US oil prices fell for a second week in three, despite escalating Mideast violence, after the Saudis cut prices for their exports to Asia by $2…after rising 3% to $73.81 a barrel last week on widespread unrest in the Middle East and on an OPEC pledge to support prices, the contract price for the benchmark US light sweet crude for February delivery opened lower on Monday after Saudi Aramco on Sunday had lowered the price of its Arab Light crude to Asia by $2/barrel due to persistent weakness in the global market, and tumbled throughout the day to settle $3.04 or more than 4% lower at $70.77 a barrel as demand doubts stemming from the Saudi price cut and a rise in OPEC output offset supply concerns generated by escalating geopolitical tension in the Middle East…oil prices retraced some of those losses as it rallied to a high of $72.93 early Tuesday before falling back. as Middle East tensions and a Libyan supply outage had nejped pare the previous day's heavy losses, then rallied again in afternoon trading to settle $1.47 higher at $72.24 a barrel, after the U.S. EIA forecast global oil inventories will draw down rapidly during the first quarter, putting upward pressure on oil prices… oil prices surged in overseas trading early on Wednesday, after Yemen’s Houthis launched their largest missile and drone attack to date on ships in the Red Sea, forcing a response from U.S. and U.K. forces, but reversed lower from an early advance during the New York trading session to settle 87 cents lower at $71.37 a barrel, after the EIA reported large increases of U.S. crude and refined fuels stockpiles during the first week of 2024…however, oil prices rallied more than 3% early Thursday, supported by news that Iran seized a tanker off the coast of Oman that was transporting Iraqi crude destined for Turkey, in retaliation for the US seizure last year of the same vessel and its Iranian oil, but pulled back on an unexpected increase in U.S. consumer inflation, and reports that China was seeking fewer Saudi imports, to settle 65 cents or less than 1% higher at $72.02 a barrel…however, oil prices jumped more than 4% in overnight trading early Friday after a U.S.-led coalition launched more than a dozen attacks against Houthi targets in Yemen, risking an escalatory spiral in the broader Middle East conflict, before again pulling back to settle just 66 cents higher at $72.68 a barrel, after U.S. Treasury yields eased on news that U.S. producer prices unexpectedly fell in December, and thus finished 1.5% lower for the week…
On the other hand, natural gas prices rose for a fourth straight week on forecasts for record breaking demand for heating and a larger than expect draw of gas from storage….after rising 15.1% to a six week high of $2.893 per mmBTU last week as forecasts for the first serious outbreak of cold weather this winter drove prices higher each day, the contract price for natural gas for February delivery opened 14 cents lower and slid to an intraday low of $2.694 early on Monday, as the cold snap forecast was no match for a global glut of gas supplies, but rallied confidently for the balance of the day to settle 8.7 cents higher at $2.980 per mmBTU, as traders ignored fundamentals and instead refocused on the more-exciting bitter cold snap of the coming weeks…natural gas prices opened 13 cent higher on Tuesday, bolstered by growing confidence surrounding next week’s impending arctic conditions, and rallied to settle 21.0 cents higher at $3.190 per mmBTU after the EIA forecast that growing demand for LNG exports would outpace gas supply by 2025…however, after a bearish shift overnight in the impending arctic conditions, the February contract opened 18 cents lower on Wednesday and held 15.1 cents of that pullbackk to settle lower for the first time in 2024 at $3.039 per mmBTU, with speculators hesitant to hold positions and bears seizing on forecasts for a late January warm-up…the front-month gas contract opened five cents lower on Thursday and fell to an intraday low of $2.976 by 9:55AM, but mounted a steady ascent following a bullish storage report and rose to as high as $3.231 before selling off to settle 5.8 cents higher on the day at $3.097 per mmBTU, on the bigger-than-expected storage withdrawal and on forecasts that extreme cold in coming days will boost gas demand to record highs...natural gas prices continued to rally on Friday and soared 21.6 cents or 7% to a ten week high of $3.313 per mmBTU, \as the weekend’s extreme cold was expected to boost natural gas demand to record highs while also cutting gas supplies by freezing wells, and thus finished 14.5% higher on the week…
The EIA's natural gas storage report for the week ending January 5th indicated that the amount of working natural gas held in underground storage in the US fell by 140 billion cubic feet to 3,336 billion cubic feet by the end of the week, which left our natural gas supplies 436 billion cubic feet, or 15.0% above the 2,900 billion cubic feet that were in storage on January 5th of last year, and 348 billion cubic feet, or 11.6% more than the five-year average of 2,988 billion cubic feet of natural gas that were typically in working storage as of the 5th of January over the most recent five years…the 140 billion cubic foot withdrawal from US natural gas working storage for the cited week was much more than the average 119 billion cubic feet withdrawal from supplies that had been forecast by analysts polled by Reuters, and was seven times the 23 billion cubic feet that were pulled from natural gas storage during the corresponding first week of January 2023, and was also much more than the average 89 billion cubic feet withdrawal from natural gas storage that has been typical for the same early winter week over the past 5 years…
The Latest US Oil Supply and Disposition Data from the EIA
The US oil data from the US Energy Information Administration for the week ending January 5th appeared to show that after a big drop in our oil exports and a modest decrease in our refinery throughput, we had surplus oil to add to our stored commercial crude supplies for the eighth time in twelve weeks, and for the 12th time in the past 30 weeks, even though the oil supply that the EIA could not account for last week virtually disappeared….Our imports of crude oil fell by an average of 654,000 barrels per day to average 6,241,000 barrels per day, after rising by an average of 619,000 barrels per day the prior week, while our exports of crude oil fell by 1,970,000 barrels per day to average a 3,322,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 2,919,000 barrels of oil per day during the week ending January 5th, 1,316,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, natural gasoline, condensate, and unfinished oils averaged 695,000 barrels per day, while during the same period, production of crude from US wells decreased by 100,000 barrels per day to 13,200,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,814,000 barrels per day during the January 5th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,516,000 barrels of crude per day during the week ending January 5th, an average of 161,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 278,000 barrels of oil per day were being added to the supplies of oil stored in the US... So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending January 5th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was a rounded 19,000 barrels per day more than what was added to storage plus what our oil refineries reported they used during the week. To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [-19,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the 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 omission of that size in the week’s oil supply & demand figures that we have just transcribed.... However, since line last week’s balance sheet included a [+547,000) barrels per day figure on line 16, meaning 547,000 barrels of oil supplies per day could not be unaccounted for last week, that means there was a 566,000 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 necessarily off by that much, and therefore useless... However, since most oil traders react 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)….(note there is also an aging twitter thread from an EIA administrator addressing these errors, and what they had hoped to do about it…the errors have since gotten larger; Reuters recently addressed that issue here..)
This week's rounded 278,000 barrel per day average increase in our overall crude oil inventories came as 191,000 barrels per day were being added to our commercially available stocks of crude oil, while 87,000 barrels per day were being added to our Strategic Petroleum Reserve, the sixth SPR increase in thirteen weeks. following withdrawals over the prior 39 months... Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 6,526,000 barrels per day last week, which was still 8.2% more than the 6,033,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be 100,000 barrels per day lower at 13,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 12,800,000 barrels per day, while Alaska’s oil production was 42,000 barrels per day lower at 393,000 barrels per day but still added the same 400,000 barrels per day to the EIA's 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 is still 0.8% above that of our pre-pandemic production peak, and 36.1% 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 92.9% of their capacity while processing those 16,518,000 barrels of crude per day during the week ending January 5th, down from their utilization rate of 93.5% the prior week, but a near normal utilization rate for early January ... the 16,518,000 barrels per day of oil that were refined this week were 12.7% more than the 14,651,000 barrels of crude that were being processed daily during week ending January 6th of 2023 (following the refinery-freeze-offs due to the Christmas 2022 blizzard), but 2.2% less than the 16,897,000 barrels that were being refined during the prepandemic week ending January 3rd, 2020, when our refinery utilization rate was at 93.0%..
Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries was much higher, increasing by 901,000 barrels per day to 9,656,000 barrels per day during the week ending January 5th, after our refineries' gasoline output had decreased by 1,275,000 barrels per day during the prior week. This week’s gasoline production was also 13.2% more than the 8,533,000 barrels of gasoline that were being produced daily over the storm impacted week of last year, and 8.7% more than the gasoline production of 8,887,000 barrels per day during the prepandemic week ending January 3rd 2020....on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 64,000 barrels per day to 5,167,000 barrels per day, after our distillates output had increased by 115,000 barrels per day to a 30 week high of 5,231,000 barrels per day during the prior week. With this week’s decrease, our distillates output was 13.7% more than the 4,544,000 barrels of distillates that were being produced daily during the week ending January 6th of 2022, but 2.7% less than the 5,310,000 barrels of distillates that were being produced daily during the week ending January 3rd 2020..
With this week's jump in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the 7th time in eight weeks, increasing by 8,028,000 barrels to a ninety six week high of 244,982,000 barrels during the week ending January 5th, after our gasoline inventories had increased by a record 10,900,000 barrels during the prior week. Our gasoline supplies increased by less this week because the amount of gasoline supplied to US users rose by 371,000 barrels per day to 8,325,000 barrels per day, even as our imports of gasoline fell by 159,000 barrels per day to 500,000 barrels per day, as our exports of gasoline fell by 88,000 barrels per day to 823,000 barrels per day.…Even after twenty-seven gasoline inventory withdrawals over the past forty-six weeks, our gasoline supplies were 8.0% above than last January 6th's gasoline inventories of 226,776,000 barrels, and about a percent above the five year average of our gasoline supplies for this time of the year…
Despite this week's decrease in our distillates production, our supplies of distillate fuels rose for the seventh consecutive week, following eight straight decreases, increasing by 6,528,000 barrels to a 115 week high of 125,855,000 barrels over the week ending January 5th, after our distillates supplies had increased by 10,090,000 barrels, the most in 5 years, during the prior week. Our distillates supplies rose by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 774,000 barrels per day to 3,432,000 barrels per day, while our exports of distillates fell by 249,000 barrels per day to 1,325,000 barrels per day, and while our imports of distillates rose by 80,000 barrels per day to 274,000 barrels per day ...With 23 inventory decreases over the past forty-three weeks, our distillates supplies at the end of the week were 12.5% above the 117,716,000 barrels of distillates that we had in storage on January 6th of 2022, but still about 4% below the five year average of our distillates inventories for this time of the year...
Finally, after the big drop in our oil exports, our commercial supplies of crude oil in storage rose for the 11th time in twenty-six weeks and for the 25th time in the past year, increasing by 1,338,000 barrels over the week, from 431,065,000 barrels on December 29th to 432,403,000 barrels on January 5th, after our commercial crude supplies had decreased by 5,503,000 barrels over the prior week... With that modest increase, our commercial crude oil inventories remained about 2% below the most recent five-year average of commercial oil supplies for this time of year, but were still about 32% above the average of our available crude oil stocks as of the first weekend of January over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had 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 January 5th were 1.6% less than the 439,607,000 barrels of oil left in commercial storage on January 6th of 2023, but 4.6 % more than the 413,298,000 barrels of oil that we still had in storage on January 7th of 2022, while still 10.3% less than the 482,211,000 barrels of oil we had in commercial storage on January 8th of 2021, after 2020’s pandemic precautions had left a lot of oil unused…
This Week's Rig Count
In lieu of a detailed report on the rig count, we are again just including below a screenshot of the rig count summary from Baker Hughes...in the table below, the first column shows the active rig count as of January 12th, the second column shows the change in the number of working rigs between last week’s count (January 5th) and this week’s (January 12th) count, the third column shows last week’s January 5th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 13th of January, 2023...
you might notice from the above that a rig was added to Ohio's Utica shale; checking that, we find it was a horizontal rig drilling to over 15,000 feet in Belmont county...that means there are now three rigs drilling in Belmont county, and a total of thirteen across the southeast part of the state, including three in Guernsey county, two each in Jefferson and Noble counties, and one each in Harrison, Monroe, and Tuscarawas counties…further details are available in the North America Rotary Rig Count Pivot Table, an Excel file updated weekly by Baker Hughes…
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The outrageous blank check Ohio just wrote on behalf of the state's gas customers: editorial - By The Editorial Board, The Plain Dealer - It’s not clear if such rankings are kept, but any list of the most pro-utility states – and pro-utility governors – would surely give Ohio, and Republican Gov. Mike DeWine, a place near the top of the scoreboard. Latest example: The governor’s decision to sign into law Amended Substitute House Bill 201, which, according to the pithy comment of a legislator who opposed the measure, state Sen. Kent Smith, a Euclid Democrat, “allows gas utility companies to build pipelines anywhere under the guise of economic development.” “That means,” he added in a Dec. 31 cleveland.com guest column, “the utility could build a bunch of pipelines to dozens of potential industrial sites, hoping that a company moves into just one of those sites and the utility gets a new customer.” But here’s the rub: Even if those pipelines are in fact never used by new customers won’t matter on gas consumers’ monthly bills: HB 201 requires ratepayers to cover the cost of any gas lines built, plus any planning or development work that may have preceded pipeline construction and its regulatory approval -- all, essentially, on speculation.The new law offers no clear explanation for why consumers, rather than utility investors, should pay for gas lines that might never benefit consumers or the state’s economic development goals. Meanwhile, the “Intel” argument -- that the state needs pipeline-equipped sites -- falls flat when one considers that Intel Corp. wasn’t influenced by that, and in fact aims to use all-renewable power at its Ohio mega-factory site.However, there’s no question about one point: The hurriedly added pipeline provisions in HB 201 -- a bill that started out life as (and still contains) a prohibition on Ohio adopting California’s strict auto emissions standards or trying to ban cars based on their fuel source -- will plump up gas companies’ profits.As cleveland.com’s Jeremy Pelzer and Jake Zuckerman reported, the bill DeWine signed Dec. 28 would let Ohio gas utilities “charge Ohio’s 3.7 million gas customers up to $1.50 per month for as long as five years to extend gas lines to sites that could potentially be used for megaprojects, even if no buyer has been lined up yet.” That could work out to as much as $5.55 million per month.The $1.50 monthly charge was already in law but applied only to narrowly defined and authorized actual investments -- which have dwindled in number (and costs on customers’ bills).“Columbia Gas currently charges its customers 63 cents per month on their monthly bills. Both Dominion and CenterPoint charge their customers 3 cents per month,” Pelzer and Zuckerman reported. In other words, natural gas utilities were in search of a bonanza, and got one, thanks to Ohio’s obsequiously pro-utility elected officials -- and the pipeline amendments rushed into being over a roughly 36-hour period. Among those who opposed the gas utility giveaway was the Ohio Manufacturers’ Association, whose members are among the state’s biggest consumers of natural gas.The General Assembly’s excessive deference to utilities has already stoked the FirstEnergy Corp./House Bill 6 scandal and its still-ongoing federal corruption investigation. Among consequences: the convictions and imprisonment of former Ohio House Speaker Larry Householder and former Republican State Chair Matthew Borges, and the indictment of former PUCO Chair Samuel Randazzo, who awaits trial and is entitled to the presumption of innocence.DeWine signed HB 6 the same day the General Assembly passed it in July 2019. And while the General Assembly has since repealed parts of HB 6, it still requires Ohio ratepayers to shell out more than $153,000 a day to subsidize two money-losing coal-fired power plants, one in Indiana. HB 6 also squeezed Ohio’s renewable energy and energy efficiency standards in provisions that also remain in effect. The passage of House Bill 201 is evidence, were more needed, that what the utilities want from the General Assembly, and the governor, they usually get. That is, what should be a ratepayer-utility balance at the Statehouse is anything but. As a matter of fairness, that needs to change.
Marathon Petroleum gifts $20,000 to Utica Shale Academy boosting outdoor welding program — MPLX Marathon Petroleum presented the Utica Shale Academy $20,000 for personal protective equipment. Utica Shale Academy is a tuition-free publicly funded school where students are taught traditional coursework along with specialty courses targeting the trade workforce. It became Ohio’s first outdoor welding lab in 2023. "Whenever we learned about all of the great successes that the Utica Shale Academy is having and that they have had such great successes that their enrollment has really grown, we wanted to be able to help support that,” said Tina Rush, advance community relations representative for MLPX Marathon Petroleum, said. According to Utica Shale Academy Superintendent Bill Watson, the academy has implemented a work-based program for seniors. This initiative entails 35 out of their 54 senior students engaging in three days of work each week. "On average, we've graduated 50-plus kids,” Watson said. “Each year, we do a survey to follow up with how they are. And were about 60-65% placed within the industrial setting in which they've been educated.” How do the students feel about the grant money they received? "They haven't been letting us weld outside much because it's been colder and some of the kids have been complaining because it's been colder outside,” student Connor Smith said. “So, they took the money from the grants and such and bought us these jackets. So, like, whenever it gets colder, we can weld outside.” Ohio's 33rd District State Senator Michael Rulli worked with the academy when it was a concept and finds it gives young adults the chance to stay out of trouble and work toward a successful future. "That we could get kids and give them a future and give them an idea on how to live,” Rulli said. “And they could do it debt free. So, they could actually have a skill and a trade where they can make a lot of money and they don't have a student loan that’s going to strangle them.” The academy began in Salineville and has six Ohio locations.
Utica Shale Academy receives significant donation from MPLX and Marathon Petroleum -- — The Utica Shale Academy in Salineville, has become the proud recipient of a $20,000 donation from MPLX and Marathon Petroleum. This generous contribution is earmarked for fire-resistant personal protective gear, crucial for the safety and comfort of students involved in the academy’s outdoor welding program. Emery Tyson, Utica Region Operations Director for MPLX, was deeply touched by the academy’s needs and the potential impact of this donation. Tyson stated, “we deeply believe that safety comes first, so supporting personal protective equipment needs of students learning valuable trades is an honor,” highlighting the significance of the contribution in enhancing the educational environment for the students. Holly Williams, a member of the MPLX giving committee, also shared her perspective on the donation. Williams commented, “when the MPLX team read about the project, it was obvious that this was something that we wanted to support. The impact this donation will have on these students and the community will be evident now and in the years to come.,” providing insight into the committee’s decision-making process and its commitment to supporting local education initiatives. The donation was also praised by State Senator Michel Rulli, who represents the counties served by the Utica Shale Academy. Senator Rulli, an advocate for workforce development and career technical education in Appalachia, expressed his gratitude towards MPLX and Marathon Petroleum. He emphasized the Utica Shale Academy gives students an opportunity to earn a sustainable living wage without compiling college debt. Senator Rulli stated: “We could get kids and give them a future and give them an idea on how to live, and they could do it debt free. So, they could actually have a skill and a trade where they can make a lot of money and they don’t have a student loan that’s going to strangle them.” Bill Watson, the superintendent of Utica Shale Academy, and Carter Hill, the principal, expressed their gratitude to MPLX and Marathon Petroleum. Hill highlighted the academy’s commitment to providing essential equipment and supplies to its students at no additional cost. This donation from MPLX is a significant boost to the academy’s efforts to serve its 130 students from more than 15 school districts, focusing on dropout prevention and recovery through career education.
Q&A: Anti-Fracking Activist Sandra Steingraber on Scientists’ Moral Obligation to Speak Out - For many, a cancer diagnosis is a deeply personal, private matter. But when Sandra Steingraber confronted a diagnosis of cancer that is rarely found in young women as a college biology student more than 40 years ago, it set her on a life-long mission to document the intimate connection between human and environmental health and hold polluters to account. Steingraber used her scientific training to unearth a vast body of evidence linking toxic chemicals in the environment to cancer, including the bladder cancer that had upended her life. Patients often hear that cancer is a result of bad luck or poor lifestyle choices, but bladder cancer, she discovered, is a “quintessential” environmental cancer, linked to industrial chemicals and contaminants in drinking water. She marveled at the huge gap between what the science shows and what patients and the public hear about cancer causes. In 1993, Steingraber left her tenure track job to communicate scientific evidence about environmental threats to public health. She framed the potential for chemical and fossil fuel companies’ toxic products to poison people, even before they are born, as “toxic trespass.” “From the right to know and the duty to inquire, flows the obligation to act,” Steingraber wrote in her acclaimed 1997 book “Living Downstream,” the first in a trilogy on environmental health. Over the past decade, Steingraber has led efforts to halt fracking across the Marcellus Shale deposits, which run from eastern Ohio through several states to upstate New York, where she lives. Steingraber retired as a scholar in residence at Ithaca College in 2021, and now works as a senior scientist with the Science and Environmental Health Network. She co-edits a peer-reviewed compendium of scientific, medical and media findings showing the risks and harms associated with fracking and related oil and gas infrastructure, which ultimately convinced Gov. Andrew Cuomo to make New York the first state to ban fracking, in 2014. She believes fracking—which she calls the world’s “ugliest gerund”—is “linked to every part of the environmental crisis.”Steingraber received the prestigious Heinz Award in 2011 for her efforts to understand how contaminants in air, water and food endanger human health. Last month, 170 scientists led by Steingraber and seven other high-profile scientists including Peter Kalmus, Michael Mann and Rose Abramoff, urged President Joe Biden to reject a proposed liquefied natural gas terminal in Louisiana known as CP2 and similar projects to instead chart a rapid, just transition from fossil fuels.Inside Climate News spoke to Steingraber in San Francisco last month during the annual meeting of the American Geophysical Union, the world’s largest gathering of earth and space scientists. The conversation has been edited for length and clarity.
18 New Shale Well Permits Issued for PA-OH-WV Jan 1-7 | Marcellus Drilling News -- There were 18 new permits issued to drill in the Marcellus/Utica during the first full week of 2024 (Jan. 1-7), versus 24 permits issued for the final two weeks of last year (Dec. 18-31). Pennsylvania issued 9 new permits last week. Ohio issued just 1 — which was to drill a Marcellus (not a Utica) well! West Virginia issued 8 permits. Antero Resources took the top spot last week with 7 new permits, all of them issued for drilling in Wetzel County, WV. ANTERO RESOURCES | ARMSTRONG COUNTY | ASCENT RESOURCES | INDIANA COUNTY | INR | JEFFERSON COUNTY (OH) | OHIO COUNTY | SOUTHWESTERN ENERGY | WETZEL COUNTY
Southwestern, Chesapeake Energy close to $17 billion merger - source (Reuters) - U.S. natural gas producer Chesapeake Energy (CHK.O) and peer Southwestern Energy (SWN.N) are nearing a merger that would create a nearly $17 billion company, a person familiar with the matter told Reuters on Friday. The deal could come together as soon as next week provided the talks do not fall apart, the source said, requesting anonymity since talks are private. Reuters had reported in October that Chesapeake was exploring an acquisition of Southwestern. A potential deal could create a company that would overtake EQT (EQT.N) as the largest natural gas-focused exploration and production firm in the U.S. by market value, at a time when shale companies seeking scale and efficiencies are fueling a rapid consolidation in the energy sector. Shares of Southwestern and Chesapeake closed more than 7% and 3%, respectively, after the Wall Street Journal reported the talks earlier in the day. The companies did not immediately respond to requests for comment from Reuters. The deal talks come against the backdrop of a sluggish U.S. natural gas prices. U.S. natural gas futures ended 2023 with the biggest percentage decline since 2006 due to record production, ample inventories and a mild winter. Chesapeake has been shedding oil-producing assets to focus on its competence in natural gas since emerging from bankruptcy in 2021. The two companies are neighbors; most of Southwestern's production is in Appalachia's shale formations and the Haynesville basin in Louisiana, where Chesapeake also operates.
U.S. Natural Gas Mergers & Acquisitions “Scarce” and “Uneven” - Marcellus Drilling News - Apart from today’s news that Chesapeake Energy and Southwestern Energy (two huge gas drillers) are close to announcing a merger (see today’s lead story), it is oil companies in U.S. shale that seem to be at the epicenter of a hot M&A market. According to an analyst writing for Argus Media, “meaningful consolidation among US natural gas producers looks unlikely to take place soon owing to historically low, volatile commodity prices and a dearth of large privately-held operators.” The best opportunities lie with companies that have assets in the Haynesville, says the analyst. Perhaps uncoincidentally, both Chesapeake and Southwestern have major assets in the Haynesville (and the Marcellus/Utica).
Haynesville & LNG the Main Driver of Chesapeake/Southwestern Deal --- Marcellus Drilling News -- Even though separately (and together) Chesapeake Energy and Southwestern Energy own MORE assets in the Marcellus/Utica than in the Haynesville shale play, the main driver to do a merger between the two companies is the Haynesville and that play’s close proximity to LNG export facilities along the Gulf Coast. That is the conclusion of most analysts based on comments made yesterday by Chesapeake and Southwestern in announcing a $7.4 billion deal to combine the companies (see Deal is Done! Chesapeake & Southwestern Announce $7.4B Merger). So, the big question is, What does that mean for the Marcellus/Utica?
Mountain Valley Pipeline Almost Done – Makes Good Time with Weather - Marcellus Drilling News - The 303-mile Mountain Valley Pipeline (MVP), which runs from Wetzel County, WV, to Pittsylvania County, VA, is nearly done, thanks to our recent warm weather. What’s left to do? Less than one mile of “upland” pipe to install, less than 50 water/wetland crossings, and just one more compression station to finish. According to Equitrans, the majority partner and builder of MVP, the pipeline will come online in March. Finally!!!!
Boston LNG Import Terminal Still Looking for Customers to Stay Open - Marcellus Drilling News - In early December, MDN updated you on the very real possibility that Everett LNG import terminal (Boston area), which accepts and regasifies foreign-sourced natural gas, may shut down this May following the closure of New England’s biggest natural gas-fired power plant, the Mystic Generating Station in Everett, MA (see Constellation May Have to Close Boston LNG Import Terminal). As we pointed out in that post, Constellation Energy, the owner and operator of the Everett LNG terminal, is actively trying to find new contracted customers so it can keep the terminal open. The search continues. A company spokesman confirmed to Bloomberg that nothing has yet been finalized, but the clock is ticking.
Floods, winds, blizzards: Testing the Northeast's gas-guzzling grid - This week’s winter weather is a harsh reminder that a deep freeze a year ago slashed gas production in Pennsylvania, crippled pipeline networks, triggered blackouts and almost plunged New Yorkers into an energy crisis. Flood warnings, high winds and tornadoes in the East earlier in the week and an Arctic blast expected to move across the Midwest and into the Ohio Valley starting Friday are renewing concerns about what played out during Winter Storm Elliott, a monster storm that stretched from the Great Lakes to Tennessee when it reached the eastern U.S. on Dec. 23, 2022. Labeled a “bomb cyclone” because of its combination of freezing temperatures and high-velocity winds, the storm seized power grids and natural gas utilities along the Eastern Seaboard. New York City came within a day of a disaster that utility Consolidated Edison says could have cut off gas to more than a million homes and businesses. Potential scenarios were horrific: People dying from the cold, emergency evacuations and buildings wrecked by flooding from broken water pipes. To make sure pilot lights were on before turning on the gas again, utility technicians would have had to visit each customer. It might have taken a month or more to restore gas to city boroughs, Con Edison officials and federal regulators said. Elliott shut between one-quarter and one-half of the gas pipeline flows out of the Appalachian shale gas basins stretching across Pennsylvania and Ohio. That meant cuts to fuel supplies for gas turbine plants, the dominant source of electricity across the Northeast. As a result of collapsing pipeline pressure, Con Edison was pushed to the brink, according to a joint investigation of the Federal Energy Regulatory Commission and NERC. At the storm’s height, 127,000 megawatts of mostly natural gas generation went down. “America’s natural gas infrastructure and electric grid continue to be severely challenged during extreme cold weather events,” FERC and NERC said in the report on Elliott, “repeatedly jeopardizing reliability during life-threatening conditions, even when technology exists to protect the vulnerable components.” Even basic communication broke down during Elliott. As one power plant after another shut down or could not start, operators for the mid-Atlantic-based PJM Interconnection — the largest U.S. grid operator — called on backup power plants that were supposed to be ready to operate. But a stunning number of these plants could not run either. PJM operators in the Valley Forge, Pennsylvania, control center often found out only at the last minute that a plant they counted on was down, PJM said in its investigative report on Elliott. A critical issue was the loss of natural gas supplies, whether because gas equipment froze or power generators had not secured gas deliveries in advance of the storm. Some generators were not willing to pay sky-high spot market prices for gas during the storm, according to PJM. The misalignment leaves the United States facing growing extreme weather risks as executives inside the gas and power industries disagree over a path forward. And part of the issue is just how far apart the regulatory regimes governing the two industries are. One is an electric power industry with mandatory reliability rules. The other is a gas industry that flatly rejects such regulation, Robb and other officials said. “No regulatory entity is tasked with ensuring the reliability of the natural gas fuel supply,” the Elliott report noted. Acting FERC Chair Willie Phillips punctuated the report with a plea to Congress to extend federal oversight of interstate electric power networks to the gas sector. “Someone must have authority to establish and enforce gas reliability standards,” Phillips said in a statement attached to the Elliott report. Creating mandatory gas regulation would require congressional action, and although that has often been proposed, nothing has happened, noted Susan Tierney, senior adviser for the Analysis Group who co-chaired a lengthy review of grid and gas policy last summer. For one, she said, energy committees in Congress are typically packed with people representing states that produce oil and gas. “It doesn’t surprise me that it’s hard at times to gather broad bipartisan support for taking action that the gas industry doesn’t want,” Tierney said. Gas plants ‘disproportionately vulnerable to failure,’ warns Union of Concerned Scientists report Gas-fired power plants are not as reliable as grid planners believe and this is a “significant vulnerability” for the electric grid and consumers, the Union of Concerned Scientists said Tuesday in a new issue brief examining thermal generation failures in extreme temperatures. Gas plants accounted for 63% of the generating capacity forced offline by severe weather during Winter Storm Elliott in 2022, and 56% of the capacity offline during Winter Storm Uri in 2021 when almost 250 people died in Texas amid rolling blackouts, according to the issue brief, “Calling into Question the Reliability of Gas Power Plants.” The report recommends grid operators consider new approaches to accounting for the contributions of thermal resources, and for regulators to make more information available about the cause of generator failures. Some investment in weatherization may be needed, but UCS energy analyst and report co-author Paul Arbaje cautioned against the “vicious cycle” of investment in new gas-fired resources. Despite growth in renewable resources, natural gas still provides about 40% of U.S. electricity generation annually and 43% of its generating capacity, according to UCS. “The energy system’s overreliance on gas is problematic for many reasons,” said UCS Senior Energy Analyst and report co-author Mark Specht. “Our analysis found that gas plants were disproportionately vulnerable to failure.” Gas plants accounted for most of the failed capacity in all five recent extreme winter weather events, and they failed “disproportionately in comparison with gas’s percentage of total installed capacity, indicating that they are more susceptible to extreme winter weather than are other resource types.” During Winter Storm Elliott, 90.5 GW in the Eastern Interconnection failed to run or operated at reduced capacity, the Federal Energy Regulatory Commission and North American Electric Reliability Corp. concluded in a joint report. Gas-fired capacity accounted for 63% of the outages, followed by coal and lignite at 23%, oil at 4%, wind at 4%, and nuclear, solar and hydroelectric at 1% each. The UCS issue brief looks at gas plant operations in both summer and winter, as well as direct impacts and associated fuel supply issues. Gas plants face most issues in the winter, when equipment freezing can impact valves, water lines, inlet air systems and sensing lines, said UCS. Mechanical and electrical issues can also impact wiring and the mechanical wear of valves, while rubber and silicone seals can become brittle. Summer temperatures also threaten gas plant reliability, said UCS. High temperatures can reduce “both the efficiency and the maximum generating capacity of gas plants,” according to the paper, while droughts can force plants to reduce output or shut down if they are dependent on water for cooling. “Extreme weather events have become more frequent and intense putting the U.S. power grid and broader energy system under significant pressure,” Arbaje said. Gas plants are “not up to the task of supplying power when it’s needed most,” he said. And further investment in them “continues the vicious cycle of releasing heat-trapping emissions that exacerbate climate change impacts and in turn strain the electric grid.” The long-term solution is a transition to renewables while utilizing new regulatory approaches along the way. Limited information about gas plant failures is made available publicly, UCS said, including from grid operators and regulators like FERC and NERC. “Making high-quality data on grid reliability available and accessible to policymakers, researchers, and the public would help ensure that the grid is better prepared to withstand the wide array of threats to reliability,” the issue brief said.
FERC and NERC Issue Joint Recommendations in Response to Winter Storm Elliott Potentially Impacting Well Head to the Burner Tip | Steptoe & Johnson PLLC – JDSupra -- On November 7, 2023, the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) issued a joint report including recommendations targeting the natural gas industry from the well head to power generators (the Recommendations). The report was in response to Winter Storm Elliott, an unprecedented winter weather event occurring from December 21, 2022, through December 26, 2022. During the storm, 90,500 MW of generating units went out of service, and a total of over 127,000 MW of generation was unavailable. These numbers represent an unprecedented 18% of eastern U.S. electric-generation resources. Natural gas fuel issues accounted for 20% of all causes (and 83% of outages caused by fuel issues). In the Marcellus Shale and Utica Shale formations, production dropped to just 54% during the event, the top causes of which were wellhead freeze-offs, natural gas supply chain equipment freezing, and weather-related transportation issues preventing maintenance, such as road conditions.The Recommendations focus on natural gas production and FERC and non-FERC pipelines and fall into two categories: (i) those pertaining to cold-weather infrastructure reliability; and (ii) those pertaining to natural gas and electric-generation coordination for cold-weather reliability.Recommendation 4, which is specific to natural gas production and other infrastructure cold-weather reliability, calls for legislation by Congress and state legislatures, as well as regulation by entities with jurisdiction over natural gas infrastructure reliability. Specifically, the Recommendations call for the establishment of reliability rules for natural production and gas infrastructure necessary to support the grid and natural gas local distribution companies (LDCs). The Recommendations specify that any potential legislation concerning cold-weather infrastructure reliability should address the following issues: (i) cold-weather preparedness plans, freeze protection measures, and operating measures for when extreme cold-weather periods are forecast, and during extreme cold-weather periods; (ii) the need for regional natural gas communications coordinators who can share timely operational communications throughout the natural gas infrastructure chain and communicate potential issues to, and receive grid reliability information from, grid reliability entities; and (iii) the need to require natural gas infrastructure entities to identify those natural gas infrastructure loads that should be designated as critical for priority treatment during load shed and provide criteria for identifying such critical loads.Recommendations 5-7, which address natural gas and electric-generation coordination for cold-weather reliability, provide for the following: (i) convening natural gas infrastructure entities, electric grid operators, and LDCs to enhance situational awareness and improve communications in future extreme cold-weather events; (ii) considering whether to order FERC-jurisdictional natural gas entities to provide FERC reports describing their roles in assessing and responding to natural gas supply and transportation vulnerabilities in extreme cold-weather events; and (iii) calling for an independent research group to perform studies in early 2024 to consider if additional infrastructure, such as interstate natural gas pipelines and storage, is necessary to increase electric grid and LDC reliability.
EQT CEO Toby Rice: NatGas Price Below $3.50 Means Less Production --Marcellus Drilling News - EQT CEO Toby Rice appeared on CNBC’s ‘Money Movers’ program last Friday to discuss what he expects for natural gas prices this year, what lower natural gas production means for EQT, and more. It was an interesting segment (watch it below; it is just four minutes long). Rice said, among other things, that a key issue for people to understand is that the marginal cost (i.e., the breakeven cost) in the U.S. to produce natural gas is around $3.50/MMBtu, which will hold production levels flat. Prices lower than that lead to lower production.
Natural Gas Demand Gains to Outpace Supply Growth in 2025 as Exports Rise, EIA Says - Henry Hub natural gas spot prices will average $2.60-2.70/MMBtu in 2024 before climbing further next year amid higher LNG exports and slowing production growth, the U.S. Energy Information Administration (EIA) said Tuesday. In its latest monthly Short-Term Energy Outlook (STEO), EIA called for a 2025 average Henry Hub natural gas spot price of $2.95. The benchmark averaged just $2.54 in 2023, a fraction of 2022’s average of $6.42, EIA data show. “Record natural gas production and storage inventories that remain above the 2019-2023 average mean that natural gas prices in our forecast are less than half the relatively high annual average price in 2022,” researchers said.
Natural Gas Producers’ Game Plan for LNG: Wait Out 2024 -Unlike the winter, the forecast for natural gas prices as 2024 arrives isn’t mild.Many industry experts predict a strong demand for LNG exports will result in a dominant U.S. position in the global gas market. However, producers are waiting for new LNG export terminals to come online, and another warm winter will spell trouble for a market already abundantly supplied. A few cold snaps hit parts of the U.S. in October and November. However, the influence of El Niño has driven a relatively warm winter in the northern U.S., which is the prime area of the country that uses gas for heating.According to the U.S. Energy Information Administration (EIA), natural gas storage on Dec. 1 was at 3.719 Tcf, about 6.7% above the five-year average of 3.485 Tcf. Natural gas storage levels have been above the five-year average since January, and the price of gas has stayed under $3/MMbtu for most of 2023. Jack Weixel, senior director of East Daley Analytics (EDA), said that if the temperatures stay elevated, the price of gas is in for a rough spot around spring. “15-day weather forecasts have been mega-bearish for the market and essentially have told the market that, as far winter is concerned, December is cooked,” Weixel said. East Daley estimated that a warm winter would sap about 2 Bcf/d of incremental residential and commercial demand. “January and February are still somewhat unknown, but overall, the damage may already be done unless those months are unseasonably cold.” The natural gas market has been reacting to the weather news: January 2024 futures price fell 5.8% on Dec. 11 to $2.431/MMbtu, the lowest price since June. “What this means is that the market has come to a realization that storage will remain above the 5-year average for the foreseeable future and end-of-season March inventories could come in over 2 Tcf, or a surplus to the 5-year average of around 500 Bcf,” Weixel said. “That kind of surplus means $2 gas and, if it were to grow larger, sub-$2 gas.” Meanwhile, U.S. gas producers have not significantly decreased their output, according to the EIA. U.S. natural gas production hit a monthly record high in May 2023, with 3.869 Tcf in gross withdrawals, according to the EIA. The monthly production was been above 3.71 Tcf for eight of the first nine months of 2023, while monthly production hit that threshold five times in all of 2022. Gas production in some parts of the U.S. continued to increase into the end of 2023, despite the high inventories. EDA noted that gas samples for flows heading out of the Permian Basin hit a record 6.3 Bcf/d in November. High production may seem counterproductive when storage is full, but the natural gas industry is focusing on transitioning, according to EDA. Producers are preparing for 10 new LNG export terminals opening on the North American coastline, resulting in a dramatic increase of LNG for the global market. Capacity is expected to more than double by 2027, from 11.4 Bcf/d today to 24.3 Bcf/d. Most of the projects are in the U.S., though Canada and Mexico are adding capacity as well. Venture Global LNG targeted its Plaquemines LNG facility in Louisiana to begin exporting by the end of 2024. The Golden Pass LNG facility near Port Arthur or the Corpus Christi Stage 3 LNG facility, both located in Texas, are expected to come online in 2025. However,Cheniere Energy’s Corpus Christi facility is ahead of schedule and may start production by the end of 2024. The international demand for North American LNG came from several trends over the last few decades. Countries in Europe and Asia are seeking LNG supplies thanks to its predictable availability from the U.S. and a tightening supply of natural gas abroad, said Majed Limam, Americas’ manager for Poten & Partners’ natural gas and LNG advisory team. “LNG is naturally more flexible than pipelines. LNG can directly connect the buyers and the seller point to point,” Limam said during a seminar on the impact of global conflict on future LNG supply projects. “Also, the low-hanging fruits, the gas fields that used to be closer to the buyer, are gone.”Russia’s invasion of Ukraine in 2022 — and the political fallout that followed — interrupted gas pipeline flows to Europe. The war has bogged down and appears to be in a long-term situation, meaning that European countries would prefer another source for the long term as well. In 2022, LNG became the primary player in the global natural gas market, taking 56% of market share versus the 44% delivered by pipelines.“Europe has learned a lesson,” Limam said. “A strong reliance on Russia for energy is dangerous. The infrastructure has been developed to provide Europe alternatives to Russia and Europe will use that.”
‘We’re the good guys’ in energy transition, says US exporter of LNG - The US’s largest exporter of liquefied natural gas has defended its industry from criticism by climate change campaigners, saying it was vital for keeping the lights on in Europe.“I would actually like to think that we’re the good guys,” Corey Grindal, chief operating officer of Cheniere Energy, told the Financial Times. “We are trying to do our part to be that safe, reliable operator that our customers have to have in order to keep the lights on.”His comments come after environmental groups such as Greenpeace attacked the LNG industry, accusing companies of using the energy crisis to lock in contracts for years to come.Europe has been a beneficiary of US LNG since Russia slashed its pipeline gas exports, with imports helping the region avert an energy crisis following the full-scale invasion of Ukraine in 2022.Last year, Cheniere signed long-term LNG deals with Norway’s Equinor, Germany’s BASF and Austria’s OMV.The US LNG industry has also come under pressure from those concerned the long-term burning of the fossil fuel is exacerbating climate change. More than 60 congressional Democrats sent a letter to the US energy secretary Jennifer Granholm in November, urging her to consider whether issuing new export licences for LNG exports was in the interests of the US public because of its greenhouse warming effect.Gas is made up of mainly of methane, a molecule which has the capacity to store greater warmth over a shorter lifespan than carbon dioxide. The UN Environment Programme estimates methane is 80 times as potent as CO2 at trapping heat in the atmosphere in the first 20 years after it is released. At the COP28 climate summit last month, more than 300 organisations sent a joint letter calling on the Biden administration to end its support for LNG, saying that the “expansion of LNG infrastructure is locking in decades of emissions”.Grindal said his company was deploying technologies such as drones and satellites to monitor methane leaks in its infrastructure.“LNG is part of the energy transition,” he added, arguing that renewable sources of energy could not be scaled up quickly enough to remove gas from the energy mix. “LNG is going to be needed for at least the next couple of decades.”The US accounted for more than 40 per cent of Europe’s LNG imports last year, according to data from Kpler. It was also the third-largest LNG exporter in the world in 2022 and is set to claim the top spot in 2023.Cheniere said it has provided 760 LNG cargoes to Europe since Russia’s invasion, or about one in five cargos imported by the region. “The knowledge that [the European companies] needed to sign up for [long-term LNG contracts] has come through,” Grindal said.He added that Cheniere was also in talks with more European entities over LNG supply deals.
NextDecade Secures Funding for Rio Grande LNG Train Project - NextDecade Corp., through its subsidiary NextDecade LNG LLC, has secured a total of $62.5 million for various purposes including the development costs of Train 4 at the Rio Grande liquefied natural gas (LNG) facility. The company said in a media release that it has entered into a credit agreement with MUFG Bank Ltd. as lender and administrative agent that provides for a $50 million senior secured revolving credit facility and a $12.5 million interest term loan. Borrowings under the revolving credit facility may be utilized for general corporate purposes, including development costs related to Train 4 at the Rio Grande LNG facility, according to NextDecade. Borrowings under the interest term loan may be utilized to pay interest expense, fees and other expenses related to the revolving credit facility. Borrowings under the revolving credit facility and interest term loan will bear interest at SOFR or the base rate plus an applicable margin as defined in the credit agreement. The revolving credit facility and the interest term loan mature at the earlier of two years from the closing date or 10 business days after a positive final investment decision (FID) on Train 4 at the Rio Grande LNG facility. NextDecade expects the revolving credit facility to provide meaningful liquidity and capital resources as the company progresses toward a positive FID for Train 4. NextDecade has started the front-end engineering and design and engineering, procurement and construction (EPC) contract processes with Bechtel Energy Inc. for Train 4 and expects to finalize the EPC contract in the first half of 2024. The company said it is progressing numerous discussions with potential buyers of LNG to provide commercial support for Train 4 and is targeting a positive FID of Train 4 in the second half of 2024. The company made an FID to construct the first three liquefaction trains (Phase 1) at its 27 million tonnes per annum (MMtpa) Rio Grande LNG export facility in Brownsville, Texas, in July last year.
Calcasieu Pass LNG Needs ‘Further Commissioning’ Before Fulfilling Contracts, Venture Global Says - Venture Global LNG Inc. told regulators Calcasieu Pass LNG has yet to meet requirements to begin fulfilling deliveries to contract holders, pushing back against efforts from its long-term offtakers to force disclosure around the years-long commissioning process. In December, BP plc filed a request with FERC requesting it compel Virginia-based Venture Global to release confidential information about the extended commissioning process at Calcasieu Pass. BP and other long-term offtakers of the project, including Edison SpA, Galp Energia SA, Shell plc and Repsol SA, have accused the company of hiding behind alleged technical issues to delay sending contracted cargoes in favor of selling its own spot volumes. Shell and, mostly recently, Portugal’s Galp have asked the Federal Energy...
EQT Advances Natural Gas Export Strategy with Texas LNG Tolling Agreement - Glenfarne Energy Transition LLC has inked a tentative tolling agreement with EQT Corp. as the U.S. natural gas production leader progresses its LNG exposure strategy. Under the heads of agreement disclosed Thursday, EQT could have access to 0.5 million metric tons/year (mmty) in liquefaction services for 15 years from the first train at Glenfarne’s proposed liquefied natural gas facility in Brownsville, TX. “This is an important milestone for Texas LNG, with additional agreements to be announced in the near-term as we progress towards a final investment decision (FID),” Glenfarne CEO Brendan Duval said. Glenfarne has guided that it could reach FID and begin construction this year, placing delivery of first cargoes sometime in 2028.
Biden’s aides weigh climate test for natural gas exports - The Biden administration is launching a review that could tap the brakes on the booming U.S. natural gas export industry — a move that threatens to pit the president’s climate ambitions against his foreign policy agenda. The outcome of the review could have big implications for the fossil fuel industry, U.S. clout as an energy superpower and the credibility of President Joe Biden’s climate pledges — and his reelection hopes in November. The review being led by the Department of Energy will examine whether regulators should take climate change into account when deciding whether a proposed gas export project meets the national interest, according to two people familiar with the action who were granted anonymity to discuss deliberations that have not yet been publicly acknowledged. U.S. gas exports have jumped four-fold during the past decade as production has surged, turning the United States into the world’s largest natural gas exporter and helping Europe replace Russian shipments after Moscow’s invasion of Ukraine. But Biden also faces growing pressure from environmental groups to live up to his pledge to transition away from fossil fuels — something the U.S. also promised to do at last month’s climate summit in Dubai. The possibility of slowing or halting that export growth came as good news to environmental groups even as national security hawks warned against disrupting a trade they say serves America’s geopolitical interests. It comes as the Energy Department is weighing whether to issue a permit for a massive gas export plant in Louisiana known as CP2, which green activists have derided as a “carbon bomb.” “We’re really hoping that DOE will pause any new permits for industry, because we know that the Biden administration really needs a climate win and in order for them to win” the 2024 election, said Roishetta Ozane, the founder of environmental group Vessel Project of Louisiana, whose hometown of Sulphur, La., is within an hour’s drive of three LNG plants. “If these politicians want to be elected or re-elected in this upcoming presidential election, they’re going to have to make some bold choices and some bold moves.” The Department of Energy, which is responsible for issuing the export permits, will reassess whether it is properly accounting for the climate impacts from proposed projects, as well as the national security and the domestic economic consequences, a senior administration official told POLITICO. People familiar with the review process said Energy Secretary Jennifer Granholm; Deputy Energy Secretary David Turk; Brad Crabtree, assistant secretary for DOE’s Office of Fossil Energy and Carbon Management; White House clean energy adviser John Podesta; and National Climate Adviser Ali Zaidi, among others, were involved in the discussions.
Wintry Weather No Match from Strong Global Natural Gas Supplies – A bitter cold snap gripping much of Europe wasn’t enough Monday to sustain a three-day rally in natural gas prices there as strong imports have kept the continent well supplied. Title Transfer Facility prices fell across the curve Monday, when the prompt month closed 9% lower to finish near $10/MMBtu. Prices jumped last week ahead of the wintry weather that’s settled in over most of Europe. While the cold is forecast to continue over the next two weeks, the weather pattern is expected to weaken slightly. The outlook has been dimmed further by ample supplies, with storage stocks at 85% of capacity, compared to the five-year average of 72%.
US natgas prices climb 2% on big storage withdrawal, record demand forecasts -(Reuters) - U.S. natural gas futures climbed about 2% on Thursday on a bigger-than-expected storage withdrawal last week and forecasts that extreme cold in coming days will boost gas demand to record highs. The U.S. Energy Information Administration (EIA) said utilities pulled 140 billion cubic feet (bcf) of gas out of storage during the week ended Jan. 5. That was more than the 119-bcf decrease analysts forecast in a Reuters poll, and compares with a withdrawal of 23 bcf in the same week last year and a five-year (2019-2023) average decline of 89 bcf. Meteorologists forecast temperatures over the weekend across most of the Lower 48 states will drop to well below normal levels, especially in the middle of the country. The frigid weather is expected to boost gas demand to record highs and has already put power and gas prices on track to hit their highest levels since December 2022. With the cold already freezing the Pacific Northwest, next-day power prices at the Mid-Columbia hub soared by 741% to a 16-month high of $850 per megawatt hour (MWh) for Thursday. The cold has also started to limit gas supplies by freezing oil and gas wells, pipes and other equipment in the Rockies (Colorado and Wyoming) and Bakken shale (North Dakota). In February 2021, massive "freeze-offs" of wells cut gas supplies for heating and power generation in Texas and other U.S. Central states, forcing rotating power outages because there was not enough electricity available with so many power plants shut due to a lack of fuel and other problems. During Winter Storm Elliott in December 2022, it happened in Appalachia. Front-month gas futures for February delivery on the New York Mercantile Exchange rose 5.8 cents, or 1.9%, to settle at $3.097 per million British thermal units (mmBtu). The front-month increase boosted the premium of futures for February over March to a one-year high of around 57 cents per mmBtu. In other news, Chesapeake Energy said it would buy smaller rival Southwestern Energy in an all-stock transaction valued at $7.4 billion, a deal that would enable the second-largest U.S. gas producer to take the top spot from current leader EQT. SUPPLY AND DEMAND Financial company LSEG said average gas output in the Lower 48 states fell to 107.1 billion cubic feet per day (bcfd) so far in January, down from a monthly record of 108.5 bcfd in December. Daily output was on track to drop by 3.7 bcfd over the last four days to a preliminary 10-week low of 104.5 bcfd on Thursday. Those output losses were small compared with losses of 19.6 bcfd during Winter Storm Elliott in December 2022 and 20.4 bcfd during the February freeze in 2021. Meteorologists projected U.S. weather would switch from mostly warmer than normal now to colder than normal from Jan. 13-21 before turning back to mostly warmer than normal from Jan. 22-26. As heating demand soars, LSEG forecast U.S. gas demand in the Lower 48 states, including exports, would jump from 136.5 bcfd this week to 160.5 bcfd next week. Those forecasts were lower than LSEG's outlook on Wednesday. On a daily basis, total U.S. gas demand, including exports, was on track to reach 162.5 bcfd on Jan. 14, 167.6 bcfd on Jan. 15 and 175.4 bcfd on Jan. 16, according to LSEG. Traders noted it would be unusual for gas use to hit a record on Jan. 15 because it is the Martin Luther King Day U.S. holiday when many businesses and government offices will be shut for a long weekend. Those daily demand forecasts would tie and then top the current all-time high of 162.5 bcfd set on Dec. 23, 2022, during Winter Storm Elliott, according to federal energy data from S&P Global Commodities Insights.
US natgas prices soar 7% to 10-week high ahead of frigid cold and record demand (Reuters) - U.S. natural gas futures soared about 7% to a 10-week high on Friday ahead of the long Martin Luther King Day holiday weekend when extreme cold is expected to boost gas demand to record highs while also cutting gas supplies by freezing wells. In recent years, the combination of soaring demand for gas for heating and power generation at the same time that supplies of the fuel are declining due to freezing wells during massive storms has threatened the reliability of electric and gas systems. This has forced electricity grid operators and utilities to impose rotating outages because many power plants cannot operate due to a lack of fuel or other reasons. That is what happened in Texas and other U.S. Central states in February 2021 when millions were left without power, water and heat for days, and during Winter Storm Elliott in December 2022 when dozens of power plants shut across the eastern half of the country and New York City's gas supply system was close to collapse. Front-month gas futures NGc1 for February delivery on the New York Mercantile Exchange rose 21.6 cents, or 7.0%, to settle at $3.313 per million British thermal units (mmBtu), their highest close since Nov. 3. That kept the front-month in technically overbought territory for a second day in a row and boosted the premium of futures for February over March NGG24-H24 to 72 cents per mmBtu, their highest since mid- December 2022. That also put the front-month up by 15% for a second week in a row. In a sign of what may be coming, extreme cold was already freezing the Pacific Northwest region. That kept next-day power prices at the Mid-Columbia hub EL-PK-MIDC-SNL in Oregon at a 16-month high of around $850 per megawatt hour for a second day in a row, while next-day gas prices at the AECO hub NG-ASH-ALB-SNL in Alberta, Canada, soared to a near one-year high of $2.68 per mmBtu. For comparison, Mid Columbia power prices averaged $81 per MWh and AECO gas prices averaged $1.86 per mmBtu in 2023. Financial company LSEG said average gas output in the Lower 48 states fell to 106.9 billion cubic feet per day (bcfd) so far in January, down from a monthly record of 108.5 bcfd in December. But on a daily basis, output was on track to drop by 3.6 bcfd over the past five days to a preliminary 10-week low of 104.6 bcfd on Friday. Those output losses were small compared with losses of 19.6 bcfd during Winter Storm Elliott in December 2022 and 20.4 bcfd during the February freeze in 2021. Meteorologists projected the weather in the Lower 48 states would switch from mostly warmer than normal now to colder than normal from Jan. 13-22 before turning back to mostly warmer than normal from Jan. 23-27. LSEG forecast U.S. gas demand in the Lower 48 states, including exports, would jump from 136.5 bcfd this week to 160.1 bcfd next week when the weather turns frigid before dropping to 149.6 bcfd in two weeks when milder weather returns. The forecast for next week was lower than LSEG's outlook on Thursday. On a daily basis, even though many U.S. businesses and government offices will shut for the long Martin Luther King Day holiday weekend, total U.S. gas demand, including exports, was on track to reach 165.9 bcfd on Jan. 15, 174.3 bcfd on Jan. 16 and 172.9 bcfd on Jan. 17, according to LSEG. Those daily demand forecasts would top the current all-time high of 162.5 bcfd set on Dec. 23, 2022, during Winter Storm Elliott, according to federal energy data from S&P Global Commodities Insights.
Flint officials investigate oil spill in Flint River | WSBT— Officials are investigating a chemical spill in the Flint River.On Monday, January 8, a chemical spill was reported at 11:50 a.m.Around 50 gallons of oil spilled into the Flint River.Flint Fire Department Battalion Chief Kwame Hogan says that they are working on identifying what happened to cause the spill.The source is unknown.However, the spill is contained and investigation continues.
Crews cleaning up oil spill in Flint River - Authorities are cleaning another oil spill in the Flint River on Monday. The spill was reported around 11:45 a.m. Monday in the 1400 block of James P. Cole Boulevard near the former Buick City site. The city of Flint estimates about 50 gallons of oil entered the river from an undisclosed source. Emergency crews stopped the flow of contaminants and were working with a hazardous materials response agency to clean it up. Absorbent booms have been placed across the river to soak up any remaining oil. City officials say Flint's municipal water remains safe because none of it draws water from the Flint River. This is at least the third oil spill in the Flint River over the past year and a half. The most significant spill in June 2022 involved nearly 40,000 gallons of oil that came from Lockhart Chemical on James P. Cole Boulevard. A second spill in late June 2023 involved about 10 gallons of petroleum that entered the river from an outfall pipe near the Utah Avenue Bridge in Flint.
USA Energy Dept in Conditional Commitment to Support Methane Monitoring In a statement sent to Rigzone, the U.S. Department of Energy’s (DOE) Loan Programs Office (LPO) announced a conditional commitment to LongPath Technologies Inc for an up to $189 million loan guarantee “to support the fabrication and installation of a real time methane emissions monitoring network”. The location of the monitoring network is in the Permian, Denver-Julesburg, and Anadarko oil and gas production basins across Texas, Oklahoma, Kansas, Colorado, North Dakota, and New Mexico, the LPO highlighted in the statement. “LongPath’s Active Emissions Overwatch System project aims to scale to cover 25 million acres of land with large-area remote methane monitors, providing emissions detection, location, and quantification services for tens of thousands of oil and gas sites through a subscription service,” the LPO noted. “If finalized, the network is expected to prevent methane emissions equivalent to at least six million tons of carbon dioxide annually - that is like taking 1.3 million gasoline powered vehicles off the road - by enabling subscribers to identify and respond to methane leaks quickly,” it added. “The project at its peak is anticipated to create an estimated 35 construction jobs and 266 operations jobs for regional workers, including trained experts to install and maintain the equipment, and provide competitive benefits,” it continued. The LPO noted in the statement that the project must satisfy certain conditions, which it said may include reaching technical, legal, commercial, contractual, or other milestones, before the Department issues a final loan. This project underscores the Biden-Harris Administration’s “commitment to dramatically reducing methane emissions” the LPO said in the statement. It added that, in 2023, the administration took more than 100 actions under the U.S. Methane Emissions Reduction Action Plan and said Biden’s Investing in America agenda is accelerating adoption of cutting-edge technologies and tools to address and mitigate methane emissions “and helping the U.S. unlock a win-win opportunity for communities and the economy”. The LPO also highlighted that its latest announcement is aligned with the goals of the Methane Emissions Reduction Program. LongPath’s technology was developed with the University of Colorado and the National Institutes of Standards and Technology (NIST), with support from DOE’s Advanced Research Projects Agency–Energy (ARPA-E) and other DOE grants, the LPO pointed out in the statement. It uses an eye-safe laser to accurately identify molecules in the air, including greenhouse gases like methane, the LPO said, adding that a single laser can continuously monitor nearly eight square miles for emissions, “providing updates of the full area as often as every two hours”. In June last year, LongPath, which describes itself as a leader in methane detection and data services, announced that it would be “substantially expanding its relationship with Vital Energy, a fast-growing pure-play operator in the Permian Basin”. “The expansion demonstrates the strong commitment of LongPath to reduce emissions while supporting profitable growth throughout the upstream and midstream sectors of the energy industry,” the company added in a statement posted on its website at the time. “Utilizing LongPath’s full-facility coverage methane detection solution, this expanded partnership will provide reliably accurate, real-time detection and quantification of methane emissions. This advanced technology aims to deliver considerable emissions reduction and sustainability progress for the oil and gas sector,” it continued.
US approves $189 million loan for real-time methane oil and monitoring (Reuters) - The Department of Energy's loan office on Friday conditionally approved a $189 million loan to support the build-out of a methane monitoring network in key oil-producing basins that would provide real-time data for tens of thousands of oil and gas sites, which it estimates could prevent the equivalent of at least 6 millions tons of carbon dioxide per year. Houston-based Long Path Technologies will use the loan to deploy its Emissions Overwatch System across 24,000 square miles (62,160 square km) in several states. The technology uses lasers - placed on 50-foot (15-meter) towers - to monitor areas for methane leaks. Unlike optical gas imaging, which takes less frequent measurements of methane, the Long Path system can continuously monitor 8-square mile (21-square km) areas, which could provide updates every two hours and notify operators in the event of a leak, according to DOE's Loan Program Office. Some of Long Path's current subscribers include oil and gas firms like Conoco Phillips and pipeline company Williams. The DOE said the loan is the latest commitment by the Biden administration to tackle methane, a potent, short-lived greenhouse gas that can leak into the atmosphere undetected from drill sites, gas pipelines and other oil and gas equipment. Methane has more warming potential than carbon dioxide and breaks down in the atmosphere faster, so reining in methane emissions can have a more immediate impact on limiting climate change. The U.S. Environmental Protection Agency last month unveiled regulations that would ban routine flaring of natural gas produced by newly drilled oil wells, require oil companies to monitor for leaks from well sites and compressor stations, and establishes a program to use third-party remote sensing to detect large methane releases from so-called "super emitters" in places like the Permian Basin.
Federal rule forces oil states to cut planet-warming methane emissions -Within two years, a new federal rule will force oil- and gas-producing states to crack down on methane gas emissions — a major driver of climate change. A handful of states already have rules that force drillers to increase monitoring and upgrade equipment, which advocates say provided an effective template for the federal action. But many other states will be starting from scratch. In those states, some officials and oil industry leaders say the burden on regulators and fossil fuel producers may outweigh the benefits of reduced emissions. “Is creating more paperwork going to have the effect the EPA hopes it will have in reducing methane?” said Matthew Bingert, manager of the oil and gas program in North Dakota’s Division of Air Quality. While carbon dioxide is emitted in far higher quantities, methane is a much more potent greenhouse gas — making it responsible for more than a quarter of the warming that the planet is currently experiencing. It also breaks down much faster in the atmosphere, meaning reducing methane emissions can have a more immediate impact than reducing carbon dioxide, which lingers for longer. “That makes it a huge opportunity,” said Jon Goldstein, senior director of regulatory and legislative affairs with the Environmental Defense Fund, a legal advocacy group. “If we can get after those emissions quickly, we can start to bend the curve on the climate problem quickly.” Oil and gas operations are the largest industrial emitter of methane. The U.S. Environmental Protection Agency estimates that its new rule will prevent 58 million tons of methane emissions by 2038 — equivalent to the carbon emissions produced by the entire power sector in 2021. Federal officials say the rule also will limit toxic pollutants that affect human health in the neighborhoods surrounding drilling operations and refineries. While some Democratic-led states have gotten a head start on methane regulations, other oil-producing states, many under GOP control, say the new requirements are going to require massive amounts of data collection and analysis for both companies and regulators — and it’s unclear how that work will be funded.
LNG, Mexico Exports Driving South Texas Natural Gas Demand Growth - LNG and Mexico exports are expected to underpin U.S. natural gas demand growth over the coming years, with the Agua Dulce hub in South Texas playing a critical supply role. In turn, both markets are building out infrastructure to ensure access to molecules and capacity in an increasingly competitive and globalized gas market. “Feed gas demand is, and will continue to be, a key component for the Agua Dulce hub,” Wood Mackenzie natural gas analyst Ricardo Falcón told NGI. “But natural gas outlets in the South Texas border with Mexico have become an increasingly competing element.”
Fort Worth Hotel Explosion Likely Caused by Natural Gas Leak, Injures 21 - An explosion Monday afternoon at a historic hotel in downtown Fort Worth, TX, which preliminary reports said was caused by natural gas, injured at least 21 people, but no fatalities had been reported as of early Tuesday, authorities said. The blast occurred at the Sandman Hotel in the heart of the business district downtown. Multiple 911 calls were received at about 3:32 p.m. CT Monday for a fire at the hotel, said Fort Worth Fire Department (FWFD) spokesperson Craig Trojacek. Authorities once on the scene switched the emergency to an explosion. One person was said to be in critical condition. Crews from Atmos Energy Corp., the natural gas utility that serves the area, were on the scene as well, Trojacek added. “We have not made 100% determination, but we wanted to..."
Victoria County officials first learned of port spill from anonymous caller - Three hundred barrels of a mixture of crude oil and diesel were spilled at the Port of Victoria on Wednesday, according to a port news release issued Friday. The Texas Commission on Environmental Quality’s air monitoring had not detected any levels of concern to the public, Richard Richter, media relations specialist, said. Victoria County emergency officials said Friday there was no need for residents to shelter in place or take precautions. “TCEQ identified the source of an area-wide odor late yesterday, which was a spill of petroleum-based material from a tank at the Shamrock Victoria Port Terminal,” Richter said. TCEQ’s investigation into this incident is ongoing. The agency is overseeing remedial activities at the site and continuing to conduct air monitoring. While impacts to the adjacent waterway have not been identified, as a precaution, contractors have set up containment booms around potential runoff points. All TCEQ activities related to this spill response will be reported through the incident command which is currently being initiated.” Shamrock Products is a tenant and private terminal at the Port of Victoria. Shamrock Products did not answer questions, including how the spill occurred, Friday. Victoria County emergency officials first learned of the spill Thursday evening when an anonymous person called the emergency dispatch line, reporting a spill at the Port of Victoria, Emergency Management Coordinator Rick McBrayer said. Officials investigated and determined a spill had in fact occurred, releasing information to the public Thursday night. It was not until Friday morning, McBrayer said, that his office was finally notified by the Texas Commission on Environmental Quality of a spill at the port. “The incident was not immediately reported to local officials in Victoria. Some residents reported strong odors throughout the region and various local and state agencies actively began conducting air quality tests throughout a seven-county area,” according to a news release issued by the Office of Emergency Management. Commission officials could not reached Friday evening to answer why the spill was reported to McBrayer’s office on Friday morning. “They have a duty and obligation to report when they have a major spill or incident,” McBrayer said.
Victoria County residents say pungent smell from port oil spill was unbearable, caused nausea, headaches -- For decades, the Crescent Valley community, the industrial facilities and the Port of Victoria have had a symbiotic relationship. However, in many community members’ eyes, as a result of Shamrock Products’ oil spill at the Port of Victoria and failure to notify them, that trust has been broken and will take time and effort to repair. “One of these days, we’re going to end up dead out here,” said Leonard Urban, 74, of Victoria, on Saturday. The spill was contained inside a berm and did not enter the Victoria Barge Canal, according to a Shamrock Products news release. Late Wednesday afternoon, “a valve on a Shamrock Products petroleum product storage tank was damaged,” spilling about 300 barrels of petroleum products, which included crude oil, fuel oil, cracked hydrocarbons and a chemical known as mercaptan, according to the release. Shamrock had not said how the storage tank was damaged, as of Saturday evening. Mercaptan, a chemical commonly used in petroleum refining, has a strong, pungent smell and was responsible for the odor spread by wind through parts of the Crossroads and Coastal Bend. Saturday night, the smell was present inside Victoria. Some reported the scent as far south as Refugio County during the week. “We understand there are complaints of a cat-urine/ammonia odor and rumors of a release of product with H2S (hydrogen sulfide). None of our products contained ammonia or detectable levels of H2S,” according to the release. In the release, Shamrock said they notified authorities of the spill but did not say when. On Friday, Victoria County Emergency Management Coordinator Rick McBrayer said his office learned of the spill from an anonymous caller on Thursday, a day after the spill occurred. Mercaptan is an organic chemical containing sulfur and is detectable at low levels as small as 10 parts per billion or 0.000001% of air. Methanethiol is one of the main chemicals in bad breath and flatulence, according to The Human Metabolome Database. The recommended exposure level by the National Institute for Occupational Safety and Health for Methanethiol is 0.5 parts per million for a 15-minute ceiling, according to the Centers for Disease Control and Prevention. The chemical was detected in the air at the parts per billion range, according to Shamrock. As of Sunday morning, the Shamrock Victoria Port Terminal was implementing odor control measures at the facility, according to a Texas Commission on Environmental Quality news release on Facebook. The investigation into the incident was still ongoing. “While impacts to the adjacent waterway have not been identified, as a precaution, contractors have set up containment booms around potential runoff points,” according to the news release. The Crescent Valley community is two miles from the Port of Victoria and Shamrock’s terminal. The community was built as an oil camp and continued to develop as the chemical plants came in, Urban said. He raised his family there. His son’s wedding reception was in the area, and when one of the plants was operated by DuPont Chemical, those at the port went out of their way to notify the community if something went wrong, even if it wasn’t that individual company’s responsibility, he said. That included an alarm system that stands on the edge of the neighborhood. “They didn’t let us know a damn thing,” Urban said, adding, “I walked outside last night, and it literally knocked me to my knees.” Late into Saturday afternoon, the smell lingered in the air and hit drivers as they crossed over U.S. 59 going toward the Port of Victoria. Many in the community reported having headaches, feeling nausea and experiencing burning eyes. They also said the smell permeated their homes. This included Urban’s son Steven Urban, 49, Victoria, who lives a few blocks away from his father. “Last night was horrible. The house, our vehicles, the insides of them still smell like that and everything else. I woke up this morning having trouble breathing,” Steven Urban said. “I didn’t even want to go to sleep because I was afraid I wouldn’t wake up.” Saturday afternoon, the smell still permeated everything in their house, including his continuous positive airway pressure machine he uses while he sleeps, he said. Even when exposed to other chemical smells, residents, such as Dena Urban, 52, who works at Dow Chemical, went to work Saturday. The smell was strong in her vehicle. “I got finished with work and got in, and it just hit me like a truck,” she said. For some, the smell and the effects of the scent were too much to bear, and they decided to leave their homes in favor of a hotel room, Steven Urban said. This included the Rhodes family, who, late Friday night, decided to take their family of five and pack into a two-bed hotel room in Victoria. Everyone in their family felt headaches as early as Wednesday night, said Thomas Rhodes, 53, of Victoria. Thursday, the family started to smell it and asked family friend Larry Casdorph, 74, of Victoria, for advice, Rhodes said. “They came up to the house, and you could just smell it all over them. It was bad,” Casdorph said. Casdorph previously smelled it on the highway as he went through Tivoli the same day and went to his home in Crescent Valley to get a better sense of the situation. He wasn’t there more than 30 minutes and his home reeked as much as the Rhodes family, he said. Their symptoms got worse to the point their three sons were feeling chest tightness Friday evening, Rhodes said. “At that point, we decided to make the call and leave,” Rhodes said.
Another Flint Hills Resources oil spill -- Late Friday night at about 10:30 pm, nearly 2,915 barrels of oil leaked from a tank inside the Flint Hills Resources (FHR) terminal in Ingleside. The oil was contained onsite and did not impact any body of water in the area, according to the report that was made to the Corpus Christi Office of Emergency Management. FHR sprayed the area with a sealing foam blanket to trap the odor of the leaked crude oil. They did say that there may still be a smell in the immediate area. “Some of our crews first smelled and then saw a release from tank seventy-five," Director of Public Affairs for Flint Hill Resources Andy Saenz said. "We immediately put our protocols in place and called emergency responders who were able to meet us out here at the site. We were able to shut the leak down completely and then we started our cleanup efforts so that’s what we’re undertaking now.” Government agencies have continued to monitor the air quality in the surrounding area and have said that all readings are normal. FHR also said that it is using fence line and mobile air monitors to monitor the air quality. "The oil stayed exactly where it was supposed to stay. This is a containment area that’s built around the tanks itself. When the oil came out, it stayed in that general area," Saenz said. The cause of the incident is under investigation and was reported to local, state, and federal authorities according to a statement from Flint Hills Resources.
APA Snaps Up Callon in $4.5B Deal - APA Corporation and Callon Petroleum Company have entered into a definitive agreement under which APA will acquire Callon in an all-stock transaction valued at approximately $4.5 billion, inclusive of Callon’s net debt, the companies announced in a joint statement recently. Under the terms of the transaction, each share of Callon common stock will be exchanged for a fixed ratio of 1.0425 shares of APA common stock, the statement noted, adding that the deal is expected to be accretive to all key financial metrics “and add to APA’s inventory of high quality, short-cycle opportunities”. “Callon’s assets provide additional scale to APA’s operations across the Permian Basin, most notably in the Delaware Basin, where Callon has nearly 120,000 acres,” the joint statement highlighted. “On a pro forma basis, total company production exceeds 500,000 barrels of oil equivalent per day and enterprise value increases to more than $21 billion,” it added. APA is expected to issue approximately 70 million shares of common stock in the transaction, according to the statement, which highlighted that, after closing, existing APA shareholders are expected to own approximately 81 percent of the combined company and existing Callon shareholders are expected to own approximately 19 percent. “APA expects to retire the existing debt at Callon and replace it with APA term loan facilities totaling $2.0 billion,” the statement noted. “The term loan facilities are expected to offer improved optionality for near-term debt reduction. JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc. and Wells Fargo Bank, National Association have jointly provided $2.0 billion of committed financing for the deal,” it added. The transaction has been unanimously approved by the boards of directors of both APA and Callon and is expected to close during the second quarter of 2024, subject to customary closing conditions, termination, or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and approval of the transaction by shareholders of both APA and Callon, the joint statement said. Upon the closing of the transaction, a representative from Callon will join the APA board, according to the statement. APA’s executive management team will lead the combined company with the headquarters remaining in Houston, Texas, the statement revealed.
Fast-Growing 'Carbon-Neutral' Energy Company Ramps Up Oil and Gas Production --It’s not a household name, but Civitas Resources has quickly become a dominant energy producer in Colorado and one of the fastest growing in the country. In turn, it’s come to exemplify a number of trends in oil and gas — from the growing role of private equity in extending the life of fossil fuels to the adoption of an approach that balances clean energy initiatives with fossil fuel production to better prepare for the inevitable transition to a green economy. The company claims to be the “first carbon-neutral energy producer” in Colorado, which is one of the biggest oil and gas producing states in the country. While its business model has been hailed by Wall Street analysts, its sustainability commitments have been questioned by environmentalists.Formed in 2021 amid a slew of mergers and acquisitions involving four of Colorado’s top nine oil producers, Civitas has kept growing, and it operated the largest number of wells over the last four years in the state’s largest oil and gas basin.Uncertainty about the fossil fuel industry’s future amid a warming climate — attributed chiefly to carbon dioxide and methane emissions from combustion of its products — is forcing companies like Civitas to obtain financing from less risk-averse institutional investors like public pensions and private equity. Its ownership structure stands out from traditional producers for its unusual mix – a Canadian pension plan (20% stake), private equity firm (Kimmeridge Energy Management Company LLC (14.5%), asset management behemoths BlackRock Inc. (11.7%) and the Vanguard Group (10.6%) and financial services giant Fidelity Investments (6.6%), a Capital & Main review of federal filings found. Private equity is known for prioritizing high rates of return and exiting investments quickly, and its increasing role in financing fossil fuel production in Colorado and around the country is raising concerns among environmentalists who question its claims to be reducing emissions. These firms in part funded a flurry of merger and acquisition activity in the industry since 2019, as companies sought out untapped hydrocarbons to meet rising demand for energy. Deal value in 2021 hit $192 billion, far exceeding the figures for 2015, 2016, 2018 and 2020, with many wells shifting from publicly traded companies with emissions reduction commitments to private firms with less robust sustainability plans, according to an analysis by the Environmental Defense Fund. Civitas and another big private equity-owned Colorado producer, Caerus Oil and Gas, have been criticized for not properly accounting for their emissions of carbon and methane. Recently, the asset shuffle in the industry has intensified as the U.S. solidified its lead as the world’s largest oil and gas supplier, with production hitting 12 billion barrels a day in 2022, outpacing Saudi Arabia and Russia. Meanwhile, scientists warn such hydrocarbons must remain underground to limit the global temperature increase to 1.5 degrees Celsius (2.7 degrees Fahrenheit) — warming that they say will lead to more intense fires, floods and drought. The window is narrowing.
US oil lobby launches eight-figure ad blitz amid record fossil fuel extraction - The American oil lobby has launched an eight-figure media campaign this week promoting the idea that fossil fuels are “vital” to global energy security, alarming climate experts.“US natural gas and oil play a key role in supplying the world with cleaner, more reliable energy,” the new initiative’s website says.Big oil ‘fully owned the villain role’ in 2023, the hottest year ever recorded The campaign comes amid record fossil fuel extraction in the US, and as the industry is attempting to capitalize on the war in Gaza to escalate production even further, climate advocates say.Launched Tuesday by the nation’s top fossil fuel interest group, the Lights on Energy campaign will work to “dismantle policy threats” to the sector, the American Petroleum Institute (API) CEO, Mike Sommers, told CNN in an interview this week.The ad blitz – which uses images of farm vehicles, footballers under floodlights and concert goers holding phones lit up – comes after US oil production reached a record high in 2023, which was also the hottest year ever recorded.“We’re already moving in the wrong direction on fossil fuels,” said Timmons Roberts, professor of environment and sociology at Brown University. “They want to push us further.”Roberts said the new ad blitz is rife with the kinds of “discourses of climate delay” that the fossil fuel industry commonly uses to thwart climate action, as documented in a 2020 study he co-authored on the topic. A video ad posted on Tuesday, for instance, says “demand for energy is growing and so is the need for American oil and natural gas”, positioning the sector as essential to continued human flourishing – a form of discourse Roberts and his co-authors call an “appeal to wellbeing”.In his CNN interview, Sommers said clean energy can currently only play a limited role. “Renewable sources have a role to play, but oil and natural gas will be needed for decades,” he said.In doing so, he employed a second discursive strategy known as “change is impossible”, which denies the ability for large-scale transformation, Roberts said, adding that the statement may be a “self fulfilling prophecy”, as fossil fuel companies still invest minimally in carbon-free energy.The claim also ignores copious evidence that the world can begin to phase out fossil fuels, and must do so to avert the worst consequences of the climate crisis, said Caleb Heeringa, campaign director of Gas Leaks, a nonprofit attempting to counter pro-gas messaging.“We aren’t saying we can turn off the spigot tomorrow,” he said. “But [the industry] is trying to expand the fossil fuel system, expand pipelines, expand fracking, and make more of our economy and our existence dependent on fossil fuels, even though clean energy is advancing at a rapid rate.”The campaign also states that increased gas usage is a “key reason” that US carbon emissions have fallen, employing a tactic Roberts calls “fossil fuel solutionism” by framing polluting energy as a climate solution.The ad blitz states that gas use led to a drop in CO2 emissions, but fails to mention the attendant rise in emissions of methane, a greenhouse gas 80 times more planet-heating than carbon dioxide in the short term, Heeringa said. It also refers to the “reliability” of gas-powered energy, “despite significant gas system failures” during weather emergencies such as 2022’s winter storm Elliott and 2021’s winter storm Uri.The campaign comes amid industry claims that Israel’s war in Gaza will threaten energy security by inhibiting the flow of oil out of the region.“This should be a real concern, I think, to every American,” Sommers told CNN.It seems like an attempt to take advantage of a crisis to maximize profit, said Patrick Galey, a senior fossil fuels investigator at Global Witness. In the wake of the Russian invasion of Ukraine in 2022, the industry similarly called to expand domestic extraction, as Global Witness tracked. “Evidence suggests the fossil fuel lobby are not letting the latest crisis – this time in the Red Sea due to Israel’s carpet bombing of Gaza – go to waste, either,” said Galey. “Until countries rapidly and justly phase out fossil fuels, consumers will continue to be prey to the whims of despotic petrostates and feeding frenzies from the oil and gas lobbies whenever the next crisis hits.”
Oil lobbyist helps craft testimony for small producers - Two small oil and gas operators testifying before a House subcommittee against EPA’s new methane fee Wednesday had more in common than their vocations: Their prepared remarks were both at least partially co-authored by the same oil lobbyist.While it’s not uncommon for industry representatives to assist with congressional testimony, collaboration between each of the witnesses and the same industry heavyweight could complicate an argument Republicans reiterated throughout the hearing that these witnesses should not be lumped in with the industry monolith so frequently vilified by Democrats.“These companies are not ‘Big Oil,’” declared Rep. Bill Johnson (R-Ohio), the chair of the House Energy and Commerce Subcommittee on Environment, Manufacturing and Critical Minerals. “On average they employ just 12 people, and this suite of methane regulations will crush these producers.” Johnson presided over a hearing to probe alleged “EPA overreach” in its new rule that would compel producers to upgrade equipment and proactively search for existing methane leaks — mandates critics contend are unworkable.The first portion of the hearing featured Joe Goffman, the acting head of the EPA air office who has been awaiting Senate confirmation since March 2022 to serve in the role in an official capacity.Later, lawmakers heard from a trio of small oil and gas operators, including Michael Oestmann of Tall City Exploration and Patrick Montalban of Montalban Oil and Gas Operations, who bemoaned the ways in which the new regulations would do more harm than good.Portions of their prepared remarks, which were submitted to the Energy and Commerce Committee and posted online earlier this week, were nearly identical.“While oil demand is still strong and will be for decades … it seems clear that a direct result of the implementation of these rules will be to ship jobs, revenue, and a key source of supply to many of our adversaries who, ironically, cause much more environmental harm by their production process than U.S. producers,” Oestmann wrote in one part of his testimony.Montalban used similar rhetorical flourishes: “By shutting down the small producers while oil demand is high, and will be for decades, will result in shipping jobs, revenue, and a key source of supply to many of our adversaries –who ironically, cause much more environmental harm by their production process than US producers.”Elsewhere, Oustmann wrote, “I understand the need for addressing environmental protection while achieving economic success in oil and gas production, but there is a right way and a wrong way to approach the issue.”Montalban said, “I would welcome the opportunity to work with this committee and anyone else who is interested in working to find a constructive way forward to balance environmental protection with economic success. … But there is a right way … and there is the wrong way: this administration’s approach.” The metadata for the PDF files of the testimony posted to the Energy and Commerce Committee website revealed Christopher Kearney, an oil and gas lobbyist with the Ferguson Group, was the “author” of both.Energy and Commerce Committee Democrats quickly seized on the connection.“Republicans have been parroting fossil fuel industry talking points for years, and the fact an oil and gas lobbyist wrote near-identical testimonies for two of their witnesses today is just the latest example of how embedded they are with their polluter friends,” a spokesperson for panel Democrats said in a statement to E&E News.“It’s no wonder so many Americans think Republicans are more interested in protecting corporate interests than theirs,” the statement said.
Shale Tycoon Harold Hamm Wants to Lure Gen Z to the Oil Industry --Shale tycoon Harold Hamm and U.S. and European supermajors are looking to support university courses in petroleum engineering and related disciplines in a bid to attract young talent to the industry that’s not viewed favorably by Millennials and Generation Z. Harold Hamm, the U.S. shale pioneer who founded Continental Resources, has donated to establish the Hamm Institute for American Energy at Oklahoma State University. At the end of 2021, the Harold Hamm Foundation and Continental Resources announced a combined $50 million gift to create the Hamm Institute for American Energy. “We believe in a world where every person has access to the reliable, affordable and sustainable energy they need to thrive,” says Hamm, who is chairman of the Hamm Institute for American Energy. Speaking to the Financial Times last week, Hamm said that “We are going to be using oil for the next 50 years and ‘clean burning’ natural gas probably for the next 100 or 150 years.”“We want to get the next generation of gamechangers involved,” Hamm told FT.A shortage of skilled workers drove last year inflationary pressures on energy projects in the U.S. and in Texas, along with higher interest rates and higher costs of materials. Some major LNG projects in the Gulf area in Texas could struggle to find enough skilled workers to execute the projects on time and on budget.“Labor availability is a big issue in blue-collar areas. It is hard to find employees, and wage rate requirements continue to increase,” one executive at an oil and gas support services firm said in comments in the Dallas Fed Energy Survey for the second quarter of 2023. Another executive, at an exploration and production (E&P) firm, commented,“Labor is hard to find. Dirty-fossil-fuels stigma drives younger talent away.”Some of those who are not driven away by the “dirty business” stigma are being poached by technology firms, data centers, Tesla, SpaceX, and other jobs in computing and engineering.
US oil output to touch a record high in 2024, but growth will slow - EIA (Reuters) - U.S. crude production will hit records over the next two years but grow at a slower rate, the U.S. Energy Information Administration (EIA) said on Tuesday, as efficiency gains offset a decline in rig activity. The rise in U.S. output comes as the Organization of the Petroleum Exporting Countries and its allies are cutting their own output in a bid to boost oil prices. U.S. crude production will rise by 290,000 barrels per day (bpd) to a record 13.21 million bpd this year, the EIA said in its Short-Term Energy Outlook (STEO). The EIA forecast OPEC+ production, excluding Angola which left the bloc in January, would fall by 620,000 barrels per day to 36.44 million barrels per day next year. That was down from a five-year average of 40.2 million bpd before the Covid-19 pandemic. A Reuters survey on Friday found that oil output by the members of the Organization of the Petroleum Exporting Countries (OPEC) rose in December as increases in Angola, Iraq and Nigeria offset continuing cuts by Saudi Arabia and others in the wider OPEC+ alliance. Worries of rising supply and weak demand for light crude also pushed Saudi Arabia to cut the February official selling price (OSP) of its flagship Arab Light crude to Asia to the lowest level in 27 months. While U.S production is set to climb to new records in 2024 and 2025 due to well efficiencies, the growth is set to slow from the 1 million bpd growth in 2023 due to lower drilling activity. Prices for global benchmark Brent crude is expected to average $82 per barrel in 2024 and $79 in 2025, close to the 2023 average of $82, EIA said. "Although we expect OPEC+ to restrict production to prevent prices from falling, we still anticipate global production to exceed consumption by mid-2025 and therefore for petroleum inventories to increase," the agency wrote in its report. EIA cautioned that heightened tensions in the Middle East and attacks on ships in the Red Sea could disrupt trade flows and push up prices. Oil prices climbed over 2% on Tuesday as the Middle East crisis and a Libyan supply outage pared the previous day's heavy losses. Brent crude futures were trading around $77.91 a barrel, while U.S. West Texas Intermediate futures were trading at $72.72 a barrel. On the demand side, the agency expects growth in global liquid fuels consumption to be 1.4 million bpd in 2024 and 1.2 million in 2025, lower than the 1.9 million bpd growth in 2023 due to a weaker Chinese economy, increasing vehicle fleet efficiency, and an end to pandemic recovery-related growth in 2023.
US EIA forecasts lower oil prices in 2025, expects production to outpace demand | S&P Global Commodity Insights -- The US Energy Information Administration Jan. 9 lowered its 2024 crude price forecasts by 8 cents/b to $77.99/b for WTI and $82.49/b for Brent, and the agency expects prices to fall further in 2025 as production grows faster than demand.In its January Short-Term Energy Outlook, the EIA forecast WTI would average $74.98/b and Brent would average $79.48/b in 2025. With crude production outpacing demand, inventories are expected to build modestly in 2025 and place some downward pressure on crude oil prices, EIA said.But several uncertainties could still affect future oil prices, the EIA said. "Heightened tensions around the critical Red Sea shipping channel and other developments in the Middle East have added upward price pressure since early December and have the potential to disrupt global oil trade flows and drive up global oil prices further should they escalate or persist," the EIA said. The EIA pushed up its outlook for 2024 US oil production by 100,000 b/d to 13.21 million b/d and expects production growth to continue in 2025 with US output averaging 13.44 million b/d that year. US crude oil production set a record in 2023 and the current forecasts for 2024 and 2025 production would set records as well, according to the STEO."Production growth continues over the next two years driven by increases in well efficiency," according to the STEO. "However, growth slows because of fewer active drilling rigs," the EIA said.One key uncertainty in the EIA's US production forecast is producer investment, according to the STEO. "Since 2021, producers have prioritized debt reduction, dividend increases, and corporate acquisitions over capital expenditures," the EIA said. "Producers increased capital expenditures in 2023, however, and further increases would suggest more active rigs than in our forecast," the EIA said. Global liquid fuels production is also expected to slow down, as OPEC+ continues its policy of production restraint and US tight oil production growth decelerates, the EIA said. OPEC+ crude oil production is forecast to average 36.4 million b/d in 2024 and 37.2 million b/d in 2025, which is likely close to the lower bound for OPEC crude oil production, the EIA said in a STEO Between the Lines report released Jan. 9."Some OPEC+ participants may push to reduce or end their production restraint after the first quarter of 2024, in which case production may increase higher than our forecast and lead to lower prices," the EIA said in the report.The start-up of longer-term projects in Guyana, Brazil, Norway and Canada are less sensitive to crude oil prices than US shale production, and those projects will add to non-OPEC+ production growth in the next two years, the EIA said."In particular, the Liza and Payara projects in Guyana's offshore oil discoveries have significantly grown crude oil production, and we expect Guyana's production will increase from 0.4 million b/d in 2023 to 0.7 million b/d in 2025."Platts, a part of S&P Global Commodity Insights, on Jan. 8 assessed Unity Gold at a 95-cents/b discount to Dated Brent, Liza at a $1.15/b discount, and Payara Gold at a $1.10/b discount. All three grades were unchanged on the day.The EIA increased its world liquid fuels consumption forecast by 120,000 b/d to average 102.46 million b/d in 2024. The EIA expects global liquid fuels consumption to reach a new record of 103.67 million b/d in 2025, according to the STEO.Yet growth in 2024 and 2025 is still less than the 1.9 million b/d growth in 2023, the EIA said. "We attribute the reduction in growth to slowing oil demand growth in China due to stalling GDP growth, increasing vehicle fleet efficiency, and an end to pandemic recovery-related growth in 2023," according to the STEO.The EIA expects US retail gasoline prices to average $3.36/gal in 2024, holding steady with December's estimate, and the agency forecasts retail gasoline prices to average $3.24/gal in 2025.
ExxonMobil Posts $2.5B Impairment for California Assets - Exxon Mobil Corp. warned investors of a $2.5 billion write down of the value of some California operations. The impairment to be recorded in fourth-quarter earnings is “primarily” related to its Santa Ynez operations off the coast of Santa Barbara, Exxon said in a filing Thursday. The announcement comes days after Chevron Corp. said it will incur a large writedown due largely to California energy policies. Exxon temporarily suspended production at its Santa Ynez oil field after a 2015 pipeline leak before resuming crude shipments via trucks. Regulators later stepped in and restricted Exxon’s ability to move oil by road, citing risks to other drivers and the environment. “While the Corporation is progressing efforts to enable a restart of production, continuing challenges in the state regulatory environment have impeded progress in restoring operations,” Exxon said in the filing. Excluding the writedown, Exxon said fourth-quarter earnings were similar to the previous three-month period. Lower oil prices inflicted a $600 million hit on earnings but that was at least partially offset by a rise in natural gas markets. Meanwhile, a $1.6 billion drop in refining earnings was partly mitigated by a gain in unsettled derivatives of about $1.2 billion.
Canada’s Trans Mountain Pipeline expansion reportedly 95% complete - Work on Canada’s Trans Mountain Pipeline expansion project is reportedly over 95% complete. When it comes onstream, the expansion will nearly triple the pipeline’s current 300,000 barrels per day (b/d) capacity to move crude oil from oil sands in landlocked Alberta to Canada’s Pacific Coast for export to new customers in Asia or along the U.S. West Coast. Although initially expected to come online early this year, the project could be delayed as much as two years by a recent ruling, according to the project’s owner. The existing Trans Mountain Pipeline currently offers one avenue for waterborne crude oil exports out of Canada by moving crude oil from Edmonton in Alberta to Burnaby, a port near Vancouver on the coast of British Columbia. The expansion project aims to increase the pipeline’s current capacity by 590,000 b/d, bringing the pipeline to a capacity of 890,000 b/d. The Canadian government acquired the pipeline from Kinder Morgan for CA $4.5 billion in 2018 and formed the Trans Mountain Corporation (TMC) to oversee and manage the pipeline and the expansion project. The pipeline expansion, which consists of added pipeline capacity that generally runs along a similar route to the current pipeline, has faced several legal challenges from environmental activists and Canadian First Nations groups. Canada’s crude oil production increased steadily for most of the last 13 years. Canada’s average annual production of crude oil and condensate rose nearly 2.0 million b/d between 2009 to 2019. In 2020, the effects of the COVID-19 pandemic decreased crude oil production as crude oil prices declined significantly. Canada’s production has since resumed its growth trend. Canada’s production exceeded pre-pandemic levels in 2022 when crude oil and condensate production averaged 4.9 million b/d, according to data from the Canada Energy Regulator (CER). Most new growth in Canada’s crude oil production is concentrated in the landlocked province of Alberta. In 2022, Alberta’s crude oil production accounted for 82.7% of total crude oil production in Canada, up from 76.1% in 2012. Currently, more crude oil flows from Canda to the United States than to any other country by a wide margin; U.S. imports from Canada have averaged about 3.7 million b/d since 2020, according to our Petroleum Supply Monthly. U.S. crude oil imports from Canada accounted for about 79% of Canada’s total crude oil production during that time. Canada is also the largest source of crude oil imports to the United States, and these imports primarily flow to refineries in the Midwest and the U.S. Gulf Coast. CER’s refusal on December 5 to grant a variance request to Trans Mountain may delay the project start date. After the decision was issued, Trans Mountain indicated the delay could last as long as two years.
Ksi Lisims Nets First Offtaker as Shell Builds Western Canada LNG Footprint - The development team behind Ksi Lisims LNG in British Columbia (BC) has inked a long-term sales and purchase agreement (SPA) with Shell plc as the supermajor looks to grow its collection of western Canadian volumes for the Asian market. Ksi Lisims LNG Ltd., a co-venture between the Nisga’a Nation, Rockies LNG Ltd. and Houston-based Western LNG, has agreed to supply a Singapore-based unit of Shell with 2 million metric tons/year (mmty) of liquefied natural gas on a free-on-board basis for 20 years. It is the project’s first SPA. “The strong fundamentals of our project have earned the confidence of some of the most established companies in the LNG industry,” Western LNG CEO Davis Thames said. “We look forward to continuing to work with...
Shell expects 'significantly' higher LNG trading results in Q4 - LNG giant Shell is expecting “significantly” higher trading and optimization results for its integrated gas business in the fourth quarter of 2023 compared to the previous quarter. The UK-based firm revealed this in its fourth-quarter update note on Monday. According to Shell, trading and optimization results for integrated gas are expected to be “significantly higher than Q3’23 due to seasonality and increased optimization opportunities.” Shell’s adjusted earnings reached $6.22 billion in the third quarter, a drop of 34.2 percent compared to $9.45 billion in the year before, while the company’s integrated gas segment reported adjusted earnings of about $2.53 billion in the third quarter. This compares to $2.32 billion in the same period a year ago and $2.5 billion in the prior quarter. Shell sold 16.01 million tonnes of LNG in the July-September period, while its liquefaction volumes dropped to 6.88 million tonnes in the third quarter compared to 7.24 million tonnes in the same quarter last year. The firm said in the update it expects liquefaction volumes to reach about 6.9-7.3 million tonnes in the fourth quarter. Shell previously expected liquefaction volumes to reach about 6.7-7.3 million tonnes in the fourth quarter. In December, Shell’s huge Prelude FLNG located offshore Western Australia shipped its first LNG cargo since August last year when it started scheduled maintenance. Moreover, Shell expects integrated gas production to reach 880–920 kboe/d in the fourth quarter, while upstream production is expected to be at 1,830-1,930 kboe/d.
Pemex Aiming to Ramp Up Refining, Fertilizer Production in AMLO’s Final Year Mexico’s state oil company Petróleos Mexicanos (Pemex) plans to substantially increase downstream production of refined products and fertilizer this year, according to CEO Octavio Romero Oropeza. Romero did not offer projections for upstream oil and natural gas production during a presentation on Thursday (Jan. 4) at President Andrés Manuel López Obrador’s morning press conference. This year will mark the end of López Obrador’s six-year term. Romero highlighted the administration’s efforts to “rescue” Pemex from the policies of previous governments. He noted the stabilization of declining oil and gas production, and a ramp-up of crude oil processing at Pemex refineries under the current regime. Pemex expects to increase the amount of crude oil processed....
Mexican authorities find the bodies of 9 men near pipeline. Fuel theft by gangs is widespread (AP) — Authorities in central Mexico said Tuesday they found the bodies of nine men in vehicles near a fuel pipeline. The circumstances around the deaths remained under investigation, but there were indications that fuel theft may have been involved. Mexico faces a problem with gangs that steal gasoline, diesel and natural gas from government pipelines. Angel Rangel Nieves, police chief of San Juan del Rio city in the central state of Queretaro, said the bodies were found in two vehicles near the pipeline north of Mexico City. The vehicles had license plates from the neighboring state of Hidalgo, considered one of the centers of fuel theft. Since taking office in December 2018, President Andres Manuel Lopez Obrador has made fighting fuel theft a central goal of his administration. But despite thousands of troops being deployed to guard pipelines, thousands of illegal taps are still found every year. In 2023, about 5,600 illegal taps were found nationwide. That was down from over 7,000 in 2022 but almost the same level as when Lopez Obrador took office. The government has cracked down on open sales of stolen fuel and managed to reduce the volume for a couple of years. Stolen fuels are often sold by the side of the road and sometimes through licensed gas stations. Losses from stolen fuel at the state-owned oil company, Petroleos Mexicanos, dropped to as little as $275 million per year in 2019 and 2020. But since then losses have ballooned, rising to over $1.1 billion in 2022. The pipeline taps cause violence between gangs and pose a risk to residents. To gain support among local people, thieves sometimes leave taps open. On Jan. 18, 2019, an explosion at an illegally tapped pipeline in Hidalgo state killed at least 134 people. The explosion occurred in the town of Tlahuelilpan as residents collected gasoline leaking from the tap.
Energos buys two FSRUs from Dynagas - US-based Energos Infrastructure, a joint venture majority-controlled by asset manager Apollo and minority shareholder New Fortress Energy, has purchased two 2021-built floating storage and regasification units from affiliates of Greece’s Dynagas.The 174,000-cbm closed-loop FSRUs, Transgas Force and Transgas Power, will be renamed Energos Force and Energos Power, according to a statement by Energos.Energos did not reveal the price tag of the deal.Earlier in 2023, both of the FSRUs started long-term charter contracts with the German Federal Ministry of Economic Affairs and Climate Change.Energos Force is planned to operate in the port of Stade under direction of state-owned LNG terminal operator Deutsche Energy Terminals (DET), while Energos Power is planned to operate in the port of Mukran and has been subchartered to private player Deutsche ReGas.DET is planning to commission its FSRU-based facility in Stade in the first quarter of 2024.In December, Transgas Force left Germany’s Bremerhaven and now works as an LNG carrier until mid-February when it is expected to be deployed in Stade, while Transgas Power started its charter with Deutsche ReGas in October.US LNG firm NFE and compatriot asset manager Apollo completed the formation of their joint venture Energos Infrastructure in August 2022.Prior to this move, the JV, 80 percent owned by Apollo, had 11 vessels in its fleet, seven FSRUs, two floating storage units, and two LNG carriers.
Dutch Gate breaks new record, working on further expansion --Dutch Gate LNG terminal in the port of Rotterdam handled a record number of vessels last year, and its owners Gasunie and Vopak are working to further expand the facility with an additional small-scale jetty and a new tank.Launched in September 2011, the terminal has a nameplate capacity of 12 Bcm or 8.8 mtpa of LNG, three LNG storage tanks with a capacity of 540,000 cbm, three truck loading bays, and three jetties, including one small-scale jetty.Following modifications, Gate managed to add 4 bcm of capacity on an interruptible basis, available to users already having a position in Gate.Gate’s current users include Shell, Uniper, OMV, and Glencore. Last year, BP and PetroChina booked capacity at Gate as part of the expansion project, while ConocoPhillipssecured capacity from September 2031.In August last year, Vopak and Gasunie took a final investment decision to build the fourth LNG tank with a capacity of 180,000 cbm and to add 4 Bcm of additional regasification capacity.Gate’s commercial manager, Stefaan Adriaens, told LNG Prime on Wednesday that the terminal regasified 14.35 Bcm in 2023, well above its nameplate capacity.This is flat compared to 2022 when the terminal regasified 14.39 Bcm.Gate’s sendout remained at record levels last year despite the launch of the FSRU-based LNG import hub in the Dutch port of Eemshaven, also owned by Gasunie and Vopak, and FSRU-based LNG terminals in Germany, France, and other European countries.Including unloading and loading operations, the LNG terminal handled record 328 vessels last year.Adriaens said that Gate unloaded a total of 169 LNG cargoes in 2023, compared to 183 shipments in 2022.Out of these, 110 shipments came from US terminals, compared to 96 shipments in the year before.Moreover, the facility loaded 159 cargoes, a jump from 84 cargoes in 2022, mainly because “competitive prices made LNG again interesting as maritime fuel,”
Spot LNG shipping rates continue to decline - Spot charter rates for the global liquefied natural gas (LNG) carrier fleet continued to decline this week, while European prices also decreased compared to the previous week. Last week, spot LNG freight rates continued their downward trend. LNG freight rates continued to decline despite delays at the Panama Canal, and constraints at the Suez Canal due to attacks in the Red Sea, prompting some owners to divert their LNG carriers towards the Cape of Good Hope. “LNG freight rates have fallen for the fifth consecutive week, with a 7 percent week-on-week decrease for Atlantic rates and a 16 percent w-o-w decrease for Pacific rates,” Qasim Afghan, Spark’s commercial analyst told LNG Prime on Friday. Afghan said that the Spark30S Atlantic decreased by $7,750 to $108,500 per day, whilst the Spark25S Pacific decreased by $15,250 to $80,250 per day. According to Afghan, Spark30S and Spark25S rates now assess rates for larger, more efficient 174,000-cbm 2 stroke vessels after a specification change to evolve in line with the evolution of the global fleet. In Europe, the SparkNWE DES LNG front month also dropped from the last week. The NWE DES LNG for February delivery was assessed last week at $9.925/MMBtu and at a $0.850/MMBtu discount to the TTF. “The SparkNWE DES LNG price for February delivery is assessed at $9.872/MMBtu and at a $0.855/MMBtu discount to the TTF,” Afghan said on Friday. He said this is a $0.185/MMBtu decrease in DES LNG price, and the discount to the TTF widened by $0.035/MMBtu, when compared to last week’s February prices. Levels of gas in storages in Europe remain high due to a mild winter. Currently, some parts of Europe such as the Nordic countries are experiencing a cold snap. Data by Gas Infrastructure Europe (GIE) shows that gas storages in the EU were 85.86 percent full on January 3. In Asia, South Korea and Japan’s demand for spot LNG cargoes remained tepid in December as comfortable inventories weighed on buying interest, according to Platts, part of S&P Global Commodity Insights. Despite stable consumption of LNG in China, buying interest emerged in the week ended December 22 as China’s second-tier companies came out of the sidelines to purchase spot cargo as the Platts JKM, the benchmark price for LNG delivered to Northeast Asia, became more competitive than the domestic gas prices in China, it said. JKM ranged between $11-$15/MMBtu price levels in December, compared to the higher price range recorded in November at $15-$17/MMBtu. This week, JKM dropped when compared to the last week. JKM for February settled at $11.555/MMBtu on Thursday.
LNG carrier orders dip from record 2022 - Orders for liquefied natural gas (LNG) carriers in South Korea and China dropped significantly in 2023 from the record number of orders logged in the year before. According to data compiled by LNG Prime from South Korean and Chinese yards and shipbuilding sources, there were at least 68 orders for large LNG carriers in 2023. This compares to more than 170 orders recorded in 2022. The large number of orders in 2022 resulted in limited availability of slots at Korean and Chinese yards. Last month, Philippe Berterottière, the chief executive of LNG tank giant GTT said that the firm had won orders for about 65 LNG carriers in 2023. The Paris-based firm received record 162 orders for LNG carriers in 2022, up by 138 percent compared to the 68 orders in 2021. This means that 2023 orders were in line with 2021. Berterottière also said that GTT expects a similar number of orders in 2024 and more than 450 orders for large LNG carriers over the next ten years due to a strong LNG demand outlook and more stringent environmental regulations. China’s Hudong-Zhonghua and other compatriot yards won a record number of orders for LNG carriers in 2022, boosted by international orders and the giant QatarEnergy shipbuilding program. China State Shipbuilding Corporation and its units secured 49 orders in 2022. Including other yards, LNG carrier orders in 2022 reached 55 vessels. LNG Prime estimates that Chinese yards won in total 17 LNG carrier orders in 2023, more than three times less compared to the year before. CSSC’s Hudong-Zhongua secured only one order in July last year to build two LNG carriers for Cosco Shipping Energy Transportation and PetroChina, while Jiangnan also secured one order in March to build two LNG carriers for Shandong Marine and Taiping & Sinopec Financial Leasing. Dalian Shipbuilding Industry (DSIC), also part of CSSC, won in total seven LNG carrier orders last year. These include an order for three LNG carriers from Cosco Shipping and Sinopec, an order for two LNG carriers for a joint venture consisting of China Gas, Wah Kwong Maritime Transport, and CSSC Shipping, and an order for two more LNG carriers with China Merchants Energy Shipping (CMES). Last year, Denmark’s Celsius Tankers, a unit of Celsius Shipping, also ordered in total six 180,000-cbm LNG carriers from China Merchants Heavy Industry in Jiangsu. In South Korea, Hanwha Ocean, previously known as DSME, HD Korea Shipbuilding & Offshore Engineering and its units, and Samsung Heavy won orders for 51 LNG carriers, according to our calculations. This compares to 119 LNG orders in 2022. Samsung Heavy received in total seven LNG carrier orders, compared to record 36 LNG carrier orders in 2022. Last year, Japan’s MOL ordered five LNG carriers at Samsung Heavy and US-based Chevron ordered two vessels. Hanwha Ocean secured orders for five LNG carriers in 2023, compared to record 38 LNG carriers in 2022. MOL ordered three LNG carriers at Hanwha Ocean and Greece’s Maran Gas ordered two vessels last year. KSOE and its units won orders for 39 LNG carriers in 2023. This compares to 45 LNG carrier orders in 2022. HD Hyundai Heavy secured 30 LNG carrier orders and Hyundai Samho won 9 orders last year. The orders include 17 carriers as part of the QatarEnergy shipbuilding program, as well as vessels for Greece’s Evalend Shipping, Japan’s NYK, Greece’s Capital Gas, and Greece’s Dynagas. Besides the deal at Hyundai Heavy, QatarEnergy was expected to award more contracts as part of its shipbuilding program by the end of last year, including for Q-Max type vessels. Under the first phase, QatarEnergy contracted 60 LNG carriers at South Korea’s three shipbuilders, and Hudong-Zhonghua. Including the 17 carriers under the second phase, QatarEnergy and its affiliates awarded contracts for 77 vessels, but the firm needs more than 100 carriers for its giant expansion projects in Ras Laffan and the Golden Pass plant.
Poland Resists Cooperation With Nord Stream Sabotage Investigation - Poland has resisted efforts to investigate the 2022 bombings of the Nord Stream natural gas pipelines that connect Russia and Germany, raising suspicion that the Polish government could have had knowledge of the attack, The Wall Street Journal reported.The leading theory among Western officials is that Ukraine was behind the blast and that it was carried out by a small group of Ukrainians who rented a yacht, the Andromeda. Most ignore the theory that the US was behind the blast, an allegation that was made in a report by investigative journalist Seymour Hersh.The Andromeda made several stops in the Baltic Sea around the time of the explosions, including in Poland. European investigators told the Journalthat Polish officials had been slow to provide information and withheld key evidence about the alleged saboteurs’ movements in Poland.Investigators are hoping the new pro-EU Polish government of Prime Minister Donald Tusk will be more cooperative. Poland’s new foreign minister, Radek Sikorski, previously suggested the US was responsible for the Nord Stream bombings.After the news of the pipeline bombings broke in September 2022, Sikorski, who was a member of the European Parliament at the time, tweeted a picture of the disturbance in the water caused by the gas leak and wrote, “Thank You, USA.” He later deleted the tweet. QatarEnergy, Hudong-Zhonghua seal deal for giant LNG carriers - State-owned LNG giant QatarEnergy has signed a shipbuilding deal with China’s Hudong-Zhonghua for the construction of eight Q-Max LNG carriers as part of its shipbuilding program, according to shipbuilding sources.The giant vessels will have a capacity of 271,000 cubic meters and are scheduled to be delivered in 2028 and 2029, shipbuilding sources told LNG Prime on Tuesday.LNG Prime reported in September last year that QatarEnergy was looking to order Q-Max LNG carriers in China and South Korea. The price tag of the new deal has not been revealed.Regular LNG carriers in China are now priced at more than $235 million, and in South Korea at about $265 million.However, the vessels previously ordered as part of the shipbuilding program in China and South Korea were booked below market prices.These Q-Max vessels could be each worth more than $300 million.QatarEnergy will now sign time charter parties with shipowners for these LNG carriers, the same as the firm did for the previous vessels which were ordered as part of the first phase of the shipbuilding program, the sources said. Back in 2020, QatarEnergy entered into an agreement with Hudong-Zhonghua to reserve LNG ship construction capacity in China for its future LNG carrier fleet requirements, including for the North Field expansion projects.In April 2022, QatarEnergy signed charter deals for four Hudong-Zhonghua LNG carriers with Japan’s MOL, completing the first batch of charter contracts awarded under its massive shipbuilding program.After that, QatarEnergy signed charter deals with MOL for three new carriers, and five LNG carriers with a consortium of Japan’s NYK, K Line, Malaysia’s MISC, and China LNG Shipping.Including these eight Q-Max carriers, Hudong-Zhonghua will build in total 20 LNG carriers as part of the shipbuilding program.In September last year, Hudong-Zhonghua received approvals in principle from classification societies for what it said is the world’s largest LNG carrier.According to Hudong-Zhonghua, the 271,000-cbm LNG carrier is 344 meters long, 53.6 meters wide, and has a design draft of 12 meters.It features dual-fuel propulsion, a reliquefaction system, an air lubrication system, and GTT’s NO96 Super+ containment tech. The vessel has five storage tanks.
Germany Discovers New Pipeline to Replace Russian Gas Sabotaged - The German Federal Prosecutor’s Office is investigating “suspicions of unconstitutional sabotage” after holes were discovered drilled into a new gas delivery pipe installed to overcome the country’s dependence on imported Russian hydrocarbons. Germany believes a number of one-centimetre (approximately half, or 13/32ths of an inch) holes have been “drilled” into a new gas delivery pipeline delivering the energy source to Germany’s national grid, an act of what is believed to be sabotage discovered in November but made public now. The exact cause of the damage or motivation behind an attempt to sabotage Germany’s energy imports is not known, but the Schleswig-Holsteinische Zeitungsverlag reports Dutch-German energy company Gasunie has now confirmed the damage took place, and that they believe it was caused by “third-party intervention”.The 35-mile pipe is intended to deliver gas brought to Germany aboard LNG carriers, which is cooled to a liquid state for safe transit at sea and re-gassified once it reaches the shore of the customer nation and then piped ashore. In this case, a floating LNG terminal receives and regasified the LNG at Brunsbüttel on the river Elbe and sends it ashore, and it was this pipe carrying the gas towards the national grid which was allegedly drilled several times.The investigation has been taken over by the Federal Prosecutor’s Office, underlining the seriousness with which the potential case of “unconstitutional sabotage” is being treated. The terminal was handed over to Deutsche Energy Terminal GmbH (DET) at the start of this year.It is possible the sabotage could be related to the Ukraine-Russia war that necessitated the construction of the new LNG terminals in the first place, and The Times also notesthey have been the subject of “heavy” protests by green activists too.Germany rushed to diversify its energy sources as, despite repeated warnings fromformer U.S. President Donald Trump that it made them vulnerable, they relied very heavily on Russian energy imports to underwrite the national economy. Many European nations import LNG, but upon the outbreak of the Ukraine War Germany didn’t have a single LNG import terminal of its own, and the Brunsbüttel regasification plant is one of several ordered to be built at speed to overcome that.
India's ONGC Produces First Oil in Bay of Bengal Block - India’s Oil and Natural Gas Corp (ONGC) has successfully produced the first oil from the deepwater KG-DWN-98/2 Block, located off the coast of the Bay of Bengal. The 98/2 project is expected to boost ONGC’s total oil production by 11 percent and gas production by 15 percent, the state-run company said in a news release Monday. ONGC said it is nearing completion of the project’s second phase, after completing the first phase in March 2020. The company noted that field development faced technical challenges “due to the waxy nature of the crude”, which it overcame by employing pipe-in-pipe technology. Majority of the fabrication was done domestically, with some subsea hardware sourced internationally to meet specific requirements, the company added. The ONGC flagship project is on track, with the rest of the fields set to produce in mid-2024 in the final phase. The peak production of the field is expected to be 45,000 barrels of oil per day and over 353.15 million standard cubic feet (10 million standard cubic meters) per day of gas, the company said. On the international front, the government of India approved the signing of a memorandum of understanding (MoU) with the government of Guyana regarding cooperation in the hydrocarbon sector. The proposed MoU covers the complete value chain of the hydrocarbon sector, including the sourcing of crude oil from Guyana, the participation of Indian companies in the exploration and production sector of Guyana, cooperation in the areas of crude oil refining, collaboration in the natural gas sector, and collaboration in clean energy, according to an official announcement from India’s Press Information Bureau (PIB). The MoU aims to strengthen bilateral trade and foster investment between the two nations. Upon the signing of the MoU, it will be valid for five years, automatically renewing for the same period unless terminated by either party. India is targeting new partnerships in the hydrocarbon sector as research from the International Energy Agency (IEA) estimates that the country’s energy demand will grow around 3 percent per year, compared to the global rate of 1 percent. India is also projected to account for approximately 25 to 28 percent of global energy demand growth between 2020-2040. Meanwhile, Guyana has seen new discoveries of 11.2 billion barrels of oil equivalent recently and is projected to have a significant increase in production, according to the announcement.
China’s oil production rises to 208 mln tons in 2023 – CCTV - China’s crude oil production rose to 208 million metric tons in 2023, equivalent to 4.16 million barrels per day, state broadcaster CCTV said on Tuesday. The figure, which according to Reuters’ calculations is a 1.6% increase on 2022 output levels, represents an anticipated slowdown in production growth, as China’s national oil companies are pushed to tap deeper, more challenging reserves to boost production. China’s domestic oil production averaged 2% annual growth between 2018 and 2022, Reuters records show, as Beijing has sought to step up output amid an energy security drive. Oil production in China fell by around 12% between 2015 and 2018, as output at mature onshore fields slipped. Offshore production has accounted for more than 60% of the country’s production increases for the last four years, the CCTV report said. Domestic natural gas production reached 230 billion cubic metres in 2023, the CCTV report said, representing a 5.6% increase over 2022 levels.
Shell Oil Spill: Nigeria's top court says Shell's appeal should be heard after oil spill claim - Nigeria's Supreme Court on Friday ruled that Shell should be granted a hearing over an alleged oil spill in the Niger Delta after the Court of Appeal halted an asset sale and ordered a judgement claim to be paid prior to hearing its case. The case, one of several against Shell Plc locally and abroad, started with a High Court ruling in November 2020 that ordered Shell to pay 800 billion naira (USD 878 million) to communities of Egbalor Ebubu in Rivers state, who accused the firm of an oil spill that damaged waterways and farms. Shell denies causing the spill. Shell had appealed to stop the High Court from executing its judgement but the Court of Appeal ordered Shell to deposit the money in an account controlled by the court, before its appeal could proceed. Shell was also ordered to pause the disposal of local assets last June until the Supreme Court ruling, to allow for any compensation due to the Niger Delta Community. Mohammed Ndarani, the community's lawyer, told Reuters that the Supreme Court had now returned the case to the Court of Appeal. The Supreme Court ruled on Friday that the appeal court did not look into the merits of the case and directed that Shell be granted a hearing. The case is being closely watched after the country's oil regulator refused to approve Exxon Mobil's USD 1.28 billion asset sale to Seplat Energy in 2022, raising concerns among international oil companies about the difficulty of selling assets in Nigeria. Shell, like other oil majors operating in the country, is focusing on deep water drilling and divesting from onshore operations, which are prone to crude theft and vandalism of pipelines, hitting Nigeria's oil production.
Trouble as Port Harcourt Refinery Pipeline Damages, Spills Oil During Test run - An oil pipeline carrying crude oil to the Port Harcourt refinery has burst, causing a significant oil spill and severe environmental damage. To lessen the damage caused by the pipeline breach on Wednesday, January 3, a cement roadblock was put up to enable the continuing flow of crude oil needed for the refinery's test run. The affected community came up with the interim fix since they wouldn't let the facility's management business, Pipelines and Products Marketing Business Limited (PPMC), fix the damaged region permanently after it happened. Instead, they insisted on conducting a cooperative study before authorizing long-term repairs, Independent.ng reported. Following the tragic incident, the Youths and Environmental Advocacy Centre (YEAC-Nigeria) has urged the National Oil Spill Detection and Response Agency (NOSDRA) to conduct a thorough joint investigation into the spill to ascertain the reason for the pipeline burst. During a press briefing in Port Harcourt, Fyneface Dumnamene Fyneface, the Executive Director of YEAC-Nigeria, urged NOSDRA to clean up the affected area and repay the community in the case that it is confirmed that equipment failure caused the damage. He stated: “Efforts by the PPMC to fix the spill point are currently stalled by the community until JIV is carried out, but the company has temporarily stopped the spill with a cement barricade to enable it to continue the transportation of crude needed for the test run of the Port Harcourt refinery, pending when requirements are met and expected permanent repairs are expected on the spill point.” Earlier Legit.ng reported that the Nigerian National Petroleum Company Limited (NNPCL) had begun the supply of crude oil for the test-running of the Port Harcourt Refinery Company Limited. Oil marketers confirmed the development and said the plant would supply petrol, diesel, and other products in 12 states, including Abia, Akwa Ibom, and Delta States.
Libya NOC Declares Force Majeure for Sharara Oil Field - Libya’s National Oil Corp. (NOC) has declared a force majeure for Sharara amid a blockade of the oil field by protesters, according to the state-owned company. “The closure has resulted in the suspension of crude oil supplies from the field to Zawiya terminal” effective January 7, the NOC said in a press release Sunday. The force majeure status pauses the facility’s contractual obligations. A report by Reuters January 3 said the protest was to demand development projects and jobs. The region was "in need of developing projects and services, such as a refinery for fuel supply, paved roads, a clinic and providing jobs for young people", one protester told the news agency. “Negotiations are ongoing to resume production as soon as possible”, said the NOC statement posted on its website. The closure of the field, one of the North African country’s biggest according to the consortium that runs Sharara, comes as Libya works to entice back international hydrocarbon developers whose operations have been hit by force majeures. Located in the Murzuq basin south of the North African country, Sharara can produce up to 330,000 barrels per day (bpd), according to news information from the NOC website. The Akakus Oil Operations company operates the field as a consortium between the NOC, Austria’s state-backed OMV Ag, France’s TotalEnergies SE and Norway’s majority state-owned Equinor ASA. Two blocks have been developed in the field, NC115 and NC186. Crude from these two concessions is transported via a 723-kilometer (449.25 miles) long pipeline across the Sahara Desert to the Akakus Oil Operations Tank Farm on Libya’s northern coast, where the oil is dispatched for shipping to the international market, Akakus says on its website. Oil and gas operations in Libya have been hit by blockades in the aftermath of the civil war that broke out 2011. World Bank estimated the Libyan economy had shrunk by 1.2 percent in 2022 due to a blockade of oil production during the first semester alone. An analysis by the United States Energy Information Administration (EIA) published May 9, 2022, said due to political instability since the start of the civil war, Libya’s petroleum production has fallen from 1.7 million bpd between 2006 and 2010 to a maximum capacity of 1.3 million bpd. The report on the EIA website cited repeated oil blockades, among other factors. The NOC is now aiming to raise oil output to two million bpd, it said in a March 30, 2023, media statement announcing the approval of its plan for 2023–27.
Iran withholds oil shipments to China, demanding higher prices -Oil trade between China and Iran has hit a roadblock as Tehran ceased shipments, seeking higher prices from its primary customer, reported Reuters, citing sources. Iranian oil, accounting for approximately 10% of China’s crude imports, saw a peak in transactions in October 2023. However, the recent halt in shipments from Iran could bolster global oil prices and strain the profitability of Chinese refiners. The situation, described by an industry executive as a “default,” may also be an unintended consequence of the US granting a sanctions waiver for Venezuelan oil in October. The waiver is said to have redirected Venezuelan shipments to the US and India, thereby inflating costs for China as Beijing’s supply consequently diminished. Iran’s National Oil Company, China’s commerce ministry and the US Treasury Department did not respond to Reuters‘ requests for comments.
Iran’s Dark Fleet: The High Cost of Clandestine Oil Exports - More than 6,000 kilometers from Tehran, in treacherous waters off the shores of Singapore, a "dark fleet" of oil tankers waits to offload the precious cargo that helps keep Iran's economy afloat -- a dependency that could also sink it.The fleet has grown steadily over the past five years, delivering Iranian crude to China as the countries work in concert to circumvent international sanctions that target Tehran's lucrative oil exports. But while the clandestine trade has buoyed Iran's budget, it also comes at tremendous cost and risk to Tehran.Iran gives China a hefty discount to take its banned oil, taking 12 to 15 percent off the price of each barrel to make it worthwhile for Beijing to take on the liability of skirting sanctions, according to research by the data analysis unit of RFE/RL's Radio Farda.Additional costs add up as well: ship-to-ship operations to offload the oil, middlemen, hidden-money transfers, and rebranding the oil to mask its Iranian origin and make it appear to come from a third country, said Dalga Khatinoglu, an expert on Iranian energy issues.Altogether, said Khatinoglu, who contributes to Radio Farda's data analysis unit, Iran's budget figures and official statements indicate that 30 percent of the country's potential oil revenue was wasted last year.And with the draft budget for the next fiscal year currently being debated by the Iranian parliament, there are no guarantees that Tehran's bet on quenching China's thirst for oil will continue to be a panacea.With Iran almost entirely dependent on Beijing to take its oil and on other entities to facilitate the trade, Tehran has managed to inject desperately needed revenue into its economy. But Iran has also put itself at risk of seeing its main revenue stream dry up."There's definitely an extent to which Tehran has become more dependent on the likes of China or those who would be willing to deal with Iran in spite of Western sanctions," said Spencer Vuksic, a director of the consultancy firm Castellum, which closely tracks international sanctions regimes.Vuksic said Iran is "definitely put in a weak position by having to depend on a single external partner who's willing to deal with and engage with Tehran."Iran has trumpeted its foreign trade, claiming in December that oil revenue had contributed to a positive trade balance for the first eight months of the year.But the oil and gas sector, by far the largest part of the Iranian economy, will not be enough to save the current budget of around $45 billion that was approved last year.The Iranian fiscal year, which follows the Persian calendar and will end in March, is expected to result in a major deficit. In presenting the draft budget to parliament in December, President Ebrahim Raisi acknowledged a $10 billion deficit. But the shortfall could be much higher -- up to $13.5 billion, the largest in Iran's history -- by the end of the fiscal year, according to Radio Farda. This is because data shows that just half of the expected oil revenues were realized, in part due to lower than expected oil prices and additional costs and discounts related to Tehran's oil trade with China. Whereas the budget expectations were based on oil being sold at $85 per barrel, the price of crude dipped below $75 per barrel in December and has fluctuated wildly recently amid concerns that tensions in the Middle East could disrupt shipping and production. And while Iran expected to export 1.5 million barrels of oil per day (bpd), it exported only 1.2 million bpd in the first eight months of the year, according to Radio Farda.Altogether, Radio Farda estimates that Iran lost some $15 million per day in potential revenue through its trade with China, which accounts for more than 40 percent of the Iranian budget.For the upcoming budget of about $49 billion, expectations for domestic and foreign oil revenue have dipped by 3 percent, according to Khatinoglu, even as the projected budget itself has risen by about 18 percent.
Oil Plunges After Saudi Arabia Cuts Oil Prices For February Amid "Persistent Weakness" Oil is plunging this morning, sending WTI on the verge of sliding below $70... ... after Saudi Arabia reduced the price of its crude oil for February delivery for all buyers amid what Bloomberg dubbed "persistent weakness", rather than just Asian ones as it has done before. State producer Saudi Aramco reduced its flagship Arab Light price to Asia by $2 to $1.50 a barrel above the benchmark. That’s bigger than a $1.25 a barrel reduction estimated in a Bloomberg survey of refiners and traders. Interestingly, Aramco also cut the price for North American buyers by the same amount, while in previous price adjustments it has cut these prices more modestly according to OilPrice. For European buyers, Aramco cut February prices by between $1.50 and $2 per barrel. "Saudi crude is still relatively more expensive compared to other regional crude. But we are happy enough to see such prices, making it much more affordable for us," a source from a refinery in North Asia told Reuters in comments on the news. The news outlet noted that the price cut is the deepest in 13 months and suggests a softer Asian market for crude. A month ago, a survey by Bloomberg among refiners suggested Aramco will cut prices amid intensified competition for the Asian market and cheaper crude from the United States and Europe, as well as Guyana. Oil from the US had become especially attractive as an alternative to Middle Eastern crudes as Brent crude came near parity with the Dubai benchmarks against with these crudes are prices. The cause of that unusual development was OPEC production cuts. Meanwhile, just two months ago, Aramco raised the prices of its crude for most of its buyers. For Asian buyers, this was the fifth price increase for the flagship Arab Light in a row as Saudi Arabia curbed output to stimulate higher prices. OPEC agreed at the end of last year to reduce production of oil this quarter by 2.2 million barrels daily. So far, this has not prompted any worry about short supply, keeping prices relatively stable. Many traders seem to believe that even a cut of 2.2 million bpd—if all comply—would be enough to offset greater supply from non-OPEC producers.
The Oil Market Sold Off Sharply on Monday on Price Cuts By Saudi Arabia --The oil market sold off sharply on Monday on price cuts by Saudi Arabia, the latest sign that fundamentals are worsening. It offset supply concerns generated by escalating geopolitical tension in the Middle East. The crude market was pressured after Saudi Aramco on Sunday lowered the price of its Arab Light crude bound for Asia by $2/barrel due to persistent weakness in the global market. Saudi Arabia signaled it aims to remain competitive in the market and is unwilling to unilaterally reduce its volume. The crude market posted a high of $73.25 in overnight trading. However, the market sold off more than $3.60 as it fell to a low of $70.13 in morning trading. The market retraced some of its losses and traded sideways during the remainder of the session. The market’s losses may have been limited by a force majeure declared by Libya’s National Oil Corp at its 300,000 bpd Sharara oilfield on Sunday after protests shut the oilfield. The February WTI contract settled down 3.04 cents at $70.77 and the March Brent contract settled down $2.64 cents at $76.12. The products markets ended the session in negative territory, with the heating oil market settling down 3.16 cents at $2.5769 and the RB market settling down 7.77 cents at $2.0278. Citigroup Inc estimates that fund tracking the Bloomberg Commodity Index and the S&P GSCI are likely to sell about $2 billion worth of WTI in the coming days as the annual realignment of portfolios take place. Hapag-Lloyd and Maersk said that they have not entered any agreements with Iranian-backed Houthi militants to prevent their ships from being attacked in the Red Sea, denying a report by industry portal Shippingwatch saying that some shippers had started to make such deals. U.S. Secretary of State Antony Blinken discussed efforts to prevent the Gaza conflict from spreading during a meeting with High Representative Josep Borrell in Saudi Arabia on Monday. He began a five-day Middle East diplomatic effort in Jordan and Qatar on Sunday, his fourth visit to the region since the October 7th attacks on Israel by Hamas militants. He said he found leaders in the Middle East determined to prevent the conflict between Israel and Hamas in Gaza from spreading. He said Houthi attacks on international shipping in the Red Sea have to stop, adding countries have made clear that there have to be consequences if the attacks continue. Meanwhile, U.S. President Joe Biden said he had been working quietly with the Israeli government to encourage it to reduce its attacks and “significantly get out of Gaza.” On Sunday, Libya’s National Oil Corporation declared a force majeure at its 300,000 bpd Sharara oilfield after protesters shut the field, forcing supplies to be halted from the field to the Zawiya export terminal. IIR Energy reported that U.S. oil refiners are expected to shut in 409,000 bpd of capacity in the week ending January 12th, cutting available refining capacity by 215,000 bpd. Offline capacity is expected to increase to 951,000 bpd in the week ending January 19th.
Oil falls more than 4% as Saudi price cut heightens global demand worries - U.S. crude oil declined 4% on Monday after Saudi Arabia slashed its prices, raising renewed worries that the market is oversupplied at the same time as demand is weakening. The West Texas Intermediate futures contract for February lost $3.04, or 4.12%, to settle at $70.77 a barrel. The Brent futures contract for March shed $2.64, or 3.35%, to settle at $76.12 a barrel. The sell-off comes after Saudi Aramco on Sunday sharply lowered the price of Arab Light Crude to Asian customers by $2 per barrel. The Saudi price cut comes amid persistent market weakness due in large part to record U.S. crude production and softening demand in China. OPEC and its allies are cutting their production by 2.2 million barrels per day this quarter in an effort to balance the market. “While it is possible that the price reduction was to maintain market share in the face of production cuts, the market is taking it as a clear sign that the economy is slowing. Maybe the landing might not be so soft,” Phil Flynn of The Price Futures Group wrote on Monday. U.S. crude and Brent, the global benchmark, both ended the first week of 2024 more than 2% higher on mounting tensions in the Middle East, but supply and demand concerns have persistently overshadowed geopolitical risks in the market. “The market seems to feel that geopolitical risk will not impact supply and if it does, demand is weak so it will not matter,” Flynn wrote. Repeated attacks by Houthi militants, who are allied with Iran, on commercial vessels in the Red Sea have forced shipping giant Maersk to avoid the crucial waterway for the foreseeable future. The situation is also deteriorating in Lebanon, where a Hezbollah commander was killed Monday in an apparent Israeli airstrike. Analysts say a regional war that draws in Iran could lead to a disruption in the Strait of Hormuz which would have a material impact on the market. So far, however, rising tensions in the region have not led to a problem in crude supplies. U.S. Secretary of State Antony Blinken is on a diplomatic tour of the region in an effort to reduce tensions. Though geopolitical risk is rising, the global oil market remains well supplied. The U.S. pumped an estimated 13.2 million barrels per day of crude in the last week of 2023, and its inventories of gasoline and distillate both soared by more than 10 million barrels. U.S. crude exports also rose by more than 1 million barrels per day to 5.2 million barrels per day in the same period. Saudi Arabia is slashing prices to stop customers from buying U.S. crude as well as to undercut cheap Iranian and Russian barrels, said Bob Yawger, energy futures strategist at Mizuho. “Obviously they’re hitting the panic button a little,” Yawger said of Riyadh. The question is what happens if the Saudi strategy does not work, he said. “You’re getting closer and closer to a 2020 situation here where they try to claw back market share by cutting everything to bare bones minimum and sparking a price war,” Yawger said.
Oil climbs 2% on Mideast conflict and Libya outage (Reuters) - Oil prices climbed around 2% on Tuesday as the Middle East crisis and a Libyan supply outage pared the previous day's heavy losses. Brent crude futures settled $1.47, or 1.9%, higher at $77.59 a barrel, while U.S. West Texas Intermediate crude (WTI) ended $1.47, or 2.1%, higher at $72.24. Prices drew support from the closure of Libya's 300,000 barrels per day (bpd) Sharara oilfield, one of its largest, which has been a frequent target for local and broader political protests, and Middle East tensions. The Israeli military has said its fight against Hamas will continue through 2024, stoking concerns the conflict could escalate into a regional crisis that disrupts oil supplies. Meanwhile, some major shipping companies are still avoiding the Red Sea following attacks by Iran-aligned Houthi militants in response to Israel's war against Hamas. However, the impact on oil tanker movements has been less than expected, according to a Reuters analysis. "The more attractive alternative for (oil tankers) right now is to make a dash for the United States, where crude oil is cheaper than Brent," Brent and WTI posted 3% and 4% losses respectively on Monday after sharp cuts to Saudi Arabia's official selling prices (OSP), prompting both supply and demand concerns. Oil futures also were also supported on Tuesday after Saudi Arabia emphasized its desire to support efforts to stabilize oil markets and following reports that Russia curbed its crude oil production level in December, Russia is part of the OPEC+ group of oil producers that has agreed to cut production by around 2.2 million bpd. In the U.S., crude production will hit record highs over the next two years but grow at a slower rate, the Energy Information Administration (EIA) said, as efficiency gains offset a decline in rig activity. Output will rise by 290,000 bpd to a record 13.21 million bpd this year. Crude stocks fell by 5.2 million barrels in the week ended Jan. 5, according to market sources citing American Petroleum Institute figures on Tuesday. Government data on stockpiles is due Wednesday.
Oil Rebounds After EIA Forecast Global Stock Draws in Q1 (DTN) -- Recouping a portion of Monday's losses, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange booked solid gains in afternoon trading Tuesday after the U.S. Energy Information Administration forecast global oil inventories will draw down rapidly during the first quarter, putting upward pressure on oil prices, before the physical market rebalances in the second half of the year. Worldwide oil inventories will decline by 800,000 bpd during the first three months of 2024, pressured by steep production cuts from OPEC+ and slowing supply growth from non-OPEC countries. EIA estimates global oil production will slow sharply this year to just 600,000 bpd from a neck-breaking pace of 1.7 million bpd seen over the course of 2023. Most of that growth in oil production will continue to be realized in the United States, Brazil, and Guyana. For OPEC+ countries, total oil production will fall 600,0000 bpd this year before ongoing production cuts of 2.2 million bpd first introduced in June 2023 will expire at the year. The most recent industry data suggests that key OPEC+ oil producers are indeed adhering to their pledged supply targets, with Russia's seaborne oil shipments during the first week of January dropping 500,000 bpd below their May–June baseline. On Nov. 30 during OPEC+'s final meeting of 2023, Russia pledged to deepen export cuts by 500,000 bpd after Saudi Arabia said it would extend a unilateral 1 million bpd production cut into the first three months of 2024. In addition to Russia and Saudi Arabia, several other OPEC+ members announced deeper production cuts of 2.2 million bpd. The oil complex came under intense selling pressure at the start of the week after Saudi Aramco, the world's largest oil company, slashed February official selling prices for its oil to all key markets by the most since November 2021. The Saudi's price-setting mechanisms correspond directly to the appetite for crude oil in the global economy. The fact that Aramco cut OSPs to all markets by a sizable $2 bbl in a single month underscores weak demand fundamentals at the start of 2024. At settlement, February West Texas Intermediate futures on NYMEX advanced $1.47 to $72.24 bbl, and the international crude benchmark Brent contract for March delivery also gained $1.47 bbl to $77.59 bbl. NYMEX February ULSD futures added $0.0735 to $2.6504 gallon, while NYMEX February RBOB futures gained $0.0490 to $2.0768 gallon.
Yemen's Houthis Launched Their Largest Missile and Drone Attack to Date on Ships in the Red Sea -- The oil market on Wednesday continued to trade within Monday’s trading range as it erased its earlier gains and sold off following an unexpected build in crude stocks. The crude market erased some of Tuesday’s gains in overnight trading before it bounced higher ahead of the release of the EIA’s weekly petroleum stocks report. The market was well supported by concerns over the escalating tensions in the Middle East. Yemen’s Houthis launched their largest missile and drone attack to date on ships in the Red Sea, forcing a response from U.S. and U.K. forces patrolling the waterway. The oil market extended its gains by $1.35 as it rallied to a high of $73.59. However, the market erased its earlier gains and sold off to a low of $71.01 in afternoon trading after the EIA highlighted concerns of slowing demand growth as it showed an unexpected build in crude stocks and larger than expected builds in both distillates and gasoline stocks. The market later settled in a sideways trading range ahead of the close. The February WTI contract settled down 87 cents at $71.37, while the March Brent contract settled down 79 cents at $76.80. The product markets ended the session lower, with the heating oil market settling down 4.98 cents at $2.6006 and the RB market settling down 95 points at $2.0673. The EIA reported U.S. gasoline stocks increased last week to the highest level since February 2022. Gasoline stocks increased by 8.028 million barrels to nearly 245 million barrels in the week ending January 5th. Inventories of the motor fuel in the Midwest increased to 56.5 million barrels, the highest since April 2022, while Gulf Coast gasoline stocks increased to 90.2 million barrels, the highest level since June 2021. U.S. distillate stocks increased by 6.5 million barrels to 132.4 million barrels, the highest level since September 2021. U.S. Midwest distillate stocks increased 1.9 million barrels to 34.1 million barrels, the highest level since September 2020 and U.S. Gulf Coast distillate stocks increased by 1.9 million barrels to 46.5 million barrels, the highest level since August 2021. Bloomberg reported that Yemen’s Houthis launched their largest missile and drone attack to date on ships in the Red Sea, forcing a response from U.S. and U.K. forces patrolling the waterway. According to the U.S. military, American and British jets and warships shot down 18 drones and three anti-ship missiles on Tuesday night. It was the Houthis’ 26th shipping attack since November 19th. Separately, Houthi military spokesperson, Yahya Saree, said Yemen's Houthis attacked a U.S. ship "providing support" to Israel with a large number of ballistic and naval missiles and drones. U.S. Secretary of State, Antony Blinken, said there will be consequences for continued attacks on commercial shipping lanes in the Red Sea by Yemen’s Houthis and that it had been made clear to Iran that support being provided needs to stop. Kpler ship tracking data points to 288,000 mt of gasoline have been fixed for loading out of Europe with the USAC set as its destination in the week ending January 12th, a four month high for a single week.
Oil Futures Erase Gains After EIA shows Building Inventory -- Reversing lower from an early session advance, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled down Wednesday under pressure from large builds across U.S. crude and refined fuels stockpiles during the first week of 2024, with the downside limited by a softer U.S. dollar index. The greenback lost ground against a basket of foreign currencies on Wednesday, falling 0.2% to 102.080 as traders increased exposure to risk assets ahead of fresh inflation data for the United States. U.S. Bureau of Labor Statistics will release the Consumer Price Index for December 8:30 AM ET Thursday. A consensus calls for overall price pressure to have ticked slightly higher last month, reflecting rising food and energy prices. On the month, CPI is expected to inch up to 0.2% from November's 0.1% gain, bringing annualized rate in inflation to 3.2%. While still above the Federal Reserve's 2% target, headline inflation has fallen at a rapid clip over the past 12 months, easing from 6.5% in December 2022 to just a tick above 3% in November 2023. So-called core inflation, which excludes volatile food and energy categories, is also forecast to have declined to 0.2% for December and 3.8% on an annualized basis. Investors will closely monitor the CPI report for confirmation that the Federal Reserve could start cutting interest rates in March. A stronger-than-expected employment report for December briefly pared back those bets, but more than 65% of investors still envision a 25-basis point rate cut in two months' time. That comes against a background of slowing global growth that is forecast to ease to 2.4% this year, down from 2.6% estimated for 2023, and 3% for 2022, according to the latest estimates from the World Bank. GDP for advanced economies slips from 1.5% in 2023 to 1.2% this year, and from 4% to 3.9% for emerging and developing economies, citing "the tightest financial conditions in decades." Underlying losses in the oil complex, U.S. commercial crude oil inventories unexpectedly increased 1.3 million bbl during the first week of January, with another 600,000 bbl added to the Strategic Petroleum Reserves. EIA also showed outsized builds in product inventory continued during the first week of January, with gasoline stocks up 8 million bbl to 244.982 million bbl, a 22-month high. API late Tuesday afternoon reported a 4.896 million bbl increase in gasoline stocks for the week-ended Jan. 5. A 6.5 million bbl increase in distillate inventory was more than expected by the market pre-API, while slightly below the Washington, D.C.-based trade association's survey showing a 6.873 million bbl build. Distillate stocks have now increased for seven consecutive weeks through Jan. 5 to a 132.4 million bbl 16-month high. At settlement, NYMEX West Texas Intermediate futures declined $0.87 to $71.37 bbl, and ICE March Brent fell back $0.79 to $76.80 bbl. NYMEX February ULSD futures were $0.0498 lower at $2.6006 gallon at settlement, and February RBOB declined $0.0095 to $2.0673 gallon.
The Market Was Well Supported By News That Iran Seized a Tanker Off the Coast of Oman -- The oil market on Thursday continued to trade within Monday’s trading range for the third consecutive session as it retraced Wednesday’s losses on escalating tensions in the Middle East. The market was well supported by news that Iran seized a tanker off the coast of Oman that was transporting Iraqi crude destined for Turkey in retaliation for the confiscation last year of the same vessel and its oil by the U.S. The seizure of the tanker coincides with attacks by Yemen’s Houthi militants targeting Red Sea shipping routes. The U.S. and Britain stated that they would take further measures if the attacks continued. The crude market posted a low of $71.31 in overnight trading before it bounced off that level and rallied over $2.40 to a high of $73.81 by mid-day. The market later erased some of its gains during the remainder of the session. The market gave up some of its gains on an unexpected increase in U.S. inflation. The February WTI contract settled up 65 cents at $72.02 and the March Brent contract settled up 61 cents at $77.41. The product markets ended the session higher, with the heating oil market settling up 7.32 cents at $2.6738 and the RB market settling up 4.7 cents at $2.1143. Wood Mackenzie said global oil demand is expected to increase by almost 2 million barrels a day in 2024, with China accounting for more than 25% of the increase. It projected total oil demand of 103.5 million bpd for this year. The consultancy said oil supply is expected to lag demand growth as OPEC+ supply cuts slow production growth across 2024, although it said it could move into oversupply without output restraint, especially if demand growth is lower than expectations. Barclays lowered its 2024 Brent price forecast by $8/barrel to $85/barrel. It said despite the extension of the voluntary OPEC+ reductions through the first quarter of 2024, its 2024 balance estimate is mostly unchanged. The bank maintained its forecast of 300,000 bpd oil growth in 2024. According to a British maritime security firm and the United Kingdom Maritime Trade Operations Authority, an oil tanker involved in a dispute between the U.S. and Iran was boarded by armed individuals east of Oman and appeared to be changing course towards Iranian waters. The security firm Ambrey said the Marshall Islands-flagged tanker's AIS tracking system was turned off as it headed in the direction of the Iranian port of Bandar e-Jask at the time it made the report. Tracking data from LSEG showed that the ship, which loaded in the Iraqi port of Basra, was heading to Aliaga in western Turkey. Source stated that Chinese refiners asked for less Saudi crude oil for February, even as the world's top oil exporter conducted its biggest price cut in 13 months. About 38.5 million barrels were nominated by Chinese refiners for February-loading, down slightly from about 40 million barrels for January. A trader said "The price cut came too late. Refineries had set plans for oil purchase and production before Saudi revealed the OSPs." Saudi Aramco has notified at least five North Asian buyers that it will supply full contractual volumes in February.
ICE Brent Spikes 4% After US-Led Coalition Strike Houthis -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange jumped more than 4% in overnight trading, sending international crude benchmark above $80 barrel (bbl) for the first time this year after a U.S.-led coalition launched more than a dozen attacks against Houthi targets in Yemen, risking an escalatory spiral in the broader Middle East conflict. U.S. and U.K. military overnight struck a number of key Houthi targets near Yemen's capital Sanaa, including logistical hubs, air defense systems, weapons storage, and launching locations, according to officials. The strikes represent the first U.S. military response to scores of drone and missile attacks on commercial ships by the Iran-backed Houthi militants in Yemen. "These strikes are in direct response to unprecedented Houthi attacks against international maritime vessels in the Red Sea -- including the use of anti-ship ballistic missiles for the first time in history," said U.S. President Joe Biden in a statement released by the White House. As of Friday morning, Houthi leaders said that all U.S. and U.K. interests are now legitimate targets, adding that the attacks will not go without a retaliatory response. Although traders speculated that it's unlikely the conflict would metastasize into a regional war, the risk to oil supplies and energy infrastructure has always been present. In September 2019, Houthis carried out successful attacks against Saudi oil processing facilities at Abqaiq and Khurais oil field, temporarily removing 5.7 million barrels per day (bpd) or half of Saudi oil production in a matter of hours. For context, Saudi crude oil production is currently 9 million bpd -- the lowest in 30 years outside the pandemic years. In response to the developments, Saudi Arabia's Foreign Minister Faisal bin Farhan Al-Saud Friday morning called for restraint from all parties and "avoiding escalation." Earlier this week, Houthi militia fired their largest-ever barrage of drones and missiles targeting shipping in the Red Sea, with U.S. fighter jets responding by shooting down 18 drones, two cruise missiles and an antiship missile. And on Thursday, Iranian Navy seized a U.S. oil tanker in the Sea of Oman, carrying 1.04 million bbl of oil that was loaded at the Basra port in Iraq. The oil tanker was seized by the United States in 2023 for allegedly trying to sell more than 980,000 bbl of Iranian oil to China in violation of U.S. sanctions. Container ships have been forced to reroute voyage through the Suez Canal and Red Sea -- the shortest path between Europe and Asia, to around the Cape of Horn of Africa because of the Houthi attacks, raising global transport costs. Should the conflict in the Red Sea region persist or escalate further, it would add oil and energy-driven cost pressures to the inflation data across countries that are part of the Organization for Economic Cooperation and Development. Near 8:30 a.m. EST, ICE March Brent futures advanced $2.42 to $79.83 bbl, retreating from an overnight high of $80.75 bbl. West Texas Intermediate February futures on NYMEX rallied $2.33 bbl to near $74.35 bbl. NYMEX February ULSD futures rallied $0.0911 to $2.7649 gallon, NYMEX February RBOB futures gained $0.0630 to near $2.1773 gallon.
Oil up 1% as Middle East tensions offset US inflation worries (Reuters) - Oil prices gained on Friday as some oil tankers diverted course from the Red Sea after overnight strikes by the U.S. and Britain on Houthi targets in Yemen, while U.S. Treasury yields eased on news that U.S. producer prices unexpectedly fell in December. Wall Street stocks closed nearly flat after moving between modest gains and losses during the session. U.S. earnings season unofficially began, with major U.S. banks reporting lower profit on Friday in a quarter hit by special charges and job cuts and signs some consumer loans are starting to sour. Even as its quarterly profit fell, JPMorgan Chase (JPM.N) reported its best-ever annual profit and forecast higher-than-expected interest income for 2024. Its shares fell 0.7%, and an S&P 500 bank index (.SPXBK) dropped 1.3%. American and British warplanes, ships and submarines launched dozens of air strikes across Yemen overnight in retaliation against Iran-backed Houthi forces for attacks on Red Sea shipping. The move widened a conflict stemming from Israel's war in Gaza. Brent crude futures rose 88 cents, or 1.1%, to settle at $78.29 a barrel. The session high was more than $80, highest this year so far. U.S. West Texas Intermediate crude futures climbed 66 cents, or 0.9%, to settle at $72.68, paring gains after touching a 2024 high of $75.25. The U.S. PPI data raised expectations of an early U.S. interest rate cut from the Federal Reserve. The producer price index for final demand dipped 0.1% last month as the cost of goods declined, while prices for services were unchanged, which bodes well for lower inflation in the months ahead. Data on Thursday showed U.S. consumer prices rose more than expected in December. "Markets are shrugging off yesterday's CPI report since the underlying inflation trend is improving and the Fed can legitimately consider cutting rates this year," Jeffrey Roach, chief economist for LPL Financial in Charlotte, North Carolina, wrote. "The inflation pipeline is clearing and consumer prices will gradually get to the Fed's 2% target." U.S. two-year Treasury yields dropped to their lowest since May at 4.119% in the wake of the PPI data. They were last down 11.8 basis points (bps) at 4.142%. For the week, two-year yields, which reflect rate move expectations, were down 13.1 bps, their worst weekly showing in a month. The benchmark 10-year yield slid to a one-week trough of 3.916% , and was last at 3.955%, down 1.7 bps. The U.S. rate futures market has priced a nearly 80% chance of a rate cut at the Fed's March policy meeting, up from 71% late on Thursday, according to LSEG's rate probability app. The Dow Jones Industrial Average fell 118.04 points, or 0.31%, to 37,592.98. The S&P 500 (.SPX) gained 3.59 points, or 0.08%, at 4,783.83 and the Nasdaq Composite rose 2.58 points, or 0.02%, to 14,972.76. For the week, the S&P 500 rose 1.84% in its biggest weekly percentage gain since mid-December. European Central Bank (ECB) President Christine Lagarde said rates could be cut if the central bank was sure that inflation had fallen to its 2% target. The dollar index pared gains after the PPI data. The dollar index was last up 0.19% at 102.40.
Iran Seizes Tanker in Retaliation for the US Stealing Its Oil - Iran seized an American tanker in the Gulf of Oman on Thursday in retaliation for the US previously seizing the same tanker and stealing a shipment of Iranian oil that it was carrying. In April 2023, the US forced the tanker, formerly named Suez Rajan, to sail to Texas when it was carrying 800,000 barrels of Iranian oil using the pretext of sanctions enforcement. The ship sat off the coast of Texas for months as Iran was warning of retaliation if it was discharged, and American companies did not want to be involved. But the oil, worth approximately $56 million, was eventually transferred to another tanker in August 2023. Iran’s Fars news agency reported on Thursday: “Following the violation of the Suez Rajan in April and the theft of Iranian oil by the United States, the oil tanker renamed St. Nicholas was seized in retaliation this morning by the court order and the approval of the Ports and Shipping Organization by the strategic Navy of the Islamic Republic of Iran Army and transferred to Iranian ports.” The report said the tanker was taken because it had stolen cargo belonging to Iran at the direction of the US. The St. Nicholas was seized after it was loaded with oil in Basra, Iraq, and was bound for Aliaga, Turkey, via the Suez Canal. The US has a history of seizing tankers carrying Iranian oil and gas and outright stealing the cargo by selling it off for profit, and Iran has previously seized tankers in retaliation for US actions. In 2022, the US seized a tanker carrying Iranian oil in Greece and attempted to take the cargo, but a Greek court ruled against the confiscation. Tehran seized two Greek tankers in response to the US move and released them after the court’s ruling. In 2021, the US government sold 2 million barrels of Iranian oil for $110 million from a tanker seized near the UAE. During the Trump administration, the US sold off Iranian gas that was bound for Venezuela.
Houthis launch biggest attack yet in Red Sea Yemen’s Houthi rebels fired a barrage of rockets and missiles at U.S. and U.K. forces in the Red Sea on Tuesday night in the group’s largest attack yet on ships in the region since conflict erupted in November. U.S. Central Command (CENTCOM) said the Houthis launched the attack from Yemen at 9:15 p.m. local time in the southern Red Sea, sending a “complex” number of anti-ship cruise missiles, suicide drones and anti-ship ballistic missiles toward commercial and merchant ships transiting the corridor. In the statement, CENTCOM said 18 suicide drones were shot down, two anti-ship cruise missiles, and one anti-ship ballistic missile were shot down by U.S. and U.K. forces.The aircraft carrier USS Dwight D. Eisenhower, along with destroyer ships USS Gravely, USS Laboon, USS Mason and the U.K.’s HMS Diamond all responded to the attack.There does not appear to be any damage to U.S. and U.K. forces or to the merchant ships they were guarding. The Houthis said in a statement on Telegram that fighters targeted an American ship providing support to Israel.The rebels said they will continue to “prevent Israeli ships or those headed to the ports of occupied Palestine from navigating in the Arabian and Red Seas until the aggression stops and the siege on our steadfast brothers in the Gaza Strip is lifted.” The Houthis have attacked commercial ships 26 times since Nov. 19 in a campaign they say is targeting Israeli-based ships or boats en route to Israel. Like other Iranian-backed groups, the Houthis say they are standing up for Palestinians as Israel fights a major war against Palestinian militant group Hamas in Gaza. The U.S. last month convened a multi-nation task force under an existing maritime framework to defend merchant boats and combat the Houthi threat in the Red Sea, which has scared off major shipping companies and surged cargo prices. The task force is being tested by the Houthis, who have refused to back down and are continuing the attacks in the Red Sea. For now, some major shipping companies are avoiding the Red Sea and are instead transiting around the Cape of Good Hope in Africa.
Shipping Giant Halts Container Ship Sails To Israel Iran-backed Houthi rebels in Yemen have targeted commercial vessels with drones and missiles passing through the southern Red Sea. They say the attacks on ships destined for Israel are in solidarity with Palestinians and to facilitate humanitarian aid into the Gaza Strip. As a result, one major shipping company has had enough of the disruptions and decided to halt sails to Israel to avoid being attacked on the critical waterway that connects to the Suez Canal. Bloomberg reports that Chinese state-owned shipping giant Cosco suspended all container ship transits through the Red Sea to Israel. This is to avoid being attacked. The head of the Israeli Chambers of Commerce, Amir Shani, said Cosco informed him of the decision today. A source told Bloomberg that Cosco bookings to Israel will end next week. Major shipping companies, such as Maersk and Hapag-Lloyd, suspended container ship sailings through the Red Sea in recent weeks. This has forced shippers to re-route cargo to the Cape of Good Hope, adding 1-2 weeks to sails plus additional costs. Longer sails have reduced container capacity, which has sent shipping rates surging higher. So far, shippers have diverted more than $200 billion in trade over the last several weeks.As of Monday morning, there are no container ships with destinations for Europe and North America in the Red Sea. However, Bloomberg noted a "majority of oil and gas tankers continue to transit the Red Sea despite ongoing attacks, although some vessels have taken diversions to avoid the route." Still, the critical waterway that's responsible for 10-12% of global seaborne trade by volume is still a highly contested area. Yet more evidence of the Pentagon's Operation Prosperity Guardian mission to police the Red Sea is failing.
Attack on US Ship as 'Initial Response' to Sinking of Houthi Boats - Yemen’s Houthis, officially known as Ansar Allah, said Wednesday that its forces attacked a US ship in the Red Sea as part of an “initial response” to a recent incident where the US military sank three Houthis boats, killing 10 Yemenis.Houthi military spokesman Yahya Sarea said Ansar Allah forces “executed a joint military operation involving a large number of ballistic and naval missiles and drones, targeting an American ship that was providing support to the Zionist entity.”US Central Command said that US fighter jets, several US warships, and a British naval vessel downed 18 Houthi drones, two anti-ship cruise missiles, and one anti-ship ballistic missile. It’s unclear if the attack is the same incident Sarea referenced. CENTCOM said the attack targeted “commercial shipping” and that there was no damage or injuries.The Associated Press reported the drone and missile barrage reported by CENTCOM marked the largest Houthi attack in the Red Sea. The Houthis started targeting Israeli-linked commercial shipping in response to the onslaught in Gaza and have vowed not to back down in the face of the US military.Also on Wednesday, the UN Security Council voted to condemn the Houthi attacks “in the strongest terms.” Eleven countries voted in favor of the resolution, and four abstained: China, Russia, Algeria, and Mozambique. The Houthis dismissed the resolution as a “political game.”Sarea reaffirmed that the Houthis would continue to “prevent Israeli ships or those headed to the ports of occupied Palestine from navigating in the Arabian and Red Seas until the aggression stops and the siege on our steadfast brothers in the Gaza Strip is lifted.”
U.S. and UK Forces Hit Military Targets in Yemen - - Yves Smith -- U.S. and UK forces in the Red Sea have struck military targets in Yemen in response to Houthi attacks on ships in the area.Reuters cited witnesses as saying there had been strikes across the country.“These targeted strikes are a clear message that the United States and our partners will not tolerate attacks on our personnel or allow hostile actors to imperil freedom of navigation,” President Biden said in a statement following the air and sea strikes.The escalation follows what the U.S. Central Command called the biggest Houthi attack yet, the U.S. and UK forces in the Red Sea shot down 21 drones and missiles on Tuesday. The Houthis’ military spokesman, Yahya Saree, said they had attacked a U.S. military ship because it was “providing support” to Israel.The news of the U.S. and UK retaliation pushed oil prices higher, initially spiking by more than 2% before retreating some. In mid-morning trade in Asia today, Brent crude was trading above $78 per barrel, with West Texas Intermediateat over $73 per barrel.The U.S. and UK strikes on Yemen are the first on the country’s territory since 2016, Reuters noted in its report as it recalled that the Houthis have made a vow to respond to any attack in kind. This would mean further escalation of the Middle Eastern conflict.“The concern is that this could escalate,” security studies professor Andreas Krieg from King’s College in London told Reuters, noting Saudi Arabia and the UAE could be drawn into the war. The Saudis have already issued a statement calling for restraint and avoidance of escalation.“The kingdom emphasizes the importance of maintaining the security and stability of the Red Sea region, as the freedom of navigation in it is an international demand,” the Saudi foreign ministry said in the statement.
US and UK Bomb Dozens of Sites in Yemen - The US and the UK on Thursday night launched strikes against more than a dozen sites in Houthi-controlled areas of Yemen, where the majority of Yemenis live, in a move that risks escalating the situation in the Middle East into a major regional war.A US official told CNN that the strikes were launched by fighter jets and Tomahawk missiles fired by warships and submarines and that Houthi drone and missile sites were targeted. Yemeni media reported strikes in several cities, including the capital, Sanaa, and the Red Sea port of Hodeidah. President Biden said in a statement that the strikes received support from Australia, Canada, the Netherlands, and Bahrain. He claimed that the US and Britain “successfully conducted strikes against a number of targets in Yemen used by Houthi rebels to endanger freedom of navigation.” The bombing of Yemen came in response to Houthi attacks on Israel-linked shipping in the Red Sea that started in protest of the US-backed Israeli onslaught in Gaza. The Houthis, officially known as Ansar Allah, have vowed not to back down in the face of the US military and said their attacks in the Red Sea will only stop once the Israeli slaughter in Gaza ends. So far, there have been no reports of the number of casualties caused by the US and British strikes. The US and its allies have a history of killing civilians in Yemen, as the UN estimated in 2021 that about 377,000 people were killed by the US-backed Saudi/UAE war against the Houthis that started in 2015. More than half died of starvation and disease caused by the blockade and the coalition’s brutal bombing campaign. Some members of Congress have criticized President Biden for launching the strikes in Yemen without congressional authorization. “The President needs to come to Congress before launching a strike against the Houthis in Yemen and involving us in another middle east conflict. That is Article I of the Constitution,” Rep. Ro Khanna (D-CA) wrote on X.
Houthis Undeterred After US Coalition Pummels Over 60 Targets With Tomahawk Missiles, Airstrikes -The Thursday night US and UK-led major strikes on Houthi-controlled areas of Yemen, while posing a significant risk for escalating the Gaza war into a regional conflict, still apparently have not deterred the Iran-backed rebel group's resolve to attack Red Sea shipping and even Western naval vessels.Houthi spokesman Brig. Gen. Yahya Saree released a videotaped address saying "The American and British enemy bears full responsibility for its criminal aggression against our Yemeni people, and it will not go unanswered and unpunished." Houthi sources have tallied over 70 strikes across five regions of Yemen, indicating that at least five people died in the attacks. The Pentagon indicated over 100 missiles of a variety of types were used.The US Air Force's Mideast command said in a statement that a combination of jets, destroyers, and a submarine were used, hitting Houthi "command-and-control nodes, munitions depots, launching systems, production facilities and air defense radar systems" in the operation which followed repeat Houthi attacks on Red Sea vessels. "I will not hesitate to direct further measures to protect our people and the free flow of international commerce as necessary," President Biden had said in a written statement."These strikes are in direct response to unprecedented Houthi attacks against international maritime vessels in the Red Sea—including the use of anti-ship ballistic missiles for the first time in history," the US Commander-in-Chief had added.According go more details of the variety of weapons systems and platforms used: More than 15 F/A-18 Super Hornet strike fighters operating from the aircraft carrier USS Dwight D. Eisenhower were involved, according to Fox News, citing unnamed Pentagon sources. Unspecified Air Force fighters operating from a base in the Middle East were also part of the attack. Newsweek has yet to verify these reports.The USS Florida guided missile submarine and U.S. surface ships launched Tomahawk cruise missiles. It is not clear what other vessels took part in the bombardment, but American Arleigh Burke-class guided-missile destroyers have been operating in the Red Sea in recent months.But though intense, it was a relatively brief attack, likely lasting not more than 30 minutes, or definitely less than an hour. Videos of large fireballs lighting up the night sky looded social media as key cities like Saana and the port city of Hodeidah were hit, where there also remain large population centers.But again, the key takeaway here is that after these brief fireworks which many officials have complained comes much too belatedly (though some US lawmakers have already highlighted there was no Congressional approval), the Houthis are likely soon to resume their attacks. Also likely is that there will eventually be more rounds of coalition strikes on Yemen as the crisis endures. Thursday night's attack is likely to actually result in further reduced commercial shipping traffic in Red Sea waters now visited by war:
Yemen Issues Defiant Response to US and UK Strikes - A day after dozens of US and UK bombs and missiles rained down on northern Yemen, tens of thousands took to the streets in a show of unity. Yemeni officials downplayed the impact of the Western strikes claiming a small number of casualties and minor infrastructure damage.On Thursday night, the US and UK fired scores of munitions at Yemen. US Central Command claimed that the strikes “targeted radar systems, air defense systems, and storage and launch sites for one-way attack unmanned aerial systems, cruise missiles, and ballistic missiles.” Washington reports striking 60 targets across 16 locations.According to the Guardian, British forces hit targets in northwest Yemen, while Americans targeted larger cities including Saada, Saana, and Hodeida. Both the airport and port in Hodeida were reported to be targets. The Port of Hodeida is crucial for commerce and for badly needed aid to reach the country.On Friday, the Houthis reported the Western strikes had a minimal impact. Yemeni officials reported five fighters were killed and six wounded. The Houthis said damage to their infrastructure was limited but attacks would not go “unanswered and unpunished.” Nasr Aldeen Amer, vice president of the Houthi Media Authority, stated“Without hesitation, and we will not back down from our position in supporting the Palestinian people, whatever the cost.” At least tens of thousands of Yemenis turned out in multiple cities the day after the strike in a show of unity.The US and UK are bombing Yemen as a spillover of Israel’s brutal war in Gaza. The Houthis have pledged to stop all Israeli-linked shipping in the Red Sea in an effort to pressure Tel Aviv to end its military campaign against the besieged Gaza Strip.Washington and London claim the Houthis attempt to block Israeli shipping violates “freedom of navigation” and international law. However, the US has helped Saudi Arabia enforce a blockade of Yemen for about nine years.
Fresh Attack On US Base At Syrian Oilfield After Coalition Bombs Yemen: Reports - Emerging reports in Iranian state media and from Iraqi and Russian sources have indicated the US base at Syria's Conoco oilfield in northeast Syria has come under fresh attack on Friday.Additionally Sputnik’s regional correspondent has cited a series of violent explosions at the US outpost. The statement, though unconfirmed in other international sources, said the "American air defenses tried to confront the missile attack with their ground and air anti-aircraft weapons, to no avail… the American occupation army’s air force and helicopters, in the meantime, began flying over the skies of the towns surrounding its bases."Iranian state IRNA said "the US military base has come under attacks by the Iraqi resistance groups in response to the Washington-backed Israeli war crimes in Gaza Strip" on Friday.Overnight, the US and UK launched a major assault on Iran-linked Houthis in Yemen, related to the Red Sea shipping crisis, and American bases in the regions are now bracing for a response from Tehran-backed militants.Beirut-based media outlet The Cradle says that although Iraqi militia sources have yet to confirm the new operation targeting Conoco, "The attack comes just days after US forces carried out live drills near the Conoco base, aimed at training for potential attacks on the facility."There are other significant rumors that additional bases in the region could be facing hostile fire, but nothing has been verified from the Pentagon or US Central Command at this early stage.But what has been confirmed is the recent soaring number of attacks, according Military Times:U.S. troops deployed to Iraq and Syria have come under attack from Iran-backed militias 130 times since Oct. 17 as of Thursday, according to the Pentagon, totaling 53 attacks in Iraq and 77 in Syria.The drone, rocket, mortar and missile attacks have injured 69 U.S. troops, but a Pentagon spokesman said Thursday that no troops have been injured since Dec. 25. "When it comes to U.S. forces in the region, again, we’re there for one reason and one reason only, which is the enduring defeat of ISIS,” Air Force Maj. Gen. Pat Ryder said in a fresh briefing. "And so we will continue to call on these Iranian proxies to cease these attacks, but we won’t hesitate, as we’ve demonstrated in the past, to take appropriate action to protect our forces should we need to do that."
Saudi Arabia Calls for US To 'Avoid Escalation' in Yemen - Saudi Arabia is asking the White House to show restraint in Yemen and avoid further escalating fighting with the Houthis. Riyadh is one of Washington’s closest partners in the Middle East and has been at war with the Houthis for nine years but is nearing an agreement to end the war with Saana. On Thursday, the US and UK targeted 16 sites in Yemen with at least 60 rockets and missiles. Pentagon spokesman Patrick Ryder claimed the strikes had a “good effect.” Yemeni officials say the bombs did minor damage and killed five figures. Houthi leaders pledged to respond to the US and UK attacks. A White House statement after the attack warned that Biden “will not hesitate to direct further measures to protect our people and the free flow of international commerce, as necessary.” However, Saudi Arabia expressed “great concern” about the Western airstrikes and called for “self-restraint and to avoid escalation.” Riyadh is one of Washington’s core partners in the Middle East. Saudi Arabia went to war with Yemen in 2015 after the Houthis seized power. The US backed the Saudi war in Yemen, providing Riyadh with weapons, intelligence, and logistical support in the war. The Saudi war in Yemen targeted large portions of Yemen’s civilian infrastructure, creating a grave humanitarian crisis. At least 377,000 Yemenis died in the Saudi-led war. Contributing to the starvation that claimed the lives of tens of thousands of children was a blockade of Yemen, enforced by the US and Saudi Arabia. A ceasefire brought cross-border attacks between Saudi Arabia and Yemen to an end in 2022. The UN reports that the Houthis are now nearing a peace agreement with Riyadh that would bring the war to a conclusion. If the US continues to strike Yemen by hitting targets in the Middle East and East Africa, including those in Saudi Arabia, this may well bring the fragile truce in Yemen to an end.
White House Conducts Additional Strike in Yemen -The US followed up its widespread bombing of Yemen by conductinganother strike early Saturday morning. The second attack came as Biden is facing criticism among his political and Middle East allies for starting a war with the Houthis.US officials reported that Saturday’s strike targeted a radar facility that was missed during Thursday night’s initial attack. US Central Command posted on X, “The strike was conducted by the USS Carney (DDG 64) using Tomahawk Land Attack Missiles and was a follow-on action on a specific military target associated with strikes taken on Jan. 12.” The initial attack was conducted jointly by the US and UK. Washington and London targeted nearly 30 positions across Yemen with scores of missiles and bombs. Pentagon Spokesperson Gen. Pat Ryder said the attack had a “good effect.” However, Yemen issued a defiant response. Tens of thousands of Yemenis took to the streets across the country to protest the Western attack. Houthi leaders downplayed the impact of the strikes and vowed a response to the attack.The Biden administration claimed the strikes were needed to restore freedom of navigation in the Red Sea. The Houthis, who control north Yemen and most of the country’s population, have hijacked one ship and attacked about two dozen others transiting the Red Sea. The Houthis say they are targeting Israeli-linked ships because Tel Aviv is conducting a genocide in Gaza.The White House’s assertion that the strikes are justified to ensure international trade is questionable. For most of the past nine years, Washington and Riyadh have maintained a blockade of Yemen, leading to a humanitarian crisis in the Middle East’s poorest country. The US has also attempted to substantially restrict trade with North Korea, Cuba, Venezuela, Russia, China, Syria, Afghanistan, and Iran.Biden’s authority to order the strikes in a country against which Congress has not authorized a war is in question. “The President needs to come to Congress before launching a strike against the Houthis in Yemen and involving us in another Middle East conflict. That is Article I of the Constitution,” Rep. Ro Khanna posted on X. Democratic lawmakers Rep. Pramila Jayapal, Rep. Val Hoyle, Rep. Rashida Tlaib, Rep. Cori Bush, Rep. Mark Pocan, Rep. Barbara Lee, and Rep. Sarah Jacobs have also publicly attacked Biden over the strikes in Yemen.
Hezbollah Trades Heavy Fire With Israel, Damages Strategic Airbase - Still angry at the assassination of top Hamas figure Saleh al-Harouri in Beirut last week, the Hezbollah movement carried out what it called a “preliminary response,” trading heavy fire with Israel along the Lebanese border.Hezbollah focused the attack on a hilltop observation post, firing off 62 rockets. The outpost was purported to be for “observation” and “aerial control.” Israel later confirmed the attacks hit the strategic airbase at Mt. Meron.Though Israel was somewhat late in commenting at all, beyond saying they’d retaliated against the “terrorist cell,” Israeli officials ultimately admitted Mt. Meron sustained “extensive damage” from the strikes. Mt. Meron is an aerial control site for the Israeli Air Force, and essentially serves the northern air control unit. The Hezbollah strike came with anti-tank missiles, not smaller ones that could be intercepted by Iron Dome. What’s embarrassing is that Israel doesn’t have a way to intercept these missiles, which fly at low altitude. Essentially, they had to sustain all the damage to the base. It is not clear how functional it remains after the attacks.
Israeli Military Claims It Killed Hamas Official in Syria - The Israeli military claimed on Monday that it “eliminated” a Hamas official in southern Syria who was allegedly responsible for rocket attacks on Israel. The Israeli military named the Hamas official Hassan Akasha and said he was a “central figure” in rocket attacks on Israel. But Israel provided no evidence for the claim, and many elements inside Syria have the motive to attack Israel since the Israeli military has been bombing the country for years with impunity. “Since the beginning of the war, Akasha directed Hamas terrorist cells which fired rockets from Syria toward Israeli territory,” the Israeli military said in a statement. The statement did not say how Akasha was killed, and so far, there’s been no confirmation of his death from Syria or Hamas.Before October 7, Israeli warplanes bombed Syria at least 25 times, and the airstrikes have significantly escalated since then. In one airstrike, Israelkilled a senior member of Iran’s Islamic Revolutionary Guard Corps (IRGC). The claim about the killing of a Hamas official in Syria comes amid fears of Israel’s onslaught in Gaza escalating into a major regional war that could draw in the US. Israel seems determined to escalate things as it has been launching attacks across the region, including a drone strike in Beirut last week that killed a senior Hamas official.
Qatar Tells Hostage Families That Israel's Killing of Hamas Official in Beirut Complicates Negotiations - Qatar’s prime minister and other officials met with family members of six Israelis held captive in Gaza on Saturday and told them Israel’s killing of a senior Hamas official in Beirut made negotiating a new hostage deal much more difficult, several media outlets have reported.Israel launched a drone strike in Beirut on January 2 that killed Saleh al-Arouri, the deputy chief of Hamas’s political bureau, who played a key role in negotiating the deal that resulted in over 100 Israelis and over 200 Palestinians being freed. A day before the drone strike, Israeli officials told the media that Hamas was showing a willingness to negotiate.Qatari Prime Minister Mohammed bin Abdulrahman al-Thani hosted families of Israeli hostages in Doha and told them Qatar was committed to working toward their release. “We have engaged directly with the hostages’ families to share as much information as possible, and to assure them that Qatar is committed to using every resource to secure their release. We will continue to engage with these families,” a Qatari official told Axios.The official said Qatar is “using every possible channel” but stressed that “Qatar is a mediator” and “does not control Hamas.” The official said it’s become “increasingly difficult” to maintain channels of communication due to the “escalation of bombardment in Gaza and elsewhere, which candidly complicates the hostage negotiations.”Besides sabotaging negotiations, the Israeli drone strike in Beirut also risks a major regional war that could draw in the US. Hezbollah has vowed retaliation and said it fired 62 rockets at an Israeli observation post on Saturday in what it called a “preliminary response” to the assassination of al-Arouri. The Israel strike on Beirut marked the first time Israel bombed the Lebanese capital since the 2006 Lebanon War. In November, Axios reported that US officials were worried Israel was trying to provoke Hezbollah as a pretext for a wider war in Lebanon.
US Officials Think Netanyahu Might See War in Lebanon as Key to Political Survival - Some US officials are concerned that Israeli Prime Minister Benjamin Netanyahu might see an expanded war in Lebanon as key to his political survival, The Washington Post reported on Sunday. Polls show the majority of Israelis want Netanyahu to resign once the campaign in Gaza is over, giving him the incentive to continue the slaughter and escalate the situation into a regional conflict that draws in the US. Hezbollah and its leader Hasan Nasrallah, on the other hand, are not seeking a wider war, according to the US officials who spoke with the Post. But the two sides continue to trade significant fire across the border, which has increased since Israel escalated the situation by launching a drone strike in Beirut last week that killed a senior Hamas official. On Monday, an Israeli airstrike in Lebanon killed Wissam Hassan Tawil, a top Hezbollah commander, escalating the situation even further. Israeli officials also continue to threaten a major war in Lebanon if Hezbollah does not move back from the Israeli border. In his latest threat, Israeli Defense Minister Yoav Gallant said Israel could “copy-paste” the destruction in Gaza into Beirut. Gallant has said Israel’s open to diplomacy, but US officials concede a deal with Hezbollah is unlikely as long as Israel is still slaughtering Palestinians in Gaza. An intelligence assessment from the Pentagon’s Defense Intelligence Agency (DIA) found that if the situation in Lebanon does escalate, Israel would have a hard time-fighting Hezbollah. The Post report reads: “A new secret assessment from the [DIA] found that it will be difficult for Israel Defense Forces (IDF) to succeed because its military assets and resources would be spread too thin given the conflict in Gaza.” US officials told HuffPost that they believe President Biden’s policy of unconditional military aid to Israel could embolden Israel to expand in Lebanon and lead the US into a major Middle East war. “Every scenario shows this would escalate into something terrible… whether in terms of counterterrorism or war with Iran,” one official said, citing Pentagon war games.
Israel Seen as Even More Likely to Launch War with Lebanon as Fate of ICJ Suit Uncertain Due to China and Russia Doubts --As feared, Israel looks determined to go to war against Lebanon as the vote-count on the ICJ genocide case may favor Israel.
Israeli MK Doubles Down on Call to 'Burn' Gaza, Says There Are 'No Innocents' - A member of the Israeli Knesset has doubled down on comments he made in November when he called to “burn Gaza now” and is now claiming there are “no innocents” in areas where the Israeli military ordered evacuations.“I stand behind what I said. It is better to burn, to take down buildings, than that our soldiers should be harmed,” said MK Nissim Vaturi, a member of Prime Minister Benjamin Netanyahu’s Likud Party.“I said to ‘burn Gaza.’ What does it mean to burn? To go in and rip them apart. There should be no thoughts, no considerations. The soldiers of the IDF should not think for one second and be hurt because we need to be humane,” Vaturi added.Discussing the areas where the Israeli military ordered evacuations, Vaturi said, “We evacuated them all – we succeeded in evacuating 1,900,000 in an organized fashion, and there are 100,0000 left. I don’t think that there are any innocents there now – not now, and not when I made my statement.” Vaturi’s comments come a day before the International Court of Justice (ICJ) will hold its first hearing on South Africa’s genocide case that it has brought against Israel. The 84-page filing submitted by South Africa cites genocidal rhetoric from Israeli officials as evidence of Israel’s intent to commit genocide against Gaza’s Palestinian population.
Israeli Military Chief Says 'Fighting' in Gaza Will Continue All Year - The head of the Israeli Defense Forces (IDF) said Sunday that he expects Israel to continue its brutal assault on the Gaza Strip all year.“The year 2024 will be challenging. We will be at war in Gaza,” said IDF Chief of Staff Herzi Halevi during a visit to the West Bank. “I don’t know if it will be all year long. We will be fighting in Gaza all year, that’s for sure, and this will also hold the other arenas, certainly in [the West Bank], to a certain state of alertness.”Halevi also warned of the possibility of “another war” in Lebanon as cross-border strikes between Hezbollah and the IDF have increased since Israel launched a drone strike in Beirut that killed a senior Hamas official last week.On Saturday, IDF spokesman Daniel Hagari said moving forward, Israel would be focusing its operations in Gaza on the central and southern portion of the Strip, where most of the 2.3 million Palestinians who live in the enclave are located after many fleed Israel’s bombardment in the north.Hagari signaled Israeli operations in the north might wind down, claiming Israel has dismantled the “military framework” of Hamas in the area. He said there continues to be fighting but that Hamas had been left “without a framework and without commanders.”“Now, we are focusing on dismantling Hamas in the central and southern Gaza Strip. We will do this differently, thoroughly, based on the lessons we have learned from the fighting so far,” Hagari said.According to the latest numbers from Gaza’s Health Ministry, nearly 23,000 Palestinians have been killed in Gaza since October 7, mostly women and children. As the siege continues, hundreds of thousands of Palestiniansare at risk of dying of starvation or disease. Despite the horrific situation on the ground, the US continues to provide unconditional military support for Israel.
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