Monday, June 19, 2023

gasoline imports at 12 month high; May global oil shortage at 600,000 bpd; OPEC output 899,000 bpd below lowered target

SPR at a new 39½ year low, gasoline imports at a twelve month high;  global oil demand exceeded production by 600,000 barrels per day during May, OPEC production was 899,000 barrels per day below their ​lowered targets

oil prices finished higher for the first time in three weeks after the Fed left interest rates unchanged and OPEC successfully implemented its promised round of voluntary production cuts ...after falling 2.2% to $70.17 a barrel last week on concerns about weakening demand, the contract price for the benchmark US light sweet crude for July delivery fell over $2 in overseas trading early Monday, as traders feared further rate hikes from the Fed meeting this week, then deepened those losses early in the New York session on news of stronger-than-expected crude exports from Russia, Iran and Venezuela, among others​,​ and settled $3.05 lower at a three month low of $67.22 a barrel after analysts highlighted rising global supplies and concerns about demand growth just ahead of key ​US ​inflation data and a​ Fed​ ​meeting​ to follow​ later in the week...however, oil prices rebounded in Asian trading Tuesday after China’s central bank lowered a key short-term rate for the first time in 10 months, and continued to rally in the New York session after CPI data showed the gains in ​US ​consumer prices had slowed more than expected, causing traders to revise expectations of a Fed interest rate hike​,​ and settled $2.30 higher at $69.42 a barrel after OPEC reported that the group's largest members slashed crude output sharply ahead of the unilateral production cut ​announced ​by Saudi Arabia, meaning th​at global market balance​s​ would likely tighten sharply in the second half of the year....oil prices inched up slightly in Asian morning trade on Wednesday, as traders awaited the outcome of the Fed's June meeting, key economic data from China and government data on US crude stockpiles, then backed off after JPMorgan cut its oil price forecasts for this year and 2024, as it sees global supply growth offsetting a record rise in demand, while inventory build-up would lower the risk of price spikes, but rallied again on bullish oil demand growth forecasts from the International Energy Agency before turning south again to close $1.15 lower at $68.27 a barrel after the Fed held rates steady this month, but projected further rate hikes for the rest of this year...oil prices moved 2% higher again in early trading on Thursday as the U.S. dollar weakened and data showed a jump in refinery runs in top importer China, and built on those gains to settle $2.35 higher at a one week high of $70.62 a barrel against a backdrop of strong demand in the U.S. that was expected to stay strong after the Fed left ratres unchanged...oil prices edged higher early on Friday as higher Chinese demand and OPEC+ supply cuts lifted prices, despite expected weakness in the global economy and the prospect for further interest rate hikes, then steadily advanced to settle $1.16 higher at $71.78 a barrel propelled by another weekly drop in the U.S. oil rig count and new import quotas for Chinese refineries that ​were around 20% above 2022 levels​,​ and thus finshed 2.3% higher on the week, on hopes for growing Chinese demand and supported by the output cuts implemented by OPEC and its allies, and the additional cut by Saudi Arabia coming in July.

Natural gas prices also finished higher, rising for the seventh week in the past ten, on forecasts for record heat and air conditioning demand in the South....after rising 3.8% to $2.254 per mmBTU last week on forecasts for hotter weather and increased cooling demand during the second half of June, the contract price of US natural gas for July delivery opened 7 cents lower on Monday, on reduced expectations for cooling demand in the coming week, but clawed back through the afternoon to eke out a 1.2 cent increase at $2.266 per mmBTU on forecasts that hot weather would boost air conditioning demand in late June and as wildfires caused gas exports from Canada to decline again....riding Monday’s wave of cooling-demand driven strength, natural gas prices opened six cents higher on Tuesday and rose to the intraday high of $2.370 by 9:25 AM, supported by a hit to production and advancing heat in the South and then traded in a tight range the remainder of the session before settling 7.4 cents higher at $2.340 per mmBTU on a drop in daily output to a four-month low and on forecasts confirming hotter weather in late June....natural gas prices then opened four cents higher on Wednesday on an overnight bullish shift in expected cooling demand, but then traded in a tight band near $2.34 all day and settled just two-tenths of a cent higher at $2.342 per mmBTU as a bullish drop in supplies from lower U.S. output and fewer exports from Canada offset a bearish decline in demand from LNG export plants and a forecast delay in the start of hot weather in late June..natural gas opened seven cents higher on Thursday as the weather driven rally continued, then rose to a four-week intraday high of $2.568 by 1:30PM, bolstered by a bullish storage print that came on the heels of hotter weather and lower production and setttled with a 19.1 cent or 8% gain on the day at $2.533 per mmBTU on a smaller-than-expected storage build, soaring gas prices in Europe, a decline in U.S. output, and expectations of record power demand in Texas next week...natural gas prices rallied for a fifth straight day on Friday, with bullish sentiment building on the combination of rising cooling demand and sagging production and settled 9.9 cents higher at a three month high of $2.632 per mmBTU on forecasts for demand to soar as the weather turns hot in late June, especially in Texas, where power use was expected to break records next week, and hence finished 16.8% higher on the week..

The EIA's natural gas storage report for the week ending June 9th indicated that the amount of working natural gas held in underground storage in the US had increased by 84 billion cubic feet to 2,634 billion cubic feet by the end of the week, which left our natural gas supplies 552 billion cubic feet, or 26.5% above the 2,082 billion cubic feet that were in storage on June 9th of last year, and 353 billion cubic feet, or 15.5% more than the five-year average of 2,281 billion cubic feet of natural gas that were in working storage as of the 9th of June over the most recent five years…note, however, that natural gas supplies are still 27.9% below normal for this date in the Pacific states, while 26.7% and 22.7% above normal in both the East and Midwest regions of the country at the same time...this week's 84 billion cubic foot injection into US natural gas working storage for the cited week was less than the 95 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, and it was also less than the 94 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, but it exactly matched the average of 84 billion cubic feet addition to natural gas storage that has been typical for the same June 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 June 9th showed that even after a big jump in our oil exports, we had extra oil to add to our stored commercial crude supplies for the 5th time in twelve weeks, and for the 26th time in the past 42 weeks, essentially due to a big increase in new oil supplies that the EIA could not account for... Our imports of crude oil fell by an average of 19,000 barrels per day to 6,381,000 barrels per day, after falling by an average of 817,000 barrels per day the prior week, while our exports of crude oil rose by an average of 795,000 barrels per day to 3,270,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 3,111,000 barrels of oil per day during the week ending June 9th, 814,000 fewer barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly unchanged at a three year high of 12,400,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have averaged a total of 15,511,000 barrels per day during the June 9th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 16,586,000 barrels of crude per day during the week ending June 9th, an average of 60,000 fewer barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that an average of 862,000 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 June 9th appear to indicate that our total working supply of oil from net imports and from oilfield production was 1,937,000 barrels per day less than what we added to storage plus what our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [ +1,937,000 ] 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 error or that magnifturd in the week’s oil supply & demand figures that we have just transcribed….Moreover, since last week’s “unaccounted for crude oil” was at [-9,000] barrels per day, that means there was a 1,94​6,000 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 respond to 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 862,000 barrel per day increase in our overall crude oil inventories came as an average of 1,131,000 barrels per day were being added to our commercially available stocks of crude oil, while 269,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time, the eleventh 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 a result of that withdrawal, the 351,687,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since August 26th, 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 6,462,000 barrels per day last week, which was statistically equal to the 6,461,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at a three year high of 12,400,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged  at 12,000,000 barrels per day, while Alaska’s oil production was 8,000 barrels per day lower at 422,000 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 still 5.3% below that of our pre-pandemic production peak, but was 27.8% 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 93.7% of their capacity while using those 16,587,000 barrels of crude per day during the week ending June 9th, down from their 95.8% utilization rate during the prior week, and a utilization rate that's closer to normal for the 2nd week of June... The 16,587,000 barrels per day of oil that were refined this week were 1.6% more than the 16,320,000 barrels of crude that were being processed daily during week ending June 10th of 2022, but 2.8% less than the 17,064,000 barrels that were being refined during the prepandemic week ending June 7th, 2019, when our refinery utilization rate was at 93.2%, also close to normal for this time of year...

Even with the modest decrease in the amount of oil being refined this week, the gasoline output from our refineries was still higher, increasing by 106,000 barrels per day to 10,171,000 barrels per day during the week ending June 9th, after our gasoline output had ​increased by ​94,000 barrels per day during the prior week. This week’s gasoline production was 1.5% more than the 10,019,000 barrels of gasoline that were being produced daily over the same week of last year, but 1.0% less than the gasoline production of 10,276,000 barrels per day during the prepandemic week ending June 7th, 2019. On the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 255,000 barrels per day to 4,988,000 barrels per day, after our distillates output had increased by 203,000 barrels per day during the prior week. Even with that decrease, our distillates output was 0.9% more than the 4,944,000 barrels of distillates that were being produced daily during the week ending June 10th of 2022, but was 4.8% less than the 5,239,000 barrels of distillates that were being produced daily during the week ending May 31st, 2019...

With this week's increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the fourth time in seventeen weeks, increasing by 2,108,000 barrels to 218,815,000 barrels during the week ending June 9th, after our gasoline inventories had increased by  2,745,000 barrels during the prior week. Our gasoline supplies rose again this week because the amount of gasoline supplied to US users fell by 25,000 barrels per day to 9,193,000 barrels per day and because our imports of gasoline rose by 81.000 barrels per day to a twelve month high of 1,054,000 barrels per day,  and because​ our exports of gasoline fell by 31,000 barrels per day to 957,000 barrels per day. Even after thirteen gasoline inventory decreases over the past seventeen weeks, our gasoline supplies were 1.6% above last June 10th’s gasoline inventories of 217,474,000 barrels, but still about 7% below the five year average of our gasoline supplies for this time of the year…

Meanwhile, even with this week's decrease in our distillates production, our supplies of distillate fuels increased for the fifth time in fourteen weeks, rising by 2,123,000 barrels to 113,854,000 barrels during the week ending June 9th, after our distillates supplies had increased by 5,074,000 barrels during the prior week. Our distillates supplies rose by less this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 240,000 barrels per day to 3,574,000 barrels per day, because our exports of distillates rose by 371,000 barrels per day to 1,247,000 barrels per day, and because our imports of distillates fell by 36,000 barrels per day to 136,000 barrels per day.... with 31 inventory increases over the past fifty-six weeks, our distillate supplies at the end of the week were 3.8% above the 109,709,000 barrels of distillates that we had in storage on June 10th of 2022, but were still about 14% below the five year average of our distillates inventories for this time of the year...

Finally, even after the big increase in our oil exports, the jump of new oil supplies that the EIA could not account for meant that our commercial supplies of crude oil in storage r​ose for the 17th time in 24 weeks and for the 28th time in the past year, increasing by 7,919,000 barrels over the week, from 459,205,000 barrels on June 2nd to 467,124,000 barrels on June 9th, after our commercial crude supplies had decreased by 452,000 barrels over the prior week. Even after several large oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories are now back to the most recent five-year average of commercial oil supplies for this time of year, but are still around 26% above the average of our available crude oil stocks as of the second weekend of June 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 June 9th were 11.6% more than the 418,714,000 barrels of oil we had in commercial storage on June 10th of 2022, and were 0.1% more than the 466,674,000 barrels of oil that we still had in storage in the wake of winter storm Uri on June 11th of 2021, but are still 13.4% less than the 539,280,000 barrels of oil we had in commercial storage on June 12th of 2020, after early pandemic precautions had left a lot of oil unused…

OPEC's Report on Global Oil for May

Tuesday of this past week saw the release of OPEC's June Oil Market Report, which includes the details on OPEC's & global oil data for May, and hence it gives us a picture of the global oil supply & demand situation as Chinese demand for oil had stalled during the fifth month after they had reopened to foreign traveler​s​ and removed the Covid-related restrictions on its citizens, while oil supplies from Russia were further reduced by their independent ​production ​cut in response to the European Union's ban of Russian oil imports by sea and other sanctions...May was also the sixth month that OPEC and aligned oil producers were operating under a 2 million barrel per day production cut, meant to take roughly 2% of global oil supplies off the market, in response to a perceived global surplus and related lower prices, and the first month month of a Saudi led cut of an additional 1.16 million barrels per day, which, when combined with the unilateral Russian cut, was intended to take an additional 1.66 million barrels per day off the market for the rest of this year..

The first table from this month's report that we'll review is from the page numbered 49 of this month's report (pdf page 59), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC has used an average of production estimates by as many as eight "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA), the industry newsletter Petroleum Intelligence Weekly, the energy consultancy Wood Mackenzie and the research and intelligence firm Rystad Energy, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures….

As we can see in the bottom right hand corner of the above table, OPEC's oil output decreased by a rounded 464,000 barrels per day to 28,065,000 barrels per day during May, down from their revised April production total that averaged 28,529,000 barrels per day....however, that April OPEC output figure was originally reported as 28,603,000 barrels per day, which therefore means that OPEC's April production was revised 74,000 barrels per day lower with this report, and hence OPEC's May production was, in effect, 538,000 barrels per day less than the previously reported OPEC production figure (for your reference, here is a copy of the table of the official April OPEC output figures as reported a month ago, before this month's revision)...

at the beginning of April, six OPEC oil producers and two other oil producers aligned with OPEC+ came to an agreement, outside of the formal OPEC structure, to reduce their combined production by an additional 1.16 million barrels per day beginning in addition, Russia ​agrred to extend their ongoing 500,000 barrels per day cut for the rest of the year for a total cut of 1.66 million barrels per day from those ​nine ​producers...production cuts for OPEC members under that agreement included 500,000 barrels per day (bpd) from the Saudis, 211,000 bpd from Iraq, 140,000 bpd from the Emirates, 128,000 bpd from Kuwait, 48,000 barrels per day from Algeria, and 8,000 barrels per day from Gabon...a quick glance at the table above indicates that only the Saudis managed to hit the additional production cut the same time, Nigeria, Angola, and Iran, all of whom had been under-producing, increased their output in the net reduction of May's production was less than half of what had been committed to by the parties to that April 2nd agreement..

OPEC and other aligned oil producers had previously agreed to reduce production by 2,000,000 barrels per day beginning in November, so the net 1,452,000 barrels per day they've cut since then is also short of that...however, OPEC's production was already running 1,585,000 barrels per day below what they were expected to produce when that policy was initiated in October, so the 28,065,000 barrels per day they produced in May leaves them far short of what they were expected to produce during the month, as we'll see in the next table...

The above table was originally included as a downloadable attachment to the press release following the 33rd OPEC and non-OPEC Ministerial Meeting on October 5th, 2022, which set OPEC's and other aligned oil producers' production quotas for November and the following months through the end of 2023, and the quotas shown above were reaffirmed by the cartel for the first 6 months of 2023 in during the 34th OPEC and non-OPEC Ministerial Meeting on December 4th, 2022....the first column above, labeled "August 2022 required production", actually matches the October 2018 baseline production level on which OPEC and aligned producers have based all of their quotas since the onset of the pandemic, and the "Voluntary adjustment" is the production cut each country is expected to make from that benchmark level to achieve a 2 million barrel per day cut for the cartel as a whole, leaving each country with a Volun​t​ary Production level they're expected to hit during 2023, whether they've produced that much recently or not....since war torn Libya and US sanctioned producers Iran and Venezuela have been exempt from the production cuts imposed by the joint agreement that has governed the output of the other OPEC producers since May 2020, they are not shown on the above list, and OPEC's quota excluding them is aggregated under the total listed for the 'OPEC 10', which you can see was expected to be at 25,416,000 barrels per day from November 2022 through December 2023...

with the April 2nd agreement, six members of OPEC agreed to further reduce their production by 1,035.000 starting in May and through the end of the year....thus the new voluntary production level for the OPEC 10 would be 24,381,000 through December...therefore, the 23,482,000 barrels those 10 OPEC members actually produced in May were 899,000 barrels per day short of what they were expected to produce during the month, with Nigeria and Angola still accounting for the majority of this month's production shortfall...

The next graphic from this month's report that we'll look at shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from June 2021 thru May 2023, and it comes from page 50 (pdf page 60) of OPEC's June Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....

Including this month's 464,000 barrel per day decrease in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate is that total global liquids production decreased by a rounded 1,020,000 barrels per day to average 100.2 million barrels per day in May​,​ a reported decrease which came after April's total global output figure was apparently revised down by 80,000 barrels per day from the 101.30 million barrels per day of global oil output that was reported for April a month ago, as non-OPEC oil production fell by a rounded 600,000 barrels per day in May after that downward revision, with most of May's production reduction due to lower oil output from Russia and Canada, which more than offset production increases in "other Asian" and "other Eurasian" countries...

After that 1,020,000 barrel per day decrease in global output, the 100.20 million barrels of oil per day that were produced globally during May were still 1.70 million barrels per day, or 1.7% more than the revised 98.50 million barrels per day that were being produced globally in May a year ago, which was the tenth month of the series of 400 million barrel per day production increases that OPEC and their allied producers implemented as their fourth output policy reset in response to the global demand recovery, following the early pandemic lockdowns (see the June 2022 OPEC report for the originally reported May 2022 details)…with this month's decrease in OPEC's output accounting for more than 40% of the reported global decrease, their May oil production of 28,065,000 barrels per day was 28.0% of what was produced globally during the month, down from their 28.2% of global output last month….OPEC's May 2022 production was ultimately revised to 28,482,000 barrels per day with the July 2022 OPEC report, which means that the same 13 OPEC members who were part of OPEC last year produced 417,000 barrels per day, or 1.5% fewer barrels per day of oil this May than what they produced last May, when they accounted for 28.8% of a smaller global output total…

With the big decrease in global oil output that we've seen in this report, the amount of oil being produced globally during the month was below the expected global demand, as this next table from the OPEC report will show us...

The above table came from page 28 of the June Oil Market Report (pdf page 38), and it shows regional and total oil demand estimates in millions of barrels per day for 2022 in the first column, and then OPEC's estimate of oil demand by region and globally, quarterly over 2023 over the rest of the table…on the "Total world" line in the third column, we've circled in blue the figure that's relevant for May, which is their estimate of global oil demand during the second quarter of 2023….OPEC has estimated that during the 2nd quarter of this year, all oil consuming regions of the globe have been using an average of 100.80 million barrels of oil per day, which is down from the first quarter's demand figure because the most populated areas of the globe no longer need oil to heat during the Spring, and don't start vacation traveling until Summer.…but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were only producing 100.20 million barrels per day during May, which would imply that there was a shortage of around 600,000 barrels per day of global oil production in May, when compared to the demand estimated for the month...

In addition to figuring May's global oil supply surplus that's evident in this report, the upward revision of 100,000 barrels per day to second quarter demand that's shown circled in green above, combined with the 80,000 barrel per day downward revision to April's global oil supplies that's implied in this report, means that the 600,000 barrels per day global oil output surplus we had previously figured for April would now be revised to a surplus of 420,000 barrels per day...

Note that in green we have also circled a downward revision of 30,000 barrels per day to OPEC's previous estimates of first quarter demand...for March, that means that the 210,000 barrels per day global oil output surplus we had previously figured for March would be revised to a surplus of 240,000 barrels per day.. similarly, the downward revision to first quarter demand means that the global oil surplus of 510,000 barrels per day we had previously figured for February would now be revised to a surplus of 540,000 barrels per day, but that the 250,000 barrels per day global oil output shortage we had previously figured for January would be revised to a shortage of 220,000 barrels per day, in light of the 30,000 barrel per day downward revision to first quarter demand....

This Week's Rig Count

The number of drilling rigs active in the US decreased for the fourteenth time in the past eighteen weeks during the week ending June 16th, and is now 13.4% below the prepandemic rig count, despite increasing ninety-nine times over the past 141 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by 8 rigs to 687 rigs over the past week, which was 53 fewer rigs than the 740 rigs that were in use as of the June 17th report of 2022, and was also 1,242 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 was down by four to 552 oil rigs during the past week, after the number of rigs targeting oil had increased by one rig during the prior week, leaving thirty-two fewer oil rigs active now than were running a year ago, as they amount to just 34.3% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are now down 19.1% from the prepandemic oil rig count of 683….at the same time, the number of drilling rigs targeting natural gas bearing formations was down by five to 130 natural gas rigs, which was also down by 24 natural gas rigs from the 156 natural gas rigs that were drilling during the same week a year ago, as they now amount to just 8.1% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….

In addition to those rigs specifically targeting oil and natural gas, Baker Hughes now reports that five rigs they've labeled as "miscellaneous" are drilling this week....the new miscellaneous rig is a vertical rig targeting the Marcellus at between 10,000 and 15,000 feet in Monongalia county West Virginia;  legacy miscellaneous rigs 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....Five such "miscellaneous" rigs operating at once is unusual; the last time that happened was May 2015... a year ago, there were two such "miscellaneous" rigs running...

The offshore rig count in the Gulf of Mexico was down by one to 19 rigs this week, with 17 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 4 from the 15 Gulf rigs running a year ago, when all 15 Gulf rigs were drilling for oil offshore from Louisiana…however, this week we also have a directional rig drilling for oil to a depth of 5,000 to 10,000 feet offshore from Los Angeles California, the first offshore California rig since March 2016....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 also 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 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 10 to 615 horizontal rigs this week, which was 59 fewer rigs than the 674 horizontal rigs that were in use in the US on June 17th of last year, and only 44.8% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014…on the other hand, the directional rig count was up by one to 52 directional rigs this week, and those were up by 13 from the 39 directional rigs that were operating during the same week a year the same time, the vertical rig count was up by one to 20 vertical rigs this week, while those were still down by 7 from the 27 vertical rigs that were in use on June 17th 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 16th, the second column shows the change in the number of working rigs between last week’s count (June 9th) and this week’s (June 16th) count, the third column shows last week’s June 9th 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 17th of June, 2022...

obviously, there was a lot going on this week...first, to determine what happened in New Mexico, we'll check the Rigs by State file at Baker Hughes for the changes the Texas Permian basin...there we find that there were two rigs added in Texas Oil District 8, which includes the counties overlying the core Permian Delaware, while there were two rigs pulled out of Texas Oil District 8A, which includes the counties of the northern Permian Midland...since the Texas Permian rig count was thus unchanged while the national Permian count was down by four, we can therefore conclude that the four rigs that were shut down in New Mexico had been drilling in the far western Permian Delaware in the southeast corner of that the Eagle Ford districts of Texas, there was an oil rig added in Texas Oil District 2, while there was a natural gas rig pulled out of Texas Oil District 3...however, since the Eagle Ford was up by three oil rigs to 59, two more oil rigs must have been added to target the Eagle Ford, while rigs targeting a basin not covered by Baker Hughes were pulled out at the same time...

in other states, the two rigs added in Alaska were both targeting oil and include one on the North Slope and one on a Kenai Penisula, neither tracked by Baker Hughes...the three rigs pulled out of Lousiana include one offshore and two land based rigs in the southern tier of the state, also basins not covered by Baker Hughes...two rigs were also pulled out of Oklahoma, also from a basin or basins not covered by Baker Appalachia, two natural gas rigs were pulled out of Pennsylvania's Marcellus, while three natural gas rigs were pulled out of West Virginia's Marcellus, while a miscellanous Marcellus rig was added in Monongalia county West Virginia at the same time, and hence the Marcellus was down by a total of 5 natural gas the same time, three natural gas rigs were added in Ohio's Utica shale, as two rigs were pulled from Belmont county, three rigs were added in Harrison county, and initial rigs were also added in Columbia county and Jefferson county at the same time....the national natural gas rig count was still down by 5 with the removal of a gas rig from the Eagle Ford, and two gas rigs from basins that Baker Hughes doesn't cover, which could have included those we've cited earlier..


ONU fracking research reveals small stream impacts that could be altering ecosystems | Ohio Northern University --Hydraulic fracturing, or “fracking,” is episodically reducing small Eastern Ohio River basin stream levels, an Ohio Northern University study found. The fluctuations, the authors warn, could be negatively impacting aquatic life in those areas – a situation that, if confirmed by more studies and monitoring, would warrant additional environmental protection measures.Fracking requires significant amounts of water, combined with sand and chemical additives, pumped at high pressure to extract natural resources from subterranean shale formations. Extreme flow reductions in the studied streams occur infrequently and episodically, the researchers found, but “could have lasting negative impacts on the stream biota” and “have the potential to affect downstream users, including regionally-endangered species. The stream ecosystem might be severely impacted,” they report. The authors note that the smaller streams scrutinized, where most UOG (unconventional oil and gas) wells are located, “are much more susceptible to change than larger streams and rivers.”Modeling revealed that 10% and 20% reductions occurred at least episodically in about half of the watersheds analyzed, amounting to 8.8% and 2.4% of active days. A consistent 9% or greater reduction in baseflow “could completely change the aquatic habit in smaller streams, and render spaces uninhabitable for many of the species which live there presently,” the study asserts.UOG impacts on streamflow have mostly been studied in water-scarce regions such as Texas. The limited amount of such studies in water-rich areas have mostly focused on freshwater input quantities or production of flowback, the ONU study notes. For this latest research, government data itself was limited because of Ohio’s patchwork nature of water withdrawal regulations and noncomprehensive permitting requirements.The results yielded some surprises for the researchers.Spiese said he was surprised at “how widespread the flow reductions were. Around half of the streams had significant reductions during fracking operations. I was also naively surprised at how difficult it was to find water source locations for well pad permits,” he added. “With the sheer scope of fracking operations in Ohio alone, it is almost impossible to actually track where the water is coming from specifically.”Logan said fracking regulations are always a shock to her. “On the one hand, we have reporting requirements in place which provide us with vast datasets on water quality, quantity, and more in the United States. And on the other hand, we are severely lacking in fracking data in regions like Southeast Ohio,” she said. The requirements and permit tracking vary by state. In Ohio, laws and proposed legislation remain in flux and can be contradictory. For instance, House Bill 57 opens state lands, including state parks, to fracking, but Spiese said “several environmental groups recently sued the state to block this law going into effect until rules are established to regulate such leases.”

Researchers Find Fracking May Impact Smaller Streams in SE Ohio - Marcellus Drilling News -- Researchers with Ohio Northern University recently published a study that finds that fracking for Utica Shale sometimes (“episodically”) reduces small Eastern Ohio River basin stream levels. The fluctuations in those stream levels “could” (but not necessarily do) negatively impact aquatic life (ecosystems) in those areas. The situation should, according to the researchers, be confirmed by more studies and monitoring.

Barnesville News » Driller asks Ohio for rights to frack Wolf Run State Park - Noble County, Ohio- An oil and gas extraction company has submitted a request to the state of Ohio, seeking rights to drill beneath approximately 2,000 acres of Wolf Run State Park in Noble County. The company’s identity remains undisclosed, as per state law. The request, known as a “nomination,” has initiated a public comment period. If accepted, the leasing rights for the land will be subject to a competitive bidding process. It is important to note that the nomination does not mention any immediate surface impacts to the park. Instead, the drilling would be carried out vertically from an adjacent plot, allowing access to the oil and gas reserves underneath the park. This marks the second instance where an Ohio state park has garnered interest from the oil and gas industry. Previously, similar requests were made for Salt Fork State Park and two other designated wildlife areas in the eastern part of the state. Wolf Run State Park offers various recreational activities such as fishing, hunting, boating, swimming, and hiking.

Oil and gas company wants to frack under a local Ohio State Park - A gas and oil extraction company, whose identity is shielded, due to state law, has put in a request, or nomination to drill under the state-owned park in Noble County. The company put in the nomination to the Oil and Gas Land Management (OGLM) Commission to free up the land for drilling, which has triggered a public comment period. If the OGLM decides whether to accept the nomination, leasing rights go out in a competitive bidding process. The nomination can be found here. The initial nomination does not indicate any surface impacts of the park. Drillers will be able to access gas and oil by drilling thousands of feet down from an adjacent well, then turning horizontally or across to reach the minerals. High Volumes of water, sand, and chemicals are then used to free methane and other compounds from the shale. Wolf Run is not the only state park wanted by the oil and gas industry. Salt Fork State Park in Guernsey County and two other designated wildlife areas in Eastern Ohio are also wanted. Wolf Run offers many recreational activities such as fishing, boating, swimming, and hiking, and is known for its scenic and peaceful woodlands.

9th Request to Frack Under OH State Land – Wolf Run State Park - Marcellus Drilling News - Two weeks ago, shale drillers could, for the first time, begin to apply for permits to drill under (not on top of) Ohio state lands and state parks under newly formulated rules established by the Ohio Oil & Gas Land Management (OGLM) Commission (see Ohio State Lands Now Open for O&G Leasing – Virtual Ribbon-Cutting). Last week we brought you the list of the first eight “nominations” (requests) to drill under Ohio state land once the door opened (see 8 Ohio State Land Locations Nominated for Utica Shale Drilling). We now have a ninth nomination/request to drill–this one a request to drill under 2,000 acres of Wolf Run State Park in Noble County.

GOA director visits USA expansion site – State officials got a glimpse of the Utica Shale Academy’s planned expansion site during a visit to the campus in Salineville on June 7. John Carey, director of the Ohio Department of Development’s Governor’s Office of Appalachia, was joined by GOA representatives as well as officials from the Ohio Department of Education, Ohio Mid-Eastern Governments Association (OMEGA), Sustainable Opportunity Development (SOD) Center of Salem and Southern Local School District to view the community school and career-tech offerings and USA Superintendent Bill Watson also unveiled designs for a new, $4.8 million building along East Main Street. The GOA awarded an Appalachian Community Grant totaling $2,356,417 to erect a two-story building adjacent to the original community school in the Hutson Building at 70 E. Main St. while USA leveraged nearly half the costs with two $600,000 equity grants and Emergency Elementary and Secondary School Relief (ESSER) funds. Watson said the new structure will include nearly 5,100 square feet of space for offices, classrooms, machinery, virtual welding equipment, lockers and restrooms for students working with heavy equipment operation and CNC plasma cutting. Two older buildings were razed to create some space while a separate 2,800-square-foot outdoor welding lab is also onsite. He noted that the project has been put out to bid and hopes are to begin construction over the next few months. “We’re looking [to begin] at the end of July or early August and the new building will be ready for Fiscal Year 2025,” Watson added. “I’m ready for the project post-COVID. The hardest part of the expansion during COVID were the supply chain issues and other shutdowns. I’m really looking forward to starting from scratch. “This is a phenomenal opportunity and I believe this grant will is a benefit for small, rural Appalachian schools. I’m glad we were fortunate to receive it.” In addition to the community school, which incorporates general classrooms and Virtual Learning Academy (VLA) programming through the Jefferson County Educational Service Center, USA also operates the Energy Center in partnership with Youngstown State University. The facility is lodged at the former Huntington Bank at 70 E. Main St. and offersprogramming formegatronics, hydraulics, pneumatics, AC/DC electric, Programmable Logic Controllers (PLC’s), diesel mechanics and horticulture to train both students and adults. Officials said the expansion is also part of the Connecting Communities through Workforce Training project to reduce the barrier of transportation and increase accessibility to quality workforce training for residents in Columbiana, Carroll, Jefferson and Mahoning counties. It will have a transformational impact on the region by providing residents with a career pathway and an opportunity to earn a sustainable living wage, plus it also looks to eliminate generational poverty in the area.

Eureka! Columbiana County Strikes Oil - Business Journal Daily – Oil production in Columbiana County skyrocketed during the first quarter of 2023, driven by a handful of wells that are among the better producing assets in the state of Ohio. Four horizontal wells operating in Hanover Township owned by EAP Ohio, a subsidiary of Houston-based Encino Energy Partners, have shattered previous production figures in the county, data provided by the Ohio Department of Natural Resources show. According to ODNR, Columbiana County pumped out 233,390 barrels of oil over a 90-day period, all of it from EAP-owned wells. Four of these wells, located on the Mountz pad in Hanover Township, accounted for 228,058 barrels. EAP’s Mountz Cl Han 205H well produced the most oil from a single well in Columbiana County during the period with 62,887 barrels, according to ODNR. The pad’s 1H well produced 61,125 barrels; its 5H well yielded 47,400 barrels; and the Mountz 3H well produced 56,646 barrels of oil. Three other energy companies operating in Columbiana County – Hilcorp Energy Co., Geopetro LLC and Pin Oak Energy Partners – reported zero oil production during the quarter, according to ODNR. In all, Columbiana County yielded 3.5% of all oil produced across the Utica/Point Pleasant shale in Ohio during the first quarter, data show. Traditionally, wells in Columbiana County have not produced much oil, as this portion of the shale play is instead known as a major source of natural gas and natural gas liquids. During the fourth quarter of 2022, for example, the entire county produced just 5,084 barrels of oil. The figures for the first quarter of 2023 represent an astonishing increase of 4,490%. Most of oil production in the Utica is further south in Carroll, Harrison and Guernsey counties, data show. EAP – which operates the majority of its wells in Columbiana, Carroll, Harrison, Guernsey and Jefferson counties – accounted for 3,521,197 barrels, or 53.7% of the total 6,549,638 barrels of oil produced in the Utica/Point Pleasant during the first quarter. Ascent Resources Utica LLC’s Lavada 2H well in Guernsey County produced the most oil from a single unit during the first quarter with 123,946 barrels. In all, total oil production across Ohio increased by 11.8% during the three months ended March 31 compared with the previous quarter. When measured against the same period in 2022, oil production in the Utica/Point Pleasant has increased 65%, data show. Natural gas production in Columbiana County also hit new records during the first quarter, according to ODNR. Horizontal wells in the county yielded 27.5 billion cubic feet of natural gas during the period, a 26.7% increase over the previous quarter. The highest-producing natural gas well is EAP’s Maskaluk 1H well in Washington Township, which produced 1.6 billion cubic feet of gas over a 90-day period. Three other wells at the Maskaluk pad all yielded more than 1.3 billion cubic feet during the period. Collectively, EAP’s 73 wells in the county produced 12.8 billion cubic feet of natural gas, according to ODNR. Hilcorp Energy also reported strong natural gas production during the quarter. The company operates 50 wells in Columbiana County, which in total produced 14.4 billion cubic feet of natural gas, according to ODNR.

Oil Prod. in Northern Utica Comes Alive – Encino Cracks Oil Code - Marcellus Drilling News -The Ohio Dept. of Natural Resources (ODNR) recently released production numbers for the first quarter of 2023, and wow! What a surprise! Oil production in the northern Utica Shale skyrocketed, led by wells drilled by Encino Energy. According to an analysis by the Youngstown Business Journal, four shale wells drilled by Encino in Columbiana County have “shattered previous production figures in the county.” Adding up all oil production by all drillers, Encino had the most oil production in the state, with 53.7% of the total oil produced in the Utica/Point Pleasant during the first quarter. It certainly looks like Encino has cracked the oil code in the Buckeye State!

Dominion Energy begins gas line replacement project in New Philadelphia - ‒ Dominion Energy has begun a project to replace gas lines along Front Avenue and Fair Avenue NE in the city of New Philadelphia.The work began Monday and is expected to continue through November. The company will replace bare steel gas lines with corrosion-resistant plastic lines.Similar work is already going on in Dover.The project is part of Dominion Energy Ohio's Pipeline Infrastructure Replacement program, which was launched in 2008 to replace more than 5,500 miles ...

20 New Shale Well Permits Issued for PA-OH-WV Jun 5-11 | Marcellus Drilling News - New shale permits issued for Jun 5-11 in the Marcellus/Utica last week dipped a bit from the previous week. There were 20 new permits issued, down from 25 issued the previous week. Last week’s permit tally included 6 new permits for Pennsylvania, 8 new permits for Ohio, and 6 new permits in West Virginia. Ascent Resources scored the most new permits with 8 issued in the Ohio Utica, spread across three counties. Chesapeake Energy had the second most new permits with 6 permits issued in the PA Marcellus across two counties. Ascent Resources, Belmont County, Bradford County, Brooke County,Chesapeake Energy, Harrison County, Jefferson County (OH), Monongalia County, Northeast Natural Energy, Southwestern Energy, Sullivan County

Capstone Green Energy Secures Second Order this Year from Oil and Gas Customer in the Marcellus Shale Region in Appalachia--Capstone Green Energy Corporation (NASDAQ: CGRN), announced that E-Finity Distributed Generation, Capstone's long-time distributor for the Mid-Atlantic, Southeastern United States, and the Caribbean, secured a follow-on order for ten Capstone C65 microturbines from a leading oil and gas producer. The systems will be deployed in the heart of the Marcellus Shale Play in Appalachia and add to an already extensive fleet of Capstone microturbine systems. The order is being commissioned this summer. “These microturbine units will significantly enhance production and facilitate the efficient extraction of clean-burning, abundant natural gas from one of the world's largest natural gas fields” “When our customers, who rely on power in remote locations for critical operations, consistently choose to return for additional units, it serves as a testament to the positive impact of Capstone Green Energy. This degree of customer loyalty can be attributed to the dependable performance, minimal maintenance requirements, and environmentally-friendly nature of our microturbine-based solutions. We deeply value the trust and confidence that our repeat customers place in our team, technology, and partners,” said Darren Jamison, President and Chief Executive Officer of Capstone Green Energy. The C65 microturbines, fueled by wellhead natural gas extracted directly from the pipeline, will provide primary electrical power at various wellhead sites where utility power is unavailable. Serving as the primary power source for these remote sites, the microturbines will maintain ultra-low site emissions. This leading oil and gas customer continues to select Capstones microturbines based on their proven field reliability, remote monitoring and diagnostic capabilities, and high availability with partial load redundancy. By incorporating microturbines, customers can increase on-site power production, reduce operational expenses, fortify reliability, and concurrently minimize emissions.

A Pennsylvania Community Wins a Reprieve on Toxic Fracking Wastewater - A decade ago, Pennsylvania General Energy first applied for state permits to convert an old natural gas well in tiny, rural Grant Township, Pennsylvania, to take wastewater from nearby fracking operations. The action raised fear among the town’s 700 residents that their drinking water would be tainted with toxic fracking chemicals, and led to its assertion of local authority to control oil and gas development through a home-rule charter. A cascade of lawsuits by the company, the state and the town followed, leading to a court ruling—now on appeal before the Pennsylvania Supreme Court—that the charter was unconstitutional. But in early May, the community about 80 miles east of Pittsburgh won a victory in the long-running case when Pennsylvania General Energy, an oil and gas production company, said it now plans to plug the well instead of converting it to hold wastewater because of a geological problem that could result in natural gas leaking into underground sources where every household in the township gets its drinking water. The Yanity well, named for a local family that leased some of its land to the energy company, had been found by state inspectors to have an “annulus”—a space around the bore hole where gas can escape—and the company asked the Pennsylvania Department of Environmental Protection to approve a plugging technique that would stop the gas spreading beyond the formation where it was found.“This method will in PGE’s opinion … provide significant protection to be sure gas cannot migrate into the water table once the well is fully plugged and abandoned,” the company wrote in an application to the DEP on May 1. It said it would begin plugging the well on June 1. If the company goes ahead with plugging the well, it will be a cause for celebration, said Stacy Long, chair of the town’s board of supervisors, who has played a prominent role in the fight against the “injection” well. But she is holding back until the work is done. “We have to see it to believe it,” she said. “This is 10 years, and everyone told us, ‘You can’t fight the gas company.’ We did anyway, and now we have this plugging, and if it happens, I’m going to say whoopee. But I’m not getting excited until it happens.” Regardless of the outcome, Long said she will continue to educate the public on threats to water as part of a community group called the East Run Hellbenders, which adopted the name of an imperiled local salamander that needs clean water to survive. The animal, officially designated as an endangered species in some parts of the central and eastern United States, was adopted as Pennsylvania’s state amphibian in 2019. Long said it’s not clear whether the well-plugging plan was really driven by the geological problems, or by the town’s long campaign against it. But she argued that the decision to end plans to site an injection well for frack waste in an area where all residents depend on private water wells vindicates the town’s opposition. “We aren’t sure why they are plugging a well, but nobody plugs a well that’s working,” she said. If the plugging plan goes ahead, it will add to the earlier closure of about half a dozen PGE gas wells in the township, leaving the company with no further business there, Long said. Given that, it’s unclear why the company is continuing to pursue its federal court case against the town, she said. In that case, filed in 2020, PGE called the charter “unconstitutional and unlawful.” It said the document prevented it from operating or selling the injection well, and exposed it to criminal penalties and civil actions. The DEP also sued the township, saying in a 2017 state court suit that the home rule charter unlawfully prohibits the agency from issuing oil and gas permits, and threatens to impose fines on any state or federal agency that violates the charter.

A Pennsylvania community wins a reprieve on toxic fracking wastewater - Environmental Health News -- Inside Climate News reporter Jon Hurdle writes that the decision by PGE to plug a well in a township of fewer than 700 residents rather than inject it with wastewater suggests that fighting the oil and gas industry may not be as futile as some would argue. In a nutshell: Pennsylvania General Energy has announced plans to plug an old natural gas well in Grant Township, Pennsylvania instead of converting it to hold wastewater from fracking operations, due to a geological problem that could result in natural gas leaking into underground water sources. The move comes after a decade-long legal battle between PGE, the state and the town, where the town's assertion of local authority to control oil and gas development through a home-rule charter was deemed unconstitutional. The decision to plug the well is seen as a victory for the community and highlights the potential success of local resistance against the oil and gas industry. “Did Grant Township know? No, they don’t have experts, scientists, geologists but they knew that this was a bad idea, and that this would potentially contaminate their water supply,” community organizer Chad Nicholson said. “Now we have the proof that this was a leaking well with stuff that could get into the water table.” PGE's move comes after concerns were raised about the possibility of toxic fracking chemicals contaminating the town's drinking water. This victory for the community may serve as an example to other towns fighting against the oil and gas industry, demonstrating that local opposition can yield positive outcomes and protect the environment.

Frackers Look to Increase Productivity with Refracs, New Tech | Marcellus Drilling News -Is shale energy beginning to peter out? We’re beginning to see stories in oil and gas publications about how the best locations to drill for shale oil and gas are gone, and the less desirable, less productive locations are now left. We don’t know if that’s true, but it seems people whose multi-billion-dollar businesses depend on it believe it–people like the CEO of Exxon Mobil, Darren Woods. The general attitude that we’re running out has led to two notable strategies to keep the good times rolling: (1) refracing existing wells, and (2) researching new technologies and techniques to get more oil and gas from existing and new wells.

Commercialization of Certified Natural Gas Advances as Seneca, NNE Offer 1 Bcf/d-Plus via CG Hub - Appalachian natural gas producers Seneca Resources Co. LLC and Northeast Natural Energy (NNE) have agreed to provide access to more than 1 Bcf/d of certified natural gas via commodities trading platform CG Hub, a signal that selling premium supply to overseas markets is advancing. The Chicago-based trading hub, operated through TruMarx Data Partners Inc.’s Comet platform, supports primary and secondary trading in natural gas and related certificates. The gas is independently verified by MiQ, which created an audit certification system for methane gas emissions. “Certified natural gas is the bridge to the future of sustainability,” CG Hub CEO Jon Olson said. “By creating a trading platform that supports a vibrant and dynamic marketplace in certified natural gas, we...

Mountain Valley's $6.6bn gas pipeline gets West Virginia permit - Mountain Valley LLC (Mountain Valley) has secured new water permit from the West Virginia environmental regulators for its $6.6bn Mountain Valley natural gas pipeline, reported Reuters, citing the firm as saying in court papers. Equitrans is the operator of Mountain Valley, which owns the pipeline project. Other partners in the project are NextEra Capital, Con Edison Transmission, WGL Midstream, and RGC Midstream.Mountain Valley told the US Court of Appeals for the Fourth Circuit, that its West Virginia-to-Virginia pipeline secured renewed Section 401 water quality certification from West Virginia.The project is expected to unlock additional gas supplies from the US’ biggest shale gas basin Appalachia.Mountain Valley expects to secure a Section 404 water permit from the US Army Corps of Engineers as mandated by the Fiscal Responsibility Act, the company said in the court filing.Mountain Valley said in the filing: “Once (the Army Corps) does [that], Mountain Valley expects to resume construction.”Construction of the planned underground, interstate natural gas pipeline has been delayed due to regulatory and legal fights with environmental and local groups. Work on the project started in 2018.The pipeline will span about 303 miles from northwestern West Virginia to southern Virginia.The project is designed to transport up to two billion cubic feet per day of natural gas drawn from the Marcellus and Utica shale.In May 2023, Reuters reported that Equitrans expects to secure required authorisations from the federal agencies for the pipeline by the early summer and complete the construction by the end of 2023.

MVP Natural Gas Pipeline Inches Closer to Completion with Reissued West Virginia Permit -Mountain Valley Pipeline LLC (MVP) developers got a boost with a new water permit that could help the long-delayed and contentious natural gas pipeline reach completion by the end of the year. West Virginia regulators last week said that after a thorough review, the project complied with state water quality requirements. The West Virginia Department of Environmental Protection issued a renewed Section 401 water quality certification. Gov. Jim Justice called the decision “a big certification…I’m glad we’re doing our part in state permitting and trying to move this permit along,” according to reports. He said he was not aware of any remaining state regulatory hurdles.

Environmentalists may challenge Congress on clearance for the Mountain Valley Pipeline -When UVA Law School Professor Cale Jaffe heard about efforts to fast-track the Mountain Valley Pipeline, he thought of two cases where courts had upheld objections from environmental groups. One involved the Tennessee Valley Authority and construction of a dam that threatened snail darters – small fish protected by the Endangered Species Act. “That case went all the way up to the U.S. Supreme Court. Those lobbying to protect the species prevailed at the Supreme Court,” he says. But in 1979, Congress approved a spending bill that authorized completion of the dam. “Within about 12 hours after that appropriations bill became law, the bulldozers started moving again on that dam project,” Jaffe recalls. Then, in the 90’s, came efforts to protect spotted owls in the old growth forests of Washington State and Oregon. A federal court again sided with environmentalists, but Jaffe says Congress got creative. "It suspended all environmental laws for one year to allow for logging in national forests in the state of Washington and the state of Oregon in 1995-1996." Still, he expects those who oppose the Mountain Valley Pipeline to challenge the right of Congress to keep federal judges from ruling on three MVP cases already underway – citing the constitution’s separation of powers clause. “You had active litigation in the federal courts, under rules that Congress had previously established, and then the question is, ‘Can congress say: Y’know in this case we don’t like the way it’s going, and we’re picking this person to win the case?’” Jaffe concludes.

Mountain Valley Pipeline asks FERC for extension to finish Southgate project in NC --The owners of the Mountain Valley Pipeline sent a letter to federal regulators today, asking for a three-year extension to finish the southern leg, most of which would run through North Carolina.The controversial MVP Southgate Project would start in Chatham, Virginia, and enter North Carolina in Eden, in Rockingham County. From there, the natural gas pipeline would continue roughly 46 miles southeast, ending near Haw River in Alamance County. It originally was scheduled to be finished and in service this month, but it has not received the necessary permits.The Southgate project is an extension of the main MVP, a 303-mile line that starts at a fracked gas facility in West Virginia and winds through environmentally sensitive terrain in Virginia. In 2020, the NC Department of Environmental Quality denied a water quality permit application for Southgate in part because the main MVP line was in doubt.Opponents have successfully delayed further construction of the MVP main line through a series of lawsuits and permit challenges, which have bloated the cost of the project to more than $2.5 billion. However, the debt ceiling deal between Congress and President Biden removed many of those obstacles. According to today’s letter to FERC — the Federal Energy Regulatory Commission — the MVP main line could start sending natural gas at the end of this year. Given construction has not begun in the most difficult terrain, including water crossings, that timeline could be optimistic.In North Carolina there is significant opposition to the Southgate project, including landowners whose properties the pipeline would cross. Thirty-four percent of the route is forested. It would require drilling beneath the Dan River and the Stony Creek Reservoir — Burlington’s drinking water supply– and cross another 12 water bodies containing fisheries of special concern, according to a Final Environmental Impact Statement.The project would cause long-term, permanent impacts to hundreds of acres of forest, including those in the Jordan Lake watershed, and more than 1,000 acres of wildlife habitat. The route would also cross tribal lands belonging to the Occoneechi-Saponi.In addition, natural gas pipelines and fracked gas wellheads leak large amounts of methane, a potent greenhouse gas and driver of climate change. Appalachian Voices Virginia Field Coordinator Jessica Sims issued a statement this afternoon about the extension request:
“This Southgate pipeline is not in the public interest and the developers have not demonstrated its viability. Its threats remain — from disproportionately impacting environmental justice communities along the pipeline route to endangering the waterways it would cross. Mountain Valley Pipeline Southgate should not have a future.”

With new hope from Congress, gas pipeline project in NC may be revived. What we know.The developers of the proposed MVP Southgate gas pipeline have asked federal regulators for more time to complete the project.Thursday, a lawyer for the company that owns the Mountain Valley Pipeline project sent a letter to the Federal Energy Regulatory Commission asking it to extend the mandatory completion date of the project three years, to June 18, 2026.The proposed MVP Pipeline’s main stem would carry fracked natural gas from the Marcellus Shale in Virginia south to a compressor station in Chatham, Virginia. Despite years of challenges from climate change activists and environmental regulators, the project was revived in Congress’ debt ceiling negotiations in May, with the final package including approval of the pipeline.That approval also appears to have revived the MVP Southgate project, a proposed 75-mile stretch of pipeline running southwest from Chatham before entering North Carolina just northeast of Eden. The path would soon turn southeast and pass by Reidsville and Graham before ending just south of I-40 in Alamance County.“Mountain Valley is targeting to complete construction and commence service on the Mainline System by the end of 2023. After resolving Mainline System permitting, Mountain Valley can resume its permitting efforts for the Southgate Project,” Matthew Eggerding, a lawyer for Equitrans Midstream, wrote in the letter, which was first reported by NC Newsline.The Federal Energy Regulatory Commission regulates interstate pipelines, but the projects also need environmental approvals from environmental regulators in each state they pass through.MVP’s 303-mile main stem is about 94% complete, according to the project’s website. That includes the completion of three compressor stations and three interconnect facilities, as well about 280 miles of pipe. Some additional work is needed at an additional interconnect point.DEQ denied a Water Quality Certification for the Southgate extension in August 2020, citing ongoing uncertainty about the MVP’s mainline. Without the main stem, DEQ said, it wasn’t worth harming North Carolina waters and riparian buffers, particularly considering that pipeline operators intended to push ahead with discussion even if the West Virginia to Virginia portion’s fate remained undecided.”This problem is unique to the MVP Southgate project in that its sole utility and purpose is tied to and wholly relies on, the completion of the entire MVP Mainline project,” Bill Lane, DEQ’s general counsel, wrote in a denial letter.Republican legislators in North Carolina have long supported the Southgate extension, which they say would provide a boon for the economy and much-needed access to natural gas. That discussion gained some momentum in early 2021, after the Colonial Pipeline hack left North Carolinians scrambling for gas for days.At hearings about the hack, state legislators heard that there is only one pipeline supplying natural gas to North Carolina, something industry officials called “a vulnerability.”North Carolina environmentalists have been wary in recent weeks that the project would re-emerge. They’ve pointed to a provision in House Bill 600, a regulatory reform bill making its way through the Senate, that would limit the time the N.C. Department of Environmental Quality has to grant or deny the water quality certification. Under the proposed law, DEQ would have 30 days to deem an application complete and another 30 to approve or deny it.In an email to members of the Senate Rules Committee, Haw Riverkeeper Emily Sutton said the proposed changes were intended to aid the pipeline and would sharply curtail the involvement of both local governments and the public.“These permit processes are put in place to protect not only our environmental resources, but our communities who depend on them. This bill is meant to serve only the investors of the MVP Southgate project,” Sutton wrote.

State sues two companies over 2021 diesel fuel spill in Frederick -- The Maryland Attorney General’s Office on Thursday said it is suing two companies, seeking to hold them responsible for a 2021 diesel fuel spill of over 7,000 gallons in Frederick. The lawsuit was brought on behalf of the Maryland Department of the Environment against D.M. Bowman Inc., and Day and Sons Inc. In December 2021, the Maryland Department of the Environment (MDE) received a report of a release of diesel fuel from D.M. Bowman’s Frederick facility. MDE determined that the spill occurred when Day and Sons struck the D.M. Bowman facility’s underground diesel lines while drilling. D.M. Bowman is a transportation, warehousing and logistics company. Day and Sons is a drilling and utility construction company. Over 7,000 gallons were estimated to have been spilled from Dec. 1 to Dec. 7, but investigation of the incident is still ongoing, according to a news release from the MDE and the Maryland Attorney General’s Office on Thursday. Kevin Day, the president of Day and Sons, declined to comment. D.M. Bowman did not immediately respond to requests for comment. In an inspection report from Dec. 18, 2021, which MDE spokesperson Jay Apperson provided to The Frederick News-Post, several borings were installed around the damaged piping at the D.M. Bowman facility to help inspectors initially evaluate the extent of suspected petroleum contamination. At the time the report was made, the report noted that one of the borings had a noticeable petroleum smell in the groundwater near the bottom of the boring. Apperson said there are multiple inspection reports in connection with the spill. In the complaint, MDE asks the court to enter injunctions requiring the companies to remediate damage to the environment due to the spill and comply with any conditions imposed by the department. The department seeks civil penalties for violations of Maryland’s oil control pollution laws. MDE alleges that D.M. Bowman failed to investigate what it called unusual operating conditions at the facility and properly maintain inventory records, which led to the spill being unreported for several days, and it failed to submit a site characterization report to the MDE. “The negligence displayed by these two companies demonstrate a complete disregard for our environment and the well-being of our communities,” Maryland Attorney General Anthony Brown said in the release.

US gas inventories start summer well above normal -- Spring temperatures across the continental United States were close to the seasonal average – providing no relief to a gas market struggling with too much production and excess inventories accumulated last winter. Temperatures in March were a little lower than usual for the past 10 years, but April and May were in line with the 2013-2022 average, according to degree day data from the U.S. Climate Prediction Center (CPC). For the three months as a whole, there were 1,064 population-weighted heating degree days across the Lower 48 states compared with a prior 10-year average of 1,022. Over the same period, however, working gas inventories increased by 454 billion cubic feet compared with a prior 10-year average increase of 401 billion cubic feet. Significantly larger-than-normal inventory builds despite slightly colder-than-normal temperatures early in the season confirms over-production in the market. No progress was made eliminating excess inventories during the spring quarter. Gas stocks ended the quarter with a surplus of 280 billion cubic feet (+13% or +0.68 standard deviations) above the prior 10-year average, having started in a surplus of 227 billion cubic feet (+12% or +0.58 standard deviations). U.S. gas production increased to a new monthly record in March, the latest month for which data is available, and was 7% higher than the same month a year earlier. Production was still rising in a delayed response to the extremely high prices that prevailed for much of 2022 following Russia’s invasion of Ukraine. Freeport LNG’s re-opened export terminal did not make a significant difference in depleting the excess inventories accumulated during the winter of 2022/23. With inventories stubbornly high, prices remained under pressure throughout the spring months, averaging just $2.20 to $2.40 per million British thermal units, in only the 2nd or 3rd percentile for all months since 1990, after adjusting for inflation. But there are signs that lower prices were starting to force a slowdown in drilling. The number of active rigs targeting primarily gas-rich formations declined to an average of 144 in May down from 153 in February. Fewer rigs drilling for gas as well as oil (which results in associated gas from oil wells) will eventually rebalance production and consumption.

US natgas futures rise 3% on output drop, hot late June forecasts (Reuters) - U.S. natural gas futures rose about 3% on Tuesday on a drop in daily output to a preliminary four-month low and forecasts confirming hotter weather in late June that should increase demand for gas to produce power for air conditioning. Electricity use in Texas will break records this week as homes and businesses crank up air conditioners to escape the summer's first heat wave, the state's power grid operator projected. Limiting gas price gains, the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants dropped to a five-month low due to maintenance, which helped cut forecasts for overall U.S. gas demand this week and next. Front-month gas futures for July delivery on the New York Mercantile Exchange rose 7.4 cents, or 3.3%, to settle at $2.340 per million British thermal units (mmBtu). Mostly mild weather in recent weeks has kept heating and cooling demand low, limiting price changes. The lack of price movement cut historic or actual 30-day close-to-close volatility to just 61.8%, its lowest since April 2022 for the second day in a row. Data provider Refinitiv said average gas output in the U.S. lower 48 states slid to 102.1 billion cubic feet per day (bcfd) so far in June, down from a monthly record of 102.5 bcfd in May. But on a daily basis, output was on track to plunge 2.6 bcfd to a preliminary low of 98.8 bcfd on Tuesday, its lowest since February. That would be the biggest daily decline in output since December 2022. Analysts, however, noted preliminary data is often revised later in the day. Meteorologists said the weather in the lower 48 states would remain mostly near normal through June 20 before turning hotter than normal from June 21-28. With warmer weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 92.7 bcfd this week to 96.7 bcfd next week. Those forecasts, however, were lower than Refinitiv's outlook on Monday. Gas flows to the seven big U.S. LNG export plants fell to an average of 11.8 bcfd so far in June, down from 13.0 bcfd in May. That is well below the monthly record of 14.0 bcfd in April due to maintenance at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana.

US natgas futures jump 8% on small storage build, soaring prices in Europe (Reuters) - U.S. natural gas futures jumped about 8% to a three-week high on Thursday on a smaller-than-expected weekly U.S. storage build, soaring gas prices in Europe, a decline in U.S. output and expectations of record power demand in Texas next week. That price increase came despite a drop in the amount of gas flowing to U.S. liquefied natural gas (LNG) export facilities due to plant maintenance. The U.S. Energy Information Administration (EIA) said utilities added just 84 billion cubic feet (bcf) of gas into storage during the week ended June 9. That was less than the 95-bcf build analysts forecast in a Reuters poll and compared with an increase of 94 bcf in the same week last year and a five-year (2018-2022) average increase of 84 bcf. Analysts expected the build to be higher because mild weather last week kept air conditioning demand low. Traders, however, said low wind power last week forced generators to burn more gas to produce power despite the mild weather. The amount of total U.S. power generation from wind fell to just 5% last week, down from a recent high of 10% during the week ended June 2, according to federal energy data. That boosted the amount of generation from gas to 45% last week, up from recent lows of 40% during the weeks ended May 26 and June 2. Looking ahead, however, wind power rose to 9% and gas dropped to 42% of total power generation so far this week. In Texas, meanwhile, the state's power grid operator, the Electric Reliability Council of Texas (ERCOT), now expects electricity use will break peak demand records next week as homes and businesses crank up air conditioners to escape the summer's first heat wave. Earlier in the week, ERCOT forecast demand would break the record this week. Front-month gas futures for July delivery on the New York Mercantile Exchange rose 19.1 cents, or 8.2%, to settle at $2.533 per million British thermal units (mmBtu), their highest close since May 19. That was the biggest daily percentage gain for the front-month since it jumped about 10% in mid May and put the contract up for a ninth time in the last 10 days. Global prices have moved in different directions this month, with gas at the Dutch Title Transfer Facility (TTF) benchmark in Europe soaring to around $14 per mmBtu, which is up about 84% since TTF fell to a 25-month low of $7.34 on June 2. Recent price increases in Europe came in part on supply outages in Norway, low wind power and reports that Europe's biggest gas field, Groningen in the Netherlands could shut in October, traders said. In Asia, meanwhile, gas prices at the Japan Korea Marker (JKM) in Asia have held near a 24-month low of $9 per mmBtu since late May. With warmer weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 93.1 bcfd this week to 96.1 bcfd next week. Gas flows to the seven big U.S. LNG export plants fell to an average of 11.6 bcfd so far in June, down from 13.0 bcfd in May and a monthly record high of 14.0 bcfd in April. On a daily basis, the amount of gas flowing to LNG plants dropped to 10.2 bcfd on Wednesday, the lowest since December 2022, due to declines at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana and Freeport LNG in Texas.

US natgas up 4% to three-month high with hot weather coming in late June (Reuters) - U.S. natural gas futures gained about 4% to a three-month high on Friday on a recent drop in output and forecasts for demand to soar as the weather turns hot in late June, especially in Texas. Power use in Texas is expected to break records next week as homes and businesses crank up their air conditioners to escape the first heat wave of the 2023 summer season, the state's power grid operator projected on Friday. That will boost the amount of gas burned by power generators, since Texas gets most of its power from gas. In 2022, about 49% of the state's power came from gas-fired plants, with most of the rest from wind (22%), coal (16%), nuclear (8%) and solar (4%), according to federal energy data. In addition to preparing for the coming heat, utilities in Texas and other Gulf Coast states were restoring power to over 664,000 customers left without service after severe storms battered the region. Front-month gas futures for July delivery on the New York Mercantile Exchange rose 9.9 cents, or 3.9%, to settle at $2.632 per million British thermal units (mmBtu), their highest close since March 7. That put the front-month up for a fifth day in a row and a 10th time in the last 11 days. . For the week, the front-month rose about 17% after gaining about 4% last week. That was its biggest weekly gain since early March when it jumped about 23%. In Europe, meanwhile, gas prices at the Dutch Title Transfer Facility (TTF) benchmark remained extremely volatile, plunging by around 22% on Friday after rising about 65% during the prior seven days. Data provider Refinitiv said average gas output in the U.S. Lower 48 states has slid to 101.9 billion cubic feet per day (bcfd) so far in June, down from a monthly record of 102.5 bcfd in May. As the wildfires in Alberta and other Canadian provinces died down, gas exports from Canada were on track to rise to 8.3 bcfd on Friday, up from 7.4 bcfd on Thursday and 7.2 bcfd on Tuesday and Wednesday. That compares with average Canadian exports of 7.8 bcfd so far in June, 7.4 bcfd in May when the wildfires were raging, 8.3 bcfd so far in 2023 and 9.0 bcfd in 2022. About 8% of the gas consumed in or exported from the United States comes from Canada. Meteorologists forecast the weather would remain mostly near normal from June 16-22 before turning hotter than normal from June 23-July 1. With warmer weather coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 93.2 bcfd this week to 96.0 bcfd next week and 101.8 bcfd in two weeks. The forecasts for this week and next were similar to Refinitiv's outlook on Thursday.

Emerging gas production areas helping fill in for stalled Marcellus-Utica growth - S&P Global -Constrained pipeline infrastructure is providing a check on Northeast gas production, but is not affecting the overall US gas market, which has seen heady production growth from some private players elsewhere and new activity in non-core areas, an official with Macquarie Energy said June 13. At the end of 2022, "we think that production was really much stronger than what people probably appreciate," said Kevin Little, managing director, Macquarie Energy, speaking at the 2023 LDC Gas Forum Northeast in Boston. "If we're correct, this 103-Bcf/d level that we think we reached at the end of 2022 represents about 7 Bcf/d of year-on-year growth," Little said. "That would be the strongest growth rate that the markets achieved since 2018 and 2019." After the growth trajectory in Marcellus and Utica gas production from 2005 to 2019, Little noted that production there has generally stagnated amid major infrastructure permitting challenges out of the Appalachian Basin. Multiple longhaul projects stalled amid legal battles or state permitting struggles. But US production still hit highs in late 2022 continuing into the first quarter of 2023, Little said, with the investment and growth transitioning south, to other areas like the Permian, the Haynesville and South Texas. Amid strong gas prices, there was a market response and "some really spiky runs from some private producers," Little observed. For instance, he offered the example of three private producers in the Haynesville that combined added 1.1 Bcf/d in late 2022 and into 2023. Little also called attention to emerging activity in non-core areas "where we haven't traditionally thought about gas production" -- for example, the Dorado, in the southwest Eagle Ford in Webb County, Texas, near the border of Mexico. After EOG Resources announced a dry gas discovery in that area in November 2020, the rig count in the area rose to 20, as other producers sought to replicate the company's well performance in the area, he added. "At one point, Webb County was the busiest county in the entire Eagle Ford in 2022." Further, Little pointed to recent strong production results in Robertson and Leon counties in the Western Haynesville play in Texas by Comstock Resources. The resource has been previously known but thought to present equipment and cost challenges because the depth of the gas. "This will be an emerging resource base over time," he said. At the same time, Little cautioned that some of the growth may be misaligned with the timing of adding US LNG export capacity, which could rise to 25 Bcf by 2027 or 2028. "So, 2023 is a little bit of a gap year , if you will, for the market, but we think that extends into 2024," he said. Along those lines, he also tallied 12 Bcf of new pipeline capacity that is being added to bring supply from basins -- excluding Marcellus and Utica -- to the Gulf Coast, targeting the LNG market. "The growth story from an LNG perspective is real," he said. "There's just a little bit of a mismatch in terms of the timing of these midstream expansions coming on," as well as the overall pipeline capacity planned. But Little asserted it will be necessary unlock Marcellus and Utica production for the US to meet the potential to help shave global CO2 emissions. Looking beyond 2030 and 2040, "we need to not have the Marcellus and Utica be resource-constrained," he said. "This is the US' most economic gas basin and it could possibly be one of the most economic gas basins in the world."

Oil Spill Reported from Mississippi River Barge - An oil spill has been reported from a barge on the Mississippi River in the US. The US Coast Guard was notified about the spill from a Kirby Inland Marine barge near Natchez on Saturday evening, it said in a statement on its website on Monday. The vessel was being towed along the river at the time of the incident, in which an estimated 3,402 gallons of oil was discharged into the water. No reports of wildlife impact have been reported so far, and 800 gallons of oily water mixture had been recovered by Monday. "The Coast Guard is working diligently with Kirby Inland Marine and the Oil Spill Removal Organizations to ensure a timely and effective clean-up to mitigate any environmental impacts," Capt. Ryan S. Rhodes, commander of Sector Lower Mississippi River and federal on-scene coordinator for the incident, said in the statement. "Responders from each organization are working tirelessly to assess and remove the product from the shoreline and waterway

Natural gas production in the Permian region established a new record in 2022 - Gross natural gas withdrawals in the Permian region set an annual record high in 2022 at 21.0 billion cubic feet per day (Bcf/d), 14% above the 2021 average, according to our Drilling Productivity Report. Annual gross natural gas production in the Permian region, which extends across western Texas and eastern New Mexico, has been rising steadily for over a decade and continued to grow in the first four months of 2023.Producers in the Permian Basin respond to fluctuations in the crude oil price when planning their exploration and production activities because most of the natural gas production in the Permian Basin is associated natural gas produced from oil wells. The Permian Basin is the second-largest natural gas-producing basin in the United States, after the Appalachia Basin, which spans Pennsylvania, West Virginia, and Ohio. In the Appalachia Basin, well-drilling activity is focused on natural gas, making production less directly responsive to crude oil prices.Crude oil prices declined in 2020 as the COVID-19 pandemic reduced global oil demand. Prices averaged $39 per barrel (b) in 2020, contributing to a rapid drop in the rig count to a low of 122 rigs in August 2020 and an average of 220 rigs for the year. Later, as crude oil prices began to increase, averaging $68/b in 2021 and $94/b in 2022, so did the rig count, averaging 240 rigs in 2021 and 335 rigs in 2022. As the rig count grew, Permian natural gas production rose.As natural gas production increases in the Permian Basin, midstream pipeline companies continue to increase the region’s takeaway capacity. Companies have announced an additional 4.2 Bcf/d of new pipeline capacity will come online by the end of 2024, allowing more production to reach consumption markets and liquefied natural gas terminals on the U.S. Gulf Coast:

  • • The Whistler Pipeline Capacity Expansion is expanding compression by installing three new compressor stations on the pipeline, increasing capacity by 0.5 Bcf/d to 2.5 Bcf/d. The project is expected to enter service in September 2023.
  • • The Permian Highway Pipeline Expansion is expanding compression, increasing capacity by 0.55 Bcf/d to 2.65 Bcf/d. The project is expected to enter service in November 2023.
  • • The Gulf Coast Express Pipeline is expanding compression, increasing capacity by 0.6 Bcf/d to 2.65 Bcf/d by December 2023.
  • • Matterhorn Express Pipeline is adding 2.5 Bcf/d of takeaway capacity by the fourth quarter of 2024. The 490-mile long pipeline will transport natural gas from the Waha Hub to Katy, Texas.

Texas Natural Gas Production Slipped in March Amid Low Prices - Natural Gas Intelligence -Texas natural gas production was down 77 Bcf year/year in March, according to preliminary data from the Railroad Commission of Texas (RRC).Regulators said production was 896 Bcf in March, or about 29 Bcf/d, compared to 973 Bcf, or around 31 Bcf/d, in March of last year. Production in February was 853 Bcf, or around 30 Bcf/d.The trend of lower year/year production comes amid sagging natural gas prices after a year of booming production in 2022. Annual natural gas production in Texas last year marked a six-year high. RRC recorded combined production at 11,445 Bcf, up from 10,802 Bcf in 2021.

Texas Allowed 1 Billion Pounds Excess Emissions Over 20 Years - In the early hours of August 22, 2020, Hurricane Laura was still just a tropical storm off the coast of the Leeward Islands in the Caribbean. But effects from the monstrous storm, which would ultimately take at least 81 lives, were already being felt on the U.S. Gulf Coast. As rain poured down on the Sweeny refinery in Old Ocean, Texas, that afternoon, two processing units failed, releasing nearly 1,400 pounds of sulfur dioxide, which can cause trouble breathing, and other chemicals. Over the next few days, Laura siphoned up moisture from the warm waters of the Gulf of Mexico and transformed into a Category 1 hurricane. In Texas, chemical plants began shutting down, hurriedly burning off unprocessed chemicals and releasing vast amounts of pollution in anticipation of the storm making landfall. On August 24, Motiva’s Port Arthur refinery released 36,000 pounds of sulfur dioxide, hydrogen sulfide, and other noxious pollutants. The next morning, Motiva began purging chemicals its plant had been processing, emitting nearly 48,000 pounds of carbon monoxide and propylene, among other pollutants. The following day, a Phillips 66 refinery in southwest Louisiana shut down, releasing more than 1,900 pounds of sulfur dioxide. Then, as gale-force winds swept through coastal communities and the relentless rain poured down, the chemical facilities increasingly malfunctioned. On August 27, an overflow container at Motiva’s Port Arthur refinery flooded, causing it to spew over 1,700 pounds of pollutants. Across the border in Louisiana, a chemical plant caught fire. In Texas alone, Hurricane Laura resulted in at least an additional 680,000 pounds of pollution — almost as much as the toxic load carried on the train that derailed in East Palestine, Ohio, earlier this year. These so-called “excess emissions” — the term of art for intentional and at times inevitable pollution beyond permitted levels — don’t just happen during hurricanes. From petrochemical refineries on the Gulf Coast to oil and gas wells in West Texas, hundreds of polluting facilities routinely emit hundreds of millions more pounds of chemicals into the air than their permits stipulate. The reasons are many: when a plant unexpectedly loses power, or when a customer is suddenly unable to receive the natural gas extracted at a well, or when a valve or pump or any other piece of complex machinery malfunctions. The resulting pollution contains nitrogen oxides, sulfur oxides, and a slew of carcinogenic chemicals. Companies claim that these emissions are unavoidable. When faced with malfunctions or natural disasters, facilities have no option but to quickly shut down, which forces them to burn off the chemicals they’re processing. It is a necessary evil — or so goes the claim. Excess emissions inhabit a legal gray area. Court rulings and regulatory decisions by the Environmental Protection Agency, or EPA, in recent years have noted that these emissions are illegal, but the decision to penalize polluters largely lies with state regulatory agencies — who rarely punish companies. Between 2016 and 2022, Texas regulators found that less than 1 percent of these events were actually “excessive,” meaning they prompted corrective action. Texas’ own analysis has found that it pursues penalties and monetary fines in just 8 percent of cases. The lack of enforcement has left environmental advocates dumbfounded.

EIA Sees Record U.S. Shale Output Despite Slow Growth - The biggest U.S. shale regions are expected to produce a record-high level of crude oil in July, but growth is sputtering and set to be the slowest since December 2022, data from the Energy Information Administration showed on Monday. The seven main shale-producing regions in the United States are expected to pump 9.375 million barrels per day (bpd) of crude oil next month, a record high, according to estimates in the EIA’s Drilling Productivity Report. While output could reach an all-time high, it would be only 8,000 bpd higher than the estimated June crude oil production of 9.367 million bpd. The Permian, the top-producing region, is set to see only a 1,000-bpd increase in output, although July production is expected at a record 5.763 million bpd. The rise in output would be the smallest in the Permian since February 2023. The Bakken region will lead the gains with crude oil production set to rise by 7,000 bpd from June to 1.214 million bpd in July. The estimated production from the shale basin in North Dakota and Montana would be the highest since November 2020, according to EIA’s forecasts. While small gains are expected in the other regions, the Eagle Ford is expected to see its crude oil production drop by 5,000 bpd to 1.117 million bpd, which would be the lowest output level since April 2023. In natural gas output, the Permian will lead gains in July, followed by the Bakken and Appalachia, while output in the Anadarko and Eagle Ford basins is set to decline next month compared to June, according to the EIA estimates. Over the past five weeks, the total number of active drilling rigs in the United States has dropped by 53, Baker Hughes data showed on Friday. The total rig count fell to 695 last week—38 rigs below this time last year. The current count is 380 fewer rigs than the rig count at the beginning of 2019, prior to the pandemic.

US judge orders Enbridge to shut down portions of Wisconsin pipeline within 3 years (Reuters) - A U.S. judge has ordered Canadian energy company Enbridge to shutter portions of an oil pipeline that runs through tribal land in Wisconsin within three years and to pay the tribe nearly $5.2 million for trespassing plus a portion of its profits until the shutdown is completed. U.S. District Judge William Conley issued the order on Friday in Madison. The judge's action came just over a month after the Bad River Band told him an immediate shutdown was needed following heavy spring rains that eroded a riverbank protecting the pipe. The pipeline carries 540,000 barrels of oil per day from Canada through the Great Lakes region. An Enbridge spokesperson said on Saturday the company plans to appeal the judge's order. In the ruling, Conley said a sudden shutdown could lead to oil shortages and price hikes in the United States, adding that "given the environmental risks, the court will order Enbridge to adopt a more conservative shutdown and purge plan." Enbridge said in court filings ahead of the judge's action that a hasty shutdown of the pipeline was unnecessary and would cause "extreme market turmoil." The company has proposed re-routing the pipeline around the tribal reservation, but has not received federal approvals to do so. Representatives for the tribe did not immediately respond to a request for comment. The tribe has said a breach in the pipeline along the 12-mile (19 km) segment that runs through the reservation could pollute important fishing waters, wild rice habitat and potentially underground aquifers. The tribe sued Enbridge in 2019, arguing that riverbank erosion threatened a "looming disaster" that warranted removal of the pipeline and saying that the company no longer had a legal right to operate on the property after pipeline easements allowing it to use the land expired in 2013. Conley ruled last year that the pipeline was trespassing on the land but stopped short of ordering a shutdown due to public and foreign policy concerns. The judge in November said significant erosion that could cause a rupture was unlikely, but told the parties to develop a shutdown plan anyway.

Montana gas power plant can resume construction, judge rules (AP) — NorthWestern Energy will resume construction of a natural gas power plant along Montana’s Yellowstone River following a two-month delay, a company spokesperson said Friday, after a state judge revived a pollution permit for the project despite lingering concerns over its planet-warming emissions. Work on the $250 million plant near the town of Laurel was largely halted in April when Judge Michael Moses cancelled its permit and said officials had failed to adequately consider the 23 million tons of greenhouse gases it would emit over several decades. But Moses reversed his earlier order late Thursday while an appeal from NorthWestern is pending before the Montana Supreme Court. The judge cited a “changing legal landscape” that includes a new state law that eliminated a requirement for state officials to look at climate impacts from emissions. Anne Hedges with the Montana Environmental Information Center said the group was considering its next steps. Many utilities across the U.S. have replaced coal power with less-polluting natural gas plants in recent years. But the industry remains under pressure to abandon fossil fuels altogether as climate change worsens. The Montana plant would produce up to 175 megawatts of electricity. Its air permit was challenged in a 2021 lawsuit from the Montana Environmental Information Center and the Sierra Club. Moses said restoring the permit could also help avoid future cost increases to customers of Sioux Falls, South Dakota-based NorthWestern, which had warned that the construction delay would drive up the project’s price. A spokesperson for the Montana Department of Environmental Quality, Rebecca Harbage, said the agency was pleased the judge recognized his earlier ruling’s potential negative impacts on customers. Steve Krum, a Laurel resident who’s opposed to the plant, said he wasn’t surprised by the judge’s ruling after Montana legislators excluded climate change from permitting decisions. Lawmakers are “looking out for NorthWestern Energy,” Krum said. “They are giving them what they want.”

EPA has new rules for oil spill dispersants - Alaska Public Media --The EPA has updated its rules on the use of chemicals to disperse oil spills. The rules for dispersants were last updated in 1994. That was just five years after a dispersant called Corexit was used in response to the Exxon Valdez oil spill in Prince William Sound. It was a highly controversial decision at the time, and the controversy arose again in 2010, when greater volumes of dispersants were deployed on the Deep Water Horizon spill, in the Gulf of Mexico. Dispersants may break up an oil slick, sparing some birds and wildlife at the surface, but may increase the oil contamination for species that live lower in the water column. The toxicity of dispersants themselves is also a concern for cleanup workers and other wildlife. A group of Alaskans filed a lawsuit in 2020 to force the EPA to rewrite the rules to take into account research on the long-term effects of dispersants in Prince William Sound and elsewhere. The new rules revise the testing protocols before a chemical can be added to the list of approved products, require public notification of dispersant use and require more disclosure of the impacts on health and the environment. They go into effect in December.

U.S. Officials Call Alaska LNG ‘Critical Piece’ in Japan, Korea Alliance - U.S. officials are continuing to pitch the Alaska LNG project as a key part of the country’s partnership with allies in Asia.U.S. Senator Dan Sullivan (R-Alaska) earlier in the month met with government officials and private firms in Japan and Korea to discuss collaboration between the countries, specifically around energy security.Like several other U.S. officials visiting Asia over the last few months, Sullivan highlighted the benefits of investing in the 2.6 Bcf/d liquefied natural gas project long-prosed in his state.“Alaska has a stellar, 50-year, uninterrupted record of exporting LNG to Japan,” Sullivan said. “It is a seven-day...

Canada, Ohio add drilling rigs; US total slips again | Oil & Gas Journal -- Canadian drilling activity continued to climb, adding 23 rigs this week after having added 39 last week. Working rigs in Canada now total 159, up 3 from a year ago, Baker Hughes Inc. reported Friday. The US, however, lost 8 rigs this week (all land), bringing its total to 687, 53 below year-ago levels. It was the seventh week in a row the US rig count slipped. Offshore drilling remained flat at 20 rigs working in US waters this week, but up 4 from the 16 working the same time last year. The number of US rigs drilling for natural gas decreased by 5 to 130 units this week. Oil drilling fell by 4 rigs to 552. Five rigs were unclassified, up one from last week. There were 52 US directional drilling rigs active this week, 1 more than the previous week; horizontal drilling decreased by 10 units to 615, while vertical drilling increased by 1 rigs to 20. Texas and Colorado drilling was flat this week at 347 and 16 units, respectively. New Mexico lost four rigs to drop to 104 and Ohio added three to reach 13.

TC Energy Closely Monitoring Wildfire Situation -TC Energy announced this weekend that it is closely monitoring the wildfire situation in Western Canada and associated evacuation alerts/orders. “Our priority is always the safety of our workers, their families, local and Indigenous communities, and first responders,” the company said in a statement posted on its website. In the statement, TC Energy noted that it is providing support and remaining in close contact with a number of TC Energy employees and their families who were forced to evacuate from the Edson, Alberta, area on Friday night. “We continue to monitor this dynamic situation closely and the potential impact to our employees who live and work in the area,” the company said in the statement. “As a precaution, employees are not being deployed to facilities near active wildfires unless necessary. These facilities are monitored 24/7 remotely and operations can be halted, as required,” the company added. TC Energy also highlighted in the statement that it has completed the controlled and safe shutdown of two compressor stations on its NOVA Gas Transmission Ltd. (NGTL) System and a gas storage facility, which it noted are in close proximity to active wildfires in the Edson area. “Other sections of the NGTL system and other pipeline systems continue to operate safely and we continue to monitor the situation closely,” the company said. “Our regional operations team continues to support various activities in response to the wildfires and we continue to work closely with local authorities and Alberta Forestry,” TC Energy added.

Frack Free BC brings anti-fracking campaign to Vernon - Members of Frack Free BC are spreading their message in Vernon this week. The coalition of environmental groups seeks to raise awareness and apply pressure on the provincial government to end fracking in B.C. "In addition to being B.C.'s largest carbon polluter, fracking is the only industry in B.C. that is permitted to extract billions of litres of fresh water from local lakes and rivers, pump it full of toxic chemicals, and dispose of it untreated," the group says. Jason Hjalmarson and Peter McCartney of the Wilderness Committee will be in Vernon Wednesday through Sunday to provide information and answer questions. Wednesday, they will hold a pub night at 1516 Pub & Grill, starting at 7 p.m. They will share a short presentation. Thursday, a free screening of the documentary Fracking the Peace will be shown at the Vernon library. The film follows people whose lives, water, and land have been changed by fracking. Doors open at 6 p.m., event begins at 6:30. On Friday, the Vernon Frack Free BC team will be at the Polson Night Market, from 4 to 8 p.m. with a petition to asking government to stop fracking in the province. Saturday, they'll also be at the downtown Vernon Sunshine Festival. Sunday, they'll be at the Sustainable Environment Network Society EV car show at the Kal Tire administrative offices parking lot on Kal Lake Road, 11 a.m. to 2 p.m. They'll also be canvasing neighbourhoods after that.

U.S. to Support LNG Exports to Poland with $500M Guarantee - The Biden administration has agreed to provide $500 million in guarantees for Poland’s PKN Orlen SA to provide more domestic LNG for European countries working to replace Russian natural gas.The U.S. International Development Finance Corp. (DFC) board approved a plan to back the Polish utility’s hedges for liquefied natural gas with a European unit of Goldman Sachs. The plan would “facilitate higher volumes of U.S. LNG imports” to Poland, according to DFC’s draft statement. “The project is expected to have a positive but limited development impact in Poland by helping to address the country’s growing demand for natural gas after Russia, which accounted for approximately 55% of Poland’s gas imports and 42% of total gas supply, halted gas exports to the...

Grain LNG Terminal Posts Nearly 103,000GWh in New One-Year High --The United Kingdom’s Grain liquefied natural gas (LNG) terminal made a domestic grid contribution of 102,589 gigawatt hours in the 12 months to May, hitting a new utilization record of nearly 45 percent, the operator said. The total sendout from June 2022 to May 2023 is equivalent to almost 14 percent of total gas demand in Great Britain, the National Grid Group PLC said in a press release Monday. The Isle of Grain facility also unloaded 111 ships over the same period, “demonstrating its continued global reach and operational capabilities”, said the electricity and gas supplier, which also operates in the USA. National Grid earlier posted a record number of ships berthing at Grain LNG from April 2022 to March 2023. The terminal saw 102 vessels berth during the period, breaking the previous high of 71 ships, in 2019-20, the London-headquartered owner said April 5. Grain LNG can hold about 35.31 million cubic feet (MMcf), making it the biggest in Europe in terms of storage capacity. The European Union’s largest in terms of storage capacity, the Barcelona LNG Terminal, can hold up to an estimated 26.84 MMcf, according to the latest European Commission data, published December 20. “For our customers, Grain LNG provides the ability to store the gas and send it out when the market conditions are right”, Grain LNG terminal import manager Simon Culkin said in Monday’s announcement. “With the ability to swing from minimum to maximum flows within a short period of time, it is also an ideal partner to intermittent renewables”.

Cuadrilla given another two years to return Little Plumpton fracking site --Fracking firm Cuadrilla has been given another two years to fully restore its controversial exploration site in Fylde to its former use as an unremarkable field.The plot, off Preston New Road in Little Plumpton, became the focus of semi-permanent protest after the government gave the green light for test drilling in October 2016. Work began the following April and – under the planning permission granted – the company was required to complete all decommissioning and restoration activity within a period of 75 months.However, Lancashire County Council’s development control committee has now agreed to a request from Cuadrilla to push back what would have been a deadline of next month until July 2025. No further fracking will be allowed to be carried out during that extended timeframe.In a meeting on Thursday morning, committee members were split over the proposal, which had been recommended for approval by County Hall planning officials who had described the delay as “unfortunate”, but concluded that it was acceptable.Fylde MP Mark Menzies and Fylde Borough Council had both objected to the plans, along with Fylde West county councillor John Singleton and 84 members of the public.A demonstration was staged outside County Hall ahead of and during the meeting by Nanashire – Nanas Against Fracking – and Preston New Road Rolling Roadside Protest.In his objection, Mr. Menzies said that there had been “adequate time”to restore the site, but suggested that Cuadrilla had not done so in the “hope that there will be a change of government policy”.Friends of the Earth made a similar charge, stating that the firm had “not accepted the reality of national policy”.

Analysts Warn Rising European Natural Gas Prices ‘Mask’ Overall Soft Demand – LNG Recap - Global natural gas prices are starting to tick upward once again as maintenance events and warmer weather appear to signal more demand for LNG, but analysts are warning a bearish summer could still lie ahead.After sliding for several weeks to the lowest points since 2021, prompt Asian and European prices began to rally again last Friday as traders started to weigh supply risks. Planned maintenance in both Norway’s prolific gas fields and across Gulf Coast liquefied natural gas terminals could take some volumes off the market as Europe faces a heat wave. The prompt Dutch Title Transfer Facility (TTF) eclipsed the $12/MMBtu mark for the first time since early May. It was trailed by Asian prices, which have remained around $9/MMBtu since last week.

Reports: CIA Told Ukraine Not to Bomb Nord Stream Pipelines - Several Western media outlets reported Tuesday that the CIA warned Ukraine last year not to bomb the Nord Stream natural gas pipelines that connect Russia and Germany. In recent months, US and other Western officials speaking to the media have suggested Ukraine was behind the Nord Stream sabotage. Most reports on the issue have ignored or dismissed the fact that journalist Seymour Hersh has sources who said President Biden ordered the bombing of the Nord Stream pipelines.According to unnamed US officials speaking to The New York Times,Dutch intelligence officials told the CIA in June 2022 that they learned of a Ukrainian military plot to attack the pipelines. The CIA then warned Ukraine not to carry out the attack, and US officials now believe it was postponed to September 2022.A European official told the Times that Ukraine’s original plan involved Ukrainian special forces renting a submersible vessel to attack the pipelines. The CIA was also said to warn Germany about a potential plot to sabotage Nord Stream.The latest Nord Stream allegations were first reported by the news outlet Die Zeit and NOS, a Dutch broadcaster. They claimed that the Ukrainian plot was overseen by Valery Zaluchny, the commander-in-chief of Ukraine’s armed forces.For his part, Ukrainian President Volodymyr Zelensky denied Kyiv was involved in the destruction of the pipelines. “I am president, and I give orders accordingly,” he said. “Nothing of the sort has been done by Ukraine. I would never act that way.”The idea that the US suspected Ukrainian involvement in the Nord Stream bombings first surfaced in a New York Times report that was published on March 7. Sources told Seymour Hersh that the report was a cover-up planted in the paper by the CIA to discredit his story that points the finger at President Biden.Hersh’s reporting on the Nord Stream plot hasn’t been confirmed, but the US is still a prime suspect as it had a clear motive and US officials made threats against the pipelines. On February 7, 2022, President Biden vowed to “bring an end” to the Nord Stream 2 pipeline if Russia invaded Ukraine.A few weeks earlier, Victoria Nuland, undersecretary of state for political affairs, made a similar threat. “If Russia invades Ukraine, one way or another, Nord Stream 2 will not move forward,” she said.

Shell Prioritizing LNG, Upstream Ventures – and Shareholders – in Revamped Capital Plans - Natural Gas Intelligence --Investments in low-emission technologies are taking a backseat to Shell plc’s Integrated Gas arm, as LNG prospects show promise for years to come, the executive team said Wednesday.Speaking during a Capital Markets Day at the New York Stock Exchange, CEO Wael Sawan said the London-based integrated major is tilting toward buffing up the Integrated Gas portfolio, which includes LNG, as well as the Upstream unit aimed at natural gas and oil production.“We are investing to provide the secure energy customers need today and for a long time to come, while transforming Shell to win in a low-carbon future,” Sawan said. “Performance, discipline and simplification will be our guiding principles as we allocate capital to enhance shareholder distributions, while enabling the...

Shell to put profits above clean energy as oil boss signals the speed to green will slow - Shell is set to scrap a target to reduce oil output by 1 to 2 per cent per year, its chief executive will tell investors next week. The energy group will keep oil output steady or slightly higher for the rest of the decade as part of chief executive Wael Sawan’s efforts to regain investor confidence as the energy firm wrestles with poor returns from renewables while oil and gas profits are booming. Mr Sawan, who took control of Shell in January with a vow to improve its financial performance as its shares lag rivals, will tell investors in New York this week that oil and gas will remain central to Shell for years to come, insisting that efforts to shift to low-carbon businesses cannot come at the expense of profits. He is expected to argue that world’s growing demand for fossil fuels has changed the rate and extent to which it can transition to cleaner energy. Shell produced around 1.5 million barrels per day (bpd) of oil in the first quarter of 2023, down by 20 per cent from 2019 production of 1.9 million bpd. It reported profits of almost £7.7bn ($9.65bn) for the same period amid soaring oil and gas prices. Output is now expected to remain flat and could slightly rise by the end of the decade depending on whether new projects meet profit thresholds as well as on the success of exploration activity, particularly in Namibia. The move is seen as a way of satisfying shareholders who want the company to pay out greater dividends. Returns from oil and gas typically range between 10 to 20 per cent and 5 to 8 per cent for solar and wind projects, experts say. It will anger climate-focused investors who want to see its record profits used to speed up the transition to renewable energy rather than slow the progress. Last month Shell security staff were forced to protect Mr Sawan and other board members when climate activists tried to rush the podium at its Annual General Meeting.

Shell Under Fire For Doubling Down On Oil And Gas -Institutional investors in Europe are disappointed with Shell’s new strategy to continue investing in oil and gas production and selectively pour capital into renewable energy solutions, to the point of some investors considering removing it from their portfolios.Earlier this week, Shell laid out plans to raise its dividend by 15%, effective from the second quarter 2023 interim dividend, as the UK-based supermajor pledged to grow its gas business and extend its position in the upstream.“It is critical that the world avoids dismantling the current energy system faster than we are able to build the clean energy system of the future. Oil and gas WILL continue to play a crucial role in the energy system for a long time to come with demand reducing only gradually over time,” Shell’s chief executive Wael Sawan said on Shell’s Capital Markets Day on Wednesday.“Continued investment in oil and gas is critical to ensure a balanced energy transition,” Sawan added in the pivot to ensure today’s energy needs, similar to what BP announced earlier this year.Shell will continue to be committed to oil and gas, with a focus on LNG growth, where it is the world’s leading trader, the company’s top executives said, but also reiterated the commitment to net-zero emissions by 2050.But fund and pension managers in Europe are unhappy with Shell’s new strategy. The UK’s largest fund manager, Legal & General Investment Management (LGIM), will ask Shell to detail how it plans to reach net zero by 2050 if it grows its upstream and LNG businesses.“There is a sense that oil and gas companies want to keep their options open in case the world misses the net zero by 2050 deadline,” Stephen Beer, senior manager for sustainability and responsible investment at LGIM, told Bloomberg in an interview. Another institutional shareholder, the Church of England Pensions Board, is now “reviewing our remaining investments in the company,” Laura Hillis, director for climate and environment at the Church of England Pensions Board, told Bloomberg.

NT chief minister sees room for gas fracking in road to net-zero - The Northern Territory’s Labor government has hit out at critics of the Middle Arm Sustainable Development Precinct after confirming that a controversial gas fracking hopeful and two green hydrogen projects had been allocated big parcels of land on the doorstep of Darwin Port.Chief minister Natasha Fyles said “a lot of nonsense gets sprouted” about the precinct where, as foreshadowed by The Australian Financial Review, five parcels of land have been set aside for Andrew Forrest’s Fortescue Future Industries and French oil and gas major Total with green hydrogen projects, Tamboran Resources, vanadium play Tivanand phosphate-focused Avenira.Tamboran, aiming to develop the giant Beetaloo Basin gas field through fracking, said on Friday that the NT government had granted it exclusivity over 170 hectares on the precinct for a proposed LNG development.Despite Tamboran’s involvement, Ms Fyles continued to talk up the green credentials of the precinct, saying: “This is what responsibly decarbonising and diversifying our economy looks like.”Tamboran chief executive Joel Riddle said securing the strategic site was a milestone in plans to deliver large volumes of gas from the Beetaloo Basin to East Coast and international markets.Traditional owners in the Beetaloo Basin represented by the Nurrdalinji Aboriginal Corporation have called on the Albanese government to withdraw $1.5 billion in funding for the port and other facilities at the precinct because of Tamboran’s involvement.The NT government said a carbon capture utilisation and storage hub would be developed on the precinct to mitigate emissions from existing and future natural gas processing. It said this would accelerate low-emission industry development, including hydrogen production.

‘Who stole our oceans?’: Campaign under way to ban fracking - The ‘Who Stole Our Oceans’ campaign is an environmental and social justice campaign launched by The Green Connection in 2020, in a bid to protect oceans for future generations, with a particular emphasis on opposing offshore oil and gas exploration. The Rural Action for Climate Resilience (RACR) spoke to Neville Van Rooyen, Community Coordinator of Green Connections who explained about the campaign. “The organisation has started a campaign, ‘Who stole our Oceans’, in an attempt to ban fracking in the ocean, which is the process of drilling, using high-pressure fluid injections to shatter rocks and extract natural gases, releasing methane, a greenhouse gas more potent than carbon dioxide.” As part of the campaign, ‘Who Stole Our Oceans’, The Green Connections, together with civil society organisations oppose seismic surveys of the West Coast.“ According to Van Rooyen the livelihoods of the fisher-folk communities surrounding the Northern Cape Coastal Villages and the West Coast are bearing the brunt of fracking and drilling in the ocean by big corporate companies. The fish are becoming scarcer with every day that passes. He told to RACR that the fishermen are required to sail deeper into the ocean, to acquire an adequate number of fish to make ends meet. They do not always have the appropriate equipment to fish deeper in the oceans. “We believe our ocean must be kept clean and safe for our people because our cultural association with the ocean runs deep and has for many years.” said Van Rooyen. “Our fisherfolk communities know nothing other than fishing and their lives are built thereon,” said Van Rooyen. He further stressed that an oil leak in the ocean would not only negatively affect the fisherfolk community but also the biodiversity. “An oil leak does not only affect the quality of marine life but can also be lethal,” he said. The Green Connections Co-ordinator believes there are alternative development methods, that are not harmful to the environment and do not negatively impact people’s livelihoods. He adds that renewable energy is an alternative to oil and gas which is detrimental to the environment and contributes to climate change. “These massive oil companies dump their toxic chemicals into the oceans, destroying marine life, the ecosystem, and the livelihoods and well-being of the fisherfolk communities,” Van Rooyen told RACR. Green Connections oppose offshore oil and gas exploration. “Shell has tried to carry out seismic surveys along the biodiversity-rich wild coast, where many coastal communities depend on the ocean for their livelihoods,” said Van Rooyen, adding that Green Connections has successfully taken legal action to interdicted searchers from starting seismic surveys on the west coast. Devine Witbooi, a resident from Lutzville, in the West Coast told RACR that many people from Lutzville rely on the fish trade as a source of income. “Losing this source of income, increases poverty in the community and leads to many social ills,” said Witbooi. “Greed drives many of these companies. They exploit and destroy biodiversity and the people who bear the brunt of the harshest conditions of climate change, are people in rural communities,” Witbooi added.

How the gas flares in Nigeria are fuelling a health crisis - - Tom Brown and Christina Last write for The Telegraph about Nigeria’s oil-rich south, where companies are burning off so much excess gas it's enough to power the whole of sub-Saharan Africa.In Nigeria's oil-rich city of Port Harcourt, gas flares belch toxic pollutants into the air, enveloping the area in a suffocating and hazardous environment. Over 230,000 people reside within two kilometers of these flares, enduring exposure to the resulting black fumes and toxins. Gas flaring, a practice employed by companies to burn off natural gas during oil drilling, not only wastes a valuable resource but also contributes to environmental devastation and health crises. The prevalence of birth defects in Port Harcourt is alarmingly high, and air pollution levels exceed recommended safety limits, causing respiratory problems and long-term health issues.“Flaring activity should be put behind us, but up to this date, nobody has been able to do that,” says King Johnson Ologho Erieyowe, a community leader who lives on the outskirts of a mangrove forest in the Delta. “It is a long battle.”Gas flaring poses a significant threat to public health. In addition to causing respiratory and other health issues locally, the flares release massive amounts of methane and CO2 into the atmosphere, contributing to climate change and exacerbating the global warming crisis. The resulting environmental havoc affects not only local communities but also has far-reaching consequences for people worldwide.Read more at The Telegraph.

India: Authorization And Declaration Of Natural Gas Pipelines - Natural Gas Pipelines are, without a doubt, critical infrastructure. A robust pipeline infrastructure is necessary to ensure efficient delivery of natural gas to its industrial users and consumers. For more reasons than one, it is crucial to ensure that pipeline infrastructure is accessible to large numbers and redundancy is avoided. It only requires little imagination to understand the consequence if access to pipelines was controlled wholly by the owners, who are likely to be organizations with deep pockets and who may or may not engage in practices not conducive to competition and fair play. This is a complex issue, especially given that petroleum and natural gas marketing and distribution was initially confined only to a few public sector undertakings and thereafter included a few private players, and merits a separate study.The Petroleum and Natural Gas Regulatory Board ('The Board') was established under the PNGRB Act through a notification by the Central Board on October 1, 2007 ('appointed day'). The Board regulates the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas, excluding the production of crude oil and natural gas. This write up draws focus on the process involved in authorization and declaration of a 'natural gas pipeline' under the 2008 Regulations.Any entity that intends to lay, build, operate or expand a pipeline as a 'common carrier' or 'contract carrier' is required to obtain authorization under the PNGRB Act, by applying in writing to the Board. The PNGRB Act grants certain powers to the Board, including the power to declare an existing pipeline as a 'common carrier' or 'contract carrier' and regulate such a pipeline. The authorization in respect of a pipeline as granted by the Board to an entity, determines its status and the charges and tariff rates applicable to it. Therefore, the legal status of a natural gas pipeline is relevant.The write up discusses the procedure of authorization and declaration of a natural gas pipeline as a common carrier or a contract carrier and the consequences that may follow if such procedures are not being followed or adhered to by the entities or the Board. The authorization and declaration of City Gas Distribution ('CGD') network and the technical criteria for the determination of a pipeline as a common carrier or contract carrier is outside the scope of this write up.

Deadly Cyclone In India Halts Fuel Exports And Operations At Offshore Rigs --A severe cyclone off India’s western coast has suspended oil product exports from one port and halted operations at offshore oil platforms and other ports as authorities are evacuating people from coastal areas where the tropical cyclone Biparjoy in the Arabian Sea has already claimed seven lives.Biparjoy is expected to make landfall on Thursday between Mandvi in India’s western state of Gujarat and Karachi in Pakistan.Many offshore oil and gas platforms are located off Gujarat, which is also home to several major ports. Most of those have had to halt operations ahead of the cyclone.India’s large private refiner Reliance Industries, which operates the largest refining hub in the world, Jamnagar, was forced to halt exports of diesel and other refined petroleum products from the port of Sikka, due to the cyclone, traders toldReuters on Monday.Reliance Industries has declared a force majeure on petroleum product exports from the port of Sikka, it wrote in a letter to traders cited by Reuters.The refinery at Jamnagar, capable of processing 704,000 barrels per day (bpd) of crude, is a key diesel exporter from India. In recent months, Europe has raised its imports of refined petroleum products from Asia after the EU banned imports of seaborne Russian oil products as of February 5. On Monday, Indian Coast Guard airlifted 11 personnel from the jack-up rig ‘Key Singapore’ operating off Dwarka to Okha off Gujarat. By Tuesday morning, all 50 personnel have been evacuated from the rig, the Indian Coast Guard said.

India's Infinite to Build Oil Refinery in UAE: State Media --Indian company Infinite Mining & Energy will expand operations in the United Arab Emirates (UAE) by building a multifunctional oil refinery in the Hamriyah Free Zone in Sharjah, according to a report from the Emirates News Agency. The new facility will have a production capacity of 10,000 barrels per day and an annual refining capability of 3.6 million barrels, the state-owned news agency said. Under the agreement between Infinite and the Hamriyah Free Zone Authority (HFZA), Infinite will lease a plot of land measuring 200,000 square feet in the free zone for the facility. The expansion project, which would double Infinite’s investment in the free zone, will significantly increase the company’s storage capacity and help meet the growing demand for its services and products, the report said. The expansion “reinforces HFZA’s appeal and significance in the oil, energy, and various other sectors”, the report quoted HFZA Director Saud Salim Al Mazrouei as saying. "Infinite’s new facility will be a significant addition to the emirate's burgeoning economic landscape through its production volume, which caters to the demand for energy products and derivatives for both existing and future industrial projects." Al Mazrouei highlighted the favorable investment climate that HFZA offers to energy and oil investors. “This strategic positioning supports import and export operations for our investing companies, offering easy access to major markets. Coupled with our range of distinguished services, state-of-the-art infrastructure, world-class logistics services, and facilities, we have grown to become the second-largest petrochemical center in the country”, he said. Infinite began operations in the Hamriyah Free Zone in 2018, noted Infinite Managing Director Bilal Merchant. “HFZA’s strategic geographical location aligns perfectly with our company's specialties in the petrochemical, metallurgy, and energy sectors, enabling us to maintain direct interactions with leading manufacturers both locally and globally”, Merchant said. According to the HFZA website, the Hamriyah Free Zone has an oil and gas zone spanning more than 49.5 million square feet (4.6 million square meters) and offers a host of integrated solutions for upstream, midstream, and downstream projects. The zone is also the second-largest petrochemical hub in the UAE.

Brazil Gears Up To Become Fourth Largest Oil Producer -For nearly two decades, South America’s largest economy Brazil has been reaping a tremendous economic windfall from a massive oil boom that kicked off with the first offshore ultra deep-water pre-salt discovery in 2006. The boom nearly collapsed as corruption, mismanagement and malfeasance saw national oil company Petrobras laden with so much debt it was almost forced to declare bankruptcy. Since then, industry reforms and rationalization coupled with higher oil prices had reinvigorated the massive fossil fuel boom underway in Brazil, although it nearly faltered for a brief moment when left-wing President Luiz Inácio Lula da Silva assumed power. There are indications that Brazil, regardless of the naysayers, is on track to become the world’s fourth-largest oil producer, which will be a tremendous boon for the economy. Data from Brazil’s hydrocarbon regulator, the National Agency of Petroleum, Natural Gas and Biofuels (ANP – Portuguese initials), shows that for April 2023, the country pumped an average of 3.1 million barrels of oil per day. That number is almost 1% higher than a month earlier and 5% greater year over year. Total hydrocarbon output for April 2023 amounted to just over 4 million barrels of oil equivalent per day which was 1.1% higher month over month and 4.4% greater than a year earlier. Those numbers represent a modest recovery after a March 2023 slump because of rising industry concerns that Lula will take a more interventionist approach to Brazil’s oil industry. That growth indicates Brazil possesses the potential to become the world’s largest oil producer, especially when it is anticipated the country 2023 will add 300,000 barrels per day, taking production to 3.4 million barrels daily by the end of the year. During 2022, Brazil was ranked ninth globally by oil production, ahead of Kuwait and behind Iran, lifting an average of just over 3 million barrels per day. Suppose Latin America’s largest economy is to become the world’s fourth-largest oil producer. In that case, it will need to be pumping more than 4.5 million barrels of crude oil per day so as to overtake Canada, which currently holds that spot. Brazil’s energy ministry expects the country will be pumping 5.4 million barrels daily by 2029, which is a whopping 80% higher than the 3 million barrels of oil lifted daily during 2022. Consistent year-over-year growth in hydrocarbon production indicates that Brazil indeed possesses the potential to expand production and become the world’s fourth-largest oil producer. Such a massive leap in oil output will be driven by expanding pre-salt oil production, which Brazil’s energy ministry believes will eventually be responsible for 80% of the country’s hydrocarbon output compared to around 77% at this time. For that to occur, there must be a significant increase in production which can only occur if energy investment and drilling expand substantially. The energy ministry hopes to stimulate this through a plan called the Potencializa E&P programme, the main tenets of which are to encourage investment in frontier, commercially marginal and mature oil basins. There is also a push to expand spending and activity on onshore drilling in Brazil, with news agency Reuters pointing out that small to medium-sized energy companies planning to invest $7.7 billion in onshore operations between now and 2029.

Russia Turns Oil Tap for North Korea Back On -Russia has resumed sending oil to sanctions-hit North Korea for the first time since 2020, deepening cooperation between the two nations that the US claims also includes sending arms from Pyongyang to help the Kremlin’s war in Ukraine. A report released this week from a United Nations sanctions committee said Russia began sending refined petroleum products to North Korea in December 2022, which has continued into 2023. The shipments had been halted in about October 2020, the data showed, but Russia has sent about 67,000 barrels of oil since it restarted the flow. The resumption of oil shipments comes as cooperation between the long-time partners has picked up in recent months, raising concerns that both nations may be evading sanctions in a partnership that helps North Korea’s beleaguered economy and funnels arms to Russian President Vladimir Putin for his attack on Ukraine. Russia and North Korea appeared to have resumed trade over their sole rail link late last year, according to satellite images published by the 38 North website. The link had been closed in February 2020 when Kim Jong Un sealed his borders against the emerging Covid-19 threat. “We are concerned that the DPRK is planning to deliver more military equipment to Russia,” a US State Department spokesperson told Reuters on Tuesday, referring to North Korea by its official name. The State Department didn’t respond to a request for comment after normal business hours. The US in recent months has accused North Korea, which has backed Russia’s invasion, of sending arms and ammunition to aid Putin’s war, including shells and rockets. Pyongyang has dismissed the claims as groundless rumors. One thing Kim’s regime has in abundance is weaponry, especially the Soviet-era artillery experiencing a revival on the frontlines of Ukraine. North Korea possesses stores of munitions to supply what the International Institute of Strategic Studies estimates is an arsenal of more than 21,600 artillery pieces, a force that has for decades held Seoul under the threat of devastation. While the Biden administration said the weapons won’t do much to alter the battlefield, the sales would open a stream of revenue to a North Korean state isolated from much of world trade.

Russia’s Oil Production In April Down By 100,000 Bpd To 9.6Mln Bpd - OPEC Report - Oil production in Russia in April decreased by 100,000 barrels per day month-on-month to 9.6 million barrels per day, according to a fresh report by OPEC released on Tuesday. OPEC said in May that Russia's oil output in March stood at 9. 7 million barrels per day. "Russia's liquids production in April fell m-o-m by 176 tb/d to average 10.9 mb/d. This includes 9.6 mb/d of crude oil and 1.4 mb/d of NGLs and condensate," the report said.

Oil spill in Russia's Irkutsk region prompts emergency, clean-up efforts-(Xinhua) -- A state of emergency has been declared in Kirensky District of Russia's Irkutsk region, where an oil spill occurred after two tankers collided on the Lena River on Monday evening, regional governor Igor Kobzev announced on Tuesday via social media. According to Kobzev, one of the tankers, Erofey Khabarov, was carrying 832 tons of gasoline and sustained damage to one of its tanks, which held 138 tons of fuel. The crew managed to pump the remaining gasoline into another tank and install a fence boom around the vessel to contain the spill. The second tanker, TR-901, was under repair and did not carry any cargo. Kobzev said that the authorities were assessing the volume of oil products that got into the river and working to prevent water intake from the river by downstream settlements. He added that the situation is complicated by the fact that the river is navigable and there are 11 settlements in the area that may be affected by the spill. The East Siberian Transport Prosecutor's Office said that a commission has been appointed to investigate the causes of the accident and evaluate the environmental damage. The owners of the vessels are being questioned and may face administrative or criminal charges.

Oil removal from tanker to be completed by June 19 — The removal of the remaining fuel oil from the sunken MT Princess Empress off Oriental Mindoro is expected to be completed on June 19, Rear Adm. Armand Balilo, spokesperson for the Philippine Coast Guard (PCG), said on Saturday. “Hopefully we can beat the target or we can beat the deadline by June 19 to end that oil spill,” Balilo told a news forum in Quezon City. Balilo said the siphoning operations began on May 29 with the help of the Fire Opal, a diving support vessel from the Malayan Towage and Salvage Corp. “There is a hose attached and being brought to the tanks inside the ship and [the oil] is being siphoned out, and hopefully, by June 19, the siphoning operations will be finished,” he added. The PCG official said the oil could no longer spread to areas near the site of the sunken oil tanker as personnel used a catch can to contain and collect the seepage.“There’s a catch can where the leaking oil go and the oil gathered is also siphoned to the tank of the Fire Opal,” he said. Balilo was referring to the specialized catch can, which was deployed to collect the remaining oil of the sunken tanker, which lies at a depth of 400 meters below sea level.

Stricter UAE ship insurance rules look to cut oil spill risks – WAM - Tougher requirements for some ship insurers covering United Arab Emirates ships are aimed at boosting environmental safety, the UAE state news agency (WAM) reported, amid growing concerns over unregulated shipping. The UAE’s energy and infrastructure ministry in a June 2 circular announced it would tighten insurance criteria for vessels registered under its flag for insurers that are not part of the leading International Group of ship insurers, known as P&I clubs, which cover 90% of the world’s ocean-going fleet. “By prioritising stringent P&I standards, we ensure the safety, financial security, and environmental stewardship of our maritime activities, attracting reputable investors,” Hessa Al Malek, advisor to the Minister for Maritime Transport Affairs, was quoted by WAM as saying. WAM said the move would also reduce the risk of accidents and oil spills, leading to a safer and more secure marine environment. Hundreds of “ghost” tankers, which are not fully regulated, have joined an opaque parallel shipping trade over the past few years, carrying oil from countries hit by Western sanctions and restrictions, including Russia and Iran. The number of incidents last year, including groundings, collisions and near misses involving these ships reached the highest in years, a Reuters investigation showed. The Financial Action Task Force in March 2022 included the UAE on a list of jurisdictions subject to increased monitoring, known as its “grey” list. The UAE is one of the world’s biggest maritime hubs and has also become an operating location for shipping companies who do not have top tier insurance cover or other services from the world’s biggest providers such as safety certification.

Saudi Arabia, Kazakhstan sign deal to boost energy cooperation— Saudi Arabia and Kazakhstan signed on Monday a memorandum of understanding in the field of energy. Minister of Energy Prince Abdulaziz bin Salman held a meeting in Riyadh with Minister of Energy of Kazakhstan Almasadam Satkaliyev to discuss ways of cooperation between the two countries in the fields of energy, in addition to discussing developments in the global energy market. The agreement includes encouraging cooperation in the fields of petroleum and its derivatives, gas and its derivatives, refining, petrochemicals, electricity, renewable energy, clean hydrogen, energy efficiency, storage, and development. The agreement also covers cooperation in the field of circular carbon economy and its technologies aimed at reducing the effects of climate change. The memorandum also includes the development of qualitative partnerships between them to localize materials, products and services related to all energy sectors, supply chains and technologies, cooperation in developing innovative uses of hydrocarbons in various sectors, and cooperation in energy fields related to digital transformation, innovation, cyber security and artificial intelligence.

Iran Oil Exports Hit A 5-Year High --Iranian crude exports exceeded 1.5 mb/d in May, the highest level since 2018 despite the country still being under U.S. sanctions. Last month Tehran said it has boosted crude output to above 3 million bpd, again the highest since 2018.Last week, oil prices tanked after reports emerged that the U.S. and Iran are making progress after resuming talks on a nuclear deal, a move that could ease sanctions on Iran's oil exports. Israel's Haaretz newspaper reported that the talks are moving forward more rapidly than expected, with the possibility of a deal being struck in a matter of weeks. Deal terms are likely to include Iran ceasing its 60% and higher uranium enrichment activities in return for permission to export as much as 1M bbl/day of oil.Prospects of reviving the Iran nuclear deal have swung dramatically, from near certain in March 2022 to almost nil by the end of the year and now this. Iran’s dire economic situation is likely to force its hand into eventually accepting monitoring and signing a new nuclear deal sooner rather than later, with the country’s foreign currency reserves having greatly dwindled from $122.5 billion in 2018 to a mere $20 billion in 2021 before recovering to $41.4 billion in 2022. With the rate of foreign currency-denominated capital flight out of Iran running at nearly $ 5 billion per month, Iran is not in a very enviable situation. A successful nuclear deal could change the oil markets, with former Iran oil minister Bijan Namdar Zanganeh saying that his biggest dream has always been to increase Iran’s oil output to six million barrels per day; earn $2 trillion through oil exports over the next two decades and use the income to invest in the country’s development. Iran’s current production is considerably lower than the 2018 peak at 3.7 mb/d. Boosting production from the current level to anywhere close to 6mb/d could take several years at the very least due to years of underinvestment.

Iraq Gets U.S. Approval To Clear $2.76 Billion Gas Debt To Iran The Iran-Iraq Joint Chamber of Commerce Chairman, Yahya Al-e Eshaq, announced on June 10 that Iraq has released $2.76 billion worth of Iranian funds in gas export money owed by Baghdad. Iraq received a sanctions waiver from the US to make the payment. According to an unnamed foreign ministry official that spoke with Reuters, Foreign Minister Fuad Hussein got the clearance to make the payment from US State Secretary Antony Blinken on the sidelines of the Riyadh Conference on Thursday. Eshaq told Iranian media on Saturday that the released funds will meet the Central Bank of Iran (CBI) demands and ensure the purchase of goods needed in the country. He added that the funds could significantly help stabilize the foreign exchange market. In April, Eshaq said that Tehran and Baghdad had "found several solutions to receive our debt from the Central Bank of Iraq, so Iraq’s outstanding payments to Iran will be cleared gradually within the next three to five months." The US green light to release the money comes following reports that Iranian and US negotiators recently held "proximity talks" in the Omani capital Muscat, with Omani officials going between them and passing messages. According to the sources, the talks aimed to deescalate tensions as a basis for future talks on a new nuclear agreement between the parties. After months of talks between Iran and the remaining signatories of the JCPOA, last September — under heavy Israeli pressure — the US put an end to any hope of reviving the deal. Since then, Iran has restored ties with Saudi Arabia under a Chinese-brokered deal and is reportedly working alongside Gulf countries to form a "naval alliance" to protect the northern Indian Ocean.Earlier this week, Iranian media reported that $24 billion of Iran’s frozen assets would soon be released from Iraq and South Korea.

Iran, Venezuela eye trade increase, sign petrochemical deal - Iran and Venezuela want to increase bilateral trade to $20 billion, up from $3 billion, Iranian President Ebrahim Raisi said on Monday during a visit to Caracas. During the visit the two countries signed a memorandum of understanding to expand cooperation in petrochemicals with a view to carrying out joint projects, building on their already-close cooperation in oil. "We have decided to increase the cooperation between the two countries," Raisi said through translation in a statement with Venezuelan President Nicolas Maduro after the petrochemical deal and a dozen other cooperation deals were signed. "The goal we have for commercial and economic cooperation, the first step is to take the level of cooperation to $10 billion," Raisi said. "The next step, we want to take it to $20 billion." He provided no time frame on the goal. The governments, both under U.S. sanctions, provided no details of the petrochemical deal. Venezuelan state television said the accord between Venezuelan state petrochemical firm Pequiven and its Iranian counterpart would facilitate cooperation in oil exploration and development and assess the possibility of joint projects. The countries also signed a deal to expand cooperation in mining, but provided no details. Maduro hailed Raisi's visit and the two countries' bilateral relationship and said further deals and investments were on the horizon. The Caracas visit is the first stop on a Latin American tour by Raisi, who will also travel to Cuba and Nicaragua. Iran and Venezuela signed a 20-year cooperation plan in Tehran last year, pledging partnership on oil, defense and other issues. That deal includes repairs to oil refineries in Venezuela, which has the world's largest crude reserves but has struggled to produce enough gasoline and diesel, leading to intermittent shortages that have forced drivers to queue for hours. Iran has provided fuel and diluents to convert Venezuela's extra-heavy crude into exportable varieties and since 2020 has supplied parts for repairs to the refining circuit.

OPEC Oil Output Down By 464,000Bpd Month-on-Month To 28.06Mln Bpd In May - Report - OPEC oil production decreased by 464,000 barrels per day in May � the first month of voluntary output cuts � compared to the level of April to 28.06 million barrels per day, according to its fresh report published on Tuesday. "According to secondary sources, total OPEC-13 crude oil production averaged 28. 06 mb/d in May 2023, lower by 464 tb/d m-o-m. Crude oil output increased mainly in Nigeria, IR Iran and Angola, while production in Saudi Arabia, the UAE and Kuwait declined," the report read. According to OPEC data, the alliance's compliance with the oil production cut deal was fulfilled by 252%, with the organization cutting the production by 1.9 million barrels per day on top of obligations.

Supertanker Rates Soar As Middle East Oil Shipments Jump Daily rates for chartering a supertanker to carry oil from the Middle East to Asia have soared this week to the highest since April as the number of cargoes booked this month for Middle East-Asia routes has exceeded expectations, shipbrokers and analysts have toldReuters. Refineries in Asia have mostly completed spring maintenance and are increasing run rates to meet fuel demand in the summer driving season. In addition, the number of tankers booked this month to ship crude from the Middle East has jumped to the highest so far this year, according to a tanker broker at Fearnleys, who spoke to Bloomberg this week.“The VLCC market has gone from strength to strength in the week gone by,” Fearnleys said in a weekly report on Wednesday, referring to the market of very large crude carriers (VLCC) capable of carrying up to 2 million barrels of oil.The jump in the number of tankers that have joined the so-called “dark fleet” to ship Russia, Venezuelan, and Iranian oil has additionally tightened tanker availability in recent months.What’s more, this week, the tropical cyclone Biparjoy in the Arabian Sea has disrupted port operations on India’s western coast and tankers could be delayed on their return to the Middle East.The biggest driver of surging supertanker rates seems to be the larger number of Middle East cargoes going to Asia booked this month.“We are seeing more end-June cargoes than expected,” an anonymous shipbroker told Reuters.At least 156 tankers are being chartered to load crude in the Middle East en route to Asia this month, compared to 137 in May, the shipbroker added.

Analyst Looks at Decreasing Oil Price --The front-month Brent contract traded to a high of $78.73 per barrel on June 5 in response to the unilateral surprise cut of one million barrels per day for July by Saudi Arabia, but, since then, it has gradually ticked lower. That’s what Bjarne Schieldrop, the Chief Commodity Analyst at SEB, outlined in a statement sent to Rigzone on Tuesday, adding that, on June 12, it was down 1.6 percent to $73.6 per barrel “for no other obvious reason than that Goldman gave up on its $95 per barrel end of year target and replaced it with $86 per barrel”. “In its latest oil market report, the IEA projects that the world will need 30.5 million barrels per day from OPEC in H2-2023 as the world will consume 103 million barrels per day in Q3-2023 vs. 100.6 million barrels per day in Q4-2022,” Schieldrop said in the statement. “But the market is obviously not buying into this projection at all and the two to three million barrel per day deficit,” he added. “Instead, oil is selling off in the face of Saudi July cuts, Saudi July price hikes (OSPs), and large deficit projections by the IEA. The current sell-off in oil is an implied assumption by the market that oil inventories will build in July,” he continued. Schieldrop highlighted in the statement that demand needs to be below 100 million barrels per day for that to happen, “so there is an implied difference in demand in July between the IEA and the market of more than three million barrels per day”. “For the moment the market is practicing an attitude to the oil market of ‘I don't believe it before I see it’,” he said. In the statement, Schieldrop said the market has doubts about demand but noted that it shouldn't doubt Saudi Arabia’s determination. “Saudi Arabia has lifted its Official Selling Prices for July by 45 cents per barrel for all grades. Not only is Saudi Arabia reducing supply by one million barrels per day in July, it is also lifting its prices as well,” he said. “The effect of this is that it will push its term-buyers to buy more in the global spot market thereby firming up that market and its spot oil prices,” he added.

Oil prices drop below 70 per barrel as investors fear Fed rate hike --Oil prices dropped over $2 per barrel in this morning’s trading as investors fear further rate hikes from the Federal Reserve this week, when it meets to discuss interest rates. Concerns over flagging fuel demand in China and rising supplies of Russian crude are also weighing down both major benchmarks. Brent Crude has dipped 2.58 per cent to $72.86 per barrel while WTI Crude plummeted 2.91 per cent to $68.13 per barrel. This follows both benchmarks reporting their second week of declining prices this month. The Fed is set for a two-day session – finishing on Wednesday – and its hawkish response since inflation rose last summer has strengthened the US dollar. As it stands, interest rates set at 5-5.25 per cent, driving down prices and making commodities more expensive for holders of other currencies. The consensus amongst analysts is that the central bank will keep interest rates on hold, but observers will focus on the tone used to deliver the announcement. “Should the Fed continue to focus on fighting persistently high inflation through stringent monetary tightening, it will eventually achieve its objective, but the side effect will be an economic slowdown. It’s this perspective of a Fed-driven decline in demand that is now being discounted by investors, creating a downside for oil prices.” Meanwhile, persistently gloomy economic data from China has raised concerns about demand in the world’s largest crude importer. Fiona Cincotta argued that global recession fears will continue to drag on the demand outlook – despite OPEC cuts and its attempt to prop up prices. “Oil fell last week after disappointing Chinese data raised concerns over the strength of the recovery of China, the world’s largest importer of oil. This offset the production cut of one million barrels per day announced by Saudi Arabia,” Saudi Arabia’s energy minister Prince Abdulaziz bin Salman warned last weekend that OPEC+ was battling against “uncertainities and sentiment” within the market. While Saudi Arabia has cut oil production four times in the past year, Russian production has held up as sanctions have had less of an impact on output . The Kremlin’s exports to China and India have risen despite Western sanctions, and the G7’s price cap. This has caused Goldman Sachs to slash its oil price forecasts, alongside more output from Iran and Venezuela. Its crude price forecast for December 2023 now stands at $86 a barrel for Brent, down from $95, and at $81 per barrel for WTI, down from $89.

Oil Deepens Losses on Russian, Iranian Supply Prospects - - Oil futures accelerated losses early Monday, sending the international crude benchmark towards $73 bbl as investors assess supply balances amid stronger-than-expected crude exports from Russia, Iran and Venezuela among others that are seen offsetting a 1-million bpd production cut introduced by Saudi Arabia. The oil complex kicked off the new trading week with another wave of selling after investment bank Goldman Sachs revised lower its price forecast for Brent and WTI through 2024. The bank now believes oil prices will end this year at $86 bbl, down from its earlier forecast of $95 bbl. For 2023, Goldman forecasts an average price of $82 bbl, compared to its prior $88 bbl forecast. Driving the revisions are stronger-than-expected supplies from Russia, Iran and Venezuela that are seen circumventing sanctions in recent months. Goldman Sachs revised its supply forecast for all three countries through 2024. The Saudi plan to slash output by 1 million bpd from July will only partly offset that increased supply, Goldman said in a Sunday note. For context, Russian crude oil exports have fully recovered to pre-war levels despite the decision by many companies to stop buying Russian oil and a ban of Western financial and logistical services. S&P Platts Global Commodities estimates Russia-origin seaborne oil flows averaged 3.76 million bpd last month -- the highest since April 2022 and almost 20% above the pre-war level of 3.1 million bpd. Iranian exports have also risen, partly on the back of a recovery in Chinese demand, while Venezuelan production has edged higher following new production and export licenses re-introduced in November 2022. Further adding to the bearish sentiment, regional news outlets in the Middle East reported last week the United States and Iran may be nearing a temporary nuclear deal that could un-sanction Iran's oil exports, adding large supplies of crude to the global market. Although the White House quickly dismissed media reports of a breakthrough, the oil complex remains under pressure as markets assessed the potential for a nuclear deal to be reached in the coming weeks. Israel's Haaretz and other regional outlets cited high-ranking Israeli officials who said the talks are moving forward more quickly than expected, with the possibility for the two sides to reach an agreement as early as June. Iran could restore about 1 million bpd of crude oil production within months of a deal, traders and analysts said last year before talks broke down. It could be back to full capacity of about 3.7 million bpd by next year. The Persian Gulf country's oil exports already climbed to about 1.3 million bpd in November, and last month held near the highest in four years, according to data from Vortexa Ltd. The fact that OPEC+ announced two production cuts in less than two months on top of a reduction of 2 million bpd unveiled late last year highlights its failure to jawbone prices higher against centrifugal forces of the global economy. Manufacturing industries in China, the United States and European Union Western, accounting for a large chunk of global oil demand, fell into recession late last year and in recent months have shown few signs of improvement. For context, the U.S. manufacturing sector contracted in May for the seventh straight month and is now at the lowest level since the early days of the COVID pandemic in May 2020. The index has already been below 50 for longer than in most mid-cycle slowdowns, generally eight months or fewer. Near 7.30 AM ET, NYMEX WTI July futures declined $1.12 to $70.17 bbl, while the front-month August contract for the Brent international crude benchmark fell $1.37 to $73.40 bbl. NYMEX RBOB July futures declined $0.0289 to $2.5643 gallon and ULSD July futures dropped to $2.3360 gallon.

Oil prices settle down 4% on jitters ahead of US Fed meeting --Oil prices fell by around $3 a barrel on Monday after analysts highlighted rising global supplies and concerns about demand growth just ahead of key inflation data and a U.S. Federal Reserve meeting later this week. Brent crude futures fell $2.95, or 3.9%, to settle at $71.84 a barrel, their lowest since Dec. 2021.U.S. West Texas Intermediate (WTI) crude fell $3.05, or 4.4%, to settle at $67.12 a barrel. Goldman Sachs cut its oil price forecasts early on Sunday, citing higher-than-expected supplies later this year and through 2024. The bank's December crude price forecast now stands at $86 a barrel for Brent, down from $95, and at $81 a barrel for WTI, down from $89. "Goldman capitulating on their bullish price forecast appears to have been the catalyst to kickstart selling today," . The revision comes at the start of a busy week for the U.S. Federal Reserve, which meets on Wednesday. While the Fed is expected to leave interest rates unchanged this month, investors are concerned that rate hikes are likely to resume next month,. The Fed's rate hikes have strengthened the dollar, making commodities denominated in the U.S. currency more expensive for holders of other currencies and weighing on prices. "The Fed meeting and inflation pressures remain key issues for the market this week," "The more likely hold on interest rates means investors will closely track Fed Chair Powell's press conference for the expected path for interest rates," Haworth said. Also weighing on investors' minds, oil demand recovery has been muted in China, the top importer of crude oil and refined products. "Chinese demand has shown no signs of materializing, and it could be as much as 2 million barrels a day, so it is a significant amount. There are definitely fears that OPEC and IEA will cut their demand forecasts," The Organization of Petroleum Exporting Countries and the International Energy Agency will each release their monthly market updates on Tuesday. Last week, both Brent and WTI posted a second straight weekly decline after disappointing Chinese economic data erased the price boost from Saudi Arabia's pledge to cut production in July.

Oil Prices Rebound On China Stimulus Hopes --Oil prices recovered some ground on Tuesday after having fallen over 4 percent the previous day on fuel demand concerns. Benchmark Brent crude futures rose 1.2 percent to $72.73 a barrel, while WTI crude futures were up 1 percent at $67.78. A weaker U.S. dollar and China's surprise rate cut offered some support as investors fret about the outlook for energy demand. The dollar sagged on hopes that U.S. inflation data later in the day would likely show an easing in prices in May, and that the Federal Reserve would resist raising rates at the end of a two-day policy meeting on Wednesday. The European Central Bank is expected to hike interest rates by another quarter percentage point on Thursday while the Bank of Japan is expected to maintain its ultra-loose policy when it meets on Friday. Meanwhile, the People's Bank of China (PBOC) cut its seven-day reverse repo rate by 10 basis points in a bid to restore market confidence and prop up slowing economic growth. China's new loan data missed expectations, but fueled speculation that policymakers will unveil more stimulus to support the economy.

Oil Rallies as OPEC Data Signals Saudi Cut to Tighten Market - Oil futures advanced more than 3% on Tuesday, with U.S. crude benchmark rebounding from a three-month low and the global benchmark from a 19-month low after OPEC said in its Monthly Oil Market Report that the group's largest members sharply slashed crude output ahead of the announcement of a unilateral production cut by Saudi Arabia, meaning the global market balance will likely tighten sharply in the second half of the year. In its monthly report released this morning, OPEC said output from its 13 members slumped by 464,000 bpd to 28.07 million bpd in May, led by a 519,000-bpd production drop in Saudi Arabia. Other Gulf members also reduced output significantly ahead of the latest production revisions made on June 4, with United Arab Emirates reducing crude output by 140,000 bpd in May from April to 2.894 million bpd and Kuwait slashing output by 95,000 bpd to 2.555 million bpd from April to May. The drop in production suggests the group's core members in the Gulf have largely made good on their pledge announced in April to reduce their collective output. OPEC and allied partners led by Russia, collectively known as OPEC+, pledged to extend 3.6 million bpd in production curbs through the end of 2024, while Saudi Arabia unveiled an additional 1 million bpd output cut for July that could be extended beyond that timeframe. On the demand side, OPEC left its global oil consumption forecast largely unchanged at a 2.3 million bpd growth rate for this year to 101.91 million bpd. The group also made no major changes to its forecasts for global economic growth, which it continues to see at 2.6% this year. China's economy will grow by 5.2% in 2023 while the economy of the eurozone is expected to grow by 0.8%, in line with earlier forecasts. The exception was the U.S. economy, which OPEC said it expects to grow by 1.3% this year, up from last month's 1.2% forecast. Separately, oil traders also await the release of weekly inventory data from the American Petroleum Institute due out 4:30 pm ET, followed by official data from the U.S. Energy Information Administration Wednesday morning. U.S. commercial crude oil stockpiles are projected to have decreased by 300,000 bbl for the week ended June 9, with estimates ranging from a decrease of 2.5 million bbl to an increase of 2 million bbl. At settlement, NYMEX West Texas Intermediate July futures advanced $2.30 to $69.42 bbl, while the August contract for the Brent contract added $2.45 to $74.29 bbl. NYMEX RBOB July futures rallied $0.0753 gallon to $2.5579 gallon and ULSD July futures gained to $2.3955 gallon, up $0.0864 on the session.

The Oil Market Posted an Inside Trading Day on Tuesday After the Market Retraced Most of its Previous Losses The oil market posted an inside trading day on Tuesday after the market retraced most of its previous losses, breaking a three-day slide. The market posted a low of $67.15 in overnight trading before it bounced higher after the market seemed oversold from its previous losses. The market rallied over $2.70 as it posted a high of $69.83 following the release of the inflation data, which showed the Consumer Price Index increased by 0.1% in May. The data showed the gains in consumer prices slowed more than expected causing traders to increase their expectations of the Federal Reserve deciding on Wednesday forego an interest rate hike. However, the market’s gains were limited and it settled in a sideways trading range ahead of the weekly oil inventory reports and the Fed decision. The July WTI contract settled up $2.30 at $69.42 and the August Brent contract settled up $2.45 at $74.29. The product markets also ended the session sharply higher, with the heating oil market settling up 8.64 cents at $2.3955 and the RB market settling up 7.53 cents at $2.5579. OPEC left its 2023 global oil demand growth forecast steady for a fourth consecutive month, although the producer group warned that the world economy faced increasing uncertainty and slower growth in the second half of the year. In its monthly report, OPEC said world oil demand in 2023 will increase by 2.35 million bpd or 2.4%. This was virtually unchanged from 2.33 million bpd forecast last month. Chinese oil demand is now expected to increase by 840,000 bpd, up from the 800,000 bpd forecast last month, adding to a recovery after strict COVID-19 containment measures were scrapped. The report showed that OPEC's oil production fell in May, reflecting the impact of earlier output cuts pledged by OPEC+ as well as some unplanned outages. OPEC said its May output fell by 464,000 bpd to 28.06 million bpd as voluntary cuts, promised by Saudi Arabia and other members, took effect. Barclays said it remains constructive on oil prices. It expects non-OPEC+ supply growth to slow significantly over the coming quarters and added that a lot of incremental weakness in demand is likely already priced in. It said OPEC+ will likely remain proactive with the primary goal of avoiding a sustained surplus. It forecast U.S. oil output will increase by 700,000 bpd in the fourth quarter and by 300,000 bpd in 2024, with the Permian Basin still driving most of the gains. Colonial Pipeline Co is allocating space for Cycle 36 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. The U.S. Environmental Protection Agency is seeking a short-term delay to a final rule on biofuel blending mandates for the years 2023-2025. The EPA was set to issue a final rule on Wednesday, but now will likely issue it next week. Under the U.S. Renewable Fuel Standard, oil refiners must blend billions of gallons of biofuels into the nation's fuel mix or buy tradable credits from those that do..

Oil Steady After API Confirms Small Crude Build - Crude oil inventories in the United States increased this week by 1.024 million barrels, the American Petroleum Institute (API) data showed on Tuesday. Analysts were expecting a slight decline in U.S. crude-oil inventories from the previous week, with data from the Energy Information Administration (EIA) due on Wednesday. Average analyst estimates were for a 300,000-barrel decline for the week ending June 9, though forecasts ranged from a draw of 2.5 million barrels to a build of 2 million barrels. The total number of barrels of crude oil gained so far this year is more than 39 million barrels. For the week to June 9, the EIA reported an inventory decline of 500,000 barrels, compared with a build of 4.5 million barrels for the previous week. On Monday, the Department of Energy (DoE) reported that it has sold another 1.9 million barrels of crude the previous week from the Strategic Petroleum Reserve (SPR), for the 11th consecutive weekly drop in the stockpile to a 40-year low of 352 million barrels. The price of WTI and Brent were both trading up on Tuesday in the run-up to the data release, latching onto a Federal Reserve rate hike decision scheduled for Wednesday afternoon EST. By 4:40 p.m. EST, WTI was trading up 3.04%, at $69.16 per barrel, while Brent crude was trading up 3.06% at $74.04 shortly after the data release. Gasoline inventories rose 2.075 million barrels. Distillate inventories rose 1.394 million barrels. Inventories at Cushing, Oklahoma, rose by 1.5020 million barrels, similar to last week. By Julianne Geiger for

Brent Tops $75 After IEA Sees Supply Deficit in 2nd Half 2023 -- Oil futures added to gains in early trading Wednesday after the International Energy Agency forecast global oil demand is set to outpace gains in marginal supply growth in the second half of the year, leading to tight market balances exacerbated by voluntary supply cuts from Saudi Arabia. In its Monthly Oil Market Report released Wednesday morning, IEA said global oil demand will expand by 2.4 million barrels per day (bpd) this year to a new record-high 102.3 million bpd. China will account for 60% of those gains, according to IEA analysts, with soaring transport and petrochemical use propelling apparent consumption in April to an all-time high of 16.3 million bpd. Indian demand is estimated to be equally robust with the latest readings for May showing both gasoline and diesel breaking records. "Oil markets are struggling for direction as conflicting data points cloud the outlook. Bearish macroeconomic indicators and concerns over demand growth are clashing with resurgent oil use in key consuming countries. Oil prices appear to be taking their cue from the former, with benchmark North Sea Dated trading at $73 barrel (bbl) -- nearly half the high of 2022 -- despite a looming supply deficit," said IEA in its monthly report. While oil demand is expected to continue to rise, both seasonally and structurally over the remainder of the year, only a marginal increase in supply is foreseen. In May, global oil production fell by 660,000 bpd to 100.6 million bpd. Deeper cuts from some OPEC+ producers kicked in while output from Iraq's northern Kurdish region and some Canadian oilsands remained shut in. Saudi Arabia, with its voluntary cut of 500,000 bpd agreed in April, led the monthly drop in world supply. Total oil production this year is forecast to reach 101.3 million bpd, implying global oil market will fall into deficit of about 1 million bpd for the second half of the year. Production gains outside of OPEC+ will lead supply growth through the next year, adding 1.9 million bpd in 2023 and 1.2 million bpd next year. API reports gasoline inventory increased 2.075 million as of June 9, well above an expected 100,000 bbl increase. Distillate inventory rose 1.394 million bbl last week versus calls for a build of 1 million bbl. Near 7:45 a.m. EDT, NYMEX West Texas Intermediate July futures advanced $0.82 to $70.22 bbl, while the August Brent contract added $0.94 to $75.22 bbl. NYMEX RBOB July futures rallied $0.0107 gallon to $2.5686 gallon and ULSD July futures gained to $2.4099 gallon, up $0.0144 on the session.

WTI Dump'n'Pump After Across-The-Board Inventory Builds, 11th Weekly SPR Drain In A Row -- Oil prices are modestly higher this morning ahead of The Fed's decision after the International Energy Agency said it expects record demand growth this year, while predicting the clean-energy transition will begin to cut demand growth through 2028."World oil demand will grow by 2.4 mb/d in 2023 to 102.3 mb/d, a new record. China's rebound continues unabated, with its oil demand reaching an all-time high of 16.3 mb/d in April. The non-OECD accounts for 90% of gains this year, as OECD demand remains lacklustre amid the current manufacturing slump," the agency said.Additionally, China’s new crude import quotas helped cut recent pessimism over demand.“I absolutely don’t buy into this argument that China’s not reopening,” Amrita Sen, chief oil analyst at Energy Aspects said in a Bloomberg TV interview.“There’s a huge disconnect between the data that’s been coming in, and forecasts, versus prices.”We also note this morning's earlier drop in crude seems linked to headlines on US-Iran discussions once again. However, across the board builds reported by API may take some of the shine off the gains if confirmed by the official data. API

  • Crude +1.024mm (-300k exp)
  • Cushing +1.502mm
  • Gasoline +2.075mm (+100k exp)
  • Distillates +1.394mm (+1.0mm exp)


  • Crude +7.92mm (-300k exp)
  • Cushing +1.55mm
  • Gasoline +2.11mm (+100k exp)
  • Distillates +2.12mm (+1.0mm exp)

The official data confirmed API's direction but with larger size builds...All thanks to a yet another massive positive "adjustment"... Despite reports that the Biden admin is looking to buy a 'colossal' 12mm barrels of oil to refill the SPR (100s of millions of barrels drained), they drained 1.9mm barrels last week - the 11th week in a row (for a total drain of over 20 mm barrels)...

Oil Drops 1.5% as Fed Projects More Rate Hikes This Year (Reuters) - Oil prices fell 1.5% on Wednesday after the U.S. Federal Reserve projected more interest rate hikes this year, worrying markets about demand just hours after government data showed an unexpected, large build in U.S. crude oil stocks. Brent crude futures settled $1.09, or 1.5%, lower at $73.20 a barrel, while U.S. West Texas Intermediate (WTI) crude closed $1.15, or 1.7%, lower at $68.27. Both benchmarks had climbed more than 1.5% earlier in the session. They rose more than 3% the previous day on expectations of rising fuel demand after China's central bank lowered a short-term lending rate. The Federal Reserve left interest rates unchanged but signalled in new economic projections that borrowing costs will likely rise by another half percentage point by the end of this year as it reacts to a stronger-than-expected economy and a slower decline in inflation. "Markets fear that a higher interest rate environment is going to lower oil demand. The knee jerk reaction is pushing oil down," Higher interest rates strengthen the dollar, making commodities denominated in the U.S. currency more expensive for holders of other currencies. Wall Street stocks fell, while gold prices pared gains after the Fed's decision and comments. U.S. crude oil stocks rose by about 8 million barrels in the week ended June 9, according to data from the Energy Information Administration. Analysts had estimated a 500,000-barrel decline. Gasoline and diesel stocks also rose more than expected. The IEA, meanwhile, increased its oil demand growth forecast for this year by 200,000 barrels per day (bpd) to 2.4 million bpd, lifting the projected total to 102.3 million bpd. However, the agency expects economic headwinds to reduce growth to 860,000 bpd next year and increasing use of electric vehicles to help to reduce that to 400,000 bpd in 2028 for overall demand of 105.7 million bpd. The IEA's 2023 oil demand growth figure is slightly above that of the Organization of the Petroleum Exporting Countries (OPEC). JPMorgan downgraded its forecast for this year's average Brent crude price by $9 to $81 a barrel.

Oil futures up 2% on strong China refinery data, weaker US dollar - Oil prices rose over 2% to a one-week high on Thursday as the U.S. dollar weakened and data showed a jump in refinery runs in top crude importer China.Brent futures rose $1.76, or 2.4%, to $74.96 a barrel by 11:21 a.m. EDT. U.S. West Texas Intermediate (WTI) crude rose $1.70, or 2.5%, to $69.97.Brent was headed for its highest close since June 8 and WTI since June 9.A bigger increase in U.S. gasoline futures boosted the gasoline crack spread, a measure of refining profit margins, to its highest since July 2022.The oil market saw support from U.S. reports showing retail sales unexpectedly rose in May and higher than expected jobless claims last week cut the dollar to a one-month low versus a basket of other currencies. A weaker dollar makes oil cheaper for holders of other currencies which could boost demand.Data on Thursday also showed China’s oil refinery throughput rose 15.4% in May from a year earlier, hitting its second highest total on record.Chinese demand for oil is expected to keep climbing at an assured rate during the second half of the year, said Kuwait Petroleum Corp’s chief executive.But a weak economic outlook weighed, as China’s industrial output and retail sales growth in May missed forecasts.Also capping price gains were fears that higher interest rates would slow the U.S. and European economies and reduce oil demand.The European Central Bank (ECB) raised interest rates to a 22-year high as expected on Thursday. It signaled further policy tightening, as it battles high inflation.“The outlook for economic growth and inflation remains highly uncertain,” said ECB President Christine Lagarde.On Wednesday the U.S. Federal Reserve kept interest rates unchanged but signaled at least a half of a percentage point increase by year end.Analysts expect voluntary crude output cuts implemented in May by OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies, and by Saudi Arabia in July, to support prices at a time of strong demand.UBS expects a supply deficit of around 1.5 million barrels per day (bpd) in June and more than 2 million bpd in July.“Once these deficits become visible in on-land oil inventories, we expect oil prices to trend higher,” the bank said in a note.In other supply news, a Turkish energy delegation will meet Iraqi oil officials in Baghdad on June 19 to discuss the resumption of Iraq’s northern oil exports, Iraqi deputy oil minister for upstream affairs, Basim Mohammed, told Reuters.Turkey halted Iraq’s 450,000 bpd of northern exports through the Iraq-Turkey pipeline on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC).

The Fed Held Rates Steady for June but Suggested Further Rate Hikes Later This Year The oil market on Thursday retraced its previous losses and posted an outside trading day as traders covered some of their short positions. This followed Wednesday’s 1.7% decline after the Fed held rates steady for June but suggested further rate hikes later this year. The market opened 43 cents higher at $68.70 and posted a low of $67.97 in overnight trading before it bounced higher and never looked back. The oil market seemed to be supported by a weaker dollar and an apparent increase in demand as China’s refinery runs increased in May and reached its second highest total on record. The crude market extended its gains to close to $2.70 as it breached its previous high and rallied to $70.96 ahead of the close. The July WTI contract settled up $2.35 at $70.62 and the August Brent contract settled up $2.47 at $75.67. The product markets ended the session sharply higher, with the heating oil market settling up 12.19 cents at $2.4796 and the RB market settling up 8.71 cents at $2.6417. Iraqi Deputy Oil Minister for Upstream Affairs, Basim Mohammed, said a Turkish energy delegation will meet Iraqi oil officials in Baghdad on June 19th to discuss the resumption of Iraq's northern oil exports.Kuwait Petroleum Corporation’s Chief Executive, Sheikh Nawaf Saud al-Sabah, said the company sees continued good demand for oil from China in the second half of the year. He also said Kuwait's market share in China was stable despite increasing Russian exports into Asia on the back of Western sanctions on Moscow since its invasion of Ukraine. He also stated that Kuwait had taken advantage of the increased demand in Europe for its fuel oil and middle distillates.Bloomberg reported that the U.S. and Iran are working towards an understanding to free prisoners while creating space for diplomacy aimed at encouraging nuclear restraint and reduced threats to seize oil shipments. According to officials, negotiations led to an initial agreement for Iran to free U.S. prisoners, while the U.S. would release payments owed to the Islamic Republic that were frozen by sanctions. Diplomats are also pushing Iran to voluntarily limit its uranium-enrichment levels and increase its cooperation with international monitors in return for allowances to ship more crude oil. Russia’s Deputy Energy Minister, Pavel Sorokin, said Russia does not object to OPEC+ revising its oil production baseline. On Tuesday, OPEC+ said it granted Russia a slightly higher oil production baseline after the country agreed to work with several think tanks and agencies to review its output figures.Shell said its Olympus production platform in the U.S. Gulf of Mexico is offline for planned maintenance. The work started on Wednesday, June 7th and is expected to last 14 days.China's oil refinery throughput in May increased by 15.4% from a year earlier, as refiners brought units back online from planned maintenance and independent refiners processed cheap imports. Data from the National Bureau of Statistics showed that total refinery throughput in China was 62.0 million metric tons in May.

Oil heads for weekly gains as supply cuts balance demand concerns (Reuters) -Oil edged higher on Friday and was on course for a weekly gain, as higher Chinese demand and OPEC+ supply cuts lifted prices, despite expected weakness in the global economy and the prospect for further interest rate hikes. Brent crude gained 48 cents to $76.15 a barrel by 1:16 p.m. EDT (1316 GMT). U.S. West Texas Intermediate (WTI) crude rose 59 cents to $71.21. Brent was on track for a weekly gain of 1.9% and WTI was on course for a 1.6% rise. Oil has gained this week on hopes of growing Chinese demand. China's refinery throughput rose in May to its second-highest total on record and Kuwait Petroleum Corp's CEO expects Chinese demand to keep climbing during the second half. Also supporting crude price are the voluntary output cuts implemented in May by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, plus an additional cut by Saudi Arabia in July. Russian Energy Minister Nikolai Shulginov said it was "realistic" to reach oil prices of around $80 per barrel, Russian state news agencies reported. Shulginov also said Russian oil and gas condensate production is expected to fall by around 20 million tonnes (400,000 barrels per day) this year, reiterating Russia's expectations. In Iran, crude exports and oil output have hit new highs in 2023 despite U.S. sanctions, according to consultants, shipping data and a source familiar with the matter, adding to global supply when other producers are limiting output. U.S. oil rigs fell by four to 552 this week, their lowest since April 2022, while gas rigs fell 5 to 130, their lowest since March 2022, energy services firm Baker Hughes Co said. Capping oil price gains was the prospect of rising interest rates, which could slow economic growth. The Bank of England is set to raise interest rates by a quarter of a percentage point next week. The European Central Bank lifted rates to a 22-year high on Thursday and the U.S. Federal Reserve signalled at least a half of a percentage point increase by year-end. Investors have been closely watching interest rates and commentary from Fed members. "We're going to be going from Fed speaker to Fed speaker, and data point to data point,"

Oil Posts Weekly Gains on US Rig Count, China Import Quotas -- Reversing early losses, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Friday's session with gains between 1.5% and 2.5% propelled by another weekly drop in the U.S. oil rig count and new import quotas for Chinese refineries that stand around 20% above 2022 levels, a signal of recovering fuel demand in the world's largest crude oil importer. Wire services reported this week Chinese government issued a third batch of crude-oil quotas for independent refiners this year, with overall allowances up 20% in the first half of 2023 compared to the same period last year. According to sources, independent refiners in China were allotted a quota of 62.28 million tons for the remainder of the year, which has lifted total allowances to 123 million tons. For the full year 2022, independent refiners were allotted a quota of 195 million tons. This might suggest that Chinese fuel demand is finally picking up speed after a lackluster start to the year despite the country's reopening from COVID-19 restrictions. The reopening fueled expectations for an increase in China's oil consumption, but recent macroeconomic data from the world's top crude oil importer have had forecasters and analysts concerned that demand may not be as strong as initially expected. China's economic data released earlier this week showed retail sales slowed markedly over the past two months and industrial production increased only marginally compared to last year amid a sharp slowdown in exports. Domestically, the number of active rigs drilling for oil declined again this week after a one-week uptick, falling for the sixth time in seven weeks through today, Baker Hughes data show. At 552, the number of oil rigs deployed declined by four for the week ended today to the lowest number in-service since the final week of April 2022. Versus a year ago, the rig count is down 32. Baker Hughes reports the number of natural gas rigs in operation also continued lower, falling five to 130 since the prior Friday, down 24 compared with the same week in 2022. On the macroeconomic data front, inflation data out of the Eurozone showed consumer prices increased at 6.1% in May from a year earlier, with prices paid for food, tobacco and alcohol posting double-digit increases. Stubbornly high inflation persisted despite the Eurozone having entered a mild recession earlier this year, with economic activity likely to take a bigger hit as ECB works to put a lid on inflation that has spread across the collective economy. ECB policymakers on Thursday lifted the benchmark interest rate for the eighth consecutive meeting to 4% -- the highest borrowing rate in 22 years and signaled another move in July. "Inflation has been coming down but is projected to be too high, for too long. Wage pressures are becoming an increasingly important source of inflation," said Christine Lagarde at a news conference Thursday morning following the rate decision. A day after policymakers in Frankfurt raised borrowing costs, International Monetary Fund said in its outlook that strong euro-area consumer-price growth calls for more European Central Bank interest-rate hikes and a sustained "tightening bias." At settlement, NYMEX July West Texas Intermediate futures, which settled Monday's (6/12) session at a $67.12 three-month low on the continuous chart, rallied $1.16 to $71.78 bbl, with the prompt spread in a $0.15 contango ahead of the June 20 expiration of the July contract. ICE August Brent futures advanced to $76.61 bbl after hitting a 19-month spot low settlement of $71.84 bbl on Monday. Oil products futures also moved higher, which follows a plethora of refinery snafus, including a key gasoline unit at Phillip 66's 258,000 bpd Bayway refinery in Linden, New Jersey. Trade sources said the fluid catalytic cracking unit was shut Monday and is not expected to return to service until July 6. The Bayway facility is situated in the refinery short New York Harbor market, which is the underlying physical delivery location for RBOB and ULSD futures contracts. NYMEX July ULSD futures gained $0.0718 to $2.5514 gallon and NYMEX July RBOB futures advanced to $2.6805 gallon, up $0.0388.

Report: Saudi Crown Prince Threatened US With 'Major Economic Consequences' - Saudi Crown Prince Mohammed bin Salman warned the US would suffer economic consequences if President Biden retaliated for OPEC oil cuts that were announced last fall, The Washington Post reported.The Post report cited a document allegedly leaked to Discord by Airman Jack Teixeira, although it did not publish the document. The report said MbS claimed “he will not deal with the US administration anymore” if Biden imposed “consequences” on Riyadh over the OPEC cuts like he said he would.The report said MbS promised “major economic consequences for Washington” if Biden retaliated, but it’s unclear if the Saudis made the threat directly to the US or if MbS’ warning was intercepted by the US spying on him.It’s also unclear what economic consequences MbS had in mind. Saudi Arabia could stop trading its oil using the US dollar, which would seriously threaten the currency’s global dominance.President Biden never went through with his vow to impose consequences on the Saudis, and his administration has been working lately to improve the relationship after Riyadh agreed to a surprise China-brokered normalization deal with Tehran. The Saudis also reestablished diplomatic relations with Damascus and spearheaded an effort to bring Syria back into the Arab League. Secretary of State Antony Blinken visited Saudi Arabia last week, and Saudi officials made clear that they didn’t want the administration to pressure them to pick a side between the US and China.

Iran Confirms Holding Indirect Talks With US in Oman - The Iranian Foreign Ministry on Monday said that Iranian officialsheld indirect talks with the US in Oman last month but dismissed the idea that an interim nuclear deal was on the table.Iranian Foreign Ministry spokesman Nasser Kanaani appeared to confirm a report from Axios that said the talks took place in Oman on May 8, when President Biden’s top Middle East official on the National Security Council, Brett McGurk, was in Muscat.According to the report, the US and Iranian officials did not meet directly, and Omani officials acted as mediators. Sources told Axios that the main message that the US conveyed to Iran was a threat that there would be severe consequences if Iran enriched uranium at 90%, which is required to develop a nuclear bomb. But there’s no indication Tehran will take that step.Middle East Eye also recently reported that the US and Iran were holding direct talks in the US, but those negotiations haven’t been confirmed. The MEE report said an interim nuclear deal that would require Iran to reduce uranium enrichment for sanctions relief was on the table, but both sides have denied the claim.Kanaani said Iran was not interested in an interim nuclear deal but was open to restoring the original 2015 agreement, known as the JCPOA, which the Trump administration withdrew from in 2018. There’s no sign that the Biden administration is interested in resurrecting the JCPOA, which President Biden has previously said was “dead.”Amid reports of US and Iranian engagement, Iranian Supreme Leader Ayatollah Ali Khamenei said Sunday that there’s “nothing wrong” with Iran reaching an agreement on its nuclear program as long as the infrastructure remains intact. Khamenei also reaffirmed Iran’s position that it does not seek a nuclear weapon.

Iran's Khamenei Says 'Nothing Wrong' With Reaching a Nuclear Deal - Iranian Supreme Leader Ayatollah Ali Khamenei said Sunday that there was “nothing wrong” with Iran reaching an agreement related to its civilian nuclear program as long as its infrastructure remains intact.Khamenei’s comments come after Middle East Eye reported the US and Iran were close to an interim nuclear deal that would see Iran reduce uranium enrichment levels in exchange for some sanctions relief. However, both the US and Iran have denied the claims made in the report.Khamenei made the comments while visiting an exhibition of Iranian nuclear capabilities. “You may want to reach agreements in some fields. Nothing is wrong with [reaching] agreements, but the infrastructure must remain intact,” Khamenei said, according to Iran’sPressTV.The Iranian leader also denied claims that Tehran is seeking a nuclear weapon, saying Iran’s “enemies” want to target the country’s nuclear program to limit its development.“The excuse of a nuclear weapon is a lie, this is not the issue, something else is at play. They know that nuclear advancement will be a key for progress in other issues of the country,” he said.Iran is currently enriching some uranium at 60%, less than the 90% needed for weapons-grade uranium. Tehran began the 60% enrichment in response to an Israeli attack on the Natanz nuclear facility in 2021.According to the Middle East Eye report, the US and Iran have been holding talks and were close to an agreement that would involve Iran stopping its 60% uranium enrichment in exchange for some sanctions relief.A White House official said the report was “false and misleading,” and Iran’s envoy to the UN said an interim deal was “not on the agenda.”Other media outlets, including Haaretz, have reported that some sort of nuclear agreement between the US and Iran was close.

U.S. Set To Unload Oil From Seized Iranian Tanker The United States is about to start unloading crude from a tanker allegedly used to carry Iranian oil abroad, the FT has reported, noting the move would fuel the escalation of tension between the U.S. and Iran.The U.S. seized the Suez Rajan in April, prompting quick retaliation from Iran, which in its turn seized a Chinese-owned, Turkish-operated tanker that was loaded with crude for delivery to Chevron.Iran claimed that the tanker collided with an unidentified Iranian vessel just hours prior to its seizure, with several crew members reportedly falling overboard while others were left injured. The tanker then fled the scene and ignored radio calls for eight hours before a court-ordered its seizure.The Suez Rajan, according to the FT, has received a license from the U.S. Treasury Department to import Iranian crude into the United States. Its cargo is some 800,000 barrels of crude and, per an unnamed former member of the Biden administration, its arrival in Texas is likely the result of a deal that got struck between the administration and the owners and operators of the vessel.The cargo of the Suez Rajan will either be sold now or has already been sold and the proceeds may be given to a fund created by Congress for U.S. victims of state-sponsored terrorism. The affair is unlikely to go down well in Tehran, especially since it is not the first tanker seizure the U.S. has done this year.In fact, it recently emerged that another ship seizure may have been what prompted the Iranian seizure of the Chevron-bound tanker in April. Maritime security firm Ambrey said in late April that Iran's motive for seizing Chevron's load of crude oil was in retaliation for the U.S. seizure that took place not even five days prior."Both tankers were Suezmax-sized. Iran has previously responded tit-for-tat following seizures of Iranian oil cargo," Ambrey said in a note to clients, according to the Jerusalem Post.

Israel Creates New Military Intelligence Unit to Prepare for War With Iran - Israel’s military has created a new intelligence unit to prepare for war with Iran amid simmering tensions between the two nations, Ynetreported on Sunday.Israel has been conducting a covert war against Iran for some time, but in recent years, Israeli officials have been speaking more openly about the fact that they’re preparing for an overt military conflict with the Islamic Republic.The Ynet report said the intelligence branch of the Israeli Defense Forces (IDF) created the new unit to specifically prepare for a fight with Iran’s Islamic Revolutionary Guard Corps (IRGC).The head of research for the new intelligence unit, known as Branch 54, told Ynet that the preparations for a conflict with Iran are much different than the wars Israel has waged in Lebanon and Gaza. “This is a significant mindset change that the IDF is required to make. It is not similar to a war against Hezbollah or an operation in Gaza against Hamas or Islamic Jihad,” said the officer, who went by the name Lt. Col. T.“We are responsible for providing the military with the knowledge infrastructure regarding Iranian military capabilities and strategic systems under their control. We are engaged in researching the elements of control in Iran from the senior level down to the operators at the frontlines,” T added.Ynet also spoke with an officer who is compiling a list of targets the IDF could strike inside Iran, who went by Lt. Col. Y. “Every day we gather more targets and objectives at a satisfying pace and learn how to strike them effectively. We have already doubled the target bank in Iran, regardless of nuclear facilities. It is very different from interwar operations. An overt military confrontation will be an entirely different story,” Y said.

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