weekly and monthly gasoline demand at 18 month highs; SPR at a new 39½ year low; biggest jump in natural gas rigs since October 2016 on 7 gas rig increase in New Mexico's Permian Delaware, area of the Permian’s Wolf Camp and Bone Spring formations.
US oil prices rose for a second week after the Saudis and Russia extended their supply cuts and a weak US jobs report diminished fears of tighter monetary policy after rising 2.1% to $70.64 a barrel last week on a series of stronger than expected economic reports and on the 2nd largest drop in US crude supplies since Thanksgiving, the contract price for the benchmark US light sweet crude for August delivery rose in Asian trading on Monday after Saudi Arabia and Russia announced supply cuts for August, overshadowing concern over a global economic slowdown and the potential for further increases to U.S. interest rates, but erased its early gains and sold off ahead of the Fourth of July holiday and settled the New York session down 85 cents at $69.79 a barrel as global macroeconomic jitters outweighed OPEC+ supply cuts...with US markets closed for the 4th, oil prices climbed 1.4% in Asian trading Tuesday, as traders weighed August output cuts by Saudi Arabia and Russia against economic uncertainties worldwide, and then were up by 3% in early overseas trading Wednesday, as global oil traders awaited US demand data for the Fourth of July weekend....that led to a higher post holiday open in US trading, as US prices caught up with the previous day's global gains early in the session, and settled Wednesday's session $2.00 higher at $71.79 a barrel in a post-holiday response to the supply cuts announced on Monday by Saudi Arabia and Russia, even after again coming under selling pressure midday due to concerns over a slowdown in the global economy and future interest rate increases in the U.S. and Europe...oil prices moved higher in early Asian trading Thursday, on American Petroleum Institute data showing that U.S. crude oil inventories fell by 4.4 million barrels in the week to June 30, far more than expectations for a draw of 1.8 million barrels, then steadied as the prospect of tighter supply with output cuts from Saudi Arabia and Russia and a bigger-than-expected drop in U.S. crude stocks were offset by worries over a sluggish demand recovery in China, but backed off the early inventory gains to settle just a penny higher at $71.80 a barrel as traders weighed tighter U.S. crude supplies against the greater likelihood of a U.S. interest rate hike that could dent energy demand....oil prices moved higher early Friday, as fears of further monetary tightening receded on weaker than expected U.S. non-farm payroll growth in June, then erased a midmorning slump after the weaker-than-expected U.S. employment report triggered a selloff in the U.S. dollar and settled $2.06 or 3% higher at a nine week high of $73.86 a barrel as supply concerns and technical buying outweighed fears that further interest rate hikes could slow economic growth and reduce demand for oil, and thus ended 4.6% higher on the week...
Natural gas prices, on the other hand, fell every day this week and ended lower for the first time in five weeks, as production trended record levels while the intense southern heat dome lifted....after falling 1.6% to $2.798 per mmBTU last week while natural gas price quotes rose 2.5% following the expiration of the lower priced July contract, the contract price of US natural gas for August delivery opened Monday's trading 7 cents lower, as gas producers concluded on-site maintenance, resulting in higher output, and seesawed through a volatile trading session to settle 8.9 cents lower on forecasts for slightly lower temperatures next week, even as an increase in gas flowing to LNG export plants and a higher demand outlook limited losses...natural gas prices opened a penny higher and were up 5 cents by 9:30 AM on Wednesday, as production slipped and heat boosted demand, but ample supply levels kept the bulls at bay and the August contract price pulled back to settle 5.2 cents lower at $2.657 per mmBTU as production neared record highs while some of the heat that had been baking the southern states let up a little...natural gas prices opened a penny lower on Thursday, and traded off by around 5 cents for most of the morning, as production remained strong and forecasts for intense heat faded and settled 4.8 cents, or 1.8% lower at $2.609 per mmBTU as the week’s heatwave was set subside, paving the way for a drop in cooling demand ahead of the weekend....natural gas prices moved higher ahead of the delayed storage report on Friday, drawing support from a broadly warm outlook for July temperatures, but tumbled to a two week low after the latest drilling rig data showed a surprisingly hefty increase and settled 2.7 cents lower at $2.582 per mmBTU, thus ending down 7.7% on the week
The EIA's natural gas storage report for the week ending June 30th indicated that the amount of working natural gas held in underground storage in the US had increased by 72 billion cubic feet to 2,877 billion cubic feet by the end of the week, which left our natural gas supplies 575 billion cubic feet, or 25.0% above the 2,302 billion cubic feet that were in storage on June 30th of last year, and 366 billion cubic feet, or 14.6% more than the five-year average of 2,511 billion cubic feet of natural gas that were in working storage as of the 30th of June over the most recent five years… however, natural gas supplies are still 17.2% below normal for this date across the Pacific states, while 21.8% and 18.3% above normal in both the East and Midwest regions of the country at the same time....4 billion cubic feet of this week's increase was due to reclassifications from base gas to working gas, so the actual 68 billion cubic foot injection into US natural gas working storage for the cited week was larger than the 64 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, and was also more than the 63 billion cubic feet that were added to natural gas storage during the corresponding week of 2022, and more than the average of 64 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 30th showed that even after increases in our oil production and our oil imports, another release from our strategic reserves, a drop in our oil exports and a decrease in our oil refining, we had to pull oil out of our stored commercial crude supplies for the 10th time in fifteen weeks, and for the 19th time in the past 49 weeks, largely due to the virtual absence of new oil supplies that the EIA could not account for...
. Our imports of crude oil rose by an average of 418,000 barrels per day to 7,038,000 barrels per day, after rising by an average of 418,000 barrels per day the prior week, while our exports of crude oil fell by an average of 1,437,000 barrels per day to average 3,901,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 3,137,000 barrels of oil per day during the week ending June 30th, 1,896,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly 200,000 barrels per day higher at 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 15,537,000 barrels per day during the June 30th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,030,000 barrels of crude per day during the week ending June 30th, an average of 224,000 fewer barrels per day than the amount of oil that our refineries were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 424,000 barrels of oil per day were being pulled out of 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 30th appear to indicate that our total working supply of oil from net imports, from storage, and from oilfield production was 1,248,000 barrels per day less than what our oil refineries reported they used during the week. To account for that obvious disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [ +69,000 ] 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 magnitude in the week’s oil supply & demand figures that we have just transcribed....However, since last week’s “unaccounted for crude oil” figure was at [+1,248.000] barrels per day, that means there was a 1,179,000 barrel per day difference between this week's oil balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much and therefore useless...However, since most oil traders respond to these weekly EIA reports as if they were 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 had hoped to do about it)
This week's 424,000 barrel per day decrease in our overall crude oil inventories came as an average of 215,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while 208,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time, the thirteenth straight draw on the SPR this year, wherein government owned oil is being sold into the domestic markets as part of an earlier budget balancing withdrawal mandated by congress....as a result of that withdrawal, the 347,159,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since August 19th, 1983, or at a new 39 1/2 year low, as repeated tapping of our emergency oil 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 6,540,000 barrels per day last week, which was 0.4% more than the 6,512,000 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 200,000 barrels per day higher at 12,400,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 200,000 barrels per day higher at 12,000,000 barrels per day, while Alaska’s oil production was 3,000 barrels per day higher at 430,000 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 91.1% of their capacity while using those 16,030,000 barrels of crude per day during the week ending June 30th, down from their 92.2% utilization rate during the prior week, and a utilization rate that's now below the normal range for the end of June... The 16,030,000 barrels per day of oil that were refined this week were 2.5% less than the 16,438,000 barrels of crude that were being processed daily during week ending July 1st of 2022, and 7.3% less than the 17,290,000 barrels that were being refined during the prepandemic week ending June 28th, 2019, when our refinery utilization rate was at 94.2%, within the normal range for this time of year...
Even with the decrease in the amount of oil being refined this week, the gasoline output from our refineries was higher, increasing by 148,000 barrels per day to 10,265,000 barrels per day during the week ending June 30th, after our refineries' gasoline output had increased by 298,000 barrels per day during the prior week. This week’s gasoline production was 0.8% less than the 10,346,000 barrels of gasoline that were being produced daily over the same week of last year, but 3.2% more than the gasoline production of 9,948,000 barrels per day during the prepandemic week ending June 28th, 2019. At the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 141,000 barrels per day to 4,850,000 barrels per day, after our distillates output had decreased by 368,000 barrels per day during the prior week. Even after that rebound, our distillates output was 9.8% less than the 5,379,000 barrels of distillates that were being produced daily during the week ending July 1st of 2022, and was 9.1% less than the 5,336,000 barrels of distillates that were being produced daily during the week ending June 28th, 2019...
Even with this week's increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fourteenth time in twenty weeks, decreasing by 2,549,000 barrels to 219,456,000 barrels during the week ending June 30th, after our gasoline inventories had increased by 603,000 barrels during the prior week. Our gasoline supplies fell this week because the amount of gasoline supplied to US users rose by 293,000 barrels per day to an 18 month high of 9,599,000 barrels per day, as our imports of gasoline fell by 6,000 barrels per day to 851,000 barrels per day, while our exports of gasoline fell by 4,000 barrels per day to 863,000 barrels per day. Even after fourteen gasoline inventory decreases over the past twenty weeks, our gasoline supplies were 0.2% above last July 1st’s gasoline inventories of 219,112,000 barrels, but were still about 7% below the five year average of our gasoline supplies for this time of the year…with gasoline supplied at an 18 month high this week, the four week average for gasoline supplied, a proxy for gasoline demand, rose to 9,386,000 barrels per day, which was the highest since November 5th, 2021...
Meanwhile, even with this week's increase in our distillates production, our supplies of distillate fuels decreased for the tenth time in seventeen weeks, falling by 1,045,000 barrels to 113,366,000 barrels during the week ending June 30th, after our distillates supplies had increased by 123,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 497,000 barrels per day to 3,811,000 barrels per day, and even as our exports of distillates fell by 195,000 barrels per day to 1,301,000 barrels per day while our imports of distillates fell by 6,000 barrels per day to 113,000 barrels per day....Even with 33 inventory increases over the past fifty-nine weeks, our distillates supplies at the end of the week were 0.4% below the 113,803,000 barrels of distillates that we had in storage on July 1st of 2022, and are now about 16% below the five year average of our distillates inventories for this time of the year...
Finally, with an increase in our oil imports and a big decrease in our oil exports, our commercial supplies of crude oil in storage fell for the 11th time in 27 weeks and for the 25th time in the past year, decreasing by 1,508,000 barrels over the week, from 453,690,000 barrels on June 23rd to 452,182,000 barrels on June 30th, after our commercial crude supplies had decreased by 9,603,000 barrels over the prior week. With a series of three decreases, our commercial crude oil inventories are now about 1% below the most recent five-year average of commercial oil supplies for this time of year, but are still about 30% above the average of our available crude oil stocks as of the end 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, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this June 30th were 6.7% more than the 423,800,000 barrels of oil we had in commercial storage on July 1st of 2022, and were 1.5% more than the 445,476,000 barrels of oil that we still had in storage on July 2nd of 2021, but are 16.1% less than the near record 539,181,000 barrels of oil we had in commercial storage on July 3rd of 2020, after early pandemic precautions had left a lot of oil unused…
This Week's Rig Count
The number of drilling rigs active in the US increased for the first time in ten weeks during the week ending July 7th, while they are still 14.2% below the prepandemic rig count, despite increasing ninety-six times over the 123 weeks of the post pandemic recovery... Baker Hughes reported that the total count of rotary rigs drilling in the US rose by 6 rigs to 680 rigs over the past week, which was still 72 fewer rigs than the 752 rigs that were in use as of the July 8th report of 2022, and was also 1,249 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 five to 540 oil rigs during the past week, after the number of rigs targeting oil had decreased by one rig during the prior week, leaving 57 fewer oil rigs active now than were running a year ago, as they now amount to just 33.6% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, while they are now down 20.9% from the prepandemic oil rig count of 683….on the other hand, the number of drilling rigs targeting natural gas bearing formations rose by 11 to 135 natural gas rigs, the biggest gas rig jump since October 14, 2016, which was nonetheless still left natural gas rigs down by 18 from the 153 natural gas rigs that were drilling during the same week of 2022, as they now amount to 8.4% 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 reports that five rigs they've labeled as "miscellaneous" continued to drill this week, including a vertical rig targeting the Marcellus at between 10,000 and 15,000 feet in Monongalia county West Virginia; 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. We've recently learned that the Beaver county Utah well is for a utility scale geothermal project, and we suspect that's also the case with the drilling in Hawaii, in the past we've also identified various "miscellaneous" rig activity as being for exploration rather than production and for carbon dioxide storage...
The offshore rig count in the Gulf of Mexico was up by one to 19 rigs this week, and included 17 rigs drilling for oil in Louisiana's offshore waters, and two drilling for oil in Texas waters....the Gulf rig count is now up by 3 from the 16 Gulf rigs running a year ago, when all 16 Gulf rigs were drilling for oil offshore from Louisiana…however, the directional rig that had been drilling for oil offshore from Los Angeles was shut down this week, while there was a rig drilling offshore from Alaska during the same week a year ago, so the national total of 19 rigs drilling offshore is up by 2 rigs from the national offshore count of 17 a year ago..
In addition to rigs drilling offshore, there are are now four inland water based deployed this week, all in Louisiana...those now include a directional rig drilling for oil at a depth of between 10,000 and 15,000 feet through an inland body of water in Vermilion Parish, 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. a directional rig drilling for oil at a depth of less than 5,000 feet on inland waters in Lafourche Parish, and a directional rig drilling for oil at over 15,000 feet through an inland body of water in Terrebonne Parish Louisiana...a year ago, there were also four such rigs drilling on inland waters...
The count of active horizontal drilling rigs was up by 5 to 611 horizontal rigs this week, which was still 71 fewer rigs than the 682 horizontal rigs that were in use in the US on July 8th of last year, and only 44.5% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014….at the same time, the directional rig count was up by 3 to 53 directional rigs this week, and those were up by 7 from the 43 directional rigs that were operating during the same week a year ago....on the other hand, the vertical rig count was down by two to 16 vertical rigs this week, while those were down by 11 from the 27 vertical rigs that were in use on July 8th of 2022…
The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of July 7th, the second column shows the change in the number of working rigs between last week’s count (June 30th) and this week’s (July 7th) count, the third column shows last week’s June 30th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 8th of July, 2022...
Obviously, Louisiana's 7 rig increase accounts for this week's national increase, but not for the jump in natural gas rigs, since as we've already seen, Louisiana saw three oil rigs added; one offshore and two on inland waters...but it does look likely that at least three of the four rigs added in the Haynesville shale region were targeting natural gas, since a natural gas rig was pulled out of the Haynesville in Texas Oil District 6 at the same time...elsewhere in Texas, there was an oil rig pulled out of Texas Oil District 4, which accounts for the Eagle Ford loss, and there were three rigs pulled out of Texas Oil District 7C, which overlies the southern Permian Midland, and two rigs pulled out of Texas Oil District 8A, which includes the counties over the northern Permian Midland, while three rigs were added in Texas Oil District 8, which overlies the core Permian Delaware...Since the Texas Permian was down by two rigs while the national Pemain count was up by one, we can therefore conclude that the three rigs that were added in New Mexico were set up to drill in the far western Permian Delaware, in the southeast corner of that state...and it turns out, the Permian basin is where seven of the natural gas rigs were added, while 6 oil rigs were pulled out at the same time, leaving the Permian with 330 oil rigs and 12 rigs targeting natural gas, 11 of which are in Eddy county New Mexico, which saw the 7 rig increase, and one in Lea county, also New Mexico....the last change we have to note is the removal of an oil rig from the DJ Niobrara chalk in Colorado, and the addition of an oil rig in that same basin in Wyoming, leaving the Niobrara rig count unchanged..
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US House of Representatives Speaker Kevin McCarthy touts energy dominance during visit to Columbiana County, Ohio (WKBN) – Kevin McCarthy, the speaker of the U.S. House of Representatives, spent an hour Thursday afternoon touring a drill site in Columbiana County. McCarthy toured Encino Energy’s Sanor Farm Well Pad near Damascus, bringing with him a message of more than just American energy independence. “We just don’t want to be energy independent, we want to be dominant,” McCarthy said. What McCarthy was there to see were four new well heads drilled by Encino, which in the next two weeks will be producing oil and natural gas from deep in the Utica Shale by way of hydrologic fracking. He also mingled among the Encino workers, shaking hands with many of them. McCarthy was critical of energy policies in his home state of California. “They’ve reduced production by 20%,” McCarthy said. But complimentary of Ohio. “What does Ohio do? They discover new fields — safe, secure, environmentally sound,” McCarthy said. McCarthy said America’s natural gas is 41% cleaner than Russia’s natural gas, the profits of which, he says, Putin uses to kill Ukrainians. “God has blessed America with resources. If we have the ability to produce those resources, America will be stronger and the world will be safer,” McCarthy said. He was asked about the Canadian wildfires, saying people are wrong who claim they’re caused by climate change, to which he received applause. “It’s caused by not managing your forests,” he said. McCarthy cited for example the sequoia trees of California. “In the last three years, we’ve lost 30% of our giant sequoias because they won’t go in and manage the forest,” he said. McCarthy was in Columbiana County on Thursday at the invitation of Congressman Bill Johnson, who urged Congress to pass House Resolution One, the energy bill, which Johnson says includes permitting and production reforms and pushes America back toward energy independence.
Throwback: Activists Use Long Debunked Claims In Attempt to Stop Oil, Natural Gas Development Under Ohio State Lands --Watching the Ohio Oil & Gas Land Management Commission’s June meeting on leasing the state’s mineral rights and recent coverage of arelated protest is like taking a time machine back to 2013. Fortunately, many of the concerns raised about fracking, produced water management and other related issues are ones that have been put to rest with factual data compiled from nearly two decades of shale development in the Appalachian Basin and across the country, including in Ohio where producers have been responsibly developing oil and natural gas in the Utica and Marcellus shales since 2011. Let’s take a closer look:
- Claim: Shale development cannot coexist with recreation and conservation and will impact visitors to state parks. Across Ohio, there are various examples of the energy industry working cohesively with local communities and public entities to create mutually beneficial partnerships. For instance, the Muskingum Watershed Conservancy District (MWCD) has become a record-setting tourist attraction despite the energy development within its borders. In fact, MWCD has received more than $200 million in investments in campgrounds and other amenities funded by oil and natural gas revenues. The partnership has been so beneficial, the district agreed to develop 7,300 additional acres of land in the Utica Shale, where the MWCD will receive $5,500 per acre, paid over five years, and gross royalty of 20 percent.
- Claim: Ohio’s oil and gas producers are exempt from disclosing frack fluid solutions, jeopardizing communities and leaving first responders unprepared. This claim has been repeatedly debunked over the years.First, Ohio’s oil and gas operators are required by law to disclose fluid solutions to ODNR and on FracFocus, a publicly accessible database, within 60 days of completion of a well. While this does allow companies to protect proprietary information on the FracFocus website – the same as countless other industries across varied sectors – Ohio’s Senate Bill 315, which was passed in 2012, ensures that the amount, concentration, and chemical composition of fracking fluids be made available to state regulators and officials, as well as physicians, should a need arise.
- Claim: Water consumption for energy use is not regulated. Water withdrawals are strictly regulated by the Ohio Department of Natural Resources Division of Water Resources: According to ODNR:
- “Section 1521.16of the Ohio Revised code requires any owner of a facility, or combination of facilities, with the capacity to withdraw water at a quantity greater than 100,000 gallons per day (GPD) to register such facilities with the Ohio Department of Natural Resources (ODNR) Division of Water. The Water Withdrawal Facility Registration (WWFR) Program provides information of great importance to the citizens of the state. Water, one of our most basic and precious natural resources, needs to be studied more intensely and water resource planners need reliable information to plan for the future. The state’s economy depends on water and economic development will continue to place increased demands on this critical resource.” (emphasis added)
- “Any facility that is registered with the Division of Water Resources must complete and submit an annual report of all water withdrawn in a calendar year. Reports must also be submitted even if no water was withdrawn. This reporting applies to ground water withdrawals, surface water withdrawals or any combination of the two. These reports are due by March 1st of each year.” (emphasis added)
- Further, any facility withdrawing more than 100,000 gallons per day from the Ohio River Watershed must first obtain a permit, and any facility withdrawing more than an average two million gallons per day in any 30-day period from any waters of the state must also first have a permit.
- Claim: The management of brine is not regulated. The management of oil and natural gas produced water – or brine – is also strictly regulated in Ohio. Nearly 98 percent of brine is safely disposed of in Class II wells that are regulated under the Safe Drinking Water Act and by ODNR. As EID has previously explained, ODNR received primacy in 1983 and has since been consistently recognized for having more stringent rules than those set by the federal government.
- Claim: Shale development is impacting regional health. Most research that has been used to support claims of health impacts from shale development in the Appalachian Basin and beyond has consistent limitations and flawed methodology: Namely that researchers don’t take samples to identify pathways of exposure and concentrations. When samples are taken, it has been repeatedly demonstrated that shale development in the Appalachian Basin is protective of public health. In fact, the activist who wrote a 2012 memo encouraging anti-fracking groups to connect health problems and fracking even when no evidence existed to support the claims co-authored a 2019 report where he admitted that the vast majority of scientific research shows no harmful air pollutants near oil and natural gas sites.
- Claim: Oil and natural gas will not be needed long-term. The U.S. Energy Information Administration’s 2023 Annual Energy Outlook (AEO) finds that oil and natural gas will be here for the long haul. The report projects that U.S. energy production will remain high, exports will grow, and natural gas consumption will remain stable as renewable energies integrate onto the grid through 2050. Natural gas from the Appalachian Basin will play a major role in ensuring manufacturers and utilities alike have an abundant, affordable feedstock. As JobsOhio President J.P. Nauseef recently explained:“Manufacturers worldwide are now realizing that Ohio is one of the most advantageous states for natural gas and natural gas liquids consumption – that feedstock, combined with our infrastructure, access to end-use markets, and the highly-skilled workforce that calls Ohio home.” With increasing stress on U.S. power grids, as well as global tension threatening energy security, natural gas and oil will remain essential to providing dispatchable power across the globe.
KDKA Investigates: Family says natural gas processing plants turned peaceful farm into nightmare - CBS Pittsburgh(KDKA) -- A local family says their peaceful home was turned into a nightmare when two natural gas plants moved in and seemingly surrounded their property. Now they've found themselves locked in a battle of David and Goliath. "It got handed down from my grandpa to my dad and now me," said farm owner Sam Duran. The Washington County homestead and farm has been a place of quiet solitude for generations of the Duran family, until recently. The once-peaceful fields are flanked by two giant natural gas processing plants. A recently expanded plant operated by Mark West and one owned by the Texas company Energy Transfer are both sites of constant flaring and noise. "Some nights we can't even sleep with the sounds from the plants," Duran said. It all came to a head with an explosion and fire at the Energy Transfer plant on Christmas morning, causing the Durans to flee with their children. "They were opening their gifts, it was like 7:30 and the whole house shook. We gathered what dogs we could and the kids and got in the car and left," said Kasey Duran, Sam's wife. Energy Transfer's record in Pennsylvania is checkered at best. The state ordered the company to pay $30 million dollars in fines for an explosion at its Revolution Pipeline in Beaver County in 2018, and $20 million for more than 100 violations for leaks in its Mariner East pipeline, which polluted wetlands and private wells. But state environmental regulators have done little to address the problems at the plant. The state Department of Environmental Protection cited the company in 2021 for failure to prevent visible emissions, and the company agreed to pay $15,000 in fines. However, the DEP has issued no violations for the Christmas explosion and it's unclear if state regulators conducted an investigation. In a statement, the DEP said it reviewed the company's findings that a faulty valve had caused the explosion and has allowed Energy Transfer to resume operations. Despite constant calls to the DEP, Kasey Duran says she's heard nothing. "I would really like to see someone be held accountable for something. I've gone to township meetings. I've done my due diligence. I've complained, I've begged, I've cried," she said. In their statement to KDKA-TV, Energy Transfer says it has resumed operations "in accordance with all appropriate regulations under the terms of our existing permits," and has "maintained an open dialogue with the Duran family in our efforts to address their concerns." But the Durans say their pleas for them to curtail the flaring, lower the noise or construct a sound wall have fallen on deaf ears. At wit's end, they've asked Energy Transfer to buy them out but said their offer was way too low. "You know, I would really at least like to go to another farm where we got some peace and quiet and tranquility because this isn't it anymore," said Sam Duran. Between the noise, flaring and that massive explosion on Christmas Day, folks say the once peaceful farm has become unlivable, and yet, they're stuck without answers or solutions.
PA House Votes 102-101 to Study Marcellus-Busting Severance Tax - Marcellus Drilling News - Pennsylvania’s Democrat Party is hellbent on driving the Marcellus Shale industry out of the state. They have been for years. That’s just a truthful observation and beyond dispute. The latest evidence is the party’s insistence on adding a severance tax on top of the existing impact fee, PA’s version of a severance tax. The Dems in the PA House passed a resolution on Friday by a single vote that directs the Legislative Budget and Finance Committee to “study” Pennsylvania’s revenue from the oil and gas industry, comparing it with the top five states in natural gas production in the U.S.
Natgas begins July with price dip as output rises, Texas heat lets up - After the best monthly return in a year, natural gas began July trading with a dip on Monday as producers concluded on-site maintenance, resulting in higher output. Some of the heat that had pervaded the south of the United States also let up, reducing gas-driven demand for cooling. Most-active August gas the New York Mercantile Exchange’s Henry Hub fell 8.9 cents, or 3.3%, to settle at $2.709 per mmBtu, or metric million British thermal units. The benchmark gas futures rose 2.5% last week and 24% last month, the most for a month since June 2022. For the quarter, it was up 26%. For the year though, gas futures on the hub posted a loss of 37%. Monday’s trade reflected rebounding output as U.S. LNG terminals wrapped up maintenance in a bid to return to their 14.5 billion cubic feet per day, or bcf/d, capacity and meet the growing demand. “As anticipated, production has continued to see increases as companies conclude maintenance before the holiday, rising 0.32 bcf/d,” “We have seen a 0.24 bcf/d decrease in PowerBurn that we feel comes from both weather volatility and typical holiday dynamics. Heat has temporarily let up around the Texas area temporarily, which is reflected in regional PowerBurn metrics, and the upcoming 4th of July holiday puts additional downward pressure on demand.” The one bright aspect for the trade remains feeds for liquified natural gas, or LNG, which hit a relative high at 13.12 bcf/d on Chinese demand, the Gelber note said. China has been a consistent buyer of LNG despite the country’s fuel shortages having eased. One-third of this year’s global long-term LNG volume is signed to China, making it the top importer of the fuel. “A leading narrative for China’s continued demand is LNG’s lower price volatility compared to other fuel sources,” Gelber’s analysts said. “Some speculate, however, that broad influence as LNG’s largest buyer would be a powerful geopolitical lever for China as the transition away from coal continues globally. Either way, the country’s consistent buying shows no sign of slowing.”
US natgas prices drop 1% on record output, big storage build (Reuters) - U.S. natural gas futures fell about 1% on Friday to a two-week low, as drillers pulled record amounts of gas out of the ground and after a bigger-than-expected storage build last week. Forecasts called for hotter-than-normal weather through late July, especially in Texas, and rising feedgas to the nation's liquefied natural gas (LNG) export plants. The Electric Reliability Council of Texas (ERCOT), the state's power grid operator, projected another heatwave next week would boost electricity use to a record high on Wednesday, July 12. Generators burn gas to power air conditioning, and Texas in 2022 got about 49% of its power from gas-fired plants, federal energy data showed. The U.S. Energy Information Administration (EIA) said utilities added 68 billion cubic feet (bcf) of gas into storage during the week ended June 30, bigger than the 64-bcf build analysts forecast in a Reuters poll, up from an increase of 63 bcf in the same week last year and exceeding the five-year (2018-2022) average increase of 64 bcf. The 68-bcf build was the implied flow before a 4-bcf reclassification from base gas to working gas in the Nonsalt South Central region. Front-month gas futures for August delivery on the New York Mercantile Exchange fell 2.7 cents, or 1.0%, to settle at $2.582 per million British thermal units (mmBtu), their lowest close since June 20. For the week, the contract was down about 85% after rising around 3% last week. That would be the front-month's first weekly decline in five weeks. After hitting record highs in 2022, gas prices so far this year have plunged about 55% at the Dutch Title Transfer Facility (TTF) benchmark in Europe, 59% at the Japan Korea Marker (JKM) benchmark in Asia and 41% at the U.S. Henry Hub benchmark in Louisiana. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 102.2 billion cubic feet per day (bcfd) so far in July, up from 100.9 bcfd in June and on track to top the monthly record high of 101.9 bcfd in May. That production increase came even though drillers have cut the number of oil and gas rigs operating in nine of the past 10 weeks. This week, however, drillers added the most gas rigs in a week since October 2016, according to Baker Hughes. Meteorologists forecast weather in the Lower 48 states would remain near normal until July 10 before turning hotter-than-normal through at least July 22. With higher temperatures coming, Refinitiv forecast U.S. gas demand, including exports, would rise from 103.1 bcfd this week and next to 106.9 bcfd in two weeks. The forecasts for this week and next were similar to Refinitiv's outlook on Thursday. Gas flows to the seven big U.S. LNG export plants rose to an average of 13.1 bcfd so far in July from 11.5 bcfd in June. That was still well below the monthly record of 14.0 bcfd in April due to ongoing maintenance at several facilities, including Cheniere Energy Inc's Sabine Pass in Louisiana and Corpus Christi in Texas.
How the U.S. went from importing liquified natural gas to leading world exports - NPR (podcast & transcript)
USA Awards Contracts for SPR Purchase of 3.2MM Barrels - The USA Department of Energy (DOE) has awarded contracts for 3.2 million barrels of locally produced crude for over $230.34 million in another purchase to refill the Strategic Petroleum Reserve (SPR) after war-induced releases. These contracts are for the invitation announced last month, when the DOE awarded contracts for three million barrels. Macquarie Commodities Trading US LLC scored the biggest deal in the latest purchase with 1.5 million barrels, followed by Shell Trading Co. and Sunoco Partners Marketing & Terminals LP with 600 million barrels each. Atlantic Trading & Marketing Inc. is to supply 500 million barrels. These are scheduled for delivery September and will be injected into the Big Hill SPR storage site in Texas state’s Jefferson county, the DOE said in a press release Friday. The same storage is to receive the three million barrels whose contracts were awarded June, due for delivery August. “The 3.2 million barrels are being purchased for an average price of about $71.98 per barrel, lower than the average of about $95 per barrel that SPR crude was sold for in 2022, securing a good deal for taxpayers”, the department said. The contracts awarded last month had an average price of around $73 a barrel. The DOE plans to issue another invitation for SPR purchases this week. The USA wants to get the SPR to its would-be level had it not been for withdrawals to hold down prices that have skyrocketed following Russia’s invasion of Ukraine February 2022. In an interview at the Columbia Global Energy Summit April 12, Energy Secretary Jennifer Granholm estimated over 160 million barrels in replenishment volume. “Today’s announcement advances the President’s replenishment strategy following his historic release from the SPR to address the significant global supply disruption caused by Putin’s war on Ukraine”, the DOE said. President Joe Biden announced March 2022 an SPR drawdown of one million barrels a day for the next six months, 180 million barrels in total. A Treasury Department analysis showed the SPR releases and coordinated releases with partner countries in the International Energy Agency (IEA) have lowered gasoline prices by 17-42 cents, the treasury said in a news release July 26, 2022. The West Texas Intermediate (WTI) international benchmark for crude gradually fell after consistently staying above $100 per barrel March 2022, a month after the conflict started, to July 2022, according to data from the USA Energy Information Administration (EIA). WTI prices last year peaked June at a 12-year high of $114.84. WTI settled at $76.44 yearend. The Brent global benchmark also remained above $100 a barrel March 2022-August 2022 before easing to $80.92 yearend, based on the EIA data. Last year’s Brent prices also peaked June at an eight-year high $122.71. The DOE has three SPR replenishment strategies: direct buys funded by revenues from emergency sales, exchange returns and “legislative solutions that avoid unnecessary sales unrelated to supply disruptions”. The agency has so far secured the rescindment of 140 million barrels in parliament-mandated sales for 2024-27. In March the DOE awarded sales from the SPR for its full-year obligation to the congress for 2023, amounting to 26 million barrels. “This will be the last Congressionally mandated sale until FY26 [fiscal year 2026]”, it said in a press release March 9. “Congress accepted a DOE proposal that canceled 140 million barrels in congressionally mandated sales that were directed to take place between FY24 – FY27. “This action strategically maintains volume SPR at a price of ~$74 dollars a barrel by avoiding unnecessary sales.” Record Low In the third week of June according to the latest EIA update, the SPR, mandated by the Energy Policy and Conservation Act to be only used during severe supply disruptions, plunged to its lowest level since August 1983. It stood at 348,617 million barrels as of June 23. In the second quarter the SPR saw net withdrawals of 280,000 barrels a day, according to the DOE’s short-term outlook published June 6.
Permian’s Dunes Sagebrush Lizard Proposed for Endangered Species List - Natural Gas Intelligence - The dunes sagebrush lizard, found only in the shinnery oak sand dune ecosystems within the oil and natural gas-rich Permian Basin may be listed as “endangered” under the powerful Endangered Species Act (ESA). The U.S. Fish and Wildlife Service (USFWS) is accepting comments through Sept. 1 on the proposal. The determination “also serves as the 12-month finding on a petition to list the lizard and satisfies a court ordered deadline to deliver the finding” by the end of June, officials noted. “Primary threats to the lizard include loss of habitat associated with oil and gas development, sand mining and changing climate,” the USFWS noted. “After a rigorous review of the best available scientific and commercial information, the Service finds that listing the species is warranted. The designation of critical habitat was found to be prudent but not determinable at this time. “
Reporting tackles increased number of earthquakes shaking New Mexico ― The railroad track that runs behind the former Carlsbad Current-Argus office on South Main Street frequently carried trains that shook the old building for minutes. But the shaking that happened on March 26, 2020 was different. It was short and sharp. It set metal cabinets humming and the window panes rattling.The 5.0 magnitude earthquake recorded that day by the U.S. Geological Survey centered west of Mentone, Texas didn't cause any damage but was at that time the largest recorded quake in the region for at least two decades.Since then, increasingly larger-scale seismic events have struck the same region. The most recent was a 5.2 magnitude quake centered near Midland, Texas onDec. 16, 2022. Damage from a Nov. 16, 2022 quake was reported in Texas but was relatively minor. In Carlsbad, merchants in the downtown area flooded the street that day with one question: "Did you feel that, too?" Residents of Las Cruces and Albuquerque reported feeling the quake, too.In the last three years, the USGS has recorded 10 seismic events of 4.5 magnitude or higher - and earthquakes aren't only getting stronger, they're getting more frequent, which could mean those living and working in southern New Mexico and west Texas might begin to feel the increasing consequences of seismic activity.What's less obvious is why this is happening. Through our reporting, experts in seismicity and geology have linked the change to a booming oil and gas industry, which disposes of its waste water via injection wells. Those wells see millions of gallons of toxic water pumped back into a geology vulnerable to sinkholes and erosion.And there are hundreds of these disposal wells in the Permian Basin.The Current-Argus always begins its coverage of earthquake activity in the region consulting USGS data - and the data tells an alarming story of the link between the two that is now being more deeply explored in research communities and among the fossil fuel industry itself.In Shaky Ground, the Current-Argus and its reporting partner, KRWG Public Media, explores what increased seismic activity means for residents of the Permian Basin, and how solutions are now being sought to not only mitigate current effects but head off disaster.Lawmakers in Texas, Oklahoma and New Mexico have taken up the issue with legislation that tackles its supposed cause: injection wells and hydraulic fracturing.Oil and gas operators have begun to explore technology that limits the use of injection wells and focuses instead on recycling waste water, keeping it out of fragile geology.We've been lucky: Some of the most devastating natural disasters in the world are the result of earthquakes, costing lives, billions in damages and economic loss. The world is wracked by small earthquakes on a daily basis - like the hundreds of 2.0 magnitude quakes recorded in the Permian Basin yearly. Worldwide, there are about 100 per year that measure 7.0 or greater and cause serious damage.I had no idea what the appropriate response to a seismic event was before undertaking this reporting, and I've no doubt that the thousands who live in the Permian Basin have not paused to consider what the correct response to an earthquake is either.Do you move to a doorway? Do you hide under a table?What if your home or business is damaged? Do you have the appropriate insurance coverage?Is there a plan in place for your community emergency services to respond to an earthquake that causes injuries or damage?These are the questions we asked in this reporting.And there is one I hope this reporting answers for our readers: What can be done to ensure our community is safeguarded and prepared in case of a large magnitude earthquake?
Boomtowns: Once connected by railroads, Colorado River Valley towns now feel threatened by them: Local officials spar over Uinta Basin oil trains in the heart of Rep. Lauren Boebert’s district — Coyote Gulch Blog— As they head east out of the bottomlands of the Grand Valley, trains on the Union Pacific’s Central Corridor continue to follow the Colorado River in reverse, climbing gradually into Garfield County, where the rocky cliffs and sagebrush-spotted scrubland of the high desert begin to give way to the gentler slopes and lush alpine forests of the Rocky Mountains. The railroad and Interstate 70 run in parallel through this narrow stretch of the Colorado River Valley for 60 miles, rarely separated by more than 100 yards as they pass industrial lots lined with frac tanks and truck-mounted drill rigs, and narrow strips of Bureau of Land Management acreage where sheep graze beside natural gas compressors and flare stacks.The communities that the Central Corridor passes through between the Grand Valley and Glenwood Canyon have long been shaped by the boom-and-bust cycles of fossil fuel extraction, their economic fortunes rising and falling along with the viability of the energy sources buried underneath them — first coal, then oil, and now natural gas, extracted from a subterranean formation known as the Piceance Basin.The Piceance gas boom, which peaked a decade ago, swelled county property-tax revenues and provided many families like the Boeberts with high-paying jobs. But a confluence of factors, topped by a global decline in natural gas prices, has gradually soured the basin’s outlook. Corporate oil giants like ExxonMobil and Occidental have largely divested from their holdings here, and Garfield County’s total gas production last year was only slightly more than half of 2013 levels.Although the two basins form a nearly continuous 200-mile-wide belt of underground hydrocarbon reservoirs straddling the Colorado-Utah border, producing oil and gas from many of the same layers of prehistoric rock, the Piceance and the Uinta have little to do with each other on the surface. Travel between them is possible only by circuitous highway routes that skirt north or south around the rugged Roan Plateau.Soon, though, that could change in a big way. The 88-mile Uinta Basin Railway, proposed by a partnership between industry and Utah county governments, would establish a direct rail connection between the basin and Garfield County for the first time in nearly a century.The result would be one of the largest sustained efforts to transport crude oil by rail ever undertaken in the U.S., sending hundreds of fully loaded tanker cars daily along the banks of the Colorado River through Garfield County — and many residents here aren’t happy about it.“Nobody wants it,” Caitlin Carey, a Town Council member in New Castle, said in an interview. “It’s not a sound decision environmentally, it’s not a sound decision as far as safety is concerned in our small towns, and it’s not bringing any revenue to the area. So economically, environmentally and safety-wise, it doesn’t make any sense for it to come through this area.”
Yellowstone River cleanup begins after asphalt binder spill due to train derailment -Globs of asphalt binder that spilled into Montana’s Yellowstone River during a bridge collapse and train derailment could be seen on islands and riverbanks downstream from Yellowstone National Park a week after the spill occurred, witnesses report. Officials with the Environmental Protection Agency said cleanup efforts began on Sunday, with workers cooling the gooey material with river water, rolling it up and putting the globs into garbage bags. It will probably be recycled, said Paul Peronard with the EPA. Alexis Bonogofsky, whose family’s ranch was impacted by an oil spill on the Yellowstone River near Billings in 2011, took pictures Saturday of the refined petroleum product covering rocks and sandbars. She also snapped an image of a bird that had died in the black substance. “This killdeer walked across the asphalt, which had heated up in the sun, and it got stuck and died with its head buried in the asphalt,” Bonogofsky wrote in the caption of an image she posted on social media. “You could tell where it had tried to pull itself out.” A bridge over the river collapsed as a train crossed it early on June 24 near the town of Columbus and 10 cars fell into the water, spilling liquid asphalt and molten sulfur, officials said. Both materials were expected to cool and harden when exposed to the cold water, and officials said there was no threat to the public or downstream water supplies, officials said. However, the asphalt binder behaved differently. “This stuff is not sinking in this water,” Peronard said Sunday. “It adheres really well to rock, and we can roll it up like taffy on the sand.” Bonogofsky, in another of her photos, captured a sheen on the water. She said the spilled material heated up with warmer temperatures and “you can smell it.” The Montana Department of Environmental Quality, the EPA and Montana Rail Link — the entities managing the cleanup — said more asphalt product was released Friday as a rail car was being removed from the river. “Initial assessments indicate the release was minimal based on the amount of material believed to still be remaining in the impacted car,” the statement said. Professor Kayhan Ostovar with the Yellowstone River Research Center at Rocky Mountain College also took pictures Friday of the petroleum product that had washed onto the riverbank about 6 miles (10 kilometers) downstream from the spill. Ostevar’s team has been conducting turtle surveys below the derailment and is sharing the GPS locations of sensitive sites that are near areas where the asphalt binder has come to rest. Turtles are particularly vulnerable to this type of spill, Ostovar said, because they are leaving the water right now to seek out nesting sites on gravel bars and basking in the sun. The center was created after the 2011 ExxonMobil pipeline breach to gather better baseline information on species of concern that live in and around the Yellowstone River. Statements from the agencies and the railroad over the past week have asked people to report the sighting of asphalt materials on the riverbank via email to rpderailment@mtrail.com, and have listed a phone number — 888-275-6926 — for the Oiled Wildlife Care Network to report animals with oil on them. No reports from the public had been received, Peronard said. Bonogofsky argued it shouldn’t have taken more than a week to develop a cleanup plan, especially since it’s known what materials the trains haul through Montana, as well as the damage the 2011 oil pipeline spill caused. “We should have plans in place for this and we should have learned our lesson in 2011,” she said, arguing that work to clean up the asphalt binder could have happened at the same time they were removing rail cars from the water. The last of the rail cars was expected to be removed from the water on Sunday, Peronard said, while agricultural users were notified that they could resume using river water for irrigation. Their irrigation canals had been shut down as a precaution. Cleaning up spills of petroleum products is “somewhat of a losing game,” Peronard said. “We are never going to recover all of the oil here ... and there’s likely to be impacts when we are done. That is unavoidable.” As far as the cleanup delay, he said the response to any accident starts with protecting human lives, controlling the source of the spill and then protecting the environment. He said the agency also had to make sure its cleanup plan did not cause more harm than good for bird and turtle nests in the area. Cleanup crews also have to stay at least a half mile away from eagles nesting in the area, Peronard said. The spilled asphalt material is not water soluble, he said.
North Dakota Department of Environmental Quality monitoring 4 spills in the past 5 days - The North Dakota Department of Environmental Quality is monitoring 4 spills in the past 5 days. The department says a truck accident on July 3 caused roughly 150 barrels of crude oil to spill into a road ditch about 10 miles northwest of Ray. Meanwhile, roughly 20 gallons of fuel spilled into the Souris River four miles northeast of Velva on July 2 following an excavator accident. A containment boom was put in place to contain the spill. The Department of Environmental Quality also says 2,290 barrels of produced water was released from a pipeline roughly 14 miles southeast of Tioga last Thursday. The company that operates the line, Enable Bakken Crude Services LLC says some of the leak impacted agricultural land. Friday, the Department of Environmental Quality says an estimated 200 barrels of crude oil spilled from tanks at a well pad roughly a mile northwest of Belfield. Some of the oil impacted the rangeland surrounding the well pad. The pad is operated by Big D Oilfield Services, LLC. In all cases, state officials are overseeing the cleanup and remediation.
Is Biden cracking down on pipeline violators? - Fines for oil spills and other pipeline accidents are surging under the Biden administration, but industry critics and supporters aren’t sure if the trend will last.Federal civil penalties for pipeline safety violations topped $10 million for the first time in 2021 and rose again last year to $11.6 million. During the Trump administration, fines averaged about $4.5 million per year.Pipeline safety has taken on a higher profile in recent years, both in terms of protecting vulnerable communities and trying to prevent methane leaks that exacerbate climate change. Some observers say conclusions shouldn’t be drawn from a mere two years of data. But others say the rising numbers highlight an increased vigilance on pipeline safety from the Biden administration.“It kinda jumps out at you,” said Bill Caram, executive director of the Pipeline Safety Trust, a Bellingham, Wash.-based advocacy group. “This administration seems to be taking pipeline safety more seriously than previous administrations, including Democratic administrations.”Other signs, he said, include industry fighting harder against the new rules it has proposed.The average amount of each fine sought by the Pipeline and Hazardous Materials Safety Administration also jumped substantially in 2021 before growing in 2022 to nearly $264,000. A recent large fine for an offshore California oil spillcaused the average penalty for this year, so far, to surge to nearly $367,000.Any shift comes as pipelines become an increasingly controversial part of the climate debate. PHMSA, the federal pipeline regulatory agency, is preparing new regulations to crack down on emissions of methane from pipeline infrastructure.President Joe Biden is drawing heat for agreeing to force completion of the Mountain Valley pipeline. And his administration’s plans for pipelines for carbon capture and sequestration to fight climate change are drawing increasing criticism from both ends of the political spectrum.
North America Sees Rig Loss Regression - North America went back to losing rigs week on week, Baker Hughes’ latest rotary rig count, which was released on June 30, revealed. According to the count, North America dropped 10 rigs week on week, with the U.S. losing eight week on week, while Canada dropped two during the same timeframe. The total North America rig count figure is now 841, comprising 674 rigs from the U.S. and 167 from Canada, Baker Hughes’ latest count showed. The U.S. had eight fewer land rigs week on week, according to Baker Hughes’ count, which showed that the country dropped six gas rigs, one oil rig, and one miscellaneous rig during that timeframe. Louisiana, North Dakota, Oklahoma, and Texas all lost rigs week on week, while New Mexico and Wyoming added rigs, Baker Hughes showed. Louisiana and Texas each dropped four rigs, Oklahoma dropped two, North Dakota cut one, New Mexico added two and Wyoming added one, the count outlined. The total U.S. rig count comprises 653 land rigs, 19 offshore rigs, and two inland water rigs, Baker Hughes revealed. Of its total rig count of 674, the country has 545 oil rigs, 124 gas rigs, and five miscellaneous rigs, the count pointed out. Canada was shown in the count to have dropped one oil rig and one gas rig week on week. The country’s total rig count of 167 comprises 109 oil rigs and 58 gas rigs, according to Baker Hughes. Baker Hughes’ rig count highlighted that North America is down 75 rigs on year ago figures and showed that the U.S. has driven this decline, cutting 76 rigs compared to Canada’s addition of one. The U.S. has dropped 50 oil rigs and 29 gas rigs, and added three miscellaneous rigs, year on year, while Canada has added one gas rig year on year, the rig count revealed. North America had been on a streak of rig additions, according to Baker Hughes’ previous counts. In its last rig count, which was released on June 23, the company showed that North America had increased its rig count by five week on week and in the count before that, which was published on June 16, Baker Hughes showed that North America had added 15 rigs week on week. In the rig count prior to that one, which was published on June 9, Baker Hughes’ revealed that North America had finally broken a rig loss streak. The region was shown in that count to have added 38 rigs week on week. In its June 2 count, Baker Hughes outlined that North America had dropped five rigs week on week, and in the count before that, which was published on May 26, Baker Hughes revealed that North America had dropped seven rigs week on week. The count prior to that, which was posted on May 19, showed that the region had dropped 20 rigs week on week, and the rig count before that one, which was posted on May 12, showed that North America had dropped 16 rigs week on week. Baker Hughes’ May 5 count showed that North America cut seven rigs week on week, its April 28 count revealed that North America dropped 10 rigs week on week, its April 21 count revealed that the region dropped one rig week on week, and its April 14 count revealed that the region dropped 19 rigs week on week. Baker Hughes’ rig count published on April 6 showed that the region dropped 16 rigs week on week, its March 31 rig count showed that North America cut 29 rigs week on week, its March 24 count showed that the region dropped 38 rigs week on week, and its March 17 rig count revealed that the region dropped eight rigs week on week. Baker Hughes’ March 10 rig count showed a 26-rig week on week drop in North America and its March 3 count also revealed that North America had cut two rigs week on week.
Major fire breaks out on Pemex offshore platform - A major fire broke out at a Pemex offshore oil rig in the Cantarell asset off Mexico’s Campeche state on Friday. The federal oil company said in a release the fire, which started on the Nohoch-A bridge, later spread to a nearby compression platform. Images and videos of the incident circulating online showed a platform (pictured) completely engulfed in flames as a fire control vessel showers it with water. According to Pemex, 328 workers were on the compression platform at the time the fire started, and 321 had been evacuated at the time of publishing. Six of them suffered injuries. In its ESG reports, Pemex has shown both its accident rate and their seriousness have risen considerably over the past few years. The accident rate for events that produce incapacitating injuries per million work hours increased from 0.21 in the first quarter of 2020 to 0.58 in the same period this year. Pemex's gravity index, which counts losses in terms of production days by million work hours, rose from eight to 32 in the same period. It peaked in 3Q22 at 40.
Pemex Offshore Fire Injures Six Workers, Status of Seven Others Unknown - Six people were injured and seven remained unaccounted for after an explosion early Friday at an offshore natural gas processing facility operated by Mexican national oil company Petróleos Mexicanos (Pemex). The state-owned firm said 321 of the 328 workers present at the Nohoch-A gas processing center had been evacuated after a fire broke out at 5:25 a.m. local time. Pemex did not specify the status of the other seven workers. The infrastructure serves the Cantarell shallow water field, which produced 860.4 MMcf/d of natural gas and 158,300 b/d of oil in 2022, according to Pemex’s annual 20-F report to the U.S. Securities and Exchange Commission. During his regular morning press briefing on Friday, President Andrés Manuel López Obrador confirmed the explosion and...
Gulf of Mexico Pemex oil platform fire kills at least two | CNN — At least two people were killed and one person is missing after a fire broke out Friday at the Nohoch Alfa offshore platform at the Bay of Campeche, in the Gulf of Mexico, the state-owned oil company Petróleos Mexicanos (Pemex) said in a statement.Some 321 workers out of the 328 who were working on the structure when the fire started have already been evacuated, according to Pemex. Four boats have been sent to control the fires on the oil platform.The state-owned oil company said earlier that at least six were injured.In the latest video statement posted to Pemex’s Twitter account, Pemex Director Octavio Romero Oropeza, said the two people who died and the one missing are from the company that was working at the facility and not from Pemex.Oropeza said the part of the platform where the fire started has been completely destroyed, and that Pemex is investigating what caused the fire.He said the firm is now focusing its efforts on looking for the missing person and resuming operations.Some employees of other platforms told CNN Friday that the flames can be seen from the nearby platforms, so the incident appears to be of considerable magnitude.During an earlier press conference, Mexican President Andrés Manuel López Obrador said that the blaze was being battled by Pemex firefighters and the Mexican Navy was also participating in the efforts.Pemex, which has a long record of major industrial accidents at its facilities, said “it will continue to report on the control, extinction of the fire and damage assessment throughout the day.”
Venezuela Looks To Pay Down $20 Billion In U.S. Debt With Oil Exports -- The opposition party in Venezuela is working up a proposal that would see 200,000 barrels of crude oil per day exported to a trustee, who would then pay creditors who have laid claim on various Venezuelan assets abroad. Bondholders and creditors are going after Venezuela’s foreign assets in U.S. court for defaulting on payments—and those defaults, which exceed $20 billion, go beyond the value of Venezuela’s foreign assets. Even the value of Citgo, Venezuela’s most prized possession in the United States. Under this proposal, a newly designated trustee would send 200,000 bpd of crude oil to the United States. The crude oil that would be diverted to the U.S. is currently being sold to China. Parting with 200,000 bpd of its crude oil that generates much-needed revenues for the troubled country would be painful, but the country is selling that oil to China at about a $20 per barrel discount. If Venezuela ends up selling that oil to the United States instead, it could potentially recoup that discount—although it would be used to pay off debt only, not generating revenue to be used elsewhere. If Venezuela is unable or unwilling to follow through with this plan, it faces a potential breakup of oil refiner Citgo, which the courts could order yet this fall. The proposal still requires sign-off from the regime of Nicolas Maduro and Washington. In January, Washington signed off on a license that would allow Chevron to ship 134,000 bpd of Venezuelan crude oil to the United States Gulf Coast. Venezuela currently exports 715,000 bpd of crude oil and refined products based on the most recent data for June—an increase over this same time last year.
Partners in Israel's Leviathan Field to Build $568MM Third Pipeline -Chevron Corp. and its Israeli partners in the Leviathan project have agreed to invest about $568 million for the development of a third pipeline serving the gas field. The subsea conveyor “will allow expansion of the maximum gas supply capacity from the Leviathan project to INGL’s [Israel Natural Gas Lines Ltd.] transmission system from approx. 1.2 BCF [billion cubic feet] per day to approx. 1.4 BCF per day, from mid-2025”, Leviathan’s majority developer NewMed Energy said in a filing with the Israel Securities Authority on Sunday. NewMed owns 45.34 percent of the 127.41-square mile Leviathan natural gas reservoir offshore Israel, which it says is the largest in the Mediterranean with 22.9 trillion cubic feet of recoverable gas. Chevron Mediterranean Ltd, which entered the Leviathan consortium following a merger that gave the USA global giant full ownership of Noble Energy Mediterranean Ltd in 2020, holds 39.66 percent. Ratio Energy has a 15 percent stake. Following an investment of $3.75 billion for the initial development of the field, Leviathan began producing December 2019 and has reached 423.78 Bcf in annual output capacity. Leviathan “since has become a cornerstone of gas supply in Israel, Egypt and Jordan”, NewMed says on its website. The field posted natural gas sales of 402.59 Bcf in 2022, according to NewMed’s annual report. Leviathan has two operating pipelines stretching a total of 74.56 miles through which output from the project’s four subsea wells is transported to an offshore platform that processes the gas. The three partners are expanding the project to serve customers in Europe and Asia. “While the current development is strictly based on the Israeli natural gas grid and on a pipeline network, Phase B of the project is expected to include a significant liquefaction component, that will expand Leviathan's customer base beyond the Eastern Mediterranean, to Europe and the Far East”, NewMed says on its portal. “To that end, commercial negotiations are being held with two existing liquefaction facilities in Egypt, while an option for liquifying natural gas on a floating facility anchored in the Israeli EEZ [exclusive economic zone] is being explored.”
Analysts Expect Stronger Growth in Australia's Refined Fuel Demand In a report sent to Rigzone recently, analysts at BMI, a Fitch Solutions company, noted that they now expect stronger growth in Australia’s refined fuel demand in 2023, “driven by surging demand for air travel, which will be maintained through to the end of the year”. “We have revised up our forecast for Australia’s refined fuel demand in 2023, from predicting two percent year on year growth previously to now predicting six percent year on year growth,” the analysts said in the report. “This will see the country’s total demand increase to 1.065 million barrels per day, just shy of the pre-pandemic 1.088 million barrel per day level of demand seen in 2019,” they added. In the report, the analysts outlined that Australia’s demand for jet fuel/kerosene in the first quarter of 2023 increased by 67 percent, or 55,000 barrels per day, relative to the same period last year. Prior to the pandemic, jet fuel/kerosene had constituted on average 15 percent of the country’s total oil demand throughout 2015-2019, however, pandemic-era restrictions on air travel saw its share decline on average to seven percent in 2021 and 2022, the analysts noted in the report. “Industry trade groups are reporting very strong demand for domestic air travel in Australia at the start of 2023, reportedly more than doubling in comparison to a year ago,” the analysts said in the report. “Moreover, there is room for further growth given that domestic air travel still remains at approximately 90 percent of pre-pandemic levels,” they added. “The recovery will also be supported by the revival of air travel routes to mainland China since the country’s economic reopening. Prior to the pandemic China stood as the largest source of visitors to Australia,” they continued. The latest statistical review of world energy, which was published by the Energy Institute (EI) last month, showed that Australia’s total oil liquids consumption was 1.012 million barrels per day in 2022, 944,000 barrels per day in 2021, 919,000 barrels per day in 2020, and 1.069 million barrels per day in 2019. The highest total oil liquids consumption year for Australia, according to the report, which stretched back to 2012, was 2018, when the country was shown to have consumed 1.080 million barrels per day. The year with the lowest consumption was 2020, the report highlighted. From January 3, 2020, to June 28, 2023, 5.56pm CEST, there have been 11.495 million confirmed cases of Covid-19 in Australia with 21,685 deaths, according to the latest data from the World Health Organization (WHO). As of March 24, 2023, a total of 65.492 million vaccine doses have been administered in the country, WHO figures show.
Petrobras Shifts to Buying Assets after Divestments Buoyed by the response to its first bond issue in two years, Petroleo Brasileiro SA is considering issuing more debt this year and is poised to buy assets after spending most of the past decade selling refineries and oil-exploration blocks. Strong cash generation combined with low production costs puts Brazil’s state-run oil giant in a comfortable position, Chief Financial Officer Sergio Caetano Leite said in an interview, adding it’s time for the company to “take a bigger step.” “Petrobras had a divestment program,” he said. “The company has now changed sides of the table.” The new appetite for M&A doesn’t mean the company will go on an issuance spree to finance acquisitions or boost investments, according to Leite. Follow-up bond issuances will serve to improve the company’s debt profile, he said. Petrobras’ gross debt dropped to the lowest level since 2010 in the first quarter to $53.3 billion. That’s close to the low end of a range between $50 billion and $65 billion set in its five-year strategic plan, which the new CFO said he sees as appropriate. “The idea is not to put Petrobras into debt,” he said to assuage concerns about margins and the speed of investment in energy transition projects. Investments or mergers and acquisitions should have their own financing structure, according to Leite. Leite took over in March as part of the new executive board appointed by Chief Executive Officer Jean Paul Prates who vowed to halt “irrational” asset sales and said Petrobras should consider raising it stake at petrochemicals Braskem. “If we need to be aggressive we should owe a little more — $55 billion would be fine,” said Leite, stressing the global turmoiled economic and geopolitical scenario requires prudence. While Petrobras’ debt ratios may bottom up a bit, the company is still seeking to reduce its cost of capital, in part by canceling its more expensive debt early, Leite said ahead of visiting foreign investors, including in London, this week. The firm’s weighted cost of debt rose to 6.5% at the end of the first quarter compared to 5.9% in 2020, according to regulatory filings. Last week, the company sold its first dollar-denominated benchmark-size bond deal in two years, and demand suggested additional transactions could be viable, Leite said. Petrobras’ debt arrangers collected as much as $6.3 billion of potential orders out of 386 investors when a 10-year bond was preliminary discussed at a yield of about 7.25%, according to the CFO. That allowed Petrobras to reduce the offered interest and place $1.25 billion of notes due 2033 on June 26 at a yield of 6.625% with over 327 investors.
Where Do Total Recoverable Oil Reserves Stand? --In a statement sent to Rigzone recently, Rystad Energy revealed that, according to its research, total global recoverable oil reserves now stand at 1.624 trillion barrels. Rystad highlighted in the statement that, since the company’s previous reserves report, 30 billion barrels of crude oil have been extracted, “the same level seen in 2018 and 2019”, and revealed that 84 billion barrels have been added in fields, discoveries, and exploration prospects. Increased reserves in producing fields and approved projects in 2022 amount to 71 billion barrels, while 13 billion barrels were found in new discoveries during 2022, Rystad pointed out. Although 1.624 trillion barrels of oil are technically recoverable, fewer than 1.3 trillion barrels are likely to be economically viable before 2100 at an average Brent price of $50 per barrel, Rystad noted in the statement. “The upstream sector is working hard to reduce greenhouse gas emissions from oilfields, however, even with these mitigation measures and governmental efforts, if global warming is to be successfully limited to 1.6°C, only half of the world’s recoverable reserves would be required,” Rystad Energy CEO Jarand Rystad said in a company statement. In its statement, Rystad revealed that Saudi Arabia ranks first in terms of total recoverable oil with 273 billion barrels. The U.S. ranks second with 186 billion barrels, Russia ranks third with 140 billion barrels, and Canada ranks fourth with 122 billion barrels, Rystad outlined in the statement. In a graph accompanying the statement, the majority of Saudi Arabia’s recoverable oil is categorized as ‘other onshore’, while the majority of U.S. recoverable oil is categorized as shale/tight oil. The majority of Russia’s recoverable oil is also categorized as other onshore in the graph and the majority of Canada’s recoverable oil is categorized as oil sands.According to the last statistical review of world energy to show oil reserves information, which was published by BP in 2021, the world’s total proved oil reserves stood at 1.732 trillion barrels at the end of 2020. Of this figure, 1.472 trillion was found in non-OECD countries, 1.214 trillion was found in OPEC countries, 517.7 billion was in non-OPEC countries, 260 billion was in OECD countries, and 2.4 billion was in Europe, BP’s 2021 Statistical Review of World Energy showed. The country with the most proved oil reserves at the end of 2020 was Venezuela, with 303.8 billion barrels, according to the review, which placed Saudi Arabia in second with 297.5 billion barrels, and Canada in third with 168.1 billion barrels. The world’s total proved reserves stood at 1.734 trillion barrels at the end of 2019, 1.636 trillion barrels at the end of 2010, and 1.300 trillion barrels at the end of 2000, the review highlighted.
Russia's Rusty Oil Tanker Fleet Sets Sail With Newer Ships --An armada of tankers ferrying sanctioned oil around the globe is starting to get younger, bucking a months-long trend of using the world’s oldest and most dangerous vessels. Shortly after President Vladimir Putin’s invasion of Ukraine early last year, hundreds of aging tankers were snapped up by a cohort of faceless traders, intermediaries and investors to keep Russian oil flowing. By some estimates, the purchases, which added to vessels that were already transporting crude for Venezuela and Iran, created a more than 900-strong dark fleet. Now, the average age of the ships being purchased is declining, according to data from VesselsValue Ltd., a researcher of shipping deals. Two industry executives said that clampdowns in Asia were likely catalysts for the shift, following a spate of detentions in recent months over safety issues. China, one of the top consumers of Russian and Iranian oil, recently ramped up checks on older tankers at the key port of Qingdao, forcing some to wait more than a month to unload their cargo. Anxiety over aging ships was heightened when a 26-year old vessel exploded off Malaysia in May. Singapore has also detained tankers for failing safety inspections at a record clip in recent months. Newer vessels, provided they are well maintained, should help to allay fears by some importers over their seaworthiness, though the fleet remains awash with vintage ships. “Safety concerns surrounding older vessels is one of the reasons that buyers are opting for newer vessels,” said Rebecca Galanopoulos Jones, a senior analyst at VesselsValue. The average age of tankers being sold to undisclosed buyers — one defining characteristic of a ship being part of the dark fleet — fell to 15 years this month, according to VesselsValue. As recently as October, it was 19 years. The specifics of dark fleet tankers vary. Often, though, they are older vessels without industry-standard insurance or other western services, and owners that are tough to trace. Ships are near or over 20, an age at which vessels would typically be scrapped. Certain countries take a hard view on older ships. In addition to the Chinese checks, India moved to ban vessels older than 25 years of age from entering its ports earlier this year. “Some shipowners are getting more comfortable with handling restricted crude such as Russian flows, as they see that this trade is here to stay,” said Anoop Singh, global head of shipping research at Oil Brokerage Ltd. “They’re now more willing to invest in younger ships that’ll meet wider industry standards for longer.” When buying for the Russia trade first emerged, it made sense to purchase the oldest vessels available. Those ships are the cheapest, and operating without western services enabled them to bypass many of the sanctions in place on oil exports, including a $60-a-barrel price cap on Russian crude that was imposed by the Group of Seven. The surge in demand for ships has extended the lifespan for many. Not a single large crude tanker has been scrapped for seven months, something that hasn’t happened since at least the mid-1970s, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. Tankers are also spending more time in transit. The pool of buyers for Russian crude has shrunk since the war, meaning cargoes that used to be hauled just a couple of days along the Baltic Sea now travel for weeks to get to China and India.
Oil spill in Russia's north threatens 'major damage' to environment | Reuters - A pipeline burst in Russia's northwestern Komi Republic threatens to leak 1,000 cubic metres of oil into a nearby river and cause serious environmental damage, the head of state environment watchdog Rosprirodnadzor warned on Monday. "There was a burst in an oil pipeline near Usinsk. According to our calculations, 1,000 cubic metres of oil could get into the Kolva River," the official, Svetlana Radionova, wrote on the Telegram messenger app."Oil products have gotten into the ground and the water, this is major damage to the environment," she wrote.Local authorities said the incident occurred on Sunday in a pipeline in the Yuzhno-Osh oil field, operated by Nobel Oil LLC. A "high alert" regime is in effect in the area.No comment was immediately available from Nobel Oil.In May 2021, a pipeline spill in Komi leaked 100 tonnes of oil, including nine tonnes that flowed into the Kolva river.The energy-rich region witnessed one of the worst oil spills in Russian history in August 1994, when its ageing pipeline network sprang a leak that was officially said to have totalled 79,000 tonnes, or 585,000 barrels. Independent estimates put the figure at up to 2 million barrels.
Oil spill from Shell pipeline impacts farms and a river in a long-polluted part of Nigeria -—A new oil spill at a Shell facility in Nigeria has contaminated farmland and a river, upending livelihoods in the fishing and farming communities in part of the Niger Delta, which has long endured environmental pollution caused by the oil industry. The National Oil Spill Detection and Response Agency, or NOSDRA, told The Associated Press that the spill came from the Trans-Niger Pipeline operated by Shell that crosses through communities in the Eleme area of Ogoniland, a region where the London-based energy giant has faced decades-long local pushback to its oil exploration. The volume of oil spilled has not been determined, but activists have published images of polluted farmland, water surfaces blighted by oil sheens and dead fish mired in sticky crude. While spills are frequent in the region due to vandalism from oil thieves and a lack of maintenance to pipelines, according to the UN Environmental Program, activists call this a “major one.” It is “one of the worst in the last 16 years in Ogoniland,” said Fyneface Dumnamene, an environmental activist whose non-profit monitors spills in the Delta region. It began on June 11. “It lasted for over a week, bursts into Okulu River—which adjoins other rivers and ultimately empties into the Atlantic Ocean—and affects several communities and displaces more than 300 fishers,” said Dumnamene of the Youths and Environmental Advocacy Center. He said tides have sent oil sheens about six miles further to creeks near the nation’s oil business capital, Port Harcourt. Shell stopped production in Ogoniland more than 20 years ago amid deadly unrest from residents protesting environmental damage, but the Trans-Niger Pipeline still sends crude from oil fields in other areas through the region’s communities to export terminals. The leak has been contained but treating the fallout from the spill at farms and the Okulu River, which runs through communities, has stalled, NOSDRA Director General Idris Musa said. “Response has been delayed,” Musa said, blaming protesting residents. “But engagement is going on.” The apparent deadlock stems from mistrust and past grievances in the riverine and oil-abundant Niger Delta region, which is mostly home to minority ethnic groups who accuse the Nigerian government of marginalization. Africa’s largest economy overwhelmingly depends on the Niger Delta’s oil resources for its earnings, but pollution from that production has denied residents access to clean water, hurt farming and fishing, and heightened the risk of violence, activists say. The communities “are very angry because of the destruction of their livelihoods resulting from the obsoleteness of Shell’s equipment and are concerned the regulator and Shell will blame sabotage by the residents,” Dumnamene said.
With salvage ops underway, Dutch govt urged to step in for ‘safe and environmentally sound’ FSO recycling - With inspections and oil transfer preparations almost out of the way, salvage operations to transfer the oil from a rapidly decaying floating storage offshore (FSO) unit moored off the Red Sea coast of Yemen to a safe vessel are expected to start soon, as part of the UN-led efforts to prevent a potential catastrophic oil spill. This raises concerns about the facility in which this tanker will be recycled with many calling on the Netherlands to take these matters into its own hands.While the salvage operations to secure the 376-metre-long FSO Safer were delayed multiple times in the past due to lack of funding, the operations for the removal of the oil onboard this decaying oil tanker are now taking place off the coast of Yemen. The plan to address the threat posed by the FSO Safer comprises two critical tracks. This covers an emergency operation to transfer the oil from the FSO to a temporary vessel and the installation of a long-term replacement vessel or another capacity equivalent to the FSO within a target of 18 months.This FSO is in danger of exploding and unleashing a disaster, estimated to have the potential for a massive oil spill four times worse than the Exxon Valdez disaster off Alaska in 1989. Therefore, the UN Development Programme (UNDP) signed an agreement in March 2023 to purchase a very large crude carrier (VLCC), the Nautica, to take on the oil from the FSO Safer by emergency ship-to-ship transfer.The Nautica left Zhousha in China on 6 April and was expected to arrive in the Red Sea in early May to mitigate the threat posed by the ageing supertanker in an advanced state of decay, as the cost of cleanup alone would be $20 billion if this oil spill is not prevented. The FSO Safer has been moored some 4.8 nautical miles southwest of the Ras Issa peninsula on Yemen’s west coast for more than 30 years but the war between the pro-government coalition and Houthi rebels saw offloading from the vessel, as well as maintenance, grind to a halt in 2015. Moreover, UNDP inked an agreement with Boskalis, through its subsidiary SMIT Salvage, to remove oil from the tanker and the firm’s scope of work consists of a number of phases with the initial onsite phase focusing on a thorough inspection of the vessel and its cargo and creating a safe working environment. To this end, the multipurpose support vessel Ndeavor was prepared in the Netherlands.
Nigeria Looks To Boost Oil Production To 1.7 Million Bpd By Year-End - Nigeria, OPEC’s largest producer in Africa, aims to significantly increase its oil production to up to 1.7 million barrels per day (bpd) by November 2023, hoping to win a higher quota in the OPEC+ agreement, Gabriel Tanimu Aduda, Permanent Secretary at Nigeria’s Ministry of Petroleum Resources, told Energy Intelligence on the sidelines of the OPEC+ seminar in Vienna this week. Nigeria has consistently failed to produce to its quota in the OPEC+ agreement. The combination of pipeline vandalism and oil theft with a lack of investment in capacity has made Nigeria the biggest laggard in crude oil production in the OPEC+ alliance. Oil theft and pipeline vandalism have long plagued Nigeria’s upstream oil and gas industry, driving majors out of the country and often resulting in force majeure at the key crude oil export terminals.Nigeria’s quota was 1.742 million bpd earlier this year, but due to its underproduction of more than 400,000 bpd, the output cap for Nigeria was lowered to 1.38 million bpd at the OPEC+ meeting in early June.The required production level for Nigeria may be updated to equal the average production that can be achieved in 2024, as assessed by the three independent sources (IHS, Wood Mackenzie, and Rystad Energy) specialized in oil upstream by the next OPEC+ meeting to be held by the end of 2023, OPEC said.Nigeria’s stated Production Plan in 2024 is 1.578 million bpd, subject to verification, and if verified, then the number will be reflected as required production for 2024, OPEC added. Nigeria’s oil production is around 1 million bpd below its capacity. The government has cited a lack of investments, a shortage of funding sources because of the energy transition, and insecurity among the factors driving the situation. “Currently, Nigeria has the technical allowable capacity to produce about 2.5 million barrels of oil per day. However, arising from the highlighted challenges, our current production hovers around 1.5 million barrels of oil and condensate per day,” Gbenga Komolafe, chief executive at the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), said in May.
Iraq plans to increase oil production to over 5 mln bpd - The Iraqi Parliamentary Oil and Gas Committee announced that the government had made plans to increase oil production to more than 5 million barrels per day (bpd). Member of the committee, MP Zeinab Juma al-Mousawi, told the Iraqi News Agency (INA) that they support the government's directions to increase oil and gas reserves and national production of crude oil and gas. Mousawi noted that the committee also backs processing the gas associated with oil operations and converting it into wealth and productive energy that covers the local need, especially electric power plants, the petrochemical industry, fertilizers, and others. It called upon foreign companies to export the surplus to world markets to achieve financial revenues that supply the state treasury to support the national economy and sustainable development and provide new job opportunities. Mousawi reiterated the need to pay attention to the fields managed by national companies to create competition with international companies and increase the net profits of national companies. She pointed out that Iraqi oil is one of the most imported oils to countries such as India, China, and South Korea, with 54 percent of the Iraqi oil since the beginning of the year. The lawmaker indicated that Iraq achieves billions of dollars from oil sales, contributing to the country's general budget in investment and operational fields. Meanwhile, the Iraqi oil minister announced that crude oil exports averaged 3.3 million bpd in May.
Analysts Talk Saudi Oil Cut Extension -The markets immediately reacted to Saudi Arabia’s production cut extension announcement yesterday, Rystad Energy Senior Vice President Jorge Leon and Senior Analyst Patricio Valdivieso outlined in an oil trading alert sent to Rigzone this morning. In that alert, the analysts highlighted that ICE Brent front month prices increased to $76.5 per barrel, from $74.8 per barrel, “minutes after the announcement”. “Back in June, Saudi Arabia announced a voluntary cut of one million barrels per day (on top of the 500,000 barrel per day voluntary cut announced in April, running from May until December 2023), which was initially planned for July, but that could be extended, as we had mentioned in our June 4 OPEC+ alert,” the analysts said in the latest Rystad alert. “Rystad Energy believes that this move reinforces our thesis that this mechanism of a possible monthly extension of Saudi cuts limits downside price pressure for the rest of the year, regardless of the macroeconomic environment,” they added. According to a chart included in the alert, Rystad now forecasts that Saudi crude production will come in at nine million barrels per day in July and August. Leon and Valdivieso highlighted in the alert that this is the country’s lowest level since June 2021 and over two million barrels per day lower than September 2022. The chart shows that Saudi Arabia’s crude production was 10 million barrels per day in June and 11 million barrels per day back in September last year. Looking ahead, the chart forecasts that Saudi crude output will hit 9.9 million barrels per day in September this year, then 10 million barrels per day in October, November, and December 2023. “With this extension of Saudi cuts into August, our liquids balances now show a jaw-dropping 3.6 million barrel per day deficit for August, following a 3.0 million barrel per day deficit in July,” Leon and Valdivieso said in Rystad’s latest alert. “Overall, the estimated market deficit for the second half of 2023 is 2.5 million barrels per day now,” the analysts added. Examining a possible extension of the Saudi voluntary cut of one million barrels per day beyond August, the analysts said in the alert that “this will depend on several factors, such as the macroeconomic environment, price evolution, and demand recovery”. “Our latest oil market weekly report shows that global road traffic has actually fallen below 2019 levels in the last three weeks,” the analysts added. “Global aviation traffic has struggled to recover and is still 20 percent below 2019 levels,” the analysts continued.
Mysterious Cluster Of Saudi Oil Tankers Off Egypt Raises Storage Concerns - The number of Saudi supertankers carrying oil and sitting offshore Egypt increased again on Friday, according to vessel tracking data monitored by Bloomberg, after signs emerged earlier this week that the previous large cluster had started to clear. An unusual cluster of mostly Saudi supertankers loaded with oil has been idling off Egypt’s Red Sea coast since early June. Signs emerged at the end of June that the cluster may have started to clear as two of the 11 tankers were no longer anchored near the Ain Sukhna oil terminal off Egypt.As of June 16, ten very large crude carriers (VLCCs) carrying around 20 million barrels of oil were floating off Ain Sukhna and another two supertankers were heading to the same location, Vortexa data showed. All 10 floating supertankers were stationary for seven days or more and most of these cargoes loaded during or after the second half of May, Jay Maroo, Head of Market Intelligence & Analysis (MENA) at Vortexa, wrote in a note.It wasn’t immediately clear what has caused the accumulation of tankers, while Saudi Arabia hasn’t commented on the build-up of cargoes off Egypt. Most supertankers carrying Saudi Arabian crude typically deliver the oil to Ain Sukhna without transiting the Suez Canal. The most likely reason is a lack of storage, according to Bloomberg.After some of the cluster had cleared in recent days, the number of supertankers off Ain Sukhna increased again to eight, including six Saudi-owned supertankers carrying around 12 million barrels of oil, the most recent data compiled by Bloomberg showed. The tanker in this group that had arrived the earliest has been floating for three weeks now, per Bloomberg’s estimates. Around 10.5 million barrels of Saudi crude are currently sitting in floating storage off Ain Sukhna, half compared to the middle of June, Reuters reported on Friday, quoting Vortexa. Five Saudi tankers off Egypt are currently considered floating storage, while two other vessels loaded with around 4 million barrels of Saudi crude are also waiting but do not technically count as floating storage yet, Vortexa’s Maroo told Reuters.
OPEC keeps June output steady ahead of anticipated dip in July oil production -The Organisation of Oil Producing Countries or OPEC kept its production steady in June, a Bloomberg report said. According to the report, the 13-member OPEC on an average produced 28.57 million barrels a day, a modest rise of 80,000 barrels a day from May. However, oil production in July is expected to decline as Saudi Arabia is expected to cut oil production by another 1 million barrels per day. The oil-rich kingdom is likely to continue with its additional oil cut in August too, media reports said. It is not just the world's biggest oil producer that has decided to further cut oil production. Russia, another major oil producer, which has been under Western sanctions after the Ukraine war, has also promised to cut its oil exports by 500,000 barrels per day in August. In April this year, OPEC+, which includes the OPEC countries and Russia, agreed to voluntarily cut their oil production from May onward. As per reports, the grouping had decided to cut oil production by 1.15 million barrels per day. The oil producers' grouping has been cutting oil supply to lift up prices since November last year due to weaker Chinese demand and rising US supply. However, it been unable to move oil prices from the range of $70-$80 a barrel. Initially, there were expectations that the output cut will add pressure on the global oil prices. However, oil prices have dipped about 12 percent in 2023. That is largely due to a lackluster post-pandemic recovery in China and fears of a global recession later this year. While rising oil prices add to the inflationary pressure across the world, it is good news for top oil producers like Saudi Arabia. The West Asian kingdom is heavily dependent on oil to manage its government budget. According to the International Monetary Fund, Saudi Arabia needs global oil prices to be over $80 in order to balance its yearly budget.
Saudis and Russia Extend Oil Supply Cuts - Saudi Arabia will prolong its unilateral oil production cut by one month, keeping a lid on supply amid persisting fears over the global economy. Its OPEC+ ally Russia also announced fresh curbs on exports. The kingdom will maintain the 1 million barrel-a-day reduction — launched this month on top of existing curbs agreed with OPEC+ — into August and could extend it further, according to a statement published by state-run Saudi Press Agency. The country will pump about 9 million barrels a day, the lowest in several years, sacrificing sales volumes for what has so far been a minimal reward in terms of higher prices. Oil futures picked up after the announcement, with Brent crude rising 0.9% to $76.12 a barrel as of 11:27 a.m. in London. The Saudi effort will be assisted by Russia, which will reduce oil exports by 500,000 barrels a day in August, Deputy Prime Minister Alexander Novak said in comments published by his press service. He later added that the country will also aim to reduce production by this amount. So far this year, Moscow has dragged its heels on cutbacks agreed with OPEC+ as it faces pressure to keep funds flowing to its war against Ukraine. The 23-nation OPEC+ alliance aims to achieve balance in global oil markets and avoid an accumulation in inventories, United Arab Emirates Energy Minister Suhail Al Mazrouei told the state-run WAM news agency. The UAE is leading member of the coalition. “Faced with little investor confidence and very narrow range-bound trading, Saudi Arabia had virtually no other option but to extend the production cut,” Lackluster demand in China has capped crude near $76 a barrel, below the level that the International Monetary Fund believes Saudi Arabia needs to cover its budget. Against this backdrop, the extension of the kingdom’s cuts was no surprise, with almost all traders and analysts surveyed by Bloomberg predicting this outcome. Oil prices were widely expected to rally this year, but have instead sagged about 11% due to fears about the strength of the economy as interest rates climb. Wall Street forecasters including Goldman Sachs Group Inc. and Morgan Stanley have abandoned projections for the return of $100-a-barrel crude. In theory, the prolonged supply curbs shouldn’t be needed as global oil markets look set to tighten during the second half of the year. OPEC’s Vienna-based research department is projecting that world oil inventories are already on track to deplete at a brisk clip of around 2 million barrels a day. Yet the measures revealed by Riyadh and Moscow on Monday suggest they’re wary about the narrative of an increasingly tightening market. When he first announced the extra production cuts last month, Saudi Energy Minister Prince Abdulaziz bin Salman told reporters that he “will do whatever is necessary to bring stability to this market.” Consuming nations like the US have railed against the Organization of Petroleum Exporting Countries and its allies for their policy of constricting supplies, accusing the cartel of exacerbating inflation and endangering a fragile economic recovery. The International Energy Agency has condemned the group for laying “siege” to vulnerable consumers. The Saudis indicated in their statement that further extensions are possible, and Prince Abdulaziz — who will address an energy conference hosted by OPEC in Vienna on Wednesday — has promised to keep traders in “suspense” on future plans.
Saudi Arabia, Russia deepen oil cuts, sending oil prices higher | Daily Sabah - Oil rose Monday after top exporters Saudi Arabia and Russia announced supply cuts for August, overshadowing concern over a global economic slowdown and the potential for further increases to U.S. interest rates. Saudi Arabia on Monday said it would extend its voluntary cut of 1 million barrels per day (bpd) for another month to include August, the state news agency said. Shortly after the Saudi announcement, Russian Deputy Prime Minister Alexander Novak said Moscow would reduce its oil exports by 500,000 barrels per day in August, further tightening global supplies. The moves are seen as the latest attempts by major producers to stabilize markets rocked by factors, including continued fallout from the Russian invasion of Ukraine and China's faltering economic recovery. The cut by Saudi Arabia, the world's biggest crude exporter, was first announced after a June meeting of oil producers and took effect at the weekend. Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud noted at the time that it was "extendable." In a report on Monday announcing that the cut would continue through August, the official Saudi Press Agency (SPA) said it "can be extended" further, citing an Energy Ministry source. Monday's extension announcement leaves the kingdom's production at approximately 9 million bpd. Russia's move came "as part of efforts to ensure that the oil market remains balanced." The announcement by Novak, in charge of Russia's energy policy, came on the back of cuts to the country's oil production this year by the same volume as part of Moscow's response to Western sanctions levied over the conflict in Ukraine. The cuts amount to 1.5% of global supply and bring the total pledged by OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, to 5.16 million bpd. OPEC+ already has cuts of 3.66 million bpd, amounting to 3.6% of global demand, including 2 million bpd agreed last year and voluntary reductions of 1.66 million bpd agreed in April and extended to December 2024. "Saudi Arabia is hoping to bring down global inventories over the summer to support prices," "There will be little expectation that Russia will fully comply with this latest commitment, but the key thing here is that it's a public statement of commitment to Saudi Arabia's market management strategy." Brent crude futures were up $1.04 at $76.45 a barrel by 9:42 a.m. GMT after gaining 0.8% on Friday. U.S. West Texas Intermediate crude rose 97 cents to $71.61, gaining 1.1% in the previous session. "Investors are turning upbeat as the second half of the year kicks off; they expect tighter oil balance and buoyant equities also suggest that recession will be avoided, albeit probably narrowly," said PVM analyst Tamas Varga. Prices had fallen earlier in the session after eurozone manufacturing activity contracted faster than initially expected in June, with persistent policy tightening by the European Central Bank (ECB) squeezing finances. Fears of a further economic slowdown denting fuel demand had grown on Friday as U.S. inflation continued to outpace the central bank's 2% target and stoked expectations it would raise interest rates again. Higher interest rates could strengthen the dollar, making commodities like oil more expensive for buyers holding other currencies. Factory activity growth in China, the world's largest crude importer, also slowed in June as sentiment and recruitment cooled in sluggish market conditions, the Caixin/S&P Global private sector survey showed. Recent efforts by OPEC+ to bolster prices by reducing output have not succeeded. Brent is down some 11% since the beginning of the year and WTI is down 7%, as a sluggish recovery in China and worries about the U.S. economy weighs on demand forecasts. The average price of Russian Urals was $52.17 per barrel during the first half of 2023, down from $84.09 during the same period last year, the Russian Finance Ministry said Monday. That drop reflects the effects of a price cap imposed in December by a coalition involving the Group of Seven (G-7) leading economies, the European Union and Australia. Saudi Arabia is counting on high oil prices to fund an ambitious reform agenda that could shift its economy from fossil fuels. Oil giant Saudi Aramco, the jewel of the kingdom's economy, said it recorded profits totaling $161.1 billion last year, allowing Riyadh to notch up its first annual budget surplus in nearly a decade. Analysts say the kingdom needs oil to be priced at $80 per barrel to balance its budget, which is well above recent averages.
The Oil Market Erased its Gains and Sold Off Ahead of the Fourth of July Holiday -- On Monday, the oil market erased its early gains and sold off ahead of the Fourth of July holiday on Tuesday. Early in the morning, the market rallied to a high of $71.77 after Saudi Arabia and Russia announced supply cuts for August overshadowing any concern over the economy. Saudi Arabia said it would extend its voluntary cut of 1 million bpd for another month to include August, adding that the cut could be extended beyond that month. Shortly after the Saudi announcement, Russian Deputy Prime Minister, Alexander Novak, said Russia would cut its oil exports by 500,000 bpd in August. The cuts amount to 1.5% of global supply and bring the total pledged by OPEC+ to 5.16 million bpd. The oil market later erased most of its gains as it traded back towards the $70.00 level by mid-morning. It held support at that level for much of the day before further selling pushed the market to a low of $69.69 ahead of the close. The August WTI contract settled down 85 cents at $69.79, while the September Brent contract settled down 76 cents at $74.65. The product markets settled in negative territory, with the heating oil market settling down 7.03 cents at $2.3773 and the RB market settling down 8.25 cents at $2.4624. The state news agency said Saudi Arabia will extend its voluntary cut of one million bpd for another month to include August. The SPA quoted an official source from the Ministry of Energy as saying "The kingdom's production for the month of August 2023 will be approximately 9 million barrels per day." The source added that the voluntary cut could be extended beyond August. The official said "This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets."Russia’s Deputy Prime Minister, Alexander Novak, said Russia will cut its oil exports by 500,000 bpd in August.Algeria’s Energy Ministry said the country will cut oil output by an extra 20,000 barrels in August to support efforts by Saudi Arabia and Russia to balance and stabilize oil markets. The voluntary cut will be in addition to the 48,000 barrel reduction decided in April.IIR Energy reported that U.S. oil refiners are expected to shut in about 129,000 bpd of capacity in the week ending July 7th, increasing available refining capacity by 915,000 bpd. Offline capacity is expected to decrease to 92,000 bpd in the week ending July 14th.Colonial Pipeline Co is allocating space for Cycle 40 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.U.S. manufacturing fell further in June, reaching levels last seen when the economy was reeling from the initial wave of the COVID-19 pandemic. The Institute for Supply Management said that its manufacturing PMI fell to 46.0 in June, the lowest reading since May 2020, from 46.9 in May. That marked the eighth consecutive month that the PMI stayed below the 50 threshold, which indicates contraction in manufacturing, the longest such stretch since the Great Recession.
Oil prices up, stocks halt on supply, economy concerns – Oil prices rose Tuesday by more than 1 percent for both Brent and West Texas Intermediate (WTI) crudes, news agencies reported. Markets are weighing August output cuts by top oil exporters Saudi Arabia and Russia against economic uncertainties worldwide, according to Reuters. Brent crude futures were up $0.99, or 1.3 percent, to $75.64 a barrel, and WTI crude sold at $70.74 per barrel, up $0.95, or 1.4 percent, Tuesday morning. On Monday, Saudi Arabia said it would extend its voluntary output cut of 1 million barrels per day to August, Agence France-Press (AFP) reported. Whereas Russia and Algeria reportedly volunteered to lower their output and export levels for August by 500,000 and 20,000 barrels per day, respectively. In light of the announced production and export cuts, global oil supplies will drop by some 5.36 million barrels per day next month, August 2023, compared to August 2022. Further output drops are expected in August. As several members of the Organisation of Petroleum Exporting Countries and their allies (OPEC+) are unable to meet their output quotas, Nonetheless, Tuesday morning trades suggest little changed is forecast in oil dynamics despite Monday's announcements, "Only a significant break above $77 will suggest something has changed, otherwise range-bound trade could well continue," The upcoming US nonfarm payrolls report, to come out Friday, will be closely watched for clues on the trajectory of monetary policy, Although the Fed had pinned the rates at 5 to 5.25 percent and had paused on further hikes in June, it is possible that the central bank will have to raise the rates in July or August. In fact, it is forecast that US interest rates may hit or surpass a historic 6 percent in the coming months.
Oil Futures Rally on Saudi, Russian Cuts Ahead of API Stock Data -- New York oil futures rallied more than 2% on Wednesday, and Brent crude settled slightly higher after Saudi Arabia and Russia extended their voluntary production cuts until the end of August in a bid to offset weak industrial demand across advanced economies. Saudi Energy Ministry Prince Abdulaziz bin Salman said on Monday the kingdom would extend July's production cut of 1 million barrels per day (bpd) through August to support "the stability and balance of oil markets." That will keep the Gulf nation's output at 9 million bpd -- the lowest average production rate since the outbreak of COVID-19 pandemic in March 2020. "Organization of the Petroleum Exporting Countries along with its partners will do whatever is necessary to support the market. It will not be left unattended," said the Saudi energy minister Wednesday morning at OPEC's annual seminar in Vienna. Meanwhile, Russian Deputy Prime Minister Alexander Novak said his country will cut production and exports by an additional 500,000 bpd in August. The most recent data published by Bloomberg supports this statement, showing Russian oil exports from the eastern ports of Primorsk and Kozmino declined by almost 700,000 bpd over the final weeks of June, signaling that promised production cuts are indeed taking place. Along with reductions Saudi Arabia and Russians have already made, and ongoing cuts by other countries in OPEC+, total curtailments will, on paper at least, amount to 3.1 million bpd, or about 3% of global consumption. That is a gigantic curtailment to global supplies, but the output cuts have failed to make any meaningful difference for oil prices, with Brent crude stuck between $70 and $80 per barrel (bbl) since May 1. The underlying reason behind the market's muted reaction is weak manufacturing data signaling a full-fledged recession in global industrial hubs like China and the United States. Industrial data released earlier this week showed U.S. manufacturing activity slid deeper into contraction last month to the lowest level since May 2020 at 46%. The new data largely reflects companies continuing to reduce output as demand deteriorates and optimism about the second half of 2023 weakens. Also on Wednesday, oil traders positioned ahead of the releases of weekly U.S. inventory data beginning with preliminary survey from the American Petroleum Institute and followed by official data from the U.S. Energy Information Administration. Both reports are delayed one day this week due to the observance of U.S. Independence Day on Tuesday. Analysts anticipate U.S. crude oil inventories likely decreased by 1.6 million bbl for the final week of June, with estimates ranging from a drawdown of 3.4 million bbl to a build of 2.2 million bbl. The expectations for a drawdown come despite a U.S. Department of Energy report indicating it disbursed 1.4 million bbl of crude last week from the nation's Strategic Petroleum Reserve. That would bring those emergency crude supplies, already at a 40-year low, to 347.2 million bbl. At settlement, NYMEX West Texas Intermediate August futures added $2 per bbl to $71.79 per bbl, and the international crude benchmark Brent contract for September edged up $0.40 to $76.65 per bbl following a $1.60 advance on Tuesday when the U.S. market was closed for Independence Day. NYMEX RBOB August futures advanced $0.0559 to $2.5183 per gallon and the ULSD August contract rallied $0.1160 to $2.4933 per gallon.
Trading on Wednesday Appeared to Narrow the Spread Between Brent and WTI - On Wednesday, the oil market posted an outside trading day as the market weighed the supply cuts announced earlier this week by Saudi Arabia and Russia against the concerns over the global economy. The market traded mostly sideways during Tuesday’s short trading session before it sold off to a low of $69.90 in overnight trading. Given there was no settlement on Tuesday because of the Independence Day holiday, trading on Wednesday appeared to narrow the spread between Brent and WTI, with WTI catching up with Brent’s gains the previous day. Early in the session, the market seems to have come under pressure again due to concerns over a slowdown in the global economy and future interest rate increases in the U.S. and Europe. A private sector survey showed China’s services activity expanded at the slowest pace in five months in June. However, the oil market bounced off its lows and never looked back as it rallied to a high of $72.17 on the additional supply cuts announced this week and ahead of the weekly petroleum stock reports. The August WTI contract settled up $2.00 at $71.79 and the September Brent contract settled up 40 cents at $76.65. The product markets were also well supported, with the heating oil market settling up 1.16 cents at $2.4933 and the RB market settling up 5.59 cents at $2.5183. In a statement, OPEC said its ministers met on the sidelines of the 8th OPEC seminar in Vienna where they reviewed the market conditions and agreed to continue consultation with their non-OPEC counterparts, in their continued efforts to support a stable and balanced oil market. Saudi Energy Minister Prince Abdulaziz bin Salman said new joint oil output cuts agreed by Russia and Saudi Arabia earlier this week have again proven sceptics wrong about Saudi-Russian energy relations. He said OPEC+ will do whatever necessary to support the market. He also said IEA data anomalies create market distortions. The United Arab Emirates' Energy Minister, Suhail Al Mazrouei, said additional oil output and export cuts made by Saudi Arabia and Russia earlier this week should be enough to help balance the oil market. Kuwait’s Oil Minister said that his country hopes to have a higher oil production quota when it ramps up capacity and Kuwait remains committed to OPEC decisions. The minister also said his country hopes to reach 3.2 million bpd of production capacity before the end of 2024. Morgan Stanley said it expects Brent prices to moderate towards $70/barrel as the market’s focus shifts from the second half of 2023 stock draws to the first half of 2024 stock builds. Morgan Stanley lowered its oil price forecasts, predicting a market surplus in the first half of 2024 with non-OPEC supply growing faster than demand next year. The bank cut its Brent price outlook for the third quarter this year to $75/barrel from $77.50/barrel and lowered its fourth quarter forecast to $70/barrel from $75/barrel. It also cut its forecasts for 2024 by $5, and now sees prices at $70/barrel in the first quarter, at $72.50/barrel in the second, and at $75/barrel and $80/barrel for the final two quarters, respectively. IIR Energy reported that U.S. oil refiners are expected to shut in about 129,000 bpd of capacity in the week ending July 7th, increasing available refining capacity by 915,000 bpd.
Oil Prices Gain After US Inventory Drop -- Oil prices traded higher on Thursday after industry data showed a decline in the crude oil inventories in the United States. Overall gains, however, were limited by a stronger dollar, expectations of more U.S. rate hikes and lingering concerns about China's economic recovery. Benchmark Brent crude futures rose half a percent to $77 a barrel, while WTI crude futures were up 0.6 percent at $72.22. Data released Wednesday by the industry group American Petroleum Institute showed that U.S. crude oil inventories fell by 4.4 million barrels in the week to June 30, far more than expectations for a draw of 1.8 million barrels. Official numbers from the Energy Information Administration are due later in the session. Meanwhile, the dollar has drawn some strength from the hawkish Fed meeting minutes released on Wednesday showing that Fed officials expect more rate hikes, but at a slower pace. As U.S. recession worries ease, investors await the all-important U.S. jobs report due on Friday for additional clues on the economic and rate outlook.
WTI Rebounds After Crude/Product Draws; Biden Admin Drains SPR for 14th Straight Week --Oil prices are down this morning after the 'good news is bad news' data from the US offsets additional production-cut announcements this week from OPEC-plus members Saudi Arabia and Russia. Crude remains about 10% lower this year, with China’s lackluster economic recovery and higher US and European interest rates weighing on the outlook for demand. The surge in borrowing costs is leading to lower global oil inventories, possibly setting prices up for spikes further down the line.“The oil balance will likely tighten and so will financial conditions,” .“Persistent recession worries will probably encumber but not prevent oil from marching higher.”After announcing earlier this week that it would extend voluntary output cuts, Saudi Arabia lifted its flagship Arab Light crude price to Asia on Thursday and also boosted prices for Europe.API
- Crude: -4.382mm
- Cushing: +0.289mm
- Gasoline: +1.615mm
- Distillates: +0.604mm
DOE
- Crude: -1.508mm (-2.7mm exp)
- Cushing: -400k
- Gasoline: -2.555mm
- Distillates: -1.045mm
After last week's huge draw, expectations were for a smaller draw (which API showed last night), but the actual crude draw was smaller - just 1.5mm barrels. Stocks at the Cushing hub fell 400k barrels and products also saw notable draws... Despite reports from late last week that the Biden administration actually bought 3.2mm barrels oil to refill the SPR (delivery of the oil is scheduled Sept. 1-30 to the Big Hill SPR storage site in Texas), the overall level of the SPR saw a 1.46mm drain. That raised the total draw on US crude stockpiles to almost 3mm barrels. That is the 14th straight week of SPR drains...US refinery utilization rates dropped for a fourth straight week to 91.1% of capacity, the lowest since May. On a seasonal basis, it’s the lowest level seen since the pandemic. US crude production rose back to cycle highs at 12.4mm b/d despite after rig counts having tumbled to their lowest since April 2022...
Oil near flat as tighter supplies offset US rate hike risk – CNA - Oil prices were near flat on Thursday as the market weighed tighter U.S. crude supplies with the higher likelihood of a U.S. interest rate hike that could dent energy demand. Brent crude futures settled 13 cents lower at $76.52 a barrel, after a 0.5 per cent gain the previous day. U.S. West Texas Intermediate crude gained 1 cent to $71.80 a barrel, after rising 2.9 per cent in post-holiday trade on Wednesday to catch up with Brent's gains earlier in the week. The market has been expecting interest rates in the U.S. and Europe to rise further to tame stubborn inflation. Fears of a global recession mounted after recent surveys showing slower factory and services activity in China and Europe. Minutes released on Wednesday showed that a united U.S. central bank agreed to hold rates steady at its June meeting to buy time and assess the need for further hikes, though most attendees expected they would eventually need to tighten further. U.S. interest rate futures on Thursday increased the probability of another U.S. rate rise after news private payrolls surged last month. "We know the Federal Reserve wants to see the labor market cool off," . "The market is concerned that the Fed has to take the punch bowl away." Supporting prices were data from the Energy Information Administration that showed U.S. crude stockpiles fell by more than expected last week. Crude inventories fell by 1.5 million barrels in the last week to 452.2 million barrels, compared with analysts' expectations in a Reuters poll for a 1 million-barrel drop. U.S. gasoline and distillate inventories also dropped. "While the inventories are supportive for oil prices today, the oil market is being dominated by fears of further rate increases," "This is coming at a time when OPEC+, especially Saudi Arabia and Russia, are reiterating their commitment to rein in production and exports, respectively." Top oil exporters Saudi Arabia and Russia announced a fresh round of output cuts for August. The total cuts now stand at more than five million barrels per day (bpd), equating to 5 per cent of global oil output. The cuts, along with a bigger than expected drop in U.S. crude stocks, provided some support for prices. OPEC is likely to maintain an upbeat view on oil demand growth for next year when it publishes its first outlook for 2024 this month, predicting a slowdown from this year but still an above-average increase, sources close to OPEC told Reuters. OPEC ministers and executives from oil companies told a two-day conference in Vienna that governments needed to turn their attention from supply to demand. Rather than pressuring oil producers to curb supply, which heads of global energy companies say serves only to increase prices, governments should shift the focus to limiting oil demand to reduce emissions, they said.
Oil Futures Hit 5-Week High as US Dollar Sinks on Softer Employment Data - -- Erasing midmorning losses, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Friday's session sharply higher, lifting front-month West Texas Intermediate above $73 per barrel (bbl) after a weaker-than-expected U.S. employment report triggered a selloff in the U.S. dollar. Investors in financial markets upped their bets that the Federal Reserve would not have to raise the federal funds rate much higher from the current 5% to 5.25% target range following June's employment report showing the slowest pace in job growth since late 2020. The headline employment number for June was 209,000, slightly below expectations for 213,000 new jobs. However, most of the job gains were concentrated in government, social assistance, and health care categories. The categories associated with post-pandemic jobs creations, including leisure and hospitality along with professional services, showed little change from the prior month. What's more, employment for both May and April were revised lower, with average job growth over the period now 110,000 lower than previously reported. June's employment report was underwhelming in light of the strong ADP payroll report and jobless data that revealed the labor market continues to generate solid job growth. Payroll provider ADP showed private payrolls spiked 497,000 in June -- more than double expectations for 235,000, with the leisure and hospitality sector up 232,000 and education and health services up 74,000, which aligns with the post-pandemic recovery. The new data set paints an uncertain outlook for domestic fuel consumption, with the strong U.S. labor market historically supporting demand for gasoline and distillate fuels. Should the labor market decelerate more quickly over the coming months, this could lead to much weaker fuel demand in the second half of the year. Weekly inventory report from the U.S. Energy Information Administration showed total demand for oil products spiked 929,000 barrel per day (bpd) or 4.6% to a better-than-six-month high 21.235 million bpd in closing out the first half of 2023. Domestic gasoline demand surged 293,000 bpd to 9.599 million bpd for the final week of June -- the highest weekly consumption rate since October 2021, while the fifth greatest weekly demand rate since the end of pandemic lockdowns. Demand for distillate fuel during the week ended June 30 also recovered, climbing 497,000 bpd from a 2023 low to 3.811 million bpd. Total crude oil and petroleum products inventory was drawn down for a third consecutive week to 1.261 billion bbl, EIA data shows, with stocks 21.5 million bbl or 1.7% below the five-year average. At settlement, U.S. dollar declined 0.89% against a basket of foreign currencies to 101.950 and NYMEX August West Texas Intermediate futures advanced to $73.86, up $2.06 per bbl. ICE September Brent crude gained $1.95 to $78.47 per bbl. NYMEX August RBOB futures added $0.0455 to $2.5893 per gallon, and August ULSD futures rallied $0.0797 to $2.5591 per gallon.
Oil prices up three per cent to nine-week high on supply concerns - Oil prices climbed about three per cent to a nine-week high on Friday as supply concerns and technical buying outweighed fears that further interest rate hikes could slow economic growth and reduce demand for oil. Brent futures rose $1.95, or 2.6 per cent, to settle at $78.47 a barrel, while U.S. West Texas Intermediate crude (WTI) rose $2.06, or 2.9 per cent, to settle at $73.86. After two months of price consolidation between roughly $73-77, Brent moved into technically overbought territory for the first time since mid April. “The rally over the last week or so … has been quite strong and backed by momentum – as well as fresh cuts from Saudi Arabia and Russia,” Top oil exporters Saudi Arabia and Russia announced fresh output cuts this week bringing total reductions by OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, to around 5m barrels per day (bpd), or about five per cent of global oil demand. “OPEC+ production cuts are expected to tighten the market, driving supply deficits in the second half of 2023, supporting higher oil prices,” analysts at U.S. financial services company Morningstar said in a note. OPEC will likely maintain an upbeat view on oil demand growth for next year, sources close to OPEC said. Russia’s latest pledge to reduce oil exports will not require a similar cut in production, a government source told Reuters. Oil analytics firm Vortexa said there are currently 10.5m barrels of Saudi crude in floating storage off the Egyptian Red Sea port of Ain Sukhna, down by almost half from mid-June. Also supporting crude prices, the U.S. dollar fell to a two-week low after data showed U.S. job growth was lower than expected but still strong enough to likely lead the U.S. Federal Reserve (Fed) to resume raising interest rates later this month as it has signaled. A weaker dollar makes crude cheaper for holders of other currencies, which could boost oil demand. According to the CME Group Inc’s FedWatch Tool, the probability that the Fed increases interest rates by 25 basis points at its July 25-26 meeting is now around 95 per cent, up from 92 per cent just prior to the data coming out. Higher borrowing costs could slow economic growth and reduce oil demand. In Europe, decades-high inflation and the impact of war in Ukraine has forced companies to impose hiring freezes and lay-offs. In Germany, a swift economic recovery appeared less likely as data showed a surprise fall in industrial production.
Iran attempted to seize 2 oil tankers, US Navy says - Iranian naval forces attempted to capture two oil tankers in the Gulf of Oman on Wednesday and fired on one merchant vessel before they were turned back by an American battleship, according to the U.S. Navy, which posted a video of the alleged encounter.Around 1 a.m. local time Wednesday, the U.S. says, an Iranian naval vessel sailed toward a Marshall Islands-flagged oil tanker across international waters but was deterred by the American guided-missile destroyer USS McFaul.Roughly three hours later, Bahamian-flagged oil tanker Richmond Voyager issued a distress call while transiting international waters near Muscat, Oman, headed toward the Arabian Sea, according to the U.S. Navy 5th Fleet.An Iranian vessel had inched within 1 mile of Richmond Voyager, hailing the tanker to stop and even firing on the commercial ship.The USS McFaul arrived in time to again deter the Iranian ship. No one was injured on the Richmond Voyager, but the U.S. Navy says bullets pierced the boat’s hull near the living quarters.A video released by the U.S. Navy appears to show the Richmond Voyager attempting to get away from the Iranian vessel as it fires on the merchant tanker.There was no immediate comment from Iranian officials via state news agency IRNA.The encounter follows successful attempts from Iranian naval forces to seize oil tankers in the Strait of Hormuz, including a Texas-bound ship in April and another one about a week later.
A Large Iranian Drone Plant Is Already Up & Running Inside Russia -Russia already has an Iranian drone manufacturing facility up and running on its soil, in close cooperation with Tehran, which appears consistent with the US intelligence warnings of prior months."Russia’s covert drone partnership with Iran has included close co-operation on a new factory in the Russian republic of Tatarstan, where Moscow has converted an agricultural unmanned aerial vehicle maker to supply its war effort in Ukraine," Financial Times writes in a new investigative report.The facility location is very close to Kazan, Russia's fifth largest city and among the country's high-tech manufacturing hubs. Albatross, the Russian company overseeing the facility, advertises itself as an agricultural unmanned aerial vehicle maker primarily focused on farm tech, but is believed to have recently been more deeply involved in military applications for its drones. While Iran's kamikaze 'Shahed' loitering drones have already been deployed in the hundreds on the Ukrainian battlefield and over cities, FT's reporting did not suggest Shahed's were being produced at the new Tatarstan plant. Instead, at least 50 new Albatros M5 long-range reconnaissance drones have been supplied thus far to Russian forces in Eastern Ukraine. These Russian-Iranian drone initiatives are expected to expand, given that as the report underscores there's been a noticeable recruitment effort underway for Albatros company to gain more UAV engineers, scientists, and even technicians that can speak Farsi.FT writes, in reference to the name of the specific business park where the manufacturing facility has been established:In addition, they found the business park has also posted advertisements for Farsi interpreters who will be required to travel, perform simultaneous translation and translate technical documents.In June, the White House issued satellite photographs that identified two buildings in the Alabuga zone area as a key part of Iran’s attempts to help Moscow increase its drone capacity. “We are also concerned that Russia is working with Iran to produce Iranian UAVs from inside Russia,” said John Kirby, the US National Security Council spokesperson.
A year of fighting between Israel and the Palestinians just escalated. Is this an uprising? - (AP) — Airstrikes targeting Palestinian militants in a crowded residential area. Armored bulldozers plowing through narrow streets, crushing cars and piling up debris. Protesters burning tires. A mounting death toll.Israel’s large-scale military raid into the Jenin refugee camp in the occupied West Bank on Monday had undeniable similarities with the second Palestinian uprising of the early 2000s — a period that claimed thousands of lives. But the current fighting is also different from those intense years of violence. It’s more limited in scope, with Israeli military operations focused on several strongholds of Palestinian militants.The second uprising pitted Palestinian militant groups against a far more powerful Israeli military. Over 4,000 people died, including vast numbers of civilians. Roughly three times as many Palestinians as Israelis were killed.Israel struck targets in a militant stronghold in the occupied West Bank with drones and deployed hundreds of troops in the area, in an incursion that resembled the wide-scale military operations carried out during the second Palestinian uprising two decades ago. Palestinian health officials said at least eight Palestinians were killed and dozens wounded. (July 3) Israeli crackdowns upended Palestinian lives, including placing tight restrictions on movement that choked the fledgling economy. For Israelis, especially during the frequent bombings of the second intifada, stepping onto a bus or going out to a restaurant was terrifying. Those events were initially fueled by widespread participation. Many Palestinians in the West Bank, the Gaza Strip and east Jerusalem — areas captured by Israel in 1967 and claimed by the Palestinians for their state — joined in the protests. In the spring of 2022, a spate of Palestinian attacks against Israelis prompted Israel to launch near-nightly raids into Palestinian areas of the West Bank.Israel said the raids were meant to stamp out militant networks. But Palestinian attacks have continued, and the death toll on both sides has risen, making last year one of the deadliest for Palestinians in the West Bank since the second intifada.The violence has only intensified since Israel’s current far-right government, which is made up of hard-line ultranationalist settlement supporters, took power late last year.The Palestinian death toll this year in the West Bank and east Jerusalem stands at more than 135, according to a tally by The Associated Press, nearly matching the death toll for all of 2022. Hundreds of Palestinians have been arrested. Some 24 people have been killed in Palestinian attacks against Israelis.The region has not seen such a sustained cycle of violence since the second uprising, which lasted about five years. More recent periods of bloodshed have not lasted this long or involved such a strong show of force by the military.The tactics seen Monday, with airstrikes, armored bulldozers and a brigade of troops, were a mainstay of the second uprising.But analysts say that’s where the similarities end.
Arab nations condemn Israeli raid in West Bank - Several Arab countries and organizations are condemning a major Israeli raid launched Monday against an alleged terrorist base in the city of Jenin after at least eight Palestinians were killed and dozens injured.Arab nations that have traditionally sided with Palestine in its long conflict with Israel spoke out forcefully just hours after the operation.Egypt’s Ministry of Foreign Affairs in a statement condemned the “innocent civilian casualties in the excessive and indiscriminate use of force” in the operation.Egyptian officials also warned of the “grave dangers” of what they said were increased attacks against the Palestinian people.Jordan’s Foreign Affairs Ministry called for international cooperation to end the “disastrous consequences of the Israeli aggression on Jenin,” joining Iran and Turkey in speaking outagainst the military raid.The Israeli Defense Forces (IDF) began mass air strikes and sent in hundreds of soldiers to clear out the Jenin camp, which Israel said is a major base of operations for terrorist groups to launch attacks and manufacture and distribute weapons.The IDF operation has allegedly included bulldozers tearing up streets and buildings while rockets have reportedly struck populated refugee areas.Lt. Col. Richard Hecht, a spokesperson for the IDF, said there are sites in Jenin used by terrorists next to schools and humanitarian organizations.“We’re ready to do this as long as it takes,” he told a local outlet, adding that forces were seeking to “break the mindset of a safe haven for terrorists.” Ahmed Gheit, secretary-general of the League of Arab States, said “the bombing of cities and camps by planes, the bulldozing of houses and roads, is a collective punishment and revenge that will only lead to further detonation of the situation.” “I appeal to the advocates of peace in the world to intervene immediately to stop this ominous and criminal process,” he tweeted.Lynn Hastings, a United Nations resident and humanitarian coordinator for Palestine, said she was “alarmed” by the scale of the Israeli operation in Jenin.“Access to all injured must be ensured,” Hastings tweeted.The violence in the Israeli-occupied territories of the West Bank and Gaza has increased this year, fueling concerns about another major conflict in the Middle East.The IDF has responded aggressively to Palestinian militant activity under hardline Israeli Prime Minister Benjamin Netanyahu in operations it says are tasked with defending its people.Netanyahu has also been accused of allowing settlement expansions in Israel that are displacing the Palestinian people.U.S. officials have yet to make a statement on the Jenin raid, which comes just ahead of the Fourth of July celebrations, a traditional holiday break for Americans.Washington is a major ally of Israel but supports a two-state solution between Palestine and Israel.The Council on Islamic-American Relations, a major Muslim advocacy organization that has repeatedly spoken out against Israeli military activity, called for the U.S. to respond to Israeli military activity.“The Israeli government is completely out of control because it does not expect to face any consequences from the Biden administration,” said national executive director Nihad Awad in a statement. “This must change.”
US Backs Israel's Major Offensive in West Bank City of Jenin - The White House has expressed support for a major Israeli offensive that was launched against the occupied West Bank city of Jenin early Monday.“We support Israel’s security and right to defend its people against Hamas, Palestinian Islamic Jihad, and other terrorist groups,” a spokesperson for the White House National Security Council said, according toAFP.Amid the ongoing raid, Israeli Prime Minister Benjamin Netanyahu touted US support for Israel, which includes $3.8 billion in annual military aid. “America has provided Israel with moral and political backing against those who would wipe us out, the only Jewish state,” he said. “Security cooperation has never been better; intelligence sharing has never been deeper.”The Netanyahu government has significantly stepped up raids in the West Bank since taking power at the end of December. The government includes extremist settlers, and the coalition has vowed to prioritize expanding settlements in the West Bank with the ultimate goal of annexing the territory. The policies have sparked more armed Palestinian resistance.According to Al Jazeera, the attack on Jenin was launched by 1,000 Israeli troops, 150 armored vehicles, and air power. The Israeli military said Monday that it launched around 20 drone strikes across Jenin and vowed that the operation would last longer than one day.Palestinian authorities have reported at least eight Palestinians have been killed in the offensive, which has been described as the worst attack on the city since 2002. According to Defense for Children International-Palestine, two of those killed were children: Nouruddin Husam Yousef Marshoud, 15, and 17-year-old Majdi Younis Saud. The death toll is expected to rise as the city has now been under siege for 24 hours.Israel launched the offensive to root out armed resistance groups in Jenin, but the city’s mayor said civilians are also being killed. “Those being targeted now are not just the resistance fighters, but civilians are being killed and wounded as well,” Nidal Obeidi told Al Jazeera.
CENTCOM Says It Conducted 37 Operations Against ISIS in Iraq and Syria in June - US Central Command (CENTCOM) said in a press release on Thursday that it was involved in 37 operations against ISIS in Iraq and Syria during the month of June.The command said all of the operations were conducted with US partners, the Kurdish-led SDF in Syria, and the Baghdad-based government in Iraq. CENTCOM claimed 13 ISIS “operatives” were killed.In Iraq, CENTCOM was involved in 30 operations where 12 alleged ISIS operatives were killed. Seven operations were conducted in Syria, where one alleged ISIS operative was killed.CENTCOM did not offer an assessment of potential harm to civilians in the operations, and the Pentagon is notorious for undercounting civilian casualties. For example, CENTCOM claimed a drone strike it launched in northwest Syria on May 3 killed a “senior al-Qaeda leader.” But it soon became clear a civilian was killed in the strike, and it was revealed CENTCOM had no evidence to back up its initial claim.While the US is active in operations against ISIS in Iraq and Syria, the terror group no longer holds any significant territory in either country. The US uses the missions against ISIS to justify its continued presence in the region, including its occupation of eastern Syria.The US occupation of Syria is part of its economic campaign against the country, which involves crippling economic sanctions that are specifically designed to prevent Syria’s reconstruction.
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