EIA reports 1st oil supply draw in 11 weeks after a record supply to demand change in their crude oil balance sheet error; oil drilling rig activity is at a 6 month low..
US oil prices fell for the third time in four weeks as traders repriced the likelihood of a demand crushing recession following hawkish comments from Fed Chairman Powell....after rising 4.4% to $79.68 a barrel last week on stronger than expected economic data from China, record US crude oil exports, and a falling US dollar, the contract price for the benchmark US light sweet crude for April delivery moved lower in early Asian trading on Monday after China set a lower-than-expected 5% target for economic growth, then steadied as top oil executives debated supply tightness at an oil conference in Houston, and subsequently bounced back from early losses by mid-day to settle 78 cents, or 1% higher, at $80.46 a barrel, supported by a Saudi price hike for its flagship Arab light crude to Asia, as well as by a weaker dollar...oil prices were steady in Dubai trading early on Tuesday, as optimism over China’s economic recovery offset concerns of further monetary tightening, but turned lower on weak trade data from China and then tumbled after the Energy Information Administration lowered its 2023 forecasts for U.S. natural-gas and oil prices before settling $2.88 or 3.6% lower at to $77.58 a barrel, further pressured by a selloff in financial markets after Fed Chairman Powell opened the door for a 50-basis point rate hike at the Fed's next policy meeting, spooking traders across financial and commodity markets....oil prices extended those losses overnight as markets came to grips with the prospect that the Fed would continue aggressive rate increases and thus hamper US demand. but rebounded early Wednesday after EIA data showed an unexpected draw from US crude oil inventories for the first time in eleven weeks, but then fell back again a second day to settle 92 cents lower at $76.66 a barrel as the supportive U.S. inventory data was canceled out by Fed Chair Powell’s testimony to Congress, which continued to spook traders worried about the intensity of oncoming rate hikes...oil prices rose in overseas trading on Thursday, as a strike-disrupted fuel supply in France, a drop in U.S. crude inventories, and a weaker dollar temporarily offset fears over the economic impact of rising interest rates, but again turned south in US trading to extend losses for third straight session and close 94 cents lower at $75.72 a barrel as traders braced for an employment report that was seen likely to impact the decision on interest rates...oil prices extended those losses into early morning Friday, pressured by weak fuel demand and the hawkish comments from Fed Chairman Powell, but rallied after the BLS reported much better-than-expected U.S. employment data and settled up 96 cents, or 1.3% higher, at $76.68 a barrel, but nonetheless ended 3.8% lower on the week, amid fears that the Fed would pivot to more aggressive interest-rate hikes, compounding pressure from tempered economic projections from China and a slower-than-expected recovery in international travel...
Meanwhile, natural gas prices fell for the first time in 3 weeks on lowered demand expectations following moderating temperature forecasts...after rising 18.1% to a five week high of $3.009 per mmBTU last week as the amount of gas flowing to U.S. LNG export plants soared to a record high amid colder two-week forecasts, the contract price of US natural gas for April delivery opened at $2.630 per mmBTU on Monday, thirty-eight cents below Friday’s closing price, following a milder shift in the temperatures expected next week, and maintained its downward momentum to settle 43.7 cents or 14.5% lower at $2.572 per mmBTU, its biggest one-day drop in over eight months, as the weekend weather models had removed a huge amount of demand from the 15-day outlook...but natural gas prices opened higher and staged a mild rally on Tuesday, on record gas flows to liquefied natural gas (LNG) export plants following Freeport LNG's return from its outage, and settled 11.5 cents or 4.5% higher at $2.687 per mmBTU, as incoming frigid temperatures held off any additional selling...however, natural gas prices reversed and fell 13.6 cents, or about 5% on Wednesday to a one-week low of $2.551 per mmBTU, after data showed the amount of gas flowing to Freeport plant in Texas had dropped, and on forecasts indicating the weather in the near term would be warmer than had been expected...even so, natural gas prices opened higher and rose to $2.639 by 10:00AM, ahead of the weekly storage report on Thursday, before pulling back and settling eight-tenths of a cent lower at $2.543 per mmBTU, as the storage withdrawal was much smaller than usual for this time of year and as the latest weather forecasts called for less cold over the next two weeks...prices continued falling on Friday on declining March heating demand expectations coast-to-coast and settled 11.3 cents, or 4.4% lower at $2.430 per mmBTU, and thus finished 19.2% lower for the week...
The EIA's natural gas storage report for the week ending March 3rd indicated that the amount of working natural gas held in underground storage in the US fell by 84 billion cubic feet to 2,030 billion cubic feet by the end of the week, which left our natural gas supplies 493 billion cubic feet, or 32.1% above the 1,537 billion cubic feet that were in storage on March 3rd of last year, and 359 billion cubic feet, or 21.5% more than the five-year average of 1,671 billion cubic feet of natural gas that were in storage as of the 3rd of March over the most recent five years….the 84 billion cubic foot withdrawal from US natural gas working storage for the cited week was a little more than was expected by a Reuters survey of analysts, whose average forecast called for a 80 billion cubic feet withdrawal, but it was much less than the 126 billion cubic feet that were pulled out of natural gas storage during the corresponding week of 2022, and also less than the average 101 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 March 3rd indicated that even after a near record drop in our oil exports, we needed to pull oil out of our stored commercial crude supplies for the first time in 11 weeks, and for the 17h time in the past 46 weeks, largely due to the absence of oil that could not be accounted for... Our imports of crude oil rose by an average of 63,000 barrels per day to average 6,271,000 barrels per day, after falling by an average of 118,000 barrels per day during the prior week, while our exports of crude oil fell by 2,267,000 barrels per day to 3,362,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 2,909,000 barrels of oil per day during the week ending March 3rd, 2,330,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly 100,000 barrels per day lower at 12,200,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have averaged a total of 15,109,000 barrels per day during the March 3rd reporting week…
Meanwhile, US oil refineries reported they were processing an average of 14,967,000 barrels of crude per day during the week ending March 3rd, an average of 12,000 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 an average of 242,000 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 provided by the EIA for the week ending March 3rd appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 384,000 barrels per day more than what our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [-384,000] barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an omission or error of that size in this week’s oil supply & demand figures that we have just transcribed..... Furthermore, since last week’s “unaccounted for crude oil” was at [+2,266,000] barrels per day, that means there was a record 2,650,000 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 such comparisons nonsensical.... However, since most everyone treats these weekly EIA reports as precise, 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)….
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,259,000 barrels per day last week, which was still 1.4% more than the 6,176,000 barrel per day average that we were importing over the same four-week period last year. This week's 242,000 barrel per day decrease in our overall crude oil inventories was all withdrawn from our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve remained unchanged.. This week’s crude oil production was reported to be 100,000 barrels per day lower at 12,200,000 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 lower at 11,800,000 barrels per day, while Alaska’s oil production was 5,000 barrels per day lower at 440,000 barrels per day and added 400,000 barrels per day to the the rounded national total, same as last week....US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was still 6.9% below that of our pre-pandemic production peak, but was 25.8% 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 86.0% of their capacity while using those 14,967,000 barrels of crude per day during the week ending March 3rd, up from their 85.8% utilization rate during the prior week, and close to normal utilization for early March, when seasonal maintenance is still slowing throughput.. The 14,967,000 barrels per day of oil that were refined this week were 2.7% less than the 15,377,000 barrels of crude that were being processed daily during week ending March 4th of 2022, and 6.4% less than the 15,990,000 barrels that were being refined during the prepandemic week ending March 1st, 2019, when our refinery utilization was 87.5%, also close to normal utilization for early March ...
With another modest decrease in the amount of oil being refined this week, the gasoline output from our refineries finally turned lower, decreasing by 179,000 barrels per day to 9,557,000 barrels per day during the week ending March 3rd, after our gasoline output had increased by 302,000 barrels per day during the prior week. This week’s gasoline production was fractionally less than the 9,577,000 barrels of gasoline that were being produced daily over the same week of last year, and 3.0% less than the gasoline production of 9,652,000 barrels per day during the prepandemic week ending March 1st, 2019. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 84,000 barrels per day to 4,525,000 barrels per day, after our distillates output had decreased by 91,000 barrels per day during the prior week. With those decreases, our distillates output was 2.8% less than the 4,640,000 barrels of distillates that were being produced daily during the week ending March 4th of 2022, and 8.0% less than the 4,919,000 barrels of distillates that were being produced daily during the week ending March 1st, 2019...
With the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fifth time in seventeen weeks and for the 15th time in 30 weeks, decreasing by 1,134,000 barrels to 238,058,000 barrels during the week ending March 3rd, after our gasoline inventories had decreased by 874,000 barrels during the prior week. Our gasoline supplies fell by more this week even though the amount of gasoline supplied to US users fell by 550,000 barrels per day to 8,562,000 barrels per day, because our imports of gasoline fell by 226,000 barrels per day to 446,000 barrels per day, and because our exports of gasoline rose by 180,000 barrels per day to 831,000 barrels per day.. Following three straight gasoline inventory decreases, our gasoline supplies were 2.7% below last March 4th's gasoline inventories of 244,606,000 barrels, and about 3% below the five year average of our gasoline supplies for this time of the year…
Even with the decrease in our distillates production, our supplies of distillate fuels increased for the 5th time in 10 weeks, and for the 29th time over the past year, rising by 138,000 barrels to 122,252,000 barrels during the week ending February 24th, after our distillates supplies had increased by 179,000 barrels during the prior week. Our distillates supplies managed to increase again this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 321,000 barrels per day to 3,514,000 barrels per day, even as our imports of distillates fell by 56,000 barrels per day to 141,000 barrels per day, and as our exports of distillates rose by 187,000 barrels per day to 1,132,000 barrels per day... Even after fifty-seven inventory withdrawals over the past ninety-six weeks, our distillate supplies at the end of the week were were 7.4% above the 113,874,000 barrels of distillates that we had in storage on March 4th of 2022, but still about 7% below the five year average of our distillates inventories for this time of the year...
Finally, with copius new oil supplies that could not be accounted for not an issue this week, our commercial supplies of crude oil in storage fell for the 13th time in 30 weeks and for the 27th time in the past year, decreasing by 1,694,000 barrels over the week, from 480,207,000 barrels on February 24th to 478,513,000 barrels on March 3rd, after our commercial crude supplies had increased by 1,166,000 barrels over the prior week. With several large oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories were still about 7% above the most recent five-year average of commercial oil supplies for this time of year, and also about 45% above the average of our available crude oil stocks as of the first weekend of March over the 5 years at the beginning of the past decade, with the apparent disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. And even 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 March 3rd were 16.2% more than the 413,425,000 barrels of oil we had in commercial storage on March 4th of 2022, but 4.0% less than the 498,403,000 barrels of oil that we had in storage after winter storm Uri on March 5th of 2021, while 5.9% more than the 444,119,000 barrels of oil we had in commercial storage on March 6th of 2020…
This Week's Rig Count
The number of drilling rigs active in the US decreased for the 17th time over the prior 31 weeks during the week ending March 10th, and were 5.9% below the prepandemic count, even after increasing ninety-five times over the past 127 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by three to 746 rigs over the past week, which was still 83 more rigs than the 663 rigs that were in use as of the March 11th report of 2022, but was 1,183 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 2 to to a 26 week low of 590 oil rigs during the past week, after the number of rigs targeting oil had decreased by 8 during the prior week, but there are still 63 more oil rigs active now than were running a year ago, even as they amount to just 36.7% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are now down 13.6% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 1 to 153 natural gas rigs, which was still up by 18 natural gas rigs from the 135 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.6% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….
In addition to those rigs targeting oil and natural gas, Baker Hughes indicates that three rigs they've labeled as "miscellaneous" are still drilling this week: those include a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, 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, and a directional rig drilling to between 5,000 and 10,000 feet into a formation in Pershing county Nevada, also unnamed by Baker Hughes….While we haven't seen any details on any 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 two such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was down by two to 14 rigs this week, with 13 of those remaining drilling for oil in Louisiana's offshore waters and one drilling for oil in Texas waters….that Gulf rig count is still up by 3 from the 11 Gulf rigs running a year ago, when 10 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 at this time, the Gulf rig count is equal to the national offshore count..
In addition to rigs running offshore, there is also a water based directional rig drilling for oil at a depth greater than 15,000 feet through an inland body of water in Terrebonne Parish, Louisiana this week...a year ago, there were three rigs drilling on inland waters...
The count of active horizontal drilling rigs was up by 2 to 692 horizontal rigs this week, which was also 85 more rigs than the 607 horizontal rigs that were in use in the US on March 11th of last year, but was just over half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014.....on the other hand, the vertical rig count was down by two to 12 vertical rigs this week, which was also down by 11 from the 23 vertical rigs that were operating during the same week a year ago… at the same time, the directional rig count was down by three to 42 directional rigs this week, while those were still up by 9 from the 33 directional rigs that were in use on March 11th 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 March 10th, the second column shows the change in the number of working rigs between last week’s count (March 3rd) and this week’s (March 10th) count, the third column shows last week’s March 3rd 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 11th of March, 2022...
with that big rig drop in the Permian basin count, we'll start by checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian...there we find that there were five rigs pulled out of Texas Oil District 8, which overlies the core Permian Delaware, and that another rig was pulled out of Texas Oil District 8A, which overlies the northern part of the Permian Midland, but that 3 rigs were added in Texas Oil District 7C, which covers the southern Permian Midland...since the Texas Permian rig count was thus down by 3 rigs while the national Permian count was down by 6, we can figure that the 3 rigs pulled out of New Mexico had been drilling in the western Permian Delaware, in the southeast corner of that state....elsewhere in Texas, the rig count was down by one in Texas Oil District 3, apparently pulled from a basin that's not tracked by Baker Hughes, but up by one in Texas Oil District 4, which would account for the addition of a natural gas rig in the Eagle Ford shale, where the basin split is now 4 rigs targeting gas and 68 targeting oil... the Texas rig count remained unchanged, however, with the addition of three rigs in Texas Oil District 6, which included a natural gas rig in the Haynesville shale and two rigs targeting a basin that's not tracked by Baker Hughes...
that Haynesville shale gas rig addition in Texas offset the removal of a Haynesville shale natural gas rig from Louisiana, leaving the Haynesville unchanged, while the other two rigs removed from Louisiana had been drilling in state waters offshore...other natural gas rig changes include the three rigs that were pulled out of the Marcellus in Pennsylvania, and the two natural gas rigs added to the Marcellus in West Virginia...meanwhile, the oil rig added to the DJ Niobrara chalk was in Colorado, while the rig added to the Mississippian shale was in Oklahoma, which means that another rig had to have been removed from elsewhere in Oklahoma for the state count to remain unchanged....lastly, the three rigs added in Alaska were all directional rigs targeting oil at depths between 10,000 and 15,000 feet; one was targeting the Sagavanirktok formation east of the Colville River, another was drilling over the Umiat Oil Field, and the location and target of the third is not indicated...all the legacy rigs drilling in Alaska are on the North Slope, with no other specific information given...
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Ohio O&G Commission Moves Rapidly to Lease State Land for Drilling -- Marcellus Drilling News - Last week MDN told you about a presentation by the Muskingum Watershed Conservancy District (MWCD) to the Ohio Oil & Gas Land Management (OGLM) Commission, a commission established years ago to lease state-owned land for shale drilling (see Shale Drilling Safe and Successful on Ohio Public Lands for Years). The OGLM dragged its collective feet, FOR YEARS, and finally, the state legislature had enough and passed a law bypassing the OGLM until it can get its act together (see OH Gov. Signs Bill Expanding Drilling in State Parks, NatGas “Green”). The new law lit a fire under the OGLM, which has adopted a standard lease and is proposing the legislature adopt tweaks to allow for higher royalties and a bidding process.
Shale Drilling Safe and Successful on Ohio Public Lands for Years -Marcellus Drilling News - In January of this year, Ohio Gov. Mike DeWine signed House Bill (HB) 507 into law, a new law that expands the ability to drill for oil and gas in state parks and also legally redefines natural gas as a source of “green energy” (see OH Gov. Signs Bill Expanding Drilling in State Parks, NatGas “Green”). The new law has torqued off the radical left in the state. You would think from the comments by greenies that drilling on and under public land will be the end of days. Except we have a shining example of successfully and safely drilling shale wells on Ohio public lands for years: The Muskingum Watershed Conservancy District (MWCD).
Ascent Drilled & Fracked 75 Utica Wells in 2022, Made $361M Profit - Marcellus Drilling News -- Ascent Resources, originally founded as American Energy Partners by gas legend Aubrey McClendon, is a privately-held company that focuses 100% on the Ohio Utica Shale. Ascent is Ohio’s largest natural gas producer (352,000 leased acres) and the 8th largest natural gas producer in the U.S. The company issued its fourth quarter and full-year 2022 update yesterday. Ascent net production averaged 2.2 Bcfe/d (billion cubic feet equivalent per day) during 4Q, and averaged 2.1 Bcfe/d for the year. The company made $1.6 billion in profit during 4Q, and $361 million in profit for the entire year (versus losing $806 million in 2021).
Ohio Justices Should Exempt Fracking Equipment, Co. Says – Law360 - The Ohio Supreme Court should rule that a fracking company's equipment purchases were not subject to sales and use tax because the equipment was directly used in the hydraulic fracturing process,...
29 New Shale Well Permits Issued for PA-OH-WV Feb 27-Mar 5 | Marcellus Drilling News -- New shale permits issued for Feb. 27 through Mar. 5 in the Marcellus/Utica stayed the same as the prior week. There were 29 new permits issued in total last week, including 7 new permits for Pennsylvania, 20 new permits for Ohio, and 2 new permits issued in West Virginia. Last week the top receiver of new permits was Hilcorp Energy with 8 new permits–all of them in Columbiana County, OH. The second highest number of permits went to Encino Energy, with 4 permits in Carroll County and 2 in Columbiana County. EOG Resources also received 4 permits in Carroll County. It seems the northern part of the Ohio Utica saw a lot of love last week. Ascent Resources, Bradford County, Carroll County, Clarion County, Columbiana County, Coterra Energy (Cabot O&G), Encino Energy, EOG Resources, EQT Corp,Harrison County, Hilcorp Energy, Laurel Mountain Energy, Lycoming County, Marshall County, Southwestern Energy, Susquehanna County
Increased hospitalizations for heart attacks, heart failure seen in older adults living near fracking sites — A new University of Chicago study examining Medicare claims found older adults living near fracking sites in Pennsylvania were more likely to be hospitalized for cardiovascular diseases than those who lived in nearby New York state, where fracking is banned. The research was published March 6 in The Lancet Planetary Health. Her team collected Medicare claims data for tens of thousands of patients generated between 2002 and 2015 in both northern Pennsylvania, which experienced a fracking boom, and next-door New York state, where UNGD was banned. They found an association between the development of new fracking sites and increased rates of hospitalization for health conditions such as acute myocardial infarction, heart failure and ischemic heart disease. “Although we can’t point to one specific part of fracking operations as the culprit, folks living near fracking sites could be affected by exposure to things like air or water pollution that often come with fracking activity,” said Kevin Trickey, first author on the study and a former research analyst in the Sanghavi lab. “Our study connects nearby fracking activity to real, serious human health outcomes, suggesting it’s not just a matter of economics or environmental sustainability — but that policymakers and residents alike should start prioritizing the health of citizens, whether drilling new wells or plugging old ones.”Researchers have previously found elevated levels of airborne hydrocarbons and other pollutants near fracking sites, but a clear relationship between those pollutants and negative health outcomes has not yet been established. While prior studies have indicated a likelihood of this connection, this study applies statistical analysis to economics data for causal inference analysis to more directly connect UNGD to specific negative health outcomes in older adults. In the current study, the team determined there were an additional 11.8, 21.6 and 20.4 hospitalizations for acute myocardial infarction, heart failure and ischemic heart disease, respectively, per 1,000 Medicare users than would be expected if there were no fracking in the area.“We don’t find strong associations easily in the world,” Sanghavi said. “We’ve heard a lot of anecdotes, seen the documentaries, but it’s usually very difficult to find the connection, even when it exists. Even in cases where an individual might have an experience that seems to have a direct relationship to something like fracking, that doesn’t necessarily translate to a population health effect, and here we find that — yes, there is a measurable association with people’s health.”The effects were not just limited to the initial phases of UNGD. The study found that the risk continued even after drilling ended, indicating that the health impacts could be connected to the byproducts of the regular functioning and production of the well. The researchers say these results should be a call to action for communities and policy makers affected by fracking development. “This study provides additional evidence for those who think they may be experiencing exacerbated health issues as a result of fracking in their communities,” Sanghavi said. “I hope that these results can help communities and governments — who have an interest in protecting people’s health — by equipping them with more information for making an informed decision about UNGD.
Our View: Time for state to take another look at fracking severance tax | Times Leader -A story on page 1 of Sunday’s business section reported on how the Pennsylvania Budget and Policy Center believes we should reconsider levying a Severance Tax on natural gas extracted in Pennsylvania through “unconventional wells” (read: “fracking”).This is a debate we had when the fracking boom took off in 2011, and again when then-Gov. Tom Wolf, a Democrat, proposed a severance tax in 2015. Obviously, severance tax proponents lost both times, with the state opting for — and sticking with — an “impact fee.”As Budget and Policy Center Director Marc Stier pointed out during an online media event, the problem is that the impact fee does not increase when the price of natural gas goes up or the amount of gas produced rises (you can see the full slide-show presentation at krc-pbpc.org, use their search feature to look for “severance tax”)A chart the center presented showed that in some years this would not have made much of a difference. Comparing the actual revenue from the impact fee to the money that would have been raised by a 5% severance tax, the center showed a severance tax would have raised little more or even less than the impact fee in 2011, 2012, 2015 and 2016. Mind you it would still be more than the impact fee alone, because the center proposes keeping the impact fee intact.There were a few years where the severance tax would have substantially boosted state revenue, but it wasn’t until 2021, and especially 2022 that the difference between the two became truly glaring. The center notes production has increased steadily even as the price of gas fluctuated. To quote from the center’s presentation slide: “… in 2021 and 2022, production was at an all-time high while the price of gas increased from 63-cents in 2020 to an estimated $5.27 in 2022.“When production is high and gas prices are high, a severance tax will bring in significantly more money than the impact fee will.”The center estimates that a 5% severance tax would have raised about $1.7 billion in 2022, thanks to the big bump in the price of gas.Stier dismissed two old arguments against a severance tax.First: Fear that companies would simply stop drilling in Pennsylvania are unwarranted because we remain the only state without as severance tax, and companies are still drilling and extracting in states with such a levy, even in states where the tax is higher than the 5% the center is recommending. Moreover, demand is expected to keep growing as Europe weens itself off gas from Russia and turns to the U.S. to help make up the difference.Second: Claims that a severance tax would get passed on to Pennsylvania residents are unwarranted simply because — thanks to pipelines and compressed gas transportation technologies — natural gas is a fungible (our word, not his) commodity. More bluntly: Nothing requires companies to sell gas drilled in Pennsylvania to Pennsylvanians.Stier said most of the gas extracted here is sold elsewhere. By extension, that would mean we are buying natural gas from out of state. And since we are the only state without a severance tax, that in turn means we are likely paying for a severance tax levied elsewhere.
MVP Gets Sign-Off From Fish & Wildlife, but Fourth Circuit Could Deliver Fresh Setbacks - The U.S. Fish and Wildlife Service (USFWS) has issued an updated review of the Mountain Valley Pipeline (MVP) that could pave the way for the 2 million Dth/d natural gas conduit to receive further permits and complete construction this year. However, even with the updated USFWS Biological Opinion, posted to the project’s FERC docket Wednesday, MVP remains vulnerable to further delays amid ongoing legal challenges to other permits, according to analysts.The latest Biological Opinion, developed after an earlier approval in February 2022 was vacated by the U.S. Court of Appeals for the Fourth Circuit, is a “critical milestone” for MVP to meet federal Endangered Species Act requirements, analysts at ClearView Energy Partners LLC said in a recent research note.The USFWS review also serves as a “key input” in the process of completing other pending federal permits, the analysts said.For one, MVP is awaiting revised approval for a 3.5-mile crossing of the Jefferson National Forest along the Virginia/West Virginia border. The pipeline is also awaiting a permit from the U.S. Army Corps of Engineers under Section 404 of the Clean Water Act (CWA). The permit depends on the revised Biological Opinion from the USFWS, the ClearView analysts said.In a recent call with investors, MVP sponsor Equitrans Midstream Corp. outlined plans to have the 303-mile Appalachia-to-Southeast natural gas projectin service by the end of this year.CEO Thomas Karam said “based on the permitting timeline announced by other agencies, we expect to receive all of the required permits and approvals over the next few months. This timing will allow for mobilization of construction crews in the summer of 2023, which will position us to bring MVP into service in 2023.”Those plans could, once again, depend on what happens in the Fourth Circuit. The court has ruled against MVP on numerous occasions since 2017, when the Federal Energy Regulatory Commission issued the project’s certificate.“At the risk of sounding like a broken record,” pending decisions from the Fourth Circuit “remain critical to MVP’s goal of bringing the project in service by year end,” ClearView analysts said. “We did not think that oral argument in the appeal of West Virginia’s state water quality certification…went particularly well for MVP.”Whether the Fourth Circuit opts to vacate the West Virginia permit, issued under CWA Section 401, is the “real obstacle” in MVP’s path toward completing construction, according to ClearView. An adverse decision in that case could lead to a delay or suspension of the Army Corps water permit and “would also result in FERC, under its current policy, withholding authorization to resume construction anywhere on the project until that permit is reinstated,” the analysts said.
INSIGHT: US Congress may make it easier to issue pipeline permits – US energy trade groups see an opening for reforming how the country issues permits for pipelines and other energy infrastructure because Congress is facing several pieces of legislation that it must pass this session.
- Limits on pipeline capacity can constrain new oil and gas production, the source of domestic supplies of chemical feedstock
- Permit reform has bipartisan support
- The Farm Bill and the nation’s debt ceiling all present opportunities to address permit reform
The inability to receive permits to build new pipeline capacity can distort energy markets.Energy companies are running out of pipeline capacity to take away natural gas produced in the Marcellus and Utica Shale formations in the northeastern US.Growing oil production in other parts of the country could also face constraints. Oil wells – particularly those in shale basins like the Permian in west Texas and the Bakken in North Dakota – produce associated gas. If oil producers run out of pipeline capacity to ship out that gas, then that will limit their ability to increase crude production.Slow, cumbersome permitting could sabotage the renewable energy projects that feature so prominently in President Joe Biden’s administration.The Bipartisan Infrastructure Law and the Inflation Reduction Act (IRA) set aside billions of dollars for energy transmission, hydrogen, carbon capture and many other renewable and low-carbon projects.These can be enormous projects that approach the scale of a refinery or a petrochemical complex, said Ryan Lance, CEO of ConocoPhillips. He made his comments during the CERAWeek by S&P Global energy conference.“It is procedurally impossible to today to go on this journey unless we tackle the permitting process,” Lance said.
How Ohio train wreck could complicate permitting overhaul - Last month’s train derailment and chemical spill in Ohio has led to finger-pointing from both sides of the political aisle, but it is also now hardening attitudes on a still-live issue on Capitol Hill: permitting overhaul. The connection may not be perfect, but progressives see the accident as a warning sign — that deregulation leads to disastrous environmental results. “You get things like [East Palestine] when you take shortcuts,” Rep. Jared Huffman (D-Calif.), ranking member on the Natural Resources Subcommittee on Water, Wildlife and Fisheries, said last week. Most Republicans, on the other hand, see the derailment as a call for building even more energy infrastructure. “It should highlight how much safer pipelines are than trains, so it should make what, to me, is an obvious case [for more pipelines],” Sen. Kevin Cramer (R-N.D.) said on the accident. As the East Palestine incident undergoes congressional scrutiny, the growing divide among lawmakers could further scramble negotiations on permitting. Later this week, the CEO of Norfolk Southern Co., the train company at the center of the disaster, will testify before a Senate panel, where questions on regulations will likely be prominent. At the same time, the House Natural Resources Committee will be marking up its portion of what will become the House GOP’s big energy and permitting package. The bill focuses on streamlining reviews and limiting legal challenges. In recent hearings Democrats have already been trying to connect the dots between Ohio and the attempt to ease environmental reviews of energy projects. “The results of deregulation are not more pointed than what happened in East Palestine and that derailment,” House Natural Resources ranking member Raúl Grijalva (D-Ariz.) said last week during a hearing on GOP legislation. “That happened, cause and effect, after the former administration, the Trump administration, effectively deregulated some of the safety regulations that existed for railroads,” he added. Despite that type of rhetoric from Democrats and some administration officials suggesting Trump-era regulatory rollbacks were a culprit in the crash, to this point, officials say that changes in safety standards have not yet played a role. A preliminary report from the National Transportation Safety Board pointed to an overheated wheel bearing. According to that report, the Norfolk Southern crew tried to slow the train down before it derailed.
Ohio train accident spills into permitting debate - Last month’s toxic train derailment is hardening the divide between Democrats and Republicans over how to overhaul the nation’s energy permitting process.Democrats see the accident as a warning sign that easing requirements and speeding up environmental reviews could lead to future disasters. Republicans take it as proof that the U.S. needs to build more energy infrastructure like pipelines to keep more chemicals, oil and natural gas off the roads and rails,writes POLITICO’s E&E News reporter Jeremy Dillon. Meeting President Joe Biden’s goal of a carbon-free electric grid by 2035 will likely require building a network of long-distance power lines to carry wind and solar energy to cities. But the approval process for such power lines can take years, if not decades.That’s why some Democratic lawmakers support easing project permitting requirements. But they also worry a permitting overhaul could mean expediting fossil fuel infrastructure, which is the goal for many Republican lawmakers — hence the partisan gridlock. Democrats argue the Ohio accident highlights the need for strict environmental and safety regulations. “You get things like [East Palestine] when you take shortcuts,” said Democratic Rep. Jared Huffman of California.Republicans, on the other hand, say the derailment proves how critical it is to build more energy infrastructure. They have made clear that they will only support a permitting overhaul that includes relaxed pipeline reviews.“I think one of the points to be made is you’re carrying this liquid in the pipeline underground, it can’t derail,” Sen. Shelley Moore Capito, a top Republican from West Virginia, said in a recent hearing. “It’s safer. There’s no question about that.” House Republicans are finalizing their permitting proposal this week, with the goal of moving it by the end of the month as part of a broader energy package. To advance, the proposal will need to find favor among Democrats in the Senate, where its prospects are unclear.
US senator favours separate energy-permit reform bill – US Senator Joe Manchin, whose proposal for permit reform failed in 2022, would like to see Congress make another attempt with a separate bill, he said on Friday. Manchin’s proposals were attached in a continuing resolution. The proposals attracted bipartisan support but failed to break the Senate’s 60-vote threshold to pass most legislation in the 100-seat chamber. Oil, gas and midstream producers have long complained about the time and effort needed to receive permits for pipelines and other energy infrastructure. Manchin spoke of the delays holding up the Mountain Valley Pipeline, which, once approved, would ship natural gas from the Marcellus and Utica shale through his state. However, the cumbersome permitting process of the US could threaten the ambitions of recent legislation passed during the administration of US President Joe Biden, said Senator Lisa Murkowski (Republican, Alaska). She made her comments during the CERAWeek by S&P Global energy conference. She cited the Bipartisan Infrastructure Law, the Inflation Reduction Act (IRA) and the Chips and Science Act. “There is so much on the table in terms of opportunity and grants and programmes and tax credits,” she said. “We are going to lose all of that good that we put into play if we cannot address the permitting.” Murkowski said bipartisan permitting legislation is possible. Manchin added, “Republicans have been begging for permitting reform for years.” Despite such Republican support in previous years, Manchin’s proposal did not attract enough bipartisan votes to pass the Senate, something he blamed on political dynamics. In the current congressional session, Democrats hold a majority in the Senate and Republicans hold one in the House of Representatives, so any legislation will have to be bipartisan if it has a chance of passing Congress. After the Republicans captured a majority in the House in the midterm elections of 2022, Manchin approached Representative Kevin McCarthy (Republican, California), the new speaker of the House. “Permitting was the first thing that came out of our mouths,” Manchin said. “The US has the most over-regulated, over-judicated process in the world. We just can’t continue.” Manchin’s proposals would not remove steps in the permitting process, but they would impose timelines and seek other ways to make existing processes more efficient. In addition he suggested that a future reform bill could allow federal agencies to simultaneously review a permit application. This could include the Environmental Protection Agency (EPA), the Department of the Interior and the US Army Corps of Engineers, he said. Meanwhile, the reform must allow people to retain their ability to challenge permits in court without abusing the system to sabotage the projects from ever being built.
Kathairos Solutions emerges as methane elimination leader in Appalachian Basin oil and gas operations - The pressure to reduce methane emissions in the US energy sector continues to intensify, as does the need for innovative solutions to support ambitious targets set by government, regulators and industry leaders alike. Kathairos Solutions is leading the way among clean tech providers, allowing oil and gas producers to completely eliminate methane venting on remote well sites in the simplest and most economical way possible. Through expanding partnerships with producers and government, Kathairos is proud to announce an intensified commitment to the country's clean energy transformation. The company will be installing more than 1,500 methane elimination systems across the Appalachian Basin in the year ahead – an unprecedented technology deployment that will eliminate an estimated 211,500 metric tons of CO2e emissions annually. On Tuesday, March 28, Kathairos will host oil and gas industry insiders in downtown Pittsburgh to showcase Kathairos' revolutionary liquid nitrogen technology, proven to power remote well site devices effectively, affordably and at scale. "We feel an urgent need to focus our resources on Appalachia at this time, given that regulations now clearly point to zero tolerance for methane venting by 2026, if not sooner," said Dick Brown, President and CEO of Kathairos. The technology saw rapid adoption throughout North America in 2022, led by a series of forward-thinking producers in the Marcellus and Utica shale basins. The large-scale, 1500-unit deployment of Kathairos' transformative methane elimination systems will commence in April as a focused effort across southwestern and northeastern PA – home to thousands of well sites currently venting methane in their routine operations – a highly potent greenhouse gas.
Petroleum spill in Geneva caused by nearby leaking fuel container — The city of Geneva has contained the petroleum spill in Seneca Lake that began Saturday afternoon, city officials said Monday. The New York State Department of Environmental Conservation (NYS DEC) says they were notified of a possible petroleum spill impacting Seneca Lake. Once Spill Response experts and local emergency services responded to the scene, they were able to trace the source of the petroleum back to a leaking fuel container located at a property blocks away near Central Ave. and Buffalo St. They add the petroleum was released from a tote. NYS DEC’s initial investigation revealed that the container — which can hold up to 250 gallons, the city said — was leaking fuel onto the ground and into a storm sewer which eventually reached Marsh Creek and Seneca Lake. The leak occurred because the container was left open, officials said. Spill mitigation protocols, according to NYS DEC, which includes the placement of a harbor boom around the outfall into the lake, sorbent boom, as well as pads at the lake and various area of Marsh Creek. Spill booms, berms, and vaccuum systems were used to collect the spilled petroleum. The NYS DEC adds they are working with the property owner to get more information, and the investigation remains ongoing.
EIA Further Slashes Henry Hub Natural Gas Forecast After Record-Warmth in January, February - Amid lower-than-expected heating demand this winter, the Energy Information Administration (EIA) said Tuesday it is raising its projected end-March natural gas storage carryout to more than 1.9 Tcf, a 27% increase compared to projections issued in January. A 1.9 Tcf end-March carryout would also represent a 23% surplus to the prior five-year average, EIA said in its updated Short-Term Energy Outlook. EIA said it now expects Henry Hub to average around $3.00/MMBtu in 2023, down 50% year/year. Perhaps unsurprisingly given the precipitous downward trajectory natural gas futures have traced this winter, EIA’s latest Henry Hub outlook reflects a hefty 50% discount versus January forecasts. Last month, EIA modeled an average Henry Hub spot price of $3.40 for 2023. Henry Hub spot prices averaged $2.38 in February, the lowest monthly average since September 2020, the STEO data show. In terms of domestic consumption, residential/commercial demand for natural gas is on track to decline 11% year/year in the first quarter on mild winter temperatures — historically mild, in fact, according to the agency. “Preliminary data from the National Oceanic and Atmospheric Administration for January and February indicate the first two months of 2023 may be close to the warmest on record for that period in data going back to 1895,” researchers said. “The mild weather was concentrated in the eastern part of the United States.” EIA said it expects residential/commercial demand to average near 32 Bcf/d in March, close to the five-year average, with heating degree days expected to total closer to historical norms for the month. Total U.S. consumption is set to average 99.1 Bcf/d in 1Q2023, down 5% from 1Q2022 levels, according to the latest STEO. Despite lowering its Henry Hub forecast in the latest STEO, EIA said it still expects rising prices in the coming months as the Freeport LNG terminal’s roughly 2 Bcf/d of capacity comes back online and drives an increase in export demand. Also contributing to upward pressure on prices will be “seasonal increases in natural gas demand in the electric power sector,” researchers said. “In addition, we expect natural gas production will be relatively flat for the rest of 2023 as producers reduce drilling in response to lower prices.”
New Fortress Energy looks to fast-track LNG developments (UPI) -- New York-based New Fortress Energy said Tuesday it was working to take more control of its supplies of liquefied natural gas after reporting that profits improved over third-quarter levels.New Fortress is developing a so-called Fast LNG program, which utilizes modular technology to lower costs and quicken the pace of deployment. The company said last year that it expected the program could account for more than half of the LNG supply expected on the market between this year and next.While the company said it relied in the past on third-party suppliers, its Fast LNG program could change that."We believe these developments will allow us to control our own LNG supply and complete the value chain enabling full vertical integration of our business," it said.Giles Fareer, the head of gas and LNG research at Wood Mackenzie, said recently that the geopolitical premium from the war in Ukraine supported higher natural gas prices last year and led to a surge in long-term export deals, which "created huge momentum" for LNG project development.Wood Mackenzie expects the United States to overtake Australia and Qatar this year to become the world leader in LNG exports.New Fortress said it invested more than $2 billion on its Fast LNG program last year. By the middle of this year, it expects to start construction on its first-ever floating liquefied natural gas unit.The company reported adjusted net income of $182.7 million during the fourth quarter, an improvement over third quarter levels of $85.6 million.
U.S. gas producer Chesapeake makes LNG handshake with Gunvor - (UPI) -- U.S.-based shale natural gas producer Chesapeake Energy said Monday it signed a long-term agreement to deliver liquid gas to a company in Singapore.Chesapeake signed a heads-of-agreement deal with the Singapore branch of multinational commodity trading company Gunvor. The U.S. company said itwould supply Gunvor with the gas equivalent of 100 billion cubic feet of liquefied natural gas annually for a period of 15 years.A start date is set at 2027 and both sides in the interim will look for "the most optimal" U.S. facility to turn gas into the liquid form for exports."This agreement reflects the powerful combination of the premium rock, returns, and runway of our competitively positioned Haynesville natural gas assets combined with the strength of our balance sheet and financial position to securely supply global LNG markets," Nick Dell'Osso, the president and CEO at Chesapeake, said.The Haynesville shale play straddles the border of Louisiana and Texas and is the third-largest inland natural gas producer in the country. It's estimated 16 billion cubic feet of production in March is about half that of the largest shale reserve, the Appalachia basin, which covers both the Marcellus and Utica shales.Chesapeake during the fourth quarter produced the equivalent of 20% of the daily average from Haynesville.The company, however, said in its fourth-quarter earnings report that drilling activity will decline in 2023. Chesapeake said it would drop two rigs in the Haynesville play and another in the Marcellus shale this year.Dell'Osso said that while the demand for natural gas is accelerating, his company was focusing on capital discipline "as we navigate current market volatility."Chesapeake's ambitions with LNG, however, should help solidify the United States as the world's leading exporter of the super-cooled liquid form of natural gas.
Chesapeake Steps Into LNG Market to Supply Gunvor with U.S. Natural Gas - Chesapeake Energy Corp. has reached a tentative deal to supply Gunvor Group Ltd. with up to 2 million metric tons/year (mmty) of LNG from a U.S. liquefaction facility that the companies plan to jointly select. Under a heads of agreement (HOA) announced Monday, Chesapeake would supply global commodity trader Gunvor with the super-chilled fuel for 15 years beginning in 2027. Gunvor would purchase the liquefied natural gas at prices indexed to the Japan-Korea Marker on a free-on-board basis. The announcement builds on a strategy unveiled by Chesapeake last year to gain exposure to the international gas market. One of the largest producers in the Haynesville Shale, Chesapeake’s management team has previously discussed the possibility of taking equity stakes in liquefaction projects, signing gas supply agreements at prices linked to international benchmarks and entering offtake deals with foreign buyers. CEO Nick Dell’Osso said Monday the HOA reflects Chesapeake’s strong position in the Haynesville, which is near the LNG corridor along the Gulf Coast. He added that it “marks an important initial step on our path to being LNG ready and we look forward to entering into additional agreements while export capacity continues to come online.” NGI’s Patrick Rau, director of strategy and research, noted that the 2 mmty included in the HOA translates to roughly 250 MMcf/d, or about 5-10% of Chesapeake’s current U.S. output. He added that netback prices to the Gulf Coast from Asia are above $10/MMBtu, which is well above current Henry Hub prices, making the link to JKM attractive for the time being. In addition to the seven LNG terminals operating in the Lower 48, more than a dozen projects have been approved by federal regulators that are not yet under construction. About half of the projects planned along the Gulf Coast are near securing enough offtake to reach a final investment decision.All of the production from Chesapeake’s Haynesville assets is certified by an independent third party to ensure its gas is produced as responsibly as possible.
Liquefied natural gas will continue to lead growth in U.S. natural gas exports –EIA - -Exports of liquefied natural gas (LNG) will continue to drive growth in U.S. natural gas exports over the next two years, according to our recently released Short-Term Energy Outlook (STEO). In our March STEO, we forecast that U.S. LNG exports will average 12.1 billion cubic feet per day (Bcf/d) in 2023, a 14% (1.5 Bcf/d) increase compared with last year. We expect LNG exports to increase by an additional 5% (0.7 Bcf/d) next year.We forecast U.S. LNG exports to rise because of high global demand as LNG will continue to displace pipeline natural gas exports from Russia to Europe. So far this year, mild winter temperatures and fuller-than-average storage resulted in reduced LNG prices, which could be an incentive to import more LNG, especially in the price-sensitive countries of Southeast Asia. The Freeport LNG export terminal's return to service and the new LNG export projects that will commissioned by the end of 2024 support our forecast increase in exports. The Freeport LNG terminal is one of seven U.S. LNG export facilities; it can produce 2.14 Bcf/d of LNG on a peak day. Prior to the full shutdown of the facility in June 2022, exports from the facility averaged 1.9 Bcf/d from January 2021 through May 2022, according to our Natural Gas Monthly.Because of the Freeport shutdown, U.S. LNG exports declined to an average 10.0 Bcf/d from June 2022 through December 2022, after peaking at 11.7 Bcf/d in March. When the new Calcasieu Pass LNG export facility was commissioned, it partially offset the decline in exports from Freeport LNG; exports from Calcasieu Pass have averaged 1.2 Bcf/d since June 2022.This year, once all three trains at Freeport LNG return to service, we forecast U.S. LNG exports to exceed 12 Bcf/d, and the United States will remain the world’s largest LNG exporter. We forecast that U.S. LNG exports will increase further, to approximately 14 Bcf/d, by December 2024 because some LNG export projects under construction are expected to start operations by then.We expect U.S. natural gas exports by pipeline to grow by 0.5 Bcf/d in both 2023 and 2024, mainly because of increased exports to Mexico. Several new pipelines in Mexico—Tula-Villa de Reyes, Guaymas-El Oro, the Mayakan pipeline on the Yucatán Peninsula, as well as some other minor interconnects—are scheduled to come online in 2023–24. We also expect an increase in exports via the Sur de Texas-Tuxpan underwater pipeline to supply the proposed floating liquefaction (FLNG) project off the east coast of Mexico.
US natgas plunges 15% on less cold forecasts, biggest drop in 8 months U.S. natural gas futures plunged by about 15% on Monday - its biggest one-day drop in over eight months —on forecasts for much less cold weather and heating demand than previously expected over the next two weeks. That price drop came after the contract soared about 9% to a five-week high on Friday as gas flows to U.S. liquefied natural gas (LNG) export plants jumped to a record high with Freeport LNG's export plant in Texas ramping up after exiting an eight-month outage in February. "Natural gas futures have fallen massively today after major weather models corrected their forecasts higher throughout their 15-day forecasts," "This has translated to ... [gas] demand lost over the forecast period ... With the vast majority of that being [residential and commercial] demand," Meteorologists boosted their two-week average temperature forecasts for the U.S. Lower 48 states to 45 degrees Fahrenheit (7 degrees Celsius) on Monday from around 43 F on Friday, according to data provider Refinitiv. That compares with a normal level of around 46 F at this time of year. Front-month gas futures for April delivery on the New York Mercantile Exchange fell 43.7 cents to settle at $2.572 per million British thermal units (mmBtu), their lowest close since Jan. 24. In what has already been an extremely volatile start to the year, Monday's price drop was the front-month's biggest daily percentage decline since falling around 17% on June 30. The gas market is used to huge price swings, which are usually related to changes in weather forecasts. The front-month fell to a 28-month low of below $2 per mmBtu on Feb. 22 on warmer weather forecasts before jumping to a five-week high over $3 just over one week later on March 3 on colder forecasts. The drop in gas futures put pressure on shares of several gas producers, including Chesapeake Energy Corp and EQT Corp, which were both down about 4% Monday afternoon. Freeport LNG's export plant, meanwhile, was on track to pull in about 1.7 billion cubic feet per day (bcfd) of gas on Monday, up from 1.4 bcfd on Friday, according to data provider Refinitiv. Federal regulators have approved the restart of two of Freeport LNG's liquefaction trains (Trains 2 and 3). But on Monday, federal regulators had more questions about Freeport LNG's Feb. 27 request to restart the third train (Train 1) and other parts of the plant. Liquefaction trains turn gas into LNG. Total gas flowing to U.S. LNG export plants rose to 13.7 bcfd so far in March from 12.8 bcfd in February. That compares with a monthly record of 12.9 bcfd in March 2022, before the Freeport LNG facility shut. With colder weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 116.7 bcfd this week to 120.7 bcfd next week. Those forecasts, however, were much lower than Refinitiv's outlook on Friday. Milder winter weather so far this year has prompted utilities to leave more gas in storage than usual. Gas stockpiles were about 19% above their five-year average (2018-2022) during the week ended Feb. 24 and were expected to end about 22% above normal during the week ended March 3, according to federal data and analysts' estimates. Even though mild weather this winter has reduced demand for gas, analysts at U.S. investment bank Piper Sandler said some holders of gas in storage were "forced to make mandatory withdrawals (at any price), which drove incremental selling pressure." Historically, those contractual withdrawal requirements have been in place to make room in storage facilities for the upcoming April-October injection season.
US natgas falls 5% to one-week low as flow to Freeport LNG drops (Reuters) - U.S. natural gas futures fell about 5% on Wednesday to a one-week low, after data showed the amount of gas flowing to Freeport LNG's export plant in Texas dropped and on forecasts indicating the weather in the near term would be warmer than previously expected. That price decline came even though the total amount of gas flowing to all seven big U.S. LNG export plants was still on track to hit a record high this month. Front-month gas futures for April delivery fell 13.6 cents, or 5.1%, to settle at $2.551 per million British thermal units (mmBtu), their lowest close since Feb. 24. The market has been extremely volatile in recent weeks as traders bet on the latest weather forecasts. The front-month fell to a 28-month low below $2 per mmBtu in intraday trade on Feb. 22 on forecasts for warmer weather before jumping 9% to settle at a five-week high over $3 just over a week later on March 3 on forecasts for colder weather and then plunging 15% on March 6 on an outlook for warmer temperatures. Freeport LNG's export plant was on track to pull in just 0.1 billion cubic feet per day (bcfd) of gas on Wednesday, down from 1.0 bcfd on Tuesday, according to data provider Refinitiv. Freeport exited an eight-month outage in February. That outage was caused by a fire in June 2022. Officials at Freeport LNG had no comment on the decline in gas flows. When operating at full power, Freeport LNG, the second-biggest U.S. LNG export plant, can turn about 2.1 bcfd of gas into LNG for export. The seven big U.S. LNG export plants, including Freeport LNG, can turn about 13.8 bcfd of gas into LNG. Refinitiv said average gas output in the U.S. Lower 48 states has risen to 98.4 bcfd so far in March, up from 98.2 bcfd in February. That compares with a monthly record of 99.9 bcfd in November 2022. Analysts said production declined earlier this year due in part to drops in gas prices of 40% in January and 35% in December that persuaded several energy firms to reduce the number of rigs they were using to drill for gas. In addition, extreme cold in early February and late December cut gas output by freezing oil and gas wells in several producing basins. The latest weather forecasts show the weather in the Lower 48 states would remain mostly colder than normal through March 23 after some near- to warmer-than-normal days from March 8-13. With colder weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 115.5 bcfd this week to 119.2 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Tuesday. Milder winter weather so far this year has prompted utilities to leave more gas in storage than usual. Gas stockpiles were about 19% above their five-year average (2018-2022) during the week ended Feb. 24 and were expected to end about 22% above normal during the week ended March 3, according to federal data and analysts' estimates.
Nymex Natural Gas Futures, Cash Slide as Supply/Demand Too Loose -After early gains on Thursday, natural gas futures lost momentum following the latest government inventory data that confirmed supply/demand balances remain too loose. The April Nymex gas futures contract settled at $2.543/MMBtu, off eight-tenths of a cent on the day. May futures slid 3.0 cents to $2.683. Spot gas prices were mostly lower, with the West and East coasts continuing to pull back sharply from earlier highs. NGI’s Spot Gas National Avg. dropped 25.5 cents to $2.800. Against the backdrop of volatile weather models, plush storage, robust production and the ongoing return of a key export facility, futures prices have struggled to find their footing. The April Nymex contract rose to a $2.644 intraday high early in Thursday’s session, but the latest Energy Information Administration (EIA) data was yet another example of the smaller-than-average withdrawals that have occurred this winter. The EIA said stocks for the week ending March 3 fell by 84 Bcf, well within the range of expectations ahead of the report. That said, the range was wide. A Reuters survey of 17 analysts produced a range of withdrawal estimates from 61 Bcf to 95 Bcf, with a median of 79 Bcf. Bloomberg’s survey had a slightly tighter range of seven estimates that also resulted in a median draw of 79 Bcf. A Wall Street Journal poll projected a draw of 81 Bcf based on the average forecast of 12 participants whose estimates ranged from decreases of 69 Bcf to 92 Bcf. NGI modeled a 62 Bcf pull. For comparison, the EIA recorded a 126 Bcf decline for the same week last year, and the five-year average is a decline of 101 Bcf. With a couple of winter storms driving up demand on the East Coast last week, inventories there led the declines. The EIA said East stocks fell by 35 Bcf, while the Midwest followed with a 29 Bcf pull. The Pacific region withdrew a massive 18 Bcf, leaving stocks there at only 81 Bcf, more than 52% below the five-year average. Mountain inventories fell by 7 Bcf. The South Central region’s modest net 3 Bcf injection – solely in nonsalts – surprised a few Enelyst participants, but they chalked it up to spring-like temperatures during a transitional period in the gas market. Total working gas in storage as of March 3 was 2,030 Bcf, which is 493 Bcf above year-ago levels and 359 Bcf above the five-year average, according to EIA.
Natural gas down 19% on the week after ‘dead cat bounce’ -- Is natural gas returning to $3 anytime soon? That seems to be the question on the minds of almost everyone in this market though it may not be articulated as much, with the heating fuel posting another spectacular double-digit weekly loss after appearing to be on a higher trajectory just last week. The most-active April gas contract on the New York Mercantile Exchange’s Henry Hub settled Friday's trade at $2.43 per mmBtu, or metric million British thermal units, down 11.3 cents, or 4.3%. For the week, April gas was down nearly 19%. Gas futures rose a compounded 30% in the prior two weeks, hitting a 5-week high of $3.027 on March 3, on expectations of late winter chill after months of unseasonable warmth. But like a curse to the bulls, this week’s weather models were back to pointing at higher temperatures, triggering another market crash that proved the rally of the past two weeks to be nothing more than a “dead cat bounce.” Charts for April gas suggest that the path of least resistance is lower, says Sunil Kumar Dixit, chief technical strategist at SKCharting.com. “As gas breaks below the previous week's low, immediate resistance shifts to $2.66, above which $2.80 is the next challenge,” said Dixit. “Below the $2.55 support, we can witness a further drop to $2.30 and $2.18.” Fundamentally, the outlook for gas has undergone a paradigm shift after this week’s change in the weather model readings, said Houston-based energy markets advisory Gelber & Associates. “Production is still strong at 100.5 billion cubic feet per day,” Gelber said in a note that affirmed gas output back to late January highs after recent declines below 100 bcf. “NYMEX natural gas prompt month price, as a result, has largely traded sideways.” An unusually warm winter has led to considerably less heating demand in the United States this year, leaving more gas in storage than initially thought. Storage of natural gas stood at a total 2.030 tcf, or trillion cubic feet, as of March 3 — up 32% from the year-ago level of 1.537 tcf and 19% higher than the five-year average of 1.671 tcf, the EIA, or Energy Information Administration, reported. Responding to the warmth and lackluster storage draws, gas prices plunged from a 14-year high of $10 per mmBtu in August, reaching $7 in December before hitting a 2-½ year bottom of $1.967 in late February.
Environmental groups sue feds over Gulf of Mexico oil, gas leases --Several environmental groups on Monday filed a federal court legal challenge to the federal government opening up more than 73 million acres of the Gulf of Mexico to oil drilling.The lawsuit is over the Department of Interior’s sale of oil and gas leases in unleased areas of the western and central Gulf of Mexico. The nearest area is more than 200 miles west of peninsular Florida.The Biden administration has come out against some renewals of oil leases. But an agreement with West Virginia Sen. Joe Manchin was included in the approval of the Inflation Reduction Act in 2022. The sale is now scheduled for March 28.The environmental groups say the nation should be moving away from the use of fossil fuels and not enable more drilling. They say it would go against the administration’s commitment to reduce greenhouse gas emissions and transition to clean energy.It is estimated that the leased areas could extract over 1 billion barrels of oil and 4 ½ trillion cubic feet of natural gas over the next 50 years.Earthjustice and Sierra Club filed the lawsuit in federal court in the District of Columbia on behalf of Healthy Gulf, Bayou City Waterkeeper, Sierra Club, Friends of the Earth, and the Center for Biological Diversity. It was filed against Secretary of the Interior Deb Haaland and the Bureau of Ocean Energy Management.The lawsuit alleges the lease sale would jeopardize the survival of endangered marine life. Five of the world’s seven species of sea turtles inhabit Gulf waters, and the Gulf is the exclusive home of the endangered Gulf of Mexico (Rice’s) whale, whose numbers may have dwindled to fewer than 50 individuals.“Selling off more of our lands and waters to the fossil fuel industry is the last thing we should do at a time when we need to be rapidly transitioning away from oil and gas to meet our nation’s climate goals and create a livable planet for all,” said Athan Manuel, Director of the Sierra Club’s Lands Protection Program. “Offshore drilling devastates millions of acres of nature, contributes to an increasing number of climate disasters, and creates a quarter of our greenhouse gas emissions. While the IRA represents a historic step forward in achieving our nation’s climate goals, we cannot let the bad provisions of the bill, including oil and gas leasing, undercut what we stand to gain.”“As steward of the country’s public lands and waters, Interior has a duty to fully consider the harms offshore leasing can cause, from air pollution to oil spills, and beyond,” said Irene Gutierrez, senior attorney for the Natural Resources Defense Council. “This vast lease sale poses threats to Gulf communities and endangered species—like Rice’s whale—while contributing to the climate crisis this region knows far too well. We are holding the agency to its obligation to carefully assess the fallout of this giveaway to Big Oil.”
Biden delays five-year offshore leasing plan, sparking Manchin pushback - In his latest clash with the White House, Sen. Joe Manchin III (D-W.Va.) sharply criticized the Biden administration Wednesday for delays on a new federal offshore drilling plan that the Interior Department says it needs until December to put into effect. Manchin — an oil industry advocate who has been key to supporting Biden policies in a narrowly divided Congress — has recently pushed back against the administration for its appointments and its implementation of the Inflation Reduction Act, including on how it affects oil and natural gas leasing in Alaska. In court documents this week, Interior Department officials argue that they need the rest of this year to finish a legally required five-year plan to lease offshore territory for oil and gas development. The plan is months behind deadlines set in law, but in a federal appeals court brief Monday, department officials said they need the extra time to review public comments and complete other legally required analyses on a proposal issued last summer. Manchin says the delays pose a risk to steady domestic supplies of oil and natural gas. He accused the administration of slow-walking a new plan as part of its push against fossil fuels. He also said the administration was failing to meet legal requirements that every other administration has met to have a new five-year offshore leasing plan in place before the prior plan expired. “They are putting their radical climate agenda ahead of our nation’s energy security, and they are willing to go to great lengths to do it,” Manchin said in a news release Wednesday. “I will hold their feet to the fire on this.” An Interior Department spokeswoman declined to respond to Manchin’s comments. Although months of further delays have been widely expected, Interior had not made any announcement about its timeline or publicly detailed its plans before Monday’s court filing. The last five-year plan expired in June, and Interior officials had signaled last summer that a new proposal for 2023-2028 was unlikely to be in place by the start of this year. The industry’s largest trade group, the American Petroleum Institute, has sued over the delays — which have been developing since the Trump administration — and has asked the U.S. Court of Appeals for the D.C. Circuit to order Interior to approve a new program by Sept. 30. Interior officials said in their court brief Monday that that is not enough time and, further, that the judges should reject the API’s request because the group does not have standing to file such a challenge. The plan is a top priority for oil companies because offshore sites account for roughly 15 percent of U.S. production, and that output is likely to decline years from now if the government limits new leasing in the meantime. Leaders at the API and other industry executives at the CERAWeek energy conference here have said they are frustrated that the administration has let so many deadlines lapse and consider Interior’s plan a major signal for how Biden will treat U.S. oil companies. “We’re 250 days from when the last five-year plan expired,” API President Mike Sommers said in an interview Monday. “So are they going to do a five-year plan that actually encourages development in the Gulf of Mexico?” Manchin has expressed outrage in recent weeks at several policies of the administration, especially over how it is fulfilling the energy and climate provisions of last year’s Inflation Reduction Act. Manchin helped negotiate the spending package and has criticized the administration as reluctant to meet the spirit of the law, especially its offshore drilling mandates and rules tied to electric-vehicle tax credits. He has threatened to withhold support for executive branch appointees that need Senate confirmation, a major challenge for Biden because of Democrats’ slim Senate majority and because Manchin controls the Senate Energy Committee.
Enbridge doubles down on Gulf Coast in big bet on oil and gas demand -Greg Ebel, who took over as chief executive of Canadian pipeline giant Enbridge Inc. in January, wasted little time putting his own stamp on the company. At a time when governments are spending hundreds of billions of dollars to turbocharge the transition to renewable energy, Ebel this week bet there will still be enough export demand for North American crude oil and gas over the next decade to justify large new investments in U.S. Gulf Coast infrastructure. Ebel said global trends in population growth, urbanization and increased consumption, as well as the persistent need for fossil fuels in sectors like heavy transportation and petrochemicals where greener substitutions aren’t easily made, will continue to support demand for North American oil and gas. “While we all would like to go to a lower carbon future, I don’t think there’s a scenario that exists, or at least not a happy scenario, where we don’t continue to use natural gas in the future,” Ebel said at a news conference at Enbridge’s annual investor day on March 1. “And liquids, look, it may ramp down over time, but that’s decades and decades to go.” It’s a view shared by many investors in the sector. “This is not a sunset industry,” said Ninepoint Partners senior portfolio manager Eric Nuttall in a recent interview with the Financial Post. “The demand for oil will grow for at least the next 10 years. And after that, you and I will both be consuming oil for the rest of our lifetimes,” he told the Financial Post’s Larysa Harapyn. Nuttall says the combination of growing demand after COVID lockdowns and supply constraints makes him “very, very bullish” about the outlook for oil and gas. “We’re likely heading to triple-digit oil prices by the end of this year,” he said. Calgary-based Enbridge has been on a spending spree aimed at bolstering its presence in the U.S. Gulf Coast, announcing this week that it will spend US$350 million to acquire 35 billion cubic feet in additional storage assets. Enbridge will also spend US$240 million to build a new heavy-oil terminal in Houston, at the terminus of its Seaway Pipeline system, which carries Canadian crude and other U.S. crude types to the Gulf Coast, creating a heavy Canadian crude hub in the Houston area. The larger goal is to create a “super system” to rival its longstanding heavy system in Canada. In service of its Gulf Coast ambitions, Enbridge purchased the continent’s largest oil export terminal, the Ingleside Energy Centre near Corpus Christi, Texas in 2021.
Oxy Subsidiary Says Gulf Coast CCS Hub to Enter Service by 2026 - Occidental Petroleum Corp. subsidiary 1PointFive has leased more than 55,000 acres along the Texas coast to develop a carbon capture and sequestration (CCS) hub, management said Thursday (March 2). The Bluebonnet Hub would be sited in Chambers, Liberty and Jefferson counties southeast of Houston. The hub as designed would boast capacity to hold about 1.2 million metric tons of carbon dioxide (CO2), 1PointFive said.Bluebonnet, which is expected to be operational by 2026, would capture CO2 from nearby refining, petrochemical and manufacturing facilities. The CO2 would then be stored underground in saline formations that are not associated with oil and gas production.“We are progressing our plans to build sequestration hubs that will provide a solution for carbon intensive industries to help reduce their emissions,” said 1PointFive Sequestration President Jeff Alvarez. “This hub is located between two of the largest industrial corridors in Texas so captured CO2 can be efficiently transported and safely sequestered. “Rather than starting from scratch with individual capture and sequestration projects, companies can plug into this hub for access to shared carbon infrastructure.”In addition, 1PointFive and a subsidiary of Enterprise Products Partners LP are advancing a CO2 transportation solution to gather CO2 from regional emitters and deliver it to the hub.At the planned Bluebonnet site, “1PointFive has completed drilling a stratigraphic test well and subsurface assessment to characterize the site’s ability to store CO2,” management said. The company expects to apply for two Class VI CO2 injection permits from the U.S. Environmental Protection Agency.Occidental, better known as Oxy, is among the leading oil and natural gas producers in the United States. The company is advancing multiple CCS efforts through its Oxy Low Carbon Ventures business.Projects include a direct air capture facility in the Permian Basin that is slated to enter commercial operation by mid-2025. It also has a slew of potential CCS hubs proposed for the Gulf Coast and Midcontinent.Oxy also is working with Energy Transfer LP on a CO2 pipeline network connecting point source emitters in the Lake Charles, LA, area with Oxy’s Magnolia sequestration site in Allen Parish, CEO Vicki Hollub said during Oxy’s latest earnings call.
SilverBow Pivoting to Oil Drilling as South Texas Natural Gas Prices Cool Off - SilverBow Resources Inc. is shifting its near-term focus from natural gas to oil-directed drilling amid a stronger pricing outlook for the latter, according to CEO Sean Woolverton. Woolverton hosted a conference call to discuss fourth-quarter and full-year 2022 earnings for Houston-based SilverBow, which operates exclusively in the Eagle Ford Shale and Austin Chalk formations of South Texas. Natural gas accounted for 66% of the firm’s total production in 4Q2023, but the company is now targeting a roughly 55/45 split of gas and liquids by the end of this year. Longer term, plans are to aim for a roughly 50/50 mix. “In recent months, oil prices have shown relative strength compared to the gas strip,” Woolverton told analysts. “As a result, we see the highest returns this year through acceleration of our oil development. Much of our focus will be on assets we have acquired over the last 24 months.” SilverBow closed on four acquisitions during 2022, including deals to absorb Sundance Energy Inc. and key assets of SandPoint Operating LLC. Woolverton said regional gas supply in Webb County, TX, where SilverBow focused its gas-directed drilling in 2022, roughly doubled year/year during the last part of 2022. The supply increase of about 0.5 Bcfe/d was “in response to increased drilling and completion activity, and strong well performance,” the CEO said. “For reference, the Webb County rig count increased from a low of two rigs in late 2020 to a high of 17 rigs in late 2022. Regional supply is now pushing up against available pipeline capacity.” Eagle Ford spot natural gas prices stood at $2.325/MMBtu as of Tuesday (March 7), roughly half their level a year ago, according to NGI’s Shale Daily. On the demand side, meanwhile, “Mexico exports have trended below 2022 levels,” Woolverton said. Regional demand was “further impacted by outages at a key LNG export facility and a warm winter season. The net effect is a governor on growth in Webb County gas in 2023, which should improve with multiple new pipeline projects expected to come online at the end of the year.”
Lime Rock Preparing for EPA Ruling with Fugitive Emissions Scanning -- As federal regulators prepare a ruling that would strengthen emissions standards for the oil and natural gas industry, Lime Rock Resources has partnered with Bridger Photonics Inc. to conduct fugitive methane emissions scanning in the Lower 48. Lime Rock partnered with Montana-based Bridger to use Gas Mapping Light Detection and Ranging (GLM) advanced laser technology to detect fugitive methane emissions from equipment and assets in the Permian’s Delaware sub-basin and Barnett Shale. “Lime Rock has the right idea – preparing for anticipated regulatory requirements ahead of time by seeking certification of the produced natural gas,” Bridger Vice President of Operations Ben Losby said. “They are setting an example, showing that emissions reduction can be done throughout the industry.” Not only would the scans be used to bolster the Houston-based oil and gas acquisition company ahead of the proposed U.S. Environmental Protection Agency (EPA) regulations, the scans also would support Lime Rock as it pursues certification for responsibly sourced natural gas through MiQ,, according to Bridger. The EPA rulemaking (Docket EPA-HQ-OAR-2021-0317), meanwhile, is expected to impact thousands of natural gas and oil wells, natural gas processing facilities and storage tanks. Operators would be required to monitor and replace leaky equipment to reduce domestic methane emissions from covered sources by 87% in 2030 from 2005 levels. A final decision is expected from the Office of Management and Budget by May. Bridger’s aerial scans data would include aerial site photography complete with plume imagery, equipment identification, the size and GPS coordinates of any fugitive emissions, enabling repair crews to be directly dispatched to the source. Lime Rock has a portfolio of Lower 48 projects under development, with a focus in the Midcontinent, Permian and Williston basins, along with the Gulf Coast. Natural gas properties include the Cedardale-Laverne play in northern Oklahoma, Denton Creek in the Barnett of North Texas and in the Arkoma, an East Texas property.
Why Republicans want to kill the compromise methane fee - Democrats imposed the first-ever federal charge last year on a greenhouse gas, viewing it as an unprecedented compromise that would please environmentalists and fossil fuel interests alike. But now that Inflation Reduction Act program to reduce methane emissions is facing outright repeal from fossil fuel-backed Republicans. The effort is being led by Rep. August Pfluger (R-Texas), a staunch oil and gas supporter who represents producers in the Permian Basin. His “Natural Gas Tax Repeal Act,” H.R. 1141, would strip out a fee included in the Inflation Reduction Act that will eventually charge up to $1,500 per ton on methane emissions from oil and gas producers, pipeline operators, and others. The bill has 36 co-sponsors — all Republicans.Pfluger’s bill is likely to be part of a House Republican energy package designed to boost domestic production and ease regulatory hurdles. It’s scheduled for consideration later this month (E&E Daily, March 1). Republicans and industry leaders say the methane fee program, as currently constituted, is unworkable and potentially unconstitutional. Democrats, meanwhile, argue that the fee, which is paired with a grant program to help implementation, is friendly to industry concerns. Democrats were eager to impose the fee. Methane is a potent greenhouse gas that makes up 11 percent of all U.S. emissions, according to EPA. About one-third of all methane comes from oil and gas production, and industry and environmentalists alike say they want to limit methane emissions as much as possible. While some Democrats might not be surprised at Republican efforts to repeal parts of a bill they didn’t vote for, they are nevertheless confused that some in the industry have come out in strong support of Pfluger’s effort. “I think [Pfluger’s bill] undoes the important work that we did on this committee just last year in trying to address the impacts of methane, and deal with that in a way that’s reasonable for industry,” said Rep. Lizzie Fletcher (D-Texas) in a recent Energy and Commerce Committee hearing. The American Petroleum Institute and the Independent Petroleum Association of America — two of the most important fossil fuel lobbying groups in the country — back Pfluger’s repeal effort. And although those particular fossil fuel interests were against the methane fee since the Inflation Reduction Act was enacted, Democrats were still taken aback. That’s because Pfluger’s bill would also repeal a $1.55 billion grant package that Democrats see as a generous pot of money for producers to get a handle on their methane emissions and comply with the fee. The disagreement could signal a rocky road for implementation, with some producers signaling they have little relationship with the enforcer, EPA, and that some producers don’t plan on taking the grant money. Those producers believe the entire methane program, as currently constructed, is a nonstarter.
The EIA Vows To Improve The Accuracy Of Its Oil Data - The EIA has baffled the market and analysts with high adjustments in its weekly and monthly U.S. oil data in recent years. The so-called adjustment in weekly and monthly crude oil data, or “Unaccounted For Crude Oil” as it was previously referred to, has been used to balance the difference between oil supply entering the market and oil disposition, or oil leaving the market. In the latest weekly petroleum status report, the data from the Energy Information Administration showed last week that the adjustment – the balancing item – was at 2.266 million barrels per day (bpd). That was equal to the highest adjustment since reporting data in that form began in 2001. U.S. crude oil exports were also the highest on record in the weekly data for the week to February 24—at 5.629 million bpd, per EIA data. However, as the EIA itself says, data collection for these numbers has been imperfect for years and needs a change of methodology to represent U.S. oil supply and demand data more accurately. The latest Petroleum Monthly Supply report also showed growing adjustment figures to explain the gap between supply and disposition. “In our Petroleum Supply Monthly, the crude oil supply adjustment more than doubled from Q1 2022 to Q4 2022. In the same time frame, the adjustment tripled in our Weekly Petroleum Status Report,” EIA Administrator Joe DeCarolis said in a Twitter thread on Friday. Last year, up to 4% of oil supply was unaccounted for, or “adjusted,” according to EIA data. “Or this might be smaller if disposition is overstated,” DeCarolis said.The official offered explanations why such high adjustment levels have been seen in recent months and years. EIA analysis pointed to crude oil blending and under-reported production as the two principal contributors to the discrepancy in supply and disposition data.Following a 90-day assessment of the high adjustment figures in EIA’s weekly and monthly crude oil data, the Administration is confident that some of the reported U.S. crude oil exports include other products, likely natural gasoline and naphthas (light hydrocarbons). These could be blended into crude or reported as crude exports, EIA’s DeCarolis says.“That would mean that the amount of actual U.S. crude exports is slightly less than what is reported, or in other words, that disposition is overstated."There is a strong correlation between the jump in U.S. crude oil exports since 2016 and the increases in EIA adjustments, which hints at a relationship, the official noted.The issue is further compounded by the fact that products that the EIA believes are being blended with crude oil also show up as product supplied, the proxy for demand. “So those products are being *double counted* on the disposition side of the equation,” DeCarolis said. Under-reported crude oil production is the second contributor to high adjustments. Field condensate is often collected in gas gathering lines or at the inlet to gas processing plants and introduced into the crude oil system as “light hydrocarbons”. Production data on these liquids is not collected in the current natural gas or crude oil surveys by the EIA. So they largely go unaccounted for as they enter the crude oil system, EIAs DeCarolis said. The EIA needs to update its surveys to better capture the changed U.S. oil production with the shale formations which are producing a “hydrocarbon soup,” with producers separating and processing those resources at multiple steps, DeCarolis said. “There always will be an adjustment in our petroleum data,” he noted. “But making changes to account for crude oil blending and under-reported production get us closer to balance, which will present a more accurate representation of the crude oil market.” The EIA will make changes to its surveys to account for the light hydrocarbons, which will take time. The Administration will also change its accounting methods for crude oil blending to get more accurate data on U.S. crude oil production, DeCarolis said. The EIA will publish on March 22 a This Week in Petroleum article that will provide more details on the findings and specific next steps to address the issue of more accurate representation of U.S. oil market data.
The EIA Vows To Improve The Accuracy Of Its Oil Data -- In August 2022, amid soaring pump prices and plummeting approval ratings, questions were raised about "very crooked numbers" regarding gasoline demand that helped hammer the price of oil lower ahead of The Midterms. And while we previously highlighted the 'strange' seasonal adjustments across plain vanilla economic data, we now see outlier levels of 'adjustment' hitting the arcane EIA crude inventory data (coincidentally as Europe's ban on Russian imports and Washington-led price-caps hit).All of a sudden, US crude inventories have soared for 10 straight weeks - up a stunning 62 million barrels over that time (only comparable to 2020's global lockdown demand collapse)... But... along with this sudden and shocking surge in reported inventory builds, the so-called "adjustment factor" used by EIA spreadsheet-builders to manage their data has exploded to record outlier highs week after week... Oil prices have refused to follow this data, trading sideways as - according to the 'reported' data - supply is very much outpacing supply... As OilPrice.com's Tsvetana Paraskova reports, The EIA has baffled the market and analysts with high adjustments in its weekly and monthly U.S. oil data in recent years.The so-called adjustment in weekly and monthly crude oil data, or “Unaccounted For Crude Oil” as it was previously referred to, has been used to balance the difference between oil supply entering the market and oil disposition, or oil leaving the market.In the latest weekly petroleum status report, the data from the Energy Information Administration showed last week that the adjustment – the balancing item – was at 2.266 million barrels per day (bpd). That was equal to the highest adjustment since reporting data in that form began in 2001. U.S. crude oil exports were also the highest on record in the weekly data for the week to February 24—at 5.629 million bpd, per EIA data. However, as the EIA itself says, data collection for these numbers has been imperfect for years and needs a change of methodology to represent U.S. oil supply and demand data more accurately. The latest Petroleum Monthly Supply report also showed growing adjustment figures to explain the gap between supply and disposition. “In our Petroleum Supply Monthly, the crude oil supply adjustment more than doubled from Q1 2022 to Q4 2022. In the same time frame, the adjustment tripled in our Weekly Petroleum Status Report,” EIA Administrator Joe DeCarolis said in a Twitter thread on Friday. Last year, up to 4% of oil supply was unaccounted for, or “adjusted,” according to EIA data. “Or this might be smaller if disposition is overstated,” DeCarolis said.
At CERAWeek, Big Oil Executives Call for ‘Energy Security’ and Longevity for Fossil Fuels - —The past 12 months brought new climate extremes, with Pakistan’s devastating floods and record-melting of Antarctica’s sea ice as just two examples. But when the world’s top oil executives gathered for an annual conference in Houston this week, they were focused instead on the war in Ukraine and the painful reminder it delivered of the global economy’s persistent dependence on oil and gas.Many global leaders and climate scientists have seen this stubborn “addiction” to fossil fuels as an urgent call to rapidly phase out their use. The message from many oil and gas executives in Houston was the opposite.“I think the issue of how we best move toward a lower carbon energy system is getting reframed,” said Mike Wirth, chief executive of Chevron, which recorded a record-high $36.5 billion profit last year. Wirth was the first executive to speak Monday at CERAWeek by S&P Global, the annual industry conference focused on energy markets, geopolitics and technology. Over the last year, he said, energy costs and security were finally getting proper attention, alongside climate change. “I think the discussion is moving to a more balanced state. I hope it is,” Wirth said.Hours later, Mike Sommers, head of the American Petroleum Institute, the industry’s top lobby group, referred to this same goal of delivering energy that is affordable, reliable and clean.“For too long we’ve been talking about only one of those legs of the stool,” he said, referring to cutting emissions. “I think Washington has started to wake up to the fact that we need to talk about the other two as well.”On Tuesday, Ryan Lance, chief executive of ConocoPhillips, which is awaiting a decision from the Biden administration on whether it can drill a major oil project in Alaska’s Arctic, continued the theme.“It’s finally becoming reality after the Ukraine invasion, the need for energy security,” he said, speaking in front of more than a thousand people packed into a soaring ballroom, where heavy air conditioning removed any hints of the humid Houston air. The war, Lance said, has “really balanced and tipped the equation back probably in a more appropriate proportion.”The executives’ comments stood in stark contrast to recent calls from political leaders and activists. In January, former-Vice President Al Gore gave an impassioned speech at the World Economic Forum in Davos, Switzerland, where he scolded the oil and gas industry for obstructing climate action and called on leaders to act faster, saying, “We are still failing badly.”
U.S. won't reach a new record in oil production 'ever again,' says Pioneer Natural Resources CEO - While oil production in the U.S. will continue its return towards pre-Covid levels, limits on refining capacity and inventory mean it will not grow as much as some hope, according to Pioneer Natural Resources CEO Scott Sheffield. "We just don't have that potential to grow U.S. production ever again," Sheffield told CNBC's Brian Sullivan on Tuesday at CERAWeek. To be clear, this doesn't mean no production growth. Many oil companies have outlined production increases as part of spending plans this year, though oil companies are now in an era of greater fiscal discipline, not shy about signaling they will favor shareholder rewards like stock buybacks over higher production levels. Sheffield expects growth to top out at a level that was already reached pre-pandemic. "We may get back to 13 million barrels a day," he said, which would match the record high average recorded in November 2019 by the U.S. Energy Information Administration. But he added it will be at a "very slow pace," taking two and half to three years to match that previous record level. For consumers, that means gas prices are more likely to stay within the current range, and pricing risk be tilted to the upside later this year. According to the EIA, an average of 11.9 million barrels of U.S. crude oil were produced per day in 2022, below the record in 2019 of an average of 12.3 million barrels per day. The EIA is forecasting a new record for this year, but barely higher, at an average of 12.4 million barrels per day. "We don't have the refining capacity … if we all add more rigs, service costs will go up another 20%-30%, it takes away free cash flow," Sheffield said. "And secondly, the industry just doesn't have the inventory." The price of a barrel of oil has fluctuated between $75 and $80 this year, well off the $100+ prices seen this time last year. While the level of economic slowdown in the U.S. will be a significant factor as the Fed continues to signal its commitment to higher rates, Sheffield said he sees these current prices as "the bottom," citing the demand boom expected alongside the reopening of China. "The question is when do we break out? I predict sometime this summer to break fast $80, on the way to $90," he said.
Keystone's biggest oil spill cleanup continues in Kansas | Northern Public Radio: WNIJ and WNIU - In early December 2022, the Keystone pipeline carrying crude oil from Alberta, Canada to Houston, Texas, ruptured. The Environmental Protection Agency estimates 588,000 gallons of oil were spilled over land and into Mill Creek.Bill and Chris Pannbacker regularly visit this ridge on their farm to watch workers cleaning the Keystone pipeline oil spill. (Celia Llopis-Jepsen/Kansas News Service) TC Energy says it has cleaned up most of the oil, but it’s predicted there’s still months more work ahead, at a total cost of half a billion dollars. Celia Llopis-Jepsen of the Kansas News Service reports. This segment aired on March 7, 2023.
Feds slap restrictions on more than 1,000 miles of Keystone pipeline after Kansas oil spill - Oil spills on the Keystone pipeline that runs from Canada to Texas are becoming more frequent and serious, federal regulators said Tuesday. So the U.S. Department of Transportation ordered Canadian company TC Energy to lower the pressure for crude oil along another 1,200 miles of its pipeline. Federal officials also ordered a review of how the company handles geologic hazards such as unstable soil and said more spills and “serious harm” are likely if the pipeline operation doesn’t improve.Regulators want to know the risks that flawed welding or shifting ground could pose for more breaks on the Keystone, which has spilled repeatedly since 201 “Continued operation (without change) is or would be hazardous to life, property or the environment,” the order said. The order comes during an ongoing investigation into the country’s second-biggest inland spill of a Canadian tar sands product, called dilbit, in north-central Kansas in December. TC Energy says bad welding played a role in what the company has described as an “instantaneous rupture.” More than 500,000 gallons of crude oil gushed out on the night of Dec. 7, raining down on native prairie and cropland and pouring into a tributary of the Little Blue River. Bad welding caused other Keystone spills in the past, too — a fact cited by federal regulators in their decision on Tuesday. The one in Kansas was the pipeline’s worst spill yet. The Pipeline and Hazardous Materials Safety Administration — part of the US Department of Transportation — also said that TC Energy had been monitoring the area for shifting ground before the 3-foot-wide pipe burst. Unstable soil and ground movement are dangerous for pipelines. The agency says TC Energy was required to mitigate any such problems under its federal permit for the pipeline. Workers responding to the spill witnessed that the pipeline was under improper stress, the agency said. “It is not clear whether the pipe segment has been under stress since construction (in 2011) or if land movement in the area may have more recently induced or increased stress,” the agency said. The Keystone burst at the base of a ridge in Washington County. Landowners say they worried from the start about the company running pipe up the ridge’s slopes and they want to know if the hill played a role in the rupture. But federal regulators have not said whether that specific aspect of the topography played a role in the improper stress. They do, however, point out that the Keystone crosses drinking water sources, populated areas and sensitive ecological regions in more than half a dozen states. In Kansas, the oil poured into Mill Creek, a winding stream that was moving slowly during a particularly dry year. It did not affect drinking water for humans, though landowners had to move livestock away from the newly toxic creek. But the pipeline also crosses big waterways in Kansas, such as the Kansas River that provides drinking water to about 800,000 people in northeastern Kansas. After the December spill, regulators immediately slapped a lower pressure rule on nearly 100 miles of the Keystone in Kansas and Nebraska. Tuesday’s order lowers the pressure limit for another 1,200 miles of pipe, southward to Oklahoma, eastward to Illinois and northward to the Canadian border. The order cites “indications that TC Oil’s operating, maintenance, and/or integrity management programs may be inadequate to address the repetitious pattern of failures” on the Keystone since 2011, including flawed welding and the risks posed by shifting soil. It gives the company two months to review how it handles geologic hazards and whether shifting earth factored into the Dec. 7 spill. The company must hire an independent contractor for the review, which also has to investigate whether land movement could be stressing other points of the Keystone system.
California oil company must pay $65M over oil spills (AP) — A defunct company that spilled more than a million gallons of crude oil and wastewater in California must pay more than $65 million in penalties and cleanup costs, federal prosecutors announced Monday. The federal government and the state of California had sued the company, alleging that it was negligent and responsible for repeated crude oil spills into U.S. and state waterways along the central coast from ruptured storage tanks, corroded pipelines and overflowing injection ponds. The judgment finalizes a Feb. 25 ruling by a judge of the U.S. District Court for the Central District of California. The judge found the company liable for 12 spills into federal waterways from 2005 through 2010 that dumped 26,584 barrels (about 1.1 million gallons) of crude oil and wastewater. "The spills evinced a pattern of reckless disregard for good oilfield industry practices, and a series of negligent acts or omissions by HVI concerning oil spill prevention, and pipeline and facility inspection and maintenance,” the judge wrote. The firm also committed 60 violations of federal regulations at 11 facilities amounting to nearly 87,000 days of violation, the ruling held. HVI Cat Canyon was held liable to the United States for $57.5 million in civil penalties and cleanup costs, along with $7.7 million to California in penalties in addition to nearly $200,000 for damage to natural resources and for cleanup costs. The Santa Maria-based company, which owned and operated facilities in Santa Barbara County, filed for bankruptcy in 2019 and a spokesperson couldn’t immediately be found. A message left for an attorney who at one point represented the firm wasn’t immediately returned.
Biden admin paradox: Boost oil — and cut CO2? -— The Biden administration’s seemingly contradictory energy and climate strategy was on full display here Wednesday: Try to pivot away from fossil fuels, but promote them for now.Energy Secretary Jennifer Granholm faced that paradox as she addressed energy leaders and insiders gathered in a hotel ballroom, praising the uptick in U.S. oil and gas exports during Russia’s war in Ukraine while touting a clean energy shift.“Europe is poised to reach the spring without major outages or shortages, and that’s thanks in no small part to many in this room, who have been producing and exporting and working with the U.S. and with allies,” Granholm said.“Indeed, the U.S. has become in this year an indispensable energy partner to our allies and a global energy powerhouse,” she said to applause.Granholm’s remarks at the CERAWeek by S&P Global conference came one year after she called on the oil and gas industry — at the same meeting of energy leaders — to boost production (Energywire, March 10, 2022). At the time, industry leaders criticized the Biden administration for what they saw as a slow permitting process for liquefied natural gas terminals and other projects.Since then, U.S. crude oil exports to Europe have climbed along with an increase in liquefied natural gas shipments. The European Union slapped a ban on seaborne Russian crude in December amid Russia’s continuing war in Ukraine. And last month, the body banned some key Russian petroleum products (E&E News PM, Feb. 6).The surge comes as the Biden administration is simultaneously pushing to decarbonize the U.S. power sector by 2035 and move away from vehicles and power plants that rely on oil and gas from many of the companies appearing at the conference. President Joe Biden has called for a net-zero U.S. economy by midcentury.“We know that oil and gas is going to remain a part of our energy mix for years to come,” Granholm said. “Even the boldest projections for clean energy deployment suggest that in the middle of the century we are going to be using abated fossil fuels.”The fossil fuel sector says it’s trying to work constructively with the White House. But top representatives of the industry are increasingly pressuring the Biden administration to deliver on one of its most coveted priorities: more leases to operate in the Gulf of Mexico, Alaska and throughout the western United States.“The president said we’re going to be around for a while — at least 10 years,” said Mike Sommers, president of the American Petroleum Institute trade group, referring to remarks made during President Joe Biden’s State of the Union address that many conservatives mocked (Energywire, Feb. 8).“There has to be signals to the industry that these investments in the United States continue to make sense based on government policy. The policy has to meet the improved — not great but improved — rhetoric that we’ve heard from the administration in the last year,” Sommers said in an interview Wednesday.
The Alaska Willow Project -- by Bruce Oksol - Not ready for prime time. The White House has two wings: the realpolitik and the ideological wings. Rarely do we get to see "definitive fallout" from these two wings when it comes to energy. For example, the on-again / off-again / mixed messages with regard to drilling on federal land is a great example. In that arena, a lot of stories but it's difficult to really figure out how that "argument" is playing out. The ideological wing generally wins the headlines but the results have not meant much in the big scheme of things. The Keystone XL was a great example -- in that case the ideological wing won -- the Keystone XL was killed. "Everyone" knows that was a very, very wrong decision. It played to a fringe element in the Democratic Party and it was a "thank you" for their support. The Keystone XL was interesting but after ten years on the front page of energy politics most folks had tired of the story and didn't really care one way or the other. And after ten years, US oil companies had figured out how to exist without the XL. In fact, one can argue that had the XL been in operation in 2000, the Bakken never would have happened. All that for this. The big story this month, with regard to energy and the realpolitik and the ideological wings is the Willow Project in Alaska. COP wants Biden to approve five exploratory wells. COP says less than three wells will be a deal-breaker. COP needs the decision by the end of March, 2023, if there is any chance for drilling to begin this summer. If Biden kills the project, denies even three exploratory wells, it will be a clear indication that the ideological wing is in control in the administration. There's no way Biden will approve five wells. I think Biden sees his decision as a "no-brainer" but I wouldn't bet a nickel on this either way. For me, it's a win-win however he decides. If anything, I lean slightly to hoping he disapproves the COP request. This is a "decision" based on my investment portfolio, not on ideology. Break, break. How could Biden thread the needle. Delay his decision until after the "2023 drop-dead deadline." Announce in late March that he will make his decision in April. Then in late April, announces that he will approve the request for three exploratory wells. Why won't he do that? He loses both wings, that's why, if he delays the decision to April. Although, delaying the decision to April is very much akin to a "pocket veto."
Oil Investors Enjoy $128 Billion Bonanza By Defying Biden's Orders - At a time when woke western government have all but declared the death of fossil fuels (at some point in the next 30 or so years), things aren't going quite as planned by the world's most vocal of virtue signalers: with China putting Covid zero ahead of schedule and fully reopening its economy, worldwide oil demand is racing toward an all-time high and some of the smartest minds in the industry are forecasting $100-a-barrel crude in a matter of months. However, having been burned one too many times by Biden's catastrophic progressive agenda which demands more oil output and in exchange vows to crush end markets, US producers are refusing to invest more in future output and instead are playing the short game and looking to turn over as much cash as possible to investors before energy guru Hunter Biden (best known for his extremely valuable - in undisclosed - energy skillset which he brought to bear for Ukraine's Burisma) turns his crack-addled attention to the US energy industry.According to Bloomberg calculations, shareholders in US oil companies reaped a $128 billion windfall in 2022 thanks to a combination of global supply disruptions such as Russia’s war in Ukraine and intensifying Wall Street pressure to prioritize returns (dividends and buybacks) over finding untapped crude reserves. After all, why bother if progressives hope to put an end to evil internal combustion engines once and for all. Indeed, oil execs who in years past were rewarded for investing in gigantic, long-term energy projects are now under the gun to funnel cash to investors who are increasingly convinced that the sunset of the fossil-fuel era is nigh. As a result for the first time in at least a decade, US drillers last year spent more on share buybacks and dividends than on capital projects, according to Bloomberg calculations. The $128 billion in combined payouts across 26 companies also is the most since at least 2012, and they happened in a year when US President Joe Biden unsuccessfully appealed to the industry to lift production and relieve surging fuel prices. Or, as Bloomberg puts it, "for Big Oil, rejecting Biden's direct requests may never have been more profitable."
Canadian Natural’s ‘Drill-to-Fill’ Strategy Results in Record ‘22 Natural Gas Production - Calgary-based independent Canadian Natural Resources Ltd. made a strategic decision to ramp up its substantial natural gas portfolio last year, which resulted in a 23% increase in output year/year.“For North American operations, 2022 annual natural gas production was 2.08 Bcf/d, versus the 1.68 Bcf/d for 2021, up almost 395 MMcf/d,” said President Tim McKay during the company’s year-end earnings call. The gains primarily a “result of the company’s strategic decision to invest in liquid-rich natural gas areas through our drill-to-fill strategy, adding low cost, high value liquid-rich gas production, as well as opportunistic acquisitions completed in late 2021 and early 2022.”During 4Q2022, North American natural gas production rose to 2.1 Bcf/d from the year-earlier average of 1.84 Bcf/d. The producer reports in Canadian dollars (C$1.00/US 75 cents).Natural gas fetched a 2022 annual average of $6.55/Mcf versus $4.07 in 2021. The corporate performance exceeded the 2022 Alberta hub average of $5.54 by 17%. The North American natural gas operating cost was $1.19/Mcf, an increase of 3% year/year on higher energy costs.Vigorous marketing raised the value of sales by spreading them out to points across Canada and the United States beyond the crowded, chronically low-priced AECO hub in Alberta.About 28% of the natural gas production was sold at AECO/Station 2 pricing. Another 34% was exported to other North American and international markets, to capture higher natural gas prices. Additionally, the company used the equivalent of 38% of its natural gas production in its operations in 2022.The natural gas strength enabled the company to report a record combined oil and liquids output of 1.28 million boe/d in 2022, up 4% year/year. Fourth quarter output averaged 1.29 million boe/d, down from 1.31 boe/d in 4Q2021.
BC Montney Shale Driving Record Natural Gas Output in Canada as Alberta Dips - British Columbia (BC) delivered the growth while Alberta faded when Canadian natural gas production jumped to a record monthly high late last year, according to industry accounts compiled by the Canada Energy Regulator (CER). BC wells, dominated by Montney Shale flows, sustained 6.63 Bcf/d or 37% of the new 17.9 Bcf/d peak last November. The output more than doubled BC’s 2.87 Bcf/d or 16.7% of total output of the last record some 20 years ago. That record was 17.2 Bcf/d and was set in April, 2002. Alberta slipped to 10.99 Bcf/d or 61% of the November 2022 production record. In April 2002, before the spread of shale supply tapped by horizontal drilling and hydraulic fracturing, Alberta had a production share of 13.77 Bcf/d or 80%. The 20-year span between the two records saw seismic change in the integrated U.S. and Canada gas markets. Prices and Alberta exports to the United States peaked in the early 2000s on strong demand. Belief that supplies would fall below needs fostered a lineup of more than 50 proposals for LNG import terminals. Plans have since changed, with efforts now focused on liquefied natural gas exports from BC’s Pacific Coast. Field improvements prevailed over ocean imports. “Others experimented and improved existing technology to increase gas production by learning how to better hydraulically fracture horizontally drilled wells,” recalled the CER. On top of opening up rich BC shale drilling targets, the changed methods altered the economic structure of the Canadian industry. The CER observed that while about 540 Canadian firms currently produce gas, 54% of the total flows from only eight top firms. The four biggest suppliers – Canadian Natural Resources Ltd., Tourmaline Oil Corp., Ovintiv Inc. and Arc Resources Ltd. – alone account for 40% of total Canadian production. All four are prominent in BC shale drilling. “Most tight and shale gas wells are more expensive to own, because they are deeper, have long horizontal legs, and because multi-stage fracturing is expensive. Smaller operators generally cannot afford to drill or buy these more costly new wells,” said the CER. Securing the cash and talent needed for the big wells also breeds corporate competitive advantage in Canada. The new production record was set even though the crowded AECO market held prices down at a mediocre 2022 average of C$5.28/gigajoule ($4.16/MMBtu). “In general, the more expensive wells result in much higher volumes of production,” said the CER. The big flows are “making the cost per unit of gas production from expensive wells much lower than from inexpensive wells.”
7,000 barrels of liquid removed after Guayaguayare oil spill - SOME 7,000 barrels of fluids have been removed from the site of a February 11 oil spill in the Ferrier Circular, Guayaguayare operations of the Heritage Petroleum Company. Affected residents who complained about the air quality in the aftermath are now breathing a sigh of relief, as the clean-up is said to be 60 per cent completed. The company’s CEO Arlene Chow and leadership team visited Guayaguayare on March 5 to meet with residents to review the progress of the remedial work. Heritage said in a statement that its incident management team is continuing its cleanup and rehabilitation at the site. It said the Ministry of Energy and Energy Industries (MEEI) and the Environmental Management Authority (EMA) have been kept apprised of the clean-up. The police and fire services are providing daily assistance and the company said it is in daily contact with the residents, MP, councillor and village council, providing updates. The leak, in a ten-inch pipeline along Ferrier Road, was discovered on February 12, affecting the heavily forested area and an inland watercourse. Heritage said it immediately isolated and repaired the leak and began clean-up and rehabilitation. A local contractor and 85 residents were hired a day later to assist. Because the affected area was densely forested, initial access was only possible on foot, slowing down the early clean-up efforts. But Heritage said it has "now cleared roads to provide access to tractors and heavy equipment." So far, it said, "Over 7,000 barrels of fluid comprising 95 per cent water and five per cent hydrocarbons have been removed from five collection points along the riverbank.” The liquid has been transported to the Guayaguayare Tank Farm. Heritage said the onsite team has concentrated its efforts close to the village to reduce inconvenience to the residents, and has also provided welfare services. It also said: “The conservation group Serpentarium was engaged in the wildlife conservation efforts. Animals are being rehabilitated and relocated where necessary. The Forestry Division has also been listing all trees which were cut.” Further to Mayaro MP Rushton Paray's call for air-quality testing, Heritage said that is being continuously done, using an independent contractor, at sites both close to the oil-spill site and in the community. Initially, the tests revealed very low levels (parts per billion) of hydrocarbon vapours. From March 1, the testsre said to have registered no detectable levels of toxic vapour and acceptable oxygen levels.
Argentina in Natural Gas Infrastructure Buildout Mode as Vaca Muerta Production Breaks Records - Not since the 1990s has Argentina’s natural gas segment seen so much infrastructure buildout. And it doesn’t look like it’s over yet. Argentine officials met with executives from energy companies this week to work out future infrastructure works with an eye to growing natural gas and oil production out of the prolific Vaca Muerta Shale formation in western Neuquén province. At the offices of the Energy Secretary in Buenos Aires, hydrocarbons sub-secretary Fernando Bernal said that the mission was to “deepen the dialogue with the sector… We want to hear them, and help them, and they can help us plan our actions to advance and construct new infrastructure for the export of our hydrocarbons.” Representatives from all of the top upstream and midstream companies were there, according to the Secretariat. The Nestór Kirchner natural gas pipeline in Argentina is set to come online by late June, according to state-owned Energia Argentina SA. This would be just in time for the heavy-demand winter season, when costly LNG imports have been relied upon for years now to keep the lights on and industry running. Government officials have been hyping up the pipeline’s importance. President Alberto Fernández recently called it “a central piece of infrastructure for Argentina’s future.” Executives such as Miguel Galuccio, CEO of Vista Energy SA, have said that the pipeline out of Vaca Muerta is key to the growth of the upstream industry. A massive power outage last week, meanwhile, is a reminder of Argentina’s frail energy system. Some 40% of the country lost power March 1, after a transmission line fire. Argentina is also facing 100% year/year inflation. The pipeline’s $1.5 billion first phase would have a capacity of 24 million cubic meters/day (MMm3/d), or about 847 MMcf/d. It will stretch from the town of Tratayén in Neuquén province to Salliqueló in Buenos Aires province, and increase total Vaca Muerta takeaway capacity by 30%. The second phase of the project would include upgrades to the Gasoducto Norte pipeline system, including flow reversal works and compression stations in the north of the country. Once complete, it would enable Argentina to reduce or stop imports from Bolivia. YPF and Malaysian national oil company Petronas signed a memorandum of understanding last September to study the potential for an integrated liquefied natural gas export project. YPF officials have said that the project would require a separate pipeline.
No fracking ban in Derbyshire in case Government changes its mind - The door has effectively been left open for fracking in Derbyshire due to the need to future-proof against a potential change in policy from central Government. A Derbyshire County Councilmeeting on Wednesday, March 1, was told that a Minerals Local Plan, a blueprint for future development, must include references allowing fracking in set circumstances.It was told that Derby and Derbyshire could not move to ban all fracking due to the potential for central Government to change its mind on the current moratorium which, as it stands, bans all fracking in the UK due to concerns over seismic activity and environmental impacts. However, Michelle Spence, part of the team developing the Minerals Local Plan, said the concerns of residents opposing fracking – also known as hydraulic fracturing – had been taken into account.She said the council would not be in favour of the outline principle for fracking sites if there is a “sensitive receptor”, like a home or a school, within 500 metres. Ms Spence said: “If they want it within 500 metres then they would have to put quite a case together to say it won’t have any impact on them – like a stonking great hill.“It is important that we have a policy instead of having one imposed on us. There is still a lot of uncertain science there. The National Planning Policy Framework requires us to have a policy. The Government have said there needs to be clear evidence that it (fracking) will not affect sites seismically and cause other environmental effects but it hasn’t told us not to have a policy.“When (Liz) Truss was Prime Minister there was a ministerial statement removing the moratorium banning fracking, and that was then brought back in with the current Prime Minister and that could change again.” She said that a planning inspector would likely reject the proposed minerals plan, outlining mineral requirements such as gas, coal, gravel and sand up to 2038, if it did not include a policy for fracking.Ms Spence said the authorities forming the plan – Derbyshire County Council and Derby City Council – were taking a “precautionary approach” with the UK economy “still requiring” oil, gas, coal and other minerals, despite carbon-neutral climate change aims. Cllr Barry Bingham, who represents the Staveley North and Whittington division, voiced strenuous concerns about the potential fracking in his division through a previously approved site near the village of Marsh Lane, close to Eckington, overseen by petrochemical firm INEOS.He told the meeting: “I am concerned for residents living next to it. I don’t see any great benefit for our communities. It is just going to cause misery. We have many old coal mines in my division and they purposely left pillars and coal in order to keep the land stable. We don’t know where those are and it (fracking) could make the land unstable.”
'Let's bring France to a halt': Oil refineries blocked and trains halted by pension reform protestsStrike action over plans to raise the pension age in France caused widespread disruption on Tuesday, as trains came to a near-standstill, many schools were shut and fuel deliveries were blocked from refineries. State railway operator SNCF warned passengers to cancel or postpone trips, if possible, while Eurostar advised ticket holders to check whether their train is running. Most metro services are also canceled, as are some flights from Paris's Charles de Gaulle and Orly airports. Unions are calling on French President Emmanuel Macron to scrap his plan to raise the retirement age from 62 to 64 and require workers to contribute into France's shared pension fund for 43 years before receiving a full pension. Macron has for years been looking to reform the pension system, which has a projected annual deficit of 10 billion euros ($10.73 billion) each year between 2022 and 2032, according to France's Pensions Advisory Council. The move is fiercely opposed by much of the public. More than a million people marched across the country in late January to oppose the plans. Union reps aim to get two million people onto the streets on Tuesday. Eric Sellini, a representative from the CGT union at TotalEnergies, told Reuters that a strike blocking the Gonfreville refinery in Normandy would run until Thursday. Another at the Donges refinery in western France is set to run until Friday, he added. Blockages at a range of refineries could cause a petrol shortage by the end of the week, head of French supermarket group Les Mousquetaires Thierry Cotillard said, according to BBC. "Let's bring France to a halt!" a coalition of unions said in a statement, branding the reforms "unacceptable and useless."The strikes come as French workers grapple with red-hot inflation, which accelerated unexpectedly in February to hit 6.2% year-on-year.Around two thirds of the public support protests against the pension reforms, according to an Elabe survey. But with the number of people taking to the streets dipping in February, several unions have called for rolling, open-ended strikes to voice their opposition.
In Nord Stream bombings probe, German investigators see Ukraine link, reports say – — German prosecutors have found "traces" of evidence indicating that Ukrainians may have been involved in the explosions that blew up the Nord Stream gas pipelines in September 2022, according to German media reports Tuesday.Investigators identified a boat that was potentially used for transporting a crew of six people, diving equipment and explosives into the Baltic Sea in early September. Charges were then placed on the pipelines, according to a joint investigation by German public broadcasters ARD and SWR as well as the newspaper Die Zeit.The German reports said that the yacht had been rented from a company based in Poland that is "apparently owned by two Ukrainians."However, no clear evidence has been established so far on who ordered the attack, the reports said.In its first reaction, Ukraine's government dismissed the reports.Mykhailo Podolyak, an adviser to Ukrainian President Volodymyr Zelenskyy, denied the Ukrainian government had any involvement in the pipeline attacks. "Although I enjoy collecting amusing conspiracy theories about the Ukrainian government, I have to say: Ukraine has nothing to do with the Baltic Sea mishap and has no information about 'pro-Ukraine sabotage groups,'" Podolyak wrote in a tweet.Three of the four pipes making up the Nord Stream 1 and 2 undersea gas pipelines from Russia to Germany were destroyed by explosions last September. Germany, Sweden and Denmark launched investigations into an incident that was quickly established to be a case of "sabotage."The German media reports — which come on top of a New York Times report Tuesday which said that "intelligence suggests that a pro-Ukrainian group" sabotaged the pipelines — stress that there's no proof that Ukrainian authorities ordered the attack or were involved in it.Any potential involvement by Kyiv in the attack would risk straining relations between Ukraine and Germany, which is one of the most important suppliers of civilian and military assistance to the country as it fights against Russia's full-scale invasion.According to the investigation by German public prosecutors that is cited by the German outlets, the team which placed the explosive charges on the pipelines was comprised of five men — a captain, two divers and two diving assistants — as well as one woman doctor, all of them of unknown nationality and operating with false passports. They left the German port of Rostock on September 6 on the rented boat, the report said.It added that the yacht was later returned to the owner "in uncleaned condition" and that "on the table in the cabin, the investigators were able to detect traces of explosives."But the reports also said that investigators can't exclude that the potential link to Ukraine was part of a "false flag" operation aiming to pin the blame on Kyiv for the attacks.Contacted by POLITICO, a spokesperson for the German government referred to ongoing investigations by the German prosecutor general's office, which declined to comment.The government spokesperson also said: "a few days ago, Sweden, Denmark and Germany informed the United Nations Security Council that investigations were ongoing and that there was no result yet."
Who Blew Up the Nord Stream Pipelines? - NY Times podcast - The sabotage in September of the Nord Stream pipelines carrying Russian gas to Europe has become one of the central mysteries of the war in Ukraine, prompting months of finger-pointing and guesswork. Now, new intelligence reporting has provided the first significant known lead about who was responsible. On today’s episode: Julian E. Barnes, a national security correspondent for The New York Times. Background reading:
- Officials say there are still enormous gaps in what American spy agencies and their European partners know about the detonations.
- The Baltic seabed provided a nearly ideal crime scene.
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New intelligence points to pro-Ukraine group in Nord Stream attack -NYT - Reuters - New intelligence reviewed by U.S. officials suggests that a pro-Ukraine group - likely comprised of Ukrainians or Russians - attacked the Nord Stream gas pipelines in September, but there are no firm conclusions, the New York Times reported on Tuesday. Advertisement · Scroll to continue There was no evidence that Ukrainian President Volodymyr Zelenskiy or other Ukrainian government officials were behind the attacks which spewed natural gas into the Baltic Sea, the newspaper reported, citing U.S. officials. Reuters could not independently verify the report. The Sept. 26 explosions on the pipelines connecting Russia and Germany occurred in the exclusive economic zones of Sweden and Denmark. Both countries have concluded the blasts were deliberate, but have not said who might be responsible. The United States and NATO have called the pipeline attacks "an act of sabotage," while Moscow has blamed the West. Neither side has provided evidence. Denmark, Germany and Sweden said last month that their investigations have not yet concluded. The United States and Britain said on Tuesday they were waiting on those findings. "We need to let these investigations conclude and only then should we be looking at what follow-on actions might or may not be appropriate," said White House spokesperson John Kirby. Germany said on Tuesday it had taken note of the New York Times report but that its own investigation had not yet produced results. NATO Secretary-General Jens Stoltenberg and Swedish Prime Minister Ulf Kristersson both declined to comment on the New York Times report during a news conference in Stockholm. A senior aide to Zelenskiy, Mykhailo Podolyak, said that Kyiv was "absolutely not involved" in the blasts and has no information about what happened. Russia's Foreign Ministry spokeswoman Maria Zakharova said the media reports on Tuesday underscored the need for Moscow's questions about what happened to be answered. She also accused those responsible for the media leaks of wanting to divert the public's attention and avoid a proper investigation.
Attack Of The “Pro-Ukrainian Group”: Notes From The Edge Of The Narrative Matrix – Caitlin Johnstone --The latest New York Times report on the Nord Stream pipeline bombing is something else. According to NYT’s anonymous US government sources, the pipelines were blown up by a “pro-Ukrainian group” who had no known connections to any military or intelligence agency, but somehow had all the information, skills, diving equipment and military explosives necessary to carry out such an attack. Remember kids, Sy Hersh's Nord Stream report is untrustworthy because it is unproven and relies on anonymous sources. It’s actually insulting how stupid it is. It reads like a small child lying about who broke the lamp in the living room; “Uhh, some bad guy came in and broke it, then he left. He was wearing a black cape and had a twirly mustache.” At least respect us enough to make up a better lie than “Yeah it turns out it was just some random people with a boat, man! It’s crazy I know!” They literally wrote an entire article without ever addressing how bizarre it is to just keep referring to the alleged perpetrators as just a “group”. Like that’s a thing. “Yeah you know, one of those Groups we’ve all been hearing about in the news. You know Groups, they sail around the world destroying international undersea energy infrastructure.” Imagine having to tell this Scooby Doo-esque tale about a yacht of Ukraine-loving mischief-makers who pranked Europe’s energy supply like it’s a real thing. Like, “Oh come on, who among us has not taken a boatload of military explosives to go blow up international pipelines for fun with their friends?”
Germany cautious over Nord Stream pipeline attack reports - (AP) — Germany’s defense minister voiced caution Wednesday over media reports that a pro-Ukraine group was involved in blowing up the Nord Stream gas pipelines in the Baltic Sea last year. German daily newspaper Die Zeit and public broadcasters ARD and SWR reported Tuesday that investigators were able to largely reconstruct how the pipelines from Russia to Germany were sabotaged on the night of Sept. 26, 2022. Citing multiple unnamed officials, the news outlets reported that five men and a woman used a yacht hired by a Ukrainian-owned company in Poland to carry out the attack. German federal prosecutors confirmed that a boat was searched in January. The New York Times also reported Tuesday that U.S. officials reviewed intelligence that suggested a pro-Ukrainian group was behind the blasts. The Ukrainian government has denied involvement. German Defense Minister Boris Pistorius said he read the news reports “with great interest” but warned against drawing hasty conclusions. “We need to clearly differentiate whether it was a Ukrainian group that acted on the orders of Ukraine or ... without the government's knowledge,” he told reporters in Stockholm. Speaking on the sidelines of a European Union defense ministers meeting, Pistorius said some experts also had raised the possibility of a so-called false flag operation by a group pretending to be Ukrainian. “It would not be the first time in the history of such events,” the German minister said. “As such, I'm refraining from drawing premature conclusions.” Asked whether the reports could undermine Western support for Ukraine, Pistorius said he preferred to respond once he had reliable information. “Anything else is hypothetical,” he added. Ukrainian Defense Minister Oleksii Reznikov rejected suggestions that the attack might have been ordered by Kyiv. “It’s like a compliment for our special forces, but this is not our activity,” he told reporters in Stockholm. According to the German media reports, the suspects used forged passports when hiring the boat, which set off from the German port of Rostock. A captain, two divers, two diving assistants and a doctor made up the group, ARD reported. Germany's Federal Prosecutors Office declined to comment directly on the reports. But it confirmed that investigators conducted a search from Jan. 18-20 “in connection with a suspicious boat hire.” “There is a suspicion that the boat in question could have been to transport explosive devices that exploded on Sept. 26, 2022, on the Nord Stream 1 and Nord Stream 2 pipelines,” the prosecutors office said in an email to The Associated Press. “The evaluation of the seized traces and objects is ongoing.” “The identity of the perpetrators and their motives are the subject of ongoing investigations,” it added. “At present, it is not possible to make any reliable statements on this, in particular on the question of state control.”
The EU Moves Toward Forming A Natural Gas Buyers' Cartel -The European Union will make its first move as a buyers’ group on the international gas market next month as it launches the first tender for suppliers.The tender follows months of discussions on how best to secure natural gas supplies for the 27-member bloc in such a way as to avoid some member states outbid other member states because of their deeper pockets.The solution was found in what would effectively be a buyers’ cartel, shopping for gas as one. According to Bloomberg, the first offers, from gas suppliers in the United States, the Middle East, and Africa are to be signed in June.Price will be the sticking point in that joint buying exercise. One of the purposes of the ole endeavor was to keep gas prices low by buying in larger volumes. Besides, natural gas prices are currently a lot lower than they were a year ago. Yet the EU needs to buy a lot of gas and such bulk buying may very well push prices higher.The total gas needs of the EU plus four neighboring countries amount to 24 billion cubic meters over the next three years, according to European Commission Vice President Maros Sefcovic. This is a lot of gas to be sourced on the global spot market.“We clearly need to turn the economic tide in Europe,” Sefcovic told Bloomberg in an interview.“I believe we’re creating a new system that will increase competition and bring in new suppliers and push energy prices down. Since we started this exercise, there’s enormous interest from international suppliers.”According to him, some 50 gas suppliers have expressed interest in participating in the EU’s joint gas buying. There is also interest in joint buying from large industrial gas consumers in the EU, Sefcovic also said.Price, however, remains of crucial importance. Europe has been paying a lot more for its gas than the U.S., for instance, and China, according to Sefcovic. This needs to change if the bloc is to remain competitive on the world stage.
EU’s ban on diesel fuel from Russia shifts trade patterns --On June 3, 2022, the EU adopted a sixth package of sanctions that banned imports of seaborne crude oil from Russia into the EU (effective December 5, 2022) and banned seaborne imports of petroleum products from Russia, including diesel fuel (effective February 5, 2023). Prior to the sanctions, between October 2021 and September 2022, diesel imports from Russia made up 53% of Northwest Europe’s seaborne imports. In February 2023, when the sanctions took effect, those diesel imports fell to 2%. Although petroleum product imports from Russia have declined, imports from other areas, notably the Middle East and Asia, have increased.The largest increase in diesel import volumes to Northwest Europe came from Saudi Arabia, increasing to 202,000 barrels per day (b/d) in February 2023 from an average of 68,000 b/d from October 2021 through September 2022. Compared with the same periods, diesel imports from India increased by 110,000 b/d to 161,000 b/d. Diesel imports from China and South Korea, which have not been consistent diesel exporters to Europe, have likewise increased. In February, diesel imports reached 119,000 b/d from China and 45,000 b/d from South Korea.Although diesel imports into Northwest Europe from the United States fell from January to February 2023, over the past few months, they have been relatively high. From October 2021 through September 2022, diesel imports from the United States averaged 43,000 b/d. Imports from the United States increased to 107,000 b/d from October 2022 through February 2023.Warm weather, falling natural gas prices, and economic concerns, however, have pushed down diesel prices in Northwest Europe since January 23. The price of ultra-low sulfur diesel (ULSD) in Northwest Europe fell from $3.29 per gallon (gal) on January 23, 2023, to $2.65/gal on February 27, 2023, which is less than the price on February 23, 2022 (the day before Russia’s full-scale invasion of Ukraine).
Russian Diesel Buildup at Sea Raises Pressure on Global Supply | Rigzone --Millions of barrels of Russian diesel are being temporarily stored on oil tankers as the country deals with the fallout of European Union sanctions. Ships have been idling off the coasts of Europe, Africa and Latin America in what is by far the biggest buildup in floating storage of diesel-type fuel from Russia since the start of data collection in 2016, according to Kpler Pte. Ltd. While the product will almost certainly discharge eventually, the accumulation points to the difficulties in replacing EU buyers of Russian fuel. “They’ve continued to export it even knowing they haven’t got a home for it,” according to Mark Williams, research director of short-term oils at Wood Mackenzie Ltd. If the floating storage and unallocated volumes of barrels from Russia continue to build, there will be “a sharp reduction in diesel exports.” The EU’s ban on almost all seaborne imports of diesel — and other oil products — from Russia has cut the nation off from its main export market. If it fails to find new buyers then exports could be cut, eroding global supplies of a fuel used in everything from trucks to farming equipment. Locations for the diesel that’s been held in floating storage include off the coastlines of Morocco and Greece — both well known sites for ship-to-ship transfers of oil cargoes — which can make it harder to track the final destination. Meanwhile another cargo, The Loop, is off Brazil, while the Meronas is floating near Turkey’s coastline. “It’s not like placing a Russian diesel cargo into the market is impossible,” said Viktor Katona, an oil analyst at Kpler. “It’s really a question of timing and — especially — of the buyer’s receptivity to risk, namely if it is okay being seen buying Russian diesel.” The amount of diesel-type fuel from Russia being held in floating storage cannot keep rising forever. If it doesn’t find a home then at some point the country’s exports will have to be cut. It could ultimately even affect the nation’s ability to process crude oil. Wood Mackenzie expects the country’s diesel-type fuel exports to average 750,000 barrels a day in the second quarter, down from 1.1 million in January. A wider concern for the oil market is whether a drop in Russia’s exports of diesel-type fuel ultimately backs into the nation’s crude processing operations. With limited diesel storage options, a significant drop in exports would soon force Russian refineries to lower their output.Wood Mackenzie sees a drop of more than one million barrels a day in the country’s crude processing from the start of the second quarter versus January.
Which Countries Are Buying Russian Fossil Fuels? -A year on from Russia’s initial invasion of Ukraine, Russian fossil fuel exports are still flowing to various nations around the world. As Visual Capitalist's Niccolo Conte details below, according to estimates from the Centre for Research on Energy and Clean Air (CREA), since the invasion started about a year ago, Russia has made more than $315 billion in revenue from fossil fuel exports around the world, with nearly half ($149 billion) coming from EU nations. This graphic uses data from the CREA to visualize the countries that have bought the most Russian fossil fuels since the invasion, showcasing the billions in revenue Russia has made from these exports. As one might expect, China has been the top buyer of Russian fossil fuels since the start of the invasion. Russia’s neighbor and informal ally has primarily imported crude oil, which has made up more than 80% of its imports totaling more than $55 billion since the start of the invasion. The EU’s largest economy, Germany, is the second-largest importer of Russian fossil fuels, largely due to its natural gas imports worth more than $12 billion alone. Turkey, a member of NATO but not of the EU, closely follows Germany as the third-largest importer of Russian fossil fuels since the invasion. The country is likely to overtake Germany soon, as not being part of the EU means it isn’t affected by the bloc’s Russian import bans put in place over the last year. Although more than half of the top 20 fossil fuel importing nations are from the EU, nations from the bloc and the rest of Europe have been curtailing their imports as bans and price caps on Russian coal imports, crude oil seaborne shipments, and petroleum product imports have come into effect. Russia’s Declining Fossil Fuel Revenues The EU’s bans and price caps have resulted in a decline of daily fossil fuel revenues from the bloc of nearly 85%, falling from their March 2022 peak of $774 million per day to $119 million as of February 22nd, 2023. Although India has stepped up its fossil fuel imports in the meantime, from $3 million daily on the day of the invasion to $81 million per day as of February 22nd of this year, this increase doesn’t come close to making up the $655 million hole left by EU nations’ reduction in imports. Similarly, even if African nations have doubled their Russian fuel imports since December of last year, Russian seaborne oil product exports have still declined by 21% overall since January according to S&P Global.
Oil leak contained in Tamil Nadu coast, fishermen demand removal of pipeline - A leak in the pipeline of a refinery that caused an oil spill in Nagore Pattinacherry coast in the district here has been contained and steps are on to ensure a lasting solution to the issue, a senior official said on Saturday. However, the unrelenting fishermen from the village, who noticed the oil spill on Friday morning, continued their agitation for the second day today demanding the authorities to remove the underwater crude oil pipeline. The leak in the pipeline of the Cauvery Basin Refinery of the Chennai Petroleum Corporation Limited (CPCL) could have probably occurred on Thursday night, apparently due to damage to the old pipeline used to transport crude oil to the Karaikal port once in one-and-a-half months. Meanwhile, Chennai Petroleum Corporation Ltd said the leakage on the pipeline was arrested in the morning hours of Saturday and currently officials were engaged in flushing to make the pipeline hydrocarbon free. “The crude oil leakage which occurred in the nine km long 20″ crude oil pipeline from CPCL CBR Crude Storage Tanks at Nagapattinam to Karaikal Port on the late evening of March 2 was arrested today (March 4, 2023) morning hours,” CPCL said in a statement shared with PTI. Flushing is planned in the pipeline to make the pipeline ‘hydrocarbon free, the company said. “Though the leak in the pipeline was reported on Friday, the officials could not take up the restoration work immediately because of the high tide. Work to arrest the oil spill and clean the coast was taken up after the tide receded,” Nagapattinam District Collector A Arun Thamburaj had said earlier. Following the collector’s orders, officials from CPCL, Coast Guard, police and fire and rescue service officials worked round the clock and arrested the leakage in the early hours today. The drip in the carbon steel pipeline was clamped temporarily and the district administration has directed the refinery to find a lasting solution, a senior official said. CPCL said oil dispersants have been deployed to make the sea surface clear and also the oil recovery system is deployed to clear the area in totality. “This activity will be continued till the area is clear of hydrocarbons,” CPCL said. Workers from the CPCL used excavators to create a bund on the shoreline while sandbags were piled around the damaged pipeline to facilitate the clamping during the low tide between 1 am to 4.45 am today. The reasons for the leak in the pipeline is under investigation. Officials from CPCL with support from its parent IndianOil Company Ltd and district administration are working round the clock to complete the job expeditiously to ensure there was no impact on the environment, CPCL said.
Oil spill to reach Cuyo Islands in a week | The Manila Times - THE Department of Environment and Natural Resources (DENR) said that oil from the sunken vessel off the coast of Naujan, Oriental Mindoro will reach Cuyo Islands and get closer to northern Palawan in a week's time. A report of the University of the Philippines Marine Science Institute (UP-MSI) projected that the spill will continue due southwest to Cuyo group of islands in northern Palawan. "Using the modeled oil spill trajectories and looking at higher resolution data, we approximate that 20,000 hectares of coral reef, 9,900 hectares of mangroves and 6,000 hectares of seagrass may be affected by the oil slick in the following municipalities. More than half of potentially affected reefs (11,000 hectares) are found in the Cuyo group of islands," the UP-MSI said. The DENR said that a vessel of the National Mapping and Resource Information Authority (NAMRIA), BRP Hydrographer Ventura, arrived in Oriental Mindoro from Subic to determine the exact location of MT Princess Empress. "It will use a multibeam survey to locate the sunken vessel," the DENR said. The DENR and UP-MSI are performing disaster forensics to protect mangroves, seagrass, and over 36,000 hectares of coral reefs in Bulalacao, Oriental Mindoro and Caluya, Antique that can be potentially affected by the oil slick. Environment Secretary Maria Antonia Yulo-Loyzaga said that she is coordinating with Social Welfare and Development Secretary Rex Gatchalian, Interior and Local Government Secretary Benjamin "Benhur" Abalos Jr. and Labor Secretary Bienvenido Laguesma to finalize arrangements on the augmentation for the cash-for-work scheme for the clean-up teams in the local communities. The DENR is also coordinating with Semirara Mining and Power Corporation to help in the cleanup operations in Caluya, Antique.
DENR locates sunken tanker in Oriental Mindoro — The Department of Environment and Natural Resources on Monday said it may have detected the possible location of the sunken MT Princess Empress that leaked industrial oil into the sea. In an update, the DENR said the sunken oil tanker is located northeast of Pola town in Oriental Mindoro, “but is believed to have moved southeast from its last known position where it completely submerged.” The site is around 1,200 feet or 400 meters below sea. The agency noted the possible location of the tanker needs to be verified through the deployment of a remotely-operated vehicle. “We are now preparing to access an ROV in order to fully determine where the vessel actually is and to completely model the way the oil will be spilling from the vessel,” it said. MT Princess Empress was carrying 800,000 liters of industrial fuel when it sank in rough seas off Naujan on February 28. The University of the Philippines Marine Science Institute estimated that the slick produced by the oil spill may affect 20,000 hectares of coral reefs, 9,900 hectares of mangroves and 6,000 hectares of seagrass beds in Oriental Mindoro, Occidental Mindoro, Palawan and Antique. The marine scientists also said that coastal communities — especially those on the eastern and southern sides of Oriental Mindoro, including Caluya Island in Antique, and potentially Cuyo Island in Palawan — should prepare for the possibility that the oil spill could reach their shores. Fishers from Brgy. Melgar A in Naujan said the slick has not yet reached their shore. But their fishing activities have been put on hold, leaving them short on cash and food. They are hoping the government will immediately address the problem, and provide them with financial assistance and alternative livelihood. Oriental Mindoro Governor Humerlito Dolor ordered the province’s 18,000 fishers to stay ashore until it is safe to fish. MT Princess Empress sank near the Verde Island Passage (VIP), which is globally recognized for its rich marine biodiversity. Over two million individuals, such as fishers and tourism workers, rely on VIP for food and income.
P10 million fine on shipowners for oil spill eyed in House bill - A bill imposing as much as P10 million penalty to shipowners who will be found guilty of discharge or emission of oil, sewage, garbage and other harmful substances and pollutants into Philippine seas has been filed in the House of Representatives.Negros Occidental Representative Kiko Benitez made the proposal under his House Bill 7515 which he filed after the sinking of a tanker carrying 800,000 liters of oil off Naujan, Mindoro. The bill provides for the strict enforcement of the regulations under the 1973 International Convention for the Prevention of Pollution from Ships and its 1978 Protocol, or MARPOL 73/78, which the Philippines signed in 2001."We signed MARPOL 73/78 in 2001. An implementing legislation is long overdue. We must keep our commitment to international law, and perform our responsibility to protect the environment," Benitez said.“We cannot let another oil spill happen again. Its damage to the marine environment is just too much. It is impossible to express the negative impact to livelihoods and marine ecosystems in monetary terms,” he added.
Saudi Aramco Hikes Official Selling Prices of Arab Crude - Saudi Aramco has increased Official Selling Prices (OSPs) for April-loading crude to Asia, Europe, and America largely in line with expectations of oil demand recovery during the second quarter of 2023. For Aramco's key customer base in Asia, differentials for the flagship Arab Light grade were lifted to Platts Dubai/DME Oman +$2.50/b for loading next month. Arab Light for April to the US was up +$6.65/b over ASCI (Argus Sour Crude Index). This coincides with optimism in the oil markets about the increasing demand for oil from China, the biggest oil importer globally. Brent and WTI notched their third biggest weekly percentage gains this year as strong Chinese economic data fed hopes for oil demand growth. Brent crude futures traded at $85 a barrel. US West Texas Intermediate (WTI) crude futures settled at $80 a barrel. Both benchmarks posted their highest closing levels since Feb. 13. The head of the International Energy Agency (IEA), Fatih Birol, told the French publication Liberation that "Russia has lost the energy battle." Russia's position as a significant energy supplier has suffered a permanent setback following the West's abandonment of Moscow's oil and gas due to its war in Ukraine, according to the head of IEA. He noted that Moscow's oil and gas exports have fallen by 40 percent since its military forces invaded Ukraine a year ago, adding that this is just the start of its problems. Birol also emphasized that the departure of foreign experts from Russia would result in a decrease in oil and gas production without their technical support. It would take years to build pipelines from Western Siberia to China, he added. “Russia's role in international energy affairs will be much less important in the future,” Birol said. Exports via a major pipeline, which delivers natural gas to mainland Europe from the UK through Belgium, have been shut due to an equipment failure, according to Bloomberg. The late Saturday halt to the link’s export capacities is expected to last until March 8, operator Interconnector Ltd said in a notice on its website Sunday. The pipeline has been an important source of supplies to the European Union after severe cuts in exports from Russia. Even so, flows from Britain already fell last week as a late-winter cold snap boosts the country’s domestic demand for the fuel.
Oil prices down on China outlook, spotlight on possible rate hikes (Reuters) -Oil prices slipped on Monday after China set a lower-than-expected target for economic growth this year at around 5%, and as investors cautiously awaited U.S. Federal Reserve Chair Jerome Powell's testimony this week. Brent crude futures were trading down 71 cents, or 0.8%, at $85.12 a barrel at 1000 GMT. U.S. West Texas Intermediate (WTI) crude futures were also down 59 cents or 0.7% at $79.09. "Crude remains in a tug-of-war between optimism over Chinese reopening and nervousness over a hawkish Fed hurting the U.S. economy," said Vandana Hari, founder of oil market analysis provider Vanda Insights. China's closely watched growth outlook, announced on Sunday, was lower than its 5.5% gross domestic product (GDP) growth target last year. GDP grew last year by just 3%. Policy sources had told Reuters a range as high as 6% could be set for 2023. Premier Li Keqiang said on Sunday the foundation for stable growth in China needed to be consolidated, insufficient demand remained a pronounced problem, and the expectations of private investors and businesses were unstable. Both crude benchmarks settled more than $1 higher on Friday after two sources told Reuters a report that the United Arab Emirates was considering leaving OPEC was inaccurate. At the same time, oil prices are likely to be impacted by rate hikes across the world as global central banks tighten policy over fears of increasing inflation. Traders have started factoring in rate hikes, but are hoping for smaller increases than last year. U.S. Federal Reserve Chair Jerome Powell will testify to Congress on Tuesday and Wednesday, where he will likely be quizzed on whether larger hikes are needed in the world's largest oil consuming country. Future U.S. rate hikes are also likely to depend on what the February payrolls report reveals on Friday, followed by the February inflation report due next week. Over the weekend, European Central Bank President Christine Lagarde said it was "very likely" the bank would raise interest rates this month to keep a lid on inflation.
The Crude Market on Monday Erased its Earlier Losses and Settled in Positive Territory - The crude market on Monday erased its earlier losses and settled in positive territory for the fifth consecutive session. The market retraced some of its previous losses amid the news that China set a lower than expected target for economic growth this year at about 5%. The oil market remains in a tug of war between optimism over China’s reopening and concerns over a hawkish Fed hurting the U.S. economy. The crude market sold off to a low of $78.32 in overnight trading before it bounced off its low and erased its earlier losses as the market shrugged off the predictions and remained hopeful that overall global oil demand will strengthen through the rest of the year. It rallied to a high of $80.49 by mid-day before settling in a sideways trading pattern ahead of the close. The April WTI contract settled up 78 cents at $80.46, while the April Brent contract settled up 35 cents at $86.18. The product markets ended mixed, with the heating oil market settling down 2.65 cents at $2.8866 and the RB market settling up 4.61 cents at $2.7965. Goldman Sachs expects Brent crude oil to start gradually moving higher this month, reaching $100/barrel in December. Chevron Corp’s Chief Executive, Mike Wirth, said oil market and logistics are tight and vulnerable to any unexpected supply disruption as Russian oil is still getting to the market but at different costs. Gunvor’s CEO, Torbjorn Tornqvist, said crude prices may increase in the second half of the year as Chinese demand returns to the market, adding that the oil market has stabilized. The CEO of oilfield service firm SLB, Olivier Le Peuch, said the company expects oil prices to move higher amid a shortfall in supply. He said he anticipates moderate growth this year. Northwest Europe gasoline exports to the U.S. and West Africa in February fell to their lowest level since January 2022. February loadings fell to 1.65 million tons, down from 2.2 million tons in January and 2.64 million tons in February 2022. Separately, Refinitiv reported that there are now at least three newly built VLCC’s laden with diesel heading to Europe, with total February imports reaching 6.7 million tons. Estonia’s Foreign Minister, Urmas Reinsalu, said the European Union should halve the $60 price cap on Russian oil this month and further cut Russia’s ability to fund the war in Ukraine. Ecuador’s Petroecuador has lifted its force majeure declaration from late February following a bridge collapse and will soon bring crude oil exports back online. IIR Energy reported that U.S. oil refiners are expected to shut in about 1,467,000 bpd of capacity in the week endin g March 10th, increasing available refining capacity by 152,000 bpd. Offline capacity is expected to fall to 1,286,000 bpd in the week ending March 17th.
Oil Prices Slip On China Data - Oil prices fell on Tuesday amid concerns over demand from China and caution ahead of testimony before Congress by Federal Reserve Chair Jerome Powell. Benchmark Brent futures slipped 0.2 percent to $85.97 a barrel, with a weaker dollar helping cap the downside. WTI crude futures were down 0.2 percent at $80.30. A fall in China's exports for the January-February period pointed to continued weakness in demand for the country's products. China's exports declined 6.8 percent in the January to February period from the same period last year, reflecting the challenges posed by the global economy, official data showed today. However, the annual decrease was slower than the 9.9 percent drop posted in December and also better than economists' forecast of 9.4 percent fall. Despite re-opening of the economy, imports logged a double-digit decline of 10.2 percent in the January to February period that was worse than December's 7.5 percent decrease and the expected 5.5 percent fall. Meanwhile, the dollar slipped in early European trade amid bets that Fed Chair Jerome Powell will sound less hawkish during a two-day testimony before Congress, beginning later in the day.
USA EIA Cuts 2023 Oil Price Forecasts The U.S. Energy Information Administration (EIA) lowered its Brent and West Texas Intermediate (WTI) oil price forecasts for 2023 in its latest short term energy outlook (STEO), which was released this week. According to the March STEO, the EIA now sees the Brent spot price averaging $82.95 per barrel and the WTI spot price averaging $77.10 per barrel this year. In its previous STEO, which was released at the start of February, the EIA projected that the Brent spot price would average $83.63 per barrel and that the WTI spot price would average $77.84 per barrel in 2023. The March and February STEOs had identical oil price forecasts for 2024. They both saw the Brent spot price averaging $77.57 per barrel and the WTI spot price averaging $71.57 per barrel next year. “We expect that the Brent crude oil spot price will fall from an average of $84 per barrel in the second quarter of 2023 to $81 per barrel in 4Q23, and then average $78 per barrel in 2024,” the EIA stated in its latest STEO. “Although we expect global oil inventories will build throughout the forecast period, we expect that high demand for crude oil from refineries because of elevated refining margins will limit downward pressure on crude oil prices through 2Q23 as refiners maintain high levels of crude oil inputs to maximize distillate fuel production,” the EIA added in the STEO. “Russia was a key supplier of distillate fuel to Europe, and changes in distillate trade flows as Europe reduced imports of distillate from Russia in recent months have kept distillate fuel margins well-above five-year averages. However, we forecast that increasing global oil inventories will contribute to falling crude oil prices beginning in 3Q23,” the EIA continued. In its latest STEO, the EIA noted that it expects global oil and liquid fuels production will average 101.5 million barrels per day in 2023, which the organization outlined would be up 1.6 million barrels per day from 2022. The EIA stated in its March STEO that it expects global liquid fuels consumption to increase by 1.5 million barrels per day in 2023 from 2022. The organization is currently projecting total world consumption of 100.90 million barrels per day in 2023. In an oil price outlook report sent to Rigzone this week, Fitch Solutions Country Risk & Industry Research lowered its Brent oil price forecast for 2023. According to the company’s report, Fitch Solutions now sees Brent averaging $90 per barrel this year. The company’s previous oil price outlook report, which was sent to Rigzone at the start of February, showed that the company expected Brent to average $95 per barrel in 2023. The Bloomberg Consensus in the latest report saw Brent coming in at $88 per barrel this year, while the Bloomberg Consensus in the previous report saw Brent at $87.3 per barrel in 2023. In a separate report sent to Rigzone this week, Standard Chartered maintained its Brent oil price forecast of $91 per barrel for this year. Standard Chartered reports sent to Rigzone in February and January this year showed the same Brent price projection for 2023. At the time of writing, the price of Brent crude oil stood at $82.52 per barrel and the price of WTI stood at $76.51 per barrel. The 2023 Brent peak close, so far, was seen on January 23, at $88.19 per barrel, while the commodity’s lowest 2023 close, so far, was seen on January 4, at $77.84 per barrel. The 2023 WTI peak close, so far, was on January 26, at $87.47 per barrel, and the lowest 2023 WTI close, so far, was seen on January 4, at $72.84 per barrel.
WTI Dives 3% on Powell's Hawkish Remarks, Eyed Crude Build -- New York Mercantile Exchange oil futures plunged more than 3% on Tuesday, pressured by a selloff in financial markets after Federal Reserve Chairman Jerome Powell signaled during prepared remarks before Congress that the central bank is prepared to lift interest rates higher to combat inflation that has reversed the downtrend experienced at the start of the year. Powell opened the door for a 50-basis point rate hike at the Fed's next policy meeting on March 21-22, spooking investors across financial and commodity markets. "The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," Powell said in remarks to the Senate Banking, Housing and Urban Affairs Committee Tuesday morning. "If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes." What could complicate Powell's message, however, is macroeconomic data scheduled to be released between now and March 22, which include employment and inflation reports for the month of February, that will likely influence the Fed's decision-making. Investors anticipate rates would rise to around 5.5% by midyear and remain there through the end of 2023, according to CME Group. In volatile trading Tuesday, the Dow Jones Industrial Average lost nearly 570 points or 1.7%, while the S&P 500 shed 1.5% of value. As the major stock indexes fell, the U.S. dollar index rallied 1.2% against a basket of foreign currencies to 105.592, pressuring front-month West Texas Intermediate futures that have an inverse relationship with the greenback. WTI futures for April delivery plunged $2.88 from a six-week high settlement on the spot continuous chart from the previous session to $77.58 bbl Tuesday. Further pressuring the oil complex, traders and analysts anticipate U.S. commercial crude stocks increased for the 11th straight week through March 4 -- the longest inventory building pattern since the COVID-19 pandemic shuttered large chunks of the economy in Spring 2020.
Oil stabilizes as surprise U.S. crude draw offsets rate hike jitters -- Oil prices steadied in early Asian trade on Wednesday as industry data showed a draw in U.S. crude oil inventories, after the market tumbled in the previous session on fears more aggressive U.S. interest rate hikes would hit demand. Brent crude futures for April gained 8 cents to $83.37 per barrel by 0120 GMT. U.S. West Texas Intermediate (WTI) crude futures lost 4 cents to $77.54 a barrel. Supporting the market on Wednesday, data from the American Petroleum Institute showed U.S. crude inventories fell by about 3.8 million barrels in the week ended March 3, according to market sources. The drawdown defied forecasts for a 400,000 barrel rise in crude stocks from nine analysts polled by Reuters. Gasoline inventories rose by about 1.8 million barrels, while distillate stocks rose by about 1.9 million barrels, according to the sources, who spoke on condition of anonymity. Both Brent and WTI fell more than 3% on Tuesday after comments by U.S. Federal Reserve Chair Jerome Powell that the central bank would likely need to raise interest rates more than expected in response to recent strong data. "This raised concerns of weaker demand in the U.S.," ANZ Research analysts said in a note to clients. Powell's comments propelled the U.S. dollar, which typically trades inversely with oil, to hit a three-month high against a basket of currencies. The dollar index rose as high as 105.65, up 1.3% on Tuesday and the highest since Dec. 6. The euro dropped 1.28% to $1.0548.
Oil Futures Waver as Markets Reprice Fed Funds Rate -- Oil Futures were little changed early Wednesday as the U.S. dollar extended gains on the back of hawkish remarks from Federal Reserve Chairman Jerome Powell who signaled the central bank is prepared to speed up the pace and scope of rate hikes this year, prompting a resetting of expectations for higher terminal interest rates. More than 70% of investors anticipate the Federal Open Market Committee will lift interest rates by 50 basis points during the March 21-22 meeting, up from 30% seen only a week ago. What's more, markets raised the expected peak rate to the range of 5.50% to 5.75% to be reached as early as June, implying a full percentage point in interest rate hikes between now and the June 14 meeting. The repricing of the Fed's funds rate comes after Chairman Powell's surprisingly hawkish remarks in front of the Senate Banking and Housing Committee on Tuesday where he acknowledged that January data is too close for comfort to slow the pace of rate increases. "The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes." said Powell. Separately, the American Petroleum Institute reported on Tuesday U.S. commercial crude-oil inventories unexpectedly declined through March 3 while gasoline and distillate fuel stocks posted a build. The report detailed a drop of 3.835 million barrel (bbl) in commercial crude oil stocks, missing calls for an increase of 700,000 bbl. Should the EIA data confirm the drawdown, this would be the first decline in domestic crude oil stocks since mid-December 2022. Inventories at the Cushing, Oklahoma, tank farm, the New York Mercantile Exchange delivery point for West Texas Intermediate futures, gained 24,000 bbl on the week. Gasoline inventory posted a build of 1.840 million bbl in the reviewed week, missing estimates for a drop of 1.4 million bbl. The data show distillate inventory increased 1.927 million bbl versus an expected 1 million bbl draw. Near 7:45 a.m. EST, WTI futures for April delivery softened $0.48 to $77.10 bbl, and the international crude benchmark Brent contract with May delivery declined to $82.94 bbl. NYMEX RBOB April futures fell back $0.0237 to $2.6770 gallon, and ULSD April futures lost $0.0172 to $2.7803 gallon.
WTI Rebounds After 'Surprise' Crude Draw, 'Adjustment Factor' Swings Negative - Oil prices extended yesterday's losses overnight as markets came to grips with the prospect that the Fed will continue aggressive rate increases, hampering US demand. “Many traders have seen this movie before and are not buying the dip until the macro environment stabilizes and the physical market fundamentals are resoundingly bullish.”Last night's API report showed a crude draw, all eyes are now on the official data to see if it confirms. API
- Crude -3.835mm (+700k exp)
- Cushing +24k
- Gasoline +1.84mm (-1.4mm exp)
- Distillates +1.927mm (-1.0mm exp)
DOE
- Crude -1.694mm (+700k exp)
- Cushing -890k
- Gasoline -1.134mm (-1.4mm exp)
- Distillates +138k (-1.0mm exp)
US Crude inventories saw a 1.694mm barrel drawdown last week - the first draw in 11 weeks. Cushing stocks also drewdown (for the first time in 10 weeks). Gasoline inventories dropped for the 3rd straight week while Distillates saw a small build... Cushing stocks dropped very modestly... The constant ramp this year in total US crude stocks (ex SPR) came to an end this week... US Crude production fell modestly as the rig count declines... WTI was trading just below $77 before the official data hit and rallied after the draw. It appears we have an answer to our question of will the EIA un-fudge their ridiculous 'adjustment factor' Shocked! a negative adjustment! The biggest weekly swing negative in history...
Oil down 2nd day as spooky Fed offsets U.S. crude draw impact -- Crude prices fell a second day in a row on Wednesday as supportive U.S. inventory data was canceled out by Federal Reserve Chair Jerome Powell’s testimony to Congress, which continued to spook traders worried about the intensity of oncoming rate hikes. U.S. crude inventories fell by 1.694 million barrels last week for their first weekly drop since December after 10 straight weeks of builds that added some 60M barrels to inventories, the Energy Information Administration, or EIA, said in its Weekly Petroleum Status Report. Market attention, however, was more on Powell, where the Fed chair in a second day of testimony before Congress, indicated the central bank would if needed. raise rates higher than previously anticipated. The dollar hit a 15-week high on speculation that the March 22 rate decision of the Fed could result in a 50-basis point hike versus the 25-bp rise many had bet on before. “The terminal rate is likely to be higher than we expected,” Powell said, referring to the point at which the Fed would stop rate hikes, a level traders were speculating to be as high as 5.75% versus the current 4.75% peak for U.S. interest rates. New York-traded West Texas Intermediate, or WTI, settled at $76.66 per barrel, down 92 cents, or 1.2%, after Tuesday’s 3.6% slide. The two-day drop came after Monday’s close of above $80 for WTI, its first in three weeks. London-traded Brent crude settled at $82.66, down 63 cents, or 0.8%. The global crude benchmark fell 3.4% in the previous session. Like WTI, Brent’s plunge came after a three-week high in its settlement on Monday, where it closed at above $86. “Crude prices can’t shake off fears that the Fed is going to send the U.S. economy into a bad recession,” The crude stockpile draw reported by the EIA was the first since the week ended Dec. 30 and came after 10 weeks of builds that coincided with seasonal maintenance and other disruptions at U.S. refineries leading to less processing of oil. Industry analysts tracked by Investing.com had forecast a build of 0.395M barrels on average for the week ended March 3. Refineries operated at 86% of their operable capacity last week, the EIA said. Typically, inventory runs at this time of the year are about 90% or more. U.S. crude oil refinery inputs averaged 15.0M barrels per day last week, some 12,000 less than the previous week’s average. Gasoline production decreased last week, averaging 9.6M barrels per day, and distillate fuel production fell as well, averaging 4.5M barrels daily. On the gasoline inventory front, the EIA reported a draw of 1.134M barrels last week, versus the forecast decline of 1.863M and against the previous week's deficit of 0.847M. Automotive fuel gasoline is the No. 1 U.S. fuel product. While gasoline inventories fell, distillate stockpiles rose for a third week in a row. Until late January, distillates, which are refined into heating oil, diesel for trucks, buses, trains, and ships, and fuel for jets, were the strongest component of the U.S. petroleum complex in terms of demand. Distillate stockpiles rose by 0.138M versus the expected slide of 1.038M. In the previous week, distillates rose by 0.179M.
Oil rises as weaker dollar, French strike balance recession fears - Oil steadied on Thursday after a two-day decline as strike-disrupted fuel supply in France, a drop in U.S. crude inventories and a weaker dollar offset fears over the economic impact of rising interest rates. TotalEnergies was unable to make deliveries from its French refineries on Thursday because of continued strike action a day after data showing an unexpected decline in U.S. crude inventories last week. The halt in deliveries from those refineries and slight weakness in the dollar might attract some short-covering, Tamas Varga of oil broker PVM told Reuters, adding that any gains are likely to be capped by the prospect of higher interest rates. Brent crude rose by 5 cents to $82.71 a barrel by 1305 GMT while U.S. West Texas Intermediate (WTI) crude added 6 cents to $76.72. Both benchmarks fell by between 4% and 5% over the previous two days. "We're broadly seeing oil prices steady," said Craig Erlam of brokerage OANDA. "As things stand, more rate hikes mean less chance of a soft landing and therefore lower crude demand." U.S. Federal Reserve Chair Jerome Powell's comments this week on the likelihood that interest rates will need to be raised more than previously expected in response to recent strong data continued to weigh on the market. Oil had registered its largest daily fall since early January after Powell's comments on Tuesday. Still, in the second day of his testimony on Wednesday, Powell struck a cautious note, saying debate on the scale and path of future rate increases was ongoing and would depend on data, prompting a pause in the dollar's rally. A weaker dollar makes oil cheaper for buyers holding other currencies and tends to support risk appetite among investors.
Oil prices slip 1% to two-week low on recession worries (Reuters) -Oil prices slid about 1% to a two-week low on Thursday on increased worries the U.S. Federal Reserve may go too far with its interest rate hikes to control inflation, which could cause a recession and reduce future oil demand. The U.S. central bank uses higher interest rates to reduce inflation. But those higher rates increase consumer borrowing costs, which can slow the economy. "The Fed is continuing to come ... for inflation and that is translating into fears over lower oil demand down the road because of a possible recession," Brent futures fell $1.07, or 1.3%, to settle at $81.59 a barrel, their lowest close since Feb. 22. U.S. West Texas Intermediate (WTI) crude fell 94 cents, or 1.2%, to settle at $75.72, their lowest close since Feb. 27. That put both benchmarks down for a third day in a row with WTI down about 6% and Brent down about 5% during that time. The number of Americans filing new claims for unemployment benefits increased by the most in five months last week, but the underlying trend remained consistent with a tight labor market. Renewed hawkishness from the Fed is pushing investors to game out how a regime of “higher for longer” interest rates could weigh on U.S. stocks with some market watchers saying the combination of higher bond yields and sticky inflation bodes poorly for equity returns. The U.S. bond auction Thursday afternoon "spooked the market" and "was the catalyst for the risk off sentiment" for the oil and stock market declines. Crude futures and Wall Street stocks were both trading higher Thursday morning on thoughts the U.S. unemployment data could push the Fed to slow the pace of future interest rate hikes. Wall Street stocks fell on Thursday, with all three major stock indexes down as investors worried that a jobs report on Friday could spur aggressive interest rate hikes by the Federal Reserve. Analysts expect the U.S. economy to have added 205,000 jobs last month - a sharp deceleration from January - and see the unemployment rate holding firm at 3.4%. Also supporting oil prices earlier on Thursday, TotalEnergies was unable to make deliveries from its French refineries on Thursday because of continued strike action a day after data showed an unexpected decline in U.S. crude inventories last week. "The halt in deliveries from TotalEnergies' French refineries due to the nationwide strikes together with the slight weakness in the dollar might attract some shorts to cover part of their positions,"
WTI Slides Below $75 Ahead of US Employment Report -- New York Mercantile Exchange oil futures extended losses into early morning Friday, with West Texas Intermediate on course for a 6% decline this week pressured by weak fuel demand and hawkish comments from Fed Chairman Jerome Powell as markets positioned ahead of the U.S. employment report that will likely help to set the direction of the federal funds rate. The U.S. economy likely added 225,000 new jobs in February -- the lowest monthly gain since April 2022 and a marked slowdown from January's neck-breaking pace of 517,000 new jobs. The unemployment rate is still expected to remain near its 54-year low of 3.4% and the participation rate is seen unchanged at 62.4%. Should the February employment report come in with more than 250,000 job gains, it could be interpreted by investors that the labor market is much more immune to the interest rate increases than previously thought. This would be bad news for the Federal Reserve, which has tried for nearly a year to cool down the labor market. According to the Fed's own projections, the unemployment rate would have to rise to 4.6% this year from the current 3.4% to bring down inflation to 3.1%, a magnitude of change that is usually seen only in recessions. For comparison, PCE inflation -- the Fed's preferred gauge of consumer prices -- currently stands at 5.4% and the core measure of inflation, which excludes volatile food and energy prices, is at 4.7%. Both measures are far above the Fed's 2% inflation target. Fed Chair Powell and his colleagues warned this week that inflation appears to have partially reversed the downtrend that might be linked to warmer-than-usual weather or reflective of sticky price pressured in the underlying economy. Against this backdrop, investors will likely pay close attention to average hourly earnings for any clues of a wage spiral in the February jobs report. This week's economic data showed some cooling signs in the labor market, with unemployment claims for the week ended March 4 increasing more than expected to above 210,000 -- the largest week-to-week increase in claims since early October. Meanwhile, job openings in January dropped to 10.8 million from December's 11.2 million, coinciding with some private-sector data showing early signs of demand for U.S. workers easing. The Federal Open Market Committee will meet for a two-day policy meeting on March 21-22 to decide on its next rate move. More than 70% of investors anticipate the FOMC will lift the federal funds rate by 50 basis points during the meeting, up from 30% seen only a week ago. In early morning trading, West Texas Intermediate futures for April delivery declined $0.52 to $75.20 barrel (bbl), and international crude benchmark Brent contract for May delivery dropped to $81.16 bbl, down $0.42 bbl. NYMEX RBOB April futures fell to $2.5962 gallon, and ULSD April futures edged higher by $0.0150 to $2.6839 gallon.
Oil prices tick up after U.S. payrolls, but set for weekly drop - Oil prices climbed more than 1% on Friday after better-than-expected U.S. employment data, though both benchmarks fell more than 3% on the week on U.S. interest rate hike jitters. Brent rose $1.19, or 1.5%, to $82.78 a barrel. U.S. West Texas Intermediate crude (WTI) was up 96 cents, or 1.3%, at $76.68. Expectations of further rate hikes in the world's largest economy and in Europe have clouded the global growth outlook and driven both crude benchmarks down this week. However, the U.S. Federal Reserve may have less reason to raise interest rates as sharply or as high as some had thought after a government report on Friday rekindled hopes of easing inflation amid signs the pandemic-disrupted labor market is normalizing. Fed Chair Jerome Powell has warned of higher and potentially faster rate hikes, saying the central bank was wrong in initially thinking inflation was "transitory". Its next monetary policy meeting is planned for March 21-22. "Oil prices are fluctuating wildly on renewed fears of Fed interest rate increases," A strengthening dollar is also making oil more expensive for holders of other currencies. Global shares, which often move in tandem with oil prices, hit a two-month low as investors dumped banks. Broader U.S. employment data for February beat expectations with nonfarm payrolls rising by 311,000, compared with expectations of 205,000 jobs added, according to a Reuters survey. This is likely to ensure that the Fed will raise interest rates for longer, which analysts have said would weigh on oil prices. On the supply side, major oil producers Saudi Arabia and Iran, both members of the Organization of the Petroleum Exporting Countries, re-established ties on Friday after days of previously undisclosed talks in Beijing. U.S. oil rigs fell by 2 to 590 this week, their lowest since June, according to data from Baker Hughes. Meanwhile, the United States was reported to have privately urged some commodity traders to shed concerns about shipping price-capped Russian oil in a bid to shore up supply. Investors are closely monitoring export cuts from Russia, which decided to trim oil output by 500,000 barrels per day in March. U.S. President Joe Biden also proposed a budget on Thursday that would scrap billions of dollars in oil and gas industry subsidies.
Oil Posts Weekly Loss Despite Friday Gains | Rigzone - Oil posted a weekly loss with macroeconomic headwinds dominating the market as traders await clearer signals on Chinese demand trends. Crude declined $3 this week despite Friday’s gains amid fears that the Federal Reserve will pivot to more aggressive interest-rate hikes, compounding pressure from tempered economic projections from China and a slower-than-expected recovery in international travel. Bulls looking for a supply-driven bump have been disappointed by the resilience of Russian crude output. “Risk appetite is dominating as crude traders shy away from substantially increasing their positioning with prices locked into a tight range,” said Daniel Ghali, a commodity strategist at TD Securities. The market has had a bumpy year so far, tugged back and forth by the opposing drivers of US slowdown concerns and China’s rebound. Most major banks expect demand to surge in the second half of the year, with Chinese international travelers playing a key role. The possibility of such a rebound from the world’s biggest consumer of the commodity appears to be increasing as a key proxy for Asian oil demand is rallying. WTI for April delivery gained 96 cents to settle at $76.68 a barrel. Brent for May settlement increased $1.19 to settle at $82.78.
UN buys huge ship to avert catastrophic oil spill off Yemen -The UN has purchased a huge ship that it hopes will prevent an environmental catastrophe off the coast of Yemen.For years, more than a million barrels of crude oil have been sitting on a decaying supertanker in the Red Sea.There are fears the vessel could soon break apart or explode, risking one of the worst oil spills in recent memory.But on Thursday, the UN said it had purchased a crude carrier that would head to Yemen and remove the oil from the stricken ship."The purchase of this suitable vessel... marks the beginning of the operational phase of the plan to safely remove the oil and avoid the risk of an environmental and humanitarian disaster," Achim Steiner from the UN Development Programme (UNDP) said, adding that it was a "major breakthrough".A UNDP statement said the ship - which it purchased from major tanker company Euronav - was undergoing routine maintenance in China and would arrive for the operation in early May."A major spill would devastate fishing communities on Yemen's Red Sea coast, likely wiping out 200,000 livelihoods instantly. Whole communities would be exposed to life-threatening toxins. Highly polluted air would affect millions," it said.The organisation added that a potential oil spill could cost up to $20bn (£16.7bn) to clean up.The UN had been searching for years for a solution and appealed for donations. The planned operation is estimated to cost $129m of which $75m has been received and another $20m has been pledged, it said.The stranded ship - the FSO Safer - was left abandoned off the port of Hodeida after Yemen's civil war broke out in 2015. It has not been serviced since.It was constructed as a supertanker in 1976 and converted later into a floating storage for oil. It is anchored near the Ras Isa oil terminal, which is controlled by Yemen's rebel Houthi movement.The 376m (1,233ft) vessel holds an estimated 1.14m barrels of crude oil.The Safer's structural integrity has deteriorated significantly since maintenance operations were suspended in 2015, when the Houthis seized large parts of Yemen and a Saudi-led coalition intervened in support of the government. The ensuing conflict has reportedly killed more than 150,000 people and left more than 23 million in need of aid.Mr Steiner told reporters on Thursday: "Let me be very clear - this is a risky operation and things could go wrong." He added that it could still be suspended if they fail to raise enough funds.
Huwara offensive against Palestinians fuels anti-Netanyahu protests in Israel --Ongoing attacks on Palestinians in the occupied West Bank make it clear that the pogrom-like rampage by hundreds of Israeli settlers on the town of Huwara on February 26, while Israeli troops stood by, is part of a broader campaign of ethnic cleansing. Waged by Zionist settlers, it proceeds under the protection of the Israel Defense Forces (IDF) and is led politically by the newly installed government of Prime Minister Benjamin Netanyahu, which includes fascistic, racist and ultra-religious parties. Their declared aim is to annex the Palestinian territories and implement apartheid rule, as embodied in the “Nation-State Law” enshrining Jewish supremacy as the legal foundation of the state. Vigilante mobs attacked Huwara, beating residents with metal rods and rocks, killing one person and injuring 400 more, as well as setting fire to scores of homes and shops and hundreds of vehicles in a four-to-five-hour orgy of violence. They also attacked Burin and Einbus in the northern West Bank. All are in a part of the West Bank under Israeli security control and just minutes away from an army brigade headquarters. But Israeli soldiers stood by during the rampage. Not a single government minister condemned the atrocity. Just 10 people were arrested, of whom all but one were released. Itamar Ben-Gvir, national security minister and fascistic leader of Jewish Power, declared, “The government of Israel, the state of Israel, the IDF, the security forces—they are the ones who have to crush our enemies,” not the settlers. On Wednesday, Finance Minister and Religious Zionism leader Bezalel Smotrich, responsible for the settlements in the West Bank, said that Israel should “wipe out” Huwara, a demand tantamount to the horrors inflicted on the Palestinians when more than 700,000 were driven out in 1948-49 at the hands of Zionist militias. The town’s stores have only just reopened, following orders by the IDF to keep their doors shuttered that left storekeepers without an income. Settlers have issued threats on social media that they will return to the town in a repeat of their rampage. They plastered the area with posters demanding the army “crush” its enemies. One declared, “The intifada is here. We demand to crush! We demand to respond with war!” Yesterday, Israeli forces stormed the Umm Said area, southeast of Beit Lahm, and demolished a Palestinian mosque, claiming it had been built without a building permit, which the Israeli authorities never grant. On January 23, soldiers stormed the Palestinian town of Isawiyyeh and the Khan Al-Ahmar community in East Jerusalem, where they demolished a greenhouse. The United Nations’ Office of the High Commission for Human Rights (OHCHR) recently called on the major powers to take action against Israel’s systemic and arbitrary demolition of Palestinian buildings. Israel demolished 132 Palestinian structures, including 34 residential and 15 donor-funded structures, across 38 West Bank communities in January alone, a 135 percent increase on 2022.
US Issues Ultra-Rare Rebuke Of Israeli Top Minister: "Repugnant & Disgusting" -- The Biden administration this week issued a very rare rebuke directed at close US ally Israel, which receives billions in foreign aid annually, following controversial remarks by far-right Israeli finance minister Bezalel Smotrich.State Department spokesman Ned Price called statements by Smotrich "irresponsible, repugnant and disgusting" in what was probably the most strongly worded condemnation directed at a top Israeli minister in recent history.Smotrich earlier in the week called on Israelis to "wipe out" the Palestinian village of Hawara, a West Bank town which recently saw a wave of settler violence which left at least one Palestinian dead and injured over 100 others, amid a scene of torched homes and cars.Price emphasized this week that the Biden administration condemns Smotrich’s comments and considers them as an "incitement to violence". He then said the US calls on Israeli Prime Minister Netanyahu to publicly disavow Smotrich’s comments and to urge the opposite, for the sake of peace.According to The Times of Israel: US State Department spokesman Ned Price said Finance Minister Bezalel Smotrich’s call to “wipe out” the Palestinian town of Huwara were “irresponsible, repugnant and disgusting.”“Just as we condemn Palestinian incitement to violence, we condemn these provocative remarks that also amounts to incitement to violence,” he says after being asked about the senior minister’s comments during a press briefing.“We call on Prime Minister Netanyahu and other senior Israeli officials to publicly and clearly reject and disavow these comments,” Price adds.
Netanyahu Slams IAEA Chief For Saying Attacks On Iran Nuclear Facilities 'Outlawed' --Israeli Prime Minister Benjamin Netanyahu on Sunday slammed International Atomic Energy Association (IAEA) chief Rafael Grossi for saying attacks on nuclear facilities are "outlawed."Israel has a history of launching covert attacks against Iranian nuclear facilities, and Netanyahu has been threatening to take more overt action. US officials have also said President Biden will keep a military option on the table to prevent Iran from acquiring a nuclear weapon even though the Pentagon and CIA recently acknowledged Tehran is not seeking a bomb. Grossi just returned from a visit to Iran, where he secured a pledge for the IAEA to receive more access to Iranian nuclear facilities. When asked about the US and Israeli threats, Grossi said that "any military attack on a nuclear facility is outlawed, is out of the normative structures that we all abide by."Netanyahu called the remarks "unworthy" in comments at a cabinet meeting. "Rafael Grossi is a worthy person who made an unworthy remark," Netanyahu said, and questioned:"Outlawed by what law? Is Iran, which publicly calls for our extermination, allowed to protect its weapons of destruction that will slaughter us?"Often missing from the conversation about Iran’s nuclear program is the fact that Israel has a secret nuclear arsenal that is not subject to any inspections. The US doesn’t acknowledge the existence of Israel’s arsenal and doesn’t pressure Israel to sign the Non-Proliferation Treaty.
Saudi Arabia and Russia Vaunt OPEC+ Ties - Saudi Arabia and Russia reaffirmed close cooperation in the OPEC+ oil cartel, and discussed Ukraine, grains and Syria at a foreign ministers’ meeting Thursday. Saudi Foreign Minister Prince Faisal bin Farhan said he spoke with his Russian counterpart about “the importance of deep coordination between the Kingdom and Russia in the energy markets” and expressed his country’s “unflinching commitment” to the OPEC+ agreement. Speaking at a joint press conference in Moscow, Russian Foreign Minister Sergey Lavrov said that energy cooperation was not affected by the war in Ukraine. The US and its allies have been seeking to isolate Moscow for its invasion with sanctions and have armed Ukrainian forces in the conflict. The next OPEC+ ministerial meeting is in early June. US President Joe Biden last October accused Riyadh of siding with Russia when OPEC+ cut production despite pleas from Washington to do otherwise. US-Saudi relations hit a new low over oil policy, and Moscow has sought to capitalize on the rift. The Saudi foreign minister’s visit to Moscow comes after he went on a surprise trip to Kyiv at the end of last month, the first visit by a senior Saudi official in 30 years. Saudi Arabia, which has been involved in prisoner swaps between Russia and Ukraine, would continue to “search for the possibilities of facilitating dialog between both sides,” Prince Faisal said. Gulf Arab states have sought to hedge their positions between Moscow and Kyiv. Lavrov also spoke on Syria, where Russia has been deeply involved since 2015 in support of President Bashar Al-Assad. He said Syria should be allowed back to the Arab League. Saudi Arabia has said such a move is premature.
Top US General Makes Rare Visit To Syria, Reaffirms Occupation - Chairman of the Joint Chiefs of Staff Mark Milley made a rare, unannounced visit to Syria on Saturday, which was his first trip there as America's top general. The purpose was to reaffirm the US troop presence and mission there even as the public has by and large grown weary of foreign military entanglements.An official estimate of some 900 American troops remain in the northeast portion of the country, which is Syria's oil and gas rich region which before the war supplied the rest of the country. Also the US has troops at Tanf base on the Iraq-Syria border. Milley was asked by reporters if the Pentagon's presence in Syria was worth the risk. He responded: "If you think that that’s important, then the answer is 'Yes,'" according Reuters."So I think that an enduring defeat of ISIS and continuing to support our friends and allies in the region … I think those are important tasks that can be done," he added. For years US special forces have advised and assisted the Kurdish-led Syrian Democratic Forces (SDF). They maintain control of the major oil fields.While the US has long sought to portray the US presence as part of a counter-terror and counter-ISIS mission, when President Trump was in office he admitted it was about "securing the oil". Ultimately, the US is actively cutting off Damascus from its own badly needed natural resources on top of a sanctions policy aimed at strangling Assad's Syria. The Pentagon also sees the occupation as about countering Iran, by keeping up pressure on Iran's ally Damascus.Naturally, Damascus was outraged at Gen. Milley's entering sovereign Syrian territory (occupied), with a foreign ministry statement calling it a "flagrant violation of Syria’s sovereignty, territorial integrity, and unity." According to a regional publication: A source at the Ministry of Foreign Affairs and Expatriates said, "Syria strongly condemns the illegal visit of the US Chief of Staff to an illegal US military base in northeastern Syria, and affirms that it is a flagrant violation of the sovereignty, the sanctity of its lands and unity," according to RT."Syria calls on the US administration to immediately stop its systematic and continuous violations of international law and stop its support for separatist armed militias … and Syria affirms that these US practices will not deviate it from its approach to combating terrorism and preserving its sovereignty, security, and stability," the source added.Turkey has also long wanted to see American troops gone from the region, given they support Kurdish groups which Ankara views as 'terrorists'.One likely reason for the weekend trip by Milley is to show the world the US won't let up pressure on Assad in the wake of the devastating earthquake which resulted in over 50,000 deaths and billions of dollars in damage across both Turkey and Syria. This as the past weeks have seen Arab capitals send representatives to Damascus, while issuing messages of support to Assad and providing humanitarian aid to Syria. Washington is still trying to dissuade the Arab world from re-embracing the Assad government, however.
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