natural gas prices are lowest in a year; US oil supplies are at a new 36½ year low, Strategic Petroleum Reserve is at a new 39 year low; oil + oil products supplies are at an 18½ year low
US oil prices finished lower for the first time in four weeks as global recession worries weighed on the outlook for demand...after rising 0.9% to $80.26 a barrel last week after Russia cut off oil supplies to the countries plotting to cap their prices and traders anticipated a recovery in Chinese demand, the contract price for the benchmark US light sweet crude for February delivery edged lower in volatile Asian trading early on Tuesday as weak demand data from China and a gloomy economic outlook weighed on traders, and then nosedived in the New York session to settle $3.33 lower at $76.93 a barrel on the back of a rallying U.S. dollar and reports that OPEC had raised oil production in December amid recoveries in Nigerian and Iraqi output....prices slumped further in early trading on Wednesday as the deepening global downturn was widely expected to cool down oil consumption, then tumbled $4.09 or more than 5% to a three week low of $72.84 a barrel after minutes of the Fed's December meeting revealed no interest rate cuts were on the horizon in 2023, as officials signaled they are committed to fighting inflation despite growing risks of pushing the economy into recession...however, oil prices opened higher on Thursday after American Petroleum Institute data showed that combined gasoline and distillate fuel stocks fell by more than 3 million barrels during the final week of 2022, offsetting a larger-than-expected build in domestic crude oil stockpiles, and then extended those early gains after the EIA reported a smaller crude build, lower fuel supplies, and the SPR at a 1983 low, and settled 83 cents higher at $73.67 a barrel as the weak US stockpile build countered the dour outlook that followed Saudi Arabia’s decision to cut its prices....oil prices edged higher early Friday on hopes of a Chinese demand boost, but the weak broader global economic outlook limited the gains, and then backed off to settle just 10 cents higher at $73.77 a barrel as the U.S. jobs report caused the U.S. dollar to rally as traders bet that inflation was easing and that the Fed wouldn't be as aggressive as some feared, but still ended 8.1% lower for the week, their biggest weekly drop to start the year since 2016...
At the same time, natural gas prices finished lower for the fifth time in six weeks, as forecasts for exceptional mid-winter warmth continued to drive prices....after falling 10.1% to a ten month low of $4.475 per mmBTU last week on forecasts for warm weather to persist over most of the country through mid January, the contract price of US natural gas for February delivery opened 47 cents lower on Tuesday on forecasts that even more bearish weather conditions were expected to last at least another ten days and settled down 48.7 cents or nearly 11% at $3.988 per mmBTU on forecasts for highs in the 60s and 70s over the southern US, with very few sub-freezing daytime highs over the northern US...natural gas prices partly rebounded on Wednesday, despite ongoing forecasts for unseasonably mild weather, rising 18.4 cents to $4.172 per mmBTU, amid estimates for a massive storage withdrawal report and forecasts for higher-than-expected demand for LNG exports over the next two weeks...however, after the EIA reported a smaller-than-expected storage draw, natural gas prices tumbled another 11% and settled 45.2 cents lower at $3.720 per mmBTU, the lowest settlement in more than a year...February futures floundered further on Friday as warmer-than-normal forecasts persisted, and natural gas prices settled another penny lower at $3.710 per mmBTU, thus finishing down 17.1% on the week in "the worst start to a year on record"....
The EIA's natural gas storage report for the week ending December 30th indicated that the amount of working natural gas held in underground storage in the US fell by 221 billion cubic feet to 2,891 billion cubic feet by the end of the week, which meant our gas supplies were 308 billion cubic feet, or 9.6% less than the 3,199 billion cubic feet that were in storage on December 30th of last year, and 208 billion cubic feet, or 6.7% less than the five-year average of 3,099 billion cubic feet of natural gas that were in storage as of the 30th of December over the most recent five years....the 221 billion cubic foot withdrawal from US natural gas working storage for the cited week was less than the average forecast for a 228 billion cubic feet withdrawal in a Reuters poll of analysts, but much more than the 46 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, and also much more than the average 98 billion cubic feet of natural gas that have typically been withdrawn from our natural gas storage during the same winter 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 December 30th indicated that after a big drop in our oil refining due to freeze-offs during the Christmas weekend polar outbreak, we had oil left to add to our stored commercial crude supplies for the 3rd time in 8 weeks, and for the 21st time in the past 37 weeks, despite a decrease in our imports and an increase in our exports. Our imports of crude oil fell by an average of 540,000 barrels per day to average 5,712,000 barrels per day, after rising by an average of 433,000 barrels per day during the prior week, while our exports of crude oil rose by 742,000 barrels per day to average 4,207,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,505,000 barrels of oil per day during the week ending December 30th, 1,282,000 fewer 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 100,000 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 13,605,000 barrels per day during the December 30th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 13,820,000 barrels of crude per day during the week ending December 30th, an average of 2,330,000 fewer barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net average of 151,000 barrels of oil per day were being pulled out of 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 December 30th appears to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 64,000 barrels per day less than what our oil refineries reported they used during the week. To account for that modest disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+64,000) 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 an omission or error of that size in this week’s oil supply & demand figures that we have just transcribed.... However, since last week’s “unaccounted for crude oil” was at (+966,000) barrels per day, that means there was a 902,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, thus rendering those comparisons useless...nonetheless, since most everyone treats these weekly EIA reports as gospel, and since these weekly 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 151,000 barrel per day decrease in our overall crude oil inventories left our oil supplies at 793,026,000 barrels at the end of the week, which was our lowest total oil inventory level since January 17th, 1986, and therefore at another 36 1/2 year low....Our oil inventories decreased this week as an average of 242,000 barrels per day were being added to our commercially available stocks of crude oil, while 393,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve. That draw from the SPR should be the last extension of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump" (sic), that was originally 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 over that time. The SPR withdrawals under that program began fluctuating during the summer because the administration had also been attempting to use the Strategic Petroleum Reserve to manipulate prices on a weekly basis. Before that plan even ran out, Biden announced another 15,000,000 barrel release from the Strategic Petroleum Reserve to run through the end of 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. Then, on December 16th, the administration announced an initial token purchase of three million barrels under that plan, for oil to be delivered back to the SPR in February. 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 283,767,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 29 months, and as a result the 372,380,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since December 2nd, 1983, or at a new 39 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 Biden release program, which should have finished at the end of December, will have released almost a third of what remained in the SPR when the program started, and leave us with what is less than a 20 day supply of oil at the current consumption rate to begin the new year.
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,162,000 barrels per day last week, which was still 2.6% less than the 6,327,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day higher at 12,100,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,600,000 barrels per day, while Alaska’s oil production was 1,000 barrels per day lower at 453,000 barrels per day and had no impact on the rounded national total. (by the EIA's math). US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 7.6% below that of our pre-pandemic production peak, but was 24.7% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.
US oil refineries were operating at 79.6% of their capacity while using those 13,820,000 barrels of crude per day during the week ending December 30th, down from their 90.2% utilization rate during the prior week, and a well normal utilization rate for late December. The 13,820,000 barrels per day of oil that were refined this week were 12.9% less than the 15,867,000 barrels of crude that were being processed daily during week ending December 31st of 2021, and 20.0% less than the 17,283,000 barrels that were being refined during the prepandemic week ending December 27th, 2019, when our refinery utilization was at 94.5%, as refinery utilization typically rises into late December ...
With the decrease in the amount of oil being refined this week, gasoline output from our refineries was quite a bit lower, decreasing by 1,678,000 barrels per day to 8,466,000 barrels per day during the week ending December 30th, after our gasoline output had increased by 592,000 barrels per day during the prior week. This week’s gasoline production was 0.5% less than the 8,506,000 barrels of gasoline that were being produced daily over the same week of last year, and 16.8% less than the gasoline production of 10,173,000 barrels per day during the prepandemic week ending December 27th, 2019. At the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 1,050,000 barrels per day to 4,035,000 barrels per day, after our distillates output had decreased by 17,000 barrels per day during the prior week. After that big decrease, our distillates output was 18.7% less than the 4,935,000 barrels of distillates that were being produced daily during the week ending December 31st of 2021, and 24.0% less than the 5,311,,000 barrels of distillates that were being produced daily during the week ending December 27th 2019...
With the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the 2nd time in eight weeks and for the 12th time in 21 weeks, decreasing by 346,000 barrels to 222,662,000 barrels during the week ending December 30th, after our gasoline inventories had decreased by 3,105,000 barrels during the prior week. Our gasoline supplies fell by less this week despite the production drop because the amount of gasoline supplied to US users fell by 1,813,000 barrels per day to 7,514,000 barrels per day, even as our exports of gasoline rose by 201,000 barrels per day to 1,057,000 barrels per day, and as our imports of gasoline rose by 15,000 barrels per day to 551,000 barrels per day. But after 6 prior gasoline inventory increases, our gasoline supplies were little changed from last December 31st's gasoline inventories of 222,659,000 barrels, while falling to about 6% below the five year average of our gasoline supplies for this time of the year…
With the decrease in our distillates production, our supplies of distillate fuels also decreased for the 2nd time in 8 weeks, and for the 27th time over the past year, falling by 1,427,000 barrels to 118,785,000 barrels during the week ending December 30th, after our distillates supplies had increased by 283,000 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 1,081,000 barrels per day to 2,799,000 barrels per day, because our imports of distillates fell by 47,000 barrels per day to 113,000 barrels per day and because our exports of distillates rose by 229,000 barrels per day to 1,553,000 barrels per day... After fifty-four inventory withdrawals over the past eighty-eight weeks, our distillate supplies at the end of the week were were 6.4% below the 126,846,000 barrels of distillates that we had in storage on December 31st of 2021, and about 14% below the five year average of distillates inventories for this time of the year...
Meanwhile, after the big drop in our oil refining, our commercial supplies of crude oil in storage rose for the 9th time in 21 weeks and for the 21st time in the past year, increasing by 1,694,000 barrels over the week, from 418,952,000 barrels on December 23rd to 420,646,000 barrels on December 30th, after our commercial crude supplies had increased by 718,000 barrels over the prior week. After this week's increase, our commercial crude oil inventories rose to around 4% below the most recent five-year average of crude oil supplies for this time of year, and were still more than 28% above the average of our crude oil stocks as of the last weekend of December 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 December 30th were 0.7% more than the 417,851,000 barrels of oil we had in commercial storage on December 31st of 2021, but 13.4% less than the 493,469,000 barrels of oil that we had in storage on January 1st of 2021, and 2.2% less than the 429,896,000 barrels of oil we had in commercial storage on December 27th 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. After the SPR, gasoline and distillate inventory decreases we've already noted for this week, 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 5,872,000 barrels this week, from 1,583,499,000 barrels on December 23rd to 1,577,627,000 barrels on December 30th, after our total inventories had decreased by 14,737,000 barrels during the prior week. This week's decrease left our total petroleum liquids inventories down by 210,806,000 barrels over the past 52 weeks, and at their lowest since May 14th, 2004, or at a new 18 1/2 year low...
This Week's Rig Count
The number of drilling rigs active in the US decreased for the 10th time over the prior 23 weeks during the week ending January 6th and is now 2.7% below the prepandemic level....Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 7 to 772 rigs over the past week, which was still 184 more rigs than the 588 rigs that were in use as of the January 7th report of 2022, but was 1,157 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business. .
The number of rigs drilling for oil decreased by 3 to 618 oil rigs during the past week, after the number of rigs targeting oil had decreased by 1 during the prior week, but there are still 137 more oil rigs active now than were running a year ago, even as they amount to just 38.4% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 9.5% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 4 to 152 natural gas rigs, which was still up by 45 natural gas rigs from the 107 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.4% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….
Other than those rigs targeting oil and natural gas, Baker Hughes reports that two "miscellaneous" rigs continued drilling this week: 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 haven't seen any details on either of those wells, in the past we've identified various "miscellaneous" rig activity as being for exploration, for carbon dioxide storage, and for utility scale geothermal projects...a year ago, there were were no such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico increased by one to sixteen rigs this week, with 15 rigs now drilling in Louisiana's offshore waters, and one rig still drilling for oil offshore from Texas....that Gulf rig count equals the 16 Gulf rigs running a year ago, when 15 of the Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas...since there aren't any rigs drilling off our other coasts, the Gulf rig count equals the national offshore count..
In addition to rigs running offshore, there are still two water based rigs drilling through inland bodies of water this week; those include a directional rig drilling for oil at a depth greater than 15,000 feet in Terrebonne Parish, Louisiana; and a directional rig drilling for oil to between 5,000 and 10,000 feet, inland in Lafourche Parish, Louisiana ...a year ago, there was just one such rig drilling on inland waters...
The count of active horizontal drilling rigs was down by 6 to 700 horizontal rigs this week, which was still 168 more rigs than the 532 horizontal rigs that were in use in the US on January 7th of last year, but just 50.9% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....in addition, the vertical rig count was down by one to 26 vertical rigs this week, which was still up by 3 from the 23 vertical rigs that were operating during the same week a year ago…on the other hand, the directional rig count was unchanged at 46 directional rigs this week, and those were up by 13 from the 33 directional rigs that were in use on January 7th of 2022…
The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of January 6th, the second column shows the change in the number of working rigs between last week’s count (December 30th) and this week’s (January 6th) count, the third column shows last week’s December 30th 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 7th of January, 2022..
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Utica Shale Academy seeks funds for new building project - The Utica Shale Academy is seeking further expansion and has applied for $2.4 million to construct a new building in Salineville.Superintendent Bill Watson said an application has been made to the governor’s office on Appalachia and would match current funds to help erect a total $4.8 million, two-story facility on grounds that USA owns along East Main Street. The site, which is located adjacent to the Hutson Building, would feature 5,090 square feet of space for offices, several classrooms, machinery, lockers and restrooms for those working with heavy equipment operation, plus students can also learn CNC plasma cutting. A building has been razed with work on the separate 2,800-square-feet outdoor welding lab currently ongoing, and Watson said officials hope to learn later this year if the construction project will become a reality. “We submitted for a $4.8 million project to the Governor’s Office on Appalachia, but we had nearly 50-percent leverage with two $600,000 equity grants and some ESSER (Emergency Elementary and Secondary School Relief) funding and asked for $2.4 million to build a facility next to the welding lab,” Watson said. “It will be for heavy equipment operation and will also be used for recovery to work. I’ve reached out to [jails and public health commissions in] Jefferson, Columbiana and Mahoning counties to work with recovering addicts and get them back into the workforce.” The expansion comes on the heels of the acquisition of the former Huntington Bank building at 50 E. Main St., which is being used as the Energy Center in collaboration with Youngstown State University. That building was acquired in partnership with YSU using funds from a $300,000 capital budget bill allocation which was acquired by Ohio Sen. Michael Rulli and Rep. Tim Ginter (both R-Salem), and the facility houses megatronics, hydraulics, pneumatics, AC/DC electric, Programmable Logic Controllers (PLC’s), diesel mechanics and horticulture. Watson said the original Hutson Building just a few doors away at 70 E. Main St. incorporates general classrooms and Virtual Learning Academy (VLA) programming through the Jefferson County Educational Service Center while the new sites will focus on career-tech education.
Pa. gas industry report shows production, inspections increased in 2021 - -- Pennsylvania natural gas drillers pulled even more gas from the ground in 2021 than they did the year before. It’s the latest in a pattern of annual record-setting for the industry. The Department of Environmental Protection’s most recent annual report shows that the pace of new drilling slowed in recent years, but the combination of old and new wells enabled companies to extract a record amount of gas. Operators drilled 648 new wells last year, an increase from the 527 drilled in 2020, but less than the number of wells drilled in 2017, 2018, and 2019. In 2021, drillers reported producing more than 7.6 trillion cubic feet of gas. That’s about half a billion more cubic feet than was extracted in 2020. The industry has consistently broken annual records in the last decade, thanks to the rise of unconventional drilling, which allows companies to get harder-to-reach deposits through fracking and horizontal drilling. Meanwhile, the conventional section of the industry – generally made of shallower, vertical wells – has been producing less gas year over year since 2014. Wider use of natural gas in Pennsylvania has edged out coal, bringing down the state’s carbon dioxide emissions. But natural gas is mostly made of methane, a gas with 80 times more warming power than CO2 over a 20 year period, and methane can leak at different points in the process. The Wolf Administration finalized rules this year to limit leaks of volatile organic compounds and methane at oil and gas sites, though the regulation exempts many low-producing wells. Climate scientists agree the world needs to quickly ramp down fossil fuel use to avoid the worst effects of global warming. DEP says it increased inspections at natural gas sites last year, after the COVID-19 pandemic limited site visits the year before. The report shows inspectors did more than 34,000 compliance inspections in 2021, about 8,000 more than the year before but still less than previous years. Inspectors found more than 8,600 violations and collected over $2.5 million in fines. DEP highlighted a drop in permit processing times. Republican lawmakers have often criticized the agency for not issuing permits fast enough. DEP issued 997 new drilling permits in 2021. It took an average of 20 days to issue a permit in the southwest district of the state and 22 days in the northwest.
State shines a light on gas production, solar guidelines - Pennsylvania – not surprisingly – continues to be the second largest natural gas producer in the United States. This is according to the state Department of Environmental Protection, which recently released its 2021 Oil and Gas Annual Report showing the Keystone State still lags behind only Texas, thanks to an abundance of natural gas beneath us in the Marcellus and Utica shales. The data also show that production and compliance inspections in Pennsylvania increased significantly in 2021 compared with the year before. More than 7.6 trillion cubic feet of natural gas was produced from unconventional and conventional gas wells statewide in 2021, the largest volume recorded in the state in a single year. That was up from the 2020 figure of about 793 billion. The vast majority of the combined output from each year was from unconventional – fracked – wells. DEP personnel, according to the report, completed 34,145 compliance inspections at conventional and unconventional well sites in 2021, 8,200 more than the 2020 figure. All inspections are conducted electronically. Personnel from the agency issued 770 unconventional well permits in 2021, about 150 fewer than the previous year. DEP attributed that decrease to sustained low commodity prices and longer well bores. An interactive map of oil and gas locations by DEP showed heavy activity in Washington and Greene counties, which are historically among the most productive areas in Pennsylvania. Well sites also were prevalent in western Fayette, southern Beaver and southern Butler counties. Ramez Ziadeh, DEP’s acting secretary, said in a statement: “In 2021, DEP remained committed to enforcing violations of the oil and gas industry. Governor (Tom) Wolf and DEP continued their priority of maintaining environmental protection for Pennsylvania’s residents and visitors.” The DEP 2021 oil and gas report can be accessed online at www.dep.pa.gov.
EQT completes pneumatics replacement programme - EQT, the largest natural gas producer in the US, said January 4 it had completed a $28mn programme to eliminate all natural gas-powered pneumatic devices from its production operations.Swapping out nearly 9,000 gas-actuated controllers with “fit-for-purpose” technology – primarily electric actuators and compressed air controllers – has reduced EQT’s methane emissions by 70% and reduced its annual carbon footprint by 305,614 metric tons of CO2-equivalent. EQT’s natural gas and natural gas liquids sales volumes averaged about 5.3bn ft3/day-equivalent in Q3 2022, virtually all of it from the Marcellus and Utica shale horizons in the Appalachian Basin.The natural gas-powered pneumatic devices were the source of about 39% of EQT’s production-related Scope 1 greenhouse gas emissions in 2021, the company said.“We told the world we were aggressively addressing methane emissions and we did what we promised,” EQT CEO Toby Rice said. “As the nation’s largest natural gas producer, EQT not only delivered on its commitment to eliminate a major source of methane emissions in our operations, we also did it in a cost effective, expedient way.” The conversion programme spanned 515 days and was completed a year ahead of schedule. Over the course of the initiative, 341 air compressors were installed and 451 dump assemblies and 381 motor valves were retrofitted to electric actuators.
Updated MVP Draft Forest Environmental Review Seen Arriving Ahead of Schedule - Earlier than expected, the U.S. Forest Service (USFS) has released a draft version of an updated environmental review needed for the Mountain Valley Pipeline’s (MVP) proposed 3.5-mile crossing of the Jefferson National Forest along the Virginia-West Virginia border. Notice of the availability of the draft supplemental environmental impact statement (EIS) was published in the Federal Register on Dec. 23, ahead of the planned January release date previously shared by the agency.The USFS developed the latest EIS document after the U.S. Court of Appeals for the Fourth Circuit in January 2022 vacated the agency’s decision to authorize the natural gas conduit’s planned crossing of national forest lands. The USFS had issued the vacated authorization in January 2021 after developing an earlier supplemental environmental review in 2020. That process was set in motion after the Fourth Circuit vacated the agency’s initial approval of the embattled pipeline project.The release of the USFS draft environmental review puts the federal permitting process for MVP’s Jefferson National Forest crossing about five weeks ahead of schedule, analysts at ClearView Energy Partners LLC estimated, citing information from regulators shared in the fall. The latest developments would put a September target for issuing updated federal approvals for the national forest crossing, needed from the both USFS and the Bureau of Land Management, “very much within reach,” the ClearView analysts added. “If the final EIS is issued at the end of March (or close to it) the review may conclude earlier than initially planned.”MVP, a joint venture of EQM Midstream Partners LP, NextEra Capital Holdings Inc., Con Edison Transmission Inc., WGL Midstream, and RGC Midstream LLC, has said it remains “committed to working diligently with federal and state regulators to secure the necessary permits to safely and responsibly finish construction, and we remain committed to bringing” the project “into service in the second half of 2023.”Total work on the project is nearly 94% complete, according to the developer.
Haynesville Activity Slows as U.S. Drilling Numbers Pull Back in Latest BKR Count - Including a drop-off in Haynesville Shale activity, declines in both natural gas and oil drilling saw the U.S. rig count drop seven units to 772 for the week ended Friday (Jan. 6), according to the latest count from Baker Hughes Co. (BKR). Four natural gas-directed rigs exited the patch domestically, alongside three oil-directed rigs. Land drilling declined by eight rigs overall, while the Gulf of Mexico count rose one unit to end at 16. Domestic declines included six horizontal rigs and one vertical rig, with directional drilling unchanged week/week. The combined 772 active U.S. rigs as of Friday compares with 588 rigs running in the year-earlier period, according to the BKR numbers, which are based partly on data from Enverus. The Canadian rig count rebounded to end the week at 189, a net increase of 105 rigs, with activity there largely recovering from steep losses posted in mid-December. Gains included 88 oil-directed rigs and 17 natural gas-directed rigs, according to BKR. Counting by major drilling region, the Haynesville posted a three-rig decline for the period, with the Arkoma Woodford and Marcellus Shale each dropping one rig from their respective totals. The Granite Wash added two rigs week/week, while the Mississippian Lime and Utica Shale each added one, according to the BKR data. Counting by state, Oklahoma saw a three rig decline overall for the week, while California, Louisiana and New Mexico each posted declines of two rigs. Texas added two rigs for the period, while Ohio added one.
Tokyo Gas to purchase U.S. natural gas producer for $4.6 billion - — A Tokyo Gas Co. unit is in advanced talks to buy U.S. natural gas producer Rockcliff Energy in a deal worth about $4.6 billion, including debt, a person with knowledge of the matter said. Houston-based TG Natural Resources, which is majority-owned by Tokyo Gas, is discussing purchasing Rockcliff from private equity firm Quantum Energy Partners, said the person, who requested anonymity discussing confidential information. An all-cash deal could be announced as soon as this month, though it’s possible — as with all deals that aren’t finalized — that terms change or talks collapse. Representatives for Quantum Energy Partners and Tokyo Gas declined to comment. Rockcliff didn’t immediately respond to an email seeking comment. This is the latest move by an Asian firm to secure natural gas supply amid the global energy crisis. Tokyo Gas purchases liquefied natural gas from the U.S. Procuring a producer like Rockcliff gives it exposure to upstream prices. Inpex Corp., Japan’s top gas explorer, inked a deal last month to procure LNG from a U.S. project for 20 years. Jera Co., Japan’s top power producer, bought a $2.5 billion stake in a U.S. LNG exporter in 2021. Bloomberg reported last year that Rockcliff was weighing its possible sale worth $4 billion or more. Founded in 2015, the company pumps the daily equivalent of more than 1 Bcfg from the Haynesville Shale in East Texas.
U.S. natgas futures drop 11% to 10-month low on warmer Jan forecasts (Reuters) - U.S. natural gas futures collapsed about 11% to a 10-month low on Tuesday as volatility continues into 2023 on forecasts for warmer-than-normal weather and lower heating demand in January than previously expected. In 2022, U.S. gas futures had their most volatile year yet, with both implied and historic volatility at record highs as soaring global gas prices fed demand for U.S. liquefied natural gas (LNG) exports due to supply disruptions and sanctions linked to Russia's war in Ukraine. Traders said the biggest uncertainty for the market remains when Freeport LNG will restart its liquefied natural gas (LNG) export plant in Texas. After several delays, Freeport expects the facility to return in the second half of January, pending regulatory approvals. Whenever Freeport returns, U.S. demand for gas will jump. The plant can turn about 2.1 bcfd of gas into LNG for export, which is about 2% of U.S. daily production. Freeport shut on June 8 after a pipe failure caused an explosion due to inadequate operating and testing procedures, human error and fatigue, according to a report by consultants hired to review the incident and suggest action. Several vessels, including Prism Diversity, Prism Courage, Prism Agility and Elisa Larus, were waiting in the Gulf of Mexico to pick up LNG from Freeport. Some of those ships - Prism Diversity and Prism Courage - have been there since early November. Other ships were sailing toward the plant, including Corcovado LNG, which is expected to arrive in mid January, and Kmarin Diamond and Wilforce in late January. Front-month gas futures for February delivery fell 48.7 cents, or 10.9%, to settle at $3.988 per million British thermal units (mmBtu), their lowest close since Feb. 11. That was the contract's fourth decline in a row and its biggest daily percentage drop since Dec. 19 when it fell 11.4%. For the year, spot gas prices at the Henry Hub benchmark in Louisiana averaged $6.44 per mmBtu in 2022, their highest since hitting a record high of $8.86 in 2008. That compares with $3.91 in 2021 and a five-year (2017-2021) average of $2.93. Gas was trading at $22 per mmBtu at the Dutch Title Transfer Facility (TTF) in Europe and $29 at the Japan Korea Marker (JKM) in Asia.
Natural Gas Futures Rebound Wednesday, but Forecasts Show Unseasonably Mild Weather - Natural gas futures found fresh footing in positive territory Wednesday, marking the first gain of 2023, amid estimates for a massive storage withdrawal report. After dropping 48.7 cents in the previous session and closing below $4.00, the February Nymex natural gas futures contract on Wednesday gained 18.4 cents day/day and settled at $4.172/MMBtu. Gas for delivery in March rose 13.9 cents to $3.780. NGI’s Spot Gas National Avg. shed 93.5 cents to $5.370 on Wednesday, led lower by declines in western markets. Still, while natural gas cash markets gave up ground overall, costs in the West remained lofty, with several hubs posting prices three times greater than the national average. A punishing snowstorm that dropped more than 20 inches of snow in areas of the Rockies and northern Plains early this week lingered on Wednesday, delivering freezing rain and more snow as it spread over the Upper Midwest. Cold January rains – and anticipated flooding – emerged Wednesday in California and were expected to drag into Thursday, supporting demand there. “There’s no doubt” futures traders “have the eyes on the back of their heads wide open, looking at some of those key spot markets and taking note of the strong prices,” Marex North America LLC’s Steve Blair, senior account executive, told NGI. The latest bouts of winter weather followed frigid temperatures late in December that analysts expect resulted in a large pull of natural gas from underground stockpiles. Bitter chills late last year also froze wells in Montana, North Dakota and elsewhere, taking about 20% of U.S. gas supply temporarily offline, according to East Daley Analytics. Estimates for the U.S. Energy Information Administration’s (EIA) Thursday storage report, covering the week ended Dec. 30, showed the market widely expecting a much larger-than-normal withdrawal. Projections submitted to Reuters ranged from withdrawals of 153 Bcf to 269 Bcf, with a median pull of 237 Bcf. A Bloomberg survey landed at a median pull of 240 Bcf. The Wall Street Journal’s poll found draw estimates from 156 Bcf to 265 Bcf and an average of a 228 Bcf pull. NGI estimated an inventory decrease of 237 Bcf.
U.S. natgas sinks nearly 11% to 1-year trough on low storage draw, warm weather forecasts (Reuters) - U.S. natural gas futures plunged close to 11% to a one-year low on Thursday on a smaller-than-expected storage draw and forecasts for warmer-than-normal weather to continue into late January. That should keep heating demand low during what is usually the coldest part of the year and allow utilities to leave more gas in storage than usual in coming weeks. "January 2023 is off to the warmest start in more than 15 years - sending the ... gas contract cratering (over) 40% in under three weeks," "The extreme transition from record-breaking Christmas cold to exceptional warmth to start 2023 is leading to market whiplash." The U.S. Energy Information Administration (EIA) said utilities pulled 221 billion cubic feet (bcf) of gas from storage during the week ended Dec. 30. That was smaller than expected but larger than usual because colder-than-normal weather last week prompted consumers to burn more gas to heat their homes and businesses. The storage drop was less than the 228-bcf withdrawal analysts forecast in a Reuters poll and compared with a decrease of 46 bcf in the same week last year and a five-year (2017-2021) average decline of 98 bcf. Last week's decrease cut stockpiles to 2.891 trillion cubic feet (tcf), or 6.7% below the five-year average of 3.099 tcf for this time of year. After jumping about 5% on Wednesday, front-month gas futures on Thursday dropped 45.2 cents, or 10.8%, to settle at $3.72 per million British thermal units, the contract's lowest close since Jan. 4, 2022. That put the front-month down about 44% over the past three weeks. Traders said the market's biggest uncertainty remains when Freeport LNG will restart its liquefied natural gas (LNG) export plant in Texas. Whenever Freeport returns, U.S. demand for gas will jump. The plant can turn about 2.1 billion cubic feet per day (bcfd) of gas into LNG, which is about 2% of U.S. daily production. Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 98.3 bcfd so far in January, up from 96.7 bcfd in December but still below the monthly record of 99.9 bcfd in November 2022. Even though the weather is expected to remain warmer than normal through late-January, Refinitiv projected average U.S. gas demand, including exports, would jump from 110.4 bcfd this week to 121.6 bcfd next week as temperatures ease ahead of what are usually the coldest weeks of the year.
Overnight Weather Data ‘Couldn’t Be More Bearish’ as Natural Gas Futures Extend Slide -- Seemingly relentless warmth in the January temperature outlook, reinforced by milder overnight forecast trends, kept the pressure on natural gas futures in early trading Friday. After a 45.2-cent sell-off in the previous session, the February Nymex contract was off another 9.2 cents to $3.628/MMBtu at around 8:45 a.m. ET.Starting from an already “exceptionally warm and bearish” outlook, both the American and European weather models trended notably warmer overnight in terms of degree day totals, according to NatGasWeather.“To our view, the overnight weather data couldn’t be more bearish,” NatGasWeather said.National heating degree days (HDD) for the 15-day projection period were down more than 110 HDD versus norms, equating to nearly 180 Bcf less demand, according to the firm.“What also makes the coming pattern emphatically bearish is recent weather data maintains the frigid cold pool remaining locked over northern Canada through Jan. 20, suggesting colder air shouldn’t be expected into the U.S. until near or after Jan. 25,” NatGasWeather added.Meanwhile, the U.S. Energy Information Administration (EIA) on Thursday reported a withdrawal of 221 Bcf natural gas from underground storage for the week ended Dec. 30, far outpacing the five-year average 98 Bcf pull. Still, the print disappointed versus pre-report expectations. Major polls had found analysts anticipating a pull in the high 220s Bcf to high 230s Bcf. NGI modeled a 237 Bcf decrease.Total Lower 48 working gas in underground storage stood at 2,891 Bcf as of Dec. 30, a 208 Bcf (minus 6.7%) deficit versus the five-year average, according to EIA.
US LNG Exports in 2022 Match Qatar, #1 in the World. US Natural Gas Price Plunges 11% Today, 40% in 2 Weeks by Wolf Richter - US exports of Liquefied Natural Gas (LNG) in 2022, at 81.2 million tons, matched those of Qatar, the #1 LNG exporter in the world, according to ship-tracking data compiled by Bloomberg. The US would have been #1 if an explosion in June hadn’t shut down the Freeport natural gas liquefaction plant in Texas, which cut LNG export capacity by 17%.Qatar’s LNG exports have been relatively stable for the past 10 years, according to Bloomberg’s ship-tracking data. But the country is now engaged in major expansion projects amid a surge in global demand for LNG.US LNG exports began to surge in 2016 from near-nothing when the first major LNG export terminal – originally an LNG import terminal – came on line. Since then, vast sums have been invested to build and expand LNG export facilities mostlyin Louisiana and Texas, but also in Maryland and Georgia.US LNG exports, in billion cubic feet, according to the US EIA’s latest data through October: In addition, five export terminals are now under construction in the US, and 11 export terminals have been approved by the Federal Energy Regulatory Commission, but are not yet under construction, according to FERC as of its latest update on December 13.The explosion in June at the Freeport terminal damaged part of the terminal. The reopening of the plant has been delayed several times. The company reported publicly on December 23 that the reconstruction work necessary to start initial operations was “substantially complete,” and that it was “submitting responses to the last remaining questions included in the Federal Energy Regulatory Commission’s December 12 data request.” And it said it delayed plans to restart the facility until the second half of January.Given the renewed delay – the info must have gotten out days earlier – the price of natural gas in the US plunged from $6.60 per million Btu on December 15, to $4.98 on December 23, the day of the public announcement.The price then continued to plunge. Today, NG futures plunged another 11%, to $3.98 per million Btu at the moment, on weather forecasts over the weekend, which predicted a milder first half in January for the US. This brings the plunge since December 15 ($6.60) to 40%! Praying for Freeport to re-start exports asap? LNG exports provided a new market for the surging production of natural gas in the US, driven by fracking, which had collapsed the price of natural gas starting in 2009, as you can see in the above chart. For about the next 12 years, NG traded in the $2 to $4 range per million Btu, pushing many frackers into bankruptcy – including the big natural gas producer and pioneer fracker, Chesapeake in June 2020. With surging LNG exports, natural gas prices broke out of the $2 to $4 range in 2021, and then spiked to nearly $10 with the surge in prices in Europe, demand for US LNG, now that LNG exports connected the price in the US to global prices. But the explosion at the Freeport plant, which reduced exports, and removed some demand from the US market, brought those prices back down. And then, over the near term, there’s always the weather. In Europe, natural gas prices have unwound entirely the crazy spike in 2022 and have plunged back to October 2021 levels, amid record supply of LNG from the US and from other countries, record supply of piped natural gas from Norway, combined with a mild winter, and a reduction in consumption.
Commentary: The Left Sacrifices Natural Gas at the Altar of Climate Nirvana Leaving Good Americans Freeze to Death - The just-departed polar vortex confirmed that when Mother Nature is enraged, it’s wise to have options. Maddeningly, today’s “pro-choice” Democrats want Americans to have one energy choice. Neo-totalitarian, Left-wing eco-extremists are banning new natural-gas access in scores of locales. If not reversed, this cruel, stupid, needless policy will kill Americans. The Christmastime deep freeze that transformed much of the U.S. into the North Pole illustrates the deadly folly of forcing citizens to rely solely on an increasingly fragile electric grid (Plan A) while blocking natural gas as a secondary energy source (Plan B). “The root cause of our grid’s reliability problems is simple,” explains Fossil Future author Alex Epstein. “America is shutting down too many reliable power plants” and replacing them with inconsistent solar and wind facilities.Naturally, enviro-know-it-alls hate natural gas, a fossil fuel. To them, gas is like cyanide. So, they have cancelled pipelines into New England and scotched new residential and commercial hookups and gas appliances in Los Angeles, New York City, San Francisco and at least 74 other cities. “America is shutting down too many reliable power plants” and replacing them with inconsistent solar and wind facilities. Naturally, enviro-know-it-alls hate natural gas, a fossil fuel. To them, gas is like cyanide. So, they have cancelled pipelines into New England and scotched new residential and commercial hookups and gas appliances in Los Angeles, New York City, San Francisco and at least 74 other cities. Those with electricity and natural gas enjoy two kinds of energy — for heating, cooling, charging, etc. If the gasophobes prevail, millions more Americans will have electricity but no natural gas. That’s cute — until an electrical outage occurs. And then … welcome to the 19th Century. The Yuletide polar vortex saw temperatures plunge below zero from the Rockies to the Great Lakes. Coupled with power failure, this became a death sentence for Americans who froze in their unheated residences. At least nine New Yorkers in Erie County (Buffalo) suffered this miserable demise. Up to 146 Texans similarly perished in February 2021’s frigid, epic e-snafu. Those cursed with Plan A similarly would be condemned by the Left to freeze and starve. Those with both choices could ignore their non-functioning electric appliances and either activate gas heaters to stay warm — and alive — or at least use their gas stoves to cook meals and boil pots of water to steam the chill away. Gas pipelines also let those with Generac and similar generators enjoy heat, food, lights, laptops, stereos and HDTVs. The moment a disaster-driven or rolling shortage occurs, these gas-fueled generators kick in automatically. Blackout? What blackout? Gasophobia prevents Americans from capitalizing on this life-saving technology.
Colonial Pipeline Shuts Critical Conduit Supplying Fuel To Northeast After Spill – A critical conduit supplying fuel to the US Northeast was halted on Wednesday, when the Colonial Pipeline temporarily shut operations after a spill, the latest disruption to energy flows following an outage to the Keystone oil pipeline last month. As Bloomberg first reported, some product was released at Colonial’s Witt delivery station near Danville, Virginia, prompting the shutdown of its Line 3, spokeswoman Meredith Stone said in an email. The company is planning a restart at around 12 p.m. Eastern time on Saturday, according to a notice shared with users of the pipeline. Colonial’s Line 3 transports refined products such as distillates and gasoline to the New York Harbor market from Greensboro, North Carolina, and is part of a broader system that supplies fuels to the eastern US. The system’s key gasoline conduit was shut for nearly a week in 2021 after a cyberattack. Colonial's vast product system which includes Lines 1, 2, 3 and 4 are a vital source of fuels for the eastern US. Lines 1 and 2 extend from the Houston area and meet in Charlotte, North Carolina, to form Line 3 into New York Harbor. The incident follows the outage to TC Energy Corp’s Keystone pipeline after the biggest onshore oil spill since 2010. The conduit, which can deliver as much as 600,000 barrels a day of Canadian crude into the US Midwest, only fully returned to service last week. Colonial didn’t provide the cause of the leak or the volume that was discharged from Line 3, although it did say the impact had been contained within its property
Nation's largest fuel pipeline shut down after fuel leak -— A diesel fuel leak in Virginia shut down part of the Colonial Pipeline, the nation’s largest fuel pipeline, which supplies roughly half the fuel consumed on the East Coast, but it is expected to restart Saturday, the company said. The spill was discovered Tuesday. And while this particular line is shut down, the rest of the system is operating normally, spokesperson David Conti said in an email. The incident shouldn’t have much impact on gas prices, according to Patrick De Haan, head of petroleum analysis for GasBuddy. “The key being shouldn’t,” he said. “Obviously the Colonial is a key artery supplying refined products up the East Coast … It could be nothing. And it could turn into something” if regular operations fail to resume quickly. One bright spot is that fuel demand has dipped following the holidays, while a fair amount of people are still working from home, De Haan said. Gasoline demand is about 10% less than what it was before the COVID-19 pandemic. Crews are fixing equipment that failed at the Witt booster station near Danville, Colonial said in a statement. The failure caused a spill that was detected during a routine station check and appears to be contained to the property, the Alpharetta, Georgia-based company said. The company didn’t say what caused the leak or how much had spilled. Aaron Proctor, a spokesman for the Virginia Department of Environmental Quality, wrote in an email that approximately 2,500 gallons (9,464 liters) of diesel fuel spilled. All of it was contained on site between soil and an adjacent storm water retention pond, Proctor wrote. There’s been no sign of impacts to state waters or wildlife beyond fish and animals living in the retention pond. Colonial transports gasoline, diesel, jet fuel and home heating oil from refineries located on the Gulf Coast through pipelines running from Texas to New Jersey. Its pipeline system spans more than 5,500 miles (8,850 kilometers), transporting more than 100 million gallons (378 million liters) a day. The impacted line carries about 885,000 barrels of product a day from Greensboro, North Carolina, to Linden, New Jersey, the Danville Register & Bee reported. In May 2021, the company temporarily shut down its operations after a ransomware attack. The halt to fuel supplies for nearly a week led to panic-buying and shortages at gas stations from Washington, D.C., to Florida. The company disclosed that it paid a ransom of $4.4 million to retrieve access to its data and the Justice Department later announced that a ransomware task force recovered most of the ransom.
U.S. pipeline regulator probing 60-barrel leak on Colonial's Line 3 -source (Reuters) - The U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) is monitoring an estimated 60-barrel leak on Colonial Pipeline's Line 3 in Virginia, a source told Reuters on Thursday. Top U.S. pipeline operator Colonial on Wednesday shut its Line 3 for unscheduled maintenance in response to a "product release" at its Witt delivery station near Danville, Virginia. The company expects repairs will occur by Friday, the source said, adding that the PHMSA's interstate agent, the VA Corporation Commission, was investigating the leak. The outage has affected the Line 3 schedule, including downstream, and the line is expected to restart on Jan. 7, Colonial had said, noting that impacts appeared to be contained to its property and normal operations continued on the rest of the system. Line 3, with a capacity of 885,000 barrels per day (bpd), runs from Greensboro, North Carolina, to Colonial's hub in Linden, New Jersey, carrying gasoline and distillates. Last month, Canada's TC Energy Corp faced a 21-day outage on its 622,000-bpd Keystone pipeline after it spilled 14,000 barrels of oil in rural Kansas, the biggest U.S. spill in nine years, reducing flows of Canadian crude to Gulf refineries.
Cleanup Efforts Continue for Oil Spill in Corpus Christi Bay – Flint Hills Resources (FHR) continues responding to the release of approximately 335 barrels (14,000 gallons) of light crude oil from a pipe failure at its Ingleside crude oil terminal on Saturday, December 24. The U.S. Coast Guard, the Texas General Land Office, and the Port of Corpus Christi Authority continue assisting with the ongoing cleanup efforts. Flint Hills Resources has provided more than 60,000 feet of boom and 3,000 absorbent pads since the cleanup efforts began. FHR continues monitoring and responding as oil product is spotted but reports they see less oil product each day. Currently, the active clean up and recovery operations are scaling down; however, crews continue to monitor and make assessments using foot patrols, boats, drones, airplanes and helicopters. Booms remain in the waters around Corpus Christi and Nueces Bays as a precaution until the entire clean up and recovery effort is complete. FHR reports minimal oil material on the shoreline or in Corpus Christi Bay. All observed material at North Beach has been cleaned up, with no additional material reported. North Beach remains open to the public. Crews remain poised to respond to any impacted area, including:
- Near Dock 5 at the Flint Hills Resources Ingleside Crude Oil Terminal
- The Ship Channel
- North Beach
- Indian Point
- Nueces Bay
- The Rookery Island
- Dredge Material Placement Area (DMPA10)
FHR will continue working with marine and wildlife experts as the number of deceased birds is at 13. One turtle was treated for potential exposure. Residents are encouraged to report any material or oil sheens they observe to the Flint Hills Resources Ingleside Response Center at 361-396-2831. The composition of the oil may resemble yellow “popcorn” or appear to be a small pebble of paraffin or wax. Additionally, a phone number has been set up for claim requests at 1-800-254-1122.
U.S. oil refiners restoring lost output, some outages to run into January -(Reuters) - U.S. oil refiners were working feverishly to resume operations at a dozen facilities knocked offline by a holiday deep freeze, a recovery that in some cases will stretch into January. An Arctic blast sent temperatures well below freezing and led to power, instrumentation and steam losses at facilities along the U.S. Gulf Coast. The affected plants process about 3.58 million barrels of oil per day, delivering about 20% of U.S. motor fuels. Refiners had been running near full capacity with strong prices for diesel and other fuels. Retail gasoline prices ticked up along the Gulf Coast this week, but nationwide prices have not been affected by the temporary outages. Most of the affected plants suffered minor damage. Temperatures fell as low as 17 Fahrenheit (minus 8 Celsius) along the Gulf Coast - freezing some instruments and overwhelming steam and co-generation units at several facilities, according to people familiar with the matter. Two Houston-area plants - Motiva Enterprises' Port Arthur and Petroleos Mexicanos' Deer Park complexes - have restarts that will take them into the first or second week of January, according to notices filed with the state and people familiar with operations. Spokespeople did not reply to requests for comment. "We'll be up and running in about two weeks," barring any startup disruptions, according to one person involved in the restarts. "This freeze event was a lot lighter than the February (2021) freeze so I'd expect a quick recovery."
Marathon restarts Galveston Bay Refinery in Texas following shutdown -sources | Nasdaq(Reuters) - Marathon Petroleum Corp MPC.N restarted the 593,000 barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas, said people familiar with plant operations on Friday. Marathon spokesperson Jamal Kheiry declined to comment. Most units, including the 140,000 bpd gasoline-producing fluidic catalytic cracker (FCC), were in production by Thursday, the sources said. The refinery, which is the second largest in the United States shut down on Dec. 23 because of freezing weather from Winter Storm Elliott.
Fire breaks out at Lyondell Basell Houston refinery - A fire broke out at the Lyondell Basell Industries 264,000-bpd Houston refinery on Wednesday.
Gasoline Prices Spike On Refinery Shutdowns - U.S. gasoline prices rose on Tuesday as refineries across the country closed due to freezing temperatures. Gasoline prices have risen 12.4 cents from this time last week, according to the AAA data available on Tuesday. The average price for a gallon of gasoline in the United States is now $3.228, AAA shows—6 cents per gallon lower than this time last year. Gasoline prices began to rise during the cold snap that shut down refineries such as Suncor’s refinery in Colorado—that state’s only refinery. On Christmas Eve, Suncor said it was shutting the facility due to “extreme and record-setting weather.” The refinery also suffered a fire that caused damage to the facility. What’s more, the damage caused by the fire could see the refinery shut until sometime near the end of March. Suncor is responsible for supplying Colorado with more than a third of all gasoline and a third of all jet fuel for the Denver International Airport. Refinery shutdowns in the United States were widespread beginning on Christmas eve, with Rick Joswick, head of global oil analytics at S&P Global Commodity Insights, estimating that 3 million barrels per day of refining capacity were affected. By December 28, many refineries had started the restart procedures, but the restart process can take weeks. The restarts for Pemex’s Deer Park refinery and Motiva’s Port Arthur refinery were said to possibly stretch into the first or second week in January. “For the first time in two months, the nation’s average price of gasoline rose sharply last week,” Gas Buddy’s Patrick De Haan said in a note on Tuesday. The most common U.S. gas price encountered by motorists on Tuesday stood at $2.99 per gallon, Gas Buddy said—unchanged from last week. Gas prices are rising despite a 13.7% drop in gas demand last week, Gas Buddy data showed.
Commodities 2023: 'Wiggle room' seen for US President Biden to limit oil, gas leasing activity - Oil and gas companies eager to score new acres of federal lands and waters for exploration and production may find their options limited or less attractive than they'd hoped in 2023, even as a new law will compel the Biden administration to proceed with oil and gas leasing activity. Industry observers flagged the US Interior Department's onshore and offshore leasing program as one area where President Joe Biden could continue to flex his climate change mitigation muscle with little to no impunity. Although the courts dashed Biden's effort to prohibit the issuance of new federal leases, and the Inflation Reduction Act tied oil and gas leasing to certain renewable energy development, Interior has retained a considerable amount of discretion to determine the amount and quality of acreage offered in lease sales. The administration already appears to be leaning in that direction as updated guidance from the Bureau of Land Management tightens terms for onshore leasing. In addition to new instructions for abiding by leasing provisions in the IRA, the guidance also sets out some seemingly discretionary new protocols governing how parcels for lease will be selected and the duration of approved applications for permits to drill. "There is nothing really to stop them from complying with the letter of the law by offering a modest amount of acreage in areas that they know no one really wants to buy," Glenn Schwartz, director of energy policy at Rapidan Energy, said in an interview. "That is fully within their discretion to do something like that, and there's not much industry can do to really override that in any way." Schwartz said the IRA's onshore leasing requirements set "a relatively low floor" that could easily be hit. And with companies since 2009 having annually only put in bids for an average of 1.7 million offshore acres, or about 2%-3% of the acreage offered for leasing, "it's not tough to offer 60 million acres without many concessions to the oil and gas sector," he said. Schwartz added that "Biden has a little bit more wiggle room to limit federal leasing" as action here does not have an immediate impact on oil supplies or prices at the pump. Most onshore plays require a year or two before their production volumes would make a dent in gasoline prices, and drilling offshore would take even longer.
U.S. Crude Production Climbs – but Petroleum Demand Drops 20% - Domestic oil production bounced back to near pandemic-era highs in the final week of 2022, while demand plummeted following a run-up to the Christmas holiday. The U.S. Energy Information Administration (EIA) said Thursday output for the period ended Dec. 30 climbed 100,000 b/d week/week to 12.1 million b/d. That put production within 100,000 b/d of the 2022 peak that exploration and production (E&P) companies first reached last summer, data from EIA’s latest Weekly Petroleum Status Report showed. The latest reading also easily surpassed the year earlier level of 11.8 million b/d.Domestic production, while still well below the 13.1 million b/d record level reached in early 2020 prior to widespread coronavirus outbreaks, consistently held near or above 12.0 million b/d through the second half of 2022.American E&Ps are trying to strike the right balance at a time when demand is volatile. Americans’ spending had broadly recovered from pandemic lows, but many are growing more selective, including with travel, as the specter of a recession intensifies. The Federal Reserve raised interest rates multiple times through 2022 to counter 40-year-high inflation. Prices have eased some, but so too has economic activity. Aggressive central bank rate moves historically have pushed the U.S. economy into recession.The latest demand data reflects the growing uncertainty. Total petroleum product consumption for the Dec. 30 period dropped 20% week/week, led lower by an equally large plunge in demand for gasoline. Demand had climbed 9% in the week leading to Christmas, but it tapered quickly following holiday travel. Total petroleum products supplied in December averaged 20.5 million b/d, down 4% from the same period last year. Over the same stretch, motor gasoline demand averaged 8.5 million b/d, down 7%. Crude imports also were down last month. They averaged 5.7 million b/d last week, off by 540,000 b/d from the previous week. For all of December, imports averaged 6.2 million b/d, 3% less than a year earlier. Still, with production rising and demand easing, stockpiles increased last week. U.S. commercial crude inventories, excluding those in the Strategic Petroleum Reserve, rose by 1.7 million bbl from the previous week. At 420.6 million bbl, however, inventories closed 2022 at 4% below the five-year average.
Pioneer Natural Resources lowers oil production forecast in Permian Basin by 1 million bpd by 2030 — Pioneer Natural Resources Co., one of the biggest oil producers in the Permian Basin, has lowered its long-term projection for output from the entire region. On Jan. 5., Chief Executive Officer Scott Sheffield said his company now sees Permian production of about 7 million bpd by 2030, down from a previous view of 8 million bbl. His comments come amid growing concern within the industry about the fading productivity of oil wells in the Permian and whether overall production could plateau. Pioneer, Chevron Corp. and ConocoPhillips will be the only companies producing more than 1 million bpd in the Permian after 2030, Sheffield said at the Goldman Sachs Global Energy and Clean Technology Conference in Miami. The Permian Basin, which straddles West Texas and New Mexico, is the largest U.S. oil patch and has been a source of massive output growth in recent years. The Permian has helped the U.S. become the world’s largest oil producer. The basin yielded 5.5 million barrels of crude a day on average last month, according to the U.S. Energy Information Administration.
U.S. shale workers’ pay growth slows as explorers reduce oilfield activity— Monthly wage growth in the U.S. shale patch slowed to less than 1% in November as explorers pulled back activity to manage record costs in the oilfield. U.S. shale drill on oilfield Average hourly earnings in oil and gas extraction for nonsupervisory workers were up 0.6% in November from the previous month to $42.19, according to Bureau of Labor Statistics data released on Jan 6. Compared with a year ago, the 13% growth matches last month’s annual change. Labor shortages in the oilfield have been one of the biggest hurdles holding back production growth. The overall number of workers employed in U.S. oil and gas jobs totaled 136,100 in December, down 3.1% from last year’s peak in July. Near the start of 2022, oil workers showed a willingness to leave the industry for higher pay elsewhere. But record profits throughout the year allowed oil companies to boost compensation in order to lure more workers back. The jobless rate in oil and natural gas fell to 1.9% in December from 3.1% in the prior month on an unadjusted basis, government figures show. That compares with an unemployment rate of 5.8% a year ago. The slowdown in oilfield earnings growth fits the overall trend seen across the U.S. economy last month, indicating a resilient labor market that may allow the Federal Reserve to further slow interest rate hikes. Shale drillers typically reduce drilling during the final weeks of the year as annual budget outlays are exhausted. Oilfield inflation was as much as 25% last year, according to estimates by JPMorgan Chase & Co., causing some explorers to slow activity as costs ate into budgets.
Appeals court: No common thread in fracking class action-- A group of plaintiffs injured by earthquakes caused by wastewater disposal injection in hydraulic fracturing operations in Oklahoma cannot form a class action to sue oil and gas companies for damages, the Oklahoma Court of Appeals has affirmed. The plaintiffs’ claims involve several different earthquakes that affected several counties, and their claims were too varied to form a class, the court ruled. Instead, the plaintiffs may be able to seek judgment against some of the largest oil and gas companies in Oklahoma on an individual basis. The plaintiffs, listed as “Lisa Griggs and April Marler, on behalf of themselves and other Oklahoma citizens similarly situated,” had attempted to form a class to sue New Dominion LLC, Kirkpatrick Oil Company Inc., Rainbo Service Co., D&B Operating LLC, Mid-Con Energy Operating LLC, Orca Operating Co. LLC, Territory Resources LLC, Devon Energy Production Company LP, TNT Operating Company Inc., White Operating Co., Dryes Corner LLC, White Star Petroleum LLC, Equal Energy US Inc., M M Energy Inc. and Wicklund Petroleum Corp. The class-action petition identified “nine groups of earthquakes clustered according to location which they allege were induced by wastewater disposal injection into Oklahoma’s Arbuckle formation and which have caused physical and emotional damage to the plaintiff class.” Properties in Logan, Payne, Lincoln, Creek, Oklahoma, Canadian, Kingfisher, Garfield and Noble counties were affected by the increased seismic activity attributed to wastewater injection in fracking operations. The petition sought damages for earthquakes that occurred between March 2014 and October 2017, when the petition was filed. The appeals court reaffirmed the decision of the District Court of Logan County, Oklahoma, which ruled that the plaintiffs’ claims could not be taken up collectively as a class. “We have 26 defendants in this matter with a whole bunch of different earthquakes and a whole bunch of different clusters,” reads the trail court record. “The Court believes, based upon the petition on its face, that there’s no way this Court believes that the plaintiffs can show commonality, as it relates to a class certification.” The plaintiffs had grouped earthquakes by magnitude for class certification purposes, asserting that earthquakes of 4.5 magnitude and above indicate “negligence, abnormally dangerous activity and trespass theories of liability,” while earthquakes of 3.0 magnitude constitute a “nuisance.” However, the plaintiffs’ complaint makes clear that not all of the earthquakes in question were primarily caused by all of the defendants. Most of the individual companies named in the lawsuit were found to be responsible for only one “earthquake swarm,” as the groups of earthquakes were termed.
TC Energy completes controlled restart of Keystone pipeline’s Cushing extension | Oil & Gas Journal -- TC Energy Corp. began a controlled restart of the Keystone pipeline Cushing extension, returning the pipeline to service Dec. 29, the company said in a release. The restart follows repairs, inspections, and testing following a 14,000-bbl crude oil spill from the Keystone pipeline in Washington County, Kan., in early December 2022 (OGJ Online, Dec. 8, 2022).The Cushing extension is operating under plans approved by the US Pipeline and Hazardous Materials Safety Administration (PHMSA).The Keystone Pipeline System is now operational to all delivery points, the company said, as the section that extends from Hardisty, Alta. to Wood River/Patoka, Ill. was restarted Dec. 14 (OGJ Online, Dec. 14, 2022). The company continues to monitor the system and said it will operate the pipeline with additional risk-mitigation measures, including reduced operating pressures. Cleanup and restoration of the incident site is ongoing. As of Dec. 30, the company has recovered an estimated 10,637 bbl of oil from the creek (17,738 bbl of oil and water).
TC Energy plans diversion around Keystone pipeline leak; critics seek more transparency | — TC Energy, operator of the Keystone pipeline, announced plans Tuesday to build a temporary bypass around a pipeline spill on a Kansas creek to aid in the cleanup and reclamation of Mill Creek. Meanwhile, two critics of the pipeline questioned why more details have not been provided about the total amount of the spill, the extent of the cleanup, and its cause.On Dec. 7, the 36-inch pipeline sprang a leak just east of Washington, Kansas, spilling an estimated 14,000 barrels (or 588,000 gallons) of crude oil near and into the creek. It was the largest leak to date on the 12-year-old crude oil pipeline, larger than five previous leaks combined, according to a recent report by the Government Accountability Office. The spill occurred as a diagnostic tool was being run through the pipe in that area.The Keystone pipeline system — a forerunner to the more controversial and now abandoned Keystone XL pipeline — carries crude oil processed from Canada’s tar sands region to refineries in southeast Illinois and the Texas Gulf Coast.Operations on the Keystone segment from Steele City, Nebraska, to Cushing, Oklahoma, were resumed last week under plans approved by the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA), the company said.TC Energy, formerly TransCanada, said flows in Mill Creek will be diverted upstream of containment dams built to hold back crude oil. The water, pumped through an above-ground bypass, will then rejoin the creek below the dams.But both Jane Kleeb, founder of Bold Nebraska, and Zach Pistoria, a lobbyist for the Sierra Club of Kansas, said TC Energy hasn’t been completely transparent about several aspects of the repair and reclamation project.
Report: Cancellation of Keystone XL Pipeline resulted in thousands of construction jobs lost; billions in financial impact -The Department of Energy has released its report on the impact of cancelling the Keystone XL Pipeline.President Joe Biden cancelled construction of the pipeline the first day he took office. The report states that 16,000 to 59,000 construction jobs would have been created through the project, with an economic impact of more than $3.1 billion. Senator Steve Daines (R-MT) said the report highlights the damage to Montana’s working families. “Killing the Keystone XL Pipeline cost good paying jobs, it hurt Montana’s economy and was the first step in the Biden Administration’s war on oil and gas production in the United States,” said Daines. The report states that there would have been 50 permanent jobs available once the pipeline was completed.Senators Daines and Jim Risch (R-ID) introduced a bill that required a report on the number of Keystone XL jobs lost in 2021. The report was due on February 13, 2022.The Keystone XL Pipeline was expected to deliver crude oil from Canada through eastern Montana to Steele City, Nebraska. The existing Keystone line travels from Canada through eastern North Dakota to Steele City.
Group: Kansas Keystone Spill a Cautionary Tale for Michigan Pipeline - An environmental watchdog group said the recent Keystone Pipeline oil spill should serve as a warning to Michiganders if a proposed expansion of the Enbridge Line 5 project is approved. In early December, Keystone broke open and dumped 14,000 barrels of heavy tar-sands oil into a creek on the Kansas-Nebraska border, causing major environmental damage. Sean McBrearty, campaign coordinator for Oil and Water Don’t Mix, said a break in Line 5, which runs under the Mackinac Straits, could cause as much or more damage as the Keystone spill. “What the Keystone spill in Kansas goes to show is, even new pipelines spill,” McBrearty pointed out. “There’s no foolproof way to build these. There is no way to respond to a major oil spill effectively, especially in a place like the Straits of Mackinac.” Line 5 is a 30-inch-wide, 645-mile-long pipeline which carries crude oil products from central Ontario through Michigan. Enbridge wants to move the pipeline to a planned tunnel under Lakes Michigan and Huron. The company claims the project will protect the Straits from an oil spill and create jobs. McBrearty disagreed. He pointed out studies have shown the proposed project is extremely risky, and rerouting the pipeline has the potential to create an environmental disaster. “University of Michigan detailed the Straits of Mackinac is essentially the worst place in the Great Lakes for an oil spill,” McBrearty contended. “And yet, not only are we having this existing pipeline running through there, we’re talking about building another pipeline in a tunnel right underneath it.” Enbridge is awaiting an Environmental Impact Statement from the Army Corps of Engineers, and a decision from the Michigan Public Service Commission, which could take another two years. But McBrearty believes it is only a matter of time before Line 5 will fail.
Patterson-UTI Renews U.S. Drilling Contracts with 'More Favorable Pricing than Expected' - Houston-based Patterson-UTI Energy Inc. expects to record net income of $100 million-plus for 4Q2022, a sharp turnaround from year-ago losses as Lower 48 drilling expands. The oilfield services company, which previewed earnings on Wednesday, had reported net losses for the fourth quarter of 2021.“In contract drilling, average rig revenue per day benefited primarily from contract renewals with more favorable pricing than expected,” CEO Andy Hendricks said. “Pressure pumping benefited from strong pricing and utilization, including downtime around the holidays that was less severe than we had forecasted, despite the inclement weather.”During the 2Q2022 conference call in July, Hendricks had said activity already was at pre-pandemic levels, with customers locking in prices.At the end of 2022, the company had 132 rigs running across the United States, with the majority in the Permian Basin (61), followed by the Appalachian Basin (22). That compares with the final three months of 2021, when the company was running on average 106 rigs.
Santa Barbara County is cleaning up an oil spill from a well built in 1882 - Santa Barbara County is cleaning up an oil spill from a well built more than a century ago. Fire personnel responded to a report of oil in the Toro Canyon Creek on the morning of January 1. The oil leaked from a seepage well built in 1882. Crews are using damning, absorbent pads and booms to clean it up. According to a Santa Barbara County press release, the cause of the spill, the amount of oil released and the environmental impacts are under investigation. “The discharge did happen after heavy rains on New Year's Eve,” SB County Public Information Officer Lael Wageneck said. “So what we're looking at is to see if that was potentially a cause of it.” UC Davis Veterinary School Oiled Wildlife Care Network members are on-site surveying the area for impacted wildlife. So far, there are no reports of oiled wildlife. California Dept of Fish and Wildlife Public Information Officer Steve Gonzalez said a quick response is important to minimize the devastating impacts oil spills can have on wildlife. “There's a lot of things that can happen when oil gets into the environment,” Gonzalez said. “That's why we have a unified command that comes together that cleans up these oil spills as quick as possible.” Gonzalez said professionals are prepared to rescue and rehabilitate any oiled wildlife. This isn’t the first time oil has spilled out of the same well. In August 2020, about 630 gallons of oil seeped into the Toro Canyon Creek. The county waited a year before initiating a cleanup.
Study: California oil and gas workers can easily switch industries -- As California transitions away from fossil fuels in the years ahead to pursue aggressive climate goals, an increasing number of oil and gas workers across the state will be forced to put their skills to use elsewhere. But just how many workers will be affected and how difficult will it be for them to acquire new jobs earning comparable salaries? A new analysis released Tuesday offers a rosier forecast than previous predictions. The report, produced by the nonpartisan think tank Gender Equity Policy Institute, counted about 59,200 workers directly employed by the oil and gas industries in California. And of those workers, the analysis found that two out of three will likely be able to move into new jobs in other industries without any retraining. For workers at serious risk of displacement and whose skills are not as easily transferable, the report estimates that the projected cost assumed by the state of California to support them with income subsidies and relocation assistance may also be far lower than prior projections. “Our data absolutely shows that there are people who work in the oil and gas industry who will be negatively impacted by the transition to clean energy, but the big takeaway from our study is that an equitable transition is both affordable and achievable,” said Nancy Cohen, president of the Gender Equity Policy Institute. Previous studies, including one commissioned by the Western States Petroleum Association, have incorporated a wider array of occupations in the oil and gas workforce, which led to a higher number of people considered at risk of displacement and inflated the cost of potential transition programs for fossil fuel employees.. The Western States Petroleum Association, a trade group that represents oil operations in California, staunchly rebuked the latest findings. “Studies like this and the political rhetoric they fuel make it difficult to have the real discussions we need to have about energy policy,” Kevin Slagle, a spokesperson for the Association, wrote in an email. “Californians are much smarter than these groups and some of our elected leaders give them credit for — they won’t buy into simplified and ridiculous claims that don’t match what they see in the real world.”
Lower 48 Producing More Oil, Natural Gas from Fewer Wells, Report Shows - In An increasingly small percentage of oil and natural gas wells is supplying the majority of U.S. production, according to a new report from the Energy Information Administration (EIA) based on Enverus data. U.S. Production The trend is because of the proliferation of horizontal wells combined with hydraulic fracturing in the Lower 48, researchers said. “Oil and natural gas wells drilled horizontally through hydrocarbon-bearing formations are among the most productive wells in the United States,” researchers said. They added, “Horizontal drilling and hydraulic fracturing have greatly increased both oil and natural gas production rates of onshore wells in the United States.” The total number of producing wells in the United States declined by about 11.1% from a peak of more than 1,031,183 wells in 2014 to about 916,934 wells in 2021, EIA researchers said. U.S. oil production rose by 28% over the same span to average 11.25 million b/d in 2021, versus 8.79 million b/d in 2014. The total number of horizontally drilled wells grew by 67.9%, from just under 99,000 wells in 2014 to about 166,160 wells in 2021, the EIA team added. Horizontal wells’ share of the overall well count stood at 18.1% as of 2021, up from 5.4% in 2011. According to EIA, 77.9% of U.S. wells produced less than 15 boe/d in 2021, while only 6.4% of wells produced more than 100 boe/d. However, wells producing 100 boe/d or more supplied 75% of oil production and 74% of natural gas production in 2021. By comparison, in 2011, the 100 boe/d or more well category supplied 57% and 55% of oil and natural gas production, respectively. Horizontal wells accounted for 89.5% of the wells that produced 100 boe/d or more in 2021, up from 52.7% in 2011. The EIA team noted that marginal wells nearing the end of their economically useful lives, aka stripper wells, produced about 7% of total U.S. oil and natural gas in 2021. The Internal Revenue Service defines a stripper well as one that produces 15 b/d or less of oil, or 90,000 cubic feet/d or less of natural gas, over a calendar year. Stripper wells supplied 16% of oil and 14% of natural gas output in 2011. Horizontal wells are not without their challenges, however. “The decline rates of hydraulically fractured horizontal wells within shale or tight formations are typically greater than for wells drilled vertically into conventional reservoirs,” the EIA team said. In addition, the depletion of top-tier inventory is likely to make it harder for operators to improve well productivity, according to Enverus vice president Steve Diederichs. “We don’t expect per-foot recoveries to improve as inventory in the best rock quality of most plays is beginning to deplete, and more and more activity pivots to secondary parts of plays both from a geographic view and stratigraphic view,” Diederichs told NGI. “Said another way, operators are drilling primary intervals in lower quality regions” and increasing the rate at which secondary intervals are drilled on a percentage basis.
Are Higher Canada AECO Natural Gas Prices a Pipe Dream? -Discounted pricing at the NOVA/AECO C natural gas hub in Southern Alberta is likely to remain a fact of life over the near term, even if pipeline expansions and LNG exports in Western Canada come online as scheduled, according to experts. Abundant gas supply from the Western Canadian Sedimentary Basin (WCSB) and limited egress capacity out of the region have historically kept downward pressure on the price of gas delivered to AECO, the hub that is synonymous with TC Energy Corp.’s Nova Gas Transmission Ltd. (NGTL) pipeline system. Pipeline maintenance on NGTL can also cause AECO prices to collapse as molecules have nowhere to go. As a result, producers and marketers of Western Canadian gas have sought to maximize their exposure to higher prices in the United States and/or Eastern Canada. The challenge, however, is a lack of available firm transport capacity out of the AECO region and into these more lucrative markets. There simply is “no more pipe out of the basin,” a Calgary-based natural gas trader who did not want to be named told NGI. “It’s all contracted…so there’s not a lot of egress for the next little while.” Additionally, associated gas from the Bakken Shale of North Dakota has been displacing Canadian volumes on TC’s Northern Border pipeline system, which connects WCSB supply with demand in the U.S. Midwest, according to FactSet Research Systems Inc’s Connor McLean, senior energy analyst. With pipeline space already limited, “any of that capacity that gets displaced really just backs up into the AECO market,” McLean told NGI. Limited capacity beyond Alberta’s borders also can hinder the ability of Canadian gas to respond to price signals in the Western United States, he said. “The marginal molecule for the western U.S. is not Canada,” McLean said, but rather the Opal Hub in southwestern Wyoming. He explained that “Canadian gas is flowing as much as it can across the border, and every incremental molecule that California or Nevada or Utah needs, has to come from the Western Rockies.”
Peru hits Spanish energy giant Repsol with new oil spill fines -- Peru's environment authorities on Wednesday announced fines worth close to $6 million against Spanish energy giant Repsol over an oil spill that polluted beaches and cost thousands their livelihoods. Almost 12,000 barrels of crude spilled into the sea off Peru in January 2022 as a tanker unloaded oil at a Repsol-owned refinery.Peru said more than 700,000 people were affected by the spill which forced the closure of 20 beaches and dozens of tourism businesses.
Ecuador takes over two Amazon oil blocks - Ecuador has taken over operation of two oil blocks in the Amazon rainforest that since 1999 had been operated by Spain’s Repsol under a contract now expired, state company Petroecuador said Sunday. Petroecuador said in a statement it “assumes operation” of blocks 16 and 67 after Repsol’s contracts for exploration and exploitation ended on December 31. The blocks are in the Amazonian province of Orellana in Ecuador’s east and produce 13,533 barrels of oil per day. They are located in the Yasuni National Park, home to a nature reserve and Indigenous communities. Crude oil is a major revenue source in Ecuador, whose total production was 479,000 barrels per day from January to November 2022, 78 percent of it by Petroecuador. The country exported 312,400 barrels per day during that period, generating nearly $8.4 billion, according to the Central Bank. In 2020 the Ecuadoran government thwarted a deal for Repsol to sell its rights to the two blocks to the Canadian firm New Stratus Energy, meaning the blocks would revert to the state once the contracts ended. An oil spill in eastern Ecuador in February last year, had reached a nature reserve and polluted a river that supplies water to indigenous communities. Nearly two hectares (five acres) of a protected area of the Cayambe-Coca national park had been contaminated, as well as the Coca River — one of the biggest in the Ecuadoran Amazon. In May 2020 in the same area, a mudslide damaged pipelines, resulting in 15,000 barrels of oil polluting three Amazon basin rivers, affecting several riverside communities.
Shell Signals ‘Significantly Higher’ Natural Gas Profits for 4Q - Shell plc will pay around $2 billion in additional UK taxes for the final period of 2022, but the cut to revenue won’t overcome strong profits from natural gas trading, the London-based major said Friday. In fact, Shell said in a trading update that it should record “significantly higher” earnings for 4Q2022 even with a higher tax load. In the Integrated Gas unit, which includes LNG and gas-to-liquids businesses, production for 4Q2022 was estimated at 900,000-940,000 boe/d. The reduced output was pinned on a “longer than expected outage” at the Prelude floating liquefied natural gas project in Australia following a union strike. LNG liquefaction volumes in the final three months of 2022 were estimated at 6.6-7.0 million metric tons (mmt). The reduction in volumes, said Shell, mostly reflected the “longer than expected plant outage at Prelude and operational issues” at the Queensland Curtis LNG terminal, also in Australia. Upstream production in the fourth quarter was estimated at 1.83-1.93 million boe/d. For comparison, Integrated Gas production in 3Q2022 was forecast at 890,000-940,000 boe/d. Liquefaction volumes were around 6.9-7.5 mmt. Upstream output averaged 1.75-1.85 million boe/d in 3Q2022. For the final period of 2022, trading and optimization results are “expected to be significantly higher compared to 3Q2022,” Shell stated. Europe’s largest natural gas and oil company said the impact of the UK’s Energy Profits Levy, which climbed 10% to 35% beginning Jan. 1, would have limited impacts because of the timing of the payments. The higher levy was imposed by the UK until the end of March 2028. Other governments also have imposed windfall taxes on producers to reduce consumer costs. Russia cut its natural gas pipeline exports to Europe last year in the wake of sanctions following its invasion of Ukraine. Many countries in Europe and beyond, including Australia, have looked to impose additional taxes on gas and oil producers, which raked in record profits last year, to cushion consumer costs. The estimated $2 billion in levies imposed on Shell for 4Q2022 would be in addition to $360 million in windfall taxes that Shell disclosed late last year.
Wave of Long-Term European LNG Contracts Seen Likely This Year - European LNG offtakers in 2023 are expected to continue the flurry of contracting activity that closed out 2022, as more import infrastructure comes online, larger buyers recapitalize and policies become clearer. Europe LNG Capacity Since November, European buyers including Engie SA, Galp Energia SGPS SA, Ineos Group Ltd. and RWE AG have signed deals to buy U.S. liquefied natural gas for 15 years-plus. During the same time, Trafigura Group Pte. Ltd secured a $3 billion loan backed by the German government to buy more gas for the country. ConocoPhillips also signed contracts with QatarEnergy to move more of the super-chilled fuel to Germany. U.S. LNG projects are poised to benefit most from the contracting rush. Sponsors signed long-term agreements in 2022 to supply nearly 50 million metric tons/year (mmty) of LNG, mainly to Asian buyers and portfolio players. European offtakers accounted for only 11.4 mmty of the total. It is estimated that Europe needs anywhere from 50-75 mmty of long-term LNG supplies from the United States alone to help replace the decline in Russian imports. Many countries across Europe have been working to build more LNG import capacity. It was a necessary step before buyers could “really settle into working on some long-term deals,” said LNG Allies CEO Fred Hutchison. Nowhere is that more evident than in Germany, Europe’s largest gas consumer and once the most dependent on Russian imports. The country has chartered six floating storage and regasification units and is working to support construction of its first onshore import terminals at breakneck speed. “I think things are about as far advanced as they can be in Germany given when this crisis began” in February 2022, Hutchison told NGI. “My view is that there has been a lot going on behind the scenes, and we’ll start to see more specific announcements early in 2023.” Some of Europe’s larger gas buyers, including France’s Électricité de France SA, Germany’s Securing Energy for Europe GmbH (Sefe) and Germany’s Uniper SE have been nationalized and recapitalized. Others have been quasi-nationalized after a stretch of record high commodity prices last year weighed on balance sheets. That has also slowed contract negotiations. “It’s taking politicians time to recognize the severity of the problem, and they’re therefore missing out,” said a U.S. LNG executive who did not want to be named discussing ongoing contract negotiations. “That has started to break down a bit, evidenced by the Engie deal, by the Galp deal and others. “The interest from Europe is definitely there…I would anticipate around the middle of 2023, the end of 2023 and into 2024, you’re going to see a lot more Europeans come to the market,” the executive added. “The volumes we’re hearing about are in the tens of millions of tons.” Uniper and Sefe in particular are expected to join other German buyers in clinching more long-term supply deals. German utilities EnBW Energie Baden-Württemberg AG and RWE signed deals last year.
Norway Gas Exports to Stay at Record Levels for 4-5 Years - Norway plans to export around 122 billion cubic metres (bcm) of natural gas in 2023, in line with last year’s level, and to maintain this volume for the next four or five years, Minister of Petroleum and Energy Terje Aasland said on Thursday. The output for 2022, which had not previously been released, was up 8% from 2021, in line with a previous government forecast, and similar to the all-time high of 122.37 bcm set in 2017. “Norwegian authorities have updated the estimate for the sales from gas from the Norwegian continental shelf in 2023. The estimate is 122 bcm, the same level as for 2022,” Aasland said. “The expectation is that today’s high level can be maintained for the next four to five years.” Norway, Europe’s top supplier, primarily pipes its gas to receiving terminals in Britain, Germany, France and Belgium and late in 2022 also opened a new pipeline to Poland via Denmark. The Nordic country also shipped more liquefied natural gas by tanker from its Arctic Hammerfest plant, which restarted operations in May after having been offline since a fire in 2020.
Worst of Europe’s Energy Crisis May Be Yet To Come - In December, the International Energy Agency warned that Europe could face a gas shortage this year despite its successful efforts to fill up storage for winter 2022-23. Now, more voices are joining the warnings as reality sets in, and it is not a reality that one can easily brush aside. For starters, much of Europe’s success in keeping the lights on so far this winter has been the result of milder-than-usual weather. October and half of November were particularly warm, which made reducing gas consumption across the European Union—a mandatory directive—much easier than it would have been otherwise.Yet the moment the weather got colder in late November, consumption jumped, so in early December, Germany’s head of energy market regulations had to warn Germans to take it easy on the heating as they were not hitting the country’s gas savings target of 20 percent of total consumption. That warning gave everyone a taste of just how precarious the situation is. Storage units are full, and there’s more LNG coming into European terminals all the time, thanks to the weather.Reuters’ John Kemp reported that the level of gas in storage in Europe at the end of December 2022 was at the second highest for that time of year for the past ten years and set to remain comfortable until the end of the heating season, according to traders.Many were quick to celebrate the end of the crisis, but those celebrations may have been premature. To begin with, winter is far from over, and there is still a considerable likelihood of much colder weather in January and February. Besides, the end of winter does not automatically mean an abundance of natural gas.Last year, European countries managed to stock up on gas in time and in abundance, in no small part thanks to the fact that Russia sent most of its regular volumes of gas during the first half of the year. Except for the cutoff of Bulgaria and Poland for their refusal to pay in rubles, gas supply from Europe’s then-largest supplier remained largely steady.This helped a lot along with the record intake of U.S. liquefied natural gas. This year, however, there will be no regular Russian gas volumes. Indeed, Moscow, in the face of Deputy Prime Minister Alexander Novak, said it is ready to resume flows along the Yamal-Europe pipeline, which, he said, remains closed for political Yet the European Union has repeatedly stated it does not want to increase its imports of Russian gas. Instead, it wants to cut them to zero eventually. And this means it will need to seriously increase its imports of LNG from not only the United States but all other suppliers with uncontracted volumes. And because these still-available volumes are not exactly unlimited, experts are beginning to warm their audience up for another difficult year.The availability of gas would be the biggest reason why the year would likely be difficult for Europe. But even if winter continues to be mild and ends mild, the gas crisis will not be over. Because LNG is more expensive than pipeline gas, and this is a fact that does not stand to change. And this fact means that even if there is enough LNG to refill Europe’s storage—which is questionable, as the IEA warned—the bill will be huge for a second year in a row.
German lawmakers criticize gov't silence on Nord Stream blasts - The German government is taking flak from legislators for its silence on undersea explosions last year that knocked out the Nord Stream 1 and 2 pipelines, along with the Russian natural gas they carried. "I understand, especially in times of war, that these delicate investigations may also require secrecy," Konstantin von Notz, chairman of the parliamentary intelligence monitoring body, told the daily Tagesspiegel on Tuesday. But, the politician from the Green Party continued: "In a constitutional state, the public has a right to know what really happened." The blasts took place on Sept. 26, causing major ruptures and gas leaks from the two pipelines that run from Russia to Germany under the Baltic Sea. Officials from countries in the region have said sabotage was a likely cause of the incident. Von Notz called for more openness in light of the "significance of this unprecedented terrorist attack" on the country's supply infrastructure. "The federal government (Germany) must break its silence very soon, create transparency, or at least present a plausible narrative of the events of Sept. 26." The deputy chairman of the parliamentary intelligence control committee, Roderich Kiesewetter of the opposition Christian Democratic Union (CDU), told Tagesspiegel that lawmakers wanted to continue pressuring the government "because the wild speculations in this unclear situation are not harmless." Kiesewetter also claimed to have gained the impression that "investigative authorities, and thus also the German government, are indeed still in the dark."
Kiel Canal Reopens After Oil Spill -- On Tuesday, Germany's strategic Kiel Canal reopened after a weekslong closure caused by an oil spill. On December 21, a pipeline released an estimated 3,200 gallons of oil into the inner harbor at the port of Brunsbuttel, the North Sea/Elbe entrance to the canal. According to Tobias Goldschmidt, the state's environment minister, the oil slick spread over a stretch of water four miles in length. About 150 volunteers and workers and three spill-response vessels joined the effort to mitigate the spill, and the canal locks were temporarily closed to prevent the spread of pollution. A thick layer of oil floating on the water had to be removed with sorbent before traffic could resume, the incident command told DPA. At one point, at least 30 ships were queued up and waiting for the waterway to reopen, and some opted to change course and navigate around Denmark through the Kattegat instead. The closure cost German shipping more than $1.5 million per day, according to German public radio network NDR. Final cleanup will take more time, but the overwhelming majority of the spill has been removed, authorities told NDR. The work has reached a point where shipping can safely resume. The Kiel Canal is a 60-mile artificial waterway connecting the North Sea with the Baltic, allowing small vessels to shorten their voyage between the two regions. It dates to the 19th century, but in the years leading up to the First World War, it was enlarged to fit the dimensions of the largest German warships of the era. Today it can accept ships with a length up to 770 feet, a beam of up to 106 feet, air draft of 130 feet and a draft of about 23 feet. Like the Bosporus, the Kiel Canal is open to international navigation by treaty, though locally maintained and controlled.
Gazprom’s gas production falls by 20% in 2022, CEO says - Russia’s Gazprom gas giant produced 412.6 bln cubic meters of gas in 2022, the company’s CEO Alexey Miller said, Trend reports citing TASS. "As for gas output, it stood at 412.6 bln cubic meters in 2022. Gazprom exported 100.9 bln cubic meters of gas to countries outside the former Soviet Union," the company’s statement quoted Miller as saying. Gas production fell by about 20% compared to 2021 and exports dropped by 45.5%. According to the latest data, 243 bln cubic meters of gas were supplied to domestic consumers. "Our priority goal is to ensure gas supplies to Russian customers. We confidently achieved it, as always," Miller emphasized.
Russian gas exports outside ex-Soviet states fell 45.5 per cent in 2022 -- Russian gas exports to countries outside a group of former Soviet republics plunged by 45.5 percent in 2022, figures from gas giant Gazprom showed on Monday ..Gazprom said in a statement that exports outside the Commonwealth of Independent States (CIS) totalled 100.9 billion cubic metres compared to 185.1 billion in 2021. ..Europe was previously Gazprom's main export market but supplies have been drastically reduced because of sanctions following Russia's offensive in Ukraine in 2022..
China Continuing to Boost Domestic Natural Gas Production From Top Fields -Oil and natural gas output from two of China’s leading fields again crept upward last year, according to reports that cited data from China National Petroleum Corp. (CNPC) and China Petroleum and Chemical Corp. (Sinopec). Oil and gas production in the Tarim Oilfield, China’s largest ultra-deep onshore play, hit a record 33.1 million tons (Mt) in 2022, according to CNPC data. That’s up by 1.28 Mt from 2021. Natural gas output from the field hit 32.3 billion cubic meters (Bcm), or about 1.1 Tcf last year. The Tarim Basin in northwest China’s crude and gas reserves accounted for 60% of the country’s onshore ultra-deep assets and 19% of the global total, CNPC said. In southwest China, Sinopec said production from the country’s largest shale gas field also hit a record. The Fuling field produced 7.2 Bcm last year, or 254 Bcf. That’s up by roughly 1 Bcf from the previous year. Fuling accounts for about 34% of China’s shale gas reserves, according to Sinopec. The Chinese government has called on its national oil companies to boost domestic output in recent years. It also opened the country to foreign companies to develop natural gas to increase domestic supplies. China, the world’s largest energy consumer, also has invested in technically challenging hydrocarbon areas such as shale and tight gas. While natural gas demand was limited last year by Covid-19 outbreaks, the country was able to lean more heavily on domestic gas production, pipeline gas imports from Russia and other fuels like domestic coal. The strategy helped gas buyers in the country avoid costly purchases on the LNG spot market, which are expected to remain limited this year. Overall, China’s natural gas production has increased from 174 Bcm (6.1 Tcf) in 2019 to about 220 Bcm (7.8 Tcf) last year, according to the International Energy Agency (IEA). IEA projects China’s domestic gas production to reach 230 Bcm (8.1 Tcf) this year.
Nigeria's Oil Production Rebounds By 120,000bpd In December 2022 - Nigeria’s oil production rebounded by 120,000 barrels per day in December 2022 compared to November, according to a monthly Reuters survey published on Wednesday. The rebound raised the oil output of the broader Organisation of the Petroleum Exporting Countries (OPEC) last month, though the oil cartel still pumped well below the collective target of the 10-member group bound by the OPEC+ pact. The larger OPEC+ group moved to cut its collective production target by 2 million barrels per day in November—about 1.27 million barrels per day set to come from OPEC members. The member states of OPEC, with production quotas, saw their combined oil output at 780,000 barrels per day below the target for December. The shortfall slightly decreased from 800,000 barrels per day below the OPEC quota for November. In December, OPEC pumped 29 million barrels per day, up by 120,000 barrels per day month on month. Nevertheless, Nigeria remains the biggest laggard in the OPEC+ production quota, alongside other African OPEC members such as Angola. Earlier this week, a Bloomberg survey of OPEC production also showed a rise in output for December, by 150,000 barrels per day over November, thanks to the rebound in Nigerian oil production. This shows a positive development for former Africa’s largest crude producer, which has faced unprecedented oil theft. In October, Nigerian authorities discovered an illegal underwater 2.5-mile connection from the Forcados export terminal. It had been operating undetected for around nine years, according to the Nigerian National Petroleum Exporting (NNPC) Company. Analysts noted that while Nigeria has known of the land-based pipeline taps for decades, an underwater one was the first of its kind.
EPA probes diesel spill in Malé jetty area - The Environmental Protection Agency (EPA) has stated that it is investigating the incident where a large quantity of diesel spilled into Malé City’s primary jetty area. Meanwhile, the Maldives Coastguard has been working on clearing up the area and filtering out the oil. Maldives National Defence Force (MNDF) estimated that nearly 1,000 litres of diesel may have been spilled in the area. Authorities have filtered approximately 400 litres of oil from the jetty area so far. EPA Director General Ibrahim Naeem confirmed that the authority is looking into what caused the spill and attempting to identify the responsible party. “We have cause to believe the spill might have originated from a vessel that was traveling near Malé City, and the oil had traveled with the current,” Naeem said.
Gas supply to Turkey from Iran pipeline down 70 pct due to fault: BOTAS | Al Arabiya -The supply of natural gas to Turkey from an Iranian pipeline is down 70 percent from the start of 2023 due to a fault in the Iranian network, Turkish state energy company BOTAS said on Saturday. BOTAS said in a statement it was monitoring the issue and all necessary measures were being taken so that natural gas usage would not be negatively affected, with additional demand met by gas storage facilities in Turkey.
Iran to launch $8b oil projects by March 2023 - Mehr News Agency - – Iranian Oil Minister Javad Owji said a number of unfinished petroleum projects worth $8 billion in total are scheduled to come on stream by the end of the current Iranian calendar year to March 23, 2023. Javad Owji told a live televised interview on Friday that 8 billion dollars of half-finished projects will be completed in the current calendar year, adding the projects are aimed at addressing such priorities as enhancing oil and gas production, boosting gas refining capacity, gas transmission pipelines, petrochemical compounds and gathering associated petroleum gases. Referring to the president's emphasis on the implementation of half-finished projects and the need to determine their fate as soon as possible, he clarified, “Since the beginning of the work of the government, with a jihadist action, the Ministry of Petroleum has carried out basic and infrastructure works to complete the half-finished projects, and priority projects have been identified.” One of the projects is Phase-11 of the massive South Pars gas field development. Once operational, the project will add 14 million cubic meters of gas to the country’s natural gas production capacity. Owji also announced the completion of the third sweetening train of the South Pars Phase-14 Refinery, and said, "The most important of all projects was the South Pars Phase-14 Refinery, which will become fully operational by the calendar yearend to March 2023." “Good projects and plans for increasing oil and gas production, increasing refining capacity, including petrol production, gas oil, gas transmission lines and collecting flare gases, as well as petrochemical complexes and complementary chain industries, and most importantly consumption optimization projects for which we have signed $110 billion of memorandums and contracts.” The minister added that for these plans, the capacity of investment participation of domestic and foreign sectors has been tapped, SHANA reported.
Iraq exports over 100 mln barrels of crude oil in Dec.-(Xinhua) -- Iraq exported about 103 million barrels of crude oil in December, generating 7.6 billion U.S. dollars in revenue, the country's oil ministry announced Monday. The average price for Iraqi crude oil in December was 73.64 dollars per barrel, the ministry said in a statement, citing statistics from the State Organization for Marketing of Oil. A total of 100.7 million barrels were exported from oil fields in central and southern Iraq via the port of Basra, while more than 2 million barrels from the northern province of Kirkuk via the Turkish port of Ceyhan on the Mediterranean, the statement said. Oil prices have risen in global markets since the outbreak of the Russia-Ukraine crisis in February last year, benefiting Iraq and other oil exporting countries. However, oil prices witnessed a decline in the past few months because of fears of lower demand for oil in global markets. Iraq's economy heavily relies on crude oil exports, which account for more than 90 percent of the country's revenues.
Iraq oil revenue tops $115 bn in 2022 - Iraq collected over 115 billion dollars from oil sales in 2022, setting an all-time record in the month of June, and earning approximately 40 billion dollars more than the previous year. Iraq exported over 103 million barrels of crude oil during December, at an average rate of 3.3 million barrels per day and an average price of $73.6 per barrel, according to the monthly report from the Iraqi oil ministry on Monday. December marks Iraq’s lowest monthly revenue generated from oil sales throughout 2022, collecting 7.6 billion dollars. Last month’s earnings bring the country’s total yearly revenue to 115.5 billion dollars - a significant increase from 2021’s 75.6 billion dollars. June is considered Iraq’s highest ever recorded gross amount from oil sales, earning over 11.5 billion dollars during that month, besting May’s 11.436 billion and March’s 11.07 billion - both deemed the country’s highest financial income from oil sales since 1972 at the time. Oil revenue is Iraq’s main source of income, and the federal government relies on oil sales to cover its costs and pay the salaries of its civil servants.
OPEC oil output rises despite agreement to cut production targets OPEC oil output rose in December, a Reuters survey found on Wednesday, despite an agreement by the wider OPEC+ alliance to cut production targets to support the market. The Organisation of the Petroleum Exporting Countries (OPEC)pumped 29.0 million barrels per day (bpd) last month, the survey found, up 120,000 bpd from November. In September, OPEC output had been its highest since 2020. December’s rise was led by recovering output in Nigeria, which has been battling for months with crude theft and insecurity in its oil-producing region. Many Nigerian crude streams produced more in December, sources in the survey said, with some companies citing improving security. OPEC+ had been boosting output for most of 2022 as demand recovered. For November, with oil prices weakening, the group made its largest cut to production targets since the early days of the COVID-19 pandemic in 2020. Its decision from November called for a 2 million bpd cut to the OPEC+ output target, of which about 1.27 million bpd was meant to come from the 10 participating OPEC countries. The same target applied in December. With the rebound in Nigerian output in December, compliance with the agreement weakened slightly to 161% of pledged cuts, according to the survey, down from 163% in November. Output is still undershooting targeted amounts because many producers – notably Nigeria and Angola – lack the capacity to pump at the agreed levels. The 10 OPEC members required to cut production pumped 780,000 bpd below the group’s December target, the survey found. The shortfall in November was 800,000 bpd.
Saudi Arabia Cuts Oil Prices To Asian Markets Amid Sluggish Demand Saudi Arabia, the world’s top crude oil exporter, on Thursday cut the prices of all its crude grades loading for Asia in February to the lowest level to regional benchmarks in more than a year, as demand concerns continue to prevail.Saudi Aramco, the state oil giant, cut the official selling price (OSPs) of its flagship crude grade, Arab Light, to Asia for February by $1.45 per barrel, setting the price at $1.80 a barrel above the Dubai/Oman benchmark. The premium to the Dubai/Oman average is the lowest since November 2021, but it was generally in line with expectations. Earlier this week, a Reuters survey of analysts showed that Saudi Aramco was widely expected to cut its OSPs to Asia for February, following a cut for the January loadings to a 10-month-low. Last month, Saudi Arabia cut the price of the crude it would sell to Asia in January to a 10-month low versus the regional benchmarks, which had weakened amid signs of lackluster demand in the world’s most important oil-importing market. The forecasts in the Reuters survey were in line with the actual cut announced today—analysts had expected the price of the Arab Light crude grade to be cut by $1.50 per barrel for February shipments to a premium of just $1.75 per barrel over Dubai/Oman. Aramco, which generally doesn’t comment on the OSPs, also lowered the prices of its crude loading in February to northwest Europe and the Mediterranean region, while prices for the U.S. remained unchanged.
Oil Nosedives on US Dollar Rally, Nigerian Oil Output Recovery -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled the first trading session of 2023 sharply lower, pressuring West Texas Intermediate below $77 per barrel (bbl). The losses came on the back of a rallying U.S. dollar and reports suggesting the Organization of the Petroleum Exporting Countries once again raised oil production in December amid recoveries in Nigerian and Iraqi output. OPEC boosted oil production by 150,000 barrels per day (bpd) last month to 29.14 million bpd, according to industry surveys, with Nigeria -- Africa's second-largest oil producer, recovering a chunk of its previously lost crude output. In December, Nigeria pumped 1.4 million bpd, up from 1.1 million bpd seen just three months ago. Even with those gains, Nigeria's oil production is about half of what it was a decade ago amid internal strife. Nigeria's government has repeatedly called for an end to violence and theft along the oil-producing Niger River delta region. The government of strong-man Muhammadu Buhari has reportedly hired loyal warlords to secure safe passage of oil and personnel in the region. State-owned Nigerian National Petroleum Co. plans to build on the progress, according to a report in Lagos-based newspaper, aiming to raise output to its pre-pandemic high of 1.9 million bpd. NNPC started to drill for oil and gas at the field outside of Niger Delta for the first time in November, seeking to produce an additional 1 million bpd by 2025. OPEC and its allies, a 23-nation bloc known as OPEC+, agreed to collectively reduce output by 2 million bpd to 41.856 million bpd beginning in November, and then hold production steady at that rate for all of 2023. However, questions remain whether OPEC+ would raise production again as China reopens its economy in 2023 and some members, namely Nigeria, raises output unilaterally. Oil complex came under selling pressure earlier in the session after China reported its manufacturing and service sectors of the economy fell deeper into contraction in December to the lowest level since February 2020. The services index in particular was hard hit amid an abrupt end to a long-held policy of zero-COVID as people pulled back on mobility and businesses closed down. China's economy is still expected to grow robustly in 2023, with the Energy Information Administration projecting a 600,000 bpd or 4% annual increase in oil demand to 15.76 million bpd next year. Further weighing on the oil complex at the start of the new year is a strengthening U.S. dollar index which settled 1% stronger against a basket of foreign currencies at 104.312, while the U.S. stock market reversed earlier gains to finish the session with losses. Tuesday's move lower in financial markets came on the back of dire forecasts from International Monetary Fund Director Kristina Georgieva who warned over the weekend that the global economy faces "a tough year ahead, tougher than the year we leave behind." At settlement, West Texas Intermediate for February delivery fell below $77 per bbl to $76.93, down $3.33 per bbl on the session, and Brent March futures declined $3.81 to $82.10 per bbl. NYMEX RBOB February contract dropped $0.1171 to $2.3612 per gallon, and front-month ULSD futures were down $0.2085 to $3.0865 per gallon.
Oil begins 2023 with 4% plunge as China to IMF spook trade -- It’s looking to be a happy new year for oil bears thus far as tumbling China factory activity and IMF warnings of a global recession signaled pain at least in the near term for those long on the crude trade. U.S. West Texas Intermediate crude for delivery in February settled down $3.33, or 4.1%, at $76.93 per barrel, after dropping to as low as $76.64 earlier. WTI, as the U.S. crude benchmark is known, finished 2022 up 6.7%. U.K.-origin Brent crude for delivery in February settled down $3.81, or 4.4%, at $82.10 per barrel, after a session low at $81.80. Brent ended last year up 10.5%. Chinese manufacturing activity shrank for a fifth straight month in December, a private survey showed on Tuesday, as the country grappled with an unprecedented spike in coronavirus cases after it relaxed some restrictions intended to prevent the spread of the virus. President Xi Jinping recently said that China’s economy grew 4.4% in 2022 - a figure much higher than markets anticipated. But he also noted that the country faces increased headwinds from the COVID-19 pandemic in the coming months. The figures provide a snapshot of the challenges faced by Chinese manufacturers who now have to contend with surging infections after the country's abrupt COVID policy U-turn in early December. People in China’s biggest cities have braved the cold and a rise in COVID-19 infections since the start of the year to return to regular activity, raising hopes for an economic boost in the world’s largest importing nation. China has raised its first batch of 2023 export quotas for refined oil products by nearly half versus a year ago to spur refinery output, capture strong export margins and adapt to slow domestic demand. Recession fears are also back at the front and center of crude markets with the International Monetary Fund kicking 2023 off with a tough warning that the world’s three main growth centers — the United States, Europe and China — were all experiencing weakening activity. Tuesday’s plunge in crude prices came ahead of a decision on global production expected from OPEC+, which groups 23 of the world’s oil producers in an alliance led by Saudi Arabia and co-steered by Russia. OPEC+ has faced challenges to keeping oil markets higher after a G7 price cap of $60 per barrel on Russian sea-borne crude that Moscow has objected to but done little to offset. “The G7 price cap has had little impact so far, the same can be said of Russia's response,” noted Erlam. “But that could change if oil prices keep moving higher, nudging Russian crude ever closer to the cap level and forcing some very difficult decisions.”
Oil Prices Plunge Below $80 As Near-Term Demand Worries Grow - Oil prices crashed early on Wednesday, with Brent Crude falling below the $80 a barrel mark again, as concerns about immediate global oil demand intensified with soaring Covid cases in China and slowing economies globally. As of 8:33 a.m. ET on Wednesday, the U.S. benchmark, WTI Crude, had plummeted below $75 per barrel and traded down by 2.68% at $74.91. The international benchmark, Brent Crude, dipped below $80 and the front-month contract was down by 2.70% at $79.92. Oil prices continued on Wednesday the Tuesday rout when both benchmarks dipped by 4% and Brent plummeted the most in one day in more than three months. The recent sell-off in oil was the result of gloomy economic expectations from the International Monetary Fund (IMF) regarding the state of the Chinese and global economy in the early weeks of 2023, and a strong U.S. dollar. Surging Covid cases in China and a slowdown in the Chinese economy are expected to weigh on oil demand and prices in the immediate term. The Chinese economy is off to a difficult start to 2023, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), told the CBS program Face the Nation in an interview aired on Sunday. China’s re-opening and the surge in infections that followed is “bad news” for the global economy in the short term, Georgieva said. The market is currently focused on a short-term deterioration in demand as China struggles with Covid-19, milder weather reduces demand for heating fuels, and the IMF’s latest warning that one-third of the world may suffer a recession in 2023, Saxo Bank said on Wednesday. “In Brent, the uptrend from early December looks challenged with a break below $81 signalling further loss of momentum, initially towards $79.65,” the bank’s strategists said.
Oil down as global economic downturn leads to weak demand fears - Oil prices slumped on Wednesday after diving more than 4% during the previous trading session as the global recession is expected to cool down oil consumption. International benchmark Brent crude traded at $81.74 per barrel at 09.56 a.m. local time (0656GMT), down 0.43% from the closing price of $82.10 a barrel in the previous trading session. American benchmark West Texas Intermediate (WTI) traded at $76.50 per barrel at the same time, a 0.55% loss after the previous session closed at $76.93 a barrel. Both benchmarks recorded rapid declines, with Brent losing almost $5 a barrel during Tuesday’s choppy trading session. The weaker demand worries put downward pressure on prices, especially after the IMF's Managing Director Kristalina Georgieva said one-third of the world's economies are expected to go into recession in 2023. "Even countries that are not in recession, it would feel like recession for hundreds of millions of people," Georgieva told CBS news on Sunday. The year ahead will be tougher than 2022 for most of the world economy as the US, EU, and China are slowing down, said Georgieva. Noting that the EU was hit "very severely" by the ongoing war in Ukraine, Georgieva said half of the bloc would be in recession this year. She added that the outlook for emerging markets in developing economies was even direr due to interest rate hikes and a strong US dollar. Adding more to demand worries, the world's second-largest economy China significantly increased its first batch of 2023 export quotas for refined oil products, which shows that the country is expecting less consumption.
Oil Futures Tumble to 3-Week Low After Fed Minutes Show More Rate Hikes -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange posted steep losses for a second straight session on Wednesday. The losses came after minutes from the Federal Open Market Committee's December meeting revealed no interest rate cuts are on the horizon in 2023, as central bank officials signaled they are committed to fighting inflation despite growing risks of pushing the economy into recession. Oil markets kicked off the new year with a spectacular selloff, sending front-month West Texas Intermediate and Brent futures as much as $7 per barrel (bbl) lower during just the first two trading sessions of 2023. Investors see higher potential for deeper demand destruction this year both domestically and in other major economies. In China, an abrupt end to zero-COVID policies has so far led to rising infections and a pullback on basic mobility as the Chinese remain deeply skeptical over available vaccines and hospital capacity. Even though early signs point to some recovery in public transportation usage, the real impact on fuel demand won't be noticeable until after Lunar New Year holidays that take place on Jan. 22. More evidence of demand losses in Asian markets can be found in shipping data for Russian oil exports that fell to a 2022 low in the final weeks of the year as China, Turkey, and India pulled back on crude purchases. Bloomberg data shows four-week average oil shipments out of Russian ports fell 600,000 barrels per day (bpd) through Dec. 31 to 2.615 million bpd. That drop came despite steep discounts offered by Russian operators that are currently selling the Urals blend -- Russia's flagship crude benchmark -- at a $30 discount to the global benchmark Brent. Domestically, minutes from the FOMC's Dec. 13-14 meeting released Wednesday afternoon showed not a single official forecast a cut in the federal funds rate this year despite expectations by some market observers for the central bank to pivot from its aggressive monetary tightening. "Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2%, which was likely to take some time," the meeting's summary states. "In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy." At settlement, WTI for February delivery fell below $73 per bbl to $72.84, down $4.09 on the session, and Brent March futures declined $4.26 to $77.84 per bbl. NYMEX RBOB February contract dropped $0.1020 to $2.2592 per gallon, and front-month ULSD futures ended down $0.1146 to $2.9719 per gallon.
WTI Extends Gains After Small Crude Build, SPR At 1983 Lows | ZeroHedgeOil prices are hovering in the green after a roller-coaster overnight as Saudi Arabia slashed its crude prices, signaling tepid demand, and risk-off sentiment clipped broader markets. Dollar strength this morning after solid labor market data is also not helping crude. Crude inventory figures later Thursday will give a first insight into the impact of pre-Christmas cold weather on US stockpiles, after the American Petroleum Institute reported a build on Wednesday. API
- Crude +3.30mm
- Cushing +700k
- Gasoline +1.20mm
- Distillates -2.40mm
DOE:
- Crude +1.69mm (+1.1mm exp)
- Cushing +244k
- Gasoline -346k
- Distillates -1.427mm
US crude stockpiles rose for a second straight week (though built less than API reported) while gasoline inventories drew down for a second week...
Oil Up as US Stockpiles Rose Below Expectations – - Oil rallied after US crude stockpiles rose less than anticipated, countering the dour outlook reflected by Saudi Arabia’s decision to cut its prices. West Texas Intermediate rose 1.1% to settle above $73 a barrel, after swinging in a $2 range. US crude and refined product exports rose 1.33 million barrels last week, keeping inventories in check, according to data from the Energy Information Administration. Traders viewed the data as a sign that global demand persists for US products, despite worries that China’s struggles with Covid will delay its economic recovery. “The higher exports were the reason for the more bullish reaction,” said Rob Thummel, a portfolio manager at Tortoise Capital Advisors, which manages roughly $8 billion in energy-related assets. Earlier, crude pared gains after state-controlled Saudi Aramco cut crude prices to Asia and Europe, a signal that the market interpreted as demand remaining sluggish. Crude was off to a gloomy start to the year with futures curves continuing to signal a market that is oversupplied. At the same time, the oil market is grappling with lower levels of participation, which can lead to swings that seem larger than the fundamental data supports. Open interest remains near multiyear lows, leaving prices susceptible to large intraday swings. WTI for February delivery rose 83 cents to settle at $73.67 a barrel in New York. Brent for March settlement rose 85 cents to settle at $78.69 a barrel.
Oil settles flat, with weekly decline on recession worries (Reuters) - Oil prices were little changed on Friday as the market balanced a weaker U.S. dollar and mixed U.S. jobs reports, but both crude benchmarks ended the first week of the year lower due to global recession concerns. Brent futures fell 12 cents, or 0.2%, to settle at $78.57 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 10 cents, or 0.1%, to settle at $73.77. For the week, both Brent and WTI were down over 8%, their biggest weekly dives to start the year since 2016. Both benchmarks had gained about 13% during the prior three weeks. U.S. services industry activity in November contracted for the first time in more than 2-1/2 years, according to a report from the Institute for Supply Management (ISM). But another report showed the U.S. economy added jobs at a solid clip in December, pushing the unemployment rate back to a pre-pandemic low of 3.5% as the labor market remains tight. A weaker dollar can boost demand for oil, as dollar-denominated commodities become cheaper for holders of other currencies. Atlanta Federal Reserve (Fed) President Raphael Bostic said the latest U.S. jobs figures are another sign that the economy is gradually slowing and should that continue the Fed can step down to a quarter percentage point interest rate hike at its next policy meeting. The world's top crude exporter, Saudi Arabia, lowered prices for the Arab light crude it sells to Asia to its lowest since November 2021 amid the global pressures hitting oil. Stock markets in China, the world's largest crude oil importer, logged a five-day winning streak on Friday on investors' expectations that the Chinese economy would soon emerge from its COVID woes and stage a robust recovery in 2023. But, more countries around the world are demanding visitors from China take COVID tests, days before China drops border controls and ushers in an eagerly awaited return to travel for a population that has been largely stuck at home for three years. Euro zone inflation tumbled last month but underlying price pressures are still rising and economic growth indicators are surprisingly benign, suggesting that the European Central Bank will keep raising interest rates for months to come. India's government expects economic growth to slow in the financial year ending March, as pandemic-related distortions ease and pent-up demand for goods levels out going into 2023.
Netanyahu- Despicable UN Vote Has No Bearing On Israel - The United Nations General Assembly on Friday passed a resolution asking the International Court of Justice (ICJ) to evaluate the legality of Israel's “prolonged occupation, settlement and annexation of Palestinian territory.” In a video message, Prime Minister Benjamin Netayahu was quick to condemn the UN vote as a "despicable decision" that has no bearing on Israel -- a government that sprang into existence in 1948 in the wake of a UN General Assembly recommendation to partition Palestine. "The Jewish people are not occupiers in their own land nor occupiers in our eternal capital Jerusalem and no UN resolution can distort that historical truth," said Netanyahu. Friday's UN resolution also asks the ICJ to give an advisory opinion on Israeli "measures aimed at altering the demographic composition, character and status of the Holy City of Jerusalem, and from its adoption of related discriminatory legislation and measures." Jewish settlers and Israeli authorities have been intensifying their efforts to push Palestinians out of occupied East Jerusalem, with the neighborhood of Sheikh Jarrah emerging as a particular flash point. The UN vote comes after Netanyahu's formation of the most ultra-nationalist and religious government in in the country's history. Last week, Netanyahu's government declared that “the Jewish people have an exclusive and inalienable right to all parts of the Land of Israel," including the West Bank and Golan Heights. With the new leadership bent on the even more expansion of West Bank settlements-- and thus threatening to obliterate the long-running fictional pursuit of a "two-state solution" -- a leery Biden White House is dispatching national security advisor Jake Sullivan to the Israel for a mid-January visit. Friday's General Assembly's ICJ resolution passed by an 87-26 vote, with 53 members abstaining. In voting against the measure, Israel and the United States were joined by countries that included Australia, Austria, Canada, Germany, Italy and the United Kingdom. France abstained, while Russia, China, Ireland, Portugal and Saudi Arabia were among the yes votes.
Zionists to face consequences of desecrating al-Aqsa Mosque - Mehr News Agency – The Zionists Regime will face huge consequences for desecrating al-Aqsa Mosque, the Iranian Foreign Minister said in a telephone conversation with the Secretary General of Organization of Islamic Cooperation (OIC). Iranian Foreign Minister Hossein Amir-Abdollahian held a telephone conversation with Secretary-General of the Organization of Islamic Cooperation (OIC) Hissein Brahim Taha on Thursday. The two sides discussed the latest developments in the region and the Muslim world, including the recent storming of the al-Aqsa Mosque by the Zionist regime's security minister, the recent insulting move by a notorious French magazine, and the situation of women in Afghanistan. Amir-Abdollahian stressed that the consequences of storming Al-Aqsa Mosque will be grave for the fake regime of Israel. The Iranian diplomat also proposed creating an effective legal and international mechanism to stop offensive acts against sacred religious sites. He also appreciated the stance of the Secretary General of the OIC in condemning the recent Zionist desecration of the Al-Aqsa Mosque and the sacrilegious move by a notorious French magazine. Referring to the responsibility of the French government in this regard, the top Iranian diplomat underlined that the trace of the Zionists can be seen in the move by the notorious French magazine. Hissein Brahim Taha, for his part, condemned the recent Zionist desecration of the Al-Aqsa Mosque, expressing worry about the Zionist regime's minister's move in storming the al-Aqsa Mosque. Terming such provocative actions by the Zionists as disturbing peace and stability in the region, the OIC SG emphasized that he is discussing various bodies to pressure the Zionist regime to stop such moves. He further condemned the insulting action by the French Magazine Charlie Hebdo and added, "We are investigating the issue to take proportionate action to respond to it."
Taliban Signs Oil Deal With Chinese - The Taliban’s signing of an international oil deal with the Chinese was televised on Thursday--its first international agreement since it took over Afghanistan in August 2021, according to the Diplomat. The Taliban struck a 25-year deal with China-based Xinjiang central Asia Petroleum and Gas Co (CAPEIC) for the Amu Darya oil project. Under the terms of the deal, CAPEIC will invest $150 million per year over the next three years in Afghanistan, then $540 million per year for the next 22 years. The Taliban will carry a 20% share in the project but will have the option to increase its stake to 75%. The Amu Darya oil project will encompass a 4,500 square kilometer area that will be explored over the next three years, during which between 1,000 and 20,000 tons of oil will be extracted, the Taliban’s Acting Minister of Minerals and Petroleum Shahabuddin Dilawar said. The crude from Amu Darya will be refined in-country, but the Chinese could build the refinery. The Amu Darya basin was previously estimated to hold up to 87 million barrels of crude. CNPC made a deal with the former republic government in Afghanistan over a decade ago to exploit the same resources. Under that former deal, the Afghani powers at the time claimed to be ready for production, according to the Diplomat, but work was stopped shortly thereafter. Since then, the project and its prospects haven’t been the topic of much discussion. Russia also signed a preliminary deal with the Taliban back in October to provide key fuels to Afghanistan—although officially, Russia recognizes it as a terrorist group, Iran has showed a willingness to trade with the Taliban as well. The Taliban’s rule over Afghanistan is precarious and unrecognized by the world. And like Russia, the Taliban has found itself mostly cut off from the global banking system.
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