US oil prices rose for a third consecutive week after key members of OPEC agreed to cut production by another 1.16 million barrels per day from May until the end of the year....after rising 9.3% to $75.67 a barrel last week after pipeline exports from Iraq were cut off and US oil supplies fell by more than had been expected, the contract price for the benchmark US light sweet crude for May delivery jumped about $5 per barrel as trading opened in Asia Monday morning, after key OPEC members, including Saudi Arabia and Russia, pledged to make extra cuts exceeding 1 million barrels a day starting next month and lasting through the end of the year, then gapped from $75.72 to $80.10 at the open in New York on the OPEC+ news, and immediately rallied to an intraday high of $81.69 a barrel, as traders had expected OPEC to stick with their previous output cuts until December, then partially backfilled its opening price gap and settled into a sideways trading pattern for much of the day before settling $4.75 higher at $80.42 a barrel, as traders balanced their outlook for Saudi-led production cuts to significantly tighten the global oil market against weak demand fundamentals across developed countries that are struggling with high inflation and rising interest rates...oil prices edged a bit lower in choppy overseas trading on Tuesday as weak economic data from the US and China prompted fears of cooling oil demand and offset earlier gains from OPEC's plans to cut more production. but steadied and traded sideways before hitting a high of $81.81 early in the New York session, and then sold off to a low of $79.61 by mid-day after the Commerce Department reported that U.S. manufacturing new orders fell in March to the lowest level in nearly three years, before recovering to settle at their highest level since January as traders felt the unexpected way OPEC sprung the cuts was a harbinger of more surprises to come....oil prices continued higher overnight after American Petroleum Institute data showed that crude oil and gasoline inventories had again fallen by big numbers, then rose in early Asian trade on Wednesday on anticipation of U.S. crude inventory declines and on OPEC+'s new output targets, but fell in early US trading after a weak ISM Services report erased the overnight gains, and then remained in negative territory despite an EIA report that showed inventory draws across the board, and settled 10 cents lower at $80.61 a barrel as the US stockpile draws failed to quell concerns about demand in an uncertain economy....oil prices traded lower early Thursday as another round of weak U.S. economic data stoked recession fears. then flipped between modest gains and losses in low-volume trading as traders waiting for the release of the March employment report for additional clues on the economy at the end of the quarter and finished 9 cents higher at $80.70 a barrel as markets weighed further cuts by OPEC+ and falling U.S. oil inventories against fears about the global economic outlook...since the oil markets were closed in observance of Good Friday, oil prices thus finished trading with a 6.6% gain on the week, with all of that increase logged during the initial OPEC-cut price spike early on Monday...
Meanwhile, natural gas prices finished lower for a fifth straight week as weather forecasts suggested there'd be little demand for heating or cooling by mid April... after falling 6% to $2.216 per mmBTU last week after forecasts turned warmer and gas in storage fell less than had been expected, the contract price of US natural gas for May delivery opened 10 cents lower on Monday after forecasts made a convincingly bearish shift over the weekend, and settled down by 11.9 cents or 5% to $2.097 per mmBTU on the day, pressured by strong production, weak weather-driven demand and strong storage supplies....however, natural gas prices opened higher on Tuesday, supported by a drop in production due to pipeline maintenance, but then slipped lower for the rest of the session, only recovering at the last minute to settle 0.9 cents higher at $2.106 per mmBTU as rising LNG feedgas demand offset milder weather forecasts...Wednesday saw the front-month May contract price move higher from the onset of trading and settle 4.9 cents higher at $2.155 per mmBTU on a decline in daily output and an increase in the amount of gas flowing to LNG export plants....natural gas prices drifted lower early Thursday, following neutral news from the EIA on gas remaining in storage, and then accelerated their decline to settle 14.4 cents lower at $2.011 per mmBTU for a loss of 9.3% for the week, as forecasts had turned “exceptionally bearish for mid-April, with much of the U.S. expected to warm into the comfortable 60s to 80s, implying there'd be larger-than-normal injections of surplus gas into storage to start the season...
The EIA's natural gas storage report for the week ending March 31st indicated that the amount of working natural gas held in underground storage in the US fell by 23 billion cubic feet to 1,830 billion cubic feet by the end of the week, which left our natural gas supplies 443 billion cubic feet, or 31.9% above the 1,387 billion cubic feet that were in storage on March 31st of last year, and 298 billion cubic feet, or 19.5% more than the five-year average of 1,532 billion cubic feet of natural gas that were in storage as of the 31st of March over the most recent five years….the 23 billion cubic foot withdrawal from US natural gas working storage for the cited week was slightly more than was expected by analysts surveyed by Reuters, whose average forecast called for a 21 billion cubic feet withdrawal, and compares with the 24 billion cubic feet that were withdrawn from natural gas storage during the corresponding week of 2022, but it contrasts with the average for no change in natural gas in storage that has been typical for the the same early Spring 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 31st indicated that despite a big jump in our oil imports, we had to withdraw oil from our stored commercial crude supplies for the 3rd time in 15 weeks, and for the 11th time in the past 31 weeks, largely because there were less new oil supplies that the EIA could not account for this week than last... Our imports of crude oil rose by an average of 1,819,000 barrels per day to an eight month high of 7,144,000 barrels per day, after falling by an average of 847,000 barrels per day to a two year low during the prior week, while our exports of crude oil rose by 348,000 barrels per day to 5,239,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,905,000 barrels of oil per day during the week ending March 31st, 1,164,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly unchanged at 12,200,000 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 14,105,000 barrels per day during the March 31st reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,615,000 barrels of crude per day during the week ending March 31st, an average of 198,000 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 592,000 barrels of oil per day were being pulled from 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 31st appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 918,000 barrels per day less than what our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [+918,000] 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 magnitude in this week’s oil supply & demand figures that we have just transcribed.....Moreover, since last week’s “unaccounted for crude oil” was at (+1,803,000) barrels per day, that means there was a 889,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, thus rendering those comparisons completely meaningless....However, since most oil traders treat these weekly EIA reports as exact, 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)….(NB: there is also a more recent twitter thread from an EIA administrator addressing these errors, and what they hope to do about it)
This week's 592,000 barrel per day decrease in our overall crude oil inventories included an average of 534,000 barrels per day withdrawn from our commercially available stocks of crude oil, while 58,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, the first draw on the SPR in 12 weeks, and as a result the 371,175,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since November 25th, 1983, or at a new 39 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's big SPR releases. The Biden administration releases amounted to about 42% of what was left when he took office, and left us with what is less than a 20 day supply of oil at the current consumption rate.
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,214,000 barrels per day last week, which was still 2.3% less than the 6,360,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 12,200,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,800,000 barrels per day, while Alaska’s oil production was unchanged at 432,000 barrels per day and added 400,000 barrels per day to the rounded national total....US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was still 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 89.6% of their capacity while using those 15,615,000 barrels of crude per day during the week ending March 31st, down from their 90.3% utilization rate during the prior week, but still a normal utilization rate for early Spring... The 15,615,000 barrels per day of oil that were refined this week were 2.1% less than the 15,9148,000 barrels of crude that were being processed daily during week ending April 1st of 2022, and 1.5% less than the 15,831,000 barrels that were being refined during the prepandemic week ending March 29th, 2019, when our refinery utilization rate was at 86.4%, a little low for this time of year..
With the decrease in the amount of oil being refined this week, the gasoline output from our refineries was also lower, decreasing by 187,000 barrels per day to 9,851,000 barrels per day during the week ending March 31st, after our gasoline output had increased by 535,000 barrels per day during the prior week. This week’s gasoline production was still 8.0% more than the 9,124,000 barrels of gasoline that were being produced daily over the same week of last year, and 0.4% more than the gasoline production of 9,813,000 barrels per day during the prepandemic week ending March 29th, 2019. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 107,000 barrels per day to 4,740,000 barrels per day, after our distillates output had increased by 130,000 barrels per day during the prior week. Even with those increases, our distillates output was 6.0% less than the 5,042,000 barrels of distillates that were being produced daily during the week ending April 1st of 2022, and 2.7% less than the 4,870,000 barrels of distillates that were being produced daily during the week ending March 29th, 2019...
After this week's decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the seventh consecutive week and for the 38th time in 59 weeks, decreasing by 4,119,000 barrels to 222,575,000 barrels during the week ending March 31st, after our gasoline inventories had decreased by 2,904,000 barrels during the prior week. Our gasoline supplies fell by more this week because the amount of gasoline supplied to US users rose by 150,000 barrels per day to 9,295,000 barrels per day, and because our imports of gasoline fell by 160,000 barrels per day to 713,000 barrels per day, and because our exports of gasoline rose by 33,000 barrels per day to 859,000 barrels per day. Following seven straight gasoline inventory decreases, our gasoline supplies were 6.0% below last April 1st's gasoline inventories of 236,787,000 barrels, and about 7% below the five year average of our gasoline supplies for this time of the year…
Meanwhile, even with the increase in our distillates production, our supplies of distillate fuels decreased for the 8th time in 14 weeks, and by the most since October 7th, falling by 3,632,000 barrels to 113,051,000 barrels during the week ending March 31st, after our distillates supplies had increased by 281,000 barrels during the prior week. Our distillates supplies decreased this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 527,000 barrels per day to 4,240,000 barrels per day, and because our exports of distillates rose by 108,000 barrels per day to 1,134,000 barrels per day, and because our imports of distillates fell by 31,000 barrels per day to 115,000 barrels per day.. Even after fifty-nine inventory withdrawals over the past ninety-seven weeks, our distillate supplies at the end of the week only 1.1% below the 113,530,000 barrels of distillates that we had in storage on April 1st of 2022, but are now about 12% below the five year average of our distillates inventories for this time of the year...
Finally, with the drop in our oil supplies that the EIA could not account for, our commercial supplies of crude oil in storage fell for the 11th time in 30 weeks and for the 23rd time in the past year, decreasing by 3,739,000 barrels over the week, from 473,691,000 barrels on March 24th to 469 952,000 barrels on March 31st, after our commercial crude supplies had decreased by 7,489,000 barrels over the prior week. But with several large oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories were still about 4% above the most recent five-year average of commercial oil supplies for this time of year, and also about 37% above the average of our available crude oil stocks as of the first of April 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 31st were 14.0% more than the 412,371,000 barrels of oil we had in commercial storage on April 1st of 2022, but 5.7% less than the 498,313,000 barrels of oil that we had in storage in the wake of winter storm Uri on April 2nd of 2021, and 3.0% less than the 484,370,000 barrels of oil we had in commercial storage on April 3rd of 2020…
This Week's Rig Count
The number of drilling rigs active in the US decreased for the sixth time in the past eight weeks during the 6 days ending April 6th, and were left 5.3% below the prepandemic count, despite increasing ninety-seven times over the past 131 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 4 rigs to 751 rigs over the past week, which was still 62 more rigs than the 689 rigs that were in use as of the April 8th report of 2022, but was 1,178 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 590 oil rigs during the past week, after the number of rigs targeting oil had decreased by 1 during the prior week, and there are still 44 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 was fell by 2 to 158 natural gas rigs, which was still up by 17 natural gas rigs from the 141 natural gas rigs that were drilling during the same week a year ago, even as they are now just 9.8% 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 continues to show 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 rather than production, 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 1 to 16 rigs this week, with 15 of those rigs drilling for oil in Louisiana's offshore waters, and one drilling for oil in Texas waters….that Gulf rig count is up by 4 from the 12 Gulf rigs running a year ago, when all 12 Gulf rigs were drilling for oil offshore from Louisiana…in addition to rigs drilling in the Gulf of Mexico, there is also a directional rig drilling for oil at a depth between 10,000 and 15,000 feet, offshore from the Kenai Peninsula Borough of Alaska...hence, there are now a total of 17 rigs drilling offshore, up from the national offshore count of 12 a year ago..
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 two rigs drilling on inland waters...
The count of active horizontal drilling rigs was down by five to 686 horizontal rigs this week, which was still 55 more rigs than the 631 horizontal rigs that were in use in the US on April 8th of last year, even as it was less than 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 up by one to 14 vertical rigs this week, but those were still down by 12 from the 26 vertical rigs that were operating during the same week a year ago…meanwhile, the directional rig count was unchanged at 51 directional rigs this week, and those were up by 19 from the 32 directional rigs that were in use on April 8th 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 April 6th, the second column shows the change in the number of working rigs between last week’s count (March 31st) and this week’s (April 6th) count, the third column shows last week’s March 31st 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 8th of April, 2022...rig count summary:
most of the changes this week were pretty simple and straightforward; the rig pulled out of Colorado was an oil rig that had been drilling in the DJ Niobrara chalk; the rig pulled out of North Dakota was an oil rig that had been drilling in the Williston basin, the rig pulled out of Oklahoma was an oil rig that had been drilling in the Cana Woodford, and the rig pulled out of Louisiana was an oil rig that had been drilling in the state's offshore waters and hence is not shown in the basin table above; next, in checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian, we find that there was a rig added in Texas Oil District 7C, which overlies in the southern part of the Permian Midland, and there was another rig added in Texas Oil District 8, which overlies the core Permian Delaware...since the Texas Permian rig count was thus up by a net of two rigs while the national Permian count was up by one, we can figure that the rig that was shut down in New Mexico had been drilling for oil in the western Permian Delaware, in the southeast corner of that state....elsewhere in Texas, there was a rig pulled out of Texas Oil District 1, and another rig pulled out of Texas Oil District 3, but there was a rig added in Texas Oil District 2, all three of which include parts of the Eagle Ford shale...since the Eagle Ford saw the addition of an oil rig and the removal of a natural gas rig this week while the overall basin count remained unchanged, we can figure the one of the rigs pulled out of that region had been targeting Eagle Ford natural gas, and that the District 2 addition was an oil rig targeting the Eagle Ford, while the last removal came from a basin not tracked by Baker Hughes...those changes left the Eagle Ford with 7 natural gas rigs and 63 rigs targeting oil, across the first four Texas districts...meanwhile, the natural gas rig removal we have not accounted for came out of an "other" basin not tracked by Baker Hughes, so unless there were offsetting changes elsewhere that were masked from the state and basin totals, that rig appears to have been either the Texas District 1 or District 3 removal...
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Environmentalists fear Lake Erie fracking, oil and gas industry says not to worry --A bill introduced to the Ohio House would prevent oil and natural gas drilling under Lake Erie, something environmental activists have been worried about, but the oil and gas industry said the legislation isn’t necessary. “It’s an amazing lake that we need to protect,” Sandy Bihn, environmental activist, said. Lake Erie Waterkeeper is known as one of the main protectors of the body of water. Bihn is the executive director of the organization and she explained that the watershed has a rich ecosystem, one that provides drinking water for 11 million people, fishing, birdwatching and is a major source of tourism. Right now, the state extracts four million tons of rock salt from the lake’s underground mines, according to ODOT A study from the U.S. Department of Energy found that four trillion cubic feet of gas are thought to lie beneath Lake Erie, which is gaining attention as Ohio starts prioritizing natural gas production. “The hydraulic fracturing is super important because it’s allowed much more of the oil and gas to be reached through this, which allows Ohio really to have some of the cheapest natural gas prices in the world,” Rob Brundrett, president of the Ohio Oil and Gas Association, said. But the gas under Lake Erie could become untouchable. House Bill 43bill would ban any removal of taking of oil or natural gas from under the lake. State Rep. Mike Skindell (D-Lakewood) introduced the legislation with a group of other Democratic lawmakers primarily from Northeast Ohio — but this bill is more than just for the Clevelanders, he testified at the first hearing Wednesday. “The lake provides a great ecosystem which drives millions of dollars in tourism, fishing, shipping and agriculture,” Skindell said. “It is estimated that tourism alone brings in around $430 million in state tax revenue. Therefore, it is essential to protect this state treasure from potentially disastrous conditions.” Current Ohio law allows the Director of Natural Resources, with approval of the Director of Environmental Protection, the Attorney General and the Governor, to issue permits to parties applying for permission to take and remove sand, gravel, stone and other minerals or substances from and under the bed of Lake Erie, he said.Brundrett understands why this bill was introduced, but said it isn’t necessary. “The companies that I represent and the companies that operate in Ohio have not really shown much of an interest in oil and gas drilling in Lake Erie,” he said.
Environmental groups sue to block law that could force gas drilling in state – Environmental advocates filed a lawsuit Thursday seeking to block a new state law they say could force state agencies to lease their lands to oil and gas companies looking to drill under state parks.Gov. Mike DeWine signed the bill, which also redefined climate-warming natural gas as “green energy,” in January. It takes effect Friday.Rather than the merits of the law, the lawsuit focuses on alleged constitutional violations in the procedural maneuvering to pass the bill. The plaintiffs say the bill didn’t meet constitutional requirements that a bill focus on only one subject, and be “considered” by lawmakers three times. When it was first introduced and passed by the Ohio House in April 2022, House Bill 507 only adjusted a state law regulating poultry sales. After 4 p.m. on the second-to-last lawmaking day of the two-year legislative session in December, Senate Republicans added several amendments, including:
- · An expansion of oil and gas drilling rights in state parks
- · Redefining methane gas from shale (a fossil fuel) as “green energy”
- · A preemption against local governments from banning certain pesticides
Both the Senate and the House passed the amended bill the next day. Gov. Mike DeWine signed it after avoiding public comment on the matter.The Ohio Environmental Council, Ohio Valley Allies, Buckeye Environmental Network and the Sierra Club filed the lawsuit, naming the state and Ohio Department of Natural Resources Director Mary Mertz as defendants.Several Ohioans also are named as members of the plaintiff organizations. They argue that drilling on state parks they like to visit would irreversibly damage the landscape, causing air, noise, and light pollution. They say they had no real ability to voice objection to the bill at the statehouse because of how it was passed.The bill, they say, changes the status quo by “removing agency discretion to lease state lands for oil and gas development and replacing that discretion with a mandate that state agencies lease to any interested party with proof of insurance, financial assurances, and registration with ODNR” until Oil and Gas Land Management rules kick in. They’re asking a judge to temporarily block the state law “pursuant to the mandate,” until a final ruling is reached.A 2011 law first opened the door to hydraulic fracturing or “fracking” under state parks. It said, under rules created by the Oil and Gas Land Management Commission, state agencies “may” lease their lands to oil and gas companies. However, the commission never formed or enacted those rulesBut when HB507 takes effect Friday, the law says a state agency “shall” lease its lands to oil and gas companies.The recently organized commission is in the process of adopting rules to control the leasing in the future. A public hearing on one proposal is scheduled for the coming Monday.A court might invalidate a bill lawmakers pass depending on whether it “blatantly violates” the one-subject rule, according to guidance written for lawmakers by the Legislative Service Commission, a nonpartisan state research and bill drafting agency.Cleveland.com and the Plain Dealer previously reported that Encino Energy, a Houston-based gas driller with extensive operations in Ohio, has expressed interest in drilling under Salt Fork State Park, although several people said the governor’s office declined the company a key permit. A gas industry spokesman at the time called both Salt Fork and Barkcamp State Park “top prospects” for oil and gas interest. State records show the American Petroleum Institute, Ascent Resources, Vectren Energy, Columbia Gas, EQT Corp., the Ohio Oil and Gas Association, TC Energy and other fossil fuel interests registered to lobby on the bill as it passed, as did a number of renewable energy and environmental interest groups.
Failure by design: Leaking oil and gas wells slip through the cracks - — The well sits at the edge of the woods, between the trees and Dave McCallion’s hay field. The metal is rusty. Blue paint is flaking off of the fittings. Cloudy green water bubbles up around the casing. McCallion used to run his cattle in this field to graze after he’d taken off a second cutting of hay. He hasn’t let his cow-calf herd in there for several years now since the well started leaking. He’s worried a calf could get stuck in the water-filled trench around the well head. Or what if one of his cows takes a drink from that brackish water? “Every time I cut hay, I go by that well,” he said. “I can smell the natural gas. I can see the stuff bubbling up through the water. It’s been going like this for years.” McCallion said he’s tried for nearly six years to get something done about the leaking oil and gas well. He’s called the Ohio Department of Natural Resources, the agency that regulates the state’s oil and gas industry, repeatedly. He gave up after a while, figuring it was just part of life living in eastern Ohio, where there are thousands of conventional wells like the one on his Trumbull County property, drilled into the Clinton sandstone. If the regulatory body tasked with enforcing the state’s rules on oil and gas couldn’t help him, or wouldn’t help him, who could? He couldn’t afford to hire a lawyer to do battle with the well owner or the state to compel either of them to do the right thing. Then, in June 2022, Shawn Kacerski came to the Hartford Township zoning board meeting, where McCallion is a board member. During public comment, she stood up to speak and mentioned that a well was leaking on a property she and her husband recently bought. Kacerski’s story reignited McCallion’s drive to finally get something done about his well and now Kacerski’s. Between the two of them, they’ve reached out to the Ohio Attorney General’s office, the ODNR, the Ohio Environmental Protection Agency, the Sierra Club, local lawmakers and attorneys. They hit wall after wall. Their wells, they found out, exist in a regulatory gray area. The wells are leaking, but apparently not enough to present an urgent health, safety or environmental hazard. If that was the case, according to ODNR’s own policies, the department could have fixed the wells by now. The wells haven’t produced any oil or gas for several years but aren’t listed as inactive by the state, which, by law, would require them to be plugged. They’re somewhere in the middle, neither dangerous enough nor productive enough to do anything about. The wells have an owner who is responsible for maintenance and repairs. If the wells were orphaned, meaning there is no responsible owner, the state could plug them or the landowners would be allowed to arrange for plugging. Big Sky Energy, the company that owns the wells, has a history of non-compliance with state regulations. ODNR cited the company numerous times over the years for violations with its wells and infrastructure. The state agency used all of its available enforcement power against the company, and still, these problematic wells remain..This is not a unique situation. There are wells like this all over the state, left over from decades of oil and gas exploration, much of which was unregulated or barely regulated. There are other operators like Big Sky Energy that break the law without facing real repercussions.
Ohio Federal Court Allows Subsurface Trespass Suit To Move Forward - Imagine you own 135 acres in Washington County. You have received offers from several oil and gas drillers but have not yet signed a lease. Your neighbor, however, did sign a lease with XYZ Drilling back in 2019. XYZ Drilling constructed a well-pad on your neighbor’s parcel and subsequently drilled three (3) horizontal well bores into the Marcellus Shale Formation from that pad. Based on your review of the well records, it appears that a segment of one of the well bores passes within 100 feet of your property boundary. That well has been perforated and hydraulically fractured and is now producing significant volumes of gas every day. You are concerned that the well bore is now draining gas from underneath your property. Can XYZ Drilling remove and extract gas from the Marcellus Shale Formation under your unleased farm? A recent decision from the federal court in Ohio recognized that hydraulic fracturing operations can result in a subsurface trespass if the frac fissures extend into an unleased parcel. As detailed below, landowners and drillers here in Pennsylvania should closely follow and monitor the Golden Eagle Resources LLC v. Rice Drilling D LLC (Southern District of Ohio, 2.22 – CV – 02374, February 10, 2023) litigation as the law of subsurface trespass continues to evolve and develop. At issue in Golden Eagle Resources LLC v. Rice Drilling D LLC were two oil or gas leases concerning 18.93 acres (the “Subject Parcels”) in Belmont County, Ohio (the “Subject Leases”). The Subject Leases explicitly excluded the hydrocarbon formations “below the base of the Utica Shale.” In other words, the Subject Leases allowed the lessee to produce hydrocarbons from the Marcellus Shale and Utica Shale Formations but prohibited production from any other deeper formations. In 2019, Rice Drilling D LLC (“Rice Drilling”) drilled a well known as the “Big Tex” well, which did not pass directly underneath the Subject Parcels. In 2020, Rice Drilling began producing hydrocarbons from the Big Tex well. The well bore, however, did not access or penetrate the Marcellus Shale Formation. Instead, according to the well completion reports, the Big Tex well bore penetrated the deeper Point Pleasant Formation, which lies below the Marcellus Shale and Utica Shale Formations. In May 2022, the Plaintiff, Golden Eagle Resources (“Golden Eagle”), filed suit asserting claims for subsurface trespass and conversion. Although the Big Tex well did not actually pass under the Subject Parcels, Golden Eagle argued that Rice Drilling nonetheless committed a subsurface trespass by injecting hydraulic fluids into the Point Pleasant Formation below the Subject Parcels. Golden Eagle theorized that the frac fissures caused by the hydraulic fracturing process extended out from the Big Tex well bore and into the Point Pleasant Formation below the Subject Parcels. Since the Point Pleasant Formation was “below” the Utica Shale Formation, Golden Eagle asserted that no gas could be removed from said formation. Because Rice Drilling did not have any leasehold rights in and to the Point Pleasant Formation, Golden Eagle contended that the migration of hydrocarbons from and through the unauthorized frac fissures constituted a subsurface trespass. In June 2022, Rice Drilling filed a motion to dismiss Golden Eagle’s complaint. Rice Drilling’s argument was two-fold: i) Ohio law did not recognize a claim of subsurface trespass based solely on the injection of fluids and ii) even if Ohio recognized such a claim, the complaint did not sufficiently allege that a “physical invasion” of the subsurface estate occurred. Rice Drilling further argued that since Ohio law did not recognize a cause of action based on the injection of fluids, the conversion claim also failed as a matter of law. In essence, Rice Drilling asserted that the ”rule of capture” precluded Golden Eagles’ conversion claim. The rule of capture is a well-established doctrine which holds that a landowner is entitled to extract the oil and gas beneath his land, as well as the oil and gas which flows or migrates from a common reservoir. Oil and gas generally migrate to low pressure areas within a reservoir. As a result, production from one well may cause gas to migrate across property lines. The rule of capture recognizes this unique geologic phenomenon by allowing a landowner to “appropriate the oil and gas that have flowed from adjacent lands without the consent of the owner” of those adjacent lands. See, Ellif v. Texon Drilling Co., 210 S.W. 2d 558, 561 (Tex. 1948). Under this rule, there is no liability for “reasonable and legitimate drainage from the common pool.”
21 New Shale Well Permits Issued for PA-OH-WV Mar 27-Apr 2 - Marcellus Drilling News - New shale permits issued for Mar. 27-Apr. 2 in the Marcellus/Utica dropped quite a bit from the prior week. There were 21 new permits issued in total last week, down from 32 in the prior week. Last week’s tally included 15 new permits for Pennsylvania, 6 new permits for Ohio, and no new permits in West Virginia. Last week the top receiver of new permits was Ascent Resources with 6 new permits, 5 in Jefferson County, OH, and 1 in Harrison County, OH. Chesapeake Energy took the #2 slot with 5 new permits in Bradford County, PA. April 6, 2023 Ascent Resources, Bradford County, Butler County, Chesapeake Energy, Coterra Energy (Cabot O&G), EQT Corp, Fayette County, Harrison County, Jefferson County (OH),, PennEnergy Resources Range Resources Corp, Susquehanna County, Washington County
EPA Approves Potter County, PA Injection Well, Waiting Now for DEP -Marcellus Drilling News --An issue that’s been festering for more than two years appears to be coming to a head in western Potter County, PA. In early 2021, Roulette Oil and Gas applied for a Class II Injection Well Permit to drill an injection well in Clara Township. The leftists from Community Environmental Legal Defense Fund (CELDF) immediately began to whisper the siren song of “home rule” into the ears of Clara’s residents (see Clara Twp, PA Considers Illegal Home Rule to Stop Injection Well). Since that time, the federal EPA granted its approval for the project. It’s now over to the PA Dept. of Environmental Protection (DEP) to issue a final permit, and the locals are not happy that they haven’t “had a say” to try and convince the DEP to deny the permit.
PA DEP Finds 2 Repsol Wells in Susquehanna County Venting Methane -Marcellus Drilling News -During a routine inspection conducted earlier this week by the Pennsylvania Dept. of Environmental Protection (DEP), an inspector discovered two of 12 Repsol wells on a pad in Susquehanna County were (gasp!) venting methane into the atmosphere. Call the methane police! There’s fugitive methane escaping! The wells were drilled in 2016. Apparently, there has been an ongoing issue with these two wells since 2017, when the DEP determined the wells have defective casing and/or cementing.
Investigators examine pipeline in chocolate factory blast - (AP) — Federal safety investigators are examining a natural gas pipeline for fractures and other damage as they gather evidence on the cause of last week's deadly explosion at a Pennsylvania chocolate factory, a spokesperson said Wednesday.The National Transportation Safety Board opened a probe into Friday's blast at R.M. Palmer Co. that killed seven people, wounded several others and leveled the building in West Reading, a small town about 50 miles (80 kilometers) northwest of Philadelphia. Autopsies preliminarily revealed that all seven died of blast injuries, the coroner's office said as it released the victims' names.Federal investigators have said natural gas was involved in the explosion.“NTSB is continuing to gather evidence about how the building was supplied with natural gas and point of ignition, interview witnesses, examine the pipeline for fractures, any damage to pipeline, a chronology of events leading up to the explosion, among other issues that may come up as the investigation continues,” agency spokesperson Keith Holloway said by email Wednesday.A preliminary report on the explosion could be available in about three weeks, whereas the final report could take up to two years, he said. Pennsylvania State Police are also investigating the cause.
GOP bill gets construction of natural gas pipelines completed - U.S. Reps. Carol Miller (R-WV) and Guy Reschenthaler (R-PA) on March 29 offered legislation to ensure that bureaucratic red tape and lawsuits would no longer hold up the completion of natural gas pipelines like the Mountain Valley Pipeline. Rep. Miller sponsored the Complete American Pipelines Act of 2023, H.R. 2384, with two GOP original cosponsors, including Rep. Reschenthaler. If enacted, H.R. 2384 would lower energy costs by ending judicial review for legacy projects and providing jurisdiction to the United States Court of Appeals for the District of Columbia Circuit, according to the text of the bill. “The Completing American Pipelines Act will finish projects, like the Mountain Valley Pipeline, that have been held up by the radical, left-wing courts and will implement a needed check on our judicial system,” Rep. Miller said. “The American people are depending on domestic energy production so energy prices will finally go down. I look forward to the Completing American Pipelines Act coming to the House floor shortly to unleash American energy.” Once completed, the under-construction Mountain Valley Pipeline will send natural gas from West Virginia, Ohio, and Pennsylvania to North Carolina and South Carolina. Completion of the pipeline has been held up for several years by lawsuits. “The construction of the 303-mile Mountain Valley Pipeline equates to more good-paying jobs, lower energy costs, and increased energy independence for Pennsylvania and the entire region,” Rep. Reschenthaler said. “I thank Rep. Carol Miller for her diligence in ensuring this project — which is already 94 percent completed — can be seen through to the finish line for our shared states’ benefit. It’s past time to cut the liberal red tape and complete the Mountain Valley Pipeline once and for all.” H.R. 2384 has been referred to the U.S. House Energy and Commerce Committee for consideration.
Mountain Valley Pipeline's West Virginia water permit tossed by court | Reuters - A federal appeals court on Monday vacated a water permit needed by developers to restart construction on the Mountain Valley pipeline in West Virginia, marking the latest setback for the $6.2 billion project.The Richmond, Virginia-based 4th U.S. Circuit Court of Appeals found several defects in the review the West Virginia Department of Environmental Protection conducted before issuing the permit.Construction can't restart in the state until the agency reconsiders the permit, which is needed before the 303-mile proposed pipeline can cross through the state’s streams and wetlands.
Federal court blocks Manchin-backed pipeline in West Virginia -A Virginia court on Monday vacated permits for an interstate natural gas pipeline championed by Sen. Joe Manchin (D-W.Va.). In a unanimous decision, the U.S. Court of Appeals for the Fourth Circuit in Richmond tossed the earlier approval of the Mountain Valley Pipeline (MVP) by West Virginia’s Department of Environmental Protection. In its ruling, the panel found fault with the department’s certification of the pipeline under the Clean Water Act. Specifically, the court ruled that the department’s decision did not properly consider earlier violations of water quality standards by the pipeline. The panel also ruled that the department did not sufficiently justify a decision to waive review of the pipeline’s antidegradation precautions. The court had approved the pipeline’s Virginia permits days earlier, but said that West Virginia’s reviews specifically had been insufficient. MVP agreed in 2019 to pay a $2.15 million civil penalty over allegations of environmental violations in connection with the pipeline’s operations in southwestern Virginia. “Without substantive assurance that MVP will comply with those policies, the Department’s sanguine outlook is troubling—especially given MVP’s prior violations,” the panel wrote. In a statement, Manchin called the decision “infuriating,” describing the pipeline as essential to American energy security amid the ongoing war in Ukraine. “This pipeline is more than 90% constructed with 283 miles already laid, and once through the red tape can bring an additional 2 billion cubic feet per day of natural gas onto the market within months,” the West Virginia Democrat wrote. “This project has been through three rounds of water quality permitting but activist groups continue to litigate the last 20 miles, standing in the way of restoring land to its natural beauty, getting more product to market to bolster our energy security and bring down prices, and allowing West Virginians to benefit from the natural resources they own.” Manchin has long been an advocate for the pipeline and has repeatedly pointed to its repeated holdups as an example of the need for streamlining the energy permitting process.
Court throws out gas pipeline's West Virginia water permit - — A company building a long-delayed natural gas pipeline has lost a key water permit after a federal appeals court ruled that West Virginia didn't adequately assess the impact of building the Mountain Valley Pipeline across streams and wetlands. Siding with environmental groups, the court said Monday the state Department of Environmental Protection’s justifications for its 2021 water quality certification were “deficient,” the Charleston Gazette-Mail reported. The 303-mile (487-kilometer) pipeline across rugged mountainsides in West Virginia and Virginia — which is mostly finished — would transport natural gas drilled from the Utica and Marcellus shale formations in Ohio and Pennsylvania. Legal battles have delayed completion for years, as environmental groups say construction has led to violations of regulations meant to control erosion and sedimentation. Among other things, the 4th U.S. Circuit Court of Appeals said the West Virginia agency didn’t adequately address the project’s history of water quality violations. It also said the agency used the wrong standards to support the decision that in-stream activities would meet state water quality regulations. The permit is required under the federal Clean Water Act. The court noted at least 46 water quality violations and assessed civil penalties totaling roughly $569,000. Mountain Valley Pipeline LLC, the joint venture behind the project, is still aiming for a late 2023 in-service date. Spokesperson Natalie Cox said construction will proceed and the company would work with the state environmental agency "on a path forward to completing this critical infrastructure project safely and responsibly.” Angie Rosser, who leads the West Virginia Rivers Coalition, praised "the common sense reflected in the court’s decision.” “MVP has already gone too far in damaging West Virginia’s water resources, particularly in some of our most valuable mountain headwater systems,” Ms. Rosser said in a statement. Department of Environmental Protection spokesperson Terry Fletcher said the agency was reviewing the decision and declined comment. Sen. Joe Manchin released a statement Tuesday saying the ruling would further delay the pipeline. “It is infuriating to see the same 4th Circuit Court panel deal yet another setback for the Mountain Valley Pipeline project and once again side with activists who seem hell-bent on killing any fossil energy that will make our country energy independent and secure,” he said. The 4th U.S. Circuit Court signed off on Virginia’s water quality certification for the pipeline last week.
Mountain Valley loses another permit needed to complete pipeline - Less than a week after the Mountain Valley Pipeline moved one step closer to completion, it suffered another step backward Monday. A federal appeals court threw out a water quality certification from the West Virginia Department of Environmental Protection, an authorization needed by the natural gas pipeline to cross streams and wetlands in the state where it starts. Mountain Valley’s past violations of erosion and sedimentation control regulations figured prominently in a decision by a three-judge panel of the 4th U.S. Circuit Court of Appeals. “Although the Department acknowledged MVP’s violation history, it failed to dispel the tension between MVP’s checkered past and its confidence in MVP’s future compliance,” Chief Judge Roger Gregory wrote in the unanimous decision. Last Wednesday, the same panel upheld a similar decision by the Virginia Department of Environmental Quality and the State Water Control Board that allowed the company to move forward with its plans to cross streams and wetlands in Southwest Virginia.Certification from both states — through which the 303-mile pipeline runs — is required before the U.S. Army Corps of Engineers can issue a final approval for water body crossings. “This should be a huge blow to the project,” said David Sligh, conservation director for Wild Virginia, one of the environmental groups that have filed repeated legal challenges against permits issued for the pipeline. Mountain Valley, however, indicated that it will seek a renewed certification from West Virginia. The company “will continue to work with the agency on a path forward to completing this critical infrastructure project safely and responsibly,” Mountain Valley spokeswoman Natalie Cox wrote in an email Monday. Certification from both states — through which the 303-mile pipeline runs — is required before the U.S. Army Corps of Engineers can issue a final approval for water body crossings.“This should be a huge blow to the project,” said David Sligh, conservation director for Wild Virginia, one of the environmental groups that have filed repeated legal challenges against permits issued for the pipeline.Mountain Valley, however, indicated that it will seek a renewed certification from West Virginia.The company “will continue to work with the agency on a path forward to completing this critical infrastructure project safely and responsibly,” Mountain Valley spokeswoman Natalie Cox wrote in an email Monday.
'A Win for All Living Beings': Appeals Court Tosses Mountain Valley Pipeline Permit -- A U.S. appellate court panel on Monday unanimously struck down a key water permit for the Mountain Valley Pipeline, a nearly completed fracked gas project long opposed by people living along the over-300-mile route through Virginia and West Virginia.Three judges from the U.S. Court of Appeals for the 4th Circuit vacated a Clean Water Act certification from the West Virginia Department of Environmental Protection (WVDEP), without which the U.S. Army Corps of Engineers cannot allow ongoing MVP construction at stream and wetland crossings."The certification reflected the department's conclusion that MVP's activities during the pipeline's construction would not violate the state's water quality standards," the panel said. "Disagreeing with that determination, landowners and members of various environmental organizations in the state have petitioned for this court's review of the department's certification. We find the department's justifications for its conclusions deficient and vacate the certification.""West Virginia communities have endured Mountain Valley Pipeline's damage to their water resources and environment for far too long."The MVP gained national attention last year because of efforts by U.S. Sen. Joe Manchin (D-W.Va.) to force the completion of the pipeline as part of his thrice-defeated "dirty deal" on permitting reforms. House Republicans, who recently passed their own fossil fuel-friendly energypackage, are also now pushing for legislation to finish the project.While Manchin said Monday that "it is infuriating to see the same 4th Circuit Court panel deal yet another setback for the Mountain Valley Pipeline project and once again side with activists who seem hell-bent on killing any fossil energy that will make our country energy independent and secure," MVP opponents praised the decision."Today's ruling uplifts the tireless efforts of every single coalition member and volunteer fighting to protect land, water, and people," saidRussell Chisholm, managing director for the Protect Our Water, Heritage, Rights (POWHR) Coalition. "MVP should abandon their ill-fated project because we will defend every stream and river crossing that can still be saved from permanent harm." Several campaigners stressed that damage has already been done during the construction of the incomplete pipeline."MVP has already gone too far in damaging West Virginia's water resources, particularly in some of our most valuable mountain headwater systems. WVDEP clearly cannot make a good conscience argument that MVP will not further violate water quality standards,"said West Virginia Rivers Coalition executive director Angie Rosser. Similarly charging that "West Virginia communities have endured Mountain Valley Pipeline's damage to their water resources and environment for far too long," Jessica Sims, Virginia field coordinator for Appalachian Voices, agreed that "this ruinous project must be canceled." Along with violating water standards, this "disastrous" project "is already more than three years behind schedule, and billions over budget," noted Sierra Club's Patrick Grente. "With continuous legal setbacks, it has never been more clear that investors should stop throwing money at this doomed project and walk away."Bloomberg reported that the ruling likely thwarts plans to put MVP into service in 2023 and delays the project by at least a year.
More Delays Predicted for MVP After Fourth Circuit Vacates West Virginia Permit - The Mountain Valley Pipeline (MVP) will spend a while longer on its regulatory treadmill after the U.S. Court of Appeals for the Fourth Circuit vacated a key permit issued by West Virginia regulators.The latest ruling, handed down by the Fourth Circuit on Monday, marks yet another setback for the 303-mile, 2 million Dth/d Appalachia-to-Southeast natural gas conduit, which first received FERC sign-off in 2017.The court sided with a coalition of environmental groups challenging the permit issued to MVP by the West Virginia Department of Environmental Protection (DEP) under Section 401 of the federal Clean Water Act.Unlike a similar permit issued by regulators in neighboring Virginia, West Virginia’s sign-off on the embattled MVP did not withstand the Fourth Circuit’s scrutiny. The court cited a series of “oversights” that led it to find the West Virginia DEP’s decision to approve the project was “arbitrary and capricious.” Among a list of issues cited by the court, state regulators did not “sufficiently address” previous violations of water quality standards found by department inspectors during MVP’s construction in West Virginia.The West Virginia DEP “failed to provide a reasoned explanation as to why it believes MVP’s past permit violations will not continue to occur going forward,” the ruling said.Regulators also did not go far enough to require compliance with state-level construction permits, and they did not “provide a reasoned basis” for applying upland construction standards from the Environmental Protection Agency to a review of in-stream construction.Lastly, regulators should have conducted “location-specific antidegradation review” before determining the project would comply with applicable water quality standards, the court found. MVP’s developers are “disappointed” by the latest Fourth Circuit decision and remain committed to seeing the project across the finish line, spokesperson Natalie Cox told NGI. “With total project work nearly 94 percent complete, Mountain Valley remains committed to working collaboratively with state and federal regulators to finish the remaining work and help ensure Americans have greater access to cleaner, reliable and more affordable domestic energy.”Project backers are continuing to target a late 2023 in-service date, according to Cox.With the West Virginia Section 401 permit vacated, the U.S. Army Corps of Engineers will not be able to issue a federal discharge permit to MVP under Clean Water Act (CWA) Section 404, according to analysts at ClearView Energy Partners LLC. The Army Corps permit had been scheduled to be issued this month.The Fourth Circuit could have opted to remand the West Virginia permit while leaving it in place, the ClearView analysts said. “However, consistent with what appears to be a very hard line on agency permit review execution from this set of judges, the court has vacated the permit,” they told clients in a note.The end result could be more delays for MVP, slated to enter service in the second half of this year.Without the CWA permits, “we do not expect the Federal Energy Regulatory Commission to allow MVP to resume construction, even if the pipeline secures its other outstanding permits,” the ClearView analysts said. “…Therefore, we do not think MVP will hit its 2023 year-end in-serve target date. We think this ruling means that the project has likely been delayed about a year.”
Fed Court Rules EQT, Diversified Must Face WV Class Action - Marcellus Drilling News -Last summer, MDN brought you the news about a lawsuit against Diversified Energy and EQT over the issue of old and “abandoned” wells in West Virginia (see Big Green Uses WV Landowners to Sue EQT, Diversified re Old Wells). In June 2018, MDN exclusively brought our readers the news that Diversified Gas & Oil (now called Diversified Energy) had purchased EQT Corporation’s Huron Shale assets, with a bunch of conventional wells, in Kentucky, Virginia, and West Virginia for $575 million (see Diversified Gas & Oil Adds to Conventional Assets in KY, VA, WV). Several WV landowners, prompted (and supported) by Big Green groups, sued the EQT and Diversified last July, alleging the wells no longer produce and (under law) must be plugged. The new news is that a federal judge in WV ruled yesterday that a proposed class action by the landowners against the companies can proceed.
EQT Giving ‘Context’ to Decarbonize Entire Natural Gas Value Chain - EQT Corp., the largest natural gas producer in the United States, is partnering with Context Labs to commercialize verified low-carbon intensity natural gas products and carbon credits. Context Labs offers decarbonization as a service, or DaaS, using technologies to certify emissions profiles and help progress mitigation across the natural gas value chain. Technologies include distributed ledger technology, advanced climate data and analytics, machine learning and artificial intelligence (AI) capabilities. “We have taken decisive actions to cut emissions across our operations,” EQT CEO Toby Z. Rice said. “Now, with this specialized data, we can accelerate our path to net zero and reach our goals more efficiently. The Pittsburgh, PA-based independent and Context, Rice said, are capturing opportunities “not just to decarbonize natural gas, but credibly validate our emissions reductions, which is a critical component to ensuring natural gas plays a leading role in the world’s energy evolution.” Among other things, EQT has replaced or retrofitted 100% of its natural gas-powered pneumatic devices from its production operations used in the Appalachian Basin. Rice has said the transition to low-carbon technology has led to an “era of sustainable shale”. The independent is aiming to achieve net-zero emissions in 2025. The Context partnership is focusing on emissions quantification, operational analysis and certifying production “to scale emissions mitigation across the full energy value chain.” Context would deploy its proprietary DaaS “enterprise-wide” across EQT’s asset footprint in Appalachia. The end goal is to achieve full digital integration of the producer’s emissions data. [Decision Maker: A real-time news service focused on the North American natural gas and LNG markets, NGI’s All News Access is the industry’s go-to resource for need-to-know information. Learn more.] “The resulting creation of certified low-carbon intensity products will add a next dimension to EQT’s already robust and digitally enabled organization,” the partners noted. Using DaaS, Context would provide “certification and verification of the carbon intensity of EQT’s operating assets.” Certificates would be registered in Context’s Clear Path repository.
Virginia Regulator Who Pushed Gas Pipeline to Soon Rule on its Permit - An environmental regulator in Virginia who quietly promoted a proposed gas pipeline project may soon rule on one of its permits. TC Energy’s river and stream crossing permit application for its Virginia Reliability Project is currently before the Virginia Marine Resources Commission (VMRC), which will rule on the permit in the next few months. James (JJ) Minor, a VMRC board member, lobbied for the project last year. In its filings with the Federal Energy Regulatory Commission (FERC), TC Energy, a Canadian gas pipeline giant, anticipated receiving the VMRC permit by September this year. As part of the VRP, the company plans to double the size of its existing pipeline that carries fracked gas into the Hampton Roads area and upgrade two compressor stations.The project’s sole customer is gas utility Virginia Natural Gas, a subsidiary of Southern Company. FERC is currently conducting its environmental impact review of the project.Based on documents provided by the Energy and Policy Institute, the Richmond Times-Dispatch revealed in August that Minor, who works for the city of Richmond and heads the Richmond chapter of the NAACP, used a private email account to promote the pipeline project. Writing on behalf of “Team VRP,” Minor urged city of Petersburg officials to send ghostwritten letters supporting the project to FERC. The VRP will double the horsepower in TC Energy’s gas-fired compressor station in Petersburg, increasing pollutant emissions.The area adjacent to the Petersburg compressor station is an environmental justice community. TC Energy’s own statistical analysis submitted to FERC found that people living along the project route and compressor stations suffer from significantly higher health risks compared to the state and national averages, including cardiovascular disease, diabetes, life expectancy, low birth weight, and exposure to PM2.5 pollution.
CenterPoint continuing natural gas pipeline upgrades - CenterPoint Energy officials say contract crews continue replacing natural gas mains and service lines throughout its Indiana service territory as part of a multi-year program to replace approximately 1,200 miles of bare steel and cast-iron pipeline infrastructure in nearly 75 cities and towns. In 2023, CenterPoint is investing more than $76 million and upgrading 115 miles of pipeline.The bare steel and cast-iron infrastructure will be replaced with new industry-grade plastic that will last 100 years..“Our ongoing investments in our natural gas infrastructure remain a top priority for our company as we strive to provide our customers and communities with safe and reliable service,” said Ashley Babcock, Vice President, Indiana and Ohio Gas. “These improvements will also help reduce operational emissions as we continue our journey toward a cleaner energy future.”As crews perform the work, natural gas mains under streets and sidewalks are replaced first, followed by service lines running directly to homes and businesses. Upon completion of the work, affected sidewalks, yards and streets will be restored as weather conditions permit.
Judge rules LG&E can seize part of Bernheim Forest for new gas pipeline -— A Kentucky judge has ruled LG&E can seize a swathe of land in Bernheim Forest to build a natural gas pipeline following a legal battle earlier this year.The 494 acres of land in question, named the "Cedar Grove Wildlife Corridor," consists of two properties in Bullitt County near the Cedar Grove community, according to court documents.Environmental activists and Bernheim's attorneys said the new pipeline would negatively impact the surrounding wildlife and the forest's imperiled bat conservation project.“The utility hasn’t taken to account what their activity on the land will do to these species that we need to work hard to preserve and allow to continue to live in our area,” Elisa Owens, director of Kentucky Interfaith Power and Light, said.In a statement sent to WHAS11, a Bernheim Forest spokesperson said they are "morally opposed to the pipeline because of its long-term impacts to land and water.""Natural land protection and mitigating the affects of the climate crisis is good for the environment, the economy, ourselves, and for future generations," they said. "This is not just an issue of digging a trench and dropping in a pipe, it is about providing a healthy, resilient, connected, and sustainable future for all."Read Bernheim Forest's full statement here.Ultimately, Bullitt Circuit Court Judge Rodney Burress ruled LG&E has the right to use eminent domain to seize the land. In the judge's opinion, Burress agrees the new pipeline would improve natural gas service to customers in Bullitt County by "increasing capacity and improving reliability."
US Congress faces transmission-for-gas choice as permitting efforts advance -- Talks are moving ahead in Congress on a broad energy permitting package after the Republican-majority US House of Representatives passed its starting proposal March 30. Democrats, who control the Senate, want more aggressive measures to speed construction of transmission lines. They have also balked at provisions of the House bill that would roll back major Inflation Reduction Act climate programs and lower barriers to oil and gas pipelines and other fossil fuel infrastructure. But speeding oil and gas projects is a major priority for Republicans, and a divided Congress will likely force trade-offs. Although many Democrats are uneasy about supporting fossil fuel infrastructure, adding transmission will be crucial to Democrats' climate goals and fulfilling the clean energy potential of the Inflation Reduction Act. "I think Democrats in the Senate are definitely going to want to come to the table on transmission," Neil Chatterjee, a former Federal Energy Regulatory Commission chairman and past adviser to Senate GOP Leader Mitch McConnell, said in an interview. "What will be interesting to watch is ... can you form a coalition of folks who understand that in order to get durable bipartisan consensus, you're probably going to have to negotiate something that ... expedite[s] the build-out of natural gas infrastructure in the short term?" Senate Energy and Natural Resources Committee Chair Joe Manchin (D-W.Va.) will take a "close look" at the House bill and "is hopeful there might be a pathway to permitting legislation that could gain bipartisan support," spokesperson Sam Runyon said. As part of that effort, the Senate energy committee will hold a permitting oversight hearing but has yet to set a date, Runyon added. Meanwhile, Sen. John Barrasso (R-Wyo.), the ranking member of the Senate energy committee, is partnering with Sen. Shelley Moore Capito (R-W.Va.), the top Republican on the Environment and Public Works Committee, to form legislation similar to the House's bill. "We look forward to working with any Senate Democrat who is serious about fixing our disastrous permitting process," Barrasso said in a March 30 statement. Although seen as a messaging bill with no chance of enactment, the House legislation, called the Lower Energy Costs Act, could streamline permitting for a range of energy projects, particularly pipelines. "This was House Republicans putting out what they are for," Chatterjee said. "This is a pretty strong opening salvo to that negotiation [with the Senate]." The bill would limit climate considerations for pipelines under the National Environmental Policy Act and restrict states' ability to stop pipeline projects through the Clean Water Act. It would also make FERC the lead agency for federal pipeline approvals and give the commission exclusive authority to approve or deny siting of gas import and export projects, eliminating the need for the US Energy Department to sign off on LNG exports. A bigger role for FERC could give the industry more stability, Chatterjee said. "There's concern about a unilateral administrator [such as the DOE] potentially blocking these things," the former FERC chair said. "[With] FERC being an independent agency with a bipartisan configuration, you can potentially get more consistent outcomes over the course of time." Gas industry groups praised the House bill. The legislation "would expedite permitting timelines and judicial reviews for energy infrastructure — statutory changes needed to build projects," said Amy Andryszak, president and CEO of the Interstate Natural Gas Association of America.
American Gas Association Report Details US Agriculture Reliance on Natural Gas -- A new report by the American Gas Association (AGA) on natural gas usage by U.S. agriculture shows how important this product is to the industry. This is especially true for several Midwestern states with economies dependent upon agriculture and the various subsectors.The report (https://www.aga.org/…) analyzed the natural gas consumption and economic impacts of U.S. crops, livestock, food processors and agrochemical sectors of the U.S. economy. The findings in this analysis are based on data from the U.S. Energy Information Administration and federal economic data embedded in the IMPLAN economic model.Here are some of the more important figures from the report:
- -- The U.S. agriculture sector is a major part of the economy. It provides 5 million direct jobs. In addition, agriculture contributes $437 billion to the U.S. gross domestic product (GDP).
- -- Accounting for indirect suppliers and induced expenditures, the U.S. agriculture sector supports 17.2 million jobs and approximately $1.75 trillion in U.S. GDP. States with the largest share of their economies supported by the U.S. agricultural sector include Nebraska, Iowa, South Dakota, North Dakota, Idaho, Kansas, Arkansas, Kentucky, Wisconsin, Montana and Missouri.
- -- Just five of the many agricultural subsectors combined consumed 2.06 trillion cubic feet (Tcf) of natural gas in 2021, nearly the equivalent to the total consumption of California, which is the second-largest natural gas-consuming state. The five subsectors are food processing, beef and dairy cattle production, grains production, fertilizer and other agrochemicals and soybeans and other oilseeds production.
- -- The U.S. agrochemical sector produces fertilizers and other agricultural chemicals for use on farms. In 2021, U.S. production of nitrogen fertilizer and other agrochemicals required the consumption of nearly 95 billion cubic feet (Bcf) of natural gas. States with the largest consumption of natural gas related to the production or the supply chain of agrochemicals include Texas, Louisiana, Iowa, California, Ohio, Indiana, Alabama, Illinois, Oklahoma, Wisconsin and Mississippi.
- -- U.S. agriculture is one of the largest consumers of natural gas. When including direct use and use throughout the industrial supply chain, the U.S. agriculture sector consumes roughly 1.7 Tcf of natural gas. This would be the equivalent to almost 15% of all U.S. commercial and industrial consumption of natural gas, based on 2021 data.
- -- Losing secure access to ample natural gas supplies would put the U.S. agrochemical sector in a precarious position relative to competitors. If the industry were to become suddenly uncompetitive relative to foreign producers, then the U.S. would need to import more of its ammonia feedstock and finished fertilizer products.
- -- The U.S. agrochemical sector also has a significant impact on the U.S. economy, as it supports 344,000 U.S. jobs and $51 billion in U.S. GDP. The states of California, Florida, New York and Texas have the largest number of jobs supported by the agrochemical manufacturing sector. Other notable state jobs include 13,800 in Illinois; 12,400 in Pennsylvania; 7,200 in Wisconsin and 5,900 in Colorado.
How Are Growing LNG Exports Impacting U.S. Natural Gas? – Listen Now to NGI’s Hub and Flow --Click here to listen to the latest episode of NGI’s Hub & Flow podcast. NGI’s Patrick Rau, director of strategy and research, discusses the slow pace of final investment decisions for U.S. LNG projects, as well as the potential for longer-term challenges for future U.S. liquefaction projects.Rau also touches on how Chesapeake Energy Corp.’s heads of agreement to supply Gunvor Group Ltd. with liquefied natural gas could impact domestic supply.Believing that transparent markets empower businesses, economies and communities, NGI works to provide natural gas price transparency for the Americas. NGI’s Hub & Flow podcast is a part of that effort.
U.S. natural gas futures drop 5% on rising output, milder weather - Natural gas futures fell on Monday, starting the new month the way 2023 has so far — under pressure from strong production, modest weather-driven demand and strong storage supplies. The May Nymex gas futures contract was down 11.9 cents a day at $2.097 / MMBtu. June fell 13.2 cents to $2.333. The quick month had registered gains on Friday but was down 6% overall last week. NGI’s spot gas national average, however, rose 21.5 cents to $2.555 on a rise in the volatile West. Through the first quarter of this year – and then Monday – production has been around 100 bcf/d. This is near the record high of 102 bcf/d and has fueled ongoing concerns that supply could easily outpace demand after a mild winter and the spring shoulder season. NatGasWeather said forecasts coming into Monday’s trading had shifted “strongly warm” with US and European models showing a loss of more than 20 heating degree days (HDD). NatGasWeather said the temperature outlook for this week and next is now forecast to be comfortable for much of the lower 48, with highs in the 60s to 80s in addition to locally cooler 50s in far North America and the Southwest and Texas Locally warm to over 90. The firm said mild April conditions mean at least 48 storage surplus five-year averages are likely to “stall close to plus-300 bcf in the near future” unless there are particularly cold trends. . Against that backdrop, Goldman Sachs Group Inc. Analysts cut their natural gas price forecast for the winter of 2023-2024 to $3.10/mmBtu from $3.40, saying prices are likely to remain under pressure even as cooling demand picks up in the summer. The firm’s estimated storage ended near 1,800 bcf in March, higher than an earlier expectation of 1,635 bcf. Goldman analysts said the return of a major LNG export facility this year has helped the demand side of the equation. But its impact hit the market hard earlier this year and now, if anything, the unknowns of the timing of its reach this spring could prove to be a negative. Early-cycle enrollments for the Freeport Liquefied Natural Gas Export Terminal remained above 2.0 bcf/d during the past week and overall feed gas levels remained near record levels. In recent days activity at Freeport reached an all time high in the relaunch of the facility after the June 2022 explosion that put it out of commission. Nevertheless, the plant in Texas has the capacity to manufacture up to 2.4 bcf/d. “The amount of current storage surplus and lingering uncertainty around the ramp-up in LNG exports from Freeport LNG will likely continue to exert pressure on cash markets and the front of the curve, especially as we enter months of lower demand,” said Goldman analysts. he said. Preliminary estimates presented to Reuters for an Energy Information Administration storage report covering the week ending March 31 ranged from a withdrawal of 6 Bcf to 55 Bcf, with an average shortfall of 20 Bcf. NGI prepared a bridge of 22 Bcf. The projections compare to a shortfall of 24 Bcf a year ago and a five-year average of a flat balance. EIA posted a draw of 47 Bcf for the week ending March 24. This left inventories at 1,853 Bcf, well above the year-ago level of 1,411 Bcf and the five-year average of 1,532 Bcf.
US natgas futures up 2% on daily output decline, rising LNG feedgas - (Reuters) - U.S. natural gas futures rose about 2% on Wednesday on a decline in daily output and an increase in the amount of gas flowing to liquefied natural gas (LNG) export plants since Freeport LNG's export facility in Texas exited an eight-month outage in February and returned to full power over the past week. That price increase occurred despite forecasts for milder weather and lower heating demand over the next two weeks than previously expected, which should allow utilities to start injecting gas into storage this week. Front-month gas futures for May delivery on the New York Mercantile Exchange (NYMEX) rose 4.9 cents, or 2.3%, to settle at $2.155 per million British thermal units. The market has been extremely volatile in recent weeks with the front-month gaining or losing more than 5% in 12 of the past 23 trading days. Freeport LNG's export plant, which shut in June 2022 after a fire, was on track to pull in about 2.2 billion cubic feet per day (bcfd) of gas on Wednesday, down from 2.3 bcfd on Monday and Tuesday, according to data provider Refinitiv. That, however, was still above the 2.1 bcfd of gas Freeport LNG can turn into LNG for export. LNG plants can pull in more gas than they can turn into LNG because they use some of the fuel to power equipment used to produce LNG. Average gas flows to all seven big U.S. LNG export plants has risen to 13.9 bcfd so far in April, up from a record 13.2 bcfd in March. Refinitiv said average gas output in the U.S. Lower 48 states has risen to 99.9 bcfd so far in April, up from 99.7 bcfd in March. That compares with a monthly record of 100.4 bcfd in January 2023. On a daily basis, however, gas output was on track to decline 2.4 bcfd over the last three days to a preliminary two-month low of 98.5 bcfd on Wednesday. Most of the declines this week were in Pennsylvania and West Virginia. Meteorologists projected the weather in the Lower 48 states would remain mostly warmer than normal through April 20, except for a few near-normal days from April 6-8. With warmer spring-like weather expected to keep reducing the amount of gas burned to heat homes and businesses, Refinitiv forecast U.S. gas demand, including exports, would drop from 101.7 bcfd this week to 95.2 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Tuesday. Mostly mild weather over the 2022-2023 winter allowed utilities to leave more gas in storage than usual and should enable them to start injecting fuel into inventories this week. Gas stockpiles were about 21% above their five-year average (2018-2022) during the week ended March 24 and were expected to end about 20% above normal during the colder-than-normal week ended March 31, according to federal data and analysts' estimates.
Natural Gas Futures, Spot Prices Drop as April Weather Outlook Grows ‘Exceptionally Bearish’ - Natural gas futures flipped lower Thursday, snapping a modest two-day winning streak after the latest government inventory data confirmed robust supplies heading into the shoulder season and forecasts pointed to benign weather through most of April. Cash prices slid in tandem. The May Nymex gas futures contract shed 14.4 cents day/day and settled at $2.011/MMBtu. June lost 14.3 cents to $2.238. NGI’s Spot Gas National Avg. fell 33.5 cents to $2.285. NatGasWeather said forecasts were “exceptionally bearish April 10-19 as much of the U.S. warms into the very comfortable 60s to 80s for larger-than-normal builds” as storage injection season is expected to soon commence. This would add to already hefty supplies following a mild winter in the South and East and robust production levels through 2023 to date. The U.S. Energy Information Administration (EIA) on Thursday reported a pull of 23 Bcf of natural gas from storage for the week ended March 31. The result was in line with market expectations for a draw in the low 20s. NGI modeled a decrease of 22 Bcf. EIA recorded a 24 Bcf pull for the year-earlier period, while the five-year average showed no net change to stockpiles for the week. The withdrawal lowered inventories to 1,830 Bcf. Notably, however, gas in storage remained far above the year-earlier level of 1,387 Bcf and the five-year average of 1,532 Bcf. After “big warmer trends” this month, the 298 Bcf surplus to the five-year average “will increase back to plus 350-375 Bcf, then with the potential to increase toward plus 400 Bcf if weather patterns fail to trend notably hotter/colder,” NatGasWeather said. By region, the Midwest and East led with pulls of 16 Bcf and 8 Bcf, respectively, according to EIA. Mountain region stocks declined by 2 Bcf, while Pacific inventories were flat. The South Central region posted an increase of 4 Bcf, reflecting the onset of spring weather in southern markets. Looking ahead, the forecasts for benign temperatures had analysts braced for storage injection season to begin as soon as the next EIA print. Early estimates submitted to Reuters for the week ending April 7 ranged from an injection of 39 Bcf to a withdrawal of 20 Bcf, with an average increase of 30 Bcf. That compares with an increase of 8 Bcf during the same week last year and a five-year average build of 28 Bcf. “As the gas market progresses deeper into the spring, cooling demand in Texas, the Gulf Coast and Florida may emerge and balance the downward price pressure of very warm weather,” said EBW Analytics Group’s Eli Rubin, senior analyst. “Throughout April and the first half of May, however, extreme warmth (April 2023 forecasts vie for the warmest on record) is distinctly bearish for an already oversupplied natural gas market.”
Dominion Energy, National Grid pursuing pipeline sales – WSJ (Reuters) -Utility firms Dominion Energy and National Grid Plc are separately considering a potential sale of parts of their natural gas pipeline networks, the Wall Street Journal reported on Thursday, citing people familiar with the matter. Dominion is mulling a sale of its gas-distribution companies serving North Carolina, Ohio and parts of the Western U.S., which combined could be worth $13 billion, the report said. National Grid on the other hand is exploring a possible sale of part of its pipeline network serving the Northeastern U.S. The reported moves come at a time when lawmakers and regulators across the United States are debating the future of natural gas for home heating and cooking as more towns and cities look to phase it out. Eliminating natural gas appliances would mean transitioning to electric equipment such as heat pumps. In response, utilities are working to determine how to modify or repurpose their current natural-gas delivery networks. Dominion and National Grid's shares on the New York Stock Exchange were trading 0.4% and 1% higher, respectively. Dominion and National Grid declined to comment when contacted by Reuters.
2023 CapEx Spending on Shale Drilling Shifts Dramatically to Oil | Marcellus Drilling News -- In 2022, the first full year after emerging from the worldwide COVID pandemic, the U.S. and world economies rocketed. Inflation rocketed too, but that’s a different story. Because of the high price for natural gas and oil last year (in response to Russia illegally invading Ukraine), U.S. shale drillers increased capital expenditure spending by a whopping 54% over what they spent in 2021. What about this year? The analysts at RBN Energy have analyzed the announced spending by 42 shale oil and gas producers (with a market cap of at least $500 million) and find this year, shale drillers will only expand spending by a “modest” 17%. What about spending in the Marcellus/Utica?
Oil and gas production in Gulf of Mexico has twice the climate impact of official estimates, researchers say - Oil and gas production in the Gulf of Mexico is belching out significantly higher levels of potent, planet-heating gas than previously thought, according to new research, which found the climate effects of the operations are twice that of official estimates. The report comes as the Biden administration last month put millions of acres of water in the Gulf of Mexico up for auction to offshore oil and gas drilling, and has plans for further auctions. In August 2020, scientists spent 10 days doing airborne surveys of more than 50 platforms in the Gulf of Mexico. Flying in concentric rings around the facilities, they measured plumes of carbon pollution from burning processes as well as methane pollution from leaks and venting. They combined the findings with previous emissions surveys and inventories to calculate the “carbon intensity” of oil and gas operations – the total amount of planet-warming pollution released for each unit of energy produced. B Their results revealed a climate impact twice as large as that estimated by government inventories, driven by high levels of methane – a powerful greenhouse gas more than 80 times more potent than carbon dioxide in its first two decades in the atmosphere. Methane pollution in the Gulf of Mexico totaled 600,000 metric tons a year, according to the report, which found that average methane levels in federal waters were three times higher than official inventories, and 13 times higher in state waters. “Inventories are generally challenged by methane,” Alan Gorchov Negron, a study co-author and climate science researcher at the University of Michigan, told CNN. Unlike carbon pollution, which comes from burning the fuel, methane from oil and gas operations escapes into the atmosphere – either through deliberate venting and flaring or accidentally through dilapidated equipment or unknown leaks. The study found that the worst climate performers were platforms in shallow waters, which include older style “central-hub platforms” that collect oil and gas from smaller platforms for processing. These have an “extraordinarily high” carbon intensity that far exceeds that of deeper water facilities, according to the report’s authors.
A federal climate bill promised to fix oil leasing. But are the reforms being implemented? – Despite its reputation as the largest climate bill ever enacted in the United States, the Inflation Reduction Act passed last year did not trigger an end to leasing federal public land to drill for fossil fuels, as some environmental groups had advocated for. The legislation did, however, tighten the rules for oil and gas leasing. It implemented reforms to a process that has long benefited the fossil fuel industry, especially in Nevada where there is rampant speculative leasing in which companies lease public land but fail to develop the parcels, preventing the land from being managed for other interests, including for conservation. Or at least that was the intent. Although the law is meant to clamp down on speculative leasing, an upcoming lease sale in Nevada has several environmental groups concerned the U.S. Bureau of Land Management, which oversees federal land, is shirking the required reforms. To nominate land for oil and gas leasing, an individual or a company must propose parcels by submitting an “expression of interest” to federal land managers. Before the Inflation Reduction Act, parcels could be nominated by anyone anonymously and for free. Now, nominators must disclose who they are and pay a $5 nonrefundable fee to file their expression of interest. In November, an internal U.S. Bureau of Land Management memorandum provided more detail for how the new oil and gas reforms should be enforced by employees. It recommended federal land managers reject all nominations that are over three years old or submitted anonymously. But in Nevada, 31 of the 35 land parcels — a total of roughly 63,000 acres — being considered for a lease sale in July meet that criteria for rejection, according to an analysisfrom the Center for Western Priorities, a conservation advocacy organization. Some environmental groups see the July lease sale as a test of how the administration implements the reforms across the region. And it comes at a time when federal land managers are looking to strengthen protections for public land. Earlier this week, the Bureau of Land Management announced it was accepting public comment on a proposed rule that environmentalists said would better balance restoration and conservation with fossil fuel extraction and energy development, environmentalists said.
Oil drilling in Gulf safer, but concerns linger, report says --Thirteen years after the massive Deepwater Horizons spill fouled the Gulf of Mexico, regulators and industry have reduced some risks in deep water exploration in the gulf but some troublesome safety issues persist, a new study by the National Academy of Sciences said.The creation of a specific federal agency for offshore oil drilling safety, an industrywide safety center and new technology have all helped reduce risks, Tuesday’s report said. But federal inspectors remain relatively powerless over contractors on rigs, which are 80% of the workers.The report also worried about the lack of an industrywide safety culture that integrates accident prevention into everyday work.“They have not figured out how to naturally embrace safety in particular... in who they are and what they do” but instead treat it like a box to check off, Sears said.“There are a lot of things that are happening that are really good, but the industry is not at a place″ where it should be, said panel chairman Richard Sears. He was a longtime Shell executive who was the chief technical adviser to the federal panel that initially investigated the 2010 explosion on the BP rig that killed 11 people and caused America’s biggest oil spill — more than 130 million gallons.A culture that gave lip service to safety but didn’t really integrate it into the way it does business was part of the problem with the accident, Sears and others said. Some companies are treating safety the proper way — including giving flash bonuses to workers who stopped drilling because of potential dangers — but others “that don’t seem to get it,” he said.
Cities will get nearly $200M in grants for pipeline upgrades - -- Federal officials announced the first $196 million of grants Wednesday in a $1 billion program to repair and replace aging and sometimes leaking natural gas pipelines across the country. The Transportation Department and its Pipelines and Hazardous Materials Safety Administration announced that the city of Las Cruces, New Mexico, will get $10 million as the first grant recipient. Nineteen other communities will also get grants to help upgrade 270 miles (435 kilometer) of natural gas pipelines, although the government didn't identify all the recipients. Another nearly $400 million of grants will be announced later this year. The grants, announced by Transportation Secretary Pete Buttigieg, will be paid for with money from the infrastructure law President Joe Biden's administration is touting in a series of events across the country. Several of the pipelines that will be repaired or replaced were installed decades ago, and some of them are leaking. Officials estimate that completing these repairs will help reduce methane emissions by roughly 212 metric tons a year. Aging pipelines have been involved in fatal explosions and massive spills that have occurred over decades in California, Michigan, New Jersey and other states. “Investments in pipeline safety are investments in community safety and our shared environment,” said PHMSA Deputy Administrator Tristan Brown.
Mill Creek cleanup continues months after Keystone Pipeline oil spill - Personnel remain on scene as cleanup efforts at Mill Creek continue into April following the December Keystone Pipeline oil spill. The Environmental Protection Agency announced that its on-scene coordinators will remain at the site of the Keystone Pipeline rupture which discharged 14,000 barrels of oil into Washington County’s Mill Creek in early December. Since the spill happened, the EPA said it has deployed more than 30 members to provide technical advice and assistance to support the response. It has also used contractor resources to provide on-the-scene and remote technical support to the responding team members. According to the EPA, response crews have made significant progress in the last few months. The installation of a temporary water diversion system in January produced two beneficial results:
- A reduction in oil-related contaminants that impacts the surface water downstream of the oil-impacted segment of Mill Creek.
- The ability to conduct submerged oil assessments and perform cleanup of submerged oil from the creek bed, sediment and shoreline of Mill Creek.
As response crews continue to work to remove oil and oil-coated soil, sediment, shoreline and debris from Mill Creek. It also said additional personnel remains on-scene to build a higher capacity diversion system and two surface water treatment impoundments. These allow for the separation of oil and water to happen on-scene. The EPA also noted that the separated water will then be treated and tested to ensure it meets discharge limits established by the Kansas Department of Health and Environment before it can be put back into the creek downstream of the oil spill. The Agency indicated that TC Energy, the Canadian company which owns the pipeline, has led the response as it oversees the work done. The KDHE also provides oversight at the scene.
Natural Gas May Compete with Conservation in BLM’s Proposed Land Management Shift - The Bureau of Land Management (BLM) is proposing to change how public lands are managed to put conservation on equal footing as other uses, including oil and natural gas extraction. The BLM plan for conservation leasing would entail a time-limited lease of public land that allows interested organizations to conduct specific restoration or mitigation activities. These leases also would generate revenue, which could include establishing carbon markets. “As the nation continues to face unprecedented drought, increasing wildfires and the declining health of our landscapes, our public lands are under growing pressure. It is our responsibility to use the best tools available to restore wildlife habitat, plan for smart development and conserve the most important places for the benefit of the generations to come,” said Interior Secretary Deb Haaland. The federal agency manages more than 245 million acres of public land primarily in 12 western states, including Alaska. The proposed Public Lands Rule would build on other changes announced by the Biden administration as it aims to curb new oil and natural gas drilling on public lands. The proposal would provide tools for the BLM to “improve the resilience of public lands in the face of a changing climate; conserve important wildlife habitat and intact landscapes; plan for development; and better recognize unique cultural and natural resources on public lands,” the agency said last week. The rule would also allow the federal government to identify areas in need of restoration or conservation. Although President Biden had campaigned on ending drilling on federal lands, the White House last year resumed selling leases to drill for oil and gas on federal lands. The number of acres available, however, declined dramatically and it now costs drillers more to work on public property. In 2022, sales of oil, gas, and natural gas liquids produced from the federal mineral estate accounted for 11% of all oil and 9% of all natural gas produced in the United States, according to BLM. The proposed rule includes a roadmap to align the BLM with other land management agencies, such as the U.S. Forest Service, in “ensuring the agency is inventorying and assessing the health of public lands, including watersheds, forests and wildlife habitat.” The publication of the proposed Public Lands Rule in the Federal Register in the coming days would initiate a 75-day public comment period. In addition, the BLM plans to host five information forums to discuss the details of the rule.
An OPEC-driven U.S. drilling boom? Not so fast. - The price of U.S. oil climbed more than 5 percent Monday in the wake of plans by Saudi Arabia and other OPEC countries to cut production, raising new questions for the Biden administration and motorists who rely on gasoline. But even if domestic prices continue to climb, it may take months for U.S. oil output to increase in a meaningful way — if at all. Growth in oil and gas production has remained essentially flat in the United States for the past several months, according to a report released last week by the Federal Reserve Bank of Dallas. In that report, oil executives cited inflationary costs in the oil field and fear of a looming recession as reasons why output remained flat (Energywire, March 30). At the same time, wells that produce both crude and natural gas have taken financial hits since the price of natural gas has begun to crater, said Andy Lipow, an oil analyst with the Houston-based Lipow Oil Associates LLC. The average price of U.S. natural gas fell from a high of $8.81 per million British thermal units in August to $2.38 in February, according to federal data on benchmark prices, making those endeavors less profitable as the cost of a barrel of U.S. crude fell from an average of $114 in June 2022 to $72.87 on March 27. “Combined with higher labor costs, higher costs for pipe and sand and services, [oil producers] need higher oil prices simply to drill,” Lipow said. OPEC and allied countries announced production cuts over the weekend totaling more than 1 million barrels of oil per day. Saudi Arabia said it was a “precautionary” step to help stabilize the oil market, according to the Associated Press. Price fluctuations over the past few months have not inspired more production, according to data released by the U.S. Energy Information Administration last week. U.S. crude production grew by 2.9 percent from December 2022 to January, rising to a little less than 12.5 million barrels a day, or about 50,000 more barrels a day than was being produced in October 2022. But more recently, there has been a decline in U.S. crude rigs in operation according to EIA, dropping to 604 in February compared to 616 in January and 623 last December. Part of oil companies’ reluctance to increase production or invest in new exploration is likely tied to capital discipline that has become a staple of the industry since oil prices began rebounding after plunging when Covid-19 hit, said Hugh Daigle, an associate professor of petroleum engineering with the University of Texas, Austin. Oil companies’ shareholders have been demanding better returns on their investments, especially after the last major boom-and-bust cycle from 2014 through 2016. At the time, companies flooded the market when oil prices spiked by rushing to produce as much as possible in shale plays, which usually were running on low margins. That influx of product caused prices to eventually crater, offering lower returns than investors expected, with many eventually losing money. Since then, Daigle said, investors have told oil companies not to repeat those same mistakes. Even with the potential for oil prices to keep rising following OPEC’s announcement, Daigle and Lipow said they don’t expect companies to start a pumping frenzy. “In the short term, I think a lot of people are going to take a wait and see approach in light of the capital discipline we’ve seen across the industry,”
US pledges to keep pumping natural gas to Europe – natural gas (LNG) to EU ports this year as the Continent aims to continue weaning itself off Russian energy supplies.“Over the past year, the United States and Europe have thrown our energy security cooperation into even higher gear,” said U.S. Secretary of State Antony Blinken, in the EU capital for a summit with his EU counterpart Josep Borrell.The bloc last year imported 56 billion cubic meters (bcm) of U.S. LNG, more than double the previous year's level. The U.S. pledgedthat it will send "at least 50 bcm" to Europe this year.American LNG was crucial in staving off a winter energy emergency as Russia throttled its natural gas deliveries. Before Russia's full-scale invasion of Ukraine, Russia accounted for over 40 percent of the EU's gas demand, but that's now fallen to about 12 percent. The EU has seen gas prices steadily drop thanks to increased non-Russian supplies, a warmer-than-expected winter and demand reduction. The challenge now is to pump the bloc's gas storages full before the start of the next winter heating season. U.S. LNG is "necessary given the challenging supply situation and the need to ensure storage filling for the next winter 2023-24," the White House said.That message comes as global competition in the LNG market is likely to get fiercer, linked to China's reviving economy.Both EU and U.S. officials made clear that there's no going back to the old reliance on Russia."I believe this is not a temporary situation, but marks a structural change in Europe's energy outlook and trade orientation," said Energy Commissioner Kadri Simson.Tuesday's meeting was the 10th EU-U.S. Energy Council — a yearly forum aimed at coordinating stances on strategic issues ranging from energy security to shifting to cleaner forms of energy and keeping the Paris Agreement alive.
Global banks pledged to cut emissions – but still invest billions on US gas exports - America’s massive gas export boom is about to get bigger. By the end of the decade, the Gulf coast could see as many as 12 new liquefied natural gas terminals (LNG) built along its shores. This expansion would triple the amount of gas the US currently exports to be burned around the world, adding more than 200 coal plants worth of greenhouse gas emissions each year, according to one estimate. The terminals can’t move forward without money from the megabanks that bankrolled the first boom less than a decade ago. Almost all of these same banks have pledged to work toward a world with net-zero emissions. But for many, their climate targets explicitly exempt LNG projects. Banks have argued LNG exports help reduce climate pollution by replacing coal with gas but critics say the full emissions of the exports, including producing and moving that fuel around the world, make that calculus questionable. “Fossil fuel expansion is fundamentally incompatible with meeting that net-zero goal,” says Adele Shraiman, a campaign representative with Sierra Club’s Fossil-Free Finance project. In March, the Intergovernmental Panel on Climate Change warned any new fossil fuel development is likely to push the earth’s climate past an increasingly dangerous 2 degrees of warming. Both environmental groups and major investors have said banks are not using their financial power fast enough to cut carbon pollution and invest in zero-emissions energy. About 20 banks have financed the majority of the construction costs for LNG along the US Gulf coast. By the end of 2022, those financial institutions had provided loans or bond underwriting, combined, of more than $110bn, according to data compiled by the Sierra Club. An additional $14bn has been financed this year. About a quarter of the $110bn came from three financial institutions: SMBC, Mizuho and MUFG – Japan’s megabanks, which supported the building of export terminals including Sabine Pass, Corpus Christi and Plaquemines. Japan’s need for LNG in the wake of the Fukushima nuclear disaster led to those investments, and while they have pledged to cut carbon emissions, they have made no promises around LNG. Four of the six largest US banks – Morgan Stanley, JP Morgan Chase, Goldman Sachs and Bank of America – have backed export terminal construction in the region with almost $22bn in loans and underwriting. The top banks backing LNG projects in the US either declined to comment to Floodlight or did not answer written questions. Shraiman, of the Sierra Club, said US banks are trailing other global financial institutions, especially European banks, in both their pledges to reduce emissions and in actually cutting fossil fuel financing. Of the six major US banks, only Wells Fargo and Citibank, the only two major US banks not as heavily invested in LNG, have absolute emissions targets for 2030 for the oil and gas sector – publicly committing to a reduction of 26% and 29% percent respectively from 2019 levels. Others have only committed to lowering the average intensity of the emissions across all the projects they finance. This would potentially allow the total amount of greenhouse gasses they finance to grow, including increasing investments in gas that are less polluting than oil and coal, but expand their total carbon footprint.
Alaska oil plan opponents lose 1st fight over Willow project (AP) — Environmentalists lost the first round of their legal battle over a major oil project on Alaska’s petroleum-rich North Slope on Monday as a judge rejected their requests to halt immediate construction work related to the Willow project, but they vowed not to give up. The court’s decision means ConocoPhillips Alaska can forge ahead with cold-weather construction work, including mining gravel and using it for a road toward the Willow project. Environmentalists worry that noise from blasting and road construction could affect caribou. U.S. District Court Judge Sharon Gleason said she took into account support for the project by Alaska political leaders — including state lawmakers and Alaska’s bipartisan congressional delegation. She said she also gave “considerable weight” to the support for Willow by an Alaska Native village corporation, an Alaska Native regional corporation and the North Slope Borough, while also recognizing that project support among Alaska Natives is not unanimous.Environmental groups and an Alaska Native organization, Sovereign Iñupiat for a Living Arctic, had asked Gleason to delay construction related to Willow while their lawsuits are pending. They ultimately want Gleason to overturn the project’s approval, saying the U.S. Bureau of Land Management failed to consider an adequate range of alternatives.
It’s Not Just Willow: Oil and Gas Projects Are Back in a Big Way - When the Biden administration greenlighted the enormous $8 billion Willow oil project on Alaska’s North Slope last month, many decried the move as a betrayal of the United States’ pledge to move away from fossil fuels in the fight against climate change. But an analysis of global data shows that Willow represents a small fraction of hundreds of new oil and gas extraction projects approved in the past year across the world, including many more in the United States. And in the coming months, dozens of additional projects are expected to be approved. New oil and gas projects Top 30 countries where projects are approved or expected to be approved in 2022 and 2023. Data does not include fracking. [embedded table] The data reflect a surging fossil fuel industry that has rebounded to prepandemic levels of growth. Even though the past few years have seen many countries institute policies that encourage renewable energy, demand for fossil fuels remains high. Russia’s invasion of Ukraine drove up oil prices, contributing to record profits for fossil fuel companies, as governments scrambled to secure their energy supplies, sending prices soaring. “It’s a full bounce-back,” said Espen Erlingsen, a partner at Rystad Energy, the research firm that provided the data. “The future of this growth depends on policy. If the world wants to limit warming, it will have to limit demand for oil and gas because this industry can deliver this kind of volume for many more decades.” Much of the growth is taking place in traditional oil- and gas-producing nations such as the United States, Saudi Arabia and Norway. Gas, in particular, is booming. Qatar is planning to unveil the world’s biggest gas production facility in 2025. In the United States, the fracking of shale rock beds for gas is resurgent, accounting for many times the level of investment and extraction as a project like Willow. While gas causes fewer greenhouse gas emissions than oil does, the expansion of gas exploitation is incompatible with commitments that nations have made to limit emissions, according to the Intergovernmental Panel on Climate Change, the pre-eminent grouping of scientists who study global warming. The IPCC says that fossil fuel production must start declining sharply now to avoid the most catastrophic effects of climate change. Vast new oil fields have also been approved for exploitation by Western multinational companies in Guyana, Brazil and Uganda, among others. Some developing countries have argued that income from fossil fuel — essential to the prosperity of the industrialized world — is also their right, and that climate change mitigation is largely the responsibility of wealthy nations.
Qatar Staking Out Eastern Canada Offshore for More Natural Gas, Oil Prospects - Qatar’s state-owned energy producer is looking to Eastern Canada to build exploration prospects after taking sizable stakes in ExxonMobil’s Newfoundland and Canada offshore acreage. QatarEnergy agreed to join ExxonMobil Canada in developing exploration licenses (EL) 1162 and 1167, both in the deep waters offshore Eastern Canada. While Eastern Canada is not known as a natural gas-rich basin, the global producer and liquefied natural gas leader has for years worked to capture energy opportunities beyond its borders. The latest agreement, said QatarEnergy CEO Saad Sherida Al-Kaabi, is designed “to further grow our offshore Atlantic Canada portfolio as part of our international growth drive, and look forward to continue working within Canada’s transparent and stable regulatory environment.” Under the agreement, QatarEnergy gained a 28% interest in EL 1167, “where the Gale exploration well and associated activities are planned,” executives said. ExxonMobil operates EL 1167 with a 50% stake with Calgary-based Cenovus Energy a 22% stakeholder. QatarEnergy also gained a 40% working interest in EL 1162, in which ExxonMobil controls 60%. Financial details were not disclosed. Both of the EL areas lie in water depths of 100-1,200 meters (328-3,937 feet). EL 1167 covers an area of about 1,420 kilometers (km), or 882 square miles. EL 1162 encompasses about 2,400 square km (1,491 square miles). ExxonMobil and QatarEnergy long have partnered on global ventures, including in Eastern Canada’s offshore. Last fall the duo were awarded Parcel 8, considered a key deepwater exploration block in the Orphan Basin. In the Orphan venture, ExxonMobil operates and controls 70%, while QatarEnergy is minority leaseholder. Parcel 8 is in water depths of 2,500 to 3,000 meters (8,202-9,842 feet). It covers around 2,700-3,000 square km (1,678-1,864 square miles). QatarEnergy began working offshore Eastern Canada two years ago after joining ExxonMobil in EL 1165A. In that venture, QatarEnergy also holds a 40% minority participating interest, with ExxonMobil controlling the majority stake. Last year ExxonMobil and QatarEnergy were awarded Parcel 8, a deepwater block in the Orphan Basin offered in the call for bids NL22-CFB01. ExxonMobil also operates the block with a 70% stake, with Qatar holding a 30% interest. Orphan for many years has drawn the attention of the world’s integrated majors.ExxonMobil is also QatarEnergy’s minority partner in the 16 million metric tons/year Golden Pass liquefied natural gas export project currently under construction southeast of Houston. The firm has said its investment in North American natural gas exports will help provide flexible cargoes for its global portfolio as it commits volumes from its expansions of domestic projects to portfolio players and Asian firms.
First Russian Shipment of (Allegedly) Diesel Docks in Mexico Since G7 Plus-Imposed Price Cap, Stoking Controversy and Confusion - Last Thursday (March 30), a cargo ship called the Loukas I landed at the Mexican port of Guaymas, in Sonora. The vessel had set off from Novorossiysk, Russia, on February 19 and done a stopover in Spain. But it is not clear what was on board. For weeks the London-based price reporting agency Argus Media maintained that the ship was carrying Russian diesel. If true (a big “IF”), it would make it the first tanker of Russian oil to dock and unload in a Mexican port since the G7 imposed a cap on the price of Russian petroleum products in February. From El PaÃs:The Argus consultancy, an organization that produces international market analysis, mentioned in a report that the Loukas I was heading to Mexico loaded with 145,400 barrels of diesel of Russian origin. The prestigious firm explained that the ship, which left from Novorossiysk, Russia, would be the first of several fuel shipments brought to the Mexican market. “The Government of Mexico, through its state company Petróleos Mexicanos, aims to keep increases in gasoline and diesel prices below the inflation rate (…) A cheaper fuel supply from Russia could alleviate the pressure on Mexican finances”, said the consultant in a report that has generated a lot of attention.The Russian Embassy described the allegations as “fake news” while the port authorities in Guaymas insisted the vessel was carrying Russian fertilisers. Petróleos Mexicanos (aka Pemex) also denied the claims, asserting that the shipment was for a private company: “It is not ours or one of our subsidiaries'”. Mexico gets most of its diesel from US refineries, though Pemex has recently increased its output of finished gasoline and diesel.In February, as readers are well aware, the G7, the European Union and Australia agreed to limit the price of Russian diesel and other refined petroleum products, in the hope of squeezing Russian revenues. They set two price limits: a $100 per-barrel cap on products that trade at a premium to crude, such as diesel, and a $45 cap for petroleum products such as fuel oil and industrial lubricant oil.Relatively speaking, this is a small club of countries, accounting for roughly one-eighth of the global population — the so-called “Golden Billion,” as Putin disparagingly calls it. But its numbers are shrinking in size: in recent days G7 member Japan, one of the original signatories of the price cap measures, broke ranks and is now buying Russian oil at prices above the cap once again, arguing that its economy needs continued cheap access to Russian energy. So far, no other countries beyond the “Golden Billion” have agreed to apply the price caps. Instead, global demand for Russian diesel appears to be rising. According to Argus, Russian diesel exporters were more successful in selling their products in March thanks to higher discounts. This, it says, “has encouraged significant shipments from Russia to the Middle East, West Africa, transatlantic to Brazil and now to Mexico.”
WaPo: Officials at NATO Meetings Know Not to Talk About Nord Stream Bombings - The Washington Post reported on Monday that some Western officials are not eager to find out who was behind the bombings of the Nord Stream natural gas pipelines that connect Russia to Germany.An unnamed senior European diplomat told the Post that there is an understanding at gatherings of European and NATO policymakers: “Don’t talk about Nord Stream.”The report says: “Leaders see little benefit from digging too deeply and finding an uncomfortable answer, the diplomat said, echoing sentiments of several peers in other countries who said they would rather not have to deal with the possibility that Ukraine or allies were involved.”In February, investigative journalist Seymour Hersh published a bombshell report that said the US was behind the Nord Stream bombings. Hersh alleges US Navy divers planted explosives on the pipelines in an operation ordered by President Biden and carried out with the cooperation of Norway.The Post report said suspicion for the attacks has fallen on Ukraine and Poland. It does not mention Hersh’s findings but casts doubt on a new narrative that the perpetrators of the bombings planted explosives using a 5o foot sailboat. Investigators are now saying the Yacht, the Andromeda, could not have been the only vessel used to carry out the operation and think it could have been used as a decoy to distract from the true perpetrators.The idea that a yacht was used in the attack first surfaced in a report from the German newspaper Die Zeit in an article published on March 7. Hersh recently published another report that cited anonymous sources who said the Die Zeit story and another article published in The New York Times on the same day were planted by the CIA.Hersh said the CIA was ordered to develop a cover story in coordination with German intelligence following a March 3 meeting in Washington between President Biden and German Chancellor Olaf Scholz. An American intelligence source told Hersh that the cover-up was concocted to discredit his Nord Stream report.“It was a total fabrication by American intelligence that was passed along to the Germans, and aimed at discrediting your story,” the source told Hersh.
German Insurers Renew Cover for Blast-damaged Nord Stream Gas Pipeline -- German insurers Allianz and Munich Re have renewed cover for the damaged Russia-controlled Nord Stream 1 gas pipeline, five sources with knowledge of the matter said, indicating that its revival has not been ruled out after an alleged sabotage attack. Insurance by two of Germany's biggest companies is critical for any long-term future of the pipeline, which was the main route for Russian gas to Europe for a decade before the blast last September. The insurance stands in contrast to Germany's public stance of severing ties with Moscow, but one of the five sources said the German government had not opposed the cover. Most Western investors have written off their stakes in the pipeline. Munich Re, Allianz and Germany's chancellery declined to comment, while the economy ministry said insurance was not part of the support the government had in the past provided for the pipeline. Russia has a 51% stake in Nord Stream 1 through a subsidiary of the state-owned energy group Gazprom. Some of Nord Stream's German shareholders favor at least preserving the damaged pipeline in case relations with Moscow improve, two people familiar with the matter said separately. One of the people said that Berlin tolerated such an approach to the infrastructure, even though it has said that energy ties with Russia are severed. All of the insurance industry and trade sources declined to be named because of the sensitivity of the issue. The insurance policy covers damage to the pipeline and business interruption issues, one of the sources said. Having insurance would also facilitate any repair work needed to resume gas supplies under the Baltic Sea to Europe.
Lower Natural Gas Price Is Not All Good News For Europe --Europe successfully avoided a gas shortage crisis this winter thanks to high LNG imports, reduced demand, and milder weather. As a result, European natural gas prices have fallen to the levels from January 2022, just before the Russian invasion of Ukraine. This week, the front-month futures at the TTF hub, the benchmark for Europe’s gas trading, hovered around $47 (43 euros) per megawatt-hour (MWh), down from over $142 (130 euros) at the start of the 2022/2023 winter heating season and from the record-high of $350 (320 euros) per MWh in August 2022.Warmer winter weather and subdued LNG demand from Asia helped Europe fill storage sites to adequate levels before the heating season and exit that season with inventories well above historical averages.As fears of a gas crunch have subsided this winter, pulling European natural gas prices down, Europe shouldn’t count on another warmer-than-usual winter and less competition from Asia as it starts to prepare for the 2023/2024 winter, analysts say.Contrary to initial expectations, the 2022/2023 winter went surprisingly well, but the energy crisis isn’t over, and Europe is not out of the woods yet.Last year, Asia—including China—saw LNG imports decline amid high spot prices and a slowdown in the Chinese economy. With China’s reopening, however, demand for gas and LNG is set to rebound, increasing the competition between Asia and Europe for spot supply, analysts say.They also warn that next winter could be much worse for Europe if Asian—especially Chinese—demand rebounds and intensifies the competition between the European and Asian markets for drawing more LNG supply.In a market with stronger competition from Asia for LNG supply, the current European gas prices may not be enough to continue attracting spot cargoes, analysts at Swedish bank SEB said in anote this week.The current European gas price is too low. Prices between 60 and 75 euros/MWh are probably needed in 2023 to keep demand subdued, LNG imports high, and inventories elevated.“The EU will have to match whatever Asia is willing to pay plus a premium in a bidding war to keep LNG imports flowing to the EU,” SEB analysts wrote.The bank expects the European TTF price to climb from early to mid-April and average 60 euros/MWh in the second quarter of 2023, followed by 70 euros/MWh and 75 euros/MWh for Q3 and Q4, respectively.Spot LNG demand in Asia hasn’t been great so far this year, with prices falling to a 21-month low last week, per industry estimates cited by ReutersThe weekly average front-month futures prices for LNG cargoes in East Asia fell to $12.72 per million British thermal units (MMBtu) in the week to March 30, the EIA said in its weekly report citing data from Bloomberg Finance. On the other hand, the equivalent of Europe’s benchmark price in MMBtu rose to a weekly average of $13.47/MMBtu.Europe’s price is still above the one in Asia by a slight margin, but with Asian demand expected to pick up later this year with the Chinese reopening, European importers may have to pay up for spot supply to beat competition from the Asian market.Last year, LNG imports to China fell by an extraordinary 20%, Wood Mackenzie has estimated.“One of the risks of China’s return to normality has been the impact it could have on European gas imports which swallowed up a substantial proportion of the supply void left by the country’s relative inactivity,” the consultancy said in a report on how the Chinese reopening could super-charge energy commodity prices this year.
'Petrodollar' at risk as TotalEnergies sells LNG to China in yuan - Chinese and French energy companies this week finalised the first-ever deal on liquified natural gas (LNG) in China settled in the renminbi yuan currency. The trade, involving 65,000 tons of LNG imported from the United Arab Emirates, marks a major step in Beijing's attempts to undermine the US dollar as universal "petrodollar" for gas and oil trade.Yu Jin, the general manager of the China National Offshore Oil Company (CNOOC,) which closed the deal with TotalEnergies, says global resource procurement based on the yuan could "promote the globalisation of energy trading and build a more diversified ecology."Guo Xu, chairman of the Shanghai Petroleum and Natural Gas Exchange which facilitated the deal, was quoted by the state-controlled China Daily saying the transaction promoted "multi-currency pricing, settlement and cross-border payment".The says China is a major player in the global LNG market, adding the "financial infrastructure of cross-border yuan settlement" would provide "more convenient channels for domestic and international oil and gas resources".French economic daily La Tribune reported that TotalEnergies "simply explained that this unprecedented yuan transaction was 'a request from CNOOC' in a hydrocarbon market where purchases have long been settled in dollars."Neither TotalEnergies nor CNOOC wanted to comment in detail on the deal, according to the paper.
Joe Biden pushed for fracking in Ukraine days after Hunter joined Burisma board - Joe Biden pushed for Ukraine to frack gas during his 2014 vice presidential visit – just days after his son Hunter joined the board of a firm set to profit from it. The first son joined the board of allegedly corrupt Ukrainian gas firm Burisma on April 18, 2014, the company announced in a press release at the time. Three days later, Joe was aboard Air Force 2 for an official visit to the East European country. One of his senior officials briefed reporters on the plane that the VP was pushing 'medium- and long-term strategies to boost conventional gas production, and also to begin to take advantage of the unconventional gas reserves that are in Ukraine.' The 'unconventional' reserves were a reference to fracking, a gas extraction method for which Burisma was one of the few firms in Ukraine to have a license at the time. The official said Joe was also promising help for Ukrainian energy firms from US experts. Biden's push for greater energy production was politically significant – making Ukraine more economically independent from Russia. But the move also led to millions of dollars for the company his son was then working for. According to Burisma's website, it ramped up production from 100million cubic meters in 2010 to 1.3 billion cubic meters in 2018 – when it generated revenues of at least $400million, according to a Reuters estimate. In 2019 Burisma held 35 licenses for hydrocarbon production in Ukraine's main oil and gas basins. According to energy industry publication KeyFactsEnergy.com it began using hydraulic fracturing, known as fracking, in 2016 and by May 2019 used the technology in 10% of its wells. A Burisma executive explained how the company benefited from the help of US expertise in Ukraine, in a 2017 interview with Ukrainian trade publication Nefterynok. Head of country operations Taras Burdeinyi said Burisma partnered with US firms Schlumberger and ProPetro Services for fracking in Ukraine, allowing it to grow the 'largest modern rig fleet' in the country, three years after Biden's intervention. Mike McCormick, a White House stenographer who was on board the April 2014 Air Force 2 flight, told DailyMail.com that the anonymous 'senior official' who gave the briefing was Jake Sullivan, who now serves as President Biden's National Security Advisor. 'Our job basically was to record everything that was said to the press, or public facing, and very quickly make transcripts that the White House could release,' McCormick said.'The flight was on April 21, Easter Monday. We flew from DC to Ukraine on Air Force Two. My job was to sit in the back with journalists, with a tape recorder and microphone in case there was a statement to the press.'Sullivan came to the back and did a briefing as a "senior administration official". They wanted to publicize what he said, they weren't afraid of it. But as a senior administration official, so no name attached to it. Transcripts of the briefing show Sullivan was identified only as a 'senior administration official' to avoid 'attaching a name to it'
Japan Breaks With U.S. Allies, Buys Russian Oil at Prices Above Cap - WSJ —The U.S. has rallied its European allies behind a $60-a-barrel cap on purchases of Russian crude oil, but one of Washington’s closest allies in Asia is now buying oil at prices above the cap.Japan got the U.S. to agree to the exception, saying it needed it to ensure access to Russian energy. The concession shows Japan’s reliance on Russia for fossil fuels, which analysts said contributed to a hesitancy in Tokyo to back Ukraine more fully in its war with Russia.
India’s average crude oil imports from Russia at 1 million barrels/day in FY23 - India on an average imported almost 1 million barrels per day (mb/d) of crude oilfrom Russia in FY23, ended March 2023, becoming the largest buyer of the seaborne commodity from the erstwhile Soviet Union, surpassing China.According to the energy intelligence firm Vortexa, India, which imported a record 1.65 mb/d in March 2023, surpassed China as Russia’s largest seaborne crude oil buyer in December 2022. March was the fourth consecutive month of India taking the top spot. A back of the envelope calculation of India’s crude oil purchases during FY23 from Russia, as per Vortexa data, shows that on an average the contract size was 999,817.3 barrels per day (bp/d). In FY23 till February, India’s total crude oil imports stood at 211.6 million tonnes (MT) worth a whopping $146.6 billion.At present, Russia, which accounted for less than 2 per cent of India’s imports till February 2022, now has a share of more than 35 per cent. For comparison, the world’s third largest fuel guzzler imported 212.4 MT of crude oil worth $120.7 billion in the entire FY22.The second half of FY23 witnessed a significant growth in supplies with cargoes surpassing 1 mb/d from December 2022 onwards. Barring April 2022 (269,634 bp/d) and June (945,296.5 bp/d), the crude supplies between April-November 2022 stood in the range of 730,000 to 930,000 bp/d. A senior government official said India will continue to purchase crude oil from Russia, and “other markets” and is always “exploring a better deal”. “Till the price cap is not disturbed, there is no issue with imports from Russia. We will continue it. With the OPEC+ production cuts, it becomes more important for India to secure affordable and assured supplies to shield the oil marketing companies (OMCs) who have to endure under recoveries to shield the citizens from high prices,” the official added.
Russia shifts to Dubai benchmark in Indian oil deal: Sources -- Russia's largest oil producer Rosneft and India's top refiner Indian Oil Corp agreed to use the Asia-focused Dubai oil price benchmark in their latest deal to deliver Russian oil to India, three sources familiar with the deal said. The decision by the two state-controlled companies to abandon the Europe-dominated Brent benchmark is part of a shift of Russia's oil sales towards Asia after Europe shunned Russian oil following Russia's invasion of Ukraine more than a year ago. Both benchmarks are denominated in dollars and set by S&P Platts, a unit of U.S.-based S&P Global Inc, but Brent is mostly used by European oil majors and traders, whereas Dubai is heavily influenced by Asian and Middle Eastern oil trading. Rosneft's chief executive Igor Sechin said in February that the price of Russian oil would be determined outside of Europe as Asia has emerged as largest buyer of Russian oil since the West imposed progressively tighter sanctions on the export. Under the new deal, announced on March 29, Rosneft will nearly double oil sales to Indian Oil Corp, two of the sources told Reuters. IOC and Rosneft did not immediately respond to Reuters emails seeking comment on the details of the agreement, which have not been previously reported. Russian Deputy Prime Minister Alexander Novak said on Tuesday that Russian oil sales to India jumped 22-fold last year, but he did not specify the volume sold.
Pakistan to receive first shipment of Russian oil next month, claims minister -- Minister of State for Petroleum Musadik Malik on Monday claimed that the first-ever shipment of cheap oil from Russia would reach Pakistan next month, reported Geo News. During an interview with a private news channel, the State Minister said that Islamabad has finalised the deal with Moscow, adding, "The first shipment will reach next month through a cargo." The State minister also assured that the government would pass on the benefit of cheap oil to consumers. Responding to a question about rationalising power and gas tariffs, he said the government would introduce different tariffs for the poor and elite class, reported Geo News. The deal, which has been in the making for months, could ease some of Pakistan's fiscal trouble as the country, a net importer of energy, looked for ways to cut its oil import bill. Malik said the government had already made progress in this regard and hoped to issue separate billing for the underprivileged and elite class, reported Geo News. The poor segment of society will enjoy relief after the announcement of this tariff, he further said. "However, it will take some time for the oil to reach Pakistan ... nearly 26 to 27 days," he stated, revealing that the commodity will arrive in the country via sea.
Philippines, China meet next month on oil exploration - — Negotiations for joint oil and gas exploration in the West Philippine Sea are set to resume in Beijing next month, according to the Department of Foreign Affairs (DFA). In a statement, the DFA said Philippine and Chinese officials are set to meet for preparatory talks “sometime in May.” “The meeting will discuss parameters and terms of reference,” the DFA said in a statement. In his state visit to China on Jan. 5, President Marcos agreed with Beijing “to resume discussions on oil and gas development at an early date,” the DFA said. Foreign Affairs Secretary Enrique Manalo said they would regularly provide concerned parties and the public updates on the talks. In October, Chinese Ambassador Huang Xilian said China was hopeful of finding “some way out” of its rift with the Philippines and begin the joint oil and gas exploration in the West Philippine Sea as early as possible.
Nigerians accuse Shell of delay in oil spill London lawsuits -Shell Plc is attempting to shield itself from scrutiny over pollution in Nigeria’s oil-producing Niger Delta, lawyers representing more than 13,000 Nigerians argued at London’s High Court on Tuesday, allegations which the company strongly denies. Thousands of members of the Bille and Ogale communities are suing Shell and its Nigerian subsidiary SPDC over oil spills. Shell strongly denies any liability and argues that parts of the cases were brought too late. It also says the majority of the spills were caused by illegal third-party interference, such as pipeline sabotage and oil theft. The company is asking the High Court to set an initial trial in early 2024 to decide whether parts of the case were brought too late and whether SPDC is liable for oil spills caused by third-party interference. Shell says two further trials could then take place to determine allegations against its subsidiary and Shell’s alleged liability as its parent company. Shell’s proposal is “advanced as a device to shield (Shell) from scrutiny”, Richard Hermer, a lawyer representing the claimants, said in court filings. The case, parts of which began back in 2015, has already been to the UK’s Supreme Court, which ruled in 2021 that there was an arguable case that Shell owed the claimants a duty of care. Hermer said allowing Shell’s application could put off a final decision on the lawsuits until 2029. “The reality is that the defendants can readily afford for their claimants to run for seven more years but the claimants cannot,” he said. However, Shell’s lawyer James Goldsmith told the court that “the claimants are responsible for the ongoing delays” by failing to provide enough detail about their cases. “This is not an attempt to delay matters or out-resource the claimants,” he added. A Shell spokesperson said in a statement: “We believe litigation does little to address the real problem in the Niger Delta: oil spills due to theft, illegal refining and sabotage, with which SPDC is constantly faced and which cause the most environmental damage.”
Efforts to contain oil spill ramped up - RAMPING up efforts to contain the oil leaking from the sunken MT Princess Empress off Oriental Mindoro, authorities have started a “bagging” operation to “seal off the leaks.” In a statement last Saturday night, the Office of Civil Defense (OCD) said the operation is being done by personnel of the Philippine Coast Guard and Japanese dynamic positioning vessel Shin Nichi Maru using the remotely operated vessel (ROV) aboard the Japanese vessel. “Specialized bags to be used in the bagging technique to stop the oil leakage were sent to the country by the government of the United Kingdom to support the operations,” the OCD said. “The bagging technique is part of the next operational phase of PCG’s oil spill management operations,” added the OCD, the implementing arm of the National Disaster Risk Reduction and Management Council. After bagging, the next phase of the operation will be to patch the leaks, hot tapping and siphoning of the oil remaining inside the vessel. Citing information from Oriental Mindoro Gov. Humerlito Dolor, the OCD said more “customized bags” from a plant in Cavite are due to arrive in the province to support the operation. OCD administrator and concurrent NDRRMC executive director Ariel Nepomuceno expressed gratitude to countries that are providing assistance in the oil response operations. “We are grateful for all the support from the other countries in addressing this emergency,” said Nepomuceno. “We hope that along with this international assistance, the integrated response between government agencies and the local government units will enable us to accelerate the effort to contain the leakage and mitigate the impacts of the oil spill,” he added. The United States, among the countries that have extended assistance, has sent an anchor handling vessel, the Pacific Valkyrie with an ROV, that arrived in Subic, Zambales last Tuesday. The vessel will proceed to Oriental Mindoro “once all mandatory checks and preparations are completed.” Last Friday, Korean Coast Guard representatives went to the provincial capitol in Calapan City to discuss with PCG officials “approaches to improve the response operations being implemented,” the OCD said. The MT Princess Empress was traveling to Iloilo from Bataan when it sank off Naujan in Oriental Mindoro last February 28. Last March 1, the PCG said oil was spilling from the tanker in the waters of Naujan. The oil spill drifted to Caluya in Antique last March 3 while oil sheens and thick patches were seen along Verde Island on March 20, Tingloy on March 21 and the shoreline of Batangas City on March 25.
South Korea donates equipment to contain oil spill in Mindoro { The Republic of Korea has donated sorbent pads and other equipment that will be used in the operations to contain the oil spill off the waters of Oriental Mindoro and nearby areas following the sinking of an oil tanker on Feb. 28. In a statement, the Philippine Coast Guard (PCG) said it already received the equipment from the Republic of Korea after its arrival on Wednesday, April 5. “The Philippine Coast Guard (PCG) received the donations for immediate transport to Oriental Mindoro to augment the ongoing offshore and shoreline response operations,” the statement read. Donated were 20 tons of sorbent pads and snares; 1,000 meters of solid flotation curtain boom; and 2,000 sets of personal protective equipment (PPE). South Korea is among the countries that has been actively assisting the PCG in containing the oil spill, brought by the sinking of MT Princess Empress which was then carrying 820,000 liters of industrial fuel. In its latest update, the PCG said it collected 16,333 liters of oily water mixture and 135.5 sacks of oil-contaminated materials collected during its offshore oil spill response operations. For shoreline response, the PCG said it collected 184 sacks of oil-contaminated materials on April 5. So far, the PCG has already collected 4,841.5 sacks and 22 drums of waste collected in 14 affected barangays in Naujan, Bulalacao, and Pola, Oriental Mindoro from March 1 to April 5.
QatarEnergy to acquire 40% working interest offshore Mauritania - QatarEnergy will purchase a 40% working interest in the C-10 offshore Mauritania block, the company announced following an agreement with Shell. The Exploration and Production Agreement for the C-10 block will give QatarEnergy a 40% working interest, in accordance with the terms of the contract and subject to Mauritania’s usual approvals. As the operator, Shell will own a 50% stake, and 10% will be held by Société Mauritanienne des Hydrocarbures (SMH). The C-10 block is situated 50 kilometres off the coast of Mauritania and has a total area of approximately 11,500 square kilometres. The water depths range from 50 to 2,000 metres.
Iraq agrees to 30% stake in TotalEnergies $27 bln energy project - Iraq said on Tuesday it has agreed to a smaller 30% stake in TotalEnergies long-delayed $27 billion project, reviving a deal that Baghdad hopes could lure back foreign investment into the battered country which craves stability. The deal was signed in 2021 for TotalEnergies to build four oil, gas and renewables projects with an initial investment of $10 billion in southern Iraq over 25 years. But it has experienced several setbacks amid disputes between Iraqi politicians over terms.Iraq’s cabinet said in a late Tuesday statement that it had approved the amended 30% share “due to the importance of resolving the issue and proceeding with the signing of related agreements.” Earlier on Tuesday, three sources told Reuters that Iraq has agreed to lower its share to 30% from 40% in the project, which was a key sticking point as TotalEnergies wants a majority stake. Iraq’s state-owned Basrah Oil (BOC) will partner in the project, instead of the now-abolished Iraq’s National Oil company (INOC), the cabinet statement added. The potential for INOC’s involvement had been another stumbling block for the deal. Iraq, OPEC’s second largest producer, has been for years plagued by war, corruption and sectarian tensions that have held back its potential.
Oil prices jump after OPEC+ announces surprise production cuts | The Hill - Oil prices surged after key oil producing countries announced a round of surprise production cuts Sunday totaling some 1.16 million barrels per day, a move that spurred criticism from the White House. Reuters reported that oil prices jumped about $5 per barrel as trading opened in Asia Monday morning, with Brent Futures crude prices jumping about 6.3 percent to $84.95 a barrel, its highest price in about a month.West Texas Intermediate crude also jumped as much as 8 percent in early trading, hitting about $80 a barrel, in its biggest singe-day jump in a year, according to Bloomberg. Saudi Arabia, along with Russia and other OPEC+ countries, announced the production cut, which will start next month, on Sunday, in a move aimed at increasing global oil prices.It comes on top of a previous commitment by the producers to cut production by 2 million barrels a day through the end of the year. Saudi Arabia alone announced that it would start a 500,000 barrel-a-day reduction.A spokesperson for the White House’s National Security Council panned the cuts on Sunday.“We don’t think cuts are advisable at this moment given market uncertainty — and we’ve made that clear,” the spokesperson said, adding the administration remains focused on bringing down oil prices in the U.S. from their peak last year, where gas prices hit a high of $5 a gallon.
Oil surges most in a year after OPEC+'s shocking production cut - Oil rallied the most in more than a year after OPEC+ unexpectedly announced output cuts that threaten to tighten the market and deliver a fresh inflationary jolt to the world economy. The Organization of Petroleum Exporting Countries and allies, including Russia, pledged to make cuts exceeding 1 million barrels a day starting next month and lasting through the end of the year. The reduction surprised markets, which had expected the cartel to hold output steady. Adding to the shock, the decision came outside of the group’s scheduled timetable for reviewing the market’s demand and member’s supplies. The decision quickly rippled across global oil markets. WTI’s prompt-spread flipped into backwardation for the first time since December, signaling renewed strength as traders see demand outstripping supply. Goldman Sachs Group Inc. lifted price forecasts for this year and 2024 and U.S. gasoline futures also surged, underscoring inflationary risks. Embedded Image “OPEC+ shows commitment to protecting against the downside,” said Nadia Martin Wiggen, a partner at Pareto Securities. “The duration of the cut is the most surprising and bullish part.” Before the surprise intervention, crude had capped a 5.7 per cent quarterly drop amid banking-sector turmoil and recession risks. Many market watchers had expected a rebound in the second half, underpinned by rising demand in China. Bucking Wall Street’s spate of higher calls in the wake of the decision, Morgan Stanley noted China’s demand growth has lagged expectations and lowered its price forecast. The White House said the OPEC+ decision was ill-advised, while adding the U.S. would work with producers and consumers to contain gasoline prices. With the U.S. driving season around the corner, the cartel’s cut could add more than 50 cents a gallon to the national average of pump prices. Last year faced with skyrocketing prices after Russia’s invasion of Ukraine, President Joe Biden ordered an unprecedentedly large release from the nation’s strategic crude reserves. Costlier crude threatens to add to inflation, complicating central banks’ efforts to tame persistent price pressures. The U.S. Federal Reserve raised interest rates again last month, and officials are next scheduled to meet in May to set monetary policy. WTI for May delivery rose US$4.75 to US$80.42 a barrel at 2:30 p.m. in New York. Futures rallied by as much as 8 per cent earlier, the biggest intraday increase since March 2022. Brent for June settlement gained US$5.16 to US$84.93 a barrel. </P
Oil prices surge 8% after OPEC's surprise output cuts; analysts warn of $100 per barrel- Oil prices notch biggest gain in nearly a year after OPEC's surprise output cut - Oil prices notched their biggest gain in nearly a year after OPEC+ announced it was slashing output by 1.16 million barrels per day. Brent crude futures settled higher by 6.31%, at $84.93 a barrel. The commodity had its best daily performance since March 21, 2022, when it gained 7.12%. West Texas Intermediate crude settled higher by 6.28%, at $80.42 a barrel. It was the biggest daily gain for WTI since April 12, 2022, when it rose 6.69%.The voluntary cuts will begin in May and run until the end of 2023, Saudi Arabia announced, saying it was a "precautionary measure" targeted toward stabilizing the oil market.The move comes on the back of Russia's decision to trim oil production by 500,000 barrels per day until the end of 2023, according to the country's Deputy Prime Minister Alexander Novak.In addition to Saudi Arabia's output cut of 500,000 barrels per day, other member states have also pledged cuts: the UAE will be cutting output by 144,000 barrels per day, while Kuwait, Oman, Iraq, Algeria and Kazakhstan will also be reducing output."The selected involvement of the largest OPEC+ members suggest that adherence to production cuts may be stronger than has been the case in the past," Commonwealth Bank of Australia's Vivek Dhar said in a note."OPEC+'s plan for a further production cut may push oil prices toward the $100 mark again, considering China's reopening and Russia's output cuts as a retaliation move against western sanctions," CMC Markets' analyst Tina Teng told CNBC.Teng noted, however, that the cut could also reverse the decline in inflation, which would "complicate central banks' rate decisions."In March, oil prices tumbled to their lowest since December 2021, as traders feared the banking rout could dent global economic growth. The oil cartel and its allies are looking to avoid a repeat of the 2008 crash, one analyst said. "They're looking into the second half of this year and deciding they don't want to relive 2008," said Bob McNally, president of Rapidan Energy Group, citing oil prices crashing from $140 to $35 in six months in that year. McNally added that while it's not his base case, oil prices could "make a dash for $100 … if Chinese demand goes back to 16 million barrels a day second half of this year [and] if Russian supply starts to go off because of sanctions and so forth," "Then these cuts, if they stick with them, are going to super tighten the market," he said.
Death By 1.15 Million Cuts - OPEC stunned the market late on Sunday by announcing oil production cuts of around 1.15 million barrels per day. The announcement, strangely, came ahead of the actual OPEC meeting scheduled for today, and throws another spanner in the works for central bankers who may have just started to unclench their jaws a little with regards to the inflation situation. Indeed, US PCE inflation on Friday fell to 5.4% y-o-y, down from 5.3% a month earlier and a tick better than expected, but preliminary Eurozone core CPI actually lifted from a month earlier even as the headline figure fell by more than the Bloomberg survey had predicted. The durability of declining headline inflation must now be seriously questioned if oil producing countries are determined to ensure that oil prices have already bottomed. Rabobank’s energy expert, Joe DeLaura, had already seen Brent crude prices testing $85/bbl by the end of the year --as it is already is today-- and $100/bbl in 2025. The critical factor for central banks may now shift to the level at which those declines are likely to stop. Is it really going to be 2%? The OPEC+ production cuts come on top of the 500,000 bbl per day reduction announced by Russia in early March, and highlight how susceptible the economic outlook remains to (deliberate) supply shocks. The US response until now has been to release oil from its Strategic Petroleum Reserve (SPR), which has reduced stocks to its lowest level since the early 1980s. US Energy Secretary Granholm recently told Congress that it could take “years” to refill the SPR: the OPEC cuts may stretch Granholm’s timeline even further as crude prices get pushed further away from the levels at which the Biden Administration is happy to be a buyer. There is clearly an element of ‘oils ain’t oils’ about this, as energy is intensely political. For one example, the $60/bbl EU price cap on Russian exports, which Japan has just breached with permission, may soon have to be addressed by others if price rises are sustained. For another, see recent Japanese criticisms of Australia “quiet-quitting” the LNG market. But far more importantly, the new OPEC+ cuts are led by Saudi Arabia, which will drop output by 500,000 bbl, which is likely to further stoke tensions with the Biden administration, who were unhappy with Saudi unwillingness to increase oil output last year to help bring inflation under control, and as recent diplomatic developments in the Middle East show a closer relationship between Riyadh and Beijing.
OPEC: Saudis aren’t afraid of US anymore - The shock oil production cuts from May outlined by the OPEC+ on Sunday essentially means that eight key OPEC countries decided to join hands with Russia to reduce oil production, messaging that OPEC and OPEC+ are now back in control of the oil market. No single oil producing country is acting as the Pied Piper here. The great beauty about it is that Saudi Arabia and seven other major OPEC countries have unexpectedly decided to support Russia’s efforts and unilaterally reduce production. While the 8 OPEC countries are talking about a reduction of one million b/d from May to the end of the year, Russia will extend for the same period its voluntary adjustment that already started in March, by 500,000 barrels. Now, add to this the production adjustments already decided by the OPEC+ previously, and the total additional voluntary production adjustments touch a whopping 1.6 million b/d. What has led to this? Fundamentally, as many analysts had forewarned, the Western sanctions against Russian oil created distortions and anomalies in the oil market and upset the delicate ecosystem of supply and demand, which were compounded by the incredibly risky decision by the G7, at the behest of the US Treasury, to impose a price cap on Russia’s oil sales abroad. On top of it, the Biden administration’s provocative moves to release oil regularly from the US Strategic Petroleum Reserve in attempts to micromanage the oil prices and keep them abnormally low in the interests of the American consumer as well as to keep the inflationary pressures under check turned out to be an affront to the oil-producing countries whose economies critically depend on income from oil exports. The OPEC+ calls the production cuts “a precautionary measure aimed at supporting the stability of the oil market.” In the downstream of the OPEC+ decision, analysts expect the oil prices to rise in the short term and pressure on Western central banks to increase due to the possible spike in inflation. What stands out in the OPEC+ decision is that Russia’s decision to reduce oil production by the end of the year has been unanimously supported by the main Arab producers. Independent but time-coordinated statements were made by Saudi Arabia, the UAE, Kuwait, Iraq, Algeria, Oman and Kazakhstan, while Russia confirmed its intention to extend until the end of the year its own production reduction by 500,000 barrels per day, which began in March.
U.S. Losing Influence As Saudi Arabia Joins Shanghai Cooperation Organization - Saudi Arabia’s very public announcement last week that its cabinet had approved a plan to join the Shanghai Cooperation Organisation (SCO) as a ‘dialogue partner’ is the surest sign yet that any U.S. efforts to keep it out of the China-Russia sphere of influence may now be futile. The Kingdom had already signed a memorandum of understanding on 16 September 2022 granting it the status of SCO dialogue partner, as was exclusively reported by OilPrice.com at the time. However, Saudi Arabia did nothing to encourage the release of the news at that point, unlike now – just after it resumed relations with Iran, in a deal brokered by China. The SCO is the world’s biggest regional political, economic and defence organisation both in terms of geographic scope and population. It covers 60 percent of the Eurasian continent (by far the biggest single landmass on Earth), 40 percent of the world’s population, and more than 20 percent of global GDP. It was formed in 2001 on the foundation of the ‘Shanghai Five’ that was set up in 1996 by China, Russia, and three states of the former USSR (Kazakhstan, Kyrgyzstan and Tajikistan). Aside from its vast scale and scope, the SCO believes in the idea and practice of the ‘multi-polar world’, which China anticipates will be dominated by it by 2030. In this context, the end of December 2021/beginning of January 2022 saw meetings in Beijing between senior officials from the Chinese government and foreign ministers from Saudi Arabia, Kuwait, Oman, Bahrain, plus the secretary-general of the Gulf Cooperation Council (GCC). At these meetings, the principal topics of conversation were to finally seal a China-GCC Free Trade Agreement and to forge “a deeper strategic cooperation in a region where U.S. dominance is showing signs of retreat”.This idea was the centrepiece of the declaration signed in 1997 between then-Russian President, Boris Yeltsin, and his then-China counterpart, Jiang Zemin. Veteran Russian Foreign Minister, Sergey Lavrov, has since stated that: “The Shanghai Cooperation Organisation is working to establish a rational and just world order and […] it provides us with a unique opportunity to take part in the process of forming a fundamentally new model of geopolitical integration”. Aside from these geopolitical redesigns, the SCO works to provide intra-organisation financing and banking networks, plus increased military cooperation, intelligence sharing and counterterrorism activities, among other things. The U.S. itself applied for ‘observer status’ of the SCO in the early 2000s but was rejected in 2005. This latest step by Saudi Arabia away from the U.S. and towards the China-Russia axis should come as no surprise to anyone who has been watching developments in the Kingdom since the rise of Crown Prince Mohammed bin Salman (MbS) from around 2015. At that point, he was not Crown Prince (the heir designate position) – that role was held by Muhammad bin Nayef (MbN) – but rather Deputy Crown Prince with burning ambition to take the number one succession spot upon the death of King Salman. His stint as Defense Minister was disastrous, with the dramatic escalation of the war against the Houthis in Yemen – including indiscriminate bombing of civilian targets – roundly condemned by the West. This led the German intelligence service, the Bundesnachrichtendienst (BND), to leak an abridged internal-only assessment report of MbS to various trusted members of the press that stated: ‘Saudi Arabia [under MbS] has adopted an impulsive policy of intervention.’ It went on to describe MbS in terms of being a political gambler who was destabilising the Arab world through proxy wars in Yemen and Syria. In order to rebuild his reputation with a view to usurping MbN as Crown Prince, MbS came up with an idea that he thought would win over senior Saudis who supported his rival. MbS pitched the idea to the senior Saudis based on very specific benchmark targets. First, the flotation would be for 5% of the company. Second, this would raise at least USD100 billion, which would value the whole company at US$2 trillion. Third, it would be listed not just on the domestic Tadawul stock market but also on at least one of the world’s biggest and most prestigious stock markets – the New York Stock Exchange and the London Stock Exchange were the exchanges MbS had in mind. None of these targets was hit, of course, as the more information was made known about Saudi Aramco to international investors the more they regarded it as an omni-toxic liability, including financially and politically. At that point, China stepped in with an offer to save MbS’s face, an offer that he has apparently never forgotten. The offer was that China would buy the entire 5% stake for the required US$100 million, and it would be done in a private placement, meaning no possibly embarrassing details about anything surrounding the deal would ever be made public, including to those senior Saudis who opposed MbS.
Biden Has Limited Options to Respond to OPEC+’s Oil Cut - OPEC+’s surprise move to cut 1 million barrels a day of oil production is poised to raise US fuel prices just as President Joe Biden is expected to launch his re-election campaign. He has a limited range of options with which to respond. Biden may go for another release of oil from the Strategic Petroleum Reserve. The emergency stockpile was created in the 1970s after the Arab oil embargo. It’s holding about 371 million of barrels, according to Energy Department data, around half the SPR’s capacity, largely due to a historic release of 180 million barrels last year to tame surging gasoline prices in the wake of the war in Ukraine. The administration has made refilling the SPR a priority, but it has been hampered by factors that include maintenance at two of the reserve’s four sites. Energy Secretary Jennifer Granholm has said the government isn’t able to release oil from the cache and refill it at the same time, so an emergency sale would likely further delay any plans for replenishment. Still, there’s nothing to stop another sale, said Kevin Book, managing director of ClearView Energy Partners, a Washington consulting firm. “President Biden has taken ownership of gasoline prices in ways other president’s before him have not,” Book said. “If he continues that, it creates possibility for more interventions.” Don’t be surprised if there are more political attacks on the US energy sector, which has ignored repeated pleas from Biden over the past year to accelerate production increases, and received tongue-lashings for making record profits. For all the rhetoric, domestic oil output continues to grow slowly, with the industry reluctant to ramp up drilling and risk a repeat of previous boom-and-bust cycles. “Since the US can’t really force the hand of the OPEC+ members, the proverbial ‘whipping person’ will be the domestic oil and gas industry,” said Timm Schneider, an analyst who runs The Schneider Capital Group LLC. The White House hinted last year, in response to OPEC+’s unexpected decision to cut production by 2 million barrels a day, that it could back legislation that would allow the US to take the dramatic step of suing OPEC nations. Ultimately, the administration backed off from supporting the bill — the “No Oil Producing and Exporting Cartels Act,” or “NOPEC” — amid warnings of the effects it could have on diplomatic relations and the defense industry. Other levers the Biden administration has at its disposal include limiting the export of gasoline and diesel. The White House considered that option last year as a potential means to tame pump prices, which reached an all-time high in June, but it never pulled the trigger. Analysts said moving ahead with the curbs could backfire and actually lead to higher prices in some parts of the US.
Why OPEC's "Best Offense Is Defense", And The Biggest Surprise About The Output Cut Announcement - With markets still abuzz over Sunday's OPEC+ decision to cut oil output by over 1.6 million bpd, which was strategic (the political implications of Saudi Arabia bitchslapping the Biden admin just days after it effectively joined the China-Russia-India axes are unmissable even by inbred Deep State types) as well as tactical (i.e., brutalize the oil shorts, a task made easier since energy is now the second most shorted sector after banks, while CTAs are max bearish and will be forced to cover and chase oil higher from here), below we excerpt from two different perspectives on the OPEC decision, the first one from TS Lombard (it is their view that the output cut "this will deter short sellers and help oil prices settle higher – much like what December’s surprise BoJ tweak to Yield Curve Control did for the yen" but in the long run "sticky oil prices are more likely to weigh on growth than arrest the broad disinflation process already under way"), as well as a second one from JPMorgan's chief commodity strategist Natasha Kaneva who lays out what she thinks is the "most surprising part of the announcement." So without further ado, here is the first take courtesy of TS Lombard's Konstantinos Venetis who explains why OPEC's best offense is defense. Oil prices have jumped following the decision by a Saudi-led group of OPEC members to cut output by around one million bpd starting next month. This will add to the two million bpd reduction agreed by OPEC+ back in October, taking the total to around 3% of global supply.The cartel is trying to put a floor under crude prices against the backdrop of rising inventories and downside risks to demand as a US recession looms. This move is also meant to send a message to speculators: the bearish skew in futures positioning had become particularly pronounced recently, which goes some way to explaining today’s strong knee-jerk price response. There is also a political angle to the timing of this announcement, coming shortly after US officials effectively ruled out new crude purchases to replenish the Strategic Petroleum Reserve in 2023, underscoring the souring of US-Saudi relations.Given our expectations for a US recession and limited global spillovers from China’s reopening, our sense is that at this juncture sticky oil prices are more likely to weigh on growth than arrest the broad disinflation process already under way. For bonds, this means that spikes in yields on the back of renewed inflation concerns are likely to be short-lived. For equities, firmer oil prices will (if anything) weigh on already falling earnings expectations. And here is an excerpt from JPM's Natasha Kaneva laying out what is "the most surprising part of the announcement": A day before the OPEC+’s advisory (no policy-making) Joint Ministerial Monitoring Committee was set to meet on April 3, Saudi Arabia and other members of the OPEC+ alliance announced a 1.1 mbd oil production cut. Saudi Arabia pledged a “voluntary” 500 kbd supply reduction, in coordination with Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman (Table 1). The cuts will begin in May and last until the end of 2023. Fellow member Russia said the 500 kbd production cut it was implementing from March to June would extend until the end of 2023. Similar to OPEC’s 2 mbd cut last October, we view the current reduction in supply as a preemptive measure, assuring that surpluses that started accumulating in the global oil market since mid-2022 don’t extend into the second half of 2023 as the global economy slows following almost 400 bps of cumulative hikes since 2022. The most surprising part of the announcement is that it was not made sooner. Since last November our global oil supply-demand balance suggested a strong policy action was needed to keep global oil surpluses in check.
Oil price forecasts rise on Wall Street as OPEC cuts signal 'geopolitical posturing' - Wall Street is raising its forecasts on oil prices following a surprise OPEC+ announcement to cut production. The output reduction by some of the world's largest exporters, seen by some market watchers as 'geopolitical posturing', sent West Texas Intermediate (CL=F) and Brent (BZ=F) crude futures up more than 6%. Goldman Sachs Commodities Research analysts increased Brent forecasts by $5/bbl to $95/bbl (vs. 90 previously) for December 2023, and to $100 (vs. 97) for December 2024. “Today’s surprise cut is consistent with the new OPEC+ doctrine to act preemptively because they can without significant losses in market share,” wrote researchers led by Dean Struyven in a note to investors. Analysts at Capital Economics also raised their price target writing, “We have revised up our end-2023 Brent forecast to $90 per barrel ($85 previously). Nonetheless, this forecast does not rule out bouts of price weakness as advanced economies enter recession between now and then." The OPEC+ cuts consist of a voluntary reduction of 1.157 million barrels per day which will take effect in May. Additionally, Russia is extending its reduction of 500,000 barrels per day for the rest of the year. Western sanctions on Moscow amid the Ukraine war have diverted Russian energy exports away from Europe, towards countries like China and India. “While surprising, this cut reflects important economic and likely political considerations,” wrote Struyven at Goldman Sachs. On the political side, the move may be related to recent comments from United States Energy Secretary Jennifer Granholm, indicating it would be “difficult” to refill the U.S. strategic petroleum reserve this year. Those statements contradict prior indications from the Biden Administration that it wants to refill the reserve when WTI was consistently at around $70. “Aside from the impact on the physical oil market, it is hard not to think that there is some geopolitical posturing embedded in these voluntary cuts. It demonstrates the group’s support for Russia and flies in the face of the Biden administration’s efforts to lower oil prices,” wrote analysts from Capital Economics.
Goldman sees elevated OPEC pricing power, $100 per barrel by April 2024 after supply cut | Hellenic Shipping News Worldwide - Goldman Sachs says crude oil production cuts by OPEC could result in a significantly larger deficit in the market, driving a rally in prices to $100 per barrel by April 2024, and raising the group’s pricing power. OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, agreed on Sunday to widen oil supply cuts to 3.66 million barrels per day (bpd), which helped push up prices above $86 per barrel. Goldman said it sees “elevated OPEC pricing power – the ability to raise prices without significantly hurting its demand – as the key economic driver”, and estimates that the production cut will raise OPEC+ revenues as the boost to prices more than offsets the drop in volumes. Brent crude futures were trading at $85.31 a barrel on Tuesday. Goldman also said it expects a nearly 90% implementation rate for the 1.66 million bpd production cut plan, reasoning that countries that announced an additional cut have a strong compliance track record, and had implemented nearly 90% of the October 2022 cut by January 2023. The bank further reiterated its view that the market will return to sustained deficits from June onward given rapid emerging market growth, falling Russia supply, and sluggish U.S. supply. Goldman on Monday had raised its price forecast for Brent for December 2023 by $5 to $95 a barrel. Barclays also said it sees a $5 upside to its $92 per barrel price target, while Jefferies noted Brent prices could still end the year at $96 per barrel.
Russia, Kazakhstan Extend Oil Cuts to Stabilize Market - On Sunday, some of the biggest oil-exporting countries declared an additional reduction of around 1.16 million barrels per day in oil production, aiming to stabilize a market that has been continuously declining since last June. As per the recent decision by several OPEC and non-OPEC oil-producing countries, known as OPEC+, two Caspian nations, Russia and Kazakhstan, have committed to lowering their oil production by a total of 578,000 barrels per day. Russia has agreed to extend its current 500,000 barrels per day oil production cut until the end of this year, while Kazakhstan has pledged to voluntarily reduce its oil output by 78,000 bpd.According to Russian Deputy Prime Minister Alexander Novak, the current high volatility and unpredictability of the oil market can be attributed to a number of factors, including ongoing banking crises in the United States and Europe, the unpredictability of the global economy, and short-sighted decisions in energy policy. “Predictability on the global oil market is a key element of energy security,” TASSquoted Novak as saying on Sunday.In February, Moscow had announced these production cuts unilaterally in response to the introduction of price caps by the West.Meanwhile, the Kazakh Energy Ministry has announced that the country’s decision to voluntarily reduce oil production is a precautionary step, in addition to the production cut agreed upon during the 33rd OPEC and non-OPEC Ministerial Meeting held on October 5, 2022.In addition to Russia and Kazakhstan, six other countries have also announced voluntary production cuts. These nations include Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Oman, and Algeria. Saudi Arabia, for instance, has committed to reducing its production by 500,000 barrels per day until the end of this year. Similarly, the United Arab Emirates, Iraq, and Kuwait have agreed to reduce their production by 144,000 barrels per day, 211,000 barrels per day, and 128,000 barrels per day, respectively. Oman and Algeria have also decided to cut their production by 40,000 barrels per day and 48,000 barrels per day, respectively. The recent voluntary production cuts, which are set to take effect from May, were unexpected and have been declared in addition to the output cuts that were already agreed upon in October. During the October meeting, OPEC+ had agreed to impose output cuts of two million barrels per day from November onwards, which had caused concerns in the United States as tighter supply typically leads to an increase in oil prices.
The Market Weighed the OPEC+ Production Cut Against Weak Economic Data The oil market on Tuesday ended the session mostly sideway as the market weighed the OPEC+ production cut against weak economic data. In overnight trading, the market extended its previous gains following the surprising decision by OPEC+ to cut production by 1.66 million bpd from May until the end of 2023, bringing the total volume of cuts by OPEC+ to 3.66 million bpd, including a 2 million bpd cut agreed to last October. The market traded sideways before it breached its previous high as it posted a high of $81.81 early in the session. However, the market erased some of its gains amid some weak economic data. The Commerce Department reported that U.S. manufacturing activity fell in March to the lowest level in nearly three years as new orders fell. The market sold off to a low of $79.61 by mid-day. The oil market later retraced some of its losses and settled in a sideways trading range ahead of the close. The May WTI contract ended the session up 29 cents at $80.71 and the June Brent contract settled up 1 cent at $84.94. Meanwhile, the product markets ended the session mixed, with the heating oil market settling up 41 points at $2.6667 and the RB market settling down 2.04 cents at $2.7371.Goldman Sachs says crude oil production cuts by OPEC could result in a significantly larger deficit in the market, driving a rally in prices to $100/barrel by April 2024, and raising the group's pricing power. Goldman said it sees "elevated OPEC pricing power, the ability to raise prices without significantly hurting its demand, as the key economic driver", and estimates that the production cut will raise OPEC+ revenues as the increase to prices more than offsets the drop in volumes. Goldman also said it expects a nearly 90% implementation rate for the 1.16 million bpd production cut plan, reasoning that countries that announced an additional cut have a strong compliance track record, and had implemented nearly 90% of the October 2022 cut by January 2023. The bank further reiterated its view that the market will return to sustained deficits from June onward given rapid emerging market growth, falling Russia supply, and sluggish U.S. supply. On Monday, Goldman Sachs raised its price forecast for Brent for December 2023 by $5 to $95/barrel. Separately, Barclays said it sees a $5 upside to its $92/barrel price target, while Jefferies noted Brent prices could still end the year at $96/barrel. Fitch Ratings said OPEC+ output cuts will support short-term prices and may push the market into a deficit. It assumes Brent prices will average $85/barrel in 2023. Fitch said the OPEC+ output cuts increases the chances that the market could switch into a deficit in the second half of 2023 particularly due to recovering consumption in China.S&P Global is estimating the EIA could be under reporting crude inventories by between 100,000 b/d and 300,000 b/d largely because of the field condensate that is often collected in gas pipelines and introduced into the crude stream as light hydrocarbons.According to Refinitiv tracking, global seaborne diesel export to Europe this week are at around 2.84 million tons. However, this could fall as it includes about 1.31 million tons of Russian barrels. Diesel exports for Europe scheduled for April so far are estimated at 4.2 million tons with no sign of abatement in shipments from Russia. This compares with about 6.5 million tons in March.
U.S. oil prices settle at their highest since January in wake of surprise OPEC+ production cuts - Oil futures climbed on Tuesday, with U.S. prices settling at their highest since January. The move marked an extension of a 6% rally a day earlier, which was driven by a surprise Sunday decision by Saudi Arabia and several of its OPEC+ allies to collectively cut crude production by more than a million barrels a day. Brent and WTI both soared more than 6% on Monday after Saudi Arabia and other OPEC+ members announced Sunday that they would make production cuts totaling around 1.16 million barrels a day beginning in May, while Russia said it would extend a March cut of 500,000 barrels a day through the end of the year. OPEC+ is made up of the Organization of the Petroleum Exporting Countries and its allies, including Russia. "The OPEC+ cut to oil output was no surprise fundamentally, but the way OPEC+ negotiated and announced the cut, and the timing of it, was unexpected; a harbinger of surprises to come," "Our base case for this year had already assumed OPEC+ would first cut production this May," and then increase output later in its quest for $80-plus a barrel oil, adding that a potential production increase would depend on the extent of oil demand growth this year, particularly in China. Bahree also said there is "no reason to any longer assume that scheduled meetings of OPEC or OPEC+, in-person or virtual, are the only occasions for group decision-making." A "subset, or subsets of OPEC or OPEC+ countries can come together to voluntarily adjust production within the overall framework of a formal agreement and output targets." The next full OPEC+ ministerial meeting is scheduled for June 4. Still, some analysts warned that the OPEC+ decision could actually lead to lower oil prices. "The cuts come with serious implications, particularly when it comes to inflation," . Reducing the output of oil on the global market "creates an imbalance between supply and demand that could fuel inflation." That, in turn, "could cause demand destruction through higher prices," she said. So while there may be a short-term price spike, the longer-term impact of the production cuts is "bearish for oil prices." For now, the oil market remains "flush" with inventories, However, the announced output cuts will "turn the market to a deficit in the second half." Actual compliance with the cuts is a "another story altogether," he said. "Whereas Saudi Arabia, UAE and Kuwait are steadfast in their compliance, the rest of the pack that includes Iraq, Kazakhstan and Algeria have iffy track record and are unlikely to comply voluntarily." Meanwhile, Iraq's agreement to resume Kurdistan production "makes it highly unlikely that it will forego its oil revenue, despite the promises," said Raj. Looking ahead, weekly data from the Energy Information Administration on U.S. petroleum supplies will be released Wednesday. On average, analysts polled by S&P Global Commodity Insights expect to see an inventory declines of 7.5 million barrels for domestic crude, 1.3 million barrels for gasoline, and 140,000 barrels for distillates.
Oil Prices Rise As Crude And Gasoline Inventories Fall - Crude oil inventories in the United States fell by big numbers again this week, shedding 4.346 million barrels, the American Petroleum Institute (API) data showed on Tueday, with analysts expecting a smaller 1.8 million barrel draw. The total number of barrels of crude oil gained so far this year is still more than 49 million barrels. This week, SPR inventory dropped for the first time in 12 weeks, losing 400,000 barrels to reach 371.2 million barrels—the lowest amount of crude oil in the SPR since December 1983. U.S. crude oil production fell to 12.2 million bpd for week ending March 24. U.S. production is now 900,000 bpd lower than the peak production seen in March 2020, but 500,000 bpd higher than this time last year. WTI oil prices traded up on Tuesday in the run-up to the data release, still supported by OPEC+’s surprise production cut that will start in May. Brent crude was trading down slightly on the day, although up on the week. By 4:25 p.m. EST, WTI was trading up $0.10 (+0.12%) on the day to $80.52 per barrel, a gain of about $7 per barrel on the week. Brent crude was trading down $0.09 (-0.11%) on the day at $84.84—up roughly $6 per barrel from this same time last week. WTI was trading at $80.57 shortly after the data release. Gasoline inventories fell by 3.970 million barrels after falling in the week prior by 5.891 million barrels. Distillate inventories fell by 3.693 million barrels after increasing by 548,000 barrels in the week prior. Inventories at Cushing, Oklahoma, decreased by 1.035 million barrels—after falling 2.388 million barrels last week.
Oil edges up as OPEC cuts, U.S. inventories brighten outlook - Oil prices rose in early Asian trade on Wednesday on anticipated U.S. crude inventory declines and OPEC+'s latest output cut targets. Brent crude futures gained 38 cents to $85.32 a barrel at 0021 GMT. West Texas Intermediate U.S. crude was up 33 cents to $81.04 a barrel. Helping boost oil prices was an industry report showing that U.S. crude stocks fell by about 4.3 million barrels in the week ended March 31, according to market sources citing American Petroleum Institute figures on Tuesday. In Asia, Japan's service sector grew in March at the fastest rate in more than nine years. Gasoline inventories fell by about 4 million barrels, while distillate stocks fell by about 3.7 million barrels, according to the sources, who spoke on condition of anonymity because they were not authorised to speak to the media. The latest targets set by the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, also helped oil prices. The OPEC+ plan would bring the total volume of cuts by the group to 3.66 million bpd, including a 2 million-barrel cut last October, equal to about 3.7% of global demand. Keeping oil prices from moving higher were concerns about demand, with U.S. job openings in February falling to the lowest level in nearly two years and U.S. manufacturing activity in March slumping. Weak manufacturing activity in China last month also added to crude oil demand concerns.
Oil Softens Despite API Reporting Tumbling US Inventories -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange held lower in pre-inventory trade Wednesday despite American Petroleum Institute data showing U.S. crude oil stockpiles fell by a larger-than-expected margin last week, accompanied with a steep drawdown in petroleum product inventories in what could be a sign of a seasonal rebound in fuel demand. U.S. crude inventories slumped by 4.3 million barrels (bbl) in the final week of March, according to the API data released late Tuesday, marking the second weekly decline for U.S. oil inventories. Analysts forecast a more modest decline of 1.5 million bbl. Additionally, gasoline stockpiles tumbled 3.970 million bbl week-over-week, more than twice the calls for a 1.2-million-bbl drawdown. API data also showed distillate inventory toppled 3.693 million bbl, far surpassing an expected decline of 500,000 bbl. Should the EIA report confirm the steep drawdowns, this could be a sign of strengthening demand ahead of the Spring-Summer driving season. U.S. gasoline demand is already on par with 2022 levels but still 4.3% below 2019 levels for the seasonal period. Inventory drawdowns in the U.S. came just as the group of OPEC+ producers decided to slash oil output by 1.66 million barrels per day (bpd) beginning next month and keep cuts through the end of the year. The output cuts add to a reduction of 2 million bpd agreed by the group in October. Taken together, the output cuts account for about 3% of global oil production taken off the market in just seven months. In a note released this week, Fitch Ratings said the cuts should support prices in the short term, leading to an increased likelihood that the market could switch into deficit in 2H23. "We believe that the market was in a moderate surplus in 1Q23 with OECD commercial inventories increasing by 32 million tons in January and a further 10 million tons in February. The decision on production cuts increases the likelihood of the market switching into deficit this year as demand will increase by 2MMbpd in 2023, mostly because of China reopening, which will account for about half of demand growth," said Fitch Ratings. In financial markets, the U.S. Dollar Index bounced higher from a two-month low settlement of 101.145, gaining 0.10% against the basket of foreign currencies after federal data showed U.S. job openings fell below 10 million in February -- the lowest level in over two years. Further details from the JOLTS report showed available positions totaling 9.93 million, a drop of 632,000 from January's downwardly revised number. Although the survey has been widely criticized over its methodology and data accuracy, it still could offer some clues on the overall direction in the labor market. For instance, February's openings were below a record 12 million reached last March, according to revised 2022 data, but still well above 7 million openings in February 2020 ahead of the pandemic. Near 7:30 a.m. EDT, West Texas Intermediate futures for May delivery traded little changed near $80.71 bbl, and international benchmark Brent softened to $84.92 bbl. NYMEX May RBOB futures advanced $0.0166 to $2.7537 gallon, while May ULSD futures gained to $2.6706 gallon.
WTI Rebounds After Across-The-Board Inventory Draws -Oil prices are dropping this morning after the weak ISM Services print, erasing the overnight gains following API's report of inventory draws across all cohorts. However, prices remain up notably on the week, holding the post-OPEC+ production-cut surprise gains.Additionally, a weaker dollar has helped to boost the allure of commodities priced in the US currency. DOE
- Crude -3.739mm (-7.5mm exp)
- Cushing -970k
- Gasoline -4.119mm (-1.3mm exp)
- Distillates -3.632mm (-140k exp) - biggest draw since Oct
The official EIA data confirmed API's overnight with draws across the board. Distillates saw biggest drop in stocks since Oct '22. Interesting that as soon as the so-called "adjustment factor" collapses, we get draws galore?!Even more interesting, at a time when the Biden admin is supposed to be refilling the SPR, they actually drained it (admittedly by a little) for the first time since Jan 6th. No wonder the Saudis were pissed...Cushing saw stocks decline for the 5th straight month... US crude production was flat at 12.2mm b/d, even as rig counts continues to trend lower...
The Market Weighed Economic Concerns Against Plans by OPEC+ Producers to Cut Their Output --The oil market posted an inside trading day as it failed to breach its previous trading range. The market weighed economic concerns against plans by OPEC+ producers to cut their output. The market traded towards its previous high in overnight trading ahead of the expected draws in oil stocks. However, the market failed to test its previous high and it held resistance at $81.24. The market erased any of its gains and sold off to a low of $80.62 as data showing slowing economic conditions weighed on the market. U.S. job openings in February fell the lowest level in nearly two years, suggesting that the labor market was cooling. The market traded off its low and retraced some of its losses but still remained in negative territory, despite the EIA report showing draws across the board. The EIA reported a larger than expected draw in crude stocks of 3.7 million barrels on the week and distillate and gasoline stocks also fell by 3.6 million barrels and 4.1 million barrels, respectively. The May WTI contract later traded in a sideways trading pattern during the remainder of the session and settled down 10 cents at $80.61. Meanwhile, the May Brent contract settled up 5 cents at $84.99. The product markets ended in positive territory amid the draws reported in stocks, with the heating oil market settling up 6.43 cents at $2.7310 and the RB market settling up 8.3 cents at $2.8201. The EIA reported that U.S. crude oil stocks in the SPR fell by 400,000 barrels to 371.2 million barrels, the lowest level since November 1983, in the week ending March 31st.S&P Global Commodities at Sea estimated crude oil exports from the U.S. Gulf Coast in March averaged 1.707 million b/d, up some 4% from February levels.S&P Global is forecasting global oil demand will grow by 2.3 million b/d in 2023, driven by China, despite concerns over feared slowdowns in the U.S. and Europe. They see the cuts by OPEC+ will tighten balances by roughly 25 million barrels each month it is in effect. They see this reducing the stock peak by 50 million barrels and see stocks declining by an additional 75 million barrels by the end of September.IIR Energy said U.S. oil refiners are expected to shut in about 1.25 million bpd of capacity in the week ending April 7th, decreasing available refining capacity by 67,000 bpd. Offline capacity is expected to fall to nearly 1.2 million bpd in the week ending April 14th.U.S. private employers hired far fewer workers than expected in March, suggesting that the labor market was cooling. The ADP National Employment report showed that private employment increased by 145,000 jobs last month. Data for February was revised higher to show 261,000 jobs added instead of 242,000 as previously reported. Cleveland Fed Bank President, Loretta Mester, said it is too early to know if the Federal Reserve will need to raise its benchmark overnight interest rate at its next policy meeting in early May.
Oil’s biggest rally of the year stalls on demand concerns - Oil’s biggest rally this year paused as U.S. stockpile draws failed to quell concerns about demand in an uncertain economy. West Texas Intermediate stuck close to US$80 a barrel, trading in overbought territory for a third day on the nine-day relative strength index. Brent edged higher at the end of the session after Saudi Arabia hiked its official selling price for oil to Asian customers for the third month in a row, which is considered a vote of confidence in demand. U.S. crude stockpiles fell 3.7 million barrels last week, which was less than traders expected, while other economic data showed softer business activity last month. “The rally in crude is likely to be contained in the face of soft economic readings,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. Brent, though, is likely to outperform in the short term as Asian demand remains robust and OPEC cuts more directly impact the global benchmark, she added. Crude rallied in the first two days of the week after the Organization of Petroleum Exporting Countries and its allies blindsided the market with a surprise supply cut. The cartel’s move, apparently aimed at investors betting against gains, reinvigorated the debate among leading banks about whether crude can rally back to $100 a barrel. Oil has risen by more than 20 per cent since its lows in March, when a banking crisis harmed appetite for risk assets. Before the lift from the OPEC+ cut, the market was buoyed by expectations for a rebound in Chinese demand after the end of its COVID Zero policy. A weaker dollar has helped to boost the allure of commodities priced in the US currency. WTI for May delivery fell 10 cents to settle at $80.61 a barrel in New York. Brent for June settlement increased 5 cents to settle at $84.99 a barrel.
Oil falls as weak US economic data stokes recession fears - Oil fell on Thursday as weak U.S. economic data raised concerns over a potential global recession and demand reduction, but benchmark prices were headed for a weekly advance after OPEC+ announced further output cuts and U.S. oil stocks dropped.Brent crude futures fell 41 cents, or 0.5%, to $84.58 a barrel by 0616 GMT. West Texas Intermediate U.S. crude dipped 45 cents, or 0.6%, to $80.16 a barrel. Brent and WTI have both gained nearly 6% so far this week, headed towards three straight weeks of increase after the Organization of the Petroleum Exporting Countries and allies including Russia, a grouping known as OPEC+, pledged voluntary production cuts. “Crude oil’s rally paused as it battled the headwinds created by the weak economic data. This offset more positive fundamentals,” ANZ Research said in a note. The U.S. services sector slowed more than expected in March as demand cooled, while a measure of prices paid by services businesses fell to the lowest in nearly three years, giving the Federal Reserve a boost in the fight against inflation. New Zealand’s central bank raised interest rates more than expected on Wednesday, and India is likely to be the next in line to step up its benchmark rates. Meanwhile, U.S. job openings in February dropped to their lowest in nearly two years, suggesting the labor market was cooling. The slew of soft economic data soured market sentiment, stoking fears of a recession and prompting investors to adopt risk aversion strategies. The U.S. dollar index strengthened on Thursday, rebounding from a recent two-month-low. A stronger greenback could dent oil demand as crude becomes more expensive for holders of other currencies. “A slowdown in the U.S. economic outlook is weighing on the upside on U.S. oil prices, however we continue to expect a further uptick in oil prices to the end of the quarter,” Baden Moore and Adam Skelton, analysts from National Australia Bank, wrote in a note. Underpinning the market, Saudi Arabia, the world’s top oil exporter, raised prices for its flagship crude for Asian buyers for a third straight month. “This points to further strength in demand in the region,” ANZ Research said. U.S. crude inventories fell 3.7 million barrels last week, about 1.5 million barrels more than forecast, government data showed. Gasoline and distillate stocks also fell more than expected, drawing down by 4.1 million barrels and 3.6 million barrels, respectively.
Oil steady, notches 3rd weekly gain after shock OPEC+ cuts - Oil prices were little changed on Thursday but posted a third weekly gain as markets weighed further production cuts targeted by OPEC+ and falling U.S. oil inventories against fears about the global economic outlook. Brent crude settled up 13 cents, or 0.2 per cent, at $85.12 a barrel. West Texas Intermediate U.S. crude closed 9 cents, or 0.1 per cent, higher at $80.70. There will be no trading on the Good Friday holiday. Both benchmarks jumped more than 6 per cent this week after OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, surprised the market on Sunday with a pledge of production cuts. Hedge funds have bought crude all week, moving from the sidelines back into "risk on" mode, said Dennis Kissler, senior vice president of trading at BOK Financial. Prices drew support from a steeper-than-expected drop and a second consecutive weekly drawdown in U.S. crude inventories last week. Gasoline and distillate inventories also declined, hinting at rising demand. U.S. energy firms this week also cut the number of oil rigs for a second week in a row. The rig count, an early indicator of future output, dropped two to 590 this week, Baker Hughes data showed. Limiting gains, however, U.S. labor market data pointed to slowing economic growth, and there was also slower-than-expected growth in the U.S. services sector. "Demand destruction as function of the threat of recession is greater than the cut by OPEC+," said Robert Yawger, said director of energy futures at Mizuho Securities. Buyers of put options that hedge downside risk were more active than buyers of call options, which bets on rising prices, implying traders were worried prices could fall, Yawger added. "The oil market's bullish momentum may have paused, but upside potential remains given the tightening supply backdrop," said Stephen Brennock of oil broker PVM.
Oil has 3rd weekly gain, but price stuck at ‘OPEC-cut’ highs -- One of the craftiest moves in recent times to boost the oil market should result in a weekly gain at least in crude — which is exactly what OPEC+ got. But nothing more. Crude prices did not advance beyond Brent’s initial rally to $86.44 per barrel this week and WTI’s surge to $81.81, which came on the back of the announcement that the world’s largest oil producers will collude to cut a further 1.7 million barrels from daily output after an earlier decision in November to reduce 2.0M barrels per day. New York-traded West Texas Intermediate, or WTI, settled Thursday at $80.70 per barrel, up 9 cents, or 0.1%, from the previous session. For the week, the U.S. crude benchmark rose 6.6%, extending the back-to-back gain of 9.3% and 3.4% in two prior weeks. Just before the three-week stretch, WTI lost 13% in just one week.Brent settled at $85.12, up 13 cents, or 0.2%. The global crude benchmark finished the week up 6.7%, after consecutive gains of 6.4% and 2.8% in two prior weeks. Before that, Brent lost 12% in one week.The inability of crude prices to go any higher despite a bullish weekly report on U.S. supply-demand issued Wednesday was telling to some of the larger economic worries in the market. The latest output reduction by OPEC+ — which groups the 13-member Saudi-led Organization of Petroleum Exporting Countries with 10 independent oil producers steered by Russia — is “substantial” as the combined cut from November removes on paper some 3.7M barrels daily that are equivalent to 3% of world supply, Erlam wrote. But he also stressed that it was a “preemptive” cut — using the oil producing alliance’s own language — that he said “left traders questioning whether this was just a price issue or a belief that the global economy is heading for a difficult period.” U.S. jobless claims jumped their most in 17 weeks, according to data on Thursday that emitted more recession signals even as it indicated relief for the Federal Reserve which needs employment and wage growth to cool in order to curb the worst inflation in four decades. For nine weeks in a row, claims have topped 200,000. While it indicated that more Americans were getting laid off than before, the Labor Department said changes in its claims reporting methodology had also probably led to a spike in the data. Prior to the jobless numbers, company hirings rose by just 145,000 last month versus the February growth of 261,000, private payrolls processor ADP said. That was even below the 200,000 growth forecast on the average by economists polled by U.S. media. The private hiring data came on the heels of another report on U.S. job openings, which showed the smallest growth in almost two years. Job openings slipped to 9.9M in February, growing at their slowest pace since May 2021, the Labor Department said in that report released Tuesday.The two reports made print before Friday’s scheduled release of the all-important labor update for the United States: the non-farm payrolls, or NFP, report. “There have been some bullish calls on oil prices but it’s worth remembering that there’s a reason oil prices were struggling to fully recover the losses in the aftermath of the banking turmoil. Tighter credit conditions mean a slower economy, even recession, and lower demand. The extent of that at this point isn’t clear though and only when it is can we properly judge what the price impact of the cuts is.”
Saudi Arabia Makes Its Eurasian Shift -Saudi Arabia's recent reconciliations with Iran and Syria under Chinese-Russian guidance is perceived as a step toward reducing Riyadh's dependence on the US, while also advancing Beijing and Moscow's political and economic influence in West Asia. On 6 March, 2023, Iranian and Saudi officials held a meeting in Beijing where they agreed to restore bilateral relations. The agreement was significant not only for the mutual de-escalation of tensions in West Asia, but also for Saudi Arabia’s growing importance in the process of Eurasian integration led by China and Russia. By welcoming Chinese mediation, the kingdom has positioned itself as an independent actor capable of opening doors for Beijing and Moscow in a region where they have traditionally been overshadowed by a great power rival, the US. This move boosts Saudi Arabia’s importance in the geopolitical landscape and strengthens its ties with Beijing and Moscow. For much of its history, Saudi Arabia was a staunch ally of the US in the Persian Gulf region. However, Crown Prince Mohammed bin Salman’s (MbS) military quagmire in Yemen – among other things – damaged Washington’s perception of the kingdom as a stable and reliable outpost in the region. The feeling was mutual and forced MbS to seek assistance from other nations to help lower tensions on Saudi frontiers. Between 2021 and 2022, Riyadh engaged in several rounds of an Iraq-hosted dialogue with Iran to negotiate assistance from Tehran in preventing its allies in Yemen and Iraq from attacking Saudi territory. What is particularly noteworthy to China and Russia is that MbS did not use this diplomacy as a means to restore the US’ traditional centrality in the kingdom’s regional and security policies. Instead, he made a point of cooperation with Beijing and Moscow while simultaneously snubbing Washington.
Report: Saudis and Houthis Might Renew Ceasefire Soon - Warring parties in Yemen could soon sign a deal to renew a ceasefire that would last until the end of 2023, The New Arab reported Thursday.A ceasefire that took effect in April 2022 expired last October. While there has been an uptick in fighting on the ground, there have still been no Saudi airstrikes in Yemen since March 2022 and no Houthi missile and drone attacks inside Saudi Arabia.Sources told The New Arab’s Arabic language sister site that the hopes for a new truce come after Saudi Defense Minister Khalid bin Salman met with members of the presidential council that represents the Saudi-backed government in Yemen.A deal to extend the ceasefire could include the Saudis allowing more flights from the Sanaa airport, the resumption of oil exports, and the opening of roads the Houthis have blocked in Taiz. But the sources said some Houthi demands might not be fulfilled.The Houthis have long called for a complete lifting of the blockade on Yemen as a precondition for a settlement. One of their main demands now is for government employees living in Houthi-controlled areas to be paid their salaries using revenue from Yemeni oil and gas sales.The UN’s special envoy for Yemen, Hans Grundberg, said last month that he saw renewed momentum for a peace deal in Yemen following the Iran-Saudi normalization deal. While Iran isn’t nearly as involved in the Yemen war as the Saudis are, the renewed engagement between Tehran and Riyadh is expected to bring more stability to the region. Since the rapprochement with Iran, the Saudis have also taken steps toward normalizing with Syria. March 25 marked the eighth anniversary of the US-backed Saudi-led intervention in Yemen. Since then, at least 377,000 people have been killed in the war. More than half died due to starvation and disease that was caused by the blockade and the coalition’s brutal bombing campaign.
Saudi Arabia to Invite Syria’s Assad to Arab League Summit - Saudi Arabia is planning to invite Syrian President Bashar al-Assad to an Arab League summit Riyadh is hosting in May, Reuters reported Sunday, citing three people familiar with the plan.The move would be a significant step in the normalization of Syria’s relations with regional countries. Damascus was suspended from the Arab League in 2011, and many of the bloc’s members supported the failed regime change effort against Assad, including Saudi Arabia.The news comes after Syria’s foreign minister visited Egypt for the first time in over a decade. An Egyptian security source told Reuters that the purpose of the visit was to work toward Syria rejoining the Arab League, which is based in Cairo, through Saud and Egyptian mediation.Syria and Saudi Arabia have been holding talks on reestablishing ties andare expected soon to resume formal diplomatic relations, which have also been suspended since 2011.The US is opposed to regional countries normalizing with Syria as it prefers to keep the country isolated and under crippling economic sanctions. Washington also occupies about one-third of Syria’s territory, where most of the country’s oil and wheat resources are located.Much of the recent engagement between regional countries and Syria came after a devastating earthquake killed thousands in northwest Syria. Following the quake, the State Department said it opposed other countries upgrading ties with Assad even if it was part of an effort to help with earthquake relief.
Moscow Hosts Meeting Aimed at Syria-Turkey Normalization - The deputy foreign ministers of Syria, Turkey, Iran, and Russia wrapped up two days of talks in Moscow on Tuesday that were aimed at working toward a normalization deal between Ankara and Damascus.There’s no sign a breakthrough was made, but a follow-up meeting at the foreign minister level is expected to happen soon. A Turkish Foreign Ministry source told Russia’s TASS news agency that the four sides agreed to continue consultations and are planning to hold a foreign ministers meeting.Russian Foreign Minister Sergey Lavrov said that Moscow had proposed dates for the meeting of the top diplomats from the four countries. The talks this week built on a meeting between Syria and Turkey’s defense ministers hosted by Russia in December 2022, marking the first time the two countries held talks at that level since 2011.Damascus has made clear that any normalization deal with Ankara hinges on a Turkish withdrawal from the territory it occupies in northern Syria. A rapprochement between Syria and Turkey would be a major breakthrough as Ankara supported the failed regime change effort against Syrian President Bashar al-Assad and still backs anti-government fighters on the ground.The Syria-Turkey talks come as other regional countries are working toward normalizing with the Assad government, including Saudi Arabia. Riyadh is expected to invite Assad to attend an Arab League Summit it’s hosting in May. Syria was kicked out of the Arab League in 2011.The US opposes regional countries normalizing with Assad as it prefers to keep Syria isolated and under crippling economic sanctions. The US also occupies a significant portion of eastern Syria, where most of the country’s oil and wheat resources are located.
CENTCOM Says US Strike Killed ISIS Leader in Syria -US Central Command (CENTCOM) has said its forces launched a “unilateral strike” in Syria on Monday and claimed it killed a senior ISIS leader.CENTCOM said the man’s name was Khalid Aydd Ahmad al-Jabouri and claimed he was responsible for planning terrorist attacks in Europe and Turkey. The command said no civilians were harmed in the strike, but the Pentagon is notorious for undercounting civilian casualties.According to the UK-based Syrian Observatory for Human Rights, the US attack was a drone strike and hit a target in the northwestern Syrian province of Idlib, which is mainly controlled by Hayat Tahrir al-Sham, an al-Qaeda-linked group.Also on Tuesday, CENTCOM released a summary of its operations against ISIS in Iraq and Syria in March. According to the command, it was involved in nine “partnered operations” in Syria that killed a total of two ISIS “operatives” and detained 11 more. While the US says it’s in Syria to fight ISIS, the presence is also part of the economic campaign against Damascus. By backing the Kurdish-led SDF, the US controls a sizeable portion of eastern Syria and controls most of the country’s oil fields. Chairman of the Joint Chiefs of Staff Gen. Mark Milley recently visited Syria and said fighting ISIS was worth the risk of staying in the country. But Damascus and its allies are all sworn enemies of ISIS and would continue to fight against the terror group if the US withdraws.
Two Civilians Killed in Latest Israeli Airstrikes in Syria The strikes targeted Damascus, marking the fourth Israeli airstrikes in the country within one week - Israel continued its relentless bombing campaign in Syria early Tuesday morning, launching airstrikes targeting the southern suburbs of Damascus and killing two civilians, Syria’s SANA news agency reported.The pro-opposition UK-based Syrian Observatory for Human Rights also reported that two civilians were killed in the Israeli bombardment. The SOHR described the target that was hit as a “glass laboratory” and said strikes also targeted the Damascus International Airport, and “Iranian positions.”SANA said some of the missiles Israel fired were intercepted by Syrian air defenses. The report said the strikes were launched at 00:15 local time in Syria.The strikes come after Israel targeted the central province of Homs on Sunday, wounding at least five Syrian soldiers. On Friday, Israeli airstrikes hit Damascus and killed two members of Iran’s Islamic Revolutionary Guard Corps (IRGC).In March, Israel twice bombed Syria’s Aleppo airport, putting it temporarily out of service. Aleppo was devastated by the earthquake that hit Syria and Turkey on February 6, and the Israeli airstrikes cut off aid flights into the city.The Israeli escalation in Syria comes as Israeli Prime Minister Benjamin Netanyahu is facing a political crisis at home over his planned judicial overhaul. Due to the pressure, Netanyahu paused the overhaul, but massive protests in Israel continue.
Israeli forces storm Jerusalem's Al-Aqsa mosque, arresting hundreds of Palestinian worshipers --Violence broke out at the Al-Aqsa Mosque in Jerusalem's Old City overnight after Israeli police stormed the sensitive compound, fueling fear that already-high tension in the heart of the Middle East could erupt again into conflict during a sensitive holiday season.Al-Aqsa is one of the holiest sites in Islam and shares a hilltop with the Temple Mount, the holiest site for Jews. Palestinians consider the site a national symbol, and the storming of Al-Aqsa Mosque by Israeli security forces was a major catalyst for 11 days of violent clashes in 2021.In response to the raid, a series of rockets were fired from the Gaza Strip, which is run by the Palestinian militant group Hamas. Israel then said it had conducted airstrikes targeting Hamas weapons storage and manufacturing sites.Since the holy Muslim month of Ramadan began on March 22, some Palestinian worshippers have been trying to stay overnight inside Al-Aqsa, which is typically permitted only during the final 10 days of the festive period, The Associated Press reported. Israeli police have entered the site daily to evict the worshippers, the AP said.After tens of thousands of people attended prayers at Al-Aqsa Tuesday evening, Israeli officials said they were forced to enter the compound when hundreds of Palestinian "agitators" barricaded themselves inside the mosque armed with fireworks and stones. Videos posted online appeared to show police storming the compound, beating Palestinians with batons and rifle butts and restraining dozens of worshipers, and Palestinians taking aim at police with fireworks. Police said rocks had also been thrown at the officers."The youths were afraid and started closing the doors," Talab Abu Eisha, who was there at the time of the raid, told the AP. "It was an unprecedented scene of violence in terms of police brutality."
Global outrage as Israel launches yet another Ramadan attack on worshippers at Al Aqsa Mosque - Israeli police attacked and arrested Palestinian worshippers in a violent dawn raid on the Al-Aqsa Mosque compound in occupied East Jerusalem, prompting global outrage over Israel’s repeated targeting of Muslims during Ramadan. According to Palestinian officials, at least 400 Palestinians were detained by Israel on Wednesday and are being held at a police station in Atarot in occupied East Jerusalem. Palestinian eyewitnesses reported that Israeli forces beat worshippers with batons and rifles and used excessive force, including tear gas and stun grenades, causing widespread suffocation. Twelve injuries, including three hospital transfers, were reported by the Palestinian Red Crescent. In a statement, it added that Israeli forces had stopped its medical staff from getting to Al-Aqsa. The raids continued until Wednesday morning, when Israeli forces were once more seen violently assaulting Palestinians and preventing them from praying inside the mosque compound, pushing them out before allowing in Israelis under police protection. In the occupied West Bank and East Jerusalem, tension has already been high for months. As two significant religious holidays, the Jewish Passover and the Muslim Ramadan, coincide, there are fears that acts of violence will increase. Palestinian Authority Prime Minister Mohammad Shtayyeh said in a statement: “What happened in Jerusalem is a major crime against the worshippers. Prayer in Al-Aqsa Mosque is not with the permission of the [Israeli] occupation, but rather it is our right. “Al-Aqsa is for the Palestinians and for all Arabs and Muslims, and the raiding of it is a spark of revolution against the occupation,” he added.Social media users from around the world took to different platforms to amplify Palestinian voices and share the reality on the ground as Palestinians shared photos and footage of the brutal attacks.“If any other State’s army raided a holy site and brutally assaulted hundreds of worshippers inside it, that attack would cause global outrage. But because it is the army of the self-proclaimed Jewish State,” tweetedrenown Palestinian writer Mohammed Elkurd.“Strongly condemn this attack on worshippers in Al Aqsa mosque once again by Israeli forces esp during Holy month of Ramazan. It is OIC’s responsibility to inform UNSC & int community that such barbaric acts cause immense hurt to Muslims across the world,” former Pakistani Prime Minister Imran Khan said in a tweet.“Worshippers in Aqsa mosque right now are being brutally and savagely attacked by armed Israeli forces. Some people are even afraid to film because that means more beatings. Scenes coming out are horrifying,” said Mariam Barghouti in a tweet.
Qatar condemns brutal Israeli attack on Palestinian worshippers at Al Aqsa - Doha News | Qatar - Qatar has issued a statement to condemn an Israeli raid into Al Aqsa and that led to a brutal attack on worshippers on Tuesday, slamming the assaults as another violation of international law. In a statement on Wednesday, Qatar’s foreign ministry took aim at the storming and vandalism of the holy site as well as the assault on worshippers and preventing ambulances from attending to the injured. “The Ministry of Foreign Affairs considers these brutal criminal practices a serious escalation and a blatant infringement of the holy places, an extension of the policy of Judaising Jerusalem, a violation of international law and resolutions of international legitimacy,” the statement added. The statement also slammed the attacks as “a provocation to the feelings of more than two billion Muslims in the world, especially in the blessed month of Ramadan.” It also highlighted the occupation of Jerusalem, as per international law. “Therefore the responsibility for caring for the worshippers’ rights guaranteed by international and humanitarian conventions, not to mention the assault on them and the Islamic and Christian sanctities in the city, falls exclusively on the Israeli occupation forces,” the statement added. Qatar renewed its support for the Palestinian cause and its people’s “full right to practice their religious rituals without restrictions”. “It also holds the occupation authorities solely responsible for the cycle of violence that will result from their systematic policies against the rights of the Palestinian people, and urges the international community to take urgent action to stop these measures,” the statement read. Israeli forces violently attacked worshippers at Al Aqsa Mosque late on Tuesday and forcefully removed hundreds of Palestinians holding night prayers to make way for Jewish settlers. Disturbing footage circulating on social media showed Israeli forces mercilessly beating up Palestinians while firing tear gas into the mosque. As part of Israel’s efforts to change the status quo of the mosque, settlers were granted the approval to sacrifice offerings at the Muslim site for the Passover holiday According to the Commission for Detainees and Ex-Detainees Affairs, Israel detained more than 400 worshipers during the assault.
What’s behind the Ramadan raids at Jerusalem’s Al-Aqsa Mosque? | Israel-Palestine conflict News | Al Jazeera -- Tensions in Jerusalem have flared after Israeli police attacked worshippers in the Al-Aqsa Mosque compound overnight during the holy month of Ramadan. The raids continued until Wednesday morning when Israeli forces were once again seen assaulting and pushing Palestinians out of the compound and preventing them from praying – before Israelis were allowed in under police protection. Before dawn on Wednesday, Israeli police stormed the Al-Aqsa Mosque compound in occupied East Jerusalem, attacking dozens of worshippers in the Qibli Mosque. Israeli police, who claimed they were responding to “rioting”, beat worshippers with batons and used tear gas and sound bombs to force them out of the prayer halls, according to witnesses.Videos shared on social media showed women screaming for help as a small fire erupted in the prayer hall. The Palestinian Red Crescent reported 12 people injured, including three who were taken to hospital. It also said in a statement that Israeli forces prevented its medics from reaching Al-Aqsa. At least 400 Palestinians were arrested and remain in Israeli custody, according to local officials. Israeli police said in a statement that they were forced to enter the compound after “masked agitators” locked themselves inside the mosque with fireworks, sticks and stones.The Israeli police also said that according to a prior agreement with the Al-Aqsa compound authorities, no one was to spend the night inside the compound during the month of Ramadan. “The police said they ‘peacefully’ tried to convince people to leave but when that didn’t happen they forced their way into Al-Aqsa,” said Al Jazeera’s Natasha Ghoneim. But Palestinian Authority Prime Minister Mohammad Shtayyeh condemned what happened as “a major crime against the worshippers”, adding that “prayer in Al-Aqsa Mosque is not with the permission of the [Israeli] occupation … it is our right.” In recent years, the Al-Aqsa Mosque compound has been an annual flashpoint during Ramadan. Last year, more than 300 Palestinians were arrested and at least 170 wounded as Israeli forces launched incursions at the compound during the holy month. This followed deadly violence in the occupied West Bank in late March, in which 36 people were killed. The Al-Aqsa compound sits on a plateau in East Jerusalem, which Israel captured in the 1967 Six-Day War and later annexed in a move not recognised by most in the international community. For Muslims, the compound hosts Islam’s third-holiest site, Al-Aqsa Mosque, and the Dome of the Rock, a seventh-century structure believed to be where the Prophet Muhammad ascended to heaven. The compound is also where Jews believe the Biblical Jewish temples once stood and is known to them as Temple Mount. The contested site has been the focal point of the decades-long Israeli occupation of the West Bank.
Israel attacks Syria and Palestinians as an answer to anti-government protests - The Israel Defence Forces (IDF) have carried out a series of attacks against targets in Syria, criminal acts of aggression in defiance of international law. Part of the US-Israeli covert war against Iran, they were carried out to support US imperialism’s efforts to counter its declining economic and political position in the Middle East and to oppose Iran, which has intervened militarily to defend the Syrian regime of President Bashar al-Assad. According to the Syrian defence ministry, Israel launched “an aerial aggression from the direction of northwest Beirut targeting some outposts in Homs city and its countryside at 00:35 a.m.” on Sunday. The strikes injured five military personnel, reportedly hitting the T4 air base west of the ancient city of Palmyra, as well as the al Dabaa airport near al Qusayr city. This is close to the Lebanese border where Hezbollah, the Iranian-backed bourgeois clerical group, is dominant. Reuters cited sources stating that Iran has military personnel stationed alongside Hezbollah at both airports, while pro-Iranian militias have a strong presence in that area of Homs province. Another target, according to the pro-imperialist London-based Syrian Observatory for Human Rights, was an Iranian facility suspected of developing missiles and drones, where several Iranian-affiliated fighters were allegedly killed. Iranian state media said that on Friday, an Israeli attack near Damascus, the Syrian capital, killed two members of Iran's Islamic Revolutionary Guard Corps (IRGC). In a statement issued Sunday, the Revolutionary Guards said, “The crimes of the Zionist regime will not go unanswered and they will pay for this.” Friday’s attack followed missiles being fired from the Israeli-occupied Golan Heights on targets outside Damascus on the nights of March 30 and 31. While Syrian air defences downed some of the missiles, the strikes injured five Syrian soldiers and caused material damage. It was Israel’s sixth attack on Syria in March, with two separate attacks on Aleppo’s international airport and another on a weapons depot in central Syria that killed a Syrian officer and two Iranian-backed fighters. It follows hundreds of attacks on Syria since the start of the CIA-led proxy war in 2011 to topple the Assad regime, a key Iranian ally. While the IDF originally targeted Hezbollah’s arms convoys, it later extended to Syrian government forces, Iranian-backed fighters and Hezbollah, as well as weapons-production sites, with Israel insisting that it would not allow Iran to operate near its borders. Syria’s civilian airports, including Damascus International Airport, and residential neighbourhoods, have been hit. The attacks on Aleppo’s airport are particularly criminal as it has been one of the main entry points for international aid trying to reach earthquake-hit zones in northern Syria. February’s catastrophic earthquake that struck Turkey has killed nearly 60,000 people, including around 8,500 in Syria, although the number of unreported cases is likely to be far higher than official figures. Millions are suffering from homelessness, hunger and terrible weather conditions in northwest Syria, with many people forced to live in emergency shelters or tents.
Israel ‘Ready’ to Attack Iran Without US Help: IDF Chief –-The head of the Israeli Defense Forces (IDF) said Wednesday that Israel is “ready” to attack Iran and could do so without help from the US.“We are ready to act against Iran. The Israeli army has the ability to strike both in distant countries and near home,” IDF Chief of Staff Herzi Halevi said.The comments come as tensions between Israel and Iran are soaring. Israel has ramped up its airstrikes in Syria and killed two members of Iran’s Islamic Revolutionary Guard Corps (IRGC) in Damascus last Friday. Tehran has vowed that it will respond.Israel has a history of launching covert attacks inside Iran, but it’s not clear if its warplanes could pull off airstrikes against the Islamic Republic without assistance from the US. Halevi insisted that Israel can, as the IDF has been preparing to attack Iran for years.“We know how to act alone. We are a sovereign nation that reserves the right to make its own decisions. It would be good to have the United States on our side, but it is not an obligation,” he said.The US and Israel have been rehearsing for war with Iran by holding massive military exercises. In January, the US and Israel held their largest-ever joint drills in a provocative message aimed at Tehran.Tensions are also soaring in the region due to Israel’s crackdown on Palestinians and Israeli forces raiding the Al-Aqsa Mosque during Ramadan. A barrage of rockets was fired into Israel from Lebanon on Thursday in response. Sources told Reuters the rockets were fired by Palestinian factions based in Lebanon, not Hezbollah. Israel has blamed Hamas, signaling a potential escalation in Gaza.
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