was a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, while the other was a directional rig drilling to between 5,000 and 10,000 feet into a formation in Lake county California that Baker Hughes doesn't track....While we have seen no details on either of those, in the past we've identified various "miscellaneous" rigs as being exploratory, for carbon dioxide storage, and for utility scale geothermal projects...a year ago, there were were also two such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was up by 3 to 16 rigs this week, with 14 of this week's Gulf rigs drilling for oil in Louisiana's offshore waters, and two rigs drilling for oil offshore from Texas....the Gulf rig count is also up by 1 from the 15 Gulf rigs running a year ago, when 12 of rigs were drilling for oil offshore from Louisiana and two were deployed for oil offshore from Texas...in addition to rigs drilling in the Gulf, we still have an offshore directional rig drilling to between 5,000 and 10,000 feet for natural gas in the Cook Inlet of Alaska, while a year ago, drilling offshore from Alaska had already shut down for the winter...
In addition to rigs running offshore, there are now four water based rigs drilling through inland bodies of water this week; the legacy rigs include a directional rig drilling for oil to between 10,000 and 15,000 feet, inland in St Mary Parish, Louisiana, and a directional rig drilling for oil at a depth greater than 15,000 feet in Terrebonne Parish, Louisiana; the inland waters rigs added this week include a directional rig drilling for oil to between 5,000 and 10,000 feet, inland in Lafourche Parish, Louisiana, and a directional rig drilling for oil in the Haynesville shale at a depth greater than 15,000 feet from a lake in DeSoto Parish, Louisiana...a year ago, there were only two rigs drilling on inland waters...
The count of active horizontal drilling rigs was up by 6 to 711 horizontal rigs this week, which was also 213 more rigs than the 492 horizontal rigs that were in use in the US on November 12th of last year, but just 51.7% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....at the same time, the directional rig count was up by 3 to 46 directional rigs this week, and those were up by 11 from the 35 directional rigs that were operating during the same week a year ago…on the other hand, the vertical rig count was unchanged at 22 vertical rigs this week, which was the same number of vertical rigs that were in use on November 5th 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 November 11th, the second column shows the change in the number of working rigs between last week’s count (November 4th) and this week’s (November 11th) count, the third column shows last week’s November 4th 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 12th of November, 2021...
the six rig increase in Louisiana includes the previously mentioned 3 offshore rig increase in the state's Gulf of Mexico waters, the two inland waters rig additions, one of which was targeting oil in the Haynesville shale, and another rig targeting the Haynesville shale for natural gas in the northwest quadrant of the state...checking the Rigs by State file at Baker Hughes for changes in Texas, where the count was up by four rigs this week; in districts including the Eagle Ford, there was a rig added in Texas Oil District 1, and there was another rig added in Texas Oil District 4, while there was a rig pulled out of Texas Oil District 2; one of those two additions accounts for the addition of a natural gas rig in the Eagle Ford, while the other simply replaced whatever was pulled out of District 2....meanwhile, in districts overlying the Permian basin, there were two rigs pulled out of Texas Oil District 7C, which encompasses the southern Permian Midland, while there were two rigs added in Texas Oil District 8, which is the core Permian Delaware, and there were four rigs added in Texas Oil District 8A, which includes the counties in the northern Permian Midland, netting the four rig increase in the Texas Permian...there was also a rig pulled out of Texas Oil District 6, which was apparently targeting a basin that Baker Hughes doesn't track, since all of our Haynesville shale changes were accounted for in Louisiana...
elsewhere, the oil rig decrease in Oklahoma's Cana Woodford was apparently offset by an addition targeting a basin that Baker Hughes doesn't track in another part of the state, since the Oklahoma count remains unchanged... among natural gas rigs that we have yet to note, there was a gas rig added in Ohio's Utica, while there were two gas rigs pulled out of Pennsylvania's Marcellus shale, and there was another natural gas rig pulled out of a basin that Baker Hughes doesn't track, possibly the one pulled from Texas District 6...
++++++++++++++++++++++++++++++++++++++++++++++
Ascent Resources Utica Holdings, LLC reports third quarter operating results - Third Quarter Highlights:
- Averaged net production of over 2.3 bcfe per day
- Realized record Adjusted EBITDAX(1) of $559 million and Net Cash Provided by Operating Activities of $761 million
- Incurred $195 million of D&C costs and $24 million of land and leasehold costs
- Generated $277 million of Adjusted Free Cash Flow(1)
- Reduced total borrowings under our credit facility by $55 million even with funding the remaining portion of the XTO acquisition
- Achieved our long-term leverage target of less than 2.0x, ending the quarter at 1.7x on an LTM basis(2)
Ascent Resources 3Q – Production Up 18%, Adds Extra Frac Crew | Marcellus Drilling News -Ascent Resources, originally founded as American Energy Partners by gas legend Aubrey McClendon, is a privately-held company that focuses 100% on the Ohio Utica Shale. Ascent is Ohio’s largest natural gas producer (352,000 leased acres) and the 8th largest natural gas producer in the U.S. The company issued its third quarter update yesterday. Ascent averaged production of 2.34 Bcfe/d for the quarter, up significantly from the 1.98 Bcfe/d it averaged in 3Q21 (18% increase). Production was also up from the 1.97 Bcfe/d produced last quarter, 2Q22 (19% increase). Nearly all of Ascent’s production (94%) was natural gas, while the rest was oil and NGLs.
EOG Expands into Utica Shale, Touts Global Natural Gas, Oil Pricing Exposure - EOG Resources Inc. expects the Utica Shale in Appalachia “to be its next large-scale premium resource play” following the acquisition of 395,000 net acres and 135,000 mineral acres for a combined cost of less than $500 million, management said. The Houston-based exploration and production firm unveiled the acquisition alongside its third quarter earnings. The acreage spans a 140-mile trend targeting oil and both wet and dry natural gas in the Utica, management said. “EOG is now operating seven significant resource basins with the addition of the Utica Combo in Ohio,” said CEO Ezra Yacob. “Our growing multi-basin portfolio of high-return plays positions EOG for long-term sustainable value creation.” EOG’s vast Lower 48 footprint includes operations in the Permian, Williston, Powder River, Denver-Julesburg, and Anadarko basins, along with the Eagle Ford and Barnett shale formations, among other areas. Yacob said EOG’s multi-basin approach “provides flexibility to allocate capital to the highest return projects across a diverse and improving inventory of future well locations. Operating in multiple basins also fosters innovation through diverse, high-performing teams creating new ideas at the field level that are then shared across our operations.” The company said the Utica offers a “favorable drilling environment,” and that it plans to develop the play with three-mile laterals to support cost efficiencies. “Combined with strong liquids production rates, EOG expects the Utica Combo to be additive to the overall quality of its premium inventory,” the company said. “Development of this high rate-of-return play is underway with about 20 wells projected for 2023.” EOG’s realized oil and natural gas prices “beat their target benchmarks in the third quarter,” said Helms. “Our marketing teams are doing an excellent job, executing our long-term strategy of diversifying across multiple transportation outlets and sales points. This strategy is also enabling the company to navigate the recent bottlenecks transporting natural gas out of the Permian.” Helms said less than 5% of EOG’s domestic gas output is exposed to the Waha hub in West Texas, where prices briefly flipped negative in late October amid takeaway constraints. “In fact, we anticipate fourth quarter realized prices to remain strong for both natural gas and crude oil sales overall. Our crude oil and natural gas export capacity is serving us well in this regard.”For the fourth quarter of 2022, EOG expects to sell over 250,000 b/d of oil at Brent-linked prices and 140 MMcf/d of natural gas linked to the Asian benchmark Japan-Korea Marker.
Utica Shale Academy obtains Salineville beautification grant - - The Utica Shale Academy has gained grant funding which officials plan to use for beautifying Salineville.Instructor Matt Gates, who teaches horticulture, welding and industrial maintenance, obtained a $660 Best Practice Grant through the Jefferson County Educational Service Center and will put the funding to use for his “Park Waterfall Pond” project in the village. The grant will help purchase a pond form, pump, pump filter, waterfall rock and small rocks to construct a pond near the USA site on East Main Street and students will exhibit the skills they’ve learned with hand tools and heavy equipment to install the project. Officials said plans should get underway soon.Gates said the pupils will operate a backhoe to dig the hole and place the liner for the pond, plus they will learn the importance of work and values while incorporating teamwork into the project. He said these learned skills will help them be successful throughout their life and career.“The project will benefit 25 students,” Gates added. “I have not applied for or received the Best Practice Grant before. I’m really excited to be chosen for the grant, and this gives us an extra opportunity to do a great project with the students while enhancing the community.” JCESC Superintendent Dr. Chuck Kokiko said the grants help support education and engage students in unique learning opportunities.
John Fetterman Embraces Controversial Fracking in Final Bid to Beat Dr. Oz -- Democratic Pennsylvania Lieutenant Governor John Fetterman said multiple times during an appearance Friday on ABC's The View that he supports fracking. Fetterman, who is running against Republican Dr. Mehmet Oz in the neck-and-neck Senate race, has made past statements inconsistent with his current stance on fracking—drilling for oil and natural gas—of which environmentalists and many Pennsylvanians disapprove. He was not in the studio and appeared on the program via video feed. "Any of the issues that I ever had with fracking is really around environmental regulations and once those were passed and they were addressed...you know, I support fracking," Fetterman said in response to a question by Alyssa Farah Griffin. "I absolutely support energy independence and making sure that we can never be held by a country like Russia and making sure that we produce as much American energy as possible, and I fully support fracking." In a follow-up question by Joy Behar about whether he also supports green energy, Fetterman replied, "Without a doubt."
Lawsuit by Washington County homeowner says fracking caused "forever chemicals" to contaminate his drinking water “It doesn't take a lot of PFAS in your body to cause harm. And the harm that PFAS causes is pretty extensive," said a pediatrician and anti-fracking group leader. — A Washington County family is accusing gas drillers of causing so-called “forever chemicals” to get into his drinking water. The chemicals, known as PFAS, have been used in clothing, carpet and food packaging. Bryan Latkanich agreed to allow gas drilling on his property a decade ago, and he received royalties. But shortly after the drilling got underway, he said he started having health problems. “I couldn’t sleep. I had intestinal problems. I was puking,” Latkanich said. He said he was alarmed to see what happened to his young son, Ryan, after taking a bath. “This kid's covered with blisters and sores, so I jumped in the tub and felt the water and it was probably the most slippery substance I've ever felt in my life, so I said well we've got a problem,” Latkanich said. Chevron, the drilling company, gave the Latkanich family water buffalos and did an investigation. The investigation found the groundwater "consistent with pre-existing conditions" and "not the result of oil and gas operations." But Latkanich said he and his son never had health problems before fracking started. “How does my son get burned from just water if there's no real problem?” he said. Latkanich started filling water jugs at a nearby spring for drinking and bathing. Earlier this year, a team from the University of Pittsburgh tested the water at the Latkanich house and found alarming results. According to a lawsuit filed by Latkanich, the water contained high amounts of PFAS chemicals that were 280 times the EPA standard for one form of the chemical called PFOA and 379 times the EPA standard for PFOS. The tests also found Ryan had high levels of other chemicals associated with fracking, including benzene and toluene. Pitt's lead researcher declined to do an interview because of the pending lawsuit.
In Fracking’s 'Ground Zero,' Pennsylvania Residents Feel Left Behind --Ray Kemble, 30-year resident of Dimock, in the northeastern corner of Pennsylvania, still rations his water use. You may know Kemble’s community from the award-winning film Gasland, the documentary that helped thrust the 1,300-person township into the spotlight in 2010, turning it into a“ground zero” in the debate over fracking after images of brown water went viral alongside videos of residents in other parts of the state lighting their tap water on fire. Kemble has spent the last 14 years engaged in community education around fracking, the method of natural gas extraction that involves shooting drilling fluid thousands of feet underground, carving an L-shaped path beneath the earth that risks polluting groundwater and even causing earthquakes. And despite all the attention focused on the issue and his town, Kemble says the well water that feeds his home in Susquehanna County is still not potable. So, he trucks 24 miles roundtrip out to a hydrant outside of town to manually fill up two 500-gallon water tanks that have sat in his basement for years. He uses the water from these tanks, colloquially known as “water buffaloes,” to shower, wash dishes and do laundry; he runs drinking water through an additional filter that sits next to his sink. When the tanks are near half-full, he trucks back out to the hydrant again and refills them — a process that takes a few hours in all — keeping a watchful eye on his consumption.This routine is not convenient, but it’s one he’s adopted out of necessity: More than 10 years ago, natural gas drilling by Cabot Oil & Gas polluted private water wells across his town in one of the most famous cases of environmental contamination in recent history. On June 15, 2020, the culmination of a grand jury investigation by Pennsylvania Attorney General Josh Shapiro, now running for governor as a Democrat, offered the promise of some relief. Shapiro’s officecharged Coterra, then named Cabot, with 15 environmental crimes in northeastern Pennsylvania. “Cabot took shortcuts that broke the law, and damaged our environment — harming our water supply and public health,” Shapiro said at the time. Fracking has been linked to cancers, preterm birth and respiratory, cardiovascular and nervous system damage. In Dimock, residents experienced nausea and skin rashes, difficulty breathing and dizziness; well water there was found to contain methane, ethane, propane and sodium, according to a grand jury presentment. Dr. Zacariah Hildenbrand, professor in the Department of Chemistry & Biochemistry at the University of Texas at El Paso, took around 20 samples of Dimock well water in service of the AG investigation, and confirmed to Capital & Main that some residents’ water remains contaminated today. “We are in the first stages of a long process to hold the well-connected accountable and meet the promise of our Constitution to protect our environment for generations to come,” Shapiro said at the time.That process has taken much longer than residents hope, trying the patience of Kemble and some of his neighbors, who fear that Shapiro and his team of prosecutors are dragging their feet, all while regulators continue to grant the company permits to drill elsewhere and residents still lack easy access to clean water. And, as a contentious gubernatorial election nears, pitting Shapiro against a pro-drilling Republican opponent, Kemble’s faith in an outcome has dwindled. “Here we are, two and a half years later,” Kemble says. “They’ve never even stepped in the courtroom.”
43 New Shale Well Permits Issued for PA-OH-WV Oct 31-Nov 6 | Marcellus Drilling News - New shale permits issued in the Marcellus/Utica came roaring back during the week of Oct. 31 through Nov. 6. Both Pennsylvania and Ohio issued 13 new permits during that week. But West Virginia issued a whopping 17 new permits! The prior week WV issued only a single new permit. Antero Resources, Bradford County, Carroll County, Chesapeake Energy,Columbiana County, Encino Energy, Energy Companies, EQT Corp, Hilcorp Energy, Marshall County, Ohio County, Range Resources Corp, Southwestern Energy, Tyler County, Washington County, Wetzel County
Pennsylvania's Planned Blue Hydrogen Hub Driving Mid-Atlantic Energy Transition -- Zero emissions transportation-centered Nikola Corp. is partnering with Keystate Natural Gas Synthesis LLC to bring what may be Pennsylvania’s first blue hydrogen and chemicals production facility. KeyState’s planned 7,000-acre production facility is to feature commercial-scale carbon capture and storage (CCS) for a blue hydrogen, ammonia and urea production facility. Nikola and KeyState are in the works on a definitive agreement to expand the hydrogen supply for Nikola’s heavy-duty fuel cell electric vehicles (FCEV).“Nikola’s participation in the project will allow us to secure sufficient volumes of hydrogen to underpin and accelerate the adoption of zero-emission trucks by unlocking new customer demand and enabling key investments in downstream hydrogen refueling infrastructure in the Mid-Atlantic region,” said Nikola President Carey Mendes. According to Nikola, KeyState may supply the Phoenix-based clean transportation company with up to 100 metric tons (mt) daily of blue hydrogen. This has the potential to fuel about 2,500 Nikola Tre FCEVs, displacing more than 51 million gallons/year of diesel fuel based on U.S. Department of Energy (DOE) estimates.“This will be key to our supply strategy and will help develop our refueling network at scale. Additionally, the low-carbon, clean hydrogen will allow us to maximize value under the Inflation Reduction Act and future downstream fuel and dispensing incentive programs,” Mendes added. The Inflation Reduction Act, signed into law earlier this year by President Biden, allocated $3 billion through 2028 to fund developments in “advanced technology vehicles” that emit little to no greenhouse gas emissions. In addition, the act earmarked an additional $2 billion through 2031 for the production of hybrid, plug-in electric hybrid, electric vehicles and FCEVs. Nikola and KeyState also noted their intention to support an application as a principal project under DOE’s $8 billion Regional Clean Hydrogen Hubfunding program established in 2021 under the Infrastructure Investment and Jobs Act. What’s more, Nikola and KeyState said they are working to develop a liquefaction solution to support a hydrogen distribution project from KeyState to Nikola’s planned refueling center currently under development. KeyState Natural Gas Synthesis is a joint venture (JV) with Keystate LLC acting as project developer and Frontier Natural Resources Inc. providing natural gas and geological storage. The Oil and Gas Climate Initiative Climate Investments, a CEO-led oil and gas consortium, has also partnered on the JV. KeyState estimates it could produce up to 30 million kilograms/year of zero-emissions transportation fuel, aka KeyState H2Blue. This potentially could avert up to 320,000 mt annually of carbon dioxide and 27 million gallons of diesel fuel, according to the JV. Including the diesel exhaust treatment that KeyState also plans to produce from its urea and ammonia, the project could displace u p to nine billion gallons of diesel, according to KeyState.
Mega Rule Puts All Gas-Gathering Pipelines Under Federal Scrutiny --For decades, gas-gathering pipelines located in rural areas largely escaped the federal scrutiny that was primarily focused on transmission pipelines. But all that has changed with final publication of the so-called Mega Rule, which applies federal pipeline safety regulations to hundreds of thousands of miles of gas-gathering pipelines — previously not subject to federal safety regulation — for the first time. In today’s RBN blog, we look at the history behind the three-part Mega Rule, what it’s designed to do, and the challenges pipeline operators will face to stay in compliance. Discussions about ways to improve natural gas pipeline safety go back many years but gained greater prominence after a deadly explosion in San Bruno, CA, in September 2010. In that incident, a 30-inch-diameter segment of a state-regulated intrastate natural gas transmission pipeline owned and operated by Pacific Gas & Electric (PG&E) ruptured in a residential area of San Bruno, a city just south of San Francisco. The released natural gas ignited, resulting in a fire that destroyed 38 homes and damaged 70 others. Eight people were killed and several dozen injured. According to the National Transportation Safety Board (NTSB), the explosion was caused by deficiencies in quality assurance and quality control during the pipe’s installation as well as an inadequate pipeline-integrity program that failed to detect the defective section of pipeline. California Public Utilities Commission (CPUC) and U.S. Department of Transportation (DOT) exemptions related to pressure testing for existing pipelines, which likely would have detected the installation defects, were also cited as a factor, as was the CPUC’s failure to notice and address the inadequacies of PG&E’s pipeline-integrity program. In response to the San Bruno incident and others, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued an Advance Notice of Proposed Rulemaking (ANOPR) related to pipeline safety in August 2011. An ANOPR is a formal invitation for the public to participate in shaping a proposed rule and sets the notice-and-comment process in motion. The agency then published a Notice of Proposed Rulemaking (NOPR) in April 2016 based on comments received in response to the previous notice. The NOPR is the official document that announces and explains the agency’s plan to address a problem or accomplish a goal. PHMSA then determined that, given the number of comments received and the extent of the proposed changes, the rulemaking — informally referred to as the Mega Rule (presumably because of its all-encompassing nature) — should be split into three parts. In 2019, the agency issued Part 1, which addressed post-San Bruno congressional mandates and safety recommendations of the NTSB related to natural gas transmission. The agency issued Part 2 in 2021 — it significantly expanded the scope of safety and reporting requirements for more than 400,000 miles of gas-gathering lines in rural, Class 1 areas, now categorized as Type C pipelines, as detailed in Figure 1 above. (Class 1 areas have 10 or fewer buildings intended for occupancy near the pipeline, Class 2 areas have 10-45 buildings nearby, Class 3 areas have 46 or more buildings nearby or are within 100 yards of an area occupied by 20 or more people, and Class 4 areas have buildings four or more stories above ground.) Gathering pipelines typically transport gas from the production well to a gas processing plant, a treating facility, and/or a gas transmission pipeline. Volumes shipped on gathering lines, as well as operating pressures, have gone up dramatically since the start of the Shale Revolution. Although some states imposed safety regulations on these systems, there was not any nationally uniform standard. The rule also designated a new category, Type R, for all other onshore gathering line operations and made them subject to PHMSA’s annual reporting requirements. The final section of the rule, Part 3, which PHMSA issued in August, adopted changes to the gas transmission IM process, changes to the management-of-change (MOC) process, enhanced corrosion-control requirements, strengthened pipeline assessment methods and repair requirements, and safety inspections after disasters and extreme-weather events.
Gas producers using Cop27 to rebrand gas as transitional fuel, experts warn -Gas producers and their financial backers see Cop27 as an opportunity for discussions about rebranding natural gas as a transition fuel rather than a fossil fuel, experts have said. The push is coming from the host Egypt and its gas-producing allies amid a global energy crisis compounded by Russia’s invasion of Ukraine. “The opportunity for this Cop is to have the discussion openly that natural gas, and in particular when combined with carbon capture, is a scalable energy solution allowing us to meet the needs of 8 billion people while still meeting our climate goals,” said Craig Golinowski, of Carbon Infrastructure Partners, a Canadian private equity fund backing projects related to fossil fuels as well as carbon capture. Environmental experts caution that burning gas, a fossil fuel, risks increasing warming far beyond the target restriction of 1.5C required to prevent major environmental disruption. Gas is less polluting to the climate than coal, but its production involves harmful methane, and leaks from infrastructure can cause large-scale pollution. In addition, experts such as the Washington DC-based Environmental Working Group warn that carbon capture risks delaying the essential transition away from fossil fuels, calling it a licence for the fossil fuel industry to keep polluting. “Natural gas is really the only proven way to lower emissions at scale. If we don’t have enough energy, we get more emissions,” Golinowski said, suggesting a theory that a shortage of natural gas automatically involves increasing usage of coal rather than renewable energy sources, as many advocate. “I think the binary framing of oil and gas as bad, wind and solar as good is really a disaster,” he added. Golinowski is not planning to attend Cop27 but will be keeping a close eye on the discussions. In particular, he said he would rely on members of the German natural gas industry and their lobbyists to advocate “for a larger global gas market”, as Germany represents the centre of a European energy crisis sparked by the Russian invasion of Ukraine in February. In the year since Cop26 in Glasgow, which included the launch of the Beyond Oil and Gas Alliance, intended to “deliver a managed and just transition away from oil and gas production”, Russia’s invasion of Ukraine and Moscow’s decision to halt natural gas supplies to Europe have prompted a marked shift in global attitudes towards natural gas, laying the ground for discussions at Cop27 between world leaders and gas producers about whether gas should be viewed as a transition fuel and not a fossil fuel. “I think what we see right now, because of Russia, is that we are still going to need gas for some or whole part of this transition – no one’s naive enough to think you can turn off all gas usage tomorrow and we’re going to be fine,” said Nazmeera Moola, the chief sustainability officer at the South African investment firm Ninety One. “Then you add in the high price of gas at the moment, and it certainly starts to look attractive.” Moola said the hunt to replace Russia’s vast gas supply to Europe was likely to influence discussions about exploring new gas reserves across Africa, despite calls to resist this in favour of meeting emissions targets, calling this shift “a new view” on exploiting African gas reserves. Asked whether this would influence discussions between the major gas producers, policymakers and diplomats gathered at Cop27, she said: “Will that conversation happen inside meetings? Sure.”
White House wants lame-duck permitting bill - Among the items on President Joe Biden’s lame-duck wish list: a permitting reform effort backed by West Virginia Democratic Sen. Joe Manchin. Biden hopes that Congress will advance Manchin’s effort to streamline permitting as part of a pending defense authorization package during the upcoming lame-duck session, White House press secretary Karine Jean-Pierre told reporters Thursday. The White House and Senate Majority Leader Chuck Schumer (D-N.Y.) have supported Manchin’s effort after Manchin agreed to vote for the Inflation Reduction Act — a massive climate, energy and health care bill, in exchange for Democratic leaders’ pledge to pursue permitting reform. The president is expected to tout the Inflation Reduction Act and other climate policies at the COP 27 climate conference in Egypt and during other international meetings. “The president heads to COP 27 with historic momentum on climate, thanks to the passage of the Inflation Reduction Act and other significant steps that put us on an enduring path towards meeting our ambitions and clean energy goals,” White House national security adviser Jake Sullivan told reporters Thursday. Biden will “speak to his personal commitment to addressing the climate crisis,” and highlight U.S. climate policies,” Sullivan said. The president will also “underscore the need to go further, faster to help the most vulnerable communities build their resilience, without losing sight of the need for the world — and particularly for the major economies — to cut emissions drastically in this decisive decade.” The president will be in Cambodia on Sunday and Indonesia on Monday for meetings with world leaders. He’s slated to attend the annual G-20 summit in Indonesia next week, where energy will be on his agenda.
Manchin FERC shake-up may stymie Biden’s clean energy plans - - The prospect of Federal Energy Regulatory Commission Chair Richard Glick losing his job by year’s end could derail policies critical for President Joe Biden’s clean energy and climate agenda.Senate Energy and Natural Resources Chair Joe Manchin is “not comfortable” holding a hearing for Glick, Manchin spokesperson Sam Runyon said Thursday, effectively killing the chairman’s chances of staying on the regulatory panel (Greenwire, Nov. 10).Glick, a Democrat who joined FERC in 2017, had been nominated by Biden to lead the agency for another four years, pending approval by the Senate. His departure would mean that Democrats lose their majority on the five-person commission.Glick has advanced a slew of regulatory changes seen as key for adding more solar, wind and batteries to the nation’s power grid. But his efforts to establish a more climate-focused process for reviewing natural gas pipeline projects had been criticized by Republicans and Manchin, a moderate Democrat from natural gas-rich West Virginia.“It’s disappointing,” said Gregory Wetstone, CEO of the American Council on Renewable Energy. “Certainly our hope is that Chairman Manchin will reconsider.”While Glick’s term at FERC expired in June, he is allowed by law to stay at the helm of the commission through the end of this year. In an interview, he said he had spoken to Manchin’s team Wednesday evening and was told “nothing different” from what has been reported already.“We’ll see what happens,” Glick said. “I worry about the things I can control. The things I can’t control, I don’t worry about.”FERC’s authority extends across much of the energy sector. The commission oversees the reliable operation of the bulk power system, permits large natural gas pipelines, and monitors and investigates energy markets, among other roles. Glick’s departure would leave FERC with two Democratic and two Republican commissioners. Although many of FERC’s decisions have bipartisan support, the dynamic could make it harder for the commissioners to advance certain policies and orders affecting transmission, clean energy, pipelines and energy markets.
Dominion Is Said to Mull Sale of Stake in Cove Point LNG Plant
- Facility on Chesapeake Bay includes terminal, storage
- Dominion is initiating a ‘top-to-bottom’ business review
Dominion Energy Inc., a utility weighing asset sales after its shares slumped this year, is exploring the divestment of its multi-billion-dollar stake in the Cove Point LNG facility on the Chesapeake Bay, according to people with knowledge of the matter. The Richmond, Virginia-based company is working with advisers to solicit interest from potential suitors including infrastructure funds, said the people, who requested anonymity as the effort isn’t public. Talks are at an early stage, and Dominion could still decide to hold onto the 50% stake, the people said. A representative for Dominion declined to comment.
US NatGas Futures Jump As Frigid Weather Set To Swoop Across Country - US natural gas futures bottomed on Oct. 24 after a 50% haircut on warmer weather. In the last two weeks, prices have staged a rally on the prospect of cold weather and tighter supplies. Last Monday, we penned a note titled "US NatGas Spikes As Temperatures Are About To Dive Nationwide." Now, with colder weather sweeping across the US, NatGas prices are up a staggering 49% in eleven sessions. On Monday morning alone, NatGas futures are up 10%. Bloomberg said the move higher is weather-related, "as a winter storm hits the Pacific Northwest and frigid weather is expected across most of the country." National Oceanic and Atmospheric Administration released a 6-10 day temperature outlook for the lower 48 states showing that most of the country will experience below-average temperatures. An 8-14 day temperature outlook by the weather agency also points to continued below-average temperatures for much of the US. After an unseasonably warm end of October and the first week of November, the warm spell is forecasted to turn today. Average temperatures are expected around 58 degrees Fahrenheit and will revert to a downward sloping 30-year mean of the mid-40s by mid-month. Colder weather indicates heating demand will rise, and so will the demand for NatGas. The latest rally in NatGas outlines how sensitive traders are to potential cold snaps, as below-normal stockpiles and surging exports could strain domestic stockpiles in a deep freeze in the months ahead.
Forecasted Freeze Sends Natural Gas Futures, Cash Prices Soaring - - Natural gas futures flew higher on Monday, bolstered by forecasts for substantially colder weather and stronger heating demand. The December Nymex contract gained 54.4 cents day/day to settle at $6.944/MMBtu, adding to a 42.5 cent rally in Friday’s session. January climbed 49.0 cents to $7.244. While volatile in recent trading, the prompt month hit a three-week high on Monday. NGI’s Spot Gas National Avg. followed suit, spiking $1.570 to $4.180 to start the week. Weather data trended much chillier over the weekend, including a “hefty” addition of 23 heating degree days from the European model, according to NatGasWeather. The American model, too, added “a significant amount of demand” for this Saturday through Nov. 18, with lows in the teens to 30s “advancing more aggressively into the southern and eastern U.S. than what the data showed Friday,” the firm said. “The weather data was also a little colder with the pattern Nov. 19-23, although still with cold air fading toward a more seasonal demand pattern,” NatGasWeather added. EBW Analytics Group’s Eli Rubin, senior analyst, said Monday this fall “featured the loosest recorded autumn natural gas supply/demand balance,” and enabled utilities to inject an average of 101 Bcf per week for the past eight weeks. This eliminated 219 Bcf from storage deficits versus the five-year average. Futures prices were down more than 40% at one point during the shoulder season, he noted. The U.S. Energy Information Administration (EIA) reported an injection of 107 Bcf natural gas into storage for the week ended Oct. 28. The result more than doubled the prior five-year average of 45 Bcf and marked the sixth time in seven weeks that EIA printed a triple-digit increase. Analysts are looking for another stout increase with this Thursday’s inventory report. Early estimates for the week ended Nov. 4 submitted to Reuters ranged from injections of 65 Bcf to 105 Bcf, with an average increase of 81 Bcf. That compares with a five-year average build of 20 Bcf. One more big storage increase could follow, given a mild weather start to the current week. What’s more, the 14th named storm of the 2022 Atlantic hurricane season was swirling southeast of the United States on Monday. Subtropical Storm Nicole, as it was dubbed by the National Hurricane Center (NHC), was forecast to gradually strengthen and organize into a full tropical storm before powering over the northern Bahamas and toward the eastern coast of Florida around midweek. NHC meteorologists said Monday the storm could be “at or near” hurricane strength when it batters the east coast of Florida Wednesday into Thursday.
U.S. natgas futures drop 12% on forecasts for less cold weather (Reuters) - U.S. natural gas futures dropped about 12% on Tuesday in what has already been an extremely volatile couple of weeks on forecasts for less cold weather and lower heating demand through late November than previously expected. Analysts said the market was also focused on unproven rumors that the Freeport liquefied natural gas (LNG) export plant in Texas may not return in November. "There was some ambiguous information and rhetoric in the market that the Freeport LNG export terminal could postpone its restart until late November or even early December," analysts at energy consulting firm Gelber & Associates said in a note. Freeport LNG, however, has said repeatedly that it still expects the 2.1 billion-cubic-feet-per-day (bcfd) export plant to return to at least partial service in November following an unexpected shutdown on June 8 caused by a pipeline explosion. Freeport LNG submitted a draft Root Cause Failure Analysis to the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) on Nov. 1, according to sources familiar with the filing. The next step is for Freeport LNG to submit a request to resume service. Several vessels were waiting to pick up LNG from Freeport, according to Refinitiv data. Prism Brilliance, Prism Diversity and Prism Courage were offshore from the plant, while LNG Rosenrot and Prism Agility were expected to arrive in late November. Futures were also under pressure due to what will likely be federal reports showing much bigger-than-usual gas storage builds this week and next, and expectations that Subtropical Storm Nicole will strengthen into a hurricane before hitting the East Coast of Florida late Wednesday or early Thursday before moving onto Georgia and the Carolinas on Friday. Those big inventory builds could boost gas stockpiles to near- or even above-normal levels for the first time since January 2022. As for Nicole, traders said storms usually cause power outages that reduce demand for gas-fired generation. Front-month gas futures fell 80.6 cents, or 11.6%, to settle at $6.138 per million British thermal units (mmBtu). That was the biggest one-day percentage drop since June 30 when it fell by about 16%. On Monday, the contract gained about 9% to settle at its highest since Oct. 6. The premium of futures for January over December NGZ22-F23, meanwhile, was on track to close at a record high of 44 cents per mmBtu as some in the market started to give up on the prospect of extreme cold in December. Overall, gas futures are up about 67% so far this year as much higher global gas prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's invasion of Ukraine. Gas was trading at $34 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $27 at the Japan Korea Marker (JKM) in Asia.
Natural Gas Futures in Freefall Ahead of Hurricane Threat - Natural gas futures fell for a second consecutive session Wednesday as a powerful storm approached the Southeast, threatening power outages, while traders braced for another plump storage increase and the delayed return of a key export facility. Coming off an 80.6-cent slump Tuesday, the December Nymex gas futures contract shed 27.3 cents day/day to settle at $5.865/MMBtu on Wednesday. January fell 29.9 cents to $6.225. NGI’s Spot Gas National Avg. lost 14.5 cents to $3.785. Looming cold fronts and flat production this week around 99 Bcf/d favored bulls, NatGasWeather noted, with forecasts Wednesday showing a substantial shift toward wintry weather beginning this weekend and extending through the middle of November. However, Tropical Storm Nicole was racing toward Florida during trading Wednesday, and it packed powerful enough winds to galvanize emergency declarations and forecasts for lost power and substantially diminished near-term gas demand through the current trading week. The National Hurricane Center (NHC) expected Nicole would strengthen into a hurricane before reaching Florida’s east coast Wednesday night. “Nicole’s center is then expected to move across central and northern Florida into southern Georgia Thursday and Thursday night, and then across the Carolinas Friday and Friday night,” the NHC said. Meanwhile, the return to service of the Freeport LNG export facility in Texas, slated for this month, remained in question Wednesday. After a protracted outage dating to a June fire, the Texas liquefied natural gas export facility had yet to confirm the status of needed regulatory approvals to reopen. When it does return, Freeport could pull about 2.0 Bcf/d of natural gas from domestic circulation to meet export demand. But if that does not happen this month, U.S. demand would prove lighter than expected and supplies could further swell in the near term, adding to price pressure, Goldman Sachs analyst Samantha Dart said. She does not expect Freeport to relaunch until December and, as such, raised expectations for storage to stand at 1,655 Bcf at the end of the coming winter, up from 1,530 Bcf. Analysts at The Schork Report said Numex futures “crashed as doubts of Freeport LNG’s return mount.”
U.S. natgas jumps 6% on smaller-than-expected storage build, cold weather (Reuters) - U.S. natural gas futures jumps about 6% on Thursday on a smaller-than-expected storage build and forecasts for heating demand to rise next week when the weather turns much colder. Traders also noted prices were up on a possible increase in liquefied natural gas (LNG) exports if the Freeport LNG plant in Texas starts to return to service. Freeport, however, has not yet submitted a request to resume service to federal safety regulators, sources familiar with the filings told Reuters on Thursday. U.S. Energy Information Administration (EIA) said utilities added 79 billion cubic feet (bcf) of gas to storage during the week ended Nov. 4. That was smaller than the 84-bcf build analysts forecast in a Reuters poll and compares with an increase of 15 bcf in the same week last year and a five-year (2017-2021) average increase of 20 bcf. Analysts said last week's build was bigger than normal because mild weather kept demand for the fuel for heating low. They also noted that big builds last week and expected this week could boost stockpiles to above-normal levels for the first time since January. On Freeport, analysts said the market remained extremely focused on rumors the plant may not return in November since it has not yet filed its return-to-service plan with federal regulators. Demand for gas will rise once the Freeport plant returns. A couple of vessels were waiting to pick up LNG from Freeport, according to Refinitiv data. But one vessel, Prism Brilliance, which had been waiting outside the Freeport plant, is now headed toward Corpus Christi where Cheniere Energy Inc has an LNG export plant, according to Refinitiv data. Traders noted power outages from Hurricane Nicole in Florida, where about 308,000 homes and businesses were without power Thursday morning, reducing the amount of gas electric generators have to burn. That reduction in gas demand helped limit the futures price increase. Front-month gas futures rose 37.4 cents, or 6.4%, to settle at $6.239 per million British thermal units (mmBtu). Rapid price changes over the past couple of weeks - futures gained or lost more than 5% on eight of the past 10 days - boosted the contract's 30-day implied volatility index to its highest level since hitting a record in October 2021 for a second day in a row. The market uses implied volatility to estimate likely price changes in the future. Gas futures are up about 67% so far this year as much higher global gas prices feed demand for U.S. exports due to supply disruptions and sanctions linked to Russia's invasion of Ukraine. Gas was trading at $33 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $28 at the Japan Korea Marker (JKM) in Asia. Data provider Refinitiv said that average gas output in the U.S. Lower 48 states has fallen to 98.6 bcfd so far in November, down from a record 99.4 bcfd in October. With the coming of much colder weather, Refinitiv projected average U.S. gas demand, including exports, would jump from 98.3 bcfd this week to 120.4 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Wednesday.
Twitter Spoof Sank Natural Gas Prices -The explosion of corporate impersonators on Twitter sank natural gas prices Friday after tweets circulated that purported to show that restarting a Texas gas-export terminal, shutdown since a June fire, would be further delayed."Freeport LNG has not made an any public statements today regarding the restart of our liquefaction facility," the company said in a statement after markets closed.By then the damage was done. Natural-gas futures sank roughly 9% in late morning trading when the fake update began circulating. Traders penciled out the effect of fewer exports and greater domestic supplies. Prices never really recovered and ended the day down.
Protesters Rally at Gas Summit in Louisiana, Where Industry Eyes a Fossil Fuel Buildout - Black and Indigenous leaders on boats confronted energy executives through the windows of a waterfront casino in Louisiana, where the hydrocarbon sector hopes to capitalize on war in Ukraine.The U.S. today sells more compressed methane gas on international markets than any other country, though the export sector here is barely 6 years old. Fossil fuel industry leaders intend to continue on this soaring trajectory with plans to build a slate of new gas export terminals on the Gulf Coast. More than half of them will be in Louisiana, which ranks second for poverty and fifth for cancer rates among U.S. states. In Louisiana, energy executives and public officials gathered last week at the Golden Nugget Hotel and Casino for a three-day annual conference on the production and export of Liquefied Natural Gas (LNG). On a waterway behind the casino, a convoy of boats motored past its wide windows with a different vision. From the decks, the activists from across the Gulf coast demanded loudly that the executives leave and abandon their plans to build out the waterfront. “We got community folks together and we said enough is enough, we can’t take anymore,” said Roishetta Ozane, a local organizer with Healthy Gulf, who led the protest effort. “They’re not helping us at all. They’re only polluting our air and water.” The region is oversaturated with toxins, she said. Last month part of a Sasol chemical plant exploded nearby. A Westlake Chemical plant exploded several months before that, and in the year before. They contribute to the chemical fog that already fumes from smokestacks around Lake Charles, which is 48 percent Black. Three export terminals currently operate on the Louisiana coast, including the largest in the nation about 50 miles from Lake Charles. The Calcasieu Pass terminal, some 30 miles from Lake Charles, started operations this year and is still building more. Another seven are proposed, according to the Global Energy Monitor, plus three offshore terminals and two more onshore just across the border in Texas, along a corridor that is already crowded with heavy industry. “The air is almost unbreathable. It’s smelling like rotting eggs. And when it’s not it smells like chlorine,” Ozane said. “If these industries are so important, they need to go find somewhere where there are no people living.”However, industrial growth generally commands popular support in Louisiana, where every county but one supported Republican candidates in Tuesday’s election. Most public officials cheer on the development of an LNG export sector on the coast.
ConocoPhillips Building Global LNG Portfolio as Long-Term Resource in Energy Transition -Management for Houston-based ConocoPhillips during a quarterly earnings call highlighted the independent’s progress as it expanded its LNG activities while achieving record production. CEO Ryan Lance told investors “the world is going to need investments in medium- and long-term production in addition to U.S. shale plays.” ConocoPhillips’ portfolio is “well positioned to meet these long-term supply challenges.”Lance also noted that “a successful energy transition” for the world would require an “all-of-the-above approach,” complete with U.S. unconventional production and liquefied natural gas. “When you look at the transactions that we’ve done over the last couple of years, we have a growing resource position in the U.S., so creating more demand just makes a lot of sense,” Lance said, speaking to the company’s LNG strategy. “…Combined with our views of the energy transition in the view that LNG is going to be a necessary fuel…we think this is something the globe is going to be needing as we go through the energy transition.”Last month, ConocoPhillips became the third company to sign on to a two-train, 16 million metric ton/year (mmty) capacity LNG project at Qatar’s North Field South. ConocoPhillips earlier in the year also signed on to participate in Qatar’s North Field East. In addition, the exploration and production (E&P) independent in August agreed to terminal services for a 15-year period at the prospective Brunsbuettel LNG import terminal in Germany. Domestically, Lance highlighted progress on the Port Arthur LNG partnership with San Diego-based Sempra Infrastructure. Sempra last week said it is targeting a final investment decision for Port Arthur in early 2023. Lance said with a “plentiful” gas resource in the United States, the Port Arthur project is an opportunity for “…creating some of this more demand to exploit the resource in the U.S. is a good thing…We want to be involved in the liquefaction of that resource and the shipping and then the regasification as we move it to higher-value markets around the world.”The project with Sempra gives ConocoPhillips “some optionality also on their…west coast of Mexico opportunity that they have as well,” Lance said. Sempra is working on a potential LNG terminal in Salina Cruz, Oaxaca. The Mexico project “is longer-dated, and that’s an option we have to participate in expansion of that facility that is currently operating there today,” Lance said. “I think they’re converting the regas portion of that into a small liquefaction plant and looking at some expansion opportunities;” however, any participation would be “down the road, if, and when they decide to build another train at that facility.”
Part 3 - Outlook For Permian Gross Gas Production Vs. Processing Capacity - The crude-oil-driven Permian has been a hotbed of midstream development in recent years and that’s unlikely to change anytime soon. RBN estimates Permian gross gas production surpassed 22 Bcf/d last month and projects that, if unconstrained by infrastructure, it would grow by another 4 Bcf/d or so over the next couple of years. One determinant of that rate of growth is adequate capacity to process gross gas volumes. In today’s RBN blog, we conclude this series with an assessment of the timing of processing capacity additions in the basin vs. RBN’s Mid-case gross gas production forecast. We’d be remiss if we didn’t mention the latest source of turmoil in the Permian gas market: pipeline maintenance that sent spot gas prices at Waha Hub, the region’s benchmark trading point, to negative territory last week for the first time in two years — an indication of just how vulnerable and sensitive the basin is to midstream constraints. We discussed the market event in depth in this week’s NATGAS Permian report, but to briefly summarize, two major takeaway pipelines — Kinder Morgan’s Gulf Coast Express (GCX) Pipeline and Kinder’s El Paso Natural Gas (EPNG) system — conducted maintenance last week, and the partially overlapping events took as much as 1.3 Bcf/d of takeaway capacity offline at one point. With power demand and exports to Mexico in a seasonal slump, the capacity cuts hit Waha hard — absolute prices settled below zero for the flow days October 26-27. Intraday prices traded just below negative $2/MMBtu at times and averaged as low as minus $1.165/MMBtu for gas day October 27. The price disruption had various knock-on effects, including encouraging more ethane recovery and raising concerns of increased gas flaring. The maintenance events wrapped up by October 28, and cash for the weekend package rebounded to more than $3/MMBtu, according to the Natural Gas Intelligence (NGI) Daily Gas Price Index. However, the outages provided a good preview of just how little spare pipeline capacity is available on the intrastate pipelines leaving the basin and underscored the likelihood of additional negative price events occurring before more pipeline capacity comes online next fall, particularly if multiple maintenance and market events converge as they did last week. Now let’s get back to the potential for gas processing capacity constraints — yet another major source of potential volatility in the basin. In Part 1 of this series, we looked at the rapid rise of Permian crude — and associated gross gas — production in the past couple of years, as well as the frenetic build-out of processing capacity that has facilitated it. Permian crude oil production climbed ~30% since the lows of 2020 to about 5.2 MMb/d this summer. With that came substantial gross gas volumes, which surged by over 40% to 21.3 Bcf/d on average this summer, up from the 2020 low of just under 15 Bcf/d. This could not have occurred without the addition of substantial gas processing capacity — the plants required to remove natural gas liquids and other impurities from the product stream (see our Good to Be a Gas Processor series). Processing capacity in the basin has more than doubled since the start of 2018 and we estimate total Permian processing will reach 24.5 Bcf/d by the end of this year.
Equipment that's designed to cut methane emission is failing – WFMJ -- Sharon Wilson pulled up to the BP site in Texas last June, production tanks towered above the windblown grass roughly 60 miles southeast of San Antonio. Cows and pumpjacks lined the roadsides. All looked placid. But when Wilson flipped on a high-tech video camera, a disquieting image became visible: A long black plume poured from a flare pipe. Her camera, designed to detect hydrocarbons, had revealed what appeared to be a stream of methane — a potent climate-warming gas, gushing from the very equipment that is supposed to prevent such emissions. “It's very discouraging and depressing, but mostly it's infuriating,” said Wilson, a field advocate for Earthworks, which promotes alternatives to fossil fuels. “Our government is not taking the action that needs to be taken.” Methane is the main ingredient in natural gas. Measured over a 20-year period, scientists say, it packs about 80 times the climate-warming power of carbon dioxide. And according to the International Energy Agency, methane is to blame for roughly 30% of the global warming that has occurred since the Industrial Revolution. Aerial surveys have documented huge amounts of methane wafting from oil and gas fields in the United States and beyond. It's a problem the Biden administration has sought to attack in its recently enacted Inflation Reduction Act. One of the law's provisions threatens fines of up to $1,500 per ton of methane released, to be imposed against the worst polluters. Perhaps most crucially, the law provides $1.55 billion in funding for companies to upgrade equipment to more effectively contain emissions — equipment that could, in theory, help the operators avoid fines. Yet some of the best equipment for reducing emissions is already installed on oil and gas infrastructure, including at the BP site that Wilson filmed. And critics say such equipment is failing to capture much of the methane and casting doubt on whether the Biden plan would go far to correct the problem. What Wilson saw at the BP site was an unlit flare. It's among the types of equipment the EPA recommends companies consider installing to reduce methane emissions. Resembling a tall pipe, a flare is supposed to burn off methane before it can escape. Flames typically burn from the top of the flares. But in this case, the flame had gone out, so methane was pouring from the pipe. The flare’s mechanisms are supposed to alert the operator if it stopped working. That didn't happen in this case, according to a report by the Texas Commission on Environmental Quality. “Energy companies have made pledges, but I’ve got to tell you, I haven’t seen anything from a practical standpoint that makes me believe there’s any reality to reductions on the ground,” said Tim Doty, an environmental scientist and former air quality inspector for the Texas Commission on Environmental Quality. “Maybe they’re making progress, but are they making enough progress to slow down climate change? I don’t think so.” The spewing methane that Wilson detected was among more than a dozen such scenes she documented over three days in the Eagle Ford Shale, an oil and gas field in south Texas. The methane poured from unlit or broken flares, storage tanks, vapor recovery units and compressors. She found it escaping at sites owned by companies including BP and Marathon Oil, both of which have pledged to reduce methane emissions. “They have the technology, but for some reason, whether they don’t maintain it, whether the technology doesn’t work, I don’t know, but I find it not working,” Wilson said.
Marathon Pete Reports Operational Snag at Galveston Bay Refinery - Marathon Petroleum Corp. on Tuesday reported an operational disruption at the Sulfur Recovery Unit of its Galveston Bay refining complex near Houston."Foam carryover from amine stripper tower caused unit upset," the refinery said in a statement to the Texas Commission on Environmental Quality. The company added that this led to excessive gas emissions of about 2,000 pounds of sulfur dioxide late Monday in an incident that lasted about three hours."Unit resolved the issue and returned to normal operations," the refinery said. Marathon's 565,000 barrel-a-day Galveston Bay complex is the second-largest U.S. refinery after Saudi Aramco's 600,000 barrel-a-day Motiva refinery in Port Arthur, Texas.
Marathon Oil Adds More Eagle Ford Assets With $3B Ensign Buy - Marathon Oil has entered into a purchase agreement to acquire the Eagle Ford assets of Ensign Natural Resources for total cash consideration of $3 billion. The transaction is subject to customary terms and conditions, including closing adjustments, and the transaction is expected to close by year-end 2022 with an effective date of October 1, 2022. Marathon Oil said that the transaction added immediate double-digit accretion to key financial metrics and shareholder distributions consistent with the return of capital framework and anticipated the raising base dividend an additional 11 percent post-close. This adds significant high-return, high-working interest inventory that immediately competes for capital and is accretive to Marathon Oil's inventory life. Compelling industrial logic that significantly increases Eagle Ford scale by nearly doubling Marathon Oil's Basin position with high working interest acreage adjacent to the company's legacy position. Executing transactions while maintaining low leverage and investment grade balance sheet. "This acquisition in the core of the Eagle Ford satisfies every element of our exacting acquisition criteria, uniquely striking the right balance between immediate cash flow accretion and future development opportunity.” “The transaction is immediately accretive to our key financial metrics, it will drive higher distributions to our shareholders consistent with our operating cash flow driven Return of Capital Framework, it's accretive to our inventory life with high rate-of-return locations that immediately compete for capital, and it offers compelling industrial logic by nearly doubling our position in a Basin where we have a tremendous track record of execution excellence.” “Importantly, we expect to execute this transaction while maintaining our investment grade balance sheet and while still delivering on our aggressive return of capital objectives in 2022 and beyond,” chairman, president, and CEO Lee Tillman said. The transaction significantly expands Marathon Oil's Eagle Ford position by adding 130,000 net acres with 97 percent working interest located primarily in the prolific condensate and wet gas phase windows of the play. The company estimates it is acquiring more than 600 undrilled locations, representing an inventory life greater than 15 years, with inventory that immediately competes for capital in the Marathon Oil portfolio. The acreage is adjacent to Marathon Oil's existing Eagle Ford position, enabling the company to leverage further its knowledge, experience, and operating strengths in the Basin, while materially increasing its Basin-scale to 290,000 net acres and contributing to optimized supply chain accessibility and cost control in a tight service market. The acquisition also includes 700 existing wells, most of which were completed before 2015 with early-generation completion designs. These existing locations offer upside redevelopment potential, none of which was considered in the company's valuation of the asset or inventory count. The 130,000 net acres Marathon Oil is acquiring from Ensign Natural Resources span Live Oak, Bee, Karnes, and Dewitt Counties across the condensate, wet gas, and dry gas phase windows of the Eagle Ford. The estimated fourth quarter 2022 oil equivalent production is 67,000 net boed. Marathon Oil believes it can hold fourth quarter production flat with approximately 1 rig and 35 to 40 wells to sales per year.
Texas Votes for the Status Quo, Delivering Big Wins for Oil and Gas --As most pollsters had predicted, Texas Republicans routed their Democratic rivals in all statewide races in Tuesday’s midterm elections. Incumbent Gov. Greg Abbott defeated his Democratic rival, Beto O’Rourke, by double digits. Republicans won by similarly wide margins in races for lieutenant governor, attorney general, land commissioner, Railroad Commission chairman and comptroller. Republicans are also likely to retain control of both chambers of the Legislature, which they have held since 2003.All of these positions will have direct and indirect influence on how the state will manage — or decline to manage — green energy transition, oil and gas industry oversight and regulation, climate change preparedness and environmental justice concerns.Four more years of Greg Abbott will likely continue what climate scientists and environmental advocates say is a failure to take aggressive action to protect Texas from the worst consequences of climate change. Abbott, who received more than $12 million in campaign contributions from oil and gas industry-related individuals and groups before the 2022 primary, refuses to even use the words “climate change.”As president of the Texas Senate, Lt. Gov. Dan Patrick, who was reelected Tuesday to a third term, has used his position to push legislation that protects the oil and gas industry, including 2021’s Senate Bill 13, which forces state pension funds to pull their investments from financial firms such as BlackRock that have made commitments to divest from fossil fuels — boycotting the boycotters. (A Texas Monthly investigation found that Patrick still had significant personal investments with BlackRock a year after the passage of SB 13.)Comptroller Glenn Hegar, who won reelection Tuesday — and whose office is tasked with enforcing Senate Bill 13 — has also been an outspoken antagonist of federal efforts to enforce the Clean Air Act. In September, Hegar responded to an EPA proposal designating parts of the Permian Basin — a major oil and gas producing region — to be out of compliance with national air quality standards set under the Clean Air Act by accusing the agency of “federal overreach”and prioritizing “Green New Deal politics over the jobs and the Texas economy.” For Hegar, the Clean Air Act’s standards amount to “job-killing mandates.” Wayne Christian won reelection to the Texas Railroad Commission, the misleadingly named three-person panel charged with regulating the oil and gas industry. (Christian hauled in more than $800,000 in campaign contributions from the industry he oversees before the 2022 primary.) First elected to the Railroad Commission in 2016, and chairman since 2019, Christian has been an outspoken defender of industry interests, advancing permits for drilling and emergency flaring while overlooking countless violations.
New Mexico Oil and Gas Rules Await Cash After Democratic Sweep - Despite a Democratic sweep of New Mexico state offices and continuing blue majority in the upcoming Legislature, the future of oil and gas regulation remains hazy.Michelle Lujan Grisham returns to the Governor’s Mansion for another four years, after a first term spent initiating some of the nation’s most progressive clean energy incentives and most stringent oil and gas regulations. Adding to the tide, challenger Gabe Vasquez appears to have edged out Republican Yvette Herrell, an oil industry favorite, in a district covering a large part of the state’s section of the Permian Basin, thereby completing a Democratic trifecta for the state’s three U.S. Representative seats.Unlike most states, where transportation is the largest emitter of greenhouse gasses, in New Mexico more than half of those emissions come from the oil and gas production sector itself. That made regulating it a key component of Lujan Grisham’s first-term climate and environmental work. And those regulations had almost everything going for them: industry buy-in, environmentalist buy-in and a friendly Legislature — up to a point.Despite record income, the Democratic-majority Legislature has not fully funded the agencies that police the industry, leaving monitoring and enforcement of the rules largely up to the companies themselves. That funding gets diverted in the Legislature’s powerful Legislative Finance Committee, where the chair, Democrat Patty Lundstrom, raised more than $340,000 for her uncontested reelection campaign. And roughly 20% of that came from oil and gas interests. In fact, all but one committee member received fossil fuel funds for their elections.
US Cuts Oil Output Forecast Again As Shale Slows Down -The US slashed its forecast for 2023 oil production in the latest sign that world crude markets can’t rely on American shale fields to ramp up supply quickly enough to reduce high energy prices over the next year. Production is now estimated to hit 12.31 million barrels a day in 2023, according to a monthly report from the Energy Information Administration released Tuesday, a fifth straight downward revision by the government agency. Next year’s output was previously expected to surpass the record 12.315 million barrels set in 2019. The projection suggests the pace of US shale growth, one of the few sources of major new supply in recent year, is slowing despite oil prices hovering at around $90 a barrel, about double most domestic producers’ breakeven costs. If the trend continues, it would deprive the global market of additional barrels to help make up for OPEC+ production cuts and disruption to Russian supplies amid its invasion of Ukraine. The EIA’s view, coming the same day that the US votes in midterm elections, is also a likely blow to President Joe Biden. He has repeatedly called on oil companies to use record profits to increase supply and help bring down fuel prices. Biden last week threatened the industry with a tax on windfall profits unless they increase investment. The previous boom in US shale production fostered an era of relatively cheap energy costs. It added more crude to global markets than the entire production of Iraq and Iran combined from 2012 to 2020, transforming the country into the biggest producer of both oil and gas. But the rebound in US production following the initial onslaught of Covid-19 has been lackluster. The EIA said Tuesday that output this year will average 11.83 million barrels a day. While that represents the first increase in its estimate since June, it means domestic output is still about 10% below the level seen back in February 2020, the month before the pandemic triggered a collapse in demand and widespread cuts to production. US shale producers have cited rising costs as one reason for slow growth. Executives speaking on earnings conference calls over the past week have warned of the impact of supply-chain constraints. Limited supplies of labor and equipment are “dictating the pace of the industry” right now, Ryan Lance, the chief executive officer of US oil producer ConocoPhillips, said Nov. 3. Rocketing inflation for oilfield items such as pipes, steel casing and frack sand is weighing on producers. The number of rigs drilling for crude in the US has climbed at a slower pace since July, while the inventory of drilled-but-uncompleted wells that swelled during the height of the pandemic is now largely used up. But the biggest factor behind the slowdown in growth is shale companies’ commitment to profits over production, a major reversal from the preceding decade when they increased output at almost any cost. “The majority of those companies are drilling and investing in a way that’s more disciplined than what was in favor prior to the pandemic,” EOG Resources Inc. CEO Ezra Yacob said last week. The new shale business model is good for shareholders, with US oil and gas stocks trading at record highs and companies spending billions of dollars on share buybacks and dividends. But it’s stoking tensions with the White House, which this year has repeatedly implored the industry to boost production.
Biden tightens methane emissions rule amid push for more oil (AP) — The Biden administration on Friday ramped up efforts to reduce methane emissions, targeting the oil and gas industry for its role in global warming even as President Joe Biden has pressed energy producers for more oil drilling to lower prices at the gasoline pump.Biden announced a supplemental rule cracking down on emissions of methane — a potent greenhouse gas that contributes significantly to global warming and packs a stronger short-term punch than even carbon dioxide — as he attended a global climate conference in Egypt.“We’re racing forward to do our part to avert the ‘climate hell’ the U.N. secretary general so passionately warned about,″ Biden said, referring to comments this week by United Nations leader António Guterres.The new methane rule will help ensure that the United States meets a goal set by more than 100 nations to cut methane emissions by 30% by 2030 from 2020 levels, Biden said. “I can ... say with confidence, the United States of America will meet our emissions targets by 2030,″ he said. The Environmental Protection Agency rule follows up on a proposal Biden announced last year at a United Nations climate summit in Scotland. The 2021 rule targets emissions from existing oil and gas wells nationwide, rather than focusing only on new wells as previous EPA regulations have done.
Oil's Other Strategic Reserve Is Running Low, Too -- WSJ -- The inventory of drilled but uncompleted wells declined rapidly during the pandemic but has stabilized in recent months. Drill, baby, drill? After seeing oil demand plunge in 2020, U.S. producers’ mantra switched to “frack, baby, frack” as they paused drilling new rigs in favor of completing—or fracking—wells that had already been drilled. Drilling is just the first step in shale formations. Fracking, a process that involves the injection of water, sand and chemicals into the drilled well, actually gets the oil out of the ground. Producers’ preference for completion over drilling has led to a steep decline in the number of drilled but uncompleted wells, or DUCs, since August 2020. That inventory is at five-year lows, according to Rystad Energy data. While the U.S. Energy Information Administration counts all available DUCs, Rystad and S&P Global Commodity Insights prefer to track wells that are no more than two years old, because they are likely to be completed at a later date. Any older, and the chances of completion get much slimmer.
Can Refracs Boost U.S. Shale Output? -A global oil shortage and high fuel prices has triggered calls from President Joe Biden’s administration for U.S. shale producers to spend more of their profits to boost output. However, shale producers have been under pressure to focus more on returning excess cash to shareholders in the form of dividends and buybacks rather than production growth.Luckily, there’s a proven technology for U.S. shale oil producers to return to existing wells and give them a second, high-pressure blast to increase output for a fraction of the cost of finishing a new well: shale well refracturing. Refracturing is an operation designed to restimulate a well after an initial period of production, and can restore well productivity to near original or even higher rates of production as well as extend the productive life of a well. Re-fracking can be something of a booster shot for producers--a quick increase in output for a fraction of the cost of developing a new well.While refracturing has never really gone mainstream, the technique is seeing higher adoption as drilling technology improves, aging oilfields erode output, and companies try to do more with less. According to a report published in the Journal of Petroleum Technology, new research from the Eagle Ford Shale in south Texas shows that refractured wells using liners are even capable of outperforming new wells despite the latter benefiting from more modern completion designs. JPT also estimates that North Dakota’s Bakken Shale straddles some 400 openhole wells capable of generating an excess of $2 billion if refractured. Mind you, that estimate is derived from oil prices at $60/bbl vs. this year’s average oil price of almost $90/bbl. According to Garrett Fowler, chief operating officer for ResFrac, a refrac can be up to 40% cheaper than a new well and double or triple oil flows from aging wells.Fowler says the most common re-frac method involves placing a steel liner inside the original well bore and then blasting holes through the steel casing to access the reservoir. The process typically uses half as much steel and frac sand than a new wellRefrac makes a lot of sense in the current inflationary environment. Back in April, Texas shale producer Callon Petroleum Company (NYSE: CPE) revealed that frac sand, drill pipe and labor costs have increased drilling and well-completion service costs ~20% Y/Y. Callon and Hess Corp. (NYSE: HES), both of which drill in North Dakota's Bakken shale, have been forced to hike capital spending budgets over the costs with Callon adding $75 million to its original budget while Hess added $200 million to its spending, "Techniques like re-fracturing will allow the industry to continue to harvest the oil and gas out of these reservoirs," said Stephen Ingram, a regional vice president at hydraulic fracturing firm Halliburton Company (NYSE: HAL). Another key benefit: re-fracs do not require additional state permits or new negotiations with landowners. They are also less disruptive to the environment because well sites already have road access. Refracs have also demonstrated higher recovery rates: in URTeC 3724057, Roberta Barba, a longtime completions consultant and CEO of Houston-based Integrated Energy Services, et al. share a case study from the Eagle Ford Shale in south Texas involving five refractured wells. The refractured wells had a combined average post-refrac EUR of 13.2% compared to an initial EUR of 7.4% average by seven new infill wells with modern completion designs. The Authors of the paper say that despite the presumed advantages of a modern completion, refracs can increase stimulated reservoir volume “beyond what is achievable in a new completion”. This is attributed to the fact that as the reservoir depletes and pore pressure drops, fractures from a refrac tend to grow into a new direction and tap previously inaccessible portions of rock.
Environmental groups push Interior to delay oil lease sales - -More than 40 environmental groups are asking the Interior Department to hold public hearings on federal oil lease sales planned in Wyoming, New Mexico and Kansas. In a letter to Interior Secretary Deb Haaland on Monday, the organizations also requested the deadline for public comment be extended 45 days for the public to weigh in on the climate impacts of ongoing leasing and the ramifications of oil and gas development on local communities. “The proposed lease sales stand to impact a range of environmental justice, public health, natural resource, and wildlife issues, but chief among these issues is the existential imperative to limit climate change to 1.5 degrees Celsius of warming,” the groups wrote. Signed by WildEarth Guardians, the Pueblo Action Alliance, GreenLatinos and the Sierra Club, among others, the letter said a 30-day comment period for sales covering up to 260,000 acres is “unreasonable.” “The additional time will ensure the public—including environmental justice communities whose views on this type of development have historically been overlooked and who will be the first to feel the impacts of these sales—have an opportunity to meaningfully review and provide comments,” the letter says. The planned oil and gas auctions are the second round of onshore leasing under the Biden administration and represent a disappointment for organizations opposed to continued drilling on public lands and waters. The White House froze federal oil leasing last year to conduct a review of the government’s management of national stores of crude oil and natural gas in light of climate change but later lifted the moratorium to comply with a court order. While the recently passed Inflation Reduction Act included some reform measures championed by the Biden administration, such as higher royalty rates and fees, the law also toughened requirements forcing the White House to hold consistent oil and gas leases by making renewable energy contingent on regular oil auctions. When announcing the Wyoming and New Mexico sales in October, the Interior Department said the auctions were an effort to comply with that law and would follow new provisions on fees, royalties and minimum bids.
Biden courted oil companies before threatening them with windfall tax - Before President Biden lambasted oil companies for excess profits last week and threatened to slap a “windfall tax” on them, several of his top energy advisers privately attempted to woo that same industry only to get rebuffed, according to seven people familiar with the matter who spoke on the condition of anonymity. Officials from the White House and the State and Energy departments reached out to oil industry trade groups and companies in mid-October to get support for a plan to buy crude to refill the country’s emergency reserves, said source, who spoke on the condition of anonymity because they were not permitted to share the discussions. They told industry representatives their plan would help U.S. oil and gas companies by guaranteeing that the government would purchase oil in months to come if crude prices fell to about $70 a barrel or below. It was the latest of several attempts by the Biden administration to prompt oil companies to boost output, this time by telling them they could invest with the confidence that the government would help ensure steady revenue. Officials including the National Economic Council director, Brian Deese, and Amos Hochstein, a special presidential coordinator at the State Department, called some of the world’s largest oil companies, including ExxonMobil, Chevron and Shell. But none has endorsed the plan or committed to boosting output, a setback for an administration trying to lower energy prices going into an election and weaken the power of Russia as a major energy exporter. Instead of repairing relations with the U.S. oil industry, the outreach deepened a divide between the White House and executives who control U.S. oil output and have little trust that the president will back them. Several industry officials said executives told administration officials that the logic of the plan wasn’t clear and that the effort was probably too small to work as the White House claimed. Some called the outreach a political ploy amid a series of comments from the president blaming the oil companies for record-high prices and castigating them for their historically high profits. “We’ve been disappointed that the conversations of the last several weeks have been geared so much toward midterm politics,” said Chet Thompson, leader of the American Fuel and Petrochemical Manufacturers, the refiners’ trade group. “We’ll be happy after that to get back to serious energy policymaking.”
Biden-Big Oil Feud Intensifying As World Needs More US Oil -As October drew to a close, the White House saw another potential energy flash point on the horizon. Diesel and heating oil inventories in the US Northeast were getting worryingly low. Officials swung into action, organizing a series of calls between Energy Secretary Jennifer Granholm and several of the country’s biggest oil refiners to discuss strategies to boost stockpiles. The tone was cordial, according to people with knowledge of the conversations. But the very next working day, the oil industry was blindsided. At a hastily arranged press conference on Oct. 31, President Joe Biden castigated Big Oil for handing “outrageous” profits to shareholders and executives rather than bringing down prices at the pump. Unless that changed, he warned, oil companies faced more taxes. “Their profits are a windfall of war -- the windfall from the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe,” he said. It was just the kind of whiplash that has repeatedly sown mistrust and stoked tensions with the fossil fuel industry over the course of the Biden administration, according to multiple interviews with executives and lobbyists involved in oil and gas, who declined to be identified because the meetings and conversations they described were private. Biden’s team has been at odds with the industry since the 2020 election campaign. But as global energy prices spiked this year following Russia’s invasion of Ukraine, the White House called on Big Oil to help, only to grow increasingly frustrated that it’s holding back on production while reaping record earnings. “Month after month, these companies have posted record profits that they’ve then used to pad shareholder pockets rather than boost production and lower gas prices,” said White House spokesman Abdullah Hasan. “Month after month, we’ve offered them every opportunity and incentive to change their behavior.” While they were never under any illusions about the president’s green ambitions, oil industry insiders say they’ve become increasingly unhappy with a series of conflicting policy priorities -- for example, moving within a matter of months from a halt on federal leasing for oil drilling to demanding more production -- and unrealistic requests such as spending billions of dollars to rapidly add more refining capacity. Unwilling to act as fall guys for surging household fuel bills in the run-up to the midterm elections, typically low-profile industry figures are becoming more outspoken. Last week, the chief executive officers of Exxon Mobil Corp. and Chevron Corp. issued grave warnings about potential windfall taxes. Marshall McCrea, co-CEO of pipeline operator Energy Transfer LP, said this week that US energy policy is so all over the map that it’s becoming like “a Saturday Night Live skit.” “It’d be funny if it wasn’t so tragically sad,”
Fossil Fuel Firms Spent Millions in Bid to Defeat Democrats in the Midterms - Ohio voters chose Trump-backed Republican J.D. Vance over Democrat Tim Ryan to fill a crucial Senate seat on Tuesday, and the race was a nailbiter until the end. Seeking support from working-class voters in a state that former President Donald Trump won twice, Ryan ran a heterodox campaign with little support from the national Democratic Party, but the race was so competitive that Republican groups swooped in and spent at least $30 million to counter the congressman and boost Vance. A good chunk of that money was a gift from the fossil fuel industry.Ryan, a fierce critic of the trade deals that gutted manufacturing jobs across Appalachia and the Rust Belt, made it clear that he is no enemy of fossil fuels. Ryan wants Ohio to be a leading producer of clean energy technology, but he is also a big fan of fracking for natural gas, which provides jobs for his constituents and income for a region that saw coal mining and manufacturing collapse in recent decades. Ryan has backed away from supporting anything like a Green New Deal and is compared to Sen. Joe Manchin, the conservative Democrat and coal champion from West Virginia who obstructed President Joe Biden’s agenda in an attempt to win concessions for the fossil fuel industry. While Republicans attackRyan for voting against unpopular bills that would have deregulated polluters and opened sensitive ecosystems such as the Arctic National Wildlife Refuge to oil drilling, the fossil fuel lobby is more concerned about which party controls the Senate and how much Democrats can achieve before Biden leaves office.The industry spent lavishly on the 2022 midterms in hopes of flipping Congress over to GOP control and thwarting any effort by Democrats to fight climate change by reducing oil and gas pollution. As of October 19, fossil fuel industry groups and companies, such as Koch Industries and Chevron, had donated $32.8 million to two super PACs aligned with Republican congressional leadership, according to a review of federal records by Sludge co-founder David Moore. The super PACs, the Congressional Leadership Fund and the Senate Leadership Fund, have spent more money on the 2022 midterms than any other outside groups. Fueled by wealthy industries and billionaires, campaign spending by outside groups reached a record $1.3 billion by mid-October, and total spending could be higher after largely unregulated super PACs spent the final weeks ahead of the election flooding the airwaves and internet with ads. The Senate Leadership Fund, which operates independently but is dedicated to winning Senate Minority Leader Mitch McConnell a GOP majority, was the top spender as of last month after reporting nearly $150 million in expenditures, according to OpenSecrets. The Congressional Leadership Fund focuses on House races and spent $110 million on ads attacking Democrats or backing Republicans. National campaigns are not the only target. Flush with cash from record profits, the fossil fuel industry poured money into lobbying and campaigns at all levels of government in 2022, including in states, such as New York and California, where policymakers are pursuing cleaner energy and regulations to reduce the health impacts of pollution.
Colorado's Suncor Refinery is Fighting a Plan to Monitor its Toxic Pollution -Suncor filed a suit against the state to block fenceline monitoring requirements for its refinery, but community and environmental groups quickly moved to intervene and ensure they remain in place Communities have a right to know about exposures to toxic pollution that could affect their health. That’s why Earthjustice and our partners are fighting to protect critical steps the state of Colorado has taken to ensure transparency around toxic emissions. Beginning in 2023, the Suncor refinery in North Denver will be required to operate a new fenceline monitoring system to provide better data about toxic air emissions in real-time. In September, Suncor filed suit against the state to block these requirements, but community and environmental groups quickly moved to intervene and ensure they remain in place. Suncor is an immense refinery located less than a half mile from residential homes, yet it routinely spews hazardous pollution into the air. After an operational issue in 2019, a yellow dust blanketed the surrounding region and schools were forced to shelter in place. The refinery has repeatedly failed to comply with clean air laws, including by exceeding emissions limits in its permit for harmful air toxics. Those most affected by Suncor’s toxic emissions include low-income families and people of color who—because of historic environmental racism—have disproportionately faced the cumulative impacts of living in a pollution hot spot. Residents living in Commerce City and the neighboring Globeville and Elyria-Swansea communities, in particular, experience disproportionate rates of cancer, diabetes, and asthma as well as reduced life expectancy. Suncor’s new monitoring system is a result of the work of Earthjustice, our partner organizations, and community members to draft and support the passage of HB21-1189 last year. The legislation directs the Suncor refinery to install continuous air monitors along the facility’s perimeter or “fenceline”—where pollution leaves the refinery’s property and spreads into neighboring communities where people live, work and play.
Exxon faces $2 billion loss on sale of troubled California oil properties (Reuters) - Exxon Mobil Corp will take up to a $2 billion loss on the highly leveraged sale of a troubled California offshore oil and gas field that have been idled since a 2015 pipeline spill. The sale comes after a failed bid this year to restart production at the site and as Exxon culls poor performing businesses. Santa Barbara officials in March rejected an Exxon plan to restart operations and ship oil via dozens of tanker trucks each day to inland refineries. Sable Offshore, a blank check company founded by industry veteran James Flores, will borrow 97% of the $643 million purchase price from Exxon under a five-year loan. Blank check companies raise money to acquire operating businesses. If Flores fails to restart production at the Santa Ynez field by the start of 2026, Exxon could take back the entire operation, Sable disclosed in a filing. Exxon was not immediately available to comment on terms of the deal. It has accelerated asset sales to cut operating costs and improve returns after a historic loss in 2020. Flores will seek permits to restart Santa Ynez and expects to pump about 28,100 barrels of oil and gas per day beginning in 2024, according to a Sable investor presentation. The field has 112 wells and the potential for at least another 100 wells, its presentation showed. A subsea pipeline leak seven years ago sent 2,400 barrels of the Santa Ynez oil into the Pacific Ocean, leading to a shutdown. Exxon acquired the pipeline from its owner and has been trying to resume production. The Santa Ynez sale includes three oil and gas platforms that sit up to 9 miles (14 km) off the California coast, a pipeline and oil and gas processing facilities. The first platform was built in the 1970s and began producing oil in 1981. Flores has a long history of buying and selling companies. He has run five U.S. oil companies beginning with Flores & Rucks Inc in 1992, and often sold his companies at sizeable gains. His last business, Sable Permian Resources, filed for Chapter 11 bankruptcy in 2020 as oil prices tumbled. Last year, he raised $287.5 million through an initial public offering for the company that became Sable Offshore. Sable must complete a deal by March 1 or return the money to its IPO investors, its filings show.
Crews clean up tar balls from 2021 Amplify oil spill found on Laguna Beach coastline – Clean-up crews scooped up nearly 30 pounds of tar balls from the Laguna Beach coast on Sunday, Nov. 6, confirmed to be the remnants of the Huntington Beach oil spill more than a year later. Crews responded to the site in Laguna Beach today where weathered tar balls were discovered that matched product from a pipeline spill in October 2021. The team evaluated the impacted area and plan for removal tomorrow. pic.twitter.com/65WEY1oJ3f The tar balls were found on the shoreline between Thalia and Cress streets on Oct. 26, said Steve Gonzalez, a spokesman for the California Office of Spill Prevention and Response. Within days, a sample of the tar balls was sent to a state laboratory in Sacramento, where they were found to match the chemical makeup of the oil that spewed from an Amplify Energy pipeline connecting their oil rigs off the coast of Orange County to a Long Beach refining facility in October 2021. Gonzalez said Orange County beaches occasionally see tar balls wash up that escape from naturally occurring seeps along the ocean floor. But California keeps files of crude oil samples from every producer in the state — testing the tar balls found last month against that database showed the oil was from the Amplify spill, he said. “Each producer has their own ingredients that they use to treat the oil,” he said. “It’s just like people — each person has their unique fingerprint, and each oil has a unique identification that we can distinguish and track to each producer of oil out there.” At the time, the spill led to beach closures and the cancellation of several major events in Huntington Beach, devastating merchants in the area. A total of 25,000 gallons of crude oil leaked into the ocean from the ruptured pipeline. The oil escaped after a crack in the pipeline burst, resulting in a loss of pressure and alarms on board Amplify’s oil rig. But it took more than 12 hours for the company and officials to notify the public about the spill. Amplify said the crack in the pipeline occurred as a result of hits from two anchors from cargo ships passing above in January 2021. The anchors dragged the pipeline and bent it like straw. The crack finally opened in October 2021. Amplify pleaded no contest to federal and state criminal charges related to its response to the leakage and has been required to pay $50 million to individuals and businesses affected by the spill. The clean-up team includes personnel from Amplify, the U.S. Coast Guard, the California Department of Fish and Wildlife, the Office of Spill Prevention and Response and the county of Orange. There were no beach closures during the clean-up, which was completed Sunday, Gonzalez said.
Chevron to pay $200,000 in fines for Richmond oil spill - Last Friday, the Contra Costa County District Attorney’s Office and the Department of Fish and Wildlife reached a settlement with Chevron. This is in response to last year's oil leak at the Richmond Refinery Marine Terminal.The leak started as a small hole in a pipeline, back in February of last year. It went on to spill nearly 760 gallons of oil into the water of the Richmond Long Wharf.In the days following the spill, there were no reports of the spilled oil affecting the animals or people in the area. However, a sheen of oil could be seen in the Bay waters, between Point Molate to Brooks Island.In order to effectively combat oil spills like these, a coalition called a Unified Command was formed. It included Chevron, the Office of Spill Prevention and Response (or OSPR), County Health Services and the Coast Guard.In Friday’s settlement, Chevron agreed to pay more than $130,000 to the OSPR, $70,000 towards wildlife and nature funds, and $2,000 to the Coast Guard. They’ll also pay for additional staff training and new equipment installation, according to the Contra Costa County DA. This situation with Chevron is one of many. In 2018, Chevron had to pay $5,000,000 in fines relating to the fiery explosion at the Richmond Refinery in 2012.
Time Will Tell if Big Oil’s California Election Investments Pay Off -While California Gov. Gavin Newsom was easily reelected on Nov. 8, heartening environmentalists who want him to continue to push through his aggressive climate agenda, the rest of the state’s midterm election results were mixed. California’s oil and gas industry poured millions into several legislative races, some of which were always going to be competitive. Many have come down to the wire, with candidates neck-and-neck in the polls and no clear winner yet. In some of the races, it could take weeks to determine the winner. Meanwhile, the only climate-related ballot measure — Prop. 30, which would have taxed the wealthy to pay for electric vehicles and charging infrastructure — did not pass. The measure, which was funded by Lyft, was strongly opposed by Newsom. In California Senate District 8, which includes a portion of Sacramento County, the city’s Vice Mayor Angelique Ashby held a narrow lead over fellow Democrat Dave Jones. Capital & Main previously reported that a PAC representing oil refinery owners in the state plowed $1.6 million into her campaign in the last few weeks — the largest single amount from the industry for any state candidate since at least the spring. It’s not clear how her election might shape climate policy or regulations on the oil and gas industry if she’s elected. At publication time, Ashbyheld a lead of 34,749 compared to Jones’ 32,111.Refinery owners such as Chevron, Valero and Marathon bought about $1 million’s worth of ads for Stephanie Nguyen in her race against Eric Guerra for the 10th Assembly District seat representing parts of Sacramento. Nguyen had a comfortable lead at 20,297 against Guerra’s 14,728 as of Thursday morning. In another nail-biter, the state Senate race in District 38 to represent parts of Orange County, Encinitas mayor and Democrat Catherine Blakespear was just barely ahead of Republican Matthew Gunderson. The oil and gas PAC spent upwards of a million on pro-Gunderson ads and consulting, and an equal amount for opposition materials against Blakespear, who’s made taxing excess industry profits from high gasoline prices and a statewide transition to renewable energy key planks of her campaign. At publication time she held a 108,548 to 107,3580 lead over Gunderson, though determining a final winner could, again, take weeks. A race in California oil country — the state’s “most fiercely contested political turf” this election, according to CalMatters — might show the limits of industry spending in competitive elections. It spent hundreds of thousands here in the final days before the election, but at publication time, Jasmeet Bains held a large lead over fellow Democrat and Kern County Supervisor Leticia Perez. But it may not be so bad for the industry. In public statements, both Bains and Perez have spoken favorably about oil and gas producers, which are the county’s biggest tax payers and among its main employers. Republican candidate Juan Alanis, another beneficiary of oil money, who’s running for Assembly District 22 to represent parts of Stanislaus County and Merced County, held a comfortable lead over Democrat Jessica Self. But in a very tight race for Assembly District 27 to represent part of nearby Fresno County, oil candidate Esmerelda Soira barely maintained a lead over Republican Mark Pazin.
USGC heavy crude prices may remain under pressure until Canada's Trans Mountain expansion enters service - Record-low differentials for heavy crudes that compete on the US Gulf Coast may not rebound until the Trans Mountain pipeline expansion enters service and diverts Canadian sour barrels away from the US and toward Canada's West Coast, traders and analysts say. The Trans Mountain expansion is expected to add an additional 590,000 b/d of takeaway capacity in late 2023 from the Alberta oil sands to British Columbia. Increased flows to Canada's western coast may alleviate a surge of heavy Canadian crude exports to the USGC that accelerated late last year following expansions to the Enbridge Mainline, and the reversal of the Capline pipeline. "The start-up of the Trans Mountain expansion will provide relief to the distressed Western Canadian barrels as differentials will shrink in three to six months to about $10/b" discounts to WTI, said veteran Canadian crude watcher Greg Stringham, a former vice president at the Canadian Association of Petroleum Producers. Stringham said vessels will likely ship the additional Trans Mountain flows equally to Asia and California. Western Canadian Select at Hardisty, Alberta averaged at a $20.07/b discount to Cushing WTI during the third quarter, widening from a $12.81/b discount in Q3 2021, Platts assessments show. Platts is a unit of S&P Global Commodity Insights. S&P Global has a similar view, forecasting that the additional outlet and takeaway capacity for growing Western Canadian supply may support firmer Canadian heavy differentials on the USGC after the Trans Mountain expansion enters service. S&P Global sees Western Canadian crude supply, or production plus diluent, growing more than 300,000 b/d over 2022-2023. Canadian oil sands producer MEG Energy also expects narrower price discounts, CEO Derek Evans said Nov. 10 on an earnings call. But MEG, which shipped nearly 66% of its total production in third quarter 2022 to the USGC through pipelines from land-locked Alberta, will have an option to increase that figure to 80% utilizing the 20,000-b/d capacity it has booked on TMX, the company said in statement. Currently, MEG utilizes its option to ship 100,000 b/d of its Access Western Blend blend to the USGC utilizing its capacity on the Flanagan South and Seaway pipeline systems, with the remainder being sold to the Edmonton market, it said. In the USGC, the company also has access to 1.4 million barrels of crude storage in Freeport, Texas and also contracted dock space at the Beaumont Terminal that provides an option of one Aframax loading each month, it said.
China Replaces Alaskan Expensive Crude With Russian Oil - China’s passion for Alaskan oil appears to be over as the country turns to Russia. Surging Chinese energy demand amid Covid lockdowns on the US West Coast prompted Alaskan oil exporters to ship more crude than any time in two-decades, and nearly all of it went to the East Asian country. So far this year, shipments have almost dried up entirely. Just a single cargo sailed aboard the Seaways Sabine to China in March, according to Vortexa Data. Unlike Russian oil that is sold at a discount due to sanctions, Alaskan oil has traded at its biggest premium to the US benchmark since 2014 this year. There is “just a general lack of interest from the traditional buyers in China,” Rohit Rathod, a Vortexa analyst, wrote in an email. “Those buyers have mostly likely turned away from ANS in favor of cheaper Russian ESPO crude.” India boosted purchases of discounted Russian barrels after the invasion of Ukraine at the expense of oil from other parts of the world, such as Canada.
US Finds Others Aligned Against It In Saudi-Sparked Oil Row -When US President Joe Biden accused Saudi Arabia of siding with Russia over oil, Riyadh cast itself as an emerging power that stands up to Washington and looks after its own interests - and that’s been winning cheerleaders. Saudi Arabia rallied crude exporters behind a 2-million-barrel oil output cut by OPEC+, the crude exporters group Riyadh steers with Russia. But Turkey and China also spoke out in Saudi Arabia’s defense, even though as energy importers they suffer from the Oct 5 move that keeps oil around $90 as the economic outlook darkens. The oil row exposes a broader shift, with countries willing to push back against or question US influence, even if that runs counter to their immediate economic interests. They are keen to deepen ties with a kingdom undergoing an economic boom, or to find ways to benefit from US-Saudi frictions in their own disputes with Washington. This comes ahead of the Group of 20 world leaders summit in Bali next week where Biden seeks to rally international support for the further isolation of Russia and how to tackle the effect on the global economy and energy markets. Crude prices falling would be more beneficial to Turkey, where energy costs have helped drive inflation to a two-decade high, but Ankara objects to the US threatening another country, a Turkish official said, speaking on condition of anonymity to discuss government thinking. “This bullying is not right,” Turkish Foreign Minister Mevlut Cavusoglu said on Oct 21 after Biden vowed Saudi Arabia would face unspecified “consequences” for the outcome of the OPEC+ meeting. Turkey objected to the US reaction, even if it wasn’t happy with rising prices, he said. President Recep Tayyip Erdogan has other good reasons to side with Riyadh. He’s sought financial support from Saudi Arabia ahead of presidential elections next summer, galvanizing ties that allow him to also hedge Ankara’s relations with the West. China, in its own deepening dispute with the US over global trade, praised Saudi Arabia’s pursuit of an “independent energy policy” after the OPEC+ decision and said Riyadh should play “a greater role” in international and regional affairs. China is Saudi Arabia’s biggest trade partner and its top buyer of oil. “This is part of China trying to shore up support elsewhere which it perceives can help strengthen ‘its’ side in the global confrontation with the United States,” said Raffaello Pantucci, a senior fellow at the S. Rajaratnam School of International Studies (RSIS) in Singapore who researches China’s foreign relations. “It is really all about trying to take advantage and sow fissures in traditional US alliances to try to strengthen China’s hand on the world stage.” In turn, Saudi Arabia’s Crown Prince Mohammed bin Salman is making inroads in Asia. Chinese leader Xi Jinping is planning to visit Saudi Arabia soon, the kingdom’s foreign minister said last month, as the two countries strengthen trade and security links which have unnerved Washington.
UAE meddled in U.S. political system, intelligence report says - U.S. intelligence officials have compiled a classified report detailing extensive efforts to manipulate the American political system by the United Arab Emirates, an influential, oil-rich nation in the Persian Gulf long considered a close and trusted partner. The activities covered in the report, described to The Washington Post by three people who have read it, include illegal and legal attempts to steer U.S. foreign policy in ways favorable to the Arab autocracy. It reveals the UAE’s bid, spanning multiple U.S. administrations, to exploit the vulnerabilities in American governance, including its reliance on campaign contributions, susceptibility to powerful lobbying firms and lax enforcement of disclosure laws intended to guard against interference by foreign governments, these people said. Each spoke on the condition of anonymity to discuss classified information. The document was compiled by the National Intelligence Council and briefed to top U.S. policymakers in recent weeks to guide their decision-making related to the Middle East and the UAE, which enjoys outsize influence in Washington. The report is remarkable in that it focuses on the influence operations of a friendly nation rather than an adversarial power such as Russia, China or Iran. It is also uncommon for a U.S. intelligence product to closely examine interactions involving U.S. officials given its mandate to focus on foreign threats. “The U.S. intelligence community generally stays clear of anything that could be interpreted as studying American domestic politics,” said Bruce Riedel, a senior fellow at the Brookings Institution who served on the National Intelligence Council in the 1990s. “Doing something like this on a friendly power is also unique. It’s a sign that the U.S. intelligence community is willing to take on new challenges,” he said. Lauren Frost, a spokeswoman at the Office of the Director of National Intelligence, declined to comment when asked about the report. The UAE’s ambassador to Washington, Yousef Al Otaiba, said he is “proud of the UAE’s influence and good standing in the U.S.” “It has been hard earned and well deserved. It is the product of decades of close UAE-US cooperation and effective diplomacy. It reflects common interests and shared values,” he said in a statement. The relationship is unique. Over the years, the United States has agreed to sell the UAE some of its most sophisticated and lethal military equipment, including MQ-9 aerial drones and advanced F-35 fighter jets, a privilege not bestowed on any other Arab country over concern about diminishing Israel’s qualitative military edge. Some of the influence operations described in the report are known to national security professionals, but such activities have flourished due to Washington’s unwillingness to reform foreign-influence laws or provide additional resources to the Department of Justice. Other activities more closely resemble espionage, people familiar with the report said. The UAE has spent more than $154 million on lobbyists since 2016, according to Justice Department records. It has spent hundreds of millions of dollars more on donations to American universities and think tanks, many that produce policy papers with findings favorable to UAE interests.
Is Mexico's Natural Gas Market Adapting to the New World Order? Listen Now to NGI's Hub & Flow -Click here to listen to the latest episode of NGI’s Hub & Flow. NGI Latin America editor Christoper Lenton sits down with Mexico energy expert Rosanety Barrios to talk about Mexico’s natural gas market in light of global turmoil after Russia’s invasion of Ukraine. Lenton and Barrios discuss how Mexico is now competing for natural gas with European and Asian buyers of LNG, the perils of energy security in the new world order, and how Mexico needs to adapt – from releasing pipeline capacity to opening more exploration rounds, from rewriting policy to progressing key infrastructure projects. Believing that transparent markets empower businesses, economies and communities, NGI – which publishes daily, weekly and monthly natural gas indexes at pricing points across North America – works to provide natural gas price transparency for the Americas. NGI’s Hub & Flow podcast is a part of that effort.
Peru indigenous group frees dozens of tourists held in oil spill protest -- A Peruvian indigenous group freed a group of tourists held for over a day in a protest over what the community alleged to be government inaction over toxic oil spills, one of the released tourists and local officials said separately on Friday. The Cuninico indigenous group, from the Urarinas district in Loreto province in Peru's Amazon rainforest, had held an estimated 150 tourists — which included some US and European nationals — to raise awareness about the oil spillage in a local river, according to local media. "We were just all freed, we have boarded a boat and are on our way to (the city of) Iquitos," one of the freed tourists, Peruvian Angela Ramirez, told Reuters. Peru's independent public defender agency said on Twitter that "after dialogue with the (head) of the Cuninico communities, our request to release people was accepted." "The right and respect for life must prevail," the chief of the indigenous group, Watson Trujillo, told local media outlet RPP. RPP added that none of the tourists were physically harmed. Among those taken while travelling river boats were disabled individuals, a pregnant women and a 1-month-old child, said Ramirez. Media reports cited the number of people being held as ranging from 70 to as many as 300, including between 17 and 23 foreign nationals. The United Kingdom's foreign ministry said in a statement that it was in contact with local authorities regarding a "very small number of British nationals involved in an incident in Peru."
‘No evidence MPs were bullied,’ says report into fracking vote chaos -- A controversial and chaotic vote on fracking last month did see some MPs shout and crowd closely together, but there is no evidence to indicate bullying or intimidation, an official report for the Commons speaker has concluded. The speaker, Lindsay Hoyle, ordered the inquiry by Commons officials after claims that some wavering Conservative MPs were physically pulled into the “no” voting lobby following the debate on 19 October. The melee took place as MPs voted on a Labour opposition day motion which would have sought to ban fracking in England. Liz Truss’s then-government ended up winning the vote easily. The report for Hoyle, compiled by three senior parliamentary officials, found that while there was evidence of shouting and “intemperate language”, claims of jostling seemed caused by the large numbers of MPs gathered around, and no members believed they had come under pressure to change their vote. It found that much of the chaos was created by confusion over whether the vote was deemed a confidence motion, a day before Truss agreed to step down as prime minister. Tory MPs had been told it was a confidence issue, meaning they could lose the party whip if they voted with Labour or abstained. But near the end of the debate the energy minister, Graham Stuart, told them it was not, something the report said “came as a surprise” to both MPs and Conservative whips. As the whips left to seek guidance from No 10, a crowd of agitated Tory MPs gathered around the “no” lobby, which was swollen by the arrival of opposition MPs who had just voted yes and had heard rumours that the now-absent chief whip, Wendy Morton, and her deputy had resigned. “The continued uncertainty about the status of the vote meant that discussions between Conservative members became more fraught and some opposition members also sought to make themselves heard by those involved in the discussions,” said the report, based on interviews or written statements from 36 MPs and four nearby officials. “The crowded nature of the lobby meant that voices were raised in order to be heard; some members may have raised their voices more than was necessary. “It appears that a few members, from differing parties, used intemperate language towards one another, although exact details of what was said are unclear.” Some opposition MPs were urging Tory MPs to rebel which “further inflamed general tensions”, it added.
Exclusive: Industry body slams UK-US LNG deal following fracking snub - The UK’s leading onshore energy body has hammered the Government’s decision to chase a long-term liquefied natural gas (LNG) deal with the US, while re-imposing a moratorium on fracking.Charles McAllister, director of policy, government and public affairs at UK Onshore Oil and Gas (UKOOG) blasted what he saw as the hypocrisy of Downing Street’s reported decision to take LNG supplies that originated from US shale sites, while effectively banning the process in the UK.He told City A.M.: “This decision shows that the UK Government supports fracking as a technology, as long as it doesn’t take place in the UK. There is no justification for the UK onshore oil and gas industry to face such hypocritical treatment.”The policy director also criticised the increased reliance on LNG, with its higher carbon footprint and costs, alongside the growing reliance on overseas vendors compared to domestically procured gas.He noted that LNG is around four times as carbon intensive as UK shale, making it considerably less appealing than domestic supplies as the country scrambles to meet net zero carbon emissions targets over the next three decades.McAllister said: “Imported shale gas does not offer the evident economic, geopolitical or environmental advantages offered by exploiting our own natural gas.”Following Russia’s invasion of Ukraine and a Kremlin-backed squeeze on gas flows into Europe, the UK has turned its focus to boosting domestic energy supplies.This includes ambitious targets for offshore wind, solar power, nuclear and hydrogen.However, the new Government has no plans to revive fracking, with Prime Minister Rishi Sunak repealing former leader Liz Truss’ decision to scrap the moratorium – which had been in place since 2019 amid concerns over tremors.
Estonia drops plans for stake in Finnish LNG terminal -The Estonian government has decided to give up on acquiring a stake in the Finnish LNG terminal, and to instead buy the mooring quay at Paldiski."At today's cabinet meeting, the ministers decided to abandon the acquisition of a stake in the Finnish LNG terminal" operated by Gasgrid Finland's subsidiary Floating LNG Terminal Finland Oy, the Estonian government said today.Estonia and Finland previously signed a co-operation agreement stating that the floating storage and regasification unit (FSRU) Exemplar, wholly rented by the Finnish side, will be moored at whichever terminal — either Paldiski in Estonia or Inkoo in Finland — is finished first. But last month, the Estonian and Finnish economy ministries confirmed that Exemplar will be moored at Finland's Inkoo port, while the Finnish side suggested that Estonia would have to buy a stake in the LNG terminal before getting preferential access to it.Around €30mn has been allocated for the Estonian system operator Elering to participate in the joint project with Finland. This will be used to buy additional gas volumes, said the minister of economy and infrastructure Riina Sikkut."There is a possibility under discussion that the first gas cargo arriving to the LNG floating terminal will be offered primarily to the holders of strategic reserves in Estonia, Finland and Latvia. If the price... is good, the conditions are suitable and the purchase increases the supply security of the Estonian market, then it is reasonable to use the opportunity," Sikkut said.The FSRU at Inkoo is scheduled to receive its commissioning cargo in mid-December, according to the Finnish system operator Gasgrid.But the Estonian government instead instructed state-run gas stockpiling agency ESPA to buy the mooring quay at Paldiski from construction firms Alexela and Infortar, which according to the country's prime minister Kaja Kallas is "an important" project for Estonia's energy security.Following today's decision, construction firms will be able to sell the quay to the state "if they wish, even from this year", Kallas said. Estonia will pay the "proven costs incurred by the developer for the quay this year, the upper limit of which is €30mn", according to Sikkut. "In total, the transaction will cost up to €38mn... and this amount has already been allocated by the government to the gas stockpiling agency ESPA," Sikkut said.
Oil and Gas Industry's Expansion Plans Decried as Attack on 'Livable Planet' - Despite repeated warnings that new fossil fuel projects are incompatiblewith averting climate disaster, oil and gas corporations "are on a massive expansion course" to increase dirty energy production in the coming years, according to an analysis released Thursday at the United Nations COP27 meeting in Egypt."Keeping these oil and gas resources in the ground is the bare minimum of what is needed to keep 1.5°C attainable."The new report by the German nonprofit Urgewald and 50 NGO partners, which denounces "an industry willing to sacrifice a livable planet," found that the vast majority of the world's oil and gas companies intend to scale up the extraction of fossil fuels in the years ahead, having collectively dumped $160 billion into exploration since 2020.None of this investment is consistent with the International Energy Agency's (IEA) blueprint for achieving net-zero emissions by 2050, a key component of meeting the Paris agreement's goal of limiting global warming to 1.5°C above preindustrial levels—beyond which impacts will growincreasingly deadly for millions of people, particularly those residing in poor nations that have done the least to cause the crisis.The IEA made clear in its May 2021 report that no new oil and gas fields can be exploited if the world is to avoid climate catastrophe. But according to Urgewald, 96% of upstream fossil fuel companies (655 out of 685) are planning to expand their operations, and short-term expansion plans have increased by 20% since last year.According to Urgewald, 512 of these companies are currently "taking active steps to bring 230 billion barrels of oil equivalent (bboe) of untapped resources into production before 2030."If these fossil fuels are removed from the ground and burned, an additional 115 billion tonnes of heat-trapping carbon dioxide equivalent will be pumped into the atmosphere by the end of the decade. That's 30 times more greenhouse gas pollution than Europe generates each year.Urgewald's report comes one day after Climate Trace revealed in a separate analysis that global emissions from oil and gas production are up to three times higher than reported."The outcome of our calculations is truly frightening," Fiona Hauke, senior oil and gas researcher at Urgewald, said in a statement. "Oil and gas companies' short-term expansion plans are not in line with the net-zero emissions course put forward by the IEA. Keeping these oil and gas resources in the ground is the bare minimum of what is needed to keep 1.5°C attainable."As the report points out, even "if the oil and gas industry simply maintained its 2021 production level of 56.3 bboe, it alone would exhaust our remaining carbon budget within 15.5 years."Just over a dozen corporations—including Saudi Aramco, ExxonMobil, TotalEnergies, Chevron, and Shell—are responsible for more than half of the industry's short-term expansion efforts, Urgewald found.
Fracking: The energy issue splitting the German government – DW – Finance Minister Christian Lindner, whose FDP party is losing ground in the polls, has once again raised the debate of fracking for natural gas. The proposal could crack the governing coalition, as well as the bedrock. Fracking has become the latest issue to stress-test Chancellor Olaf Scholz's coalition government, after Finance Minister Christian Lindner raised the prospect of lifting Germany's partial ban last week. We have considerable gas reserves in Germany that can be extracted without endangering drinking water," the leader of the neoliberal Free Democratic Party (FDP) told the Funke Media Group. The extraction could be "responsible within ecological conditions," Lindner said, before arguing that it would in fact be more "irresponsible to forgo fracking out of ideological commitments." After pushing to extend the lifeline of nuclear power, Lindner now wants frackingImage: Oliver Berg/dpa/picture-alliance The extraction method — fracturing bedrock by pumping water and chemicals into it to release gas — was partially banned in Germany in 2016. But a string of politicians, mostly from the far-rightAlternative for Germany (AfD) and the center-right Christian Democratic Union (CDU), have insisted that it remains a viable way to find new fossil fuels on German soil. The Environment Ministry, led by the Green Party's Steffi Lemke, lost no time in shooting Lindner's idea down. "Fracking gas is damaging to the climate and extracting it damages the environment," a ministry spokesman told the RND news network. Extracting it was banned in Germany "for good reason," he said. Germany theoretically has enough natural gas under its own territory to cover 20% of the country's needs, but only half of it is "economically viable," according to the gas and oil industry association BVEG. On top of that, the BVEG told the ARD broadcaster in April that it would take three years of exploration just to establish where the new extraction sites should be, never mind actually start pumping gas out of the ground.
Vitol Threatens Gas Halt in $1 Billion Standoff With Germany - Commodities giant Vitol SA is threatening to suspend gas deliveries to a German state-controlled energy business in a legal standoff that could cost the German company around €1 billion. SEFE Marketing & Trading Ltd., a former Gazprom PJSC-trading arm, lost an urgent London court bid seeking to stop trading firm Vitol from cutting the gas supplies as soon as next week. Gas prices have surged since the contract was first signed, meaning the stakes for both sides are huge. SEFE faces potential losses of around €1 billion ($987 million) if it needs to replace the lost gas at higher prices, two people familiar with the matter said. “These contracts were entered into when market prices were significantly lower,” SEFE said in an emailed statement. The firm “strongly refutes the validity of the announced suspension and will continue to contest it through all available channels.” A Vitol spokesperson declined to comment. The potential losses mean extra financial pressure on the German taxpayer, which has propped up SEFE with an €11.8 billion credit line via German state-bank KfW Group. Vitol, one of the world’s largest commodity trading houses, made a record profit of $4.2 billion last year. A court order shows the London-based SEFE unit asked the judge to prevent Vitol from taking action that threatened to “cause immediate and irreparably harmful consequences” as soon as Tuesday. Vitol argued it has the right to terminate or suspend supplies because of SEFE’s change in ownership in April, according to two people familiar with the matter. The SEFE parent company, Securing Energy for Europe GmbH, was known as Gazprom Germania GmbH, and was an arm of the Russian state’s energy empire. The firm was cut loose in April after European sanctions followed its invasion of Ukraine, which prompted the German government to step in to prevent a collapse that would have sent financial waves across the global energy markets and destabilized much of Germany’s industrial region. The German regulator BNetzA, which has oversight over SEFE, didn’t comment on any figures and referred to ongoing legal proceedings. “This is about the security of supply in Europe,” a spokeswoman said. After Russia cut gas flows to Europe, Vitol in a separate move applied to the German government for compensation for the gas it was owed by Russia, which would have been funded by a proposed German levy on consumers. The entire levy was stopped due to political and administrative hurdles before any payments were made.
Germany And India Get In Tussle Over Canceled LNG Cargoes -A commercial spat over natural gas has escalated to a diplomatic tussle between Berlin and New Delhi as Europe’s energy crunch takes a growing toll on the developing world. Diplomats have been called in to try to resolve a disagreement over a cut in supplies of liquefied natural gas to India by a German-state-backed company, according to people familiar with the matter who asked not to be named because the matter is private. Gas supplies from Germany’s Securing Energy for Europe GmbH to GAIL India Ltd. have been disrupted since May after Moscow’s sanctions on the group made it impossible to source cargoes from Russia. India is suggesting the company should source alternative supplies from its portfolio to meet contractual obligations, one of the people said. The global surge in natural gas costs after Russia’s invasion of Ukraine has hit price-sensitive emerging countries hard. India is paying record amounts to replace canceled supply, that’s if it can find any. With prices soaring, some suppliers to South Asia have simply canceled long-scheduled deliveries in favor of better yields elsewhere. SEFE’s Singaporean unit said in September it can’t fulfill its long-term LNG contract with GAIL. SEFE, a former Gazprom PJSC business now under control of the German government, is paying a small penalty fee of 20% the value of the contractual shipment, a fraction of the value of current spot gas prices in Europe, leaving a big gap for GAIL to cover to get replacement supplies. “As a result of Russian sanctions against SEFE and its subsidiaries, including SM&T and SM&T Singapore, both the SEFE group and GAIL are affected by the subsequent cessation of supplies,” a SEFE spokesperson said. “SEFE and GAIL are addressing this issue together under their contractual agreements.” Spokespeople for GAIL, Germany’s economy and foreign ministries and India’s foreign ministry all declined to comment. Finding a diplomatic solution is the aim but pre-arbitration talks are also taking place between SEFE and GAIL, the people said. SEFE has canceled 17 cargoes since May, Rakesh Kumar Jain, GAIL’s director for finance, said on an earning call on Friday. GAIL has a contract to receive 2.5 million tons of LNG a year until 2041 signed with the previously named GM&T, according to data from the LNG importers group GIIGNL.
European Energy Crisis Will Trigger Years Of Shortages, Blackouts -Bills will be high, but Europe will survive the winter: It’s bought enough oil and gas to get through the heating seasons. Much deeper costs will be borne by the world’s poorest countries, which have been shut out of the natural gas market by Europe’s suddenly ravenous demand. It’s left emerging market countries unable to meet today’s needs or tomorrow’s, and the most likely consequences — factory shutdowns, more frequent and longer-lasting power shortages, the foment of social unrest — could stretch into the next decade. “Energy security concerns in Europe are driving energy poverty in the emerging world,” said Saul Kavonic, an energy analyst at Credit Suisse Group AG. “Europe is sucking gas away from other countries whatever the cost.” After a summer of rolling blackouts and political turmoil, cooler weather and heavy rains have alleviated the immediate energy crisis in Pakistan, India, Bangladesh, and the Philippines. But any relief promises to be temporary. Colder temperatures are on the way — parts of South Asia can be more bitter than London — and the chances of securing long-term supplies are slim. The strong US dollar has only complicated the situation, forcing nations to choose between buying fuel or making debt payments. Under the circumstances, global fuel suppliers are increasingly wary of selling to countries that could be heading for default. The center of the issue is Europe’s response to tightening fuel supplies and the war in Ukraine. Cut off from Russian gas, European countries have turned to the spot market, where energy that isn’t committed to buyers is made available for short-notice delivery. With prices soaring, some suppliers to South Asia have simply canceled long-scheduled deliveries in favor of better yields elsewhere, traders say. “Suppliers don’t need to focus on securing their LNG to low affordability markets,” Raghav Mathur, an analyst at Wood Mackenzie Ltd. said. The higher prices they can get on the spot market more than make up for whatever penalties they might pay for shirking planned shipments. And that dynamic is likely to hold for years, Mathur says. Damage caused by global warming, such as the devastating floods in Pakistan, is also wreaking economic havoc on emerging nations, prompting leaders at UN climate talks in Egypt this month to discuss how richer countries can help provide more support. At the same time, Europe is speeding up construction of floating import terminals to bring in more fuel in the future. Germany, Italy, and Finland have secured the plants. The Netherlands started importing LNG from new floating terminals in September. European demand for natural gas is expected to surge by nearly 60% through 2026, according to BloombergNEF. Exporters in Qatar and the United States are now entertaining bids from European importers looking to buy fuel to fill the new capacity. For the first time, emerging nations like Pakistan, Bangladesh and Thailand are forced to compete on price with Germany and other economies several times their size. “We are borrowing other people’s energy supplies,” “It’s not a great thing.” Usually when there’s a short-term shortage, nations can sign long-term supply contracts, paying a fixed rate for the assurance of reliable deliveries for years. That hasn’t worked this time. Even bids for deliveries starting years into the future are being rejected.
Europe May See Forced De-Industrialization As Result Of Energy Crisis –- The European Union has been quietly celebrating a consistent decline in gas and electricity consumption this year amid record-breaking prices, a cutoff of much of the Russian gas supply, and a liquidity crisis in the energy market. Yet the cause for celebration is dubious: businesses are not just curbing their energy use and continuing on a business-as-usual basis. They are shutting down factories, downsizing, or relocating. Europe may well be on the way to deindustrialization. That the European Union is heading for a recession is now quite clear to anyone watching the indicators. The latest there—eurozone manufacturing activity—fell to the lowest since May 2020.The October reading for S&P Global’s PMI also signaled a looming recession, falling on the month and being the fourth monthly reading below 50—an indication of an economic contraction.In perhaps worse news, however, German conglomerate BASF said last month it would permanently downside in its home country and expand in China. The announcement served as a blow to a government trying to juggle energy shortages with climate goals without extending the lives of nuclear power plants.“The European chemical market has been growing only weakly for about a decade [and] the significant increase in natural gas and power prices over the course of this year is putting pressure on chemical value chains,” said BASF’s chief executive, Martin Brudermueller, as quoted by the FT, in late October.Yet it is worth noting that the energy crisis was not the only reason for BASF’s plans to shrink its presence at home and grow abroad. Increasingly tighter EU regulation was also a factor behind this decision, Brudermueller said.Other industries also seem to have problems with new EU regulations. The trade body for the steel and aluminum industries, which have also suffered significantly from the energy cost inflation, recently proposed that the EU takes a gradual approach with its new Cross-Border Adjustment Mechanism, also known as the import carbon tax.The CBAM was conceived as a way of leveling the playing field for European industrial businesses subjected to strict emission regulation that makes its production costlier compared to the production of countries with laxer emission standards. Yet it would also make important feedstock for the European steel and aluminum industries costlier, too, adding to the pain these industries are already feeling because they are also among the most energy-intensive ones.A tenth of Europe’s crude steel production capacity has already been idled, according to estimates from Jefferies. All zinc smelters have curbed production, and some have shut down. Half of the primary aluminum production has shut down as well. And in fertilizers, 70 percent of factories have been idled because of the energy shortage.Chemical plants are also curbing their activities, ferroalloy furnaces are going cold, and plastics and ceramics manufacturing is shrinking as well.Some of these businesses might choose to eventually relocate to a place with cheaper and more widely available sources of energy, contributing to the deindustrialization process in Europe. As for the best candidate for this relocation, according to some observers, it is the United States, with its abundant gas reserves, rising production, and friendly investment climate.Meanwhile, one thing has become crystal clear: reduced energy consumption in Europe’s industrial sectors is really no cause for celebration. If anything, it is a cause for concern and urgent action on the part of decision makers.
Armenia Doubles Gas Imports From Iran Through 2030 -Armenia gets the bulk of its natural gas from Russia. But ties with Moscow are fraying and Yerevan will soon have more alternatives Iran and Armenia have agreed to double the amount of natural gas that Iran sells to Armenia, and to extend their gas trade agreement to 2030.The deal was made during a visit by Armenian Prime Minister Nikol Pashinyan to Tehran. The memorandum of understanding was signed on November 1 by Majid Chegeni, Iran’s deputy minister of oil for gas affairs and director of the National Iranian Gas Company (NIGC), and Gnel Sanosyan, Armenia’s minister of territorial administration and infrastructure.Currently, Armenia imports about 365 million cubic meters of natural gas from Iran every year. "Now we export 1 million cubic meters of gas to Armenia daily, which will be doubled based on the new memorandum," Chegeni said.The two sides trade energy based on a 2006 gas-for-electricity barter agreement; Armenia gets one cubic meter of gas from Iran in exchange for three kilowatt hours of electricity produced by thermal plants in Armenia. An expansion of the deal has been in the works for some time. The increase in gas imports has been made possible by Armenia’s increasing capacity to generate electricity, economist Suren Parsyan told Eurasianet. A new thermal power plant constructed by Italian firm Renco came online in 2021 and will be able to supplement the other supplier, the state-run Yerevan Thermal plant. Even with the additional Iranian imports, Russia will remain Armenia’s main gas supplier. Armenia buys over 2 billion cubic meters of Russian gas annually, paying $165 per thousand cubic meters. The price for Russian gas went up by $15 per thousand cubic meters in 2019, and that price remains unchanged.In April, Armenia started paying for its Russian gas in rubles, though the rate remains pegged to the dollar price. The supply has not been affected even as the world natural gas markets are in turmoil, with Russia cutting off many European customers and prices fluctuating wildly. In 2021, Armenia paid $414 million to Russia for its gas."Russian gas is still cheaper” than Iranian, Parsyan said. “The issue is that Russia wants money for it, but Iran agrees to be paid in electricity.” Further expansion of the Iran-Armenia energy trade could be in the works in the future.Electricity is currently supplied to Iran through two power lines, but construction of a third high-voltage line has been long delayed and is now scheduled to be completed by the end of 2023.
Oil Executives Warn G7 Price Cap Could Lead To Stranded Tankers - Yves here. Is G7 managing to undo what little progress it had made on key details of how the “fire, aim, ready” Russian oil price cap will work when it goes live on December 5?Get a load of this, from the Financial Times in G7 says Russian oil price cap to be ready ‘in the coming weeks’ a week ago: The G7 decided in September that the cap will work by allowing western companies to provide insurance to seaborne Russian oil exports, so long as the crude has been sold at a price below the cap. “We will finalise implementation of the price cap on seaborne Russian oil in the coming weeks,” the ministers said in a joint statement following two days of talks in Germany….The pledge comes a day after the UK said it would cut off the vital Lloyd’s of London insurance market for ships carrying Russian oil, with a waiver for any countries that sign up for the price cap. Pull out a calendar. The sanctions go live in less than four weeks. Both insurance and international trade are complex, legally and documentation-intensive businesses. Parties need time to prepare procedures and forms. But the G7 big kahunas seem to think if they can reduce a plan to PowerPoint, that’s the same as making it happen. Note that one James O’Brien, head of sanctions co-ordination at the US state department, gave the pink paper airy assurances that the industry was providing input and everyone was a grown up, they can see what is coming. That is clearly contradicted by the OilPrice story below. (Originally published at OilPrice.com)Oil cargo could soon be stranded at sea if G7 leadership fails to get insurers details regarding the upcoming—but undefined—price cap mechanism on Russian crude oil, senior industry executives told Reuters this week.The price cap plan—although it can hardly be called a plan at this point—is set to take effect as of December 5, after Canada, France, Germany, Italy, Japan, the UK, and the United States agreed to hold buyers within the group to purchase crude oil from Russia only if it could be purchased below a set minimum.The plan, if the G7 nail down the details—would seek to limit the revenue Russia receives from the sale of crude oil, while allowing those in need to still purchase oil from the sanctioned country.With just three-and-a-half weeks to go before the measure would go into effect, the industry is clamoring for clarity.One lingering question, according to Reuters’ sources, is that insurers could discover that an oil cargo en route was actually sold at a level that exceeded the agreed-upon price cap. As it stands, insurers would need to pull coverage for the cargo, and the buyer would not accept the delivery—what happens after that has not yet been ironed out, and has the potential to leave cargo stranded at sea, at great environmental risk.“If the time is too short, I think everyone will have a Plan B to de-risk, terminate, stay away, not maybe conclude any new contracts until there is some clarity,” George Voloshin, Global Anti-Financial Crime Expert at ACAMS, the Association of Certified Anti-Money Laundering Specialists told Reuters. “It will probably be quite messy.”
Russia largest oil supplier to India in October, surpasses Iraq : The Tribune India -- Russia became India’s largest oil supplier in October, surpassing traditional top sellers Saudi Arabia and Iraq by supplying an average of 9.35 lakh barrels per day (bpd) of crude oil last month, according to data from energy cargo tracker Vortexa.Russian oil accounted for 22 per cent of India’s total crude imports in October as against 20.5 per cent from Iraq and 16 per cent from Saudi Arabia. Russian oil made up for 0.2 per cent of total crude imports in the year ended March 31, 2022.Before war broke out in Ukraine, India imported an average of 36,255 bpd of crude oil from Russia in December last year. During that month, India imported 10.5 lakh bpd from Iraq and 9.52 lakh bpd from Saudi Arabia.Interestingly, India did not import a single barrel from Russia in January and February but imports surged after Moscow unloaded its oil in the market with heavy discounts. In March, India bought 2.66 lakh barrels, rising gradually to an all-time high of 9.42 lakh barrels in June.
Russia becomes India’s largest source of oil and fifth-biggest trade partner - Russia is reported to have become India’s largest supplier of crude oil in October 2022 as refiners stepped up the purchase of discounted seaborne oil. India is estimated to have imported 1.07 million barrels per day (bpd) of crude from that country during the month, up nearly 5 percent from 1.02 million bpd in September, according to cargo tracking and analytical services provider Vortexa. Russia became India’s largest supplier after it bought a record 1.12 million bpd in June, according to the UK-based energy tracking company. Petroleum and natural gas minister Hardeep Singh Puri, however, maintained that Iraq remained the largest supplier, even as he earlier this week in an interview with international news channel CNN defended India’s decision to buy cheaper oil from Russia despite sanctions on that country by the West following its invasion of Ukraine. Traditionally, India has met the bulk of its crude oil needs from Iraq, Saudi Arabia and the United Arab Emirates. However, the decision by OPEC+, the Saudi Arabia-led Organisation of the Petroleum Exporting Countries (OPEC) that also includes some Central Asian, South American and Asia nations apart from Russia, to cut production and maintain prices at elevated levels was a matter of concern for the Indian government. Its pleas to leading producers in West Asia to consider measures to lower the price of the fuel failed to yield any favourable results. Purchasing Russian oil was not an option at one point given the costs involved in transporting the fuel. As a result, Russia’s share in India’s oil import basket was tiny. Commerce ministry data shows that about 2 percent of crude imports worth $2.47 billion came from Russia in 2021-22. In comparison, that is almost equivalent to the imports from that country in April-May of the current fiscal year. That is in no small measure due to the deep discounts offered by Russian that undercut crude oil from West Asia. As a result, Russia’s share in India’s petroleum crude imports by value zoomed to about 16 percent in the first half of the current fiscal. India bought nearly as much crude by volume from Russia in the April-August period as it had from Saudi Arabia, commerce ministry data showed. Volume data for September has not been published by the commerce ministry yet. The rise in oil imports from Russia also made that country India’s fifth largest trade partner in September. Bilateral trade with Russia is now larger than trade with countries such as Indonesia, Iraq, Singapore, South Korea and Australia. Bilateral trade with Russia is mostly a one-way street, dominated by petroleum crude imports. India’s exports to that country have been small. Indian refiners, mostly those in the private sector, imported petroleum crude worth $14.07 billion between April and September 2022. Imports of petroleum products also rose to $1.52 billion. In the same period of the last financial year, India imported crude and products worth only $1.58 billion.
Singapore gas pipelines so far unaffected by oil tanker grounded nearby: EMA - Pipelines conveying natural gas from Indonesia to Singapore have been unaffected so far by an oil tanker grounded nearby, said the Energy Market Authority on Thursday (Nov 3). The Djibouti-registered tanker Young Yong ran aground off Takong Kecil in Indonesia’s Riau Islands in the Singapore Strait, at around 8.20pm on Oct 26, according to a statement issued by the Maritime and Port Authority of Singapore on Monday. “The grounded vessel is in the vicinity of subsea pipelines that convey natural gas from South Sumatra and West Natuna, Indonesia to Singapore for power generation and industrial use,” said EMA in a statement on Thursday. “These pipelines are rock-armoured for additional protection. Thus far, gas supply and pressure from these pipelines remain normal.” The agency added it was closely monitoring the situation and prepared to activate the necessary contingency plans to minimise disruptions to electric supply in Singapore. According to Reuters, the tanker has a capacity of about 2 million barrels of crude oil and is almost full. On Monday, MPA said that prior to the tanker’s grounding, its Port Operations Control Centre (POCC) had issued early shallow water warnings to the vessel, highlighting the potential risks. With the vessel grounded in Indonesian waters, Indonesian authorities are leading refloatation efforts for the tanker as well as preventive efforts against possible oil spills, said MPA. It added that as of Monday, navigation in the Singapore Strait remains unaffected and there have been no reports of injuries or oil pollution. “MPA’s patrol crafts are monitoring for any oil spill pollution within Singapore Port Limits,” said the authority. “MPA’s POCC is also issuing safety broadcasts to warn transiting vessels to keep clear of the location of the grounded tanker.”
Vietnam Gas Stations Start To Close Due To Widespread Shortages - In Vietnam, a tangle of reactions to a constrained petroleum market - including government price controls and distributors' decreasing profits - has worsened the country's gasoline shortage, increasing the burden on domestic refineries.While these refineries are moving to increase gasoline production, it will take time for Vietnam to fully solve the fundamental problems behind its petroleum crisis according to Nikkei Asia.The government in mid-October called on two refineries to boost output to the maximum extent possible in a bid to meet domestic demand. The government also asked distributors to speed deliveries to gas stations. PetroVietnam, the country's largest state-run oil company, responded by raising the operation rate of its Dung Quat refinery in the central province of Quang Ngai to 109% from 107%. A refinery executive said the rate can be pushed to 110% or even higher, should the government make further requests.Oil refineries generally save some production capacity even when declaring they are running at 100%. When they crank up production during emergencies, their operation rate can surpass 100%. At the Nghi Son refinery in the northern province of Thanh Hoa, in which Idemitsu Kosan of Japan has a major stake, production at the beginning of the year had to be substantially cut as it failed to procure sufficient funds to import crude oil. Since April, however, the refinery has been operating near full capacity. According to a refinery source, the plant can afford to increase its operation rate.Alas, these measures are too late to fix what is already a major crisis: since early October, several hundred gas stations in Ho Chi Minh City, the country's biggest metropolis, and in surrounding cities in southern Vietnam have had to occasionally suspend operations, saying they have nothing to sell.One reason for this is that distributors have been unable to pass on their rising costs due to what is effectively a government cap on gasoline prices, according to industry sources. Smaller distributors have been hit particularly hard, discouraging them from supplying stations as their profits turn too meager.Another reason gas stations are temporarily closing is the lack of refineries in the southern part of Vietnam, where Ho Chi Minh City is located and which accounts for about 45% of the country's demand for oil and petrochemical products.Even in the capital of Hanoi, some citizens have rushed to gas stations fearing that the fuel shortage will soon spread north. "Another gas station was closed," said Nam, a weary-looking commuter refueling his motorcycle. "Here I at least got gas after waiting for 20 minutes."Since motorcycles are a common means to commute to work and school in the country, the gasoline situation is hampering the daily activities of many Vietnamese.
'Arctic Silk Road' Comes Alive As Russia Sends Oil To China Western energy sanctions against Russia have helped Moscow achieve the second-ever sail of a crude tanker east through the Arctic Circle toward China, a route dubbed 'Arctic Silk Road,' that could one day revolutionize energy trade flows from Russia to Asia because it's about half the time versus R -- ussia's Baltic ports through the Suez Canal. Vessel tracking data compiled by Bloombergshows the Vasily Dinkov, a specialized ice-breaking tanker, departed from Murmansk, a city in northwestern Russia, off the Barents Sea, hauling a cargo of crude. The vessel traversed Russia's northern coast between Oct. 27 - Nov. 4 and entered the Bering Strait, a strait between the Pacific and Arctic Oceans that separates Alaska and Russia, on Nov. 5.As of Tuesday morning, the tanker is full speed ahead off Russia's Kamchatka Peninsula. Its final destination is the Chinese port of Rizhao on Nov. 17."The journey is the shortest passage between Europe and east Asia, taking half the time to reach China from Russia's Baltic ports than the conventional route through the Suez Canal," Bloomberg said. Even before the war in Ukraine and the resulting sanctions on Moscow, trade flows were already in the beginning stages of shifting towards the Northern Sea Route. In 2017, we noted, "transit routes through the Arctic will assume a certain level of importance vis-à-vis the global geopolitics of Russia and China." Visual Capitalist's Nicholas LePan published a map of all the critical routes and resources in the Arctic in 2019.
Russia Sends Oil Thousands Of Miles Through Arctic Circle Again -Russia sent its second-ever crude oil shipment east through the Arctic Circle toward China, a route that could one day give the country a faster way to buyers in Asia. The Vasily Dinkov, a specialized ice-breaking tanker, is traveling along the Northern Sea Route after loading crude late last month from a storage tanker moored at Murmansk, vessel tracking data compiled by Bloomberg show. The ship, hauling a relatively tiny cargo, crossed Russia’s northern coast and passed through the Bering Strait, separating the country from Alaska, over the weekend. It’s due to arrive at the Chinese port of Rizhao on Nov. 17. The route includes a 3,300-mile voyage across the top of Russia and through some of the planet’s harshest sailing conditions where icebergs and freezing conditions are common. The journey is the shortest passage between Europe and east Asia, taking half the time to reach China from Russia’s Baltic ports than the conventional route through the Suez Canal. It’s unclear how significant the logistics tweak will prove for Russia -- that will depend on how weather conditions develop. Until now, the vast majority of the nation’s Arctic Sea production has been gathered on storage tankers at Murmansk from small shuttle tankers. It’s then re-loaded onto bigger vessels to deliver mostly to Europe. That trade will essentially halt in the coming weeks because the European Union is banning most seaborne imports from Russia from Dec. 5. The Vasily Dinkov is a “very advanced” ship with a specialized ice-breaking hull, but there are only eight that can make such trips, according to Richard Matthews, head of research at E.A. Gibson Shipbrokers Ltd. in London. As such, the route wouldn’t be particularly viable before summer at the earliest. “It looks unlikely that any significant volumes could be shipped along this route until summer,” he said. That the shipment is taking place is a reminder of how the world is getting warmer. World leaders are gathering in Egypt for the next two weeks to discuss ways to combat climate change.
OPEC raises forecast for world oil demand - Even as the globe transitions to renewable energy, the need for oil is going to climb in the medium and long run, and the sector is going to need billions of dollars in investment to keep up with the demand, according to OPEC's 2022 World Oil Outlook released this week. OPEC Secretary General Haitham Al Ghais claims that, compared to last year's estimate, "the overall investment number for the oil sector is USD12.1 trillion out to 2045." According to the analysis, global oil consumption would increase by 2.7 million barrels per day (bpd) to 103 million bpd the next year. The group's 2023 forecast for the overall demand was revised upward by 1.4 million bpd for the next year. According to OPEC, demand is going to be up by roughly two million bpd by the end of the forecast period, which is now extended to 2027. Due to a "strong focus on energy security issues" and a more sustained recovery of the market, the company has changed its projection.
Oil Prices Are Primed To Spike This Winter - Less than a month from now, an embargo on seaborne Russian crude oil exports to the European Union will come into effect. As a result, global oil supply is set to tighten considerably as Russia is the biggest oil and fuels exporter in the world. And the market is preparing. Hedge funds once again like oil, and are buying it on the futures market in considerable volumes, according to Reuters’ John Kemp.Last week, the buying reached 22 million barrels of Brent crude and 15 million barrels of West Texas Intermediate.India is buying Russian crude at a discount, so it is buying a lot: its share of Middle Eastern oil imports fell to the lowest in 19 months in September, according to new data.Russia overtook Saudi Arabia as India’s number-two supplier after Iraq.China is also buying Russian oil and not giving any indications it’s going to stop when the embargo enters into effect. The same is true of the G7 price cap for Russian crude that should also be coming into effect in a few weeks. China has already stated this will not change its current oil-buying habits.Yet, with an EU embargo and a G7 price cap, what will almost certainly happen by the end of the year is that oil will become more expensive than it is now. Perhaps more worryingly, fuels - especially diesel - will become more expensive as the supply of crude oil tightens further while no new refineries are on the horizon.The fuel situation is going to become a lot more complicated in February, too, when the EU’s Russian fuels embargo comes into effect. Currently, the European Union is importing some 400,000 barrels daily of Russian diesel, according to a Wall Street Journal report, as well as 1.7 million barrels daily of diesel from other suppliers. This 400,000 bpd will need to be replaced come February 5. And it will fuel higher inflation.“Europe’s going to pay whatever these producers ask, and it’s going to be very, very high,” Benedict George, head of diesel pricing at Argus Media, told the WSJ. “If something unexpected happens, the price will go very high, very quickly because no one has anything to fall back on.”Indeed, distillate stocks are below historic averages across regions, notably in the United States, which is also a major exporter of oil products to the European Union. This means prices will remain elevated because the only new refining capacity is in the Middle East and China, and it is limited. Demand for diesel fuel, on the other hand, is consistently strong because the fuel is used across the world for freight transport. According to one oil analyst from S&P Global, who spoke to the WSJ, Europe could import more fuels from the U.S. and China, and reduce exports to South America and Africa. This would help it cope, of course, but it will cause a ripple effect on two different continents.There is also the OPEC+ production cut to consider when looking ahead to the next couple of months in oil. Some expect that the anti-Russian oil embargo will lead to a decline of about 1 million bpd in global supply. OPEC+ is cutting another 1 million bpd from its collective production. That’s 2 million bpd in lower oil supply at a time when production growth in the U.S. shale patch is also slowing down.In this context, institutional traders will likely keep buying crude, whatever the outlook for China’s Covid policies that have served as a major deterrent to oil prices this year. Oil supply is about to tighten, and if the G7 manages to put its price cap into effect and Russia stops selling oil to buyers complying with it, supply will tighten a lot. And life will become even more expensive.
OPEC+ Cuts Could Bring On $100 Crude -Oil’s rise toward $100 a barrel is exposing some of the risks in OPEC+’s controversial production cuts. For about a month, the group’s decision appeared to fulfill its stated aim of stabilizing oil markets, with crude prices steadying against a deteriorating backdrop for fuel demand. Now, at the mid-point between the Oct. 5 OPEC+ meeting and the group’s next gathering in December, prices have moved close to triple digits again as the seasonal demand peak threatens to coincide with additional sanctions on Russian supplies. “I think OPEC+ is super-happy with stabilizing Brent in the $90s,” said Helge Andre Martinsen, senior analyst at DNB Bank ASA in Oslo. But “there is a real risk of over-tightening in the next three-to-five months.” Brent rose to a two-month high of $99.56 a barrel on Monday, before paring gains. The January futures contract retreated 0.5% to $97.39 a barrel as of 12:35 p.m. in London on Tuesday. The run-up in prices, just as the US votes in midterm elections, threatens to further inflame relations between Joe Biden and Saudi Arabia, the cartel’s defacto leader. The president has fiercely criticized the kingdom for the supply curbs, accusing the long-time American ally of abetting fellow OPEC+ member Russia in its war on Ukraine. In the weeks following the decision by the Organization of Petroleum Exporting Countries and its allies to cut output by 2 million barrels a day, the political fallout was intense. But initial trends in crude prices and demand gave some vindication to the strategy, which was spearheaded by Saudi Energy Minister Prince Abdulaziz bin Salman. Oil demand has proved to be “significantly lower” than expectations, according to Russell Hardy, chief executive of Vitol Group, the world’s biggest independent crude trader. Demand in China, the world’s biggest oil importer, is unlikely to recover from strict pandemic lockdowns until the second half of 2023, Hardy said in a Bloomberg television interview. “We’re in a world where demand is sloshing downward,” said Ed Morse, head of commodities research at Citigroup Inc. “There’s ample supply in the market.” Instead of the potential shortage that was being predicted a few months ago, global markets now faced a surplus this quarter, according to OPEC Secretary-General Haitham al Ghais. Price differentials in key Asian markets have deteriorated as China re-confirmed its tough anti-Covid measures. The International Monetary Fund has warned that “the worst is yet to come” for the global economy.
Saudi Arabia Cuts Asian Oil Prices As Growth Slows - Saudi Arabia lowered most oil prices for Asia, in a sign of the regional market weakening with the global economic slowdown. Rising interest rates and strict virus-related lockdowns in China have hit energy consumption, causing a 20% drop in crude futures since June. State-controlled Saudi Aramco cut its key Arab Light grade for December sales to Asia, its main market, by 40 cents to $5.45 a barrel above the regional benchmark. That was in line with refiners and traders’ prediction of a 35-cent drop, according to a Bloomberg survey. Yet Brent’s still trading above $95 a barrel because of the prospect of a fall in Russian exports from once the European Union tightens sanctions on Dec. 5, part of the bloc’s efforts to punish Vladimir Putin for his invasion of Ukraine. OPEC+ -- a 23-nation producers alliance led by Riyadh and Moscow -- also decided to reduce output from this month. Aramco’s official selling prices remain historically high amid the tightness of the physical market, in which actual barrels are bought and sold. “It’s a tale of two markets,” Joe McMonigle, head of the International Energy Forum, told Bloomberg TV this week, adding that Russian supply could fall by between 1 million and 3 million barrels a day. “The physical markets are very tight. The paper markets are pricing in bad economic news and a bad recession.” For Asia, Aramco reduced its medium and heavy oil grades to the lowest level in at least nine months. The company mostly raised prices for European buyers, who may struggle to find alternative supplies once the near embargo on imports from Russia is in place. Saudi Arabia sells most of its oil under long-term contracts to Asia, pricing for which is reviewed each month. China, Japan, South Korea, and India are the biggest buyers.
Oil Slips On Demand Concerns But Holds Near $100 A Barrel As Dollar Weakens (Reuters) -Oil prices edged lower on Monday on demand concerns linked to China's stringent COVID containment policy but remained close to $100 a barrel on support from a weaker dollar and recovering Chinese crude imports. Brent crude futures fell by 39 cents, or 0.4% to $98.18 a barrel by 1306 GMT. U.S. West Texas Intermediate crude fell by 47 cents, or 0.51%, to $92.14. Both contracts dropped by more than $1 a barrel earlier in the session after Chinese health officials at the weekend reiterated their commitment to strict COVID containment measures, dashing hopes of a rebound in oil demand from the world's top crude importer. Brent and WTI rose last week, climbing 2.9% and 5.4%, respectively on speculation about a possible end to COVID-19 lockdowns despite the lack of any announced changes. However, prices pared gains on stronger risk sentiment, news of recovering Chinese crude imports and the U.S. dollar weakening against against other currencies, UBS analyst Giovanni Staunovo said. Both contracts remain well above $90 a barrel, with Brent hovering nearer $100. The U.S. dollar sank against the euro on Monday and sterling was supported by risk-on sentiment and a rally in European stock markets. While China's imports and exports contracted unexpectedly in October, its crude oil imports rebounded to the highest level since May. Oil prices have also been underpinned by expectations of tighter supplies when the European Union's embargo on Russia's seaborne crude exports starts on Dec. 5, even though refineries worldwide are ramping up output. U.S. oil refiners this quarter will run their plants at breakneck rates, near or above 90% of capacity. China's largest private refiner Zhejiang Petroleum and Chemical Co (ZPC), meanwhile, is raising diesel output. Kuwait Integrated Petroleum Industries Co (KIPIC) said on Sunday that the first phase of its Al Zour refinery has started commercial operations, the KUNA state news agency reported.
Oil Falls Back After Nearing $100 on Weak Dollar as Markets Play CPI Game The dollar’s tumble on expectations of a Federal Reserve rate pivot brought oil to within cents of $100 a barrel on Monday, vindicating market bulls who’ve been beating since last week the drum on triple-digit pricing. By the close though, crude squandered its midmorning gains and fell further to settle the day in the negative, exhibiting the choppy trade typical before weekly oil inventory data due from the U.S. government. The Weekly Petroleum Status Reports released the last two Wednesdays by the Energy Information Administration, or EIA, have been fairly supportive of longs in the market. China’s affirmation at the weekend of its commitment to a strict COVID containment approach also offset any bullish fervor emerging from news of recovering Chinese crude imports in the world’s largest importing nation. Oil bulls, meanwhile, are banking on the dollar to continue falling ahead of this week’s release of the Consumer Price Index, or CPI, by the Commerce Department on Thursday. With inflation having trended at four-decade highs for a year, some think the forthcoming CPI report for October could show a meaningful retreat in price pressures, reflecting the interest rate hike of 375 basis points by the Fed from just 25 points in March. Economists expect the annual reading for the CPI in October at 8.0%, versus September’s 8.2%, and the monthly rate at 0.6% versus the previous 0.4%. But if both the annual and monthly readings come in sharply lower, the Fed will likely adopt a rate hike of just 50 basis points in December from the four straight increases of 75-bp between June and November. The dollar has been tumbling on that notion. A weak dollar is supportive for crude and other commodities priced in the greenback as it lowers transaction/acquisition costs for users of the euro and other non-dollar currencies. The Dollar Index, which pits the greenback against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, was at under the key 110 mark on Monday versus Thursday’s three-week high of 113.035. “You have to think we need two good [inflation] readings for the Fed to scale back its [rate] expectations and give markets the festive cheer they so clearly want,” “Until then, more choppy and confused trade may be what we get.” New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled down 82 cents, or 0.9%, at $91.79 a barrel. The session high for the so-called WTI was $93.74. London-traded Brent, the global benchmark for oil, settled down 65 cents, or 0.7%, at $97.92 after a session peak at $99.55. Aside from hopes for a Fed rate pivot, the call for crude prices to be above $100 is underpinned by expectations of tighter supplies when the European Union's embargo on Russia's seaborne crude exports starts on Dec. 5 — even though refineries worldwide are ramping up output. “What you’d normally never hear is how the oil industry somehow fixes itself regardless of its structural deficits to supply almost every buyer of the crude that’s needed,” “And to those who think the Fed needs to retreat on rate hikes, just ask yourselves this: If oil goes well beyond $100, how in the world would inflation go down meaningfully given the energy input in almost everything we consume? You don’t need a Harvard degree in economics to ask that question.”
Oil Eases as USD Regains Ground Ahead of Midterms - West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange extended losses into early morning Tuesday, pressured by a stronger U.S. dollar as investors positioned ahead of the midterm elections in the United States that could see Republicans taking control of one or both chambers of Congress, increasing the risk for policy gridlock over the next two years. The likelihood of a Republican sweep in the midterm elections and a divided U.S. government over the second half of President Joe Biden's term in office helped the U.S. Dollar Index gain some ground Tuesday, while pressuring the front-month WTI contract. The U.S. dollar jumped 0.26% against the basket of foreign currencies to above 110.2, while WTI for December delivery, which has an inverse relationship to the greenback, slipped $0.68 to trade just above $91 barrel (bbl). Polls suggest Republicans will win a majority in the House where all 435 seats, 220 of which are currently held by Democratic lawmakers, are up for grabs on Tuesday, and pick up as many as three seats in the Senate, ensuring Republican control over both chambers of Congress. Democrats losing control of Congress will almost certainly limit the room for proactive policymaking and lead to a muted response to the headwinds facing the U.S. economy. Bloomberg economists see a 100% probability for the U.S. to enter a recession over the next 12 months as the Federal Reserve is aggressively raising interest rates with inflation running at a four-decade high. While an economic downturn in 2023 is almost certain, the odds of a recession hitting sooner have also gone up. The model forecasts the likelihood of a recession within 11 months at 73%, up from 30%, and the 10-month probability rose to 25% from 0%. Against this backdrop, investors will get an update on a key inflation metric this week, with the Bureau of Labor Statistics' Consumer Price Index for October scheduled for release on Thursday morning. Consensus calls for headline inflation to moderate to 7.9% from a year earlier, down from September's year-over-year increase of 8.2%. Core CPI, which excludes the volatile food and energy categories, is projected to come in at 6.5%, little changed from last month's 6.6%. Further pressuring the oil complex, China's health officials on Monday rebuffed the reports suggesting Beijing is prepared to loosen COVID-19 restrictions next year, dashing hopes for stronger demand growth in Asia. The country reported 5,436 new cases on Sunday, up 27% from the day before and the most since May 2, when Shanghai was in the midst of its months-long lockdown. "Previous practices have proved that our prevention and control plans and a series of strategic measures are completely correct," Hu Xiang, an official at the National Health Commission's Disease Prevention and Control Bureau, told reporters. "The policies are also the most economical and effective." While this containment strategy has saved lives, it has also clouded China's outlook, exacerbated supply-chain disruptions, and kept millions under lockdown for months. Near 8:00 a.m. EST, ICE January Brent fell $0.45/bbl to $97.47/bbl. NYMEX December RBOB futures declined $0.0140 to $2.6391 per gallon, and December ULSD futures advanced $0.0294 to $3.8105 per gallon.
Oil Falls on Demand Fears as Covid Cases Rise in China -Oil fell as China’s renewed commitment to strict Covid-19 policies overshadowed a global market backdrop of shrinking fuel inventories. West Texas Intermediate fell 3.1% to settle below $89 barrel, while Brent futures traded below $96 barrel. The week started on a sour note as China reaffirmed its commitment to its Covid Zero strategy, which includes demand-sapping movement curbs and lockdowns. Despite the fall, oil has remained within a relatively narrow range, with lackluster trading volumes rendering futures especially susceptible to macro-market moves. Momentum for buying has stalled at the moment, while the market enters a wait-and-see mode, traders said. Meanwhile, the outlook for fuel inventories has tightened after OPEC+ recently slashed output and ahead of ban on Russian exports. Dwindling fuel stockpiles has bolstered the global benchmark’s recent rally toward $100, and Dated Brent --the world’s most important physical oil price, rose above $100 a barrel for the first time since August, according to S&P Global Platts which publishes the benchmark. “Brent crude is hovering below the $100 a barrel level for now but it seems the oil market is convinced it is one headline away from breaking above that key barrier,” said Ed Moya, senior market analyst at Oanda Corp. “Energy traders still remain confident that the oil market is still going to remain tight throughout this winter even if China’s reopening is slightly delayed.” WTI for December delivery fell $2.88 to settle at $88.91 a barrel in New York. Brent for January settlement fell $2.36 to $95.36 a barrel.
Oil down 3% despite weak dollar; U.S. inventories awaited - Oil prices tumbled 3% on Tuesday despite a weaker dollar as Chinese cities widened their Covid dragnet and as players on crude futures markets tried to limit exposure ahead of weekly U.S. inventory data due on Wednesday.Other than Tuesday’s mild rally on Wall Street, most U.S. markets saw dampened trading as investors awaited the outcome of the midterm election where President Joe Biden and Democrats face challenge to their control of the House of Representatives and the Senate.Nonpartisan forecasts and opinion polls suggested a strong chance of Republicans winning a House majority and a tight race for Senate control, Reuters reported. A surprise victory for Democrats, however, could raise concerns about tech-sector regulation as well as budget spending that could add to already-high inflation.Investors are also awaiting a key inflation reading due on Thursday, which is expected to show easing in consumer prices and provide further clues on whether the Federal Reserve could soften its campaign of aggressive U.S. rate hikes.New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled Tuesday’s trading down $2.88, or 3.14%, at $88.91 per barrel, extending the previous session’s near 1% slide. The session low was $88.69.London-traded Brent, the global benchmark for oil, settled down $2.56, or 2.6%, at $95.36 after a session low at $95.13. On Monday, Brent slipped by 0.7%.Crude prices fell as reports of a spike in new coronavirus cases in several Chinese cities, especially Guangzhou, the global manufacturing hub that officials are trying to prevent from becoming China's latest COVID-19 epicenter, to avoid a Shanghai-style multi-month lockdown.The drop in oil markets came despite the dollar’s tumble to a six-week low and a slump in Treasury yields amid the higher risk appetite as investors took the U.S. midterm election in their stride and braced for Thursday's pivotal Consumer Price Index report for October.Economists are expecting the CPI reading to show an annual increase of 8.0% and a monthly growth of 0.6%.Market watchers generally expect price pressures to have cooled from the 40-year highs seen in June, after a barrage of outsize rate hikes by the Fed.Since March, the central bank has raised interest rates six times in a bid to containinflation, with four jumbo-sized hikes of 75 basis points from June onwards that brought rates to a peak of 400 basis points from just 25 in March.If the October CPI report signals a definitive retreat in inflation, the Fed could revert to a rate hike of the 50-basis points that it used in May. Such a drop would be positive for oil and other dollar-denominated commodities though as it lowers transaction/acquisition cost for users of the euro and other non-dollar currencies. The Dollar Index, which pits the greenback against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, remained below the key 110 mark on Tuesday versus Thursday’s three-week high of 113.035. The caveat for oil from a lower CPI report is that crude prices should not rise beyond $100 a barrel if one wants to keep a lid on inflation — given the influence of energy on almost all economic activity. Oil market participants were also on the lookout for U.S. weekly inventory data, due after market settlement from API, or The American Petroleum Institute.
WTI Extends Losses After API Reports Large Unexpected Crude Build -- Despite ongoing dollar weakness, oil prices tumbled for a second straight day as China Zero-COVID easing hopes faded and the crypto meltdown today appeared to hit every asset class for a period..."The lack of a concrete timeline or any real details about plans to reopen the Chinese economy and move away from the still very strict and economically crippling restrictions weighed on the energy market into the afternoon," wrote analysts at Sevens Report Research.Of course, traders are also waiting for any signals on supply/demand tomorrow with tonight's API report offering some early insight...API
- Crude +5.618mm (-700k exp)
- Cushing -1.848mm - biggest draw since May
- Gasoline +2.553mm (-1.2mm exp)
- Distillates -1.773mm (-900k exp)
Expectations were for a small crude draw on top of last week's surprisingly large draw but instead API reported a significant build of 5.618mm barrels. Additionally Cushing saw a major draw and Distillates stocks dropped again... WTI was holding just above $89 ahead of the API data and extended losses below the low of the day after the surprise build...
Oil Prices Decline On US Crude Inventory Build, China Covid Worries (Reuters) -Oil prices slipped on Wednesday after industry data showed that U.S. crude stockpiles rose more than expected and on concerns that a rebound in COVID-19 cases in top importer China would hurt fuel demand. Brent crude futures fell 74 cents, or 0.7%, to $94.62 a barrel by 1201 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 76 cents, or 0.8%, to $88.15 a barrel. The benchmarks fell around 3% on Tuesday. U.S. crude oil inventories rose by about 5.6 million barrels for the week ended Nov. 4, according to market sources citing American Petroleum Institute figures, while seven analysts polled by Reuters estimated on average that crude inventories would rise by about 1.4 million barrels. Last week, the market had latched onto hopes that China might be moving toward relaxing COVID-19 restrictions but over the weekend health officials said they would stick to their "dynamic-clearing" approach to new infections. COVID-19 cases in Guangzhou and other Chinese cities have surged, with millions of residents of the global manufacturing hub being required to have COVID-19 tests on Wednesday. "With that (China reopening) narrative getting pushed back, coupled with a considerable build on U.S. inventory data, implying dimming U.S. demand, the recessionary crews are back out in full force this morning in Asia," Stephen Innes, managing partner at SPI Asset Management, said in a note. In another bearish sign, API data showed gasoline inventories rose by about 2.6 million barrels, against analysts' forecasts for a 1.1 million drawdown. The market will be looking out for official U.S. inventory data from the Energy Information Administration due at 10:30 a.m. EST (1530 GMT) for a further view on demand in the world's biggest economy. Meanwhile, supply concerns remain. "In addition to ongoing OPEC+ supply cuts, Russian oil supply should fall as the EU ban on Russian crude and refined products comes into effect," ING commodities strategists said in a note. The EU will ban Russian crude imports by Dec. 5 and Russian oil products by Feb. 5, in retaliation to Russia's invasion of Ukraine. Russia calls its actions in Ukraine a "special operation".
WTI Extends Losses On US Crude Build, Production Ramp - Oil prices are extending their losses this morning after last night's bigger than expected crude build reported by API and perhaps on increasing odds of gridlock in Washington meaning less oil industry pressure from the left. Also, no signs at all from China of any easing in their Zero-COVID policies, with cases in Beijing hitting the highest in more than five months despite the nation’s program of lockdowns and mass testing, is not helping oil bulls.“For now, the market worries about fresh lockdowns hurting sentiment and demand, and together with the API storage report it has triggered some light selling,” said Ole Hansen, head of commodities strategy at Saxo Bank.“Especially after the failed attempt to break higher through recent highs earlier in the week.”The official supply/demand data this morning is key for where we go next:"Inventory numbers should be in focus this week as the U.S. will aim to extend last week's small increase to distillate stocks, which remain persistently low," said Robbie Fraser, manager, global research and analytics at Schneider Electric, in a daily note."Strong export demand has kept diesel in short supply, and some additional inventories would be welcomed ahead of a heating season that could carve out more room for diesel as global natural gas supply remains tight," said Fraser. DOE
- Crude +3.925mm (-700k exp)
- Cushing -923k - biggest draw since June
- Gasoline -900k (-1.2mm exp)
- Distillates -521k (-900k exp)
API reported a major crude build overnight (despite analyst expectations for a small draw) and the official data confirmed it with a 3.925mm bbl build. Cushing stocks fell by the most since June and Gasoline and Distillates inventories drewdown...
Oil Futures Fell for the Third Straight Day on Wednesday - Oil futures fell for the third straight day on Wednesday after a weekly EIA report showed a large increase in commercial crude oil inventories that was mostly due to more government sales of crude oil from the nation’s strategic reserves to the private sector. A week-on-week uptick in US oil production to 12.1M barrels a day also helped to boost supplies. On the fuels side, inventories of both gasoline and distillates declined from the previous week, and implied US gasoline demand rose to 9M barrels a day. A drop in US stock markets is adding to the selling pressure on crude. Ongoing concerns over the impact of China’s zero COVID policy on that country’s demand for oil also added pressure on oil prices. WTI for December delivery lost $3.08 per barrel, or 3.46% to $85.83. Brent Crude for January delivery lost $2.71 per barrel, or 2.84% to $92.65. RBOB Gasoline for December delivery lost 9.21 cents per gallon, or 3.49% to $2.5446, while ULSD for December delivery lost 11.44 cents per gallon, or 3.03% to $3.6563. The head of the International Energy Agency, Fatih Birol, said oil prices "flirting with $100" were a real risk for the global economy, adding that he was surprised by the OPEC+ decision to cut output at its October 5th meeting. He said "Those countries (oil producers) in the past took decisions which did comfort the oil markets...this decision may put further upward pressure on inflation and weaken the global economy." He said “The recent decision of OPEC+ to cut the production by 2 million bpd was definitely not helpful.” He added that the move is fueling inflation, especially in developing countries, and may require a “rethink”.Iraq's Oil Ministry said it respects the OPEC+ agreement to achieve global market stability, and wants to raise the "value or revenue" of a barrel of oil in a way that works for both producers and consumers.European diesel imports are on track to reach 4.9 million tons in November, down from about 6.4 million tons in October. Refinitiv reported that about 40% of the November imports are expected to come from Russia, relatively unchanged from October’s level.IIR Energy reported that U.S. oil refiners are expected to shut in about 518,000 bpd of capacity in the week ending November 11th, increasing available refining capacity by 253,000 bpd. Offline capacity is expected to decrease to 347,000 bpd in the week ending November 18th.Chevron said an isolated fire inside its 269,000 bpd El Segundo refinery in California was extinguished on Tuesday and did not occur at any of the facility’s major processing units. It said the fire did not impact the refinery’s ability to supply petroleum products to its customers in the region. Flint Hills Resources LLC reported emissions from crude unit fugitives F-40 at its Corpus Christi, Texas West refinery. It reported that it discovered a pinhole leak from a 16-inch diesel line at the crude unit on November 6th.
Oil down 3% again on U.S. stockpile build, IEA warns against $100 a barrel -- U.S. oil inventories have been volatile of late and crude prices have been overreaching on their way up and down, depending on whether the data shows a stockpile build or drop. But when the head of the International Energy Agency, or IEA, cautions about the damage $100 a barrel can do to the economy, especially when U.S. crude stockpiles come in three times more than forecast, expect the “damage” to oil bulls to be worse. Oil prices fell 3% for a second day in a row to show a net loss of 7% on the week — that wiped out all of last week’s 5% gain — as IEA chief Fatih Birol’s warning about the hazards of triple-digit pricing coincided with a large crude stockpile build reported by the U.S. government. New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled Wednesday’s trading down $3.08, or 3.5%, at $85.83 per barrel, extending the near 4% slide from two previous sessions. WTI hit a three-month high of $93.74 on Monday. London-traded Brent, the global benchmark for oil, settled down $2.71, or 2.8%, at $92.65, adding to the 3.2% drop between Monday and Tuesday. Earlier this week, Brent came within cents of touching $100, with a session high of $99.56. Crude inventories jumped by 3.925 million barrels during the week to Nov. 4, the Washington-based Energy Information Administration, or EIA (not to be confused with Birol’s Paris-based IEA), said. The market had expected a build of 1.36M barrels instead. In the previous week to Oct. 28, crude inventories saw a drop of 3.115M in stockpiles. Distillate stockpiles fell by 0.521M barrels last week versus a forecast drop of 0.8M. In the previous week, distillates saw a build of 0.427M. Gasoline inventories, meanwhile, dropped by 0.899M barrels, against expectations for a draw of 1.08M barrels, the EIA said. In the previous week, gasoline saw a drop of 1.257M in stockpiles. Total U.S. gasoline consumption for last week was impressive at 9.011M barrels per day, versus the previous week’s 8.66M bpd. But other key statistics like crude exports and production were disappointing. Crude exports have stabilized at around 3.5M barrels per day from the 5M bpd peak of two weeks ago, and withdrawals from the SPR appeared to be their last gasp of around 3M barrels per week. U.S. crude production, meanwhile, has jumped to 12.1M bpd, up 200,000 from the previous week. Birol, the executive director at the IEA, added to oil’s bearish case when he said prices flirting with $100 per barrel were “a real risk to the global economy”. “OPEC+ production cuts could push inflation even higher and weaken the global economy,” Birol added. The IEA chief’s warning touched on an area that had been overlooked of late as OPEC+, officially led by Saudi Arabia, with allies steered by Russia, pushed ahead with maximizing revenue for its oil by announcing a production cut of 2M barrels per day from this month even as global crude supplies were in a structural deficit. Oil bulls’ support for OPEC+ isn’t surprising as they typically support every supply crunch — real or artificial. But many are also hoping inflation would cool enough for the U.S. Federal Reserve to step away from the jumbo-sized rate hikes it has been doing since March.
Inflation in the U.S. Last Month Was Lower Than Expected - Oil futures erased early losses on Thursday, moving higher after the U.S. Bureau of Labor Statistics released data for October showing that inflation in the U.S. last month was lower than expected. Over the last 12 months, the CPI increased by 7.7% before seasonal adjustment, which again was lower than the 7.9% expected annual inflation for October. The lower-than-expected inflation data instilled confidence in the markets, including the oil market, that the Fed may have reasons to pivot from the aggressive interest rate hikes in recent months. A potentially slower pace of interest rate increases could reinvigorate economic growth and oil demand growth. Speculation about a Fed pivot on interest rate hikes to tame inflation sent oil prices higher at the end of last week. WTI for December delivery gained 64 cents per barrel, or 0.75% to $86.47. Brent for January delivery gained $1.02 per barrel, or 1.10% to $93.6. RBOB Gasoline for December delivery gained 2.17 cents per gallon, or 0.85% to $2.5663. ULSD for December delivery lost 8.69 cents per gallon, or 2.38% to $3.5694.According to the General Administration of Customs, China’s diesel exports increased significantly in September after being severely restricted over the previous 13 months. Exports increased to 1.73 million tons or 430,000 bpd in September, up from an average of 460,000 tons per month or 114,000 bpd between August 2021 and August 2022. Reuters reported that increased exports will provide some relief amid a global diesel shortage, but are unlikely to be enough to stabilize and rebuild global inventories, or offset any future disruption as a result of sanctions on Russia’s fuel exports. Saudi Aramco told at least four refinery customers in North Asia they will receive full contract volumes of crude oil in December. It is maintaining a steady supply to Asia despite the decision by OPEC+ to lower the group’s target by 2 million bpd starting this month. The Benicia Fire Department reported that Valero’s 145,000 bpd Benicia, California refinery flared for a short period after experiencing a mechanical issue. The second largest crude distillation unit, a reformer and a lube oil hydrocracker completed their restart and were operating at Motiva Enterprises’ 636,000 bpd Port Arthur, Texas refinery. Motiva’s 81,000 bpd fluid catalytic cracking unit was operating normally on Thursday after a malfunction on Wednesday. U.S consumer prices increased less than expected in October and underlying inflation appeared to have peaked, which would allow the Federal Reserve to dial back its interest rate hikes. The U.S. Labor Department said the Consumer Price Index increased by 0.4% in October after increasing by the same margin in September. In the 12 months through October, the CPI increased 7.7% after rising 8.2% on the same basis in September. Excluding the food and energy components, the CPI increased 0.3% in October after gaining 0.6% in September. The so-called core CPI is being driven by surging rents as soaring mortgage rates price out prospective buyers. The core CPI increased 6.3% in the 12 months through October. The core CPI increased 6.6% on a year-on-year basis in September.
Oil up modestly on chance for fed pivot; China Covid limits gains -- Crude prices climbed out of a three-day hole as U.S. inflation at 9-month lows suggested the Federal Reserve could do a smaller rate hike in December that could benefit businesses as a whole, including oil drillers and refiners. But while most commodities rallied strongly Thursday on the prospect of the Fed rate pivot — gold, for instance, gained more than 2% as the dollar fell its most in a day in 11 years — crude was one of the laggards. New York-traded West Texas Intermediate, or WTI, settled up 64 cents, or 0.75%, at $86.47 per barrel, after a 7% slide between Monday and Wednesday. Just before this week’s tumble, the U.S. crude benchmark hit a three-month high of $93.74 on Monday. London-traded Brent, the global benchmark for oil, settled up $1.02, or 1.1%, at $93.67, after a 6% drop in the past three days. On Monday, Brent came within cents of touching $100, with a session high of $99.56. Commodities saw a broad-based rally on Thursday as the Dollar Index, which pits the greenback against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, fell 1.9% to hover at the 108 mark versus last Thursday’s three-week high above 113. Investing.com data showed it to be the dollar’s biggest percentage loss in a day since Oct. 27, 2011 when it also fell 1.9%. OIl’s relatively modest rise was due to continued horror stories on Covid infections and lockdowns in top oil importing country China. In the capital of China’s export-heavy Guangdong province, new coronavirus cases exploded, raising fears of late that the area could see the type of tough curbs placed on Shanghai earlier this year. “To the oil market, the damage from China lockdowns far outweigh the benefits from any easing in Fed rates,” China Covid fears aside, oil also saw an outsized price drop on Wednesday after data showing U.S. crude inventories jumping by almost 4.0 million barrels during the week to Nov. 4, about three times more than forecast. On the inflation front, the U.S. Consumer Price Index, or CPI, expanded by just 7.7% over a 12-month period, versus a growth of 8% forecast by economists and against the previous yearly growth of 8.2% to September. Historical data showed it to be the lowest annual reading for inflation since January. Prior to October, both the White House and economic policy-makers at the Federal Reserve had struggled to contain inflation, with the annual reading for the CPI hitting a four-decade high of 9.1% in June. In its bid to control inflation, the Fed has added 375 basis points to interest rates since March via six rate hikes. Prior to that, interest rates were at a peak of just 25 basis points as the central bank cut rates to nearly zero after the global outbreak of the coronavirus pandemic in 2020. The Fed’s rate hikes have pushed up borrowing costs, adding to higher overall expenses for consumers, some of whom have begun to rein in their spending. U.S. consumer confidence, one of the pillars of the economy, hit three-month lows in October, according to The Conference Board, which groups public and private corporations that track and publish economic data. The Fed, which executed four back-to-back jumbo rate hikes of 75 basis points from June through November, is contemplating a more modest 50-basis point increase in December. The latest CPI reading might enable the central bank to do that, economists said.
Oil prices jump by over 2% as China eases some coronavirus restrictions - Oil prices jumped more than 2% on Friday after health authorities in China, the top global crude importer, eased some of the country's heavy COVID curbs. Brent crude futures rose $2.39, or 2.6%, to $96.06 a barrel by 0745 GMT, extending a 1.1% rise in the previous session. U.S. West Texas Intermediate (WTI) crude futures gained $2.24, or 2.6%, to $88.71 a barrel, after climbing 0.8% in the previous session. The easing curbs include shortening quarantine times for close contacts of cases and inbound travellers by two days, as well as eliminating a penalty on airlines for bringing in infected passengers. "Oil traders are applauding the news. The key for oil markets is to continue watching developments closely for this and further marginal positive changes in the government's zero-COVID stance," said Stephen Innes, managing partner at SPI Asset Management. The move towards liberalising the COVID-zero policy will provide a springboard for oil markets, given that lockdowns hurt mobility and oil prices more than economic activity, he said. Prices also picked up on Friday after milder-than-expected U.S. inflation data reinforced hopes that the Federal Reserve would slow down rate increases, boosting chances of a soft landing for the world's biggest economy. A weaker U.S. dollar also supported oil prices as it makes the commodity cheaper for buyers holding other currencies. Still, the benchmark oil contracts were headed for weekly declines of more than 1% due to rising U.S. oil inventories, and lingering fears over capped fuel demand in China amid an uptick in daily COVID cases. China's COVID-19 case load soared to its highest since the lockdown in Shanghai earlier this year. Both Beijing and Zhengzhou reported record daily cases. Besides work-from-home orders reducing mobility and fuel demand, travel across China remained subdued as people wanted to avoid the risk of being caught up in quarantine, ANZ Research analysts said in a note.
Crude settles higher; Yellen says India can buy Russian oil outside price cap | Arab News - Oil prices settled higher on Friday but fell week-on-week after health authorities in China eased some of the country’s heavy COVID-19 curbs, raising hopes for improved economic activity and demand in the world’s top crude importer. Brent crude futures settled up $2.32 at $95.99 a barrel, extending a 1.1 percent rise from the previous session but falling 2.6 percent on the week. US West Texas Intermediate crude futures settled up $2.49, or 2.9 percent, at $88.96 a barrel, after climbing 0.8 percent in the previous session but down nearly 4 percent on the week. The US is happy for India to continue buying as much Russian oil as it wants, including at prices above a G7-imposed price cap mechanism, if it steers clear of Western insurance, finance and maritime services bound by the cap, US Treasury Secretary Janet Yellen said on Friday. The cap would still drive global oil prices lower while curbing Russia’s revenues, Yellen said in an interview with Reuters on the sidelines of a conference on deepening US-Indian economic ties. Russia will not be able to sell as much oil as it does now once the EU halts imports without resorting to the capped price or significant discounts from current prices, Yellen added. “Russia is going to find it very difficult to continue shipping as much oil as they have done when the EU stops buying Russian oil,” Yellen said. “They’re going to be heavily in search of buyers. And many buyers are reliant on Western services.” India is now Russia’s largest oil customer other than China. Yellen told Reuters that India and private Indian oil companies “can also purchase oil at any price they want as long as they don’t use these Western services and they find other services. And either way is fine.” Oil and gas producers Canada and Nigeria have become the latest countries to tackle the potent greenhouse gas methane with laws to rein in emissions in the fossil fuel energy sector. The announcements came as the US on Friday said it would expand its own rules to require oil and gas drillers to find and fix leaks of methane at all of the country’s well sites. Methane has more than 80 times the planet-warming potency of CO2 in its first 20 years, but breaks down faster in the atmosphere, making it a high-value target for near-term efforts to slow climate change. Canada said its new rules would target a 75 percent cut in methane emissions from the oil and gas sector by 2030, including through a proposed monthly requirement for oil and gas companies to find and fix methane leaks in their infrastructure. “It’s kind of a big deal for us, we are the fourth biggest producer of oil and gas. So, we have a big responsibility, but it’s also a big challenge,” Canadian Environment Minister Steven Guilbeault said at the UN climate summit on Friday. Nigeria, among the world’s top 10 methane emitters, announced new rules for how to reduce emissions in its oil and gas industry. They include requirements for leak detection and repair, limits to flaring and controls on venting equipment. Methane is the main component of natural gas, and leaches into the atmosphere from oil wells and leaky gas pipelines.
Iranian Oil Pipeline Catches Fire As Mass Protests Continue -A fire erupted at an oil pipeline in the southwest of Iran this weekend in an incident authorities are still investigating amid continued anti-government protests and clashes in the country following the death of Mahsa Amini, who was arrested by the morality police. According to Iranian media and videos shared on Twitter, an oil pipeline in the southwestern Iranian port city of Bandar Mahshahr caught fire on Sunday, the Jerusalem Post reported, noting that neither the regime nor semiofficial media in Iran had reported that sabotage may have caused the fire.The fire has caused some damage, but no casualties have been reported, according to Iranian news agency IRNA quoted by the Jerusalem Post.The anti-government protests in the Islamic Republic started in September after Mahsa Amini died of injuries three days after being detained by morality police for not wearing a headscarf properly, as dictated by Iran’s strict rules on women’s wear. The protests continue, and even oil workers in Iran have joined them, while the government is trying to crack down on the biggest mass dissent in the country in decades.In October, dozens of Iranian oil workers joined nationwide protests, and striking petrochemical workers at the Asaluyeh refinery chanted “death to the dictator” and walked off the complex on October 11, a video shared on Twitter by Bloomberg showed. The workers also set tires on fire to block the road for Iran’s security forces.The Iranian government has blamed the protests on Iran’s enemies, including the United States, saying it’s a ploy run by armed dissidents, among others. Protesters have continued to brave the harsh crackdown by security forces, burning pictures of Supreme Leader Ayatollah Ali Khamenei, calling for the downfall of the clerical establishment, and chanting “Death to the Dictator.” Iranian authorities have, however, denied that the protests are in any way related to nuclear talks.
Iraq Daily Roundup: 11 Killed - Antiwar.com Original -- At least 11 people were killed, and another was wounded in recent violence:Two Turkish soldiers were killed in a bomb blast in northern Iraq. A Turkish soldier was killed during a Kurdistan Workers’ Party (P.K.K.) attack.Near Bani Saad, the body of a security member was found.Gunmen killed a truck driver near Abu Saida.In Baghdad, a dumped body was discovered.Three ISIS members were killed during an operation on Mount Badush. One of them was described as an emir. Special Forces killed two ISIS members and wounded another in Chamchamal.
US To Establish Another New Military Base In Northeast Syria -The US-led international coalition forces operating in northeastern Syria intend to establish a new military base in their controlled areas in the countryside of Raqqa. Local sources said that a convoy of US forces, including several armored military vehicles, arrived in Raqqa city as part of preparations to install a new base in the area.On the field, the illegal troops began transferring the logistical equipment and necessary gear to the specified location, coinciding with heavy surveillance drone activity. The US army and international coalition occupy at least 28 declared military sites in Syria, distributed over three provinces, mainly Hasakah (17 sites), Deir Ezzor (nine locations), and Homs (two areas). The UK-based Syrian Observatory for Human Rights (SOHR) released photographs showing the construction of a new base near Al-Raqqa Bridge on the Euphrates River, south of the city. The distribution of Washington’s illegal bases resembles the cordon surrounding the sources of oil and gas located east of the Euphrates River, representing most of Syria’s underground wealth.
Syria: Parties to the Conflict Aggravate Cholera Epidemic (HRW) - Turkish authorities are exacerbating an acute water crisis that is believed to have given rise to the deadly cholera outbreak spreading across Syria and into nearby countries, Human Rights Watch said today. All parties to the conflict need to ensure the right to clean water and health for everyone in Syria. The Turkish authorities have failed to ensure an adequate water flow downstream into the Syrian-held portion of the Euphrates river and a consistent water supply from Allouk water station, a critical source of water located in an area of northern Syria under their control, to areas held by Kurdish-led forces in northeast Syria. Discriminatory diversion of aid and essentialservices by the Syrian government as well as ongoing security and access constraints across all of Syria inhibit an adequate humanitarian and emergency response in affected parts of the country.“This devastating cholera outbreak will not be the last water-borne disease to impact Syrians if the country’s severe water problems are not immediately addressed, particularly in the northeast,” said Adam Coogle, deputy Middle East director at Human Rights Watch. “Turkey can, and should, immediately stop aggravating Syria’s water crisis.”The Syrian Health Ministry declared a cholera outbreak on September 10, 2022, with the former UN Humanitarian Relief Coordinator Imran Riza calling it a “serious threat to the Syrian people” and to the entire Middle East region. As of November 1, the World Health Organization had recorded 81 deaths from cholera in Syria and more than 24,000 suspected cases. Cholera has since spread to Lebanon, a country enduring multiple crises.Human Rights Watch spoke to 10 humanitarian workers at 5 international aid organizations working in and on Syria. They highlighted the water crisis, the shortage of medical supplies to the northeast, and the lack of consolidated information from all regions of Syria as major obstacles to an effective response. Researchers also reviewed internal reports by humanitarian organizations on the water crisis from May 2021 onward and on the cholera outbreak more recently.More than 10 years of conflict have fragmented Syria, decimating its civilian infrastructure and services, including healthcare facilities, water and sanitation systems, and electricity grids. The United Nations estimates that two-thirds of Syria’s water treatment plants, half of its pumping stations, and a third of its water towers have been damaged since 2011. “Cholera does not have to be fatal,” said an aid worker for northeast Syria, stressing that malnutrition rates, the country’s severely damaged healthcare system, and the lack of safe drinking water for many people make the situation so acute.
No comments:
Post a Comment