US oil prices finished the week lower for the first time in five weeks as a fear of an interest rate hike induced recession outweighed falling oil supplies and stronger than expected economic reports …after rising 2.3% to $82.52 a barrel last week after reports showed that US inflation was moderating, and as international agencies forecast record demand amid tight supplies for later this year, the contract price for the benchmark US light sweet crude for May delivery dipped below $82 a barrel early on Monday as a rallying U.S. dollar and worries about stuttering economic growth countered warnings from the International Energy Agency of higher prices ahead, then sold off to $80.61 in early afternoon trading amid strengthening of the U.S. dollar as traders bet the Fed would raise interest rates in May by another quarter of a percentage point, and settled down $1.69 or 2% at $80.83 a barrel after New York manufacturing activity unexpectedly strengthened in April, lifting the odds for two more rate hikes from the Fed….oil prices steadied in Asian trading early Tuesday on news that China's economy grew at a faster-than-expected pace in the first quarter, but resumed their downward trend early in the New York session as the market’s focus on a possible increase in U.S. interest rates and wider concerns over the growth outlook more than offset any of its earlier gains on strong Chinese economic data, but later bounced off the day's low and rallied to settle 3 cents higher at $80.86 a barrel as the dollar eased following the upbeat China data, which made commodities priced in dollars less expensive for buyers with other currencies.…oil prices fell early on Wednesday as recession fears resurfaced following the latest hints from the Fed that one more rate hike could be coming in early May, intensifying concerns about a material economic slowdown that would weigh on oil demand, but rebounded after the initial downthrust after the EIA reported a notable drawdown of commercial crude supplies and the SPR saw its 3rd weekly drain in a row, but again turned lower and slid $1.70 or about 2% to a two-week low of $79.16 a barrel, as the U.S. dollar strengthened on fears of looming Fed interest rate hikes, which would curb energy demand....oil prices opened lower and remained on its downward trend ahead of the May contract’s expiration on Thursday, as a stronger dollar and rate hike expectations continued to weigh on the market, as the May contract expired $1.87 lower at $77.29 a barrel, while the more actively traded contract for US crude for June delivery also settled $1.87 lower at $77.37 a barrel as a firmer dollar and rate hike expectations outweighed lower U.S. crude stocks....with the contract price for the benchmark US crude for June delivery now being quoted, oil prices extended the two-day streak of losses early Friday, as market sentiment remained bearish after weak European and U.S. economic data, while technical traders warned a correction would push oil prices even lower. but turned higher and settled with a 50 cent gain to $77.87 a barrel after U.S. manufacturing data for the month of April surprised to the upside...however, oil prices still finished 5.4% lower for the week, while the June contract, which had closed the prior week at $82.43, settled 5.5% lower...
On the other hand, natural gas prices finished higher for the second time in seven weeks on colder near term forecasts, declining production, and a record pace of LNG exports... after rising 5.1% to $2.114 per mmBTU last week as warm April forecasts shifted cooler and shortsellers took profits, the contract price of US natural gas for May delivery opened 15 cents higher on Monday, as short-term US forecasts trended colder for the middle of April, and held near that level through most of the session to settle 16.1 cents or nearly 8% higher at a three week high of $2.275 per mmBTU, as the amount of gas flowing to U.S. LNG export plants remained on track to hit a record high for a second month in a row...natural gas prices slipped early Tuesday even as weather models maintained a chilly forecast for the late-April period, but rallied to finish 9.1 cents higher at a one-month high of $2.366 per mmBTU on a decline in daily output and forecasts for more cold weather and heating demand over the next week or so than was previously expected.... however, natural gas prices opened 8 cents lower and fell from there on Wednesday, as traders seemingly waited for further support behind the forecast for below-average temperatures for the coming weeks, and settled 14.4 cents lower at $2.222 per mmBTU on forecasts confirming the weather will remain mostly mild and heating demand lower than usual for the next two weeks ....natural gas prices opened two cents higher on Thursday, but quickly turned negative ahead of the gas storage report, which was expected to show a larger than normal increase in inventories, but recovered late in the session to settle 2.7 cents higher at $2.249 per mmBTU, as confidence grew regarding the forecast for below average temperatures expected to close out the month...however, natural gas prices slipped on Friday on forecasts for milder weather and less heating demand to settle 1.6 cents lower at $2.233 per mmBTU on the day, but still managed to post a 5.6% gain for the week...
The EIA's natural gas storage report for the week ending April 14th indicated that the amount of working natural gas held in underground storage in the US rose by 75 billion cubic feet to 1,930 billion cubic feet by the end of the week, which lifted our natural gas supplies to 488 billion cubic feet, or 33.8% above the 1,442 billion cubic feet that were in storage on April 14th of last year, and to 329 billion cubic feet, or 20.5% more than the five-year average of 1,601 billion cubic feet of natural gas that were in storage as of the 14th of April over the most recent five years…we would note, however, that the national average hides that supplies are 53.4% below normal in the West, while 32.7% and 32.9% above normal in the Midwest and South Central areas of the country....the 75 billion cubic foot injection into US natural gas working storage for the cited week was more than the 69 billion cubic feet addition that was expected by industry analysts surveyed by Reuters, and quite a bit more than the 47 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, as well as the average 41 billion cubic feet addition to natural gas storage that has been typical for 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 April 14th indicated that because of a big jump in our oil exports and an increase in our refining, we had to pull oil out of our stored commercial crude supplies for the 4th time in 17 weeks, and for the 12th time in the past 33 weeks, even after a big increase in new oil supplies that the EIA could not account for... Our imports of crude oil rose by an average of 101,000 barrels per day to 6,294,000 barrels per day, after falling by an average of 951,000 barrels per day the prior week, while our exports of crude oil rose by 1,844,000 barrels per day to 4,571,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,723,000 barrels of oil per day during the week ending April 14th, 1,743,000 fewer barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly unchanged at 12,300,000 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 14,023,000 barrels per day during the April 14th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,844,000 barrels of crude per day during the week ending April 14th, an average of 260,000 more barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that an average of 885,000 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 April 14th appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was still 936,000 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 [+936,000] 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 (-324,000) barrels per day, that means there was a 1,261,000 barrel per day difference between this week's oil 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 useless....However, since most oil traders treat these weekly EIA reports as reliable, 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 885,000 barrel per day decrease in our overall crude oil inventories came as an average of 654,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while 230,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time, the third draw on the SPR in 14 weeks on an earlier budget balancing program mandated by congress, and as a result the 367,963,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since November 4th, 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. But those Biden administration releases have amounted to about 42% of what was left in the SPR when they 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 fell to an average of 6,239,000 barrels per day last week, which was 2.3% more than the 6,098,000 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 12,300,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,900,000 barrels per day, while Alaska’s oil production was 16,000 barrels per day lower at 424,000 barrels per day but still added the same 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 6.1% below that of our pre-pandemic production peak, but was 26.8% 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 91.0% of their capacity while using those 15,585,000 barrels of crude per day during the week ending April 14th, up from their 89.3% utilization rate during the prior week, but still close to a normal rate for early Spring... The 15,844,000 barrels per day of oil that were refined this week were 0.8% more than the 15,717,000 barrels of crude that were being processed daily during week ending April 15th of 2022, but 1.5% less than the 16,078,000 barrels that were being refined during the prepandemic week ending April 12th, 2019, when our refinery utilization rate was at 87.7%, a little low for this time of year..
Even with the increase in the amount of oil being refined this week, the gasoline output from our refineries was still lower, decreasing by 343,000 barrels per day to 9,475,000 barrels per day during the week ending April 14th, after our gasoline output had decreased by 33,000 barrels per day during the prior week. This week’s gasoline production was 3.7% less than the 9,836,000 barrels of gasoline that were being produced daily over the same week of last year, and 4.5% less than the gasoline production of 9,917,000 barrels per day during the prepandemic week ending April 12th, 2019. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 167,000 barrels per day to 4,583,000 barrels per day, after our distillates output had decreased by 157,000 barrels per day during the prior week. Even with that increase, our distillates output was still 1.4% less than the 4,816,000 barrels of distillates that were being produced daily during the week ending April 15th of 2022, and 1.5% less than the 4,823,000 barrels of distillates that were being produced daily during the week ending April 12th, 2019...
Even after this week's decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the first time in nine weeks, and for the 22nd time in 61 weeks, increasing by 330,000 barrels to 222,245,000 barrels during the week ending April 14th, after our gasoline inventories had decreased by 330,000 barrels during the prior week. Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 417,000 barrels per day to 8,519,000 barrels per day, and while our imports of gasoline fell by 113,000 barrels per day to 700,000 barrels per day, and while our exports of gasoline rose by 158,000 barrels per day to 943,000 barrels per day. But following eight prior gasoline inventory decreases, our gasoline supplies were 3.9% below last April 15th's gasoline inventories of 8,868,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of the year…
Meanwhile, even with the increase in our distillates production, our supplies of distillate fuels decreased for the 10th time in 16 weeks, falling by 355,000 barrels to 112,090,000 barrels during the week ending April 14th, after our distillates supplies had decreased by 606,000 barrels during the prior week. Our distillates supplies decreased again this week as the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 2,000 barrels per day to 3,765,000 barrels per day, and as our imports of distillates fell by 120,000 barrels per day to 233,000 barrels per day, while our exports of distillates rose by 9,000 barrels per day to 1,149,000 barrels per day.... But even after 61 inventory withdrawals over the past ninety-nine weeks, our distillate supplies at the end of the week were 3.1% above the 108,735,000 barrels of distillates that we had in storage on April 15th of 2022, but are still about 11% below the five year average of our distillates inventories for this time of the year...
Finally, with the jump in our oil exports and the increase in refining, our commercial supplies of crude oil in storage fell for the 12th time in 32 weeks and for the 23rd time in the past year, decreasing by 4,581,000 barrels over the week, from 470,549,000 barrels on April 7th to 465,968,000 barrels on April 14th, after our commercial crude supplies had increased by 597,000 barrels over the prior week. With several large oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories are still about 2% above the most recent five-year average of commercial oil supplies for this time of year, and also about 35% above the average of our available crude oil stocks as of the middle 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 12.6% more than the 413,733,000 barrels of oil we had in commercial storage on April 15th of 2022, but were 5.5% less than the 493,017,000 barrels of oil that we had in storage in the wake of winter storm Uri on April 16th of 2021, and 10.2% less than the 518,640,000 barrels of oil we had in commercial storage as the pandemic took hold on April 17th of 2020…
This Week's Rig Count
The number of drilling rigs active in the US increased for the third time time in the past ten weeks during the week ending April 14th, and were still 5.0% below the prepandemic count, despite increasing ninety-eight times over the past 133 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US rose by 5 rigs to 753 rigs over the past week, which was also 58 more rigs than the 695 rigs that were in use as of the April 22nd report of 2022, but was 1,176 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business. .
The number of rigs drilling for oil increased by 3 to 591 oil rigs during the past week, after the number of rigs targeting oil had decreased by 2 during the prior week, and there are still 42 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 still down 13.5% from the prepandemic oil rig count of 683….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 2 to 159 natural gas rigs, which was also up by 14 natural gas rigs from the 143 natural gas rigs that were drilling during the same week a year ago, even as they are still just 9.9% 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 unchanged at 18 rigs this week, with 17 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 6 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 are now two directional rigs drilling for oil at a depth between 10,000 and 15,000 feet, offshore from the Kenai Peninsula Borough of Alaska...since there was only one rig drilling offshore from Alaska a year ago, the national total of 20 rigs drilling offshore is up from the national offshore count of 13 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 was also one such rig drilling on inland waters...
The count of active horizontal drilling rigs was up by four to 687 horizontal rigs this week, which was also 48 more rigs than the 639 horizontal rigs that were in use in the US on April 22nd of last year, even as it was still only half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014…at the same time, the directional rig count was up by 2 to 48 directional rigs this week, and those were up by 17 from the 31 directional rigs that were operating during the same week a year ago....on the other hand, the vertical rig count was down by one to 18 vertical rigs this week, and those were also down by 7 from the 25 vertical rigs that were in use on April 22nd 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 21st, the second column shows the change in the number of working rigs between last week’s count (April 14th) and this week’s (April 21st) count, the third column shows last week’s April 14th 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 22nd of April, 2022...
We'll again start by checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian... there we find that there were two rigs added in Texas Oil District 8, which overlies the core Permian Delaware, and that rig counts in other Texas Permian Districts were unchanged....since there was also a rig added in New Mexico, where most rigs target the western Permian Delaware, while the national Permian count was only up by two, that means one of those rigs was not targeting the Permian...furthermore, while the Permian rig count was up by two, that was as three oil rigs were added in the basin while a natural gas rig was shut down, leaving the Permian with 4 natural gas rigs and 354 targeting oil...while there were no evident rig count changes elsewhere in Texas, the Eagle Ford shale had a natural gas rig added while an oil rig in the same Texas district was shut down, leaving the Eagle Ford with 8 rigs targeting natural gas and 60 targeting oil...
to account for this week's other evident changes, Oklahoma's count was up by one even as an oil rig was pulled out of the Cana Woodford, so two rigs had to have been added elsewhere in the state in a basin not shown by Baker Hughes; the Mississippian rig removed this week came out of Kansas, while a Mississippian shale rig continued to drill in Oklahoma...meanwhile, it appears the rig added in Colorado was targeting the DJ-Niobrara chalk in Weld county, so the rig pulled out of Wyoming must have been drilling in that basin for the Niobrara rig count to show no change...lastly, both rigs added in Utah were set up to drill directionally for natural gas into the Uintah basin to depths between 10,000 and 15,000 feet...Utah's Uintah is one of the major basins not tracked by Baker Hughes, but it now has 5 natural gas rigs and 8 rigs targeting oil..
DUC well report for March
Monday of the past week saw the release of the EIA's Drilling Productivity Report for April, which included the EIA's March data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (click tab 3)....that data showed an decrease in uncompleted wells nationally for the 31st time out of the past 33 months, as both well completions and drilling of new wells were unchanged in March, remaining well below the average pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 10 wells, falling from a revised 4,686 DUC wells in February to 4,676 DUC wells in March, which was also 5.5% fewer DUCs than the 5,105 wells that had been drilled but remained uncompleted as of the end of March of a year ago...this month's DUC decrease occurred as 989 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during March, unchanged from the number of wells that were drilled in February, while 999 wells were completed and brought into production by fracking them, also unchanged from the well completions seen in February, but up by 109 from the 890 completions seen in March of last year....at the March completion rate, the 4,676 drilled but uncompleted wells remaining at the end of the month represents a 4.7 month backlog of wells that have been drilled but are not yet fracked, down from the 4.9 month DUC well backlog of a month ago, but up from the 7 1/2 year low of 4.4 months of five months ago, despite a completion rate that is now about 20% below 2019's pre-pandemic average...
Oil basin DUCS fell in March while natural gas basin DUCs rose, and four out of seven basins saw DUCs increase....the number of uncompleted wells in the Permian basin of west Texas and New Mexico decreased by 32, from 793 DUC wells at the end of February to 761 DUCs at the end of March, as 432 new wells were drilled into the Permian basin during March, while 464 already drilled wells in the region were being fracked....at the same time, DUCs in the Eagle Ford shale of south Texas decreased by 10, from 423, DUC wells at the end of February to 413 DUCs at the end of March, as 113 wells were drilled in the Eagle Ford during March, while 123 of the already drilled Eagle Ford wells were fracked....in addition, DUC wells in the Bakken of North Dakota were down by 1 to 608 by the end of March, as 80 wells were drilled into the Bakken during March, while 81 of the drilled wells in the Bakken were being fracked.....on the other hand, DUC wells in the Niobrara chalk of the Rockies' front range increased by 15, rising from 704 at the end of February to 719 DUC wells at the end of March, as 117 wells were drilled into the Niobrara chalk during March, while 102 Niobrara wells were completed....at the same time, the number of uncompleted wells remaining in Oklahoma's Anadarko basin increased by 4, rising from 754 at the end of February to 760 DUC wells at the end of March, as 73 wells were drilled into the Anadarko basin during March, while 69 Anadarko wells were completed....
among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, increased by two wells, from 704 DUCs at the end of January to 706 DUCs at the end of March, as 99 new wells were drilled into the Marcellus and Utica shales during the month, while 97 of the already drilled wells in the region were fracked....at the same time, the uncompleted well inventory in the natural gas producing Haynesville shale of the northern Louisiana-Texas border region rose by 12, from 707 DUCs in February to 719 DUCs by the end of March, as 75 wells were drilled into the Haynesville during March, while just 63 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of March, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by 24 to 3,251 DUC wells, while the uncompleted well count in the major natural gas basins (the Marcellus, the Utica, and the Haynesville) was up by 14 to 1,425 DUC wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...
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Gas and oil wells in Ohio are leaking. Who’s responsible for fixing them? | The Statehouse News Bureau -- More than 270,000 oil and natural gas wells dot the landscape of Ohio. They’ve accumulated over centuries and they’ve been a big economic boon for the state since the first one was drilled in 1860. Eastern Ohio is especially attractive for oil and gas drilling because of an energy-producing geological formation there. Known as “Clinton sand,” overlapping layers of shale and sandstone produce trillions of cubic feet of gas.The region boasts 80,000 Clinton wells built to harvest that energy. About half are still active today, but many are in a state of disrepair. They’re rusty, covered in flaky paint, and some leak for years on end with no fix in sight.Rachel Wagoner, a journalist with Farm and Dairy Magazine, spent more than six months investigating this issue for her piece “Failure by design: Leaky gas and oil wells slip through the cracks.” She found that some companies don’t fix leaky wells – or take a long time to do so – despite rules put in place by the Ohio Department of Natural Resources.Though the leaks don’t pose a threat to public safety, they affect the farming industry, and landowners who live nearby are left frustrated by corporate inaction and government bureaucracy.This interview has been lightly edited for clarity and brevity. Interview Highlights: Green water bubbles around a gas well at the edge of Dave McCallion's hay field in Trumbull County. It has leaked like this for years. "[Wells] are leaking and some of them in really spectacular and gross ways. One well [in Trumbull County] really struck me. The well casing is coming up out of the ground. There's water surrounding it and the gas is bubbling up through the water, so it's really gross, brackish. There's green algae in the water. It looks like a witch's cauldron, and it's just constantly bubbling. And that's what it's been doing for over five years now, just bubbling away, letting methane out into the environment."
Ohio judge denies request to halt state park fracking (WCMH) – An Ohio law loosening restrictions on oil and gas companies’ ability to drill under state parks can remain in place for now, a Franklin County judge ruled last week. On April 10, Judge Kimberly Cocroft denied environmental groups’ request that she temporarily block the state’s enforcement of House Bill 507, dubbed the “chicken bill,” whose provisions make it easier for oil and gas companies to get green-lit for a fracking lease in Ohio’s state parks. The lawsuit – filed by the Ohio Environmental Council, Sierra Club, Buckeye Environmental Network and Ohio Valley Allies one day before the law took effect – contends that state lawmakers skirted constitutional requirements when considering HB 507, which plaintiffs say forces state agencies to grant an oil or gas company’s request for a fracking lease, regardless of an applicant’s qualifications. “The vitality of our public lands is essential to our own well-being,” said Nathan Johnson, an attorney and public lands director for the Ohio Environmental Council. “No one wants to experience visual blight or breathe in toxic air pollution when out on the trail. Our parks are often our best refuge for health and relaxation. These public resources must be protected.” Cocroft, however, dismissed the environmental advocates’ claims that expanded drilling could corrupt Ohio’s public land and those who enjoy it.Since HB 507 took effect this month, Cocroft pointed to the fact that no company has submitted a proposal to frack in a state park, according to Ohio Department of Natural Resources spokesperson Andy Chow.Plus, given the “very few leases” that have been granted since 2011 – the year fracking in state parks was first legalized – Cocroft argued that HB 507 does not present an “immediate or irreparable harm” that must be remedied with a temporary restraining order.“The Court finds that any reference regarding an injury to the recreational, cultural, and aesthetic interests in the lands to the plaintiffs’ members is speculative, at best, and does not constitute an immediate and irreparable injury, loss, or damage,” Cocroft wrote.
Church officials, residents continue to discuss proposed natural gas well --Stow -- Dan and Denise Tonelli, residents who oppose the possible drilling for natural gas on the property of Stow Community United Church of Christ, maintain that a gas well could be dangerous. "It is not worth the risk," said Denise Tonelli, whose house on Pilgrim Drive is near the church. David Beck, president of Beck Energy of Ravenna, said his company is following all the legal guidelines in place. Beck said he already has numerous wells operating in the Stow area, among his 300 wells in 10 Ohio counties. No final decision was reached during an informational meeting July 15 at Stow City Hall. About 30 people were in attendance. "We'll meet with the church and discuss where we are," Beck said after the meeting. Beck said the possibility of mandatory pooling, where residents can be forced by a state committee to take part in the natural gas project -- similar to eminent domain, "has been shelved." Beck said his company is insured and bonded. "If a well is not producing, the state requires me to plug the well or they will remove my bond," Beck said. Stow Community United Church of Christ, 1567 Pilgrim Drive, is considering installing a natural gas well, which would allow the church to have free use of natural gas. Gary Aleman, a spokesman for the church, told the audience that the church has been running a deficit budget over the last 10 years, and the average age of its members is 62. "This [a proposed natural gas well] is a risk that we're willing to trying so we can keep our church doors open," Aleman said. "We're trying to raise money, but it's hard." Rich Reinhart, the Stow church's council president, previously said church officials wouldn't be pursuing the project if they didn't believe it was safe.
Ohio oil, gas offer energy solutions - The Toledo Blade - The United States is the world’s top producer of natural gas and oil, and millions of people across our nation and around the world rely on American-made energy to power and heat our homes, cook our food, and fuel our vehicles. Yet, as global demand for more U.S. natural gas and oil grows, a lack of commonsense energy policy, out of date regulations, and opposition to desperately needed infrastructure projects has created a worldwide energy crisis. Fortunately, as policymakers seek solutions to this crisis, they need look no further than Ohio. The American Petroleum Industry recently outlined a three-pronged approach to strengthen U.S. energy leadership to keep pace with demand while creating a lower-carbon future, and Ohio is poised for a leadership position in meeting these goals. First, API’s plan calls for making more American energy. Demand continues to outpace supply in the post-pandemic world, U.S. petroleum exports remain near record levels, and our Strategic Petroleum Reserve crude oil inventories are at the lowest levels since 1983. According to the U.S. Energy Information Administration, natural gas and oil are projected to supply nearly 50 percent of the world’s energy in 2050. Increasing production has never been more important. Ohio produces energy. Ohio’s natural gas production meets more than 70 percent of the state’s primary energy needs. A significant portion of the nation’s third largest shale formation exists in Ohio. The Utica Shale play accounts for almost all the rapid increase in Ohio’s natural gas output, which was more than 29 times higher in 2021 than in 2010, according to the energy administration. Since 2011, the natural gas and oil industry has invested nearly $98 billion in Ohio, according to a recent study conducted by JobsOhio and Cleveland State University. More than $2.5 billion of these investments were made between July and December, 2021. Second, API calls for streamlining the permitting processes to facilitate infrastructure construction such as new pipelines to move energy where it is needed. But permitting delays, prolonged regulatory agency reviews, and needless bureaucratic involvement have rendered many of the projects financially unviable and forced cancellation. In recent years, $34 billion in capital investments have been scuttled by permitting delays harming U.S. competitiveness, economic growth, and energy security. In Appalachia alone, infrastructure projects that could have transported significant volumes of natural gas to regions in desperate need, such as New England, were canceled. The third prong of API’s approach stresses the need to continue to improve the ways we produce and move energy with sound policy that encourages further investment in innovation for carbon capture, utilization, and storage, hydrogen use, and cleaner fuel technology, as well as advancing permitting for low-carbon infrastructure — including pipelines. Ohio is blessed with the resources and geology to take advantage of the next generation of energy production. Of note, Ohio already supports a robust hydrogen economy that cost-effectively generates, stores, and transports hydrogen to an industrial market led by the steel, petrochemical and fertilizer industries. Energy-intensive sectors accounted for one-third of the state’s $639 billion economy in the third quarter of 2022. In addition to Ohio’s natural gas and oil production capabilities and vast reserves, the state has four refineries that process 600,000 barrels of crude oil per calendar day, ranking Ohio as the sixth-largest refining state in the United States. Additionally, the industry operates more than 12,000 miles of pipeline infrastructure, employs more than 420,000 people and contributes $67.4 billion to the Buckeye State’s economy.
Extraction influences seismicity at some hydraulic fracturing sites in Ohio - A decade’s worth of research at oil and gas operations in the central and eastern United States has confirmed that fluid injection from hydraulic fracturing and wastewater disposal can induce seismicity.Now, data from hydraulic fracturing wells in eastern Ohio indicate that extraction activities also can influence the seismicity rate, according to a presentation at the Seismological Society of America (SSA)’s 2023 Annual Meeting. During hydraulic fracturing, well operators inject a pressurized liquid into a rock layer after drilling vertically and often horizontally through the rock. The liquid breaks apart—fractures–the rock layer and allows natural gas or petroleum to flow out more freely. This process can induce seismic activity large enough for people to feel, possibly by increasing fluid pressures within the rock that helps to unlock faults and allow them to slip.When seismologists detected a flurry of seismicity last fall in eastern Ohio, however, there was no clear link to injection, said Michael Brudzinski of Miami University.“The amount of seismicity kind of looked like patterns we would see when an injection operation was ongoing,” he explained. “However, when we asked the regulator what kind of activities were going on, he shared with us that there wasn’t anything new going on.”Puzzled, Brudzinski and his colleagues began to look for other well processes that might influence seismicity. One idea they had was that “fluctuations in the amount of extraction from the reservoir might be influencing when seismicity is occurring,” said Brudzinski.Because fracturing is so pervasive in newer wells, he explained, the amount of oil and gas that can be extracted “is large initially but it diminishes fairly quickly. So sometimes operators will stop extracting for a month or two, then start it up again, and when they start it up again it tends to produce a little bit better.”Comparing seismic data to publicly available oil and gas operations records for the Ohio wells, the researchers saw that the unusual change in seismicity rates was associated with this “charge-up” process. “When a particular well was temporarily halted in terms of their extraction, that’s when we see an increase in seismicity afterward,” said Brudzinski.The researchers also noted an increase in the seismicity rate accompanying initial flowback, when liquid injected for fracturing makes its way back up to the surface when extraction starts after the fracturing process.Extraction-related seismicity isn’t a new finding, Brudzinski said, noting studies of extraction earthquakes at the Groningen gas field in the Netherlands as one example.“But what’s new for us is that we were not really thinking about the extraction process having an influence on seismicity in these cases where injection has been the primary cause of seismicity,” he said.The earthquakes induced by extraction activities in this region are magnitude 2.6 or smaller—large enough to be felt but not damaging. The magnitude distribution of extraction-related earthquakes is similar to the distribution of earthquakes occurring when the wells were initially fractured.
Is there an association between residential proximity to fracking sites and birth defects? - A recent study to be published in the Environmental Research Journal explores the incidence of birth defects in children born to mothers residing within 10 km of fracking sites. Oil and gas development produces a slew of toxic chemicals, more so when produced by unconventional methods. Some of these are known to be teratogens or reproductive poisons.A new study from Ohio, where natural gas production shot up 30-fold in the period between 2010 and 2020, seeks to identify an association between unconventional oil and gas development (UOGD) and birth anomalies. UOGD refers to the “extraction of oil and gas from previously inaccessible reservoirs through the use of directional drilling and high-volume hydraulic fracturing.”, according to the US Department of Energy, Environmental Protection Agency. The most common birth anomaly was hypospadias, followed closely by congenital heart disease and oral clefts. There were over 40,000 births to women living close to UOGD facilities, making up about 4% of the total cohort.The researchers found that children born to women who lived within a 10 km radius of UOGD were at higher odds for certain birth defects, though not for any birth defect overall. The risk of NTDs was increased by almost 60%, and that of limb reduction defects was doubled.Spina bifida risk was also doubled, but hypospadias was reduced by almost 40% following UOGD exposure. The latter was an unexpected finding, perhaps reflecting the presence of androgenic as well as anti-androgenic chemicals in the fracking fluid and wastewater. Earlier studies have not specifically mentioned hypospadias results.Structural defects were not significantly increased overall, but among females, the risk was ~30% higher.The odds for birth defects were higher among births to women living within 5 km of a UOGD plant and if the exposure was in the first trimester of pregnancy. The highest risk was associated with drinking water exposure.Lower-class neighborhoods were at greater risk compared to those with better social advantages. However, rural and urban neighborhoods appeared to be at equal risk. The presence of fine particulate matter did not seem to affect the risk.Our results suggest a positive association between UOGD and certain birth defects, and findings for neural tube defects corroborate results from prior studies.”Living near UOGD wells is associated with spina bifida and with limb reduction anomalies. A new parameter, namely, drinking water exposure to UOGD toxicants, was also presented as being associated with birth defects.This is the only study on the health risks of UOGD in Ohio, despite the boom in its production. Further studies would help frame appropriate guidelines, for instance, on the minimum setback distance from a UOGD well to a receptor, namely, a well that is used for drinking water or a house where people live.At present, Ohio mandates between 50-200 feet distance between a well drilled in a specific direction and the nearest receptor, such as the latter.The current study looked at groups of diagnoses that might have been caused by different mechanisms but presented similarly. This could have biased the results to show a false lack of association. To overcome this limitation, larger sample sizes are necessary to ensure adequate statistical power.Secondly, Ohio has a passive surveillance system, tending to underreport birth defects. This could be corrected by the direct use of hospital records by researchers or by using samples from states with active surveillance systems.Thirdly, serious anomalies that caused miscarriage or fetal death, or neonatal death would not be captured in the present study, causing falsely low estimates of the risk to the fetus, especially if the baby is already anomalous and more vulnerable to health risks because of UOGD toxicant exposure.These results, in conjunction with the broader literature, underscore the need to consider impacts to children’s health specifically when developing or improving public health protections around UOGD.”
Strs Ohio Sells 20% of Holdings in MRC Global Inc. - Strs Ohio, a prominent institutional investor, has significantly lessened its holdings in MRC Global Inc. (NYSE:MRC) by 20.5% in the fourth quarter, according to its recently released SEC filing. The company sold around 15,300 shares during the period, causing a decrease in the number of shares it owns from 74,800 to 59,500. Strs Ohio held approximately 0.07% of MRC Global’s total market value prior to the sale at $689,000. MRC Global is a holding company that offers distribution services for oil and gas pipelines, fittings, valves and other infrastructure services to energy companies operating in industrial plants and gas utility markets around the world. Operating across three main regions: Canada, US and International sectors; it was founded on November 20th of 2006 with its headquarters situated in Houston, TX. The Q4 results were positive for MRC Global – on February 13th they announced their quarterly earnings data showing an EPS of $0.32 per share higher than consensus predictions which was set at $0.28 per share – with an upswing of $0.04 per share since then they have beaten estimates again reinvesting billions back into their technology and marketing strategies as well as hiring new professionals to secure growth plans from this sector aimed towards meeting demands under increasingly rigorous restrictions.
Fracking yields both fears, funding for Pennsylvania public lands - In 2008, former Pennsylvania Gov. Ed Rendell opened 2.2 million acres of state forests to the new, profitable — and controversial — use of hydraulic fracturing to access natural gas in rock formations thousands of feet underground. The Pennsylvania Game Commission, which controls another 1.4 million acres of predominantly wooded land that is open to the public, also jumped on the gas-leasing bandwagon. Together, 255,000 acres among some of the state’s last vast forests have been leased to private industry to extract natural gas by fracking. The contracts have brought in well over $1 billion in revenue for the state and $812 million for the Game Commission. Both say the money has led to benefits for the public and conservation. But others say that clearings for drilling rigs, wastewater holding tanks and hundreds of miles of new access roads and pipelines have fragmented the forests, harmed wildlife and altered the wild character of beloved forests. The debate over benefits and drawbacks won’t end soon, especially as a new state bill aims to lift a moratorium on additional leases in forests managed by the state Department of Conservation and Natural Resources. Meanwhile, about half of the existing leases haven’t become active yet. According to David Callahan, president of the Marcellus Shale Coalition, a gas industry group based in Pittsburgh, drilling on those lands will come.About 1.5 million acres of the DCNR-managed forests lie atop the Marcellus Shale gas formation, which covers about three-fifths of the state.By 2010, two years after Rendell opened the gates for fracking on state land, 35 leases were in place for about 139,000 of those acres. As a result, about 1,900 acres of state forest have been converted to shale gas infrastructure, according to DCNR. That includes 171 well pads, many containing multiple wells. About 172 miles of pipelines have been built through the forests to connect the wells and move gas to markets. Trees were cleared to create approximately 46 miles of access roads, and another 186 miles of existing dirt roads have been widened or had their surfaces hardened with gravel and other fortifying methods. The leases have earned the state $1.3 billion as of 2021, much of it used to fill budget gaps. But that is set to change, as the Pennsylvania Supreme Court ruled in 2021 that drilling revenue must stay within DCNR and be used for conservation. The other main public caretaker of Pennsylvania’s large forests is the Pennsylvania Game Commission. To date, the commission has signed 72 leases on 116,000 acres. All but three are still producing gas. But 48 of the 72 only allow drilling underground from adjacent private properties and do not result in surface disturbance on game lands. Even so, about 1,200 acres have seen trees cut or the landscape altered at 98 fracking sites. So far, the leases have brought in more than $812 million to the Game Commission, an independent state agency that had been facing a fiscal crisis as sales of hunting licenses steadily declined.
Awash in Toxic Wastewater From Fracking for Natural Gas, Pennsylvania Faces a Disposal Reckoning - Gillian Graber considers herself an “accidental activist,” a stay-at-home mom who learned in 2014 that a gas company wanted to drill wells 2,400 feet from her house on the eastern outskirts of Pittsburgh and had a vague notion that fracking that close would be dangerous for her two young children. She started reading everything she could find about the boom in harvesting gas from Pennsylvania’s Marcellus Shale. She soon concluded that she was concerned not just about the drilling itself but also about its toxic byproducts. In the fracking process, millions of gallons of water are tainted first by chemicals used to extract the gas and then by potentially dangerous substances that had been safely sequestered in the shale for millions of years until drillers washed them up. Add to that tons of solid waste that can also be toxic. Wells can produce wastewater for decades. “Holy cow. This is worse than we thought,” she recalls musing after an expert talked to her nascent group of protesters in Trafford, Pennsylvania, about fracking waste. Considering what to do about drilling waste is not for the faint of heart, Graber soon found. A daunting array of agencies regulate the process, but important loopholes remain. Scientists say they need more facts. Activists who fear fracking and seek cleaner energy collide with neighbors who want jobs, and with a powerful industry that provides a lot of them. “It’s an extremely complex web of risk and technology, and there’s a need for very strong regulations and enforcement,” said Amy Mall, a senior advocate on the National Resources Defense Council’s dirty energy team who has studied fracking regulation.The water that comes from gas wells in the Marcellus can contain a long list of substances you’ve probably barely heard of along with poisons like arsenic and naturally occurring radioactive material like radium 226 and 228. It is far saltier than the ocean. That alone makes it deadly to most plants and freshwater life. Some experts and activists fear that an industry producing a trillion gallons a year of wastewater nationwide—2.6 billion gallons of that were churned out in Pennsylvania last year—is heading for a disposal reckoning.
Environmentalists win; company drops plans for $1B gas-fired generating plant in Pa. - Plans for a $1 billion natural gas-fired power generating plant on the site of former railroad yards in a borough northwest of Lock Haven in Clinton County have been scrapped. “It’s a sad and disappointing time,” Michael Flannigan, president and CEO of the Clinton County Economic Partnership, said Friday about the decision of the Bechtel Corp. of Reston, Va. Bechtel cited the ongoing appeals from environmental groups as the reason for discontinuing the project that had been in the planning stages for eight years. The company referred to the appeal filed two years ago by the Clean Air Council, Penn Future and the Center for Biological Diversity over the approval by the state Department of Environmental Resources of the air quality permit. Only recently did the Environmental Hearing Board schedule a hearing on the appeal for later this year. “After more than eight years, we do not see a path to a reasonable conclusion of the project’s air permit appeal and have made the difficult decision to discontinue development,” Bechtel said in a statement. It noted the opponents were poised to appeal any further permit renewals. An environmental hearing judge asked the parties to discuss settlement talks but it was to avail, the company stated. “There was tremendous community and local and state official support for this project. In the end, the delay tactics of the environmental groups won out.” The Clean Air Council, Penn Future and the Center for Biological Diversity praised Bechtel’s decision stating in a release: “After many years of community opposition and nearly two years of litigation, the residents of Renovo can breathe easier.” “Bechtel’s decision to cancel this dangerous plant is a crucial win for the health, welfare and safety of the residents of Renovo, who have been peddled lies about this project’s purported benefits and illegally cut out of the permitting process,” said Joseph Otis Minott, executive director and chief counsel of the Clean Air Council. “It is a win for Renovo and for all Pennsylvanians when we realize that the fracked gas industry doesn’t make sense - from an economic, energy or environmental health perspective,” said PennFuture’s senior attorney Jessica O’Neill. “The cancellation of this proposed fracked gas burning power plant helps move us forward to a future powered by wind and solar power,” said Robert Ukeiley, an environmental health lawyer at the Center for Biological Diversity. “As a great-grandparent, I’m grateful that this power plant didn’t come to fruition because we are now able to protect what is most important - the health of our children,”
What a ‘fossil fuel-free’ redo of the PES refinery looks like – WHYY - At a community summit on the redevelopment of the former Philadelphia Energy Solutions refinery in South Philly Saturday, residents talked about their visions for the site’s future, free of fossil fuels.“People want to live,” said Sylvia Bennett, a longtime resident of the Grays Ferry neighborhood near the refinery and a member of the activist group Philly Thrive. “We’re tired of dying and being sick.” When operating, the PES refinery was the largest oil refinery on the East Coast and the single largest source of greenhouse gas emissions and unhealthy local particulate pollution in Philly. Scientists say the world needs to transition awayfrom planet-warming fossil fuels, and the redevelopment of the former South Philly refinery site is a chance to reenvision a massive piece of old fossil fuel infrastructure.The company redeveloping the site, Hilco Redevelopment Partners, plans to turn it into a warehousing and logistics hub and life sciences campus called The Bellwether District. Activists with Philly Thrive have pushed for fossil fuel-free development at the site, but current plans for the redevelopment — including truck-intensive warehousing— could clash with this vision.
Pennsylvania natural gas production changed little in 2022 - In 2022, Pennsylvania accounted for 19% of U.S. marketed natural gas production, with more natural gas produced than in any other state except Texas. Marketed natural gas production in Pennsylvania fell slightly by 2% to average 20.5 billion cubic feet per day (Bcf/d) in 2022 after reaching an annual high of 20.9 Bcf/d in 2021, according to our Natural Gas Monthly. Natural gas production in Pennsylvania comes largely from the Marcellus shale gas play. In 2022, productivity declines and a plateauing of natural gas takeaway capacity resulted in the small decrease in production of 0.4 Bcf/d in Pennsylvania.Natural gas production in Pennsylvania is affected by drilling activity, well productivity, and the availability of infrastructure to transport natural gas to demand centers. Drilling activity in Pennsylvania, as measured by rig and permit counts in the state, has generally declined over the past 10 years. Pennsylvania averaged 384 permits and 59 rigs per month in 2013, compared with 83 permits and 18 rigs per month in 2021. In 2022, the rig and permit counts increased slightly to average 87 permits and 24 rigs per month.Despite declining rig and permit counts, operators in Pennsylvania have recently increased natural gas production by improving well productivity. Over the past decade, advances in hydraulic fracturing and horizontal drilling led to rapid production growth. An important indicator of productivity is the volume of natural gas that new wells produce during the first six months of drilling. In 2013, a new well’s first six months of production in Pennsylvania averaged 0.7 billion cubic feet (Bcf); by 2021, that number had grown to a record high of 2.2 Bcf. Well productivity fell by 7% in 2022.The required infrastructure to transport natural gas from production regions to demand centers has also grown. Since 2013, about 11 Bcf/d of interstate pipeline takeaway capacity has entered service. Although natural gas pipeline takeaway capacity out of Pennsylvania has grown annually since 2014, the rate of increase slowed in recent years. In 2022, no new interstate pipeline takeaway capacity was added in Pennsylvania. Most interstate pipelines transporting natural gas out of Pennsylvania ran close to maximum capacity in 2022.Several pipeline projects that would expand natural gas takeaway capacity out of Pennsylvania have been proposed to enter service in 2023 or later, including the 1.05 Bcf/d Regional Energy Access Project and the 0.4 Bcf/d Northeast Supply Enhancement Project. Our Natural Gas Pipeline Project Tracker, which is updated quarterly, tracks recently approved natural gas pipeline projects through completion.
Mountain Valley Pipeline gets U.S. Forest Service blessing — again — but still faces legal challenges - On Thursday, the Mountain Valley Pipeline received a little good news to mix with recent legal hurdles: The U.S. Forest Service approved the pipeline to pass through Jefferson National Forest along the West Virginia-Virginia border from Monroe County to Giles County. The Forest Service decision impacts about 3.5 miles of the 303-mile project, which is said to be 94% complete. The Mountain Valley Pipeline project is planned to span approximately 303 miles from northwestern West Virginia to southern Virginia.
Environmentalists: Certified natural gas efforts fail to contain damaging leaks - Environmental groups charge that the oil and gas industry is using promises of a future “green” fossil fuel economy to boost the use of the fuels in the present. The Biden administration is backing a broad expansion of U.S. gas exports and a buildout in the infrastructure needed to produce it. That includes government approval of liquid natural gas plants and deepwater export terminals along the Gulf Coast, in South Florida and in New Jersey. “We know that oil and gas will remain part of our energy mix for years to come,” Secretary of Energy Jennifer Granholm told a leading oil industry event in March. Even by midcentury “we’ll be using abated fossil fuels,” Granholm added, referring to fuels whose carbon cost has been lessened by some technological means. But the oil and gas sector is already building out the infrastructure to sell customers products billed as lower-emission — which may be called “green,” “certified,” “low-carbon,” or “responsibly sourced” gas. Could ‘certified’ gas be a green solution? Companies like the for-profit Project Canary and EO100 and the nonprofit MiQ have pitched their certification of “socially responsible gas” as a win-win solution to the age-old challenge between the need to slow planetary heating and the need for on-demand power. Project Canary CEO Chris Romer has described the certification of gas as a potentially industry-saving step in a climate-conscious world. In April, he told a company interviewer that such documentation is “critical for the industry’s social license to operate” — its ability to persuade regulators, employees and the general public that it should exist at all. That industry had spent much of the 2010s under a growing public relations assault spurred by increasing investigations that its gas polluted far more than had been believed. More than a decade of reporting from West Texas — much of it by Earthworks employees driving around with optimal gas cameras, which can take video of usually invisible methane — has revealed a constant stream of planet-warming gas spilling into the atmosphere. These leaks — which go largely unregulated by the state government — make the Permian Basin, stretching from West Texas into New Mexico, one of the largest sources of emissions on Earth and constitute a growing commercial liability for its gas industry. Natural gas is mostly methane — a pollutant that warms the planet dozens of times more powerfully than carbon dioxide — as well as a spicing of potential carcinogens, as The Hill reported. Its small molecules also leak easily from wellheads, valves and pipelines — leaks which may cancel out any climate benefits of gas over coal, according to a 2018 study in Science. That study also found that the Environmental Protection Agency was likely undercounting methane leaks by 60 percent. And while the International Energy Agency (IEA) found that gas was slightly less carbon-intensive than coal — even with leaks factored in — it also estimated that the world energy industry leaked 135 million tons of methane in 2022. According to U.S. government data, that’s the equivalent emissions of 900 coal plants — or nearly 8,500 gas plants — running year round without producing anything.
Louisiana energy companies wasted $82 million in natural gas, study finds - A new environmental advocacy group analysis released Thursday found Louisiana’s oil and gas industry wasted over $82 million worth of natural gas in 2019, which is more than two-thirds of the state’s yearly residential consumption.Commissioned by the Environmental Defense Fund, the analysis drew gas production data from the U.S. Energy Information Administration and fed it into a peer-reviewed emissions inventory modeling formula, EDF spokesperson Matt McGee said. The goal of the research was to try to determine how much methane, the primary compound in natural gas, is wasted and released into the atmosphere in Louisiana. The waste occurs when gas is flared, vented or leaked from oil and gas infrastructure.Compared with carbon dioxide, methane causes much more harm to the atmosphere in the short term. It traps over 80 times more heat than carbon dioxide over a 20-year period and is responsible for more than 25% of the atmospheric warming the Earth experiences, according to research cited by the United Nations. Natural gas is found at virtually every oil well because it’s a natural byproduct of exploration. But it is colorless and odorless, making it difficult to detect without expensive thermal imaging equipment. Scientists have begun finding significant methane leaks across the globe as such imaging technology becomes more accessible.According to the EDF analysis, Louisiana government missed out on an estimated $2.5 million in lost tax and royalty revenue in 2019 due to the 27 billion cubic feet of oil and gas methane wasted from Louisiana’s 31,000 active onshore wells.“Methane venting and flaring is bad for the environment, bad for the state economy, and bad for the state budget,” the Louisiana Budget Project’s Jan Moller said in an EDF press release. “When the industry is allowed to waste natural gas, it robs the state of important tax revenue, which then has to be made up through other taxes or else leave the state without the revenue it needs to fund critical programs.”
Methane leaks from oil and gas industry are 70% higher than EPA estimates, study shows - Planet-warming methane pollution from the US oil and gas industry was 70% higher than the Environmental Protection Agency’s own estimates between 2010 and 2019, scientists reported Monday.The new study, published in the Proceedings of the National Academy of Sciences, suggests the federal government’s current system for detecting methane leaks from fossil fuel pipes, wells and compressors is inadequate. Several recent studies have shown similar results, and scientists now say the EPA needs to leverage new technology to get a fuller picture of how much of this potent greenhouse gas is escaping into the atmosphere and hold companies accountable for the leaks.Methane, the main component of natural gas and a byproduct of fossil fuel drilling, has more than 80 times the warming power of carbon dioxide in the first two decades it’s in the atmosphere. The oil and gas industry is the main source of global methane emissions, according to the International Energy Agency. Levels have risen precipitously in recent years, and scientists are looking at the gas as a target to cut climate emissions quickly because it has such a powerful warming effect.While researchers used data from satellite instruments to paint a picture of methane leaks across the US, oil and gas operators and the EPA often rely on engineering models and hand-held infrared equipment to track leaks, which experts say is inadequate. “This has been known for a while, at least in the atmospheric science community,” said Daniel Jacob, one of the study’s lead authors and a professor of atmospheric chemistry and environmental engineering at Harvard University. “When we observe methane in the air, we find concentrations much higher than one would expect from the EPA inventories.”In a statement, an EPA spokesperson noted that another recent study found that 2019 levels were on par with the agency’s estimates for that year.“The EPA continues to work through its stakeholder process to review new data from [its] Greenhouse Gas Reporting Program and research studies to assess how emissions estimates can be improved,” the spokesperson said.Experts told CNN Monday’s study points to the need for the agency to adopt better monitoring practices, as technology has advanced by leaps and bounds in the last few years. New satellite instruments can monitor methane leaks with high accuracy from space, and there are emerging remote-sensing technologies that can help pinpoint leaks coming from specific locations.
US natgas jumps 8% to 3-week high on cooler forecasts, record LNG feedgas (Reuters) - U.S. natural gas futures jumped about 8% to a three-week high on Monday on forecasts for cooler weather and more heating demand over the next two weeks than previously expected. Prices also rose as the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants remained on track to hit a record high for a second month in a row in April after Freeport LNG's export plant in Texas exited an eight-month outage in February. Front-month gas futures for May delivery on the New York Mercantile Exchange rose 16.1 cents, or 7.6%, to settle at $2.275 per million British thermal units (mmBtu), their highest close since March 21. That puts the contract close to topping its 50-day moving average, a key point of technical resistance, for the first time since mid-December. On Friday, gas futures fell to a two-week low of $1.946 per mmBtu in intraday trade, while spot gas for Monday at the Henry Hub benchmark in Louisiana collapsed to a 30-month low of $1.87. "As front-month gas prices crumble towards the $2.00/MMBtu threshold, shorts appear to be taking profits and decreasing exposure - potentially narrowing the scope of downward pressure on NYMEX gas futures later this year," Last week, gas speculators cut their net short futures and options positions on the New York Mercantile and Intercontinental Exchanges for the sixth time in seven weeks to their lowest since late March, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report. 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 Monday, the same as its two-week average, according to data provider Refinitiv. Refinitiv said average gas output in the U.S. Lower 48 states rose to 100.1 bcfd so far in April, up from 99.7 bcfd in March. That compares with a monthly record of 100.4 bcfd in January. Meteorologists projected the weather in the Lower 48 states would remain mostly colder than normal from April 17-25 before turning near normal from April 26-May 2. With the weather expected to remain cooler for longer, Refinitiv forecast U.S. gas demand, including exports, would rise from 94.1 bcfd this week to 94.8 bcfd next week. Mostly mild weather during the winter of 2022-2023 allowed utilities to leave more gas in storage than usual. Gas stockpiles were about 19% above their five-year average (2018-2022) during the week ended April 7 and were expected to end about 23% above normal during the warmer-than-normal week ended April 14, according to federal data and analysts' estimates.
U.S. natgas up 4% to one-month high on output decline, cold weather (Reuters) - U.S. natural gas futures climbed about 4% to a one-month high on Tuesday on a decline in daily output and forecasts for more cold weather and heating demand over the next week or so than previously expected. Prices also gained support as the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants remained on track to hit a record high for a second month in a row in April after Freeport LNG's export plant in Texas exited an eight-month outage in February. Front-month gas futures for May delivery on the New York Mercantile Exchange rose 9.1 cents, or 4.0%, to settle at $2.366 per million British thermal units, their highest since March 16. That put the front-month up for a third day in a row for the first time since early March, gaining about 18% during that time. In addition, the contract settled over its 50-day moving average, a key point of technical resistance, for the first time since mid-December. In other news, the U.S. Ninth Circuit Court of Appeals ruled that Berkeley, California, cannot ban gas hookups in new buildings because a U.S. federal law pre-empts the city's rule. Analysts said the California decision could be a blow to numerous state and local gas bans imposed across the country in recent years if upheld by the Supreme Court. "Functionally, however, new construction remains likely to generally favor electricity hookups due to ongoing legal uncertainty and increasing consumer preference for multi-decade assets," analysts at energy consulting firm EBW Analytics said in a note. 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 Tuesday, the same amount it has pulled in over the past two weeks, according to data provider Refinitiv. That was 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 rose to 14.1 bcfd so far in April, up from a record 13.2 bcfd in March. The seven big U.S. LNG export plants can turn about 13.8 bcfd of gas into LNG.
U.S. natgas futures fall 6% on forecasts for mild weather (Reuters) - U.S. natural gas futures fell about 6% on Wednesday from a one-month high in the prior session on forecasts confirming the weather will remain mostly mild and heating demand lower than usual for the next two weeks. That price decline came despite a drop in preliminary daily output and as the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants remained on track to hit a record high for a second month in a row in April after Freeport LNG's export plant in Texas exited an eight-month outage in February. Front-month gas futures for May delivery on the New York Mercantile Exchange fell 14.4 cents, or 6.1%, to settle at $2.222 per million British thermal units. On Tuesday, the contract gained about 4% to close at its highest since March 16. The market has been extremely volatile over the past month or so with the front-month gaining or losing more than 5% on 11 of the past 21 trading days. With gas market volatility rising, shares outstanding in the U.S. Natural Gas Fund climbed to a record 181.3 million on Tuesday, topping the prior record of 176.9 million on April 10. UNG is an exchange-traded fund (ETF) designed to track the daily price movement of gas. Refinitiv said average gas output in the U.S. Lower 48 states rose to 100.2 bcfd so far in April, up from 99.7 bcfd in March. That compares with a monthly record of 100.4 bcfd in January. On a daily basis, however, output was on track to drop about 1.5 bcfd over the past couple of days to a preliminary two-week low of 99.3 bcfd on Wednesday due mostly to declines in Pennsylvania and West Virginia. Analysts, however, noted preliminary data is often revised later in the day. Meteorologists projected the weather in the Lower 48 states would remain mostly near normal through April 4, except for some colder-than-normal days from April 23-25 and May 1-3. With the weather turning seasonally warmer, Refinitiv forecast U.S. gas demand, including exports, would ease from 95.9 bcfd this week to 95.5 bcfd next week due to an expected decline in gas flows to LNG plants. Those forecasts were similar to Refinitiv's outlook on Tuesday.
Natural Gas Futures Prices Slip After EIA Reports Plump Storage Build, Expanding Surpluses - The U.S. Energy Information Administration (EIA) said natural gas storage inventories for the week ending April 14 increased by a larger-than-normal 75 Bcf, indicating that supply/demand balances remain far too loose. The May Nymex gas futures contract was trading slightly lower day/day at $2.210/MMBtu early in Thursday’s session and slipped under $2.200 as the EIA print crossed trading desks. By 11 a.m., the prompt month was at $2.184, down 3.8 cents from Wednesday’s close. After a nearly 36.0-cent rally over the past three trading sessions, natural gas traders had booked profits amid a stable weather outlook and continued soft production. The May Nymex gas futures contract settled Wednesday at $2.222/MMBtu, off 14.4 cents from Tuesday’s close. June futures fell 12.2 cents to $2.395. Cash prices declined across the majority of U.S. locations on Wednesday, but gains out West lifted NGI’s Spot Gas National Avg. up 2.5 cents to $2.210. With production holding below 100 Bcf/d and weather models not deviating from a fluctuating weather pattern the remainder of this month, traders sold off positions as the near-term bearish price outlook remained firmly intact. EBW Analytics Group noted that the halving of demand from Tuesday into the end of the week could have sparked the relapse in the Nymex front month, particularly following the rapid rise over the past three trading sessions. Gas prices could fall further under pressure from the next round of government inventory data. Injection estimates point to the first weekly increase in the storage surplus versus the five-year average in five weeks with the Energy Information Administration’s (EIA) next storage report, to be published at 10:30 a.m. ET Thursday. Injection estimates on Wednesday spanned a 16 Bcf range for the week ending April 14. A Bloomberg survey of 10 analysts had a range of estimates from 64 Bcf to 77 Bcf, with a median of 70 Bcf. Reuters polled 14 analysts, whose estimates ranged from injections of 64 Bcf to 80 Bcf, with a median increase of 68 Bcf. NGI modeled a 66 Bcf injection. Total working gas in storage as of April 7 stood at 1,855 Bcf, which is 460 Bcf higher than last year at this time and 295 Bcf above the five-year average of 1,560 Bcf, according to EIA. Even with several weather systems set to plunge into the Lower 48 in the coming days and weeks, NatGasWeather said surplus may improve only slightly when all are accounted for. Instead, the gas market needs early-season heat to make a more substantial impact on storage inventories. In the South Central region, where the overhang to the five-year average has contracted significantly in recent weeks, strong power burns and near-record LNG demand are driving gas demand. EBW noted that over the past four weeks, the South Central surplus has fallen by 72 Bcf, representing the lion’s share of an 83 Bcf decline in the national surplus.
Natural Gas Futures Slide as Robust Supply Outweighing Late-Season Demand, Strong LNG -Natural gas futures retreated on Friday, with the small loss driven by the continuation of an oversupplied market in the throes of shoulder season. The May Nymex gas futures contract closed out the week at $2.233/MMBtu, off 1.6 cents from Thursday’s close. June futures slid 1.9 cents to $2.408. Spot gas prices were mostly lower, especially out West, sending NGI’s Spot Gas National Avg. down 3.0 cents to $2.130. Coming off a modest gain in spite of the Energy Information Administration’s (EIA) bearish storage inventory data, futures traded mostly in the same band on Friday. This indicates that traders are in a wait-and-see mode to determine the next significant move for futures prices. On one hand, supplies are stout. Production continues to fluctuate in the high 90s Bcf/d to low 100s Bcf/d as pipeline maintenance events temporarily curb gas flows. However, analysts have said a sustained decline below the century mark is needed in order for futures to gain momentum. That’s because storage inventories across most of the United States are sitting well above seasonal levels weeks into the injection season. The surplus to the five-year average is most pronounced in the South Central region, where stocks as of April 14 stood about 33% above the five-year average at 949 Bcf. Midwest inventories also are nearly 33% above the five-year average, while East stocks are about 30% above the norm. However, EBW Analytics Group pointed out that while the surplus in the South Central region is stout, it actually has narrowed for a fifth straight week. Tightening fundamentals driving the contraction include record feed gas demand to U.S. Gulf Coast export facilities along with softening regional production, EBW said. At the same time, particularly weak spot gas prices have rebalanced regional gas builds toward the East and Midwest regions. “From a market perspective, the narrowing surplus in the region home to Nymex benchmark Henry Hub may alleviate oversupply fears and risks of severe price weakness later this year,”
Oil, Gas Drilling Activity In The U.S. Perks Up - The total number of total active drilling rigs in the United States rose by 5 this week, according to new data from Baker Hughes published Friday, after falling 3 last week. The total rig count rose to 753 this week—58 rigs higher than the rig count this time in 2022—still 322 rigs lower than the rig count at the beginning of 2019, prior to the pandemic. Oil rigs in the United States increased by 3 this week after two weeks of declines, landing at 591. Gas rigs rose by 2 to 159. Miscellaneous rigs stayed the same. The rig count in the Permian Basin rose by 2, while the rig count in the Eagle Ford stayed the same. Primary Vision’s Frac Spread Count, an estimate of the number of crews completing unfinished wells fell by 4 for the week ending April 14, to 283. This is 7 fewer rigs than a month ago, and 14 more than a year ago. Crude oil production in the United States stayed the same for the week ending April 14 at 12.3 million bpd, according to the latest weekly EIA estimates. U.S. production levels are up 400,000 bpd versus a year ago. At 12:18 p.m. ET, the WTI benchmark was trading up $0.69 (+0.89%) on the day at $78.06, but down roughly $4 per barrel from this time last week. The Brent benchmark was trading up $0.70 (+0.86%) at $81.80 per barrel on the day, but down more than $4 per barrel from last Friday. WTI was trading at $77.76 minutes after the data release, up 0.50% on the day.
Washington's Biggest Clean Energy Lobbying Group Pushes Natural Gas-Friendly Policy - On two of the most consequential decisions facing Congress and the Biden administration on energy and climate change, the nation’s newest and largest clean power industry group has decisively aligned itself with companies that want to preserve markets for natural gas.To the dismay of some in the clean energy community, the American Clean Power Association, or ACP, has praised House Republicans’ fossil-fuel friendly treatment of permitting reform, or the fast-tracking of big energy infrastructure projects crucial to both oil and gas, and wind and solar, companies. The benefits for clean energy will depend on the details of that policy, now being hammered out in the Democratic-led Senate after House Republicans passed their sprawling energy package as their first piece of legislation in this Congress. The ACP’s new CEO—longtime bipartisanship advocate Jason Grumet—has blasted progressives for their opposition, which he has termed “solution denial.” He portrays them as naive idealists, who fail to recognize that clean energy projects won’t move forward without a compromise that allows fossil fuel infrastructure to advance as well, which he calls the only energy policy that is politically viable in a closely divided Congress. “We’re bringing a lot of carrots to the table, and the carrots are going to rot on the table,” Grumet said recently on the public radio program Living on Earth. “Do we actually care about doing something about climate change? Or do we just want to talk about caring about doing something about climate change?” On another issue that has received less attention but could decide the fate of one of the most lucrative incentive packages from last year’s Inflation Reduction Act—the so-called “clean hydrogen” program—ACP has staked out a position directly at odds with its own wind energy members. ACP is urging the Treasury Department and Internal Revenue Service to adopt lenient accounting rules on clean hydrogen that are supported by its big utility and gas industry members like utility giant NextEra Energy, and the oil and gas behemoth BP. Like these big energy players, ACP argues that “overly burdensome” regulations will make hydrogen production too costly, will discourage investment and slow the pace of hydrogen production. The accounting method ACP favors would allow a large portion of more than $100 billion in tax credits in the program to flow to natural gas interests. Moreover, three separate peer-reviewed academic studies in the past year have concluded that the kind of hydrogen program being championed by ACP could have the perverse effect of generating higher carbon emissions than if there were no federal incentives for hydrogen at all.The most recent of these studies, published in January and led by researchers at Princeton University, showed that federally subsidized hydrogen production from the fossil fuel-heavy locations on the electric grid like Wyoming and Colorado could result in greenhouse gas emissions four times higher than unsubsidized hydrogen production directly from natural gas. Renewable energy industry companies—including some of ACP’s own members, turbine manufacturer Vestas and solar and storage project developer Intersect—have sided with most environmental groups in urging Treasury and the IRS to adopt rules keeping close track of whether hydrogen is produced with carbon-free energy. A tough regulation “is critical to the clean energy industry’s credibility and is essential to secure the emission-reducing intent of the Inflation Reduction Act,” the renewable energy companies said in comments filed with the IRS.
Mad Dog Phase 2 Centerpiece in Gulf of Mexico Starts Oil Production | Rigzone - BP has announced that it has started oil production at the Argos offshore platform in the Gulf of Mexico. In a statement posted on its website, the company noted that the move delivers “more energy at a critical time” and strengthens BP’s position “as a leading producer in the deepwater U.S. Gulf of Mexico”. BP highlighted in the statement that Argos is the company’s fifth platform in the Gulf of Mexico and its first new operated production facility in the region since 2008. Argos has a gross production capacity of up to 140,000 barrels of oil per day and will increase BP’s gross operated production capacity in the Gulf of Mexico by an estimated 20 percent, according to the company, which said it expects to “safely and systematically ramp up production from Argos through 2023”. In the statement, BP described Argos as its most digitally advanced platform operating in the Gulf of Mexico and as the “centerpiece” of its Mad Dog Phase 2 project, which it noted extends the life of the “super-giant” oil field discovered in 1998. Argos operates in 4,500 feet of water about 190 miles south of New Orleans and will support 250 permanent jobs, according to BP. Starlee Sykes, BP’s Senior Vice President of Gulf of Mexico and Canada, said, “safely starting up the Argos platform is an incredible milestone for BP and a proud moment for our team who delivered the project with an impeccable safety record”. “Producing some of BP’s highest value, lowest operational emissions barrels, our Gulf of Mexico business has an important role to play in delivering the energy the world needs. I am grateful to everyone who worked on Argos over the years - from discovery to start-up,” Sykes added. BP’s Mad Dog asset partner, Woodside, confirmed the start-up of the Mad Dog Phase 2 project in a statement posted on its website, describing the development as a “significant addition” to Woodside’s Gulf of Mexico position. In the statement, Woodside CEO Meg O’Neill said production start-up from Mad Dog Phase 2 demonstrates the ongoing value being delivered by Woodside’s merger with BHP’s petroleum business in 2022.
They cleaned up BP’s massive oil spill. Now they’re sick – and want justice -- After 18 rounds of chemotherapy, Samuel Castleberry is tired. If it were up to him, he’d still be working his trucking job. The 59-year-old was making a decent living and felt fit. But in June 2020, he was diagnosed with prostate cancer, which has already spread to his liver. Now he gets out of breath wheeling his garbage can to the curb at his home in Mobile, Alabama. Floyd Ruffin, 58, grew up around horses in Gibson, an unincorporated community in south Louisiana. In 2015, he was also diagnosed with prostate cancer, which has made it uncomfortable for him to ride. Before his prostate was removed, he had dreams of having more kids. Terry Odom, 53, lies awake at night in her home in San Antonio, Texas. She worries that she, too, has cancer. As a chemist she’s used to finding answers, but she can’t figure out why her health is deteriorating. She’s emailed dozens of doctors and researchers in search of answers. “You feel like you might die before your time,” she said. A single disaster unites the three of them. Thirteen years ago, they helped clean up BP’s Deepwater Horizon oil spill, the largest ever in US waters. They rushed toward the toxic oil to save the place they loved, joining forces with more than 33,000 others to clean up our coastlines. Now, they have active lawsuits against BP, saying the company made them sick. Since the cleanup, thousands have experienced chronic respiratory issues, rashes and diarrhea – a problem known among local residents as “BP syndrome” or “Gulf coast syndrome”. Others, like Castleberry and Ruffin, have developed cancer. The valor displayed by cleanup workers was comparable to the heroism of first responders during the 9/11 terror attacks, who ran to the World Trade Center to save people and breathed in toxic dust and fumes, said the Alaska toxicologist Riki Ott, who became involved in advocating for oil spill cleanup workers after the 1989 Exxon Valdez spill in Alaska. “What resident and professional oil spill responders do is exactly what professional firefighters and emergency responders everywhere do: put their lives on the line to protect ours,” she said. But while those who responded to the deadliest single terror attack in American history have been rightly cemented into public memory, coastal workers in some of the poorest parts of the country – those who laid their bodies on the line following the worst industrial catastrophe in a generation – have faded away, unrecognized and left to fight for themselves.
A U.S. Shale Job Boom Is Coming - Rising oil and gas production in the U.S. shale patch is expected to bring higher wages for workers in the sector as companies need to attract more labor in an already tight market, energy research firm Rystad Energy says. Wages are set to grow through the end of 2024, due to the tight labor market, retirements in the industry, and competition from clean energy jobs, Rystad Energy said in a new report quoted by the Journal of Petroleum Technology. Average wage growth is expected at 2.5% and 7.2% in 2023 and 2024. Wages have already grown in the key shale basins, including the Permian, the Eagle Ford, Haynesville, Williston, and Appalachia, according to Rystad Energy. Those areas saw on average over 9% growth in wages in 2022.The growth in wages has increased the budgets of the operators in the shale patch and contributed to cost inflation.According to the Dallas Fed Energy Survey for the first quarter, executives at Permian operators saw oil and gas expansion stall amid surging costs and worsening outlooks.The aggregate wages and benefits index edged higher, to 43.6 from 40.2, according to the survey.Asked about what changes they expect in the workforce at their company from December 2022 to December 2023, more than half of the executives — 55% —expect their headcount to remain unchanged from December 2022 to December 2023. However, 37% of executives expect the number of employees to increase, of which 4% expect a significant increase and 33% anticipate a slight increase. Only 8% anticipate the number of employees decreasing over the period, according to the survey.Whereas the most-selected response among E&P firms was for employment to “remain the same” in 2023, the most-selected response of support service firms was for employment to “increase slightly” in 2023, the poll found.One executive at a services firm said in comments to the survey, “Regulatory uncertainty is a major overhang. Labor remains tight, with continued wage pressures. Supply-chain issues remain.”
Why 2 gas giants aren't changing after Southwest winter storms - Legislators and regulators vowed two years ago to hold energy companies accountable after Winter Storm Uri caused power outages across the central United States. But in Texas and Oklahoma — the largest natural gas-producing states — investigations into actions during the storm have sputtered. That has left the two gas giants potentially unprepared for future storms, raising concerns that there could be a repeat of the 2021 crisis, which led to more than 240 deaths in Texas alone. Without more federal action, states have been left to investigate and police actions taken by natural gas companies during the 2021 disaster. A number of gas sellers reported record profits after Uri, while many customers will be paying off billions of dollars of debt for years as utility companies pass along costs from the freeze in monthly bills. The lack of action by the two states shows the challenge governments across the country face as they prepare for extreme weather events while still working with energy companies that deliver natural gas. “The industry is very well insulated politically in Texas, and there’s lots of reasons for that: the number of jobs it creates, the revenue it generates and politicians they’re associated with give them a lot of pull in the Legislature,” said Brandon Rottinghaus, a professor of political science at the University of Houston. The chief financial officer of natural gas producer Comstock Resources Inc. said in February 2021 that the storm was “like hitting the jackpot” and that it was able to sell its product at “super-premium prices.” A BloombergNEF analysis found gas sellers in Texas made $11 billion in the five days during the storm. Oklahoma’s attorney general said he’s still investigating whether to act. In Texas, several bills that would make in-state natural gas transactions more transparent and give the state more authority to investigate and prosecute price gouging or market manipulation have been referred to legislative committees. Lawmakers, people affected by the high prices and political scientists say it’s unlikely that gas companies in the two states will face stiff new oversight despite industry failures as temperatures plunged below freezing. State courts have taken some steps. A Texas appellate court ruled in March that the state’s Public Utility Commission erred in raising the price of electricity to the then-maximum price of $9,000 a megawatt-hour during the storm. It remains to be seen how much money customers may be able to claw back. But Texas’ governor “has declared the problem has been solved,” Rottinghaus said. “Passing a bill relating to natural gas markets now or natural gas prices during the freeze backtracks on that.”
What Caused the Texas Sinkhole? Some Residents Blame the Oil Industry -About 15 years after residents of Daisetta, Texas witnessed the formation of a massive sinkhole back in 2008, yet another has collapsed adjacent to the first. Measuring at a length of almost 230 feet, and a depth of nearly 30 feet, environmental scientists worry the sinkholes may multiply or grow. Some believelocal oil production could be to blame — but does fracking cause sinkholes?"On Sunday, April 2, 2023, a sinkhole formed on the northwestern flank of the Hull salt dome in the city of Daisetta, Texas," reads a report written by the Bureau’s State of Texas Advanced Resource Recovery(STARR) program following its collapse. "This nearly circular sinkhole, having a water-filled diameter of about 70 meters (almost 230 feet), is located adjacent to the southwestern edge of the larger 2008 Daisetta sinkhole."Fortunately, the team doesn't expect the sinkhole to grow, for now."The collapsed area could also not expand much beyond its current extent (similar to the limited growth of the larger 2008 sinkhole)," it continues. "Future collapse similar to that observed in 2008 and 2023 is also possible in adjacent areas along the steep flank of the salt dome. Further investigations are recommended to better understand the cause and mechanism of collapse to minimize risk associated with similar possible future events." Though it may get worse as gas production continues.
Bureau of Land Management Seeks Public Comment for Proposed Oil Lease Sale | Rigzone - Earlier this month, the Bureau of Land Management (BLM) announced that, “consistent with the direction in the Inflation Reduction Act”, its Nevada State Office had released an environmental assessment analyzing four parcels for a proposed competitive oil and gas lease sale in July. The BLM outlined that the four parcels are located within Nye County, Nevada, and comprise 4,270 acres. The organization noted that it completed scoping on these parcels on December 21, 2023, and said it now seeks public comment on the environmental analysis. The public comment period will end on May 4, 2023, BLM highlighted. “The most valuable public comments are practical and relevant to the proposed action,” BLM said in a statement posted on its website. “For example, comments may question, within reason, the accuracy of information, methodology or assumptions, then present reasonable alternatives to those already analyzed,” the BLM added. “Comments containing only opinions and/or preferences, or those seeming similar to other comments will not be addressed specifically in the environmental review process,” the organization went on to state. The BLM noted that this lease sale will include updated fiscal provisions authorized by Congress in the Inflation Reduction Act. Minimum bids for all offered parcels will be $10 per acre, an increase from the $2 per acre minimum bid set in 1987, and royalty rates will be 16.67 percent, up from the previous minimum of 12.5 percent, the BLM pointed out. The organization also stated that rental rates will be $3 per acre for the first two years; $5 per acre for years three through eight; and $15 per acre for years nine and ten. Prior to the Inflation Reduction Act, rental rates were $1.50 per acre for the first five years and $2 per acre for each year thereafter, the BLM highlighted. On March 31, the BLM announced that its Montana-Dakotas State Office had opened a 30-day public scoping period to receive public input on 68 oil and gas parcels, totaling approximately 25,759 acres, which it said may be included in a scheduled September 2023 lease sale. On the same day, the BLM Wyoming State Office announced that it had issued an environmental assessment and a competitive sale notice for a second quarter competitive oil and gas lease sale. The posting of the sale notice initiated a 30-day public protest period that ends May 1, BLM revealed. On March 17, the BLM revealed that its Wyoming State Office had opened a 30-day public scoping period to receive public input on 47 oil and gas parcels, totaling 46,327.60 acres, which it said may be included in an upcoming lease sale. On March 10, BLM Wyoming announced that it had released an environmental assessment analyzing 115 oil and gas parcels, totaling approximately 95,419 acres, for a proposed lease sale that would be held in September 2023. The release started a 30-day public comment period, which ended on April 7, the organization outlined. Also on March 10, the BLM Eastern States Office revealed that it had released two environmental assessments analyzing an oil and gas parcel in Michigan, totaling 40 acres, and three parcels in Louisiana, totaling 88.81 acres, for proposed lease sales that would be held in June 2023. The BLM initiated a 30-day public comment period on the environmental assessments, parcels, and potential deferrals, which closed on April 9, the organization highlighted. Again on March 10, the BLM Montana-Dakotas State Office announced that it had released an environmental assessment analyzing 51 parcels, totaling 20,722.22 acres, for a proposed June 2023 competitive oil and gas lease sale. The release of this environmental assessment started a 30-day public comment period, which ended April 10, the BLM outlined. The BLM manages more than 245 million acres of public land located primarily in 12 western states, including Alaska, on behalf of the American people, the organization states on its website.
TC Energy says Keystone oil spill caused by fatigue crack --Canada’s TC Energy on Friday said a 14,000-barrel oil spill from its Keystone pipeline in rural Kansas in December was primarily due to a progressive fatigue crack, which originated during the construction of the pipeline. The Calgary-based company released the findings after receiving an independent third-party root cause failure analysis (RCFA), as required by regulators. Keystone’s spill into a Kansas creek was the biggest U.S. oil spill in nine years and prompted a 21-day shutdown of a portion of the 622,000 barrel-per-day pipeline, which ships crude from Alberta to U.S. refineries. TC said it has recovered 98 per cent of the spilled product from the pipeline and cleaned up 90 per cent of the Mill Creek shoreline. “We are unwavering in our commitment to fully remediate the site and are taking action on the recommendations from the RCFA,” said Richard Prior, president of liquids pipelines at TC Energy in a statement. The company said it is now investigating other sites along Keystone with similar characteristics, performing extra inspections on 300 miles (482 km) of the pipeline, and reviewing design guidelines, construction and operations. TC said the RCFA report found the fatigue crack came from a girth weld connecting a manufactured elbow fitting to the section of pipe constructed across Mill Creek. The girth weld was completed at a fabrication factory and met applicable standards. During construction, the pipe segment came under “bending stresses” that initiated a crack in the girth weld and also led to a deformation in the elbow fitting and a wrinkle in the adjacent piping, TC said. The design of the weld transition made the pipe in that location more susceptible to bending. “This resulted in the initiation of a circumferential crack in the weld, which led to failure through operations after over a decade,” TC said. The company said the RCFA findings are consistent with its own investigation released in February. TC also noted the segment of pipeline where the leak occurred had always operated within its temperature and pressure design limits, and never exceeded 72 per cent of its Specific Minimum Yield Strength (SMYS).
The US Oil Pipeline With The Worst Spill Record - Following a serious rupture of the Keystone pipeline in Kansas this past December, the Federal government last month announced that stricter regulations were on the way, targeting Canada’s TC Energy Corp., the operator of the infamous pipeline. The rupture this past winter dumped 14,000 barrels of heavy crude, some of it into a creek, in the largest U.S. oil spill in nearly a decade. The new regulations would require TC Energy to reduce the pipeline’s operating pressure. The temporary shutdown resulting from the December rupture interrupted the flow of this critical artery through which 622,000 barrels of heavy crude oil flows daily from Alberta, Canada, to U.S. refineries and oil farms as far south as Houston. (Also see, cities with the most land flagged for hazardous waste cleanup.)The rupture, caused by faulty welding and stress fatigue on the pipe, was of the biggest spill in the company’s 71-year history. The 2,600-mile pipeline has had 22 accidents since its first phase went online in 2010, according to a report last year from the U.S. Government Accountability Office.Unfortunately, Keystone’s track record is actually about on par for the industry, which experiences dozens of “significant” oil pipeline incidents every year, according to data collected by the U.S. Pipeline and Hazardous Materials Safety Administration. To determine the U.S.-based pipelines that have leaked the most oil since 2010, 24/7 Wall St. examined press coverage from Bloomberg and other local and national news sources. Revenue and profit figures for the publicly listed companies operating the leakiest oil pipelines in the U.S. were taken from 2021 annual regulatory filings.Many of these spills are relatively small, but some are significant enough to cause property and environmental damage as well as, occasionally, the loss of life. Of Keystone’s 22 accidents reported by the GAO, six were large enough to impact people and the environment. The Kansas spill helped put the Keystone Pipeline at the top of the list of the five leakiest crude oil arteries in the country. The five based pipelines listed have spilled nearly 92,000 barrels (3.8 million gallons) of crude in various incidents since 2010.
DOJ reaches multimillion-dollar settlements against gas companies it says were failing to control harmful leaks --The Justice Department reached multimillion-dollar settlements in three major lawsuits against US oil and gas companies Thursday that it says will reduce air pollution and planet-warming gas emissions in a dozen states and Indian Country.The settlements aim to resolve claims that several large companies were using faulty equipment to manufacture and refine natural gas, failed to control leaks and allowed hazardous air pollution to seep into the atmosphere in violation of the Clean Air Act standards set by the Environmental Protection Agency.Each settlement is still subject to approval by a federal judge and will undergo a 30-day public comment period.As part of the settlements, the companies will spend approximately $16 million combined on repairs, upgrades and other ways to fix the problems, according to the department. The details of the settlements were shared first with CNN.The agreements are a major move in the Justice Department’s effort to prioritize mitigation efforts as part of environmental lawsuits related to the climate crisis – and signal a willingness to target large fossil fuel companies.The department has undertaken an environmental justice effort to involve communities impacted by the climate crisis in understanding how company practices are contributing to the harmful personal effects of climate change.Nearly 36% of Americans live in areas with unhealthy air quality, according to the American Lung Association, and low-income communities and communities of color face disproportionate risks from pollution and the impacts of the climate crisis, scientists and health experts have reported.“Having these Clean Air Act rules on the books, having state leak detection rules on the books, and actually enforcing this is sending a message to this entire industry that this matters, and we need you to be paying attention to these leaks,” Kate Konschnik, the principal deputy assistant attorney general for the Justice Department’s Environment and Natural Resources Division said in an interview with CNN Thursday.“We expect you to do what is necessary to protect human health and the environment,” Konschnik said.
Xcel pushing measure that has raised gas bills in Minnesota, scrapped in other states -Xcel Energy is fighting the scheduled sunset of a Minnesota law that enables utilities to charge customers hundreds of millions of dollars for fossil gas infrastructure upgrades without standard regulatory review, an approach ended in other states amid concerns that such programs significantly increase utility bills and undercut climate goals.Passed in its current form in 2013, Minnesota’s Gas Utility Infrastructure Cost rider – known as GUIC – was designed to fast-track the most critical improvements to an aging fossil gas pipe network, then expire in June 2023. Over the past decade, utilities have used the rider to recoup from customers the costs of replacing thousands of miles of the oldest, leakiest pipes, delivering on a promise of safety improvements and reduced methane emissions from leaks.With the most urgent upgrades made and state policy now prioritizing a transition away from the use of methane/fossil gas, critics say the provision should sunset on schedule to avoid inflating customers’ rates and padding utilities’ profits. But Xcel is pushing legislation to extend GUIC for five more years and the bill has quietly edged its way into Minnesota House and Senate omnibus energy bill discussions, set for debate in the coming weeks. Whether GUIC is in place or not, utilities have a duty to provide safe, reliable service. But the rider offers them wide latitude to invest customers’ money in fossil gas projects and collect a return for themselves. Without the rider, utilities would need to demonstrate the need for such expenditures in a traditional regulatory process before the Minnesota Public Utilities Commission, like a rate case that has significantly more oversight.
California city can't enforce natural gas ban, appeals court says (Reuters) - Berkeley, California, cannot ban natural gas hookups in new buildings because a U.S. federal law preempts its rule, a federal appeals court said Monday, siding with a challenge the state's restaurant industry made. The 9th U.S. Circuit Court of Appeals in San Francisco said Berkeley's 2019 ban on new gas hookups effectively barred appliances that use the fuel, and that the U.S. Energy Policy Conservation Act preempts such a move. The federal appeals court is the first to weigh in on bans against new natural gas hookups. New York City, San Francisco, San Jose and Seattle are among dozens of U.S. municipalities that have enacted similar restrictions since Berkeley adopted its rule, citing environmental and health concerns. The California Restaurant Association challenged the ban in court in 2019 alongside other industry groups including natural gas utilities and homebuilders, claiming the ordinance would introduce major costs and burdens. The restaurant group said the ban would mean restaurants can no longer prepare popular dishes. A spokesperson for the restaurant association welcomed the 9th Circuit decision, saying Berkeley's ordinance "is an overreaching measure beyond the scope of any city."
Appeals court tosses California city's ban on natural gas connections — A federal appellate court in California ruled Monday that a ban on natural gas hookups in Berkeley, Calif., is not allowed under federal energy laws. The ruling came as cities and towns across the country have forbidden the construction of new buildings with natural gas systems, as they seek to battle climate change. Such measures could reduce demand for natural gas from producers in states like Texas.A three-judge panel on the Ninth Circuit Court of Appeals found that Berkeley's ban on natural gas systems was preempted, or superseded, by the Energy Policy and Conservation Act, a 1970's era law designed to conserve American oil and natural gas resources."By its plain text and structure, EPCA’s preemption provision encompasses building codes that regulate natural gas use by covered products,” Judge Patrick Bumatay wrote for the panel. “And by preventing such appliances from using natural gas, the new Berkeley building code does exactly that.”Berkeley's City Council in 2019 approved the ban on natural gas connections in new construction, which took effect in January 2020. That and further local bans on natural gas have drawn regular criticism from suppliers, who say they limited domestic demand at a time hydraulic fracturing and horizontal drilling had opened up vast new gas reserves in the United States.“The U.S. Court of Appeals for the Ninth Circuit took a huge step today that will both safeguard energy choice for California consumers and help our nation continue on a path to achieving our energy and environmental goals,” Karen Harbert, president of the American Gas Association, said in a statement.The ruling stemmed from a 2019 lawsuit by the California Restaurant Association, which had argued that natural gas stoves were "crucial for restaurants to operate effectively and efficiently."Monday's decision also overturned a 2021 ruling by a California federal judge, who had found the gas bans did not preempt federal energy law because they did not "directly regulate either the energy use or energy efficiency of covered appliances.”Some 20 Republican-led states, including Texas, have passed legislation prohibiting bans on natural gas appliances like those that have been instituted in dozens of cities around the country.For natural gas producers and the utilities that distribute their product, which have spent years promoting the climate benefits of natural gas relative to coal, the recent attempts to ban natural gas appliances is an increasing cause of concern. Residential and commercial buildings account for more than 25 percent of natural gas demand, according to the Department of Energy.
What 9th Circuit ruling means for building gas bans --A federal appeals court’s overturning of the nation’s first natural gas ban for new buildings handed a victory to the fossil fuel industry Monday and sparked disagreement over whether similar restrictions should stay in place across the country. The decision from the 9th U.S. Circuit Court of Appeals, which struck down the landmark ordinance in Berkeley, Calif., has unclear ramifications, although some legal scholars expressed concerns that it could have a chilling effect on states and cities pursuing similar bans. The ruling also may not be the final one in the case. Lawyers representing the city of Berkeley did not rule out an appeal, saying they were assessing next steps. Several backers of Berkeley’s ban said they expect the city to challenge the decision. “I worry that state and local governments are going to take a broader view of today’s decision than is actually warranted,” said Amy Turner, a senior fellow at Columbia Law School’s Sabin Center for Climate Change Law, who supported the Berkeley ordinance but did not represent the city. Advertisement Berkeley passed the ban, which prevented builders from installing gas infrastructure in most new projects, in 2019. The California Restaurant Association sued the city soon after, claiming that the ordinance was preempted by federal law and would discourage restaurateurs from opening new businesses. The three judges on the 9th Circuit unanimously sided with the association, finding that the Energy Policy and Conservation Act “expressly preempts” state and local restrictions on gas appliances’ energy use (E&E News PM, April 17). By prohibiting gas piping, the city of Berkeley had indirectly banned gas appliances, despite federal laws against it, the judges wrote.“By completely prohibiting the installation of natural gas piping within newly constructed buildings, the City of Berkeley has waded into a domain preempted by Congress,” wrote Judge Patrick Bumatay.Last year, the Energy and Justice departments, eight state attorneys general and the 2,500-member National League of Cities submitted legal briefs in support of Berkeley’s policy. On the other side of the debate were national trade groups representing the natural gas industry, homebuilders and heating equipment manufacturers (Energywire, Feb. 10, 2022).
Federal appeals court rejects bid by conservation groups to immediately stop work at Willow oil project - A federal appeals court ruled Wednesday that ConocoPhillips can continue its early stage construction work this winter season at the controversial Willow oil project in Alaska, as the broader case brought by conservation groups against the project continues. The U.S. 9th Circuit Court of Appeals said in a single sentence that it was denying the emergency motions seeking to stop the work, which is expected to wrap up by the end of the month. Several conservation groups have filed two lawsuits against the Interior Department to overturn the approval for the project. The decision is another step forward for ConocoPhillips and the $8 billion project. The company is pursuing plans to produce up to 600 million barrels of oil from the giant field over three decades, starting as early as 2029. The administration of President Joe Biden approved the project last month, over arguments from conservation groups that the project is a “carbon bomb” that will undermine the president’s plans to dramatically reduce greenhouse gas emissions. Willow is located on Alaska’s North Slope not far from the Arctic Ocean, about 35 miles west of the village of Nuiqsut, in the Indiana-sized National Petroleum Reserve-Alaska. ConocoPhillips has said it will extract gravel from a mine this month in order to build a 3-mile road toward the Willow project area, among other relatively small, early-stage projects. ConocoPhillips has said it expected to employ about 125 people for the work. Conservation groups that sued issued a statement Wednesday blasting the decision. “This ruling comes as more hard news and demonstrates again how the oil and gas industry exerts so much power over those whose health and food are most impacted and who will most experience the climate harm and disaster this project will fuel,” said Siqiñiq Maupin, executive director of Sovereign Inupiat for a Living Arctic, one of the groups involved in the lawsuits.
ExxonMobil says it plans 'relatively limited' Arctic investment - ExxonMobil told shareholders last week the company doesn’t expect to expand its activities in the Arctic. “Our current investment plans do not include exploration activity within the (global Arctic) region, and we plan relatively limited investment to sustain our existing interests in the region,” it said in an April 13 proxy statement. Exxon has been a major player in Alaska since the dawn of the state’s oil industry. It has a stake in some of the largest oilfields in Alaska, including Prudhoe Bay and Kuparuk, as well as Point Thomson. Exxon also owns a 21% share in the Trans-Alaska Pipeline. Environmental groups trumpeted the news as a sign that next year’s lease sale in the Arctic National Wildlife Refuge will be a bust. “I think it shows that oil companies are losing interest in the Arctic and recognizing that it’s a bad investment and it’s bad business,” said Tim Woody, a spokesman for The Wilderness Society in Alaska. The Wilderness Society, the Sierra Club and other groups have been trying to make the Arctic unattractive to oil companies, in part by pressing major banks and insurance companies not to support industrial activity there. Kara Moriarty, president of the Alaska Oil and Gas Association, said Exxon’s statement does not indicate any change in the company’s strategy for the region. “And it does not say that they have no interest, because if they had no interest, then their assets would be up for sale,” she said. A tax law Congress passed in 2017 requires the federal government to hold a second lease sale in the Arctic National Wildlife Refuge by the end of 2024. The first generated few bids and only a fraction of the revenue that was projected. The only bidder that has kept its leases in the refuge is a state-owned entity, the Alaska Industrial Development and Export Authority.
Canada's Suncor spills 5,900 cubic metres of water from oil sands site – (Reuters) – Canada’s Suncor Energy has reported a spill of 5,900 cubic metres of muddy water from a sedimentation pond at Suncor Energy’s Fort Hills oil sands mining project in northern Alberta. The spill on April 16 was reported to the Alberta Energy Regulator (AER) because the total suspended solids in water exceeded the approved limits, Suncor said. The news comes as oil sands companies face intense scrutiny into how they manage their tailings ponds, which hold a toxic mixture of mining waste products and water. Imperial Oil said in February that ponds at its Kearl site had been seeping for months and another spill released 5,300 cubic metres of process water in late January. “This is not a tailings pond, but a water run off pond that collects and discharges run off into Fort Creek (not directly to the Athabasca), in line with regulatory approvals,” Suncor spokeswoman Erin Rees said in an email. The AER said samples have been collected for analysis.
Peru Finds New Oil Spill Near Repsol’s La Pampilla Refinery -- Peruvian authorities said they spotted a new oil spill near a Repsol SA-operated refinery during a routine inspection, according to a statement. Peru’s environmental authority OEFA said the oil spill at the port of La Pampilla refinery affected a 300 square meter area. It was discovered on April 15 at the multi buoy terminal 2, which is regularly inspected after a major oil spill affected the area last year. Repsol had been required to “immediately and with urgency” report on the causes and measures taken to minimize the impact of the event, environmental officials said. In a later statement, Repsol said the spill was a “migratory stain” with the appearance of burnt fishing and motor oil that wasn’t related to the 2022 spill or with the La Pampilla refinery. The multi buoy has been idle since January last year and is free from hydrocarbons. Clean up procedures have started. Madrid-based Repsol spilled over 10,000 barrels of oil into the Pacific Ocean in January 2022, the largest ever in Peru. The Spanish energy giant operates the La Pampilla refinery, in El Callao province, the Andean nation’s largest that accounts for just over 50% of the country’s refining capacity. The government imposed fines worth about $5.75 million on Repsol over the 2022 accident.
Sinopec Wins Equity Stake in Qatar’s North Field East LNG Expansion --Sinopec becomes the first Asian equity holder in the NFE expansion after having signed a 27-year sales and purchase agreement with Qatar, the longest term in the industry.China Petrochemical Corporation (Sinopec) has become partner No. 6 in Qatar’s North Field East (NFE) expansion, the first and so far, only Asian equity stakeholder to participate in what the industry regards as its largest project to date.Qatar’s Energy Minister and President and CEO of QatarEnergy, Saad Sherida Al-Kaabi, signed the equity-participation agreement with Sinopec Chairman Ma Yong-sheng on 12 April in Doha. Under the agreement, Sinopec will hold a 5% interest in one of the NFE joint-venture companies that own the project, according to a QatarEnergy news release.Sinopec’s stake is the equivalent of one NFE train with a capacity of 8 mpta and doesn’t affect the participating interests of any other shareholder, QatarEnergy said, while Sinopec clarified in its own release that its 5% joint-venture interest represents 1.25% of shares in the overall project.Sinopec now joins a partnership structure announced in summer 2022 in which Shell holds a 6.25% of NFE shares overall, TotalEnergies (6.25%), Exxon (6.25%), Eni (3.12%), and ConocoPhillips (3.12%).Phase 1 of the $28.75-billion NFE expansion envisions four new mega LNG trains with a combined nameplate capacity of 32 mpta to boost production initially by 43% to 110 mtpa from the current 77 mtpa. Two more trains will be added during Phase 2 (known as the North Field South) development to reach a final targeted production of 126 mtpa (up 64%) by 2027, according to QatarEnergy’s current plan.
Asia’s collapsing refinery margins undermine bullish crude case - There is an increasing disconnect between the forecasts for strong global oil demand growth this year, led by Asia, and the reality of weakening margins for refined fuels. The profit from turning a barrel of Dubai crude into refined products at a typical Singapore refinery dropped to $2.53 a barrel on Monday. This was the lowest since Oct. 27 and down 82% from the peak so far in 2023 of $14.33 a barrel on Jan. 25. It is also about a quarter of the moving 365-day average of $10.34 a barrel. The slide in refinery margins comes as OPEC+ producers act to further cut crude supply, a move seen as aimed at asserting the group’s influence in theglobal marketas well as boosting oil prices. The drop in refinery profits is being led by a contracting margin for gasoil, the base for diesel and jet fuel, with 10 ppm gasoil margin dropping for a seventh session on Monday. The margin declined to $14.25 a barrel on Monday, the lowest since January 2022 and down 63% from the peak so far in 2023 of $38.89 on Jan. 25. Given diesel is mainly used as a heavy vehicle transport and industrial fuel, falling margins indicate that sectors such as construction and manufacturing may be starting to come under pressure. It is not just gasoil that is being affected, with the margin on gasoline also dropping. The profit from turning a barrel of Brent crude into the light motor transport fuel in Singapore GL92-SIN-CRK slid to $12.03 on Monday, the weakest since March 7 and down 38% from the peak so far in 2023 of $19.32 on March 30. The falling margins on refined fuels may result in refiners in Asia processing less, especially as crude costs continue to rise. The April 2 announcement by OPEC+, the group consisting of the Organization of the Petroleum Exporting Countries and allies including Russia, that they would cut a further 1.16 million barrels per day (bpd) of output from May has boosted oil prices. Global benchmark Brent futures LCOc1 ended at $84.76 a barrel on Monday, having held onto the gains of about $5 a barrel made in the wake of the OPEC+ production decision. The cost of some physical crude for Asian refiners has also risen after top exporter Saudi Arabia hiked its official selling prices (OSPs) for May-loading cargoes for a third straight month. The OSP for the kingdom’s benchmark Arab Light blend was raised to a premium of $2.80 a barrel over the Oman/Dubai, up 30 cents from April-loading cargoes. Saudi Arabia’s pricing moves tend to be followed by other major Middle East exporters, thereby affecting the bulk of seaborne crude shipped to Asian customers. The question for the crude market is whether Asia’s refiners will start to cut throughput in response to the higher crude price and weaker margins on refined products.
Tanker Company Moving Russian Oil Loses Insurance on G7 Cap --An oil tanker company heavily involved in moving Russian oil lost industry standard insurance for its fleet after falling foul of a Group of Seven price cap relating to the transportation of the nation’s barrels. Gatik Ship Management lost so-called protection and indemnity cover that was provided by the American Club, a person familiar with the matter said, declining to be identified discussing sensitive information. The cover protects against risks including collisions and spills. The cover was terminated because the American Club was informed that Gatik intended to transport barrels bought at prices above the threshold, the person said. The American Club confirmed the discontinuation of cover. It declined to comment on why. Since early December, companies in G-7 countries have only been allowed to provide services for Russian oil if the cargoes cost $60 a barrel or less. While the threshold initially appeared to prioritize the continuation of Russian oil flows, the cessation of Gatik’s cover shows the measures have some teeth. On Monday, the US government warned that some oil tankers shipping Russian crude in Asia are using deceptive tactics to evade the Washington-led price cap on the country’s exports. The American Club is one of 12 organizations within the International Group of P&I Clubs, which collectively provide industry standard cover that serves as a passport to trade freely. Gatik, which has an address in Mumbai according to the Equasis international maritime database, is one of a handful of tanker companies that sprang up out of nowhere when the west began ratcheting up sanctions on Moscow last year. When Bloomberg visited the address earlier this year, a person from a neighboring office said Gatik had moved out and there was mail strewn on the floor outside. There is no website, phone number, or other means of contacting the firm. The insurance that Gatik lost is important for vessels when they enter ports or sail through key waterways like Turkey’s Bosphorus and Dardanelles shipping straits.
These Five Countries Are Laundering Russian Oil And Selling It To The West -- Five countries have expanded imports of Russian oil in the wake of the Ukraine invasion and refined it into products they are selling to countries that have sanctioned Russian oil, according to a report released today by the Centre for Research on Energy and Clean Air (CREA). Their “laundering” operation is undermining the price cap on Russian oil and fueling the invasion, the analysts say.“This is currently a legal way of exporting oil products to countries that are imposing sanctions on Russia as the product origin has been changed,” according to the report. “This process provides funds to Putinʼs war chest.”CREA identifies China, India, the United Arab Emirates, Turkey and Singapore as “laundromat countries” that increased imports of Russian oil after the Ukraine invasion. They also increased exports of refined products to the “price-cap countries” that sanctioned Russian oil, including the European Union, Australia, Japan, the United Kingdom, Canada and the United States.“The EU, G7 and Australia ... continue to import Russian fossil fuels as refined oil products from third countries and allow transportation on their vessels and insurance,” said Isaac Levi, Energy Analyst and co-author of the report.The EU has been the largest importer of these refined products, according to CREA, followed by Australia. And most of the laundered products are traveling on European ships.Five countries are helping Russian oil evade the cap set by a coalition led by the G7 nations.In the year following Russia’s invasion of Ukraine, the five laundering countries increased seaborne imports of Russian crude oil by 140% over the previous year, according to CREA. They are absorbing 70% of Russiaʼs crude oil exports.Meanwhile, they increased exports of oil products by 26% to price cap-coalition countries. Their exports to non price-cap countries rose only 2%, showing that the price cap-coalition countries drove the increase in oil-product exports from countries importing Russian crude.“Increasing the imports of oil products from the main importers of Russian crude oil undermines the oil sanctions against Russia,” said Lauri Myllyvirta, lead analyst and co-author of the report. “On the other hand, clamping down on this trade is an opportunity to exert badly needed additional leverage and cut off financing for Russia's brutal invasion of Ukraine.”The Russian oil finds its way into the price-cap countries as diesel, jet fuel andgasoil. The EU spent $19.3 billion on products from the countries sourcing the most Russian crude oil in the 12 months after the invasion of Ukraine, according to CREA, followed by:
- Australia, $8.74 billion
- The United States, $7.21 billion
- The United Kingdom, $5.46 billion
- Japan, $5.24 billion
Beetaloo companies urged to consider ‘human element’ of fracking - Australia’s most powerful onshore drilling rig has arrived in Darwin, as a federal inquiry recommended tighter carbon offset regulations and more consultation with local communities before fracking goes ahead in the Beetaloo Basin. Scientists and environmental activists were at Darwin’s port on Wednesday to protest the rig’s arrival. They joined Larrakia traditional owner Eric Fejo, who waved the Larrakia flag and called on companies to “stop ripping the veins out of my mother’s country” while trucks carrying drilling pipes drove past behind him. The owner of the drilling rig, Tamboran Resources, said its size would allow for more efficient operations, and reduce the number of well pads needed to extract gas. The rig’s arrival comes as a long-awaited Senate inquiry report into oil and gas exploration in the NT’s Beetaloo Basin was released. The report called on federal and territory governments to create better frameworks around reducing emissions in compliance with the newly reformed safeguard mechanism. Also among the inquiry’s final 14 recommendations was a call for more consultation with traditional owners and pastoralists. “In addition to these environmental concerns, there is a deeply human element to ‘unlocking’ gas reserves in the Beetaloo,” the report’s concluding comments said. “While certain corporations and local interests, the wider Territory, and the nation as a whole might benefit economically from gas extraction, many local communities in and around the Beetaloo are bearing, and will continue to bear, the brunt of exploration and production activities. “The committee believes it is incumbent on development proponents to clearly identify and articulate the benefits, and ensure they are shared more broadly across the region.” The cross-party inquiry was established in June 2021. Environmental groups, gas industry executives and pastoralists were among those who contributed to the 300-plus submissions. The paper also recommended further inquiries be made into a proposed gas and petrochemical plant at Middle Arm in Darwin Harbour that would likely source supplies from projects in the Beetaloo. Nurrdalinji Native Title Aboriginal Corporation, which represents Beetaloo Basin native title holders, called for a halt to fracking exploration while the report’s recommendations were implemented. “This is an important report because it tells the story of how we never consented to the scale of fracking on our country which gas companies now want,” Nurrdalinji chair Johnny Wilson said. The Senate inquiry also highlighted worries about the impact of gas exploration on groundwater and surface water resources. “In the driest continent on Earth, this is not a trivial concern,” the report said. “It raises very serious questions concerning the sustainability of life and livelihoods in the territorial centre, as well as risking irreversible damage to the culture and identity of First Nations people.” The inquiry’s recommendations come a day after the NT government released its own report into baseline environmental data in the Beetaloo Basin. Geologist Alan Langworthy criticised the government’s Strategic Regional Environmental and Baseline Assessment’s finding of no new risks from fracking. “There are no new risks identified, because we’ve identified all the risks before,” he said. “It doesn’t mean that those earlier identified risks are in any way mitigated against.”
Beetaloo Basin cattle company loses Supreme Court bid to stop fracking exploration - A gas company will be able to continue exploration in the Beetaloo Basin after a cattle company's appeal to stop the activity was dismissed by the Northern Territory Supreme Court. Rallen Australia, owned by the Langenhoven-Ravazotti family, had sought to overturn a February 2022 NT Civil and Administrative Tribunal decision that allowed Tamboran Resources' subsidiary Sweetpea Petroleum to come onto Tanumbirini Station to explore for gas.Justice Peter Barr dismissed all eight grounds of appeal that Rallen's lawyers had argued.The case was seen as a precedent for legal interactions between pastoralists and gas companies because it was the first to test mandatory land access laws introduced in the NT in 2021. Tamboran chief executive and managing director Joel Riddle said in a statement that he was "pleased with the NT Supreme Court's ruling" and was looking forward "to working closely with all our stakeholders in progressing the development of the Beetaloo Basin in a safe and responsible manner"."As the first challenge of the NT government's changes to the legislation and regulations permitting access for exploration purposes, the decision sets an important precedent for future operations across the Beetaloo Basin," he said.
Clean-up removes 400,000 litres of oily water from Poole Harbour after spill - The Irish News - A total of 417,000 litres of oily water and 300 bags of waste have been collected as part of the clean-up operation following the oil leak in Poole Harbour. About 200 barrels of reservoir fluid made up of 85% water and 15% oil were released into Ower Bay last month from q pipeline operated by gas company Perenco, prompting a major containment and clean-up operation to protect the sensitive natural habitats in the area. Now, Poole Harbour Commissioners (PHC) have said that “good progress” is being made and no oil had been spotted outside of the harbour. At least 30 oiled birds have been spotted since the spill although no “serious” bird casualties had been reported, the PHC has said previously. A spokesman for PHC said that the clean-up operation was continuing and although people can enter water in the area and continue fishing, shellfishing was advised against because of health concerns. He said: “Good progress has continued with the clean-up operation since the Perenco oil spill on March 26. “Focus is centred around the site of the leak in Ower Bay and a recovery co-ordinating group has been set up to oversee the remediation of the affected area. “Floating booms remain in place to ensure that oil does not escape in to the wider harbour. “There have been no reports of any oil outside of Poole Harbour and no reports of oil outside of the contaminated site in Ower Bay since April 3. “So far, over 300 bags of oil and contaminated materials have been collected from the beaches as well as 417,000 litres of oil and oily water collected to tankers from Ower Bay. “The clean-up and remediation operation will continue at Ower Bay until the contamination has been fully dealt with.” He added: “Shellfish harvested from Poole Harbour from Sunday March 26 onwards should not be relayed or marketed. “This advice regarding shellfish remains unchanged, due to the difference in metabolism between fish and shellfish.”
Oil spill: CPCL begins removing pipeline along coast in Nagapattinam - Following relentless pressure from the fishing community, Chennai Petroleum Corporation Limited (CPCL) on Tuesday started removing the damaged pipeline carrying crude oil from the ONGC oil wells at Narimanam to its refinery in Nagapattinam along the Pattinamchery coast. The pipeline had developed cracks on March 3 resulting in oil spill which polluted the sea and marine environment. With tension mounting in the fishing community and CPCL failing to fix the cracks, fishermen began protesting to remove the pipeline permanently. Subsequently, district collector A Arun Thamburaj and minister V Meyyanathanvisited the spot and instructed CPCL authorities to give in to the fisher folk's demand. They held peace talks with the fisherfolk from Pattinamchery, Akkaraipettai and Nambiar Nagar in this regard. Finally, CPCL authorities agreed to remove the pipeline permanently by May 31.
Oil spill leaves P130-M damage in Oriental Mindoro town — Pola, Oriental Mindoro has so far sustained around P130 million in damage from the oil spill that spread across the province's waters, Pola Mayor Jennifer Cruz said Monday. “More or less, nasa P130 million ang naapektuhan sa shoreline pa lang natin,” Cruz said in a public briefing. (The damage to our shorelines, at the very least, is at more or less P130 million.) She said that while the volume of oil reaching their area from the sunken tanker MT Princess Empress has been significantly reduced, the town continues to suffer from the effects of the spill. "Simula noong nagka-oil spill ang Pola, kung noon ay 100 percent, ngayon mga 60 to 70 percent na,” she said. (Since Pola was hit by the oil spill, if the damage was initially at 100 percent, now it is around 60 to 70 percent.) Some 4,800 fisherfolk and their families have been affected by the oil spill, a number of whom experienced respiratory illnesses aside from losing their livelihood. “Kasi noong unang bugso talaga ng oil, napakahirap namin. Noong unang 3 days, wala kaming katulong kung hindi iyong ating mga Bantay Dagat, fisherfolk, at naglinis ng dalampasigan; dumating lang sila mga after three or four days na,” she said. (During the first few days of the spill, it was difficult for us. On the first 3 days, we did not have anyone else to rely on except for our Bantay Dagat personnel and fisherfolk to clean our shores. Authorities only came three or four days later.) “So talagang nagkasakit sila, nagkaroon ng respiratory problem. At ngayon ay tinututukan ng ating mga MHO (municipal health office) at doctor iyong 200 plus natin, more or less, 80 na lang ang under observation.” (So they fell ill and suffered respiratory problems. Our municipal health office and town doctor had to look after more than 200 patients. But now only 80 remain under observation.) Meanwhile, the Philippine Coast Guard announced the completion of underwater Remotely Operated Vehicle (ROV) operations conducted by ukada Salvage and Marine Works and U.S. Navy Supervisor of Salvage and Diving (USN SUPSALV). The Japanese Dynamic Positioning Vessel (DPV), Shin Nichi Maru, first deployed ROV Hakuyo on March 21 and it later found 24 sources of leakage. By April 1, DPV Shin Nichi Maru found that 11 out of the 24 previously identified sources remain leaking. On April 2, the USN SUPSALV-contracted DPV Pacific Valkyrie arrived in Calapan to help in the operations. The ROVs capped the oil-leaking sections of the sunken tanker, and both the DPV Shin Nichi Maru and Pacific Valkyrie have already completed their missions and already departed their operation areas as of April 5 and 7, respectively. PCG said that their is still one remaining pressure valve producing a "slow intermittent release of oil" and it was not capped "due to obstructions that may compromise the ROV operations." On Saturday, President Ferdinand R. Marcos Jr. conducted an aerial inspection of the area to assess the extent of damage caused by the oil spill. He also led the distribution of aid to some 1,200 beneficiaries in Pola. The Bureau of Fisheries and Aquatic Resources (BFAR) earlier said that the Mindoro oil spill has caused more than P1 billion in damage, with P19 million worth of daily losses since MT Princess Empress sank on Feb. 23. More than 178,000 people across several provinces near Oriental Mindoro have also been affected by the spill, the Department of Social Welfare and Development (DENR) earlier said.
Nigeria's Oil And Gas Sector Hit By $21 Billion In Divestments --The oil and gas production in Nigeria is being severely impacted by the Western ESG strategies that are forcing IOCs to reconsider their upstream and downstream operations worldwide, resulting in major reshuffling and divestments of assets. Nigeria, one of OPEC's leading oil producers, has already seen $21 billion worth of assets divested, putting its future in jeopardy. In contrast to Western NGO's strategies, NGOs in Nigeria, such as "We, the People," are calling for a government moratorium to prevent further divestments in the Niger Delta. The NGO is concerned that if oil companies are allowed to divest without cleaning up the entire Niger Delta region, the environmental issues in the area will never be addressed. Despite the ongoing divestments, African nations, including Nigeria, need to be given time to transition to using gas as their transition fuel, according to Ainojie Alex Irune, CEO of Oando Energy Resources. More investments and production are needed to counter expected demand growth in the future on the continent. In addition, NJ Ayuk, Executive Chairman of Africa Energy Chamber, believes that the continent needs to leverage its immediate resources to eliminate energy poverty, as Africa is a gas continent. The regulatory uncertainty of Nigeria's oil and gas sector prior to the enactment of the Petroleum Industry Act 2021 and ESG-related fossil fuel divestment schemes forced by energy transition and COVID-19 are the main reasons for the divestments, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). Nigeria's yearly capital expenditure in the upstream arm of the oil sector decreased by over 70% within a period of eight years. The country's total annual upstream capital expenditure decreased by 74% from $27 billion in 2014 to less than $6 billion in 2022, and competition from regional peers has led to a decrease in the proportion of the overall upstream investment attracted by Nigeria.However, there is still hope, as Nigeria is showing increased natural gas reserves and oil reserves in the short term. The NUPRC has reported that Nigeria's oil and condensate reserves are 31.060 billion barrels for oil and 5.906 billion barrels for condensate. Associated gas reserves are 102.32 trillion cubic feet, non-associated gas reserves are 106.51 trillion cubic feet. The future of Nigeria and Sub-Saharan Africa is at stake, and according to a growing amount of Southern leaders and analysts, it is time to reassess strategies and policies pushed by the North without delay. The divestment strategies being pushed by Western climate change and IPCC/IEA reports are not only controversial but now counterproductive for most developing countries.
Guyana Refuses To Sell Discounted Oil To India -One of the world’s growing hotspots for crude oil exploration has refused to sell discounted crude oil to India, Guyana’s Vice President Bharrat Jagdeo said this week. Guyana’s crude oil production has increased three-fold from a year ago, with the government of Guyana holding the rights to about 12.5% of the country’s vast oil riches. BP has a one-year contract to market those government-controlled barrels. India has lobbied Guyana for two years—well before Guyana’s oil boom took off, but the two have been unable to come to an agreement, Jagdeo said, adding that any crude oil sales from Guyana to India would “have to be on commercial terms, not a discounted terms.” India said it is interested in sourcing discounted crude oil to make up for the increased costs for shipping the crude oil to India. “Guyana crude is costly for us because of high freight. Instead of paying a high freight for their oil, we will prefer to buy oil from the Middle East and east and west Africa,” a person familiar with the Indian traders thinking said, according to Reuters. “Without concessions their crude doesn’t make commercial sense for us.” Despite Guyana’s unwillingness to offer India crude oil on the cheap, the oil-rich nation is eager to invite India to the auction table for its first competitive oil auction, which is scheduled to be held later this summer. In that auction, 14 offshore blocks will go up for bid. India has not said whether or not it will participate. Jagdeo confirmed, however, that although an oil deal has not been reached, it will continue to discuss with India other areas of cooperation, including in agriculture and health.
India Sees Oil Cuts And War Impact As Biggest Risks To Economy -The effect on fuel prices from the recent surprise OPEC+ oil-output cut and “the spillover of all the decisions which are related to the Russia-Ukraine war” are “the two main things which I think I’d be more worried about than anything internal,” said Finance Minister Nirmala Sitharaman during an interview in Washington. p The biggest threats to India’s economic growth would likely come from forces outside the country, Finance Minister Nirmala Sitharaman said, citing the risk of higher oil prices and the impacts from Russia’s war in Ukraine. The effect on fuel prices from the recent surprise OPEC+ oil-output cut and “the spillover of all the decisions which are related to the Russia-Ukraine war” are “the two main things which I think I’d be more worried about than anything internal,” she said in an interview in Washington on Saturday She also said possible recessions in the US or other developed countries could be a drag on India by hurting exports, particularly manufacturing. India is also exploring buying Russian crude oil near or past the price cap imposed by the G7 as it navigates external risks it sees as the biggest economic threat. “Yes, because otherwise I’ll end up paying far more than what I can afford,” Finance Minister Nirmala Sitharaman said in an interview on Saturday in Washington, when asked if India would continue importing Russian oil beyond the $60-a-barrel price cap. “We have a large population and we also therefore have to look at prices which are going to be affordable for us.” The stance underscores the pressing need in the country of 1.4 billion people to curb inflation and spur growth amid a surprise output cut by OPEC+ and western sanctions to rein in Russia’s oil revenue following the invasion of Ukraine. India, along with China, has emerged as one of the key buyers of Russian crude. It is now India’s top supplier, above Iraq and Saudi Arabia. The country needs to constantly look for the “best deal” since it imports almost 80 percent of its crude oil requirements, Sitharaman said. “For us, it is a very critical input for the economy.” Sitharaman was in the US to attend the International Monetary Fund’s Spring Meetings and to co-chair the Group of 20 finance chiefs’ gathering, along with Reserve Bank of India Governor Shaktikanta Das.
UN in final $29m push to avert oil spill off Yemen - A fundraising event next month will attempt to secure the final $29m needed to remove 1.14m barrels of oil from a decaying tanker off the coast of Yemen. The UN appeal has bought a VLCC to receive oil from the 406,600-dwt floating “time-bomb” FSO Safer (built 1976) but the spiralling cost of the operation means more money is needed. The conference, co-hosted by the UK and Dutch governments, will attempt to fill the funding gap and allow the salvage operation to start. The appeal has nearly hit $100m, United Nations officials said. The 307,000-dwt VLCC Nautica (built 2008) has been converted into an FSO at a yard in China and the vessel is currently off the coast of Singapore en route to Yemen, according to Kpler tracking data. The UN bought the Nautica from Belgian tanker giant Euronav but rising asset values pushed the price up to $55m — a sum not covered in the original budget. “The replacement vessel has begun its journey to Yemen but there is not enough funding for the salvage operation to take place,” ambassador Barbara Wood, the UK’s permanent representative at the UN, said. “The costs of inaction are severe. This would devastate marine life and coastal livelihoods, disrupt live-saving humanitarian assistance for 17m people and cost the global economy billions in lost trade every day.” The conference will be held on 4 May for the final funding push for the salvage operation, the UK government said. “This event aims to fill the shortfall and provide a long-term solution for Yemen,” Woodward said. “It is on all of us, states, private sector, individuals, to step up and help. The time to act is now.” The long-delayed operation followed sluggish efforts to raise the money despite the threat of the ship breaking up leading to a spill in the Red Sea that would be four times the size of the Exxon Valdez disaster. “[The FSO] Safer could break apart or explode at any time, unleashing an environmental, trade and humanitarian catastrophe,” UK development minister Andrew Mitchell warned. The Nautica is expected to arrive at the FSO Safer off Yemen’s Red Sea coast in May. The Nautica will remain there for months after receiving the FSO Safer’s oil and Euronav will help operate its former ship throughout that period. “We’re closer than ever to averting a catastrophe, but urgently need $29m more to start the salvage operation.”
QatarEnergy signs energy tie-up deal with Namibia - QatarEnergy has signed a memorandum of understanding (MoU) with the Ministry of Mines and Energy of the Republic of Namibia to strengthen cooperation in the energy sector. The agreement was signed by Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, the President and CEO of QatarEnergy, and Tom Alweendo, Minister of Mines & Energy of the Republic of Namibia in a special signing ceremony held at QatarEnergy’s headquarters in Doha. The MoU paves the way for continued cooperation and covers key areas such as knowledge sharing, workforce development and exploring further investment opportunities in Namibia. Minister Al-Kaabi said: “We are pleased to further enhance our cooperation with the Government of Namibia and build on our recent successes. This agreement further strengthens our relationship as we work jointly towards a prosperous future.” QatarEnergy recently announced a light oil discovery in the Jonker-1X well in the Orange Basin, offshore southern Namibia, adding to the previous two separate oil and associated gas discoveries in the same basin in 2022. QatarEnergy holds interests in three Exploration Licenses offshore Namibia, PEL-39 (45%), PEL-56 (30%) and PEL-91 (28.33%), covering a total area of over 28,000 sq km.
Gulf Energy wins $100mn contract extensions in Oman - National Energy Services Reunited (NESR), an international leading provider of integrated energy services in the Middle East and North Africa, announced that its Oman-based subsidiary, Gulf Energy, has successfully completed negotiations with multiple clients in the sultanate to extend existing well intervention contracts for up to five years. The multiple contract extensions secured in Oman amounts to US$100mn, NESR said in a statement. The company said based on Gulf Energy’s excellent service delivery and new technology introductions across various fields, the new contracts range in duration for different clients and reflect the strong mutual trust with the client base in an improving oilfield services landscape. NESR CEO and chairman Sherif Foda said, “The success of Gulf Energy in its In-Country Value and Omanisation initiatives clearly reflects NESR’s broader localisation ambition as national champion of the MENA region. Our foremost goal is to hire and train Omanis, and cultivate Omani R&D and manufacturing to support our operations.” Gulf Energy currently works with almost all of the major energy operators in Oman including Petroleum Development Oman (PDO), BP, Occidental Petroleum Corporation, ARA Petroleum Oman B44 Limited, Medco Energi, OQ, CC Energy Development (CCED) and PetroTel Oman. NESR is one of the largest national oilfield services providers in the MENA region. With over 5,000 employees, representing more than 60 nationalities in over 15 countries, the company provides production services such as hydraulic fracturing, cementing, coiled tubing, filtration, completions, stimulation, pumping and nitrogen services.
Iran, Venezuela sign MOUs on oil, gas, petchem co-op - Tehran Times - Iran and Venezuela inked several memorandums of understanding (MOUs) on the expansion of cooperation in the fields of oil, gas, and petrochemicals. The MOUs were inked by Iranian Oil Minister Javad Oji and his Venezuelan counterpart Pedro Rafael Tellechea in the presence of Venezuelan Vice President Delcy Rodriguez, with the aim of strengthening bilateral cooperation between Iran and Venezuela in the upstream and downstream sectors of the oil industry, Shana reported on Sunday. The development of oil and gas fields, and the reconstruction and renovation of Venezuelan oil refineries with the aim of maximizing the capacity of these complexes are among the issues mentioned in the MOUs signed by the two sides. In these documents, agreements were also made about the reconstruction and modernization of Venezuelan petrochemical complexes with Iranian technical and engineering services and equipment, the reconstruction and modernization of the loading dock, oil terminal, and trade and export of oil, gas condensate, and petroleum products. Oji arrived in Caracas, the capital of Venezuela, at the head of a delegation on Thursday, to strengthen energy cooperation with the Latin American country. The minister, who has traveled to Venezuela in order to strengthen energy cooperation in the upstream and downstream areas, was welcomed by the country's officials. Back in last December, Oji had discussed the latest developments in the oil market in a phone conversation with his former Venezuelan counterpart Tareck El Aissami. The officials also talked about the development of energy cooperation between the two countries and followed up on the recent agreements reached between the two sides. Iran and Venezuela have taken a new path to expand cooperation in all areas over the past two years, and the Latin American country has been one of the focal points of the Iranian oil ministry’s foreign diplomacy.
IEA Still Predicts Record Oil Demand in 2023 - The International Energy Agency (IEA) is still predicting record world oil demand this year, according to its latest oil market report (OMR). In its April OMR, the IEA projected that world oil demand will climb by two million barrels per day in 2023 to “a record 101.9 million barrels per day”. Non-OECD countries, buoyed by a resurgent China, will account for 90 percent of growth, the April OMR noted. OECD demand was “dragged down by weak industrial activity and warm weather” and contracted by 390,000 barrels per day year on year in the first quarter of 2023, the report outlined. “While oil demand in developed nations has underwhelmed in recent months, slowed by warmer weather and sluggish industrial activity, robust gains in China and other non-OECD countries are providing a strong offset,” the IEA stated in its April OMR. “In 1Q23, OECD oil demand fell 390,000 barrels per day year on year, but a solid Chinese rebound lifted global oil demand 810,000 barrels per day above year-earlier levels to 100.4 million barrels per day. A much stronger increase of 2.7 million barrels per day is expected through year-end, propelled by a continued recovery in China and international travel,” the IEA added. “For 2023 as a whole, world oil demand is forecast to rise by an average two million barrels per day, to 101.9 million barrels per day, with the non-OECD accounting for 87 percent of the growth and China alone making up more than half the global increase,” the IEA continued. In its April OMR, the IEA noted that meeting those gains may prove challenging “as the new OPEC+ cuts could reduce output by 1.4 million barrels per day from March through year-end, more than offsetting a one million barrel per day increase in non-OPEC+ production”. “Growth from the U.S. shale patch, traditionally the most price-responsive source of more output, is currently limited by supply chain bottlenecks and higher costs,” the IEA said in the OMR. The IEA noted in the report that its oil market balances were already set to tighten in the second half of 2023, “with the potential for a substantial supply deficit to emerge”. The latest OPEC+ cuts risk exacerbating those strains, pushing both crude and product prices higher, the IEA warned in the OMR. The April OMR projects that global oil production growth will come in at 1.2 million barrels per day in 2023. This figure stood at 4.6 million barrels per day in 2022, the report highlighted. “Non-OPEC+, led by the U.S. and Brazil, drives the 2023 expansion, rising 1.9 million barrels per day. OPEC+ is expected to drop by 760,000 barrels per day,” the report stated. In its March OMR, the IEA predicted that global oil demand growth would reach 102 million barrels per day in 2023. The IEA noted in that report that it expected non-OPEC+ to drive global output growth of 1.6 million barrels per day this year. In its February OMR, the IEA projected that demand would reach 101.9 million barrels per day and that global production would rise by 1.2 million barrels per day in 2023. Back in its January OMR, the IEA noted that global oil demand was set to rise by 1.9 million barrels per day in 2023 “to a record 101.7 million barrels per day”. That OMR said world oil supply growth in 2023 was set to slow to one million barrels per day. According to the U.S. Energy Information Administration’s (EIA) latest short term energy outlook (STEO), which was released on April 11, total world petroleum and other liquids consumption will hit 100.87 million barrels per day and total world production will come in at 101.30 million barrels per day in 2023. “Although our forecast includes declining production in OPEC and Russia, we expect global liquids fuel production will increase by 1.5 million barrels per day in 2023 because of strong growth from non-OPEC countries, which (excluding Russia) increase by 2.3 million barrels per day in our forecast,” the latest STEO noted. Non-OPEC production growth is largely driven by countries in North and South America, according to the STEO, which noted that global liquids production rises by an additional two million barrels per day in 2024, “driven by non-OPEC production growth of one million barrels per day and by OPEC crude oil production, which we expect to increase by 0.9 million barrels per day when current production cuts expire at the end of 2023”.
Oil prices stall as short-covering rally is completed: Kemp --Hedge funds and other money managers purchased the equivalent of 36 million barrels in the six most important petroleum futures and options contracts over the seven days ending on April 11. Purchases over the three most recent weeks totaled 225 million barrels, among the largest increases over any three-week period in the last decade. As a result, fund managers held a combined position of 515 million barrels (34th percentile for all weeks since 2013) on April 11, up from just 289 million barrels (6th percentile) on March 21. Bullish long positions outnumbered bearish short ones by a ratio of 5.13:1 (66th percentile) up from 2.16:1 (16th percentile) three weeks earlier. But the pace of buying slackened noticeably last week as most of the short positions that existed in late March had been closed out. Short positions were trimmed by just 9 million barrels over the seven days ending on April 11, compared with 67 million in the week ending on April 4 and 48 million in the week to March 28. By April 11, total shorts had been reduced to just 125 million barrels (7th percentile) as bearish investors were squeezed out of the market. The most recent week saw hedge funds purchase NYMEX and ICE WTI (+22 million barrels), U.S. gasoline (+13 million) and U.S. diesel (+4 million) but no change in Brent and small sales of European gasoil (-3 million). Fund short positions in NYMEX WTI were reduced to 24 million barrels, the lowest for almost six months, and down from 127 million barrels three weeks earlier. The short-selling cycle that began around January 27, reflecting concerns about faltering growth, persistent inflation, rising interest rates and bank failures, had largely been completed by April 11. Its end has removed upward pressure on oil prices and explains why they have been broadly stable since April 11 after increasing rapidly over the previous three weeks. Hedge fund long positions in NYMEX WTI outnumbered shorts by 9.11:1 (73rd percentile) on April 11 up from 1.56:1 (1st percentile) on March 21. Investors remain fairly bearish on the outlook for U.S. gas, though with prices already close to record lows in real terms the scope for them to decline further is limited. Funds purchased the equivalent of 49 billion cubic feet over the seven days ending on April 11 in the two main futures and options contracts based on deliveries at Henry Hub in Louisiana. The buying reversed 55 billion cubic feet the previous week, based on position records published by the U.S. Commodity Futures Trading Commission. Funds held a net short position of -55 billion cubic feet (30th percentile for all weeks since 2010) with the ratio of longs to shorts at 0.98:1 (also 30th percentile).
Oil Wavers as Traders Eye Demand, Tight Supply Concerns -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange edged lower early Monday as traders balanced persistent concerns about weak demand fundamentals in the U.S. and the Eurozone against expectations of tighter supplies in the second half of the year. Near 7 a.m. EDT, West Texas Intermediate futures for May delivery slipped $0.38 to $82.14 barrel (bbl) and the international crude benchmark Brent for June delivery fell to $85.92 bbl, slipping $0.39 bbl in overnight trading. NYMEX May RBOB futures declined by $0.0342 to $2.8017 gallon, while the May ULSD contract fell $0.0092 to $2.6300 gallon. The International Energy Agency and Organization of the Petroleum Exporting Countries forecast last week the global oil market will likely slide into a deeper deficit in response to production cuts announced by OPEC+ on April 3. "Our oil market balances were already set to tighten in the second half of 2023, with the potential for a substantial supply deficit to emerge," said the IEA. Global oil demand is seen climbing by about 2 million barrels per day (bpd) this year to a record 101.9 million bpd, with 90% of that growth realized in developing and emerging economies led by China, said the IEA in its Monthly Oil Market Report Friday morning. Despite a sizable fall in fuel consumption across advanced economies in the first quarter, a solid rebound in China's fuel consumption already lifted worldwide demand 810,000 bpd above year-ago levels to 100.4 million bpd, said IEA. The agency expects a further increase of 2.7 million bpd in global oil demand through year end, propelled by a continued recovery in the Asian region. For advanced economies, the IEA acknowledged that weakness in industrial activity is impacting diesel demand, whereas the services sector and personal consumption are driving gasoline and jet uptake. A similar sentiment was echoed by OPEC in their Monthly Oil Market Report on Thursday, in which the group left 2023 demand projections unchanged at 101.9 million bpd despite acknowledging risks tied to the banking stress in the United States and Eurozone. OPEC said its forecast for demand growth across OECD countries was revised down for all four quarters, but consumption in non-OECD countries was boosted in part by "better-than-expected improvements in economic activity in China after it dropped its zero-COVID policy." Separately, the International Monetary Fund last week downgraded its global growth forecast to 2.8% for this year from 3.4% in 2022, while forecasting a median of 3% expansion over the next five years -- the lowest growth rate since the 1990s. Advanced economies in North America and the European Union will likely suffer the sharpest slowdown from 2.7% in 2022 to 1.3% this year, reflecting tight policy stances needed to bring down inflation, the fallout from the recent deterioration in financial conditions and growing geoeconomic fragmentation. "Risks to the outlook are heavily skewed to the downside, with the chances of a hard landing having risen sharply," said the IMF.
Oil prices sink on prospect of more oil export from Iraq (Xinhua) -- U.S. oil prices suffered substantial losses on Monday on possible resumption of oil export from Iraq's semi-autonomous Kurdistan region via Türkiye's Ceyhan oil terminal. The West Texas Intermediate (WTI) for May delivery dropped 1.69 U.S. dollars, or 2.05 percent, to settle at 80.83 dollars a barrel on the New York Mercantile Exchange. Brent crude for June delivery decreased 1.55 dollars, or 1.8 percent, to settle at 84.76 dollars a barrel on the London ICE Futures Exchange. Iraq's federal government and the Kurdistan regional government have resolved technical issues essential to resuming the region's oil exports via the Turkish port of Ceyhan, said a report by Reuters on Monday. Türkiye's Ceyhan port halted the shipment of oil from the Kurdistan region and Kirkuk province on March 25 after the International Chamber of Commerce (ICC) ruled that export of oil from the Kurdistan region is subject to approval from the Iraqi central government. Crude oil supply in the international market lost around 450,000 barrels per day due to measures taken following the ruling by the ICC. The Iraqi federal government and the Kurdistan regional government signed an agreement on April 4 to resume Kurdish oil exports via Türkiye. Traders also tend to book profits as oil prices struggle to gain additional growth momentum amid economic uncertainties. "Given enough time we will get a bit of a pullback, simply because a lot of traders are sitting on nice gains that they would like to book sometime soon, especially if the market is not going to pick up more momentum," said Christopher Lewis, analyst with market information platform FX Empire. The substantial rise of the U.S. dollar index on Monday also weighed on commodity prices denominated in the currency.
Oil drops 2% on higher dollar, interest rate concerns -Oil prices turned lower on Monday as the U.S. dollar strengthened and as investors mulled over a possible May interest rate hike by the U.S. Federal Reserve, which could dampen economic recovery hopes. Brent crude futures settled lower by 1.8% at $84.76 a barrel, while U.S. West Texas Intermediate crude dropped 2.05% to $80.83 a barrel. Both contracts notched their fourth weekly gain in a row last week, the longest such streak since mid-2022. The U.S. dollar has been strengthening alongside interest rate hikes, making dollar-denominated oil more expensive for holders of other currencies. The dollar index gained around 0.5% on Monday. "The dollar is a little bit stronger, and that seems to be putting a little bit of pressure on oil here," Price Futures Group analyst Phil Flynn said. Traders are betting the Fed will raise its lending rate in May by another quarter of a percentage point and have pushed out to late this year expectations of a rate cut, as typically occurs in a slowdown. Meanwhile, the release of China's first-quarter gross domestic product (GDP) data at 0200 GMT on Tuesday is expected to be positive for commodity prices, with the International Energy Agency (IEA) forecasting it will account for most of 2023 demand growth. However, the IEA also warned in its monthly report that output cuts announced by OPEC+ producers risked exacerbating an oil supply deficit expected in the second half of this year and could hurt consumers and a global economic recovery. The Group of Seven (G7) coalition will keep a $60 per barrel price cap on seaborne Russian oil, a coalition official said, despite rising global crude prices and calls by some countries for a lower price cap to restrict Moscow's revenues. In Iraq, the federal government and the Kurdistan Regional Government (KRG) have ironed out technical issues essential to resuming northern oil exports from the Turkish port of Ceyhan to international markets, four sources told Reuters on Monday. Turkey halted Iraq's 450,000 barrels per day (bpd) of northern exports on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC), which ordered Turkey to pay Baghdad damages of $1.5 billion for the KRG's unauthorised exports between 2014 and 2018. In Saudi Arabia, crude oil exports in February fell to 7.455 million bpd from 7.658 million bpd in January, official data showed on Monday.
Oil steadies on China recovery hopes after 2% drop -- Oil prices steadied on Tuesday after falling nearly 2 per cent the previous day amid signs of an economic recovery in China, the world’s largest crude importer. Brent, the benchmark for two thirds of the world’s oil, was trading 0.20 per cent higher at $84.93 a barrel at 8.47am UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.19 per cent at $80.98 a barrel. On Monday, Brent settled 1.8 per cent lower at $84.76, while WTI was down 2.05 per cent at $80.83. China's economy, the world’s second-largest, grew at a faster-than-expected pace in the first quarter as the lifting of Covid-19 curbs earlier this year helped improve consumer spending. The country’s gross domestic product increased by 4.5 per cent on a yearly basis in the first three months of the year, higher than the 2.9 per cent recorded in the previous quarter, according to data from the National Bureau of Statistics. The market was expecting China’s economy to grow by 4 per cent in the first quarter, Emirates NBD said in a research note. China, which followed a strict zero-Covid policy for nearly three years, is set to be a key driver of crude demand this year. The International Energy Agency expects global oil demand to rise by 2 million barrels per day to a record 101.9 million bpd in 2023. Oil futures ended lower on Monday as investors worried that higher inflation from a recent surge in energy prices may prompt the US Federal Reserve to adopt a more aggressive monetary policy. Last week, the International Monetary Fund trimmed its forecast for global growth this year and next by 0.1 percentage points to 2.8 per cent and 3 per cent, respectively. The global economy faces a “rocky” recovery as geopolitics, monetary tightening and inflation continue to weigh on growth, the fund said. Earlier this month, Opec+ producers said they would make voluntary oil production cuts of 1.16 million bpd from May until the end of December to support oil market stability. Russia, a part of the 23-member alliance of producers, also said it would extend its output cut of 500,000 bpd until the end of this year. Moscow had previously pledged to curb its production until June in response to the price caps imposed by the West on exports of its crude oil and refined products.
The Market on Tuesday Continued on its Downward Trend Early in the Session Before it Bounced Higher and Settled in Positive Territory - The oil market on Tuesday continued on its downward trend early in the session before it bounced higher and settled in positive territory. The market traded mostly sideways in overnight trading in light of some data showing that China’s economy grew by a faster than expected 4.5% in the first quarter. However, the market erased its gains as the market’s focus on a possible increase in U.S. interest rates and wider concerns over the growth outlook more than offset any of its earlier gains on strong Chinese economic data. The market sold off to a low of $79.87 by mid-morning. The oil market later bounced off its low and rallied higher, with a weaker dollar driving some of its gains and ahead of the release of the weekly petroleum stocks reports later on Tuesday and Wednesday morning, which are expected to show draws across the board. The oil market rallied to a high of $81.48 ahead of the close. The May WTI contract settled up 3 cents at $80.86 and the June Brent contract settled up 1 cent at $84.77. The product markets ended the session in negative territory, with the heating oil market settling down 1.48 cents at $2.5999 and the RB market settling down 2.31 cents at $2.7509.Spencer Dale, BP Plc's chief economist, said the global oil market will likely tighten in the second half of 2023 after the recent decision by OPEC+ to cut oil production. He said there is a scope for oil markets to tighten a little bit in case China's oil demand and its overall economy recovers.Transatlantic gasoline shipments in March fell to a near three-year low due to poor arbitrage economics but exports along the route in April are rebounding. Shipments to the U.S. in April are already at 634,000 tons, exceeding the 407,000 tons exported in March. Meanwhile, European diesel imports are set to reach 6.59 million tons in April, up from 6.11 million tons that arrived in March.Colonial Pipeline Co is allocating space for Cycle 24 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee.Chinese oil refinery throughput increased to a record high in March, as refiners increased runs to capture strong export demand and build up inventories ahead of planned maintenance. Data from the National Bureau of Statistics showed that total refinery throughput in March reached 63.9 million tons or 14.9 million bpd, up 8.8% from a year earlier. The National Bureau of Statistics also showed that China's crude oil production in March increased by 2.4% on the year to 18.2 million tons or about 4.28 million bpd.St. Louis Federal Reserve President, James Bullard, said the U.S. central bank should continue raising interest rates on the back of recent data showing inflation remains persistent while the broader economy seems poised to continue growing, even if slowly. Federal Reserve Bank of Atlanta President, Raphael Bostic, said the U.S. central bank probably has one more rate increase ahead of it.
Oil Prices Dip As Recession Fears Resurface -Oil prices fell early on Wednesday as the market assessed the latest hints from the Fed that one more rate hike could be coming in early May, which intensified concerns about a material economic slowdown that could weigh on oil demand.Early on Wednesday morning, the U.S. benchmark WTI Crude was down by 2.07% at $79.19, and the international benchmark Brent Crude was down by 2.05% on the day at $83.03. Prices dipped on Wednesday after having risen on Tuesday following the industry report from the American Petroleum Institute (API), which estimated that both crude oil and product inventories in the United States fell last week.Official data on inventories is due out later today from the EIA. Comments from a Fed official on Tuesday suggested that another small rate hike could be needed offset bullish economic data out of China. The world’s second-biggest economy and top crude oil importer posted GDP growth of 4.5% in the first quarter of 2023, beating analyst estimates of 4% economic growth in a Reuters poll. The growth was the highest quarterly Chinese growth since the first quarter of 2022. However, Atlanta Federal Reserve President Raphael Bostic told CNBC on Tuesday that one more rate hike is coming.“One more move should be enough for us to then take a step back and see how our policy is flowing through the economy, to understand the extent to which inflation is returning back to our target,” Bostic told CNBC’s “Squawk on the Street”.“If the data come in as I expect, we will be able to hold there for quite some time,” said Bostic, who is a non-voting member of the Federal Open Market Committee (FOMC) this year. “Having failed to build on the OPEC+ production news a couple of weeks of ago, the market could now be exposed to some long liquidation from recently established longs,” Saxo Bank analysts said on Wednesday. “Brent is currently trading below $85, and a break below $83.50 could prompt a fresh attempt to close the gap down to $80 (for WTI, between $79 and $75.70).”
WTI Rebounds After 3rd Straight Weekly SPR Drain - Oil prices rebounded after the initial downthrust on the gasoline inventory build. Flat production and a notable crude draw exacerbated the buy-the-dip as it became clear that the SPR saw its 3rd weekly drain in a row... And WTI is testing back up towards $80... ...but we thought the Biden admin was supposed to be refilling the SPR? Oil prices are sliding this morning after UK's shockingly high CPI set yields higher and reignited rate-hike-driven fears for demand growth. As Bloomberg reports, the upshot is that oil traders are wrestling with a quandary that has troubled them for much of this year: will consumption rise enough in the coming months to make a dent in inventories that are more than 100 million barrels higher than a year ago? Or, will recessionary forces continue to menace demand, stopping prices from moving higher? And today's official EIA data will give us the latest glimpse into that crystal ball. API
- Crude -2.675mm (-500k exp)
- Cushing -600k
- Gasoline -1.00mm (-1.2mm exp)
- Distillates -1.9mm (-900k exp)
DOE
- Crude -4.581mm (-500k exp)
- Cushing -1.088mm
- Gasoline +1.299mm (-1.2mm exp) - biggest build since Feb
- Distillates -355k (-900k exp)
Official estimates show crude stocks fell 4.68mm barrels last week (more than API reported) and inventories at the Cushing Hub fell for the 7th straight week. Gasoline stocks unexpectedly rose, breaking an 8-week streak of draws, while Distillates fell... The so-called 'adjustment factor' was higher once again... Stocks at the Cushing hub fell for the 7th straight week, back at the lowest levels since Jan... US Crude production was flat at 12.3m b/d as rig counts continue to drift lower... Graphics Source: Bloomberg WTI is trading around $79.50, after bouncing back off the lower end of its post-OPEC-production-cut spike range... But prices are extending losses here after the print...
Oil falls 2% as U.S. dollar strengthens on Fed rate hike expectations (Reuters) - Oil prices slid about 2% to a two-week low on Wednesday despite a sharp decline in U.S. crude inventories, as the U.S. dollar strengthened on fears that looming U.S. Federal Reserve interest rate hikes could curb energy demand in the world's top consumer. A stronger dollar can hurt global demand for oil by making it more expensive in other countries. Investors were also discouraged by still high inflation in Europe and uneven economic data in China, the world's biggest crude importer. Brent futures fell $1.23, or 1.5%, to $83.54 a barrel by 1:45 p.m. EDT (1745 GMT), while U.S. West Texas Intermediate (WTI) crude fell $1.23, or 1.5%, to $79.63. That put both WTI and Brent on track for their lowest closes since March 31, erasing most of the price gains since the surprise oil output cut announced on April 2 by the Organization of the Petroleum Exporting Countries, Russia and other allies in the OPEC+ group. "The crude benchmarks are posting ... lows ... in response to a strengthening in the U.S. dollar that is, in turn, weighing on risky assets following some hot inflation data out of Europe," U.S. crude stockpiles fell by a bigger-than-expected 4.6 million barrels last week as refinery runs and exports rose, while gasoline inventories jumped unexpectedly on disappointing demand, according to the U.S. Energy Information Administration (EIA). That is a much bigger crude withdrawal than the 1.1-million barrel decline analysts forecast in a Reuters poll and the 2.7-million barrel decline reported by the American Petroleum Institute late Tuesday. In China, stock markets closed lower due to uneven first-quarter data indicating a bumpy economic recovery after the country dropped its strict zero-COVID-19 policy. Wall Street's main stock market indexes edged down on growing expectations that the Federal Reserve could keep interest rates higher for longer. The Fed is likely to have one more interest rate rise in store, Atlanta Fed President Raphael Bostic said on Tuesday. Markets are pricing in an 86% chance of the Fed raising rates by 25 basis points in May. In Europe, European Central Bank officials remained wary of inflation and have suggested further rate hikes also. Adding more pressure on oil benchmarks, Asian refiners have continued to snap up Russian crude in April. India and China have bought the vast majority of Russian oil so far in April at prices above the Western price cap of $60 a barrel, according to traders and Reuters calculations. Oil loadings from Russia's western ports in April will rise to the highest since 2019, above 2.4 million barrels per day (bpd), despite Moscow's pledge to cut output, trading and shipping sources said. In the U.S., meanwhile, heating oil futures were on track to close at their lowest since January 2022 for a second day in a row on low diesel demand
Oil prices dip 2% as expected rate hikes take toll - Oil prices fell to their lowest level in about three weeks on Thursday, as a firmer dollar and rate hike expectations outweighed lower U.S. crude stocks.Brent crude futures were down $1.65, or 2%, to trade at $81.47 a barrel at 1342 GMT. West Texas Intermediate crude (WTI) futures dropped $1.61, or 2%, to $77.55 a barrel.Both benchmarks, after a 2% fall on Wednesday, are at their lowest since late March, just before a surprise OPEC+ production cut announcement, but not all those gains have been wiped out.Equities markets, which often move in tandem with oil prices, were down after disappointing results from Tesla and other companies, while the U.S. dollar index has risen around 0.2% this week, putting it on course for its strongest week since late February.A strengthening greenback makes oil more expensive for holders of other currenciesAlthough the number of Americans filing new claims for unemployment benefits increased moderately last week, employment is still strong and a Reuters poll of economists showed the U.S. Federal Reserve is likely to deliver a final 25 basis point rate rise in May, ending an aggressive spate of policy tightening.In Britain, persistent double-digit inflation has also bolstered expectations of a further Bank of England rate hike.Meanwhile, U.S. crude stockpiles fell by 4.6 million barrels as refinery runs and exports rose, while gasoline inventories jumped unexpectedly, according to the U.S. Energy Information Administration.On the supply side, oil loading from Russia’s western ports in April is likely to rise to the highest since 2019, trading and shipping sources said.Pakistan has placed its first order for discounted Russian crude under a new deal which could cover 100,000 barrels per day, the country’s petroleum minister said.
The Market Has Reversed Almost All of its Gains Following the Saudi Announcement of Further Output Cuts - The oil market on Thursday remained on its downward trend ahead of the May contract’s expiration at the close, trading to the lowest level since the end of March as a stronger dollar and rate hike expectations continued to weigh on the market. The market has reversed almost all of its gains following the Saudi announcement of further output cuts earlier this month. The crude market opened 29 cents lower at $78.87 and continued to back fill its remaining gap from $78.46 to $75.72 as it sold off to a low of $76.97 ahead of the close. The May WTI contract went off the board down $1.87 at $77.29 while the June WTI contract settled down $1.87 at $77.37. The June Brent contract settled down $2.02 at $81.10. Meanwhile, the product markets also ended the session lower, with the heating oil market settling down 6.28 cents at $2.4949 and the RB market settling down 5.91 cents at $2.5864. Amos Hochstein, the special presidential coordinator for global infrastructure and energy security said the U.S. could begin to refill its SPR as soon as the third quarter of 2023, if the price is right. However, he cautioned that the timeline would depend on a number of factors, including maintenance on the infrastructure while the reserve is half empty and how well the Biden administration can manage a congressionally mandated sale of 26 million barrels by June 30th. The U.S. has stated that it wanted to sell at a price target of $70/barrel.The White House said the federal government has offered assistance to Florida as it copes with a gasoline shortage. White House Press Secretary, Karine Jean-Pierre, said the EPA is processing a request it received from Florida to expand the available supply of gas in the region. Flooding from last week’s rainstorms across South Florida have caused a run on gas in some areas.Platts is reporting that Iraq’s federal oil marketer SOMO is seeking to draft and replace contracts with traders seeking to buy and sell crude oil produced in the semi-autonomous Kurdistan region. These contracts will need to be signed and accepted before it will allow exports to resume through the Turkish port of Ceyhan. Exports of Kurdish-origin crude and federally produced Kirkuk grade through Ceyhan have been suspended since March 24th. Export flows at that time had been averaging 450,000 b/d. Iraqi officials reportedly have said that they expect exports to now resume in a “few days once all technical, administrative and logistical issues are finally ironed out.”The EPA reported that the U.S. generated 619 million biodiesel (D4) blending credits in March, up from 514 million credits in February. It also reported that the U.S. generated 1.22 billion ethanol (D6) blending credits in March, up from 1.13 billion credits in February.Reuters reported that China's refineries processed more crude than ever before in March, but despite this record, the world's largest oil importer still increased its inventories. China's refinery throughput hit a record high of 63.9 million tons in March, equivalent to about 15.11 million bpd, up from 14.36 million bpd in the first two months of the year. However, according to calculations based on official data, the amount of crude available to refiners from imports and domestic output also increased in March, reaching 16.67 million bpd. Subtracting the refinery throughput leaves 1.56 million bpd that likely flowed into either commercial or strategic inventories. This was an increase in the amount available for stockpiles from the first two months of the year, when the surplus was 270,000 bpd.
Oil prices extend losses on fears of recession - Brent futures for June delivery were down by 14 cents, or 0.2%, at $80.96 a barrel at 0101 GMT. West Texas Intermediate crude (WTI) for June delivery slid 12 cents, or 0.2%, to $77.25 a barrel, CNBC reported.Both benchmarks slid by more than 2% to their lowest level since late March on Thursday amid fears of a possible recession, and were on track for a weekly drop of about 6%."Market sentiment remained bearish after the weak U.S. economic data, along with expectations of interest rate hikes, fueling worries over a recession that could dent oil demand," "WTI is expected to trade in the $75-$80 range for the next week as investors try to figure out if U.S. gasoline demand will increase toward the summer driving season, and if China's oil demand will really pick up in the second half of the year," Economic data showed weekly jobless claims rose last week, indicating the U.S. labor market may be starting to show signs of slowing as the lag effect of multiple interest rate hikes by the Federal Reserve takes hold, fanning concerns about a slowdown in fuel demand.U.S. crude oil inventories last week fell more than forecast as refinery runs and exports rose, while gasoline stockpiles jumped unexpectedly on disappointing demand, Energy Information Administration data showed on Wednesday.Meanwhile, China may cut quotas for refined oil products exports in a second batch for 2023 as domestic demand improves while the need to boost its economy through oil products abates, a Reuters survey showed.On the supply side, oil loading from Russia's western ports in April is likely to rise to the highest since 2019, above 2.4 million barrels per day, despite Moscow's pledge to cut output, trading and shipping sources said.
Oil Gains After US Manufacturing Index Improves in April -- After retreating for four consecutive sessions, West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Friday's session with modest gains, although both benchmark contracts lost as much as 6% this week amid persistent concerns over global oil demand.Friday's higher settlements came after U.S. manufacturing data for the month of April surprised to the upside this morning, lifting the U.S. Dollar Index and Treasury yields. At 50.40 reading, U.S. manufacturing index moved out of contraction to the highest reading since October 2022. The survey data is a forward-looking indicator and highlights an economy that wasn't bruised as much as it was feared by the March banking crisis."The latest reading is indicative of GDP growing at an annualized rate of just over 2%," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.The survey also showed prices paid by operators in the service sector are growing again, underscoring persistent inflationary pressures.It's worth noting that one data point cannot tell the full picture and there are plenty of macroeconomic indicators pointing to weakness, but it certainly raises the possibility that the Federal Reserve's rate hiking cycle won't end on May 3. The market is pricing in a 90% chance for a 25-basis-point increase in the federal funds rate when the Federal Open Market Committee meets in less than two weeks' time and is now pricing in a modest chance for another rate hike on June 14.Oil complex came under modest selling pressure earlier in the session after overnight macroeconomic data showed European industrial sector fell into deeper contraction this month, with the headline index for manufacturing activity eroding to the lowest level since May 2020.The European manufacturing sector has remained in contraction for the tenth straight month and shows little signs of recovery in the foreseeable future. More positively, Eurozone business activity in the service sector accelerated to a 12-month high 56.6, lifting the composite PMI solidly into growth territory. Possibly contributing to manufacturing weakness were widespread protests in France that prompted shutdowns of industrial facilities and power plants.Oil traders pay close attention to manufacturing data given the energy-intensive nature of the industrial sector versus private consumption that has grown increasingly energy-efficient in recent years.At settlement, NYMEX June WTI futures advanced $0.50 to $77.87 barrel (bbl), with international crude benchmark ICE Brent futures for June delivery gaining to $81.66 bbl, up $0.56. NYMEX May RBOB futures moved $0.0152 higher to $2.6016 gallon and May ULSD futures edged $0.0063 lower to $2.4886 gallon.
Oil Reverses OPEC Gains to Post Weekly Loss - Oil set its first weekly loss in a month after erasing most of the gains stemming from OPEC+’s surprise output cut. Brent crude has wiped out almost all of the $7 that it gained after the Organization of Petroleum Exporting Countries and its allies blindsided markets with a pledge to cut production. Global supplies are showing signs of growth with Russia’s crude exports bouncing back above 3 million barrels a day last week, while in global fuel markets, gasoline and diesel are slowing at a time when they should be ramping up or peaking. Asian refiners are considering cutting volumes as margins have weakened recently, signaling that refineries didn’t manage to pass on higher costs to consumers. “It appears that some of the excitement around the OPEC+ cuts has faded, amid light flows,” said Emily Ashford, Executive Director of Energy Research at Standard Chartered. Technical indicators also took a toll on prices. The US benchmark failed to break through its 200-day moving average last week and has been trading lower ever since. The $7 jump in prices after OPEC+ announcement created a so-called chart gap, which then prompted a corrective move to the downside to fill the large break in prices. In March, oil hit a 15-month low in the aftermath of bank turmoil that shook confidence across all markets. The combination of the surprise announcement by OPEC+ on production cuts coupled with a reduction in Iraqi flows pushed oil back into the $80-range. Many market watchers are still betting on China’s demand rebound, which grew its economy at the fastest pace in a year, putting the country on track to reach its growth goal. Hedge funds increased bullish bets on crude in the week ending April 18th, boosting long positions in WTI and Brent to five-month and six-week highs, respectively. WTI for June delivery rose 50 cents to settle at $77.87 a barrel. Brent for June settlement gained 56 cents to settle at $81.66 a barrel.
Syria's Assad Meets Saudi FM in Damascus - Syrian President Bashar al-Assad hosted Saudi Arabia’s foreign minister in Damascus on Tuesday in the latest sign that Riyadh is ready to normalize diplomatic relations with Syria, which have been suspended since 2012.Saudi Foreign Minister Prince Faisal bin Farhan’s trip to Damascus marked the first high-level Saudi visit to Syria since 2011 when Riyadh threw its support behind the failed regime change effort against Assad.The visit comes as Saudi Arabia is looking to bring Syria back into the Arab League. In a statement, the Saudi Foreign Ministry said bin Farhan’s trip showed Riyadh’s desire to find a solution to the conflict in Syria that would “Arab identity, and return it to its Arab surroundings.”Also on Tuesday, Syria’s foreign minister visited Tunisia on a trip to restore diplomatic ties with the African country, which also severed relations with Damascus in 2012.The Saudis are facing some resistance among other Arab nations in its push to bring Assad out of isolation, including Qatar, Morocco, and Kuwait, and the US is opposed to the idea, but Riyadh seems determined to follow through. Bin Farhan’s visit came after Syria’s foreign ministertraveled to Damascus for the first time since 2011.CIA Director William Burns recently visited Riyadh and told the Saudis that the US was “blindsided” by their steps to upgrade ties with Damascus and normalize with Iran. The US prefers to keep Syria isolated and under crippling economic sanctions, but more and more regional countries are accepting that Assad isn’t going anywhere. The Wall Street Journal reported in March that Arab countries were looking to work out a normalization deal with Assad that would involve Saudi Arabia, Jordan, and other US allies lobbying for an end to Western sanctions on Syria.
Putin and Saudi Crown Prince Discuss OPEC+ Cooperation - Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman talked about OPEC+ cooperation by phone, the Kremlin said. The two leaders expressed “satisfaction with the level of coordination within OPEC+ in order to ensure the stability of global oil market,” according to a statement on Friday. The phone call was initiated by Saudi Arabia. The phone call between the two de-facto leaders of the Organization of Petroleum Exporting Countries and its allies follows an unexpected round of output cuts exceeding 1 million barrels a day earlier this month. The reductions were led by Saudi Arabia with a pledge to curb production by 500,000 barrels a day, while Russia extended its existing cut until the end of the year. The surprise cuts were driven by their interest “in keeping crude oil and petroleum product prices at a certain level,” Kremlin spokesman Dmitry Peskov said on April 3. Russia and Saudi Arabia’s leaders also discussed bilateral relations, with a focus on further expansion of “mutually beneficial ties in the trade, economic, investment and energy areas,” according to the Kremlin. They also talked about the prospects of Saudi Arabia’s cooperation with the BRICS nations.
Ukraine Rejects Iraqi Offer to Mediate Negotiations With Russia - Ukrainian Foreign Minister Dmytro Kuleba on Monday rejected an Iraqi offer to mediate talks between Ukraine and Russia during a visit to Baghdad, his first since the Russian invasion.Iraqi Foreign Minister Fuad Hussein met with Kuleba and called for a ceasefire, saying it was the same message he gave to Russian Foreign Minister Sergey Lavrov when he visited Baghdad in February.“We always strive to be a part of the solution. Wars end with negotiation and dialogue; that’s why we believe in the language of dialogue,” Hussein said. “That’s why when we negotiate or discuss with officials in Moscow, and Minister Lavrov was here in the same hall, we mentioned the same principles, and we told them that we support a ceasefire and the start of negotiations.”Hussein said that Iraq “has experience in communication with countries that have tension between them” and “is ready to be in service of peace.” But Kuleba declined the offer and reaffirmed Kyiv’s position that peace talks with Moscow can’t happen until Russia withdraws from all the territory it has captured.“Russia is on the offensive … and this is the biggest hurdle on the way to peace,” Kuleba said. “We need Russia to agree with a very simple fact that it has to stop the war and withdraw.”Kuleba has maintained a very hard line concerning peace talks with Moscow. He previously said negotiations could only happen after tribunals are held for alleged Russian war crimes. For their part, Moscow maintains any future peace deal must recognize the Ukrainian territory it has annexed as Russian, which is a non-starter for talks with Kyiv.
G7 Foreign Ministers Vow to Increase Russia Sanctions, Slam China - On Tuesday, the foreign ministers of the G7 nations vowed to increase sanctions on Russia and issued a scathing statement against Beijing after three days of talks in Japan.The foreign ministers of the US, Britain, France, Germany, Italy, Canada, and Japan said in a joint statement that they would “intensify” sanctions against Russia and threatened countries that looked to circumvent sanctions or provide Moscow with support.“We remain committed to intensifying sanctions against Russia, coordinating and fully enforcing them, including through the Enforcement Coordination Mechanism, and countering Russia’s and third parties’ attempts to evade and undermine our sanctions measures. We reiterate our call on third parties to cease assistance to Russia’s war, or face severe costs,” the statement said.Concerning China, the ministers said they recognize “the importance of engaging candidly with and expressing our concerns directly to China.” They acknowledged the need to “work together with China on global challenges” but went on to slam Beijing.“We reiterate our call for China to act as a responsible member of the international community,” the ministers said. They slammed China for its actions in the South China Sea, Hong Kong, and over allegations of human rights abuses in Xinjiang and Tibet.“We remind China of the need to uphold the purposes and principles of the UN Charter and abstain from threats, coercion, intimidation, or the use of force,” they said. The ministers also mentioned Taiwan, saying they “reaffirm the importance of peace and stability across the Taiwan Strait.”In response to the statement, Chinese Foreign Ministry spokesman Wang Wenbin said, “The G7 Foreign Ministers’ Meeting grossly interfered in China’s internal affairs and maliciously smeared and discredited China.”“The communiqué reflects the group’s arrogance, prejudice, and deliberate desire to block and contain China. We deplore and reject this and have made a strong démarche to the host Japan,” Wang added.T
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