SPR at a new 39½ year low, exports of distillates at a 13 month high, lowest May gasoline supplies since 2014; biggest oil rig drop in three years
oil prices fell for the first time in three weeks on recessionary Chinese data and mixed messages from oil producers, but partly recovered from steep losses early in the week after Congress passed a supportive debt ceiling bill....after rising 1.4% to $72.67 a barrel last week on a big jump in gasoline demand and on the largest drawdown of commercial oil supplies since Thanksgiving, the contract price for the benchmark US light sweet crude for July delivery eked out modest gains in overseas trading on Memorial day, after US leaders reached a tentative debt ceiling deal, likely averting a default of the world's largest economy and oil consumer, but then tumbled nearly 2% in overseas trading Tuesday, as concerns about the US debt ceiling pact's viability cooled the market's sentiment, while mixed messages from major oil producers clouded the outlook ahead of their meeting this weekend...oil prices continued to slide after markets opened in New York, as physical market indicators for crude signaled that supplies were more than enough to meet demand, and settled the session $3.21 or 4.4% lower at $69.46 a barrel, as traders began to lose faith that Congress would finalize the deal that would raise the debt ceiling and allow the US to meet its financial obligations....oil prices continued lower in Asian trading Wednesday, after a survey indicated that Chinese manufacturing slowed more than had been expected, and were off by 3% in early US trading on the disappointing Chinese data and a stronger US dollar, amid concerns about opposition to the U.S debt ceiling deal, before partly recovering on progress on the debt ceiling bill, but still settied $1.37 lower at $68.09 a barrel....oil prices then extended those losses in evening trading after the American Petroleum Institute surprised traders with a report of a large crude supply build, against expectations of a large withdrawal, but rallied early Thursday on the passage of the debt ceiling bill in the US House late Wednesday night, and settled $2.01 higher at $70.10 a barrel, supported by hopes for a pause in U.S. interest rate increases after Fed officials had suggested interest rates could be held steady this month...oil prices moved higher in Asian trading Friday, as traders priced in the lifting of the US debt ceiling, then rallied in US trading after jobs data indicated a possible pause in rate hikes, and settled $1.64 higher at $71.74 a barrel after Baker Hughes reported the largest drop in oil rig activity since early June 2020, but still ended 1.3% lower on the week as traders awaited the outcome of a weekend meeting of OPEC and its allies, a meeting to which Bloomberg, Reuters and the Wall Street Journal were not invited..
Meanwhile, US natural gas prices finished lower for the third time in eight weeks following an oversized injection of gas into storage amid strong production and weak weather related demand...after falling 10.3% to $2.417 per mmBTU last week as the June gas contract tumbled 15.9% to expire at $2.181 per mmBTU, the contract price of US natural gas for July delivery opened 9 cents lower on Tuesday, as short-term weather forecasts remained bearish, and settled 9.0 cents lower at $2.327 per mmBTU despite trading 12 cents higher midday on record output from US gas wells and on forecasts for milder weather over the next two weeks than had been expected...while natural gas prices opened 5 cents higher on Wednesday, that just served to start a steady descent that would span the balance of the session, driven lower by the ongoing storage glut and bearish weather forecasts to settle 6.1 cents lower at $2.266 per mmBTU on a decline in gas flows to LNG export plants due to maintenance, and on rising gas imports coming in from Canada....with traders expecting a bearish storage report, natural gas prices opened 7 cents lower on Thursday and tumbled to intraday low of $2.136 at 11:15AM after a storage report that was in line with bearish expectations before settling down 10.8 cents at $2.158 per mmBTU, driven lower by a robust inventory injection that reflected strong production and anemic demand...with support from bargain buying and technical trading, natural gas prices crept into positive territory on Friday and managed to hold there to settle 1.4 cents higher at $2.172 per mmBTU on record exports to Mexico and on forecasts for more demand over the next two weeks than was previously expected, but still finished 10.1% lower on the week amid ongoing unfavorable supply and demand fundamentals...
The EIA's natural gas storage report for the week ending May 26th indicated that the amount of working natural gas held in underground storage in the US increased by 110 billion cubic feet to 2,446 billion cubic feet by the end of the week, which left our natural gas supplies 557 billion cubic feet, or 29.5% above the 1,889 billion cubic feet that were in storage on May 26th of last year, and 349 billion cubic feet, or 16.6% more than the five-year average of 2,097 billion cubic feet of natural gas that were in storage as of the 26th of May over the most recent five years…note, however, that the often cited national average obscures the fact that gas supplies are still 34.6% below normal for this date in the Pacific states, while 30.8% and 26.3% above normal in both the East and Midwest regions of the country at the same time....the 110 billion cubic foot injection into US natural gas working storage for the cited week was more than the 106 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, and it was much more than the 82 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, as well as more than the average 101 billion cubic feet addition to natural gas storage that has been typical for the same May 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 26th showed that after a big jump in our oil imports, an even bigger jump in new oil supplies that the EIA could not account for, and an increase in the oil released from our Strategic Petroleum Reserve, we had surplus oil to add to our stored commercial crude supplies for the 4th time in ten weeks, and for the 25th time in the past 40 weeks, as oil also continued to be released to the markets from our Strategic Petroleum Reserve .. Our imports of crude oil rose by an average of 1,367,000 barrels per day to a four month high of 7,217,000 barrels per day, after falling by an average of 1,010,000 barrels per day the prior week, while our exports of crude oil rose by an average of 366,000 barrels per day to 4,915,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 2,302,000 barrels of oil per day during the week ending May 26th, 1,001,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly 100,000 barrels per day lower at 12,200,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have averaged a total of 14,502,000 barrels per day during the May 26th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,165,000 barrels of crude per day during the week ending May 26th, an average of 96,000 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 281,000 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 26th appear to indicate that our total working supply of oil from net imports and from oilfield production was 1,945,000 barrels per day less than what was added to storage plus 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 [+1,945,000] 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….Moreover, since last week’s “unaccounted for crude oil” was at (+456,000) barrels per day, that means there was a 1,489,000 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 complete nonsense...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 281,000 barrel per day increase in our overall crude oil inventories came as an average of 641,000 barrels per day were being added to our commercially available stocks of crude oil, while 360,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time, the eighth straight draw on the SPR this year, wherein government owned oil is being sold into the domestic markets as part of an earlier budget balancing withdrawal mandated by congress....as a result the 355,436,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since September 9th, 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 rose to an average of 6,370,000 barrels per day last week, which was 0.2% less than the 6,385,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day lower at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,800,000 barrels per day, while Alaska’s oil production was 20,000 barrels per day lower at 418,000 barrels per day, but still added the same 400,000 barrels per day to the rounded national total as it did last week...US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 6.9% below that of our pre-pandemic production peak, but was 25.8% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.
US oil refineries were operating at 93.1% of their capacity while using those 16,165,000 barrels of crude per day during the week ending May 26th, up from their 91.7% utilization rate during the prior week, and a utilization rate that's on the high side of normal for late May... The 16,165,000 barrels per day of oil that were refined this week were 0.8% more than the 16,033,000 barrels of crude that were being processed daily during week ending May 27th of 2022, but 3.6% less than the 16,767,000 barrels that were being refined during the prepandemic week ending May 24th, 2019, when our refinery utilization rate was at 91.2%, close to normal for this time of year...
Even with the increase in the amount of oil being refined this week, the gasoline output from our refineries was somewhat lower, decreasing by 344,000 barrels per day to 9,971,000 barrels per day during the week ending May 26th, after our gasoline output had increased by 833,000 barrels per day during the prior week. This week’s gasoline production was still a bit more than the 9,968,000 barrels of gasoline that were being produced daily over the same week of last year, and 1.1% more than the gasoline production of 9,863,000 barrels per day during the prepandemic week ending May 24th, 2019. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 165,000 barrels per day to 5,040,000 barrels per day, after our distillates output had increased by 19,000 barrels per day during the prior week. With those increases, our distillates output was 1.1% more than the 4,984,000 barrels of distillates that were being produced daily during the week ending May 27th of 2022, but 2.7% less than the 5,182,000 barrels of distillates that were being produced daily during the week ending May 24th, 2019...
With this week's big decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the thirteenth time in fifteen weeks, and for the 44th time in 66 weeks, decreasing by 207,000 barrels to 216,070,000 barrels during the week ending May 26th, after our gasoline inventories had decreased by 2,053,000 barrels during the prior week. Our gasoline supplies fell by much less this week despite the lower production because the amount of gasoline supplied to US users fell by 339,000 barrels per day to 9,098,000 barrels per day, and because our imports of gasoline rose by 70,000 barrels per day to 833,000 barrels per day, while our exports of gasoline rose by 240,000 barrels per day to 951,000 barrels per day. After thirteen gasoline inventory decreases over the past fifteen weeks, our gasoline supplies were 1.3% below last May 27th's gasoline inventories of 218,996,000 barrels, and about 8% below the five year average of our gasoline supplies for this time of the year…
Meanwhile, with this week's big increase in our distillates production, our supplies of distillate fuels increased for the third time in twelve weeks, rising by 985,000 barrels to 106,657,000 barrels during the week ending May 26th, after our distillates supplies had decreased by 561,000 barrels to a twelve month low during the prior week. Our distillates supplies also rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 552,000 barrels per day to 3,646,000 barrels per day, even as our exports of distillates rose by 539,000 barrels per day to a 13 month high of 1,453,000 barrels per day, and as our imports of distillates rose by 43,000 barrels per day to 199,000 barrels per day.... Even after 65 inventory withdrawals over the past one hundred and five weeks, our distillate supplies at the end of the week were 0.2% above the 106,392,000 barrels of distillates that we had in storage on May 27th of 2022, but are still about 18% below the five year average of our distillates inventories for this time of the year...
Finally, after the big jumps in our oil imports and in our new oil supplies that the EIA could not account for, our commercial supplies of crude oil in storage rose for the 16th time in 23 weeks and for the 29th time in the past year, increasing by 4.489,000 barrels over the week, from 455,168,000 barrels on May 19th to 459,657,000 barrels on May 26th, after our commercial crude supplies had decreased by 12,456,000 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 2% below the most recent five-year average of commercial oil supplies for this time of year, but are around 28% above the average of our available crude oil stocks as of the last weekend of May 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 26th were 10.8% more than the 414,733,000 barrels of oil we had in commercial storage on May 27th of 2022, but were 4.1% less than the 479,270,000 barrels of oil that we still had in storage in the wake of winter storm Uri on May 21st of 2021, and are now 13.7% less than the 532,345,000 barrels of oil we had in commercial storage on May 29th of 2020, after the pandemic restrictions had left a lot of oil unused…
This Week's Rig Count
The number of drilling rigs active in the US decreased for the twelfth time in the past sixteen weeks during the week ending June 2nd, and is now 12.2% below the prepandemic rig count, despite increasing ninety-nine times over the past 139 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 15 rigs to 696 rigs over the past week, which was 31 fewer rigs than the 727 rigs that were in use as of the June 3rd report of 2022, and was also 1,233 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 15 to 555 oil rigs during the past week, the biggest oil rig drop in three years, after the number of rigs targeting oil had fallen by five rigs during the prior week, leaving nineteen fewer oil rigs active now than were running a year ago, as they amount to just 34.4% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are now down 18.7% from the prepandemic oil rig count of 683….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 137 natural gas rigs, which was still down by 14 natural gas rigs from the 151 natural gas rigs that were drilling during the same week a year ago, and as they now amount to just 8.5% 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 shows that four rigs they've labeled as "miscellaneous" are drilling this week: those include a directional rig drilling to between 10,000 and 15,000 feet into a formation in Beaver county Utah, 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 such rigs 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 unchanged at 20 rigs this week, with 18 of those rigs drilling for oil in Louisiana's offshore waters, and two drilling for oil in Texas waters....the Gulf rig count is still up by 5 from the 15 Gulf rigs running a year ago, when all 15 Gulf rigs were drilling for oil offshore from Louisiana…but since there was a rig drilling offshore from Alaska during the same week a year ago, the national total of 20 rigs drilling offshore is up by 4 rigs from the national offshore count of 16 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 14 to 628 horizontal rigs this week, which was 38 fewer rigs than the 666 horizontal rigs that were in use in the US on June 3rd of last year, and only 45.7% 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 1 at 16 vertical rigs this week, and those were down by 9 from the 25 vertical rigs that were operating during the same week a year ago....meanwhile, the directional rig count was unchanged at 52 directional rigs this week, and those were up by 16 from the 36 directional rigs that were in use on June 3rd 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 June 2nd, the second column shows the change in the number of working rigs between last week’s count (May 26th) and this week’s (June 2nd) count, the third column shows last week’s May 26th 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 3rd of June, 2022...
we'll start by checking the Rigs by State file at Baker Hughes for the changes Texas...in the districts overlying the Eagle Ford shale, we find that a rig was pulled out of Texas Oil District 1, another rig was pulled out of Texas Oil District 2, and that two more rigs were pulled out of Texas Oil District 3....those removals account for the drop of two oil rigs in the Eagle Ford shale, and the removal of two more oil rigs from basins that Baker Hughes doesn't track....in the Texas Permian, we find that there was a rig pulled out of Texas Oil District 8A, which includes the counties overlying the northern Permian Midland, but that the rig counts in other Texas Permian districts were unchanged....since the Texas Permian rig count was thus down by one while the national Permian count was down by two, we can therefore conclude that the rig pulled out of New Mexico had been drilling in the far western Permian Delaware in the southeast corner of that state...
elsewhere in Texas, there was a rig pulled out of Texas Oil District 6, which accounts for one of the natural gas rigs pulled from the Haynesville shale; the other Haynesville shale rig removal was from northwest Louisiana, where there was also an oil rig pulled out of a basin that Baker Hughes doesn't track in the southern tier of the state...despite the Haynesville shale removals, the natural gas rig count remained unchanged because two Permian basin oil rigs were swapped out and replaced by two Permian rigs targeting natural gas, leaving the area totals unchanged;....the Permian basin now has 5 natural gas rigs and 343 targeting oil still active...in Oklahoma, oil rigs were pulled out of the Ardmore Woodford and the Cana Woodford and from fa basin that Baker Hughes doesn't cover, while the two rigs pulled out of the Williston basin included one from North Dakota and one from Montana, which was the last rig that had been drilling in that state...
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Ohio opens door to applications for oil and gas drilling underneath state parks - A screenshot of a map enclosed in documents, obtained in a public records request, Encino Energy submitted to the state of Ohio in an offer to buy leasing rights to drill for oil and gas under Salt Fork State Park. The state's new process for applying to drill underneath state parks and other state-owned land took effect Tuesday. —After more than a decade of delays, oil and gas drillers will be able start applying Tuesday for permission to drill underneath Ohio state parks and other state-owned lands. “It’s like a ribbon-cutting,” said Mike Chadsey, director of public relations for the Ohio Oil and Gas Association. “State lands leasing is open – cut the ribbon and see who’s interested.” Already, energy companies have expressed interest in drilling under state lands, though it will take at least six months – and possibly much longer than that – before any drilling could start. It’s also unclear how big of a payday Ohio could be in for, and there are already warnings about significant restrictions on how state officials could use any money they get from oil and gas drilling. Under the new rules that take effect Tuesday, oil and gas drillers will be able to nominate parcels of land for potential drilling to the Ohio Department of Natural Resources’ Oil & Gas Land Management Commission. Gov. Mike DeWine has said that the state won’t allow any new drilling activity – such as rigs, roads, or tanks – on state-owned land while he’s in office. However, energy companies could still access oil and gas underneath state land by setting up wells on adjacent private property and drilling horizontally to extract oil and gas from underneath state land. If the commission signs off on a drilling request, a lease agreement could be reached starting sometime after this October, ODNR Director Mary Mertz said in testimony earlier this month to an Ohio Senate committee. However, she added, state law allows a company to enter into a lease and not act on it for six years. “And I have been told there is at least one energy company that may seek to extend that time to 10 years,” she stated. While it remains to be seen how many applications the state will receive, at least one company – Texas-based Encino Energy – has offered the state a signing bonus of $115 million and royalties it says could total nearly $2 billion if it’s allowed to drill for oil and gas underneath Salt Fork State Park in Southeastern Ohio. “I think there has been and continues to be a lot of interest,” Chadsey said. “But I don’t know that anybody’s going to see a line at the door at 8 a.m. (Tuesday) or anything like that.” Mertz testified that her department doesn’t yet know how much money it stands to bring in from oil and gas leasing. Senate President Matt Huffman, a Lima Republican, suggested in March that fracking revenue from state lands could be used to pay for legislative Republicans’ plan to cut state income taxes. However, Mertz told lawmakers that any money paid from oil and gas drilling under state parks could, under Ohio law, only be spent by the Ohio Division of State Parks and Watercraft. Mertz also cautioned that because thousands of acres of ODNR land – including all of Salt Fork State Park – were bought or improved with money from a National Park Service grant program, National Park Service officials may have control over how any oil and gas revenue from those properties is spent. She said National Park Service officials have indicated they will only allow the state to spend such revenue on certain things, such as acquiring land for outdoor recreation, picnic facilities, trails, and camping facilities. “If the revenue from leasing these properties is diverted for unapproved uses, the state could be responsible for replacing millions of dollars’ worth of property,” she stated. The Oil & Gas Land Management Commission was created in 2011, but for years it remained inactive because then-Gov. John Kasich didn’t appoint anyone to it. DeWine appointed commission members after he took office in 2019, but until now no rules have been in place setting up the permitting process – such as creating a standard application form. Last December, the Republican-dominated state legislature jump-started the process by passing legislation – which DeWine signed – that required state agencies to approve all drilling lease applications until the Oil & Gas Land Management Commission put the needed rules in place. Since that legislation, House Bill 507, took effect last month, ODNR hasn’t received any applications to drill in state parks, according to department spokesman Andy Chow. Chadsey said that’s because the oil and gas industry wanted to wait until state officials put the new permitting rules in place.
Ohio State Lands Now Open for O&G Leasing – Virtual Ribbon-Cutting | Marcellus Drilling News -- Yesterday the virtual ribbon was cut, and drillers could, for the first time, begin to apply for permits to drill under (not on top of) Ohio state lands and state parks. In January, Ohio House Bill (HB) 507 became law with the signature of Gov. Mike DeWine (see OH Gov. Signs Bill Expanding Drilling in State Parks, NatGas “Green”). The new law allows shale drilling under Ohio state-owned land. In fact, it encourages (pushes for) more drilling under state-owned land. The question now is, will anybody show up and apply? Chances are pretty good they will.
Fracking debate continues as Ohio begins parcel leasing | NBC4 — Oil and gas companies can now request parcels of Ohio public land so it can be leased for oil and gas extractions. The new law defines Ohio public land as including parks, forests, and wildlife areas.Cathay Cowan Becker with Save Ohio Parks said she is worried about the environmental and health impacts. “If you’re hiking or you’re trying to stargaze and just outside the park there are frack rigs that are flaring methane, that’s going to make it really hard for you to do what you came to that park to do and what all our citizens are paying to support,” Cowan Becker said.Others said this could be a good thing for Ohio’s economy and could give money back to the state. Plus, Ohio Oil and Gas Association President Rob Brundrett said the process of drilling on public land is nothing new in Ohio and it won’t be disruptive because it happens underground.“The drilling will all take place on private land off public property and then they’ll drill down very, very deep under the property so you don’t see any surface disruption,” Brundrett said.Cowan Becker said oil and gas drilling can cause methane leaks which can contribute to global warming. She doesn’t want to see our parks and forests turn into fracking sites, even if the drilling happens underground.“This is what we have in Ohio to go enjoy nature, see nature and acquaint kids with nature and it’s just not right to allow that to be degraded and polluted through fracking,” Cowan Becker said.
On day one, Ohio gets eight applications to frack on state lands - cleveland.com -- – On the first day under a new legal regime, the state received eight applications to drill for oil and gas under state lands, a spokesman said Wednesday. Ohio Department of Natural Resources spokesman Andy Chow didn’t provide further detail including the identities of the applicants and where they want to drill, or details from their proposals, such as signing bonuses, royalty payments and water use deals. He said the count is current as of 5 p.m. Tuesday. He said the department is in the process of posting non-confidential portions of the applications online. The eight offers on the table mark a new chapter in the roughly 12-year-old effort to drill for oil and gas under state lands, which could include some of Ohio’s most pristine state parks. Republican lawmakers in 2011 passed legislation that first allowed for fracking on state lands, but the policy never took on its full force as its administrative rules were never written and enacted. This year, GOP state lawmakers passed legislation that successfully pressured the Oil and Gas Land Management Commission to roll out the rules that took effect Tuesday. Should the commission sign off on a drilling request, leases could be bid out and finalized by October, according to Ohio Department of Natural Resources Director Mary Mertz. Just before Tuesday’s rollout, Ohio Oil and Gas Association spokesman Mike Chadsey likened the event to a “ribbon-cutting.” Chadsey said Wednesday he didn’t immediately have information available about the eight applications. Mertz, in May 9 budget testimony to state lawmakers, downplayed the likelihood of drilling interest. Under the new process, the Oil and Gas Land Management Commission must post notification of industry’s “nomination” to lease the state land. This opens a 45-day comment period followed by a commission ruling not more than 120 days after the nomination comes in. The commissioners must consider the economic benefits, current land use, environmental impact, geological impact, impact to visitors, public comments, and other factors before approving or denying the nomination. Approved nominations then go out to bid. The ultimate decision comes down to a board with an industry tilt. By state law, the four-member commission is comprised of two people with “knowledge or experience in the oil and gas industry” who are recommended by an industry trade association; one person with expertise in finance or real estate; and one representing environmental or conservation interests. However, if the lease proposal calls for surface use on state property, the “sole discretion” over whether to enter a surface use agreement lies with the state agency that owns the land, not the OGLM. Gov. Mike DeWine, who selects the agency heads, said when he signed the recent legislation that his administration will not enter any surface use agreements on state parks. That could change with his successor. Even without surface impacts, the new state law could yield state parks essentially surrounded by well pads making underground inroads to the ore below. Drillers have done so under a few recreational parks under control of Ohio’s Muskingum Watershed Conservancy District since 2011. A few miles away from the picturesque hubs of swimming, boating and camping lies a ring of wells, processors and other gas infrastructure around locales like Tappan Lake. The sprawling conservancy district has leased 31,000 subsurface acres under its land to gas companies for $278 million in signing bonuses and royalty payments. Meanwhile, it has sold 1.2 billion gallons from its freshwater bodies to power the drilling. The 2011 law allowed state agencies, if they choose, to lease state lands. But a last-minute amendment to unrelated legislation that passed late last year instead forced state agencies to lease state lands following an application by a qualified driller. This scheme was in effect until the new rules took effect Tuesday, although no drillers seized the opportunity. That same bill last year also legally redefined natural gas as “green energy,” despite the fact it comes from shale (a fossil fuel) and produces climate-warming greenhouse gasses like methane and carbon dioxide. It passed with behind the scenes involvement from a dark money entity linked to Ohio’s gas industry and drew lobbying attention from the likes of the American Petroleum Institute, Ascent Resources, Vectren Energy, Diversified Gas and Oil, EQT Corp., the Ohio Coal Association, the Ohio Oil and Gas Association, and TC Energy. As Cleveland.com and The Plain Dealer previously reported, Texas-based Encino Energy submitted a $2 billion offer to frack under Salt Fork State Park in Southeast Ohio late last year. The state rejected the offer while it still had the legal authority to do so. A spokesman DeWine previously said the offer was rejected out of deference to the commission.
Dangers of Fracking Wastewater Put Spotlight on Halliburton Loophole -A law known as the "Halliburton Loophole" is under growing scrutiny. It exempts oil and gas companies from revealing the chemicals they use in the hydraulic fracking process. The latest study finds between 2014 and 2021, companies used hundreds of millions of pounds of toxic chemicals - without any governmental oversight. Another report published last year by scientists and medical organizations says living near fracking sites increases risks for cancer, respiratory diseases, heart problems, birth defects and more.Leatra Harper, managing director of the Freshwater Accountability Project, explained that the loophole prevents communities from understanding potential harms.
"People need to know what the exposures could be," said Harper. "We need to know what the chemicals are to look for when we find water contamination. And we don't even know how to test for it, because we don't know what to test for."The Independent Petroleum Association of America and other industry groups argue that fracking poses little to no risk of harmful health effects. The group FracTracker estimates hydraulically fractured wells produce about 2.3% of the oil and gas output in Ohio.Harper added that previously proposed federal legislation would have addressed the issue by requiring companies to reveal which chemicals they use in the fracking process.There's something called the FRAC Act that has just basically been mothballed," said Harper. "And we need to revive that and fix this problem that started at the federal level, that allowed this industry to take off."As of 2022, hydraulic fracturing techniques have been used on an estimated 1.7 million wells across the U.S.
Fracking can contaminate soil and poison groundwater. Maya K. van Rossum wrote a book on how to strengthen your state's Bill of Rights to stop this from happening --Back in late April, I attended an Earth Day celebration, where I met a thoroughly remarkable woman, Maya K. van Rossum. An attorney based in Pennsylvania, van Rossum has served as the Delaware Riverkeeper since 1994. As she explained to me, that means she is responsible for coordinating a network of advocates who guard the health of that river, which drains 13,539 square miles in the states of Pennsylvania, New Jersey, Delaware and New York. A principal threat that van Rossum and her colleagues have confronted is the environmental devastation caused by fracking. They had succeeded in securing a temporary ban on fracking within the watershed by 2012 when the fracking industry struck back. Working behind closed doors, industry leaders assembled a bill (Act 13) that would greatly loosen public control of their activities in Pennsylvania and succeeded in pushing this through the state legislature and getting it signed by the governor.Because of its temporary fracking ban, this new law wouldn’t have immediately affected the Delaware watershed, but van Rossum takes an ecosystem-wide view of environmental protection. She discovered that the Pennsylvania state constitution included a clause in its Bill of Rights section which affirmed that residents had a right to pure water, clean air and a healthy environment. Joining with seven municipalities that were concerned that the new law deprived local communities of the right to regulate fracking within their borders, the Delaware Riverkeeper Network brought a suit before the Pennsylvania Supreme Court that charged Act 13 with violating the state Bill of Rights. In December of 2013, the plaintiffs won.Van Rossum pointed out to me in a conversation last May that most existing environmental regulations, including the landmark Clean Water and Clean Air Acts of the 1970s, essentially took ongoing pollution and environmental degradation for granted. All these laws did was to regulate how and to what extent these harms would be permitted. Her experience with Act 13 suggested that the language in Pennsylvania’s Bill of Rights was a far more powerful tool for protecting the environment. When van Rossum checked, however, she found that Montana was the only other state with a similar guarantee. She resolved to change that.
Sara Innamorato Upends Fracking Politics in Pennsylvania - Pundits and political insiders have spent years warning candidates in Pennsylvania that taking on the fracking industry means certain defeat. Those of us who live here know better. We aren’t afraid to fight corporate polluters—and we are showing that doing so is a winning strategy. Sara Innamorato’s resounding victory in the primary race to be the next Allegheny County Executive shows that bold candidates can defy conventional wisdom by taking on the fossil fuel industry in its own backyard. And they are succeeding thanks to powerful grassroots organizing that reaches voters directly. This county executive is one of the most powerful positions in the state—arguably the second- or third-most powerful office in Pennsylvania. The outgoing executive, Rich Fitzgerald, made a name for himself by being an unwavering ally of the drilling industries. Fracking was welcome in our county. Our movement is unquestionably bolstered when leaders like Sara Innamorato wield their own political power to stop the fossil fuel industry. And she is not alone. Those of us who live here know that what the industry promises—jobs and economic prosperity—is little more than a mirage. The jobs are few, the profits are siphoned away by executives and Wall Street investors, and we are left with air and water pollution, degraded property values, and a wide range of health problems.That’s why we organize on the ground in communities that are being targeted for drilling. We have developed strategies that use local zoning ordinances to keep the frackers away from our schools and neighborhoods. Last year, we defied all the odds – and County Executive Fitzgerald’s veto—by banning fracking in all of our county parks. Next up: banning fracking countywide.Our movement is unquestionably bolstered when leaders like Sara Innamorato wield their own political power to stop the fossil fuel industry. And she is not alone. Summer Lee was a community leader in the fight to stop a fracking well in Braddock - the town famously synonymous with its former mayor ( and current U.S. Senator) John Fetterman. In 2018, Lee ran a successful campaign for a State House seat, part of a wave of bold climate champions (including Sara Innamorato) that we helped send to Harrisburg that year. They arrived in a state capital that has historically been controlled by dirty energy interests. But they pushed for bold climate legislation that would keep fracking in check and help build a green economy that works for everyone. Innamorato championed the Whole-Home Repair Act, a first-in-the-nation program that provides grants and loans to bolster energy efficiency, along with workforce development programs to create jobs in communities across the state. In 2021, Summer Lee decided to run for a Congressional seat representing Allegheny County. Outside interests poured millions into the race, inundating mailboxes and clogging the airwave with outrageous attacks. But big money was no match for the people power that Lee and grassroots organizers have built; she won the primary and the 2022 general election. Innamorato blazed a similar trail this year, with a fiery campaign that attracted dedicated volunteers eager to get the word out. For our part, Food & Water Action knocked on 40,000 doors, made thousands of texts and phone calls, and even wrote over 1,500 letters to voters. This is the model for building political power—in Pennsylvania and anywhere else. Community organizing is rarely glamorous work, but it’s the only way to develop deep connections with folks who are quite literally on the frontlines. In Allegheny County and across the country, that means going to council meetings and community get-togethers with neighbors who want to stop fracking near their kids’ school. It means showing up to support families who have lost their water, or whose lives have been turned upside down by illnesses they suspect are connected to the drilling in their neighborhoods. We cannot always give people the comfort they need. But we give them the respect they deserve, and empower them to fight back. And when we work to elect candidates like Sara Innamorato, we bring all of our voices into the halls of power—which strikes fear into the hearts of the fracking bosses who wish we would just go away. No chance. We’re just getting started.
8 New Shale Well Permits Issued for PA-OH-WV May 22-28 | Marcellus Drilling News -- New shale permits issued for May 22-28 in the Marcellus/Utica fell again for a second week. There were only 8 new permits issued, down from 12 new permits issued the previous week (and 26 the week before that). This is the latest indicator of a slowdown in gas drilling in our region–the first indicator being a sudden dropoff a few weeks back in the rig count (see U.S. Natural Gas Drilling Rig Count Craters, Down 10% in One Week). Last week’s permit tally included 6 new permits for Pennsylvania, no new permits for Ohio, and 2 new permits in West Virginia. Brooke County, Cameron County, Energy Companies, Olympus/Huntley & Huntley, Range Resources Corp, Seneca Resources, Southwestern Energy,Washington County, Westmoreland County
3rd Circuit Finds Insurer Not Liable for Botched Fracking Operation -- A well servicing company that damaged 53 natural gas wells by using a defective chemical during a hydrofracking operation is not entitled to insurance coverage for a $13 million jury verdict because there was no accident, a panel of the 3rd Circuit Court of Appeals ruled Wednesday. The appellate panel reversed a US District Court decision that found American Home Assurance Co. liable under a general liability insurance policy it issued to Superior Well Service. Even though a jury did not use the exact words “faulty workmanship” in its award, the verdict did say that Superior’s failure to act “in a workman like manner” caused the damage, which means there was no “occurrence” that triggered coverage, the panel said. The opinion said “under Pennsylvania law, faulty workmanship, such as rendering a substandard service or causing damage by use of an unsuitable product, as was the case here, does not constitute an ‘occurrence’ when an insurance policy defines an ‘occurrence’ as an ‘accident.'” In 2007, US Energy Development Corp. contracted with Superior Well Service to use a process known as hydrofracturing to extract natural gas from 97 wells it owned in western New York state. The fracturing, or “fracking” process involves the use of various chemicals, including liquid emulsions, to “stimulate” wells so that they produce more gas. US Energy alleged that Superior used a type of liquid emulsion that was not suitable for its wells. It filed a lawsuit in New York state court alleging that it lost at least $17 million in revenues because its wells did not produce as much natural gas as they should have. In May 2018, a jury determined that Superior had damaged 53 of US Energy’s wells and awarded approximately $6.2 million in damages. With interest calculated by the state court, the total award amounted to $13.2 million. Before the jury returned its verdict, American Home filed a lawsuit seeking a declaration from the US District Court for the District of Western Pennsylvania that there was no coverage for damage to the wells. The insurer cited a 2006 Pennsylvania Supreme Court decision that held faulty workmanship is not an “occurrence” that triggers coverage from an insurance policy that defines occurrence as an accident. The District Court, however, granted summary judgment in favor of Superior. Judge David S. Cercone noted in his order that the jury did not use the term “faulty workmanship” in its ruling. What’s more, the judge said an underground resources and equipment coverage endorsement in the liability policy superseded or expanded the definition of occurrence and provided coverage even if Superior’s own failure to perform the contract in a “workman like manner” caused the damage.
EDITORIAL: Hold gas industry responsible for capping wells - Republican & Herald, Pottsville, Pa. - If you doubt that the coal and railroad industries once dominated the Pennsylvania Legislature, look around. Evidence abounds, more than 70 years after the end of large-scale mining, that the state government allowed mine operators to pollute with impunity. Now, as pollutants from abandoned mines gush into streams and culm piles still tower over many towns, too many lawmakers remain reluctant to ensure that extractive industries clean up their messes. In 2022, the Republican majorities in both legislative houses stripped an independent state board of much of its authority to make some gas drillers accountable for closed wells. The wells in question are "conventional" shallow vertical wells that tap gas relatively near the surface, rather than the deep, horizontally drilled wells characteristic of the Marcellus and Utica shale formations. According to the Department of Environmental Protection, 131 shallow conventional wells were drilled in 2021. To obtain a well permit, a driller must supply a bond to cover closure and cleanup costs, akin to a landlord requiring a security deposit from a prospective tenant. If a driller fails to properly cap a well, the DEP can seize the bond to pay for the work. Prior to the 2022 law, the state Environmental Hearing Board was empowered to review the bond requirements and set new amounts every two years. But the new law eliminates that authority and freezes the bond cost at $2,500 per well. According to the DEP, the median cost to cap a well is $33,000, and it can be as high as $400,000. Bonds for the new generation of deep wells range from a minimum of $35,000 to $500,000, depending on technical specifications for each well. Statewide, there are thousands of uncapped wells from earlier generations of drilling that spew climate-warming methane into the atmosphere and often pose physical dangers. They will cost billions of taxpayer dollars to cap. And they exist because of an earlier generation of irresponsible legislators who refused to hold drillers responsible. Now, lawmakers should pass a pending bill to repeal the free pass that lap-dog legislators gave the industry just a year ago.
Debt limit deal includes controversial W.Va. pipeline - As part of a deal to lift the debt ceiling, the White House and GOP leaders came to a deal that includes the Mountain Valley Pipeline and time limits for environmental reviews. Sen. Joe Manchin (D-W.Va.) touted the inclusion of the Mountain Valley Pipeline in the bill. The controversial pipeline, which would transport fuel from West Virginia to Virginia, has become a key personal project for Manchin, who is up for reelection next year. In addition to approving the pipeline, the bill would also set two-year time limits for the most rigorous type of environmental review. It would limit less rigorous reviews to one year and also implement page limits. When looking to implement similar reforms, the Trump administration found that the average timeline for more rigorous reviews was about 4.5 years. The legislation would make it easier for agencies to exclude entire categories of projects from environmental review if another agency has already issued a similar exclusion for that type of project. It did not include significant reforms to build out the country’s electric infrastructure, as many Democrats had been pushing for. It did, however, require a study of how much electricity can be transferred between the country’s different grid regions and adds energy storage to the types of projects eligible for a program that could provide more coordination in their approval process.
Debt limit bill would speed completion of West Virginia gas pipeline -- A bipartisan debt limit bill struck by President Joe Biden and House Republicans over the weekend would expedite approval of all permits for a West Virginia natural gas pipeline and curtail environmental reviews under one of the country's landmark environmental laws. The Mountain Valley Pipeline, which has been promoted by Sen. Joe Manchin, D-W.Va., would transport natural gas 303 miles from West Virginia to the Southeast, and part of it would cross through the Jefferson National Forest. The construction of the $6.6 billion pipeline is nearly done, though plans have been delayed for several years amid legal setbacks.Climate and civil rights activists and some state Democrats have strongly opposed the pipeline. Scientists have repeatedly warned that the country must halt approvals for new fossil fuel projects and quicken the clean energy transition to avoid the worst effects of climate change.While the Biden administration has imposed an aggressive climate agenda, the president has also taken steps to boost fossil fuel production and work with Manchin and Republicans, who've argued the president's climate agenda is endangering U.S. energy security.Critics of the Mountain Valley Pipeline say it will run through predominantly rural, low-income Indigenous communities and will undermine the country's efforts to curb fossil fuel emissions and pollution that disproportionally harms environmental justice communities. "The dirty debt ceiling deal is essentially an assault on our climate and working families. It is a climate bomb ... and health threat to every community in its pathway," Jean Su, energy justice program director at the Center for Biological Diversity, said during a call on Tuesday. "It's incredibly vital that Congress vote on a clean debt ceiling deal."Proponents say the pipeline is vital to bolstering U.S. domestic energy security, and that the plan was already near completion and set to move forward.The debt limit bill expedites the pipeline's federal permits and limits judicial review. Still, the project could still be held up or blocked by lawsuits.U.S. energy company Equitrans Midstream Corporation earlier this month said it anticipated to finish the pipeline by the end of the year, but added "there remains significant risk and uncertainty, including regarding current and likely litigation.""President Biden protected his historic climate legislation, stopped House Republicans from clawing back record funding for environmental justice projects and secured a deal to get hundreds of clean energy projects online faster all while protecting the full scope of environmental reviews," Abdullah Hasan, a White House spokesman, said."We believe this is a bipartisan compromise that Congressional Democrats can be proud of and that will accelerate our clean energy goals and climate agenda," Hasan said.The deal would also streamline the National Environmental Policy Act (NEPA), a landmark environmental regulation, to limit its requirements on some projects.The agreement would designate "a single lead agency" to develop environmental reviews in order to speed the process, and shorten the time the federal government takes to analyze a proposed plan's environmental impact.Environmental groups argued the NEPA provision would further curtail the public's ability to provide input on fossil fuel projects that would harm overburdened communities. A letter from 175 groups on Tuesday urged Senate Majority Leader Chuck Schumer, House Minority Leader Hakeem Jeffries and members of Congress to vote on a clean debt ceiling bill.
Manchin pipeline in debt ceiling deal prompts Democratic pushback -- The inclusion of a West Virginia gas pipeline championed by Sen. Joe Manchin (D-W.Va.) in the debt ceiling deal is causing consternation among Democrats. Getting the pipeline into the must-pass legislation is a huge victory for Manchin, who has been pushing for congressional approval of the project to fulfill a deal he made with Democratic leaders. But it’s also both a surprise — and hugely controversial with Democrats and environmental groups who say it will lock in lock in more years of fossil-fuel dependency for the country. They say the project is circumventing normal procedures for such works. “Singling out the Mountain Valley Pipeline for approval in a vote about our nation’s credit limit is an egregious act,” Peter Anderson, Virginia policy director with Appalachian Voices, said in a statement Sunday. “By attempting to suspend the rules for a pipeline company that has repeatedly polluted communities’ water and flouted the conditions in its permits, the president and Congress would deny basic legal protections, procedural fairness, and environmental justice to communities along the pipeline’s path,” he added. The debt deal could receive a vote in the House as soon as Wednesday as lawmakers work to pass the package through both chambers by a June 5 deadline. Treasury Department Secretary Janet Yellen has warned the government will not be able to pay its bills if legislation is not enacted by that date. The debt ceiling bill is coupled with spending restrictions won by House Republicans. Both sides have misgivings about the legislation, with conservatives arguing that spending cuts should be greater and progressives saying the administration gave up too much. As a result, votes in both chambers are likely to be close, with opposition coming from members of each party. Virginia lawmakers, who would see the Mountain Valley Pipeline run through their state, were among the most vocal in opposing its inclusion in the bill. The 303-mile vessel would bring gas from West Virginia to southern Virginia. Sen. Tim Kaine (D-Va.) said he will offer an amendment to strip the pipeline from the deal, as did several House Democrats representing Virginia: Reps. Don Beyer, Gerry Connolly, Abigail Spanberger, Bobby Scott and Jennifer Wexton. “Senator Kaine is extremely disappointed by the provision of the bill to greenlight the controversial Mountain Valley Pipeline in Virginia, bypassing the normal judicial and administrative review process every other energy project has to go through,” a Kaine spokesperson told The Hill in an email. “This provision is completely unrelated to the debt ceiling matter. He plans to file an amendment to remove this harmful Mountain Valley Pipeline provision,” the spokesperson said. It’s unclear whether Kaine or other opponents of the pipeline’s inclusion in the legislation will oppose the package if their amendment fails, however.
Pipeline provision in debt ceiling agreement likely to withstand legal challenges - Environmental advocates who have fought the Mountain Valley Pipeline in court for years say a deal between the White House and Congress to force its completion is corrupt and corrosive to democracy. But despite fears in some quarters that the language of the deal built into debt ceiling negotiations will upend the system of checks and balances built in the government, experts say it is likely to withstand any legal challenge.Building the 303-mile pipeline across national forest and hundreds of streams in Virginia and West Virginia requires permits from federal and state agencies overseeing compliance with environmental laws. The U.S. Court of Appeals for the 4th Circuit, which has jurisdiction in those states, has repeatedly blocked those permits as failing to account for environmental damage, particularly construction pollution of local waterways that has led to fines against the company behind the project. Initially planned for completion in 2020, the pipeline project has dragged on for years, and its cost estimate has doubled to $6.6 billion.The language in the debt ceiling deal — which the House approved Wednesday night — directs the federal government to approve any outstanding permits for the pipeline and blocks courts from reviewing them or any other agency action in approval of the project. Any challenge to the deal itself can be heard only by the U.S. Court of Appeals for the District of Colombia. “Can they do this? Almost certainly, yes,” said Jay Austin of the nonprofit Environmental Law Institute. Lawmakers have made similar moves in the past, Austin said, that have been controversial but generally have been held to be constitutional.“All the Constitution says is that there shall be a Supreme Court,” Austin said. “Congress establishes the jurisdiction of the lower courts.”Environmental litigators said they could not think of another bill that exempted a project from all legal challenges after it had repeatedly failed to meet environmental standards.“I think there is a separation-of-powers problem when Congress steps in to overturn judicial process at a case-specific level like this,” said Earthjustice President Abigail Dillen, whose group opposes the pipeline. “That is not how the three branches are intended to work with each other.”
Donations from Mountain Valley Pipeline developers, gas industry have flowed frequently into WV congress members' campaign coffers - West Virginia’s members of Congress have been among the Mountain Valley Pipeline’s most vocal supporters. Support has flowed both directions between the lawmakers and the pipeline.Manchin and Sen. Shelley Moore Capito, R-W.Va., have received campaign contributions totaling over $70,000 from political action committees for developers of the Mountain Valley Pipeline since the start of 2018. Manchin and Capito have hailed a provision to force completion of the pipeline in a debt limit deal.
House Republicans, not Joe Manchin, led charge to secure major gas pipeline in debt ceiling deal House Republicans were ultimately responsible for a provision fast-tracking a major natural gas pipeline in the debt ceiling package announced over the weekend, sources told Fox News Digital. After text of the legislation was published Sunday, Sen. Joe Manchin, D-W.Va., was immediately credited with ensuring the provision green-lighting all outstanding federal environmental permits for the Mountain Valley Pipeline project was included. In a statement, Manchin said he was "proud to have fought for this critical project and to have secured the bipartisan support necessary to get it across the finish line." However, sources close to the closed-door talks between the White House and House leaders said it was Republicans who led the charge to secure the provision's inclusion in the deal. The sources told Fox News Digital that Chief Deputy Whip Guy Reschenthaler, R-Pa., and Rep. Garret Graves, R-La., in particular pushed for the provision to be included after Rep. Carol Miller, R-W.Va., appealed to them. After the White House repeatedly communicated that it would oppose involving the pipeline in the deal, Republicans finally asked Manchin to lobby the White House to drop its opposition. "Manchin could have asked to put MVP in any of the Dem-only must-pass bills they passed in the last two years. He didn't because he couldn't get it done," one of the sources said. "Manchin played a key role without a doubt. But his role was simply getting the White House to agree to stop blocking it." However, Sam Runyon, a spokesperson for Manchin, pushed back on that characterization of negotiations and noted he had authored legislation to green-light the pipeline last year. "Everyone knows Joe Manchin was the one legislator to bring legislation to complete MVP to the national conversation last summer and secure a bipartisan vote on it," Runyon told Fox News Digital. "He never let up and he is thrilled the bipartisan support is so robust everyone is racing to take credit for this critical energy infrastructure project." Still, in a statement, Rep. Miller said it was Republicans who brought the pipeline provision to the table during debt ceiling negotiations.
Should officials approve pipeline? - (Letter to Editor) Exporting U.S natural gas will raise ratepayer prices exponentially, yet most U.S. natural gas is slated for export. The Mountain Valley Pipeline, for example, will provide no gas outlets in West Virginia and only one in Virginia! It plans, instead, to connect to the Transco pipeline going to Gulf Coast LNG-export terminals. Nevertheless, in a letter urging Biden to approve a four-year extension for the Mountain Valley Pipeline, heavily fossil-fuel-invested WV politicians, Joe Manchin and Shelly Moore Capito state, “It is imperative that FERC works to accelerate the development of domestic energy infrastructure so that Americans may have access to a reliable and affordable supply of natural gas.” Another signer, Congresswoman Carol Miller, has unabashedly cited the coal and gas industries’ “full support” for her campaign. Since the start of the fracking boom, Ohio, Pennsylvania, and West Virginia’s biggest gas-producing counties, have seen declines in jobs and population according to the Ohio Valley Institute. An MIT study further states that Pennsylvania’s unemployment rate increased almost a full percentage point during the natural gas boom while unemployment fell in 46 other states. Moreover, most fracking jobs created in Appalachia no longer exist. Prior to the release of these reports, however, our politicians had continually assured us that fossil fuel projects increase job availability. More incredibly, Bloomberg shows that although average gas well production declines by 60% in the first year, extraordinarily generous government subsidies cover the cost. Thus while more and more gas wells are required to maintain output, this polluting, destructive practice is being supported by taxpayers! A nation tied to exporting fossil fuels is not secure — nor is its environment. Instead, that nation is beholden to foreign governments and corporate bottom-lines. Furthermore, despite subsidies, the MVP still is only about 55% complete. Yet according to the letter, “MVP is nearly 94% constructed but is still subject to ongoing litigation and permit challenges, to the detriment of American consumers, our national security . . . and the environment.” Toxic, rapidly depleted, creating deadly accidents on a massive scale, fossil fuels must be phased out — not enabled! -- Barbara Daniels, Craigsville
Kaine’s effort to remove Mountain Valley Pipeline provision from debt-limit deal fails - U.S. Sen. Tim Kaine, D-Virginia, on Thursday unsuccessfully tried to remove expedited approval of the controversial Mountain Valley Pipeline from the deal to address the nation’s debt ceiling, arguing that the provision amounted to Congress putting its “thumb on the scale” and calling it a “sweetheart deal for one company in one part of the U.S.” Kaine’s amendment to the Fiscal Responsibility Act was one of 11 considered by the Senate; it was voted down 30-69. All amendments failed before the Senate ultimately voted Thursday night to approve the bill 63-36. It now heads to President Joe Biden’s desk, since the House already passed the bill, 314-117, on Wednesday. Treasury Secretary Janet Yellen has said that Monday is when the U.S. government would no longer have the money to pay its obligations if Congress didn’t raise or suspend the nation’s debt limit by then.In a statement after his amendment failed to pass, Kaine said he was “deeply troubled by the unprecedented provision to cherry-pick one project and exempt it from the normal judicial and administrative review process that every other energy project has to go through.”“Especially when this project takes away Virginians’ land, my constituents deserve a fair process,” Kaine said, referring to the Mountain Valley Pipeline’s use of eminent domain to acquire property along the pipeline route. “I left it all out on the field in the fight for my amendment to remove this harmful provision.”The Fiscal Responsibility Act, which suspends the federal debt limit for nearly two years, includes a provision to speed up approval of the remaining permits necessary for the construction and operation of theMountain Valley Pipeline — a $6.6 billion, 42-inch pipeline that would run 303 miles from northwestern West Virginia to southern Virginia — and shield the project from further legal challenges.“Congress should not be putting our thumb on the scale and taking one project in the United States and saying it doesn’t have to comply with any permitting rules and it doesn’t go to judicial review,” Kaine said in a conference call with news media on Thursday before the Senate vote. “By doing so, we are hurting Virginians whose land is going to be taken for this pipeline.”Mountain Valley Pipeline spokesperson Natalie Cox on Thursday declined to comment specifically on Kaine’s amendment but sent a statement to Cardinal News about the debt-ceiling legislation generally, saying the project is “grateful for the full support of the White House, as well as the strong leadership of Democratic and Republican legislators for recognizing the Mountain Valley Pipeline (MVP) as a critical energy infrastructure project.”
Senate clears debt deal with pipeline, permitting mandates - The Senate voted 63-36 late Thursday night to extend the nation’s borrowing authority ahead of a June 5 deadline after disposing of several contentious amendments — including on the Mountain Valley pipeline. The “Fiscal Responsibility Act,” H.R. 3746, will suspend the nation’s debt limit until after the 2024 election. It will cut spending, institute new work requirements for federal food assistance programs and make a suite of changes to the National Environmental Policy Act as part of “permitting reform.” The legislation passed the House late Wednesday night with the support of 165 Democrats and 149 Republicans in a 314-117 vote. It now heads to President Joe Biden for his signature. The vote breakdown in the Senate followed a similar template as the House, though it occurred under some different circumstances. Many Senate Republicans, for instance, blasted cuts to defense programs in the debt limit deal. They came around after an agreement to provide floor time for fiscal 2024 spending bills and a potential national security supplemental. Senate climate hawks, meanwhile, were allowed a vote on an amendment — albeit without success — to strip out a provision to green-light completion of the Mountain Valley pipeline, a controversial natural gas project that would run through Appalachia and which has been the subject of environmental lawsuits for years. The provision was included in the debt ceiling bill in a surprise bid to make good on an outstanding promise to Sen. Joe Manchin (D-W.Va.), specifically that the White House would back the pipeline in exchange for the senator’s support last year for the Inflation Reduction Act. Environmental activists and their progressive allies in Congress railed against its inclusion. The effort to remove it from the bill was championed on Capitol Hill by Sen. Tim Kaine (D-Va.), a self-described “energy moderate” who has accused the Biden administration of putting its “thumb on the scale” in favor of one project still being litigated by the courts. In a floor speech Thursday, Kaine described the Mountain Valley pipeline as “a highly controversial projects that directly impacts families whose land will be taken for the [pipeline] project, and I stand on their behalf.” Kaine also took the White House to task for not calling him and Virginia’s other Democratic senator, Mark Warner, to advise them the provision would be included in the debt ceiling deal. Warner supported the amendment Thursday night, while others who might have otherwise backed Kaine’s effort voted against it in fear of jeopardizing passage of the entire measure. It failed, 30-69. Schumer had warned that any changes to the bill in the Senate would likely not have left enough time for the House to vote on it again ahead of the Monday deadline. Manchin, in his own floor speech Thursday, made an impassioned plea in support of the pipeline project, saying it would put 2,500 people to work and deliver as much as $50 million annually to West Virginia “and some to Virginia.” He said that MVP, as it’s called in shorthand, stands for the “’Most Valuable Pipeline’ we have to offer reliable energy to the people of America.”
Equitrans Midstream Surges 40% On Debt Ceiling Deal – Equitrans Midstream Corp. got some fuel from D.C. politicians, climbing 40% for the week as its Mountain Valley Pipeline project looks set for completion as part of the debt ceiling deal. Does this stock’s big advance have wider ramifications for other pipeline stocks? The Pennsylvania-based mid-cap has been attempting to get permits for the pipeline for several years. The pipeline would transport natural gas from northwestern West Virginia through southern Virginia. It’s faced environmental challenges standing in the way of the permitting process. As part of the debt ceiling deal, the pipeline’s permitting and completion may be expedited. Environmental groups are opposed to the project, but that hasn’t stopped investors from piling into the stock. The pipeline received the initial OK from federal regulators in 2017, with the expectation that the project would be up and running by the following year. However, legal challenges stymied completion. On May 30, Royal Bank of Canada upgraded the stock to sector outperform from sector perform, as you can see using MarketBeat’s Equitrans Midstream analyst ratings. Equitrans is part of the oil and gas pipeline and transportation sub-industry within the energy sector. Unlike the broader sector, Equitrans failed to have a record-breaking year in 2022. The stock declined while its industry peers notched big gains. Equitrans’ price declines were largely due to concerns about the company’s as-yet unsuccessful efforts to complete the Mountain Valley Pipeline. Equitrans operates an extensive pipeline network that spans major production areas in Pennsylvania, West Virginia, and Ohio. As a midstream company, Equitrans connects natural gas producers to end-users and markets, collecting natural gas from wells and transporting it to processing plants or transmission pipelines. Equitrans also operates storage facilities. Natural gas stored during periods of low demand can be delivered to end users during peak consumption periods.
Hope Gas to buy 900 miles of gathering pipelines from Equitrans - — Hope Gas has received approval to acquire nearly 900 miles of gathering pipelines in northern West Virginia from Equitrans Midstream Corp. The transaction was reviewed and approved by the West Virginia Public Service Commission on May 26. Closing is anticipated in 30 days. With this purchase, Hope will acquire gathering assets that are an important piece of West Virginia’s energy infrastructure, O’Brien said. About 4,900 farm tap customers are served from this pipeline and there are about 1,000 interconnections that allow natural gas producers to transport gas supplies from their wells. The pipeline plays an important role in future strategies to bring additional supplies into Hope’s system, the utility said. “Because of the continuing decline of gas production on this system, customers have experienced service issues associated with this pipeline, particularly on cold winter days,” Morgan O’Brien, CEO of Hope Gas, said. “Now that Hope owns the pipeline, we will be working hard with our partners at Equitrans and with local producers to solve the problems that have impacted these customers. It will not be fixed overnight, but the Hope Gas operations team will make this right for our customers as they always do.” Hope Gas was purchased from Dominion in September. Founded in 1898, its new corporate headquarters are in Morgantown where Hope Gas is among the largest local natural gas companies in West Virginia. The company in January purchased Peoples Gas and recently entered into an agreement to purchase Southern Public Service Company. Hope Gas is a subsidiary of Hearthstone Holdings, a holding company that owns regulated natural gas and water distribution utilities in West Virginia, Arizona, Indiana, Maine, Michigan, Montana, North Carolina, Ohio and Texas. Hope Gas provides gas service to more than 112,000 residential, industrial and commercial customers in 35 counties in West Virginia.
Cheniere Energy Inks Long-Term LNG Deal with Korean Power Firm - Cheniere Marketing, a subsidiary of Houston-based energy company Cheniere Energy, has closed a long-term sale and purchase agreement for liquefied natural gas (LNG) with Korea Southern Power (KOSPO), Cheniere Energy said in a press release. Under the agreement, Korean power generation company KOSPO will purchase around 0.4 million metric tons per annum (mtpa) of LNG from Cheniere Marketing on a delivered ex-ship basis from 2027 to 2046, though smaller annual quantities will be delivered starting 2024. The purchase price for LNG to be delivered before 2027 will be market-based, after which the price will be indexed to the Henry Hub benchmark, plus a fee, Cheniere said. The volumes under the agreement “are subject to a positive final investment decision with respect to the first train of the Sabine Pass Liquefaction Expansion Project” of Cheniere Energy Partners LP (Cheniere Partners). Cheniere Partners owns the Sabine Pass LNG terminal located in Cameron Parish, Louisiana. The terminal has natural gas liquefaction facilities consisting of six liquefaction trains, with a total production capacity of approximately 30 mtpa of LNG, according to the company’s website. The Sabine Pass Liquefaction Expansion Project is being developed to include up to three natural gas liquefaction trains with an expected total production capacity of approximately 20 mtpa of LNG.
U.S. Exports Of LNG Dip In May -- LNG exports out of the United States fell in May to 7.66 million tonnes, according to shipping data cited by Reuters. That’s a 0.35 million tonne dropoff from the previous month. The United States shipped less LNG to Europe in May, while increasing LNG exports to Asia and Latin America. Asia’s thirst for U.S.-derived LNG intensified in May as Asia LNG prices for July delivery increased. But Europe’s LNG prices have eased, weakening the continent’s appetite for U.S. LNG. For the month of May, the United States exported 60.5% of all its outgoing LNG to Europe, 14% to Asia, and 11% to Latin America, the shipping data showed. Demand for LNG globally is currently high, as European countries rush to build import terminals and purchase liquefied natural gas to offset the very low, or complete lack of, Russian pipeline gas supply. But despite the surge in LNG demand and the abundance of natural gas in the United States, America’s next LNG export boom could stall as costs have surged, financing has become more complicated with the higher interest rates, and customers are loathed to sign onto 20-year supply contracts. May’s exports highlight the effect that price volatility has on the flow of LNG. The EIA has predicted that U.S. LNG exports will average 12.1 billion cubic feet per day this year, a 14% increase over last year—and another 5% increase next year, to 12.8 billion cubic feet per day. Responsible for the U.S. LNG export rise, the EIA said, was “high global demand as LNG will continue to displace pipeline natural gas from Russia to Europe,” adding that the Freeport LNG export terminal’s return to service and additional LNG export projects to be commissioned by the end of 2024 supports its forecast.
US natgas futures drop 4% on record output, lower demand forecast (Reuters) - U.S. natural gas futures dropped about 4% on Tuesday on record output and forecasts for milder weather and lower demand over the next two weeks than previously expected. On its first day as the front-month, gas futures for July delivery on the New York Mercantile Exchange fell 9.0 cents, or 3.7%, from where the July contract closed in the prior session to settle at $2.327 per million British thermal units (mmBtu). That, however, was still up about 7% from where the June contract expired when it was still the front-month on Friday before the long U.S. Memorial Day weekend. That settle for the June contract was the lowest for the front-month since May 5. Equitrans Midstream Corp's long-delayed $6.6 billion Mountain Valley gas pipe from West Virginia to Virginia could win federal approval as part of Washington's debt limit deal. If Equitrans is able to complete Mountain Valley in late 2023 or early 2024, it would boost the amount of fuel producers could pull out of the ground in the Appalachia basin in Pennsylvania, West Virginia and Ohio, the nation's biggest shale gas producing region. Producers in Appalachia are already producing about all the gas they can ship out of the region since the pipes out of the basin are close to full. Even though gas prices dropped about 16% last week, speculators boosted their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges for a second week in a row to their highest since June 2022, according to the U.S. Commodity Futures Trading Commission's Commitments of Traders report. In the spot market, mild weather in the U.S. East pressured next-day power prices for Tuesday to their lowest since March 2021 in New England and December 2021 at the PJM Western Hub in western Pennsylvania. In the U.S. West, mild weather and ample hydropower pushed next-day gas prices for Tuesday at the Southern California Border to $1.60 per mmBtu, their lowest since July 2020. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 101.7 billion cubic feet per day (bcfd) so far in May, which would top April's monthly record of 101.4 bcfd. The amount of gas flowing from Canada to the U.S., meanwhile, was on track to rise to 7.6 bcfd on Tuesday, up from 7.2 bcfd on Monday, according to Refinitiv. So far this month, Canadian exports have dropped from a six-week high of 8.5 bcfd on May 4 to a 25-month low of 6.4 bcfd on May 17 as wildfires in Alberta caused energy firms to cut oil and gas production. Those exports rose to 8.1 bcfd on May 23 after firefighters made significant progress controlling the blazes. That compares with average Canada-to-U.S. exports of 8.3 bcfd since the start of the year and 9.0 bcfd in 2022. About 8% of the gas consumed in, or exported from, the U.S. comes from Canada. Meteorologists projected the weather in the Lower 48 states would remain near normal through June 14 with a couple of warmer than normal days on June 1-2 and June 13-14. Refinitiv forecast U.S. gas demand, including exports, would rise from 89.4 bcfd this week to 92.9 bcfd next week as the weather turns seasonally warmer. Those forecasts were lower than Refinitiv forecast on Friday.
US natgas drops 5% to 3-week low on record output, big storage build (Reuters) - U.S. natural gas futures dropped about 5% to a three-week low on Thursday on record U.S. output, rising exports from Canada and a slightly bigger-than-expected weekly storage build. Prices fell despite record daily gas exports to Mexico and forecasts for warmer-than-expected weather over the next two weeks that should boost the amount of gas power generators burn to produce electricity for air conditioning. The U.S. Energy Information Administration (EIA) said utilities added 110 billion cubic feet (bcf) of gas into storage during the week ended May 26. That was slightly bigger than the 106-bcf increase analysts forecast in a Reuters poll and compared with a rise of 82 bcf in the same week last year and a five-year (2018-2022) average increase of 101 bcf. Analysts said the storage increase was bigger than usual because mild weather last week limited demand for the fuel for both heating and cooling. Last week's rise boosted stockpiles to 2.446 trillion cubic feet (tcf), or 16.6% above the five-year average of 2.097 tcf for the time of year. Front-month gas futures for July delivery on the New York Mercantile Exchange fell 10.8 cents, or 4.8%, to settle at $2.158 per million British thermal units (mmBtu), their lowest close since May 5. The premium of futures for August over July NGN23-Q23 rose to 11.3 cents per mmBtu, putting it on track to hit an all-time high for a second day in a row after settling at a record 9.2 cents per mmBtu on Wednesday. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to a record 102.5 billion cubic feet per day (bcfd) in May, topping the prior monthly all-time high of 102.2 bcfd in April. The amount of gas flowing from Canada to the United States was on track to jump to a near four-month high of 9.7 bcfd on Thursday from 8.3 bcfd on Wednesday, according to Refinitiv. That is up from an average of 7.0 bcfd from the May 6-22 period when wildfires in Alberta caused energy firms to cut oil and gas production. Gas exports from the United States to Mexico were on track to hit a preliminary 7.7 bcfd on Thursday, which would top the current daily all-time high of 7.3 bcfd set in June 2021. That compares with average U.S.-to-Mexico exports of 5.2 bcfd since the start of the year and 5.7 bcfd in 2022. Meteorologists projected the weather in the Lower 48 states would remain mostly near normal from June 1-11 before turning warmer than normal from June 12-16. Refinitiv forecast U.S. gas demand, including exports, would rise to 93.3 bcfd next week from 91.0 bcfd this week as the weather turns seasonally warmer. Those forecasts were higher than Refinitiv's forecast on Wednesday. Gas flows to the seven big U.S. LNG export plants fell from a record 14.0 bcfd in April to an average of 13.0 bcfd in May due to maintenance at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana.
BP subsidiary agrees to record $40M penalty and pollution-cutting steps at Lake Michigan refinery — A BP subsidiary will pay a $40 million penalty and install technology to control releases of benzene and other contaminants at its Whiting oil refinery on the Indiana shoreline of Lake Michigan, Biden administration officials said Wednesday.The actions will settle a civil case against BP Products North America Inc. filed by the U.S. Department of Justice and the Environmental Protection Agency, which described the penalty as the largest ever under the Clean Air Act for pollution from a structure. Additionally, the company will invest around $197 million in improvements.“This settlement will result in the reduction of hundreds of tons of harmful air pollution a year, which means cleaner, healthier air for local communities,” said Larry Starfield, acting assistant administrator of EPA’s Office of Enforcement and Compliance Assurance.The 134-year-old refinery, located between Hammond, Indiana, and Chicago, is the biggest in the U.S. Midwest and sixth largest nationally. It processes about 440,000 barrels of crude oil daily, making a variety of liquid fuels and asphalt.It has a record of pollution rule violations, reaching settlements in 2019 and 2022 over releases of sooty “particulate matter” linked to asthma and other respiratory diseases.A new federal complaint accused the BP unit of breaking rules limiting benzene in refinery wastewater streams and emissions of hazardous and volatile air contaminants.Under the agreement, the company will add benzene stripping equipment and take other steps intended to reduce annually reductions of cancer-causing benzene along with hundreds of tons of other pollutants.
Indiana BP refinery to pay record $40M penalty for pollution charges --An Indiana manufacturing facility has set a new record, but not in a good way. The subsidiary of BP is paying an unprecedented penalty — $40 million — to settle charges its Indiana refinery violated federal law by releasing harmful pollutants into the air and wastewater. The settlement, between BP Products North America Inc., the U.S. Environmental Protection Agency and the Department of Justice, was announced in May. The refinery located near Lake Michigan is one of the oldest and largest in the U.S., with the capacity to process more than 400,000 barrels of crude oil every day. The settlement stems from an October 2019 site visit where inspectors observed multiple violations, according to the Indiana Department of Environmental Management.The federal government's complaint alleged the refinery violated federal regulations limiting benzene in wastewater streams and hazardous air pollutants. Benzene is a known cancer-causing chemical and air emissions are linked to health problems including difficulty breathing, aggravated asthma and reduced lung capacity. The settlement obligates BP to pay a penalty of $40 million — the largest civil penalty ever secured for a Clean Air Act settlement for a fixed location. Larger penalties assessed for vehicle manufacturers for combined emissions violations. Roughly $9 million will go to the state, with the remainder going to the U.S. Treasury. The settlement also requires BP to invest approximately $197 million in new technology and other improvements to reduce pollution from the site. These improvements are expected to reduce annual releases of benzene by about seven tons, other hazardous air pollutants by roughly 28 tons and volatile organic compounds by as much as 372 tons. The company also agreed to complete a $5 million supplemental project to reduce diesel emissions in the surrounding communities.Both the EPA and environmental advocates say they hope this settlement will set a precedent. The agency said it "expects compliance and when violations are repeated, violators should expect that the EPA will assess large penalties." The BP site has a history of violations and pollution issues. Last year, BP had to pay nearly $3 million for repeated air pollution violations. The Environmental Integrity Protect — a nonprofit dedicated to enforcing environmental laws and strengthening policy to protect public health and the environment — released a report year showing the Whiting Refinery is one of the worst water polluters in the nation.
Major Midwest pipeline faces threat of court-ordered shutdown - A federal court is considering whether to shut down the contested Line 5 pipeline out of concerns that riverbank erosion in Wisconsin could cause a rupture and catastrophic oil spill into Lake Superior and on tribal lands. Line 5’s opponents say it is not a question of if but when the aging Enbridge Inc. pipeline will be forced to stop operating on its full 645-mile path. Spring flood waters have quickly stripped away feet of riverbank along a bend of the Bad River in Wisconsin near the pipeline’s path, they say. The erosion is not likely to stop there, said the Bad River Band of the Lake Superior Tribe of Chippewa Indians, which is seeking an emergency court order requiring Canada-based Enbridge to purge Line 5 of oil and halt its operation. The pipeline — which moves light crude oil, light synthetic crude and natural gas liquids — runs from Superior, Wis., to Sarnia, Ontario, and crosses approximately 12 miles of the reservation. The segment of the pipeline under question is buried about four feet below the surface, and the amount of riverbank shielding it from exposure is rapidly eroding. The evidence “strongly suggests that further bank loss could be substantial and result in exposure and rupture of the pipeline,” the band said in its motion to the U.S. District Court for the Western District of Wisconsin earlier this month. Judge William Conley, who is likely to issue a ruling on the motion for a permanent injunction in the coming days, signaled in a recent hearing on the motion that he wouldn’t order an immediate shutdown but instead is likely to define riverbank conditions that would force the court to intervene in coming months. He will also be balancing the potential risk of an oil spill into the Bad River watershed and Lake Superior against the economic effects of shutting down the pipeline. If the pipeline were to shut down in the coming months, Enbridge and industry groups say it would seriously crimp oil and propane supplies, but Line 5 opponents say there are several alternative options to carry fuel and a shutdown would have limited economic repercussions. Last year, Conley handed the band a victory when he ruled Enbridge was trespassing on the reservation, and the company is now considering an alternate route for the pipeline to circumvent it. But a new pipeline segment around the reservation would not be built quickly enough to avoid a spill if erosion continues unchecked, according to Line 5 opponents.
Haaland order extends Chaco Canyon drilling protections for next 20 years - Albuquerque Journal — After an extended review, U.S. Interior Secretary Deb Haaland issued an order Friday withdrawing federal lands within a 10-mile radius of Chaco Canyon from new oil and natural gas leasing for the next 20 years. Haaland, a former New Mexico congresswoman who is the nation’s first-ever Native American Cabinet secretary, said tribal communities have raised concern for decades about the impacts of new oil and gas drilling in the northwest New Mexico national historical site. “Today marks an important step in fulfilling President Biden’s commitments to Indian Country, by protecting Chaco Canyon, a sacred place that holds deep meaning for the indigenous peoples whose ancestors have called this place home since time immemorial,” Haaland said in a statement. The order applies only to federal lands within the 10-mile buffer surrounding Chaco Canyon, meaning it does not apply to subsurface mineral rights owned private, state or tribal entities. It also does not affect existing leases, including Navajo Nation allottees who get monthly royalty checks from oil and gas production.
Stop Fracking Around leader sentenced for disobeying probation ban on blocking roadways - A Provincial Court judge in Vancouver banned a telecommunications installer on Thursday from organizing or participating in protest roadblocks for the next two years. Brent Eichler, 56, pleaded guilty to breaching his probation at an anti-natural gas protest last Aug. 15 on Vancouver’s Cambie Street Bridge. Eichler had received a conditional discharge and 200 hours of community work service in October 2021 after pleading guilty to mischief for his role in a February 2021 Extinction Rebellion protest that closed the Hornby and Smithe intersection for several hours. His probation stipulated that he must not block or impede any traffic for two years. Eichler, who gained media attention for hunger-striking with Save Old Growth in 2022, formed the Stop Fracking Around splinter group last summer and organized a protest march from Vancouver city hall to the CBC studios via the Cambie Bridge. Crown prosecutor Ellen Leno said that Eichler was under the “simple condition to not block or impede the traffic,” but he marched on the bridge and was arrested on a warrant in September. “His moral culpability is at the highest end, it was planned and deliberate and he was an organizer. He was breaching a court order, and he has a history of breaching court orders, as evidenced by the criminal contempt conviction,” said Leno, referring to the 25-hour community work service sentence for breaching the Trans Mountain Pipeline protest injunction in 2018. Eichler’s defence lawyer Ben Isitt told Judge James Sutherland that Eichler followed the march on the Cambie Bridge in a vehicle so that he could assist elderly or physically infirm protesters. The group paused mid-span for about 20 minutes for speeches. Eichler got out of the vehicle with the intent to de-escalate a confrontation between a protester and a reporter. “That's where the breach occurred and he regrets having done it,” Isitt said. “He was strongly inclined to try this allegation, but, ultimately, when he learned of the Crown's position on sentence, he was able to enter a guilty plea.”
Buffett Boosts Occidental Petroleum Stake To 24.9% - Warren Buffett’s Berkshire Hathaway has bought more shares in Occidental Petroleum, boosting its stake in the company to some 24.9%, MarketWatch has reported, citing a regulatory filing. According to the filing, Berkshire Hathaway paid a total $275 million for the new package of Oxy shares. Following these purchases, the investment company’s stake in Oxy is worth some $13 billion. Warren Buffett has been raising his holding in Occidental for about a year now. This sparked speculation that he might be considering a takeover but Buffett dismissed the speculation saying he had no intention of buying out the oil major. “There’s speculation about us buying control, we’re not going to buy control,” Buffett said during Berkshire Hathaway’s annual meeting. “We wouldn’t know what to do with it.”At the same time, Buffett said at the meeting that “We don’t know where the price of oil will be, but we like Occidental’s position in the Permian.”“We will not be making any offer for control of Occidental, but we love the shares we have,” Buffett said. “We may or may not own more in the future but we certainly have warrants on what we got as part of the original deal on a very substantial amount of stock around $59 a share, and warrants last a long time, and I’m glad we have them.” To date, Berkshire is Oxy’s largest shareholder. Besides the purchase warrants, the company owns $10 billion worth of Oxy preferred stock, which carries an 8% dividend. Oxy bought Anadarko for $55 billion in 2019, making it one of the biggest M&A deals in energy over the past few years. In that, it outbid Chevron, which had earlier announced a bid for the energy company. Berkshire lent Oxy $10 billion for the takeover, which later translated into the preferred stock the investment company now holds in the oil driller.
Argentina's Vaca Muerta Shale Play Could Produce 1 Million Bpd In 2030 -- Crude oil production from Argentina’s burgeoning shale patch, Vaca Muerta, could surge in the coming years and top 1 million barrels per day (bpd) by the end of the decade – but only if takeaway capacity and rig availability do not limit growth. Rystad Energy’s modeling shows that if production is relatively unimpeded, oil output could realistically grow from 291,000 bpd in February 2023 to more than 1 million bpd in the second half of 2030. The forecast growth could lift Vaca Muerta’s profile and position it as a leading source of shale production, alongside the likes of the Bakken or Eagle Ford developments, two of the US’ world-class shale basins. It would also help the Neuquen region become a net oil exporter, potentially contributing $20 billion in total revenue by 2030. Crude exports could be making their way to South American neighbors Brazil, Chile and Peru, as well as the US and Europe. Still, big question marks remain, which could potentially alter our long-term growth outlook. Takeaway capacity constraints linger, and rig availability remains an ongoing concern. The learning curve for operators in the basin has been steep, and they will need to continue this trend to maximize their production potential. If all industry participants work together to address these constraints before they become critical, output could top 1 million bpd sooner rather than later. “Vaca Muerta could hold the key to Argentina’s future energy economy following more than a decade of oil production declines. While major challenges lie ahead, reaching the important 1 million barrels per day threshold would change the country’s narrative, reduce its reliance on imports and become a key regional and global oil market player,” says Alexandre Ramos Peon, head of shale research at Rystad Energy. Related: Goldman And Others Sees
Fracking Ban Could Cause Gas Shortage In Colombia | OilPrice.com --Colombia’s first-ever leftist president emerged victorious from the July 2022 election run-off after running a broad reform-based campaign with a focus on transitioning the Andean country away from a reliance on fossil fuels. This includes plans to ban hydraulic fracturing and end awarding new contracts for oil and natural gas exploration. That sparked considerable concern because Colombia is highly reliant upon petroleum which is the largest export by value while natural gas is a key source of energy domestically. Colombia was already battling a natural gas shortage with aging mature fields, low proven reserves, and a lack of hydrocarbon exploration success all weighing on supply at a time when demand for the fossil fuel is expanding at a solid clip. Those developments coupled with Petro’s plans to ban fracking and end hydrocarbon exploration have sparked fears that Colombia’s energy security is at risk.Natural gas is a key source of energy in Colombia’s energy mix. According to the U.S. EIA, the fuel was responsible for 28% of all energy consumed in the Andean country in 2021, and that portion is expanding. That makes natural gas the second largest source of energy consumed in the Andean country behind crude oil, at 31%, and ahead of hydroelectricity which is responsible for 22%. Consumption of natural gas in Colombia has been rising at a steady clip over the last decade. By 2017, the Andean country was consuming more natural gas than it was producing with growing demand for gas-fired electricity the key driver of soaring demand domestically. As a result, later that year Colombia started receiving the first bulk LPG imports at a specialized LPG import terminal in the Caribbean port city of Cartagena.
Natural Gas Prices Could Fall Below Zero In Parts Of Europe -- As tepid demand for gas from power generation and industry has sent European natural gas prices into a freefall in recent weeks, traders and industry officials are not ruling out the possibility that Europe may see a brief dip to below zero for day-ahead prices in some markets this summer. The combination of ample inventories at the end of a mild winter, steady imports of LNG, and weak demand has led to eight consecutive weeks of weekly losses in European benchmark natural gas prices, the longest weekly losing streak in more than six years. While the benchmark price is unlikely to drop below zero, some regional day-ahead natural gas prices in Europe could see sub-zero prices briefly this summer, if demand remains weak and renewable power generation holds high, traders and industry officials at the E-World energy fair in Essen, Germany, told Bloomberg. “Individual regional gas markets in Europe could go negative when you have hours and days with renewable production,” Peder Bjorland, vice president for gas trading and optimization at Norway’s energy giant Equinor, told Bloomberg. “There is quite a big distance from the price level we see now and to the single-digit and negative prices, and a lot can happen on that route,” Bjorland added. The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, crashed by 10% on Thursday to settle at $26.78 (24.94 euros) per megawatt-hour (MWh), the lowest price since the start of the energy crisis in the autumn of 2021. The price trend in European natural gas prices is in stark contrast with last year, when benchmark prices soared to as much as $322 (300 euros) per MWh in August, after Russia slashed supply via pipelines and governments and industry were spooked by potential gas shortages in the winter. Thanks to milder winter weather, reduced consumption on EU level, and demand destruction in industry from the high energy costs, Europe made it through the 2022/2023 winter without gas shortages or gas rationing. Currently, gas inventories are comfortably high for this time of the year. As of May 24, natural gas storage sites in the EU were 66.71% full, according to data from Gas Infrastructure Europe. The level of gas in storage is the highest for this time of the year in at least a decade.
Exxon And Chevron Close To Signing Gas Exploration Deals In Algeria - ExxonMobil and Chevron could gain access to Algeria’s vast natural gas resources as the U.S. supermajors are in advanced talks for exploration and production deals in the North African country, The Wall Street Journal reported on Friday, quoting sources with knowledge of the talks and Algerian Energy Minister Mohamed Arkab.Algeria holds huge conventional natural gas reserves, and it is also estimated to have the third–largest shale gas reserves in the world after China and Argentina.ExxonMobil and Chevron could complete the talks on the deals with Algerian state-held oil and gas firm Sonatrach by the end of this year, the sources told the Journal. “I am pushing Sonatrach,” Arkab told the WSJ, “because we need to increase our volumes.”Sonatrach is discussing the terms of agreements with Exxon and Chevron which would include both conventional and shale gas reserves exploration. Earlier this year, the Journal reported that Chevron had increased efforts to reach an energy exploration agreement with Algeria and was assessing the North African country’s estimated huge shale gas resources.Most of Algeria’s gas exports are heading to Europe, which is increasingly betting on Africa to import large volumes of pipeline gas and LNG to replace pipeline gas supply from Russia, which was Europe’s top gas supplier before the Russian invasion of Ukraine.Italy’s energy major, Eni, has been particularly active in securing more natural gas supply for Europe from Africa and has fast-tracked projects in Africa to meet Europe’s gas demand in the absence of Russian pipeline deliveries.
QatarEnergy, Bangladesh to sign 15-year LNG deal - QatarEnergy will sign a long-term LNG supply deal with Bangladesh’s state-owned gas company Petrobangla on Thursday, Reuters reported. This marks the second Asian sales deal to be sealed for Qatar’s North Field expansion project. The 15-year agreement is for the supply of 2 million tonnes annually, Petrobangla’s Chairman Zanendra Nath Sarker told Reuters. Supplies are set to start in January 2026, he said. The agreement will be one of many to come this year as state-owned QatarEnergy secures sales for its mega expansion of North Field, a source with direct knowledge of the new contract agreement, who did not wish to be identified, said. Qatar is the world’s top LNG exporter and competition for LNG has ramped up since the start of the Ukraine war, with Europe in particular needing vast amounts to help replace Russian pipeline gas that used to make up almost 40% of the continent’s imports. But Asia, with an appetite for long-term sales and purchase agreements, has been ahead so far in securing gas from Qatar’s massive production expansion project. The two-phase expansion plan will raise Qatar’s liquefaction capacity to 126 million tonnes per year by 2027 from 77 million. Qatar’s first Asian deal, with Sinopec, the longest to be signed at 27 years for the supply of 4 million tonnes a year, was followed by the state-owned Chinese company taking a 5% stake in the equivalent of one North Field East LNG train.
Twelve cos confirm interest in developing oil and gas fields - Ukrnafta chief - Twelve local and foreign companies have confirmed their interest in developing oil and gas fields in Ukraine in writing, Ukrnafta CEO Sergei Koretsky said. Ukrainian quoted the company's website as saying that Ukrnafta had selected 20 fields both in the east and west of Ukraine for development with investors. "These 20 fields between them contain reserves of 12 million tonnes of oil with condensate and 30 billion cubic meters of gas. To date, 12 companies that have confirmed their interest in participating in this competitive bidding process in writing. These are companies from Ukraine, Slovakia, France, Britain, the United States, Canada and Mexico," Koretsky was quoted as saying. He said the key principle for attracting investors is simple: Ukrnafta's profit from these operations must be higher with the involvement of a partner than without it. In addition, he said the company planned to develop the oil production services market in Ukraine, for which it is ready to offer long-term five-year contracts with guaranteed work load. "We expect to attract domestic and foreign contractors in such areas as the drilling of horizontal wells and sidetracks, hydraulic fracturing, coiled tubing, the latest advanced recovery and artificial lift methods, production optimization systems, geological exploration and more," Koretsky said. He said the success of increasing production would depend directly on the parallel development of oil production services in Ukraine. The company also said that in 2023 Ukrnafta planned to start drilling nine wells both on a standalone basis and with external contractors. These will be horizontal and inclined wells and sidetracks. Ukrnafta 's plans to increase oil production 5.8% to 1.45 million tonnes and gas 0.3% to 1.04 billion cubic meters in 2023. The growth in oil output will be achieved by investing UAH 5.5 billion in drilling, workovers and special permits at new fields.
Russian Oilfield Service Sees Record Revenue in 2022 - Russian oilfield service companies earned record revenues in 2022 after major foreign players exited the market due to Moscow’s invasion of Ukraine, Vedomosti newspaper reported Friday. According to data from Kasaktin Consulting cited by Vedomosti, Russian oilfield services earned 1.79 trillion rubles ($22.2 billion) in 2022, the highest figure since at least 2018. The international presence in the Russian oilfield services sector has shrunk from 15% to 9%, primarily due to exits by U.S. companies Baker Hughes and Halliburton, according to Vedomosti. Among the areas that saw the biggest growth for Russian companies was well maintenance and repair, which increased 24% in value to be worth 293 billion rubles ($3.6 billion), Vedomosti reported. Drilling saw nearly 16% growth to 609 billion rubles ($7.5 billion), followed by nearly 14% growth each for hydraulic fracturing (90 billion rubles) and exploration (249 billion rubles). Russia’s Energy Ministry says oil production increased 2% to 535 million tons in 2022. Kasaktin Consulting is the Russian-owned successor to accounting firm Deloitte after the British company exited the country in the wake of the invasion of Ukraine. Analysts expect Russia’s oilfield service market to contract by 6% to be worth 1.68 trillion rubles ($20.8 billion) in 2023 due to oil production cut in response to Western price caps and oil embargoes, Vedomosti reported, Moscow Times reports.
Russia’s share in India’s crude oil imports soars to 19% in FY23 - Russia’s share in India’s crude oil imports soared to 19.1% from 2.0% a year ago, the Reserve Bank of India (RBI) says in its latest annual report. "In 2022-23, there was a change in the sources of India’s crude imports. Russia’s share in India’s crude imports soared to 19.1 per cent from 2.0 per cent a year ago," the RBI said. The country-wise import data shows Russia gaining the biggest share of the crude pie in FY23, while crude oil imports from Saudi Arabia and the U.S. showed a slight decline. The crude oil imports from Iraq and the U.A.E. remained almost the same as the previous fiscal year. Moreover, India's combined crude oil imports from other nations declined in FY23 as compared to FY22. In value terms, crude oil imports were the highest in December 2022 at slightly less than $20 billion. In volume terms, crude oil imports were the highest at over 30 million tonnes in December, followed by March 2022 at over 25 million tonnes. The Centre for Research on Energy and Clean Air (CREA), an advocacy and research group that claims to have started in Helsinki in December 2019, accuses five countries led by India and China of 'laundering' sanctions against Russia by importing crude from Russia and selling refined products in 'price cap coalition' countries, mostly in Europe. Terming the five oil-exporting countries -- China, India, Turkey, United Arab Emirates, and Singapore as "laundromat countries", the report says India exported the highest volume of oil products to price cap coalition countries, one year since Russia’s invasion.
Gujarat: ONGC asked to pay damages for crude oil leak in Bharuch district -- An agricultural field near Kachhipura village was found covered in crude oil leaked from a pipeline belonging to ONGC on Sunday, said Bharuch-based GPCB regional officer Margi Patel.The Gujarat Pollution Control Board (GPCB) has ordered the Oil and Natural Gas Corporation (ONGC) to pay Rs 50 lakh in damages for the spillage of crude oil from its pipeline in Bharuch district, an official said on Friday. It has been alleged that 25 camels died after drinking water contaminated with the spillage on Sunday, though the central government-controlled oil major has denied it. An agricultural field near Kachhipura village was found covered in crude oil leaked from a pipeline belonging to ONGC on Sunday, said Bharuch-based GPCB regional officer Margi Patel. The board ordered inquiry after the death of camels was reported. "We have directed ONGC to pay Rs 50 lakh as environmental damage compensation (to the state authorities)," Patel said. The actual cause of the death of the camels will be clear only after the autopsy report is available, the official said. The GPCB has also directed the ONGC to clean up the site, she added. ONGC said in a statement that cleaning-up operation was being carried out on a war footing and the site will be restored by May 30. It also claimed that "the unfortunate death of camels in the area and oil leakage are two unrelated incidents." "However, as a responsible corporate, ONGC continues to provide all assistance to GPCB, state administrative agencies, and forensic team investigating the incident," it said.
Extraction of remaining oil spill will take up to 30 days — The extraction of the remaining oil spill in Oriental Mindoro and nearby areas will take up to a month, government officials said on Saturday, May 27. “The operations will last for 20 to 30 days, if weather conditions are favorable, meaning the remaining oil from the sunken vessel will be retrieved,” Office of the Civil Defense administrator Ariel Nepomuceno said in a statement issued by the Presidential Communications Office on Saturday. Philippine Coast Guard (PCG) Commandant Admiral Artemio Abu, whose agency also addresses the spill, shared the same position. Extraction of remaining oil spill will take up to 30 days – PH gov’t On Saturday, Malacañang also announced that the Dynamic Support Vessel (DSV), the ship that will extract the remaining oil, had arrived in the country. The DSV Fire Opal arrived at Riviera Pier in Subic Bay Freeport Zone on Friday, Malacañang added. The ship was chartered by the Malayan Towage & Salvage Corporation, and contracted by the Protection & Indemnity Insurance Club. The vessel will siphon the remaining oil and then transfer the waste to a tanker. The collected oil will be disposed afterwards. On Saturday night, the DSV Fire Opal will leave Subic and will arrive in Batangas on Sunday. It will later proceed to its designated mission area, Malacañang added. Japanese vessel Shin Nichi Maru, a remotely-operated vehicle, was also deployed and helped in clean-up efforts in Oriental Mindoro in March. Meanwhile, Department of National Defense Senior Undersecretary Carlito Galvez Jr. earlier said that 62.95 kilometers or 84.26% of the 74.71 kilometers of affected coastline has already been cleaned up, as of May 10.
Philippines starts siphoning oil from sunken tanker — Work to recover the remaining oil from the MT Princess Empress that sank off Oriental Mindoro began Monday and may last for a month, the Philippine Coast Guard said. MT Princess Empress, which was loaded with 800,000 liters of industrial fuel, sank in rough seas on February 28, affecting over 194,000 people in Southern Luzon and Western Visayas and threatening the area’s rich marine life Diving support vessel Fire Opal is expected to siphon 120,000 to 240,000 liters of oil. Commodore Geronimo Tuvilla, Coast Guard’s incident management team in Oriental Mindoro commander, said it may take between 20 and 30 days to extract the remaining oil from the vessel. “Once the oil removal is completed, we hope that the process will pave the way for the rehabilitation of affected areas and finally transition to the normalcy of lives of affected Mindoreños,” Tuvilla said. Fishers from some parts of Oriental Mindoro have yet to resume their fishing activities. Fishers who were ordered to stay ashore participate in the government’s cash-for-work program, which provides temporary income. The oil spill is also posing threats to the Verde Island Passage, an area called the “Amazon of the Oceans” because of its rich marine life. Initial estimates by the Department of Environment and Natural Resources put the environmental damage caused by the oil spill at P7 billion. Pola Mayor Jennifer Cruz expressed frustration over the government’s slow response in addressing the oil spill. Pola is one of the worst-affected municipalities. “Those behind this should be held accountable because we are tired,” Cruz said in a joint hearing conducted by the House ecology and natural resource committees Monday. Fr. Edwin Gariguez, lead convenor of Protect Verde Island Passage (VIP), noted the oil spill is still not being treated as a “national disaster.” “While the government dilly-dallies in exacting accountability and justice, the damage to Verde Island Passage’s ecosystem and resulting impacts on stakeholders continue to worsen. Companies responsible for this must be punished,” Gariguez said. RDC Reield Marine Services owns the oil tanker. Reports identified SL Harbor Bulk Terminal Corporation, a subsidiary of San Miguel Shipping and Lighterage Corporation, as the charterer. Under the Oil Pollution Compensation Act, charterers are exempted from claims for compensation for pollution damage.
Philippines launches final phase to clean up oil spill from sunken tanker — In the final phase of a massive environmental clean-up, the Philippine Coast Guard announced Wednesday that efforts were under way to siphon remaining oil from the cargo hold of a sunken tanker in waters off Oriental Mindoro province. The MT Princess Empress, operated by Philippines-based RDC Reield Marine Services, sank in rough seas on Feb. 28 while carrying about 800,000 liters of industrial fuel oil. All 20 crew members were rescued and the tanker was located weeks later at a depth of 400 meters (1,312 feet) off the coastal town of Naujan. The spill led to the contamination of vast coastal regions in the central Philippines. It forced officials to impose a fishing ban in seven coastal towns, and affected nearly 200,000 people as well as threatened rich marine life in the southern Luzon and western Visayas regions. Coast Guard spokesman Rear Adm. Armand Balilo said the tanker’s insurer hired the Dynamic Support Vessel Fire Opal to remove an estimated 120,000 to 240,000 liters (31,700 to 63,400 gallons) of oil believed to be inside the tanker’s cargo hold. The ship arrived on site late last week, and the removal could take weeks. “But it will depend on the weather as well as how fast they work,” Balilo said in an interview with DZBB radio. Commodore Geronimo Tuvilla, who oversees coast guard operations on the ground, said the siphoning of the remaining oil could take 20 to 30 days. “Once oil removal is completed, we hope that the process will pave the way for the rehabilitation of affected areas and finally transition to the normalcy of lives of affected Mindoreños,” Tuvilla said, referring to residents of Oriental Mindoro province. In Manila, an MT Princess Empress official said the tanker was newly constructed. The company, according to Tee, is working with the Philippine government, international oil spill experts and responders to minimize the impact. Meanwhile, Filipino fishers group Pamalakaya called for the company to be made to pay for the ecological damage.
UN begins salvage operation to stop catastrophic oil spill off Yemen - BBC News -- The United Nations has started an operation to remove 1.1 million barrels of oil from a decaying supertanker moored off Yemen's Red Sea coast. A salvage vessel with a crew of experts reached the FSO Safer on Tuesday. They will undertake work to make it secure for oil to be transferred to another tanker, Nautica, which is due to sail from Djibouti next month. There is an imminent risk that the Safer could explode or break apart, causing an environmental catastrophe. The UN has so far raised $114m (£92m) to pay for the unprecedented project through donations from dozens of member states, private companies and even the general public through a crowdfunding campaign. But it says another $29m is urgently required, including to safely moor the Nautica to an anchored loading buoy and tow the Safer to a recycling yard. UN Development Programme Administrator Achim Steiner described the arrival at the site of the salvage support vessel Ndeavor, operated by Dutch company SMIT, as a "critical step" and a "proud moment". He added that it was a "a prime example of the importance of prevention". "Aside from a possible humanitarian and environmental catastrophe, funds spent now will prevent a disaster that could cost billions in the future." The Safer was constructed as a supertanker in 1976 and converted later into a floating storage and offloading facility for oil. It is anchored near the Ras Isa oil terminal, which is controlled by Yemen's rebel Houthi movement. Its structural integrity has deteriorated significantly since maintenance operations were suspended in 2015, when the Houthis seized large parts of Yemen and a Saudi-led coalition intervened in support of the Yemeni government. The ensuing war has reportedly killed more than 150,000 people and left 21 million others in need of aid. The Safer holds four times the amount of oil spilled in the 1989 Exxon Valdez disaster, in Prince William Sound, Alaska.
Here’s Why Oil Flows Can Only Be Redirected, Not Stopped --Asian oil imports were due for a marked rebound this month after the end of the maintenance season. Chances are that a lot of the additional oil would be coming from Russia, which has become one of the largest suppliers of China and India.In fact, Russian oil flows are growing despite claims from Moscow that it has reduced its total oil production. According to Bloomberg, Russian oil exports actually hit the highest since the start of 2022 last month.This is happening in the context of the most severe sanction push by the collective West against the country. And it is the clearest evidence yet of just how essential oil is for the functioning of the global economy.Before the invasion of Ukraine, Russia’s biggest oil clients were European countries. For China and India, it was a minor supplier. Since last year this has changed dramatically.Now, China and India are the two biggest buyers of Russian crude. The two together took in as much as 80% of Russia’s total oil exports last month, according to the International Energy Agency. And the total, at 8.3 million barrels daily, was markedly higher than the annual average for both last year and the year before that.What’s more, Europe, which placed an embargo on direct Russian oil and fuel imports, has been taking in more fuels made in Asia—notably India. In fact, it seems to be taking in a lot of these fuels if the EU’s top diplomat Josep Borrell had to call publicly for an end to this practice.Indeed, India’s fuel exports to Europe over the past 12 months have jumped by over 70%, Reuters reported earlier this month. The report also noted that there is precious little the EU could do to change this without plunging the European economy into a deep recession brought on by fuel price inflation.So, while until a year ago, Russian crude and fuels were going mostly to Europe directly, now almost all crude oil that Russia exports ends up in China and India. From there, processed into fuels, it goes to Europe. The routes have shifted. Oil demand has not.
OPEC oil output falls in May after voluntary cuts pledged -Reuters survey - OPEC oil output fell in May after Saudi Arabia and other members of the OPEC+ alliance made voluntary output cuts to support the market, a Reuters survey found on Wednesday, although increases elsewhere in the group limited the decline. The Organization of the Petroleum Exporting Countries has pumped 28.01 million barrels per day (bpd) this month, the survey found, down 460,000 bpd from April. Output is down more than 1.5 million bpd from September. The survey aims to track supply to the market. It is based on shipping data provided by external sources, Refinitiv Eikon flows data, information from companies that track flows such as Petro-Logistics and Kpler, and information provided by sources at oil companies, OPEC and consultants.
Goldman And Others Sees Rising Odds Of Another OPEC+ Output Cut -- If it was Russia's intention to send oil tumbling after its oil minister last week said that OPEC+ has no intentions of cutting production, in the process inviting another round of shorts and bearish CTAs, well... mission accomplished: on Wednesday oil tumbled more than 3% following the latest dismal Chinese PMI data, and followed a 4.4% drop on Tuesday the black gold is now on pace for its worst month since November 2021. But the real driver behind the latest dump is the reversal of last week's speculation that an OPEC+ cut may be coming following a thinly veiled threat by the Saudi energy minister. Still, many were surprised by the speed and ferocity of the latest drop and as Goldman trader John Flood writes overnight, "we were peppered with questions today on weakness in oil/broader commods complex." His retort: "sentiment around both muted Asia refining margins + European industrial recovery are headwinds. The potential US debt deal includes a resumption of US student loan repayments beginning in Sept which could weigh on discretionary spending and shows you how glass half empty the mkt has become." As for this weekend’s OPEC meeting, Flood writes that "it feels like expectations are pretty low. If they cut, it helps the front but builds spare capacity, if they don't, the mkt might wonder if $70 moves from a floor to a ceiling. All of this suggests any froth that might have been added last week has come out." A more in-depth take was published this morning by Goldman's commodities team, in which Jeffrey Currie and Daan Struyven write that they "expect the nine major OPEC+ producers which announced voluntary production cuts in April to keep production unchanged, but utilize some partly offsetting hawkish rhetoric." One possibility, according to Goldman, is to officialize these voluntary cuts, and broaden the cuts to smaller producers. While constraints on production of these smaller producers imply only a modest hit from a broader announcement to actual output, the bank suspects the alliance will want to signal strong cohesion.Meanwhile, Goldman forecasts a hold for major producers because they likely first want to observe the impact of fresh cuts which just started this month (actually, they haven't as Russia has been cutting output only verbally, while its exports remain near record high). As an aside, OPEC has never cut within three months of a previous cut with stocks as low as today.
Oil Prices Rise As US Debt Default Worries Ebb -Oil prices eked out modest gains on Monday after U.S. President Joe Biden and House Speaker Kevin McCarthy, R-Calif., reached an agreement in principle to raise the debt ceiling and avoid a potentially disastrous default by the U.S. government. Overall gains, however, remained capped by doubts about China's economic recovery and mixed messages from OPEC+ on production cuts. Benchmark Brent crude futures rose 0.3 percent to $77.19 a barrel, while WTI crude futures were up 0.4 percent at $72.94. The last-minute will raise the debt ceiling for two years and keep non-defense spending roughly flat for fiscal 2024 and increase it by 1 percent in fiscal year. McCarthy told reporters Saturday evening that he expects the GOP-controlled House to vote on the agreement on Wednesday. Meanwhile, China growth concerns resurfaced after data showed profits at industrial profits in China fell 20.6 percent in the January-to-April period from the same period the previous year. Traders now look ahead to upcoming OPEC+ meeting for directional cues amid tensions between Russia and Saudi Arabia over output targets. Russia prefers its partners of the OPEC+ group to leave oil production unchanged when it meets next week.
Oil prices drop on OPEC+, US debt ceiling deal uncertainty – Oil prices dropped $0.59 and $0.42 on the barrel of Brent and West Texas Intermediate (WTI) crudes on Tuesday, according to Reuters. Brent crude futures fell to $76.48 on the barrel, after a 0.5 percent rise on Friday, and WTI crude futures dipped to $72.25 on the barrel, the news agency reported. Concerns over the viability of the United States (US) debt ceiling deal and warnings by Saudi officials on the woes of betting against oil weighed heavily on oil prices, both Reuters and Bloomberg explained. Members of the Organisation of the Petroleum Exporting Countries (OPEC) and their allies (OPEC+) are slated to meet on June 3 to discuss output policy. However, last week, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman warned speculators to “watch out” and that betting against the oil market is ill-advised. OPEC+ surprised the market in April with an unexpected round of production cuts. But since then, according to Bloomberg, traders have been steadily ramping up bearish bets on oil. Speculators also slashed bets against Europe’s diesel benchmark, which had one of the largest concentrations of short positions across the oil market, Bloomberg reported. Meanwhile, in the US, President Joe Biden and House of Representatives Speaker Kevin McCarthy both voiced their confidence that the US debt ceiling deal will be passed by June 4. Nonetheless, the deal must clear a divided Congress soon, before June 5, which is when the Treasury Department said the country will not be able to meet its financial obligations. In the meantime, Republican lawmakers and officials in the US have been speaking out against the debt ceiling deal. Failing to pass this deal will result in downgrading the credit rating of the US and will surely disrupt financial markets in the US and worldwide.
The Physical Market for Crude Signaled that Supplies are More Than Enough to Meet Demand - The oil market sold off on Tuesday as the physical market for crude signaled that supplies are more than enough to meet demand. Bloomberg reported that WTI’s June-July cash roll fell to a discount of 30 cents/barrel, indicating lower demand for barrels being delivered in June than in July. The market also reflected ample supply in the short term as the front month WTI spread deepened into contango. The oil market was also pressured by concerns about whether the U.S. Congress will pass the U.S. debt ceiling agreement reached over the weekend. The crude market traded to a high of $73.55 during Monday’ shortened trading session in observance of Memorial Day. However, the market erased its gains and extended its losses to $3.65 as it retraced more than 50% of its move from a low of $63.90 to a high of $74.73 and posted a low of $69.02 in afternoon trading. The market later bounced off its low and retraced some of its losses ahead of the close. The July WTI contract settled down $3.21 at $69.46 and July Brent contract settled down $3.53 at $73.54. The product markets ended the session sharply lower, with the heating oil market settling down 8.85 cents at $2.2808 and the RB market settling down 10.75 cents at $2.5959. IIR Energy said that U.S. oil refiners are expected to shut in about 222,000 bpd of capacity in the week ending June 2nd, increasing available refining capacity by 335,000 bpd. Offline capacity is expected to fall to 34,000 bpd in the week ending June 9th. Colonial Pipeline Co is allocating space for Cycle 33 on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina. The current allocation is for the pipeline segment north of Collins, Mississippi. Russia's Deputy Prime Minister Alexander Novak is set to discuss the situation on the oil market with oil companies on Tuesday. Novak's office said the meeting is taking place against a background of higher gasoline prices. The government has been considering restrictions on gasoline exports to stem the increase in fuel prices. OPEC’s Secretary General, Haitham Al Ghais, told the Iranian oil ministry's website SHANA that OPEC will welcome Iran’s full return to the oil market when sanctions are lifted. OPEC’s Secretary General, who is visiting Tehran for the first time, added that Iran has the capacity to bring on significant production volumes within a short period of time. According to Refinitiv analyst Raj Rajendran, Northwest Europe gasoline exports to the United States so far in May are high, with April loadings bound for the US being revised upwards to 1.26 million tons from 1.06 million tons. Shipments to the US so far in May increased to 790,000 tons, up from 618,000 tons estimated last week and this could increase to the million ton level. Shipments to West Africa in May are at 370,000 tons, sharply less than the revised 797,000 tons in April. Exports to Latin America increased sharply. NWE flows in May on the two major routes were estimated at about 1.2 million tons, down from 2.05 million tons in April. Meanwhile, European diesel arrivals in May are set to reach 5.91 million tons, down from 6.9 million tons in April.
WTI, Brent Plunge 4% on OPEC, US Debt Ceiling Uncertainty - New York oil futures and Brent crude traded on the Intercontinental Exchange settled Tuesday's session with sharp losses triggered by growing skepticism that the Saudi-led coalition of 23 producers, known at OPEC+, can deliver a sustainable cut to collective oil production this year, opening a pathway for higher crude and product exports out of Russia. Further weighing on market sentiment, a group of at least 20 Republican lawmakers said this afternoon they will vote against a debt ceiling deal unveiled late Sunday by President Joe Biden and House Speaker Kevin McCarthy. The deal itself neither raises nor freezes the debt limit for U.S. federal government, but simply suspends it until 2025. However, it ends prospects of a U.S. default and would allow the government to keep borrowing money through the 2024 presidential election year. The Dow Jones Industrial Average erased earlier gains to finish the session lower as Wall Street assessed the odds for the tentative deal to clear the Congress. West Texas Intermediate July futures, the U.S. crude benchmark, settled the session $3.21 lower at $69.46 barrel (bbl), and international crude benchmark Brent for July delivery shed $3.53 bbl for a $73.54 bbl settlement before the contract's expiration Wednesday afternoon. Next-month Brent August futures settled $3.39 bbl lower at $73.71 bbl. NYMEX RBOB June futures plunged 10.75cts gallon to $2.5959, with the next-month delivery contract expanding its discount against the expiring contract to a 11.67cts gallon. NYMEX ULSD June contract declined $0.0885 to $2.2808 gallon and next-month delivery July futures finished the session at $2.2690 gallon. Later this week, traders will turn their focus to the OPEC+ Joint Ministerial Monitoring Committee meeting scheduled for Sunday, June 4, amid growing uncertainty over the group's next move on production policy. Saudi Oil Minister Prince Abdulaziz bin Salman appeared to suggest the group might opt for another output cut, warning short sellers against "ouching" for taking on bearish positions. Striking a different tone, Russian Deputy-Prime Minister Alexander Novak later said that the market requires no additional cuts. Arguably, Moscow has made little progress on pledged production cuts, with oil and product exports continuing to flow at the pre-war level.
Oil Prices Extend Losses On Weak Economic Data From China - Oil prices slumped by another 3% early on Wednesday, extending the 4% losses from Tuesday after manufacturing data from China disappointed and the U.S. dollar strengthened.As of 7:27 a.m. EDT on Wednesday, the U.S. benchmark, WTI Crude, had plunged below $68 per barrel, at $67.48, down by 2.89%. WTI crude oil futures sank below $70 a barrel on Tuesday amid concerns about opposition to the U.S debt ceiling deal.The international benchmark, Brent Crude, was down by 2.64% early on Wednesday at $71.61.WTI and Brent were on track to post a seventh month of monthly declines of more than 9% and 11%, respectively.While the debt limit deal late on Tuesday cleared its first hurdle at the Rules Committee, which considered the terms by which the legislation would be debated and voted on by the full House, fresh macroeconomic data out of China early on Wednesday weighed on market sentiment again. China’s purchasing managers’ index (PMI) droppedin May to a five-month low of 48.8, pointing to a sharper-than-expected contraction in factory activity. Manufacturing activity was below estimates for a second consecutive month, raising again concerns about oil demand in the world’s top crude importer. Market participants are also on edge ahead of a key OPEC+ meeting this weekend, at which the top producers of the alliance, Saudi Arabia and Russia, are heading with contrasting views on output policy.“Lower prices ahead of the OPEC+ weekend meeting may raise the temperature in the room with Russia continuing to pump while key Middle East producers have shown constraint,” Saxo Bank’s analysts said on Wednesday.“The front month spreads of Brent and WTI both trades in contango, a sign of ample supply.” ING strategists said on Wednesday, “Market reports of divergent views from Russia and Saudi Arabia on oil supply requirements weighed on the sentiment yesterday as the probability of the OPEC+ meeting concluding without any production cut increases rose.”
Oil settles lower on weak China data, stronger US dollar - Oil prices settled lower on Wednesday, pressured by a stronger U.S. dollar and weak data from top oil importer China that fed demand fears. Brent crude futures for August delivery settled down $1.11 to $72.60 a barrel. U.S. West Texas Intermediate crude (WTI) settled down $1.37, or 2%, to $68.09. At their session lows, both benchmarks were down more than $2 to multi-week lows. On Tuesday, both fell more than 4%. Oil prices tumbled after Chinese data showed manufacturing activity contracted faster than expected in May, as weakening demand cut the official manufacturing purchasing managers' index (PMI) down to 48.8 from 49.2 in April, lagging a forecast of 49.4. The dollar index, which measures the U.S. unit against six major peers, saw support from cooling European inflation and progress on a bipartisan U.S. debt ceiling bill, which will advance to the House of Representatives for debate. House passage would send the bill to the Senate, where debate could stretch to the weekend, as a June 5 deadline loomed. A stronger dollar makes oil more expensive for buyers holding other currencies. U.S. data showed job openings unexpectedly rose in April, pointing to persistent strength in the labor market that could push the Federal Reserve to raise interest rates in June. "We have weaker-than-expected Chinese data, the debt limit situation, two years of flat spending, and likely another rate hike next month weighing on markets," Traders will watch the upcoming June 4 meeting of OPEC+ - the Organization of the Petroleum Exporting Countries and allies including Russia. Mixed signals by major producers on further production cuts have sparked volatility in oil prices, yet banks HSBC and Goldman Sachs and analysts do not expect OPEC+ to announce further cuts at this meeting. HSBC said stronger oil demand from China and the West from the summer onwards will trigger a supply deficit in the second half. In the U.S., field production of crude oil rose in March to 12.696 million barrels per day, the highest since March 2020, when the coronavirus pandemic began to decimate global energy demand, Energy Information Administration data showed. U.S. crude oil and gasoline stockpiles were seen falling last week, while distillate inventories likely increased, a preliminary Reuters poll showed on Tuesday. .
WTI Extends Losses After API Reports Big Surprise Crude Build - Despite Saudi threats to the shorts, oil prices ended significantly lower to cap an ugly month ahead of OPEC's meeting this weekend after a weak China PMI print overnight and nothing from US data -to spur any excitement. Prices "remained on the defensive after China's manufacturing PMI showed more signs of weakness in May, adding to concerns about the outlook for demand from the world's biggest importer. Lower prices ahead of the OPEC+ weekend meeting may raise the temperature in the room with Russia continuing to pump while key Middle East producers have shown constraint", After last week's surprise (and large) draw in official crude stocks, it appears API is playing catch up with expectations of another large drop. API
- Crude +5.2mm (-5.1mm exp)
- Cushing +1.777mm
- Gasoline +1.89mm (-900k exp)
- Distillates +1.849mm (+500k exp)
API reports a big surprise crude build - exactly opposite of what was expected. All the cohorts saw sizable builds last week... WTI was hovering just above $68 ahead of the API print and extended losses on the build... US demand for oil and diesel was more robust in March than previously thought, but remained below levels seen at the same time a year ago. Finally, we note that a DOE report Monday indicated that the Biden admin sold another 2.6 million barrels of crude last week from the nation's Strategic Petroleum Reserve to the commercial side.
As Oil Plunges, OPEC Bans Mainstream Media Groups From Vienna Meeting -- The Financial Times reports that OPEC has barred several media groups from attending its crucial production meeting in Vienna this weekend, in a move officials said was driven by Saudi Arabia. Reporters from Reuters, Bloomberg News and Dow Jones, the publisher of The Wall Street Journal, have been denied invites to Opec’s Vienna headquarters, according to people familiar with the matter. The ban is unusual and no reason has been given for excluding the media groups, but people familiar with the decision said it had been instigated by Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman. Are they readying a surprise cut announcement and don't want any leaks?
WTI Holds Gains After Biden Admin's 9th Straight Weekly SPR Drain --Oil prices have been choppy overnight, since API reported a big surprise crude build, with WTI hovering around $68. China's factory activity and the OPEC+ meeting over the weekend in Vienna to discuss the group’s production policy are weighing on traders' minds, as US debt ceiling doubts fade.“Today the market will look to US weekly inventory data and in particular the pace of Strategic Petroleum Reserve selling last week,” “Oil prices are stabilizing after better-than-expected Chinese PMIs and a halt in the recent dollar rally,” he added, referring to the purchasing managers’ index, a measure of economic activity. DOE
- Crude +4.49mm (-5.1mm exp)
- Cushing +1.63mm
- Gasoline -207k (-900k exp)
- Distillates +985k (+500k exp)
The official inventory data confirmed API's report that crude stocks rose significantly last week - after the massive draw the prior week. Cushing stocks rose for the 6th straight week. Gasoline stocks fell very modestly...
Oil prices rise after US decision to raise debt limit: 1 June 2023 - Oil prices increased on Thursday after the US passed a bill that is anticipated to lift the US debt ceiling and limit government spending in an effort to reduce the federal deficit, Kazinform cites Anadolu Agency.International benchmark Brent crude traded at $73.34 per barrel at 09.52 a.m. local time (0652 GMT), a 1.02% rise from the closing price of $72.60 a barrel in the previous trading session on Friday.The American benchmark West Texas Intermediate (WTI) traded at the same time at $68.75 per barrel, up 0.97% from the previous session's close of $68.09 per barrel.The US House of Representatives passed a bill on Wednesday to avert a catastrophic default on the nation's debt. The bill, which suspends the $31.4 trillion cap on the federal government's borrowing limit through January 2025, needs to be passed by the Senate. President Joe Biden urged the Senate to pass the bill as quickly as possible so he could sign it into law.The debt limit was hit in January, but the Treasury Department had taken steps to ensure that the US continued to pay its bills.Meanwhile, the American Petroleum Institute announced its expectation of a 5.20 million-barrel increase in US oil inventories.Markets now await official data from the US Energy Information Administration due later in the day.Ahead of the OPEC meeting on June 4, when producers will choose their output plan, investors and dealers are paying close attention and exercising caution.Although Saudi Arabia and Russia, two other members of OPEC+, have given conflicting signals about whether the group will increase production curbs, analysts do not anticipate a change in output strategy during the meeting.
The Oil Market Was Supported by Hopes For a Pause in U.S. Interest Rate Increases - The market retraced little more than 62% of the selloff seen over the past couple of sessions, despite the weekly petroleum stock report showing an unexpected build in crude stocks of over 4 million barrels. The oil market was supported by hopes for a pause in U.S. interest rate increases as U.S. Federal Reserve officials suggested interest rates could be steady this month. The market was also supported by the passage of the debt ceiling bill in the House of Representatives late Wednesday night, increasing the chances of averting a default. The crude market, which posted a low of $67.51 in overnight trading, rebounded from its previous losses following data showing that China’s manufacturing Purchasing Managers’ Index returned to expansionary territory in May. The market paid little attention to the mostly bearish inventory report and rallied to a high of $71.07 by mid-day. The July WTI contract later erased some of its gains ahead of the close and settled up $2.01 at $70.10. The August Brent contract settled up $1.68 at $74.28. Meanwhile, the product markets ended mixed, with the heating oil market settling up 6.38 cents at $2.3147 and the RB market settling down 76 points at $2.4362. Four sources stated that OPEC and its allies are unlikely to deepen supply cuts at their ministerial meeting on Sunday despite a fall in oil prices toward $70/barrel. According to the EIA, U.S. crude oil stocks in the SPR fell by about 2.5 million barrels in the week ending May 26th to 355.4 million barrels, the lowest level since September 1983. Meanwhile, crude oil stocks built by 4.489 million barrels on the week to 459.7 million barrels. The EIA also reported that the four-week average U.S. gasoline product supplies increased in the latest week to the highest level since December 2021. Senate Majority Leader Chuck Schumer said the Senate will stay in session until members approve a bipartisan bill to suspend the government's $31.4 trillion debt ceiling and send it to President Joe Biden's desk. He said the Senate will continue working until the job is done. A White House official said the White House has been reaching out to Democratic U.S. Senators as the chamber prepared to take up a bipartisan bill to raise the country’s debt ceiling and avoid a default. Kpler vessel tracking service shows that 29.36 million barrels of gasoline and unspecified clean products being imported into the USAC market in May, up from 27.67 million barrels in April. Kpler data already shows that 17.67 million barrels are expected so far in June. The Kremlin said that relations with Saudi Arabia in OPEC+ were constructive and based on trust. S&P Global Commodities is reporting that according to one Turkish official the reason that the pipeline flows from Iraq to Turkey remains halted and that Turkey has made no concrete announcement on when it plans to reopen the line, is that it is over a political/economic issue. Turkish officials reportedly are seeking talks with Iraqi government officials over the penalties it was ordered to pay Baghdad in the recent arbitration case, as well as a second arbitration case that is still pending.
Oil prices up with approval of US debt ceiling: 2 June 2023 -- Oil prices increased on Friday as investors priced in the lifting of the US debt ceiling, despite market uncertainty ahead of the much-anticipated OPEC+ meeting, which is widely expected to yield an unchanged production policy, Kazinform cites Anadolu Agency. International benchmark Brent crude traded at $75.08 per barrel at 09.33 a.m. local time (0633 GMT), a 1.07% rise from the closing price of $74.28 a barrel in the previous trading session on Friday. The American benchmark West Texas Intermediate (WTI) traded at the same time at $70.82 per barrel, up 1.02% from the previous session's close of $70.10 per barrel. Both benchmarks are on track to slash their marginal weekly losses after investors throughout the week priced in the US debt ceiling decision to set the maximum amount of outstanding federal debt that the US government can incur. Averting a first-ever catastrophic default on the nation’s debt before a June 5 deadline, the US Senate passed a bill to suspend the debt ceiling late Thursday. This came as the US Institute for Supply Management (ISM) released the ISM Manufacturing Purchasing Managers' Index (PMI), which indicated a contraction in the country’s manufacturing sector in May for the seventh consecutive month, limiting crude oil prices' upward trajectory. Another headwind to limit price upticks was the less-than-expected rise in US commercial crude oil inventories, which rose by around 4.5 million barrels to 459.7 million barrels, against the American Petroleum Institute's forecast of a jump of 5.2 million barrels. Positive demand sentiment in the market was supported by reports that manufacturing activity in China recovered for the first time in three months in May. The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) increased to 50.9 in May from 49.5 in April, owing to a robust and rapid growth in output in May. With a rise above the neutral level of 50, the result marked the first improvement in overall manufacturing sector conditions since February. As markets await Sunday’s meeting of the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, experts say the group will most probably keep its production level unchanged. Rystad Energy on Thursday said the 23-member group could decide to maintain the current production policy, citing tight market conditions that are expected to lead to higher oil prices in the second half of the year. The meeting will be the group’s first ministerial meeting after some OPEC+ countries in April decided to cut output by 1.6 million barrels per day (bpd) on top of their existing cuts of 2 million bpd in place since October last year. Without ruling out «further production cuts», Jorge Leon, senior vice president of oil market research at Rystad Energy, predicted that the group may stick to current production levels, taking a «wait and see» approach.
Oil Prices Climb As U.S. Rig Count Sees Another Double-Digit Decline -The total number of total active drilling rigs in the United States fell by 15 this week, according to new data from Baker Hughes published Friday, falling by 52 over the last four weeks—the largest 4-week dropoff in activity since June 2020. The total rig count fell to 696 this week—31 rigs below this time last year. The current count is 379 fewer rigs than the rig count at the beginning of 2019, prior to the pandemic.The number of oil rigs fell by 15 this week to 555. Gas rigs stayed the same at 137. Miscellaneous rigs stayed the same at 4.The rig count in the Permian Basin fell by 2—to land at just 6 above this time last year. The rig count in the Eagle Ford also fell by 2.Primary Vision’s Frac Spread Count, an estimate of the number of crews completing unfinished wells—a more frugal use of finances than drilling new wells, fell by 2 in the week ending May 26, to 260—the lowest number of completion crews in operation since January. The number of fracking crews have fallen for four weeks in a row, losing a total of 34. Year over year, it is 23 fewer than a year ago.Crude oil production levels in the United States fell in the week ending May 26, to 12.2 million bpd, according to the latest weekly EIA estimates, as it ping pongs between 12.2 million and 12.3 million bpd where it’s been all year. U.S. production levels are up just 300,000 bpd versus a year ago.At 12:23 p.m. ET, the WTI benchmark was trading up $1.66 (+2.35%) on the day at $71.75 still down almost $1 per barrel from this time last week.The Brent benchmark was trading up $1.77 (+2.38%) at $76.05 per barrel on the day, down $0.60 per barrel from last Friday.WTI was trading at $71.448 minutes after the data release, up 1.97% on the day.
Oil up Over 2% After US Debt Deal and Jobs Data; Focus Turns to OPEC+ (Reuters) -Oil prices rose over 2% on Friday after the U.S. Congress passed a debt ceiling deal that averted a government default in the world's biggest oil consumer and jobs data fueled hopes for a possible pause in Federal Reserve interest rate hikes. The focus is now turning to a meeting of OPEC and its allies this weekend. Brent futures rose $1.85, or 2.5%, to settle at $76.13 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.64, or 2.3%, to settle at $71.74. The closes were the highest since May 26 for WTI and May 29 for Brent. For the week, both contracts were down about 1%, in their first weekly losses in three weeks. Open interest in futures contracts rose on Thursday to the highest since July 2021 for Brent and March 2022 for WTI. The U.S. Senate approved a bipartisan deal to suspend the limit on the government debt ceiling, following approval in the House of Representatives, staving off a default that would have rocked financial markets. U.S. employment increased more than expected in May, but a moderation in wages could allow the U.S. Federal Reserve to skip a rate hike this month for the first time in more than a year, which could support oil demand. Oil traders will watch the June 4 meeting of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia. The group in April announced a surprise production cut of 1.16 million barrels per day, but resulting price gains have been erased and crude is trading below pre-cut levels. OPEC+ is debating an additional oil production cut among possible options, three OPEC+ sources told Reuters on Friday. "No one wants to be short crude going into a weekend OPEC+ meeting. ... Traders should never underestimate what the Saudis will do and leverage during OPEC+ meetings," Saudi Arabia is the biggest producer in OPEC. In the U.S., energy firms this week slashed the number of oil rigs operating by the most since September 2021, reducing the overall count for a fifth week in a row, energy services firm Baker Hughes Co said in a closely followed report. U.S. drillers have been cutting back on drilling for months due to an 11% drop in U.S. crude prices and a 51% drop in natural gas futures since the start of the year. In a reminder of the upcoming Atlantic hurricane season, Tropical Storm Arlene formed in the Gulf of Mexico near Florida. It is expected to weaken over the next day or so as it heads south toward Cuba, moving away from U.S. Gulf Coast oil and gas infrastructure. On the demand side, manufacturing data out of China, the world's second biggest oil consumer, painted a mixed picture. China is suffering from early heatwaves, expected to persist through June, putting power grids under strain as consumers in mega-cities like Shanghai and Shenzhen crank up air conditioners.
Further OPEC+ Production Cuts Are Still on the Table - Further production cuts are still on the table when OPEC+ ministers meet in Vienna this Sunday, Rystad Energy Senior Vice President Jorge Leon outlined in a statement sent to Rigzone. “Macroeconomic headwinds are putting significant downward pressure on oil markets in recent weeks, despite the voluntary cuts implemented by seven OPEC+ countries starting in May, and the group of producers could cut output to support prices in the short term,” Leon said in the statement. “U.S. shale’s unresponsiveness should be seen as a positive for the group, as OPEC+ could cut production and support prices without the risk of losing market share,” he added. “However, the impact of higher oil prices on the global economy will weigh heavily on the ministers’ minds,” Leon continued. High oil prices would fuel inflation in the West right when central banks are starting to see inflation gradually recede, the Rystad SVP noted, adding that this could prompt central banks to continue increasing interest rates, which he dubbed “a detrimental move for the global economy and oil demand”. “Given all these caveats, the group could decide to maintain production instead,” Leon said in the statement. “The oil market is expected to tighten significantly in the year’s second half, even if OPEC+ maintains production, prices will likely experience significant upward pressure,” he added. “The ministers might therefore take a ‘wait and see’ approach and hold off taking any action,” Leon continued. In the statement, Leon noted that demand forecasts “remain lukewarm at best” and said “maintaining current output could be the most prudent course”. “Rystad Energy’s real-time global traffic monitoring tool shows that activity has remained flat in the last six weeks compared to 2019,” Leon said. “Aviation demand paints a gloomier picture, as mobility rates are flat compared to 2019 and stubbornly below 2019 levels since February,” he added.
US Builds New Base In Northern Syria, Signaling Indefinite Occupation -The US-led anti-ISIS coalition is building a new military base in Syria’s northern province of Raqqa, The New Arab reported, citing a source close to the Kurdish-led Syrian Democratic Forces (SDF).The US backs the SDF and keeps about 900 troops (officially at least) in eastern Syria, allowing the US to control about one-third of Syria’s territory. The report said there are currently about 24 US-led military sites spread throughout eastern Syria.While the US says it’s in Syria to fight ISIS, the presence is part of Washington’s economic war against Damascus, which includes crippling economic sanctions.ISIS also holds no significant territory, and the Syrian government and its allies would continue to fight the remnants of the terror group if the US withdrew.But the construction of a new base demonstrates the US plans to continue the occupation indefinitely. In March, the House voted down a resolution introduced by Rep. Matt Gaetz (R-FL) that would have ordered President Biden to withdraw from Syria. The legislation failed in a vote of 103-321, with 56 Democrats and 47 Republicans voting in favor of the bill.The House also recently voted to maintain sanctions on Syria after an earthquake killed thousands of Syrians. Only two members of Congress voted against the legislation.The US could come under pressure to withdraw from Syria and lift sanctions on the country as more and more regional countries are normalizing ties with the government of Syrian President Bashar al-Assad.
US Increases Sanctions on Syria After Damascus Rejoins Arab League -The US on Tuesday imposed new sanctions on Syria for the first time since the country was brought back into the Arab League as part of a normalization push between Damascus and regional governments.According to the Treasury Department, the US sanctioned two Syrian money service businesses that are accused of helping the government of Syrian President Bashar al-Assad maintain access to the global financial system. The companies are also accused of aiding Hezbollah and Iran’s Islamic Revolutionary Guard Corps.The businesses were targeted using the Caesar Act, a law the US has used to impose sanctions on Syria that are specifically designed to prevent the country’s reconstruction. The House voted overwhelmingly to maintain Caesar Act sanctions on Syria following a devastating earthquake that killed thousands of Syrians in February.Hawks in Congress are infuriated by Syria’s readmission into the Arab League, which was spearheaded by Saudi Arabia despite US opposition. A bipartisan group of lawmakers in the House introduced a piece of legislation that aims to combat Syria’s normalization in the region by expanding sanctions.Because they are designed to prevent Syria’s reconstruction, US sanctions on the country have had a devastating impact on the civilian population. On top of the economic campaign against the country, the US continues to occupy eastern Syria and controls most of its oil resources.
Drones attack Russian oil refineries near major oil port, officials say --Drones attacked two oil refineries just 40-50 miles (65-80 km) east of Russia's biggest oil export terminals on Wednesday, sparking a fire at one and causing no damage to the other, according to Russian officials. At around 0100 GMT a drone struck the Afipsky oil refinery in Russia's Krasnodar region, causing a fire which was later extinguished, Governor Veniamin Kondratyev said. The Afipsky refinery lies 50 miles east of the Black Sea port of Novorossiisk, one of Russia's most important oil export gateways. Novorossiisk, together with the Caspian Pipeline Consortium (CPC) terminal, bring about 1.5% of global oil to market. Another drone crashed into the Ilsky refinery, which lies around 40 miles east of Novorossiisk, Russian state-owned news agency RIA reported, citing local officials. There was no immediate information on who launched the drone but Russia has accused Ukraine of increased attacks on targets inside the country, including on Moscow on Tuesday. Ukraine almost never publicly claims responsibility for attacks inside Russia or on Russian-controlled territory in Ukraine..
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