Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 27 June 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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PIPELINES: 18 states to Supreme Court: Release Army Corps permits — Wednesday, June 24, 2020 — Eighteen states say it is “critical” for the Supreme Court to intervene in a circuit court case and allow the use of a key Army Corps of Engineers water crossing permit for new oil and gas pipelines pending an appeal.
A Giant Plastics Company Tried to Halt a Juneteenth Ceremony for Buried Slaves -Death Alley activists gathered near the hamlet of Welcome on Friday to celebrate Juneteenth, which observes the date when news of the end of slavery reached enslaved Black people in Texas. About 40 people danced, prayed and sang gospel songs at a cemetery of unmarked graves on the grounds of a former plantation where nearby residents firmly believe their Black ancestors were buried after working the land as slaves. The celebration paid homage to those who founded their rural community along the Mississippi River and lived through one of the nation’s darkest periods.But had Formosa Plastics gotten its way, the ceremony would never have happened. Formosa is a Taiwanese mega-corporation building a $9.4 billion petrochemical complex known as the Sunshine Project at the site, a swath of former plantation fields a couple miles from a church and elementary school on the outskirts of Welcome. The company’s attorneys were in court Thursday attempting to prevent residents from accessing the cemetery on land it now owns. A local judge rejected the company’s arguments and upheld a temporary restraining order allowing residents observe Juneteenth on the hallowed grounds. In a statement, the company cited concerns over “health and safety.” The ruling comes as communities across the U.S. contend with the brutal reality of state violence against Black people, with waves of protest against ongoing police killings continuing in cities across the country. The Sunshine Project would significantly increase the concentration of cancer-causing chemicals and other harmful air pollutants in majority-Black neighborhoods located along the riverside, which are already surrounded by petrochemical facilities. Friends and neighbors have died of cancer, and activists have renamed the industrial corridor “Death Alley.” Death Alley has become an internationally recognized landmark of environmental racism, and research shows that cancer rates are higher in lower-income, majority-Black neighborhoods than in higher-income, whiter areas of the region. In Death Alley and across the U.S., polluting industries are known to locate near to communities of color like Welcome. Nationally, Black people are three times more likely to die from air pollution than the overall population.
ANR Pipeline asks US FERC to review expansion between Canada, Gulf Coast | S&P Global Platts – ANR Pipeline asked the US Federal Energy Regulatory Commission to authorize a 165,000-Dt/d expansion that would help deliver natural gas from as far away as Manitoba to markets in the Gulf Coast region and other points on its interstate pipeline system. Stay up to date with the latest commodity content. Sign up for our free daily Commodities Bulletin. Sign Up “Demand has grown not only in the Gulf Coast, driven in part by the construction of LNG export terminals, but also at areas served by … various receipt and delivery points on the ANR system,” the pipeline company told FERC. “The project will match this growing demand at several points on the ANR system with low-cost natural gas supply from multiple supply basins, including imports” from Western Canada. ANR, a subsidiary of TC Energy, submitted a June 22 abbreviated application for a Natural Gas Act certificate and related authorizations for the Alberta XPress project. The company asked FERC to authorize the project by May 20, 2021, to allow the project to enter service by November 2022. ANR has executed binding precedent agreements with two shippers to provide firm transportation service that would cover the full gas transportation capacity of the project. The project shippers were designated “foundation shipper” and “anchor shipper,” but not otherwise named in the application. ANR told FERC the project would not hurt its existing customers and would have minimal impacts on landowners, communities and the environment. The project, estimated to cost $81.1 million, would put in place a 15,900-hp greenfield compressor station in Evangeline Parish, Louisiana, which would boost incremental capacity on ANR’s Southeast Mainline 501 and 501 Loop pipelines between Ohio and Louisiana. The project would also involve a lease between ANR and affiliate Great Lakes Gas Transmission, under which ANR would lease capacity on the Great Lakes pipeline system between Manitoba and an ANR system connection in Wisconsin (CP20-484). At a June 18 FERC meeting, the regulator granted ANR authorization to build and operate the Grand Chenier XPress project in Louisiana to serve Venture Global Calcasieu Pass and the Calcasieu Pass LNG export terminal.
Several Louisiana oil and gas companies file for bankruptcy amid coronavirus, low crude oil prices – Several oil and gas service businesses in Louisiana have filed for bankruptcy protection in recent weeks amid an economic downturn spurred by the coronavirus pandemic and low crude oil prices. Two businesses near Lafayette, one in Houma and another in Kenner filed for bankruptcy, all of which appear to be oil and gas services companies. Dozens more Louisiana businesses are owed money by the companies filing for bankruptcy, records show. In recent weeks, the Louisiana Oil and Gas Association has said about half its 460 member companies have told the organization that bankruptcy was on the table as an option to survive the economic downturn. Hundreds of wells in Louisiana have been shut-in since the coronavirus pandemic began. Wells are shut in for various reasons, one of which could be lack of production. Operators aren’t required by the state to disclose why the decision was made. Crude oil futures briefly fell below $0 several weeks ago as demand for fuels plummeted amid stay-at-home orders across the globe to control the spread of the coronavirus. Storage became an issue for a glut of oil on the market. With some countries agreeing since then to limit oil production and world economies gradually reopening, the price of U.S. benchmark oil has rebounded about 20% in the past 30 days to about $40 per barrel. However, experts say $55 to $65 per barrel is needed by U.S. producers. In early June, there were fewer than 300 oil rigs running across the U.S., the lowest in recent history. During the most dire point of the 2014 to 2016 oil bust, there were still about 400 rigs operating. If there’s less oil and gas extraction, there’s less demand for related services – the majority of Louisiana companies tied to the oil and gas sector. “We are going to get hit hard,” said Gifford Briggs, president of the Louisiana Oil and Gas Association. “If you’re not drilling wells, it doesn’t matter what kind of debt you have, there’s not enough business.” Some of the organization’s members have concerns about what happens when existing work dries up at the end of the year. “They said, ‘We’ve got some work to finish out 2020, but we have nothing in 2021,” Briggs said. “That V-shaped recovery is not going to happen.” None of the companies filing in recent weeks had filed for bankruptcy before, despite the significant downturn in the industry in 2016. (list of the companies, assets and liabilities, follows)
PANDEMIC: Report: 1 in 6 oil execs say drilling won’t recover — Thursday, June 25, 2020 — The nation’s oil producers think it will take up to two years for oil output to recover in the wake of the coronavirus pandemic, according to a new survey by the Federal Reserve Bank of Dallas.
Dallas Fed Energy Survey – Dallasfed.org – Activity in the oil and gas sector deteriorated further in second quarter 2020, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index – the survey’s broadest measure of conditions facing Eleventh District energy firms – fell from -50.9 in the first quarter to -66.1 in the second quarter. It was the lowest reading in the survey’s four-year history and indicative of significant contraction in activity. The business activity index for oilfield services firms plunged from -46.3 to -73.5, while the business activity index for exploration and production (E&P) firms fell from -53.3 to -62.6. Production indexes suggest oil and gas production sank relative to the previous quarter. According to E&P executives, the oil production index declined sharply, falling 36 points to -62.6. The natural gas production index also fell significantly, from -21.2 to -47.8. The oil production index is at its lowest point in the survey’s four-year history. The index for capital expenditures for E&P firms declined from -49.0 in the first quarter to -66.1 in the second, indicating a further reduction in capital spending. Additionally, the index for capital expenditures for oilfield services firms declined from -50.0 to -73.5. Most indexes point to worsening conditions among oilfield services firms. The equipment utilization index fell from -47.2 in the first quarter to -69.2 in the second, a survey low. The operating margins index dropped from -50.0 to -68.6. While firms found relief as input costs collapsed – that index fell from -11.3 to -50.0 – the index of prices received for services also slid further into negative territory, from -37.7 to -64.7. The aggregate employment index posted a fifth consecutive negative reading, declining from -24.0 to -46.1, which suggests an acceleration in job cuts. Additionally, the aggregate employee hours worked index dropped from -32.1 to -47.0. The index for aggregate wages and benefits fell further into negative territory, from -8.2 to -41.7. The company outlook index reading improved but remained deeply negative at -51.0 in the second quarter, indicating outlooks deteriorated. While uncertainty remained elevated, slightly fewer firms noted rising uncertainty this quarter than last, and the aggregate index fell 28 points to 35.7. On average, respondents expect a West Texas Intermediate (WTI) oil price of $42.11 per barrel by year-end 2020, with responses ranging from $22 to $65 per barrel. Survey participants expect Henry Hub natural gas prices to be $2.15 per million British thermal units (MMBtu) by year-end.
ENERGY POLICY: Lawmakers propose new aid for oil, gas and efficiency — Thursday, June 25, 2020 — Republican senators are proposing to ease the tax burden and royalty payments for oil and gas companies weathering the COVID-19 fallout, while new bipartisan legislation in the House and Senate would aid the ailing energy efficiency sector.
Blanco County residents sue company over drilling spill – – Teri Albright held up a glass of opaque water that she’d gotten from her Blanco County well as she explained Monday why she was suing the company that had, months earlier, spilled tens of thousands of gallons of drilling fluid into an underground aquifer. “This is not drinkable,” she said. Albright is one of four Blanco County residents who have filed a federal lawsuit against Kinder Morgan LLC, alleging that the Houston-based pipeline company violated the national Safe Drinking Water Act as it worked to construct the Permian Highway Pipeline. Kinder Morgan pumped 36,000 gallons of drilling fluid into the aquifer on March 28 as the company attempted to drill under the Blanco River. Kinder Morgan did not notify the Texas Railroad Commission – the state agency that regulates pipelines – or the Texas Commission on Environmental Quality until after Albright had posted pictures of the chocolate-colored water on Facebook and the photos were shared by residents and environmental groups concerned about the project. After the mishap, Kinder Morgan suspended drilling activities at the Blanco River. The company on Monday said crews have not yet resumed drilling. The company is evaluating alternative measures for crossing the river. However, other construction activities on the pipeline and compressor stations are continuing as planned. The project is 65% complete, the company said Monday. The Trinity Edwards Springs Projection Association, a nonprofit formed in 2015 by landowners who depend on private wells in the Trinity Aquifer for their water supply, is also suing Kinder Morgan. The nonprofit repeatedly asked Kinder Morgan to route its pipeline away from the aquifer, said Jim Blackburn, an environmental attorney and the nonprofit’s board president. “Kinder Morgan ignored these pleas and then failed to competently construct this project – violating the trust our politicians and state agencies gave them and, in the process, violating common law and federal law,” Blackburn said. “Kinder Morgan earned this lawsuit.”
Brazoria County landowner wins eminent domain fight against pipeline giant – Houston pipeline operator Enterprise Products Partners will have to renegotiate with a Brazoria County landowner after a Texas appeals court ruled it couldn’t use eminent domain to cheaply acquire land for a planned pipeline. The ruling Thursday overturns a 2018 Brazoria County Court decision and throws out Enterprise’s $132,000 purchase of a 30-foot-wide swath of land from Terry Hlavinka, who had sought $3.4 million for the pipeline easement.Soon after Enterprise garnered a permit to build the pipeline in 2016, the company and Hlavinka failed to agree on a price for an easement. An Enterprise subsidiary, HSC Pipeline, took the case to court claiming that the pipeline was a common carrier allowing the company to use eminent domain to obtain the property through condemnation proceedings rather than paying fair market value.The pipeline, however, transported only propylene from a Texas City refinery to the Braskem plant in Freeport. Under Texas law, a pipeline must deliver product to a third party, such as the public, for it to be considered a common carrier. The appeals court ruled that the pipeline was not a common carrier and therefore didn’t qualify for the type of eminent domain used to buy Hlavinka’s land.Enterprise declined to comment. Hlavinka’s 16,000-acre property off Chocolate Bayou has more than two dozen pipelines across it. The 30-foot easement Enterprise sought totaled 6.41 acres and ran parallel to existing pipelines.Hlavinka told the appeals court that Connecticut industrial gas company Praxair paid him $3.4 million to build a private, non-common carrier pipeline on his land and that Michigan chemical company Dow paid $2 million to build another.”He used comparable sales to support his opinions regarding the fair market value of the easement based on its value as a separate economic unit,” Justice Russell Lloyd wrote in the court’s opinion.
State denies request to limit oil production The three-member Oklahoma Corporation Commission on Wednesday denied a request to limit the amount of oil that can be produced from Oklahoma wells. Commission Chairman Todd Hiett, Commissioner Dana Murphy and Commissioner Bob Anthony approved a final order that ended the agency’s consideration of the case. The Oklahoma Energy Producers Alliance (OEPA) and affiliated companies requested the relief in early April. The OEPA represents mostly smaller, independent oil and gas producers who primarily operate older, vertical wells with smaller rates of production. It had asked for a mandatory oil waste declaration from commissioners so that the agency could take additional steps to require operators to shut in wells or to take other actions deemed appropriate to cut crude oil production inside the state. The OEPA had sought the relief as the price for a West Texas Intermediate barrel of crude oil approached $20 a barrel, based upon arguments that a curtailment would help remove excess market supplies and improve crude oil’s price. The OEPA’s request, however, was opposed by the Petroleum Alliance of Oklahoma and its member companies. Representatives of both the alliance and many larger oil and gas companies operating in Oklahoma countered that the free market would take care of excess supply issues on its own.
North Dakota state revenues plunge in pandemic but remain ahead of forecast – North Dakota sales and oil taxes amid the coronavirus pandemic have fallen well below forecasts, but state revenues overall remain ahead of the Legislature’s projections for the current budget period. State Office of Management and Budget Director Joe Morrissette presented the latest revenue figures on Tuesday to the Legislature’s interim Government Finance Committee. May revenues to the state’s general fund, which funds general government operations, were down 19.1%, or $36 million, from a 2019 legislative forecast. But overall, state revenues are running 1.9%, or $45.4 million, ahead of the forecast. “That’s positive news,” Morrissette told the committee. North Dakota state revenues see some ‘good news’ amid pandemic North Dakota is about halfway through its 2019-21 budget cycle. The 2019 Legislature passed a record $14.7 billion overall budget that includes federal money. That budget has about $4.8 billion in general fund spending. Sales taxes, the general fund’s biggest revenue source, were down 35.4%, or $27.4 million, which Morrissette said reflects business restrictions in April due to the pandemic. “That’s the worst month that we’ve seen,” he said, telling the committee, “we would expect that to be kind of the bottom.”
Gavin Newsom Hands Out Fracking Permits to Connected Driller – Steve Horn – On June 1, in the midst of the turmoil created by the coronavirus pandemic and the death of George Floyd in Minneapolis, California Gov. Gavin Newsom’s administration quietly issued 12 fracking permits to Aera Energy, a joint venture owned by ExxonMobil and Shell.Oil drilling in California has faced criticism for its disproportionately negative health impactson Latino communities and other people of color. The 12 new permits will be for fracking in the Lost Hills Oil Field. The Kern County town of Lost Hills is more than 97 percent Latino, according to 2010 U.S. Census data. The fracking permits are the latest example of California’s oil industry benefiting from regulatory or deregulatory action during the COVID-19 pandemic and came just months after the Newsom administration said it supported taking actions to “manage the decline of oil production and consumption in the state.” Aera, which also received 24 permits from the California Geologic Energy Management Division (CalGEM) on April 3 during the early days of COVID-19, has well-connected lobbyists in its corner who work for the firm Axiom Advisors.One of them, Jason Kinney, headed up Newsom’s 2018 transition team and formerly served as asenior advisor to Newsom while he was lieutenant governor. He is also a senior advisor to California’s Senate Democrats. The other, Kevin Schmidt, previously served as policy director for Newsom when the latter was lieutenant governor. Aera paid Axiom $110,000 for its lobbying work in 2019 and, so far in 2020, has paid $30,000, lobbying reports reveal. Axiom’s lobbying disclosure records show both Kinney and Schmidt listed as lobbyists and Aera as one of the firm’s clients. Kinney’s wife, Mary Gonsalvez Kinney, was also the stylist for Newsom’s wife – Jennifer Siebel Newsom – dating back to their time spent living in the San Francisco Bay Area. Kinney and Schmidt did not respond to repeated requests for comment for this article. Calling the situation “unseemly,” Jamie Court, president for the Los Angeles-based group Consumer Watchdog, wrote via email that “Aera should not be able to buy the influence it apparently has over state oil and gas policy.” Last November, prior to the 24 permits issued in April, Newsom had declared a statewide fracking permit moratorium in response to a scandal involving a regulator for the California Division of Oil, Gas, and Geothermal Resources (DOGGR). The regulator, who had been tasked with heading oversight issues on issuing permits, was revealed to have stock investments valued up to $100,000 in Aera Energy’s parent company, ExxonMobil. Newsom fired the head of DOGGR at the time, Ken Harris, and eventually renamed the agency CalGEM.
Chevron’s ‘Black Lives Matter’ Tweet Prompts a Debate About Big Oil and Environmental Justice -When Chevron tweeted “black lives matter” on June 5, the multinational U.S. energy corporation evoked a visceral reaction from many climate activists.”Your performative solidarity with the Black community is an absolute joke,” Communities for a Better Environment, a California-based environmental justice organization, responded. “You should be ashamed of yourself for killing, poisoning and ruining the health and lives of Black people all over the world.”Chevron’s tweet referred readers to a statement from the company’s leadership that was released amidst international protests over the killing of George Floyd on May 25 by a Minneapolis police officer. “As the human energy company, we are just that – humans, and we’ve felt the impact of what is happening in the United States around ra cial injustice,” the statement says. “Our company is rooted in a diverse and inclusive culture, but we also understand it is our time to listen and learn.” The statement goes on to quote a number of senior executives, including CEO Mike Wirth: “I share the anger and pain felt by so many Americans at the recent killings of unarmed black men and women. Racism and brutality have no place in America. Yet these incidents still occur. And they impact people well beyond those directly affected by such tragedies. Including people at our company. I absolutely believe we are stronger when we embrace our differences, and now is an important time to do just that.” Though Chevron was not the only oil industry heavyweight to issue a statement declaring its commitment to combating racism, the Chevron tweet was shared far more widely than one from BP, which linked to a letter by CEO Bernard Looney that condemned “racial injustice in all its forms.” By contrast, Royal Dutch Shell and ExxonMobil have remained silent on the issue.
15,000 gallon oil spill reported near Kobuk River – (KTUU) – An oil tank at Shungnak School in the Native Village of Shungnak has overflowed, causing around 15,000 gallons of heating oil to spill, according to the Alaska Department of Environmental Conservation. The spill was reported by the Native Village on Saturday and officials say it could impact the Kobuk River – which is around 300 feet away from the spill – and local drinking water which is 160 feet away. AEDC said the spill was caused during a fuel transfer from a barge on the Kobuk River that was intended for the Shungnak Native Store but was delivered to the school instead, causing an overflow of the school tank #1. For now, the fuel transfers have been stopped and a crew in Shungnak is working to remove the oil by excavating contaminated soil and pumping it into containers. Currently, no injuries or impacts to wildlife have been reported, AEDC said, but the area is being monitored by the department to prevent the oil from moving to other areas. Both the Environmental Protection Agency and AEDC are working on cleaning the spill, but due to travel restrictions put in place because of the COVID-19 pandemic, neither agency is actually in Shungnak.
15,000 Gallon Oil Spill Threatens River and Drinking Water in Native Alaskan Village –Around 15,000 gallons of fuel oil spilled in a Native Alaskan village Saturday, threatening a nearby river and the local drinking water supply.The spill occurred during a routine fuel delivery to the Northwest Arctic village of Shungnak. The fuel spilled around 12:30 p.m. June 20, but was not discovered by the villagers until 1:06 p.m. They reported it to the Alaska Department of Environmental Conservation (ADEC) immediately thereafter, The Arctic Sounder reported.”A response crew from Shungnak responded to the spill immediately, removing the spilled heating oil using sorbent material and also by pumping it into containers,” ADEC said in a situation report.There have been no injuries reported and the oil spill has not harmed any wildlife so far. However, there are concerns that it could spread to sensitive areas.”The extent of contamination has been reported by the incident commander to be approximately 160 feet from the Kobuk River and approximately 295 feet from the Shungnak drinking water source,” ADEC said. The spill occurred when fuel intended for the Shungnak Native Store was delivered to the school instead,KTUU reported. This caused fuel tank #1 to overflow. The fuel was being transferred from a barge on the Kobuk River. All transfers have now been stopped.
Interior opens more of Alaska reserve to oil development – (AP) – More than 18 million acres of a petroleum reserve in Alaska will be opened to oil and gas drilling under a plan released Thursday by federal officials, who touted it as being key to President Donald Trump’s goal of increasing energy production. “Today’s action is one more significant step in the process of delivering on his promise,” Interior Secretary David Bernhardt said in a statement. The Department of Interior released the environmental review for the National Petroleum Reserve-Alaska, which covers an area the size Indiana. The area was set aside by President Warren Harding in 1923 for its potential petroleum value. The 23-million-acre site on the western North Slope contains about 8.7 billion barrels of oil, according to the U.S. Geological Survey. Environmentalists decry opening up the reserve, worried about what drilling could do to wildlife such as polar bears and a large caribou herd. “This plan turns its back on unique and spectacular Arctic wildlife species and sells their key habitat out to the oil industry,” said Nicole Whittington-Evans, Alaska program director for Defenders of Wildlife. “It gives away critical habitat for imperiled polar bears and vital habitat for caribou and migratory birds to oil companies that will only exacerbate the climate crisis by expanding into a fragile frontier area with new drilling,” she said. “It is bad for the Western Arctic and bad for the planet.”
60,000 litres of wastewater diverted after refinery oil spill – The Water Security Agency (WSA) is shedding a bit of light on the size of and the immediate response to a recent oil spill at the Co-op Refinery Complex. On May 22, a spill from a refinery storage pond, attributed by CRC officials to wind, caused a substance containing oil to leak into the City of Regina’s sewage system. The WSA confirmed to Global News on Thursday that Regina wastewater treatment plant operators visually identified oil in incoming wastewater. At that point, about 60,000 litres of incoming wastewater were diverted to a lagoon cell for special treatment. Exactly how much oil was in that wastewater, however, is still being determined. “The refinery normally does send a treated oil product through there. They have a very substantial system that cleans this and brings it through, so something happened there that changed some of those products,” said WSA spokesperson Patrick Boyle. “So that’s part of the investigation. We’re trying to figure out how much, and when.” Boyle said that none of what was spilled has been determined to have escaped the sewage system into the environment. While the plant is owned and operated by the city of Regina, the WSA oversees and regulates the treatment of wastewater in Saskatchewan. Read more: Co-op refinery workers in Regina back to work after two sides agree to new deal Neither the City of Regina or the Co-op Refinery Complex issued a public notice to alert residents or media of the spill.
Cleanup for Arctic oil spill tops $1b – President Vladimir Putin said on Friday the scale of the clear-up operation after a huge fuel spill in the Arctic was unprecedented for Russia, with Greenpeace estimating the environmental damage to waters in the region at $1.4 billion. A vast fuel tank lost pressure on May 29 and unleashed 21,000 metric tons of diesel into rivers and subsoil near the city of Norilsk, an incident that Greenpeace has compared to the devastating 1989 Exxon Valdez oil spill off Alaska. “Russia has not yet had experience of clearing up such vast pollution from bodies of water as far as I understand,” Putin told officials on state television. It will take at least 10 years for biodiversity in the waters to fully return where the accident happened, the state fishing agency said at the meeting. The state environmental watchdog plans to finish its assessment of the damage by July 1, its head told Putin. Vladimir Chuprov, a Greenpeace activist, said the damage to the water totalled 100 billion roubles ($1.44 billion), a figure that was higher than it should be because of what he said was the slow official response, the TASS news agency reported. The city of Norilsk is home to mining giant Norilsk Nickel. The company and emergency specialists are collecting contaminated soil and fuel from local rivers into containers. Nornickel has already spent 5 billion roubles on the clean-up, its co-owner Vladimir Potanin said. The mining giant also plans to spend 13.5 billion roubles on safety checks for its remaining fuel storage tanks in 2020-2021. More than 90% of the fuel from the rivers and about 70% of the contaminated soil have been already collected, Nornickel said earlier this week. Putin previously ordered officials to check all similar fuel storages in Russia, and they plan to complete this process by July 24, they told him.
Mexico’s largest refinery restarts after quake that killed worker – (Reuters) – A worker at Mexico’s largest refinery died after a fall during a powerful earthquake on Tuesday, the country’s civil protection agency said, with the tremors also causing a fire that led to the brief shuttering of the installation. The fire, which ignited where power generators and a boiler are located, was quickly extinguished, a company spokesperson said. The facility on the coast of the southern state of Oaxaca near the epicenter of the earthquake reopened after a short period of time, the civil protection agency said. “A small fire broke out and was immediately controlled,” the Pemex spokesperson told Reuters. The worker died in hospital after he fell from one of the plant’s structures during the quake, the protection agency said. The Pemex spokesperson did not respond to requests for additional information on the status of its workers. Two photos posted on the company’s Twitter page showed flames engulfing the corner of the plant and firefighters dousing them with water from several hoses. Pemex said on Twitter that all other company installations were operating normally. The 7.4 magnitude earthquake hit the coast of southern Mexico on Tuesday morning, killing at least one person, buckling roads and sending people fleeing their homes into the streets. Some buildings elsewhere in Oaxaca state were badly damaged, and fallen rocks could be seen blocking some roadways. The Salina Cruz refinery, which has been operating below its operating capacity for an extended period of time, holds a total crude oil processing capacity of 330,000 barrels per day.
The Newest Battlefield In The European Gas War — Across the planet LNG prices in May-June 2020 have dropped to unprecedentedly low levels – landed seaborne prices still remain below $2 per MMBtu, compelling rivals of LNG to counteract the trend. In the vanguard of those affected is the Russian pipeline gas monopoly Gazprom which expects its exports to drop from the peak of 199-200 BCm per year attained in the last 2 years to some 167 BCm in 2020. Pipeline gas supplies to Europe seems somewhat paralyzed currently with little to no availability of ramping up exports despite producers curbing natural gas production concurrently to oil. With this in mind, Gazprom is looking to beat its competitors on their own field, having no liquefaction facility that could realistically target European customers. In the first days of June 2020, the Greek industrial holding Mytilineos announced that it had concluded a long-term contract with Gazprom’s commercial arm, Gazprom Export, to import Russian natural gas. The news in and of itself should not be considered as anything surprising – Mytilineos had several short-term contracts with the Russian firm in the past couple of years and imported 0.6 BCm in 2019. Were one to examine the details of the deal though, it gets much more interesting – LNG prices to Greece have started off this year at $3.5 per MMbtu, oscillated around the $2.5 per MMbtu mark in March-April and then took a plunge below $2 per MMbtu in the last days of April, remaining there ever since. Were it not for the increase of US LNG exports to Greece, this might not even trigger a response from Russia – Revithoussa has traditionally relied on a combination of Qatari, Algerian, Nigerian and Norwegian LNG deliveries. As indicated above, the onset of continuous US LNG deliveries to Greece bears a much harsher reputational blow to Russian energy interests than Qatari or Algerian supplies. This year has already seen 13 LNG cargo arrivals to Revithoussa, a manifold increase over the 2019 end result of 3 cargoes in total. Coming from a fairly extended list of LNG hubs (Sabine Pass, Cameron LNG, Cove Point), US LNG calls into question Kremlin’s claim that the American shale gale would not be able to supplant Russian deliveries – it turns out it can, albeit at highly adverse market conditions. Thus, instead of the initial question whether US LNG can reach Southern Europe, the issue to follow through lies with American producers’ ability to withstand such low gas prices for a long-term period.
Bland LNG contracts need a bit of seasoning – Platts Insight – The LNG market has clung tenaciously to traditional contracting structures, but so many of the justifications – the rationale for oil indexation, limited LNG supply, and lack of spot gas trade or benchmark – no longer pass the sniff test in 2020 and beyond. The LNG market needs different options. Sellers still need some long-term commitments to provide financial security to shareholders, and buyers still need some security of supply to assuage regulatory concerns regarding economic vulnerability. That said, the tropes that define each of these concepts for buyers and sellers desperately need to evolve, and now is the perfect time to move on. Shifting the focus from “how much” and “how long” to “when” and “what period of the year” provides a better solution to what currently ails the market for LNG contracts. Taking the LNG contract to the next level involves better defining when – more specifically what time of the year – having an LNG contract is an absolute necessity, and when it is more of an option. Here’s where the introduction of seasonal LNG contracts come into focus. This new type of LNG contract supports the goals of both buyers and sellers, while also simultaneously reducing mutual risks. In a seasonal LNG contract, a long-term deal will be struck, where both sides agree to a specific period of the year when the LNG is most and least valued. For most buyers in the northern hemisphere, this period of time would be during the fourth and first quarters, when weather can increase consumption by two to three times the annual average. Fine tuning the starting and stopping point of the seasonal LNG contract would depend on individual markets, with different criteria used such as heating and cooling degree day profiles or population weighting relative to total gas use. Seasonal differences in contracts are not unprecedented. Some Asian buyers previously negotiated for highly seasonal annualized volume at a 60-40 or 70-30 ratio towards the winter (Korea) or the summer (Taiwan), which also involved swapping arrangements for lifting LNG out of season. However, the contracts still required lifting volumes 12 months per year, whereas what is being suggested here is that the contract will only exist for a fixed period of the year, with no commitment to lift at other times.
Niger Delta Still Waiting for Big Oil to Clean Up Devastating Pollution – In 2011, a ground-breaking report by the UN Environment Programme (UNEP) on oil pollution in Ogoniland highlighted the devastating impact of the oil industry in the Niger Delta and made concrete recommendations for clean-up measures and immediate support for the region’s devastated communities.Now, nearly ten years later, a new report published Thursday by Friends of the Earth Europe, Amnesty International, ERA and Milieudefensie, details Shell’s failure to implement the “emergency measures” laid out by UNEP and says only 11 percent of contaminated areas in the Niger Delta have begun the clean-up process.Titled “No Clean-Up, No Justice,” the new report explains that for “more than five decades, the people of Ogoniland, in the Niger Delta, have struggled against oil pollution, destruction of the environment and human rights violations.”According to estimates, Shell Oil has dumped an estimated nine to 13 million barrels of crude oil into the Niger Delta since 1958.”Oil and gas extraction has caused large-scale, continued contamination of the water and soil in Ogoni communities,” said Friends of the Earth in a statement. “The continued and systematic failure of oil companies and government to clean up have left hundreds of thousands of Ogoni people facing serious health risks, struggling to access safe drinking water, and unable to earn a living.” As Common Dreams reported earlier this year, the local government has also worked with Shell to suppress the right of people in Ogoniland to fight against pollution.”The discovery of oil in Ogoniland has brought huge suffering for its people,” said Osai Ojigho of Amnesty International Nigeria. “Over many years we have documented how Shell has failed to clean up contamination from spills and it’s a scandal that this has not yet happened.”The ecological damage, Ojigho added, “is leading to serious human rights impacts – on people’s health and ability to access food and clean water. Shell must not get away with this – we will continue to fight until every last trace of oil is removed from Ogoniland.”
Nigerians bid to sue Shell in UK over oil spill pollution – Thousands of Nigerians are asking British judges to give them permission to sue Royal Dutch Shell Plc in London over environmental damage caused by oil spills 3,000 miles away in Africa. Lawyers for residents of the crude-rich Niger Delta believe a landmark UK Supreme Court ruling last year against a London-based miner should set a precedent. Shell, which has blocked the suit twice from entering British courts, says the litigation should be heard in the West African country. Oil companies are hurting from squeezed profits as the coronavirus pandemic has destroyed demand and pushed prices lower. Adding to its worries, Shell might also face legal battles in the UK, as well those already underway in the Netherlands, that could expose the firm to higher damages for causing pollution in the developing world. An April 2019 decision that allowed a group of Zambians to proceed to trial against Vedanta Resources for pollution caused by a copper-mining unit clarifies the law around a company’s duty of care to those affected by operations of a subsidiary, said Robert Meade, an attorney at Bracewell who specialises in oil and gas. Still, “it does not mean that a parent company might be liable for its subsidiaries’ actions or inaction,” he said. Daniel Leader, a partner at Leigh Day representing the Nigerian claimants, said the English courts should hold the oil major to account in English courts “for the devastating damage Shell has caused to their communities over many years.” Nigeria is Africa’s largest oil producer, and depends on crude for about half of government revenue and 90% of export earnings. However, thousands of spills over decades have destroyed the livelihoods of fishing and farming communities in the southeast of the country, including more than 40,000 people from the Bille and Ogale communities who are trying to force Shell to pay compensation and clean up. While the two communities have been hurt by spills, a spokesperson for Nigeria-registered Shell Petroleum Development Co. said that most are caused by oil theft, pipeline sabotage and illegal refining. Despite preventative measures such as cages around wellheads and community engagement, SPDC says it saw a 40% rise in spills over 100 kilograms related to theft and sabotage last year compared to 2018. Amnesty International in 2018 questioned Shell’s claims concerning the cause of spills, finding the company likely understated the number attributable to “operational” faults. SPDC, the operator of a joint venture that includes Nigeria’s state oil company as the majority shareholder, denied the allegations.
Closure notice issued to Assam OIL withdrawn — The Pollution Control Board of Assam (PCBA) conditionally withdrew on Monday the closure notice issued to Oil India Limited’s (OIL) Baghjan oil field where a blowout last month sparked an inferno that displaced thousands, spewed thousands of litres of oil and gas into the fragile ecosystem and wreaked havoc on the local wildlife. In a letter to OIL’s resident chief executive based in Assam’s Duliajan, PCBA said the closure notice issued on June 19 was withdrawn following an affidavit by the company to the pollution watchdog that said OIL will submit a detailed timebound environmental management plan within 15 days. Monday’s order – seen by HT – also said OIL will have to apply for consent to operate (CTO) under section 25 of the Water (Prevention And Control) Act 1974 and section 21 of the Air (Prevention And Control) Act 1981 separately each for drilling, production and other installations along with an environmental management plan. “They have to submit all the details of hazardous waste generated, disposed and treatment facilities as per the Hazardous and Other Waste (Management and Transboundary Movement) Rules, 2016,” the letter said. The board issued the closure notice on Friday on the grounds that the company has been operating it without prior permissions, including the key “consent to establish” and “consent to operate” clearances. “Baghjan oil field is located just 500 metres to the Maguri Motapung wetland which is part of eco-sensitive zone of Dibru Saikhowa National Park, which is effected severely due to the negligence from your end,” read the closure notice. “You are destroying the aquatic life of Dibru Saikhowa National Park and Maguri Motapung wetland , of endangered species in the name of exploring oil without any mitigation measures,” it added. The blowout that began on May 27 led to the uncontrollable flow of oil from gas well 5 — causing extensive damage to biodiversity and wildlife the region, according to a preliminary report on the environmental damage caused by the incident. There are 17 oil wells and five gas wells in the Baghjan oil field, which generates 1,200 kilolitres of crude oil and 1.5 to 2 million metric standard cubic metres of gas per day.
No oil flow from Baghjan gas well site to water bodies – PSU major Oil India Limited on Friday said that no oil is flowing into water bodies from a gas well in Assams Baghjan following a blowout last month, as claimed in a video clip which has gone viral on social media. Floodwaters have entered the gas well fire site in Tinsukia district affecting efforts of the OIL authorities to cap the well and douse the blaze, the company said. “There is a video clip is in circulation in the social media wherein it has been claimed that lot of oil is flowing into nearby water bodies/river from Baghjan blowout well. This is totally false since all hydrocarbon coming out of the well is completely burnt at the well head,” OIL said in a tweet. A release by the Press Information Bureau (PIB) also said that the well head area is dry and no oil is flowing into any waterbody. “Before the fire occurred, condensate was falling in nearby area as it was coming out along with gas. But once the well caught fire on 9th June, all condensate and gas is getting burnt,” the release said. Well number 5 at Baghjan has been spewing gas uncontrollably since the blowout on May 27 and it caught fire on June 9, killing two of OIL’s firefighters at the site. Meanwhile, it has been raining continuously and various parts of Baghjan gas well site and three roads leading to the spot from Tinsukia were inundated making it difficult to move personnel and equipment, OIL said in a statement. The site of helipad earmarked earlier cannot be used now because of the presence of floodwater on the road and efforts are on to identify a new site to set up a helipad. Due to damage of Doomdooma-Baghjan Bridge, all movement on the bridge has been suspended. OIL had contacted the Army for construction of a Bailey bridge but it can be done only after the water level recedes, the company said. Another bridge over Daisajan near Daisajan Tea Estate on Tiphuk Kordaiguri road is deteriorating too due to the flood. However, environmental Impact Assessment by M/s ERM is continuing with collection of samples of air, water, soil from different parts of the area since June 4 as a part of a study. Due to agitation by people, there was production loss of 88 MT of crude oil and 0.14 million metric standard cubic meters (MMSCM) of natural gas as on Thursday, the company said adding that operations were disrupted in 13 oil wells and one gas well.
Australia introduces increased fines for pollution related incidents – Ship owners, charterers, masters, operators need to be aware of increased liabilities for fines being introduced in Australia, in addition to any pollution clean-up costs and damage claims. As reported by law firm HWL Ebsworth, with effect from 1 July 2020, the majority of Australian States (and the Northern Territory) have increased their fines for pollution related incidents. The State and Territory legislation and penalties apply to oil spills that are within, or migrate to within, 3 nautical miles of the coast. Beyond 3 nautical miles the Commonwealth legislation will apply. Members are reminded that the discharge of oil in Commonwealth, State or Territory waters is a strict liability offence for owners and masters and potentially crew members too, plus those involved in the operation and maintenance of the ship. The Commonwealth legislation expressly also includes charterers in the list of those strictly liable. The maximum fine for an oil spill in Commonwealth waters will now increase to AUS$4.44 million for a master and AUS$22.2 million for a corporate owner or charterer. It is worth noting that the fines are not limited to oil or bunker spills and could also apply to other situations, for example where containers have been lost overboard. Both AMSA and the relevant State regulators and port authorities continue to police this policy area strictly. Members are advised to take extra care when trading in Australia. Should a spill or incident occur, owners should take immediate steps to notify the relevant authorities. Steps should also be taken to mitigate the physical damage and manage the resulting liabilities and penalties with care.
Asian Buyers Turn to U.S. Oil Amid Uncertain Flows From OPEC – As the OPEC+ alliance sticks to its guns in trying to curb oil output to shore up prices, Asian buyers are increasingly looking to the U.S. for a cheaper source of supply.Refiners in the top crude-importing region have been forced to accept big reductions in their regular contracted volumes from producers includingSaudi Arabia and Iraq in the past couple of months. They’ve also been taken aback by sharp swings in official selling prices.The lower volumes and pricing uncertainty is encouraging Asian processors to take a closer look at American crudes, particularly as freight rates across the Pacific have fallen over the last couple of months. Staff at four Asian processors who buy and sell crude said they were considering purchasing U.S. oil, declining to be named because the information is confidential. Saudi Arabia and other OPEC members have long-standing reputations as reliable suppliers to Asia, but the price war followed quickly by massive output cuts have unsettled buyers in the region. While these traditional suppliers are unlikely to be overtaken by the U.S. anytime soon, the instability has created an opening for American producers.”It’s difficult for refiners to cope with such volatility,” said John Driscoll, chief strategist at JTD Energy Services Pte in Singapore. “On the other hand, U.S. oil is looking more attractive with lower prices and freight rates. The volume of U.S. oil flowing to Asia is already rising. About 49 million barrels are scheduled to arrive next month, compared with 27 million barrels each in May and June, figures from Vortexa Ltd. show. Deeper discounts for American crude relative to other benchmark crudes such as Brent are spurring interest from China, said Serena Huang, a senior analyst at the market analytics firm.As the OPEC+ alliance sticks to its guns in trying to curb oil output to shore up prices, Asian buyers are increasingly looking to the U.S. for a cheaper source of supply.Refiners in the top crude-importing region have been forced to accept big reductions in their regular contracted volumes from producers includingSaudi Arabia and Iraq in the past couple of months. They’ve also been taken aback by sharp swings in official selling prices. The lower volumes and pricing uncertainty is encouraging Asian processors to take a closer look at American crudes, particularly as freight rates across the Pacific have fallen over the last couple of months. Staff at four Asian processors who buy and sell crude said they were considering purchasing U.S. oil, declining to be named because the information is confidential. Saudi Arabia and other OPEC members have long-standing reputations as reliable suppliers to Asia, but the price war followed quickly by massive output cuts have unsettled buyers in the region. While these traditional suppliers are unlikely to be overtaken by the U.S. anytime soon, the instability has created an opening for American producers.
China hits brakes on crude imports after buying frenzy (Reuters) – China will press the brakes on crude imports in the third quarter, after record purchases in recent months, as higher oil prices hurt demand and refiners worry about a second virus outbreak, analysts and trade sources said. China imported a record 11.3 million barrels per day (bpd) of crude in May, with volumes set to rise in June and July, as cheap crude purchased during an oil price slump in April arrives in the country. But the world’s top crude importer is expected to receive around 0.8-1.3 million bpd less crude from abroad in August and September than it did in May, analysts forecast. With Brent LCOc1 prices back above $40 a barrel and a new wave of coronavirus cases raising fears a nascent recovery could be derailed, traders say independent refineries – which account for a fifth of China’s crude imports – are already reducing the amount of crude oil they are buying. Chinese oil imports soared as Brent crude prices fell to their lowest since 1999, dipping below $20 a barrel. Refiners cashed in, snapping up cheap crude and selling diesel and gasoline at higher retail prices secured by the government. Shipping data from Refinitiv Eikon showed over 50 tankers queued around the oil refining hub of Shandong province on June 18 – double the 22 vessels recorded a month earlier. But energy consultancies FGE, SIA Energy and Rystad Energy all expect imports to ease off in the third quarter from the second quarter, even as the country has added new refining capacity, underpinning crude demand.
Abandoned freighter off Yemen could dump 1 million barrels – The abandoned freighter FSO Safer has been sitting off the coast of Yemen for five years, with more than 1 million barrels of crude oil in its hull. The United Nations and others monitoring the ship says it’s a ticking time bomb that could cause an environmental disaster in the Red Sea and on nearby shorelines worse than the 1989 Exxon Valdez oil spill. Meanwhile, the Safer and its fate have been caught up for years in a civil war and political wrangling that have thrown Yemen into a humanitarian crisis. “The disaster could happen at any second,” said an unnamed senior official at the state-owned company in charge of the ship, according to the Associated Press. He issued a plea for international help, but Houthi rebels who control the area have denied access to inspectors who could assess the damage and perhaps repair or move the ship. “Rescue Yemen from a terrible, imminent disaster that will add to Yemen’s burdens for tens of years and deprive thousands from their source of living, and kill marine life in the Red Sea,” the official said. (MORE: Lightning Kills at Least 83 in India) Photos taken last year show the tanker partially submerged and listing to one side. Seawater is leaking into the engine compartment, increasing the risk of sinking, and rust has covered parts of the tanker, according to documents obtained by the AP. Protections in place to help contain flammable gases have deteriorated. There are also rumors that explosive devices have been planted in the waters around the ship but no one knows if that’s true, according to I.R. Consilium, a consulting firm that’s been monitoring the Safer. The damage, lack of access and continued decline have put the ship in danger of rupture or explosion. Joanna Wronecka, Poland’s ambassador to the United Nations, said at a U.N. Security Council meeting in November that could lead to an “unprecedented environmental and humanitarian catastrophe in the Red Sea.” Among the impacts could be contaminated drinking water for millions of people who rely on coastal desalinization plants, an analysis by I.R. Consilium found. A spill could also disrupt shipping lanes in the Red Sea, a crucial route for oil and other goods, and cause damage to marine life. The tanker was being used as a floating storage facility when the rebels took over in 2015, according to the AP report. It measures 118 feet long and has 34 storage tanks. The state-owned oil company can no longer afford to take care of it, although they recently sent a dive team to seal holes in the ship where seawater was leaking in.
In 2020’s biggest energy deal, six firms strike $20 billion agreement with Abu Dhabi state oil giant – A consortium of six global investors has entered into a $20.7 billion agreement with Abu Dhabi National Oil Company (ADNOC), the state-owned oil company said Tuesday. As part of the agreement, the group will invest $10.1 billion to acquire a 49% stake in a newly-formed subsidiary, ADNOC Gas Pipeline Assets, with lease rights to 38 pipelines. ADNOC will hold the majority stake of 51% and will retain ownership of the pipelines. It will also manage operations and remain responsible for capital expenditure. It is the single-largest energy infrastructure investment in the region, and the largest in the world in 2020, according to Abu Dhabi National Oil Company. It is also part of the UAE national oil company’s strategy to attract foreign capital and maximize the value of its assets. The six companies involved are Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, NH Investment & Securities and Snam. “We are excited to have completed this deal, and once again partner with some of the word’s leading infrastructure and institutional investors,” said Sultan al-Jaber, chief executive officer of ADNOC Group and UAE’s minister of state. “It is in fact a huge achievement, particularly given the current challenging economic climate and business environment, and it is, if anything, a testament to Abu Dhabi and the UAE’s position as a trusted, reliable and credible investment destination,” he told CNBC’s Hadley Gamble. Al-Jaber said the deal would allow ADNOC to reinvest responsibly and finance activities that produce higher returns.
Oil edges up on tighter supply, but demand concerns check gains – Oil prices nudged higher on Monday on tighter supplies from major producers, but concerns that a record rise in global coronavirus cases could curb a recovery in fuel demand checked gains. Brent crude rose 9 cents, or 0.2%, to $42.28 a barrel by 0009 GMT, while U.S. crude was at $39.76 a barrel, up 1 cent. Both contracts rose about 9% last week and Brent crude futures flipped into backwardation, where oil for immediate delivery costs more than supply later, usually an indication of tightening supply. In the United States and Canada, the number of operating oil and natural gas rigs fell to a record low even as higher oil prices prompt some producers to start drilling again. Iraq and Kazakhstan pledged to comply better with oil production cuts during an OPEC+ panel on Thursday. However, the OPEC+ group, consisting of Organization of the Petroleum Exporting Countries and its allies including Russia, has yet to decide whether to extend a record supply cut of 9.7 million barrels per day (bpd) for a fourth month in August. Oil prices have also been supported by a recovery in fuel demand globally following a collapse in April-May during coronavirus shutdowns as countries across the world resume economic activities. Still, the World Health Organization reported a record jump in global coronavirus cases on Sunday, with the biggest increase seen in north and south America. Spikes in coronavirus infections in parts of the world such as Beijing and Australia’s second-most populous state Victoria have prompted authorities to reimpose movement restrictions to curb the spread. “The potential economic damage of a new round of COVID-19 countermeasures will likely contain any investor enthusiasm,” said Michael McCarthy, chief market strategist at CMC Markets.
Oil prices seesaw after Navarro walks back U.S.-China trade deal comment Oil flat, near highest since March, after Trump assurance on China trade – Oil prices were little changed on Tuesday, hovering near their highest levels since early March after U.S. President Donald Trump soothed jangled nerves over U.S.-China trade. Prices rose a day after Trump wrote in a tweet late Monday that the trade agreement was “fully intact.” Markets had been unsettled by surprise comments from White House trade adviser Peter Navarro who said the hard-won deal with China was “over”. “Oil prices need a healthy relationship between the U.S. and China,” said Edward Moya, senior market analyst at OANDA in New York. He also noted that crude prices pared gains when traders were unimpressed by a U.S. purchasing managers report. Brent futures were up 11 cents, or 0.3%, to $43.19 a barrel. Brent was on track for its second straight daily close at the highest level since prices collapsed on March 6 after the Organization of the Petroleum Exporting Countries (OPEC) and allied producers including Russia, failed to agree on production cuts. West Texas Intermediate crude rose 5 cents, or 0.1%, to $40.78. U.S. crude could close its highest since March 6 for a third straight session. Prices pared early gains after the U.S. Purchasing Managers’ Index (PMI) showed the country’s rebound from coronavirus depressed levels was not as sharp as in Europe. “Looking at the strength of the physical market and recovering global oil demand, we think that the crude oil price is still on its way higher,” Nordic bank SEB said in a note. Bank of America (BofA) Global Research has lifted its oil price forecast for this year. It now expects Brent crude to average $43.70 a barrel in 2020, up from a previous estimate of $37.
WTI Tumbles Below $39 On Crude Build, Rebound In Production – WTI prices fell back below $40 this morning following a surprisingly large crude build reported by API overnight., as fears of a second-wave of COVID-19 (and perhaps lockdowns) stymie hopes for a rebound in demand amid record inventories.While the “focus lies on the inventory data,” there’s also persistent anxiety around the growth of the pandemic, said Hans van Cleef, senior energy economist at ABN Amro.”Hopes for a rise in demand are counterbalanced by fears regarding new Covid-19 spread.”As Bloomberg notes, anxiety over trade also weighed on the market, with the U.S. mulling new tariffs on $3.1 billion of exports from France, Germany, Spain and the U.K., adding to an arsenal of measures against the European Union that could spiral into a wider transatlantic trade fight later this summer. DOE:
- Crude +1.44mm (+1.5mm exp, Platts -100k exp, BBG WHIS -595k exp)
- Cushing -991k
- Gasoline -1.673mm (-1.9mm exp)
- Distillates +249k (+100k exp)
Official EIA data confirmed API’s reported build in crude stocks last week, and the smallest draw at Cushing since May. The build in distillates also pours cold water in any pick up in jet fuel or diesel (trucking) demand. Graphs Source: Bloomberg. Gasoline demand is also closely-watched as an indicator of the speed of recovery in the economy, and jet-fuel demand remains low… US Crude production tumbled the prior week due to storm Cristobal shut-ins, and that drop was erased last week, back up to 11.0mm b/d…WTI briefly traded back above $40 overnight but was hovering around $39.50 ahead of the DOE print and tumbled to the lows of the day after the data…
Oil drops nearly 6% on record U.S. crude inventories, pandemic resurgence fears –Oil prices fell nearly 6% on Wednesday after U.S. crude storage hit another record and coronavirus cases rebound in countries like Germany and surge in heavily populated areas of the United States. Mounting coronavirus cases in the United States, which had its second-largest rise in new infections since the crisis began, China, Latin America and India have unnerved investors and pressured oil prices. “These are all important oil demand centers. A second wave of infections and lockdowns will derail the global economic recovery and with it, oil demand and prices,” said Stephen Brennock of broker PVM. Brent crude was down $2.29, or 5.5%, to $40.29 a barrel, a day after hitting its highest levels since early March, just before the pandemic and Saudi-Russia price war hit the markets. West Texas Intermediate crude settled $2.36, or 5.85%, lower at $38.01 per barrel. U.S. crude oil inventories swelled last week by 1.4 million barrels, exceeding analysts’ expectations in a Reuters poll for a 299,000-barrel rise, the Energy Information Administration said, citing rising production. That marked the third straight record for crude in U.S. storage. “The thing I was most concerned about was the rebound in domestic production and it was up – as a standalone it was capable of doing some damage to the market,” said Bob Yawger, director of energy futures at Mizuho. The International Monetary Fund said the coronavirus is causing wider and deeper damage to economic activity than first thought, and it slashed its 2020 global output forecasts further. India’s oil imports in May hit the lowest since October 2011 as refiners with brimming crude inventories cut purchases. China, the world’s top crude importer, is also expected to slow imports in the third quarter, after record purchases in recent months.
Oil Prices Fall Back Below $40 On New COVID Fears – The two-month oil rally has stalled, with WTI falling back to $38 per barrel. The resurgence of Covid-19 across the U.S. has halted the market’s positive momentum. In many ways, the rally was already overdone. Texas Governor Greg Abbott ordered bars to shut down on Friday as the spread of the coronavirus continues to accelerate. With several states – and the U.S. as a whole – setting new daily records for positive cases, fuel demand faces enormous downside risk in the weeks ahead. For instance, Texas gasoline demand on June 24 was 17.8 percent lower than on June 17. California regulators approved a new rule requiring more than half of all trucks sold to be zero-emissions by 2035, with incremental targets beginning in 2024. The rule is estimated to lower the state’s greenhouse gas emissions by 17 million metric tons, and save truck operators $6 billion on fuel costs. It is also expected to spur manufacturing for electric heavy-duty trucks. A federal judge ordered Enbridge totemporarily shut down the aging Line 5 pipeline after an anchor support of the pipeline recently shifted. The judge will hold a hearing on Tuesday to weigh the state of Michigan’s request to keep the pipeline closed indefinitely. The pipeline carries 540,000 bpd of light crude and natural gas liquids from Alberta through Wisconsin, Michigan and then back into Canada at the oil hub of Sarnia, Ontario. Washington DC and Minnesota each announced separate lawsuits against the oil industry this week. The DC attorney general sued ExxonMobil, BP, Royal Dutch Shell, and Chevron over its decades-long campaign of climate disinformation. A day earlier, Minnesota’s attorney general filed a similar lawsuit against Exxon, Koch Industries and the American Petroleum Institute. Unlike past cases, which sought damages for the company’s role in fueling climate change, these cases hinge on consumer protection violations. Occidental Petroleum said it would write down $9 billion, or more than 10 percent of the company’s assets.. Natural gas prices fell below $1.50/MMBtu this week, the lowest level since the 1990s. Poor refining margins throw up a red flag to the oil rally. With demand still weak enough to squeeze margins, refiners may purchase less crude oil, sapping the momentum for inventory drawdowns.
Oil prices hold ground after sharp retreat on virus fears – Oil prices rose about 2% in a volatile session on Thursday, buoyed by signs of a marginal improvement in the U.S. economy and a tepid rise in fuel demand, but price gains were limited by rising cases of COVID-19 in some U.S. states. Brent crude rose 74 cents, or 1.8%, to $41.05, after trading as low as $39.47. The global benchmark dropped 5.4% on Wednesday. West Texas Intermediate crude settled 71 cents, or 1.87%, higher at $38.72 per barrel. Road traffic in some of the world’s major cities in June had returned to 2019 levels, data provided to Reuters by location technology company TomTom showed. Oil prices fell early, then found support as data showed fewer Americans filed for unemployment benefits last week and orders for key capital goods rebounded in May. Still, the decline in jobless claims was less than analysts expected and other data supported expectations that second-quarter GDP could shrink at as much as a 40% annualized rate. To kick-start the world economy devastated by coronavirus, central banks have unleashed trillions of dollars in stimulus. “Part of the rebound here is the idea that all the stimulus measures that central banks and the world’s governments are pumping into the economy is going to have a positive impact on economic activity and that it will be supportive to demand,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. “The only roadblock is if the number of COVID-19 cases picks up and we have to reimpose shelter in place measures but I don’t think we can conclude that it’s in the cards yet.”
Oil Prices Climb as U.S. Economic Data Lends Support (Reuters) – Oil prices rose about 2% in a volatile session on Thursday, buoyed by signs of a marginal improvement in the U.S. economy and a tepid rise in fuel demand, but price gains were limited by rising cases of COVID-19 in some U.S. states. Brent crude rose 74 cents, or 1.8%, to settle at $41.05 a barrel. U.S. West Texas Intermediate (WTI) crude ended the session up 71 cents, or 1.9%, at $38.72. Road traffic in some of the world’s major cities in June had returned to 2019 levels, data provided to Reuters by location technology company TomTom showed. Oil prices fell early, then found support as data showed fewer Americans filed for unemployment benefits last week and orders for key capital goods rebounded in May. Still, the decline in jobless claims was less than analysts expected and other data supported expectations that second-quarter GDP could shrink at as much as a 40% annualized rate. To kick-start the world economy devastated by coronavirus, central banks have unleashed trillions of dollars in stimulus. “Part of the rebound here is the idea that all the stimulus measures that central banks and the world’s governments are pumping into the economy is going to have a positive impact on economic activity and that it will be supportive to demand,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. “The only roadblock is if the number of COVID-19 cases picks up and we have to reimpose shelter in place measures but I don’t think we can conclude that it’s in the cards yet.”
Oil futures decline, with U.S. prices down over 3% for the week as spread of coronavirus looks to hurt demand recovery – Oil futures declined on Friday, as a record rise in U.S. coronavirus cases and growing infections in parts of the world pointed to long-term challenges for a recovery in crude-oil demand, pulling U.S. prices down by more than 3% for the week. “The oil demand recovery story was dealt a blow this week after the U.S. registered the biggest-ever jump in coronavirus cases, suggesting many states may have to visit regional lockdowns soon,” wrote Edward Moya, senior market analyst at Oanda, in a Friday research note.U.S. states, including Arizona, Texas, South Carolina and Florida, saw confirmed cases rise by more than 30% over the past week, according to a Wall Street Journal analysis of data aggregated by Johns Hopkins University.West Texas Intermediate crude for August CLQ20, -0.85% fell 23 cents, or 0.6%, to settle at $38.49 a barrel on the New York Mercantile Exchange, following a 1.9% gain on Thursday.Global benchmark Brent oil for August delivery BRNQ20, -0.85% shed 3 cents, or 0.07%, to end at $41.02 a barrel on ICE Futures Europe, after a 1.8% advance in the previous session. For the week, WTI saw a 3.4% decline, while Brent lost 2.8%, based on the most-active contract settlements last Friday, according to Dow Jones Market Data.
Oil dips on rise in coronavirus cases, posts second negative week in three – Oil prices dipped on Friday, erasing earlier gains, as new coronavirus cases spiked in the United States and China, and on growing concerns about rising U.S. output ticking up while crude stockpiles sat at record highs. Brent crude futures were 14 cents lower at $40.9. West Texas Intermediate crude futures fell 23 cents, or 0.6% to settle at $38.49 per barrel. Brent was on track for a weekly decline of 3.1% and U.S. crude was headed for a weekly drop of 3.6%, after record U.S. crude inventory data dragged prices down on Wednesday. Earlier gains, supported by optimism over rising road traffic boosting fuel demand, were erased in early U.S. trading on fears that spiking COVID-19 infections in large gasoline-consuming U.S. states could stall the demand recovery. Cases have risen sharply in California, Texas and Florida, the three most populous U.S. states. Friday morning, Texas Governor Greg Abbott reversed the state’s reopening plan, ordering most bars to close due to the surge in cases. That could undermine the steady increase in refining output, with U.S. refiners now operating at nearly 75% of their capacity, per official government data. “Employers are delaying the return of their employees back to the office and that will impact the return of gasoline demand,” said Andrew Lipow, president of Lipow Oil Associates. The global economic outlook has also worsened or at best stayed about the same in the past month, a majority of economists polled by Reuters said, and the recession under way is expected to be deeper than earlier predicted. A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July. U.S. and Canadian energy firms cut the number of oil and natural gas rigs operating to a record low again this week, according to data from Baker Hughes.
Coronavirus: Saudi Arabia bars international pilgrims for Hajj – Saudi Arabia has banned international visitors from making the Islamic pilgrimage, or Hajj, this year in a bid to control coronavirus. Only a very limited number of people currently living in the kingdom may take part, an announcement on state media says. An estimated two million people would otherwise have visited Mecca and Medina this summer for the annual gathering. There had been fears the Hajj might be cancelled altogether. In normal times the pilgrimage is one of the most significant moments in the Muslim religious calendar. But only citizens from countries around the world who are already resident in Saudi Arabia will be allowed to attend this year. The authorities say this is the only way they will be able to make plans for social distancing that will keep people safe. Saudi Arabia has recorded 161,005 cases of infection and 1,307 deaths. It only lifted a nationwide lockdown at the weekend. Making the pilgrimage at least once is one of the Five Pillars of Islam – the five obligations that every Muslim, who is in good health and can afford it, must satisfy in order to live a good and responsible life, according to Islam. Pilgrims gather in Mecca to stand before the structure known as the Kaaba, praising Allah (God) together. They perform other acts of worship too, renewing their sense of purpose in the world.
Treasury sanctions Iranian ship captains after gasoline delivery to Venezuela – – The Treasury Department on Wednesday slapped fresh sanctions on five Iranian ship captains who delivered gasoline to Venezuela, whose once-thriving oil industry has suffered a breakdown. The Iranian shipping sector is a frequent target of the Trump administration for its financial support of Venezuelan President Nicolas Maduro’s regime. Earlier this week, five Iranian tankers brought approximately 1.5 million barrels to the gas-starved country, which was once a prominent fuel exporter. The move was likely to anger Washington as the two OPEC nations sidestep U.S. sanctions. “The Treasury Department will target anyone who supports Iranian attempts to evade United States sanctions and who further enables their destabilizing behavior around the world,” Treasury Secretary Steven Mnuchin wrote in a statement. “The Iranian regime’s support to the authoritarian and corrupt regime in Venezuela is unacceptable, and the administration will continue to use its authorities to disrupt it.” The five Iranian captains’ designated work for Islamic Republic of Iran Shipping Lines and National Iranian Tanker Co. and, over the past month, have captained vessels identified as blocked property. “Mariners who do business with Iran and Venezuela will face consequences from the United States of America,” Mike Pompeo, the nation’s top diplomat, said Wednesday at the State Department. “The Maduro regime has mismanaged Venezuela’s abundant natural resources to the point that it must import gasoline from Iran, and Maduro’s claims of equal and fair gasoline distribution are fooling no one,” he added. Gasoline is scarce in Venezuela due to a near-complete breakdown of the OPEC nation’s 1.3 million barrel-per-day refining network. Oil, the country’s biggest export, has plummeted more than 60% since Maduro succeeded dictator Hugo Chavez as Venezuela’s president in 2013.
Sisi’s ‘Declaration Of War’ Puts Egypt & Turkey On War Footing Over Libya –Egypt and Turkey have long been on opposite sides of the raging battle for the fate of Libya, with Turkey providing major military support and backing for the UN-recognized Government of National Accord (GNA) in Tripoli, and with Egypt backing Gen. Khalifa Haftar.The situation escalated over the weekend, amid a pullback of pro-Haftar forces from Tripoli after being defeated in the bid for the capital, when Egypt’s President Sisi announced from an airbase near the Libyan border that the Egyptian Army stands ready to intervene in Libya on behalf of Haftar. Sisi declared that if GNA forces attempt to enter Haftar-controlled Sirte, pushing deeper into central Libya, this would be a ‘red line’ for Egypt, forcing it’s intervention. Crucially both Tripoli and its main ally Turkey on Sunday condemned what they called Sisi’s “declaration of war”. Turkish state media recorded the GNA statement as follows: “This is a hostile act, direct interference, and amounts to a declaration of war” – in condemnation of Sisi’s statements. It added that for the Libyan state, “interference in its internal affairs, attacks on its sovereignty, whether by declarations… like those of the Egyptian president or by support for putschists, militias, and mercenaries, is unacceptable.”The heated rhetoric, and with Egypt potentially beefing up forces and military hardware along its border with Libya, has some regional sources saying that Turkey and Egypt are headed for direct war in a rapidly intensifying situation.”Now Egypt’s president is signaling possible red lines in Libya,” The Jerusalem Post writes. “This line could keep the Turkish-backed GNA from Sirte and a strategic airfield at Jufra. The country would be split down the middle. Egypt has a massive army, but it is also an army mostly untested on foreign battlefields.”Tripoli is now calling on the international community, especially the UN, to step in should Egypt’s army get involved.
France backs Egypt’s threat to intervene against Turkey in Libyan war – French President Emmanuel Macron’s support for Egypt’s threat to intervene militarily against the Italian-backed Turkish intervention in Libya marks a major escalation of the nine-year imperialist carve-up of Libya launched by the 2011 NATO war. On June 21, Egypt’s bloodstained dictator, General Abdel Fattah al-Sisi, threatened to intervene in Libya to defend warlord Khalifa Haftar’s forces against the Turkish-backed Government of National Accord (GNA). Speaking while inspecting troops at a military base near the Libyan border, he warned that a GNA capture of Sirte, a strategic town and gateway to Libya’s oil industry, would be a “red line.” “Any direct intervention from the Egyptian state has now acquired international legitimacy,” Sisi said. He told Egyptian air force pilots and special forces units: “Be prepared to carry out any mission, here inside our borders – or if necessary, outside our borders.” Echoing the rhetoric he used to justify a 2013 coup against Islamist President Mohamed Mursi and the savage repression of a two-year revolutionary upsurge of the working class in Egypt, Sisi said Egypt would intervene in Libya in self-defense against “direct threats” from “terrorist militias and mercenaries.” He added: “If the Libyan people … asked us to intervene, this would be a signal to the world that Egypt and Libya are one country, one interest.” The target, Egyptian officials made clear, is the Turkish intervention in Libya, launched in January, to support the UN-recognized GNA against Haftar’s forces. “The aim is deterrence: Egypt does not want a single Turk to cross the line into eastern Libya,” Ziad Akl of Egypt’s Al-Ahram Centre for Political and Strategic Studies told London’s Financial Times. The French government, which together with Russia, the UAE and Egypt has backed Haftar in Libya, promptly intervened to declare its support for Cairo in the war. Speaking alongside Tunisian President Kais Saied at the Elysee presidential palace in Paris, Macron accused Turkish President Recep Tayyip ErdoÄŸan’s government of “playing a dangerous game in Libya.” This comes shortly after a dangerous confrontation between French and Turkish warships in the Mediterranean.
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