natural gas rigs dropped by the most in over seven years as west Texas spot prices turned negative; global oil production exceeded demand by 600,000 barrels per day during April, despite Russian cuts and OPEC production that was 1.3 million barrels per day below their reduced quota; SPR at a new 39½ year low; distillates supplies were at at six month low after the biggest draw in 7 months
US oil prices fell for a fourth consecutive week on weak economic reports from the US and China and on the largest jump in US commercial oil supplies since February ..after falling 7.1% to $71.34 a barrel last week after the Fed raised interest rates and Treasury Secretary Yellen warned that the US was nearing a default, the contract price for the benchmark US light sweet crude for June delivery extended Friday's gains in weekend trading after solid jobs data had quelled fears of a U.S. recession, then rallied in New York trading on Monday as recession fears eased and as some traders saw the recent drop in prices due to demand concerns as overdone and settled $1.82 higher at $73.16 a barrel, supported by supply disruptions in Canada and indications of tight global supply, even as all petroleum contracts pared initial sharp advances after a Fed survey revealed tighter credit conditions for U.S. businesses and households...however, oil prices weakened notably in Asian trading Tuesday as fresh data showed China's imports contracted sharply in April while their exports grew at a slower pace, reinforcing signs of a feeble domestic demand recovery following their lifting of Covid-19 controls, then sold off to a low of $71.34 by mid-day in New York as traders took some profits following oil's recent rebound, but then reversed course to settle up 55 cents at $73.71 a barrel by the close, after U.S. Energy Information Administration upwardly revised its global oil demand forecast to indicate a balanced global oil market by later this year and the Biden administration announced it was cancelling 140 million barrels of previously mandated SPR sales and would begin to replenish the SPR later this year...oil prices traded mostly sideways overnight, coming under further pressure after the American Petroleum Institute had reported surprise builds in domestic crude and gasoline stockpiles during the first week of May, then rallied and posted a high of $73.89 following the release of CPI data that showed that US inflation had eased in April, but turned lower after the EIA reported the largest jump in commercial crude supplies since February (albeit facilitated by a withdrawal from the SPR) and then slid to settle $1.15 lower at $72.56 a barrel as the CPI data still suggested that the U.S. Fed would likely hike interest rates further...oil prices slid about 1% in Asian trading on Thursday as a political standoff over the US debt ceiling restoked recession jitters, while a stronger dollar pressured oil too, but then opened higher in New York as strong fuel demand data coupled with optimism over a possible Fed interest rate cut later this year outweighed U.S. debt ceiling worries, before selling off after the weekly jobless claims report showed claims increased to the highest level since October 2021, and a gauge of producer sentiment came in below market expectations, and then tumbled to settle $1.69 or 2% lower at $71.87 a barrel on weak US and Chinese economic data...oil prices fell in early trading on Friday as renewed economic concerns in the United States and China (two main oil consumers) raised fears about global fuel demand growth. then were further pressured by reports that Iraq was preparing to resume oil exports through the Turkish port of Ceyhan, returning 450,000 barrels per day of shuttered oil flows to the global market and thus slid to close 82 cents lower at $70.05 a barrel...that late selloff left oil prices down 1.8% on the week, and in their longest weekly losing streak since November 2021
Meanwhile, US natural gas prices finished higher for the fourth time in 5 weeks after spot prices in west Texas turned negative and drillers shut down the most natural gas rigs in seven years...after falling 11.3% to $2.137 per mmBTU last week as the weather settled into a pattern portending overall light national demand while gas production continued at a record pace, the contract price of US natural gas for June delivery opened 7 cents higher on Monday as production concerns and mild cooling demand provided support and held its early gains to settle 10.1 cents higher at $2.238 per mmBTU on small declines in U.S. daily output and a drop in gas exports from Canada after wildfires shut in some oil and gas production....natural gas prices opened higher again on Tuesday as wildfires in Canada’s Alberta province caused significant disruptions to energy production and gas exports to the US, but traded in a narrow range for the rest of the day before settling 2.9 cents higher at $2.267 per mmBTU on bargain buying amid production interruptions...however, gas prices opened lower and slid on Wednesday, giving up ground amid strengthening production, fading demand and weakness in cash markets, and settled 7.6 cents lower at $2.191 per mmBTU as Canada resumed exports while spot gas prices at the Waha hub in West Texas closed below $0.00 for the first time since October 2020...natural gas prices opened lower ahead of the storage report on Thursday, but advanced most of the day following it, bolstered by a modestly bullish storage print and lighter production, before pulling back and settling a tenth of a cent lower at $2.190 per mmBTU as forecasts for higher demand over the next two weeks than was previously expected were offset by a bigger-than-expected storage build,,,.natural gas prices lost ground early Friday, as forecasts pointed to weak weather-driven demand while supplies remained robust, but bounced back in early afternoon trading after the latest Baker Hughes data showed natural gas-directed rigs fell by the most in over seven years, and held on to settle 7.6 cents higher at $2.266 per mmBTU, thus finishing 6.0% higher on the week..
The EIA's natural gas storage report for the week ending May 5th indicated that the amount of working natural gas held in underground storage in the US increased by 78 billion cubic feet to 2,141 billion cubic feet by the end of the week, which left our natural gas supplies 509 billion cubic feet, or 31.2% above the 1,632 billion cubic feet that were in storage on May 5th of last year, and 332 billion cubic feet, or 18.4% more than the five-year average of 1,809 billion cubic feet of natural gas that were in storage as of the 5th of May over the most recent five years…we would note, however, that the oft quoted national average obscures the fact that gas supplies are 43.6% below normal for this date in the West, while 31.1% above normal in both the East and Midwest regions of the country at the same time....the 78 billion cubic foot injection into US natural gas working storage for the cited week was a little higher than the 74 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, but closer to the 76 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, and somewhat less than the average 87 billion cubic feet addition to natural gas storage that has been typical for the same 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 May 5th showed that after a big drop in our oil exports and a big release of oil from the SPR, we had oil left to add to our stored commercial crude supplies for the 2nd time in 7 weeks, and for the 22nd time in the past 36 weeks, even as new oil supplies that the EIA could not account for were lower this week than last.. Our imports of crude oil fell by an average of 843,000 barrels per day to 5,553,000 barrels per day, after rising by an average of 21,000 barrels per day the prior week, while our exports of crude oil fell by an average of 1,861,000 barrels per day to 2,876,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 2,677,000 barrels of oil per day during the week ending May 5th, 1,018,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly unchanged at 12,300,000 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 14,977,000 barrels per day during the May 5th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,745,000 barrels of crude per day during the week ending May 5th, an average of 10,000 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 4,000 barrels of oil per day were being added to the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending May 5th appear to indicate that our total working supply of oil from net imports and from oilfield production was 771,000 barrels per day less than what we added to storage plue 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 [+771,000] 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 the week’s oil supply & demand figures that we have just transcribed.....In addition, since last week’s “unaccounted for crude oil” was at (+1,306,000) barrels per day, that means there was a 535,000 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 completely useless...However, since most oil traders treat these weekly EIA reports as accurate, and since these weekly figures therefore 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 reliable 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 4,000 barrel per day increase in our overall crude oil inventories came as an average of 422,000 barrels per day were added to our commercially available stocks of crude oil, while 418,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time, the sixth straight draw on the SPR this year, wherein government owned oil is being sold as part of an earlier budget balancing withdrawal mandated by congress, and as a result the 362,014,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since October 7h, 1983, or at a new 39 1/2 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's big SPR releases of last year. However, those Biden administration releases amounted to about 42% of what was left in the SPR when they took office, and that left us with what is now less than a 19 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 6,155,000 barrels per day last week, which was still 1.0% more than the 6,039,000 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 because 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 unchanged at 442,000 barrels per day and 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 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 15,745,000 barrels of crude per day during the week ending May 5th, up from their 90.7% utilization rate during the prior week, and a fairly normal rate for early Spring... The 15,745,000 barrels per day of oil that were refined this week were 0.3% more than the 15,696,000 barrels of crude that were being processed daily during week ending May 6th of 2022, but 4.0% less than the 16,405,000 barrels that were being refined during the prepandemic week ending May 3rd, 2019, when our refinery utilization rate was at 88.9%, on the low side of normal for this time of year...
With the increase in the amount of oil being refined this week, the gasoline output from our refineries was also higher, increasing by 445,000 barrels per day to 9,823,000 barrels per day during the week ending May 5th, after our gasoline output had decreased by 638,000 barrels per day during the prior week. This week’s gasoline production was 1.1% more than the 9,716,000 barrels of gasoline that were being produced daily over the same week of last year, but 3.0% less than the gasoline production of 10,129,000 barrels per day during the prepandemic week ending May 3rd, 2019. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 30,000 barrels per day to 4,606,000 barrels per day, after our distillates output had decreased by 93,000 barrels per day during the prior week. Even with that increase, our distillates output was 5.7% less than the 4,882,000 barrels of distillates that were being produced daily during the week ending May 6th of 2022, and 9.5% less than the 5,089,000 barrels of distillates that were being produced daily during the week ending May 3rd, 2019...
Even after this week's increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the tenth time in twelve weeks, and for the 41st time in 63 weeks, decreasing by 3,167,000 barrels to 219,711,000 barrels during the week ending May 5th, after our gasoline inventories had increased by 1,742,000 barrels during the prior week. Our gasoline supplies fell this week because the amount of gasoline supplied to US users rose by 685,000 barrels per day to 9,303,000 barrels per day, even as our imports of gasoline rose by 55,000 barrels per day to 8538,000 barrels per day, while our exports of gasoline fell by 81,000 barrels per day to 760,000 barrels per day. However, after ten gasoline inventory decreases over the past twelve weeks, our gasoline supplies were 2.3% below last May 6th's gasoline inventories of 224,968,000 barrels, and about 7% below the five year average of our gasoline supplies for this time of the year…
Meanwhile, after a small increase in our distillates production, our supplies of distillate fuels decreased for the 8th time in 9 weeks, falling by 4,170,000 barrels, the biggest drop in 7 months, down to a six month low of 106,153,000 barrels during the week ending May 5th, after our distillates supplies had decreased by 1,190,000 barrels during the prior week. Our distillates supplies decreased by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 163,000 barrels per day to 4,035,000 barrels per day, and because our exports of distillates rose by 260,000 barrels per day to 1,278,000 barrels per day, while our imports of distillates rose by 51,000 barrels per day to 111,000 barrels per day.... Even after 64 inventory withdrawals over the past one hundred and two weeks, our distillate supplies at the end of the week were 2.0% above the 104,029,000 barrels of distillates that we had in storage on May 6th of 2022, but are now about 16% below the five year average of our distillates inventories for this time of the year...
Finally, even with 1.3 million barrels per day of new oil supplies that the EIA could not account for, our commercial supplies of crude oil in storage rose for the 14th time in 20 weeks and for the 27th time in the past year, increasing by 2,951,000 barrels over the week, from 459,633,000 barrels on April 28th to 462,584,000 barrels on May 5th, after our commercial crude supplies had decreased by 1,281,000 barrels over the prior week. Even after several large oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories are now about 1% below the most recent five-year average of commercial oil supplies for this time of year, but more than 31% above the average of our available crude oil stocks as of the last weekend 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. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, our commercial crude supplies as of this May 5th were 9.0% more than the 424,214,000 barrels of oil we had in commercial storage on May 6th of 2022, but were 4.6% less than the 484,691,000 barrels of oil that we still had in storage in the wake of winter storm Uri on May 7th of 2021, and 13.0% less than the 531,476,000 barrels of oil we had in commercial storage as the pandemic effects took hold on May 8th of 2020…
OPEC's Report on Global Oil for April
Thursday of this past week saw the release of OPEC's May Oil Market Report, which includes the details on OPEC's & global oil data for April, and hence it gives us a picture of the global oil supply & demand situation during a period when Chinese demand for oil was increasing during the fourth month after they had reopened to foreign traveler and removed the Covid-related restrictions on its citizens, while oil supplies from Russia were further reduced by their independent cut of 500,000 barrels per day, in response to the European Union's ban of Russian oil imports by sea, and by the G7's Russian oil price cap....April was also the sixth month that OPEC and aligned oil producers were operating under a 2 million barrel per day production cut, meant to take roughly 2% of global oil supplies off the market, in response to a perceived global surplus and related lower prices...the production cut announced at the end of March will take an additional 1.16 million barrels per day of the market starting in May, but that announcement had no impact on the April production covered in this report..
The first table from this month's report that we'll review is from the page numbered 49 of this month's report (pdf page 59), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC has used an average of production estimates by as many as eight "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA), the industry newsletter Petroleum Intelligence Weekly, the energy consultancy Wood Mackenzie and the research and intelligence firm Rystad Energy, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures….
As we can see in the bottom right hand corner of the above table, OPEC's oil output decreased by a rounded 191,000 barrels per day to 28,603,000 barrels per day during April, down from their revised March production total that averaged 28,794,000 barrels per day....however, that March OPEC output figure was originally reported as 28,797,000 barrels per day, which therefore means that OPEC's April production was revised 3,000 barrels per day lower with this report, and hence OPEC's March production was, in effect, 194,000 barrels per day less than the previously reported OPEC production figure (for your reference, here is a copy of the table of the official March OPEC output figures as reported a month ago, before this month's revision)...
while OPEC and other aligned oil producers agreed to reduce production by 2,000,000 barrels per day beginning in November, and while the net 926,000 barrel per day they've cut since were well short of that, OPEC's production was already running 1,585,000 barrels per day below what they were expected to produce when this policy was initiated in October, so the 28,603,000 barrels per day they produced in April leaves them far short of what they were expected to produce during the month, as we'll see in the next table...
The above table was originally included as a downloadable attachment to the press release following the 33rd OPEC and non-OPEC Ministerial Meeting on October 5th, 2022, which set OPEC's and other aligned oil producers' production quotas for November and the following months through the end of 2023, and the quotas shown above were reaffirmed by the cartel for the first 6 months of 2023 in during the 34th OPEC and non-OPEC Ministerial Meeting on December 4th, 2022....the first column above, labeled "August 2022 required production", actually matches the October 2018 baseline production level on which OPEC and aligned producers have based all of their quotas since the onset of the pandemic, and the "Voluntary adjustment" is the production cut each country is expected to make from that benchmark level to achieve a 2 million barrel per day cut for the group, leaving each country with a Volunary Production level they're expected to hit during 2023, whether they've produced that much recently or not....since war torn Libya and US sanctioned producers Iran and Venezuela have been exempt from the production cuts imposed by the joint agreement that has governed the output of the other OPEC producers since May 2020, they are not shown on the above list, and OPEC's quota excluding them is aggregated under the total listed for the 'OPEC 10', which you can see was expected to be at 25,416,000 barrels per day from November 2022 through December 2023...therefore, the 24,114,000 barrels those 10 OPEC members actually produced in March were 1,302,000 barrels per day short of what they were expected to produce during the month, with Nigeria, Angola, and Iraq accounting for the majority of this month's production shortfall...
The next graphic from this month's report that we'll look at shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from May 2021 thru April 2023, and it comes from page 50 (pdf page 60) of OPEC's May Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....
Including this month's 191,000 barrel per day decrease in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate is that total global liquids production decreased by a rounded 500,000 barrels per day to average 101.30 million barrels per day in April, a reported decrease which came after March's total global output figure was apparently revised down by a rounded 100,000 barrels per day from the 101.90 million barrels per day of global oil output that was reported for March a month ago, as non-OPEC oil production fell by a rounded 300,000 barrels per day in April after that downward revision, with most of April's production reduction due to lower oil output from Russia and Canada, which more than offset production increases in "other Asian" countries and Latin America...
After that 500,000 barrel per day decrease in global output, the 101.30 million barrels of oil per day that were produced globally during April were still 1.40 million barrels per day, or 1.4% more than the revised 99.90 million barrels per day that were being produced globally in April a year ago, which was the ninth month of the series of 400 million barrel per day production increases that OPEC and their allied producers implemented as their fourth output policy reset in response to the global demand recovery, following the early pandemic lockdowns (see the May 2022 OPEC report for the originally reported April 2022 details)…with this month's decrease in OPEC's output accounting for almost 40% of the reported global decrease, their April oil production of 28,603,000 barrels per day was 28.2% of what was produced globally during the month, unchanged from their percentage last month, which was incorrectly reported at 28.8% of the global total in last month's report….OPEC's April 2022 production was ultimately revised to 28,684,000 barrels per day with the June 2022 OPEC report, which means that the same 13 OPEC members who were part of OPEC last year produced 81,000 barrels per day, or 0.3% fewer barrels per day of oil this April than what they produced last April, when they accounted for 29.0% of a smaller global output total…
Even with the decrease in global oil output that we've seen in this report, the amount of oil being produced globally during the month was still above the expected global demand, as this next table from the OPEC report will show us...
The above table came from page 29 of the May Oil Market Report (pdf page 39), and it shows regional and total oil demand estimates in millions of barrels per day for 2022 in the first column, and then OPEC's estimate of oil demand by region and globally, quarterly over 2023 over the rest of the table…on the "Total world" line in the third column, we've circled in blue the figure that's relevant for April, which is their estimate of global oil demand during the second quarter of 2023….OPEC has estimated that during the 2nd quarter of this year, all oil consuming regions of the globe will be using an average of 100.70 million barrels of oil per day, which is down from the first quarter's demand figure because the most populated areas of the globe no longer need oil to heat during the Spring, and don't start vacation traveling until Summer.…but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were producing 101.30 million barrels per day during March, which would imply that there was surplus of around 600,000 barrels per day of global oil production in April, when compared to the demand estimated for the month...
Note that in green we have circled an upward revision of 40,000 barrels per day to OPEC's previous estimates of first quarter demand...for March, that means that that the 350,000 barrels per day global oil output surplus we had previously figured for March would be revised to a surplus of 210,000 barrels per day, after the downward revision of 100,000 barrels per day to March's global oil output that's implied in this report is also taken into account... similarly, the upward revision to first quarter demand means that the global oil surplus of 550,000 barrels per day we had previously figured for February would now be revised to a surplus of 510,000 barrels per day, but that the 210,000 barrels per day global oil output shortage we had previously figured for January would be revised to a shortage of 250,000 barrels per day, in light of the 40,000 barrel per day upward revision to first quarter demand....
Also note that in orange we've also circled a downward revision of 10,000 barrels per day to 2022's demand, which also means that the supply shortfalls that we previously reported for last year would have to be revised....a separate table on page 28 of the May Oil Market Report (pdf page 38) indicates the revision to 2022 demand was a downward revision of 30,000 barrels per day to 4th quarter 2022 demand, and demand for prior quarters was unrevised...while we're not inclined to go back and recompute supply & demand for the months of 2022, we have those totals for each month of last year accompanying our review of OPEC's January report, should anyone want to review how 2022's oil supply & demand shook out..
This Week's Rig Count
The number of drilling rigs active in the US decreased for the ninth time in the past thirteen weeks during the week ending May 12th, and is now 7.8% below the prepandemic count, despite increasing ninety-nine times over the past 136 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 17 rigs to 731 rigs over the past week, which was still 17 more rigs than the 705 rigs that were in use as of the May 13th report of 2022, but was 1,198 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 fell by 2 to 586 oil rigs during the past week, after the number of rigs targeting oil had fallen by three rigs during the prior week, while there are still 23 more oil rigs active now than were running a year ago, even as they amount to just 36.4% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are still down 14.2% from the prepandemic oil rig count of 683….at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 16 to 141 natural gas rigs, the largest drop since 2016, which was also down by 8 natural gas rigs from the 149 natural gas rigs that were drilling during the same week a year ago, and as they now amount to just 8.8% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….
In addition to those rigs specifically targeting oil and natural gas, Baker Hughes now shows that four rigs they've labeled as "miscellaneous" are drilling this week: the new one is a directional rig drilling to between 10,000 and 15,000 feet into a formation in Beaver county Utah....other miscellaneous rigs that continue to drill this week 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 into a formation 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....Four operating at once is unusual; a year ago, there were two such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was up by two to 22 rigs this week, with 19 of those rigs drilling for oil in Louisiana's offshore waters, one drilling for natural gas offshore from Vermilion, Louisiana, and two drilling for oil in Texas waters....that Gulf rig count is up by 5 from the 17 Gulf rigs running a year ago, when all 17 Gulf rigs were drilling for oil offshore from Louisiana…however, the directional rig that had been drilling for oil offshore from Alaska was shut down this week, and since there was a rig drilling offshore from Alaska during the same week a year ago, the national total of 22 rigs drilling offshore is up from the national offshore count of 18 a year ago..
In addition to rigs running offshore, there are still two inland water based deployed this week...one is a vertical rig drilling for natural gas to between 10,000 and 15,000 feet on a lake in Jefferson Parish Louisiana, while the other is a directional rig drilling for oil at a depth of between 10,000 and 15,000 feet through an inland body of water in Lafourche Parish, Louisiana...a year ago, there was just one such rig drilling on inland waters...
The count of active horizontal drilling rigs was down by sixteen to 660 horizontal rigs this week, which was still 9 more rigs than the 651 horizontal rigs that were in use in the US on May 613th of last year, even as it was only 48.1% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014…at the same time, the vertical rig count was down by 2 to 19 vertical rigs this week, and those were down by 6 from the 25 vertical rigs that were operating during the same week a year ago....on the other hand, the directional rig count was up by 1 to 52 directional rigs this week, and those were up by 14 from the 38 directional rigs that were in use on May 13th 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 May 12th, the second column shows the change in the number of working rigs between last week’s count (May 5th) and this week’s (May 12th) count, the third column shows last week’s May 5th 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 13th of May, 2022...
we'll start with natural gas rigs this week, since they fell by 16, or by more than 10%, in their largest drop in 7 years....five of those gas rigs pulled out this week had been deployed in the Haynesville shale of northwestern Louisiana, but the Louisiana rig count was just down by four with the addition of a rig in the state's offshore waters....three more natural gas rigs were pulled out of the Marcellus shale, including two from Pennsylvania and one that had been drilling in West Virginia, while the nearby Utica shale in Ohio also saw a gas rig shut down...natural gas rigs in the Eagle Ford shale of Texas were down by four, while there was also considerable other rig switching in the region, leaving the Eagle Ford with 60 oil rigs and just two targeting natural gas...the Permian basin was also down a gas rig, in addition to pulling out two oil rigs, leaving the Permian with 350 oil rigs and three targeting natural gas, as that basin also saw considerable rig switching that doesn't show up in the totals...the last two natural gas rigs removed this week were pulled from a basin that Baker Hughes doesn't track; there are three such basins in Wyoming, so that seems to have been their most probable origin..
among other rig removals, the rig shut down in Alaska had been drilling for oil offshore from the Cook Inlet, the rig pulled out of North Dakota had been drilling for oil in the state's Williston basin, while the three rigs pulled out of Oklahoma include the two oil rigs removed from the Cana Woodford, and another rig pulled from an Oklahoma basin that Baker Hughes doesn't track...rig additions include the "miscellaneous" directional rig added in Beaver county, Utah, and a rig added in Washington county, Colorado that was targetting the DJ Niobrara chalk; the Niobrara was still down one with the removal of two rigs that had been targeting that formation in Laramie County, Wyoming...
Finally, to determine the placement of the New Mexico rig addition, we start by checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian…there we find that there were four rigs pulled out of Texas Oil District 8, which overlies the core Permian Delaware, and that two more rig were pulled out of Texas Oil District 7C, which includes the counties over the southern Permian Midland, while two rigs were added in Texas Oil District 8A, which includes the counties of the northern Permian Midland...since those changes indicate the Texas Permian rig count was down by 4 while the national Permian count was down by three, we can thus conclude the rig added in New Mexico was set up in the far western Permian Delaware in the southeast corner of that state...meanwhile, in the Texas oil districts that include portions of the Eagle Ford Shale in Texas, we find that six rigs were added in Texas Oil District 1, that another rig was added in Texas Oil District 3, while seven rigs were pulled out of Texas Oil District 2, and four more rigs were pulled out of Texas Oil District 4, which thus accounts for an addition of two oil rigs and the removal of four natural gas rigs from the Eagle Ford shale, as well as other offseting rig activity, not all necessarily targeting the Eagle Ford...lastly, there were also five rigs added in Texas Oil District 6, which we would normally consider a Haynesville shale region, but in this week's case they must have been targeting another basin, since the Haynesville count was down by five...
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Ascent Resources 1Q – Big Swing to Profitability, Drilled 19 Wells - Marcellus Drilling News - Ascent Resources, originally founded as American Energy Partners by gas legend Aubrey McClendon, is a privately-held company that focuses 100% on the Ohio Utica Shale. Ascent, headquartered in Oklahoma City, OK, is Ohio’s largest natural gas producer (352,000 leased acres) and the 8th largest natural gas producer in the U.S. The company issued its first quarter 2023 update yesterday. Ascent net production averaged 2.2 Bcfe/d (billion cubic feet equivalent per day) during 1Q23, up 12% over 1Q22. The company made $1.1 billion in profit during 1Q23, a massive +$2.7 billion swing from losing $1.6 billion in 1Q22.
20 New Shale Well Permits Issued for PA-OH-WV May 1-7 | Marcellus Drilling News - New shale permits issued for May 1-7 in the Marcellus/Utica rose slightly from the prior week. There were 20 new permits issued last week, up from 18 in the prior week. Last week’s tally included 15 new permits for Pennsylvania, 5 new permits for Ohio, and no new permits in West Virginia. Last week the top receiver of new permits was PennEnergy Resources, with 5 permits issued in Armstrong County, PA. Chesapeake Energy was second-highest, with 4 permits issued in Bradford County, PA. Armstrong County, Ascent Resources, Bradford County, Chesapeake Energy,Columbiana County, Elk County, EQT Corp, Greene County (PA), Harrison County, Hilcorp Energy, Monroe County, PennEnergy Resources, Seneca Resources, Statoil, Washington County
Shell Sued Over Air Emissions at Pennsylvania’s New Petrochemical Plant - Two environmental groups sued Shell on Thursday, claiming that air emissions from its massive new petrochemical plant about 30 miles north of Pittsburgh repeatedly violated federal and state air-quality laws and far exceeded limits set in its operating permit. The plant officially opened in November 2022 after months of testing. The Environmental Integrity Group and the Clean Air Council said Shell Chemical Appalachia emitted volatile organic compounds including benzene, a carcinogen, as well as nitrous oxide, at levels that exceeded requirements set by state authorities.The 400-acre complex on the banks of the Ohio River in Monaca, Beaver County, also broke state rules on the length of time that it flared, or burned off, waste gases, the suit said.The legal action, which follows an Intent to Sue notice by the plaintiffs in February, is the latest action by community opponents who predicted long before operations began that the plant would worsen air and water quality in a region that has endured historically high levels of air pollution as a result of decades of coal and steel production.“We are witnessing, unfortunately, what many have warned about our region’s choice to follow a petrochemical industry-centered economic strategy: harmful pollution and health costs being placed on families and workers,” said Matthew Mehalik, executive director of the Breathe Project, a Pittsburgh-based nonprofit that campaigns for better air quality. “Just like elsewhere where this industry operates, this lawsuit documents physical pollution failures stemming from bad economic regional strategic bets on outdated business models that neglect the health of communities.”Since being announced in 2015, the estimated $6 billion project has been criticized for attracting $1.6 billion in state subsidies from the administration of former Republican Gov. Tom Corbett. It has also come under fire from environmentalists for “cracking” molecules of ethane, a byproduct of fracked natural gas from the Marcellus and Utica shale formations, to produce what is estimated to be 1.6 million metric tons a year of plastic “nurdles,” tiny pellets that are the feedstock for plastics manufacturers.“Shell received $1.6 billion in taxpayer subsidies from the state to build this plant,” said Sarah Kula, an attorney for the Environmental Integrity Project. “The very least this international corporation can do is to follow the law and not make Pennsylvania taxpayers breathe in their illegal pollution.” Alex Bomstein, an attorney with Clean Air Council, said the plaintiffs had been in talks with Shell during the required 60 days since filing the Intent to Sue notice. But he declined to say whether talks had broken down, or why.The suit says that Shell has emitted high levels of volatile organic compounds, which contribute to atmospheric petrochemical reactions and can produce health effects including headaches, dizziness, respiratory tract infection and memory impairment, according to the U.S. Environmental Protection Agency. The suit also alleges that Shell has exceeded its permitted level of nitrous oxide, which can cause dizziness, impaired memory and even death, according to the Centers for Disease Control and Prevention. The company’s emissions of both substances violates the federal Clean Air Act, and Pennsylvania’s Air Pollution Control Act, the suit says.
Shell's Pennsylvania polyethylene cracker slows operations - Operations at Shell Plc subsidiary Shell Chemical Appalachia LLC’s start-up ethylene cracker in Pennsylvania have started running ‘slower than expected’ due to technical glitches faced by the company just a few months after commencing operations. The plant, with a cumulative capacity of 1.6 million tonnes per annum, began operations in November of last year but has since slowed, presumably due to protests from local citizens. “Our polyethylene cracker at Pennsylvania, also known as Shell Polymers Monaca (SPM), is a world-class facility significantly advantaged by its location, offering an opportunity to create sustainable earnings for us as a company. As we have guided in the past, the ramp-up is going to take the rest of the year,” said Wael Sawan, Chief Executive Officer of Shell Plc during an analysts’ call after the January-March 2023 quarter earnings. “It’s been slower than we would have hoped for, but the team is doing a great job battling with some of the obvious technical niggles that start-ups typically have. We remain hopeful that, through the course of this year, we will bring it up to the levels that we had anticipated in the plan,” he added. The polyethylene cracker is situated on a 386-acre site just southwest of Monaca. The cracker started operations on November 15, 2022, and is proposed to achieve its full ‘nameplate’ operating capacity by the second half of 2023. Shell began construction on SPM in April 2017 following the operator’s final investment decision to move forward with the development in June 2016. The company first proposed its investment possibility in this project in 2012. While announcing the implementation of the SPM petrochemical complex in November, the company stated that it had contracted at the final investment decision for most of the complex’s required natural gas feedstock from regional gas operators in nearby Utica and Marcellus basins. Without divulging details of the gas supply agreements, Shell said, “The Monaca complex will receive the entirety of its regionally-sourced ethane feedstock via Shell Pipeline Co LP’s Falcon ethane pipeline system (FEPS). This is a 97-mile common carrier ethane pipeline stretching across south-western Pennsylvania, West Virginia, and eastern Ohio and connecting Monaca with three major ethane source points in the rich-gas portions of the Marcellus and Utica shale reservoirs such as Houston Pa, Scio, and Cadiz in Ohio.” Explaining the significance, Sawan said, “Our SPM project is going to be a robust asset going forward. I think this is a healthy asset in the US$1-plus billion earnings range in a normal year. A lot of it is tied, but this is a really differentiated asset, uniquely positioned in that supply envelope. Roughly two-thirds of the industry is around that specific asset.” The company can gain an advantage perspective compared to some of the competitors in the Gulf Coast, and therefore, this project has access to nicely priced gas in that area. So, by and large, this is an asset that should be able to outcompete and is well positioned to do so, a company note said.
Antis Attack PA Conventional Drillers Again Over Abandoned Wells -- Marcellus Drilling News --Spotlight PA, a partisan Democrat “newsroom” (propaganda outfit) powered by the Philadelphia Inquirer in partnership with Harrisburg Patriot-News, Pittsburgh Tribune-Review, and WITF PBS Public Media, is taking aim at the conventional drilling industry. In an article about the “crisis” of unplugged orphaned and abandoned conventional oil and gas wells, Spotlight PA, via interviewees, says the $400 million coming from the federal government is not nearly enough money to plug some 200,000+ old wells in the state.
Energy company's latest plan to use Big Sewickley Creek water for fracking draws more pushback -Environmental activists fighting to stop an energy company from drawing millions of gallons of water a day out of Big Sewickley Creek for fracking say the driller has submitted an application to take water from an area that is a popular spot for fishing and swimming. =Members of the Big Sewickley Creek Watershed Association say allowing any water to be removed from the creek or its tributaries runs the risk of causing permanent damage to its ecosystem. In 2021 PennEnergy Resources submitted a request to draw up to 3 million gallons a water a day from a site along the creek and another 1 million gallons a day from the North Fork tributary. In March 2022, after addressing a number of deficiencies called out by state regulators, the company resubmitted its application to only draw 1.5 million gallons a day from a single location along the creek near the Cooney Hollow Waterhole, a dog-leg in the creek at Cooney Hollow and Hoenig roads. The “waterhole,” a roughly 70-foot area and the deepest pool in the creek, is a popular spot for fishing and swimming. On March 9 of this year, PennEnergy submitted an application to move the water intake about 55 feet from the location proposed in last year’s application, according to the DEP. Amanda Peterson, PennEnergy’s manager of investor relations, said the company “is committed to safe and responsible natural gas development utilizing industry best practices that meet or exceed regulatory requirements.” “All water sourcing activities are highly regulated by the Pennsylvania DEP, with applications going through a rigorous permitting process to ensure that the withdrawal of water does not adversely impact the subject water sources. “These regulations ensure the protection of fish and other species, their habitat and that our operations would not impede or interfere with other uses of the water source,” she said. A copy of the company’s water management plan application for proposed operations along Big Sewickley Creek is available on it website.
Summit Midstream 1Q – Marcellus Flows Down, Utica Flows Up - Marcellus Drilling News -- Summit Midstream Partners, formed in 2009 and headquartered in The Woodlands, Texas, operates natural gas, crude oil, and produced water gathering (pipeline) systems in several unconventional shale plays, including the Marcellus and Utica. Last week Summit issued its first quarter 2023 update. While most upstream and midstream companies have seen positive cash flow and profits over the past year, Summit continues to miss the mark. The company lost $14.1 million in 1Q23 versus losing $5 million in 1Q22.
PA AG Indicts 2 Workers for Conspiracy, Fraud re MarkWest Pipeline | Marcellus Drilling News -- On Friday, Pennsylvania Attorney General Michelle Henry announced her office has filed criminal charges against two men for falsifying paperwork and risking catastrophe while working on a natural gas pipeline project in western PA. The AG’s Environmental Crime Section and the US Department of Transportation’s Office of Inspector General investigated a case of suspected fraud in falsifying records for portions of a MarkWest Liberty Pipeline to transport NGLs.
NextEra Energy Selling Its Stake in NE Pa. Marcellus Pipeline | Marcellus Drilling News -- Yesterday, the management of NextEra Energy announced it has officially lost its collective mind. The company is selling its two natural gas pipeline investments–one in Texas and the other right here in the heart of the Marcellus Shale–because it wants to concentrate 100% on unreliable (and government-funded) “renewable” energy projects instead. You may recall that NextEra bought Meade Pipeline Co LLC for $1.37 billion in 2019 (see NextEra Energy Buys 39% Stake in Atlantic Sunrise Pipe for $1.37B). Meade is another name for a small consortium that invested in the Atlantic Sunrise pipeline project, which is majority owned and operated by Williams and a feeder pipeline of Marcellus molecules to the mighty Transco Pipeline system.
Oil and gas production linked to $77 billion in annual health care costs • In an era where global initiatives are pushing for a transition from fossil fuels to cleaner energy sources, the United States is experiencing a concerning trend. Despite these efforts, oil and gas (O&G) production in the country is approaching record levels, raising alarms among health experts who worry about the potential implications of this growth on air quality and human health. While the climate effects of methane produced by O&G operations have been extensively researched, there is a lack of studies examining the health effects of the air pollution generated by these activities. Aiming to address this gap, a collaborative study led by the Boston University School of Public Health (BUSPH), the University of North Carolina Institute for the Environment (UNC-IE), PSE Healthy Energy, and Environmental Defense Fund has been published in the journal Environmental Research: Health. This groundbreaking study reveals that air pollution from the oil and gas sector in the United States has significant detrimental effects on air quality, human health, and associated healthcare costs. The researchers found that nitrogen oxide (NO2), fine particulate matter (PM2.5), and ozone (O3) emitted from U.S. oil and gas production contributed to 7,500 excess deaths, 410,000 asthma attacks, and 2,200 new cases of childhood asthma across the nation in 2016. Taking into account respiratory and cardiovascular-related hospitalizations, adverse pregnancy outcomes, and other health issues, the study estimates that oil and gas production is responsible for $77 billion in annual health costs. This figure is three times the estimated climate impact costs of methane emissions from oil and gas operations. The consequences of O&G-related pollution are not evenly distributed, with the most significant impacts concentrated in areas with substantial oil and gas production. Some of the most affected regions include southwest Pennsylvania, Texas, and Eastern Colorado. However, the health effects of this pollution do not stop at the borders of these production areas. Densely populated cities with little or no gas activity, such as Chicago, New York City, Baltimore, Washington DC, and Orlando, also experience negative health outcomes due to pollution from O&G operations. The study has indicated that policies aimed at reducing oil and gas (O&G) emissions, such as the forthcoming EPA methane regulations, could produce immediate and significant air quality benefits for human health, in addition to the substantial climate benefits. The researchers behind the study are urging policymakers to take these “co-benefits” into account when developing future emissions reduction strategies. The scientists also emphasize that focusing solely on end-of-pipe pollution controls during combustion in power plants, vehicles, buildings, and industries only addresses a part of the problem. According to study corresponding author Jonathan Buonocore, assistant professor of environmental health at BUSPH, “These substantial impacts from oil and gas production show that there are serious consequences across the full life cycle of oil and gas, from ‘well to wheels,’ ‘well to power plant,’ and ‘well to furnace.’” “The health impacts are not just from the combustion of oil and gas. In order for energy, air quality, and decarbonization policies to successfully protect health, they need to incorporate health impacts across this full life cycle.” The research identified the five states with the highest impacts from O&G pollution as Texas, Pennsylvania, Ohio, Oklahoma, and Louisiana. However, interestingly, Illinois and New York – states that produce very little O&G – still ranked 6th and 8th, respectively. Among the three pollutants studied, NO2 was found to be the highest contributor to overall health impacts, accounting for 37% of the effects, followed by ozone at 35%, and PM2.5 at 28%. The majority of these effects were related to mortality. NO2 contributes to the formation of PM2.5 and ozone, so strategies aimed at reducing O&G-produced NO2 could be effective in mitigating health impacts. State regulations addressing precursor NO2 emissions from the O&G sector could help alleviate childhood asthma cases in communities located near emission sources and provide secondary ozone and PM2.5 health benefits in downwind areas. “Curbing oil and gas emissions is one of the fastest, most cost-effective ways to reduce methane and other air pollutants, which improves air quality, protects public health and slows climate change,” said study co-author Ananya Roy, senior health scientist at EDF. “It’s critical that the U.S. Environmental Protection Agency strengthen and finalize its proposed oil and gas methane rules as quickly as possible. These proposed rules should build from leading state approaches in Colorado and New Mexico and go further to end pollution from the practice of routine flaring.”
PHMSA Seeks Stricter Methane Emissions Regulation on Natural Gas Infrastructure - The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) is proposing a new rule to improve the detection and repair of leaks from gas pipelines.The proposed rule would apply to pipelines as well as natural gas storage and liquefied natural gas facilities, according to PHMSA.“Quick detection of methane leaks is an important way to keep communities safe and help curb climate change,” said Transportation Secretary Pete Buttigieg. Overall, the rule would reduce emissions from covered pipelines by up to 55%. The proposal would require pipeline operators to establish advanced leak detection programs; reduce the volume of gas released due to unintentional emissions like leaks and equipment failures; minimize intentional flaring...
Federal pipeline agency rolls out methane proposal - Federal pipeline regulators Friday formally proposed their first regulations to crack down on natural gas leaks from pipelines to reduce pollution and the effects of climate change. “Quick detection of methane leaks is an important way to keep communities safe and help curb climate change” Transportation Secretary Pete Buttigieg said in a statement Friday. “We are proposing a long-overdue modernization of the way we identify and fix methane leaks, thereby reducing emissions and strengthening protections for the American people.” The proposal would cover the 2.7 million miles of transmission, distribution and other pipelines under the jurisdiction of the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration. It would also cover underground natural gas storage facilities and liquefied natural gas facilities. It would update leak detection and repair rules to require companies to use commercially available technologies to find and fix methane leaks from pipelines and other facilities. The proposal was met with enthusiasm from environmental groups and cautious approval from the trade group representing large pipeline companies.
Biden DOT Issues New Partisan Methane Rules for All Gas Pipelines - Marcellus Drilling News - Another breathtaking attempt to strip away the power to regulate oil and gas from the states and concentrate it in unelected bureaucracies (the DC swamp). This latest attempt comes from the Dept. of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA). On Friday, the PHMSA issued a proposed new rule that would slap onerous and very expensive new requirements on pretty much all natural gas pipelines in the country, including 2.7 million miles of gas transmission, distribution, and gathering pipelines; 400+ underground natural gas storage facilities; and 165 liquefied natural gas facilities.
MAD: Time to Oppose “Permitting Reform” for Pipelines & Renewables | Marcellus Drilling News - Ever hear of the term MAD–or mutually assured destruction? It was popularized during the Cold War we had with Communist Russia (i.e. the Soviet Union) in the last century. The MAD doctrine said if one side used a nuclear weapon against the other, the other side would retaliate. The war would quickly escalate, and each side would essentially destroy the other side, and there would be nothing left but cinders. MAD meant nobody, in their right mind, would launch the first nuke. Let’s apply that doctrine to today’s environmental Communists on the left (i.e. the Democrats in Washington). They HAVE launched the equivalent of a nuclear attack against the fossil fuel industry. We think it’s time to retaliate and take them out, too (no winners). How? By refusing to vote in favor of so-called “permitting reform” that would make it easier to build so-called renewable energy projects in this country. Let’s let the left have a taste of the destruction they have brought on fossil energy for the past 20 years or so. See how THEY like it. Yeah, it’s MAD.
US weekly natgas rig count falls by most since 2016 -Baker Hughes (Reuters) -The U.S. oil and natural gas rig count fell this week to its lowest in nearly a year, as gas rigs slumped by the most in a week since February 2016, energy services firm Baker Hughes Co BKR.O said in its closely followed report on Friday. U.S. natural gas NGc1 futures jumped over 5% shortly after Baker Hughes issued the report on expectations the rig count reduction would cut output later this year. NGA/ The oil and gas rig count, an early indicator of future output, fell by 17 to 731 in the week to May 12, the lowest since June 2022. The weekly drop was the biggest since June 2020. Baker Hughes said that leaves the total rig count up by just 17, or 2%, over this time last year. At the end of 2022, the rig count was 193 rigs over the prior year. U.S. oil rigs fell by two to 586 this week, their lowest since June 2022, while gas rigs plunged by 16 to 141, their lowest April last year. U.S. oil futures CLc1 were down about 13% so far this year after gaining about 7% in 2022. U.S. gas futures NGc1, meanwhile, have plunged about 49% so far this year after rising about 20% last year. The drop in gas prices has already caused some exploration and production companies, including Chesapeake Energy Corp, Southwestern Energy Co and Comstock Resources, to announce plans to reduce production by cutting some gas rigs - especially in the Haynesville shale in Arkansas, Louisiana and Texas. The number of rigs active in the Haynesville, the nation's third biggest shale gas field, fell by five this week to 57, its lowest since February 2022, according to Baker Hughes. The rig count in the Eagle Ford shale in South Texas, meanwhile, dropped by two this week to 62, its lowest since May 2022. Despite some plans to lower rig counts, U.S. crude production was still on track to rise from 11.9 million barrels per day (bpd) in 2022 to a new record high of 12.5 million bpd in 2023 and 12.7 million bpd in 2024, according to projections from the U.S. Energy Information Administration (EIA) in May. The last record output was hit in 2019 at 12.3 million bpd. U.S. gas production, meanwhile, was on track to rise from a record 98.13 billion cubic feet per day (bcfd) in 2022 to 101.09 bcfd in 2023 and 101.24 bcfd in 2024, according to EIA's projection. 10:06 AM
Democrats press Biden administration on climate impact of LNG buildout (Reuters) - Dozens of Democratic lawmakers on Monday called on the Biden administration to consider the climate and environmental justice impacts of the expansion of the liquefied natural gas (LNG) industry.The 44 lawmakers, including Senators Jeffrey Merkley, Edward Markey and Representatives Jared Huffman and Raul Grijalva, urged the Council on Environmental Quality, a White House office, to "include greater scrutiny on the entire LNG supply chain" as it finalizes guidance on greenhouse gas emissions and climate change under bedrock U.S. environmental law.In a letter to Brenda Mallory, the CEQ chair, the lawmakers asked for the scrutiny "from wellhead, through export outside the United States, to combustion."As the U.S. vies for the top LNG exporting spot, administration officials have been holding talks with global energy companies and foreign officials about potential ways to certify emissions reductions of natural gas.While some gas drillers are marketing certified, or responsibly sourced gas, with carbon reductions certified by third parties, the administration has not weighed in on how such certification should work.As Europe cuts gas purchases from Russia after its invasion of Ukraine, the Biden administration has approving exports of LNG from projects, a step in opening potential projects.In the latest support for the industry, it approved LNG exports from Alaska LNG last month. Project backers hope it will be open by 2030, though no final investment decision has not been made."Existing LNG infrastructure already has a disproportionate impact on Black, Brown, Indigenous, and poor communities; this will only be exacerbated with the addition of the proposed projects," the letter said.The lawmakers said U.S. agencies decide on LNG projects based on a public interest determination made during the era of former President Donald Trump that fails to incorporate drilling emissions of methane, a potent greenhouse gas, which, they said, makes LNG exports worse than coal.
Congressional Democrats ask Biden administration to revamp LNG permit process More than 40 congressional Democrats urged the Biden administration, in a letter released Monday, to consider the possible environmental risk of liquefied natural gas (LNG) expansion. Forty-four senators and representatives wrote to Brenda Mallory, chair of the White House Council on Environmental Quality (CEQ), calling on her to develop specific best practices for the LNG infrastructure approval process.Specifically, the members expressed concerns that CEQ assesses LNG permits based on a Trump-era framework that does not address upstream methane emissions. The 2020 changes to the assessment process barred the CEQ from considering indirect environmental impacts of permitting.Although methane dissipates faster in the atmosphere than carbon dioxide, it is also about 25 times more effective at trapping heat in the atmosphere, making it a particular concern as a driver of climate change. The letter was led by Sen. Jeff Merkley (Ore.) and Reps. Raúl Grijalva (Ariz.), Jared Huffman (Calif.) and Nanette DÃaz Barragán (Calif.).“Our ability to combat the worst impacts of the climate crisis depends, to a significant degree, on whether the United States approves proposed LNG pipeline and export terminal projects on top of the already-substantial LNG infrastructure,” the members wrote.“CEQ’s guidance should include examples and best practices for how agencies should conduct meaningful engagement to ensure that relevant agencies conduct proper and adequate analysis of the direct, indirect, and cumulative effects of LNG infrastructure,” they added.U.S. production of LNG has dramatically expanded in recent years, particularly for export to European nations seeking an alternative to the Russian oil they relied on before the invasion of Ukraine. Exports rose to an average of 10.6 billion cubic feet per day last year, a 9 percent increase from 2021, according to the U.S. Energy Information Administration, which projects a daily average of 12.1 billion per day this year.
In the Florida Panhandle, a Black Community’s Progress Is Threatened by a Proposed Liquified Natural Gas Plant - —Not long ago, this rural coastal town in the Florida Panhandle was home to a thriving Black community, with locally owned shops and restaurants and plentiful jobs at the nearby paper mill. Their community fell into decay after the paper mill closed in 1999, but today residents have big plans for restoring and uniting it, finally, with the white side of town. They envision a reinvented Martin Luther King Boulevard, the main thoroughfare here, with mixed-use development, extended sidewalks and a new Black history museum. They had crafted a redevelopment plan with the community’s beachy location making tourism and real estate opportunities the centerpiece. To support their dream, the residents had secured three grants from the Environmental Protection Agency, together totaling $850,000, for health and housing needs, repairs after Hurricane Michael in 2018 and a legacy of pollution left by the paper mill. They just garnered another one in April from the Biden administration, aimed at finding nature-based solutions for frequent flooding affecting the community. But elected officials and a Miami-based energy company, Nopetro Energy, have other plans: a liquified natural gas plant on the same 60 acres, now vacant and weedy, where the paper mill once stood. The LNG plant would involve three enormous refrigerators that would cool natural gas to an extreme minus-260 degrees Fahrenheit, turning the fossil fuel into a liquid. The LNG then would be loaded into shipping containers and trucked a crucial quarter mile—1,300 feet—to a dock, where a crane would hoist the containers on cargo ships destined for the Caribbean and Latin America. The 1,300 feet is a crucial detail because it has enabled Nopetro to move forward with the plant without any oversight from federal regulators, sparing the energy company a lengthy and costly environmental review process that would have involved the public, said Tyson Slocum, energy program director at Public Citizen, a consumer advocacy group in Washington. “If you look at the details of Nopetro’s design, they clearly worked with lawyers to intentionally design and orient their LNG terminal specifically to evade FERC oversight,” he said. “This is why this case is so insane. FERC is mangling common sense and the plain statutory language. It’s insane that we’re even having to file this lawsuit.”
Sempra Considers Delaying Cameron LNG Phase 2 as Gulf Coast Costs, Labor Crunch Grow - Sempra Infrastructure could delay a final investment decision (FID) to expand the Cameron LNG facility in Louisiana to avoid further impacts from a mounting labor and supply crunch for projects on the Gulf Coast. The liquefied natural gas infrastructure unit of San Diego-based Sempra had been targeting the completion of a competitive front-end engineering and design (FEED) process sometime this summer. Management said the project would then soon reach FID, as Sempra has already formed equity and offtake agreements with partners in the first phase. However, CEO Justin Bird told analysts during a first quarter call Thursday that the process may be extended as cost headwinds stack up for Gulf Coast projects.
US natgas up 5% on daily output decline, Canada wildfires (Reuters) - U.S. natural gas futures gained about 5% to a one-week high on Monday on small declines in U.S. daily output and a drop in gas exports from Canada as wildfires shut in some oil and associated gas production. Prices climbed despite forecasts for milder weather and less U.S. demand over the next two weeks than previously expected. Front-month gas futures for June delivery on the New York Mercantile Exchange rose 10.1 cents, or 4.7%, to settle at $2.238 per million British thermal units (mmBtu), their highest close since May 1. With gas prices down about 11% last week, speculators boosted their net short futures and options positions on the New York Mercantile and Intercontinental Exchanges for a second week in a row to their highest since early April, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report. Analysts said that increase in shorts could lead to a short-squeeze that would boost prices in the near future. In the spot market, mild spring weather and a lack of heating or cooling demand pressured next-day power and gas prices for Monday to their lowest in years. Next-day gas fell to its lowest since October 2020 at the Henry Hub benchmark in Louisiana and its lowest since July 2020 at the Southern California Border NG-SCL-CGT-SNL. Next-day power sunk to a record low of $3.25 per megawatt hour (MWh) at the SP-15 hub in Southern California. At the Palo Verde in Arizona power prices dropped to their lowest since May 2020, while in New England power prices fell to their lowest since March 2021. Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 101.6 billion cubic feet per day (bcfd) so far in May, up from a record 101.4 bcfd in April. On a daily basis, however, output fell to a two-week low of 101.1 bcfd on Saturday. Wildfires in Alberta in Canada caused some producers to shut some oil and gas output and pipeline flows. Gas exports from Canada to the U.S. fell to 6.7 bcfd on Sunday, the lowest since April 2021, according to Refinitiv. That is down from an average of 8.5 bcfd of gas that Canada has exported to the U.S. since the start of the year. Meteorologists projected the weather would remain mostly warmer than normal through May 23 with fewer Total Degree Days (TDD) than usual for this time of year. TDDs measure the number of degrees a day's average temperature is above or below 65 degrees Fahrenheit (18 degrees Celsius) to estimate demand to cool or heat homes and businesses. With the warmer weather coming, Refinitiv forecast U.S. gas demand, including exports, would hold near 90.8 bcfd this week and next. Those forecasts were lower than Refinitiv's outlook on Friday.
Natural Gas Futures Continue to Climb Early Amid Supply Disruptions - Natural gas futures added to recent gains in early trading Tuesday as the market continued to gauge the impact of cuts to Canadian supply amid wildfires in Alberta. Coming off a 10.1-cent rally in the previous session, the June Nymex contract was up 3.6 cents to $2.274/MMBtu at around 8:50 a.m. ET. Monday’s rally saw the June contract approach the 20-day moving average at $2.25, with supply disruptions from wildfires in Canada contributing to the move higher, EBW Analytics Group analyst Eli Rubin said. “The 20-day moving average remains a key near-term technical inflection point; if Nymex gas can break out higher, it could open the door to prices in the $2.30s/MMBtu,” Rubin said. Analysts at ICAP Technical Analysis said that even after Monday’s rally it will take...
US natgas falls 3% as Canada exports rise, Waha turns negative (Reuters) - U.S. natural gas futures fell about 3% on Wednesday as Canada boosted exports after reducing flows earlier in the week due to wildfires in Alberta, and spot gas prices at the Waha hub in West Texas closed in negative territory for the first time since October 2020. The spot gas prices at the Waha hub in the Permian Shale closed in negative territory as pipeline maintenance prevented some gas from leaving the basin and mild spring weather reduced demand for the fuel. Gas futures fell despite a decline in U.S. output in recent days and forecasts for higher gas demand over the next two weeks than previously expected. Front-month gas futures for June delivery on the New York Mercantile Exchange fell 7.6 cents, or 3.4%, to settle at $2.191 per million British thermal units (mmBtu). On Tuesday, the contract settled at its highest level since May 1 for a second day in a row. The White House on Wednesday called on Congress to pass permitting legislation that would help speed up clean energy and fossil fuel projects, betting that the bipartisan measure may help end a standoff on the debt ceiling. Data provider Refinitiv said average gas output in the U.S. Lower 48 states held at 101.4 billion cubic feet per day (bcfd) so far in May, matching the monthly record hit in April. On a daily basis, however, output was on track to drop by 1.3 bcfd over the past couple of days to a preliminary two-week low of 100.4 bcfd on Wednesday. The amount of gas flowing from Canada to the U.S. was on track to reach 8.0 bcfd on Wednesday after dropping to a 25-month low of 6.7 bcfd on Sunday as wildfires in Alberta caused some producers to shut oil and gas output and pipeline flows. Since the start of the year, Canada exported an average of 8.5 bcfd of gas to the U.S. Meteorologists projected the weather would remain mostly warmer than normal through May 23 with fewer Total Degree Days (TDD) than usual for this time of year.
UPDUS natgas futures climb 4% as producers drop rigs (Reuters) - U.S. natural gas futures climbed about 4% on Friday on worries output will decline in the future after energy companies this week cut the number of rigs drilling for gas by the most in seven years. The gas rig count, an early indicator of future output, fell by 16 to 141 in the week to May 12, the lowest since April 2022, energy services firm Baker Hughes Co said in its closely followed report. That weekly gas rig decline was the most since February 2016. Before Baker Hughes released its report, gas prices were little changed despite record U.S. output, rising exports from Canada after wildfires and forecasts for mild weather that should keep demand low and allow utilities to inject more gas into storage than usual in coming weeks. Front-month gas futures for June delivery on the New York Mercantile Exchange rose 7.6 cents, or 3.5%, to settle at $2.266 per million British thermal units (mmBtu). For the week, the contract was up about 6% after falling about 11% last week. In the spot market, a lack of demand due to mild weather caused next-day prices for Friday at the PG&E Citygate in Northern California to drop to its lowest since June 2021. Data provider Refinitiv said average gas output in the U.S. Lower 48 states held at 101.4 billion cubic feet per day (bcfd) so far in May, matching the monthly record high in April. The amount of gas flowing from Canada to the U.S. was on track to hold at 7.6 bcfd for a third day in a row on Friday, up from a 25-month low of 6.7 bcfd on Sunday as wildfires in Alberta caused some producers to shut oil and gas output and pipeline flows. Since the start of the year, Canada has exported an average of 8.5 bcfd of gas to the United States. Meteorologists projected the weather in the U.S. Lower 48 states would switch from warmer-than-normal levels from May 12-17 to near-normal from May 18-27. Refinitiv forecast U.S. gas demand, including exports, would rise from 91.2 bcfd this week to 91.9 bcfd next week as some homes and businesses turn on their air conditioners before sliding to 90.1 bcfd in two weeks as the weather turns milder. Gas flows to the seven big U.S. LNG export plants fell to an average of 13.1 bcfd so far in May, down from a record 14.0 bcfd in April. The decline was due mostly to reductions at Cameron LNG's terminal in Louisiana and Cheniere Energy Inc's Sabine Pass in Louisiana. Last month's record flows were higher than the 13.8 bcfd of gas the seven plants can turn into LNG since the facilities also use some of the fuel to power equipment used to produce LNG. Some analysts have questioned whether this year's gas price collapse in Europe and Asia could force U.S. exporters to cancel LNG cargoes this summer after mostly mild weather over the winter left massive amounts of gas in storage. In 2020, at least 175 LNG shipments were canceled due to weak demand. But for now, most analysts say energy security concerns following Russia's invasion of Ukraine in February 2022 should keep global gas prices high enough to sustain record U.S. LNG exports in 2023. Gas was trading at 22-month lows of around $11 per mmBtu at the Dutch Title Transfer Facility (TTF) benchmark in Europe and the Japan Korea Marker (JKM) in Asia. That put TTF down about 54% and JKM down about 62% so far this year.
14,000 Inactive Oil & Gas Wells In U.S. Unplugged -A study published in Nature Energy on Monday has revealed that the U.S. Oil Patch is home to tens of thousands of inactive offshore oil and gas wells that remain unplugged, posing the risk of possible leaks into the ocean. The study estimates that whereas plugging and abandoning these wells could minimize their environmental risk, the exercise would cost the industry a hefty $30 billion. There are more inactive, non-producing wells in the Gulf of Mexico coastal waters in Louisiana, Texas and Alabama that have not been plugged and abandoned than currently active wells in this region. It also means that companies operating in the region risk clashing with the regulators sooner rather than later.Last week, the U.S. pipeline regulator unveiled new rules aimed at lowering methane leaks from the vast network of 2.7 million miles of natural gas pipelines in the country. The proposal issued Friday by the Transportation Department's Pipeline and Hazardous Materials Safety Administration could "significantly improve the detection and repair of leaks from gas pipelines... deploy pipeline workers across the country to keep more product in the pipe, and prevent dangerous accidents."The agency estimates the new rules could potentially eliminate 1 million metric tons of methane emissions by 2030, the equivalent of emissions from 5.6 million cars. Leaky oil and gas infrastructure has been playing an outsized role in climate change by spewing out far more quantities of an even more potent greenhouse gas into the atmosphere than earlier thought. Three years ago, Reuters reported that satellites by the European Space Agency had detected huge plumes of methane leaking from the 2,607-mile-long Yamal pipeline that transports natural gas from Siberia to Europe. The massive methane leaks could throw a monkey wrench into the natural gas bridge which presupposes that natural gas is a cleaner fossil fuel resulting in it being favored over coal in the global energy mix. Although methane does not usually get the same bad rap that carbon dioxide does, it’s actually a far more potent greenhouse gas, more than 80X more powerful at warming the earth than CO2 over 20 years and 28x more powerful on a 100-year timescale.
Price to Plug Old Wells in Gulf of Mexico? $30 Billion, Study Says. - Ever since the first offshore platforms went up off Louisiana 85 years ago, the Gulf of Mexico has been an oil and gas juggernaut. But decades of drilling has left behind more than 14,000 old, unplugged wells at risk of springing dangerous leaks and spills that may cost more than $30 billion to plug, a new study has found. Nonproducing wells that haven’t been plugged now outnumber active wells in the gulf, the study says. The researchers also found that, in federal waters, nearly 90 percent of the old wells were owned at some point in the past by giant oil companies known as the “supermajors,” including BP, Shell, Chevron and Exxon. Under federal law, that means those companies would still be responsible for cleanup costs, even though they might have sold the wells in the past, the study’s authors said.. Decades of drilling has left 14,000 old, unplugged wells in the Gulf of Mexico.Oil and gas companies are responsible under federal and state rules for securely plugging wells that are no longer in service. In the boom-and-bust world of oil and gas drilling, though, operators frequently go bankrupt, leaving wells orphaned and unplugged, and taxpayers on the hook.That raises risks that oil and other pollutants will leak into the ocean and travel to shore and smother wetlands, particularly sensitive salt marshes along the northern Gulf Coast. Wells that aren’t properly plugged with concrete can also leak significant amounts of methane, a potent greenhouse gas that contributes to climate change and its increasingly catastrophic consequences.Orphaned oil and gas wells are a big issue onshore, too. “But offshore is a different beast, particularly in terms of the costs involved,” said Mark Agerton, an expert in energy economics at the University of California, Davis, who is one of the study’s authors. “The wells are bigger, and they’re just a lot more expensive. You can’t just drive a truck up to it.”The $1 trillion infrastructure bill that President Biden signed into law in 2021 sets aside $4.7 billion to plug orphaned wells, both onshore and off. That’s a sizable sum, but not nearly enough to cover the backlog of orphaned wells. Still, in federal waters, the government can hold prior owners of wells liable for plugging them, even if the current owners go under or otherwise don’t fulfill their cleanup obligations. Eighty-seven percent of wells under federal jurisdiction were once owned by one of the supermajors, many of which have recently booked record profits. The companies named in the report did not respond to requests for comment. It makes sense for public funds to prioritize plugging wells in state waters, where no such provision exists. Wells in state waters also tend to be in shallower locations, which make them cheaper to plug. Any pollution from wells closer to shore has a higher chance of reaching the shore and wreaking havoc with the coastal environment, making plugging those shallower wells more urgent.
Shell Refinery Unit Had History of Malfunctions Before Fire - The units at a Houston-area Shell refinery that caught fire this weekend repeatedly malfunctioned in recent years without recourse from Texas regulators. Since the start of 2022, the British oil giant reported at least four malfunctions at one olefins unit in its Deer Park petrochemical refinery that had resulted in thousands of pounds of illegal pollution but no fines or citations. Olefins units—the heart of petrochemical complexes—separate hydrocarbons into the components of plastics. In every case prior to this weekend’s fire, Shell invoked the “affirmative defense,” an element of Texas law that relieves industrial operators of liability for pollution events that are reported as accidents or emergencies. Critics of the affirmative defense say it allows companies to defer expensive equipment upgrades and maintenance without fear of consequences for dangerous malfunctions. “If I was involved in a car crash and hurt someone, I can’t just put my hands up and say ‘it was an accident,” said Jaun Parras, a longtime public health advocate in Houston and co-director of TEJAS Barrios, an environmental justice nonprofit. “So why are we letting Shell and its funders get away with incidents like this?”Last month, a study released by the Environmental Integrity Project found that industries in Texas reported thousands of illegal emissions each year but rarely faced legal consequences. “In only one half of one percent of these incidents did the state use its legal authority to require the companies to analyze the cause of the problem and take concrete action to avoid these pollution releases in the future,” the study said. According to a Friday report filed by Shell with the Texas Commission on Environmental Quality, a fire at its Deer Park chemical plant shut down the refinery’s olefins units on Friday afternoon. The fire went out early Saturday morning but then reignited and burned until Monday.
Big Oil Tries To Buy Its Own Courts -When Texas oil and gas companies need to remove a legal roadblock to drilling, or answer for alleged wrongdoing, they head to court — and a bill that could be considered by the state legislature as early as Thursday would hand them considerable sway in picking the judges that hear some of their cases.The state’s $200 billion fossil-fuel industry has thrown its weight behind legislation that would create a new system of district courts to hear certain disputes involving corporations. While 26 states already have so-called business courts, the Texas proposal has a unique feature: Republican Gov. Greg Abbott, who has been bankrolled by fossil fuel donors, would have the power to personally appoint judges, who would then serve two-year terms — a tenure that would let Abbott quickly remove judges if they deny favorable rulings to his supporters.The legislation backed by the oil industry comes just after the U.S. Supreme Court allowed climate cases against fossil fuel companies to proceed in state courts. Opponents of the business-court plan say that not only would it run afoul of the state constitution, which mandates the popular election of district and appellate judges, it could also set a dangerous national precedent by undermining the independence of the judiciary.As a result, cases that would otherwise be heard by judges elected by communities in their districts could instead be forced into courts controlled by the governor — and by extension, his donors.Abbott, who has raked in more than $42 million of campaign cash from the oil and gas industry during his career, has already raised eyebrows by appointing some of those donors to political positions — including an oil tycoon whom he tapped to head the agency overseeing the state’s energy grid.Some experts also raised alarms about a separate intervention by Abbott into the legal process last month, when he called for the pardon of a man convicted of killing a protester before his sentencing had even taken place.The business court bill exacerbates those concerns by allowing the governor to handpick judges overseeing cases impacting some of his largest contributors.Since they serve terms shorter than his own, “there’s a real danger that he can just swap them out every two years if they aren't making the kinds of rulings he wants,” said Texas-based commercial practice attorney Michael Smith. “It’s a basic separation of powers issue.”Smith testified against the bill last month on behalf of the Texas chapter of the American Board of Trial Advocates (ABOTA), one of three statewide legal associations opposing the measure alongside several Democratic appeals court judges and state consumer groups.The push for business courts is backed by a broad swath of industries,including lobbying groups representing the different segments of the state’s fossil fuel sector, as well as Energy Transfer, the pipeline company owned by billionaire Abbott donor Kelcy Warren.Those groups rely on the state’s district courts for a range of issues that help maintain business as usual — from suing Texas cities over municipal bans on fracking to removing regulatory roadblocks to pipeline development and filing condemnation petitions against residents who resist it.Fossil-fuel companies also frequently end up in the state’s district courts when they’re accused of wrongdoing. Energy Transfer, ExxonMobil, and Kinder Morgan — all of which have delivered big donations to Abbott — are among the energy companies currently facing a spate of lawsuits over claims of profiteering during the state’s deadly winter blackouts in 2021, though the new business courts would not have jurisdiction over claims already before district courts.The Texas House passed the bill last week on a party-line vote; the state Senate is scheduled to vote on it as soon as Thursday.
Lawsuit: State allowance on oil and gas violates New Mexico Constitution - Plaintiffs in a civil lawsuit filed Wednesday are seeking a seismic shift for New Mexicans’ rights to a “healthful and beautiful environment.” In a complaint spanning 100 pages, environmental groups, youth activists and individuals from the Pueblos, the Permian Basin and Navajo Nation sued the state of New Mexico, top officials and rulemaking bodies on oil and gas. Their argument is twofold. Plaintiffs allege the state’s permitting of oil and gas production and failing to enforce pollution laws violated its duty laid out in a 1971 amendment Article XX Section 21 of the state constitution. The second claim is that the state’s actions allowing more oil and gas production and failing to limit pollution discriminated against indigenous people, youth and frontline communities. New Mexico is the second largest producer of crude oil in the nation, and seventh-largest in gas extraction. High extractions pumped billions of dollars into state coffers this past year – but that production and use of oil and gas is driving the heating of the planet. The state also feels the sharp edge of the climate crisis. Wildfiresripped across forests parched by drought, intensified by higher temperatures. Water shortages on the state’s rivers, depleted aquifers as a result of the drought lasting decades has cut into agriculture and Pueblo traditional ways of life. Those areas are dried out, then inundated with stronger rainstorms, causing flooding. The decimation of habitats and the changing climate is driving another mass extinction. The lawsuit claims the state damaged the health of people living around oil and gas extraction and the environment “in a way that has caused and will continue to cause human deaths, shorten life spans, result in widespread damage to property, threaten food sources and dramatically alter ecosystems.” Mario Atencio, one of the plaintiffs, said he’s looking for justice after he said the state failed to protect water and resources from an oil and gas disaster near Counselor, New Mexico. In 2019, Atencio described how a spill of 42,000 gallons of toxic liquid waste and 12,500 gallons crude oil contaminated water near property owned by his father’s family. The lawsuit alleges the state failed to warn the family about the spill or any problems with groundwater.
Saving abandoned wells from environmental disaster in Kansas – Have you ever wondered what happens with old abandoned oil derricks in Kansas? Since 1995, around 11,000 natural gas and oil wells drilled over the last century-and-a-half have been plugged off. Oil and gas drilling started in the late 1800s and spread east to west through Kansas. Development of drilling regulations didn’t begin until the late 1930s, with comprehensive regulation not established until the 1970s, according to a Kansas Corporation Commission (KCC) report.Many oil wells were never properly plugged off, leaving potential environmental consequences up to a century later, according to the KCC. Many wells weren’t documented and have been buried or overgrown, making them hard to find. Wells found in the eastern part of the state are typically older and have very little industry or historical documentation. “As a general rule, as you move west, specifically the southwest, it [wells] gets deeper,” KCC Conservation Division Director Ryan Hoffman said. “The further east you go, the shallower it is. It’s geology. It’s where the formations that produce the oil and gas are.” Kansas has historically been a top 10 producer of oil and gas in the U.S., according to Hoffman. In the late 1800s and early 1900s, wells were typically plugged by pouring cement in the hole from the surface, according to the National Petroleum Council (NPC). For shallower wells, the method was somewhat effective. As wells went deeper, cement needed to be pumped down to desired depths. Many early plugs didn’t harden as desired because holes required prior cleaning, according to the NPC. Newer methods use cement with hole-cleaning characteristics, which can displace leftover mud. Modern methods run a tube to the desired depth, and cement is pumped down the tubing. Cement flows around the tubing then water is pumped behind the cement. If done correctly, the cement will fill the space left by the tubing and leave a section of clean cement. In the 1950s, prior to modern regulations, many wells were plugged with brush, wood, paper sacks, linen or any other form of material that could be pushed into a well, according to the NPC. “If it’s a shallower well, we may just pull the tubing out and fill it with cement,” Hoffman said. “So, you have your casing there, and you fill that with cement all the way to the surface. Some of the deeper wells, instead of filling with cement, we’ll stage plugs over useful water or other formations like salt sections to keep them from being intruded by any other fluids and then cement at the surface.” Field data from four Conservation Division Districts puts the average cost to plug a well at $10,739. At this price, the remaining 5,290 abandoned wells in Kansas would cost roughly $56 million. Price discrepancies between districts are typically due to well depth, with deeper wells requiring more effort to plug, according to the KCC. In 2022, 249 plugging operations were approved, and all projects were completed. There are still more abandoned wells needing plugs than federal funds can provide.
As the anniversary of Enbridge’s refusal to shut down Line 5 approaches, groups press Biden admin ⋆ As the two-year anniversary approaches since Canadian oil company Enbridge began defying a state shutdown order, environmental groups this week are renewing their call for the Biden administration to take immediate action to protect the Great Lakes from a controversial 70-year-old crude oil pipeline. “There’s no place for old technology that pumps crude oil through Lake Michigan,” said Sean McBrearty, coordinator for the anti-Line 5 group Oil & Water Don’t Mix. “Whether or not Line 5 in the Straits of Mackinac is ever replaced some day, right now it is a ticking time bomb. That’s why the State of Michigan acted to shut it down and that’s why President Biden must urgently act to protect the Great Lakes before it’s too late.” In November 2020, Michigan Gov. Gretchen Whitmer set a six-month deadline for Enbridge to cease operation of the two 20-inch underwater pipelines in the Straits of Mackinac while ordering the company’s 1953 easement with the state to be revoked and terminated. That deadline expired on May 12, 2021. Saturday will mark two years since the energy company has refused to comply. Enbridge is fighting a federal lawsuit filed by Michigan Attorney General Dana Nessel in 2019 seeking to return the case to state court. That case currently sits before the U.S. Court of Appeals for the Sixth Circuit, with Democratic leaders, with Democratic leaders in Michigan recently urging the Biden administration to intervene on behalf of the state. Tribal citizens and supporters march through Mackinaw City to protest Line 5 as part of the “Heart of the Turtle” international Indigenous gathering in opposition to oil pipelines, May 14, 2022 | Laina G. Stebbins Whitmer’s order terminating Enbridge’s Line 5 easement agreement cited numerous violations by Enbridge, including missing anchor supports, missing protective coatings, and pipeline damage, including from multiple ship anchor strikes. Enbridge argues that the pipeline tunnel they are seeking to build through the Straits would eliminate the chance of problems like an anchor strike while vastly reducing the possibility of oil ever leaking into the Great Lakes.
Bad River tribe and allies call for emergency Line 5 shutdown - Next week a court filing by the Bad River Band of Lake Superior Chippewa will be brought before a U.S. district court judge in Madison who is presiding over a legal battle between the tribe and the Canadian energy company Enbridge, over the company’s Line 5 pipeline. Since 2019, the tribe has argued that Enbridge is trespassing on its land, and that the pipeline endangers the Bad River. Momentum has continued to build on both sides of the legal battle, with the pipeline continuing to operate all the while.“The interconnected waters flowing through the Mashkiiziibii—the Bad River — are inseparable from our people’s existence,” said Bad River Band Chairman Mike Wiggins in a May 11 statement. “We cannot afford to place our trust wholly in Enbridge’s assurances that these waters are safe. Instead, we must follow the science and our own traditional knowledge gathered by generations whose lives depended on this ecosystem.”Wiggins’ statement accompanied the tribe’s court filing calling for an emergency closure of the pipeline. The filing echoes many concerns expressed by the tribe and environmental advocates about the possibility of a catastrophic failure in the pipeline. It highlights that some estimates show there are just 11 feet of protective soil underneath the pipeline, and just 5 feet above it.A breach in the pipeline could trigger a significant water quality and ecological disaster, the filing argues. Those fears have been further amplified by the arrival of spring flood season. In October, during court proceedings related to the tribe’s lawsuit, experts testifying on behalf of the Bad River Band stated that spring flooding could leave Line 5 virtually inaccessible. The lawsuit stemmed from the pipeline’s operation on tribal lands despite the tribe’s decision not to renew easements which expired in 2013.Last September, U.S. District Judge William Conley ruled that Enbridge is illegally trespassing on tribal land while collecting profits. An immediate shutdown of the pipeline was not on the table at the time. By December, the tribe and Enbridge were supposed to meet to discuss completing shutdown protocols for the pipeline, but were unable to come to an agreement. Opponents of the pipeline point to its design as an underground pipeline, not one meant to endure rushing river currents and flood waters. Shoreline erosion in Wisconsin is another concern, with experts testifying that in 2016 the riverbank lost 15 feet of shoreline in a single storm. Some 10 feet of riverbank has been lost in one part of the river in the two weeks prior to the emergency filing on Wednesday. Shoreline erosion is one effect of climate change in Wisconsin.The Enbridge company has countered that the 645-mile oil pipeline — which was built in 1953 — is modern, safe and crucial for supporting local economies, jobs and the supply of energy. A reroute has been proposed for the pipeline to steer it away from tribal lands. However, the Bad River Band has continued to demand that the pipeline be removed from the entire watershed, and not just from tribal lands.Wiggins is concerned that while the court makes its decision, Line 5 remains a ticking time bomb. “In one week alone, nearly half the riverbank eroded away,” said Wiggins. “At this moment, just one more storm could expose the oil pipeline to the river’s current, and we could experience a release of oil akin to what happened in the Yellowstone River in 2011 or the Arkansas River in 2014. This is an imminent threat not just to our way of life, but to the clean waters that sustain all the residents and businesses throughout the Lake Superior basin. The court needs to take action to shut down and purge Line 5 before it’s too late.”
EIA sees US oil output rising 5% in 2023, cuts price forecasts --The Energy Information Administration forecast U.S. crude production will rise about 5% in 2023, while fuel demand will increase 1%, and cut its estimates for Brent and U.S. crude prices. Crude production will rise 5.1% to 12.53 million barrels per day (bpd) in 2023 and 1.3% to 12.69 million bpd in 2024, the EIA said in its Short Term Energy Outlook (STEO). Total petroleum consumption is due to rise nearly 1% to 20.5 million bpd in 2023, and 1.4% to 20.8 million bpd in 2024, the EIA said. Growth in energy demand will help bring the global oil market into balance between the third quarter 2023 and the first quarter 2024, the EIA said. The EIA lowered forecasts for international benchmark Brent crude and U.S. West Texas Intermediate crude oil (WTI) spot prices in the latest report. The administration expects Brent spot prices to average $78.65 per barrel in 2023, versus $85.01 per barrel previously, the EIA said. It expects WTI crude spot prices to average $73.62 per barrel in 2023, versus $79.24 per barrel previously. Retail gasoline prices during the peak summer driving season this year will average about $3.40 per gallon, a 20% decrease from the summer 2022, the EIA said.
Just How Important Is The U.S. Shale Industry? | OilPrice.com - In 2022, almost 7.8 million barrels of crude oil daily were produced from so-called tight oil resources. The other name for these is unconventional resources. Yet a third and a lot more popular name is shale.Shale is a porous rock that traps hydrocarbon molecules in its pores and makes their release tricky. Or it used to be tricky. Back in the early 20th century, a technology called hydraulic fracturing was developed that allowed the extraction of those hydrocarbon molecules from the pores of the shale rock.Some trace the origins of fracking back to the 19thcentury when some producers used liquid and solid nitroglycerin to stimulate yields from oil wells in several U.S. states. Modern fracking, luckily for all involved, does not use nitroglycerin. It uses water, chemicals, and sand.Although known for decades, fracking only gathered pace in the early 2000s after a landmark study by the Environmental Protection Agency, which concluded that hydraulic fracturing does not pose a contamination threat to drinking water resources. What followed this study was aptly named a revolution.A historical U.S. oil production chart by the Energy Information Administration reveals a fascinating story. Until about the end of 2010, production grows gradually and consistently, with a few dips here and there following the industry boom and bust cycles.From 2011 onwards, growth is no longer smooth and gradual—it is a literal spike from around 5.6 million barrels daily at the end of 2010 to 13 million barrels daily by late 2019. All thanks to fracking. Fracking turned the United States into the world’s biggest oil producer and also the world’s biggest gas producer. It was gas production that hydraulic fracturing was first used for, and only later expanded to oil.To date, despite slowing production growth and forecasts from some analysts that the revolution is over for good, hydraulic fracturing still contributes the bulk of U.S. total oil and gas production and keeps it higher than anyone back in the 1970s, for instance, could have expected.
U.S. oil and gas health impacts cost $77 billion per year - Air pollution from U.S. oil and natural gas production causes roughly $77 billion in health impacts nationwide every year, while also contributing to thousands of early deaths and health flare-ups, a new study finds. It puts a price tag on one of the human costs of domestic oil and gas activity. The pollutants nitrogen oxide, fine particulate matter and ozone from U.S. oil and gas production contributed to 7,500 excess deaths, 410,000 asthma attacks, and 2,200 new cases of childhood asthma across the U.S. in 2016, per the study published Monday in the journal Environmental Research: Health.Nitrogen oxide was the largest contributor to the overall health impacts, followed by ozone and then fine particulate matter, according to researchers at Boston University School of Public Health, the University of North Carolina Institute for the Environment, PSE Healthy Energy and the Environmental Defense Fund. Texas, Pennsylvania, Ohio, Oklahoma, and Louisiana — all states with significant oil and gas activity — saw the highest proportions of associated health damages. Lead author Jonathan Buonocore, an assistant professor at Boston University School of Public Health, tells Axios that the effects were not limited to areas with active oil and gas production.Cases of premature deaths, asthma attacks and childhood asthma also spread regionally to affect densely populated cities with little to no gas activity, which included Chicago, New York City, Baltimore, Washington, D.C., and Orlando, according to Buonocore. Plus, Illinois and New York — states that produce "very little oil and gas," per the study — were among the top eight most impacted health hot spots. The $77 billion in annual health outcomes also includes hospitalizations and emergency room visits. "This is a major cost that's not being accounted for" in most discussions of oil and gas, says Buonocore. Ananya Roy, a senior health scientist at EDF and co-author of the study, tells Axios that their paper shows that air pollution "doesn't respect state boundaries."She also notes that while many studies have found that communities around oil and gas activity have been facing harm, scientists have not been able to directly link it to the air pollution arising from oil and gas production. "What's become really clear is that the oil and gas sector has climate, air pollution and health impacts," says Roy. "As they evaluate policies in the sector, they need to account for all of them."
$3.4 million fine proposed over 2021 oil spill that shuttered California beaches -- An energy company should be fined nearly $3.4 million for safety violations involving a 2021 oil pipeline spill that fouled Southern California beaches, a federal regulator said. Amplify Energy Corp. ignored 83 alarms indicating the offshore pipeline had leaked and failed to notify federal authorities or shut down the pipeline to San Pedro Bay until 17 hours after the first alarms, the Pipeline and Hazardous Materials Safety Administration said in a letter proposing the fine that was sent April 6 to the company's president. An email to the Houston-based firm seeking comment wasn't immediately returned Tuesday. The pipeline carries oil to shore from platforms in San Pedro Bay, near the Los Angeles and Long Beach harbors. The October 2021 spill of 25,000 gallons of crude oil created a miles-wide sheen in the ocean and sent blobs of crude ashore, primarily affecting the cities of Huntington Beach and Newport Beach. It further shuttered beaches for a week and fisheries for more than a month, oiled birds and threatened area wetlands. Amplify Energy said the spill was linked to damage from two ships it accused of dragging anchors and striking the pipeline during a January 2021 storm. It reached an $85 million settlement with the vessel companies. Southern California fishermen, tourism companies and property owners sued Amplify and the shipping vessels seeking compensation for their losses. Amplify agreed to pay $50 million and the vessel companies agreed to pay $45 million to settle those lawsuits. Amplify also reached a plea deal with federal authorities for negligently discharging crude. The company announced last month that it received approval from federal regulatory agencies to restart the pipeline.
Wildfires In Canada Force 30,000 To Flee, Slash Oil And Gas Production - Canada's top oil-producing province, Alberta, declared a state of emergency on Saturday as more than 100 wildfires raged across the region. On Monday, there were 100 wildfires, 29 of which were classified as out of control. Evacuation orders have been posted for 30,000 residents in the province. Bloomberg said numerous companies shut down 234,000 barrels a day of oil and gas production. The fires are striking Canada's main natural gas production region, including the prolific Montney and Duvernay formations, an area studded with wells and processing plants and criscrossed by pipelines. The region also is a major center for light oil production, and the disruptions have sent prices for some local grades of crude surging.Edmonton Mixed Sweet's discount to West Texas Intermediate narrowed by more than a third to $2.50 a barrel, the smallest discount since March, and Syncrude Sweet's premium grew to $3.50 a barrel, data compiled by Bloomberg show. Condensate's discount narrowed to $3.20 a barrel. One community under evacuation order as of Sunday was Fox Creek, a major center for light oil and gas drillers. Energy facilities and local residents were also being evacuated in Grande Prairie, provincial officials said. –Bloomberg NatGas for spot delivery at the Alberta Energy Co.'s hub jumped 34% to the equivalent of $2 per million British thermal units due to disruptions. The list (courtesy of Bloomberg) is the following energy companies whose operations have been impacted by out-of-control fires.
- Crescent Point Energy Corp. has shut in 45,000 barrels a day of production in the Kaybob Duvernay region, though the company said it has seen no damage to its assets.
- Vermilion Energy Inc. temporarily shut 30,000 barrels a day of production, but added in a statement that initial assessments indicate minimal damage to key infrastructure.
- Pipestone Energy Corp. has shut in around 20,000 barrels a day of production, the company said in a statement.
- Tourmaline Oil Corp. has closed down nine South and West Deep Basin gas processing facilities as nearby fires expanded and new wildfires rapidly emerged.
- Paramount Resources Ltd. has shut the equivalent of about 50,000 barrels a day of oil production as of May 5 as a precaution and because of disruptions to third-party infrastructure, the company said Sunday. Its operations in the Grande Prairie and Kaybob regions are being affected.
- TC Energy Corp. halted two compressor stations on its Nova Gas system nearest to active wildfires, the company said in an email Sunday. Other sections of the system and other networks continue to operate safely. The company is keeping workers away from facilities near active blazes unless necessary.
- Tidewater Midstream & Infrastructure Ltd. shut its Brazeau River Complex, a gas processing facility, west of Edmonton and evacuated all personnel, the company said in an email.
- Cenovus Energy Inc. has shut down some production and halted plants in some areas, a company spokesperson said.
- Kiwetinohk Energy Corp. shut in the majority of its Placid operations in response to third-party service interruptions.
- The government-owned Trans Mountain Pipeline, the sole link carrying Canadian crude to the Pacific coast, is still in operation but the company has deployed mitigation measures, including a perimeter sprinkler system at its Edson pump station, and is ready to deploy additional protection measures if needed, the company said.
- Tamarack Valley Energy Ltd. had to shut in less than 300 barrels a day of production after the gas processing plants operated by Tidewater and another run by Keyera Corp. went out of operation due to the blazes, Chief Executive Officer Brian Schmidt said by phone.
- Pembina Pipeline Corp. also said it evacuated some workers west of Edmonton.
Here are scenes from the ground.
Canada Probes Exxon Unit For Leaks At Oil Sands Site -- Canada said on Thursday that it had opened an investigation into Imperial Oil Ltd, a unit of U.S. supermajor ExxonMobil, over seepage of oil from its oil sands production site that has endangered fish in the area. “Environment and Climate Change Canada Enforcement has opened an investigation into a suspected contravention of subsection 36(3) of the Fisheries Act at Imperial Oil Ltd.’s Kearl Oil Sands Site,” the government said. That particular subsection of the Fisheries Act “prohibits the deposit of a deleterious substance into water frequented by fish, or in any place where the deleterious substance may enter any such water,” it added. Imperial Oil could be charged with non-compliance with the Act, Canada’s Environment and Climate Change Minister, Steven Guilbeault, said at a news conference on Thursday. “The process is underway to hold the company to account,” Guilbeault added. The first seepage was detected in May last year. However, neither Imperial Oil nor the Alberta Energy Regulator kept local First Nations or provincial and federal environment officials briefed until February 2023. In March this year, Canada issued a direction to Imperial Oil requiring immediate action to contain the seep and prevent it from entering a fish-bearing waterbody.First Nations in early March demanded“ accountability for the frequent and unprecedented failures of tailings dams, toxic tailing leaks and spills at the Kearl mine site – an oil sands mine in the Athabasca Oil Sands region north of Fort McMurray.” According to representatives of First Nations, the unestimated seepage amount continued in March, and the wastewater exceeded federal and provincial guidelines for iron, arsenic, sulfates, and hydrocarbons that could include kerosene, creosote, and diesel. “The government needs immediate and urgent action to protect people and the environment. Identify the causes of Imperial’s tailings breaches and find a resolution immediately. Imperial and the governments’ must contain Tar Sands’ toxic leaks,” Dene National Chief Gerald Antoine said in the March statement.
Sudbury news: Almost four months later, cleanup continues of oil spill in Ramsey Lake --Oil from a ruptured heating oil tank that spilled into Ramsey Lake last winter is still being cleaned up. A spokesperson for the Ministry of the Environment and Climate Change told CTV News that ministry staff visit the site at least once a week to monitor the process. “The excavation and removal of remaining contaminated soil is ongoing,” Gary Wheeler said in an email. “The mobile treatment unit remains in place to remove fuel from impacted runoff. The site is monitored daily, including weekends, by a professional environmental service provider.” On Jan. 12, roughly 812 litres of home heating fuel spilled to the ground from a residential storage tank on Gennings Street. Wheeler said most of the spilled fuel was recovered during the cleanup. “On Jan. 16, oil sheen was observed along the shoreline of (Ramsey Lake) at the home where the spill occurred. Containment measures were immediately put in place and the oily water was recovered using absorbent materials and skimmers,” he said. Since the spill, contaminated soil has been removed from all affected areas of the property and shoreline. “Regular water quality monitoring at the lakeshore has also occurred in addition to the installation of a mobile treatment unit to pump and treat run-off from a collection sump,” Wheeler said. “Marine booms and absorbent products will remain in place to prevent any remaining contamination from entering Lake Ramsey while cleanup activities continue.”
Letter: End fracking to protect British Columbians from climate disaster | The Rossland Telegraph --To The Editor: I am writing to express my total opposition to fracking in BC and anywhere in the world. Hydraulic fracturing, or fracking, involves drilling deep into the earth and directing a high-pressure mixture of water, sand and chemicals at a rock layer, to release the gas inside. Fracking for gas in northeast BC produces methane, a greenhouse gas that traps 86 times as much heat as carbon dioxide, and is responsible for about a quarter of global warming. Fracking can lead to methane leakage and groundwater pollution, as well as carbon emissions, and has been shown to be a danger to human health. In recent years, British Columbians have experienced deadly heat waves, wildfires, storms and floods, and pollution from fracking have caused these climate disasters. The number one job of governments is to keep people safe. That means we must end fracking as soon as possible. BC should stop issuing permits for new gas wells immediately and cancel all proposed LNG natural gas permits. Electric appliances can replace gas with affordable renewable energy in our homes and workplaces and help keep our planet safe. Gas is a fossil fuel that is just as bad as oil and coal for our environment. Let's end fracking and protect British Columbians from more climate disasters. We have everything we need to make the transition from fossil fuels except the political will. Sincerely, Sandra Hartline, Nelson, BC
Exxon, Conoco see new LNG markets with planned Alaskan pipeline – Oil companies have for decades pulled billions of dollars of natural gas from Alaska’s rugged North Slope, only to pump it back underground once it’s been separated from the crude oil they are seeking. More than 800 miles from the closest ice-free port accessible to ships, the North Slope has no natural gas pipeline and thus no market for companies such as Exxon Mobil and Conoco Phillips to sell their gas into. Now a planned $44 billion project that would pipe gas the length of Alaska to an LNG terminal outside Anchorage stands to change all that as state officials, with the support of the Biden administration, seek to breathe new life into the state’s declining oil and gas industry by shipping the gas across the northern Pacific to South Korea and Japan. Decades in the making, the project has confounded developers and engineers for years, entailing not only planning to build a pipeline across some of the nation’s most rugged and frigid wilderness but doing so at a price that can compete with a flood of new LNG projects coming online along the Gulf Coast, the Middle East and Australia. All at a time energy analysts are projecting demand for oil and gas to peak within the next two decades as nations respond to climate change. “It seemed like this thing was dead,” said Clark Williams-Derry, an analyst with the nonprofit Institute for Energy Economics and Financial Analysis. “This project isn't cheap to begin with, and then you have all the question marks about what the LNG market will look like a decade from now. There's many reasons to think this isn't going to happen, but without this project, that gas is stranded." When Russian troops invaded Ukraine last year, driving up gas prices in Europe and Asia to well in excess of $15 per mmBTUs, Alaska LNG suddenly looked like it could be a viable project. “The impact of the Russian invasion of Ukraine tipped the world’s energy market on its head,” said Frank Richards, president of the Alaska Gas Development Corp. “What we see is increased interest from allies in Japan and Korea in having a reliable source of supply, and we have a stranded asset we can offer at a stable price.” And they have the ostensible support of the Biden administration, with U.S. Ambassador to Japan Rahm Emanuel hosting a meeting of top officials from both countries in Tokyo last year to “discuss how Alaska LNG can provide stable, sustainable and affordable energy sources to Japan.” Last month the Department of Energy renewed an export license for the project that had been previously approved by the Trump administration, following Biden's decision to allow Conoco Phillips to move ahead on its controversial Willow oil project on the North Slope. But deep questions remain as to whether Alaska LNG will actually go ahead, including whether it can clear a series of lawsuits by environmental groups arguing the federal government has failed to adequately assess the greenhouse gas emissions the project will generate. They claim those emissions will be far in excess of LNG projects along the Gulf Coast because of the energy demands of pumping gas more than 800 miles from the North Slope – almost twice the distance from West Texas’ Permian Basin to the Gulf Coast. At the same time, they are questioning whether the project is necessary considering the flood of LNG projects already under construction along the Gulf Coast.
LNG Cargoes Stall at Sea as High European, Asian Storage Outweighs Rock Bottom Prices - The amount of LNG floating on vessels at sea for extended periods is ticking above average levels, particularly in Asia, as buyers continue to shun cheap spot cargoes amid weak demand.
Greek Shipping Company Fined €2 Million For Environmental Violations On Oil Tanker -- Greek shipping company, Zeus Lines Management S.A., has been found guilty of violating environmental laws and has agreed to pay a penalty of €2,027,065 euros ($2.25 million US dollars), according to federal prosecutors. The violations were carried out by the captain and chief engineer of one of its oil tankers, the Galissas, during a voyage from Rotterdam, the Netherlands, to Rhode Island.The U.S. Attorney's Office in Providence announced that the Galissas discharged almost 10,000 gallons of oily bilge water directly into the ocean and failed to report a hazardous condition in the vessel’s cargo tanks to the U.S. Coast Guard last year. The tanker’s captain pleaded guilty to failing to report the hazardous condition to the Coast Guard prior to the tanker entering the port of Newport, Rhode Island.The vessel’s chief engineer pleaded guilty to knowingly discharging untreated oily bilge water directly from the tanker into the sea during the voyage. As per the plea agreement, Zeus' penalty of €2,027,065 euros includes a fine of €1,515,917.5 euros and €511,147.5 euros to be allocated to the National Fish and Wildlife Foundation for marine and coastal natural resources in Rhode Island. Additionally, Zeus will need to implement a robust environmental compliance plan for its vessels when they enter a U.S. port."This prosecution demonstrates our commitment to ensuring the health and safety of the marine environment," Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division said in a statement. "The reckless actions of these defendants not only threatened the marine environment, but also the safety of this coastal community."
Turkey Makes Huge 1-Billion-Barrel Oil Discovery - Turkish Petroleum (TPAO) has made the largest crude oil discovery onshore Turkey with a find estimated to hold 1 billion barrels of crude, the Turkish company said. The discovery was made in the southeastern province of Sirnak, which borders the semi-autonomous Kurdistan Region in Iraq and Syria. Turkish Petroleum has drilled an exploration well and has encountered more than 162 meters of light oil-bearing reservoir with API gravity of 41. The well already produces around 10,000 barrels of oil per day, TPAO said. TPAO plans to drill back-to-back appraisal wells and conduct well tests to have a full-field development plan until the end of this year. Additional exploration activities are planned for the second half of 2023. The production target is set for 100,000 bpd, which would be more than double Turkey’s oil production. The exploration success is expected to help achieve Turkey’s energy independence, TPAO said in a statement. Currently, Turkey depends mostly on oil imports for its consumption. The country is also targeting natural gas independence with recent huge finds of gas in the Black Sea and the start of gas transmission from the Sakarya Gas Field last month. In April, Turkish Energy and Natural Resources Minister Fatih Dönmez told broadcaster CNN Türk that the volumes of natural gas that Turkey had found so far in the Black Sea were worth in excess of $500 billion. The huge gas finds would be enough to supply all households in the country for 35 years, or to cover total Turkish natural gas consumption, including from industry, for 15 to 20 years, the minister added.
Indias Russia oil imports jumped tenfold in 2022, bank says --India's imports of Russian oil rose tenfold last year, according to Indian state-controlled lender Bank of Baroda. The figures show Asia's third largest economy saved around $5bn (£4bn) as it ramped up crude purchases from Moscow. It comes as Western countries have been cutting their imports of energy from Russia after its invasion of Ukraine. Russia has been selling energy at a discount to countries like China and India, which is the world's third largest importer of oil. In 2021 Russian oil accounted for just 2% of India's annual crude imports. That figure now stands at almost 20%, Bank of Baroda said. India's purchases of oil from Russia during the last financial year, saved it around $89 per tonne of crude, the figures show. Despite pressure from the US and Europe, India has refused to adhere to Western sanctions on Russian imports. New Delhi has also not explicitly condemned Russia's invasion of Ukraine. India has defended its oil purchases, saying that as a country reliant on energy imports and with millions living in poverty, it was not in a position to pay higher prices. Since the Ukraine war began, Europe had imported six times more energy from Russia than India, the country's External Affairs Minister S. Jaishankar said in a TV interview last year. "Europe has managed to reduce its imports while doing it in a manner that is comfortable," he said. Mr Jaishankar added: "If it is a matter of principle why did Europe not cut on the first day?"
Northern Territory clears way for fracking to begin in Beetaloo Basin | Northern Territory --The Northern Territory government says it is satisfied the recommendations of an independent inquiry into fracking have been met, clearing the way for gas production and the expansion of wells across the Beetaloo basin. The NT chief minister, Natasha Fyles, announced Wednesday morning her government was giving a green light for gas production in the region between Katherine and Tennant Creek, a move environment organisations and scientists have warned will have an unacceptable impact on the climate. Wednesday’s announcement means gas companies can apply for production licences and environmental impact assessments. “Along with our world class renewable resources, our highly prospective onshore gas resources will support the energy transition to renewables not only for the Northern Territory, but for Australia and the world,” Fyles said. The territory’s deputy chief minister, Nicole Manison, said “we want nations to be able to decarbonise the economy in a safe and sustainable way and gas will be that important fuel of transition, the onshore gas industry will also be good for the territory’s economy.” Companies will still need to make financial decisions about whether to proceed, but if the Beetaloo did reach full production it could see thousands of wells across the landscape. Analysis by Reputex in 2021 estimated a high production scenario in the Beetaloo could lead to an additional 1.4 billion tonnes of life cycle emissions - which includes emissions from when the gas is sold and used - over 20 years. On Wednesday, 96 scientists published an open letter calling for the Northern Territory government to ban unconventional gas projects because of their effects on the climate. The International Energy Agency and the Intergovernmental Panel on Climate Change have said no new coal and gas projects can proceed if the world is to limit global heating to 1.5C. “This is a profoundly sad day for the Northern Territory. As we look down the barrel of unliveability here in the Northern Territory due to climate change, the Chief Minister has today given the green light for a carbon bomb that will hurtle us towards climate collapse,” Kirsty Howey, the executive director of the Environment Centre NT, said.
Tamboran Resources welcomes Beetaloo Basin fracking approval, as Northern Territory locals raise concerns over groundwater use - A US gas company with the biggest stake in the Beetaloo Basin has welcomed the approval of a full-scale fracking industry, promising "billions of dollars" in royalties. On Wednesday, the company's hopes came true. "We're very pleased [with] the way the timing worked out," chief executive Joel Riddle told reporters on Friday. "That was not planned." Mr Riddle said Tamboran was committed to delivering 10 per cent of royalties from its Beetaloo gas production revenues to territory coffers. "The quantum of royalties is in the billions of dollars that could flow into the Northern Territory government and the Northern Land Council," he said. The total figure would depend on gas prices and demand, he said. In a small town closer to the basin, not everyone was celebrating. "I'm devastated," local Des Barritt said. "I'm really, really angry." Mr Barritt runs the Little Roper stock camp in Mataranka, about 100 kilometres from the Beetaloo sub-basin. His business relies upon tourists visiting natural thermal pools — such as Bitter Springs — which draws in groundwater from a huge interconnected aquifer. "The water is irreplaceable," he said. In one scenario outlined by the Pepper Inquiry's final report, about 2,500 to 5,000 megalitres of water could be needed per year for drilling and fracking wells in the Beetaloo Basin. Mr Barritt said he didn't trust the Northern Territory government to properly monitor fracking water use. "They're not transparent," he said. "Any risk to our water needs to be considered with a lot more rigour than what the Northern Territory government's doing at the moment."
‘This is so disappointing’: Outrage after Northern Territory Labor government --The Northern Territory government has paved the way for fracking in the Beetaloo Basin, a move which has caused outrage. Chief Minister Natasha Fyles on Wednesday released the Final Implementation Report into the Scientific Inquiry into Hydraulic Fracturing. She said it sets out significantly "stronger environmental, cultural, social, economic and health protections”. “Gas is the transition fuel that enables renewable energy technology,” Ms Fyles said. “The new industry standards set the bar high with clear expectations and transparency for industry compliance. Ms Fyles stressed that Indigenous Territorians have the power to veto a project. "All applications made for gas production, subject to the industry's successful exploration and appraisal results, will go through this rigorous approval and monitoring process," she added. "I want to make it clear, traditional owners, Aboriginal Territorians have the power to veto a project." Independent Senator David Pocock said the announcement was “frankly ridiculous”, especially from a Labor government. “This is so disappointing to see in 2023 Labor governments pushing for the expansion of the fossil fuel industry,” he told the ABC. "It is frankly ridiculous, given what we know about climate change and the incredible opportunity for Australia to decarbonise and start to lead the world in that. “Instead, we're seeing politicians wanting to have it both ways.
Letters: Fracking move ignores science -It’s outrageous that the Northern Territory government has approved fracking in the Beetaloo Basin (“Indigenous anger as NT allows fracking in Beetaloo”, May 4).A forensic legal analysis completed last year found that only 27 per cent of risks had been addressed since the 2018 Pepper Inquiry into hydraulic fracturing.It is therefore very unlikely that all 135 scientific recommendations have suddenly been implemented. Amid climate and environmental breakdown, and opposition from traditional owners, it is shocking that this destructive industry is even considered, let alone given the green light by governments.As Saul Griffith proposes, an “aggressive decarbonisation agenda” is the sensible and safe path forward (“Labor’s ‘electrify everything’ ambition muted by inflation fear”, May 4). --Amy Hiller, Kew, Vic
Fracking regulator disputes NT government's claim it met all Pepper Inquiry promises - ABC News --The Northern Territory's independent regulator has disputed a claim that the government met all the recommendations of a major inquiry before approving fracking.On Wednesday NT Chief Minister Natasha Fyles green-lit full-scale gas production in the Beetaloo Basin, five years after amoratorium on fracking was lifted.The ban was lifted on the condition the NT government implement in full all 135recommendations of the 2018 Pepper Inquiry, which were aimed at mitigating all associated risks from fracking."We have undertaken a comprehensive body of work so that we can meet those independent recommendations — all 135 from the initial inquiry," Ms Fyles said.But the independent officer overseeing the implementation of the requirements, David Ritchie, said recommendation 9.8 remained outstanding. What is Recommendation 9.8?This measure requires the NT and federal governments seek to ensure there is no net increase to Australia's carbon emissions from fracked gas in the NT."My report makes it very clear … that [with recommendation] 9.8, we've still got Scope 2 emissions that have not been accounted for," Dr Ritchie told reporters this morning."The inquiry found that the release of that quantity of gas, that 26-odd million tonnes, is an unacceptable risk."That's why 9.8 exists."Speaking to reporters yesterday, Ms Fyles said: "In terms of 9.8, we have absolutely met the recommendation".In Dr Ritchie's final report, he wrote "there has been no progress on the crux of this recommendation". Grattan Institute program director for energy and climate change, Tony Wood, said it was still unclear how the NT government would help offset all the lifecycle emissions from fracking, as promised."The Northern Territory government says 'we can't take responsibility for emissions that occur outside the Northern Territory'," Mr Wood said. "But inside Australia, the Commonwealth government hasn't come up with a particular view yet about how it would contribute." Climate Council chief executive Amanda McKenzie said the question of whether Beetaloo emissions were being burned in the NT, interstate or overseas was irrelevant in the context of global warming. "It doesn't matter where it's burned — climate change affects all of us," she said. "You can't slow down by putting your foot on the accelerator."
UK: Bonga Oil Spill Case Resolved in Shell's Favour - --A UK court has ruled in favour of oil major Shell in an oil pollution case going back to 2011. The Nigerian claimants' case against two Shell subsidiaries emanated from an oil spill involving a tanker loading crude oil from Shell's Bonga oil field 120 m from the Nigerian coast. The UK's Supreme Court upheld rulings by two lower courts that found the claimants had brought their case after the expiry of a six-year legal deadline for taking action, Reuters reports. The claimants' lawyers had argued that the ongoing consequences of the pollution represented a "continuing nuisance", a type of civil tort, which would have meant the deadline did not apply. Two Nigerian citizens were appellants in the Supreme Court case, but the ruling will also apply to the thousands of other claimants. Shell had disputed the claimants' allegations, saying the Bonga spill did not impact the shoreline. The court did not rule on the disputed facts as it was seeking only to decide the legal point about nuisance.
Exxon & Guyana environment agency breaches oil spill insurance --- A Guyanese court on Wednesday ruled that oil giant ExxonMobil’s offshore oil unit in Guyana is in breach of its insurance obligations, Reuters reports. According to high court justice Sandil Kissoon, ExxonMobil “engaged in a disingenuous attempt” to dilute its obligations under its environmental permit for its Liza One project. The environmental permit for the Liza One unit requires ExxonMobil to take responsibility for a range of potential outcomes, including an umbrella guarantee that commits the company to cover all damage costs, beyond a $600m penalty should the project spill its oil. Kissoon’s ruling stated that ExxonMobil must provide Guyana’s authorities with a liability agreement from an insurance company by 10 June. If they miss this deadline, Liza One’s environmental permit will be suspended. The agreement would protect the company from future damages stemming from incidents that cause environmental damage, such as oil spills. Exxon “engaged in a course of action made permissible only by the omissions of a derelict, pliant, and submissive Environmental Protection Agency,” Kissoon wrote in the ruling via Reuters. However, the country’s government has rejected the High Court’s decision. It said that the court breached its statutory duty by failing to enforce compliance by Esso Exploration and Production Guyana, adding that Kissoon “fell into error in his findings”. The government plans to appeal the ruling, it said in a statement, adding that it will seek orders to suspend the decision. “The ruling is what it is and we will comply at this time,” a spokesperson for the country’s Environmental Protection Agency (EPA) said. A spokesperson for Exxon said that the company is reviewing the court decision and will evaluate next steps. An association of oil firms, led by ExxonMobil and including US company Hess and China’s CNOOC, currently produce the entirety of Guyana’s crude oil output, totalling approximately 380,000 barrels per day.
Japan urges action on decaying oil tanker in Yemen --Japan’s State Minister for Foreign Affairs Kenji Yamada has called for urgent international action to salvage the FSO Safer, a supertanker in an advanced state of decay moored off Yemen’s Red Sea coast, in a video message statement delivered on May 4 at the Pledging Conference. The conference, co-hosted by the UN and governments of the UK and the Netherlands, highlighted the critical situation of the supertanker. The FSO Safer, which currently holds four times the amount of oil spilled by the Exxon Valdez — enough to make it the fifth-largest oil spill from a tanker in history — is expected to break apart or explode if not addressed promptly, according to the UN. A massive spill could devastate the Red Sea’s pristine reefs, coastal mangroves, and sea life, exposing millions to highly polluted air and cutting off food, fuel, and other life-saving supplies to Yemen. During the conference, Yamada highlighted the importance of the UN-coordinated Safer Salvage Operation Project to mitigate the risk of a catastrophic spill. “In light of the importance of this issue, we will continue to work with the international community to advance this project,” he stated, emphasizing that the FSO Safer was one of the most pressing issues for the international community, given the many challenges Yemen is facing. Yamada highlighted Japan’s commitment to addressing the humanitarian crisis in Yemen, having provided approximately $430 million in humanitarian assistance since 2015. He announced that Japan would provide at least $24 million of additional humanitarian assistance in 2023. Reiterating Japan’s determination to continue working with the international community to address the FSO Safer issue, Yamada underscored the importance of collaboration to mitigate the risk of having one of the world’s largest oil spills.
Fuel released into sea as ship capsizes off Bataan — A vessel capsized off Mariveles, Bataan Saturday morning, releasing several liters of fuel into the sea, the Philippine Coast Guard (PCG) said. PCG said MV Hong Hai 189 capsized and sank 400 yards from the Sisiman Lighthouse in Mariveles town at around 5:21 a.m. Saturday, prompting authorities to install oil spill booms in the area. The sunken vessel spilled between 30 and 50 liters of fuel and other mixed substances into the sea, PCG added, noting that there was no additional traces of an oil spill in the nearby waters. Personnel from the PCG Station Bataan and Marine Environmental Protection Unit (MEPU) were monitoring the situation "for further measures." The sinking came more than two months since oil tanker MT Princess Empress sank off Oriental Mindoro last February, releasing about 800,000 liters of industrial fuel into the sea. Damage caused by the Mindoro oil spill has reached P3.88 billion, with the number of affected families rising to around 40,000, the National Disaster Risk Reduction and Management Council (NDRRMC) said.
Tethys begins oil export from extended well in Oman - Oil export from the extended well test from Oman's Al Jumd discovery started at the end of March following the installation and commissioning of the fiscal meter, Tethys Oil said in a statement on Tuesday. “The three horizontal wells drilled on the Al Jumd discovery last year will now be evaluated, and the structure appraised for commercial viability. An important, if not decisive, milestone has been reached in the continuing exploration of onshore Block 56 in Oman,” the statement added. The other major Block 56 event in Oman in the first quarter was the finalisation of the processing of the Central Area seismic. Interpretation is ongoing and by the end of the second quarter, we hope to have identified several drillable prospects to be tested by the drill bit in the second half of 2023. Regarding Oman's Block 58 seismic interpretation is further along with work on the Fahd area completed, drillable prospects identified, and prospective resources estimated and risked. Interpretation of the Lahan area is nearing completion and these carbonate stringers imbedded in salt hold interesting potential but the year’s exploration drilling in Block 58 will most likely target the large Fahd prospects, the statement further said. The exploration drilling on Block 58 and Block 56 will be the main focus areas for the second half of the year and with prospective resources well close to 200 million barrels of oil, success could be transformative. “We expect to revisit our old friend on Block 49, the Thameen-1 well, later this year, most likely in the third quarter. The well will undergo a re-test and preparations and tendering for the services needed to re-enter the well and conduct hydraulic fracturing operations in the tight sandstone are ongoing,” the statement said.
Global oil supply falls by half a million barrels per day in April --- Global oil supply fell month-on-month by 500,000 barrels per day (bpd) in April, averaging 101.3 million bpd, according to the Organization of Petroleum Exporting Countries’ (OPEC) most recent monthly oil market report on Thursday. Secondary sources showed that total crude oil production from the 13 member countries of the OPEC group, or OPEC-13, averaged 28.60 million bpd in April, 191,000 bpd lower than the previous month. Crude oil output increased mainly in Saudi Arabia, Angola and Iran, while production in Iraq and Nigeria declined by 203,000 bpd and 170,000 bpd, respectively. Production in Saudi Arabia rose by 95,000 bpd, followed by 79,000 bpd in Angola. The share of OPEC crude oil in total global production remained unchanged at 28.2% in April. Meanwhile, the global rig count totaled 1,889 in April, a reduction of 65 from March, while OPEC countries accounted for 420 rigs. - World oil demand growth forecast remains unchanged for 2023 OPEC kept its forecast for global oil demand growth unchanged for 2023. The group predicts that oil demand will increase by 2.3 million bpd in 2023 to reach 101.9 million bpd. 'Minor upward adjustments were made due to the better-than-expected performance in China's economy, while other regions are expected to see slight declines, due to economic challenges that are likely to weigh on oil demand,' OPEC said. 'However, this forecast is subject to many uncertainties, including global economic developments and ongoing geopolitical tensions,' OPEC added.
OPEC: World Oil Demand To Rise By 2.33 Million Bpd In 2023 --For the third month running, OPEC has barely changed its forecast of global oil demand, predicting growth of 2.33 million barrels per day, or 2.3% Y/Y growth, good for a very slight increase from its previous forecast of 2.32 million barrels per day. According to OPEC, strong growth in the Chinese market of 800,000 b/d is likely to be offset by downside risks elsewhere such as the U.S. debt ceiling. "Minor upward adjustments were made due to the better than expected performance in China's economy, while other regions are expected to see slight declines due to economic challenges that are likely to weigh on oil demand," OPEC said in the report. Over the past year, energy agencies have generally grown more bearish with their forecasts on oil demand growth. The EIA’s latest growth prediction of a decline of 420,000 barrels per day (kb/d) in what experts refer to as the call on OPEC (i.e. global demand minus non-OPEC supply) in the current year, a level 1.87 million barrels per day (mb/d) lower than its July 2022 forecast. Other agencies expect lackluster growth: Standard Chartered sees “the call” growing by just 63,000 b/d, 1.41mb/d less than its July 2022 forecast, while the International Energy Agency (IEA) expects growth of 400kb/d, 2.326mb/d below its July 2022 forecast. The upshot of it all is that all four agencies at least expect some growth, though they can’t seem to come close to finding consensus on the magnitude. At least one expert has predicted that oil demand will hit an all-time high in the current year. Commodity experts at StanChart have predicted that global oil demand will set a new all-time high of 102.24mb/d in August, surpassing the previous record of 102.2mb/d set in August 2019. The bullish interpretation simply is that this is an all-time high; the bearish one is that it has taken no less than four years for global demand just to get back to the previous high. Indeed, StanChart reckons that had it been business-as-usual during those four years, global oil demand would have increased by another 5mb/d. Even better, StanChart sees oil demand setting fresh all-time highs in both November and December with demand set to rise above 103mb/d for the first time in June 2024.
Oil Gains Nearly 2% After ‘Overblown’ Selloff Brent crude oil was up nearly 2% on Monday, largely driven by the easing of economic slowdown fears in the U.S. At 10:39 a.m. EST on Monday, Brent was trading up 1.62% at $76.52, for a $1.22 gain on the day, while West Texas Intermediate (WTI) was trading up 1.95% at $72.73, for a $1.39 gain on the day. Last week, while Brent was up on Friday, the crude benchmark shed over 5% and WTI shed over 7% on the week, hitting their lowest levels since Q4 2021. Friday also marked three straight weeks of price slides. Driving bearish sentiment in markets are renewed fears of a US banking crisis contagion and lukewarm industrial figures from China. Hijacked tankers in the Strait of Hormuz, falling US inventories, and the lack of a deal to unlock Kurdish oil exports all failed to offset the macroeconomic doom and gloom. Recession, though, has been the buzzword putting oil prices in reverse, and Monday saw traders change course with the view that the sell-off had been overdone. Traders were also looking at the U.S. April jobs market data, though with a bit of caution as a strong labor market could prompt more rate hikes from the Federal Reserve. Some analysts continue to be concerned about future oil demand, based on what is viewed as a deteriorating growth outlook, which has since been somewhat eased by the April jobs report. However, over the weekend, Goldman Sachs labeled the oil sell-off as “overblown” in the face of a strong demand outlook, also noting that production cuts from OPEC+ begin this month, putting further pressure on supply to meet demand. The market will now be looking first to OPEC’s monthly oil market report due out on May 11, followed by the next OPEC+ meeting scheduled for June 4.
Oil Trims Gains on US Dollar After Survey Shows Tighter Credit - Oil futures settled Monday's session higher, although all petroleum contracts pared earlier advances after a Federal Reserve survey revealed tighter credit conditions for U.S. businesses and households over the past three months, lifting the U.S. dollar index against a basket of major currencies. The Senior Loan Officer Opinion Survey on Bank Lending Practices, or SLOOS, published Monday afternoon showed 48.5% of large banks and 36.7% of smaller lending institutions reported they "tightened credit somewhat," although a majority of banks still see the availability of credit largely unchanged from the fourth quarter 2022. While no large banks reported beefed up lending standards, 3.2% of all banks responded they "tightened credit considerably" over the past three months, which follows the collapse of Silicon Valley Bank on March 10. "Regarding ... reasons for changing standards on all loan categories in the first quarter, banks cited a less favorable or more uncertain economic outlook, reduced tolerance for risk, deterioration in collateral values, and concerns about banks' funding costs and liquidity positions," according to comments from the SLOOS survey. The survey suggests that the recent turmoil in the banking sector has been somewhat contained, having a limited impact on credit availability that might have contributed to a stronger economy at the start of the second quarter. Friday's employment report revealed U.S. economy added 253,000 new jobs in April as the unemployment rate fell for the second straight month to a 3.4% 54-year low. The strength of the labor market coupled with still-solid consumer spending lifted the Atlanta Federal Reserve Bank's GDPNow running estimate of U.S. Gross Domestic Product growth to 2.7% for the second quarter, up from 1.8% seen on May 1. As fears over imminent recession fade, oil traders raised bets on more robust U.S. fuel demand this summer, pushing oil futures up more than 2% on the session. After reaching a $73.69-per-barrel (bbl) four-day high intraday, NYMEX West Texas Intermediate June futures settled up $1.82 at $73.16 per bbl. ICE Brent July futures climbed $1.71 bbl to $77.01 bbl. NYMEX RBOB June futures jumped $0.0826 for a $2.4616-per-gallon settlement, and the front-month ULSD contract advanced $0.0630 to $2.3777 per gallon. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, strengthened 0.156 points to 101.155.
Oil Prices Decline On Weak China Data -- Oil prices fell notably on Tuesday, after having gained more than 2 percent in the previous session on the back of better-than-expected U.S. jobs data and signs of supply disruptions in Canada. Benchmark Brent crude futures fell 0.7 percent to $76.45 a barrel, while WTI crude futures were down 0.8 percent at $72.61. Oil prices weakened today as fresh data showed China's imports contracted sharply in April and exports grew at a slower pace, reinforcing signs of feeble domestic demand despite the lifting of Covid-19 controls. Exports registered an annual growth of 8.5 percent in April, the General Administration of Customs reported. Economists had forecast shipments to climb 8.0 percent after a 14.8 percent gain in March. On the other hand, imports declined 7.9 percent annually, which was much bigger than March's 1.4 percent drop and economists' forecast of 5.0 percent decrease. Traders also looked ahead to the release of U.S. reports on consumer and producer price inflation on Wednesday and Thursday, respectively for additional clues on the Federal Reserve's monetary policy path.
The Oil Market Looked Ready to Post an Inside Trading Day Before the Market Rallied to its Highs Ahead of the Close -- The oil market looked ready to post an inside trading day before the market rallied to its highs ahead of the close. The market had traded to $73.08 in overnight trading before it sold off to a low of $71.34 by mid-day as traders took some profits following its recent rebound. The market was pressured amid the strength in the dollar. However, the market bounced off its low and rallied higher ahead of the close, breaching its previous high of $73.69 as it traded to a high of $73.78. The market turned around on reports that the Biden administration announced it was cancelling some 140 million barrels of previously mandated sales and would begin replenishing the SPR later this year. The market was also supported by the EIA forecasting higher seasonal demand and lower than expected output in its Short Term Energy Outlook. The June WTI settled up 55 cents at $73.62 and the July Brent contract settled up 43 cents at $77.44. The product markets ended the session in positive territory, with the heating oil market settling up 1.25 cents at $2.3902 and the RB market settling up 1.83 cents at $2.4799. In its Short Term Energy Outlook, the EIA raised its 2023 world oil demand growth forecast by 120,000 bpd to 1.56 million bpd but cut its forecast for 2024 world oil demand growth by 130,000 bpd to 1.72 million bpd. World oil demand is forecast to total 100.99 million bpd in 2023 and 102.71 million bpd in 2024. World petroleum output is forecast to increase by 1.49 million bpd in 2023 to 101.34 million bpd and by 1.68 million bpd in 2024 to 103.02 million bpd. OPEC oil output in 2023 is forecast to fall by 330,000 bpd to 28.34 million bpd but increase by 650,000 bpd to 28.99 million bpd in 2024. The EIA said that U.S. oil output in 2023 is forecast to increase by 640,000 bpd to 12.53 million bpd, up 660,000 bpd from a previous forecast. U.S. oil output in 2024 is forecast to increase by 160,000 bpd to 12.69 million bpd, up 210,000 bpd from a previous forecast. U.S. total petroleum consumption is forecast to increase by 200,000 bpd to 20.5 million bpd, up from a previous estimate of a 100,000 bpd increase and demand is expected to increase by 300,000 bpd to 20.8 million bpd in 2024. The EIA cut its forecasts for Brent crude and WTI crude spot prices. It expects Brent spot prices to average $78.65/barrel in 2023, down from a previous forecast of $85.01/barrel and expects WTI crude prices to average $73.62/barrel in 2023, down from a previous forecast of $79.24/barrel. Retail gasoline prices during the peak summer driving season this year will average about $3.40/gallon, down 20% on the year. The United Arab Emirates' Energy Minister, Suhail al-Mazrouei, said that additional voluntary cuts by the OPEC+ producer group were implemented to balance the oil market. He said he was concerned about future supply shortages due to low investment. According to Wood Mackenzie, Canada’s energy production, shut in due to wildfires, may be able to return quickly as rain headed for the areas in western Canada should improve safety conditions. It said that about 2.5 bcfd of natural gas production or about 15% of Canada’s output, has been shut in due to the fires. Wood Mackenzie also said that while some oil output has been curtailed, crude pipeline operations in western Canada have been “largely unaffected”. The fires have shut down the equivalent of at least 234,000 bpd of oil production. Alberta is reporting 89 active wildfires, with 27 out of control, down from more than 100 total active fires on Monday.
Oil recoups losses on plans for SPR refill, higher seasonal demand (Reuters) -Oil prices ticked up on Tuesday, reversing a more than 2% drop earlier in the session, as markets weighed U.S. government’s plans to refill the nation’s emergency oil reserve and anticipated higher seasonal demand. Brent crude settled 43 cents, or 0.6% higher, at $77.44 a barrel, while U.S. West Texas Intermediate (WTI) crude closed up 55 cents, or 0.8%, at $73.71. Both benchmarks had fallen about 2.5% earlier in the session after two days of gains. Biden administration plans to begin purchasing oil to replenish the Strategic Petroleum Reserve helped cover speculative short positions, said Robert Yawger, executive director of energy futures at Mizuho. Energy Secretary Jennifer Granholm has said the administration could start buying back crude oil for the Strategic Petroleum Reserve late this year after President Joe Biden last year directed the largest sale yet from the stockpile. A report from the Energy Information Administration (EIA) pointing to higher seasonal demand and lower-than-expected output also supported prices. “We expect the seasonal rise in oil consumption and a drop in OPEC crude oil production to put some upward pressure on crude oil prices in the coming months,” the Energy Information Administration said in its Short-Term Energy Outlook. The EIA also forecasts U.S. crude production will rise 5.1% to 12.53 million barrels per (bpd) day this year, but lowered its output estimate for this year and next from previous forecasts. It cut its estimate for Brent and WTI prices by more than 7% each to $78.65 and $73.62 a barrel, respectively. U.S. crude oil inventories rose by about 3.6 million barrels in the week ended May 5, according to market sources citing American Petroleum Institute figures on Tuesday, compared with analysts’ estimate for a drawdown of about 917,000 barrels. Prices were held back, however, by data that showed China’s imports contracted in April, while exports rose at a slower pace, implying weak domestic demand. Markets were also monitoring U.S. President Joe Biden and top Republican lawmakers’ comments on raising the $31.4 trillion U.S. debt ceiling, fearing an unprecedented default if Congress does not act in three weeks. U.S. consumer price index (CPI) figures for April are due to be released on Wednesday and could determine the Federal Reserve’s next interest rate decision. New York Fed President John Williams said inflation remains too high and that the central bank will raise rates again if necessary, even though the U.S. central bank dropped guidance about the need for future hikes. While doubts about the economy could weigh on markets, crude prices were supported as wildfires prompted oil producers in the Canadian province of Alberta to shut in at least 319,000 barrels of oil equivalent per day, more than 3.7% of Canada’s output.
Goldman Sachs Reiterates $100 Brent Price Forecast, Expects Oil To Rally If US Avoids Recession - United States Oil Fund (ARCA:USO) - Despite the sharp declines experienced by oil prices in recent weeks, Goldman Sachs GS reiterated its forecast for Brent prices of $95 by December 2023 and $100 for April 2024. Supply deficits are expected to surge in the second half of the year, the firm predicts. The selloff was mostly driven by recessionary fears about demand, the U.S. banking crisis and reports about increased oil production in Russia, Iran, and other OPEC nations. The United States Oil Fund USO, an exchange-traded fund that tracks WTI prices, is down 5% thus far this year. It witnessed an 18% dip between mid-April and early May, after surging nearly 25%. Further increases in emerging market demand, along with OPEC cuts, will result in oil supply shortfalls in the second half of the year, according to Goldman Sachs. The investment bank forecasts a roughly 90% compliance rate for the announced 1.16mb/d drop in OPEC+ ex-Russia output, as the nations who announced the additional cut had a solid compliance track record. Goldman analysts remarked that forward prices appear exceptionally low in comparison to analysts' consensus predictions, with the difference between 12 months ahead Brent consensus estimates ($90/bbl) and futures ($70/bbl) ranking in the 98th percentile in its history. The Goldman Sachs model forecasts that oil spot prices in May 2023 will be 16% higher than today's 12-month forward in the absence of a US recession, at $81/bbl, but only 4% lower in the event of a recession, at $67/bbl.
WTI Extends Losses After Biden Admin Drains SPR By Most Since December - Oil prices are lower this morning, after a quick trip higher on weaker-than-expected CPI (less Fed tightening). However, this 'dovish' dip in CPI was not enough to quell concerns about a recession and implicitly weak oil demand.“Wall Street remains unsure of how long this disinflation journey will take to get to the Fed’s inflation target of 2.0%,” Prices were also weighed down by API's report which showed an unexpected crude build (the biggest since Feb). API
- Crude +3.618mm (-800k exp) - biggest build since Feb
- Cushing -1.316mm
- Gasoline +399k (-800k exp)
- Distillates -3.945mm (-400k exp)
DOE
- Crude +2.951mm (-800k exp) - biggest build since Feb '23
- Cushing +397k
- Gasoline -3.167mm (-800k exp)
- Distillates -4.17mm (-400k exp) - biggest draw since Oct '22
The official data confirmed API's reported and unexpected crude build and gasoline;s large inventory draw...Despite all the chatter about refilling, the Biden admin drained 2.924mm barrels from the SPR (the 6th straight week of draws)... The so-called 'adjustment' factor was positive yet again...US Crude production remains at cycle highs despite the rig counts decline...mWTI was hovering around $72.50 ahead of the official data and is extending those losses after a brief spike as the belief in the admin's plan to refill fades...The White House’s plan to begin purchasing oil to replenish the nation’s emergency reserve added some price support, along with output disruptions in Canada. Wildfires in Alberta may have reduced energy production by the equivalent of 500,000 barrels a day, according to Rystad Energy.
Oil Mixed After EIA Shows Large Crude Build, Products Draw - New York Mercantile Exchange oil futures turned mixed in late-morning trade Wednesday, reacting to inventory data from the U.S. Energy Information Administration showing domestic crude oil stockpiles increased sharply last week, while supplies of refined fuels dropped by more than 7 million barrels (bbl) amid higher fuel demand. U.S. commercial crude oil inventories fell for the first time in four weeks through May 5, rising 3 million bbl to 462.6 million bbl, and are now about 1% below the five-year average. Markets have mostly expected crude stockpiles would fall by 800,000 bbl from the prior week. The build was realized on the back of another 2.9-million-bbl transfer of crude oil last week from the nation's Strategic Petroleum Reserve to the commercial side. Such sales will continue through the end of June, according to the Energy Department, which is conducting the transactions. Oil stored at Cushing, Oklahoma, hub -- the delivery point for West Texas Intermediate -- increased 397,000 bbl from the previous week to 34 million bbl, the EIA said in its weekly report. U.S. crude oil production remained unchanged at 12.3 million bpd. Domestic refiners raised utilization by 0.3% from the previous week to 91% of capacity, processing 15.745 million bpd in the reviewed week. Analysts were expecting a larger 0.5% increase in refinery run rates. In the gasoline complex, stockpiles slid 3.2 million bbl last week to 219.7 million bbl compared with analyst expectations for an 800,000-bbl decrease. Demand for gasoline, meanwhile, improved by 685,000 bpd to 9.303 million bpd ahead of the busy summer travel season. Distillate stocks, which are mostly diesel fuel, fell by 4.2 million bbl to 106.2 million bbl, and remained about 15% below the five-year average, EIA said. Analysts had expected distillate inventories would fall 400,000 bbl from the previous week. Total products supplied over the last four-week period averaged 19.9 million bpd, up 2.5% from the same period last year. Over the past four weeks, gasoline supplied to the U.S. market averaged 9 million bpd, up 2.2% from the same period last year. Distillate fuel supplied averaged 3.9 million bpd over the past four weeks, up 0.1% from the same period last year. Near 11:15 a.m. EDT, NYMEX WTI futures for June delivery declined $1.08 to $72.63 bbl. NYMEX RBOB June futures increased $0.0172 to $2.4968 gallon and ULSD April futures gained $0.053 to $2.3964 gallon.
Oil drops 1% after US data points to further rate hikes - Oil prices fell by more than a dollar a barrel on Wednesday, ending a three-day rally, as economic data suggested that the U.S. Federal Reserve might hike interest rates further. Brent crude dropped $1.03, or 1.3%, to settle at $76.41 a barrel while U.S. West Texas Intermediate crude (WTI) fell $1.15, or 1.6%, to $72.56 a barrel. U.S. consumer prices rose in April, potentially raising the likelihood that the Fed will maintain higher interest rates for the time being. Rising global interest rates have weighed on oil prices in recent months, as traders are concerned about the economy crashing into a recession. "Oil prices have been depressed by fears about economic growth related to the banking crisis and normal seasonal weakness during the spring as energy demand moderates," U.S. crude oil inventories rose by about 3 million barrels last week due to another release from national reserves and a drop in exports, the Energy Information Administration said. The government report confirmed industry data released late Tuesday that had reported an unexpected build, which weighed on prices for most of Wednesday's session. [API/S} Analysts polled by Reuters had forecast a crude drawdown of 900,000 barrels. The surprising U.S. crude inventory build, along with lower crude imports and April's softer export growth in China exacerbated worries about global oil demand. The decline in crude prices was, however, limited by a surge in U.S. gasoline demand ahead of the summer driving season. U.S. gasoline inventories decreased by 3.2 million barrels last week, much bigger than the 1.2 million-barrel draw forecast by analysts. Distillate stocks also declined, EIA data showed. RBOB gasoline futures rose 0.7% to $2.50 per gallon, while the ULSD futures contract was trading about unchanged. "We are forecasting that oil prices range from $75-95 during 2023 based on fundamental supply and demand and that oil will rally as we head into the summer driving season,"
Oil Prices Climb On US Fuel Demand Optimism - Oil prices climbed on Thursday as strong fuel demand data coupled with optimism over the Federal Reserve cutting interest rates later this year outweighed U.S. debt ceiling worries. Benchmark Brent crude futures rose a little over 1 percent to $77.18 a barrel, while WTI crude futures were up nearly 1 percent at $73.27. Latest data from the U.S. Energy Information Administration (EIA) showed that gasoline inventories declined by 3.2 million barrels last week, raising optimism about strong fuel demand from the world's top oil consumer. Distillate fuel inventories, which include diesel and heating oil, tumbled by 4.2 million barrels, helping offset worries surrounding recession and the U.S. debt ceiling. U.S. jet fuel demand rose to its highest level since December 2019, suggesting demand for transport fuels remains resilient in the U.S. Meanwhile, softer-than-expected U.S. inflation data raised hopes that the Fed would start cutting rates this year to shore up the economy. The dollar traded higher in European trade ahead of U.S. producer price inflation data due out later in the day. The Bank of England's rate decision is also due later in the day.
Oil prices slip 1%, US jobless data and debt-ceiling talks weigh - Oil prices slid about 1% on Thursday as a political standoff over the US debt ceiling stoked recession jitters in the world’s biggest oil consumer, while rising US jobless claims weighed on sentiment and a stronger dollar pressured oil too. Brent futures fell 73 cents, or 1.0%, to $75.68 a barrel by 11:19 a.m. EDT (1519 GMT). US West Texas Intermediate (WTI) crude fell 92 cents, or 1.3%, to $71.64. The dollar rose to its highest in a week against a basket of major currencies, after recent jobless claims data strengthened the case for the Federal Reserve to halt interest rate hikes but did not prompt expectations of year-end rate cuts. A stronger US dollar makes oil more expensive in other countries. Higher interest rates can weigh on oil demand by boosting borrowing costs, pressuring economic growth. US Treasury Secretary Janet Yellen urged Congress to raise the $31.4 trillion federal debt limit and avert an unprecedented default that would trigger a global economic downturn. “Uncertainties regarding the US debt ceiling, recent banking issues that could prompt a credit crunch across much of the oil industry and continued strong possibility of a recession remain … significant obstacles” for oil markets, analysts at energy consulting firm Ritterbusch and Associates said in a note. An extended period of high interest rates could put more stress on banks, but would be necessary if inflation stays stubbornly high, said Minneapolis Federal Reserve President Neel Kashkari. US producer prices rose moderately last month, the smallest annual producer inflation increase in more than two years. US President Joe Biden’s administration unveiled a sweeping plan to slash greenhouse gas emissions from the power industry, one of the biggest steps so far in its effort to decarbonize the American economy to fight climate change. The Organization of the Petroleum Exporting Countries (OPEC) kept its global oil demand forecast for 2023 steady for a third month, saying potential growth in China, the world’s biggest oil importer, could be offset by economic risks elsewhere such as the US debt ceiling battle. New Chinese bank loans tumbled far more sharply than expected in April, adding to worries that the economy’s post-pandemic recovery is losing steam. On the supply front, Iraq has sent an official request to Turkey to restart oil export flows through a pipeline running from the semi-autonomous Kurdistan Region in northern Iraq to the Turkish port of Ceyhan, which could add 450,000 barrels per day (bpd) to global crude flows.
On Thursday, the Market Continued to Retrace its Previous Losses --On Thursday, the oil market continued to retrace its previous losses as increasing jobless claims and a stronger dollar weighed on sentiment. The market traded sideways in overnight trading and ahead of the release of the weekly unemployment report. However, the market breached its previous low and began the day’s sell off upon the release of the weekly jobless claims report showing claims increased to the highest level since October 2021 and a gauge of producer sentiment came in below market expectations. The market sold off to a low of $70.63 by mid-morning and remained pressured during the remainder of the session. The market traded towards its low ahead of the close and settled in a sideways trading range before settling in negative territory for the second consecutive session. The June WTI contract settled down $1.69 at $70.87 and the July Brent contract settled down $1.43 at $74.98. The product markets settled lower, with the heating oil market settling down 4.39 cents at $2.3495 and the RB market settling down 3.7 cents at $2.4577. OPEC raised its forecast for Chinese oil demand growth this year but left its global projection steady, citing potential downside risks such as the U.S. debt ceiling. In its monthly report, world oil demand in 2023 will increase by 2.33 million bpd or 2.3%. This was virtually unchanged from 2.32 million bpd forecast last month. OPEC said Chinese oil demand is now expected to increase by 800,000 bpd, up from the 760,000 bpd forecast last month, adding to a recovery after strict COVID-19 containment measures were scrapped. The global demand growth figure was unchanged for a third straight month and OPEC left its 2023 economic growth forecast at 2.6%, citing potential downside risks such as persistent inflation and increasing debt payments from higher interest rates. The OPEC report showed that OPEC’s oil production fell in April by 191,000 bpd to 28.6 million bpd, with declines in Iraq and Nigeria. Iraq’s northern exports were halted while some of Nigeria’s exports were disrupted by a labor dispute. OPEC kept its forecast that non-OPEC supply would increase by 1.4 million bpd in 2023 and flagged factors that could limit or cut supplies such as investment levels and the war in Ukraine. Three sources said Russia's Deputy Energy Minister Pavel Sorokin held a call this month with Western analysts about the country's oil production, trying to convince them that Russia had reduced output as targeted. Nigerian officials reported Wednesday the nation’s crude oil and condensate production in April fell to just 1.25 million b/d as a result of strikes at key oil export terminals. April’s production was down 18% from March’s levels and was at the lowest level since October 2022, when output had fallen to a 40 year low. This production level was well below its OPEC+ production quota of 1.74 million b/d. The country currently has a production capacity of 2.2 million b/d. S&P Global Commodity Insights is estimating OPEC and its allies pumped 380,000 b/d of crude oil less in April than they did in March. Much of this decline was the result of Kurdish barrels not being able to reach export markets and the shortfall in Nigeria.
Oil Prices Set For The Longest Weekly Losing Streak Since November 2021 - Early on Friday, oil prices extended the losses of the previous two days as concerns about the Chinese and U.S. economies continue to weigh on market sentiment, dragging prices down and on track for a fourth consecutive weekly loss. As of early morning trade in Europe, the U.S. benchmark WTI Crude had slumped again to the $70 per barrel mark, and traded at $70.57, down by 0.42% on the day, and down from this week’s high of over $73 a barrel. Brent Crude, the international benchmark, was trading down by 0.53% at $74.62. Both benchmarks were on course to book another weekly loss, despite gains in the first two trading days of this week. A fourth consecutive week of losses would mark the longest weekly losing streak for oil since November 2021. Concerns about the U.S. economy, another build in U.S. inventories, and signs of a patchy economic recovery in China have weighed on the petroleum complex this week, overshadowing signals that the United States could begin buying crude soon to fill the Strategic Petroleum Reserve (SPR). The impasse on raising the U.S. debt ceiling and a subsequent looming debt default have also dragged down prices and sentiment in the oil market. Crude oil prices were also weighed down by the Energy Information Administration (EIA) reporting on Wednesday an inventory build of 3 million barrels for the week to May 5. Later on Wednesday, U.S. inflation data showed a decline in core consumer prices. But the still sticky inflation could mean that the Fed may not start cutting rates in the near term, analysts say. Concerns about oil demand in the near future outweighed signals from U.S. Energy Secretary Jennifer Granholm that the Administration could start repurchasing crude to fill the SPR once the June sale from the SPR is completed.
Oil price falls to $75 a barrel amid demand fears in US, China -Oil prices fell on Friday as renewed economic concerns in the United States and China (two main oil consumers) raised fears about the global fuel demand growth.Brent crude futures dropped 0.60 percent to $75.47 a barrel by 14:30 GMT+1, while US West Texas Intermediate (WTI) crude was down 0.47 percent to $70.54.US President Joe Biden and lawmakers have been in talks over the US debt ceiling — a limit that congress imposes on the amount that the federal government can owe.Democrats have long pushed for an unconditional increase of the debt ceiling, while Republicans have demanded a number of policy reforms in addition to sharp spending cuts.On Friday, Janet Yellen, US treasury secretary, said the US faces financial and economic catastrophe if congress fails to raise the debt ceiling.Also, Michelle Bowman, US Federal Reserve governor, said the Fed would probably need to raise interest rates further if inflation stays high, adding that data, so far this month, has not convinced her that price pressures are receding.Staff economists at the Fed had projected that the recent banking turmoil would trigger a “mild recession” later this year.On the other hand, a decline in new loans to businesses and weaker economic data inChina earlier in the week refocused doubts about the country’s recovery from COVID restrictions driving oil demand growth, according to Reuters.Meanwhile, with international oil prices falling, Nigeria has been battling to resume optimal crude oil production.Last month, the country’s oil production fell below the one million mark.The production figure decreased to 998,602 barrels per day (bpd), a 21.26 percent declinecompared to March, when output was 1,268,202 bpd. In January and February, oil production averaged 1,258,150 bpd and 1,306,304 bpd, respectively
Oil Pressured by USD, Possible Kurdish Oil Exports Restart -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled Friday's session lower, with all petroleum contracts notching their fourth consecutive weekly loss amid a one-two punch of a stronger U.S. dollar and the potential return of Kurdish oil exports to the global market after the Iraqi government signaled a breakthrough in an ongoing dispute with their Turkish counterpart. Friday's rally in the U.S. dollar was, in part, spurred by a weaker-than-expected consumer sentiment index released by the University of Michigan this morning, showing Americans feel less optimistic about the economy than at any point over the past six months. The combination of a softer labor market and standoff in Washington, D.C. over raising the federal debt ceiling renewed worries about the economic outlook. Year-ahead expectations for the economy plummeted 23% from last month, while long-run expectations slid 16%, indicating consumers are concerned that an expected economic downturn will not be brief. "While current incoming macroeconomic data show no sign of a recession, consumer worries about the economy escalated in May alongside the proliferation of negative news about the economy," said Surveys of Consumer Director Joanne Hsu. In reaction to the data, the U.S. dollar advanced 0.6% against a basket of foreign currencies to finish Friday's session at 101.873, while pressuring front-month West Texas Intermediate to $70.04 bbl, down $0.83 bbl on the session. International crude benchmark Brent for July delivery declined $0.81 to settle at $74.17 bbl. NYMEX RBOB June futures dropped back $0.0275 to $2.4302 gallon, while ULSD June futures fell $0.0440 to $2.3055 gallon. Further weighing on the oil complex, the Iraq National Oil Company has officially asked Turkey to restart its pipeline connecting the port of Ceyhan on the Mediterranean coast with the oil-producing region of Kurdistan in northern Iraq, authorities said on Thursday. Ankara stopped receiving oil exports from Kurdistan in March after Paris-based International Chamber of Commerce ruled that Turkey owed Iraq $1.5 billion for receiving unauthorized exports between 2014 and 2018. The oil exports from the Kurdistan Region to Turkey were expected to begin in April following a trilateral deal, but Turkey has not given the green light allowing exports. The halt of oil flows is threatening the Kurdistan Region's oil sector due to the lack of storage capacity in the region. Norwegian oil company DNO, one of the operators in the region, said on Thursday it will reduce operations in Kurdistan amid uncertainty of the dispute with Turkey. "Given the uncertain timing of export resumption and, importantly, of payments by the Kurdistan Regional Government for previous oil sales, DNO has scaled back [spending] in Kurdistan, including drilling," the company said in a statement. The stoppage of Kurdish oil flows has depressed production volumes from the Organization of the Petroleum Exporting Countries last month, according to OPEC's Monthly Oil Market Report. OPEC showed its collective oil production fell by 191,000 bpd in April to 28.6 million bpd just as some of the group's largest producers have started production cuts aimed for May. The drop off in production pressed Iraqi crude production 292,000 bpd below its voluntary quota established in October 2022, and 81,000 bpd less than its quota that took effect this month.
Iraq asks Turkey to resume oil flows -- Iraq has officially requested that Turkey restart the pipeline responsible for sending Iraqi crude oil from the semi-autonomous Kurdistan Region to the port of Ceyhan, a statement from Iraq’s Kurdistan Regional Government said on Thursday. Oil flows along the pipeline have been halted for weeks. “Both the Kurdistan Region’s Ministry of Natural Resources and Iraq’s Ministry of Oil are reportedly waiting for Turkey’s response before resuming oil exports,” the KRG statement said. Iraq’s oil minister said last week that Baghdad and Erbil were set to reach an agreement over crude oil exports from the semi-autonomous Kurdistan Region within the next two weeks. “Regarding the agreement with the Region, we have reached the final stage and hopefully we will reach the final agreement on the exportation of crude oil within a maximum of two weeks,” Iraq’s oil minister Hayan Abdul Ghani said at the time. The only outstanding issue was how Iraq would handle the bank account where Erbil’s oil money is kept. Kurdistan’s crude oil exports – around 400,000 to 450,000 bpd shipped through an Iraqi-Turkey pipeline to Ceyhan and then on tankers to the international markets – were halted in late March by the federal government of Iraq. A few days earlier, the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and Ceyhan without approval from the federal government of Iraq. The court ruled that Turkey should pay Iraq compensation of $1.5 billion for what now appears to be illegal exports of oil over five years. Turkey then shut off the Kirkuk-Ceyhan pipeline in response, which suspended the flow of oil from the Kurdistan region. Kurdistan’s oilfields also shut down due to a lack of storage. The negotiations between Baghdad and Erbil are focused on who gets more control over the oil flows, with the latest iteration of talks settling on export revenues being deposited into an existing KRG bank account with Citi in the UAE, three Reuters sources close to the matter said. Baghdad will have auditing access.
Saudi Envoy Says Yemen Peace Talks are 'Serious' But Unclear When Deal Will Come - Saudi Arabia’s envoy to Yemen said Thursday that all sides engaged in talks to end the war in Yemen are “serious,” but the next steps are unclear.“Everybody is serious. Serious means everybody is looking for peace,” Mohammed al-Jaber told AFP. “It’s not easy to be clear about next steps.”Jaber traveled to Sanaa last month to hold in-person talks with the Houthis that were mediated by Oman. The negotiations were a significant step, andboth sides said good progress was made, but no deals were signed.The Saudis and the Houthis are expected to soon agree to an extension of a ceasefire, which is meant to pave the way for a lasting political settlement. While no official ceasefire has been in effect since last October, there have been no Saudi airstrikes in Yemen or Houthi attacks inside Saudi Arabia in over a year.Jaber tried to characterize Riyadh’s role as a mediator between the Houthis and the Saudi-backed Yemeni government, whose leadership is in exile. But Saudi Arabia is a direct party to the conflict and has been since it led a coalition to intervene in Yemen in 2015 with full US backing.Last year, the exiled Yemeni government formed the Presidential Leadership Council in Riyadh, which took power from President Hadi, who fled to Saudi Arabia in 2015. Members of the PLC insist the Saudis are mediating between them and the Houthis. Jaber said the Houthis and the PLC “refuse to sit together.”The PLC has little power in Yemen, and southern separatists have added to their problems. The UAE-backed Southern Transition Council (STC) held a meeting on Monday and called for the partition of Yemen to reflect the borders of the previous states of North Yemen and South Yemen before they were combined to create the modern borders of Yemen in 1990.
Bold gambits on the West Asian chessboard – Pepe Escobar -- West Asia is a region that is currently experiencing a great deal of geopolitical activity. Recent diplomatic efforts, initiated by Russia and overseen by China, secured a long-elusive Iranian and Saudi Arabian rapprochement, while Syria’s return to the Arab League has been welcomed with great fanfare. The diplomatic flurry signals a shift away from the Imperial “Divide and Rule” tactics that have been used for decades to create national, tribal, and sectarian rifts throughout this strategic region. The proxy war in Syria, backed by the Empire and its terror outfits – including the occupation of resource-rich territories and mass theft of Syrian oil – continues to rage on despite Damascus having gained the upper hand. That advantage, weakened in recent years by a barrage of western economic killer sanctions, is now growing exponentially: the Syrian state was further bolstered by Iranian President Ebrahim Raisi’s recent official visit – pledging to expand bilateral ties – on the eve of Syria’s return to the Arab League. “Assad must go” – a meme straight out of collective western hubris – in the end, did not go. Imperial threats notwithstanding, those Arab states that had sought to isolate the Syrian president came back to praise him all over again, led by Moscow and Tehran. Syria is extensively discussed in informed circles in Moscow. There’s a sort of consensus that Russia, now concentrated in the “all or nothing” proxy war against NATO, will not currently be able to impose a Syrian peace solution, but that doesn’t preclude the Saudis, Iranians, and Turks fronting a Russian-led deal. Had it not been for the aggressive behavior of Straussian neo-cons in the Washington Beltway, a comprehensive multi-territorial peace could have been achieved, including everything from Syria’s sovereignty, to a demilitarized zone in the Russian western borderlands, stability in the Caucasus, and a degree of respect for international law. However, such a deal is unlikely to materialize, and instead, the situation in West Asia is likely to worsen. This is due in part to the fact that the North Atlantic has already shifted its focus to the South China Sea. The collective west appears to lack a decisive leader, with the Hegemon currently being “led” by a senile president who is remote-controlled by a pack of polished-faced warmongers. The situation has devolved to the point where the much-hyped “Ukrainian counter-offensive” may actually be the prelude to a NATO humiliation that will make Afghanistan look like Disneyland in the Hindu Kush. Arguably there may be some similarities between Russia-NATO now and Turkiye-Russia before March 2020: both sides are betting on some crucial military breakthrough on the battlefield before sitting at the negotiating table. The US is desperate for it: even the 20th century ‘Oracle’ Henry Kissinger is now saying that with China involved, there will be negotiations before the end of 2023. Despite the urgency of the situation, Moscow does not appear to be in a hurry. Its key military strategy, as seen in Bakhmut and Artemyovsk, is to use a combination of the snail technique and the mincing machine. The ultimate goal is to demilitarize NATO as a whole rather than just Ukraine, and so far, it appears to be working brilliantly.
House Hawks Urge Biden to Use Sanctions to Prevent Syria Normalization - The top Republican and Democrat on the House Foreign Affairs Committee released a statement on Monday slamming Syria’s readmission into the Arab League and urging President Biden to use sanctions to prevent further normalization.“Readmitting Assad to the Arab League is a grave strategic mistake that will embolden Assad, Russia, and Iran to continue butchering civilians and destabilizing the Middle East,” Rep. Michael McCaul (R-TX) and Gregory Meeks (D-NY) said.“The United States must fully enforce the Caesar Act and other sanctions to freeze normalization efforts with this war criminal,” the lawmakers added. The Caesar Act imposed crushing economic sanctions on Syria in 2020 that are specifically designed to prevent the country’s reconstruction. The measures have had a devastating impact on Syria’s civilians. The House recently voted overwhelmingly to keep enforcing sanctions following a devastating earthquake that killed thousands of Syrians. What makes the Caesar Act sanctions so sweeping is that they allow the US to sanction any person or entity for doing business with the Syrian government. This means US allies like Saudi Arabia and Jordan, which spearheaded the effort to bring Syria back into the fold, could potentially be targeted. On Tuesday, Syria and Saudi Arabia announced they were reestablishing diplomatic ties for the first time in over 10 years.The State Department has denounced Syria’s readmission to the Arab League. “We do not believe that Syria merits readmission to the Arab League at this time,” State Department spokesman Vedant Patel said on Monday. “We continue to believe that we will not normalize our relations with the Assad regime, and we don’t support our allies and partners doing so either.”On top of the crippling sanctions, the US has about 900 troops in eastern Syria and backs the Kurdish-led SDF, allowing the US to control about one-third of the country, where most of its oil resources are located. Syria’s normalization with its neighbors could complicate the US’s plans to keep occupying the country.
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